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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE COLONIAL BANCGROUP, INC.
AND
FFLC BANCORP, INC.
DATED AS OF
JANUARY 14, 2005
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TABLE OF CONTENTS
CAPTION PAGE
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ARTICLE 1 NAME
1.1 Name............................................................................................1
ARTICLE 2 -- MERGER -- TERMS AND CONDITIONS
2.1 Applicable Law..................................................................................1
2.2 Corporate Existence.............................................................................1
2.3 Articles of Incorporation and Bylaws............................................................2
2.4 Resulting Corporation's Officers and Board......................................................2
2.5 Shareholder Approval............................................................................2
2.6 Further Acts....................................................................................2
2.7 Effective Date and Closing......................................................................2
2.8 Merger of Subsidiary Bank.......................................................................3
ARTICLE 3 -- CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 Conversion of Acquired Corporation Stock........................................................3
3.2 Fractional Shares...............................................................................5
3.3 Adjustments.....................................................................................5
3.4 BancGroup Stock.................................................................................5
3.5 Dissenting Rights...............................................................................5
3.6 Election and Exchange Procedures................................................................5
3.7 Exchange Procedures.............................................................................6
ARTICLE 4 -- REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BANCGROUP
4.1 Organization...................................................................................10
4.2 Capital Stock..................................................................................10
4.3 Financial Statements; Taxes....................................................................10
4.4 No Conflict with Other Instrument..............................................................12
4.5 Absence of Material Adverse Change.............................................................12
4.6 Approval of Agreement..........................................................................12
4.7 Tax Treatment..................................................................................12
4.8 Title and Related Matters......................................................................12
4.9 Subsidiaries...................................................................................12
4.10 Contracts......................................................................................13
4.11 Litigation.....................................................................................13
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4.12 Compliance.....................................................................................13
4.13 Registration Statement.........................................................................13
4.14 SEC Filings ...................................................................................14
4.15 Form S-4.......................................................................................14
4.16 Brokers........................................................................................14
4.17 Government Authorization.......................................................................14
4.18 Absence of Regulatory Communications...........................................................14
4.19 Disclosure.....................................................................................15
ARTICLE 5 -- REPRESENTATIONS, WARRANTIES AND
COVENANTS OF ACQUIRED CORPORATION
5.1 Organization...................................................................................15
5.2 Capital Stock..................................................................................15
5.3 Subsidiaries...................................................................................16
5.4 Financial Statements; Taxes....................................................................16
5.5 Absence of Certain Changes or Events...........................................................17
5.6 Title and Related Matters......................................................................19
5.7 Commitments....................................................................................20
5.8 Charter and Bylaws.............................................................................20
5.9 Litigation.....................................................................................20
5.10 Material Contract Defaults.....................................................................20
5.11 No Conflict with Other Instrument..............................................................21
5.12 Governmental Authorization.....................................................................21
5.13 Absence of Regulatory Communications...........................................................21
5.14 Absence of Material Adverse Change.............................................................21
5.15 Insurance......................................................................................21
5.16 Pension and Employee Benefit Plans.............................................................22
5.17 Buy-Sell Agreements............................................................................22
5.18 Brokers........................................................................................22
5.19 Approval of Agreements.........................................................................22
5.20 Disclosure.....................................................................................22
5.21 Registration Statement.........................................................................23
5.22 Loans; Adequacy of Allowance for Loan Losses...................................................23
5.23 Environmental Matters..........................................................................23
5.24 Collective Bargaining..........................................................................24
5.25 Labor Disputes.................................................................................24
5.26 Derivative Contracts...........................................................................24
5.27 SEC Filings....................................................................................24
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ARTICLE 6 -- ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup..............................................................24
6.2 Additional Covenants of Acquired Corporation ..................................................28
ARTICLE 7 -- MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation......................................................................31
7.2 Press Release..................................................................................32
7.3 Mutual Disclosure..............................................................................32
7.4 Access to Properties and Records...............................................................32
7.5 Notice of Adverse Changes......................................................................32
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF ALL PARTIES
8.1 Approval by Shareholders.......................................................................33
8.2 Regulatory Authority Approval..................................................................33
8.3 Litigation.....................................................................................33
8.4 Registration Statement.........................................................................33
8.5 Tax Opinion....................................................................................34
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
9.1 Representations and Warranties.................................................................34
9.2 Performance of Obligations of BancGroup........................................................35
9.3 Closing Certificate............................................................................35
9.4 Opinion of Counsel.............................................................................35
9.5 NYSE Listing...................................................................................35
9.6 Other Matters..................................................................................35
9.7 Material Events................................................................................35
9.8 Fairness Opinion...............................................................................36
9.9 Merger Consideration...........................................................................36
ARTICLE 10 -- CONDITIONS TO OBLIGATIONS OF BANCGROUP
10.1 Representations and Warranties.................................................................36
10.2 Performance of Obligations of the Acquired Corporation.........................................36
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10.3 Closing Certificate............................................................................36
10.4 Opinion of Counsel.............................................................................37
10.5 Controlling Shareholders.......................................................................37
10.6 Other Matters..................................................................................37
10.7 Dissenters.....................................................................................37
10.8 Material Events................................................................................37
10.9 Landlord's Consents............................................................................38
ARTICLE 11 -- TERMINATION OF REPRESENTATIONS
AND WARRANTIES...................................................................................38
ARTICLE 12 -- NOTICES............................................................................................38
ARTICLE 13 -- AMENDMENT OR TERMINATION
13.1 Amendment......................................................................................39
13.2 Termination....................................................................................39
13.3 Damages .......................................................................................40
ARTICLE 14 -- DEFINITIONS........................................................................................40
ARTICLE 15 -- MISCELLANEOUS
15.1 Expenses.......................................................................................46
15.2 Benefit and Assignment.........................................................................46
15.3 Governing Law..................................................................................47
15.4 Counterparts...................................................................................47
15.5 Headings.......................................................................................47
15.6 Severability...................................................................................47
15.7 Construction...................................................................................47
15.8 Return of Information..........................................................................47
15.9 Equitable Remedies.............................................................................47
15.10 Attorneys' Fees................................................................................48
15.11 No Waiver......................................................................................48
15.12 Remedies Cumulative............................................................................48
15.13 Entire Contract................................................................................48
Exhibit A...............................................................................................50
Exhibit B...............................................................................................55
Exhibit C...............................................................................................60
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this
the 14th day of January, 2005, by and between FFLC BANCORP, INC. ("Acquired
Corporation"), a Delaware corporation, and THE COLONIAL BANCGROUP, INC.
("BancGroup"), a Delaware corporation.
WITNESSETH
WHEREAS, Acquired Corporation operates as a savings and loan holding
company for its wholly owned subsidiary, First Federal Savings Bank of Lake
County (referred to herein as the "Bank"), with its principal office in
Leesburg, Florida; and
WHEREAS, BancGroup is a bank holding company with a Subsidiary bank,
Colonial Bank, N.A., operating in Alabama, Florida, Georgia, Nevada, Tennessee
and Texas; and
WHEREAS, Acquired Corporation wishes to merge with BancGroup; and
WHEREAS, it is the intention of BancGroup and Acquired Corporation that
such Merger shall qualify for federal income tax purposes as a "reorganization"
within the meaning of section 368(a) of the Code, as defined herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Parties hereto agree as follows:
ARTICLE 1
NAME
1.1 NAME. The name of the corporation resulting from the Merger
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shall be "The Colonial BancGroup, Inc."
ARTICLE 2
MERGER -- TERMS AND CONDITIONS
2.1 APPLICABLE LAW. On the Effective Date, Acquired Corporation shall
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be merged with and into BancGroup (herein referred to as the "Resulting
Corporation" whenever reference is made to it as of the time of merger or
thereafter). The Merger shall be undertaken pursuant to the provisions of and
with the effect provided in the Delaware General Corporation Law (the "DGCL").
The offices and facilities of Acquired Corporation and of BancGroup shall become
the offices and facilities of the Resulting Corporation.
2.2 CORPORATE EXISTENCE. On the Effective Date, the corporate existence
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of Acquired Corporation and of BancGroup shall, as provided in the DGCL, be
merged into and continued in the Resulting Corporation, and the Resulting
Corporation shall be deemed to be the same corporation as Acquired Corporation
and BancGroup. All rights, franchises and interests of Acquired Corporation and
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BancGroup, respectively, in and to every type of property (real, personal and
mixed) and choses in action shall be transferred to and vested in the Resulting
Corporation by virtue of the Merger without any deed or other transfer. The
Resulting Corporation on the Effective Date, and without any order or other
action on the part of any court or otherwise, shall hold and enjoy all rights of
property, franchises and interests, including appointments, designations and
nominations and all other rights and interests as trustee, executor,
administrator, transfer agent and registrar of stocks and bonds, guardian of
estates, assignee, and receiver and in every other fiduciary capacity and in
every agency, and capacity, in the same manner and to the same extent as such
rights, franchises and interests were held or enjoyed by Acquired Corporation
and BancGroup, respectively, on the Effective Date.
2.3 ARTICLES OF INCORPORATION AND BYLAWS. On the Effective Date, the
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certificate of incorporation and bylaws of the Resulting Corporation shall be
the restated certificate of incorporation and bylaws of BancGroup as they exist
immediately before the Effective Date.
2.4 RESULTING CORPORATION'S OFFICERS AND BOARD. The board of directors
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and the officers of the Resulting Corporation on the Effective Date shall
consist of those persons serving in such capacities of BancGroup as of the
Effective Date.
2.5 SHAREHOLDER APPROVAL. This Agreement shall be submitted to the
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shareholders of Acquired Corporation at the Shareholders' Meeting to be held as
promptly as practicable consistent with the satisfaction of the conditions set
forth in this Agreement. Upon approval by the requisite vote of the shareholders
of Acquired Corporation as required by applicable Law, and the satisfaction of
such other conditions as set forth herein, the Merger shall become effective as
soon as practicable thereafter in the manner provided in section 2.7 hereof.
2.6 FURTHER ACTS. If, at any time after the Effective Date, the
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Resulting Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (i) to vest,
perfect, confirm or record, in the Resulting Corporation, title to and
possession of any property or right of Acquired Corporation or BancGroup,
acquired as a result of the Merger, or (ii) otherwise to carry out the purposes
of the Merger and this Agreement, BancGroup and its officers and directors shall
execute and deliver all such proper deeds, assignments and assurances in law and
do all acts necessary or proper to vest, perfect or confirm title to, and
possession of, such property or rights in the Resulting Corporation and
otherwise to carry out the purposes of this Agreement; and the proper officers
and directors of the Resulting Corporation are fully authorized in the name of
Acquired Corporation or BancGroup, or otherwise, to take any and all such
action.
2.7 EFFECTIVE DATE AND CLOSING. Subject to the terms of all
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requirements of Law and the conditions specified in this Agreement, the Merger
shall become effective on the date specified in the Certificate of Merger to be
issued by the Secretary of State of the State of Delaware (such time being
herein called the "Effective Date"). Assuming all other conditions stated in
this Agreement have been or will be satisfied as of the Closing, the Closing
shall take place at the offices of BancGroup, in Montgomery, Alabama, at 2:00
p.m. on a date specified by BancGroup that shall be as soon as reasonably
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practicable after the later to occur of the Shareholder Meeting or all required
regulatory approvals under Section 8.2, or at such other place and time that the
Parties may mutually agree.
2.8 MERGER OF SUBSIDIARY BANK. BancGroup and Acquired Corporation
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anticipate the possibility that on or after the Effective Date, the Bank will
merge with and into Colonial Bank, N.A., BancGroup's Subsidiary bank (the "Bank
Merger"). The exact timing and structure of the Bank Merger have not been
finalized at this time, and BancGroup in its discretion will determine if such
Bank Merger shall proceed and will finalize such timing and structure at a later
date. Acquired Corporation will cooperate with BancGroup in consummating the
Bank Merger, including the calling of any special meetings of the board of
directors of the Bank and the filing of any regulatory applications.
ARTICLE 3
CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 CONVERSION OF ACQUIRED CORPORATION STOCK.
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(a) (i) On the Effective Date, and subject to sections
3.1(a)(ii), 3.1(a)(iii), 3.1(a)(iv), 3.3 and 3.5, each share of common stock of
Acquired Corporation outstanding and held by Acquired Corporation's shareholders
("Acquired Corporation Stock"), shall be converted into the right to receive
shares of BancGroup Common Stock and/or cash (the "Merger Consideration") as
specified below. Each outstanding share of Acquired Corporation Stock on the
Effective Date shall be converted into the right to receive either (A) 2.0
shares (subject to section 3.3 hereof) of BancGroup Common Stock or (B) $42.00
in cash in accordance with sections 3.1(a)(ii), (iii) and (iv) of this
Agreement.
(ii) A holder of Acquired Corporation Stock may, prior to the
Shareholders Meeting, file a written election form (an "Election Form") with the
Acquired Corporation specifying whether such holder (an "Electing Shareholder")
prefers to have the Merger Consideration paid to such holder in shares of
BancGroup Common Stock only, cash only, or any proportion of cash and whole
share of BancGroup Common Stock that such holder desires to receive, subject to
the limitation on cash consideration in sections 3.1(a)(iii) and (iv) of this
Agreement.
(iii) Notwithstanding section 3.1(a)(ii) of this Agreement and
notwithstanding any elections made pursuant to the Election Forms, the aggregate
amount of cash to be distributed in the Merger (the "Maximum Cash Amount") shall
not be more than the amount of 35% of the outstanding Acquired Corporation Stock
at the time of the Closing times $42 ($79,501,819 assuming 5,408,287 shares of
Acquired Corporation Stock are outstanding at the time of the Closing) even if
the aggregate amount of cash elected by stockholders (the "Aggregate Cash
Amount") exceeds the Maximum Cash Amount. If the Aggregate Cash Amount exceeds
the Maximum Cash Amount, the Merger Consideration distributable to each holder
of Acquired Corporation Stock shall be adjusted by taking the following steps:
(1) determine the amount by which the Aggregate Cash Amount exceeds the Maximum
Cash Amount; (2) reduce the amount of cash that each Electing Shareholder
electing cash will receive on a pro rata basis until the Aggregate Cash Amount
is equal to the Maximum Cash Amount (the aggregate amount of this reduction
shall be referred to as the "Excess Cash Election"); (3) determine the number of
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shares of Acquired Corporation Stock that each Acquired Corporation
Shareholder's pro rata portion of the Excess Cash Election represents (which
will be the pro rata portion of the Excess Cash Election divided by $42); (4)
increase such Electing Shareholder's stock component of such Electing
Shareholder's Merger Consideration by 2.0 shares of BancGroup Common Stock for
each share of Acquired Corporation Stock determined in step (3) above.
(iv) Elections made shall apply to all shares of record of
Acquired Corporation Stock held by a record holder making the election. If an
Acquired Corporation shareholder does not submit an Election Form, then such
holder will receive BancGroup Common Stock and no cash as his or her Merger
Consideration. For purposes of this section 3.1(a), and in accordance with
section 3.6, cash to be paid to holders exercising dissenter's rights of
appraisal under section 3.5 hereof shall be included as part of the Merger
Consideration for determining the amount of cash to be paid under section
3.1(a). Interest will not be paid on any cash to be paid as part of the Merger
Consideration.
(b)(i) On the Effective Date, BancGroup shall assume all
Acquired Corporation Options outstanding, and each such option shall cease to
represent a right to acquire Acquired Corporation common stock and shall,
instead, represent the right to acquire BancGroup Common Stock on substantially
the same terms applicable to the Acquired Corporation Options except as
specified below in this section. The number of shares of BancGroup Common Stock
to be issued pursuant to such options shall equal the number of shares of
Acquired Corporation common stock subject to such Acquired Corporation Options
multiplied by the Option Exchange Ratio (defined below), provided that no
fractions of shares of BancGroup Common Stock shall be issued and the number of
shares of BancGroup Common Stock to be issued upon the exercise of Acquired
Corporation Options, if a fractional share exists, shall equal the number of
whole shares obtained by rounding to the nearest whole number, giving account to
such fraction, or by paying for such fraction in cash, based upon a value of
$42.00 per share. The exercise price for the acquisition of BancGroup Common
Stock shall be the exercise price for each share of Acquired Corporation common
stock subject to such options divided by the Option Exchange Ratio, adjusted
appropriately for any rounding to whole shares that may be done. The Option
Exchange Ratio shall be 2.0 shares of BancGroup Common Stock for each share of
Acquired Corporation Stock. It is intended that the assumption by BancGroup of
the Acquired Corporation Options shall be undertaken in a manner that will not
constitute a "modification" as defined in Section 424 of the Code as to any
stock option which is an "incentive stock option." Schedule 3.1(b) hereto sets
forth the names of all persons holding Acquired Corporation Options, the number
of shares of Acquired Corporation common stock subject to such options, the
exercise price and the expiration date of such options.
(ii) BancGroup shall file at its expense a
registration statement with the SEC on Form S-8 or such other appropriate form
(including the Form S-4 to be filed in connection with the Merger) with respect
to the shares of BancGroup Common Stock to be issued pursuant to such options
and shall use its reasonable best efforts to maintain the effectiveness of such
registration statement for so long as such options remain outstanding. Such
shares shall also be registered or qualified for sale under the securities laws
of any state in which registration or qualification is necessary.
(c) In lieu of the conversion specified in paragraph (b)(i) of
Section 3.1 of this Agreement, no later than five days prior to the Effective
Date, each holder of outstanding Acquired Corporation Options may provide
written notice to Acquired Corporation (in form and substance reasonably
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satisfactory to BancGroup) that he or she wishes to exchange his or her Acquired
Corporation Options, as of the Effective Date, and, to receive an amount of cash
in exchange therefore. The amount of cash to be received shall be determined by
calculating the difference between (i) the number obtained by multiplying the
number of shares of Acquired Corporation Stock issuable pursuant to his or her
Acquired Corporation Options times $42.00 less (ii) the number obtained by
multiplying the number of shares of Acquired Corporation Stock issuable pursuant
to his or her Acquired Corporation Options times the exercise price per share
(as determined pursuant to the applicable stock option plan and stock option
agreement of the Acquired Corporation). In the event that the exercise prices of
all Acquired Corporation Options are not the same, the above calculation shall
be made for each series of options. The amount of cash paid to Option holders
shall not be included in the Maximum Cash Amount. Acquired Corporation shall
inform all holders of Acquired Corporation Options of their ability to exchange
their options for cash as described in this Section 3.1(c).
3.2 FRACTIONAL SHARES. No fractional shares of BancGroup Common Stock
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shall be issued, and each holder of shares of Acquired Corporation Stock having
a fractional interest arising upon the conversion of such shares into shares of
BancGroup Common Stock shall, at the time of surrender of the certificates
previously representing Acquired Corporation Stock, be paid by BancGroup an
amount in cash equal to $42.00 per share.
3.3 ADJUSTMENTS. In the event that prior to the Effective Date
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BancGroup Common Stock shall be changed into a different number of shares or a
different class of shares by reason of any recapitalization or reclassification,
stock dividend, combination, stock split, or reverse stock split of the
BancGroup Common Stock, an appropriate and proportionate adjustment shall be
made in the number of shares of BancGroup Common Stock into which the Acquired
Corporation Stock shall be converted.
3.4 BANCGROUP STOCK. The shares of Common Stock of BancGroup issued
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and outstanding immediately before the Effective Date shall continue to be
issued and outstanding shares of the Resulting Corporation.
3.5 DISSENTING RIGHTS. Any shareholder of Acquired Corporation who
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shall not have voted in favor of this Agreement and who has complied with the
applicable procedures set forth in the DGCL, relating to rights of dissenting
shareholders, shall be entitled to receive payment for the fair value of his
Acquired Corporation Stock. If after the Effective Date a dissenting shareholder
of Acquired Corporation fails to perfect, or effectively withdraws or loses his
right to appraisal and payment for his shares of Acquired Corporation Stock,
BancGroup shall issue and deliver the consideration to which such holder of
shares of Acquired Corporation Stock is entitled under Section 3.1 (without
interest) upon surrender by such holder of the certificate or certificates
representing shares of Acquired Corporation Stock held by him or her.
3.6 ELECTION AND EXCHANGE PROCEDURES. Each holder of record of shares
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of the Acquired Corporation Common Stock (other than Dissenting Shares)
("Holder") shall have the right, subject to the limitations set forth in this
Article 3, to submit an election in accordance with the following procedures:
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(a) Each Holder may specify in a request made in accordance with the
provisions of this Section 3.6 (herein called an "Election") (x) the number of
shares of Acquired Corporation Common Stock owned by such Holder with respect to
which such Holder desires to make a Stock Election and (y) the number of shares
of Acquired Corporation Common Stock owned by such Holder with respect to which
such Holder desires to make a Cash Election.
(b) BancGroup shall prepare a form reasonably acceptable to the
Acquired Corporation (the "Form of Election") which shall be mailed to the
Acquired Corporation's stockholders entitled to vote at the meeting of the
stockholders of the Acquired Corporation at which the stockholders of the
Acquired Corporation consider and vote on this Agreement (the "Acquired
Corporation Stockholders Meeting") so as to permit the Acquired Corporation's
stockholders to exercise their right to make an Election prior to the Election
Deadline.
(c) BancGroup shall make the Form of Election initially available at
the time that the Proxy Statement (as defined herein) is made available to the
stockholders of the Acquired Corporation, to such stockholders, and shall use
all reasonable efforts to make available as promptly as possible a Form of
Election to any stockholder of the Acquired Corporation who requests such Form
of Election following the initial mailing of the Forms of Election and prior to
the Election Deadline. In no event shall the Form of Election be made available
less than twenty (20) days prior to the Election Deadline.
(d) Any Election shall have been made properly only if the Person
authorized to receive the Elections and to act as Exchange Agent under this
Agreement, which Person shall be designated by BancGroup and not reasonably
objected to by the Acquired Corporation (the "Exchange Agent"), pursuant to an
agreement entered into prior to Closing and not reasonably objected to by the
Acquired Corporation, shall have received, by 5:00 p.m. local time in the city
in which the principal office of such Exchange Agent is located, on the date of
the Election Deadline, a Form of Election properly completed and signed and
accompanied by certificates of the shares of Acquired Corporation Common Stock
(the "Company Stock Certificates") to which such Form of Election relates or by
an appropriate customary guarantee of delivery of such certificates, as set
forth in such Form of Election from a member of any registered national
securities exchange or a commercial bank or trust company in the United States;
provided, that such certificates are in fact delivered to the Exchange Agent by
the time required in such guarantee of delivery. Failure to deliver shares of
Acquired Corporation Common Stock covered by such a guarantee of delivery within
the time set forth on such guarantee shall be deemed to invalidate any otherwise
properly made Election, unless otherwise determined by BancGroup, in its sole
discretion. As used herein, "Election Deadline" means 5:00 p.m. on the date that
is the day prior to the date of the Acquired Corporation Stockholder Meeting.
The Acquired Corporation and BancGroup shall cooperate to issue a press release
reasonably satisfactory to each of them announcing the date of the Election
Deadline not more than fifteen (15) business days before and at least five (5)
Business Days prior to, the Election Deadline.
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(e) Any Acquired Corporation stockholder may, at any time prior to the
Election Deadline, change or revoke his or her Election by written notice
received by the Exchange Agent prior to the Election Deadline accompanied by a
properly completed and signed, revised Form of Election. If BancGroup shall
determine in its reasonable discretion that any Election is not properly made
with respect to any shares of Acquired Corporation Common Stock, such Election
shall be deemed to be not in effect, and the shares of Acquired Corporation
Common Stock covered by such Election shall, for purposes hereof, be deemed to
be Non-Election Shares, unless a proper Election is thereafter timely made.
(f) Any Acquired Corporation stockholder may, at any time prior to the
Election Deadline, revoke his or her Election by written notice received by the
Exchange Agent prior to the Election Deadline or by withdrawal prior to the
Election Deadline of his or her Acquired Corporation Stock Certificate, or of
the guarantee of delivery of such certificates, previously deposited with the
Exchange Agent. All Elections shall be revoked automatically if the Exchange
Agent is notified in writing by BancGroup or the Acquired Corporation that this
Agreement has been terminated in accordance with Article 13.
(g) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name an Acquired Corporation Stock
Certificate so surrendered is registered, it shall be a condition to such
payment that such Acquired Corporation Stock Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the Person requesting
such payment shall pay to the Exchange Agent any transfer or other similar Taxes
required as a result of such payment to a Person other than the registered
holder of such Acquired Corporation Stock Certificate, or establish to the
reasonable satisfaction of the Exchange Agent that such Tax has been paid or is
not payable. The Exchange Agent (or, subsequent to the six month anniversary of
the Effective Time, BancGroup) shall be entitled to deduct and withhold from the
Merger Consideration (including cash in lieu of fractional shares of BancGroup
Common Stock) otherwise payable pursuant to this Agreement to any holder of
Acquired Corporation Common Stock such amounts as the Exchange Agent or
BancGroup, as the case may be, is required to deduct and withhold under the
Code, or any provision of state, local or foreign Tax law, with respect to the
making of such payment. To the extent the amounts are so withheld by the
Exchange Agent or BancGroup, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
shares of Acquired Corporation Common Stock in respect of whom such deduction
and withholding was made by the Exchange Agent or BancGroup, as the case may be.
(h) BancGroup, in the exercise of its reasonable discretion, shall have
the right to make all determinations, not inconsistent with the terms of this
Agreement, governing (A) the validity of the Forms of Election and compliance by
any Acquired Corporation Stockholder with the Election procedures set forth
herein, (B) the manner and extent to which Elections are to be taken into
account in making the determinations prescribed by this Article 3, (C) the
issuance and delivery of BancGroup Stock Certificates into which shares of
Acquired Corporation Common Stock are converted in the Merger and (D) the method
of payment of cash for shares of Acquired Corporation Common Stock converted
into the right to receive the Cash Consideration and cash in lieu of fractional
shares of BancGroup Common Stock where the holder of the applicable Acquired
Corporation Stock Certificate has no right to receive whole shares of BancGroup
Common Stock.
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(i) Upon surrender to the Exchange Agent of its Acquired Corporation
Stock Certificate or Acquired Corporation Stock Certificates, accompanied by a
properly completed Form of Election a Holder of Acquired Corporation Common
Stock will be entitled to receive promptly after the Effective Time the Merger
Consideration (elected or deemed elected by it) in respect of the shares of
Acquired Corporation Common Stock represented by its Acquired Corporation Stock
Certificate. Until so surrendered, each such Acquired Corporation Stock
Certificate shall represent after the Effective Time, for all purposes, only the
right to receive the Merger Consideration and any cash in lieu of fractional
shares of BancGroup Common Stock to be issued or paid in consideration therefor
upon surrender of such certificate in accordance with Section 3.1 and any
dividends or distributions to which such holder is entitled under this
Agreement.
3.7 EXCHANGE PROCEDURES.
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(a) Exchange Agent. Prior to the Effective Time, BancGroup shall
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appoint an exchange agent (the "Exchange Agent") for the purpose of exchanging
certificates (other than Dissenting Shares) which immediately prior to the
Effective Time evidenced shares of Acquired Corporation Common Stock (the
"Acquired Corporation Certificates") for the Merger Consideration.
(b) Exchange Fund. BancGroup or the Resulting Corporation, as the case
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may be, agrees to make available to the Exchange Agent from time to time as
needed, certificates representing the BancGroup Common Stock, cash sufficient to
pay the Cash Consideration, cash in lieu of fractional shares and any dividends
and other distributions. Any cash and certificates of BancGroup Common Stock
deposited with the Exchange Agent shall hereinafter be referred to as the
"Exchange Fund."
(c) Exchange Procedures. Within five (5) Business Days after the
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Effective Time, the Resulting Corporation shall cause the Exchange Agent to mail
to each holder of an Acquired Corporation Certificate: (i) a letter of
transmittal ("Letter of Transmittal") which shall specify that delivery shall be
effected and risk of loss and title to the Acquired Corporation Certificates
shall pass only upon delivery of the Acquired Corporation Certificates to the
Exchange Agent and which Letter of Transmittal shall be in customary form and
have such other provisions as BancGroup or the Resulting Corporation, as the
case may be, may reasonably specify and (ii) instructions for effecting the
surrender of such Acquired Corporation Certificates in exchange for the Merger
Consideration. Upon surrender of an Acquired Corporation Certificate to the
Exchange Agent together with such Letter of Transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Exchange Agent, the holder of such Acquired
Corporation Certificate shall be entitled to receive in exchange therefor (i)
one or more shares of BancGroup Common Stock (which may be in uncertificated
book-entry form unless a physical certificate is requested) representing, in the
aggregate, the whole number of shares that such holder has the right to receive
pursuant to this Agreement and (ii) a check for any cash portion of the Merger
Consideration and for the cash that such holder has the right to receive
pursuant to this Agreement, including cash in lieu of any fractional shares of
BancGroup Common Stock and dividends and other distributions required or
permitted by this Agreement. No interest will be paid or will accrue on any cash
payable for the cash portion of the Merger Consideration. In the event of a
transfer of ownership of Acquired Corporation Common Stock which is not
registered in the transfer records of Acquired Corporation, one or more shares
of BancGroup Common Stock evidencing, in the aggregate, the proper number of
shares of BancGroup Common Stock and a check for the cash portion of the Merger
Consideration, the cash in lieu of any fractional shares of BancGroup Common
Stock and any dividends or other distributions to which such holder is entitled
pursuant to this Agreement, may be issued with respect to such Acquired
Corporation Common Stock to such a transferee if the Acquired Corporation
Certificate representing such shares of Acquired Corporation Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
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(d) No Further Ownership Rights in Acquired Corporation Common Stock.
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All shares of BancGroup Common Stock issued and cash paid upon conversion of
shares of Acquired Corporation Common Stock in accordance with the terms of this
Article 3 (including any cash paid pursuant to this Agreement) shall be deemed
to have been issued or paid in full satisfaction of all rights pertaining to the
shares of Acquired Corporation Common Stock. Until surrendered as contemplated
by this Section 3.7, each Acquired Corporation Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration (and any cash to be paid pursuant to
this Agreement).
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
----------------------------
which remains undistributed to the holders of the Acquired Corporation
Certificate six months after the Effective Time shall be delivered to the
Resulting Corporation and any holders of the Acquired Corporation Certificates
who have not theretofore complied with this Section 3.7 shall thereafter look
only to the Resulting Corporation for the Merger Consideration with respect to
the shares of Acquired Corporation Common Stock formerly represented thereby to
which such holders are entitled pursuant to this Agreement, any cash in lieu of
fractional shares of BancGroup Common Stock to which such holders are entitled
pursuant to this Agreement and any dividends or distributions with respect to
shares of BancGroup Common Stock to which such holders are entitled pursuant to
this Agreement.
(f) No Liability. Neither BancGroup, Acquired Corporation, the
------------
Resulting Corporation nor the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(g) Lost Certificates. If any Acquired Corporation Certificate shall
-----------------
have been lost, stolen, destroyed, upon the making of an affidavit of that fact
by the Person claiming such Acquired Corporation Certificate to be lost, stolen,
or destroyed and, if required by the Resulting Corporation that posting by such
Person of a bond in such reasonable amount as the Resulting Corporation may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will deliver in exchange for such lost,
stolen or destroyed Acquired Corporation Certificate the applicable Merger
Consideration with respect to the shares of Acquired Corporation Common Stock
formerly represented thereby, any cash in lieu of fractional shares of BancGroup
Common Stock, and unpaid dividends and distributions on shares of BancGroup
Common Stock deliverable in respect thereof, in each case, pursuant to this
Agreement.
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(h) Stock Transfer Books. The stock transfer books of the Acquired
--------------------
Corporation shall be closed immediately upon the Effective Time and there shall
be no further registration of transfers of shares of Acquired Corporation Common
Stock thereafter on the records of Acquired Corporation. On or after the
Effective Time, any Acquired Corporation Certificates presented to the Exchange
Agent or the Resulting Corporation for any reason shall be converted into the
Merger Consideration with respect to the shares of Acquired Corporation Common
Stock formerly represented thereby, any cash in lieu of fractional shares of
BancGroup Common Stock to which the holders thereof are entitled pursuant to
this Agreement and any dividends or other distributions to which the holders
thereof are entitled pursuant to this Agreement.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
BancGroup represents, warrants and covenants to and with Acquired
Corporation as follows:
4.1 ORGANIZATION. BancGroup is a corporation duly organized, validly
------------
existing and in good standing under the Laws of the State of Delaware. BancGroup
has the necessary corporate powers to carry on its business as presently
conducted and is qualified to do business in every jurisdiction in which the
character and location of the Assets owned by it or the nature of the business
transacted by it requires qualification or in which the failure to qualify
could, individually or in the aggregate, have a Material Adverse Effect.
BancGroup is duly registered as a financial holding company under the Bank
Holding Company Act of 1956, as amended.
4.2 CAPITAL STOCK.
-------------
(a) The authorized capital stock of BancGroup consists of (i)
200,000,000 shares of Common Stock, $2.50 par value per share, of which as of
September 30, 2004, 133,617,232 shares were validly issued and outstanding,
fully paid and nonassessable and are not subject to preemptive rights (not
counting additional shares subject to issue pursuant to stock option and other
plans and convertible debentures), and (ii) 1,000,000 shares of Preference
Stock, $2.50 par value per share, none of which are issued and outstanding. The
shares of BancGroup Common Stock to be issued in the Merger are duly authorized
and, when so issued, will be validly issued and outstanding, fully paid and
nonassessable, will have been registered under the 1933 Act, and will have been
registered or qualified under the securities laws of all jurisdictions in which
such registration or qualification is required, based upon information provided
by Acquired Corporation.
(b) The authorized capital stock of each Subsidiary of
BancGroup is validly issued and outstanding, fully paid and nonassessable, and
each Significant Subsidiary (as defined in Section 1-02 of Regulation S-X under
the Securities Act of 1933, as amended) is wholly owned, directly or indirectly,
by BancGroup.
4.3 FINANCIAL STATEMENTS; TAXES. (a) BancGroup has delivered to
-----------------------------
Acquired Corporation copies of the following financial statements of BancGroup:
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(i) Consolidated balance sheets as of December 31,
2002, December 31, 2003, and September 30, 2004;
(ii) Consolidated statements of operations for each
of the three years ended December 31, 2001, 2002 and 2003, and for the nine
months ended September 30, 2004;
(iii) Consolidated statements of cash flows for each
of the three years ended December 31, 2001, 2002 and 2003, and for the nine
months ended September 30, 2004; and
(iv) Consolidated statements of changes in
shareholders' equity for the three years ended December 31, 2001, 2002 and 2003,
and for the nine months ended September 30, 2004.
All such financial statements are in all material respects in accordance with
the books and records of BancGroup and have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated unless
otherwise stated, all as more particularly set forth in the notes to such
statements. Each of the consolidated balance sheets presents fairly as of its
date the consolidated financial condition of BancGroup and its Subsidiaries.
Except as and to the extent reflected or reserved against in such balance sheets
(including the notes thereto), BancGroup did not have, as of the dates of such
balance sheets, any material Liabilities or obligations (absolute or contingent)
of a nature customarily reflected in a balance sheet or the notes thereto. The
consolidated statements of operations, cash flows and changes in shareholders'
equity present fairly the results of operations and changes in financial
position of BancGroup and its Subsidiaries for the periods indicated. The
foregoing representations, insofar as they relate to the unaudited interim
financial statements of BancGroup for the nine months ended September 30, 2004,
are subject in all cases to normal recurring year-end adjustments and the
omission of footnote disclosure.
(b) All Tax returns required to be filed by or on behalf of
BancGroup have been timely filed (or requests for extensions therefore have been
timely filed and granted and have not expired), and all returns filed are
complete and accurate in all material respects. All Taxes shown on these returns
to be due and all additional assessments received have been paid. The amounts
recorded for Taxes on the balance sheets provided under section 4.3(a) are, to
the Knowledge of BancGroup, sufficient in all material respects for the payment
of all unpaid federal, state, county, local, foreign or other Taxes (including
any interest or penalties) of BancGroup accrued for or applicable to the period
ended on the dates thereof, and all years and periods prior thereto and for
which BancGroup may at such dates have been liable in its own right or as
transferee of the Assets of, or as successor to, any other corporation or other
party. No audit, examination or investigation is presently being conducted or,
to the Knowledge of BancGroup, threatened by any taxing authority which is
likely to result in a material Tax Liability, no material unpaid Tax
deficiencies or additional liabilities of any sort have been proposed by any
governmental representative and no agreements for extension of time for the
assessment of any material amount of Tax have been entered into by or on behalf
of BancGroup. BancGroup has withheld from its employees (and timely paid to the
appropriate governmental entity) proper and accurate amounts for all periods in
material compliance with all Tax withholding provisions of applicable federal,
state, foreign and local Laws (including without limitation, income, social
security and employment Tax withholding for all types of compensation).
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4.4 NO CONFLICT WITH OTHER INSTRUMENT. The consummation of the
---------------------------------
transactions contemplated by this Agreement will not result in a breach of or
constitute a Default (without regard to the giving of notice or the passage of
time) under any material Contract, indenture, mortgage, deed of trust or other
material agreement or instrument to which BancGroup or any of its Subsidiaries
is a party or by which they or their Assets may be bound; will not conflict with
any provision of the restated certificate of incorporation or bylaws of
BancGroup or the articles of incorporation or bylaws of any of its Subsidiaries;
and will not violate any provision of any Law, regulation, judgment or decree
binding on them or any of their Assets.
4.5 ABSENCE OF MATERIAL ADVERSE CHANGE. Since the date of the most
----------------------------------
recent balance sheet provided under section 4.3(a)(i) above, there have been no
events, changes or occurrences which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BancGroup.
4.6 APPROVAL OF AGREEMENT. The board of directors of BancGroup, or its
---------------------
Executive Committee, has approved this Agreement and the transactions
contemplated by it and has authorized the execution and delivery by BancGroup of
this Agreement. This Agreement constitutes the legal, valid and binding
obligation of BancGroup, enforceable against it in accordance with its terms.
Approval of this Agreement by the stockholders of BancGroup is not required by
applicable Law. Subject to the matters referred to in section 8.2, BancGroup has
full power, authority and legal right to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. BancGroup has no
Knowledge of any fact or circumstance under which the appropriate regulatory
approvals required by section 8.2 will not be granted without the imposition of
material conditions or material delays.
4.7 TAX TREATMENT. BancGroup has no present plan to sell or otherwise
-------------
dispose of any of the Assets of Acquired Corporation, subsequent to the Merger,
and BancGroup intends to continue the historic business of Acquired Corporation.
4.8 TITLE AND RELATED MATTERS. BancGroup has good and marketable title
-------------------------
to all the properties, interests in properties and Assets, real and personal,
that are material to the business of BancGroup, reflected in the most recent
balance sheet referred to in section 4.3(a), or acquired after the date of such
balance sheet (except properties, interests and Assets sold or otherwise
disposed of since such date, in the ordinary course of business), free and clear
of all mortgages, Liens, pledges, charges or encumbrances except (i) mortgages
and other encumbrances referred to in the notes of such balance sheet, (ii)
liens for current Taxes not yet due and payable and (iii) such imperfections of
title and easements as do not materially detract from or interfere with the
present use of the properties subject thereto or affected thereby, or otherwise
materially impair present business operations at such properties. To the
Knowledge of BancGroup, the material structures and equipment of BancGroup
comply in all material respects with the requirements of all applicable Laws.
4.9 SUBSIDIARIES. Each Subsidiary of BancGroup has been duly
------------
incorporated and is validly existing as a corporation in good standing under the
Laws of the jurisdiction of its incorporation and each Subsidiary has been duly
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qualified as a foreign corporation to transact business and is in good standing
under the Laws of each other jurisdiction in which it owns or leases properties,
or conducts any business so as to require such qualification and in which the
failure to be duly qualified could have a Material Adverse Effect upon BancGroup
and its Subsidiaries considered as one enterprise; BancGroup's banking
subsidiary has its deposits fully insured by the Federal Deposit Insurance
Corporation to the extent provided by the Federal Deposit Insurance Act; and the
businesses of the non-bank Subsidiaries of BancGroup are permitted businesses of
registered bank holding companies that are financial holding companies.
4.10 CONTRACTS. Neither BancGroup nor any of its Subsidiaries is in
---------
violation of its respective certificate of incorporation or bylaws or in Default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any Contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which it is a party or by which it or its
property may be bound except where such violation could not be reasonably
expected to have a Material Adverse Effect on BancGroup.
4.11 LITIGATION. Except as disclosed in or reserved for in BancGroup's
----------
financial statements, there is no Litigation before or by any court or Agency,
domestic or foreign, now pending, or, to the Knowledge of BancGroup, threatened
against or affecting BancGroup or any of its Subsidiaries (nor is BancGroup
aware of any facts which could give rise to any such Litigation) which is
required to be disclosed in the Registration Statement (other than as disclosed
therein), or which is likely to have any Material Adverse Effect or prospective
Material Adverse Effect, or which is likely to materially and adversely affect
the properties or Assets thereof or which is likely to materially affect or
delay the consummation of the transactions contemplated by this Agreement; all
pending legal or governmental proceedings to which BancGroup or any Subsidiary
is a party or of which any of their properties is the subject which are not
described in the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not material; and
neither BancGroup nor any of its Subsidiaries have any contingent obligations
which could be considered material to BancGroup and its Subsidiaries considered
as one enterprise which are not disclosed in the Registration Statement as it
may be amended or supplemented.
4.12 COMPLIANCE. BancGroup and its Subsidiaries, in the conduct of
----------
their businesses, are to the Knowledge of BancGroup, in compliance with all
federal, state or local Laws applicable to the conduct of their businesses
except where non-compliance could not be reasonably expected to have a Material
Adverse Effect on BancGroup.
4.13 REGISTRATION STATEMENT. At the time the Registration Statement
----------------------
becomes effective and at the time of the Shareholders' Meeting, the Registration
Statement, including the Proxy Statement which shall constitute a part thereof,
will comply in all material respects with the requirements of the 1933 Act and
the rules and regulations thereunder, will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity with information furnished in
writing to BancGroup by Acquired Corporation or any of its representatives
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expressly for use in the Proxy Statement or information included in the Proxy
Statement regarding the business of Acquired Corporation, its operations, Assets
and capital.
4.14 SEC FILINGS. (a) BancGroup has heretofore delivered to Acquired
-----------
Corporation copies of BancGroup's: (i) Annual Report on Form 10-K for the fiscal
year ended December 31, 2003; (ii) 2003 Annual Report to Shareholders; (iii)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004, June 30,
2004 and September 30, 2004 and (iv) any reports on Form 8-K, filed by BancGroup
with the SEC since September 30, 2004. Since December 31, 2002, BancGroup has
timely filed all reports and registration statements and the documents required
to be filed with the SEC under the rules and regulations of the SEC and all such
reports and registration statements or other documents have complied in all
material respects, as of their respective filing dates and effective dates, as
the case may be, with all the applicable requirements of the 1933 Act, the 1934
Act and the Sarbanes-Oxley Act of 2002. As of the respective filing and
effective dates, none of such reports or registration statements or other
documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The documents to be incorporated by reference into the
Registration Statement, at the time they were filed with the SEC, complied in
all material respects with the requirements of the 1934 Act and Regulations
thereunder and when read together and with the other information in the
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading at the time the Registration
Statement becomes effective or at the time of the Shareholders' Meeting.
4.15 FORM S-4. The conditions for use of a registration statement on
--------
SEC Form S-4 set forth in the General Instructions on Form S-4 have been or will
be satisfied with respect to BancGroup and the Registration Statement.
4.16 BROKERS. Except for negotiations with Keefe, Bruyette & Woods,
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Inc. as referenced in Section 5.18 of this Agreement, all negotiations relative
to this Agreement and the transactions contemplated by this Agreement have been
carried on by BancGroup directly with Acquired Corporation and without the
intervention of any other person, either as a result of any act of BancGroup or
otherwise in such manner as to give rights to any valid claim against BancGroup
for finders fees, brokerage commissions or other like payments.
4.17 GOVERNMENT AUTHORIZATION. BancGroup and its Subsidiaries have all
------------------------
Permits that are or will be legally required to enable BancGroup or any of its
Subsidiaries to conduct their businesses in all material respects as now
conducted by each of them.
4.18 ABSENCE OF REGULATORY COMMUNICATIONS. Neither BancGroup nor any of
------------------------------------
its Subsidiaries is subject to, or has received during the past three (3) years,
any written communication directed specifically to it from any Agency to which
it is subject or pursuant to which such Agency has imposed or has indicated it
may impose any material restrictions on the operations of it or the business
conducted by it or in which such Agency has raised a material question
concerning the condition, financial or otherwise, of such company.
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4.19 DISCLOSURE. No representation or warranty, or any statement or
----------
certificate furnished or to be furnished to Acquired Corporation by BancGroup,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED CORPORATION
Except as set forth in a disclosure schedule delivered by the Acquired
Corporation to BancGroup (the "Acquired Corporation Disclosure Schedule") prior
to the date hereof (which sets forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express provision
of this Agreement or as an exception to one or more of its representations and
warranties set forth below or its covenants in Articles 6 and 7, provided, that
(i) no such item is required to be set forth in the Acquired Corporation
Disclosure Schedule as an exception to any representation or warranty of the
Acquired Corporation if its absence (in combination with any other undisclosed
information) would not be reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
set forth in Section 9.1 and (ii) the mere inclusion of an item in the Acquired
Corporation Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by the Acquired Corporation that such item
represents a material exception or fact, event or circumstance or that such item
is or would be reasonably likely to result in a Material Adverse Effect with
respect to the Acquired Corporation.
Acquired Corporation represents, warrants and covenants to and with
BancGroup, as follows:
5.1 ORGANIZATION. Acquired Corporation is a Delaware corporation, and
------------
the Bank is a federally chartered savings and loan association. Each Acquired
Corporation Company is duly organized, validly existing and in active status
under the respective Laws of its jurisdiction of incorporation or association
and has all requisite power and authority to carry on its business as it is now
being conducted and is qualified to do business in every jurisdiction in which
the character and location of the Assets owned by it or the nature of the
business transacted by it requires qualification and in which the failure to
qualify could, individually, or in the aggregate, have a Material Adverse
Effect.
5.2 CAPITAL STOCK. As of the date of this Agreement, the authorized
-------------
capital stock of Acquired Corporation consisted of 10,000,000 shares of common
stock, $0.01 par value per share, 5,408,287 shares of which are issued and
outstanding. All of such shares which are outstanding are validly issued, fully
paid and nonassessable and not subject to preemptive rights. Acquired
Corporation has 199,891 shares of its common stock subject to issuance pursuant
to the exercise of stock options under its stock option plans. Except for the
foregoing, Acquired Corporation does not have any other arrangements or
commitments obligating it to issue shares of its capital stock or any securities
convertible into or having the right to purchase shares of its capital stock,
including the grant or issuance of Acquired Corporation Options.
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5.3 SUBSIDIARIES. Acquired Corporation has no direct Subsidiaries other
------------
than the Bank and FFLC Statutory Trust I (the "Trust"), and there are no
Subsidiaries of the Bank other than Lake County Service Corporation ("LCSC").
Acquired Corporation owns all of the issued and outstanding capital stock of the
Bank free and clear of any liens, claims or encumbrances of any kind. All of the
issued and outstanding shares of capital stock of each Acquired Corporation
Company have been validly issued and are fully paid and non-assessable. As of
the date of this Agreement, there were (i)with respect to the Bank, 10,000,000
shares of common stock, par value $1.00 per share, authorized and 1,000 shares
outstanding and 1,000,000 shares of preferred stock, par value $1.00 per share
authorized, none of which is outstanding, (ii) with respect to the Trust, 155
shares of common stock, par value $1,000 per share, authorized and 155 shares
outstanding, (iii) with respect to LCSC 6,500 shares of common stock, par value
$1.00 per share, authorized and 6,500 shares outstanding, all of which are
wholly owned by Acquired Corporation (or the Bank in the case of LCSC). Other
than as listed above, no Acquired Corporation Company has any other form of
stock authorized or outstanding. The Bank has no arrangements or commitments
obligating it to issue shares of any of its capital stock or any securities
convertible into or having the right to purchase shares of any of its capital
stock.
5.4 FINANCIAL STATEMENTS; TAXES (a) Acquired Corporation has delivered
---------------------------
to BancGroup copies of the following financial statements of Acquired
Corporation:
(i) Consolidated balance sheets as of December 31,
2002, December 31, 2003 and September 30, 2004;
(ii) Consolidated statements of income for each of
the three years ended December 31, 2001, 2002 and 2003, and for the nine months
ended September 30, 2004;
(iii) Consolidated statements of cash flows for each
of the three years ended December 31, 2001, 2002, and 2003, and for the nine
months ended September 30, 2004; and
(iv) Consolidated statements of changes in
shareholders' equity for the three years ended December 31, 2001, 2002 and 2003,
and for the nine months ended September 30, 2004.
All of the foregoing financial statements are in all material respects
in accordance with the books and records of Acquired Corporation and have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated, except for changes required by GAAP, all as more particularly
set forth in the notes to such statements. Each of such balance sheets presents
fairly as of its date the financial condition of Acquired Corporation. Except as
and to the extent reflected or reserved against in such balance sheets
(including the notes thereto), Acquired Corporation did not have, as of the date
of such balance sheets, any material Liabilities or obligations (absolute or
contingent) of a nature customarily reflected in a balance sheet or the notes
thereto. The statements of income, shareholders' equity and cash flows present
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fairly the results of operation, changes in shareholders' equity and cash flows
of Acquired Corporation for the periods indicated. The foregoing
representations, insofar as they relate to the unaudited interim financial
statements of Acquired Corporation for the nine months ended September 30, 2004,
are subject in all cases to normal recurring year-end adjustments and the
omission of footnote disclosure.
(b) Except as set forth on Schedule 5.4(b), all Tax returns
required to be filed by or on behalf of Acquired Corporation have been timely
filed (or requests for extensions therefore have been timely filed and granted
and have not expired), and all returns filed are complete and accurate in all
material respects. All Taxes shown on these returns to be due and all additional
assessments received have been paid. The amounts recorded for Taxes on the
balance sheets provided under section 5.4(a) are, to the Knowledge of Acquired
Corporation, sufficient in all material respects for the payment of all unpaid
federal, state, county, local, foreign and other Taxes (including any interest
or penalties) of Acquired Corporation accrued for or applicable to the period
ended on the dates thereof, and all years and periods prior thereto and for
which Acquired Corporation may at such dates have been liable in its own right
or as a transferee of the Assets of, or as successor to, any other corporation
or other party. No audit, examination or investigation is presently being
conducted or, to the Knowledge of Acquired Corporation, threatened by any taxing
authority which is likely to result in a material Tax Liability, no material
unpaid Tax deficiencies or additional liability of any sort has been proposed by
any governmental representative and no agreements for extension of time for the
assessment of any material amount of Tax have been entered into by or on behalf
of Acquired Corporation. Acquired Corporation has not executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect.
(c) Each Acquired Corporation Company has withheld from its
employees (and timely paid to the appropriate governmental entity) proper and
accurate amounts for all periods in material compliance with all Tax withholding
provisions of applicable federal, state, foreign and local Laws (including
without limitation, income, social security and employment Tax withholding for
all types of compensation). Each Acquired Corporation Company is in compliance
with, and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under section 3406 of the Code.
5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
-------------------------------------
Schedule 5.5, since the date of the most recent balance sheet provided under
section 5.4(a)(i) above, no Acquired Corporation Company has
(a) issued, delivered or agreed to issue or deliver any stock,
bonds or other corporate securities (whether authorized and unissued or held in
the treasury) except shares of common stock issued upon the exercise of existing
Acquired Corporation Options and shares issued as director's qualifying shares;
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(b) borrowed or agreed to borrow any funds or incurred, or
become subject to, any Liability (absolute or contingent) except borrowings,
obligations (including purchase of federal funds) and Liabilities incurred in
the ordinary course of business and consistent with past practice;
(c) paid any material obligation or Liability (absolute or
contingent) other than current Liabilities reflected in or shown on the most
recent balance sheet referred to in section 5.4(a)(i) and current Liabilities
incurred since that date in the ordinary course of business and consistent with
past practice;
(d) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any Assets of any kind whatsoever to
shareholders, or purchased or redeemed, or agreed to purchase or redeem,
directly or indirectly, or otherwise acquire, any of its outstanding securities;
provided, however, that Acquired Corporation may continue to make quarterly cash
- --------
dividends of no more than $0.14 per share and at times consistent with past
practices and as set forth on Schedule 5.5(d) to this Agreement;
(e) except in the ordinary course of business, sold or
transferred, or agreed to sell or transfer, any of its Assets, or canceled, or
agreed to cancel, any debts or claims;
(f) except in the ordinary course of business, entered or
agreed to enter into any agreement or arrangement granting any preferential
rights to purchase any of its Assets, or requiring the consent of any party to
the transfer and assignment of any of its Assets;
(g) suffered any Losses or waived any rights of value which in
either event in the aggregate are material considering its business as a whole;
(h) except in the ordinary course of business, made or
permitted any amendment or termination of any Contract, agreement or license to
which it is a party if such amendment or termination is material considering its
business as a whole;
(i) except in accordance with normal and usual practice, made
any accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former officer or
employee;
(j) except in accordance with normal and usual practice,
increased the rate of compensation payable to or to become payable to any of its
officers or employees or made any material increase in any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement or other
employee benefit plan, payment or arrangement made to, for or with any of its
officers or employees;
(k) received notice or had Knowledge or reason to believe that
any of its substantial customers has terminated or intends to terminate its
relationship, which termination would have a Material Adverse Effect on its
financial condition, results of operations, business, Assets or properties;
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(l) failed to operate its business in the ordinary course so
as to preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations;
(m) entered into any other material transaction other than in
the ordinary course of business; or
(n) agreed in writing, or otherwise, to take any action
described in clauses (a) through (m) above.
Between the date hereof and the Effective Date, no Acquired Corporation
Company, without the express written approval of BancGroup, will do any of the
things listed in clauses (a) through (n) of this section 5.5 except as permitted
therein or as contemplated in this Agreement, and no Acquired Corporation
Company will enter into or amend any material Contract, other than Loans or
renewals thereof entered into in the ordinary course of business, without the
express written consent of BancGroup.
5.6 TITLE AND RELATED MATTERS.
-------------------------
(a) Title. Each Acquired Corporation Company has good and
-----
marketable title to all the properties, interest in properties and Assets, real
and personal, that are material to the business of such Acquired Corporation
Company, reflected in the most recent balance sheet referred to in section
5.4(a)(i), or acquired after the date of such balance sheet (except properties,
interests and Assets sold or otherwise disposed of since such date, in the
ordinary course of business), free and clear of all mortgages, Liens, pledges,
charges or encumbrances except (i) mortgages and other encumbrances referred to
in the notes to such balance sheet, (ii) Liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the Knowledge of Acquired Corporation, the material
structures and equipment of each Acquired Corporation Company comply in all
material respects with the requirements of all applicable Laws.
(b) Leases. Schedule 5.6(b) sets forth a list and description
------
of all real and personal property owned or leased by any Acquired Corporation
Company, either as lessor or lessee. Complete and accurate copies of all such
leases have been attached to a Schedule to this Agreement.
(c) Personal Property. Schedule 5.6(c) sets forth a
-----------------
depreciation schedule of each Acquired Corporation Company's fixed Assets as of
September 30, 2004.
(d) Computer Hardware and Software. Schedule 5.6(d) contains a
------------------------------
description of all agreements relating to data processing computer software and
hardware now being used in the business operations of any Acquired Corporation
Company. Acquired Corporation is not aware of any defects, irregularities or
problems with any of its computer hardware or software which renders such
hardware or software unable to satisfactorily perform the tasks and functions to
be performed by them in the business of any Acquired Corporation Company.
Complete and accurate copies of all Contracts, plans and other items so listed
have been attached to a Schedule to this Agreement.
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5.7 COMMITMENTS. Except as set forth in Schedule 5.7, no Acquired
-----------
Corporation Company is a party to any oral or written (i) Contract for the
employment of any officer or employee which is not terminable on 30 days' (or
less) notice, (ii) profit sharing, bonus, deferred compensation, savings, stock
option, severance pay, pension or retirement plan, agreement or arrangement,
(iii) loan agreement, indenture or similar agreement relating to the borrowing
of money by such party, (iv) guaranty of any obligation for the borrowing of
money or otherwise, excluding endorsements made for collection, and guaranties
made in the ordinary course of business, (v) consulting or other similar
material Contracts, (vi) collective bargaining agreement, (vii) agreement with
any present or former officer, director or shareholder of such party, (viii) any
contract that is not terminable within ninety (90) days or (ix) other Contract,
agreement or other commitment which is material to the business, operations,
property, prospects or Assets or to the condition, financial or otherwise, of
any Acquired Corporation Company. Complete and accurate copies of all Contracts,
plans and other items so listed have been attached to a Schedule to this
Agreement.
5.8 CHARTER AND BYLAWS. Schedule 5.8 contains true and correct copies
------------------
of the articles of incorporation and bylaws of each Acquired Corporation
Company, including all amendments thereto, as currently in effect. There will be
no changes in such articles of incorporation or bylaws prior to the Effective
Date, without the prior written consent of BancGroup.
5.9 LITIGATION. Other than as set forth on Schedule 5.9, there is no
----------
Litigation (whether or not purportedly on behalf of Acquired Corporation)
pending or, to the Knowledge of Acquired Corporation, threatened against or
affecting any Acquired Corporation Company (nor does Acquired Corporation have
Knowledge of any facts which are likely to give rise to any such Litigation) at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind, which involves the possibility of any judgment or
Liability not fully covered by insurance in excess of a reasonable deductible
amount or which may have a Material Adverse Effect on Acquired Corporation, and
no Acquired Corporation Company is in Default with respect to any judgment,
order, writ, injunction, decree, award, rule or regulation of any court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality, which Default would have a Material Adverse Effect on Acquired
Corporation. To the Knowledge of Acquired Corporation, each Acquired Corporation
Company has complied in all material respects with all material applicable Laws
and Regulations including those imposing Taxes, of any applicable jurisdiction
and of all states, municipalities, other political subdivisions and Agencies, in
respect of the ownership of its properties and the conduct of its business,
which, if not complied with, would have a Material Adverse Effect on Acquired
Corporation.
5.10 MATERIAL CONTRACT DEFAULTS. Except as disclosed on Schedule 5.10,
--------------------------
no Acquired Corporation Company is in Default in any material respect under the
terms of any material Contract, agreement, lease or other commitment which is or
may be material to the business, operations, properties or Assets, or the
condition, financial or otherwise, of such company and, to the Knowledge of
Acquired Corporation, there is no event which, with notice or lapse of time, or
both, may be or become an event of Default under any such material Contract,
agreement, lease or other commitment in respect of which adequate steps have not
been taken to prevent such a Default from occurring.
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5.11 NO CONFLICT WITH OTHER INSTRUMENT. Except as disclosed on
---------------------------------
Schedule 5.11, the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of or
constitute a Default under any material Contract, indenture, mortgage, deed of
trust or other material agreement or instrument to which any Acquired
Corporation Company is a party and will not conflict with any provision of the
charter or bylaws of any Acquired Corporation Company.
5.12 GOVERNMENTAL AUTHORIZATION. Each Acquired Corporation Company has
--------------------------
all Permits that, to the Knowledge of Acquired Corporation, are or will be
legally required to enable any Acquired Corporation Company to conduct its
business in all material respects as now conducted by each Acquired Corporation
Company.
5.13 ABSENCE OF REGULATORY COMMUNICATIONS. Except as provided in
------------------------------------
Schedule 5.13, no Acquired Corporation Company is subject to, nor has any
Acquired Corporation Company received during the past three years, any written
communication directed specifically to it from any Agency to which it is subject
or pursuant to which such Agency has imposed or has indicated it may impose any
material restrictions on the operations of it or the business conducted by it or
in which such Agency has raised any material question concerning the condition,
financial or otherwise, of such company.
5.14 ABSENCE OF MATERIAL ADVERSE CHANGE. To the Knowledge of Acquired
----------------------------------
Corporation, since the date of the most recent balance sheet provided under
section 5.4(a)(i), there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on any Acquired Corporation Company.
5.15 INSURANCE. Each Acquired Corporation Company has in effect
---------
insurance coverage and bonds with reputable insurers which, in respect to
amounts, types and risks insured, management of Acquired Corporation reasonably
believes to be adequate for the type of business conducted by such company. No
Acquired Corporation Company is liable for any material retroactive premium
adjustment. To the Knowledge of Acquired Corporation, all insurance policies and
bonds are valid, enforceable and in full force and effect, and no Acquired
Corporation Company has received any notice of any material premium increase or
cancellation with respect to any of its insurance policies or bonds. Within the
last three years, no Acquired Corporation Company has been refused any insurance
coverage which it has sought or applied for, and nothing has come to its
attention which would lead it to believe that existing insurance coverage cannot
be renewed as and when the same shall expire, upon terms and conditions as
favorable as those presently in effect, other than possible increases in
premiums that do not result from any extraordinary loss experience. To the
Knowledge of Acquired Corporation, all policies of insurance presently held or
policies containing substantially equivalent coverage will be outstanding and in
full force with respect to each Acquired Corporation Company at all times from
the date hereof to the Effective Date.
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5.16 PENSION AND EMPLOYEE BENEFIT PLANS.
----------------------------------
(a) To the Knowledge of Acquired Corporation, all employee
benefit plans of each Acquired Corporation Company have been established in
compliance with, and such plans have been operated in material compliance with,
all applicable Laws. Except as set forth in Schedule 5.16, no Acquired
Corporation Company sponsors or otherwise maintains a "pension plan" within the
meaning of section 3(2) of ERISA or any other retirement plan other than the
Section 401K plan of Acquired Corporation that is intended to qualify under
section 401 of the Code, nor do any unfunded Liabilities exist with respect to
any employee benefit plan, past or present. To the Knowledge of Acquired
Corporation, no employee benefit plan, any trust created thereunder or any
trustee or administrator thereof has engaged in a "prohibited transaction," as
defined in section 4975 of the Code, which may have a Material Adverse Effect on
the condition, financial or otherwise, of any Acquired Corporation Company.
(b) To the Knowledge of Acquired Corporation, no amounts
payable to any employee of any Acquired Corporation Company will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the Code
and regulations thereunder.
5.17 BUY-SELL AGREEMENTS. To the Knowledge of Acquired Corporation,
-------------------
there are no agreements among any of its shareholders granting to any person or
persons a right of first refusal in respect of the sale, transfer, or other
disposition of shares of outstanding securities by any shareholder of Acquired
Corporation, any similar agreement or any voting agreement or voting trust in
respect of any such shares.
5.18 BROKERS. Except for services provided to Acquired Corporation by
-------
Keefe, Bruyette & Woods, Inc., all negotiations relative to this Agreement and
the transactions contemplated by this Agreement have been carried on by Acquired
Corporation directly with BancGroup and without the intervention of any other
person, either as a result of any act of Acquired Corporation, or otherwise, in
such manner as to give rise to any valid claim against Acquired Corporation for
a finder's fee, brokerage commission or other like payment. The general terms
and the exact fee which will be paid to Keefe, Bruyette & Woods, Inc. by
Acquired Corporation at or prior to the Effective Time is described in Schedule
5.18.
5.19 APPROVAL OF AGREEMENTS. The board of directors of Acquired
----------------------
Corporation has approved this Agreement and the transactions contemplated by
this Agreement and has authorized the execution and delivery by Acquired
Corporation of this Agreement. Subject to the matters referred to in Section
8.2, Acquired Corporation has full power, authority and legal right to enter
into this Agreement, and, upon appropriate vote of the shareholders of Acquired
Corporation in accordance with this Agreement, Acquired Corporation shall have
full power, authority and legal right to consummate the transactions
contemplated by this Agreement.
5.20 DISCLOSURE. No representation or warranty, nor any statement or
----------
certificate furnished or to be furnished to BancGroup by Acquired Corporation,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.
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5.21 REGISTRATION STATEMENT. At the time the Registration Statement
----------------------
becomes effective and at the time of the Shareholders Meeting, the Registration
Statement, including the Proxy Statement which shall constitute part thereof,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this section shall only apply to
statements in or omissions from the Proxy Statement relating to descriptions of
the business of Acquired Corporation, its Assets, properties, operations, and
capital stock or to information furnished in writing by Acquired Corporation or
its representatives expressly for inclusion in the Proxy Statement.
5.22 LOANS; ADEQUACY OF ALLOWANCE FOR LOAN LOSSES. All reserves for
--------------------------------------------
loan losses shown on the most recent financial statements furnished by Acquired
Corporation have been calculated in accordance with prudent and customary
banking practices and are reasonably adequate in all material respects to
reflect the risk inherent in the loans of Acquired Corporation. Acquired
Corporation has no Knowledge of any fact which is likely to require a future
material increase in the provision for loan losses or a material decrease in the
loan loss reserve reflected in such financial statements. To the Knowledge of
Acquired Corporation, each loan reflected as an Asset on the financial
statements of Acquired Corporation is the legal, valid and binding obligation of
the obligor of each loan, enforceable in accordance with its terms subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors' rights generally and to general equitable
principles and complies in all material respects with all Laws to which it is
subject. Acquired Corporation does not have in its portfolio any loan exceeding
its legal lending limit, and except as disclosed on Schedule 5.22, Acquired
Corporation has no known significant delinquent, substandard, doubtful, loss,
nonperforming or problem loans.
5.23 ENVIRONMENTAL MATTERS. Except as provided in Schedule 5.23, to
---------------------
the Knowledge of Acquired Corporation, each Acquired Corporation Company is in
material compliance with all Laws and other governmental requirements relating
to the generation, management, handling, transportation, treatment, disposal,
storage, delivery, discharge, release or emission of any waste, pollution, or
toxic, hazardous or other substance (the "Environmental Laws"), and Acquired
Corporation has no Knowledge that any Acquired Corporation Company has not
complied with all regulations and requirements promulgated by the Occupational
Safety and Health Administration that are applicable to any Acquired Corporation
Company. To the Knowledge of Acquired Corporation, there is no Litigation
pending or threatened with respect to any violation or alleged violation of the
Environmental Laws. Except as disclosed on Schedule 5.23, to the Knowledge of
Acquired Corporation, with respect to Assets of any Acquired Corporation
Company, including any Loan Property, (i) there has been no spillage, leakage,
contamination or release of any substances for which the appropriate remedial
action has not been completed; (ii) no owned or leased property is contaminated
with or contains any hazardous substance or waste; and (iii) there are no
underground storage tanks on any premises owned or leased by any Acquired
Corporation Company. Moreover, to the Knowledge of Acquired Corporation, no
Acquired Corporation Company has extended credit, either on a secured or
unsecured basis, to any person or other entity engaged in any activities which
would require or requires such person or entity to obtain any Permits which are
required under any Environmental Law which has not been obtained.
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5.24 COLLECTIVE BARGAINING. There are no labor contracts, collective
---------------------
bargaining agreements, letters of undertakings or other arrangements, formal or
informal, between any Acquired Corporation Company and any union or labor
organization covering any Acquired Corporation Company's employees and none of
said employees are represented by any union or labor organization.
5.25 LABOR DISPUTES. To the Knowledge of Acquired Corporation, each
--------------
Acquired Corporation Company is in material compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment, wages and hours. No Acquired Corporation Company is or has been
engaged in any unfair labor practice, and, to the Knowledge of Acquired
Corporation, no unfair labor practice complaint against any Acquired Corporation
Company is pending before the National Labor Relations Board. There have not
been, nor to the Knowledge of Acquired Corporation, are there presently, any
attempts to organize employees, nor to the Knowledge of Acquired Corporation,
are there plans for any such attempts.
5.26 DERIVATIVE CONTRACTS. No Acquired Corporation Company is a party
--------------------
to or has agreed to enter into a swap, forward, future, option, cap, floor or
collar financial contract, or any other interest rate or foreign currency
protection contract or derivative security not included in Acquired
Corporation's financial statements delivered under Section 5.4 hereof which is a
financial derivative contract (including various combinations thereof).
5.27 SEC FILINGS. Since December 31, 2002, Acquired Corporation has
-----------
timely filed all reports and registration statements and the documents required
to be filed with the SEC under the rules and regulations of the SEC and all such
reports and registration statements or other documents have complied in all
material respects, as of their respective filing dates and effective dates, as
the case may be, with all the applicable requirements of the 1933 Act, the 1934
Act and the Sarbanes-Oxley Act of 2002. As of the respective filing and
effective dates, none of such reports or registration statements or other
documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
ARTICLE 6
ADDITIONAL COVENANTS
6.1 ADDITIONAL COVENANTS OF BANCGROUP. BancGroup covenants to and
---------------------------------
with Acquired Corporation as follows:
(a) Registration Statement and Other Filings. As soon as
----------------------------------------
reasonably practicable after the execution of this Agreement, BancGroup shall
prepare and file with the SEC the Registration Statement on Form S-4 (or such
other form as may be appropriate) and all amendments and supplements thereto, in
form reasonably satisfactory to Acquired Corporation and its counsel, with
respect to the Common Stock to be issued pursuant to this Agreement. BancGroup
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shall use commercially reasonable efforts to prepare all necessary filings with
any Agencies which may be necessary for approval to consummate the transactions
contemplated by this Agreement and shall use its reasonable efforts to cause the
Registration Statement to become effective under the 1933 Act as soon as
reasonably practicable after the filing thereof and take any action required to
be taken under other applicable securities Laws in connection with the issuance
of the shares of BancGroup Common Stock upon consummation of the Merger. Copies
of all such filings shall be furnished in advance to Acquired Corporation and
its counsel.
(b) Blue Sky Permits. BancGroup shall use its best efforts to
----------------
obtain, prior to the effective date of the Registration Statement, all necessary
state securities Law or "blue sky" Permits and approvals required to carry out
the transactions contemplated by this Agreement.
(c) Financial Statements. BancGroup shall furnish to Acquired
--------------------
Corporation:
(i) As soon as practicable and in any event within
forty-five (45) days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated statements of operations of
BancGroup for such period and for the period beginning at the commencement of
the fiscal year and ending at the end of such quarterly period, and a
consolidated statement of financial condition of BancGroup as of the end of such
quarterly period, setting forth in each case in comparative form figures for the
corresponding periods ending in the preceding fiscal year, subject to changes
resulting from year-end adjustments;
(ii) Promptly upon receipt thereof, copies of all
audit reports submitted to BancGroup by independent auditors in connection with
each annual, interim or special audit of the books of BancGroup made by such
accountants;
(iii) As soon as practicable, copies of all such
financial statements and reports as it shall send to its stockholders and of
such regular and periodic reports as BancGroup may file with the SEC or any
other Agency; and
(iv) With reasonable promptness, such additional
financial data as Acquired Corporation may reasonably request.
(d) No Control of Acquired Corporation by BancGroup.
-----------------------------------------------
Notwithstanding any other provision hereof, until the Effective Date, the
authority to operate the Acquired Corporation and the Bank and establish and
implement the business policies of Acquired Corporation and the Bank shall
continue to reside solely in Acquired Corporation's and Bank's officers and
boards of directors.
(e) Listing. Prior to the Effective Date, BancGroup shall use
-------
its reasonable efforts to list the shares of BancGroup Common Stock to be issued
in the Merger on the NYSE or other quotations system on which such shares are
primarily traded.
(f) Employee Benefit Matters. (i) On the Effective Date, all
------------------------
employees of any Acquired Corporation Company shall, at BancGroup's option,
either become employees of the Resulting Corporation or its Subsidiaries or be
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entitled to severance benefits in accordance with Colonial Bank, N.A.'s
severance policy as of the date of this Agreement. All employees of any Acquired
Corporation Company who become employees of the Resulting Corporation or its
Subsidiaries on the Effective Date shall be entitled, to the extent permitted by
applicable Law, to participate in all benefit plans of Colonial Bank, N.A.,
including retirement plans, to the same extent as Colonial Bank, N.A. employees,
except as stated otherwise in this section. Employees of any Acquired
Corporation Company who become employees of the Resulting Corporation or its
Subsidiaries on the Effective Date shall be allowed to participate as of the
Effective Date in the medical and dental benefits plan of Colonial Bank, N.A. as
new employees of Colonial Bank, N.A., and the time of employment of such
employees who are employed at least 30 hours per week with any Acquired
Corporation Company as of the Effective Date shall be counted as employment
under such dental and medical plans of Colonial Bank, N.A. for purposes of
calculating any 30 day waiting period and pre-existing condition limitations.
Except with respect to BancGroup's retirement plan, to the extent permitted by
applicable Law, the period of service with the appropriate Acquired Corporation
Company of all employees who become employees of the Resulting Corporation or
its Subsidiaries on the Effective Date shall be recognized for vesting and
eligibility. With regard to BancGroup's retirement plan, such employee shall be
treated as if hired by Colonial Bank, N.A. as of the Effective Time. In
addition, if the Effective Date falls within an annual period of coverage under
the medical plan of the Resulting Corporation and its Subsidiaries, each such
Acquired Corporation Company employee shall be given credit for covered expenses
paid by that employee under comparable employee benefit plans of the Acquired
Corporation Company during the applicable coverage period through the Effective
Date towards satisfaction of any annual deductible limitation and out-of-pocket
maximum that may apply under that group health plan of the Resulting Corporation
and its Subsidiaries; (ii) for a period of six months following the Effective
Time, BancGroup shall provide all employees of the Company and its Subsidiaries
whose employment was terminated other than for cause, disability or retirement
at or following the Effective Time, and who so desires, job counseling and
outplacement assistance services in accordance with BancGroup's employment
policies and practices, shall assist each employee in locating new employment
and shall notify all such employees who want to be so notified of opportunities
for positions with BancGroup or any of its Subsidiaries for which BancGroup
reasonably believes such persons are qualified and shall consider any
application for such positions submitted by such persons, provided, however,
that any decisions to offer employment to any such person shall be made in the
sole discretion of BancGroup.
(g) BancGroup will take no action that would prevent or impede
the merger from qualifying as a tax-free reorganization within the meaning of
Section 368 of the Code.
(h) Indemnification. (i) Subject to the conditions set forth
---------------
in the succeeding paragraphs, for a period of six years after the Effective Date
BancGroup shall, and shall cause Colonial Bank, N.A. to, indemnify, defend and
hold harmless each director and officer from the Acquired Corporation (each
being an "Indemnified Party") against all Liabilities arising out of actions or
omissions occurring upon or prior to the Effective Date (including without
limitation the transactions contemplated by this Agreement) to the extent
required under the articles of incorporation and bylaws of Acquired Corporation
and the DGCL and other applicable Laws, and subject to the limitations contained
in 12 USC ss.1828(K) and 12 CFR Part 359 of the FDIC's regulations.
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(ii) BancGroup shall use commercially reasonable
efforts to cause individuals serving as directors and officers of the Acquired
Corporation on the Closing Date to be covered for at least three years from the
Closing Date by the directors' and officers' liability insurance policy
maintained by the Acquired Corporation immediately prior to the Closing Date
with respect to acts or omissions occurring prior to the Closing Date that were
committed by such officers and directors as such.
(iii) Any Indemnified Party wishing to claim
indemnification under this subsection (h), upon learning of any such Liability
or Litigation, shall promptly notify BancGroup thereof. In the event of any such
Litigation (whether arising before or after the Effective Date) (A) BancGroup or
Colonial Bank, N.A. shall have the right to assume the defense thereof with
counsel reasonably acceptable to such Indemnified Party and, upon assumption of
such defense, BancGroup shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
BancGroup or Colonial Bank, N.A. elects not to assume such defense or counsel
for the Indemnified Parties advises that there are substantive issues which
raise conflicts of interest between BancGroup and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and BancGroup or
Colonial Bank, N.A. shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received;
provided, that BancGroup shall be obligated pursuant to this subsection to pay
for only one firm of counsel for all Indemnified Parties in any jurisdiction,
(B) the Indemnified Parties will cooperate in the defense of any such
Litigation; and (C) BancGroup shall not be liable for any settlement effected
without its prior consent; and provided further that BancGroup and Colonial
Bank, N.A. shall not have any obligation hereunder to any Indemnified Party (i)
when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law, or (ii) it is determined that indemnification is prohibited under 12 USC
ss.1828(K) or 12 CFR Part 359.
(iv) In consideration of and as a condition precedent
to the effectiveness of the indemnification obligations provided by BancGroup in
this section to a director or officer of the Acquired Corporation, such director
or officer of the Acquired Corporation shall have delivered to BancGroup on or
prior to the Effective Date a letter in form reasonably satisfactory to
BancGroup concerning claims such directors or officers may have against Acquired
Corporation. In the letter, the directors or officers shall: (A) acknowledge the
assumption by BancGroup as of the Effective Date of all Liability (to the extent
Acquired Corporation is so liable) for claims for indemnification arising under
section 6.1(h) hereof; (B) affirm that they do not have nor are they aware of
any claims they might have (other than those referred to in the following clause
(C)) against Acquired Corporation; (C) identify any claims or any facts or
circumstances of which they are aware that could give rise to a claim for
indemnification under section 6.1(h)(i) hereof; and (D) release as of the
Effective Date any and all claims that they may have against any Acquired
Corporation Company other than (W) those referred to in the foregoing clause (C)
and disclosed in the letter of the director or officer, (X) claims by third
parties which have not yet been asserted against such director or officer (other
than claims arising from facts and circumstances of which such director or
officer is aware but which are not disclosed in such director or executive
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officer's letter), (Y) claims by third parties arising from any transaction
contemplated by this Agreement or disclosed in any schedule to this Agreement,
and (Z) claims by third parties arising in the ordinary course of business of
any Acquired Corporation Company after the date of the letter.
(v) Acquired Corporation hereby represents and
warrants to BancGroup that it has no Knowledge of any claim, pending or
threatened, or of any facts or circumstances that could give rise to any
obligation by BancGroup to provide the indemnification required by this section
6.1(h) other than as disclosed in the letters of the directors and executive
officers referred to in section 6.1(h)(iii) hereof or described in any schedule
to this Agreement and claims arising from any transaction contemplated by this
Agreement.
6.2 ADDITIONAL COVENANTS OF ACQUIRED CORPORATION. Acquired
--------------------------------------------
Corporation covenants to and with BancGroup as follows:
(a) Operations. Acquired Corporation will conduct its business
----------
and the business of each Acquired Corporation Company in a proper and prudent
manner and will use its commercially reasonable efforts to maintain its
relationships with its depositors, customers and employees. Without the prior
written consent of BancGroup, no Acquired Corporation Company will engage in any
material transaction outside the ordinary course of business or make any
material change in its accounting policies or methods of operation, nor will
Acquired Corporation permit the occurrence of any change or event which would
render any of the representations and warranties in Article 5 hereof untrue in
any material respect at and as of the Effective Date with the same effect as
though such representations and warranties had been made at and as of such
Effective Date. Except as set described in detail on Schedule 6.2(a), Acquired
Corporation shall cause the Bank to postpone all branch relocation and/or
expansion plans prior to the Effective Date or the date of termination pursuant
to this Agreement. Acquired Corporation shall contact any person who may be
required to execute an undertaking under Section 10.5 hereof to request such
undertaking and shall take all such reasonable steps as are necessary to try to
obtain such undertaking. Acquired Corporation will take no action that would
prevent or impede the Merger from qualifying as a tax-free reorganization within
the meaning of Section 368 of the Code.
(b) Shareholders' Meeting; Best Efforts. Acquired Corporation
-----------------------------------
will cooperate with BancGroup in the preparation of the Registration Statement
and any regulatory filings and will cause the Shareholders' Meeting to be held
for the purpose of approving the Merger as soon as practicable after the
effective date of the Registration Statement, and will use commercially
reasonable efforts to bring about the transactions contemplated by this
Agreement, including shareholder approval of this Agreement, as soon as
practicable unless this Agreement is terminated as provided herein.
(c) Prohibited Negotiations. (i) Except with respect to this
-----------------------
Agreement and the transactions contemplated hereby, no Acquired Corporation
Company nor any affiliate thereof nor any investment banker, attorney,
accountant, or other representative (collectively, "Representatives") retained
by an Acquired Corporation Company shall directly or indirectly solicit any
Acquisition Proposal by any Person. Except to the extent necessary to comply
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with the fiduciary duties of Acquired Corporation's Board of Directors as
advised by counsel to such Board of Directors, no Acquired Corporation Company
or any Representative thereof shall furnish any non-public information that it
is not legally obligated to furnish, negotiate with respect to, or enter into
any Contract with respect to, any Acquisition Proposal, and each Acquired
Corporation Company shall direct and use its reasonable efforts to cause all of
its Representatives not to engage in any of the foregoing, but Acquired
Corporation 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 as advised in writing by counsel to such Board
of Directors. Acquired Corporation shall promptly notify BancGroup orally and in
the event that any Acquired Corporation Company receives any inquiry or proposal
relating to any such Acquisition Proposal. Acquired Corporation shall
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons other than BancGroup conducted
heretofore with respect to any of the foregoing.
(ii) If Acquired Corporation (A) willfully breaches
this Agreement and the Merger is not consummated, (B) enters into a letter of
intent or definitive agreement regarding an Acquisition Proposal with any third
party (other than BancGroup or any of its Subsidiaries) prior to the earlier of
(i) the Effective Date or (ii) the termination of this Agreement pursuant to
Article 13 hereof (other than a termination pursuant to paragraph (a) of section
13.2 hereof or by Acquired Corporation pursuant to paragraphs (b), (c) or (d) of
section 13.2 hereof), or (C) if Acquired Corporation receives or is the subject
of an Acquisition Proposal from a third party (other than BancGroup or its
Subsidiaries) prior to the termination of this Agreement pursuant to Article 13
hereof (other than a termination pursuant to paragraph (a) of section 13.2
hereof or by Acquired Corporation pursuant to paragraphs (b), (c) or (d) of
section 13.2 hereof), and within eighteen (18) months after termination of this
Agreement pursuant to Article 13 hereof (other than a termination pursuant to
paragraph (a) of section 13.2 hereof or by Acquired Corporation pursuant to
paragraphs (b), (c) or (d) of section 13.2 hereof) an Acquisition Proposal is
consummated with such third party, Acquired Corporation covenants and agrees
that it shall pay to BancGroup upon written demand at any time (Y) after
Acquired Corporation enters into an agreement which is legally binding on
Acquired Corporation regarding an Acquisition Proposal or (Z) at any time on or
after the date of consummation of such Acquisition Proposal, which ever is the
first to occur, the principal sum of $10,000,000. Such payment shall compensate
BancGroup for its direct and indirect costs and expenses in connection with the
transactions contemplated by this Agreement, including BancGroup's management
time devoted to negotiation and preparation for the Merger and BancGroup's loss
as a result of the Merger not being consummated. The Parties acknowledge and
agree that it would be impracticable or extremely difficult to fix the actual
damages resulting from the foregoing events and, therefore, the Parties have
agreed upon the foregoing payment as liquidated damages which shall not be
deemed to be in the nature of a penalty. Other than the payment provided for in
this section 6.2(c)(ii) and any Liability for expenses as set forth in Section
15.10 hereof, there shall be no other Liability or obligation on the part of any
Acquired Corporation Company or their respective directors or officers resulting
from any of the events described in this section 6.2(c)(ii).
(d) Director Recommendation. Except to the extent necessary to
-----------------------
comply with their fiduciary duties, the members of the Board of Directors of
Acquired Corporation agree to support publicly the Merger and to recommend that
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Acquired Corporation shareholders vote to approve the Merger at any meeting of
the shareholders in which the Merger is considered.
(e) Shareholder Voting. Acquired Corporation shall on the date
------------------
of execution of this Agreement obtain and submit to BancGroup an agreement from
its directors, executive officers and affiliates substantially in the form set
forth in Exhibit A.
(f) Financial Statements and Monthly Status Reports. Acquired
-----------------------------------------------
Corporation shall furnish to BancGroup:
(i) As soon as practicable and in any event within 45
days after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidated statements of operations of Acquired
Corporation for such period and for the period beginning at the commencement of
the fiscal year and ending at the end of such quarterly period, and a
consolidated statement of financial condition of Acquired Corporation as of the
end of such quarterly period, setting forth in each case in comparative form
figures for the corresponding periods ending in the preceding fiscal year,
subject to changes resulting from year-end adjustments;
(ii) With reasonable promptness, such additional
financial data as BancGroup may reasonably request; and
(iii) Within 10 calendar days after the end of each
month (or, if the financial statements referred to in clause (d) are not then
available, as soon as possible thereafter) commencing with the next calendar
month following the date of this Agreement and ending at the Effective Date, a
written description of (a) any non-compliance with the terms of this Agreement,
together with its then current estimate of the out-of-pocket costs and expenses
incurred or reasonably accruable in connection with the transactions
contemplated by this Agreement; (b) the status, as of the date of the report, of
all existing or threatened litigation against any Acquired Corporation Company;
(c) copies of minutes of any meeting of the board of directors of any Acquired
Corporation Company and any committee thereof occurring in the month for which
such report is made, including all documents presented to the directors at such
meetings; and (d) monthly financial statements, including a balance sheet and
income statement.
(g) Fiduciary Duties. Except as disclosed in Schedule 6.2(g),
----------------
prior to the Effective Date, Acquired Corporation will use its commercially
reasonable efforts so that (i) no director or officer (each an "Executive") of
any Acquired Corporation Company shall, directly or indirectly, own, manage,
operate, join, control, be employed by or participate in the ownership, proposed
ownership, management, operation or control of or be connected in any manner
with, any business, corporation or partnership which is competitive to the
business of any Acquired Corporation Company; provided that the ownership of
such Executive as an investor of not more than one percent of the outstanding
securities of stock of any corporation whose stock is listed for trading on any
securities exchange or is quoted on the automated quotation system of the
National Association of Securities Dealers, Inc., or the shares of any
investment company as defined in Section 3 of the Investment Company Act of
1940, as amended, shall not in itself constitute a violation of Executive's
obligations under this Section 6.2(g); (ii) all Executives, at all times, shall
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satisfy their fiduciary duties to Acquired Corporation and its Subsidiaries, and
(iii) such Executives shall not (except as required in the course of his or her
employment with any Acquired Corporation Company) communicate or divulge to, or
use for the benefit of himself or herself or any other person, firm, association
or corporation, without the express written consent of Acquired Corporation, any
confidential information which is possessed, owned or used by or licensed by or
to any Acquired Corporation Company or confidential information belonging to
third parties which any Acquired Corporation Company shall be under obligation
to keep secret or which may be communicated to, acquired by or learned of by the
Executive in the course of or as a result of his or her employment with any
Acquired Corporation Company.
(h) Certain Practices. At the request of BancGroup, (i)
-----------------
Acquired Corporation shall consult with BancGroup and advise BancGroup through
Caryn Cope (334-240-5002) or her designee of all of the Bank's loan requests
over $1,000,000 that are not single-family residential loan requests or of any
other loan request outside the normal course of business, and (ii) Acquired
Corporation will consult with BancGroup to coordinate various business issues on
a basis mutually satisfactory to Acquired Corporation and BancGroup. Acquired
Corporation and the Bank shall not be required to undertake any of such
activities, however, except as such activities may be in compliance with
existing Law and Regulations.
(i) Sale of Subsidiary Bank Charter. BancGroup contemplates
-------------------------------
that it may enter into agreements with another financial institutions to
undertake a transaction or a series of transactions that would have the effect
of transferring the Bank's Charter to such other financial institution (a
"Charter Sale"). Acquired Corporation agrees that it will take all commercially
reasonable actions to assist BancGroup in such a Charter Sale, including,
without limitation, approving such transactions as shareholder of the Bank,
causing the Bank to prepare and execute such regulatory applications as may be
required and to enter into such merger or other agreements as may be required to
effectuate a Charter Sale.
ARTICLE 7
MUTUAL COVENANTS AND AGREEMENTS
7.1 BEST EFFORTS; COOPERATION. Subject to the terms and conditions
-------------------------
herein provided, BancGroup and Acquired Corporation each agrees to use its best
efforts promptly to take, or cause to be taken, all actions and do, or cause to
be done, all things necessary, proper or advisable under applicable Laws or
otherwise, including, without limitation, promptly making required deliveries of
stockholder lists and stock transfer reports and attempting to obtain all
necessary Consents and waivers and regulatory approvals, including the holding
of any regular or special board meetings, to consummate and make effective, as
soon as practicable, the transactions contemplated by this Agreement. Each Party
to this Agreement shall use commercially reasonable efforts to cause its
respective officers to fully cooperate with officers and employees, accountants,
counsel and other representatives of the other Parties not only in fulfilling
the duties hereunder of the Party of which they are officers but also in
assisting, directly or through direction of employees and other persons under
their supervision or control, such as stock transfer agents for the Party, the
other Parties requiring information which is reasonably available from such
Party.
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7.2 PRESS RELEASE. Each Party hereto agrees that, unless approved by
-------------
the other Parties in advance, such Party will not make any public announcement,
issue any press release or other publicity or confirm any statements by any
person not a party to this Agreement concerning the transactions contemplated
hereby. Notwithstanding the foregoing, each Party hereto reserves the right to
make any disclosure if such Party, in its reasonable discretion, deems such
disclosure required by Law. In that event, such Party shall use reasonable
efforts to provide to the other Party the text of such disclosure sufficiently
in advance to enable the other Party to have a reasonable opportunity to comment
thereon.
7.3 MUTUAL DISCLOSURE.
-----------------
(a) Each Party hereto agrees, upon request from the other
Party, to promptly furnish to each other Party hereto its public disclosures and
filings not precluded from disclosure by Law including but not limited to call
reports, Form 8-K, Form 10-Q and Form 10-K filings, Y-3 applications, reports on
Form Y-6, quarterly or special reports to shareholders, Tax returns, Form S-4
and S-8 registration statements and similar documents;
(b) promptly upon receipt thereof, each Party agrees to
furnish to the other Party copies of all audit reports submitted to such Party
by independent auditors in connection with each annual, interim or special audit
of the books of such Party made by such accountants; and
(c) as soon a practicable, copies of all such financial
statements and reports as each Party shall send to its stockholders and of such
regular and periodic reports as each Party may file with the SEC or any other
Agency shall be delivered to the other Party.
7.4 ACCESS TO PROPERTIES AND RECORDS. Each Party hereto shall afford
--------------------------------
the officers and authorized representatives of the other Party reasonable access
to the Assets, books and records of such Party in order that such other Parties
may have full opportunity to make such investigation as they shall desire of the
affairs of such Party and shall furnish to such Parties such additional
financial and operating data and other information as to its businesses and
Assets as shall be from time to time reasonably requested. All such information
that may be obtained by any such Party will be held in confidence by such party,
will not be disclosed by such Party or any of its representatives except in
accordance with this Agreement, and will not be used by such Party for any
purpose other than the accomplishment of the Merger as provided herein.
7.5 NOTICE OF ADVERSE CHANGES. 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, a Material Adverse Effect on it or (ii) would cause or constitute a
material 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.
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ARTICLE 8
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligations of BancGroup and Acquired Corporation to cause the
transactions contemplated by this Agreement to be consummated shall be subject
to the satisfaction, in the sole discretion of the Party relying upon such
conditions, on or before the Effective Date of all the following conditions,
except as such Parties may waive such conditions in writing:
8.1 APPROVAL BY SHAREHOLDERS. At the Shareholders Meeting, this
------------------------
Agreement and the matters contemplated by this Agreement shall have been duly
approved by the vote of the holders of not less than the requisite number of the
issued and outstanding voting securities of Acquired Corporation as is required
by applicable Law and Acquired Corporation's articles of incorporation and
bylaws.
8.2 REGULATORY AUTHORITY APPROVAL. (a) Orders, Consents and approvals,
-----------------------------
in form and substance reasonably satisfactory to BancGroup and Acquired
Corporation, shall have been entered by the Board of Governors of the Federal
Reserve System and other appropriate bank regulatory Agencies (i) granting the
authority necessary for the consummation of the transactions contemplated by
this Agreement, including the possible merger of the Bank with Colonial Bank,
N.A., if such merger is desired by Colonial Bank, N.A., as contemplated pursuant
to section 2.8 hereof and (ii) satisfying all other requirements prescribed by
Law. No Order, Consent or approval so obtained which is necessary to consummate
the transactions as contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable good faith judgment of the Board of Directors of
BancGroup would so materially adversely impact the economic benefits of the
transaction as contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(b) Each Party shall have obtained any and all other Consents
required for consummation of the Merger (other than those referred to in Section
8.2(a) of this Agreement) 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, a Material Adverse Effect on such Party.
No Consent 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 BancGroup would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement so as to render inadvisable the consummation of
the Merger.
8.3 LITIGATION. There shall be no pending or threatened Litigation in
----------
any court or any pending or threatened proceeding by any governmental
commission, board or Agency, with a view to seeking or in which it is sought to
restrain or prohibit consummation of the transactions contemplated by this
Agreement or in which it is sought to obtain divestiture, rescission or damages
in connection with the transactions contemplated by this Agreement and no
investigation by any Agency shall be pending or threatened which might result in
any such suit, action or other proceeding.
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8.4 REGISTRATION STATEMENT. The Registration Statement shall be
----------------------
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement shall be in effect; no proceedings for such purpose,
or under the proxy rules of the SEC or any bank regulatory authority pursuant to
the 1934 Act, with respect to the transactions contemplated hereby, shall be
pending before or threatened by the SEC or any bank regulatory authority; and
all approvals or authorizations for the offer of BancGroup Common Stock shall
have been received or obtained pursuant to any applicable state securities Laws,
and no stop order or proceeding with respect to the transactions contemplated
hereby shall be pending or threatened under any such state Law.
8.5 TAX OPINION. An opinion of PricewaterhouseCoopers LLP or such
-----------
other reputable firm, shall have been received in form and substance reasonably
satisfactory to the Acquired Corporation and BancGroup to the effect that (i)
the Merger will constitute a "reorganization" within the meaning of section 368
of the Code; (ii) no gain or loss will be recognized by BancGroup or Acquired
Corporation; (iii) no gain or loss will be recognized by the shareholders of
Acquired Corporation who receive shares of BancGroup Common Stock except to the
extent of any taxable "boot" received by such persons from BancGroup, and except
to the extent of any dividends received from Acquired Corporation prior to the
Effective Date; (iv) the basis of the BancGroup Common Stock received in the
Merger will be equal to the sum of the basis of the shares of Acquired
Corporation common stock exchanged in the Merger and the amount of gain, if any,
which was recognized by the exchanging Acquired Corporation shareholder,
including any portion treated as a dividend, less the value of taxable boot, if
any, received by such shareholder in the Merger; (v) the holding period of the
BancGroup Common Stock will include the holding period of the shares of Acquired
Corporation common stock exchanged therefore if such shares of Acquired
Corporation common stock were capital assets in the hands of the exchanging
Acquired Corporation shareholder; and (vi) cash received by an Acquired
Corporation shareholder in lieu of a fractional share interest of BancGroup
Common Stock will be treated as having been received as a distribution in full
payment in exchange for the fractional share interest of BancGroup Common Stock
which he or she would otherwise be entitled to receive and will qualify as
capital gain or loss (assuming the Acquired Corporation common stock was a
capital asset in his or her hands as of the Effective Date).
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
The obligations of Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction on or before the Effective Date of all the following conditions
except as Acquired Corporation may waive such conditions in writing:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
------------------------------
of BancGroup set forth herein shall be true and correct at and as of the date
hereof and at and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), provided that no representation or warranty of BancGroup shall be
deemed untrue or incorrect for purposes hereunder as a consequence of the
existence of any fact, event or circumstance inconsistent with such
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representation or warranty, unless (i) such fact, event or circumstance was the
result of an intentional act of BancGroup or (ii) such fact, event or
circumstance, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty of BancGroup, has
had or would reasonably be expected to result in a Material Adverse Effect on
BancGroup, disregarding for these purposes (x) any qualification or exception
for, or reference to, materiality in any such representation or warranty or (y)
any use of the terms "material," "materially," "in all material respects,"
"Material Adverse Change," "Material Adverse Effect" or similar terms or phrases
in any such representation or warranty, and the Acquired Corporation shall have
received a certificate, dated the Closing Date, signed on behalf of BancGroup by
the Chief Executive Officer and the Chief Financial Officer of BancGroup, to
such effect.
9.2 PERFORMANCE OF OBLIGATIONS OF BANCGROUP. BancGroup shall have
---------------------------------------
performed in all material respects all obligations required to be performed by
it at or prior to the Closing Date under this Agreement; and the Acquired
Corporation shall have received a certificate, dated the Closing Date, signed on
behalf of BancGroup by the Chief Executive Officer and the Chief Financial
Officer of BancGroup, to such effect.
9.3 CLOSING CERTIFICATE. In addition to any other deliveries required
-------------------
to be delivered hereunder, Acquired Corporation shall have received a
certificate from the President or an Executive Vice President and from the
Secretary or Assistant Secretary of BancGroup dated as of the Closing certifying
that:
(a) the Board of Directors of BancGroup has duly adopted
resolutions approving the substantive terms of this Agreement and authorizing
the consummation of the transactions contemplated by this Agreement and such
resolutions have not been amended or modified and remain in full force and
effect;
(b) each person executing this Agreement on behalf of
BancGroup is an officer of BancGroup holding the office or offices specified
therein and the signature of each person set forth on such certificate is his or
her genuine signature;
(c) the certificate of incorporation and bylaws of BancGroup
referenced in section 4.4 hereof remain in full force and effect;
9.4 OPINION OF COUNSEL. Acquired Corporation shall have received an
------------------
opinion of Miller, Hamilton, Snider & Odom, L.L.C., counsel to BancGroup, dated
as of the Closing, substantially in the form set forth in Exhibit B hereto.
9.5 NYSE LISTING. The shares of BancGroup Common Stock to be issued
------------
under this Agreement shall have been approved for listing on the NYSE.
9.6 OTHER MATTERS. There shall have been furnished to such counsel for
-------------
Acquired Corporation certified copies of such corporate records of BancGroup and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
9.7 MATERIAL EVENTS. There shall have been no determination by the
---------------
board of directors of Acquired Corporation that the transactions contemplated by
this Agreement have become impracticable because of any state of war,
declaration of a banking moratorium in the United States or a general suspension
of trading on the NYSE or any other exchange on which BancGroup Common Stock may
be traded.
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9.8 FAIRNESS OPINION. Acquired Corporation shall have received from
----------------
Keefe, Bruyette & Woods, Inc. a letter, dated as of the date of this Agreement,
setting forth its opinion that the Merger Consideration to be received by the
shareholders of Acquired Corporation under the terms of this Agreement is fair
to them from a financial point of view.
9.9 MERGER CONSIDERATION. BancGroup shall have deposited with the
--------------------
Exchange Agent sufficient cash to pay the Aggregate Cash Amount.
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BANCGROUP
The obligations of BancGroup to cause the transactions contemplated by
this Agreement to be consummated shall be subject to the satisfaction on or
before the Effective Date of all of the following conditions except as BancGroup
may waive such conditions in writing:
10.1 REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of the Acquired Corporation set forth herein shall be true and
correct at and as of the date hereof and at and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), provided that no representation or
warranty of the Acquired Corporation shall be deemed untrue or incorrect for
purposes hereunder as a consequence of the existence of any fact, event or
circumstance inconsistent with such representation or warranty, unless, (i) such
fact, event or circumstance was the result of an intentional act of Acquired
Corporation or (ii) such fact, event or circumstance, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty of the Acquired Corporation, has had or would
reasonably be expected to result in a Material Adverse Effect on the Acquired
Corporation, disregarding for these purposes (x) any qualification or exception
for, or reference to, materiality in any such representation or warranty or (y)
any use of the terms "material," "materially," "in all material respects,"
"Material Adverse Change," "Material Adverse Effect" or similar terms or phrases
in any such representation or warranty, and BancGroup shall have received a
certificate, dated the Closing Date, signed on behalf of the Acquired
Corporation by the Chief Executive Officer and the Chief Financial Officer of
the Acquired Corporation, to such effect.
10.2 PERFORMANCE OF OBLIGATIONS OF THE ACQUIRED CORPORATION. The
------------------------------------------------------
Acquired Corporation shall have performed in all material respects all
obligations required to be performed by it at or prior to the Closing Date under
this Agreement; and BancGroup shall have received a certificate, dated the
Closing Date, signed on behalf of the Acquired Corporation by the Chief
Executive Officer and the Chief Financial Officer of the Acquired Corporation,
to such effect.
10.3 CLOSING CERTIFICATE. In addition to any other deliveries required
-------------------
to be delivered hereunder, BancGroup shall have received a certificate from
Acquired Corporation executed by the President or Vice President and from the
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Secretary or Assistant Secretary of Acquired Corporation dated as of the Closing
certifying that:
(a) the Board of Directors of Acquired Corporation has duly
adopted resolutions approving the substantive terms of this Agreement and
authorizing the consummation of the transactions contemplated by this Agreement
and such resolutions have not been amended or modified and remain in full force
and effect;
(b) the shareholders of Acquired Corporation have duly adopted
resolutions approving the substantive terms of the Merger and the transactions
contemplated thereby and such resolutions have not been amended or modified and
remain in full force and effect;
(c) each person executing this Agreement on behalf of Acquired
Corporation is an officer of Acquired Corporation holding the office or offices
specified therein and the signature of each person set forth on such certificate
is his or her genuine signature;
(d) the articles of incorporation and bylaws of Acquired
Corporation and the Bank referenced in section 5.8 hereof remain in full force
and effect and have not been amended or modified since the date hereof;
10.4 OPINION OF COUNSEL. BancGroup shall have received an opinion of
------------------
Muldoon Murphy & Aguggia, LLP, counsel to Acquired Corporation, dated as of the
Closing, substantially as set forth in Exhibit C hereto.
10.5 CONTROLLING SHAREHOLDERS. Each shareholder of Acquired Corporation
------------------------
who may be an "affiliate" of Acquired Corporation, within the meaning of Rule
145 of the general rules and regulations under the 1933 Act shall have executed
and delivered an agreement satisfactory to BancGroup to the effect that such
person shall not make a "distribution" (within the meaning of Rule 145) of the
Common Stock which he receives upon the Effective Date and that such Common
Stock will be held subject to all applicable provisions of the 1933 Act and the
rules and regulations of the SEC thereunder. Acquired Corporation recognizes and
acknowledges that BancGroup Common Stock issued to such persons may bear a
legend evidencing the agreement described above.
10.6 OTHER MATTERS. There shall have been furnished to counsel for
-------------
BancGroup certified copies of such corporate records of Acquired Corporation and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
10.7 DISSENTERS. The number of shares as to which shareholders of
----------
Acquired Corporation have exercised dissenters rights of appraisal under section
3.7 does not exceed 10% of the outstanding shares of common stock of Acquired
Corporation.
10.8 MATERIAL EVENTS. There shall have been no determination by the
---------------
board of directors of BancGroup that the transactions contemplated by this
Agreement have become impracticable because of any state of war, declaration of
a banking moratorium in the United States or general suspension of trading on
the NYSE or any exchange on which BancGroup Common Stock may be traded.
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10.9 LANDLORD'S CONSENTS. BancGroup shall have received any required
-------------------
consents from any landlords to any property leased by any Acquired Corporation
Company.
ARTICLE 11
TERMINATION OF REPRESENTATIONS AND WARRANTIES
All representations and warranties provided in Articles 4 and 5 of this
Agreement or in any closing certificate pursuant to Articles 9 and 10 shall
terminate and be extinguished at and shall not survive the Effective Date. All
covenants, agreements and undertakings required by this Agreement to be
performed by any Party hereto following the Effective Date shall survive such
Effective Date and be binding upon such Party. If the Merger is not consummated,
all representations, warranties, obligations, covenants, or agreements hereunder
or in any certificate delivered hereunder relating to the transaction which is
not consummated shall be deemed to be terminated or extinguished, except that
the last sentence of Section 7.4, and Sections 6.2(c)(ii), 7.2, 13.3, Article
11, Article 12, Article 15, any applicable definitions of Article 14 and the
Confidentiality Agreement shall survive. Items disclosed in the Exhibits and
Schedules attached hereto are incorporated into this Agreement and form a part
of the representations, warranties, covenants or agreements to which they
relate.
ARTICLE 12
NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so received:
(a) If to Acquired Corporation to Stephen T. Kurtz, FFLC
Bancorp, Inc., 800 North Boulevard West, Leesburg, Florida 34749, facsimile
(352) 787-7206, telephone (352) 787-3311 with copies to George W. Murphy, Jr.,
Esq., Muldoon Murphy & Aguggia LLP, 5101 Wisconsin Avenue, N.W., Washington,
D.C. 20016, facsimile (202) 966-9409, telephone (202) 362-0840, or as may
otherwise be specified by Acquired Corporation in writing to BancGroup.
(b) If to BancGroup, to W. Flake Oakley, One Commerce Street,
Suite 803, Montgomery, Alabama, 36104, facsimile (334) 240-5069, with copies to
Hugh C. Nickson, III, Esq., Miller, Hamilton, Snider & Odom, L.L.C., One
Commerce Street, Suite 305, Montgomery, Alabama 36104, facsimile (334) 265-4533,
telephone (334) 834-5550, or as may otherwise be specified in writing by
BancGroup to Acquired Corporation.
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ARTICLE 13
AMENDMENT OR TERMINATION
13.1 AMENDMENT. This Agreement may be amended by the mutual consent of
---------
BancGroup and Acquired Corporation before or after approval of the transactions
contemplated herein by the shareholders of Acquired Corporation.
13.2 TERMINATION. This Agreement may be terminated at any time prior
-----------
to or on the Effective Date whether before or after action thereon by the
shareholders of Acquired Corporation, as follows:
(a) by the mutual consent of the respective boards of
directors of Acquired Corporation and BancGroup;
(b) by the board of directors of 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 representation or warranty
contained in this Agreement which cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching Party of such
breach and which breach would provide the non-breaching Party the ability to
refuse to consummate the Merger under the standard set forth in section 10.1 of
this Agreement in the case of BancGroup and section 9.1 of this Agreement in the
case of Acquired Corporation;
(c) by the board of directors of 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 thirty (30) days
after the giving of written notice to the breaching Party of such breach, or if
any of the conditions to the obligations of such Party contained in this
Agreement in Article 9 as to Acquired Corporation or Article 10 as to BancGroup
shall not have been satisfied in full or waived; or
(d) by the board of directors of either BancGroup or Acquired
Corporation if all transactions contemplated by this Agreement shall not have
been consummated on or prior to September 30, 2005, if the failure to consummate
the transactions provided for in this Agreement on or before such date is not
caused by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 13.2(d).
(e) without further action by either Party, upon the
execution by Acquired Corporation of an agreement which is legally binding on
Acquired Corporation with any third party (other than BancGroup or its
Subsidiaries) with respect to an Acquisition Proposal if, in connection
therewith, BancGroup will have the right to demand the payment of the sum
described in section 6.2(c)(ii) by the Acquired Corporation.
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13.3 DAMAGES. In the event of termination pursuant to section 13.2,
-------
this Agreement shall become void and have no effect other than as set forth in
section 6.2(c)(ii) and except as provided in Article 11, and except that
Acquired Corporation and BancGroup shall be liable for damages for any willful
breach of a warranty, representation, covenant or other agreement contained in
this Agreement.
ARTICLE 14
DEFINITIONS
(a) The following terms, which are capitalized in this
Agreement, shall have the meanings set forth below for the purpose of this
Agreement:
Acquired Corporation FFLC Bancorp, Inc., a Delaware
corporation.
Acquired Corporation Company Shall mean Acquired Corporation, the
Bank, any Subsidiary of Acquired
Corporation or the Bank, or any
person or entity acquired as a
Subsidiary of Acquired Corporation
or the Bank in the future and owned
by Acquired Corporation or the Bank
at the Effective Date.
Acquired Corporation Options Options respecting the issuance of a
maximum of 199,891 shares of
Acquired Corporation common stock
pursuant to Acquired Corporation's
stock option plans.
Acquired Corporation Stock Shares of common stock, par value
$0.01 per share, of Acquired
Corporation.
Acquisition Proposal Shall mean, with respect to a Party,
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 such Party or
any of its Subsidiaries or the
acquisition of a substantial equity
interest in, or substantial portion
of the assets of, such Party or any
of its Subsidiaries.
Agencies Shall mean, collectively, the
Federal Trade Commission, the United
States Department of Justice, the
Board of the Governors of the
Federal Reserve System, the Federal
Deposit Insurance Corporation, the
Office of Thrift Supervision, all
state regulatory agencies having
jurisdiction over the Parties and
their respective Subsidiaries, HUD,
the VA, the FHA, the GNMA, the FNMA,
the FHLMC, the NYSE, and the SEC.
Agreement Shall mean this Agreement and Plan
of Merger and the Exhibits and
Schedules delivered pursuant hereto
and incorporated herein by
reference.
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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.
BancGroup The Colonial BancGroup, Inc., a
Delaware corporation with its
principal offices in Montgomery,
Alabama.
Bank First Federal Savings Bank of Lake
County, a federally chartered
savings and loan association.
Closing The submission of the certificates
of officers, legal opinions and
other actions required to be taken
in order to consummate the Merger in
accordance with this Agreement.
Code The Internal Revenue Code of 1986,
as amended.
Common Stock BancGroup's Common Stock authorized
and defined in the restated
certificate of incorporation of
BancGroup, as amended.
Confidentiality Agreement Confidentiality Agreement executed
by BancGroup and Acquired
Corporation on or around December 2,
2004.
Consent Any consent, approval,
authorization, clearance, exemption,
waiver, or similar affirmation by
any Person pursuant to any Contract,
Law, Order, or Permit.
Contract 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 or default under any
Contract, 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 or default
under any Contract, Order or Permit,
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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 to terminate or
revoke, change the current terms of,
or renegotiate, or to accelerate,
increase, or impose any Liability
under, any Contract, Order or
Permit.
DGCL The Delaware General Corporation
Law.
Effective Date Means the date and time at which the
Merger becomes effective as defined
in section 2.7 hereof.
Environmental Laws Means the laws, regulations and
governmental requirements referred
to in section 5.23 hereof.
ERISA The Employee Retirement Income
Security Act of 1974, as amended.
Exchange Ratio The appropriate ratio calculated in
the manner set forth in Section
3.1(a).
Exhibits A through C, 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.
GAAP Means generally accepted accounting
principles applicable to banks and
bank holding companies consistently
applied during the periods involved.
Knowledge Means the actual knowledge (or the
knowledge that should have been
obtained) after due investigation
and inquiry of the Chairman,
President, Chief Financial Officer,
Chief Operating Officer or any
Senior or Executive Vice President
of BancGroup, in the case of
knowledge of BancGroup. In the case
of Acquired Corporation it means the
actual knowledge (or the knowledge
that should have been obtained)
after due investigation and inquiry
by the Chairman, President, Chief
Financial Officer, Chief Credit
Officer, or any other Executive
Officer of Acquired Corporation or
the Bank.
Law Any code, law, ordinance,
regulation, reporting or licensing
requirement, rule, or statute
applicable to a Person or its
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Assets, Liabilities or business,
including, without limitation, those
promulgated, interpreted or enforced
by any Agency.
Liability Any direct or indirect, primary or
secondary, liability, indebtedness,
obligation, penalty, cost or expense
(including, without limitation,
costs of investigation, collection
and defense), 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 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 in the form of easements
and restrictive covenants on real
property which do not materially
adversely affect the use of such
property by the current owner
thereof, and (iv) Liens which are
not reasonably likely to have,
individually or in the aggregate, a
Material Adverse Effect on a Party.
Litigation Any action, arbitration, complaint,
criminal prosecution, governmental
or other examination or
investigation, hearing, inquiry,
administrative or other proceeding
but shall not include regular,
periodic examinations of depository
institutions and their Affiliates by
Regulatory Authorities, relating to
or affecting a Party, its business,
its Assets (including Contracts
related to it), or the transactions
contemplated by this Agreement.
Loan Property Any property owned by the Party in
question or by any of its
Subsidiaries or in which such Party
or Subsidiary holds a security
interest, and, where required by the
context, includes the owner or
operator of such property, but only
with respect to such property.
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Loss Any and all direct or indirect
payments, obligations, recoveries,
deficiencies, fines, penalties,
interest, assessments, losses,
diminution in the value of Assets,
damages, punitive, exemplary or
consequential damages (including,
but not limited to, lost income and
profits and interruptions of
business), liabilities, costs,
expenses (including without
limitation, reasonable attorneys'
fees and expenses, and consultant's
fees and other costs of defense or
investigation), and interest on any
amount payable to a third party as a
result of the foregoing.
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.
Material Adverse Effect On a Party shall mean an event,
change or occurrence which has a
material adverse impact on (i) the
financial position, Assets,
business, or results of operations
of such Party and its Subsidiaries,
taken as a whole, or (ii) the
ability of such Party to perform its
obligations under this Agreement or
to consummate the Merger or the
other transactions contemplated by
this Agreement, provided that
"material adverse effect" shall not
be deemed to include the impact of
reasonable expenses incurred in
connection with the transaction
contemplated hereby (w) changes in
banking and similar laws of general
applicability or interpretations
thereof by courts or governmental
authorities, (x) changes in
generally accepted accounting
principles or regulatory accounting
principles generally applicable to
banks and their holding companies,
(y) actions and omissions of a Party
(or any of its Subsidiaries) taken
with the prior informed consent of
the other Party in contemplation of
the transactions contemplated
hereby, and (z) the Merger and
compliance with the provisions of
this Agreement on the operating
performance of the Parties.
Merger The merger of Acquired Corporation
with BancGroup as contemplated in
this Agreement.
Merger Consideration The consideration as provided in
Section 3.1(a).
Net Income Net income as calculated in
accordance with GAAP.
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NYSE The New York Stock Exchange.
Order 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
Agency.
Party Shall mean Acquired Corporation or
BancGroup, and "Parties" shall mean
both Acquired Corporation and
BancGroup.
Permit 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 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 The proxy statement used by Acquired
Corporation to solicit the approval
of its shareholders of the
transactions contemplated by this
Agreement, which shall include the
prospectus of BancGroup relating to
the issuance of the BancGroup Common
Stock to the shareholders of
Acquired Corporation.
Registration Statement The registration statement on Form
S-4, or such other appropriate form,
to be filed with the SEC by
BancGroup, and which has been agreed
to by Acquired Corporation, to
register the shares of BancGroup
Common Stock offered to shareholders
of Acquired Corporation pursuant to
this Agreement, including the Proxy
Statement.
Resulting Corporation BancGroup, as the surviving
corporation resulting from the
Merger.
SEC United States Securities and
Exchange Commission.
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Shareholders Meeting The special meeting of shareholders
of Acquired Corporation called to
approve the transactions
contemplated by this Agreement.
Significant Subsidiaries Shall have the same definition as it
does in Section 1-02 of Regulation
S-X under the Securities Act of
1933, as amended.
Subsidiaries Shall mean all those corporations,
banks, associations, or other
entities of which the entity in
question owns or controls 5% or more
of the outstanding equity securities
either directly or through an
unbroken chain of entities as to
each of which 5% or more of the
outstanding equity securities is
owned directly or indirectly by its
parent; provided, however, there
shall not be included any such
entity acquired through foreclosure
or any such entity the equity
securities of which are owned or
controlled in a fiduciary capacity.
Tax or Taxes Means any federal, state, county,
local, foreign, and other taxes,
assessments, charges, fares, and
impositions, including interest and
penalties thereon or with respect
thereto.
1933 Act The Securities Act of 1933, as
amended.
1934 Act The Securities Exchange Act of 1934,
as amended.
ARTICLE 15
MISCELLANEOUS
15.1 EXPENSES. (a) Except as otherwise provided in this Section 15.1,
--------
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 BancGroup shall bear and pay the filing
fees payable in connection with the Registration Statement and printing costs
incurred in connection with the printing of the Registration Statement.
(b) Nothing contained in this Section 15.1 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
15.2 BENEFIT AND 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.
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15.3 GOVERNING LAW. Except to the extent the Laws of the State of
-------------
Delaware apply to the Merger, this Agreement shall be governed by, and construed
in accordance with the Laws of the State of Alabama without regard to any
conflict of Laws.
15.4 COUNTERPARTS. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to constitute an original. Each such counterpart
shall become effective when one counterpart has been signed by each Party
thereto.
15.5 HEADINGS. The headings of the various articles and sections of
--------
this Agreement are for convenience of reference only and shall not be deemed a
part of this Agreement or considered in construing the provisions thereof.
15.6 SEVERABILITY. Any term or provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining terms and provisions thereof or affecting the
validity or enforceability of such provision in any other jurisdiction, and if
any term or provision of this Agreement is held by any court of competent
jurisdiction to be void, voidable, invalid or unenforceable in any given
circumstance or situation, then all other terms and provisions, being severable,
shall remain in full force and effect in such circumstance or situation and the
term or provision shall remain valid and in effect in any other circumstances or
situation, except if such omitted term or provision would so materially
adversely impact the economic benefits of the transaction to a Party as
contemplated by this Agreement so as to render inadvisable the consummation of
the Merger.
15.7 CONSTRUCTION. Use of the masculine pronoun herein shall be deemed
------------
to refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No
inference in favor of or against any Party shall be drawn from the fact that
such Party or such Party's counsel has drafted any portion of this Agreement.
15.8 RETURN OF INFORMATION. In the event of termination of this
---------------------
Agreement prior to the Effective Date, each Party shall return to the other,
without retaining copies thereof, all confidential or non-public documents, work
papers and other materials obtained from the other Party in connection with the
transactions contemplated in this Agreement and shall keep such information
confidential, not disclose such information to any other person or entity, and
not use such information in connection with its business.
15.9 EQUITABLE REMEDIES. The parties hereto agree that, in the event
------------------
of a breach of this Agreement by either Party, the other Party may be without an
adequate remedy at law owing to the unique nature of the contemplated
transactions. In recognition thereof, in addition to (and not in lieu of) any
remedies at law that may be available to the non-breaching Party, the
non-breaching Party shall be entitled to obtain equitable relief, including the
remedies of specific performance and injunction, in the event of a breach of
this Agreement by the other Party, and no attempt on the part of the
non-breaching Party to obtain such equitable relief shall be deemed to
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constitute an election of remedies by the non-breaching Party that would
preclude the non-breaching Party from obtaining any remedies at law to which it
would otherwise be entitled.
15.10 ATTORNEYS' FEES. If any Party hereto shall bring an action at
---------------
law or in equity to enforce its rights under this Agreement (including an action
based upon a misrepresentation or the breach of any warranty, covenant,
agreement or obligation contained herein), the prevailing Party in such action
shall be entitled to recover from the other Party its costs and expenses
incurred in connection with such action (including fees, disbursements and
expenses of attorneys and costs of investigation).
15.11 NO WAIVER. No failure, delay or omission of or by any Party in
---------
exercising any right, power or remedy upon any breach or Default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or Default, nor shall it be construed to be a wavier of any such right,
power or remedy, or an acquiescence in any similar breach or Default; nor shall
any waiver of any single breach or Default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Agreement must be in writing and be executed by the Parties
to this Agreement and shall be effective only to the extent specifically set
forth in such writing.
15.12 REMEDIES CUMULATIVE. All remedies provided in this Agreement,
-------------------
by law or otherwise, shall be cumulative and not alternative.
15.13 ENTIRE CONTRACT. This Agreement, the Confidentiality
---------------
Agreement and the documents and instruments referred to herein constitute the
entire contract between the parties to this Agreement and supersede all other
understandings with respect to the subject matter of this Agreement.
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IN WITNESS WHEREOF, Acquired Corporation and BancGroup have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
ATTEST: FFLC BANCORP, INC.
/s/ Sandra L. Rutschow /s/ Stephen T. Kurtz
- ---------------------------------- ------------------------------------------
By: Sandra L. Rutschow By: Stephen T. Kurtz
Its: Secretary Its: Chief Executive Officer and President
(CORPORATE SEAL)
ATTEST: THE COLONIAL BANCGROUP, INC.
/s/ By: Helena T. Duncan /s/ W. Flake Oakley
- ---------------------------------- ------------------------------------------
By: Helena T. Duncan By: W. Flake Oakley
Its: Secretary Its: President
(CORPORATE SEAL)
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EXHIBIT A
---------
AGREEMENT
This Agreement (the "Agreement") is made and entered into as of
_________, 2005 by and between _____________________________ ("Shareholder"),
who is a shareholder and may be an "Affiliate" of FFLC Bancorp, Inc. ("Acquired
Corporation") within the meaning of Rule 145 under the Securities Act of 1933,
as amended (the "1933 Act"), and The Colonial BancGroup ("BancGroup") with
regard to the following:
A. Acquired Corporation and BancGroup have entered into an Agreement
and Plan of Merger, dated as of ____________, 2005 (the "Merger Agreement"),
providing for the merger of Acquired Corporation with and into BancGroup (the
"merger") and for the payment of consideration of Acquired Corporation
shareholders in the form of BancGroup common stock, par value $2.50 (the
"BancGroup Common Stock").
B. Shareholder has the power to vote or direct the voting of the shares
of Acquired Corporation common stock identified on Annex I hereto (such shares,
together with all shares of Acquired Corporation common stock subsequently
acquired by Shareholder during the term of this Agreement being referred to
collectively as the "Shares").
C. In order to induce BancGroup to enter into the Merger Agreement and
in consideration of the substantial expenses incurred and to be incurred by
BancGroup in connection therewith, Shareholder has agreed to enter into and
perform this Agreement solely in such person's capacity as a Shareholder of
Acquired Corporation and not as a director and/or officer of Acquired
Corporation.
NOW THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. Shareholder shall vote or cause to be
------------------------
voted the Shares in favor of adoption and approval of the principal terms of the
Merger Agreement and the Merger and all transactions relating thereto and
against any business combination or other reorganization of any kind involving
Acquired Corporation or its subsidiaries with any entity other than BancGroup at
every meeting of Shareholders of Acquired Corporation at which such matters are
considered and at every adjournment thereof, provided that the foregoing is
subject to Shareholder's receipt of the Proxy Statement, as defined in the
Merger Agreement.
2. Voting Trusts. Shareholder agrees that Shareholder will not, nor
-------------
will Shareholder permit any entity directly or indirectly controlled by him or
her, to place any Shares in a voting trust or subject the Shares to any
agreement, arrangement or understanding with respect to voting of the Shares
inconsistent with this Agreement.
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3. Sales of Stock. Shareholder agrees not to (i) make a "distribution"
--------------
within the meaning of Rule 145 under the 1933 Act of the BancGroup Common Stock
received by Shareholder in the Merger, or (ii) sell, transfer or otherwise
dispose of shares of BancGroup Common Stock received by Shareholder in the
Merger, except pursuant to all applicable provisions of the 1933 Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
4. Business Protection and Non-Competition. Paragraphs 4.3 and 4.4 of
---------------------------------------
the provisions of this Section 4 shall apply only to those Directors who are not
also Employees of an Acquired Corporation Company. Neither Shareholder nor any
corporation, partnership, trust or other entity controlled by Shareholder,
directly or indirectly, shall:
4.1 at any time following the Effective Time of the Merger,
without the prior written consent of BancGroup, disclose confidential
information regarding Acquired Corporation or BancGroup to any third parties,
except as required by law, regulation or court order, in the defense of
litigation for which Acquired Corporation or BancGroup may be liable, or in any
actions relating to this Agreement or the Merger Agreement and the transactions
contemplated hereby or thereby; or
4.2 for the period of ten (10) years from the Effective Date
engage in any business which uses the name "First Federal Savings Bank of Lake
County," "Lake County Bank," First Bank of Lake County" or any name similar
thereto or any name which could be readily confused by the public with such
names.
4.3 for a period of two years following the Effective Time of the
Merger, solicit, directly or indirectly, on its own behalf or on behalf of any
other person or entity, management personnel employed by BancGroup or any of its
subsidiaries immediately after the Effective Time of the Merger for employment
with any other business.
4.4 for a period of two years from the Effective Time of the
Merger (i) engage in the banking business (which term shall include the business
of savings and loan institutions, credit unions and other such financial
institutions but not the financial planning or investment advisory business if
not conducted as an employee, consultant or agent of a financial institution)
other than on behalf of BancGroup or its affiliates within the Designated Area
(as hereinafter defined), (ii) directly or indirectly own, manage, operate,
control, be employed by, or provide management or consulting services in any
capacity to any firm, corporation or other entity (other than BancGroup or its
affiliates) engaged in banking business in the Designated Area, or (iii)
directly or indirectly solicit or otherwise intentionally cause any employee,
officer or member of the respective Boards of Directors of BancGroup or Acquired
Corporation or any of their affiliates to engage in any action prohibited under
(i) or (ii) of this paragraph 4.4, or (iv) solicit business that Resulting Bank
or its affiliates does with its customers; provided that the ownership of
Shareholder as an investor of not more than one percent of the outstanding
shares of stock of any corporation whose stock is listed for trading on any
securities exchange or is quoted on the automated quotation system of the
National Association of Securities Dealers, Inc., or the shares of any
investment company as defined in Section 3 of the Investment Company Act of
1940, as amended, shall not in itself constitute a violation of Shareholder's
obligations under this paragraph 4.4. As used herein, "Designated Area" shall
mean Lake, Citrus and Sumter Counties, Florida and any county contiguous
thereto.
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5. Specific Performance and Remedies. Shareholder acknowledges that it
---------------------------------
will be impossible to measure in money the damages to BancGroup if Shareholder
fails to comply with the obligations imposed by this Agreement and that, in the
event of any such failure, BancGroup will not have an adequate remedy at law or
in damages. Accordingly, Shareholder agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or in damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that BancGroup has an adequate remedy at law. In addition to
all other rights or remedies which BancGroup may have against Shareholder in the
event of a default in Shareholder's performance of Shareholder's obligations
under this Agreement, Shareholder shall be liable to BancGroup for all
reasonable litigation costs and attorneys' fees incurred by BancGroup in
connection with the enforcement of any of its rights or remedies against
Shareholder. In addition, after discussing the matter with Shareholder,
BancGroup shall have the right to inform any third party that BancGroup
reasonably believes to be, or to be contemplating, participating with
Shareholder or receiving from Shareholder assistance in violation of this
Agreement, of the terms of this Agreement and of the rights of BancGroup
hereunder, and that participation by any such persons with Shareholder in
activities in violation of this Agreement with BancGroup set forth in this
Agreement may give rise to claims by BancGroup against such third party.
6. Term of Agreement; Termination. The term of this Agreement shall
------------------------------
commence on the date hereof and such term and this Agreement shall terminate
upon the earlier to occur of (i) the Effective Time of the Merger, and (ii) the
date on which the Merger Agreement is terminated in accordance with its terms.
Such termination shall not affect the provisions of Sections 3 and 4, which
shall continue according to their terms and the enforceability of which under
the other provisions of this Agreement shall also continue. Termination shall
not relieve any party from liability for any breach of this Agreement prior to
such termination.
7. Future Payments. Except for benefits set forth on Schedule A to this
---------------
Agreement, Shareholder acknowledges that after the Effective Date, no
remuneration or other benefit of any kind will be paid to Shareholder, except in
accordance with BancGroup's established policies and procedures.
8. Entire Agreement. This Agreement supersedes all prior agreements,
----------------
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a continuing waiver of any provision
hereof by such party.
9. Notices. All notices, requests, claims, demands or other
-------
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
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If BancGroup, to:
The Colonial BancGroup
One Commerce Street, Suite 803
Montgomery, AL 36104
Facsimile: (334) 240-5069
Attention: W. Flake Oakley
With copies to:
Miller, Hamilton, Snider & Odom, L.L.C.
One Commerce Street, Suite 305
Montgomery, AL 36104
Facsimile: (334) 265-4533
Attention: Hugh C. Nickson, III, Esq.
If to Shareholder, to:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
With copies to:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Telecopier:
------------------
Attention:
------------------
10. Miscellaneous.
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10.1 Severability. If any provision of this Agreement or the
------------
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the provision held invalid or
unenforceable and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, and the remainder of this
Agreement, shall not be effected.
10.2 Capacity. The covenants contained herein shall apply to
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Shareholder solely in his or her capacity as a Shareholder of Acquired
Corporation, and no covenant contained herein shall apply to Shareholder in his
or her capacity as a director and/or officer of Acquired Corporation.
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10.3 Counterparts. This Agreement may be executed in one 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.
10.4 Headings. All Section headings herein are for convenience of
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reference only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
10.5 Choice of Law. This Agreement shall be deemed a contract
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made under, and for all purposes shall be construed in accordance with, the laws
of the State of Alabama, without reference to its conflicts of law principles.
10.6 Definitions. Terms not otherwise defined herein shall have
-----------
the meanings assigned in the Merger Agreement.
10.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
--------------------
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the year and day first above written.
THE COLONIAL BANCGROUP, INC.
By:
------------------------------
Its:
------------------------------
------------------------------------
(Print or Type Name)
------------------------------------
(Signature)
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EXHIBIT B
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(OPINION OF COUNSEL FOR BANCGROUP)
[DATE]
FFLC Bancorp, Inc.
- ----------------------
- ----------------------
- ----------------------
Ladies and Gentlemen:
We have acted as counsel to The Colonial BancGroup, Inc. ("BancGroup"),
a Delaware corporation, in connection with the merger of FFLC Bancorp, Inc.
("Acquired Corporation"), a Delaware corporation, with and into BancGroup,
pursuant to the Agreement and Plan of Merger (the "Agreement") dated as of
____________________, by and between BancGroup and Acquired Corporation. We have
also acted as counsel to BancGroup in connection with the preparation and filing
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "1933 Act"), of a Registration Statement
on Form S-4, Registration No. 333-_______ (the "Registration Statement"), and
other related matters. Unless otherwise defined herein, capitalized terms in
this opinion are used as defined in the Agreement.
We deliver this opinion pursuant to section 9.4 of the Agreement. In
connection therewith, we have examined originals or copies of the following
documents:
1. A certified copy, such certificate dated as of _____________,
of the restated certificate of incorporation of BancGroup
filed with the Delaware Secretary of State on February 21,
1995, as amended on April 16, 1997 and filed on April 16,
1997, and as amended on May 15, 1998 and filed on May 19,
1998;
2. Bylaws of BancGroup, dated January 18, 1995;
3. Certificate of Good Standing for BancGroup issued by the
Secretary of State of Delaware, dated as of _______________;
4. Certificate of Existence of Colonial Bank, N.A. from the
Alabama Secretary of State, dated as of _____________;
5. Certificate of Good Standing of Colonial Bank, N.A. from the
Alabama Department of Revenue, dated as of _____________;
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6. Officers' Certificate of BancGroup dated _____________;
7. The Agreement; and
8. The Registration Statement.
We have further reviewed such other papers, documents, certificates and
proceedings, and such laws, statutes, ordinances, codes, orders, decrees,
regulations and rules, as we have deemed necessary as a basis for the opinions
set forth herein.
As to matters of fact, we have relied on the statements,
representations and warranties of the officers of BancGroup contained in the
Agreement and the Officers' Certificate dated _________________. We have not
independently verified the accuracy and completeness of the information
contained therein, although we have no knowledge of any inaccuracies in or
incompleteness of such information.
In reaching the opinions set forth below, we have assumed, and to our
knowledge there are no facts inconsistent with, the following:
1. (a) the genuineness of all signatures, (b) the authenticity of all
documents submitted to us as originals, (c) the conformity to the original
documents of documents submitted to us as certified or photostatic copies, (d)
the legal capacity of all natural persons, and (e) as to documents executed by
parties other than BancGroup: (i) such parties' power to enter into and perform
their obligations under such documents, and (ii) that such documents have been
duly authorized, executed and delivered by, and are binding upon and enforceable
against, such parties; and
2. the accuracy and correctness of the indexes and filing systems
maintained at the public offices at which we have searched or inquired, and we
have assumed the authority of the person or persons who have executed any such
documents on behalf of any state or other entity.
Although some members and associates of this firm are licensed to
practice law in other jurisdictions, we do not purport to be experts in, or to
express any opinion herein concerning, any law other than the law of the State
of Alabama, the general corporate law of the State of Delaware, and the law of
the United States of America. This opinion is limited to the matters expressly
set forth herein, and no opinion is implied or may be inferred beyond the
matters expressly stated herein.
Upon the basis of the foregoing and subject to the limitations,
qualifications and assumptions herein contained, we are of the opinion that:
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(i) Based solely upon the certificate issued by the Secretary of State
thereof, BancGroup is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to carry on its business as now conducted, and Colonial Bank,
N.A., based solely upon certificates issued by the Secretary of State and the
Department of Revenue of Alabama, is duly incorporated, validly existing and in
good standing under the laws of the State of Alabama with full power and
authority to carry on its business as now conducted;
(ii) The Agreement has been duly authorized, approved and adopted by
all requisite corporate action of the board of directors of BancGroup, this
being the only corporate authorization required under BancGroup's restated
certificate of incorporation, bylaws and applicable law, has been duly executed
and delivered by BancGroup, and constitutes a valid and legally binding
agreement of BancGroup enforceable in accordance with its terms except as such
enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and except that the remedies of specific
performance, injunction and other forms of equitable relief are subject to
certain tests of equity jurisdiction, equitable defenses and the discretion of
the court before which any proceeding therefor may be brought;
(iii) The execution, delivery and performance by BancGroup of the
Agreement will not violate the restated certificate of incorporation or bylaws
of BancGroup and, to the best of our knowledge but without independent
verification, will not violate, result in a breach of, or constitute a default
under any material lease, loan agreement, indenture, mortgage, deed of trust or
other material agreement or instrument known to us to which BancGroup is a
party;
(iv) All consents, approvals, authorizations or orders required to be
obtained by BancGroup for the consummation of the transactions contemplated by
the Agreement have been obtained;
(v) The shares of BancGroup Common Stock to be issued pursuant to the
Agreement are duly authorized and will be when so issued, validly issued and
outstanding, fully paid and nonassessable;
(vi) The authorized, issued and outstanding shares of capital stock of
BancGroup are as stated in the Agreement, all of which are validly issued, fully
paid and nonassessable and not issued in violation of the preemptive rights of
any shareholder;
(vii) To our knowledge, there is no Litigation pending or currently
threatened against BancGroup which questions the validity of the Agreement or
the right of BancGroup to enter into the Agreement, or to consummate the
transactions contemplated thereby, or which might result, either individually or
in the aggregate, in any changes in the assets, condition, affairs or prospects
of BancGroup which are materially adverse to BancGroup, financially or
otherwise, or any change in the current equity ownership of BancGroup. To our
knowledge, BancGroup is not a party to nor is BancGroup subject to the
provisions of any currently effective Order of any court or government agency or
instrumentality which would materially affect the Agreement or the Merger.
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(viii) To our knowledge, BancGroup is in compliance with all applicable
federal, state, municipal and other political subdivision or governmental agency
statutes, ordinances and regulations in every applicable jurisdiction, in
respect of the ownership of its properties and the conduct of its business,
including, without limitation, antitrust and fair trade practice laws, the
violation of which would materially affect the Agreement or the Merger. To our
knowledge, there are no investigations, audits or other proceedings by any
federal, state or municipal governmental agency pending or threatened against
BancGroup which would materially affect the Agreement or the Merger.
(ix) To our knowledge, BancGroup is not in default under any term or
condition of any instrument evidencing, creating or securing any material
indebtedness of BancGroup and there has been no default in any material
obligation to be performed by BancGroup under any other material contract,
lease, agreement, commitment or undertaking to which it is a party or by which
it or its assets or properties are bound; nor has BancGroup waived any material
right under any such contract, lease, agreement, commitment or undertaking.
(x) The Registration Statement has become effective and, to our
knowledge, no stop order suspending its effectiveness has been issued nor have
any proceedings for that purpose been instituted; and
(xi) The Registration Statement complies as to form in all material
respects with the requirements of the 1933 Act and the rules and regulations
promulgated thereunder. We do not know of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement, or
required to be incorporated by reference into the Proxy Statement or required to
be described in the Registration Statement or Proxy Statement which have not
been filed or incorporated by reference or described as required. While we have
made no independent investigation or verification of factual information
relating to BancGroup set forth in the Registration Statement, during the course
of our representation of BancGroup, nothing has come to our attention to
indicate that the Proxy Statement delivered to Acquired Corporation's
shareholders, or any amendments or revisions thereto so delivered, as of the
date thereof, contained or incorporated by reference any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made (it being understood that we do not
hereby express an opinion as to the financial statements, the notes thereto or
other financial or statistical data contained or incorporated by reference in
such Registration Statement or as to any information concerning or provided by
Acquired Corporation for inclusion in the Registration Statement).
The foregoing opinions are subject to the following qualifications and
exceptions:
A. We express no opinion as to the enforceability of remedies
and obligations of the Agreement, as such rights and remedies may be limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent
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conveyance and other similar laws relating to or affecting the rights of
creditors. We advise you that the enforceability of the Agreement may be limited
by (i) certain equitable, legal or statutory principles affecting the
enforcement of contractual rights generally, regardless of whether such
enforcement is considered in a proceeding in equity or at law, including,
without limitation, concepts of notice, materiality, impairment of security,
reasonableness, good faith and fair dealing, jurisdiction, service of process,
venue and applicable statutes of limitations and (ii) judicial discretion or
statutory limitations with respect to the availability of equitable remedies or
defenses, the calculation of damages and the entitlement to attorneys' fees and
other costs.
B. Whenever our opinion is qualified by the phrase "to our
knowledge," it is intended to indicate the current and actual (as opposed to
imputed) knowledge of Hugh C. Nickson, III, and Michael A. White, the attorneys
in our office most likely to have actual personal knowledge of the matters
discussed herein.
The opinions rendered herein are as of the date hereof. We assume no
obligation, and specifically disclaim any responsibility, to update or
supplement these opinions to reflect any facts which hereafter may come to our
attention or any changes in facts or law subsequent to the date hereof.
These opinions have been furnished to you at your request, and we
consider them to be a confidential communication which may not be furnished,
reproduced, distributed, or disclosed to anyone without our prior written
consent. These opinions are rendered solely for your information and assistance
in connection with the transactions contemplated in the Agreement. They may not
be relied upon by any other person or for any other purpose without our prior
written consent.
Sincerely,
MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
cc: W. Flake Oakley
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EXHIBIT C
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(OPINION OF COUNSEL FOR ACQUIRED CORPORATION)
_______________, 2003
The Colonial BancGroup, Inc.
One Commerce Street, Suite 800
Montgomery, AL 36104
Gentlemen:
We have acted as counsel to FFLC Bancorp, Inc. ("Acquired
Corporation"), a Delaware corporation, in connection with the transactions
contemplated by that certain Agreement and Plan of Merger (the "Agreement")
dated as of __________, 2005, by and between Acquired Corporation and The
Colonial BancGroup, Inc. ("BancGroup"). We render this opinion pursuant to
section 10.4 of the Agreement. Capitalized terms not otherwise defined in this
letter have the definitions set forth in the Agreement.
In connection with our representation of Acquired Corporation and in
order to render this opinion pursuant to section 10.4 of the Agreement, we have
examined and relied upon the accuracy of original, certified, conformed or
photographic copies of such records, agreements, instruments, documents, and
certificates of officers and employees of Acquired Corporation and of other
persons, and such questions of law, as we deemed necessary or appropriate. In
all such examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
the original documents of documents submitted to us as certified or photo static
copies. We have relied on certificates issued to us by the secretaries of state
and other appropriate government officials of the various states in which
Acquired Corporation is incorporated or qualified and, except as expressly set
forth in any such documents or hereinafter, we have assumed the authority of the
person or persons who have executed any such documents on behalf of any person
or persons, state or any other entity. We also have relied, as to various
matters of fact material to this opinion, on the representations and warranties
contained in the Agreement and the certificates delivered pursuant thereto and
we have made no independent investigations with regard thereto.
Based upon the foregoing and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:
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1. Acquired Corporation is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. Acquired Corporation's
subsidiary bank, First Federal Savings Bank of Lake county (the "Bank") is a
federally chartered savings and loan association duly chartered, organized,
validly existing and in good standing under the laws of each jurisdiction that
it operates, and is a wholly owned subsidiary of Acquired Corporation. Acquired
Corporation has the full corporate power and authority to own its properties and
to conduct its business as now conducted. The Bank is an "insured institution"
as defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and each of their deposits are insured by the [Federal Insurance
Fund], to the extent provided by applicable law.
2. Acquired Corporation has the requisite corporate power and authority
to execute, deliver and perform its undertakings and obligations under the
Agreement and to consummate the transactions provided for therein. The
execution, delivery and performance of the Agreement and the consummation of the
transactions provided for therein have been duly and validly authorized by all
necessary corporate action with respect thereto on the part of Acquired
Corporation and its shareholders. The Agreement constitutes a legal, valid and
binding obligation of Acquired Corporation, enforceable against Acquired
Corporation in accordance with its terms.
3. The execution, delivery and performance by Acquired Corporation of
the Agreement will not violate or any provision of Acquired Corporation's
Articles of Incorporation or Bylaws or, to our knowledge, will not violate,
result in a breach of, or constitute a default under any material lease, loan
agreement, indenture, mortgage, deed or trust or other material agreement or
instrument known to us to which Acquired Corporation is a party.
4. The authorized capital stock of Acquired Corporation consists of
[10,000,000] shares of common stock, par value $.01 per share (the "Shares"), of
which 5,405,954 Shares are issued and outstanding. All such issued and
outstanding Shares are validly issued, fully paid and nonassessable and are free
of preemptive rights.
5. To our knowledge, there is no action, suit, proceeding or
investigation pending or currently threatened against Acquired Corporation which
questions the validity of the Agreement or the right of Acquired Corporation to
enter into the Agreement, or to consummate the transactions contemplated
thereby, or which might result, either individually or in the aggregate, in any
changes in the assets, condition, affairs or prospects of Acquired Corporation
which are materially adverse to Acquired Corporation, financially or otherwise,
or any change in the current equity ownership of Acquired Corporation. To our
knowledge, Acquired Corporation is not a party to nor is Acquired Corporation
subject to the provisions of any currently effective order, writ, injunction or
decree of any court or government agency or instrumentality.
6. To our knowledge, there are no investigations, audits or other
proceedings by any Federal, state or municipal governmental agency pending or
threatened against Acquired Corporation.
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7. To our knowledge, Acquired Corporation is not in default under any
term or condition of any instrument evidencing, creating or securing any
material indebtedness of Acquired Corporation, and there has been no default in
any material obligation to be performed by Acquired Corporation under any other
material contract, lease, agreement, commitment or undertaking to which it is a
party or by which it or its assets or properties are bound.
Our opinion concerning the validity, binding effect and enforceability
of the Agreement means that: (a) the Agreement constitutes an effective contract
under applicable law; (b) the Agreement is not invalid in its entirety because
of a specific statutory prohibition or public policy, and is not subject in its
entirety to a contractual defense; and (c) subject to the last sentence of this
paragraph, some remedies are available if Acquired Corporation is in material
default under the Agreement. This opinion does not mean that (a) any particular
remedy is available upon a material default, or (b) every provision of the
Agreement will be upheld or enforced in any circumstance by a court.
Furthermore, the validity, binding effect, and the enforceability of the
Agreement may be limited or otherwise affected by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar statutes,
rules and regulations, or other laws affecting the enforcement of creditors
rights and remedies generally, and (b) the unavailability of, or limitation on
the availability of, a particular right or remedy (whether in a proceeding in
equity or at law) because of an equitable principle or a requirement as to
commercial reasonableness, conscientability or good faith.
We are licensed to practice only in the State of _________, and our
opinions expressed herein are limited to the application of laws in the State of
_________ and the Federal laws of the United States of America, and do not
extend to any laws of any other state or nation.
The opinions rendered herein are as of the date hereof. We assume no
obligation, and specifically disclaim any responsibility, to update or
supplement these opinions to reflect any facts which hereafter may come to our
attention or any changes in facts or law subsequent to the date hereof.
These opinions have been furnished to you at your request, and we
consider them to be a confidential communication which may not be furnished,
reproduced, distributed, or disclosed to anyone without our prior written
consent. These opinions are rendered solely for your information and assistance
in connection with the transactions contemplated in the Agreement. They may not
be relied upon by any other person or for any other purpose without our prior
written consent.
Very truly yours,
By: ______________________________
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Disclosure schedules were delivered to BancGroup by the Acquired
Corporation in connection with the execution of the Merger Agreement. Such
schedules will be delivered to the Securities and Exchange Commission upon
request. Such schedules included a list of people holding stock options,
publicly available financial statements required to be delivered under the
Merger Agreement, updates regarding dividends paid since September 30, 2004,
stock option grants, leases, schedules of personal property, schedules of
agreements between the Acquired Corporation and third parties, schedules of
Acquired Corporation employment agreements and benefit plans, schedules of
consulting contracts, copies of charters and bylaws, schedules regarding
delinquent, doubtful, loss and non-performing loans and other information
specifically required by the Merger Agreement.
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