EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
R&G FINANCIAL CORPORATION,
R&G ACQUISITION HOLDINGS CORPORATION,
THE CROWN GROUP, INC.
AND
CROWN BANK, A FEDERAL SAVINGS BANK
DATED AS OF DECEMBER 19, 2001
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................................................1
ARTICLE II THE MERGER............................................................................................6
2.1 The Merger.....................................................................................6
2.2 Effect of the Merger...........................................................................6
2.3 Articles of Incorporation and Bylaws...........................................................7
2.4 Directors and Officers.........................................................................7
2.5 Effective Time.................................................................................7
2.6 Effect on Outstanding Shares...................................................................7
2.7 Shareholder Rights; Stock Transfers............................................................8
2.8 Dissenting Shares..............................................................................9
2.9 Additional Actions.............................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF GROUP AND THE BANK................................................10
3.1 Capital Structure of Group....................................................................10
3.2 Organization, Standing and Authority of Group.................................................10
3.3 Ownership of the Bank.........................................................................10
3.4 Organization, Standing and Authority of the Bank..............................................11
3.5 Authorized and Effective Agreement; Consents and Approvals....................................11
3.6 Regulatory Reports............................................................................12
3.7 Financial Statements..........................................................................12
3.8 Material Adverse Change.......................................................................14
3.9 Environmental Matters.........................................................................14
3.10 Tax Matters...................................................................................14
3.11 Legal Proceedings.............................................................................17
3.12 Compliance with Laws..........................................................................17
3.13 Employee Benefit Plans........................................................................18
3.14 Certain Contracts.............................................................................20
3.15 Brokers and Finders...........................................................................20
3.16 Insurance.....................................................................................21
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3.17 Properties....................................................................................21
3.18 Labor.........................................................................................21
3.19 Transactions with Affiliates..................................................................22
3.20 Loans; Nonperforming Loans and Classified Assets..............................................22
3.21 Administration of Fiduciary Duties............................................................22
3.22 Required Vote; Inapplicability of Antitakeover Statutes; Fairness Opinion.....................23
3.23 Disclosures...................................................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF R&G AND HOLDINGS...................................................23
4.1 Capital Structure of R&G......................................................................23
4.2 Organization, Standing and Authority of R&G...................................................24
4.3 Ownership of the R&G Subsidiaries.............................................................24
4.4 Organization, Standing and Authority of the R&G Subsidiaries..................................24
4.5 Authorized and Effective Agreement; Consents and Approvals....................................24
4.6 Securities Documents..........................................................................25
4.7 Financial Statements..........................................................................26
4.8 Material Adverse Change.......................................................................26
4.9 Legal Proceedings.............................................................................26
4.10 Compliance with Laws..........................................................................26
4.11 Certain Contracts.............................................................................27
4.12 Brokers and Finders...........................................................................27
4.13 Ability to Pay Cash Consideration.............................................................28
4.14 Disclosures...................................................................................28
ARTICLE V COVENANTS.............................................................................................28
5.1 Reasonable Best Efforts.......................................................................28
5.2 Solicitation of Shareholder Consents..........................................................28
5.3 Regulatory and Other Matters..................................................................29
5.4 Investigation and Confidentiality.............................................................29
5.5 Press Releases................................................................................30
5.6 Business of Group and the Bank................................................................30
5.7 Current Information...........................................................................34
5.8 Benefit Plans and Employment..................................................................34
5.9 Indemnification...............................................................................35
5.10 Additional Covenants..........................................................................35
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5.11 Disclosure Supplements........................................................................35
5.12 Failure to Fulfill Conditions.................................................................36
5.13 Certain Additional Action.....................................................................36
ARTICLE VI CONDITIONS PRECEDENT.................................................................................37
6.1 Conditions Precedent - All Parties...........................................................37
6.2 Conditions Precedent - Group and the Bank.....................................................38
6.3 Conditions Precedent - R&G and Holdings.......................................................38
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT...................................................................40
7.1 Termination...................................................................................40
7.2 Effect of Termination.........................................................................41
7.3 Survival of Representations, Warranties and Covenants.........................................42
7.4 Waiver........................................................................................42
7.5 Amendment or Supplement.......................................................................42
ARTICLE VIII MISCELLANEOUS......................................................................................42
8.1 Expenses; Termination Fee.....................................................................42
8.2 Entire Agreement..............................................................................45
8.3 Assignment; Successors........................................................................45
8.4 Notices.......................................................................................45
8.5 Alternative Structure.........................................................................46
8.6 Interpretation................................................................................46
8.7 Counterparts..................................................................................47
8.8 Governing Law.................................................................................47
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Exhibit A Form of Stockholder Agreement
Exhibit B Form of Debenture
Exhibit C Matters to be covered by opinion of counsel to R&G
Exhibit D Matters to be covered by opinion of counsel to Group
Exhibit E Form of Employment Agreements
Exhibit F Form of Tenant Estoppel
Exhibit G Form of Landlord Estoppel Letter
Exhibit H Form of Accredited Investor Representation Letter
Exhibit I Form of Cresleigh Bancorp, LLC Indemnification Letter
Exhibit J Form of LLC Indemnification Letter
Exhibit K Form of Power of Attorney
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 19, 2001
("Agreement") among R&G Financial Corporation ("R&G"), a Puerto Rico
corporation, R&G Acquisition Holdings Corporation ("Holdings"), a Florida
corporation and wholly-owned subsidiary of R&G, The Crown Group, Inc. ("Group"),
a Florida corporation, and Crown Bank, a Federal Savings Bank (the "Bank"), a
federal savings bank and wholly-owned subsidiary of Group.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of R&G, Holdings, Group and the Bank
have determined that it is in the best interests of their respective companies
and their shareholders to consummate the business transactions provided for
herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to R&G's willingness to enter
into this Agreement, certain stockholders of Group are concurrently entering
into a Stockholder Agreement with R&G (the "Stockholder Agreement"), in
substantially the form attached hereto as Exhibit A, pursuant to which, among
other things, such stockholders agree to vote their shares of Group Common Stock
(as defined herein) in favor of this Agreement and the transactions contemplated
hereby; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
"Acquisition Transaction" shall have the meaning set forth in Section
5.6(d) hereof.
"Affiliate" shall have the meaning set forth in Section 3.19 hereof.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
"Attorney-in-Fact" shall mean Xxxx X. Xxxxxx, or any duly appointed
successor.
"Bank" shall mean Crown Bank, a Federal Savings Bank.
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"Bank Common Stock" shall mean the common stock, par value $.01 per
share, of the Bank.
"Bank Financial Statements" shall mean (i) the financial statements
referred to in Section 3.7(b) hereof, and (ii) the balance sheets of Bank
(including related notes and schedules, if any), and the statements of income,
changes in stockholders' equity and cash flows (including related notes and
schedules, if any) of Bank with respect to the quarterly and annual periods
ended subsequent to September 30, 2000 and delivered to R&G pursuant to Section
5.7 hereof.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC.
"Closing" shall have the meaning set forth in Section 2.5 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Confidentiality Agreement" shall have the meaning set forth in Section
5.4(b) hereof.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Dissenting Shares" shall have the meaning set forth in Section 2.8
hereof.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" shall mean the time specified pursuant to Section 2.5
hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface or subsurface soil, plant and animal
life or any other natural resource), and/or (2) the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Materials of Environmental Concern. The term
Environmental Laws includes without limitation (1) the Comprehensive
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Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 2901, et seq; the Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 9601, et seq; the Emergency Planning and Community Right to Know Act, 42
U.S.C. Section 11001, et seq; the Safe Drinking Water Act, 42 U.S.C. Section
300f, et seq; (2) all comparable state and local laws and any amendment, rule,
regulation, order, or directive issued thereunder; and (3) any common law
(including without limitation common law that may impose strict liability) that
may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Materials of
Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FBCA" shall mean the Florida Business Corporation Act.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"FRB" means the Board of Governors of the Federal Reserve System.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Group" shall mean The Crown Group, Inc.
"Group Common Stock" shall mean the common stock, no par value per
share, of Group.
"Group Employee Plans" shall have the meaning set forth in Section
3.14(a) hereof.
"Group Financial Statements" shall mean (i) the consolidated financial
statements referred to in Section 3.7(a) hereof, and (ii) the consolidated
balance sheets of Group (including related notes and schedules, if any), and the
consolidated statements of income, changes in stockholders' equity and cash
flows (including related notes and schedules, if any) of Group with respect to
the quarterly and annual periods ended subsequent to September 30, 2000 and
delivered to R&G pursuant to Section 5.7 hereof.
"Group Option" shall mean each option outstanding under the Group Stock
Option Plan.
"Group Stock Option Plan" shall mean the 1986 Incentive Stock Option
Plan and the 1992 Executive Stock Option Plan.
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"HOLA" shall mean the Home Owner's Loan Act, as amended.
"Holdings" shall mean R&G Acquisition Holdings Corporation.
"LLC" shall mean a limited liability company to be formed by the
holders of Group Common Stock outstanding prior to the Effective Time.
"Material Adverse Effect" means, with respect to an entity, any
condition, event, change or occurrence that has or may reasonably be expected to
have a material adverse change on the business, operations, results of
operations or financial condition of such entity on a consolidated basis but
shall not include an adverse change with respect to, or effect on such entity
resulting from (1) changes in general economic conditions (including, without
limitation, increases or decreases in market rates of interest, (2) any change
in a law, rule or regulation generally applicable to financial institutions, (3)
any change in generally accepted accounting principles or regulatory accounting
principles, as such would apply to the financial statements of such entity or
(4) actions taken or to be taken by Group or the Bank in accordance with the
specific terms of this Agreement or based upon the written request of R&G or
Holdings pursuant to this Agreement.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under the Environmental Laws.
"Merger" shall have the meaning set forth in Section 2.1 hereof.
"Merger Consideration" shall mean an aggregate of $100.0 million in
cash, into which shares of Group Common Stock shall be converted in the Merger
pursuant to Section 2.6(b) hereof, but only after reduction to provide for the
rights of holders of any Group Options to receive the amount described in
Section 2.6(c) hereof, and the R&G Debenture.
"OTS" shall mean the Office of Thrift Supervision of the U.S.
Department of the Treasury, or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Previously Disclosed" shall mean disclosed in (i) a schedule dated the
date hereof delivered from the disclosing party to the other party specifically
referring to the appropriate section of this Agreement and describing in
reasonable detail the matters contained therein or (ii) a letter dated after the
date hereof from the disclosing party specifically referring to this Agreement
and describing in reasonable detail the matters contained therein and delivered
by the other party pursuant to Section 5.12 hereof.
"R&G" shall mean R&G Financial Corporation.
"R&G Common Stock" shall mean the common stock, par value $.01 per
share, of R&G.
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"R&G Debenture" shall mean the 6 3/4 Subordinated Debenture of R&G, in
the form of Exhibit B hereto, the aggregate principal amount of which shall be
$5.0 million.
"R&G Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of R&G as
of December 31, 2000 and 1999, and the consolidated statements of income,
changes in stockholders' equity and cash flows (including related notes and
schedules, if any) of R&G for each of the three years ended December 31, 2000,
1999 and 1998 as filed by R&G in its Securities Documents, and (ii) the
consolidated statements of financial condition of R&G (including related notes
and schedules, if any), and the consolidated statements of income, changes in
stockholders' equity (other than on a quarterly basis) and cash flows (including
related notes and schedules, if any) of R&G included in the Securities Documents
filed by R&G with respect to the quarterly and annual periods ended subsequent
to December 31, 2000.
"R&G Preferred Stock" shall mean the shares of preferred stock, par
value $.01 per share, of R&G .
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests.
"SAIF" shall mean the Savings Association Insurance Fund administered
by the FDIC.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act, the Exchange Act and
the rules and regulations of the Commission promulgated thereunder.
"Stockholder Agreement" means the agreement dated the date hereof
between certain of the stockholders of Group and R&G, the form of which is
attached hereto as Exhibit A.
"Subsidiary" and "Significant Subsidiary" shall have the meanings set
forth in Rule 1-02 of Regulation S-X of the Commission.
"Surviving Corporation" shall have the meaning set forth in Section 2.1
hereof.
"Tax" or "Taxes" shall mean any U.S. federal, state, local or foreign
income, gross receipts, profits, windfall profits, severance, occupation,
premium, environmental, personal property, real property, intangibles, ad
valorem, mortgage, production, sales, use, license, excise, customs duties,
franchise, registration, value-added, estimated, documentary, stamp, transfer,
capital stock, employment, payroll, withholding, social security (or similar),
unemployment, disability, transfer, withholding or other taxes or charges of any
kind whatsoever levied or
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imposed on any person or such person's income, properties, assets or operations
by any governmental authority or under any law, together with any interest,
additions to tax or penalties with respect thereto and any interest in respect
of such additions to tax or penalties, whether or not disputed.
"Tax Returns" shall mean any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
"Valuation Analysis" shall have the meaning set forth in Section 5.6(e)
hereof.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER
Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 2.5 hereof), Holdings shall be merged with and into
Group in accordance with Section 607.1101 of the FBCA (the "Merger"), with Group
as the surviving corporation (hereinafter sometimes called the "Surviving
Corporation").
2.2 EFFECT OF THE MERGER
As of the Effective Time (as defined in Section 2.5 hereof), the
Surviving Corporation shall be considered the same business and corporate entity
as each of Group and Holdings and thereupon and thereafter, all the property,
rights, powers and franchises of each of Group and Holdings shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of Group and Holdings and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same extent as if
such property rights, privileges, powers, franchises, debts, obligations, duties
and relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of Group and
Holdings in any contract or document, whether executed or taking effect before
or after the Effective Time, shall be considered a reference to the Surviving
Corporation if not inconsistent with the other provisions of the contract or
document; and any pending action or other judicial proceeding to which either of
Group and Holdings is a party, shall not be deemed to have abated or to have
discontinued by reason of the Merger, but may be prosecuted to final judgment,
order or decree in the same manner as if the Merger had not been made; or the
Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of Group and Holdings if the
Merger had not occurred.
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2.3 ARTICLES OF INCORPORATION AND BYLAWS
As of the Effective Time, the Articles of Incorporation and Bylaws of
Holdings shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation until otherwise amended as provided by law.
2.4 DIRECTORS AND OFFICERS
As of the Effective Time, the directors and officers of Holdings shall
become the directors and officers of the Surviving Corporation.
2.5 EFFECTIVE TIME
The Merger shall become effective upon the occurrence of the filing of
Articles of Merger ("Articles of Merger") with the Department of State of the
State of Florida, unless a later date and time is specified as the effective
time in such Articles of Merger ("Effective Time"). A closing (the "Closing")
shall take place immediately prior to the Effective Time at 10:00 a.m. Eastern
Time, on the fifth business day following the receipt of all necessary
regulatory or governmental approvals and consents and the expiration of all
statutory waiting periods in respect thereof and the satisfaction or waiver, to
the extent permitted hereunder, of the conditions to the consummation of the
Merger specified in Article VI of this Agreement (other than the delivery of
certificates and other instruments and documents to be delivered at the
Closing), at the principal offices of counsel to R&G in Vienna, Virginia or at
such other place, at such other time, or on such other date as the parties may
mutually agree upon. At the Closing, there shall be delivered to the parties
hereto the certificates and other documents required to be delivered under
Article VI hereof.
2.6 EFFECT ON OUTSTANDING SHARES
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
party hereto:
(a) Each share of R&G Common Stock and R&G Preferred Stock issued
and outstanding immediately prior to the Effective Time shall be unchanged and
shall remain issued and outstanding.
(b) Each share of common stock of Holdings issued and outstanding
immediately prior to the Effective Time shall become the issued and outstanding
common stock of the Surviving Corporation.
(c) Subject to Section 2.9 hereof, the Group Common Stock issued
and outstanding immediately prior to the Effective Time (other than (i) shares
held by Group or Bank other than in a fiduciary capacity that are beneficially
owned by third parties, which shall be canceled and retired without
consideration, and (ii) Dissenting Shares) shall become and be converted into
the right to receive without any action on the part of the holders thereof, a
pro rata interest in the Merger Consideration.
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(d) Each Group Option granted under the Group Stock Option Plan
issued and outstanding immediately prior to the Effective Time shall, without
any action on the part of holders thereof, become and be converted into the
right to receive the difference between (i) the per share cash portion of the
Merger Consideration (calculated by dividing the aggregate Merger Consideration
by the outstanding shares of Group Common Stock plus the Group Common Stock
underlying the Group Options exercisable at the Effective Time) and (ii) the
applicable Group Option exercise price.
2.7 SHAREHOLDER RIGHTS; STOCK TRANSFERS
(a)(1) To the extent that, as of the Effective Time, holders of Group
Common Stock and holders of Group Options shall have (i) executed the Power of
Attorney, the form of which is set forth as Exhibit K hereto; (ii) delivered to
the Attorney-in-Fact all outstanding shares of Group Common Stock held by such
holders duly endorsed in blank and, to the extent applicable, certificates for
Group Options; and (iii) executed the Accredited Investor Representation Letter
in the form set forth in Exhibit H hereto, then R&G and Holdings shall cause the
cash portion of the Merger Consideration to which such holder shall be entitled
to be delivered at the Closing to the order of the Attorney-in-Fact. To the
extent that the condition set forth in Section 6.3(l) is satisfied, R&G shall
issue the R&G Debenture to the LLC and R&G shall make all required payments
under the R&G Debenture to the LLC, which in turn shall distribute such payments
to its members. To the extent that the condition set forth in Section 6.3(l) is
not satisfied, R&G will take the actions specified in Section 2.7(c) hereof with
respect to the R&G Debenture. Group has Previously Disclosed each person's pro
rata holdings of Group Common Stock.
(2) To the extent that as of the Effective Time, any
holder has not satisfied the requirements of Section 2.7 (a)(1), R&G and
Holdings shall distribute the Merger Consideration to which those holders not
satisfying such requirements are entitled in accordance with the requirements of
Section 2.7(b) hereof.
(b) Subject to Sections 2.7(a) and 2.8 hereof, R&G and Holdings
shall use their best efforts to cause to be mailed, within three (3) business
days of the Effective Time, to each such holder who has not satisfied the
requirements of Section 2.7(a)(1) and who was, at the Effective Time, a holder
of record of issued and outstanding Group Common Stock, a letter of transmittal
and instructions for use in effecting the surrender of the Group Common Stock
certificate(s) ("Certificates") which, immediately prior to the Effective Time,
represented such shares. Upon surrender to R&G of such certificates (or such
documentation as is acceptable to and required by R&G with respect to lost
certificates), together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, R&G shall promptly cause
to be issued to such persons entitled thereto a check and, subject to Section
6.3(l) hereto, to the LLC, an R&G Debenture, in each case, in the amount to
which such persons are entitled (which shall be determined based upon each
person's pro rata holdings of Group Common Stock which has been Previously
Disclosed by Group and the Bank), after giving effect to any required tax
withholdings. If payment of the Merger Consideration is to be made to a person
other than the registered holder of the Group Certificate(s) surrendered, it
shall be a condition of such payment that the Group Certificate(s) so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
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taxes required by reason of the payment to a person other than the registered
holder of the Group Certificate(s) surrendered or established to the
satisfaction of R&G or Holdings that such tax has been paid or is not
applicable.
(c) To the extent that the condition set forth in Section 6.3(l)
is not satisfied, at the Effective Time, R&G shall issue the R&G Debenture to an
exchange agent selected by R&G ("Exchange Agent") in trust to be held for the
exclusive benefit of the holders of Group Common Stock entitled to receive the
Merger Consideration. Under such circumstances, R&G shall make all required
payments under the R&G Debenture to the Exchange Agent, which will in turn
distribute such payments to the former holders of Group Common Stock entitled
thereto.
2.8 DISSENTING SHARES
Each outstanding share of Group Common Stock, the holder of which has
perfected his right to dissent under Section 607.1302 of the FBCA and has not
effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
the Merger Consideration hereunder and the holder thereof shall be entitled only
to such rights as are granted by Section 607.1302 of the FBCA. If any holder of
Dissenting Shares shall fail to perfect or shall have effectively withdrawn or
lost the right to dissent, the Dissenting Shares held by such holder shall
thereupon be treated as though such Dissenting Shares had been converted into
the right to receive the Merger Consideration in accordance with the applicable
provisions of this Agreement. Group shall give R&G prompt notice upon receipt by
Group of any such written demands for payment of the fair value of shares of
Group Common Stock and of withdrawals of such demands and any other instruments
provided pursuant to Section 607.1302 of the FBCA. Any payments made in respect
of Dissenting Shares shall be made by the Surviving Corporation.
2.9 ADDITIONAL ACTIONS
If, at any time after the Effective Time, the Surviving Corporation
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its rights, title or interest in, to or
under any of the rights, properties or assets of Group acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger, or (ii) otherwise carry out the purposes of this Agreement, each of the
Group and its proper officers and directors shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments and assurances in law and to do all
acts necessary or proper to vest, perfect or confirm title to and possession of
such rights, properties or assets in the Surviving Corporation and otherwise to
carry out the purposes of this Agreement; and the proper officers and directors
of the Surviving Corporation are fully authorized in the name of Group or
otherwise to take any and all such action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GROUP AND THE BANK
Except as Previously Disclosed, Group and the Bank represent and
warrant to R&G and Holdings as follows:
3.1 CAPITAL STRUCTURE OF GROUP
The authorized capital stock of Group consists of 5,000,000 shares of
Group Common Stock. Group has no authorized shares of preferred stock. As of the
date hereof, there are 2,058,237 shares of Group Common Stock issued and
outstanding and 31,734 shares of Group Common Stock are held as treasury shares.
All outstanding shares of Group Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and none of the outstanding
shares of Group Common Stock have been issued in violation of the preemptive
rights of any person, firm or entity. Group has Previously Disclosed each Group
Option outstanding as of the date hereof, including the number of shares covered
by each such Group Option and the exercise price thereof. Except for Group
Options to purchase 47,200 shares of Group Common Stock as of the date hereof,
there are no Rights authorized, issued or outstanding with respect to the
capital stock of Group.
3.2 ORGANIZATION, STANDING AND AUTHORITY OF GROUP
Group is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida. Group 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 and is in good standing 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,
except where the failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect on Group and the Bank considered as one
enterprise. Group is registered as a savings and loan holding company under the
Savings and Loan Holding Company Act, as amended. Group has heretofore delivered
to R&G true and complete copies of the Articles of Incorporation and Bylaws of
Group as in effect as of the date hereof.
3.3 OWNERSHIP OF THE BANK
Except for (i) its ownership of the Bank Common Stock, (ii) stock in
the Federal Home Loan Bank of Atlanta owned by the Bank, (iii) securities and
other interests held in a fiduciary capacity by the Bank and beneficially owned
by third parties or taken in consideration of debts previously contracted, and
(iv) as Previously Disclosed, Group does not own or have the right to acquire,
directly or indirectly, any outstanding capital stock or other voting securities
or ownership interests of any corporation, bank, savings association,
partnership, joint venture or other organization, including but not limited to
Cresleigh Bancorp, LLC. The authorized capital stock of the Bank consists of
5,000,000 shares of common stock and no shares of preferred stock. As of the
date hereof, there were 2,016,071 shares of the Bank Common Stock outstanding
and no shares of the Bank Common Stock are held as treasury shares. The
10
outstanding Bank Common Stock has been duly authorized and validly issued, is
fully paid and nonassessable and is directly owned by Group free and clear of
all liens, claims, encumbrances, charges, pledges, restrictions or rights of
third parties of any kind whatsoever. No Rights are authorized, issued or
outstanding with respect to the Bank Common Stock and there are no agreements,
understandings or commitments relating to the right of Group to vote or to
dispose of such capital stock or other ownership interests. The Bank has no
direct or indirect Subsidiaries.
3.4 ORGANIZATION, STANDING AND AUTHORITY OF THE BANK
The Bank (i) is duly organized, validly existing and in good standing
under the laws of the United States, (ii) has the corporate power and authority
to own or lease all of its properties and assets and to conduct its business as
it is now being conducted, and (iii) is duly licensed or qualified to do
business and is in good standing 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,
except where the failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect on Group and the Bank considered as one
enterprise. The deposit accounts of the Bank are insured by the SAIF to the
maximum extent permitted by the FDIA, and the Bank has paid all deposit
insurance premiums and assessments required by the FDIA and the regulations
thereunder. Group has heretofore delivered or made available to R&G true and
complete copies of the Federal Stock Charter and Bylaws of the Bank as in effect
as of the date hereof.
3.5 AUTHORIZED AND EFFECTIVE AGREEMENT; CONSENTS AND APPROVALS
(a) Group and the Bank have all requisite corporate power and
authority to enter into this Agreement and (subject to receipt of all necessary
governmental approvals and the approval of Group's shareholders of this
Agreement) to perform all of their obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Group and the Bank,
except for the approval of this Agreement by Group's shareholders. This
Agreement has been duly and validly executed and delivered by Group and the Bank
and constitutes legal, valid and binding obligations of Group and the Bank which
are enforceable against Group and the Bank in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and except that the
availability of equitable remedies (including, without limitation, specific
performance) is within the discretion of the appropriate court.
(b) None of the execution and delivery of this Agreement by Group
and the Bank, the consummation by Group and the Bank of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by Group
and the Bank with any of the terms or provisions hereof, will (i) violate any
provision of the Articles of Incorporation, Federal Stock Charter and Bylaws or
equivalent documents of Group or the Bank, (ii) assuming that the consents and
approvals set forth herein are duly obtained, violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Group or the Bank or any of their respective properties or assets,
or (iii) violate, conflict with, result in a breach of any provisions
11
of, 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,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of Group or the Bank 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 Group or the Bank is a party, or by
which any of its respective properties or assets may be bound or affected,
except, with respect to (ii) and (iii) above, such as individually or in the
aggregate will not have a Material Adverse Effect on Group and the Bank
considered as one enterprise and which will not prevent or delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the OTS, the FRB and
the stockholders of Group, no consents or approvals of or filings or
registrations with or notices to any Governmental Entity are required on behalf
of Group or the Bank in connection with (a) the execution and delivery of this
Agreement by Group and the Bank, and (b) the completion by Group and the Bank of
the transactions contemplated hereby.
(c) Except as Previously Disclosed, as of the date hereof, neither
Group nor the Bank is aware of any reasons relating to Group or the Bank why all
consents and approvals shall not be procured from all regulatory agencies having
jurisdiction over the transactions contemplated by this Agreement as shall be
necessary for consummation of the transactions contemplated by this Agreement.
3.6 REGULATORY REPORTS
Since January 1, 1996, Group and the Bank have duly filed with the
appropriate regulatory authorities, in correct form the monthly, quarterly and
annual reports required to be filed under applicable laws and regulations and
such reports were in all material respects complete and accurate and in
compliance with the requirements of applicable laws and regulations, and Group
and the Bank have previously delivered or made available to R&G accurate and
complete copies of all such reports. In connection with the most recent
examinations of Group and the Bank by the appropriate regulatory authorities,
neither Group nor the Bank were required to correct or change any action,
procedure or proceeding which Group or the Bank believes in good faith has not
been now corrected or changed, other than corrections or changes which, if not
made, either individually or in the aggregate, would not have a Material Adverse
Effect on Group and the Bank considered as one enterprise. The most recent
regulatory rating given to the Bank as to compliance with the CRA is
"satisfactory." To the knowledge of Group and the Bank, since its last
regulatory examination of CRA compliance, the Bank has not received any
complaints as to CRA compliance.
3.7 FINANCIAL STATEMENTS
(a) Group has previously delivered or made available to R&G
accurate and complete copies of (i) the consolidated balance sheet of Group as
of December 31, 2000 and the consolidated statements of income, changes in
shareholders' equity and cash flows for the year ended December 31, 2000, which
are accompanied by the audit report of Xxxxx Xxxxxx and Company, (ii) the
consolidated statements of financial condition of Group as of December 31, 1999
and the consolidated statements of income, stockholders' equity and cash flows
for each of
12
the years ended December 31, 1999 and 1998, which are accompanied by the audit
report of Deloitte & Touche LLP, in each case, independent public accountants
with respect to Group, and (iii) the unaudited consolidated balance sheets as of
September 30, 2001 and the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for the nine months ended
September 30, 2001 and 2000. The Group Financial Statements referred to herein,
as well as the Group Financial Statements to be delivered pursuant to Section
5.7 hereof, fairly present or will fairly present, as the case may be, the
consolidated financial condition of Group as of the respective dates set forth
therein, and the consolidated results of operations, changes in shareholders'
equity and cash flows of Group for the respective periods or as of the
respective dates set forth therein.
(b) Bank has previously delivered or made available to R&G
accurate and complete copies of (i) the balance sheet of Bank as of December 31,
2000 and the statements of income, changes in shareholders' equity and cash
flows for the year ended December 31, 2000, which are accompanied by the audit
report of Xxxxx Xxxxxx and Company, (ii) the statements of financial condition
of Bank as of December 31, 1999 and the statements of income, stockholders'
equity and cash flows for each of the years ended December 31, 1999 and 1998,
which are accompanied by the audit report of Deloitte & Touche LLP, in each
case, independent public accountants with respect to Bank, and (iii) the
unaudited balance sheets as of September 30, 2001 and the related unaudited
statements of income, changes in shareholders' equity and cash flows for the
nine months ended September 30, 2001 and 2000. The Bank Financial Statements
referred to herein, as well as the Bank Financial Statements to be delivered
pursuant to Section 5.7 hereof, fairly present or will fairly present, as the
case may be, the financial condition of Bank as of the respective dates set
forth therein, and the results of operations, changes in shareholders' equity
and cash flows of Bank for the respective periods or as of the respective dates
set forth therein.
(c) Each of the Group Financial Statements and Bank Financial
Statements have been or will be, as the case may be, prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as stated therein, and except that unaudited Group Financial
Statements and Bank Financial Statements may not include all footnote
disclosures required by generally accepted accounting principles. The audits of
Group and Bank have been conducted in accordance with generally accepted
auditing standards. The books and records of Group and the Bank are being
maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of Group and the Bank.
(d) Except as Previously Disclosed and to the extent (i)
reflected, disclosed or provided for in the consolidated statement of financial
condition of Group or Bank as of September 30, 2001 (including related notes)
and (ii) of liabilities incurred since such date in the ordinary course of
business, neither Group nor the Bank has any liabilities, whether absolute,
accrued, contingent or otherwise, which would have a Material Adverse Effect on
Group and Bank considered as one enterprise.
13
3.8 MATERIAL ADVERSE CHANGE
Since September 30, 2001, (i) Group and the Bank have conducted their
respective businesses in the ordinary and usual course and (ii) no event has
occurred or circumstances arisen that, individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect on Group and the Bank
considered as one enterprise, except that Fortune Insurance Company, a
wholly-owned subsidiary of Fortune Financial, Inc., in which Group has a
$10,100,257.10 investment at October 31, 2001, is in receivership.
3.9 ENVIRONMENTAL MATTERS
(a) To the knowledge of Group and the Bank, the Group and the Bank
are in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, individually or in the aggregate, have a
Material Adverse Effect on Group and the Bank considered as one enterprise.
Neither Group nor the Bank has received any communication alleging that the
Group or the Bank is not in such compliance and, to the knowledge of Group and
the Bank, there are no present circumstances that would prevent or interfere
with the continuation of such compliance.
(b) To the knowledge of Group and the Bank, none of the properties
owned, leased or operated by the Group or the Bank nor any of the properties
which serve as collateral for loans owned by Group or the Bank has been or is in
violation of or liable under any Environmental Law, except any such violations
or liabilities which would not, individually or in the aggregate, have a
Material Adverse Effect on Group and the Bank considered as one enterprise.
(c) To the knowledge of Group and the Bank, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against Group or the Bank or
against any person or entity whose liability for any Environmental Claim Group
or the Bank has or may have retained or assumed either contractually or by
operation of law, including but not limited to loans made by Group or Bank,
except such which would not, individually or in the aggregate, have a Material
Adverse Effect on Group and the Bank considered as one enterprise.
(d) Group and the Bank have Previously Disclosed any environmental
studies conducted by either of them with respect to any properties directly or
indirectly owned or leased by Group or the Bank as of the date hereof.
3.10 TAX MATTERS
(a) All Tax Returns required to be filed by or on behalf of Group
and the Bank or any Affiliated Group of which Group or the Bank is or was a
member have been (or, prior to the date that includes the Effective Time, will
be) timely filed with the appropriate taxing authorities in all jurisdictions in
which such Tax Returns were required to be filed, after giving effect to any
valid extensions of time in which to make such filings, and all such Tax Returns
were true, complete and correct in all respects.
14
(b) All Taxes due and payable by or on behalf of Group and the
Bank or any Affiliated Group of which Group or the Bank is or was a member or in
respect of their income, assets or operations, have been (or, prior to the date
that includes the Effective Time, will be) fully and timely paid, and adequate
reserves or accruals for Taxes of Group and the Bank have been provided in the
books and records of Group and the Bank in accordance with generally accepted
accounting principles with respect to any period for which Tax Returns have not
yet been filed or for which Taxes are not yet due and owing. Group and the Bank
have made all required estimated Tax payments.
(c) Neither Group nor the Bank has executed or filed with the
Internal Revenue Service ("IRS") or any other taxing authority any agreement,
waiver or other document or arrangement extending or having the effect of
extending the period for assessment or collection of Taxes (including, but not
limited to any applicable statute of limitations), and no power of attorney of
Group and the Bank with respect to any Tax matter is currently in force.
(d) Group and the Bank have complied in all respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and have duly and timely withheld from employee salaries, wages and
other compensation and have paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable laws.
(e) R&G or Holdings have received complete copies of (i) all U.S.
federal, state, local and foreign income or franchise Tax Returns of Group and
the Bank (or any Affiliated Group of which Group or the Bank are members)
relating to the Tax periods ended December 31, 1998, 1999 and 2000 and
thereafter and (ii) any audit report issued within the last three years relating
to Taxes due from or with respect to Group and the Bank (or any Affiliated Group
of which Group or the Bank are members) or its income, assets or operations.
Group and the Bank have Previously Disclosed all income and franchise Tax
Returns filed by or on behalf of Group and the Bank (or any Affiliated Group of
which Group or the Bank are members), which have been examined by the relevant
taxing authority or with respect to which the statute of limitations has
expired.
(f) Group and the Bank have Previously Disclosed all types of
Taxes paid and Tax Returns filed by or on behalf of Group and the Bank relating
to the Tax periods ended December 31, 1998, 1999 and 2000 and thereafter.
(g) No claim has been made by a taxing authority in a jurisdiction
where Group or Bank does not file Tax Returns that Group or Bank is or may be
subject to taxation in that jurisdiction.
(h) All deficiencies asserted or assessments made as a result of
any examination by any taxing authority of the Tax Returns of Group or the Bank
or any Affiliated Group of which Group or the Bank is or was a member have been
fully paid, and there are no audits or investigations of Group or the Bank or
any Affiliated Group of which Group or the Bank is or was a member by any taxing
authority in progress, nor has Group or the Bank or any Affiliated
15
Group of which Group or the Bank is or was a member received any notice from any
taxing authority that it intends to conduct such an audit or investigation. No
issue has been raised by a U.S. federal, state, local or foreign taxing
authority in any current or prior examination of Group or the Bank which, by
application of the same or similar principles, would reasonably be expected to
result in a proposed deficiency with for any subsequent Tax period.
(i) Except as Previously Disclosed, neither Group nor Bank has (i)
filed a consent pursuant to Section 341(f) of the Code, (ii) agreed to or is
required to make any adjustments pursuant to Section 481(a) of the Code or any
similar provision of state, local or foreign law by reason of a change in
accounting method initiated by Group or Bank or has knowledge that the Internal
Revenue Service has proposed any such adjustment or change in accounting method,
or has any application pending with any taxing authority requesting permission
for any changes in accounting methods that relate to the business or operations
of Group and the Bank, or has otherwise taken any action that would have the
effect of deferring any liability for Taxes from any Tax period ending on or
before the date that includes the Effective Time to any Tax period ending
thereafter, (iii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of state, local or foreign law with respect to Group or the Bank, or
(iv) requested any extension of time within which to file any Tax Return of
Group or the Bank, which Tax Return has since not been filed prior to the end of
the extension period. Neither Group nor the Bank have not been a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.
(j) No property owned by Group or the Bank (i) is property
required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) constitutes "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code or (iii) is "tax-exempt bond financed property" within the
meaning of Section 168(g) of the Code.
(k) Except as Previously Disclosed, neither Group nor the Bank is
a party to any Tax sharing or similar agreement or arrangement with any person.
(l) There is no contract, agreement, plan or arrangement,
including this Agreement, covering any person that, individually or
collectively, would give rise to the payment of any amount that would be not be
deductible by Group or the Bank by reason of Section 280G or 162(m) of the Code.
(m) Neither Group nor the Bank is subject to any private letter
ruling of the Internal Revenue Service or comparable rulings of other tax
authorities.
(n) Group is not, nor has it ever been, a member of an Affiliated
Group other than the Affiliated Group of which it is the parent, and the Bank
has never been a member of any Affiliated Group for any Tax purposes other than
the Affiliated Group of which Group is the parent. Neither Group nor the Bank
has any liability for the Taxes of any Person under Section
16
1.1502-6 of U.S. Treasury Regulations (or any similar provision of state, local
or foreign law) as a transferee or successor, by contract or otherwise.
(o) Except as Previously Disclosed, neither Group nor the Bank
owns any interest in any entity that is treated as a partnership for U.S.
federal income Tax purposes or would be treated as a pass-through, transparent
or disregarded entity for any Tax purposes.
(p) There are no material liens on any assets of Group or the Bank
that arose as a result of any unpaid Taxes (except for Taxes not yet due) of
Group or the Bank.
(q) Group and the Bank have Previously Disclosed all material Tax
elections of Group and the Bank that are required to be made on any Tax Return
and which are currently in effect.
3.11 LEGAL PROCEEDINGS
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the knowledge of Group and the Bank,
threatened against Group or the Bank or against any asset, interest or right of
Group or the Bank, or against any officer, director or employee of Group or the
Bank that in any such case, if decided adversely, could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Group
and the Bank considered as one enterprise. Neither Group nor the Bank is a party
to any order, judgment or decree which has or could reasonably be expected to
have a Material Adverse Effect on Group and the Bank considered as one
enterprise.
3.12 COMPLIANCE WITH LAWS
(a) Group and the Bank have all permits, licenses, certificates of
authority, orders and approvals of, and have made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are necessary in order to permit them to carry on their businesses
as they are presently being conducted and the absence of which could reasonably
be expected to have a Material Adverse Effect on Group and the Bank considered
as one enterprise; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect; and to the knowledge of Group and
the Bank, no suspension or cancellation of any of the same is threatened.
(b) Neither Group nor the Bank is in violation of its Articles of
Incorporation, Federal Stock Charter (as the case may be) and Bylaws, or of any
applicable federal, state or local law or ordinance or any order, rule or
regulation of any federal, state, local or other Governmental Entity (including,
without limitation, all the banking, securities, municipal securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and hour
laws, ordinances, orders, rules and regulations), or in default with respect to
any order, writ, injunction or decree of any court, or in default under any
order, license, regulation or demand of any Governmental Entity, any of which
violations or defaults could reasonably be expected to have a Material Adverse
Effect on Group and the Bank considered as one enterprise; and Group and the
Bank have not received any notice or communication from any Governmental Entity
asserting that Group and the Bank are in violation of any of the foregoing which
could reasonably be
17
expected to have a Material Adverse Effect on Group and the Bank considered as
one enterprise. Neither Group nor the Bank is subject to any regulatory or
supervisory cease and desist order, agreement, written directive, memorandum of
understanding or written commitment, and neither Group nor the Bank has received
any written communication from a Governmental Entity requesting that it enter
into any of the foregoing.
3.13 EMPLOYEE BENEFIT PLANS
(a) Group and the Bank have Previously Disclosed all stock option,
employee stock purchase and stock bonus plans, qualified pension or
profit-sharing plans, any deferred compensation, bonus or group insurance
contract or any other incentive, welfare or employee benefit plan, as defined in
Section 3(3) of ERISA, or agreement, understanding, practice or commitment,
formal or informal, sponsored, maintained or contributed to by Group or the Bank
for the benefit of the current or former directors, officers, employees or
independent contractors of Group and the Bank (the "Group Employee Plans").
Group and the Bank have Previously Disclosed accurate and complete copies of the
Group Employee Plans together with (i) the most recent actuarial and financial
reports prepared with respect to any such plans that are qualified plans, (ii)
the most recent annual reports filed with any Governmental Entity with respect
to each such plan and (iii) all rulings and determination letters and any open
requests for rulings or letters that pertain to any such plan that is a
qualified plan.
(b) None of Group, the Bank, any pension plan maintained by either
of them and qualified under Section 401 of the Code or, to the knowledge of
Group and the Bank, any fiduciary of such plan, has incurred any liability to
the PBGC, the Department of Labor or the Internal Revenue Service with respect
to the coverage of any employees of Group or the Bank under any Group Employee
Plan that has not been satisfied in full and that would have a Material Adverse
Effect on the Bank. To the knowledge of Group and the Bank, no reportable event
under Section 4043(b) of ERISA has occurred with respect to any Group Employee
Plan that is a pension plan.
(c) Neither Group nor the Bank participates in or has incurred any
liability under Section 4201 of ERISA for a complete or partial withdrawal from
a multi-employer plan (as such term is defined in ERISA), and neither Group nor
the Bank (or their respective successors) will incur any liability in the event
of a complete withdrawal from any multi-employer plan of which Group and the
Bank is a participant as of the date hereof in connection with the transactions
contemplated hereby.
(d) A favorable determination letter has been issued by the
Internal Revenue Service with respect to each Group Employee Plan that is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a "Group
Pension Plan") which is intended to qualify under Section 401 of the Code to the
effect that (i) such plan is qualified under Section 401 of the Code and (ii)
the trust associated with such employee pension plan is tax exempt under Section
501 of the Code. No such letter has been revoked or, to the knowledge of Group
and the Bank, is threatened to be revoked and neither Group nor the Bank knows
of any ground on which such revocation may be based. Neither Group nor the Bank
has any material liability under any such plan that is not reflected on the
consolidated balance sheet of Group at December 31, 2000
18
included in the Group Financial Statements, other than liabilities incurred in
the ordinary course of business in connection therewith subsequent to the date
thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any Group Employee Plan
which would result in the imposition, directly or indirectly, of a material
excise tax on Group under Section 4975 of the Code or otherwise have a Material
Adverse Effect on Group and the Bank considered as one enterprise.
(f) Full payment has been made (or proper accruals have been
established to the extent required by generally accepted accounting principles)
of all contributions which are required for periods prior to the date hereof,
and full payment will be so made (or proper accruals will be so established to
the extent required by generally accepted accounting principles) of all
contributions which are due and payable after the date hereof and prior to the
Effective Time, under the terms of each Group Employee Plan or ERISA; no
accumulated funding deficiency (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, exists with respect to any Group
Pension Plan, and there is no "unfunded current liability" (as defined in
Section 412 of the Code) with respect to any Group Pension Plan.
(g) The Group Employee Plans have been operated in compliance in
all material respects with the applicable provisions of ERISA, the Code, all
regulations, rulings and announcements promulgated or issued thereunder and all
other applicable governmental laws and regulations.
(h) There are no pending or, to the knowledge of Group and the
Bank, threatened claims (other than routine claims for benefits) by, on behalf
of or against any of the Group Employee Plans or any trust related thereto or
any fiduciary thereof.
(i) The consummation of the transactions contemplated by this
Agreement would not, directly or indirectly (including, without limitation, as a
result of any termination of employment prior to or following the Effective
Time) reasonably be expected to (i) entitle any director, officer, employee or
consultant of or to Group and the Bank to any payment (including severance pay
or similar compensation) or any increase in compensation, (ii) result in the
vesting or acceleration of any benefits under any Group Employee Plan or (iii)
result in any material increase in benefits payable under any Group Employee
Plan, except to the extent provided in the employment agreements between the
Bank and Xxxx X. Xxxxxx, Xxxxxx X.X. Xxxxx, Xxx X. Xxxxxx and Xxxxxx X. Xxxxxxx,
which have been Previously Disclosed.
(j) Neither Group nor the Bank maintains any compensation plans,
programs or arrangements the payments under which would not reasonably be
expected to be deductible as a result of the limitations under Section 162(m) of
the Code and the regulations issued thereunder.
(k) None of the execution of this Agreement, stockholder approval
of this Agreement or consummation of the transactions contemplated hereby will
(A) except for the employment agreements referred to in Section 3.13(i) hereof,
entitle any employees of Group or the Bank to severance pay or any increase in
severance pay upon any termination of employment after the date hereof, (B)
accelerate the time of payment or vesting or trigger any payment or funding
19
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Group Benefit Plans, (C) result in any breach or violation of, or
a default under, any of the Group Benefit Plans or (D) result in any payment
that would be a "parachute payment" to a "disqualified individual" as those
terms are defined in Section 280G of the Code, without regard to whether such
payment is reasonable compensation for personal services performed or to be
performed in the future.
3.14 CERTAIN CONTRACTS
(a) Except as Previously Disclosed, neither Group nor the Bank is
a party to, is bound or affected by, receives or is or may become obligated to
make payments under (i) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to the
borrowing of money by Group or the Bank (other than in the case of deposits,
federal funds purchased and securities sold under agreements to repurchase in
the ordinary course of business) or the guarantee by Group and the Bank of any
obligation; (ii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election or retention in office of
any present or former director, officer or employee of Group or the Bank; (iii)
any agreement, arrangement or understanding pursuant to which Group or the Bank
is obligated to indemnify any existing or former director, officer, employee or
agent of Group or the Bank; (iv) any agreement, arrangement or understanding to
which Group or the Bank is a party or by which either of the same is bound which
limits the freedom of Group or the Bank to compete in any line of business or
with any person or entity; (v) any supervisory agreement, memorandum of
understanding, consent order, cease and desist order or condition of any
regulatory order or decree with or by an applicable federal or state regulatory
agency; (vi) any lease of real or personal property requiring payments of annual
rental in excess of $15,000, whether as lessor or lessee; (vii) any other
agreement, arrangement or understanding which involves an annual payment of more
than $15,000 or (viii) any sales agreement, arrangement or understanding
pursuant to which Group or the Bank has transferred any loans and which provides
for recourse against Group or the Bank in the event that any borrower fails to
pay the principal or interest when due. Group and the Bank have Previously
Disclosed all contracts which provide for the servicing of loans by or for Group
and the Bank.
(b) Neither Group nor the Bank is in default or in non-compliance,
which default or non-compliance could reasonably be expected to have a Material
Adverse Effect on Group and the Bank considered as one enterprise, under any
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party or by which its assets, business or operations
may be bound or affected, whether entered into in the ordinary course of
business or otherwise and whether written or oral, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a default or non-compliance.
3.15 BROKERS AND FINDERS
Except as Previously Disclosed, neither Group nor the Bank nor any of
their directors, officers, employees or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has
20
acted directly or indirectly for Group or the Bank in connection with this
Agreement or the transactions contemplated hereby.
3.16 INSURANCE
Group and the Bank believe that Group and the Bank are insured, and
during each of the past three calendar years have been insured, for reasonable
amounts with financially sound and reputable insurance companies against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured, and have maintained all insurance
required by applicable laws and regulations. Group and the Bank have Previously
Disclosed to R&G a list identifying all insurance policies maintained by Group
and the Bank as of the date hereof and any claims pending thereunder. All of the
policies and bonds maintained by Group and the Bank are in full force and effect
and all claims thereunder have been filed in a due and timely manner and no such
claim has been denied.
3.17 PROPERTIES
All real and personal property owned by Group and the Bank or presently
used by them in their respective businesses are in an adequate condition
(ordinary wear and tear excepted) sufficient to carry on their respective
businesses of Group and the Bank in the ordinary course of business consistent
with past practices. Group and the Bank have good and marketable title free and
clear of all liens, encumbrances, charges, defaults or equities (other than
equities of redemption under applicable foreclosure laws or of lessors
respecting any leased property) to all of the material properties and assets,
real and personal, reflected on the consolidated balance sheet of Group as of
September 30, 2001 included in the Group Financial Statements or acquired after
such date, other than properties sold by Group and the Bank in the ordinary
course of business, except for (i) liens for current taxes not yet due or
payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of its the banking business and (iii) such imperfections of
title, easements and encumbrances, if any, as are not material in character,
amount or extent. All real and personal property which are material to Group and
the Bank's respective businesses and leased or licensed by Group or the Bank are
held pursuant to leases or licenses which are valid and enforceable in
accordance with their respective terms and such leases will not terminate or
lapse prior to the Effective Time. Group and the Bank have Previously Disclosed
a description of each real property owned or leased by Group and the Bank and
used in the conduct of their respective businesses.
3.18 LABOR
No work stoppage involving Group or the Bank is pending or, to the
knowledge of Group and the Bank, threatened. Neither Group nor the Bank is
involved in, nor to the knowledge of Group and the Bank, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving the employees of Group or the Bank which could reasonably
be expected to have a Material Adverse Effect on Group and the Bank considered
as one enterprise. Employees of Group or the Bank are not represented by any
labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the knowledge of Group and the Bank,
there have been no efforts to unionize or organize any employees of Group or the
Bank.
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3.19 TRANSACTIONS WITH AFFILIATES
Except as Previously Disclosed, there are no existing or pending
transactions, nor are there any agreements or understandings, with any
directors, officers or employees of Group or the Bank or any person or entity
affiliated with Group or the Bank ("Affiliates"), relating to, arising from or
affecting Group or the Bank, including, without limitation, any transactions,
arrangements or understandings relating to the purchase or sale of goods or
services, the lending of monies or the sale, lease or use of any assets of Group
or the Bank.
3.20 LOANS; NONPERFORMING LOANS AND CLASSIFIED ASSETS
(a) Each loan agreement, note or borrowing arrangement, including
unfunded portions of outstanding lines of credit and loan commitments, on the
books and records of Group or the Bank, was made and has been serviced in all
material respects in accordance with customary lending standards in the ordinary
course of business, is evidenced in all material respects by appropriate and
sufficient documentation and, to the knowledge of Group and the Bank,
constitutes the legal, valid and binding obligation of the obligor named
therein, subject to the bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditor's rights and to
general equity principles.
(b) All mortgage loans originated by AABCO Mortgage Loans &
Investments, Inc. ("AABCO") while such company was owned by Group and Bank were
originated in all material respects in compliance with all applicable federal
and state laws and regulations including, but not limited to, real estate
settlement procedures, truth in lending and predatory lending practices, and to
the best of its knowledge, neither Group nor Bank has experienced any
complaints, nor has Group or Bank been involved with any threatened or actual
lawsuits or settlements arising from or related to any loans originated by
AABCO.
(c) Group and the Bank have Previously Disclosed: (i) a list as of
September 30, 2001 of any written or, to Group's and the Bank's knowledge, oral
loan or similar agreement under the terms of which an obligor of Group or the
Bank is 90 or more days delinquent in payment of principal or interest, or to
the knowledge of Group and the Bank, in default of any other provision thereof;
(ii) a list of each loan or similar agreement which has been classified as
"substandard," "doubtful" or "loss" or designated "special mention" by Group or
the Bank or an applicable regulatory authority as of September 30, 2001; and
(iii) a listing of the real estate owned or acquired by Group or the Bank by
foreclosure or by deed-in-lieu thereof as of October 31, 2001.
3.21 ADMINISTRATION OF FIDUCIARY DUTIES
Group and the Bank have properly administered all accounts for which
they act as a fiduciary, including but not limited to accounts for which they
serve as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable laws and regulations, except for failures to so
administer which would not have a Material Adverse Effect on Group and the Bank
considered as one enterprise. Neither Group nor the Bank, nor any of their
directors, officers or employees, has committed any breach of trust with respect
to any such fiduciary account and the records for each such fiduciary account
are true and correct and accurately reflect the assets of such fiduciary
account, except for breaches of trust and failures to maintain records which
would not, individually or in the aggregate, have a Material Adverse Effect on
Group and the Bank considered as one enterprise.
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3.22 REQUIRED VOTE; INAPPLICABILITY OF ANTITAKEOVER STATUTES; FAIRNESS
OPINION
(a) This Agreement and the transactions contemplated hereby are
required to be approved on behalf of Group by the affirmative vote of the
holders of at least a majority of the outstanding shares of the Group Common
Stock.
(b) No "control share acquisition," "business combination
moratorium," "fair price" or other form of antitakeover statute or regulation is
applicable to this Agreement and the transactions contemplated hereby.
3.23 DISCLOSURES
None of the representations and warranties of Group or the Bank or any
of the written information or documents furnished by Group or the Bank to R&G
and Holdings pursuant to this Agreement or in connection with the transactions
contemplated hereby, when considered as a whole, contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact required to be stated or necessary to make any such information or
document, at the time and in light of the circumstances (including without
limitation the nature and scope of the information described in the
representation, warranty, information or document), not misleading. Copies of
all documents Previously Disclosed or made available to R&G and Holdings
pursuant to this Article III are true, correct and complete copies thereof and
include all amendments, supplements and modifications thereto and all waivers
thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF R&G AND HOLDINGS
R&G and Holdings represent and warrant to Group and the Bank as
follows:
4.1 CAPITAL STRUCTURE OF R&G
The authorized capital stock of R&G consists of 80,000,000 shares of
R&G Common Stock (40,000,000 shares of which are designated as Class A shares
and 40,000,000 shares of which are designated as Class B shares), and 10,000,000
shares of R&G Preferred Stock. As of the date hereof, there are 16,053,056 Class
A shares and 15,241,322 Class B shares of R&G Common Stock issued and
outstanding, respectively, 5,760,000 shares of R&G Preferred Stock issued and
outstanding (of which 2,000,000 shares, 1,000,000 shares and 2,760,000 shares
are designated as the 7.40% Noncumulative Perpetual Monthly Income Preferred
Stock, Series A, the 7.75% Noncumulative Perpetual Monthly Income Preferred
Stock, Series B, and the 7.60% Noncumulative Perpetual Monthly Income Preferred
Stock, Series C, respectively) and no shares of R&G Common Stock are held as
treasury shares. All outstanding shares of R&G Common Stock and R&G Preferred
Stock have been duly authorized and validly issued and are fully paid and
nonassessable, and none of the outstanding shares of R&G Common Stock and R&G
Preferred Stock have been issued in violation of the preemptive rights of any
person, firm or entity. As of the date hereof, there are no Rights authorized,
issued or outstanding with respect to the capital stock of R&G, except for
shares of R&G Common Stock issuable pursuant to the
23
R&G Stock Option Plan. The R&G Debenture to be issued in connection with the
Merger is duly authorized (subject to receipt of all governmental approvals)
and, when issued in accordance with the terms hereof, will be validly issued and
fully paid and nonassessable.
4.2 ORGANIZATION, STANDING AND AUTHORITY OF R&G
R&G is a corporation duly organized, existing and in good standing
under the laws of the Commonwealth of Puerto Rico. R&G 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 and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties
owned or leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed, qualified or in good standing would not
have a Material Adverse Effect on R&G on a consolidated basis. R&G is duly
registered as a bank holding company under the BHCA.
4.3 OWNERSHIP OF THE R&G SUBSIDIARIES
R&G has Previously Disclosed the name, jurisdiction of incorporation
and percentage ownership of each direct or indirect R&G Subsidiary, including
Holdings. The outstanding shares of capital stock of each R&G Subsidiary have
been duly authorized and validly issued, are fully paid and nonassessable and
are directly or indirectly owned by R&G free and clear of all liens, claims,
encumbrances, charges, pledges, restrictions or rights of third parties of any
kind whatsoever. No Rights are authorized, issued or outstanding with respect to
the capital stock or other ownership interests of any R&G Subsidiary and there
are no agreements, understandings or commitments relating to the right of R&G to
vote or to dispose of such capital stock or other ownership interests. For
purposes of this Agreement, the R&G Significant Subsidiaries are R&G Mortgage
Corp. and R-G Premier Bank of Puerto Rico.
4.4 ORGANIZATION, STANDING AND AUTHORITY OF THE R&G SUBSIDIARIES
Each of the R&G Subsidiaries (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized, (ii) has the corporate power and authority to own or lease all of its
properties and assets and to conduct its business as it is now being conducted,
and (iii) is duly licensed or qualified to do business and is in good standing
in each jurisdiction in which the nature of the business conducted by it or by
character or location of the properties or assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on R&G on a consolidated basis. The deposit accounts of R&G Premier Bank of
Puerto Rico are insured by the BIF to the maximum extent permitted by the FDIA,
and R&G Premier Bank of Puerto Rico has paid all deposit insurance premiums and
assessments required by the FDIA and the regulations thereunder.
4.5 AUTHORIZED AND EFFECTIVE AGREEMENT; CONSENTS AND APPROVALS
(a) R&G and Holdings have all requisite corporate power and
authority to enter into this Agreement and (subject to receipt of all necessary
governmental approvals) to perform all of their obligations under this
Agreement. The execution and delivery of this Agreement and the
24
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
R&G and Holdings. This Agreement has been duly and validly executed and
delivered by R&G and Holdings and constitutes the legal, valid and binding
obligation of R&G and Holdings which is enforceable against R&G and Holdings in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of equitable
remedies (including, without limitation, specific performance) is within the
discretion of the appropriate court.
(b) None of the execution and delivery of this Agreement by R&G
and Holdings, the consummation by R&G and Holdings of the transactions
contemplated hereby in accordance with the terms hereof or compliance by R&G and
Holdings with any terms or provisions hereof will (i) violate any provision of
the Certificate of Incorporation or other governing instrument or Bylaws of R&G
or any R&G Significant Subsidiary, (ii) assuming that the consents and approvals
set forth herein are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to R&G or an
R&G Significant Subsidiary or any of their respective properties or assets, or
(iii) violate, conflict with, result in a breach of any provisions of,
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, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of R&G or an R&G Significant Subsidiary 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 R&G or an
R&G Significant Subsidiary is a party, or by which any of their respective
properties or assets may be bound or affected, except with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a Material
Adverse Effect on R&G on a consolidated basis and which will not prevent or
delay the consummation of the transactions contemplated hereby. Except for
consents and approvals of or filings or registrations with or notices to the OTS
and the FRB, no consents or approvals of or filings or registrations with or
notices to any Governmental Entity are required on behalf of R&G and Holdings in
connection with (i) the execution and delivery of this Agreement by R&G and
Holdings and (ii) the completion by R&G and Holdings of the transactions
contemplated hereby.
(c) As of the date hereof, R&G and Holdings are not aware of any
reasons relating to R&G or an R&G Subsidiary why all consents and approvals
shall not be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated by this Agreement.
4.6 SECURITIES DOCUMENTS
Since January 1, 1996, R&G has timely filed with the Commission all
Securities Documents required by the Securities Laws and such Securities
Documents complied in all material respects with the Securities Laws and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, at the time and in light of the circumstances under which they were
made, not misleading.
25
4.7 FINANCIAL STATEMENTS
(a) R&G has previously delivered or made available to Group
accurate and complete copies of (i) the consolidated statements of financial
condition of R&G as of December 31, 2000 and 1999, and the consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the years ended December 31, 2000, 1999 and 1998, which are accompanied by the
audit report of PricewaterhouseCoopers LLP, independent public accountants with
respect to R&G, and (ii) the unaudited consolidated statement of financial
condition as of September 30, 2001, and the related consolidated statements of
income, and cash flows for the nine months ended September 30, 2001 and 2000.
The R&G Financial Statements referred to herein, as well as the R&G Financial
Statements to be delivered pursuant to Section 5.7 hereof, fairly present or
will fairly present, as the case may be, the consolidated financial condition of
R&G as of the respective dates set forth therein, and the consolidated results
of operations, changes in stockholders' equity and cash flows of R&G for the
respective periods or as of the respective dates set forth therein.
(b) Each of the R&G Financial Statements has been or will be, as
the case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein and except that unaudited R&G Financial Statements may not include all
footnote disclosures required by generally accepted accounting principles.
Except to the extent (i) reflected, disclosed or provided for in the Securities
Documents filed by R&G prior to the date hereof and (ii) of liabilities incurred
since September 30, 2001 in the ordinary course of business, neither R&G nor any
R&G Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, which are material to the financial condition, results of operations
or business of R&G on a consolidated basis.
4.8 MATERIAL ADVERSE CHANGE
Since September 30, 2001, no event has occurred or circumstance arisen
that, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect on R&G on a consolidated basis.
4.9 LEGAL PROCEEDINGS
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the knowledge of R&G, threatened against
R&G or any R&G Subsidiary or against any asset, interest or right of R&G or any
R&G Subsidiary, or against any officer, director or employee of any of them that
in any such case, if decided adversely, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on R&G on a
consolidated basis. Neither R&G nor any R&G Subsidiary is a party to any order,
judgment or decree which has or could reasonably be expected to have a Material
Adverse Effect on R&G on a consolidated basis.
4.10 COMPLIANCE WITH LAWS
(a) R&G and each R&G Significant Subsidiary has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations
26
with, federal, state, local and foreign governmental or regulatory bodies that
are required in order to permit it to carry on its business as it is presently
being conducted and the absence of which could reasonably be expected to have a
Material Adverse Effect on R&G on a consolidated basis; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect; and to the knowledge of R&G, no suspension or cancellation of any of the
same is threatened.
(b) Neither R&G nor any R&G Significant Subsidiary is in violation
of its respective Articles of Incorporation and Bylaws or equivalent documents,
or of any applicable federal, state or local law or ordinance or any order, rule
or regulation of any federal, state, local or other Governmental Entity
(including, without limitation, all banking, securities, municipal securities,
safety, health, environmental, zoning, anti-discrimination, antitrust, and wage
and hour laws, ordinances, orders, rules and regulations), or in default with
respect to any order, writ, injunction or decree of any court, or in default
with respect to any order, writ, injunction or decree of any court, or in
default under any order, license, regulation or demand of any Governmental
Entity, any of which violations or defaults could reasonably be expected to have
a Material Adverse Effect on R&G on a consolidated basis; and neither R&G nor
any R&G Significant Subsidiary has received any notice or communication from any
Governmental Entity asserting that R&G or any R&G Significant Subsidiary is in
violation of any of the foregoing which could reasonably be expected to have a
Material Adverse Effect on R&G on a consolidated basis. Except as Previously
Disclosed, neither R&G nor any R&G Significant Subsidiary is subject to any
regulatory or supervisory cease and desist order, agreement, written directive,
memorandum of understanding or written commitment, and none of them has received
any written communication from a Governmental Entity requesting that it enter
into any of the foregoing.
4.11 CERTAIN CONTRACTS
Neither R&G nor any R&G Significant Subsidiary is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on R&G on a consolidated basis, under any
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party or by which its assets, business or operations
may be bound or affected, whether entered into in the ordinary course of
business or otherwise and whether written or oral, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a default or non-compliance.
4.12 BROKERS AND FINDERS
Except as Previously Disclosed, neither R&G nor any R&G Subsidiary, nor
any of their respective directors, officers, employees or agents has employed
any broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finders' fees in connection with this Agreement
or the transactions contemplated hereby.
27
4.13 ABILITY TO PAY CASH CONSIDERATION
R&G or Holdings will have available to it as of the Effective Time
sufficient cash to pay the cash portion of the Merger Consideration to
stockholders of Group as set forth in Section 2.6(c).
4.14 DISCLOSURES
None of the representations and warranties of R&G nor Holdings or any
of the written information or documents furnished by R&G or Holdings to Group
pursuant to this Agreement or in connection with the transactions contemplated
hereby, when considered as a whole, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to be stated or necessary to make any such information or document, at
the time and in light of the circumstances (including without limitation the
nature and scope of the information described in the representation, warranty,
information or document), not misleading. Copies of all documents Previously
Disclosed or made available to Group pursuant to this Article IV are true,
correct and complete copies thereof and include all amendments, supplements and
modifications thereto and all waivers thereunder.
ARTICLE V
COVENANTS
5.1 REASONABLE BEST EFFORTS
Subject to the terms and conditions of this Agreement, each party to
this Agreement shall use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or advisable under applicable laws and regulations so as to permit
consummation of the Merger (including, without limitation, satisfaction of the
conditions to consummation of the Merger specified in Article VI of this
Agreement) as promptly as practicable thereafter and to otherwise enable
consummation of the transactions contemplated hereby, and shall cooperate fully
with the other party or parties hereto to that end.
5.2 SOLICITATION OF SHAREHOLDER CONSENTS
Group shall take all action necessary to properly solicit its
shareholders as soon as practicable after the date hereof to consent to this
Agreement and the transactions contemplated hereby. The Board of Directors of
Group will recommend that the shareholders of Group approve this Agreement and
the transactions contemplated hereby, provided that the Board of Directors of
Group may fail to make such recommendation, or withdraw, modify or change any
such recommendation, if such Board of Directors, after having consulted with and
considered the written advice of outside counsel, has determined that the making
of such recommendation, or the failure to withdraw, modify or change such
recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable law.
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5.3 REGULATORY AND OTHER MATTERS
(a) To the extent that Group utilizes any written solicitation
material to obtain the consents required by Section 5.2 hereof, Group shall
provide R&G with a reasonable opportunity to review such material prior to its
use. R&G shall use its reasonable best efforts to obtain all necessary state
securities law or "blue sky" permits and approvals required to carry out the
issuance of the R&G Debenture pursuant to the Merger and all other transactions
contemplated by this Agreement, and Group shall furnish all information
concerning Group and the holders of Group Common Stock as may be reasonably
requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use
their 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 Governmental Entities and third parties which are necessary or advisable to
consummate the transactions contemplated by this Agreement. R&G and Group shall
have the right to review in advance, and to the extent practicable each will
consult with the other on, in each case subject to applicable laws relating to
the exchange of information, all the information 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. Subject to the
requirements of this Section 5.3(b), R&G agrees to file all regulatory
applications and other required documentation with Governmental Entities by
February 15, 2001, unless such date is extended with the permission of Group,
which consent shall not be unreasonably withheld.
(c) R&G and Group shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with any statement, filing, notice or application
made by or on behalf of R&G, Group or any of their respective Subsidiaries to
any Governmental Entity in connection with the transactions contemplated by this
Agreement.
(d) R&G and Group shall promptly furnish each other with copies of
written communications received by, R&G or Group, as the case may be, from or
delivered by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement.
5.4 INVESTIGATION AND CONFIDENTIALITY
(a) Each party shall permit the other party and its
representatives reasonable access to its properties and personnel, and shall
disclose and make available to such other party all books, papers and records
relating to the assets, stock ownership, properties, operations, obligations and
liabilities of it and its Subsidiaries including, but not limited to, all books
of account (including
29
the general ledger), tax records, minute books of meetings of boards of
directors (and any committees thereof) and shareholders, organizational
documents, bylaws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, loan files,
plans affecting employees, and any other business activities or prospects in
which the other party may have a reasonable interest, provided that such access
shall be reasonably related to the transactions contemplated hereby and not
unduly interfere with normal operations, shall not violate any law or agreement
or constitute the waiver of any privilege. In the event that any party is
prohibited by law or agreement from providing any of the access referred to in
the preceding sentence, it shall use its reasonable best efforts to obtain
promptly waivers thereof so as to permit such access. Each party and its
Subsidiaries shall make their respective directors, officers, employees and
agents and authorized representatives (including counsel and independent public
accountants) available to confer with the other party and its representatives,
provided that such access shall be reasonably related to the transactions
contemplated by this Agreement and not unduly interfere with normal operations.
(b) Each of Group and R&G shall hold all information furnished by
or on behalf of the other party or any of such party's Subsidiaries or
representatives pursuant hereto in confidence to the extent required by, and in
accordance with, the confidentiality agreement, dated July 11, 2001, between
Group and R&G (the "Confidentiality Agreement").
5.5 PRESS RELEASES
R&G and Group shall agree with each other as to the form and substance
of any press release related to this Agreement or the transactions contemplated
hereby, and consult with each other as to the form and substance of other public
disclosures which may relate to the transactions contemplated by this Agreement,
provided, however, that nothing contained herein shall prohibit either party,
following notification to the other party, from making any disclosure which it
determines in good faith is required by law or regulation.
5.6 BUSINESS OF GROUP AND THE BANK
(a) During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of R&G, each of
Group and the Bank shall carry on its business in the ordinary course consistent
with past practice. Each of Group and the Bank shall use all reasonable efforts
to (x) preserve its business organizations intact, (y) keep available to itself
and R&G the present services of the employees of Group and the Bank and (z)
preserve for itself and R&G the goodwill of the customers of Group and the Bank
and others with whom business relationships exist.
(b) Without limiting the generality of the foregoing, except with
the prior written consent of R&G or as expressly contemplated hereby, between
the date hereof and the Effective Time, Group and the Bank shall not (to the
extent applicable):
(i) except as otherwise permitted by Section 5.13 hereof,
declare, set aside, make or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, except that, to the extent that funds are
30
legally available therefor, Bank may declare and pay cash dividends to Group in
an amount which does not exceed $308,736 per quarter and Group may declare and
pay cash dividends to its stockholders in an amount which does not exceed
$308,736 per quarter;
(ii) except for Group Common Stock issued upon exercise of
the Group Options, issue any shares of its capital stock, issue, grant, modify
or authorize any Rights, or effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization;
(iii) amend its Articles of Incorporation, Federal Stock
Charter or Bylaws or equivalent documents; impose, or suffer the imposition, on
any share of Group Common Stock or Bank Common Stock of any material lien,
charge or encumbrance or permit any such lien to exist; or waive or release any
material right or cancel or compromise any material debt or claim;
(iv) increase the rate of compensation of any of its
directors, executive officers or employees, or pay or agree to pay any bonus or
severance to, or accelerate the payment of any employee benefit or incentive to,
or provide any other new employee benefit or incentive to, any of its directors,
officers or employees, except (A) as may be required pursuant to binding
commitments existing on the date hereof and Previously Disclosed, and (B) in the
case of employees who are not officers above the level of Vice President, such
as may be granted in the ordinary course of business consistent with past
practice;
(v) enter into or, except as may be required by law,
modify any pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, supplemental retirement,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement related thereto,
in respect of any of its directors, officers or employees; or except for
matching contributions required by the Bank's 401(k) plan, make any
contributions to Group Employee Plans;
(vi) enter into (w) any agreement, arrangement or
commitment not made in the ordinary course of business, (x) any agreement,
indenture or other instrument relating to the borrowing of money (other than in
the case of deposits, federal funds purchased, Federal Home Loan Bank advances
and securities sold under agreements to repurchase in the ordinary course of
business) or guarantee of any such obligation, (y) any agreement, arrangement or
commitment relating to the employment of, or severance of, an officer, employee
or consultant or amend any such existing agreement, except that an individual
may be employed in the ordinary course of business if the employment of such
employee is terminable at will without liability, other than as required by law,
or (z) any contract, agreement or understanding with a labor union;
(vii) change its method of accounting in effect for the
year ended December 31, 2000, except as required by changes in laws or
regulations or generally accepted accounting principles concurred in by its and
R&G's independent public accountants, or change any of its methods of reporting
income and deductions for federal income Tax purposes from those employed in the
preparation of its federal income Tax Return for the year ended December 31,
2000, except as required by changes in laws or regulations;
31
(viii) purchase or otherwise acquire any assets or incur any
liabilities other than in the ordinary course of business consistent with past
practice and policies;
(ix) engage in any transaction of any type in excess of
$500,000, including but not limited to the making of any loan or renewal
thereof, or investment in excess of such amount;
(x) originate any non-conforming residential loan for its
portfolio with a principal balance in excess of $300,000;
(xi) make any capital expenditures in excess of $10,000
individually or $15,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof which are Previously Disclosed and other
than expenditures necessary to maintain existing assets in good repair;
(xii) file any applications or make any contract with
respect to branching, site location or relocation or closing of a branch;
(xiii) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity or enter
into any new line of business;
(xiv) engage in any transaction with an Affiliate, other
than transactions in the ordinary course of business consistent with past
practice and which are in compliance with the requirements of applicable laws
and regulations;
(xv) enter into any futures contract, option contract,
interest rate caps, interest rate floors, interest rate exchange agreement or
other agreement for purposes of hedging the exposure of its interest-earning
assets and interest-bearing liabilities to changes in market rates of interest;
(xvi) discharge or satisfy any material lien or encumbrance
or pay any material obligation or liability (absolute or contingent) other than
at scheduled maturity or in the ordinary course of business;
(xvii) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its assets or
rights or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xviii) change its lending, investment, deposit or asset and
liability management or other banking policies in any material respect except as
may be required by applicable law or regulations;
(xix) incur any liability for borrowed funds (other than in
the case of deposits, federal funds purchased, advances from the Federal Home
Loan Bank of Atlanta and securities sold under agreements to repurchase in the
ordinary course of business) or place upon or permit any lien or encumbrance
upon any of its properties or assets, except liens of the type permitted in the
exceptions to Section 3.18;
32
(xx) invest in any investment securities other than United
States government agencies with a term of one (1) year or less or federal funds;
(xxi) sell or otherwise dispose of, any assets with
recourse, or otherwise other than in the ordinary counsel of business consistent
with past practices;
(xxii) originate any loan which would have a Fair Xxxxx
Credit Analysis score of 680 or less;
(xxiii) file any Tax Returns with respect to Taxes before
providing R&G with a reasonable period of time to review such Tax Return;
(xxiv) take any action that would or could reasonably be
expected to result in any of the representations and warranties of Group and the
Bank contained in this Agreement not to be true and correct in any material
respect at or prior to the Effective Time, or in any of the conditions to the
Merger set forth in Article VI hereof not being satisfied or in violation of any
provision of this Agreement, except in each case as may be required by
applicable law; or
(xxv) agree to do any of the foregoing.
(c) For purposes of any loan or commitment sought to be made by
Group in excess of the limits set forth in Section 5.6(b), R&G and Holdings
shall be deemed to have consented to such loan or commitment if it shall not
have objected in writing to such loan or commitment within five (5) business
days after receiving written notice and reasonable detail thereof.
(d) Group and the Bank shall not authorize or permit any of their
respective directors, officers, employees or agents to directly or indirectly
solicit, initiate or encourage any inquiries relating to, or the making of any
proposal which constitutes, an Acquisition Transaction (as defined below), or,
except to the extent legally required for the discharge of the fiduciary duties
of the Board of Directors of Group, as advised by counsel in writing, (i)
recommend or endorse an Acquisition Transaction, (ii) participate in any
discussions or negotiations regarding an Acquisition Transaction or (iii)
provide any third party (other than R&G) with any nonpublic information in
connection with any inquiry or proposal relating to an Acquisition Transaction.
Group and the Bank will immediately cease and cause to be terminated any
existing activities, discussions or negotiations previously conducted with any
parties other than R&G with respect to any of the foregoing, and will take all
actions necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 5.6(c). Group and the Bank will notify R&G immediately if any inquiries
or proposals relating to an Acquisition Transaction are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, Group or the Bank, and Group and the
Bank will promptly inform R&G in writing of all of the relevant details with
respect to the foregoing. As used in this Agreement, "Acquisition Transaction"
shall mean (i) a merger or consolidation, or any similar transaction, involving
Group or the Bank, (ii) a purchase, lease or other acquisition of all or a
substantial portion of the assets or liabilities of Group or the Bank or (iii) a
purchase or other acquisition (including by way of share exchange, tender offer,
exchange offer or otherwise) of an interest in any class or series of equity
securities of Group or the Bank.
33
(e) Group shall engage Matrix Capital Markets, Denver, Colorado
("Matrix"), to perform a valuation analysis of the Bank's mortgage servicing
portfolio (the "Valuation Analysis"), which shall be performed as of December
31, 2001 and as of the month-end prior to the Effective Time. In each instance,
such Valuation Analysis shall be completed and delivered to R&G and Holdings by
the 15th day of the month following the valuation date. Group represents and
warrants that all information submitted to Matrix hereunder will be accurate in
all material respects. Any such Valuation Analysis shall be conclusive and
binding on the parties hereto.
5.7 CURRENT INFORMATION
During the period from the date of this Agreement to the Effective
Time, each party shall, upon the request of the other party, cause one or more
of its designated representatives to confer on a monthly or more frequent basis
with representatives of the other party regarding its financial condition,
operations, business and prospects and matters relating to the completion of the
transactions contemplated by this Agreement. As soon as reasonably available,
but in no event more than 45 days after the end of each calendar quarter ending
after the date of this Agreement (other than the last quarter of each calendar
year ending December 31), (i) Group and Bank will each deliver to R&G an
unaudited consolidated balance sheet and consolidated statements of income,
changes in shareholders' equity and cash flows for such quarter and the same
quarter in the preceding year prepared in accordance with generally accepted
accounting principles, and (ii) R&G will deliver to Group its quarterly report
on Form 10-Q under the Exchange Act. As soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year, (i) Group and Bank
will each deliver to R&G audited consolidated financial statements which are
comparable in nature and scope to the audited Group Financial Statements and the
Bank Financial Statements, and (ii) R&G will deliver to Group its Annual Report
on Form 10-K. Within 15 days after the end of each month, Group and Bank will
each deliver to R&G a balance sheet and a statement of income, without related
notes, for such month prepared in accordance with generally accepted accounting
principles. The statements delivered by Group pursuant to the preceding sentence
shall be on a consolidated basis.
5.8 BENEFIT PLANS AND EMPLOYMENT
(a) Subject to the provisions of this Section 5.8, all employees
of Group and the Bank immediately prior to the Effective Time who continue to be
employed by R&G or the Bank immediately following the Effective Time
("Transferred Employees") will either (i) continue to be covered by Group's or
the Bank's employee benefit plans or (ii) be covered by the employee benefit
plans of R&G or its Subsidiaries in a manner which compares with the employee
benefits previously provided to the Transferred Employees by Group and the Bank.
Notwithstanding the foregoing, R&G may determine to terminate any of Group's or
the Bank's employee benefit plans, or to merge any such employee benefit plan
with the benefit plans of R&G and/or its Subsidiaries, provided the result is
the provision of benefits to Transferred Employees that are substantially
similar to the benefits previously provided by Group and the Bank. Except as
specifically provided in this Section 5.8 and as otherwise prohibited by law,
Transferred Employees' service with Group or the Bank shall be recognized as
service with R&G or its Subsidiaries for purposes of eligibility to participate
and vesting, if applicable (but not for
34
purposes of benefit accrual) under the benefit plans of R&G and/or its
Subsidiaries subject to applicable break-in-service rules.
(b) R&G and Holdings anticipate that most employees of Group and
the Bank as of the Effective Time shall continue as employees of the Bank
following the Effective Time, provided that R&G and Holdings shall have no
obligation to continue the employment of any such person and nothing contained
in this Agreement shall give any employee of Group or the Bank a right to
continuing employment with the Bank following the Effective Time.
5.9 INDEMNIFICATION
From and after the Effective Time through the third anniversary of the
Effective Time, R&G (the "Indemnifying Party"), agrees to indemnify and hold
harmless each present director, officer or employee of Group and the Bank,
determined as of the Effective Time (the "Indemnified Parties"), against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, only and to the fullest extent to which Group and the
Bank is or was required by law or their Bylaws to indemnify such Indemnified
Parties and in the manner to which it could indemnify such parties under the
Bylaws of Group or the Bank, as in effect on the date hereof; provided, however,
that the Indemnifying Party shall maintain directors' and officers' insurance
coverage for three years of not less than $3,000,000 for the benefit of the
Indemnified Parties.
5.10 ADDITIONAL COVENANTS
(a) Group and Bank shall use commercially reasonable efforts to
procure and deliver to R&G and Holdings not more than thirty (30) days following
the date of this Agreement the resignations, together with a release of claims,
each effective as of the Effective Time, of each director of Group and the Bank,
each officer of Group and the officers of the Bank identified in Section 3.13(i)
hereof.
(b) Group and Bank shall use their best efforts to obtain and
deliver to R&G and Holdings at the Closing with respect to all real estate (i)
owned by Group or the Bank, an estoppel letter dated as of the Closing in the
form of Exhibit F from all tenants and (ii) leased by Group or the Bank, an
estoppel letter dated as of the Closing in the form of Exhibit G from all
lessors.
5.11 DISCLOSURE SUPPLEMENTS
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and delivered to
the other party pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in materials Previously Disclosed to
the other party or which is necessary to correct any information in such
materials which has been rendered inaccurate thereby; no such supplement or
amendment to such
35
materials shall be deemed to have modified the representations, warranties and
covenants of a party for the purposes of determining whether the conditions set
forth in Article VI hereof have been satisfied.
5.12 FAILURE TO FULFILL CONDITIONS
In the event that any of the parties hereto determines that a condition
to its respective obligations to consummate the transactions contemplated hereby
cannot be fulfilled on or prior to the termination of this Agreement pursuant to
Section 7.1 hereof, it will promptly notify the other party or parties. Each
party will promptly inform the other party or parties of any facts applicable to
it that would be likely to prevent or materially delay approval of the Merger
and the transactions contemplated hereby by any Governmental Entity or third
party or which would otherwise prevent or materially delay completion of the
Merger and the transactions contemplated hereby.
5.13 CERTAIN ADDITIONAL ACTION
(a) Prior to the Effective Time, Group shall cause to be
transferred to the LLC the assets identified in Schedule 5.13(a) hereto.
Concurrent with such transfer, Group shall cause the LLC to execute and deliver
to R&G the Indemnification Letter the form which is set forth as Exhibit J
hereto.
(b) Prior to the Effective Time, Group shall caused to be sold for
cash the assets identified in Schedule 5.13(b) hereto. To the extent that, as of
the Effective Time, the condition set forth in Section 6.3 (k) is satisfied, R&G
or Group shall distribute to the LLC on behalf of the holders of Group Common
Stock any cash held by Group in excess of Twelve Million Dollars ($12,000,000).
The LLC agrees to indemnify R&G and Group for any Tax imposed in connection with
the sales contemplated by this Section 5.13(b), which may be satisfied by any
amounts due to the LLC pursuant to Section 5.13(c) hereof.
(c) It is expected that Group will write-down the value of its
investment in Fortune Financial, Inc. ("FFI") for both accounting and Tax
purposes as of December 31, 2001. Group expects that the amount of such
write-down for federal income Tax purposes will equal or exceed that amount
which, if such write-down had not occurred, would have been its taxable income
for purposes of computing its federal income Tax liability for the year ended
December 31, 2001. R&G agrees to pay (the "Initial Additional Payment"), an
amount equal to (x) the excess of (A) Group's federal income Tax liability for
the year ended December 31, 2001 computed as if Group had not written-down the
value of its investment in FFI over (B) Group's federal income Tax liability for
the year ended December 31, 2001 as actually computed, reduced by (y) any Tax
cost to Group or R&G resulting from such write-down plus the reasonable costs
and expenses incurred in the analysis and preparation of requirements of this
Section 5.13(c). The Initial Additional Payment, if any, shall be due and shall
be payable to the LLC on behalf of the holders of Group Common Stock promptly
after Group's federal income Tax Return for the year ended December 31, 2001 is
filed. In addition, R&G agrees to make as an additional payment (a "Subsequent
Additional Payment"), an amount equal to any refund of federal income Tax
actually realized by Group with respect to Tax years of Group ending prior to
December 31, 2001 that is realized due to a carryback of any portion of the
write-down of FFI. Any Subsequent Additional Payment shall be due and payable to
the LLC on behalf of the holders of Group Common Stock promptly upon receipt of
such refund. The computation and determination of the Initial Additional Payment
and any Subsequent Additional Payment shall be
36
made solely by R&G in good faith, which such determination shall be final absent
manifest error, provided that upon request from the LLC, R&G agrees that it will
make available to the LLC the method of making such computation and
determination, provided further that nothing in this Agreement shall require R&G
to make available its or any of its affiliates' Tax Returns to the LLC. If,
subsequent to the payment of the Initial Additional Amount or any Subsequent
Additional Amount, any portion of the write-down is successfully challenged by
the IRS (which such challenge shall be controlled by R&G), the LLC shall pay to
R&G an amount, computed on an after-tax basis, equal to the sum of (x) the
amount of any Tax assessed as a result of such challenge, including any interest
and penalties thereon, plus (y) the reasonable costs and expenses (including
attorney's fees) incurred in connection with such challenge; provided, however,
that R&G shall consult with the LLC prior to taking any action in response to
such challenge.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT - ALL PARTIES
The respective obligations of all of the parties hereto to effect the
transactions contemplated by this Agreement shall be subject to satisfaction of
the following conditions at or prior to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by all of the parties
hereto, including approval by the requisite vote of the shareholders of Group of
this Agreement.
(b) All approvals, consents and waivers from any Governmental
Entity the approval, consent or waiver of which is required for the consummation
of the transactions contemplated by this Agreement shall have been received and
all statutory waiting periods in respect thereof shall have expired, provided,
however, that no approval, consent or waiver referred to in this Section 6.1(b)
shall be deemed to have been received if it shall include any condition or
requirement that, individually or in the aggregate, would so materially reduce
the economic or business benefits of the transactions contemplated by this
Agreement to R&G and Holdings that had such condition or requirement been known,
R&G and Holdings, in its reasonable judgment, would not have entered into this
Agreement.
(c) None of the parties hereto shall be subject to any statute,
rule, regulation, order, injunction or decree which shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which prohibits,
restricts or makes illegal consummation of the transactions contemplated by this
Agreement.
37
6.2 CONDITIONS PRECEDENT - GROUP AND THE BANK
The obligations of Group and the Bank to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by Group and the Bank
pursuant to Section 7.4 hereof.
(a) The representations and warranties of R&G and Holdings set
forth in Article IV hereof shall be true and correct as of the date of this
Agreement and as of the Effective Time as though made on and as of the Effective
Time (or on the date when made in the case of any representation and warranty
which specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.2(a) shall be
deemed to have been satisfied even if such representations and warranties are
not true and correct (exclusive of any exceptions in such representations and
warranties relating to materiality or Material Adverse Effect) unless the
failure of any of the representations and warranties to be so true and correct
would have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on R&G on a consolidated basis.
(b) R&G and Holdings shall have performed all material obligations
and covenants required to be performed by it on or prior to the Effective Time.
(c) R&G and Holdings shall have delivered to Group and the Bank a
certificate, dated the date of the Closing and signed by its Chief Executive
Officer and Chief Financial Officer, to the effect that the conditions set forth
in Sections 6.2(a) and 6.2(b) have been satisfied.
(d) Group and the Bank shall have received an opinion of Xxxxxx
Xxxx & Xxxxxx LLP, dated the date of the Closing, that addresses the matters set
forth in Exhibit C hereto.
(e) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the transactions contemplated by this Agreement.
(f) R&G and Holdings shall have furnished Group and the Bank with
such certificates of its respective officers or others and such other documents
to evidence fulfillment of the conditions set forth in Sections 6.1 and 6.2 as
such conditions relate to R&G and Holdings as Group may reasonably request.
6.3 CONDITIONS PRECEDENT - R&G AND HOLDINGS
The obligations of R&G and Holdings to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by R&G and Holdings
and pursuant to Section 7.4 hereof.
(a) The representations and warranties of Group and the Bank set
forth in Article III hereof shall be true and correct as of the date of this
Agreement and as of the Effective Time as though made on and as of the Effective
Time (or on the date when made in the case of any representation and warranty
which specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.3(a) shall be
deemed to have been satisfied even if such representations and warranties are
not true and correct (exclusive of any
38
exceptions in such representations and warranties relating to materiality or
Material Adverse Effect) unless the failure of any of the representations and
warranties to be so true and correct would have, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Group
and the Bank considered as one enterprise.
(b) Group and the Bank shall have performed all material
obligations and covenants required to be performed by it on or prior to the
Effective Time.
(c) Group and the Bank shall have delivered to R&G and Holdings a
certificate, dated the date of the Closing and signed by its Chief Executive
Officer and Chief Financial Officer, to the effect that the conditions set forth
in Sections 6.3(a) and 6.3(b) have been satisfied.
(d) R&G shall have received an opinion of Squire, Xxxxxxx &
Xxxxxxx LLP, dated the date of the Closing, that addresses the matters set forth
in Exhibit D hereto.
(e) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 6.1(b) hereof) whose consent,
approval or waiver shall be required in connection with the transactions
contemplated by this Agreement under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
Group or the Bank is a party or is otherwise bound shall have been obtained,
except those consents or approvals for which failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on Group and
the Bank considered as one enterprise.
(f) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the transactions contemplated by this Agreement.
(g) Holders of a number of shares of outstanding Group Common
Stock which represents 10.0% or more of the Group Common Stock shall not have
elected to exercise dissenters' or appraisal rights under Section 607.1302(b) of
the FBCA.
(h) Group shall have taken all appropriate steps to cause the Bank
to take, and the Bank shall have taken, aggregate adjustments equal to $8.6
million with respect to the Bank's mortgage servicing portfolio, loan loss
reserves, sale of real estate owned properties identified in Schedule 6.3(h)
hereto and residual interest in its collateralized mortgage obligation, $6.6
million of which shall be allocated as specified by R&G and Holdings to the Bank
prior to the Effective Time and $2.0 million of which shall be allocated by
Group.
(i) Bank shall have allocated all pre-tax earnings (calculated in
accordance with generally accepted accounting principals) for the months of
November 2001 through the month end prior to the Effective Time to a reserve for
potential losses for capitalized mortgage servicing rights or, if mutually
agreed upon, for other purposes.
(j) Group (on an unconsolidated basis) shall have cash of not less
than Twelve Million Dollars ($12,000,000);
(k) Group shall have total stockholders' equity of Fifty Nine
Million Dollars ($59,000,000.00), determined in accordance with generally
accepted accounting principles after
39
taking into consideration the actions required to be taken pursuant to Section
6.3(h) and (j) hereof, but without giving effect to any increase in
stockholders' equity arising out of tax benefits associated with the write-down
in value of the FFI investment referenced in Section 5.13(c) hereof and without
giving effect to any adjustments required by Financial Accounting Standards
Board Statement No. 115.
(l) The holders of all of the outstanding Group Common Stock as
evidenced on the stock transfer books of Group as of the close of business on
the day prior to the Effective Time shall have executed and provided to R&G and
Holdings the Accredited Investor Representation Letter set forth in Exhibit H
hereto, and not more than thirty-five (35) of such holders shall fail to certify
that they are "accredited investors," as defined in Rule 501(a) promulgated
pursuant to the Securities Act, or any successor provision; provided that to the
extent this condition is not satisfied, the R&G Debenture shall be issued in
accordance with the provisions of Section 2.7(c) hereto.
(m) Subject to Section 5.7 and not later than five (5) days of the
Effective Time, Group and Bank shall each have delivered to R&G and Holdings the
audited Group Financial Statements and Bank Financial Statements for the year
ended December 31, 2001 required by Section 5.7 hereof.
(n) R&G and Holdings shall have executed letter agreements with
Cresleigh Bancorp, LLC and the LLC substantially in the form as set forth as
Exhibits I and J hereto, respectively.
(o) As of the Effective Time, the officers of the Bank identified
in Schedule 3.13(i) shall have terminated their employment agreements Previously
Disclosed pursuant to Section 3.13(i) and each of those officers shall have
entered into employment agreements with the Surviving Corporation substantially
in the form attached hereto as Exhibit E.
(p) The Guaranty dated October 13, 2000 between Group and
Residential Funding Corporation, as amended, shall have been terminated without
any liability, obligation or contingencies to R&G or Group.
(q) Group and the Bank shall have furnished R&G and Holdings with
such certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.3 as such
conditions relate to Group and the Bank as R&G and Holdings may reasonably
request.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by R&G and
Holdings in writing if Group and the Bank have, or by Group and the Bank in
writing if R&G and Holdings have (provided that the terminating party is not
then in material breach of any representation,
40
warranty, covenant or other agreement contained therein), breached (i) any
covenant or undertaking contained herein, or (ii) any representation or warranty
contained herein, which in the case of Group and the Bank would have, or could
reasonably be expected to have, a Material Adverse Effect on Group and the Bank
considered as one enterprise, and in the case of R&G and Holdings would have, or
could reasonably be expected to have, a Material Adverse Effect on R&G on a
consolidated basis, in any case if such breach has not been cured following
written notice of such breach by the earlier of 30 days after the date on which
such written notice of such breach is given to the party committing such breach
or the Effective Time;
(c) at any time, by any party hereto in writing, if any of the
applications for prior approval referred to in Section 5.3 hereof are denied or
withdrawn at the request or recommendation of the applicable Governmental Entity
or are approved in a manner which does not satisfy the requirements of Section
6.1(b) hereof, and the time period for appeals and requests for reconsideration
has run, unless the failure of such occurrence shall be due to the failure of
the party seeking to terminate to perform or observe in any material respect its
agreements set forth herein to be performed or observed by such party at or
before the Effective Time;
(d) by any party hereto in writing, if the Effective Time has not
occurred by the close of business on June 30, 2002, provided that this right to
terminate shall not be available to any party whose failure to perform an
obligation under this Agreement has been the cause of, or resulted in, the
failure of the transactions contemplated by this Agreement to be consummated by
such date; or
(e) by the Board of Directors of R&G and Holdings, (i) at any time
on or prior to January 31, 2002 if the results of R&G's investigation of the
business, operations, assets, liabilities, prospects, affairs and condition
(financial or otherwise) of Bank are not satisfactory to R&G or Holdings in
their sole discretion, whether or not any of the foregoing would constitute a
Material Adverse Effect on Group and the Bank considered as one enterprise, (ii)
at any time if the Valuation Analysis of Bank's mortgage servicing portfolio
delivered pursuant to Section 5.6(e) hereof demonstrates an impairment of the
value of such mortgage servicing portfolio which is greater than the amounts
which have been allocated to the reserve for potential losses for capitalized
mortgage servicing rights, including additions to such reserves required by
Section 6.3(h) (solely with respect to the portion allocated thereto) and
Section 6.3(i) hereof, (iii) if the Board of Directors of Group shall have
withdrawn, modified or changed in a manner adverse to R&G and Holdings its
recommendation of this Agreement and the transactions contemplated hereby
pursuant to Section 5.2 hereof or (iv) if any party to the Stockholder Agreement
shall have failed to deliver his or its consent to approve this Agreement and
the transactions contemplated hereby.
7.2 EFFECT OF TERMINATION
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i)
Sections 5.4(b) and 8.1 hereof shall survive any such termination and (ii) a
termination pursuant to Section 7.1(b), (c), (d) or (e) hereof shall not relieve
the breaching party from liability for willful breach of any covenant,
undertaking, representation or warranty giving rise to such termination.
41
7.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
Except for the representations and warranties provided in Section
3.7(d), Sections 3.11 and 3.20(b) and the liability of any party hereto for any
fraudulent misrepresentation hereto, which shall remain in full force and effect
and survive until the 90th day following the expiration of the applicable
statute of limitations, all representations, warranties and covenants in this
Agreement or in any instrument delivered pursuant hereto shall expire on, and be
terminated and extinguished at, the Effective Time, other than covenants that by
their terms are to be performed after the Effective Time (including, without
limitation, the covenants set forth in Sections 5.8, 5.9, 5.10 and 5.13(b) and
(c) hereof) provided that no such representations, warranties or covenants shall
be deemed to be terminated or extinguished so as to deprive the parties hereto
(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
person, including, without limitation, any shareholder or former shareholder of
either R&G or Group.
7.4 WAIVER
Each party hereto by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of Group) extend the time for the performance of
any of the obligations or other acts of the other party hereto and may waive (i)
any inaccuracies of the other party in the representations or warranties
contained in this Agreement or any document delivered pursuant hereto, (ii)
compliance with any of the covenants, undertakings or agreements of the other
party or, to the extent permitted by law, satisfaction of any of the conditions
precedent to its obligations contained herein or (iii) the performance by the
other party of any of its obligations set forth herein, provided that any such
waiver granted, or any amendment or supplement pursuant to Section 7.5 hereof
executed, after shareholders of Group have approved this Agreement shall not
modify either the amount or form of the consideration to be provided hereby to
the holders of Group Common Stock upon consummation of the Merger or otherwise
materially adversely affect any of such shareholders without the approval of the
shareholders who would be so affected.
7.5 AMENDMENT OR SUPPLEMENT
This Agreement may be amended or supplemented at any time by mutual
agreement of the parties hereto, subject to the proviso to Section 7.4 hereof.
Any such amendment or supplement must be in writing and approved by all of the
parties' respective Boards of Directors.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES; TERMINATION FEE
(a) Each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated by this
Agreement, including fees and expenses of
42
its own financial consultants (which, in the case of Xxxxx, Xxxxxxxx and Xxxxx,
shall be paid by the Bank), accountants and counsel, provided that in the event
of a termination of this Agreement resulting from a breach of a representation,
warranty, covenant or undertaking pursuant to the provisions of Section 7.1(b)
hereof, the party committing such breach shall be liable for $300,000 to the
other party, plus the expenses of the other party, without prejudice to any
other rights or remedies as may be available to the non-breaching party,
including without limitation any rights under Section 8.1(b) hereof.
(b) Notwithstanding any provision in this Agreement to the
contrary, in order to induce R&G and Holdings to enter into this Agreement and
as a means of compensating R&G and Holdings for the substantial direct and
indirect monetary and other damages and costs incurred and to be incurred in
connection with this Agreement in the event the transactions contemplated hereby
do not occur as a result of a Termination Event (as defined herein), Group and
the Bank jointly and severally agree to pay R&G, and R&G shall be entitled to
payment of, a fee (the "Fee") of $3.0 million upon the occurrence of a
Termination Event so long as the Termination Event occurs prior to a Fee
Termination Event (as defined herein). The parties hereto acknowledge that the
actual amount of such damages and costs would be impracticable or extremely
difficult to determine, and that the sum of $3.0 million constitutes a
reasonable estimate by the parties under the circumstances existing as of the
date of this Agreement of such damages and costs. Such payment shall be made to
R&G in immediately available funds within five business days after the
occurrence of a Termination Event. A Fee Termination Event shall be the first to
occur of the following: (i) the Effective Time, (ii) 15 months after termination
of this Agreement in accordance with its terms following the first occurrence of
a Preliminary Termination Event (as defined herein), (iii) termination of this
Agreement in accordance with the terms hereof prior to the occurrence of a
Termination Event or a Preliminary Termination Event (other than a termination
of this Agreement by R&G pursuant to Section 7.1(b) hereof as a result of a
willful breach of any representation, warranty, covenant or agreement of Group
or the Bank) or (iv) 15 months after the termination of this Agreement by R&G
pursuant to Section 7.1(b) hereof as a result of a willful breach of any
representation, warranty, covenant or agreement of Group or the Bank.
(c) For purposes of this Agreement, a "Termination Event" shall
mean any of the following events:
(i) Group or the Bank, without having received R&G's
prior written consent, shall have entered into an agreement to engage
in an Acquisition Transaction with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the rules and
regulations thereunder), other than R&G or any Subsidiary of R&G, or
the Board of Directors of Group shall have recommended that the
stockholders of Group approve or accept any Acquisition Transaction
with any person other than R&G or any Subsidiary of R&G;
(ii) any person, other than R&G or Holdings, shall have
acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of or the right to acquire
beneficial ownership, or any "group" (as such term is defined in
Section 13(d)(3) of the Exchange Act) shall have been formed which
beneficially owns
43
or has the right to acquire beneficial ownership of, 25% or more of the
aggregate voting power represented by the outstanding Group Common
Stock (except for the holdings of the Xxxxxx and Rapaport Families
existing on the date of this Agreement); or
(iii) one or more stockholders of Group shall have breached
his or her obligations pursuant to the Stockholder Agreement in a
manner which materially adversely affects the ability of Group to
obtain the approval of the holders of Group Common Stock of this
Agreement or otherwise materially adversely affects the ability of the
parties hereto to consummate the transactions contemplated hereby.
(d) For purposes of this Agreement, a "Preliminary Termination
Event" shall mean any of the following events:
(i) any person (other than R&G or Holdings) shall have
commenced (as such term is defined in Rule 14d-2 under the Exchange
Act), or shall have filed a registration statement under the Securities
Act of 1933, as amended ("Securities Act"), with respect to, a tender
offer or exchange offer to purchase any shares of Group Common Stock
such that, upon consummation of such offer, such person would own or
control 10% or more of Group Common Stock outstanding (such an offer
being referred to herein as a "Tender Offer" and an "Exchange Offer,"
respectively, regardless of whether the provisions of Regulations 14D
or 14E under the Exchange Act apply to such Tender Offer or Exchange
Offer);
(ii)(A) the holders of Group Common Stock shall not have
approved this Agreement through the consent solicitation conducted for
the purpose of voting on this Agreement, (B) such consent solicitation
shall not have been conducted prior to termination of the Agreement or
(C) Group's Board of Directors shall have withdrawn or modified in a
manner adverse to R&G and Holdings the recommendation of Group's Board
of Directors with respect to the Agreement, in each case after any
person (other than R&G or Holdings) shall have (x) made, or disclosed
an intention to make, a bona fide proposal to Group or its stockholders
to engage in an Acquisition Transaction, (y) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect
to an Exchange Offer or (z) filed an application or given notice,
whether in draft or final form, with the appropriate regulatory
authorities for approval to engage in an Acquisition Transaction; or
(iii) Group or the Bank shall have breached any
representation, warranty, covenant or obligation contained in this
Agreement and such breach would entitle R&G and Holdings to terminate
this Agreement under Section 7.1(b) hereof (without regard to the cure
period provided for therein unless such cure is promptly effected
without jeopardizing consummation of the Merger pursuant to the terms
of this Agreement) after any person (other than R&G or Holdings) shall
have (x) made, or disclosed an intention to make, a bona fide proposal
to Group or its stockholders to engage in an Acquisition Transaction,
(y) commenced a Tender Offer or filed a registration statement under
the Securities Act with respect to an Exchange Offer or (z) filed an
application or given
44
notice, whether in draft or final form, with the appropriate regulatory
authorities for approval to engage in an Acquisition Transaction.
(e) Group shall promptly notify R&G and Holdings in writing of the
occurrence of any Preliminary Termination Event or Termination Event.
8.2 ENTIRE AGREEMENT
This Agreement (including the Stockholder Agreement) and the
Confidentiality Agreement contains the entire agreement among the parties with
respect to the transactions contemplated hereby and supersede all prior
arrangements or understandings with respect thereto, written or oral.
8.3 ASSIGNMENT; SUCCESSORS
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person without the prior written consent of
the other party or parties. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors. Except as provided in Sections 5.8, 5.9, 5.10 and 5.13(c)
hereof, nothing in this Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors,
any rights, remedies, obligations or liabilities. In the event that R&G or any
of its successors, (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors shall assume the obligations set
forth in Sections 5.8, 5.9, 5.10 and 5.13(c) hereof, which obligations are
expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each person covered thereby.
8.4 NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
overnight express or by registered or certified mail, postage prepaid, addressed
as follows:
If to R&G and Holdings:
R&G Financial Corporation
R&G Plaza
280 Xxxxx X. Xxxxxx Xxx.
Xxxx Xxx, Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
45
With a required copy to:
Xxxxxx Xxxx & Xxxxxx LLP
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxx, Esq.
If to Group or the Bank:
The Crown Group, Inc.
000 Xxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
President and Chief Executive Officer
With a required copy to:
Squire, Xxxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Xxxx X. Summer, Esq.
8.5 ALTERNATIVE STRUCTURE
Notwithstanding any provision of this Agreement to the contrary, R&G
and Holdings may elect, subject to the filing of all necessary applications and
the receipt of all required regulatory approvals, to modify the structure of the
Merger set forth herein, provided that (i) the Merger Consideration is not
thereby changed in kind or reduced in amount as a result of such modification or
alters the taxation of any amounts to be received by Group's stockholders and
(ii) such modification will not materially delay or jeopardize receipt of any
required regulatory approvals or any other condition to R&G's obligations set
forth in Sections 6.1 and 6.3 hereof.
8.6 INTERPRETATION
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The phrases "the date of this Agreement," "the
date hereof" and terms of similar import herein, unless the context otherwise
requires, shall be deemed to be the date first above written on page one (1)
hereof.
46
8.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Puerto Rico applicable to agreements made and
entirely to be performed within such jurisdiction except to the extent federal
law may be applicable.
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
R&G FINANCIAL CORPORATION
Attest:
------------------------------- By:
Name: Xxxxxxx Xxxxxxxx Xxxxxx ----------------------------------
Title: Corporate Secretary Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief
Executive Officer
R&G HOLDINGS CORPORATION
Attest:
------------------------------ By:
Name: Xxxxxxx Xxxxxxxx Xxxxxx ----------------------------------
Title: Corporate Secretary Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief
Executive Officer
THE CROWN GROUP, INC.
Attest:
------------------------------ By:
Name: Xxxxx X. Xxxxxxx ----------------------------------
Title: Secretary Name: Xxxx X. Xxxxxx
Title: President and Chief
Executive Officer
CROWN BANK, A FEDERAL SAVINGS BANK
Attest:
------------------------------ By:
Name: Xxxxx X. Xxxxxxx ----------------------------------
Title: Secretary Name: Xxxx X. Xxxxxx
Title: President and Chief
Executive Officer
48
EXHIBIT A
December 19, 2001
R&G Financial Corporation
R&G Xxxxx
000 Xxxxx X. Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Gentlemen:
The undersigned, a director or executive officer or stockholder of The
Crown Group, Inc. ("Group") or Crown Bank, a Federal Savings Bank ("Bank")
understands that R&G Financial Corporation ("R&G") and R&G Acquisition Holdings
Corporation ("Holdings") are about to enter into an Agreement and Plan of
Reorganization (the "Agreement") with Group and Bank. The Agreement provides for
the merger of Holdings with and into Group and the related conversion of all of
the outstanding common stock of Group into the Merger Consideration set forth in
the Agreement.
In order to induce R&G and Holdings to enter into the Agreement, and
intending to be legally bound hereby, the undersigned represents, warrants and
agrees that in connection with the solicitation of Group shareholder consents
contemplated by Section 5.2 of the Agreement, the undersigned will provide a
written consent to and approval of the Agreement and the transactions
contemplated thereby with respect to the shares of Group Common Stock
beneficially owned by the undersigned individually or, to the extent of the
undersigned's proportionate voting interest, jointly with other persons, as well
as (to the extent of the undersigned's proportionate voting interest) any other
shares of Group Common Stock over which the undersigned may hereafter acquire
beneficial ownership (collectively, the "Shares"). Subject to the final
paragraph of this agreement, the undersigned further agrees that he will use his
best efforts to cause a consent to and approval of the Agreement and the
transactions referenced therein to be provided with respect to any other shares
of Group Common Stock over which he has or shares voting power.
The undersigned represents and warrants that he has or shares the
beneficial ownership of the number of shares of Group Common Stock set forth at
the bottom hereof.
The undersigned further represents, warrants and agrees that until the
earlier of (i) the consummation of the transactions contemplated by the
Agreement or (ii) the termination of the Agreement in accordance with its terms,
the undersigned will not, directly or indirectly:
(a) vote any of the Shares or provide a consent with respect to
such Shares, or cause or permit any of the Shares to be voted or consented to,
in favor of any other merger, consolidation, plan of liquidation, sale of
assets, reclassification or other transaction involving Group or the Bank which
would have the effect of any person, other than R&G or an affiliate of R&G,
acquiring control over Group or the Bank or any substantial portion of the
assets of Group
A-1
or the Bank. As used herein, the term "control" means (1) the ability to direct
the voting of 10% or more of the outstanding voting securities of a person
having ordinary voting power in the election of directors or in the election of
any other body having similar functions or (2) the ability to direct the
management and policies of a person, whether through ownership of securities,
through any contract, arrangement or understanding or otherwise.
(b) sell or otherwise transfer any of the Shares, or cause or
permit any of the Shares to be sold or otherwise transferred (i) pursuant to any
tender offer, exchange offer or similar proposal made by any person, other than
R&G or an affiliate of R&G, (ii) to any person known by the undersigned to be
seeking to obtain control of Group or the Bank or any substantial portion of the
assets of Group or the Bank or to any other person, other than R&G or an
affiliate of R&G, under circumstances where such sale or transfer may reasonably
be expected to assist a person seeking to obtain such control or (iii) for the
principal purpose of avoiding the obligations of the undersigned under this
agreement.
It is understood and agreed that this agreement relates solely to the
capacity of the undersigned as a shareholder or other beneficial owner of the
Shares and, to the extent applicable, is not in any way intended to affect the
exercise by the undersigned of the undersigned's responsibilities as a director
or officer of Group or Bank. It is further understood and agreed that this
agreement is not in any way intended to affect the exercise by the undersigned
of any fiduciary responsibility which the undersigned may have in respect of any
Shares as of the date hereof.
Use of the masculine gender herein shall be considered to represent the
masculine, feminine or neuter gender whenever appropriate.
Very truly yours
----------------------------------------
Name
----------------------------------------
Number of shares beneficially controlled
----------------------------------------
Status as officer or director of Group
or Bank, if applicable
Accepted and Agreed to:
R&G FINANCIAL CORPORATION
By:
---------------------------
Name:
Title:
A-2
EXHIBIT B
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. THIS SECURITY HAS
BEEN ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION STATEMENT
REQUIREMENTS OF THE SECURITIES ACT AND HAS NOT BEEN OFFERED PURSUANT TO A
REGISTRATION STATEMENT FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"). THIS SECURITY MAY NOT BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) (1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION STATEMENT REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR
OTHER INFORMATION SATISFACTORY TO IT. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS.
R&G FINANCIAL CORPORATION
SUBORDINATED PROMISSORY NOTE
DUE _______ __, 2007
$ , 2002
--------------- ----------- ---
San Xxxx, Puerto Rico
FOR VALUE RECEIVED, R&G FINANCIAL CORPORATION, a Puerto Rico corporation (the
"Company" or "Maker"), promises to pay to the order of _________________________
(the
B-1
"Holder" who, together with all other holders of like notes issued in this form
on the date hereof and their respective assignees, are designated herein as the
"Holders"), at such place as the Holder hereof may from time to time designate
in writing, in lawful money of the United States of America, without offset, the
principal sum of _____________ Dollars and No Cents ($____________), together
with interest as described below and in accordance with the following terms and
provisions:
1. INTEREST RATE. The unpaid principal balance of this
Subordinated Promissory Note (as the same may be amended, modified,
supplemented, renewed or replaced from time to time, the "Note") outstanding
from time to time shall bear interest at the rate of six and three-fourths
percent (6 3/4%) per annum. Interest shall accrue daily as set forth herein,
shall be calculated using a 360 day year and shall be payable semi-annually on
March 15 and September 15 of each year (an "Interest Payment Date"), beginning
________ __, 2002 to holders of record on the books of the Company as of the
close of business on the first day of the month in which such payment is due to
be made. Each Note will bear interest from and including each Interest Payment
Date or, in the case of the first interest period, the original date of issuance
of the Note to, but excluding, the next succeeding Interest Payment Date or, in
the case of the last interest period, the Maturity Date (as defined below).
Payment of interest shall be made by check mailed to the address of the person
entitled thereto as such address shall appear in the books of the Company or, in
accordance with arrangements satisfactory to the Company, at the option of the
Holder, by wire transfer to an account designated in writing by the Holder. If
any payment under this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the Commonwealth of Puerto Rico, such payment shall be
made on the next succeeding business day, but without the payment of any
additional interest.
2. MATURITY DATE. The entire unpaid principal balance of this
Note, together with all accrued and unpaid interest, shall be due and payable in
full on ______ __, 2007 (the "Maturity Date").
3. PREPAYMENT. The Company shall have the ability to prepay the
Subordinated Promissory Note in whole, but not in part, without penalty, at any
time upon thirty (30) days prior written notice to the Holders at each Holder's
address appearing on the records of the Company.
4. NO COLLATERAL. This Note is not secured by any assets of
Maker.
5. MERGER. The Company shall not consolidate with or merge into
any other corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any person, unless the corporation formed by
such consolidation or into which the Company is merged or the person which
acquires by conveyance or transfer, or which leases, the properties and assets
of the Company substantially as an entirety (the "successor corporation") shall
be a corporation or other banking organization organized and existing under the
laws of the United States or any state or territory thereof or the District of
Columbia and shall expressly assume, in the agreement providing for such
consolidation, or merger or conveyance, transfer or lease, the due and punctual
payment of the principal of and interest on the Note. Upon any consolidation
with or merger into any other corporation, or any conveyance, transfer or lease
of the properties and assets of the Company substantially as an entirety, the
successor corporation formed by such
B-2
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company with the same effect as if such
successor corporation had been named as the Company herein, and thereafter, the
predecessor corporation shall be relieved of all obligations and covenants under
this Note.
6. ACCELERATION OF PAYMENT. If an Event of Default (as defined
below) occurs and is continuing, then the Holders of not less than 25% in
principal amount of the Note may declare the principal amount of and all accrued
but unpaid interest on the Note to be due and payable immediately, by a notice
in writing to the Company, and upon any such declaration, such principal amount
and interest shall become immediately due and payable. Upon payment of such
amounts, all obligations of the Company in respect of the payment of principal
of and interest on the Note shall terminate.
For purpose of this Note, an "Event of Default" means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law, pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) a decree or order by a court having jurisdiction in
the premises shall have been entered adjudging the Company a bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization, readjustment, arrangement, composition or similar
relief for the Company under the Federal bankruptcy laws, or any other
similar applicable law of any governmental unit, domestic or foreign,
and such decree or order shall have continued undischarged or unstayed
for a period of 90 days; or a decree or order or other decision of a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of any person to act as a receiver or
conservator or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of a substantial part of its property, or
for the involuntary winding up or liquidation of its affairs, shall
have been entered and such decree or order shall have remained in force
undischarged and unstayed for a period of 90 days; or, under the
provisions of any insolvency, bankruptcy, or other law for the relief
or aid of creditors or depositors, any court, or agency or supervisory
authority having jurisdiction in the premises shall assume custody or
control of the Company or of a substantial part of its property, and
such custody and control shall not be terminated or stayed within 90
days from the date of assumption of such custody or control; or any
substantial part of the property of the Company shall be sequestered or
attached and shall not be returned to the possession of the Company or
released from such attachment within 90 days thereafter; or
(b) the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization, readjustment, arrangement, composition
or similar relief under the Federal bankruptcy laws, or any other
similar applicable law of any governmental unit, domestic or foreign,
or shall consent to the filing of any such petition or shall consent to
the appointment of a receiver or conservator or liquidator or trustee
or assignee in bankruptcy or insolvency of it or of a substantial part
of its property, or shall make an assignment for the benefit of
creditors, or shall
B-3
admit in writing its inability to pay its debts generally as they
become due, or if corporate action shall be taken by the Company in
furtherance of any of the aforesaid purposes; or
(c) the Company fails to pay the principal of the Note at
the Maturity Date and such failure is continued for seven days; or
(d) the Company fails to pay any installment of interest
on an Interest Payment Date and such failure is continued for 30 days.
7. SUBORDINATION OF INDEBTEDNESS EVIDENCED BY THE NOTE. The
Company, for itself, its successors and assigns, covenants and agrees, and each
Holder likewise covenants and agrees by such Holder's acceptance hereof, that
the obligation of the Company to make any payment on account of the principal of
and interest on the Note shall, to the extent and in the manner provided herein,
be subordinate and junior in right of payment to the Company's obligations to
the holders of Senior Indebtedness. For purposes of this Note, "Senior
Indebtedness" means the principal of and any premium on the following, whether
outstanding on the date of execution of the Note or thereafter created, assumed
or incurred: (a) any obligation of, or any obligation guaranteed by, the Company
for the repayment of borrowed money (including general unsecured creditors),
whether or not evidenced by bonds, debentures, notes or other written
instruments, and similar obligations arising from off-balance sheet guarantees
and direct credit substitutes, (b) deposits, (c) obligations under bankers'
acceptances and letters of credit, (d) obligations associated with derivative
products such as interest rate and foreign exchange rate contracts, commodity
and currency contracts and similar arrangements, (e) any deferred obligations
of, or any such obligation guaranteed by, the Company for the payment of the
purchase price of property or assets (f) obligations of the Company as lessee
under any lease of real or personal property required to be capitalized under
generally accepted accounting principles at the time and (g) any amendments,
deferrals, renewals, extensions or refundings of any such indebtedness or
obligations referred to in clauses (a) or (c) through (f) above; provided, that
Senior Indebtedness will not include the Note.
In the event of any insolvency, bankruptcy, receivership,
conservatorship, reorganization, readjustment of debt, marshalling of assets and
liabilities or similar proceedings or any liquidation, dissolution or winding-up
of or relating to the Company as a whole, whether voluntary or involuntary, all
obligations of the Company to holders of Senior Indebtedness shall be entitled
to be paid in full before any payment, whether in cash, property or otherwise,
shall be made on any account of the principal of or interest on the Note. In the
event of any such proceeding, after payment in full of all sums owing with
respect to Senior Indebtedness, the Holder shall be entitled ratably to be paid
from the remaining assets of the Company the amounts at the time due and owing
on account of unpaid principal of and interest, if any, on the Note. In
addition, in the event of any such proceeding, if any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate to the payment of all Senior Indebtedness at the time outstanding
and to any securities issued in respect thereof under any such plan of
reorganization or readjustment), including any such payment or distribution that
may be payable or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Note, shall be received
by the Holder before all Senior
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Indebtedness is paid in full, such payment or distribution shall be held (in
trust if received by such Holder) for the benefit of and shall be paid over to
the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Indebtedness may have been issued,
ratably, for application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
The Holder of the Note, in respect of any claims of the Holder to
payment of any principal or interest in respect of the Note, by acceptance of
the Note will be deemed to have waived any right of set-off or counterclaim that
such Holder might otherwise have.
Subject to the payment in full of all Senior Indebtedness, the Holder
shall be subrogated to the rights of the Holder of such Senior Indebtedness to
receive payments or distributions of assets of the Company applicable to such
Senior Indebtedness until the Note shall be paid in full, and none of the
payments or distributions to the Holder of such Senior Indebtedness to which the
Holder would otherwise be entitled or of payments over, pursuant to the
provisions of this Note, to the Holder of such Senior Indebtedness by the Holder
shall, as among the Company, its creditors other than the Holder of such Senior
Indebtedness, and the Holder, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness.
8. NO IMPAIRMENT. The Company covenants that it shall not by
amendment of its Certificate of Incorporation or through reorganization,
consolidation, merger, dissolution, issuance or sale of securities, sale of
assets, or by any other voluntary act or deed, avoid or seek to avoid the
observance or performance of any of its agreements, covenants, stipulations or
conditions to be observed or performed by it hereunder.
9. TRANSFER OF NOTE.
(a) This Note has not been registered under the
Securities Act of 1933 or any state securities laws. This Note has been
issued pursuant to an exemption from the registration statement
requirements of the Securities Act and has not been offered pursuant to
any registration statement filed with, and declared effective by, the
SEC. This Note may not be reoffered, sold, assigned, transferred,
pledged, encumbered or otherwise disposed of except pursuant to an
effective registration statement under such registration statement
requirements or pursuant to an exemption from such requirements. The
Holder of this Note by its acceptance hereof agrees to offer, sell or
otherwise transfer such Security only (a) to the Company, (b) pursuant
to Rule 144a, to a person it reasonably believes is a "Qualified
Institutional Buyer" as defined in Rule 144a that purchases for its own
account or for the account of a Qualified Institutional Buyer to whom
notice is given that the transfer is being made in reliance on Rule
144a, (c) to an "Accredited Investor" within the meaning of
subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities
Act that is acquiring this Note for its own account, or for the account
of an "Accredited Investor," for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act, or (d) pursuant to another available
exemption from the registration statement requirements of the
Securities Act, subject to the Company's right prior to any such offer,
sale or
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transfer pursuant to clause (c) or (d) to require the delivery of an
opinion of counsel, certification or other information satisfactory to
it. The Holder of this Note agrees that it will comply with the
foregoing restrictions.
(b) This Note shall be registered on the books of the
Company kept at its principal office for that purpose, and shall be
transferable only on such books by the registered owner hereof in
person or by a duly authorized attorney upon surrender of this Note
properly endorsed, and only in compliance with this Section 9.
10. NOTICES. All notices, request, demands and other
communications with respect hereto shall be in writing and shall be delivered by
had, sent prepaid by Federal Express (or a comparable overnight delivery
service) or sent by the United States mail, certified, postage prepaid, return
receipt requested, to the following addresses:
(a) If to the Holder:
(b) If to the Company:
R&G Financial Corporation
R&G Xxxxx
000 Xxxxx X. Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Attn: President and Chief Executive Officer
Any notice, request, demand or other communication delivered or sent in
the manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (a) the date it is actually received, (b) the business day after the
day on which it is delivered by hand, (c) the business day after the day on
which it is properly delivered to Federal Express (or a comparable overnight
delivery service), or (d) the third business day after the day on which it is
deposited in the United States mail. The Company or the Holder may change its
address by notifying the other party of the new address in any manner permitted
by this Section 10.
11. SEVERABILITY. If any provision of this Note, or the
application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of the provisions of this Note, or the
application of such provision to other persons or circumstances, shall not be
affected thereby, and each provision of this Note shall be valid and enforceable
to the fullest extent permitted by law.
12. SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
inure to the benefit of the Company and the Holder, and their respective
successors and assigns; provided, however, that the Company may not assign or
delegate its obligations hereunder without the prior written consent of the
Holder.
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13. PAYMENTS. All payments due hereunder, if any, shall be made in
immediately available funds.
14. GOVERNING LAW. This Note shall be governed by and construed
in accordance with the laws of the Commonwealth of Puerto Rico, without
reference to conflict of law principles.
15. MISCELLANEOUS. No provision of this Note shall alter or impair
the obligation of the Maker, which is absolute and unconditional, to pay the
principal of, and interest on, this Note at the time, place and rate and in the
coin or currency or stock, herein prescribed. This Note is a direct obligation
of the Maker.
IN WITNESS WHEREOF, the Company has executed this Note as of the date
first written above.
R&G FINANCIAL CORPORATION
By:
-----------------------------
Name:
Title:
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EXHIBIT C
Matters to be covered in Opinion(s) of Counsel to be delivered to Group
and the Bank pursuant to Section 6.2(d) of the Agreement.
(a) Each of R&G, Holdings and the R&G Significant Subsidiaries is
duly incorporated and validly existing under the laws of its respective
jurisdiction of incorporation.
(b) The R&G Debenture to be issued in connection with the Merger
is duly authorized (subject to receipt of all governmental approvals) and, when
issued in accordance with the terms hereof, will be validly issued and fully
paid and nonassessable.
(c) The Agreement has been duly authorized, executed and delivered
by R&G and Holdings and constitutes a valid and binding obligation of R&G and
Holdings and enforceable in accordance with its terms, except that the
enforceability of the obligations of R&G and Holdings may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors, (ii) equitable principles limiting the right to obtain
specific performance or other similar equitable relief and (iii) considerations
of public policy, and except that certain remedies may not be available in the
case of a nonmaterial breach of the Agreement.
(d) All corporate actions required to be taken by R&G and Holdings
by law and its Certificate of Incorporation, and Bylaws to authorize the
execution and delivery of the Agreement and consummation of the transactions
contemplated thereby have been taken.
(e) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity or third party which are necessary to
be obtained by R&G and Holdings to permit the execution, delivery and
performance of the Agreement and consummation of the transactions contemplated
thereby have been obtained.
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(f) The R&G Debenture to be issued pursuant to the terms of the
Agreement have been duly authorized by all necessary corporate action on the
part of R&G and, when issued in accordance with the terms of the Agreement, will
be validly issued and fully paid and nonassessable.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials, certificates or opinions of other counsel to R&G,
Holdings or an R&G Significant Subsidiary reasonably satisfactory to Group and
the Bank and, as to matters of fact, certificates of officers of R&G, Holdings
and the R&G Significant Subsidiaries. The opinion of such counsel need refer
only to matters of Puerto Rico law and may add other qualifications and
explanations of the basis of their opinion as may be reasonably acceptable to
Group and the Bank.
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EXHIBIT D
Matters to be covered in Opinion of Counsel to be delivered to R&G and
Holdings pursuant to Section 6.3(d) of the Agreement.
(a) Each of Group and the Bank are duly incorporated and validly
existing under the laws of Florida and the United States, respectively.
(b) The authorized capital stock of Group consists of 5,000,000 shares
of Group Common Stock. Group has no authorized shares of preferred stock. As of
the date hereof, there are 2,089,971 shares of Group Common Stock issued and
outstanding and 31,734 shares of Group Common Stock are held as treasury shares.
All outstanding shares of Group Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and none of the outstanding
shares of Group Common Stock have been issued in violation of the preemptive
rights of any person, firm or entity. To such counsel's knowledge, except for
Group Options to purchase 47,200 shares of Group Common Stock as of the date
hereof, there are no Rights authorized, issued or outstanding with respect to
the capital stock of Group.
(c) Except for (i) its ownership of the Bank Common Stock, (ii) stock
in the Federal Home Loan Bank of Atlanta owned by the Bank, and (iii) securities
and other interests held in a fiduciary capacity and beneficially owned by third
parties or taken in consideration of debts previously contracted, to such
counsel's knowledge, Group does not own or have the right to acquire, directly
or indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings association, partnership,
joint venture or other organization. The authorized capital stock of the Bank
consists of 5,000,000 shares of common stock and no shares of preferred stock.
As of the date hereof, there were 2,016,071 shares of the Bank Common Stock
outstanding and no shares of the Bank Common Stock are held as treasury shares.
The outstanding Bank Common Stock has been duly authorized and validly issued,
is fully paid and nonassessable and is directly owned by Group free and clear of
all liens, claims, encumbrances, charges, pledges, restrictions or rights of
third parties of any kind whatsoever. No Rights are authorized, issued or
outstanding with respect to the Bank Common Stock and there are no agreements,
understandings or commitments relating to the right of Group to vote or to
dispose of such capital stock or other ownership interests. The Bank has no
direct or indirect Subsidiaries.
(d) The Agreement has been duly authorized, executed and delivered by
Group and the Bank and constitutes a valid and binding obligation of Group and
the Bank enforceable in accordance with their terms, except that the
enforceability of the obligations of Group and the Bank may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors, (ii) equitable principles limiting the right to obtain
specific performance or other similar equitable relief and (iii) considerations
of public policy, and except that certain remedies may not be available in the
case of a nonmaterial breach of the Agreement.
(e) All corporate and shareholder actions required to be taken by Group
and the Bank by law and the Articles of Incorporation, Federal Stock Charter and
Bylaws or similar documents
D-1
of Group and the Bank to authorize the execution and delivery of the Agreement
and consummation of the transactions contemplated thereby have been taken.
(f) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity or third party which are necessary to
be obtained by Group and the Bank to permit the execution, delivery and
performance of the Agreement and consummation of the transactions contemplated
thereby have been obtained.
(g) To such counsel's knowledge, except as Previously Disclosed, there
are no material legal or governmental proceedings pending to which Group and the
Bank is a party or to which any property of Group and the Bank are subject and
no such proceedings are threatened by governmental authorities or by others.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers of
Group and the Bank. The opinion of such counsel need refer only to matters of
Florida and federal law and may add other qualifications and explanations of the
basis of their opinion as may be reasonably acceptable to R&G and Holdings.
D-2
EXHIBIT E
AGREEMENT
AGREEMENT, dated this __ day of __________ 2002, between Crown Bank, a
Federal Savings Bank (the "Bank"), a wholly-owned subsidiary of R&G Acquisition
Holdings Corporation, and ________________________ (the "Executive").
WITNESSETH
WHEREAS, the Executive has served previously as an officer of the Bank
under an employment agreement that has been voluntarily terminated;
WHEREAS, the Bank desires to be ensured of the Executive's continued
active participation in the business of the Bank;
WHEREAS, the Bank desires to enter into an employment agreement with
the Executive with respect to his employment by the Bank;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) BASE SALARY. "Base Salary" shall have the meaning set
forth in Section 3(a) hereof.
(b) CAUSE. Termination of the Executive's employment for
"Cause" shall mean termination because of personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this Agreement.
(c) DATE OF TERMINATION. "Date of Termination" shall mean
(i) if the Executive's employment is terminated for Cause or for Disability, the
date specified in the Notice of Termination, and (ii) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given or as specified in such Notice.
(d) DISABILITY. Termination by the Bank of the
Executive's employment based on "Disability" shall mean termination because of
any physical or mental impairment which qualifies the Executive for disability
benefits under the applicable long-term disability plan maintained by the Bank
or, if no such plan applies, which would qualify the Executive for disability
benefits under the Federal Social Security System.
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(e) NOTICE OF TERMINATION. Any purported termination of
the Executive's employment by the Bank for any reason, including without
limitation for Cause or Disability, or by the Executive for any reason, shall be
communicated by written "Notice of Termination" to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated, (iii) specifies a Date of Termination, which shall be not less
than thirty (30) nor more than ninety (90) days after such Notice of Termination
is given, except in the case of the Banks' termination of Executive's employment
for Cause, which shall be effective immediately; and (iv) is given in the manner
specified in Section 9 hereof.
2. TERM OF EMPLOYMENT.
(a) The Bank hereby employ the Executive as
____________________________ of the Bank and the Executive hereby accepts said
employment and agrees to render such services to the Bank on the terms and
conditions set forth in this Agreement. The term of employment under this
Agreement shall be for one year, commencing on the date of this Agreement. The
term of this Agreement, and the employment of the Executive hereunder, may be
renewed and extended for such period or periods as may be mutually agreed to by
the Bank and the Executive in a written supplement to this Agreement. If this
Agreement is not so renewed and extended, this Agreement shall automatically
terminate and the employment of the Executive shall become month-to-month unless
otherwise agreed to by the parties.
(b) During the term of this Agreement, the Executive
shall perform such executive services for the Bank as may be consistent with his
titles and from time to time assigned to him by the Bank's Board of Directors.
3. COMPENSATION AND BENEFITS.
(a) The Bank shall compensate and pay the Executive for
his services during the term of this Agreement at a minimum base salary of
__________ per year ("Base Salary"), which may be increased from time to time in
such amounts as may be determined by the Board of Directors of the Bank and may
not be decreased without the Executive's express written consent. In addition to
his Base Salary, the Executive shall be entitled to receive during the term of
this Agreement such bonus payments as may be determined by the Board of
Directors of the Bank.
(b) During the term of this Agreement, the Executive
shall be entitled to participate in and receive the benefits of any pension or
other retirement benefit plan, profit sharing, stock option, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Bank, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Bank.
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(c) During the term of this Agreement, the Executive
shall be entitled to _____ weeks of paid annual vacation. The Executive shall
not be entitled to receive any additional compensation from the Bank for failure
to take a vacation, nor shall the Executive be able to accumulate unused
vacation time from one year to the next, except to the extent authorized by the
Board of Directors of the Bank.
(d) In the event the Executive's employment is terminated
due to Disability, the Bank shall provide continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Bank for the Executive immediately prior to his termination. Such coverage shall
cease upon the expiration of the term of this Agreement.
(e) The Bank shall, during the term of this Agreement,
pay the Executive ____ per month as a car allowance.
4. EXPENSES. The Bank shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of or in connection with the business of the Bank, including, but
not by way of limitation, traveling expenses, subject to such reasonable
documentation and other limitations as may be established by the Board of
Directors of the Bank. If such expenses are paid in the first instance by the
Executive, the Bank shall reimburse the Executive therefor.
5. TERMINATION.
(a) The Bank shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause or Disability and the
Executive shall have the right, upon prior Notice of Termination, to terminate
his employment hereunder for any reason.
(b) In the event that (i) the Executive's employment is
terminated by the Bank for Cause or (ii) the Executive terminates his employment
hereunder other than for Disability or death, the Executive shall have no right
pursuant to this Agreement to compensation or other benefits for any period
after the applicable Date of Termination.
(c) In the event that the Executive's employment is
terminated as a result of Disability during the term of this Agreement, the
Executive shall receive his salary for the duration of the term of this
Agreement. In the event of the Executive's death during the term of the
Agreement, the Executive's estate shall receive his salary to the end of the
term of this Agreement.
(d) In the event that (i) the Executive's employment is
terminated by the Bank for other than Cause, Disability, or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Bank, which breach has not been cured
within fifteen (15) days after a written notice of non-compliance has been given
by the Executive to the Bank, then the Bank shall provide the Executive with the
compensation otherwise payable pursuant to Section 3(a) hereof:
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6. NON-COMPETITION. The Executive agrees that:
(a) During the term of this Agreement, the Executive will
not, directly or indirectly, participate in or act as a principal, partner,
officer, employee, agent, or consultant to any business entity which is
competitive with the business now or hereafter engaged in or conducted by the
Bank, nor shall the Executive hold greater than 5% of the equity securities of
any such business.
(b) For a period of one year following the termination of
this Agreement for any reason, the Executive will not, directly or indirectly,
solicit for employment, or hire any person who during the term of this Agreement
was engaged as an employee or officer of the Bank or any of its subsidiary or
affiliated companies.
7. WITHHOLDING. All payments required to be made by the Bank
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
8. ASSIGNABILITY. The Bank may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Bank may hereafter merge or
consolidate or to which the Bank may transfer all or substantially all of its
assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Bank
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
9. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
The Corporation: Secretary
Crown Bank, a Federal Savings Bank
000 Xxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
The Executive
with a copy to: Secretary
R&G Financial Corporation
280 Xxxxx X. Xxxxxx Ave.
Hato Rey, San Xxxx, Puerto Rico 00918
10. AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer or officers as
may be specifically designated by the Board of Directors of the Bank to sign on
its behalf. No waiver by any party hereto at any time
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of any breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
11. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of
____________.
12. NATURE OF OBLIGATIONS. Nothing contained herein shall create
or require the Bank to create a trust of any kind to fund any benefits which may
be payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.
13. HEADINGS. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. REGULATORY ACTIONS. The following provisions shall be
applicable to the parties to the extent that they are required to be included in
employment agreements between a savings association and its employees pursuant
to Section 563.39(b) of the Regulations Applicable to All Savings Associations,
12 C.F.R. ss. 563.39(b), or any successor thereto, and shall be controlling in
the event of a conflict with any other provision of this Agreement, including
without limitation Section 5 hereof.
(a) If the Executive is suspended from office and/or
temporarily prohibited from participating in the conduct of the Bank's affairs
pursuant to notice served under Section 8(e)(3) or Section 8(g)(1) of the
Federal Deposit Insurance Act ("FDIA") (12 U.S.C. ss.ss.1818(e)(3) and
1818(g)(1)), the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If the charges
in the notice are dismissed, the Bank may, in its discretion: (i) pay the
Executive all or part of the compensation withheld while its obligations under
this Agreement were suspended, and (ii) reinstate (in whole or in part) any of
their obligations which were suspended.
(b) If the Executive is removed from office and/or
permanently prohibited from participating in the conduct of the Bank's affairs
by an order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12
U.S.C. ss.ss.1818(e)(4) and (g)(1)), all obligations of the Bank under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the Executive and the Bank as of the date of termination shall not be
affected.
E-5
(c) If the Bank is in default, as defined in Section 3(x)
(1) of the FDIA (12 U.S.C. ss.1813(x)(1)), all obligations under this Agreement
shall terminate as of the date of default, but vested rights of the Executive
and the Bank as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be
terminated pursuant to 12 C.F.R. ss.563.39(b)(5) (except to the extent that it
is determined that continuation of the Agreement for the continued operation of
the Bank is necessary): (i) by the Director of the Office of Thrift Supervision
("OTS"), or his/her designee, at the time the Federal Deposit Insurance
Corporation ("FDIC") enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the FDIA
(12 U.S.C. ss.1823(c)); or (ii) by the Director of the OTS, or his/her designee,
at the time the Director or his/her designee approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank are
determined by the Director of the OTS to be in an unsafe or unsound condition,
but vested rights of the Executive and the Bank as of the date of termination
shall not be affected.
17. REGULATORY PROHIBITION. Notwithstanding any other provision of
this Agreement to the contrary, any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDIA (12 U.S.C. ss.1828(k)) and the
regulations promulgated thereunder, including 12 C.F.R. Part 359. In the event
of the Executive's termination of employment with the Bank for Cause, all
employment relationships and managerial duties with the Bank shall immediately
cease regardless of whether the Executive remains in the employ of the
Corporation following such termination. Furthermore, following such termination
for Cause, the Executive will not, directly or indirectly, influence or
participate in the affairs or the operations of the Bank.
18. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Bank and the Executive with respect to the matters agreed to herein.
All prior agreements between the Bank and the Executive with respect to the
matters agreed to herein are hereby superseded and shall have no force or
effect.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
CROWN BANK, A FEDERAL SAVINGS BANK
By:
--------------------------------------
Xxxxxx X. Xxxxx
Chairman of the Board
EXECUTIVE
By:
-------------------------------------
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EXHIBIT F
TENANT ESTOPPEL LETTER
__________, 2002
R&G Financial Corporation
R&G Plaza
280 Xxxxx X. Xxxxxx Xxx.
Xxxx Xxx, Xxx Xxxx, XX 00000
Re: ______________, as amended __________________ ("Lease") by and
between Crown Bank, A Federal Savings Bank ("Landlord") and
__________________ ("Tenant") for the premises commonly known as
____________________ ("Premises")
Dear __________:
In connection with the acquisition of Crown Bank, A Federal Savings
Bank, by R&G Financial Corporation ("Assignee"), and the corresponding
assignment of the above referenced Lease, the undersigned Tenant hereby
certifies to Assignee that the following statements are true, correct and
complete as of the date hereof:
1. Tenant is the tenant under the Lease for the Premises. The
term of the Lease commenced on _____________, and will expire on _____________.
There have been no amendments, modifications or revisions to the Lease, and
there are no agreements of any kind between Landlord and Tenant regarding the
Premises, except as provided in the attached Lease.
2. Attached hereto as Schedule A is a true, correct and complete
copy of the Lease which has been duly authorized and executed by Tenant and
which is in full force and effect.
3. Tenant has accepted and is in sole possession of the Premises
and is presently occupying the Premises. The Lease has not been assigned, by
operation of law or otherwise, by Tenant, and no sublease, concession agreement
or license, covering the Premises, or any portion of the Premises, has been
entered into by Tenant. If the landlord named in the Lease is other than
Landlord, Tenant has received notice of the assignment to Landlord of the
landlord's interest in the Lease and Tenant recognizes Landlord as the landlord
under the Lease.
4. Tenant began paying rent on _______________. Tenant is
obligated to pay rent under the Lease in the total amount of
______________________________ Dollars ($_________), payable in ______
installments of ___________________________ Dollars ($_________). No rent under
the Lease has been paid more than one (1) month in advance, and no other sums or
security deposits have been deposited with Landlord, except in the amount of
$__________. (If none, state "NONE"). Tenant is not entitled to rent concessions
or free rent.
F-1
5. All conditions and obligations of Landlord relating to
completion of tenant improvements and making the Premises ready for occupancy by
Tenant have been satisfied or performed and all other conditions and obligations
under the Lease to be satisfied or performed by Landlord as of the date hereof
have been fully satisfied or performed.
6. There exists no defense to, or right of offset against,
enforcement of the Lease b Landlord. Neither Landlord nor Tenant is in default
under the Lease and no event has occurred which, with the giving of notice or
passage of time, or both, could result in such a default.
7. Tenant has not received any notice of any present violation of
any federal, state, county or municipal laws, regulations, ordinances, orders or
directives relating to the use or condition of the Premises.
8. Except as specifically stated herein, Tenant has not been
granted (a) any option to extend the term of the Lease; (b) any option to expand
the Premises or to lease additional space with in the Premises; (c) any right to
terminate the Lease prior to its stated expiration; or (d) any option or right
of first refusal to purchase the Premises or any part thereof.
9. Tenant acknowledges having been notified that Landlord's
interest in and to the Lease has been, or will be, assigned to Assignee. Until
further notice from Landlord, however, Tenant will continue to make all payments
under the Lease to Landlord and otherwise look solely to Landlord for the
performance of the Landlord's obligations under the Lease.
The agreements and certifications set forth herein are made with the knowledge
and intent that Assignee will rely on them in purchasing the Premises, and
Assignee's successors and assigns may rely upon them for that purpose.
Very truly yours,
[TENANT]
-------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
------------------------------
F-2
SCHEDULE A
LEASE
X-0
XXXXXXX X
XXXXXXXX XXXXXXXX LETTER
__________, 2002
R&G Financial Corporation
R&G Plaza
280 Xxxxx X. Xxxxxx Xxx.
Xxxx Xxx, Xxx Xxxx, XX 00000
Re: ________________, as amended __________________ ("Lease") by and
between ______________ ("Landlord") and Crown Bank, A Federal
Savings Bank ("Tenant") for the premises commonly known as
____________________ ("Premises")
Dear __________:
In connection with the acquisition of Crown Bank, A Federal Savings
Bank by R&G Financial Corporation ("Assignee"), and the corresponding assignment
of the above referenced Lease, the undersigned Landlord hereby certifies to
Assignee that the following statements are true, correct and complete as of the
date hereof:
1. Tenant is the tenant under the Lease for the Premises. The
term of the Lease commenced on _____________, and will expire on _____________.
There have been no amendments, modifications or revisions to the Lease, and
there are no agreements of any kind between Landlord and Tenant regarding the
Premises, except as provided in the attached Lease.
2. Attached hereto as Schedule A is a true, correct and complete
copy of the Lease which has been duly authorized and executed by Landlord and
which is in full force and effect.
3. Tenant has accepted and is in sole possession of the Premises
and is presently occupying the Premises. To the Landlord's knowledge, the Lease
has not been assigned, by operation of law or otherwise, by Tenant, and no
sublease, concession agreement or license, covering the Premises, or any portion
of the Premises, has been entered into by Tenant.
4. Tenant began paying rent on _____________. Tenant is obligated to pay
rent under the Lease in the total amount of _____________________ Dollars
($_____________), payable in ______ installments of _______________________
Dollars ($__________). No rent under the Lease has been paid to Landlord more
than one (1) month in advance, and no other sums or security deposits have been
deposited with Landlord, except in the amount $__________. (If none, state
"NONE"). Tenant is not entitled to rent concessions or free rent.
5. All conditions and obligations of Landlord relating to
completion of tenant improvements and making the Premises ready for occupancy by
Tenant have been satisfied or
G-1
performed and all other conditions and obligations under the Lease to be
satisfied or performed by Landlord and Tenant as of the date hereof have been
fully satisfied or performed.
6. There exists no defense to, or right of offset against,
enforcement of the Lease by Tenant. Neither Landlord nor Tenant is in default
under the Lease and no event has occurred which, with the giving of notice or
passage of time, or both, could result in such a default.
7. Landlord has not received any notice of any present violation
of any federal, state, county or municipal laws, regulations, ordinances, orders
or directives relating to the use or condition of the Premises.
8. Except as specifically stated herein, Tenant has not been
granted (a) any option to extend the term of the Lease, except as follows:
______________ (if none, state "NONE"); (b) any option to expand the Premises or
to lease additional space with in the Premises, except as follows:
_______________ (if none, state "NONE"); (c) any right to terminate the Lease
prior to its stated expiration, except as follows: _______________ (if none,
state "NONE"); or (d) any option or right of first refusal to purchase the
Premises or any part thereof, except as follows: ________________ (if none,
state "NONE").
The agreements and certifications set forth herein are made with the
knowledge and intent that Assignee will rely on them in purchasing the Premises,
and Assignee's successors and assigns may rely upon them for that purpose.
Very truly yours,
[LANDLORD]
----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
G-2
SCHEDULE A
LEASE
G-3
EXHIBIT H
_______________ __, 2002
R&G Financial Corporation
R&G Xxxxx
000 Xxxxx X. Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Gentlemen:
The undersigned shareholder ("Shareholder") of The Crown Group, Inc. ("Group")
understands that R&G Financial Corporation ("R&G") and R&G Acquisition Holdings
Corporation ("Holdings") have entered into an Agreement and Plan of
Reorganization (the "Agreement") with Group and Crown Bank, a Federal Savings
Bank ("Bank"). The Agreement provides for the merger of Holdings with Group (the
"Merger") and the related conversion of all of the outstanding common stock of
Group into the Merger Consideration set forth in the Agreement.
The undersigned understands that it is a condition to the
obligation of R&G and Holdings to complete the Merger, for each stockholder of
Group to provide R&G and Holdings with certain representations, warranties and
covenants. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Agreement.
The Shareholder represents as follows:
(a) The Shareholder is acquiring the R&G Debenture solely
for his, her or its own account, for investment and not with a view to sale or
distribution thereof, or any portion or component thereof, and the Shareholder
will not sell, offer to sell or otherwise dispose of or distribute the R&G
Debenture, or any portion or component thereof, in any transaction other than a
transaction complying with the registration requirements of the Securities Act
and applicable state securities or "Blue Sky" laws, or pursuant to an exemption
therefrom.
(b) The Shareholder understands that the R&G Debenture
involves a high degree of risk and will be a highly speculative investment. The
Shareholder is able, without impairing his, her or its financial condition, to
hold the R&G Debenture for an indefinite period of time and to suffer a complete
loss of the Shareholder's investment therein.
(c) The Shareholder understands that neither R&G nor any
of its officers/directors has any obligation to register the R&G Debenture, and
that no public market currently exists or may in the future exist for the R&G
Debenture.
H-1
(d) The Shareholder understands and agrees that R&G will
cause to be placed on the certificate evidencing the R&G Debenture a customary
legend relating to the fact that the R&G Debenture is a restricted security and
restrictions on transfer of the R&G Debenture.
(e) If the Shareholder is a natural person (i.e., an
individual), please indicate with an "X" the manner in which such person
qualifies as an "accredited investor" pursuant to Regulation D promulgated under
the Securities Act:
___ (1) a natural person whose individual net worth(1) (or
joint net worth with such person's spouse) exceeds
$1,000,000; or
___ (2) a natural person who had an individual income in
excess of $200,000 in each of the two most recent
years and who reasonably expects to have an
individual income in excess of $200,000 in the
current year or who had joint income in excess of
$300,000 in each of the two most recent years and who
reasonably expects to have joint income in excess of
$300,000 in the current year.
(f) If the Shareholder is not a natural person (i.e., an
Entity), please indicate with an "X" the manner in which such entity qualifies
as an "accredited investor" pursuant to Regulation D promulgated under the
Securities Act:
___ (1) a bank as defined in ss.3(a)(2) of the Securities
Act, or a savings and loan association or other
institution as defined in ss. 3(a)(5)(A) of the
Securities Act, whether acting in its individual or
fiduciary capacity;
___ (2) a broker or dealer registered pursuant to ss.15 of
the Securities Exchange Act of 1934, as amended;
___ (3) an insurance company as defined in ss. 2(13) of the
Securities Act;
___ (4) an investment company registered under the Investment
Company Act of 1940, as amended;
___ (5) a business development company as defined in ss. 2(a)
(48) of the Investment Company Act;
___ (6) a Small Business Investment Company licensed by the
U.S. Small Business Administration under ss.301(c) or
(d) of the Small Business Investment Act of 1958, as
amended;
___ (7) a plan established and maintained by a state, its
political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000;
___ (8) an employee benefit plan within the meaning of Title
I of ERISA, if either:
--------------
(1) For purposes of this item, "NET WORTH" means the excess of total assets at
fair market value, including home and personal property, over total liabilities,
including mortgage debt.
H-2
(A) the investment decision is made by a plan
fiduciary, as defined in ss.3(21) of ERISA,
which is either a bank, savings and loan
association, insurance company or registered
investment adviser;
(B) the employee benefit plan has total assets
in excess of $5,000,000; or
(C) such a plan is a self-directed plan with
investment decisions made solely by persons
that are "accredited investors";
___ (9) a private business development company as defined
in ss. 202(a)(22) of the Investment Advisers Act of
1940, as amended;
___ (10) one of the following entities which was not formed
for the specific purpose of acquiring the R&G
Debenture and which has total assets in excess of
$5,000,000:
(A) an organization described in ss.501(c)(3))
of the Code;
(B) a corporation or partnership; or
(C) a Massachusetts or similar business trust;
___ (11) a trust with total assets in excess of $5,000,000 not
formed for the specific purpose of acquiring the R&G
Debenture, whose acquisition of the R&G Debenture is
directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D; or
___ (12) an entity in which all of the equity owners are
"accredited investors."
(g) If the Shareholder is not a natural person (i.e., an
Entity), please xxxx either (1) or (2), as applicable, of this subparagraph (d)
with an "X":
___ (1) the Shareholder was not organized or reorganized for
the purpose of acquiring the R&G Debenture; or
___ (2) if the Shareholder was organized or reorganized for
the purpose of acquiring the R&G Debenture, the
number of stockholders, partners, members or other
owners, direct or indirect, of the Shareholder is
__________, and all such stockholders, partners or
other investors are "accredited investors".
H-3
Very truly yours,
INDIVIDUAL INVESTOR: ENTITY INVESTOR:
---------------------------- ------------------------------
(Signature) (Name of Entity)
---------------------------
(Print Name) By:
---------------------------
Name:
-------------------------
Title:
------------------------
H-4
EXHIBIT I
_____________ , 2002
R&G Financial Corporation
R&G Plaza
000 Xxxxx X. Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 000000
Gentlemen:
The undersigned, the _____________ of Cresleigh Bancorp, LLC ("Cresleigh")
understands that R&G Financial Corporation ("R&G") and R&G Acquisition Holdings
Corporation ("Holdings") have entered into an Agreement and Plan of
Reorganization (the "Agreement") with The Crown Group, Inc. ("Group") and Crown
Bank, a Federal Savings Bank ("Bank"). The Agreement provides for the merger of
Holdings with and into Group and the related conversion of all the outstanding
common stock of Group into the Merger Consideration set forth in the Agreement.
1. In order to induce R&G and Holdings to enter into the
Agreement, and intending to be legally bound thereby, the undersigned, on behalf
of Cresleigh, agrees for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, to indemnify and defend R&G,
Holdings, their subsidiaries and each of their officers, directors, employees
and stockholders (each, an "Indemnitee") against, and hold each Indemnitee
harmless from, any loss, liability, obligation, damage or expense, including
without limitation, attorneys' fees and disbursements (collectively, "Damages"),
that any Indemnitee may suffer or incur (whether or not in connection with or
incidental to any claim or any Proceeding (as defined below) by a third party
against such Indemnitee) based on or arising from, any loan transactions
involving AABCO Mortgage Loans and Investments, Inc. ("AABCO") originated after
the sale of AABCO by Group to Cresleigh or in connection with the sale
transaction of AABCO by Group to Cresleigh. For purposes of this letter
agreement, "Proceedings" shall mean any lawsuits or other legal, administrative,
arbitration or other proceedings or claims, actions, disputes, audits, subpoenas
or investigations.
2. Promptly after notice to an Indemnitee of any claim
or the commencement of any Proceeding, including any Proceeding by a third
party, involving any Damage referred to herein, the Indemnitee shall give
written notice to Cresleigh of the commencement of such claim or Proceeding,
setting forth in reasonable detail the nature thereof and the basis upon which
such party seeks indemnification hereunder; provided, however, that the failure
of the Indemnitee to give such notice shall not relieve Cresleigh of its
obligations, except to the extent that is actually prejudiced by the failure to
give such notice.
I-1
3. In the case of any such Proceedings by a third party
against the Indemnitee, Cresleigh shall, upon receipt of notice as provided
above, assume the defense thereof, with counsel reasonably satisfactory to the
Indemnitee, and, after notice from Cresleigh to the Indemnitee of its assumption
of the defense thereof, shall not be liable to the Indemnitee for any legal or
other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof (but the Indemnitee shall have the right, but not the
obligation, to participate at its own cost and expense in such defense by
counsel of its own choice) or for any amounts paid or foregone by the Indemnitee
as a result of the settlement or compromise thereof without the written consent
of Cresleigh.
4. Notwithstanding Section 3 hereto, if both Cresleigh
and the Indemnitee are named as parties or subject to such Proceedings and
either such party determines with advice of counsel that there may be one or
more legal defenses available to it that are different from or additional to
those available to the other party or that a material conflict of interest
between such parties may exist in respect of such Proceedings, then Cresleigh
may decline to assume the defense on behalf of the Indemnitee or the Indemnitee
may retain the defense on its own behalf, and, in either such case, after notice
to such effect is duly given hereunder to the other party, Cresleigh shall be
relieved of its obligation to assume the defense on behalf of the Indemnitee,
but shall be required to pay any legal or other expenses, including without
limitation reasonable attorneys' fees and disbursements, incurred by the
Indemnitee in such defense; provided, however, that Cresleigh shall not be
liable for such expenses on account of more than one separate firm of attorneys
(and, if necessary, local counsel) at any time representing the Indemnitee in
connection with any Proceedings or separate Proceedings in the same jurisdiction
arising out of or based upon substantially the same allegations or
circumstances.
5. If Cresleigh assumes the defense of any such
Proceedings, the Indemnitee shall cooperate fully in all reasonable respects
with Cresleigh and shall appear and give testimony, produce documents and other
tangible evidence, allow Cresleigh access to the books and records of the
Indemnitee and otherwise assist Cresleigh in conducting such defense. Cresleigh
shall not, without the consent of the Indemnitee (which consent shall not be
unreasonably withheld), consent to entry of any judgement or enter into any
settlement or compromise which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to the Indemnitee of a release from all
liability in respect to such claim or Proceeding.
6. If Cresleigh shall fail to promptly and diligently to
assume the defense of any Proceeding following receipt of notice from an
Indemnitee as provided in Section 2 above, then the Indemnitee may respond to,
consent and defend against such Proceedings (but Cresleigh shall have the right
to participate at its own cost and expense in such defense by counsel of its own
choice) and may make in good faith any compromise or settlement with respect
thereto, and recover from Cresleigh the entire cost and expense thereof,
including without limitation reasonable attorneys' fees and disbursements and
all amounts paid or lost directly as a result of such Proceeding, or the
settlement or compromise thereof; provided that in no event shall Cresleigh be
liable or otherwise have any obligation with respect to any settlement,
compromise or determination of any claim agreed to by the Indemnitee without the
prior written consent of Cresleigh (which shall not be unreasonably withheld).
The indemnification required hereunder shall be made by periodic payments of the
amount thereof during the course of the investigation
I-2
or defense, as and when bills or invoices are received or loss, liability,
obligation, damage or expense is actually suffered or incurred.
7. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this letter agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that R&G and Holdings shall be entitled to
seek an injunction or injunctions to prevent breaches of this letter agreement
by Cresleigh and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having competent jurisdiction, this
being in addition to any other remedy to which it is entitled at law or in
equity.
8. This Agreement is to be governed by and construed in
accordance with the laws of the Commonwealth of Puerto Rico. If any provision
hereof deemed unenforceable, the enforceability of the other provisions shall
not be affected.
Yours truly,
CRESLEIGH BANCORP, LLC
By:
----------------------------------
Name:
Title:
Accepted and Agreed to:
R&G FINANCIAL CORPORATION
By:
-------------------------
Name:
Title:
I-3
EXHIBIT J
_____________ , 2002
R&G Financial Corporation
R&G Plaza
000 Xxxxx X. Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 000000
Gentlemen:
The undersigned, the _______________ of ________________ LLC ("____________")
understands that R&G Financial Corporation ("R&G") and R&G Acquisition Holdings
Corporation ("Holdings") have entered into an Agreement and Plan of
Reorganization (the "Agreement") with The Crown Group, Inc. ("Group") and Crown
Bank, a Federal Savings Bank ("Bank"). The Agreement provides for the merger of
Holdings with and into Group and the related conversion of all the outstanding
common stock of Group into the Merger Consideration set forth in the Agreement.
1. In order to induce R&G and Holdings to enter into the
Agreement, and intending to be legally bound thereby, the undersigned, on behalf
of ___________, agrees for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, to indemnify and defend R&G,
Holdings, their subsidiaries and each of their officers, directors, employees
and stockholders (each, an "Indemnitee") against, and hold each Indemnitee
harmless from, any loss, liability, Tax (as defined in the Agreement)
obligation, damage or expense, including without limitation, attorneys' fees and
disbursements (collectively, "Damages"), that any Indemnitee may suffer or incur
(whether or not in connection with or incidental to any claim or any Proceeding
(as defined below) by a third party against such Indemnitee) based on or arising
from, any transactions involving the sale of the assets identified in Schedule
5.13(a) to the Agreement by Group to _________. For purposes of this letter
agreement, "Proceedings" shall mean any lawsuits or other legal, administrative,
arbitration or other proceedings or claims, actions, disputes, audits, subpoenas
or investigations.
2. Promptly after notice to an Indemnitee of any claim
or the commencement of any Proceeding, including any Proceeding by a third
party, involving any Damage referred to herein, the Indemnitee shall give
written notice to ____________ of the commencement of such claim or Proceeding,
setting forth in reasonable detail the nature thereof and the basis upon which
such party seeks indemnification hereunder; provided, however, that the failure
of the Indemnitee to give such notice shall not relieve ______________ of its
obligations, except to the extent that is actually prejudiced by the failure to
give such notice.
J-1
3. In the case of any such Proceedings by a third party
against the Indemnitee, _____________ shall, upon notice as provided above,
assume the defense thereof, with counsel reasonably satisfactory to the
Indemnitee, and, after notice from _______________ to the Indemnitee of its
assumption of the defense thereof, shall not be liable to the Indemnitee for any
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof (but the Indemnitee shall have the right, but not the
obligation, to participate at its own cost and expense in such defense by
counsel of its own choice) or for any amounts paid or foregone by the latter as
a result of the settlement or compromise thereof without the written consent of
_______________.
4. Notwithstanding Section 3 hereto, if both ___________
and the Indemnitee are named as parties or subject to such Proceedings and
either such party determines with advice of counsel that there may be one or
more legal defenses available to it that are different from or additional to
those available to the other party or that a material conflict of interest
between such parties may exist in respect of such Proceedings, then
_______________ may decline to assume the defense on behalf of the Indemnitee or
the Indemnitee may retain the defense on its own behalf, and, in either such
case, after notice to such effect is duly given hereunder to the other party,
_______________ shall be relieved of its obligation to assume the defense on
behalf of the Indemnitee, but shall be required to pay any legal or other
expenses, including without limitation reasonable attorneys' fees and
disbursements, incurred by the Indemnitee in such defense; provided, however,
that _______________ shall not be liable for such expenses on account of more
than one separate firm of attorneys (and, if necessary, local counsel) at any
time representing the Indemnitee in connection with any Proceedings or separate
Proceedings in the same jurisdiction arising out of or based upon substantially
the same jurisdiction arising out of or based upon substantially the same
allegations or circumstances.
5. If _______________ assumes the defense of any such
Proceedings, the Indemnitee shall cooperate fully in all reasonable respects
with _______________ and shall appear and give testimony, produce documents and
other tangible evidence, allow _______________ access to the books and records
of the Indemnitee and otherwise assist _______________ in conducting such
defense. _______________ shall not, without the consent of the Indemnitee (which
consent shall not be unreasonably withheld), consent to entry of any judgement
or enter into any settlement or compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnitee of a release from all liability in respect to such claim or
Proceeding. Provided that proper notice is duly given, if _______________ shall
fail promptly and diligently to assume the defense thereof, then the Indemnitee
may respond to, consent and defend against such Proceedings (but _______________
shall have the right to participate at its own cost and expense in such defense
by counsel of its own choice) and may make in good faith any compromise or
settlement with respect thereto, and recover from _______________ the entire
cost and expense thereof, including without limitation reasonable attorneys'
fees and disbursements and all amounts paid or foregone as a result of such
Proceeding, or the settlement or compromise thereof; provided that in no event
shall _______________ be liable or otherwise have any obligation with respect to
any settlement, compromise or determination of any claim agreed to by the
Indemnitee without the prior written consent of _______________ (which shall not
be unreasonably withheld). The indemnification required hereunder shall be made
by periodic payments of the amount thereof during the course of
J-2
the investigation or defense, as and when bills or invoices are received or
loss, liability, obligation, damage or expense is actually suffered or incurred.
6. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this letter agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that R&G and Holdings shall be entitled to
seek an injunction or injunctions to prevent breaches of this letter agreement
by _______________ and to enforce specifically the terms and provisions hereof
in any court of the United States or any state having competent jurisdiction,
this being in addition to any other remedy to which it is entitled at law or in
equity.
7. This Agreement is to be governed by and construed in
accordance with the laws of the Commonwealth of Puerto Rico. If any provision
hereof deemed unenforceable, the enforceability of the other provisions shall
not be affected.
Yours truly,
---------------------------------
By:
------------------------------
Name:
Title:
Accepted and Agreed to:
R&G FINANCIAL CORPORATION
By:
-------------------------
Name:
Title:
J-3
EXHIBIT K
POWER OF ATTORNEY
1. Appointment; Acceptance. By executing this Power of Attorney,
each holder of common stock ("Common Stock") of The Crown Group, Inc. ("Group")
("Stockholders") and each holder of an option to acquire Group Common Stock
("Optionee") hereby irrevocably constitutes and appoints Xxxx X. Xxxxxx, acting
as hereinafter provided, as its/his/her attorney-in-fact (the "Attorney in
Fact") and agent, in its/his/her name, place and xxxxx in connection with the
transactions and agreements contemplated by the Agreement and Plan of
Reorganization dated December 19, 2001 between R&G Financial Corporation
("R&G"), R&G Acquisition Holdings Company ("Holdings"), Group and Crown Bank, a
Federal Savings Bank ("Agreement"), and acknowledges that such appointment is
coupled with an interest. By executing and delivering this Power of Attorney,
the Attorney in Fact hereby (i) accepts his appointment and authorization to act
as Attorney-in-Fact and agent on behalf of the Stockholders and Optionees in
accordance with the terms of this Power of Attorney and (ii) agrees to perform
obligations hereunder, and otherwise comply with this Power of Attorney. In the
event that Xxxx X. Xxxxxx becomes for any reason unable to serve as
attorney-in-fact, Xxxxxxx X. Xxxxxx shall become successor attorney-in-fact who,
upon acceptance of such office, shall have all of the rights and powers and be
required to fulfil all of the duties herein granted to or imposed on the
attorney-in-fact.
2. Authority. Each of the Stockholders and Optionees fully and
completely, without restriction:
(a) Authorizes the Attorney in Fact: (i) to deliver to
R&G or Holdings on its/his/her behalf the certificates representing all
of its/his/her shares of Group Common Stock and the separate stock
transfer powers, if any, relating to all such shares of Group Common
Stock duly endorsed by him, her or it and otherwise as provided in this
Agreement; (ii) to deliver to R&G or Holdings on his or her behalf the
certificates representing options to acquire Group Common Stock duly
endorsed by him or her; (iii) to deliver to R&G or Holdings on
its/his/her behalf the Investor Accreditation Representation Letter set
forth as Exhibit H to the Agreement, duly endorsed by him, her or it;
(iv) to execute and deliver and to accept delivery of, on his, her or
its behalf, such agreements, instruments and other documents as may be
deemed by the Attorney in Fact in its sole discretion to be appropriate
under the Power of Attorney; (v) to dispute or to refrain from
disputing and thereby accept any position advanced by R&G or Holdings
under the Agreement; (vi) to negotiate and settle any dispute which may
arise under this Power of Attorney and to sign any releases or other
documents with respect to such dispute or remedy; (vii) to waive any
condition contained in this Power of Attorney; (viii) to give any and
all consents under this Power of Attorney, including, but not limited
to, written consents to approve the transactions contemplated by
Section 607.0704 of the Florida Business Corporation Act; and (ix) to
give such instructions and do such other things and refrain from doing
such things as the Attorney in Fact shall deem appropriate to carry out
the provisions of this Power of Attorney.
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(b) Agrees to be bound by all notices received and
agreements and determinations made by and documents executed and
delivered by the Attorney in Fact under this Power of Attorney.
(c) Authorizes and directs the Attorney in Fact to
receive any and all payments made to Stockholders and Optionees under
the Agreement or to direct R&G or Holdings to make payment directly to
certain of the Stockholders and Optionees of such amounts as each of
such identified Stockholders and Optionees is entitled, to invest such
funds pending their disbursement in such manner as the Attorney in Fact
in its sole discretion deems appropriate, and to disburse any payments
due to Stockholders and Optionees under the Power of Attorney in
accordance with their interest, after (i) payment of any attorneys' and
other fees and expenses incurred on behalf of the Stockholders and
Optionees in connection with the consummation of the transactions
contemplated by the Agreement and (ii) withholding such amounts to pay
costs and expenses relating to potential disputes arising with respect
to any obligations of Stockholders and Optionees under this Power of
Attorney.
3. Actions. Each of the Stockholders and Optionees hereby
expressly acknowledges and agrees that (i) the Attorney in Fact is exclusively
authorized to act on his or her or its behalf, notwithstanding any dispute or
disagreement among Stockholders and Optionees, and (ii) any other person shall
be entitled to rely on any and all actions taken by Attorney in Fact under this
Power of Attorney without any liability to, or obligation to inquire of, any
Stockholders and Optionees. All notices, counternotices or other instruments or
designations delivered by any Stockholders and Optionees or the Attorney in Fact
shall not be effective unless, but shall be effective if, signed by the Attorney
in Fact, and if not, such document shall have no force and effect whatsoever
hereunder and R&G, Holdings and any other person may proceed without regard to
any such document. R&G, Holdings and any other person are hereby expressly
authorized to rely on the genuineness of the signature of the Attorney in Fact,
and upon receipt of any writing which reasonably appears to have been signed by
Attorney in Fact, R&G, Holdings and any other person or entity may act upon the
same without any further duty of inquiries to the genuineness of the writing.
4. Effectiveness. The authorization of the Attorney in Fact shall
be irrevocable and effective until its rights and obligations under this Power
of Attorney terminate by virtue of the termination of any and all of the
obligations of Group to R&G and Holdings under the Agreement.
5. Indemnification; Fees and Expenses. Stockholders and Optionees
hereby jointly and severally agree (i) to indemnify and hold the Attorney in
Fact harmless from any and all liability, loss, cost, damage or expense,
including attorneys fees (reasonably incurred or suffered as a result of the
performance of its duties under this Power of Attorney), and (ii) that the
Attorney in Fact shall not have any liability to Stockholders and Optionees for
any act or omission hereunder, except for gross negligence or willful
misconduct. The fees and expenses of the Attorney in Fact shall be paid by
Stockholders and Optionees, and neither R&G nor Holdings shall have any
liability with respect to such fees and expenses.
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6. Survival of Authorizations. Each Stockholder or Optionee
intends for the authorizations and agreements in the foregoing sections of this
Power of Attorney to remain in force and not be affected if such Stockholder or
Optionee subsequently becomes mentally or physically disabled or incompetent,
does hereby authorize such recordings and filings hereof as the Attorney in Fact
may deem appropriate, and does hereby direct that no filing of accounts or
inventories or posting of a surety bond shall be required.
By:
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Xxxx X. Xxxxxx, Attorney-in-Fact
STOCKHOLDER/OPTIONEE
By:
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Printed Name:
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