EXHIBIT 99.1
AMENDMENT NO. 3 TO AGREEMENT AND PLAN OF REORGANIZATION
This AMENDMENT NO. 3 TO AGREEMENT AND PLAN OF REORGANIZATION, dated as
of June 6, 2002 (the "Amendment"), by and among R&G FINANCIAL CORPORATION, a
Puerto Rico corporation ("R&G"), R&G ACQUISITION HOLDINGS CORPORATION, a Florida
corporation and wholly-owned subsidiary of R&G ("Holdings"), THE CROWN GROUP,
INC. a Florida corporation (the "Group"), and CROWN BANK, A Federal Savings Bank
(the "Bank" and together with R&G, Holdings and Group, the "Parties").
Capitalized terms not otherwise defined herein shall have the meaning as set
forth in the original Agreement.
WHEREAS, the Parties entered into an Agreement and Plan of
Reorganization, dated as of December 19, 2001 and as amended by amendments to
the Agreement dated as of January 31, 2002 and February 27, 2002 (collectively,
the "Agreement");
WHEREAS, the Parties hereto wish to modify and amend the Agreement as
set forth herein in connection with the closing of the transactions contemplated
by the Agreement.
NOW, THEREFORE, in consideration of the premises, covenants and
agreements hereinafter set forth, the Parties hereto agree as follows:
SECTION 1. AMENDMENT OF ARTICLE I OF THE AGREEMENT.
The definition of "Merger Consideration" in Article I of the
Agreement is hereby amended and restated in its entirety to read as follows:
"Merger Consideration" shall mean an aggregate of One
Hundred Million Dollars ($100,000,000.00) in cash,
into which shares of Group Common Stock shall be
converted in the Merger pursuant to Section 2.6(c)
hereof.
SECTION 2. AMENDMENT TO SECTION 3.1 OF THE AGREEMENT.
A new last sentence is added to Section 3.1 of the Agreement
to read in its entirety as follows:
As of the date of this Amendment, there were no Group Options
outstanding.
SECTION 3. AMENDMENT OF SECTION 5.13 OF THE AGREEMENT.
(a) Section 5.13(a) of the Agreement is amended through
the amendment and restatement of Schedule 5.13(a) thereunder, a copy of which is
attached as Exhibit A hereto.
(b) Section 5.13(b) of the Agreement is amended and
restated in its entirety to read as follows:
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(b) Prior to this Amendment, Group has caused
the assets identified in Schedule 5.13(b) hereto to be sold
for cash proceeds of One Million, Six Hundred Sixty Thousand,
Eight Hundred Ninety Three Dollars and 25/100 ($1,660,893.25)
(the "Section 5.13(b) Proceeds"). As of the Effective Time,
R&G or Group shall distribute to the LLC on behalf of the
holders of Group Common Stock cash in the amount of One
Hundred Thousand Dollars ($100,000.00) and R&G shall cause the
Surviving Corporation to retain the balance of the Section
5.13(b) Proceeds, which is One Million, Five Hundred Sixty
Thousand, Eight Hundred Ninety Three Dollars and 25/100
($1,560,893.25). The LLC agrees to indemnify R&G and Group for
any Tax imposed in connection with the sales of assets that
have been made pursuant to this Section 5.13(b), which may be
satisfied by any amounts due to the LLC pursuant to Section
5.13(c) hereof.
(c) Section 5.13(c) of the Agreement is amended and
restated in its entirety to read as follows:
(c)(1) Subject to Section 5.13(c)(2) hereof, 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 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
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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.
(c)(2) Notwithstanding anything herein to the
contrary, including specifically the payment obligation of R&G
to make to the LLC, first, the Initial Additional Payment and
if applicable, the Subsequent Additional Payment, each as
specified in Section 5.13(c)(1) hereto, the Initial Additional
Payment as calculated aforesaid and, if necessary, the
Subsequent Additional Payment, shall be reduced by the amount
of One Million Three Hundred Forty Two Thousand, Eight Hundred
Eighty One Dollars ($1,342,881.00). R&G shall be under no
obligation to make any such payment to the LLC pursuant to
Section 5.13(c)(1) unless and until it has first realized a
Federal Tax benefit in the amount set forth in the immediately
preceding sentence.
SECTION 4. AMENDMENT OF SECTION 6 OF THE AGREEMENT.
(a) The language of Section 6.3(j) of the Agreement is
amended and restated in its entirety to read as follows:
(j) Group (on an unconsolidated basis) shall
have cash of not less than Five Million Seven Hundred Sixty
Thousand, Eight Hundred Ninety Three Dollars and 25/100
($5,760,893.25) (which takes into consideration the prior
transfer by Group to the Bank of Six Million and Eight Hundred
Thousand Dollars ($6,800,000), the payment of the One Million
Dollars ($l,000,000) payable to Xxxxx Xxxxxxxx & Xxxxx and the
monies retained by Group pursuant to Section 5.13(b) hereof
($1,560,893.25).
(b) Section 6.3(r) of the Agreement is hereby deleted in
its entirety.
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SECTION 5. MISCELLANEOUS.
(a) The Agreement is incorporated herein by reference.
(b) Except as otherwise set forth herein, the Agreement,
as amended hereby, shall remain in full force and effect and the Parties shall
have all the rights and remedies provided thereunder with the same force and
effect as if the Agreement were restated herein in its entirety.
(c) The provisions hereof shall be binding upon and inure
to the benefit of the Parties and their respective executors, heirs, personal
representatives, successors and assigns.
(d) This Amendment may be executed and delivered in
several counterparts with the intention that all such counterparts, when taken
together, constitute one and the same instrument.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
R&G FINANCIAL CORPORATION R&G ACQUISITION HOLDINGS
CORPORATION
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------- --------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer Title: Chairman and Chief Executive Officer
THE CROWN GROUP, INC. CROWN BANK, A FEDERAL SAVINGS BANK
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
-------------------------------------------- --------------------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer Title: President and Chief Executive Officer
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EXHIBIT A
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SCHEDULE 5.13(A)
ASSETS OF GROUP TO BE TRANSFERRED TO LLC PRIOR TO EFFECTIVE TIME
(i) Cash Proceeds from the sale of Stock in Metro Savings Bank in
the amount of $42,000.00;
(ii) Investment in Fortune Financial, Inc.;
(iii) Note Receivable--$240,000 from Carrisbrook Properties;
(iv) Security Deposit - Stoneleigh Financial Corporation;
(v) F MACT 1997cb (CMO B tranche -- CUSIP # 302471bj5);
(vi) REO of Group (only) - as described in Schedule A hereto;
(vii) F MACT 1997bb - CUSIP #302471ba4;
(viii) F MACT 1998ab - CUSIP #302471br7; and
(ix) GNMA IO strip - CUSIP #0000xxX0.
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