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AGREEMENT AND PLAN OF MERGER
between
THE SOUTH FINANCIAL GROUP, INC.
and
CNB FLORIDA BANCSHARES, INC.
Dated as of January 20, 2004
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January
20, 2004, between The South Financial Group, Inc., a South Carolina corporation
("TSFG") and CNB Florida Bancshares, Inc., a Florida corporation ("CNBFB").
Recitals
The Boards of Directors of TSFG and CNBFB have determined that it is in
the best interests of their respective companies and their shareholders to
consummate the business combination transaction provided for herein in which
CNBFB will, subject to the terms and conditions set forth herein, merge (the
"Merger") with and into TSFG.
The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
Agreement
In consideration of the mutual covenants, representations, warranties
and agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. The following terms shall have the indicated definitions.
Acquisition Proposal. Any tender offer or exchange offer or any
proposal for a merger, reorganization, consolidation, share exchange,
recapitalization, liquidation, dissolution or other business combination
involving CNBFB or any proposal or offer to acquire a substantial equity
interest in, or a substantial portion of the assets of, CNBFB, other than the
transaction contemplated by this Agreement.
Articles of Merger. The articles of merger complying with the FBCA and
the SCBCA reflecting the merger of CNBFB with and into TSFG.
BHC Act. The Bank Holding Company Act of 1956, as amended.
CNBFB Common Stock. The common stock, par value $0.01 per share, of
CNBFB.
CNBFB Option Plan. The CNBFB 1998 Performance-Based Incentive Plan, as
referenced in CNBFB's SEC filings.
CNBFB Stock Certificate. A certificate, which previous to the Merger
represented any shares of CNBFB Common Stock.
CNB National Bank. CNB National Bank, a wholly-owned subsidiary of
CNBFB.
DPC Shares. Shares held by CNBFB, TSFG or any of TSFG's Subsidiaries in
respect of a debt previously contracted.
Effective Time. The effective time of the Merger as specified in the
Articles of Merger.
Environmental Laws. Applicable federal, state and local laws, including
common law, regulations and ordinances, and all applicable decrees, orders and
contractual obligations relating to pollution or the discharge of, or exposure
to, Hazardous Materials in the environment or workplace.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
Exchange Act. The Securities Exchange Act of 1934, as amended.
Exchange Agent. Registrar & Transfer Company or the successor stock
transfer agent of TSFG, which shall be responsible for the exchange of the
Merger Consideration for the CNBFB Common Stock.
Exchange Ratio. .84 shares of TSFG Common Stock for each share of CNBFB
Common Stock.
FBCA. The Florida Business Corporation Act, as amended.
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FDIC. The Federal Deposit Insurance Corporation.
Fair Market Value. The average of the last reported sale price per
share of the TSFG Common Stock as reported on the NASDAQ/NMS (as reported in the
Wall Street Journal or another mutually agreeable authoritative source) for the
ten consecutive trading days immediately prior to the fifth business day prior
to the Effective Time.
Federal Reserve Board. The Board of Governors of the Federal Reserve
System.
Federal Reserve Consent. The consent of the Federal Reserve Board
necessary to consummation of the Merger.
GAAP. Generally accepted accounting principles consistently applied
during the periods involved.
Governmental Entity. Any court, administrative agency or commission or
other governmental authority or instrumentality.
Hazardous Materials. Any chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances or materials.
IRS. The Internal Revenue Service.
Loan Property. Any property in which CNBFB holds a security interest,
and, where required by the context, such term means the owner or operator of
such property.
Material Adverse Effect. With respect to TSFG or CNBFB, as the case may
be, a material adverse effect on (i) the business, results of operations or
financial condition of such party and its Subsidiaries taken as a whole, other
than any such effect attributable to or resulting from (t) any change in banking
or similar laws, rules or regulations of general applicability or
interpretations thereof by courts or governmental authorities, (u) any change in
GAAP or regulatory accounting principles applicable to banks, thrifts or their
holding companies generally, (v) any action or omission of the parties taken
with the prior written consent of the other parties hereto, (w) any events,
conditions or trends in business or financial conditions affecting the banking
industry, (x) any change or development in financial or securities markets or
the economy in general, including changes in interest rates, (y) the
announcement or execution of this Agreement, including any impact on
relationships with customers or employees, or (z) charges and expenses
contemplated in connection with the Merger and not otherwise in violation of
this Agreement, including those related to employment contracts and severance
payments; legal, accounting and investment banking fees; data processing
conversion costs; and accounting changes or charges taken pursuant to Section
7.13 or (ii) the ability of the parties to consummate the transactions
contemplated hereby.
Merger Consideration. The aggregate number of shares of TSFG Common
Stock issuable by TSFG upon conversion of the CNBFB Common Stock as provided
herein.
Participation Facility. Any facility in which CNBFB participates in the
management and, where required by the context, such term means the owner or
operator of such facility.
Per Share Merger Consideration. The shares of TSFG Common Stock
issuable hereunder for each share of CNBFB Common Stock, which is .84 shares of
TSFG Common Stock for each share of CNBFB Common Stock.
Regulatory Agencies. The Federal Reserve Board, the FDIC and any other
regulatory authority or applicable self-regulatory organization with
jurisdiction over the Merger.
Rights. Subscriptions, options, warrants, calls, commitments or
agreements of any character to purchase capital stock.
SCBCA. The South Carolina Business Corporation Act, as amended.
SEC. The Securities and Exchange Commission.
Subsidiary. The word "Subsidiary" (1) when used with respect to CNBFB
shall mean any corporation, partnership or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes, and (2) when used with respect to TSFG shall mean
each Subsidiary of TSFG that is a "Significant Subsidiary" within the meaning of
Rule 1-02 of Regulation S-X of the SEC.
Superior Proposal. With respect to CNBFB, any written Acquisition
Proposal made by a person other than TSFG which is for (i) (a) a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization or similar transaction involving CNBFB, (b) a sale, lease,
exchange, transfer, or other disposition of at least 50% of the assets of CNBFB,
in a single transaction or a series of related transactions, or (c) the
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acquisition, directly or indirectly, by a person of beneficial ownership of 50%
or more of CNBFB Common Stock whether by merger, consolidation, share exchange,
business combination, tender, or exchange offer or otherwise, and (ii) which is
otherwise on terms which the Board of Directors of CNBFB in good faith concludes
(after consultation with its financial advisors and outside counsel) would, if
consummated, result in a transaction that (a) is more favorable to its
stockholders (in their capacities as stockholders), from a financial point of
view, than the transactions contemplated by this Agreement (b) is reasonably
capable of being completed, and (c) that if not accepted by CNBFB's Board of
Directors, would result in a breach of the fiduciary duties of the CNBFB Board
of Directors.
Surviving Corporation. The surviving corporation to the Merger, which
shall be TSFG.
Taxes. Taxes shall mean all taxes, charges, fees, levies, penalties or
other assessments imposed by any United States federal, state, local or foreign
taxing authority, including, but not limited to income, excise, property, sales,
transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto.
Tax Return. Any return, report, information return or other document
(including any related or supporting information) with respect to Taxes.
Trust Account Shares. Shares of CNBFB Common Stock or TSFG Common Stock
held directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity for the benefit of third parties.
TSFG Common Stock. The common stock, par value $1.00 per share, of
TSFG.
1.2 Terms Defined Elsewhere. The capitalized terms set forth below are
defined in the following sections:
"Agreement" Preamble
"Benefit Agreements" Section 7.8(c)
"CNBFB" Preamble
"CNBFB Contract" Section 4.16(a)
"CNBFB Director" Section 7.12
"CNBFB Disclosure Schedule" Section 3.1
"CNBFB Financial Statements" Section 4.8
"CNBFB Reports" Section 4.6
"Closing" Section 10.1
"Closing Date" Section 10.1
"Code" Section 2.3
"Company Director" Section 7.11
"ERISA Affiliate" Section 4.13(a)
"Exchange Fund" Section 2.8
"Hovde Financial" Section 4.9
"Injunction" Section 8.1(e)
"Loans" Section 4.21(a)
"Maximum Amount" Section 7.9
"Merger" Recitals
"Plans" Section 4.13(a)
"Proxy Statement/Prospectus" Section 4.4
"Regulatory Agreement" Section 4.17
"Representatives" Section 7.3(a)
"Requisite Regulatory Approvals" Section 8.1(c)
"S-4" Section 4.14
"Securities Act" Section 2.11(b)
"State Banking Approvals" Section 4.4
"TSFG" Preamble
"TSFG's Counsel" Section 8.2(d)
"TSFG Disclosure Schedule" Section 3.1
"TSFG Financial Statements" Section 5.7
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"TSFG Preferred Stock" Section 5.2
"TSFG Reports" Section 5.5
"Termination Fee Amount" Section 9.2(b)
1.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrases "the date
hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date of this Agreement. No provision of this
Agreement shall be construed to require CNBFB, TSFG or any of their respective
affiliates to take any action that would violate any applicable law (including
common law), rule or regulation.
ARTICLE II
PLAN OF MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement,
in accordance with the FBCA and SCBCA, at the Effective Time, CNBFB shall merge
with and into TSFG. TSFG shall be the Surviving Corporation, and shall continue
its corporate existence under the laws of the State of South Carolina. The name
of the Surviving Corporation shall continue to be "The South Financial Group,
Inc." Upon consummation of the Merger, the separate corporate existence of CNBFB
shall terminate.
2.2 Effective Time and Effects of the Merger. Subject to the provisions
of this Agreement, on the Closing Date, the Articles of Merger shall be duly
prepared, executed and delivered for filing with the Secretaries of State of the
State of Florida and the State of South Carolina. The Merger shall become
effective at the Effective Time. At and after the Effective Time, the Merger
shall have the effects set forth in the FBCA and SCBCA.
2.3 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code") and that this Agreement shall constitute a plan
of reorganization for the purposes of Sections 354 and 361 of the Code.
2.4 Conversion of CNBFB Common Stock.
(a) At the Effective Time, subject to Section 2.9(e), each share of
CNBFB Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares of CNBFB Common Stock held directly or indirectly by
CNBFB, TSFG or any of TSFG's Subsidiaries (except for Trust Account Shares and
DPC Shares)) shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into and exchangeable for the right to
receive, the Per Share Merger Consideration.
(b) At the Effective Time, all of the shares of CNBFB Common Stock
converted into the Per Share Merger Consideration pursuant to this Article II
shall no longer be outstanding and shall automatically be cancelled and shall
cease to exist, and each holder of CNBFB Stock Certificates shall thereafter
cease to have any rights with respect to such securities, except the right to
receive for each share (i) the Per Share Merger Consideration, (ii) any
dividends and other distributions in accordance with Section 2.9(b) hereof, and
(iii) any cash in lieu of fractional shares pursuant to Section 2.9(e).
(c) If, between the date hereof and the Effective Time, (i) the shares
of TSFG Common Stock shall be changed (or TSFG establishes a record date for
changing such shares which is prior to the Effective Time) into a different
number or class of shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, (ii) a stock dividend
shall be declared (or TSFG establishes a record date for such dividend which is
prior to the Effective Time) in respect of TSFG Common Stock, or (iii) any
distribution is made (or TSFG establishes a record date for such distribution
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which is prior to the Effective Time) in respect of TSFG Common Stock other than
a regular quarterly cash dividend consistent with past practice, proportionate
adjustments shall be made to the Exchange Ratio.
(d) At the Effective Time, all shares of CNBFB Common Stock that are
owned directly or indirectly by CNBFB, TSFG or any of TSFG's Subsidiaries (other
than Trust Account Shares and DPC Shares) shall be cancelled and shall cease to
exist and no stock of TSFG, cash or other consideration shall be delivered in
exchange therefor. All shares of TSFG Common Stock that are owned by CNBFB
(other than Trust Account Shares and DPC Shares) shall be cancelled.
2.5 TSFG Common Stock. Except for shares of TSFG Common Stock owned by
CNBFB (other than Trust Account Shares and DPC Shares), which shall be cancelled
as contemplated by Section 2.4 hereof, the shares of TSFG Common Stock issued
and outstanding immediately prior to the Effective Time shall be unaffected by
the Merger and such shares shall remain issued and outstanding.
2.6 Articles of Incorporation and Bylaws. At the Effective Time, the
Articles of Incorporation of TSFG, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation. At the Effective Time, the Bylaws of TSFG, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended in accordance with applicable law.
2.7 Directors and Executive Officers. At and after the Effective Time,
the directors of TSFG shall consist of all of the directors of TSFG serving
immediately prior to the Effective Time and the additional person who shall
become a director of TSFG in accordance with Section 7.11 hereof, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified. The executive officers of TSFG immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
2.8 TSFG to Make Shares Available. At the Effective Time, TSFG shall
deposit, or shall cause to be deposited with the Exchange Agent, for exchange in
accordance with this Article II, (i) certificates representing the shares of
TSFG Common Stock to be issued pursuant to Section 2.4 and Section 2.9(a) in
exchange for outstanding shares of CNBFB Common Stock, and (ii) the cash in lieu
of fractional shares to be paid in accordance with Section 2.9(e) hereof. Such
cash and certificates for shares of TSFG Common Stock, together with any
dividends or distributions with respect thereto, are hereinafter referred to as
the "Exchange Fund."
2.9 Exchange of Shares.
(a) As soon as practicable after the Effective Time, and in any event
within seven business days after the Effective Time, or otherwise as may be
agreed upon by the parties, the Exchange Agent shall mail to each holder of
record of CNBFB Stock Certificates at the Effective Time, a form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the CNBFB Stock Certificates shall pass, only upon delivery of
the CNBFB Stock Certificates, to the Exchange Agent) and instructions for use in
effecting the surrender of the CNBFB Stock Certificates in exchange for Merger
Consideration. CNBFB shall have the right to review both the letter of
transmittal and the instructions prior to the Effective Time and provide
reasonable comments thereon. Upon surrender of CNBFB Stock Certificates for
exchange and cancellation to the Exchange Agent, together with a properly
executed letter of transmittal, the holder of such CNBFB Stock Certificates
shall be entitled to receive in exchange therefor (x) a certificate representing
that number of whole shares of TSFG Common Stock which such holder of CNBFB
Common Stock became entitled to receive pursuant to the provisions of Article II
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hereof and (y) a check representing the amount of cash in lieu of fractional
shares, if any, which such holder has the right to receive in respect of the
CNBFB Stock Certificates, as provided in Section 2.9(e), and the CNBFB Stock
Certificates so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash in lieu of fractional shares or the unpaid dividends
and distributions, if any, payable to holders of CNBFB Stock Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to TSFG Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered CNBFB Stock Certificate
until the holder thereof shall surrender such CNBFB Stock Certificate in
accordance with this Article II. After the surrender of a CNBFB Stock
Certificate in accordance with this Article II, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
TSFG Common Stock represented by such CNBFB Stock Certificate.
(c) If any certificate representing shares of TSFG Common Stock is to
be issued in a name other than that in which the CNBFB Stock Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the CNBFB Stock Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other taxes
required by reason of the issuance of a certificate representing shares of TSFG
Common Stock in any name other than that of the registered holder of the CNBFB
Stock Certificate surrendered, or required for any other reason, or shall
establish to the reasonable satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of CNBFB of the shares of CNBFB Common Stock which were issued
and outstanding immediately prior to the Effective Time. If, after the Effective
Time, CNBFB Stock Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of TSFG Common Stock, as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of TSFG Common Stock shall
be issued upon the surrender for exchange of CNBFB Stock Certificates, no
dividend or distribution with respect to TSFG Common Stock shall be payable on
or with respect to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
shareholder of TSFG. In lieu of the issuance of any such fractional share, TSFG
shall pay to each former stockholder of CNBFB who otherwise would be entitled to
receive a fractional share of TSFG Common Stock an amount in cash determined by
multiplying (i) the Fair Market Value by (ii) the fraction of a share of TSFG
Common Stock which such holder would otherwise be entitled to receive pursuant
to Section 2.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of CNBFB for twelve months after the Effective Time shall be paid
to TSFG. Any stockholders of CNBFB who have not theretofore complied with this
Article II shall thereafter look only to TSFG for payment of the Per Share
Merger Consideration and/or the unpaid dividends and distributions on the TSFG
Common Stock deliverable in respect of each share of CNBFB Common Stock such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of TSFG,
CNBFB, the Exchange Agent or any other person shall be liable to any former
holder of shares of CNBFB Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(g) In the event any CNBFB Stock Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such CNBFB Stock Certificate to be lost, stolen or destroyed and the
posting by such person of a bond in such amount as the Exchange Agent may direct
as indemnity against any claim that may be made against it with respect to such
CNBFB Stock Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed CNBFB Stock Certificate the Per Share Merger
Consideration deliverable in respect thereof pursuant to this Agreement.
2.10 [Reserved].
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2.11 Stock Options.
(a) At the Effective Time, each option granted by CNBFB under the CNBFB
Option Plan, which is outstanding and unexercised immediately prior thereto
shall cease to represent a right to acquire shares of CNBFB Common Stock and
shall be converted automatically into a fully-vested option to purchase shares
of TSFG Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the applicable CNBFB
Option Plan, the agreements evidencing grants thereunder, and any other
agreements between CNBFB and an optionee regarding CNBFB Options):
(1) the number of shares of TSFG Common Stock to be subject to
the new option shall be equal to the product of the number of shares of CNBFB
Common Stock subject to the original option and the Exchange Ratio, provided
that any fractional shares of TSFG Common Stock resulting from such
multiplication shall be rounded to the nearest whole share (and .5 of a share
shall be rounded up), and
(2) the exercise price per share of TSFG Common Stock under
the new option shall be equal to the exercise price per share of CNFBB Common
Stock under the original option divided by the Exchange Ratio, provided that
such exercise price shall be rounded to the nearest cent (and .5 of a cent shall
be rounded up).
(b) Prior to the Effective Time, TSFG shall reserve for issuance the
number of shares of TSFG Common Stock necessary to satisfy TSFG's obligations
under this Section. TSFG shall file with the SEC no later than ten business days
after the Effective Time, a registration statement on an appropriate form under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of TSFG Common Stock subject to options to acquire TSFG Common Stock
issued pursuant to this Section, and shall use its best efforts to maintain the
current status of the prospectus contained therein, as well as comply with
applicable state securities or "blue sky" laws, for so long as such options
remain outstanding; provided, however, that TSFG shall only be required to file
and maintain the effectiveness of such registration statement with respect to
options that are eligible to be registered on a Form S-8.
(c) Prior to the Effective Time, TSFG and CNBFB shall take all such
steps as may be required to cause any acquisitions of TSFG equity securities
(including derivative securities with respect to any TSFG equity securities) and
dispositions of CNBFB equity securities (including derivative securities with
respect to any CNBFB equity securities) resulting from the transactions
contemplated by this Agreement by each individual who is anticipated to be
subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to TSFG or who is subject to the reporting requirements of Section 16(a)
of the Exchange Act with respect to CNBFB, to be exempt under Rule 16b-3
promulgated under the Exchange Act.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules. Prior to the execution and delivery of this
Agreement, CNBFB has delivered to TSFG, and TSFG has delivered to CNBFB, a
schedule (in the case of CNBFB, the "CNBFB Disclosure Schedule," and in the case
of TSFG, the "TSFG Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more of such party's representations or warranties contained
in Article IV, in the case of CNBFB, or Article V, in the case of TSFG, or to
one or more of such party's covenants contained in Article VI (it being
understood and agreed that (i) if an item is properly set forth in one CNBFB
Disclosure Schedule, it shall be deemed to be set forth in any other relevant
CNBFB Disclosure Schedule, and (ii) if an item is properly set forth in one TSFG
Disclosure Schedule, it shall be deemed to be set forth in any other relevant
TSFG Disclosure Schedule); provided, however, that notwithstanding anything in
this Agreement to the contrary (a) no such item is required to be set forth in
the Disclosure Schedule as an exception to a representation or warranty if its
absence would not result in the related representation or warranty being deemed
untrue or incorrect under the standard established by Section 3.2, and (b) the
mere inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or would have a Material Adverse Effect with respect to
either CNBFB or TSFG, respectively.
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3.2 Standards. No representation or warranty of CNBFB contained in
Article IV or of TSFG contained in Article V shall be deemed untrue or incorrect
for any purpose under this Agreement, and no party hereto shall be deemed to
have breached a representation or warranty for any purpose under this Agreement,
in any case as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article IV, in the case of
CNBFB, or Article V, in the case of TSFG, has had or would have a Material
Adverse Effect with respect to CNBFB or TSFG, respectively.
3.3 Subsidiaries. Where the context permits, "TSFG" shall refer to TSFG
and each of its Subsidiaries and "CNBFB" shall refer to CNBFB and each of its
Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, CNBFB hereby represents and warrants to TSFG as
follows:
4.1 Corporate Organization. (a) CNBFB is a bank holding company duly
organized, validly existing and in good standing under the laws of the State of
Florida. CNBFB has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Articles of Incorporation and Bylaws of CNBFB,
copies of which have previously been made available to TSFG, are true and
correct copies of such documents as in effect as of the date hereof.
(b) Each Subsidiary of CNBFB is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization. Each Subsidiary of CNBFB has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary. The deposit accounts of each
Subsidiary of CNBFB that is a bank are insured by the FDIC through the Bank
Insurance Fund or the Savings Association Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid when due.
(c) CNBFB has no, and since December 31, 1998 CNBFB has not had any,
Subsidiaries other than those listed in Section 4.1(c) of the CNBFB Disclosure
Schedule, all of which are 100% owned. CNBFB neither owns nor controls, directly
or indirectly 5% or more of the outstanding equity securities, either directly
or indirectly, of any Person.
(d) The minute books of CNBFB contain true and correct records of all
meetings and other corporate actions held or taken since December 31, 2000 of
its stockholders and Board of Directors (including committees of the Board of
Directors).
4.2 Capitalization. The authorized capital stock of CNBFB consists of
10,000,000 shares of common stock, par value $.01 per share and 500,000 shares
of preferred stock, par value $.01 per share. As of the date hereof, (1) there
are 6,256,662 shares of CNBFB Common Stock issued and outstanding, (2) no shares
of preferred stock outstanding, and (3) no shares of CNBFB Common Stock held by
CNBFB as treasury stock. Except as set forth on Section 4.2 of the CNBFB
Disclosure Schedule, as of the date hereof, there were no shares of CNBFB Common
Stock reserved for issuance for any reason or purpose. All of the issued and
outstanding shares of CNBFB Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as set forth on
the CNBFB Disclosure Schedule, CNBFB does not have and is not bound by any
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outstanding Rights calling for the purchase or issuance of any shares of CNBFB
Common Stock or any other equity security of CNBFB or any securities
representing the right to purchase or otherwise receive any shares of CNBFB
Common Stock or any other equity security of CNBFB. On the date hereof, CNBFB
has approximately 510 shareholders of record.
4.3 Authority. CNBFB has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of CNBFB. The Board of Directors of CNBFB has directed that
this Agreement and the transactions contemplated hereby be submitted to CNBFB's
stockholders for approval at a meeting of such stockholders and, except for the
adoption of this Agreement by the requisite vote of CNBFB's stockholders, no
other corporate proceedings on the part of CNBFB are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by CNBFB and (assuming due
authorization, execution and delivery by TSFG) this Agreement constitutes a
valid and binding obligation of CNBFB, enforceable against CNBFB in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
4.4 Consents and Approvals. Except for (a) the filing with the SEC of
the S-4, including the proxy statement/prospectus therein relating to the
meeting of CNBFB's stockholders to be held in connection with the transactions
contemplated herein (the "Proxy Statement/Prospectus") and the SEC's declaration
of the effectiveness of the S-4, (b) the approval of this Agreement by the
requisite vote of the stockholders of CNBFB, (c) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
with the FDIC under the Bank Merger Act, Federal Deposit Insurance Act and the
rules and regulations of the FDIC, and approval of such applications and
notices, (d) the filing of such applications, filings, authorizations, orders
and approvals as may be required under applicable state law (the "State Banking
Approvals") and (e) any consents or approvals listed in Section 4.4 of the CNBFB
Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are required to be made by
CNBFB in connection with (1) the execution and delivery by CNBFB of this
Agreement or (2) the consummation by CNBFB of the Merger and the other
transactions contemplated hereby.
4.5 No Violations. Except as may be set forth in Section 4.5 of the
CNBFB Disclosure Schedule, neither the execution and delivery of this Agreement
by CNBFB, nor the consummation by CNBFB of the transactions contemplated hereby,
nor compliance by CNBFB with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or Bylaws of CNBFB, or
(ii) assuming that the consents and approvals referred to in Section 4.4 hereof
are duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to CNBFB or any of its
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of CNBFB under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which CNBFB is a party, or by which it or
its properties or assets may be bound or affected.
4.6 SEC Reports. CNBFB has previously made available to TSFG a true and
correct copy of each (a) final registration statement, prospectus, report,
schedule and definitive proxy statement filed since December 31, 2001 by CNBFB
with the SEC pursuant to the Securities Act or the Exchange Act (the "CNBFB
Reports") and (b) communication mailed by CNBFB to its shareholders since
10
December 31, 2001, and no such CNBFB Report (when filed and at their respective
effective time, if applicable) or communication (when mailed) contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. CNBFB has timely filed all CNBFB Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act since December 31, 2002, and each such CNBFB Report and other documents
complied in all material respects with the rules and regulations applicable
thereto when filed.
4.7 Regulatory Reports. CNBFB has timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that it was required to file since December 31, 2001 with
the Regulatory Agencies and has paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of CNBFB, no Regulatory Agency has
initiated any proceeding or, to the knowledge of CNBFB, investigation into the
business or operations of CNBFB since December 31, 2001. There is no unresolved
violation or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of CNBFB.
4.8 Financial Statements. CNBFB has previously made available to TSFG
(1) copies of the balance sheets of CNBFB as of December 31 for the fiscal years
2001 and 2002, and the related statements of earnings, stockholders' equity and
cash flows for the fiscal years 2000 through 2002, inclusive, as reported in
CNBFB's Annual Report on Form 10-K for the fiscal year ended December 31, 2002
with the SEC under the Exchange Act, accompanied by the audit reports of Arthur
Andersen LLP and PricewaterhouseCoopers LLP, independent public accountants with
respect to CNBFB, and (2) copies of unaudited balance sheets and the related
statements of earnings, stockholders' equity and cash flows of CNBFB at and for
the quarters ended March 31, 2003, June 30, 2003 and September 30, 2003 as
reported in CNBFB's Quarterly Reports on Form 10-Q for such quarters filed with
the SEC under the Exchange Act, and will make available as soon as reasonably
practicable (but in any event on or before February 28, 2004) copies of the
audited balance sheet and the related statements of earnings, stockholders'
equity and cash flows of CNBFB at and for the year ended December 31, 2003
(collectively, the "CNBFB Financial Statements"). Subject, in the case of the
unaudited statements, to audit adjustments reasonable in nature and amount, the
CNBFB Financial Statements fairly present the financial position of CNBFB as of
the dates indicated therein, and when included in the Proxy Statement/Prospectus
will fairly present the results of the operations and financial position of
CNBFB for the respective fiscal periods or as of the respective dates therein
set forth. Subject, in the case of the unaudited statements, to audit
adjustments reasonable in nature and amount, each of the CNBFB Financial
Statements (including the related notes, where applicable) complies, and CNBFB's
Financial Statements to be included in the Proxy Statement/Prospectus after the
date hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and
CNBFB's Financial Statements to be included in the Proxy Statement/Prospectus
will be, prepared in accordance with GAAP, except as indicated in the notes
thereto or, in the case of unaudited statements, as permitted by the SEC. The
books and records of CNBFB have been, and are being, maintained in accordance
with GAAP and any other applicable legal and accounting requirements.
4.9 Broker's Fees. Neither CNBFB nor any of its officers or directors
has employed any broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement, except that CNBFB has engaged, and will pay a
fee or commission to Hovde Financial LLC ("Hovde Financial") in accordance with
the terms of a letter agreement between Hovde Financial and CNBFB, a true and
correct copy of which has been previously made available by CNBFB to TSFG.
4.10 Absence of Certain Changes or Events. (a) Except as disclosed in
any CNBFB Report filed with the SEC prior to the date hereof, since December 31,
2002, (i) there has been no change or development or combination of changes or
11
developments which, individually or in the aggregate, has had a Material Adverse
Effect on CNBFB, and (ii) CNBFB has carried on its business in the ordinary
course of business consistent with past practices.
(b) Except as may be set forth in Section 4.10(b) of the CNBFB
Disclosure Schedule, since December 31, 2002 and solely with respect to
executive officers (senior vice president or above) and directors, CNBFB has not
(1) increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any such person from the amount thereof in
effect as of December 31, 2002, (2) granted any severance or termination pay to
such person or entered into any contract to make or grant any severance or
termination pay to such person, (3) paid any bonus to such person or (4) entered
into any employment- or compensation-related agreement with such person.
4.11 Legal Proceedings. Except as disclosed in any CNBFB Report, (a)
CNBFB is not a party to any, and there are no pending or, to CNBFB's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against CNBFB
or challenging the validity or propriety of the transactions contemplated by
this Agreement and (b) there is no injunction, order, judgment or decree imposed
upon CNBFB or its assets.
4.12 Taxes. Except as may be set forth in Section 4.12 of the CNBFB
Disclosure Schedule, CNBFB has (i) duly and timely filed (including applicable
extensions granted without penalty) all material Tax Returns required to be
filed at or prior to the Effective Time, and all such Tax Returns are true and
correct, and (ii) paid in full or made adequate provision in the financial
statements of CNBFB (in accordance with GAAP) for all material Taxes shown to be
due on such Tax Returns. Except as set forth in Section 4.12 of the CNBFB
Disclosure Schedule, (i) as of the date hereof CNBFB has not requested any
extension of time within which to file any Tax Returns in respect of any fiscal
year which have not since been filed and no request for waivers of the time to
assess any Taxes are pending or outstanding, and (ii) as of the date hereof,
with respect to each taxable period of CNBFB, the federal and state income Tax
Returns of CNBFB have not been audited by the IRS or appropriate state tax
authorities.
4.13 Employees. (a) Section 4.13(a) of the CNBFB Disclosure Schedule
sets forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of ERISA); "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment, termination or
severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by CNBFB, any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with CNBFB would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, for the benefit of any
employee or former employee of CNBFB, any Subsidiary or any ERISA Affiliate (the
"Plans").
(b) CNBFB has heretofore made available to TSFG with respect to each of
the Plans true and correct copies of each of the following documents, if
applicable: (i) the Plan document; (ii) the actuarial report for such Plan for
each of the last two years, (iii) the most recent determination letter from the
IRS for such Plan and (iv) the most recent summary plan description and related
summaries of material modifications.
(c) Except as may be set forth in Section 4.13(c) of the CNBFB
Disclosure Schedule: each of the Plans is in compliance with the applicable
provisions of the Code and ERISA; each of the Plans intended to be "qualified"
within the meaning of section 401(a) of the Code has received a favorable
determination letter from the IRS; no Plan has an accumulated or waived funding
deficiency within the meaning of section 412 of the Code; neither CNBFB nor any
ERISA Affiliate has incurred, directly or indirectly, any liability to or on
account of a Plan pursuant to Title IV of ERISA (other than PBGC premiums); to
the knowledge of CNBFB, no proceedings have been instituted to terminate any
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Plan that is subject to Title IV of ERISA; no "reportable event," as such term
is defined in section 4043(c) of ERISA, has occurred with respect to any Plan
(other than a reportable event with respect to which the thirty day notice
period has been waived); and no condition exists that presents a material risk
to CNBFB of incurring a liability to or on account of a Plan pursuant to Title
IV of ERISA; no Plan is a multiemployer plan within the meaning of section
4001(a)(3) of ERISA and no Plan is a multiple employer plan as defined in
Section 413 of the Code; and there are no pending, or to the knowledge of CNBFB,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto.
(d) Except as may be set forth in Section 4.13(d) of the CNBFB
Disclosure Schedule, since December 31, 2002, CNBFB has not (i) suffered any
strike, work stoppage, slow-down, or other labor disturbance, (ii) been a party
to a collective bargaining agreement, contract or other agreement or
understanding with a labor union or organization, or (iii) had any union
organizing activities.
(e) Section 4.13(e) of the CNBFB Disclosure Schedule sets forth all
employment contracts, plans, programs, agreements or other benefits which could
be subject to Section 280G of the Code.
4.14 CNBFB Information. The information relating to CNBFB which is
provided to TSFG by CNBFB for inclusion in the registration statement on Form
S-4 (the "S-4") in which the Proxy Statement/Prospectus will be included as a
prospectus, or in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Proxy
Statement/Prospectus (to the extent it relates to CNBFB) will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
4.15 Compliance with Applicable Law. CNBFB holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
businesses under and pursuant to all, and has complied with and is not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
CNBFB, and CNBFB has not received notice of any violations of any of the above.
4.16 Certain Contracts. (a) Except as set forth in Section 4.16(a) of
the CNBFB Disclosure Schedule, CNBFB is not a party to or bound by any contract
(whether written or oral) (i) with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the consummation of the
transactions contemplated by this Agreement, will (either alone or upon the
occurrence of any additional acts or events) result in any payment or benefits
(whether of severance pay or otherwise) becoming due, or the acceleration or
vesting of any rights to any payment or benefits, from TSFG, CNBFB, the
Surviving Corporation or any of their respective Subsidiaries to any officer,
director, employee or consultant of CNBFB, (iii) which is a material contract
(as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed
after the date hereof, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not terminable on 90
days or less notice involving the payment of more than $50,000 per annum, or (v)
which materially restricts the conduct of any line of business by CNBFB. Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.16(a), whether or not set forth in Section 4.16(a) of the CNBFB
Disclosure Schedule, is referred to herein as a "CNBFB Contract." CNBFB has
previously delivered or made available to TSFG true and correct copies of each
contract, arrangement, commitment or understanding of the type described in this
Section 4.16(a).
(b) Except as set forth in Section 4.16(b) of the CNBFB Disclosure
Schedule, (i) each CNBFB Contract is valid and binding and in full force and
effect, (ii) CNBFB has performed all obligations required to be performed by it
to date under each CNBFB Contract, (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of CNBFB under any CNBFB Contract, and (iv) no other party
to any CNBFB Contract is, to the knowledge of CNBFB, in default in any respect
thereunder.
4.17 Agreements with Regulatory Agencies. Except as may be set forth in
Section 4.17 of the CNBFB Disclosure Schedule, CNBFB is not subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
13
or directive by, or is a recipient of any extraordinary supervisory letter from,
or has adopted any board resolutions at the request of (each, whether or not set
forth on Section 4.17 of the CNBFB Disclosure Schedule, a "Regulatory
Agreement"), any Regulatory Agency that restricts the conduct of its business or
that in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has CNBFB been advised by any Regulatory Agency
that it is considering issuing or requesting any Regulatory Agreement.
4.18 Environmental Matters. Except as may be set forth in Section 4.18
of the CNBFB Disclosure Schedule:
(a) CNBFB and, to the knowledge of CNBFB, each of the Participation
Facilities and the Loan Properties, are in compliance with all Environmental
Laws.
(b) To the knowledge of CNBFB, there is no suit, claim, action or
proceeding pending or threatened before any Governmental Entity or other forum
in which CNBFB, any Participation Facility or any Loan Property, has been or,
with respect to threatened proceedings, may be, named as a defendant (x) for
alleged noncompliance (including by any predecessor) with any Environmental
Laws, or (y) relating to the release, threatened release or exposure to any
Hazardous Material whether or not occurring at or on a site owned, leased or
operated by CNBFB, any Participation Facility or any Loan Property.
(c) To the knowledge of CNBFB, during the period of (x) CNBFB's
ownership or operation of any of its current or former properties, (y) CNBFB's
participation in the management of any Participation Facility, or (z) CNBFB's
interest in a Loan Property, there has been no release of Hazardous Materials
in, on, under or affecting any such property. To the knowledge of CNBFB, prior
to the period of (x) CNBFB's ownership or operation of any of its current or
former properties, (y) CNBFB's participation in the management of any
Participation Facility, or (z) CNBFB's interest in a Loan Property, there was no
release of Hazardous Materials in, on, under or affecting any such property,
Participation Facility or Loan Property.
4.19 Opinion. Prior to the execution of this Agreement, CNBFB has
received an opinion from Hovde Financial to the effect that, as of the date
thereof and based upon and subject to the matters set forth therein, the Merger
Consideration to be received by the stockholders of CNBFB is fair to such
stockholders from a financial point of view. Such opinion has not been amended
or rescinded as of the date hereof.
4.20 Approvals. As of the date hereof, CNBFB knows of no fact or
condition relating to CNBFB that would prevent all regulatory approvals required
for the consummation of the transactions contemplated hereby (including, without
limitation, the Merger) from being obtained.
4.21 Loan Portfolio. (a) Except as may be set forth in Section 4.21 of
the CNBFB Disclosure Schedule, CNBFB is not a party to any written or oral (i)
loan agreement, note or borrowing arrangement (including, without limitation,
leases, credit enhancements, commitments, guarantees or interest-bearing assets)
(collectively, "Loans"), other than Loans the unpaid principal balance of which
does not exceed $100,000, under the terms of which the obligor was, as of
November 30, 2003, over 90 days delinquent in payment of principal or interest
or in default of any other provision, or (ii) Loan with any director, executive
officer or 5% or greater stockholder of CNBFB, or to the knowledge of CNBFB, any
person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.21 of the CNBFB Disclosure Schedule
sets forth (i) all of the Loans of CNBFB that as of November 30, 2003, were
classified by any bank examiner (whether regulatory or internal) as "Other Loans
Specially Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss,"
"Classified," "Criticized," "Credit Risk Assets," "Concerned Loans," "Watch
List" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the borrower
thereunder, and (ii) each asset of CNBFB that as of November 30, 2003, was
classified as "Other Real Estate Owned" and the book value thereof.
(b) Each Loan in original principal amount in excess of $100,000 (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected and
(iii) is the legal, valid and binding obligation of the obligor named therein,
14
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
4.22 Property. Except as set forth in Section 4.22 of the CNBFB
Disclosure Schedule, CNBFB has good and marketable title free and clear of all
liens, encumbrances, mortgages, pledges, charges, defaults or equitable
interests to all of the properties and assets, real and personal, tangible or
intangible, which are reflected on the consolidated balance sheet of CNBFB as of
December 31, 2002 or acquired after such date, except (i) liens for taxes not
yet due and payable or contested in good faith by appropriate proceedings, (ii)
pledges to secure deposits and other liens incurred in the ordinary course of
business, (iii) such imperfections of title, easements and encumbrances, if any,
as do not interfere with the use of the respective property as such property is
used on the date hereof, (iv) for dispositions of or encumbrances on such
properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which CNBFB, as lessee, leases real or personal property are
valid and enforceable in accordance with their respective terms and CNBFB is
not, nor, to the knowledge of CNBFB, is any other party thereto, in default
thereunder.
4.23 Reorganization. As of the date hereof, CNBFB has no reason to
believe that the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
4.24 State Takeover Laws and Charter Provisions. CNBFB has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any restrictive provision of (i) any applicable moratorium, control share, fair
price, business combination, or other anti-takeover laws and regulations, or
(ii) the Articles of Incorporation or Bylaws of CNBFB.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TSFG
Subject to Article III, TSFG hereby represents and warrants to CNBFB as
follows:
5.1 Corporate Organization. (a) TSFG is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
Carolina. TSFG has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. TSFG is duly registered as a bank holding company under
the BHC Act. The Articles of Incorporation and Bylaws of TSFG, copies of which
have previously been made available to CNBFB, are true and correct copies of
such documents as in effect as of the date hereof.
(b) Each Subsidiary of TSFG is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization. Each Subsidiary of TSFG has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary. The deposit accounts of each
Subsidiary of TSFG that is a bank are insured by the FDIC through the Bank
Insurance Fund or the Savings Association Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid when due.
(c) The minute books of TSFG contain true and correct records of all
meetings and other corporate actions held or taken since December 31, 2000 of
its stockholders and Board of Directors (including committees of its Board of
Directors).
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5.2 Capitalization. The authorized capital stock of TSFG consists of 100,000,000
shares of TSFG Common Stock and 10,000,000 shares of preferred stock, no par
value per share ("TSFG Preferred Stock"). As of the date hereof, there were
approximately 59,120,802 shares of TSFG Common Stock and no shares of TSFG
Preferred Stock issued and outstanding, and no shares of TSFG Common Stock held
in TSFG's treasury. All of the issued and outstanding shares of TSFG Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. The shares of TSFG Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at the
Effective Time, all such shares will be fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
5.3 Authority; No Violation. (a) TSFG has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of TSFG, and no other corporate
proceedings on the part of TSFG are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by TSFG and (assuming due authorization,
execution and delivery by CNBFB) this Agreement constitutes a valid and binding
obligation of TSFG, enforceable against TSFG in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by TSFG, nor
the consummation by TSFG of the transactions contemplated hereby, nor compliance
by TSFG with any of the terms or provisions hereof, will (i) violate any
provision of the Articles of Incorporation or Bylaws of TSFG, or the articles of
incorporation or bylaws or similar governing documents of any of its
Subsidiaries or (ii) assuming that the consents and approvals referred to in
Section 5.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to TSFG or
any of its Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
TSFG or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which TSFG or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected.
5.4 Consents and Approvals. Except for (a) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act,
and approval of such applications and notices, (b) the filing with the SEC and
declaration of effectiveness of the S-4, (c) the filing of the Articles of
Merger with the Florida Secretary of State and the South Carolina Secretary of
State, (d) the filing of applications and notices, as applicable, with the FDIC
under the Bank Merger Act, Federal Deposit Insurance Act and the rules and
regulations of the FDIC, and approval of such applications and notices, (e) the
State Banking Approvals, (f) such filings and approvals as are required to be
made or obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of TSFG Common Stock pursuant to this
Agreement, and (g) approval of the listing of the TSFG Common Stock to be issued
in the Merger on the NASDAQ/NMS, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are required
to be made by TSFG in connection with (1) the execution and delivery by TSFG of
this Agreement and (2) the consummation by TSFG of the Merger and the other
transactions contemplated hereby.
5.5 SEC Reports. TSFG has previously made available to CNBFB a true and
correct copy of each (a) final registration statement, prospectus, report,
schedule and definitive proxy statement filed since December 31, 2001 by TSFG
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with the SEC pursuant to the Securities Act or the Exchange Act (the "TSFG
Reports") and (b) communication mailed by TSFG to its shareholders since
December 31, 2001, and no such TSFG Report (when filed and at their respective
effective time, if applicable) or communication (when mailed) contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. TSFG has timely filed all TSFG Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act since December 31, 2002, and each such TSFG Report and other documents
complied in all material respects with the rules and regulations applicable
thereto when filed.
5.6 Regulatory Reports. TSFG has timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that it was required to file since December 31, 2001 with
the Regulatory Agencies and has paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of TSFG, no Regulatory Agency has
initiated any proceeding or, to the knowledge of TSFG, investigation into the
business or operations of TSFG since December 31, 2001. There is no unresolved
violation or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of TSFG.
5.7 Financial Statements. TSFG has previously made available to CNBFB
(1) copies of the consolidated balance sheets of TSFG and its Subsidiaries as of
December 31 for the fiscal years 2002 and 2001 and the related consolidated
statements of income, changes in shareholders' equity and comprehensive income,
and cash flows for the fiscal years 2000 through 2002, inclusive, as reported in
TSFG's Annual Report on Form 10-K for the fiscal year ended December 31, 2002
filed with the SEC under the Exchange Act, accompanied by the audit report of
KPMG LLP, independent public accountants with respect to TSFG, and (2) copies of
unaudited consolidated balance sheets and the related consolidated statements of
earnings, stockholders' equity and cash flows of TSFG at and for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003 as reported in TSFG's
Quarterly Reports on Form 10-Q for such quarters filed with the SEC under the
Exchange Act, and will make available as soon as reasonably practicable (but in
any event on or before February 28, 2004) copies of the audited balance sheet
and the related statements of earnings, stockholders' equity and cash flows of
TSFG at and for the year ended December 31, 2003 (collectively, the "TSFG
Financial Statements"). Subject, in the case of the unaudited statements, to
audit adjustments reasonable in nature and amount, the TSFG Financial Statements
fairly present the financial position of TSFG as of the dates indicated therein,
and when included in the Proxy Statement/Prospectus will fairly present the
results of the operations and financial position of TSFG for the respective
fiscal periods or as of the respective dates therein set forth. Subject, in the
case of the unaudited statements, to audit adjustments reasonable in nature and
amount, each of the TSFG Financial Statements (including the related notes,
where applicable) complies, and TSFG's Financial Statements to be included in
the Proxy Statement/Prospectus after the date hereof will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and TSFG's Financial Statements to be
included in the Proxy Statement/Prospectus will be, prepared in accordance with
GAAP, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by the SEC. The books and records of TSFG have been,
and are being, maintained in accordance with GAAP and any other applicable legal
and accounting requirements.
5.8 Broker's Fees. TSFG has not employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, except
that TSFG has engaged JP Morgan in accordance with the terms of a letter
agreement between JP Morgan and TSFG, a true and correct copy of which has been
previously made available by TSFG to CNBFB.
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5.9 Absence of Certain Changes or Events. Except as disclosed in any
TSFG Report filed with the SEC prior to the date hereof, since December 31,
2002, there has been no change or development or combination of changes or
developments which, individually or in the aggregate, has had a Material Adverse
Effect on TSFG.
5.10 Legal Proceedings. (a) Except as disclosed in any TSFG Report,
neither TSFG nor any of its Subsidiaries is a party to any and there are no
pending or, to TSFG's knowledge, threatened, legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against TSFG or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment or decree imposed upon
TSFG, any of its Subsidiaries or the assets of TSFG or any of its Subsidiaries.
5.11 TSFG Information. The information relating to TSFG and its
Subsidiaries to be contained in the Proxy Statement/Prospectus and the S-4, or
in any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy
Statement/Prospectus (except for such portions thereof that relate to CNBFB)
will comply in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder. The S-4 (except for such portions thereof
that relate to CNBFB) will comply in all material respects with the provisions
of the Securities Act and the rules and regulations thereunder.
5.12 Compliance with Applicable Law. TSFG and each of its Subsidiaries
holds all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to all, and
have complied with and are not in default in any respect under any, applicable
law, statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to TSFG or any of its Subsidiaries and neither TSFG
nor any of its Subsidiaries has received notice of any violations of any of the
above.
5.13 Ownership of CNBFB Common Stock. Except for TSFG's ownership of
125,000 shares of CNBFB Common Stock, neither TSFG nor any of its affiliates or
associates (as such terms are defined under the Exchange Act) (i) beneficially
owns, directly or indirectly, or (ii) is a party to any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting or disposing of
any shares of capital stock of CNBFB (other than Trust Account Shares).
5.14 Approvals. As of the date hereof, TSFG knows of no fact or
condition relating to TSFG that would prevent all regulatory approvals required
for the consummation of the transactions contemplated hereby (including, without
limitation, the Merger) from being obtained.
5.15 Reorganization. As of the date hereof, TSFG has no reason to
believe that the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
5.16 Taxes. TSFG has (i) duly and timely filed (including applicable
extensions granted without penalty) all material Tax Returns required to be
filed at or prior to the Effective Time, and all such Tax Returns are true and
correct, and (ii) paid in full or made adequate provision in the financial
statements of TSFG (in accordance with GAAP) for all material Taxes shown to be
due on such Tax Returns.
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of CNBFB. During the period from the date hereof and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of TSFG, CNBFB
shall carry on its business in the ordinary course consistent with past
practice. Without limiting the generality of the foregoing, and except as set
forth in Section 6.1 of the CNBFB Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by TSFG, CNBFB shall
not:
(a) except for regular quarterly dividends consistent with past
practice, which may be increased by $0.01 per share for the regular dividends
payable May 2004, declare or pay any dividends on, or make other distributions
in respect of, any of its capital stock;
(b) (i) repurchase, redeem or otherwise acquire (except for the
acquisition of Trust Account Shares and DPC Shares) any shares of the capital
stock of CNBFB, or any securities convertible into or exercisable for any shares
of the capital stock of CNBFB, (ii) split, combine or reclassify any shares of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) except pursuant to Rights referenced on the CNBFB
Disclosure Schedule, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing (including additional Rights similar to those set forth on the CNBFB
Disclosure Schedule);
(c) amend its Articles of Incorporation, Bylaws or other similar
governing documents;
(d) make any capital expenditures other than those which (i) are made
in the ordinary course of business or are necessary to maintain existing assets
in good repair and (ii) in any event are in an amount of no more than $100,000
in the aggregate;
(e) enter into any new line of business;
(f) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire any assets, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings or in the ordinary
course of business consistent with past practices;
(g) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
(h) change its methods of accounting in effect at December 31, 2002,
except as required by changes in GAAP or regulatory accounting principles as
concurred to by CNBFB's independent auditors;
(i) (i) except as required by applicable law, as set forth in Section
7.8, or as required to maintain qualification pursuant to the Code, adopt,
amend, or terminate any employee benefit plan (including, without limitation,
any Plan) or any agreement, arrangement, plan or policy between CNBFB or one or
more of its current or former directors, officers or employees or any
"affiliate" of any such person (as such term is used in Rule 12b-2 under the
Exchange Act), or (ii) except for normal increases in the ordinary course of
business consistent with past practice or except as required by applicable law,
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any Plan or agreement as
in effect as of the date hereof (including, without limitation, the granting of
any stock options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares);
(j) other than activities in the ordinary course of business consistent
with past practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements;
(k) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(l) file any application to relocate or terminate the operations of any
of its banking offices;
(m) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any contract, agreement or lease for
goods, services or office space, involving payments thereunder by CNBFB in
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excess of $100,000 per year, to which CNBFB is a party or by which CNBFB or its
properties is bound, other than the renewal in the ordinary course of business
of any lease the term or option to renew of which expires prior to the Closing
Date;
(n) take or cause to be taken any action which would or could
reasonably be expected to prevent the Merger from qualifying as a reorganization
under Section 368(a) of the Code; or
(o) agree to do any of the foregoing.
6.2 Covenants of TSFG. Except as otherwise contemplated by this
Agreement or consented to in writing by CNBFB, TSFG shall not, and shall not
permit any of its Subsidiaries to:
(a) except for regular quarterly dividends consistent with past
practice, declare or pay any dividends on or make any other distributions in
respect of any of its capital stock;
(b) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied; (c) take any action or enter into any
agreement that could reasonably be expected to jeopardize or materially delay
the receipt of any Requisite Regulatory Approval (as defined in Section 8.1(c));
(d) take or cause to be taken any action which would or could reasonably be
expected to prevent the Merger from qualifying as a reorganization under Section
368(a) of the Code; or (e) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. TSFG, with the cooperation of CNBFB, shall
promptly prepare and file with the SEC the S-4. Each of CNBFB and TSFG shall use
its reasonable best efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and CNBFB shall
thereafter mail the Proxy Statement/Prospectus to its stockholders. TSFG shall
also use its reasonable best efforts to obtain all necessary state securities
law or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). CNBFB and TSFG shall have
the right to review in advance, and to the extent practicable each will consult
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information relating to CNBFB or TSFG, as the case may
be, and any of TSFG's Subsidiaries, which appears in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) TSFG and CNBFB shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement/Prospectus, the S-4 or any other
statement, filing, notice or application made by or on behalf of TSFG, CNBFB or
their Subsidiaries to any Governmental Entity in connection with the Merger and
the other transactions contemplated by this Agreement.
(d) TSFG and CNBFB shall promptly furnish each other with copies of
written communications received by TSFG or CNBFB, as the case may be, or any of
20
their respective Affiliates or Associates (as such terms are defined in Rule
12b-2 under the Exchange Act as in effect on the date hereof) from, or delivered
by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated hereby.
7.2 Access to Information. (a) CNBFB and TSFG will each keep the other
advised of all material developments relevant to their respective businesses,
and to the consummation of the Merger, and each shall provide to the other, upon
request, reasonable details of any such development. Upon reasonable notice,
each party shall afford to representatives of the other party reasonable access,
during normal business hours during the period prior to the Effective Time, to
all of their respective properties, books, contracts, commitments and records,
and during such period, shall make available all information concerning their
respective businesses as may be reasonably requested (except that the parties
shall take into account in determining the reasonableness of due diligence
requests the fact that TSFG is a public company which is substantially larger
than CNBFB and that TSFG is issuing shares to CNBFB shareholders as compared to
selling its business). The other provisions of this Section notwithstanding,
neither party nor any of its Subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize any attorney-client privilege
or contravene any law (including without limitation laws regarding exchange of
information), rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date hereof.
(b) All non-public information furnished to TSFG or CNBFB by the other
party hereto pursuant to Section 7.2(a) (other than (i) information already in
the receiving party's possession, or (ii) information that is or becomes
generally available to the public other than as a result of a disclosure by the
receiving party or any of its directors, officers, employees, agents or
advisors, or (iii) information that becomes available to the receiving party on
a non-confidential basis from a source other than the disclosing party or its
advisors, provided that such source is not known by the receiving party after
due inquiry to be bound by a confidentiality agreement with or other obligation
of secrecy to the disclosing party) shall be kept confidential, and the parties
shall maintain, and shall cause each of their respective directors, officers,
attorneys and advisors to maintain, the confidentiality of all information
obtained hereunder which is not otherwise publicly disclosed by the other party,
said undertakings with respect to confidentiality to survive any termination of
this Agreement. In the event of the termination of this Agreement, each party
shall return to the other party upon request all confidential information
previously furnished in connection with the transactions contemplated by this
Agreement.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
7.3 Certain Actions. (a) Except with respect to this Agreement and the
transactions contemplated hereby, neither CNBFB nor any of its directors,
officers, agents, affiliates (as such term is used in Rule 12b-2 under the
Exchange Act) or representatives (collectively, "Representatives") shall,
directly or indirectly, initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries with respect to or
the making of any Acquisition Proposal.
(b) Notwithstanding anything herein to the contrary, CNBFB and its
Board of Directors and Representatives shall be permitted (i) to comply with
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal, (ii) to engage in any discussions or negotiations with, or
provide any information to, any person in response to an unsolicited written
Acquisition Proposal by any such person, if and only to the extent that (a)
CNBFB's Board of Directors concludes in good faith and consistent with its
fiduciary duties to CNBFB's stockholders under applicable law that such
Acquisition Proposal would reasonably be expected to result in a Superior
Proposal, (b) prior to providing any information or data to any person in
connection with such Acquisition Proposal by any such person, CNBFB's Board of
Directors receives from such person an executed confidentiality agreement, and
(c) prior to providing any information or data to any person or entering into
discussions or negotiations with any person, CNBFB's Board of Directors notifies
21
TSFG promptly of any inquiries, proposals, or offers respecting such Acquisition
Proposal received by, any such information requested from, or any such
discussions or negotiations sought to be initiated or continued with, any of its
Representatives indicating, in connection with such notice, the name of such
person and the material terms and conditions of any inquiries, proposals or
offers respecting such Acquisition Proposal.
(c) CNBFB agrees that it will, and will cause its Representatives to,
immediately cease and cause to be terminated any activities, discussions, or
negotiations existing as of the date hereof with any parties conducted
heretofore with respect to any Acquisition Proposal.
7.4 Stockholder Meeting. CNBFB shall take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders to be held
as soon as is reasonably practicable after the date on which the S-4 becomes
effective for the purpose of voting upon the approval of this Agreement and the
consummation of the transactions contemplated hereby. CNBFB shall, through its
Board of Directors, subject to the fiduciary duties of such board (including
those with respect to a Superior Proposal), recommend to its stockholders
approval of this Agreement and the transactions contemplated hereby and such
other matters as may be submitted to its stockholders in connection with this
Agreement.
7.5 Legal Conditions to Merger. Each of TSFG and CNBFB shall, and shall
cause its Subsidiaries to, use their reasonable best efforts (a) to take, or
cause to be taken, all actions necessary, proper or advisable to comply promptly
with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VIII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by CNBFB or TSFG in connection with the Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions of
such consent, authorization, order or approval.
7.6 Affiliates. CNBFB shall use its reasonable best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of CNBFB to deliver to TSFG, as
soon as practicable after the date hereof, a written agreement, in the form of
Exhibit A hereto.
7.7 Nasdaq Listing. TSFG shall use its best efforts to cause the shares
of TSFG Common Stock to be issued in the Merger to be approved for listing on
the NASDAQ/NMS as of the Effective Time.
7.8 Employee Benefit Plans; Existing Agreements. (a) As of the
Effective Time, the employees of CNBFB shall be eligible to participate in
employee benefit plans and severance plans of TSFG or its Subsidiaries in which
similarly situated employees of TSFG or its Subsidiaries participate, to the
same extent that similarly situated employees of TSFG or its Subsidiaries
participate (it being understood that inclusion of CNBFB's employees in TSFG's
employee benefit plans may occur at different times with respect to different
plans).
(b) With respect to each TSFG Plan for which length of service is taken
into account for any purpose (including TSFG's severance plan), service with
CNBFB (or predecessor employers to the extent CNBFB provides past service
credit) shall be treated as service with TSFG for purposes of determining
eligibility to participate, vesting, and entitlement to benefits, including for
severance benefits and vacation entitlement (but not for accrual of defined
benefit pension benefits); provided however, that such service shall not be
recognized to the extent that such recognition would result in a duplication of
benefits. Such service also shall apply for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the application of any
preexisting condition limitations. Each TSFG Plan shall waive pre-existing
condition limitations to the same extent waived under the applicable CNBFB Plan.
CNBFB's employees shall be given credit for amounts paid under a corresponding
benefit plan during the same period for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the TSFG Plan.
(c) As of the Effective Time, TSFG shall assume and honor and shall
cause the appropriate Subsidiaries of TSFG to assume and to honor in accordance
with their terms all written agreements listed in Section 4.13(a) of the CNBFB
22
Disclosure Schedule (the "Benefit Agreements"). TSFG acknowledges and agrees
that the Merger will constitute a merger, sale or a change in control of CNBFB
for all purposes under such agreements. The provisions of this Section 7.8(c)
are intended to be for the benefit of, and shall be enforceable by, each
director, officer or employee that is a party to any Benefit Agreement.
(d) TSFG hereby acknowledges that in connection with the Merger it will
succeed to all the rights and obligations of CNBFB under the employment
agreements set forth on Section 4.13 of the CNBFB Disclosure Schedule.
7.9 Indemnification of CNBFB Directors and Officers. TSFG or a TSFG
Subsidiary shall provide and keep in force for a period of six years after the
Effective Time directors' and officers' liability insurance providing coverage
to directors and officers of CNBFB for acts or omissions occurring prior to the
Effective Time. Such insurance shall provide at least the same coverage and
amounts as contained in CNBFB's policy on the date hereof; provided, that in no
event shall the annual premium on such policy exceed 200% of the annual premium
payments on CNBFB's policy in effect as of December 31, 2003 (the "Maximum
Amount"). If the amount of the premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, TSFG shall use its reasonable
best efforts to maintain the most advantageous policies of directors' and
officers' liability insurance obtainable for a premium equal to the Maximum
Amount and CNBFB shall cooperate with TSFG in such efforts in all reasonable
respects. Notwithstanding the foregoing, TSFG further agrees to indemnify all
individuals who are or have been officers, directors or employees of CNBFB prior
to the Effective Time from any acts or omissions in such capacities prior to the
Effective Time, to the extent that such indemnification is provided pursuant to
the Articles of Incorporation or Bylaws of CNBFB on the date hereof and is
permitted under the FBCA and SCBCA.
7.10 Additional Agreements. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement shall take all such necessary action as may be reasonably requested by
TSFG or CNBFB.
7.11 Appointment of Director. Effective as of the Effective Time, TSFG
shall cause its Board of Directors to be expanded by one member, and shall
appoint a current CNBFB director selected by TSFG (the "CNBFB Director") to fill
the vacancy created by such increase.
7.12 Bank Board. For at least three years following Closing, TSFG shall
cause each individual who is currently serving as a director of CNBFB (other
than the CNBFB Director), if such persons are willing to so serve, to be elected
or appointed as Mercantile Bank Board members and/or advisory board members.
7.13 Accounting Matters. CNBFB shall cooperate with TSFG concerning (i)
accounting and financial matters necessary or appropriate to facilitate the
Merger (taking into account TSFG's policies, practices and procedures),
including, without limitation, issues arising in connection with record keeping,
loan classification, valuation adjustments, levels of loan loss reserves and
other accounting practices, and (ii) CNBFB's lending, investment or
asset/liability management policies; provided, that any action taken pursuant to
this Section 7.13 shall not be deemed to constitute or result in the breach of
any representation or warranty of CNBFB contained in this Agreement.
7.14 Tax Opinion. TSFG and CNBFB shall use their respective reasonable
best efforts to obtain the tax opinion contemplated by Section 8.1(f).
7.15 Exemption from Section 16. Prior to the Effective Time, the Board
of Directors of TSFG, or an appropriate committee of non-employee directors
23
thereof, shall adopt a resolution consistent with the interpretive guidance of
the SEC so that the acquisition by any officer or director of CNBFB who may
become a covered person of TSFG for purposes of Section 16 of the Exchange Act
and the rules and regulations thereunder ("Section 16") of TSFG Common Stock or
options to acquire TSFG Common Stock pursuant to this Agreement and the Merger
shall be an exempt transaction for purposes of Section 16.
7.16 Execution and Authorization of Bank Merger Agreement. As soon as
reasonably practicable after the date hereof, (a) TSFG shall (i) cause the Board
of Directors of Mercantile Bank to approve a merger agreement providing for the
merger of CNB National Bank into Mercantile Bank (the "Bank Merger Agreement"),
(ii) cause Mercantile Bank to execute and deliver the Bank Merger Agreement, and
(iii) approve the Bank Merger Agreement as the sole stockholder of Mercantile
Bank, and (b) CNBFB shall (i) cause the Board of Directors of CNB National Bank
to approve the Bank Merger Agreement, (ii) cause CNB National Bank to execute
and deliver the Bank Merger Agreement, and (iii) approve the Bank Merger
Agreement as the sole stockholder of CNB National Bank.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the outstanding shares of CNBFB
Common Stock under applicable law.
(b) Listing of Shares. The shares of TSFG Common Stock which shall be
issued to the stockholders of CNBFB upon consummation of the Merger shall have
been authorized for listing on the NASDAQ/NMS.
(c) Other Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby (including the Merger) shall have been
obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired (all such approvals and the
expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the S-4 shall have been issued
and no proceedings for that purpose shall have been initiated or threatened by
the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger (an
"Injunction") shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger.
(f) Federal Tax Opinion. TSFG and CNBFB shall have received a written
opinion from McGuireWoods LLP, counsel to CNBFB ("CNBFB's counsel"), in form and
substance reasonably satisfactory to TSFG and CNBFB, dated the Effective Time,
substantially to the effect that on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, CNBFB's Counsel may require and rely upon representations and
covenants, including those contained in certificates of officers of TSFG, CNBFB
and others, reasonably satisfactory in form and substance to such counsel.
8.2 Conditions to Obligations of TSFG. The obligation of TSFG to effect
the Merger is also subject to the satisfaction or waiver by TSFG at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of CNBFB set forth in this Agreement (other than
those set forth in Section 4.2) shall be true and correct as of the date hereof
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and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; and (ii) the representations and warranties of CNBFB set forth in Section
4.2 of this Agreement shall be true and correct in all material respects
(without giving effect to Section 3.2 of this Agreement) as of the date hereof
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date. TSFG shall have received a certificate signed on behalf of CNBFB by the
Chief Executive Officer or the Chief Financial Officer of CNBFB to the foregoing
effect.
(b) Performance of Obligations of CNBFB. CNBFB shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and TSFG shall have received a
certificate signed on behalf of CNBFB by the Chief Executive Officer or the
Chief Financial Officer of CNBFB to such effect.
(c) Conditions Met. TSFG shall have received a certificate of an
executive officer of CNBFB stating that to his knowledge, each of the conditions
set forth in this Article VIII have been met.
(d) No Revocation. K. C. Trowell shall not have revoked his
Noncompetition and Severance Agreement executed on the date hereof, as
contemplated in Section 6 thereof.
8.3 Conditions to Obligations of CNBFB. The obligation of CNBFB to
effect the Merger is also subject to the satisfaction or waiver by CNBFB at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of TSFG set forth in this Agreement (other than
those set forth in Section 5.2) shall be true and correct as of the date hereof
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; and (ii) the representations and warranties of TSFG set forth in Section
5.2 of this Agreement shall be true and correct in all material respects
(without giving effect to Section 3.2 of this Agreement) as of the date hereof
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date. CNBFB shall have received a certificate signed on behalf of TSFG by the
Chief Executive Officer or the Chief Financial Officer of TSFG to the foregoing
effect.
(b) Performance of Obligations of TSFG. TSFG shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and CNBFB shall have received a
certificate signed on behalf of TSFG by the Chief Executive Officer or the Chief
Financial Officer of TSFG to such effect.
(c) Conditions Met. CNBFB shall have received a certificate of an
executive officer of TSFG stating that to his knowledge, each of the conditions
set forth in this Article VIII have been met.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of CNBFB:
(a) by mutual consent of CNBFB and TSFG in a written instrument, if the
Board of Directors of each so determines by a vote of a majority of the members
of its entire Board;
(b) by either TSFG or CNBFB upon written notice to the other party (i)
30 days after the date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 30-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
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failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
(c) by either TSFG or CNBFB if the Merger shall not have been
consummated on or before the later of (i) July 31, 2004, or (ii) if the S-4 is
given a full review by the SEC, September 30, 2004, unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either TSFG or CNBFB if the approval of the stockholders of
CNBFB required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
such stockholders or at any adjournment or postponement thereof;
(e) by either TSFG or CNBFB (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within 30 days following written notice
to the party committing such breach, or which breach, by its nature, cannot be
cured prior to the Closing; provided, however, that neither party shall have the
right to terminate this Agreement pursuant to this Section 9.1(e) unless the
breach of representation or warranty, together with all other such breaches,
would entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 8.2(a) (in the case of a breach
of representation or warranty by CNBFB) or Section 8.3(a) (in the case of a
breach of representation or warranty by TSFG);
(f) by either TSFG or CNBFB (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of the other
party, which breach shall not have been cured within 30 days following receipt
by the breaching party of written notice of such breach from the other party
hereto, or which breach, by its nature, cannot be cured prior to the Closing; or
(g) by CNBFB, in the event that the Board of Directors of CNBFB
determines in good faith, after consultation with outside counsel, that in light
of a Superior Proposal it is necessary to terminate this Agreement in order to
comply with its fiduciary duties to CNBFB and to CNBFB's shareholders under
applicable law; provided, however, that the Board of Directors of CNBFB may
terminate this Agreement pursuant to this Section 9.1(g) solely in order to
concurrently enter into a letter of intent, agreement in principle or an
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to a Superior Proposal; provided further, however, that this
Agreement may be terminated pursuant to this Section 9.1(g) only after the fifth
day following TSFG's receipt of written notice advising TSFG that the Board of
Directors of CNBFB is prepared to accept a Superior Proposal, and only if,
during such five-day period, if TSFG so elects, CNBFB and its advisors shall
have negotiated in good faith with TSFG to make such adjustments in the terms
and conditions of this Agreement as would enable CNBFB to proceed with the
transactions contemplated herein on such adjusted terms.
9.2 Effect of Termination.
(a) In the event of termination of this Agreement by either TSFG or
CNBFB as provided in Section 9.1, this Agreement shall forthwith become void and
have no effect except (i) Sections 7.2(b), 9.2 and 10.3 shall survive any
termination of this Agreement and (ii) that, notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
(b) If CNBFB terminates this Agreement pursuant to Section 9.1(g),
CNBFB shall pay to TSFG a termination fee equal to $5 million (the "Termination
Fee Amount") by wire transfer of same day funds on the date of termination.
(c) In the event that an Acquisition Proposal with respect to CNBFB
shall have been made known to CNBFB and shall have been publicly announced or
otherwise become public, or shall have been made to the shareholders of CNBFB,
and thereafter (x) this Agreement is terminated by either TSFG or CNBFB pursuant
to either (i) Section 9.1(c) hereof and prior to such termination the
stockholders of CNBFB shall not have previously approved the Merger, or (ii)
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Section 9.1(d) hereof as a result of the failure of the stockholders of CNBFB to
approve the Merger, and (y) within twelve months of such termination (A) CNBFB
enters into any Acquisition Agreement providing for any transaction described in
clause (i)(a) or clause (i)(b) of the definition of "Superior Proposal," other
than any such transaction involving a merger, consolidation or similar
transaction as to which the common stockholders of CNBFB immediately prior
thereto own in the aggregate more than 50% of the common stock of the surviving
or transferee corporation or its publicly-held parent corporation immediately
following consummation thereof, or (B) any person shall acquire beneficial
ownership of or the right to acquire 50% or more of the outstanding shares of
CNBFB Common Stock, then upon the first occurrence of either of the events
contemplated by clause (y) CNBFB shall pay TSFG a termination fee equal to the
Termination Fee Amount by wire transfer of same day funds.
(d) CNBFB agrees that the agreements contained in Section 9.2(b) and
9.2(c) are integral parts of the transactions contemplated by this Agreement and
constitute liquidated damages and not a penalty.
9.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of
either CNBFB or TSFG; provided, however, that after any approval of the
transactions contemplated by this Agreement by CNBFB's stockholders, there may
not be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to CNBFB stockholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time, each of
the parties hereto, by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on the
first business day after all conditions set forth in Article VIII have either
been satisfied or waived (other than those conditions which relate to actions to
be taken at the Closing) (the "Closing Date") at TSFG's principal executive
offices, unless another time, date or place is agreed to in writing by the
parties hereto; provided, however, that the Closing Date shall not be prior to
July 1, 2004.
10.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective Time
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive TSFG or CNBFB (or any
director, officer or controlling person thereof) of any defense at law or in
equity which otherwise would be available against the claims of any third party,
including, without limitation, any shareholder or former shareholder of either
TSFG or CNBFB.
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10.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
10.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied, mailed
by registered or certified mail (return receipt requested) or delivered by an
express courier to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to TSFG, to:
The South Financial Group, Inc.
104 S. Main St.
Greenville, SC 29601
Attention: William P. Crawford, Jr.,
Executive Vice President
and
(b) if to CNBFB, to:
CNB Florida Bancshares, Inc.
9715 Gate Parkway North
Jacksonville, Florida 32246
Attention: K. C. Trowell, Chief Executive Officer
with a copy to:
McGuireWoods LLP
Bank of America Tower
50 North Laura Street, Suite 3300
Jacksonville, Florida 32202-3661
Attention: Halcyon E. Skinner, Esq.
10.5 Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.6 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
10.7 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of South Carolina, without regard to any
applicable conflicts of law, except to the extent that various matters under
this Agreement must be necessarily governed by Florida corporate law.
10.8 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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10.9 Publicity. Except as expressly permitted by this Agreement or
otherwise required by law or the rules of the Nasdaq Stock Market so long as
this Agreement is in effect, neither TSFG nor CNBFB shall, or shall permit any
of its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not be unreasonably
withheld.
10.10 Assignment; No Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. 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. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, TSFG and CNBFB have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
THE SOUTH FINANCIAL GROUP, INC.
By: /s/ William S. Hummers III
---------------------------------------
Name: William S. Hummers III
Title: Executive Vice President
CNB FLORIDA BANCSHARES, INC.
By: /s/K. C. Trowell
----------------------------------------
Name: K. C. Trowell
Title: Chief Executive Officer
30
EXHIBIT A
_________________, 2004
The South Financial Group, Inc.
102 S. Main Street
Greenville, South Carolina 29601
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
CNB Florida Bancshares, Inc., a Florida corporation (the "Company"), for
purposes of paragraphs (c) and (d) of Rule 145 promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Act").
The South Financial Group, Inc., a South Carolina corporation ("TSFG")
and the Company have entered into an Agreement and Plan of Merger, dated as of
January 20, 2004 (the "Merger Agreement"), pursuant to which, among other
things, the Company will merge with and into TSFG (the "Transaction"). Upon
consummation of the Transaction, I will receive shares of common stock, $1.00
par value per share, of TSFG ("TSFG Common Stock"). This agreement is
hereinafter referred to as the "Letter Agreement."
A. I represent and warrant to, and agree with, TSFG as follows:
1. I have read this Letter Agreement and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, pledge, transfer or otherwise dispose of shares of TSFG Common Stock, to
the extent I felt necessary, with my counsel or counsel for the Company.
2. I shall not make any offer, sale, pledge, transfer or other
disposition in violation of the Act or the rules and regulations of the SEC
thereunder of the shares of TSFG Common Stock I receive pursuant to the
Transaction.
B. I understand and agree that:
1. I have been advised that any issuance of shares of TSFG Common Stock
to me pursuant to the Transaction will be registered with the SEC. I have also
been advised, however, that, because I maybe an "affiliate" of the Company at
the time the Transaction will be submitted for a vote of the stockholders of the
Company and my disposition of such shares has not been registered under the Act,
I must hold such shares indefinitely unless (i) such disposition of such shares
is subject to an effective registration statement and to the availability of a
prospectus under the Act, (ii) a sale of such shares is made in conformity with
the provisions of Rule 145(d) under the Act or (iii) in an opinion of counsel,
in form and substance reasonably satisfactory to TSFG, some other exemption from
registration is available with respect to any such proposed disposition of such
shares.
2. Stop transfer instructions will be given to the transfer agent of
TSFG with respect to the shares of TSFG Common Stock I receive pursuant to the
Transaction in connection with the restrictions set forth herein, and there will
be placed on the certificate representing shares of TSFG Common Stock I receive
pursuant to the Transaction, or any certificates delivered in substitution
therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933, as amended (the
"Act"), applies and may only be sold or otherwise transferred in compliance with
the requirements of Rule 145 or pursuant to a registration statement under the
Act or an exemption from such registration."
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3. Unless a transfer of my shares of TSFG Common Stock is a sale made
in conformity with the provisions of Rule 145(d), or made pursuant to an
effective registration statement under the Act, TSFG reserves the right to put
an appropriate legend on the certificates issued to my transferee.
4. I recognize and agree that the foregoing provisions also apply to
(i) my spouse, (ii) any relative of mine or my spouse occupying my home, (iii)
any trust or estate in which I, my spouse or any such relative owns at least 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (iv) any corporation or other organization in which I, my
spouse or any such relative owns at least 10% of any class of equity securities
or of the equity interest.
5. I agree that at the time that I make an offer to or otherwise sell,
pledge transfer or dispose of any TSFG Common Stock that I own after the
Transaction, I will notify my broker, dealer or nominee in whose name my shares
are held or registered that such TSFG Common Stock is subject to this Letter
Agreement.
6. Execution of this Letter Agreement should not be construed as an
admission on my part that I am an "affiliate" of the Company as described in the
first paragraph of this letter or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this letter.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect and the stop
transfer instructions set forth in Paragraph B.2. above shall be lifted and the
legend set forth in Paragraph B.2 above shall be removed forthwith from the
certificate or certificates representing my shares of TSFG Common Stock upon the
delivery by the undersigned to TSFG of a copy of a letter from the staff of the
SEC, an opinion of counsel in form and substance reasonably satisfactory to
TSFG, or other evidence reasonably satisfactory to TSFG, to the effect that a
transfer of my shares of TSFG Common Stock will not violate the Act or any of
the rules and regulations of the SEC thereunder.
This Letter Agreement shall be binding on my heirs, legal
representative and successors.
Very truly yours,
--------------------------------
Name:
Accepted this_____ day of____________ , 2004
The South Financial Group, Inc.
By: _____________________________
Name: William S. Hummers III
Title: Executive Vice President
32