AGREEMENT AND PLAN OF MERGER by and between THE COLONIAL BANCGROUP, INC. and COMMERCIAL BANKSHARES, INC. dated as of January 23, 2007
AGREEMENT
AND PLAN OF MERGER
by
and between
THE
COLONIAL BANCGROUP, INC.
and
COMMERCIAL
BANKSHARES, INC.
dated
as of
January
23, 2007
TABLE
OF CONTENTS
| Caption |
Page
|
| MERGER -- TERMS AND CONDITIONS | |||
|
2.1
|
Applicable Law |
1
|
|
|
2.2
|
Corporate Existence |
1
|
|
|
2.3
|
Articles of Incorporation and Bylaws |
2
|
|
|
2.4
|
Resulting Corporation's Officers and Board |
2
|
|
|
2.5
|
Shareholder Approval |
2
|
|
|
2.6
|
Further Acts |
2
|
|
|
2.7
|
Effective Time and Closing |
2
|
|
|
2.8
|
Merger of Subsidiary Bank |
3
|
| CONVERSION OF ACQUIRED CORPORATION STOCK | |||
|
3.1
|
Conversion of Acquired Corporation Stock |
3
|
|
|
3.2
|
Fractional Shares |
5
|
|
|
3.3
|
Adjustments |
5
|
|
|
3.4
|
BancGroup Stock |
5
|
|
|
3.5
|
[Reserved] |
5
|
|
|
3.6
|
Election and Exchange Procedures |
5
|
|
|
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP | ||
|
4.1
|
Organization |
10
|
|
|
4.2
|
Capital Stock |
10
|
|
|
4.3
|
Financial Statements; Taxes |
10
|
|
|
4.4
|
No Conflict with Other Instrument |
12
|
|
|
4.5
|
Absence of Material Adverse Change |
12
|
|
|
4.6
|
Approval of Agreement |
12
|
|
|
4.7
|
Tax Treatment |
12
|
|
|
4.8
|
Title and Related Matters |
12
|
|
|
4.9
|
|
Subsidiaries |
12
|
|
4.10
|
Contracts |
13
|
|
|
4.11
|
Litigation |
13
|
|
|
4.12
|
Compliance |
13
|
|
|
4.13
|
Registration Statement |
13
|
|
|
4.14
|
SEC Filings |
14
|
|
|
4.15
|
Form S-4 |
14
|
|
|
4.16
|
Brokers |
14
|
|
|
4.17
|
Government Authorization |
14
|
|
|
4.18
|
Absence of Regulatory Communications |
14
|
|
|
4.19
|
Disclosure |
15
|
| REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED CORPORATION | |||
|
5.1
|
Organization |
15
|
|
|
5.2
|
Capital Stock |
15
|
|
|
5.3
|
Subsidiaries |
16
|
|
|
5.4
|
Financial Statements; Taxes |
16
|
|
|
5.5
|
Absence of Certain Changes or Events |
17
|
|
|
5.6
|
Title and Related Matters |
19
|
|
|
5.7
|
Commitments |
19
|
|
|
5.8
|
Charter and Bylaws |
20
|
|
|
5.9
|
Litigation |
20
|
|
|
5.10
|
Material Contract Defaults |
20
|
|
|
5.11
|
No Conflict with Other Instrument |
21
|
|
|
5.12
|
Governmental Authorization |
21
|
|
|
5.13
|
Absence of Regulatory Communications |
21
|
|
|
5.14
|
Absence of Material Adverse Change |
21
|
|
|
5.15
|
Insurance |
21
|
|
|
5.16
|
Pension and Employee Benefit Plans |
22
|
|
|
5.17
|
Buy-Sell Agreements |
22
|
|
|
5.18
|
Brokers |
22
|
|
|
5.19
|
Approval of Agreements |
23
|
|
|
5.20
|
Disclosure |
23
|
|
|
5.21
|
Registration Statement |
23
|
|
|
5.22
|
Loans; Adequacy of Allowance for Loan Losses |
23
|
|
|
5.23
|
Environmental Matters |
24
|
|
|
5.24
|
Collective Bargaining |
24
|
|
|
5.25
|
Labor Disputes |
24
|
|
|
5.26
|
Derivative Contracts |
24
|
|
|
5.27
|
SEC Filings |
25
|
| ADDITIONAL COVENANTS | |||
|
6.1
|
Additional Covenants of BancGroup |
25
|
|
|
6.2
|
Additional Covenants of Acquired Corporation |
29
|
| MUTUAL COVENANTS AND AGREEMENTS | |||
|
7.1
|
Commercially Reasonable Efforts; Cooperation |
33
|
|
|
7.2
|
Press Release |
33
|
|
|
7.3
|
Mutual Disclosure |
33
|
|
|
7.4
|
Access to Properties and Records |
34
|
|
|
7.5
|
Notice of Adverse Changes |
34
|
| CONDITIONS TO OBLIGATIONS OF ALL PARTIES | |||
|
8.1
|
Approval by Shareholders |
34
|
|
|
8.2
|
Regulatory Authority Approval |
34
|
|
|
8.3
|
Litigation |
35
|
|
|
8.4
|
Registration Statement |
35
|
|
|
8.5
|
Tax Opinion |
35
|
| CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION | |||
|
9.1
|
Representations and Warranties |
36
|
|
|
9.2
|
Performance of Obligations of BancGroup |
36
|
|
|
9.3
|
Closing Certificate |
36
|
|
|
9.4
|
[Reserved] |
37
|
|
|
9.5
|
NYSE Listing |
37
|
|
|
9.6
|
Other Matters |
37
|
|
|
9.7
|
Material Events |
37
|
|
|
9.8
|
Fairness Opinion |
37
|
|
|
9.9
|
Merger Consideration |
37
|
| CONDITIONS TO OBLIGATIONS OF BANCGROUP | |||
|
10.1
|
Representations and Warranties |
38
|
|
|
10.2
|
Performance of Obligations of the Acquired Corporation |
38
|
|
|
10.3
|
Closing Certificate |
38
|
|
|
10.4
|
[Reserved] |
39
|
|
|
10.5
|
Controlling Shareholders |
39
|
|
|
10.6
|
Other Matters |
39
|
|
|
10.7
|
Material Events |
39
|
|
|
10.8
|
Landlord’s Consents |
39
|
| TERMINATION OF REPRESENTATIONS AND WARRANTIES |
39
|
| NOTICES |
40
|
| AMENDMENT OR TERMINATION | |||
|
13.1
|
Amendment |
40
|
|
|
13.2
|
Termination |
40
|
|
|
13.3
|
Damages |
41
|
| DEFINITIONS |
41
|
| MISCELLANEOUS | |||
|
15.1
|
Expenses |
48
|
|
|
15.2
|
Benefit and Assignment |
48
|
|
|
15.3
|
Governing Law |
48
|
|
|
15.4
|
Counterparts |
48
|
|
|
15.5
|
Headings |
49
|
|
|
15.6
|
Severability |
49
|
|
|
15.7
|
Construction |
49
|
|
|
15.8
|
Return of Information |
49
|
|
|
15.9
|
Equitable Remedies |
49
|
|
|
15.10
|
Attorneys' Fees |
49
|
|
|
15.11
|
No Waiver |
50
|
|
|
15.12
|
Remedies Cumulative |
50
|
|
|
15.13
|
Entire Contract |
50
|
|
| Exhibit A |
52
|
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER
is made
and entered into as of this the 23rd day of January, 2007, by and between
COMMERCIAL
BANKSHARES, INC. (“Acquired
Corporation”), a Florida corporation, and THE
COLONIAL BANCGROUP, INC.
(“BancGroup”), a Delaware corporation.
WITNESSETH
WHEREAS,
Acquired Corporation operates as a bank holding company for its wholly owned
subsidiary, Commercial Bank of Florida (referred to herein as the “Bank”), with
its principal office in Miami, Florida; and
WHEREAS,
BancGroup is a bank holding company with a Subsidiary bank, Colonial Bank,
N.A.,
operating in Alabama, Florida, Georgia, Nevada, and Texas; and
WHEREAS,
Acquired Corporation wishes to merge with BancGroup; and
WHEREAS,
it is
the intention of BancGroup and Acquired Corporation that such Merger shall
qualify for federal income tax purposes as a “reorganization” within the meaning
of section 368(a) of the Code, as defined herein;
NOW,
THEREFORE,
in
consideration of the mutual covenants contained herein, the Parties hereto
agree
as follows:
NAME
1.1 Name.
The name
of the corporation resulting from the Merger shall be “The Colonial BancGroup,
Inc.”
MERGER
-- TERMS AND CONDITIONS
2.1 Applicable
Law.
At the
Effective Time, Acquired Corporation shall be merged with and into BancGroup
(herein referred to as the “Resulting Corporation” whenever reference is made to
it as of the time of merger or thereafter). The Merger shall be undertaken
pursuant to the provisions of and with the effect provided in the Delaware
General Corporation Law (the “DGCL”), and the applicable provisions of the
Florida Business Corporation Act (the “FBCA”). The offices and facilities of
Acquired Corporation and of BancGroup shall become the offices and facilities
of
the Resulting Corporation.
1
2.2 Corporate
Existence.
As of
the Effective Time, the corporate existence of Acquired Corporation and of
BancGroup shall, as provided in the DGCL and the FBCA, be merged into and
continued in the Resulting Corporation, and the Resulting Corporation shall
be
deemed to be the same corporation as Acquired Corporation and BancGroup. All
rights, franchises and interests of Acquired Corporation and BancGroup,
respectively, in and to every type of property (real, personal and mixed) and
choses in action shall be transferred to and vested in the Resulting Corporation
by virtue of the Merger without any deed or other transfer. The Resulting
Corporation as of the Effective Time, and without any order or other action
on
the part of any court or otherwise, shall hold and enjoy all rights of property,
franchises and interests, including appointments, designations and nominations
and all other rights and interests as trustee, executor, administrator, transfer
agent and registrar of stocks and bonds, guardian of estates, assignee, and
receiver and in every other fiduciary capacity and in every agency, and
capacity, in the same manner and to the same extent as such rights, franchises
and interests were held or enjoyed by Acquired Corporation and BancGroup,
respectively, immediately prior to the Effective Time.
2.3 Articles
of Incorporation and Bylaws.
At the Effective Time, the certificate of incorporation and bylaws of the
Resulting Corporation shall be the restated certificate of incorporation
and
bylaws of BancGroup as they exist immediately before the Effective
Time.
2.4 Resulting
Corporation's Officers and Board.
The board of directors and the officers of the Resulting Corporation as of
the
Effective Time shall consist of those persons serving in such capacities
of
BancGroup as of the Effective Time.
2.5 Shareholder
Approval.
This Agreement shall be submitted to the shareholders of Acquired Corporation
at
the Shareholders’ Meeting to be held as promptly as practicable consistent with
the satisfaction of the conditions set forth in this Agreement. Upon approval
by
the requisite vote of the shareholders of Acquired Corporation as required
by
applicable Law, and the satisfaction of such other conditions as set forth
herein, the Merger shall become effective as soon as practicable thereafter
in
the manner provided in section 2.7.
2.6 Further
Acts.
If, at any time after the Effective Time, the Resulting Corporation shall
consider or be advised that any further assignments or assurances in
law or any
other acts are necessary or desirable (i) to vest, perfect, confirm or
record,
in the Resulting Corporation, title to and possession of any property
or right
of Acquired Corporation or BancGroup, acquired as a result of the Merger,
or
(ii) otherwise to carry out the purposes of the Merger and this Agreement,
BancGroup and its officers and directors shall execute and deliver all
such
proper instruments, deeds, assignments and assurances in law and do all
acts
necessary or proper to vest, perfect or confirm title to, and possession
of,
such property or rights in the Resulting Corporation and otherwise to
carry out
the purposes of this Agreement; and the proper officers and directors
of the
Resulting Corporation are fully authorized in the name of Acquired Corporation
or BancGroup, or otherwise, to take any and all such action as may be
necessary
to effect the terms of this Agreement and Plan of Merger.
2.7 Effective
Time and Closing.
The Merger shall become effective as of the date and time the Certificate
of
Merger is accepted for filing by the Secretary of State of the State
of Delaware
(such time being herein called the “Effective Time”). Assuming all other
conditions stated in this Agreement have been or will be satisfied or
waived as
of the Closing, the Closing shall take place at the offices of Akerman
Senterfitt & Xxxxxx, P.A., One Southeast Third Avenue, Miami, Florida on a
date specified by BancGroup and agreeable to Acquired Corporation that
shall be
as soon as reasonably practicable after the later to occur of the Shareholder
Meeting or all required regulatory approvals (including waiting periods)
under
Section 8.2, or at such other place and time that the Parties may mutually
agree.
2
2.8 Merger
of Subsidiary Bank.
BancGroup and Acquired Corporation anticipate the possibility that after
the
Effective Time, the Bank will merge with and into Colonial Bank, N.A.,
BancGroup’s Subsidiary bank (the “Bank Merger”). The exact timing and structure
of the Bank Merger have not been finalized at this time, and BancGroup
in its
discretion will determine if such Bank Merger shall proceed and will
finalize
such timing and structure at a later date. Acquired Corporation will
reasonably
cooperate with BancGroup in consummating the Bank Merger, including the
calling
of any special meetings of the board of directors of the Bank and the filing of
any regulatory applications, at BancGroup’s sole cost and expense.
CONVERSION
OF ACQUIRED CORPORATION STOCK
3.1 Conversion
of Acquired Corporation Stock.
(a) (i)
At
the Effective Time, and subject to sections 3.1(a)(ii), 3.1(a)(iii), 3.1(a)(iv),
and 3.3, each share of common stock of Acquired Corporation outstanding and
held
by Acquired Corporation’s shareholders (“Acquired Corporation Stock”), shall be
converted into the right to receive shares of BancGroup Common Stock and/or
cash
(the “Merger Consideration”) as specified below. Each outstanding share of
Acquired Corporation Stock at the Effective Time shall be converted into the
right to receive either (A) 2.0214 shares (subject to section 3.3 hereof) of
BancGroup Common Stock or (B) $49.00 in cash in accordance with sections
3.1(a)(ii), (iii) and (iv) of this Agreement.
(ii)
A
holder of Acquired Corporation Stock may, prior to the Shareholders Meeting,
file a written election form (an “Election Form”) with the Acquired Corporation
specifying whether such holder prefers to have the Merger Consideration paid
to
such holder in shares of BancGroup Common Stock only, cash only, or any
proportion of cash and whole shares of BancGroup Common Stock that such holder
desires to receive, subject to the limitation on cash and share consideration
in
sections 3.1(a)(iii) and (iv) of this Agreement.
(iii)
Notwithstanding section 3.1(a)(ii) of this Agreement and notwithstanding any
elections made pursuant to the Election Forms, the aggregate amount of cash
to
be distributed in the Merger for Acquired Corporation Stock shall be the amount
of 50% of the number of shares of outstanding Acquired Corporation Stock at
the
time of the Closing times $49.00 (the “Cash Consideration”) (approximately
$148,480,658 assuming 6,060,435 shares of Acquired Corporation Stock are
outstanding at the time of the Closing) even if the aggregate amount of cash
elected by stockholders (the “Aggregate Cash Amount”) is less than or exceeds
the Cash Consideration. Notwithstanding section 3.1(a)(ii) of this Agreement
and
notwithstanding any elections made pursuant to the Election Forms, the aggregate
number of shares of BancGroup Common Stock to be distributed in the Merger
shall
be 50% of the number of shares of the outstanding Acquired Corporation Stock
at
the time of the Closing times 2.0214 (the “Stock Consideration”) (approximately
6,125,281 shares of BancGroup Common Stock assuming 6,060,435 shares of Acquired
Corporation Stock are outstanding at the time of the Closing), even if the
aggregate number of shares of BancGroup Common Stock elected by stockholders
(the “Aggregate Stock Amount”) is less than or exceeds the Stock Consideration.
If
the
aggregate of all Acquired Corporation shareholders’ Cash Elections (or Stock
Elections) exceeds the Cash Consideration (or the Stock Consideration), the
Merger Consideration distributable to each holder of Acquired Corporation Stock
shall be adjusted by taking the following steps: (1) determine the amount by
which the Aggregate Cash Amount (or Aggregate Stock Amount) exceeds the Cash
Consideration (or Stock Consideration); (2) reduce the amount of cash (or
BancGroup Common Stock) that each such Shareholder who elects, or is deemed
to
elect, cash (or BancGroup Common Stock) will receive on a pro rata basis until
the Aggregate Cash Amount (or the Aggregate Stock Amount) is equal to the Cash
Consideration (or the Stock Consideration) (the aggregate amount of this
reduction shall be referred to as the “Excess Election”); (3) determine the
number of shares of Acquired Corporation Stock that each Acquired Corporation
Shareholder’s pro rata portion of the Excess Election represents (which will be
the pro rata portion of the Excess Election divided by $49.00 in the case of
a
Cash Excess Election (or the pro-rata portion of the Excess Election divided
by
2.0214 in the case of a BancGroup Common Stock Excess Election)); (4) increase
such Shareholder’s stock (or cash) component of such Shareholder’s Merger
Consideration by 2.0214 shares of BancGroup Common Stock (or $49.00) for each
share of Acquired Corporation Stock determined in step (3) above.
3
(iv)
Elections
made shall apply to all shares of record of Acquired Corporation Stock held
immediately prior to the Effective Time by a record holder making the election.
If an Acquired Corporation shareholder does not submit an Election Form, then
such holder shall be deemed to have elected to receive $24.50 in cash and 1.0107
shares of BancGroup Common Stock for each share of Acquired Corporation
Stock as
his or
her portion of the Merger Consideration. Interest will not be paid on any cash
to be paid as part of the Merger Consideration.
(b) Promptly
after the execution of this Agreement, the Acquired Corporation shall inform
all
holders of employee stock options to purchase Acquired Corporation Stock
(“Employee Plan Options”) (whether or not such options are vested or
exercisable) of their ability to exercise their options within (30) days of
such
notice, and after such thirty (30) day period, of their ability to exercise
their Employee Plan Options for cash as described in subparagraph (c) of this
Section 3.1; provided that the election or non-election by the option holders
to
so exchange their Employee Plan options for cash as described in this section
shall not be a condition to the Closing.
(c) Each
holder of Employee Plan Options and each holder of Acquired Corporation Options
granted under the outside director stock option plans of Acquired Corporation
(“Outside Director Options”), in each case may, no later than five days prior to
the Effective Date, may exercise his or her Acquired Corporation Options (in
each case whether then or not vested or exercisable) through a cashless exercise
with such exercised stock being exchanged for cash payable on or within five
(5)
business days after the Effective Time. As a result of this cashless exercise,
the amount of cash to be received shall be determined by calculating the
difference between (i) the number obtained by multiplying the number of shares
of Acquired Corporation Stock issuable pursuant to his or her Acquired
Corporation Options times $49.00 less (ii) the number obtained by multiplying
the number of shares of Acquired Corporation Stock issuable pursuant to his
or
her Acquired Corporation Options times the exercise price per share (as
determined pursuant to the applicable stock option plan and stock option
agreement of the Acquired Corporation). In the event that the exercise prices
of
all Acquired Corporation Options are not the same, the above calculation shall
be made for each series of options. The amount of cash paid to option holders
shall not be considered as part of the Cash Consideration.
3.2 Fractional
Shares.
No
fractional shares of BancGroup Common Stock shall be issued, and each holder
of
shares of Acquired Corporation Stock having a fractional interest arising upon
the conversion of such shares into shares of BancGroup Common Stock shall,
at
the time of surrender of the certificates previously representing Acquired
Corporation Stock, be paid by BancGroup an amount in cash equal to $49.00 per
share.
4
3.3 Adjustments.
In the
event that prior to the Effective Time BancGroup Common Stock shall be changed
into a different number of shares or a different class of shares by reason
of
any recapitalization or reclassification, stock dividend, combination, stock
split, or reverse stock split of the BancGroup Common Stock, an appropriate
and
proportionate adjustment shall be made in the number of shares of BancGroup
Common Stock into which the Acquired Corporation Stock shall be
converted.
3.4 BancGroup
Stock.
The
shares of Common Stock of BancGroup issued and outstanding immediately before
the Effective Time shall continue to be issued and outstanding shares of the
Resulting Corporation.
3.5 [Reserved].
3.6 Election
and Exchange Procedures.
Each
holder of record of shares of the Acquired Corporation Stock (“Holder”) shall
have the right, subject to the limitations set forth in this Article 3, to
submit an election and exchange his or her Acquired Corporation stock
certificates (the “Acquired Corporation Stock Certificates”) in accordance with
the following procedures:
(a) The
Election.
Each
Holder may specify in a request made in accordance with the provisions of this
Section 3.6 (herein called an “Election”) (x) the number of shares of Acquired
Corporation Stock owned by such Holder with respect to which such Holder desires
to receive a portion of the Stock Consideration (a “Stock Election”) and (y) the
number of shares of Acquired Corporation Stock owned by such Holder with respect
to which such Holder desires to receive a portion of the Cash Consideration
(a
“Cash Election”).
(b) Form
of Election.
BancGroup shall prepare a form reasonably acceptable to the Acquired Corporation
(the “Form of Election”) which shall be mailed to the Acquired Corporation’s
stockholders entitled to vote at the meeting of the stockholders of the Acquired
Corporation at which the stockholders of the Acquired Corporation consider
and
vote on this Agreement (the “Acquired Corporation Stockholders Meeting”) so as
to permit the Acquired Corporation’s stockholders to exercise their right to
make an Election prior to the Election Deadline (as defined in Section
3.6(d)).
5
(c) Distribution
of Forms of Election.
BancGroup shall make the Form of Election initially available at the time that
the Proxy Statement (as defined herein) is made available to the stockholders
of
the Acquired Corporation, to such stockholders, and shall use all reasonable
efforts to make available as promptly as possible a Form of Election to any
stockholder of the Acquired Corporation who requests such Form of Election
following the initial mailing of the Forms of Election and prior to the Election
Deadline. In no event shall the Form of Election be made available for the
first
time less than twenty (20) calendar days prior to the Election
Deadline.
(d) Proper
Election and Exchange Agent.
Any
Election shall have been made properly only if the Person authorized to receive
the Elections and to act as Exchange Agent under this Agreement, which Person
shall be designated by BancGroup and not reasonably objected to by the Acquired
Corporation (the “Exchange Agent”), pursuant to an agreement entered into as
soon as reasonably practicable after the execution of this Agreement and not
reasonably objected to by the Acquired Corporation, shall have received, by
5:00
p.m. local time in the city in which the principal office of such Exchange
Agent
is located, on the date of the Election Deadline, a Form of Election properly
completed and signed and accompanied by Acquired Corporation Stock Certificates
to which such Form of Election relates or by an appropriate customary guarantee
of delivery of such certificates, as set forth in such Form of Election from
a
member of any registered national securities exchange or a commercial bank
or
trust company in the United States; provided, that such certificates are in
fact
delivered to the Exchange Agent by the time required in such guarantee of
delivery. Failure to deliver shares of Acquired Corporation Stock covered by
such a guarantee of delivery within the time set forth on such guarantee shall
be deemed to invalidate any otherwise properly made Election, unless otherwise
determined by BancGroup, in its sole discretion. As used herein, “Election
Deadline” means 5:00 p.m. on the date that is the day prior to the date of the
Acquired Corporation Stockholder Meeting. The Acquired Corporation and BancGroup
shall cooperate to issue a press release reasonably satisfactory to each of
them
announcing the date of the Election Deadline not more than thirty (30) business
days before and at least five (5) Business Days prior to, the Election Deadline.
If BancGroup shall determine in its reasonable discretion that any Election
is
not properly made with respect to any shares of Acquired Corporation Stock,
such
Election shall be deemed to be not in effect, and the shares of Acquired
Corporation Stock covered by such Election shall, for purposes hereof, be
treated as if no Election had been made, unless a proper Election is thereafter
timely made.
(e) Modification
and Revocation of Form of Election.
Any
Acquired Corporation stockholder may, at any time prior to the Election
Deadline, change or revoke his or her Election by written notice received by
the
Exchange Agent prior to the Election Deadline accompanied by a properly
completed and signed, revised Form of Election or by withdrawal prior to the
Election Deadline of his or her Acquired Corporation Stock Certificate, or
of
the guarantee of delivery of such certificates, previously deposited with the
Exchange Agent. All Elections shall be revoked automatically if the Exchange
Agent is notified in writing by BancGroup or the Acquired Corporation that
this
Agreement has been terminated in accordance with Article 13.
6
(f) Proper
Designation and Taxes.
If any
portion of the Merger Consideration is to be paid to a Person other than the
Person in whose name an Acquired Corporation Stock Certificate so surrendered
is
registered, it shall be a condition to such payment that such Acquired
Corporation Stock Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment shall pay to
the
Exchange Agent any transfer or other similar Taxes required as a result of
such
payment to a Person other than the registered holder of such Acquired
Corporation Stock Certificate, or establish to the reasonable satisfaction
of
the Exchange Agent that such Tax has been paid or is not payable. The Exchange
Agent (or, subsequent to the six month anniversary of the Effective Time,
BancGroup) shall be entitled to deduct and withhold from the Merger
Consideration (including cash in lieu of fractional shares of BancGroup Common
Stock) and from payments made to holders of Acquired Corporation Employee Plan
Options and Outside Directors Plan Options (“Acquired Corporation Options”)
otherwise payable pursuant to this Agreement to any holder of Acquired
Corporation Stock or of Acquired Corporation Options such amounts as the
Exchange Agent or BancGroup, as the case may be, is required to deduct and
withhold under the Code, or any provision of state, local or foreign Tax law,
with respect to the making of such payment. To the extent the amounts are so
withheld by the Exchange Agent or BancGroup, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid
to the holder of shares of Acquired Corporation Stock or of Acquired Corporation
Options in respect of whom such deduction and withholding was made by the
Exchange Agent or BancGroup, as the case may be.
(g) Power
of Determination.
BancGroup, in the exercise of its reasonable discretion, shall have the right
to
make all determinations, not inconsistent with the terms of this Agreement,
governing (A) the issuance and delivery of BancGroup Stock Certificates into
which shares of Acquired Corporation Stock are converted in the Merger and
(B)
the method of payment for shares of Acquired Corporation Stock converted into
the right to receive the Cash Consideration and cash in lieu of fractional
shares of BancGroup Common Stock where the holder of the applicable Acquired
Corporation Stock Certificate has no right to receive whole shares of BancGroup
Common Stock.
(h) Exchange
Fund.
BancGroup agrees to make available to the Exchange Agent from time to time
as
needed, certificates representing the BancGroup Common Stock, and agrees to
deliver in escrow to the Exchange Agent, at least one (1) Business Day prior
to
the Closing, for the benefit of the holders of the shares of Acquired
Corporation Stock and Acquired Corporation Options, and cash sufficient to
pay
the cash component of the Merger Consideration, the cash payable hereunder
to
the holders of Acquired Corporation Options, cash in lieu of fractional shares
and any dividends and other distributions. Any cash and certificates of
BancGroup Common Stock deposited with the Exchange Agent shall hereinafter
be
referred to as the “Exchange Fund.” For six months following the Effective Time,
the Exchange Fund shall not be used for any other purpose.
7
(i) Exchange
Procedures.
Within
five (5) Business Days after the Effective Time, the Resulting Corporation
shall
cause the Exchange Agent to mail to each holder of an Acquired Corporation
Certificate: (i) a letter of transmittal (“Letter of Transmittal”) which shall
specify that delivery shall be effected and risk of loss and title to the
Acquired Corporation Certificates shall pass only upon delivery of the Acquired
Corporation Certificates to the Exchange Agent and which Letter of Transmittal
shall be in customary form and have such other provisions as BancGroup or the
Resulting Corporation, as the case may be, may reasonably specify and (ii)
instructions for effecting the surrender of such Acquired Corporation
Certificates in exchange for the Merger Consideration. Upon surrender of an
Acquired Corporation Certificate to the Exchange Agent together with such Letter
of Transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Acquired Corporation Certificate shall be entitled
to
receive in exchange therefor, and Resulting Corporation shall instruct Exchange
Agent to transmit as promptly as commercially practicable, (i) one or more
shares of BancGroup Common Stock (which may be in uncertificated book-entry
form
unless a physical certificate is requested) representing, in the aggregate,
the
whole number of shares that such holder has the right to receive pursuant to
this Agreement and (ii) a check for any cash portion of the Merger Consideration
and for the cash that such holder has the right to receive pursuant to this
Agreement, including cash in lieu of any fractional shares of BancGroup Common
Stock and dividends and other distributions required or permitted by this
Agreement. No interest will be paid or will accrue on any cash payable for
the
cash portion of the Merger Consideration. In the event of a transfer of
ownership of Acquired Corporation Stock which is not registered in the transfer
records of Acquired Corporation, one or more shares of BancGroup Common Stock
evidencing, in the aggregate, the proper number of shares of BancGroup Common
Stock and a check for the cash portion of the Merger Consideration, the cash
in
lieu of any fractional shares of BancGroup Common Stock and any dividends or
other distributions to which such holder is entitled pursuant to this Agreement,
may be issued with respect to such Acquired Corporation Stock to such a
transferee if the Acquired Corporation Certificate representing such shares
of
Acquired Corporation Stock is presented to the Exchange Agent, accompanied
by
all documents required to evidence and effect such transfer and to evidence
that
any applicable stock transfer taxes have been paid.
(j) No
Further Ownership Rights in Acquired Corporation Stock.
All
shares of BancGroup Common Stock issued and cash paid upon conversion of shares
of Acquired Corporation Stock in accordance with the terms of this Article
3
(including any cash paid pursuant to this Agreement) shall be deemed to have
been issued or paid in full satisfaction of all rights pertaining to the shares
of Acquired Corporation Stock. Until surrendered as contemplated by this Section
3.6, each Acquired Corporation Certificate shall be deemed at any time after
the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration and any dividends or distributions to which a holder of
Acquired Corporation Stock on or prior to the Effective Time is entitled to
receive under this Agreement.
(k) Termination
of Exchange Fund.
Any
portion of the Exchange Fund which remains undistributed to the holders of
the
Acquired Corporation Certificate six months after the Effective Time shall
be
delivered to the Resulting Corporation and any holders of the Acquired
Corporation Certificates who have not theretofore complied with this Section
3.6
shall thereafter look only to the Resulting Corporation for the Merger
Consideration with respect to the shares of Acquired Corporation Stock formerly
represented thereby to which such holders are entitled pursuant to this
Agreement, any cash in lieu of fractional shares of BancGroup Common Stock
to
which such holders are entitled pursuant to this Agreement and any dividends
or
distributions with respect to shares of BancGroup Common Stock to which such
holders are entitled pursuant to this Agreement.
8
(l) No
Liability.
None of
BancGroup, the Acquired Corporation, the Resulting Corporation or the Exchange
Agent shall be liable to any Person in respect of any Merger Consideration
from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(m) Lost
Certificates.
If any
Acquired Corporation Certificate shall have been lost, stolen, destroyed, upon
the making of an affidavit of that fact by the Person claiming such Acquired
Corporation Certificate to be lost, stolen, or destroyed and, if required by
the
Resulting Corporation that posting by such Person of a bond in such reasonable
amount as the Resulting Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent
will deliver in exchange for such lost, stolen or destroyed Acquired Corporation
Certificate the applicable Merger Consideration with respect to the shares
of
Acquired Corporation Stock formerly represented thereby, any cash in lieu of
fractional shares of BancGroup Common Stock, and unpaid dividends and
distributions on shares of BancGroup Common Stock deliverable in respect
thereof, in each case, pursuant to this Agreement.
(n) Stock
Transfer Books.
The
stock transfer books of the Acquired Corporation shall be closed immediately
at
the Effective Time and there shall be no further registration of transfers
of
shares of Acquired Corporation Stock thereafter on the records of Acquired
Corporation. On or after the Effective Time, any Acquired Corporation
Certificates presented to the Exchange Agent or the Resulting Corporation for
any reason shall be converted into the Merger Consideration with respect to
the
shares of Acquired Corporation Stock formerly represented thereby, any cash
in
lieu of fractional shares of BancGroup Common Stock to which the holders thereof
are entitled pursuant to this Agreement and any dividends or other distributions
to which the holders thereof are entitled pursuant to this
Agreement.
(o) Investment
of Exchange Fund.
The
Exchange Agent shall invest any cash included in the Exchange Fund, as directed
by the Resulting Corporation, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Resulting Corporation. To
the
extent that there are losses with respect to such investments, or the Exchange
Fund diminishes for other reasons below the level required to make prompt
payments of the Merger Consideration as contemplated hereby, Resulting
Corporation shall promptly replace or restore the portion of the Exchange Fund
lost through investments or other events so as to ensure that the Exchange
Fund
is, at all times, maintained at a level sufficient to make such
payments.
9
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF BANCGROUP
No
representation or warranty contained in this Article 4 shall be deemed untrue
or
incorrect, and BancGroup shall not be deemed to have breached a representation
or warranty as a consequence of the existence or absence of any fact, event
or
circumstance, unless such fact, event or circumstance is not set forth in
BancGroup’s disclosure schedules to this Agreement and, whether individually or
in the aggregate with all other facts, events or circumstances that have not
been set forth in BancGroup disclosure schedules to this Agreement, has had
or
is reasonably likely to have a Material Adverse Effect. Except
as
disclosed in any BancGroup disclosure schedule to this Agreement, BancGroup
represents, warrants and covenants to and with Acquired Corporation as
follows:
4.1 Organization.
BancGroup is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. BancGroup has the necessary corporate
powers to carry on its business as presently conducted and is qualified to
do
business in every jurisdiction in which the character and location of the Assets
owned by it or the nature of the business transacted by it requires
qualification or in which the failure to qualify could, individually or in
the
aggregate, have a Material Adverse Effect. BancGroup is duly registered as
a
financial holding company under the Bank Holding Company Act of 1956, as
amended.
4.2 Capital
Stock.
(a) The
authorized capital stock of BancGroup consists of (i) 400,000,000 shares of
Common Stock, $2.50 par value per share, of which as of September 30, 2006,
156,196,005 shares were validly issued and 153,244,378 were outstanding, fully
paid and nonassessable and are not subject to preemptive rights (not counting
additional shares subject to issue pursuant to stock option and other plans),
(ii) 50,000,000 shares of Preferred stock, $2.50 par value per share, none
of
which are issued and outstanding, and (iii) 1,000,000 shares of Preference
Stock, $2.50 par value per share, none of which are issued and outstanding.
The
shares of BancGroup Common Stock to be issued in the Merger are duly authorized
and, when so issued, will be validly issued and outstanding, fully paid and
nonassessable, will have been registered under the 1933 Act, and will have
been
registered or qualified under the securities laws of all jurisdictions in which
such registration or qualification is required, based upon information provided
by Acquired Corporation.
(b) The
authorized capital stock of each Subsidiary of BancGroup is validly issued
and
outstanding, fully paid and nonassessable, and each Significant Subsidiary
(as
defined in Section 1-02 of Regulation S-X under the Securities Act of 1933,
as
amended) is wholly owned, directly or indirectly, by BancGroup.
4.3 Financial
Statements; Taxes.
(a)
BancGroup has delivered to Acquired Corporation copies of the following
financial statements of BancGroup:
(i)
Consolidated statements of condition as of December 31, 2004, December 31,
2005,
and September 30, 2006;
10
(ii)
Consolidated statements of income for each of the three years ended December
31,
2005, and for the three and nine months ended September 30, 2006;
(iii)
Consolidated statements of cash flows for each of the three years ended December
31, 2005, and for the nine months ended September 30, 2006; and
(iv)
Consolidated statements of changes in shareholders' equity for each of the
three
years ended December 31, 2005, and for the nine months ended September 30,
2006.
All
such
financial statements are in all material respects in accordance with the books
and records of BancGroup and have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods indicated unless otherwise stated,
all as more particularly set forth in the notes to such statements. Each of
the
consolidated statements of condition presents fairly as of its date the
consolidated financial condition of BancGroup and its Subsidiaries. Except
as
and to the extent reflected or reserved against in such balance sheets
(including the notes thereto), BancGroup and its Subsidiaries did not have,
as
of the dates of such balance sheets, any material Liabilities or obligations
(absolute or contingent) of a nature customarily reflected in a balance sheet
or
the notes thereto. The consolidated statements of income, cash flows and changes
in shareholders’ equity present fairly the results of operations and changes in
financial position of BancGroup and its Subsidiaries for the periods indicated.
The foregoing representations, insofar as they relate to the unaudited interim
financial statements of BancGroup for the three and nine months ended September
30, 2006, are subject in all cases to normal recurring year-end adjustments
and
the omission of footnote disclosure.
(b) All
Tax
returns required to be filed by or on behalf of BancGroup and its Subsidiaries
have been timely filed (or requests for extensions therefore have been timely
filed and granted and have not expired), and all returns filed are complete
and
accurate in all material respects. All Taxes shown on these returns to be due
and all additional assessments received have been paid. The amounts recorded
for
Taxes on the balance sheets provided under section 4.3(a) are, to the Knowledge
of BancGroup, sufficient in all material respects for the payment of all unpaid
federal, state, county, local, foreign or other Taxes (including any interest
or
penalties) of BancGroup and its Subsidiaries accrued for or applicable to the
period ended on the dates thereof, and all years and periods prior thereto
and
for which BancGroup and its Subsidiaries may at such dates have been liable
in
its own right or as transferee of the Assets of, or as successor to, any other
corporation or other party. No audit, examination or investigation is presently
being conducted or, to the Knowledge of BancGroup, threatened by any taxing
authority which is likely to result in a material Tax Liability, no material
unpaid Tax deficiencies or additional liabilities of any sort have been proposed
by any governmental representative and no agreements for extension of time
for
the assessment of any material amount of Tax have been entered into by or on
behalf of BancGroup or any of its Subsidiaries. BancGroup and its Subsidiaries
have withheld from its employees (and timely paid to the appropriate
governmental entity) proper and accurate amounts for all periods in material
compliance with all Tax withholding provisions of applicable federal, state,
foreign and local Laws (including without limitation, income, social security
and employment Tax withholding for all types of compensation).
11
4.4 No
Conflict with Other Instrument.
The
consummation of the transactions contemplated by this Agreement will not result
in a breach of or constitute a Default (without regard to the giving of notice
or the passage of time) under any material Contract, indenture, mortgage, deed
of trust or other material agreement or instrument to which BancGroup or any
of
its Subsidiaries is a party or by which they or their Assets may be bound;
will
not conflict with any provision of the restated certificate of incorporation
or
bylaws of BancGroup or the articles of incorporation or bylaws of any of its
Subsidiaries; and will not violate any provision of any Law, regulation,
judgment or decree binding on them or any of their Assets.
4.5 Absence
of Material Adverse Change.
Since
the date of the most recent statement of condition provided under section
4.3(a)(i) above, there have been no events, changes or occurrences which have
had or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BancGroup.
4.6 Approval
of Agreement.
The
board of directors of BancGroup, or its Executive Committee, has approved this
Agreement and the transactions contemplated by it and has authorized the
execution and delivery by BancGroup of this Agreement. This Agreement
constitutes the legal, valid and binding obligation of BancGroup, enforceable
against it in accordance with its terms. Approval of this Agreement by the
stockholders of BancGroup is not required by applicable Law. Subject to the
matters referred to in section 8.2, BancGroup has full power, authority and
legal right to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. BancGroup has no Knowledge of any fact or
circumstance under which the appropriate regulatory approvals required by
section 8.2 will not be granted without the imposition of material conditions
or
material delays on BancGroup or Colonial Bank, N.A.
4.7 Tax
Treatment.
BancGroup has no present plan to sell or otherwise dispose of any of the Assets
of Acquired Corporation, subsequent to the Merger, and BancGroup intends to
continue the historic business of Acquired Corporation.
4.8 Title
and Related Matters.
BancGroup or its Subsidiaries have good and marketable title to all the
properties, interests in properties and Assets, real and personal, that are
material to the business of BancGroup, reflected in the most recent statement
of
condition referred to in section 4.3(a), or acquired after the date of such
balance sheet (except properties, interests and Assets sold or otherwise
disposed of since such date, in the ordinary course of business), free and
clear
of all mortgages, Liens, pledges, charges or encumbrances except (i) mortgages
and other encumbrances referred to in the notes of such balance sheet, (ii)
liens for current Taxes not yet due and payable and (iii) such imperfections
of
title and easements as do not materially detract from or interfere with the
present use of the properties subject thereto or affected thereby, or otherwise
materially impair present business operations at such properties. To the
Knowledge of BancGroup, the material structures and equipment of BancGroup
and
its Subsidiaries comply in all material respects with the requirements of all
applicable Laws.
12
4.9 Subsidiaries.
Each
Subsidiary of BancGroup has been duly incorporated and is validly existing
as a
corporation in good standing under the Laws of the jurisdiction of its
incorporation and each Subsidiary has been duly qualified as a foreign
corporation to transact business and is in good standing under the Laws of
each
other jurisdiction in which it owns or leases properties, or conducts any
business so as to require such qualification and in which the failure to be
duly
qualified could have a Material Adverse Effect upon BancGroup and its
Subsidiaries considered as one enterprise; BancGroup’s banking subsidiary has
its deposits fully insured by the Federal Deposit Insurance Corporation to
the
extent permitted by the Federal Deposit Insurance Act; and the businesses of
the
non-bank Subsidiaries of BancGroup are permitted businesses of registered bank
holding companies that are financial holding companies.
4.10 Contracts.
Neither
BancGroup nor any of its Subsidiaries is in violation of its respective
certificate of incorporation or bylaws or in Default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any Contract, indenture, mortgage, loan agreement, note, lease
or
other instrument to which it is a party or by which it or its property may
be
bound except where such violation could not be reasonably expected to have
a
Material Adverse Effect on BancGroup.
4.11 Litigation.
Except
as disclosed in or reserved for in BancGroup's financial statements, there
is no
Litigation before or by any court or Agency, domestic or foreign, now pending,
or, to the Knowledge of BancGroup, threatened against or affecting BancGroup
or
any of its Subsidiaries (nor is BancGroup aware of any facts which could give
rise to any such Litigation) which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which is likely
to
have any Material Adverse Effect or prospective Material Adverse Effect, or
which is likely to materially and adversely affect the properties or Assets
thereof or which is likely to materially affect or delay the consummation of
the
transactions contemplated by this Agreement; all pending legal or governmental
proceedings to which BancGroup or any Subsidiary is a party or of which any
of
their properties is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the business,
are, considered in the aggregate, not material; and neither BancGroup nor any
of
its Subsidiaries have any contingent obligations which could be considered
material to BancGroup and its Subsidiaries considered as one enterprise which
are not disclosed in the Registration Statement as it may be amended or
supplemented.
4.12 Compliance.
BancGroup and its Subsidiaries, in the conduct of their businesses, are to
the
Knowledge of BancGroup, in compliance with all federal, state or local Laws
applicable to the conduct of their businesses except where non-compliance could
not be reasonably expected to have a Material Adverse Effect on
BancGroup.
4.13 Registration
Statement.
At the
time the Registration Statement becomes effective and at the time of the
Shareholders’ Meeting, the Registration Statement, including the Proxy Statement
which shall constitute a part thereof, will comply in all material respects
with
the requirements of the 1933 Act and the rules and regulations thereunder,
will
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply
to
statements in or omissions from the Proxy Statement made in reliance upon and
in
conformity with information furnished in writing to BancGroup by Acquired
Corporation or any of its representatives expressly for use in the Proxy
Statement or information included in the Proxy Statement regarding the business
of Acquired Corporation, its operations, Assets and capital.
13
4.14 SEC
Filings.
(a)
BancGroup has heretofore delivered to Acquired Corporation copies of
BancGroup's: (i) Annual Report on Form 10-K for the fiscal year ended December
31, 2005; (ii) 2005 Annual Report to Shareholders; (iii) Quarterly Reports
on
Form 10-Q for the quarters ended March 31, 2006, June 30, 2006, and September
30, 2006; and (iv) any reports on Form 8-K, filed by BancGroup with the SEC
since December 31, 2005. Since December 31, 2005, BancGroup has timely filed
all
reports and registration statements and the documents required to be filed
with
the SEC under the rules and regulations of the SEC and all such reports and
registration statements or other documents have complied in all material
respects, as of their respective filing dates and effective dates, as the case
may be, with all the applicable requirements of the 1933 Act, the 1934 Act
and
the Xxxxxxxx-Xxxxx Act of 2002. As of the respective filing and effective dates,
none of such reports or registration statements or other documents contained
any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not
misleading.
(b)
The
documents to be incorporated by reference into the Registration Statement,
at
the time they were filed with the SEC, complied in all material respects with
the requirements of the 1934 Act and Regulations thereunder and when read
together and with the other information in the Registration Statement will
not
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein not
misleading at the time the Registration Statement becomes effective or at the
time of the Shareholders’ Meeting.
4.15 Form
S-4.
The
conditions for use of a registration statement on SEC Form S-4 set forth in
the
General Instructions on Form S-4 have been or will be satisfied with respect
to
BancGroup and the Registration Statement.
4.16 Brokers.
All
negotiations related to this Agreement and the transaction contemplated by
this
Agreement, have been carried on by BancGroup with Acquired Corporation without
the intervention of any other person , other than Xxxxx Financial, Inc.
(“Xxxxx”), Acquired Corporation’s investment banker and advisor, in any manner
as to give rights to any valid claim against BancGroup for finders fees,
brokerage commissions, or other like or similar payment for services rendered
incident to this undertaking.
4.17 Government
Authorization.
BancGroup and its Subsidiaries have all Permits that are or will be legally
required to enable BancGroup or any of its Subsidiaries to conduct their
businesses in all material respects as now conducted by each of
them.
4.18 Absence
of Regulatory Communications.
Neither
BancGroup nor any of its material Subsidiaries is currently subject to, or
has
otherwise received during the past three (3) years, any written communication
directed specifically to it from any Agency to which it is subject or pursuant
to which such Agency has imposed or has indicated it may impose any material
restrictions on the operations of it or the business conducted by it or in
which
such Agency has raised a material question concerning the condition, financial
or otherwise, of such company.
14
4.19 Disclosure.
No
representation or warranty, or any statement or certificate furnished or to
be
furnished to Acquired Corporation by BancGroup, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained in this Agreement or in any
such
statement or certificate not misleading.
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF ACQUIRED CORPORATION
Except
as
set forth in a disclosure schedule delivered by the Acquired Corporation to
BancGroup (the “Acquired Corporation Disclosure Schedule”) prior to the date
hereof (which sets forth, among other things, items the disclosure of which
is
necessary or appropriate either in response to an express provision of this
Agreement or as an exception to one or more of its representations and
warranties set forth below or its covenants in Articles 6 and 7, provided,
that
(i) no such item is required to be set forth in the Acquired Corporation
Disclosure Schedule as an exception to any representation or warranty of the
Acquired Corporation if its absence (in combination with any other undisclosed
information) would not be reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
set forth in Section 9.1 and (ii) the mere inclusion of an item in the Acquired
Corporation Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by the Acquired Corporation that such item
represents a material exception or fact, event or circumstance or that such
item
is or would be reasonably likely to result in a Material Adverse Effect with
respect to the Acquired Corporation.
Acquired
Corporation represents, warrants and covenants to and with BancGroup, as
follows:
5.1 Organization.
Acquired Corporation is a Florida corporation, and Bank is a state chartered
bank. Each Acquired Corporation Company is duly organized, validly existing
and
in active status under the respective Laws of its jurisdiction of incorporation
or association and has all requisite power and authority to carry on its
business as it is now being conducted and is qualified to do business in every
jurisdiction in which the character and location of the Assets owned by it
or
the nature of the business transacted by it requires qualification and in which
the failure to qualify could, individually, or in the aggregate, have a Material
Adverse Effect.
5.2 Capital
Stock.
As of
the date of this Agreement, the authorized capital stock of Acquired Corporation
consisted of 15,000,000 shares of common stock, $0.08 par value per share,
6,615,210 shares of which are issued, and 6,060,435 were outstanding, and
5,000,000 shares of preferred stock, par value $3.75 per share, none of which
are outstanding. All of such shares which are outstanding are validly issued,
fully paid and nonassessable and not subject to preemptive rights. Acquired
Corporation has 587,106 shares of its common stock subject to issuance pursuant
to the exercise of stock options under its stock option plans of which 587,106
are exercisable (or which shall become exercisable prior to the Effective Time).
Except for the foregoing, Acquired Corporation does not have any other
arrangements or commitments obligating it to issue shares of its capital stock
or any securities convertible into or having the right to purchase shares of
its
capital stock, including the grant, issuance or vesting of additional Acquired
Corporation Options.
15
5.3 Subsidiaries.
Acquired Corporation does not have any Subsidiaries other than the Bank.
Acquired
Corporation owns all of the issued and outstanding capital stock of the Bank
free and clear of any liens, claims or encumbrances of any kind. All of the
issued and outstanding shares of capital stock of each Acquired Corporation
Company have been validly issued and are fully paid and non-assessable. As
of
the date of this Agreement, there were (i) with respect to the Bank, 2,000,000
shares of common stock, par value $5.00 per share, authorized and 1,164,712
shares outstanding and no shares of preferred stock. Other than as listed above,
no Acquired Corporation Company has any other form of stock authorized or
outstanding. The Bank has no arrangements or commitments obligating it to issue
shares of any of its capital stock or any securities convertible into or having
the right to purchase shares of any of its capital stock.
5.4 Financial
Statements; Taxes.
(a)
Acquired Corporation has delivered to BancGroup copies of the following
financial statements of Acquired Corporation:
(i)
Consolidated balance sheets as of December 31, 2004, December 31, 2005, and
September 30, 2006;
(ii)
Consolidated statements of income for each of the three years ended December
31,
2005, and for the three and nine months ended September 30, 2006;
(iii)
Consolidated statements of cash flows for each of the three years ended December
31, 2005, and for the nine months ended September 30, 2006; and
(iv)
Consolidated statements of changes in shareholders’ equity for the three years
ended December 31, 2005, and for the nine months ended September 30,
2006.
All
of
the foregoing financial statements are in all material respects in accordance
with the books and records of Acquired Corporation and have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated, except for changes required by GAAP, all as more particularly set
forth in the notes to such statements. Each of such balance sheets presents
fairly as of its date the financial condition of Acquired Corporation. Except
as
and to the extent reflected or reserved against in such balance sheets
(including the notes thereto), Acquired Corporation did not have, as of the
date
of such balance sheets, any material Liabilities or obligations (absolute or
contingent) of a nature customarily reflected in a balance sheet or the notes
thereto. The statements of income, shareholders’ equity and cash flows present
fairly the results of operation, changes in shareholders’ equity and cash flows
of Acquired Corporation for the periods indicated. The foregoing
representations, insofar as they relate to the unaudited interim financial
statements of Acquired Corporation for the three and nine months ended September
30, 2006, are subject in all cases to normal recurring year-end adjustments
and
the omission of footnote disclosure.
16
(b) All
Tax
returns required to be filed by or on behalf of Acquired Corporation have been
timely filed (or requests for extensions therefore have been timely filed and
granted and have not expired), and all returns filed are complete and accurate
in all material respects. All Taxes shown on these returns to be due and all
additional assessments received have been paid. The amounts recorded for Taxes
on the balance sheets provided under section 5.4(a) are, to the Knowledge of
Acquired Corporation, sufficient in all material respects for the payment of
all
unpaid federal, state, county, local, foreign and other Taxes (including any
interest or penalties) of Acquired Corporation accrued for or applicable to
the
period ended on the dates thereof, and all years and periods prior thereto
and
for which Acquired Corporation may at such dates have been liable in its own
right or as a transferee of the Assets of, or as successor to, any other
corporation or other party. No audit, examination or investigation is presently
being conducted or, to the Knowledge of Acquired Corporation, threatened by
any
taxing authority which is likely to result in a material Tax Liability, no
material unpaid Tax deficiencies or additional liability of any sort has been
proposed by any governmental representative and no agreements for extension
of
time for the assessment of any material amount of Tax have been entered into
by
or on behalf of Acquired Corporation. Acquired Corporation has not executed
an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect.
(c) Each
Acquired Corporation Company has withheld from its employees (and timely paid
to
the appropriate governmental entity) proper and accurate amounts for all periods
in material compliance with all Tax withholding provisions of applicable
federal, state, foreign and local Laws (including without limitation, income,
social security and employment Tax withholding for all types of compensation).
Each Acquired Corporation Company is in compliance with, and its records contain
all information and documents (including properly completed IRS Forms W-9)
necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under section 3406 of the Code.
5.5 Absence
of Certain Changes or Events.
Except
as set forth on Schedule 5.5, since the date of the most recent balance sheet
provided under section 5.4(a)(i) above, no Acquired Corporation Company
has
(a) issued,
delivered or agreed to issue or deliver any stock, bonds or other corporate
securities (whether authorized and unissued or held in the treasury) except
shares of common stock issued upon the exercise of existing Acquired Corporation
Options and shares issued as director's qualifying shares;
(b) borrowed
or agreed to borrow any funds or incurred, or become subject to, any Liability
(absolute or contingent) except borrowings, obligations (including purchase
of
federal funds) and Liabilities incurred in the ordinary course of business
and
consistent with past practice;
(c) paid
any
material obligation or Liability (absolute or contingent) other than current
Liabilities reflected in or shown on the most recent balance sheet referred
to
in section 5.4(a)(i) and current Liabilities incurred since that date in the
ordinary course of business and consistent with past practice;
17
(d) declared
or made, or agreed to declare or make, any payment of dividends or distributions
of any Assets of any kind whatsoever to shareholders, or purchased or redeemed,
or agreed to purchase or redeem, directly or indirectly, or otherwise acquire,
any of its outstanding securities; provided,
however, that Acquired Corporation may (i) continue to make quarterly cash
dividends of no more than $0.2100 per share and at times consistent with past
practices and as set forth on Schedule 5.5(d) to this Agreement and (ii)
accelerate the vesting of any existing options to purchase Acquired Corporation
common stock;
(e) except
in
the ordinary course of business or as requested by BancGroup, sold or
transferred, or agreed to sell or transfer, any of its Assets, or canceled,
or
agreed to cancel, any debts or claims;
(f) except
in
the ordinary course of business, entered or agreed to enter into any agreement
or arrangement granting any preferential rights to purchase any of its Assets,
or requiring the consent of any party to the transfer and assignment of any
of
its Assets;
(g) waived
any rights of value which in either event in the aggregate are material
considering its business as a whole;
(h) except
in
the ordinary course of business, made or permitted any amendment or termination
of any Contract, agreement or license to which it is a party if such amendment
or termination is material considering its business as a whole;
(i) except
in
accordance with normal and usual practice, made any accrual or arrangement
for
or payment of bonuses or special compensation of any kind or any severance
or
termination pay to any present or former officer or employee;
(j) except
in
accordance with normal and usual practice, increased the rate of compensation
payable to or to become payable to any of its officers or employees or made
any
material increase in any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other employee benefit plan, payment or
arrangement made to, for or with any of its officers or employees;
(k) failed
to
operate its business in the ordinary course in a manner intended to preserve
its
business intact and intended to preserve the goodwill of its customers and
others with whom it has business relations;
(l)
entered
into any other transaction material to the Acquired Corporation and its
Subsidiaries taken as a whole other than in the ordinary course of business
or
as requested by BancGroup; or
18
(m) agreed
in
writing, or otherwise, to take any action described in clauses (a) through
(l)
above.
Between
the date hereof and the Effective Time, no Acquired Corporation Company, without
the express written approval of BancGroup, will do any of the things listed
in
clauses (a) through (m) of this section 5.5 except as permitted therein or
as
contemplated in this Agreement, and no Acquired Corporation Company will enter
into or amend any material Contract, other than Loans or renewals thereof
entered into in the ordinary course of business, without the express written
consent of BancGroup.
5.6 Title
and Related Matters.
(a) Title.
Each
Acquired Corporation Company has good and marketable title to all the
properties, interest in properties and Assets, real and personal, that are
material to the business of such Acquired Corporation Company, reflected in
the
most recent balance sheet referred to in section 5.4(a)(i), or acquired after
the date of such balance sheet (except properties, interests and Assets sold
or
otherwise disposed of since such date, in the ordinary course of business),
free
and clear of all mortgages, Liens, pledges, charges or encumbrances except
(i)
mortgages and other encumbrances referred to in the notes to such balance sheet,
(ii) Liens for current Taxes not yet due and payable and (iii) such
imperfections of title and easements as do not materially detract from or
interfere with the present use of the properties subject thereto or affected
thereby, or otherwise materially impair present business operations at such
properties. To the Knowledge of Acquired Corporation, the material structures
and equipment of each Acquired Corporation Company comply in all material
respects with the requirements of all applicable Laws.
(b) Leases.
Schedule 5.6(b) sets forth a list and description of all real property owned
or
leased by any Acquired Corporation Company, either as lessor or lessee. Complete
and accurate copies of all such leases have been attached to a Schedule to
this
Agreement.
(c) Personal
Property.
Schedule 5.6(c) sets forth a depreciation schedule of each Acquired Corporation
Company's fixed Assets as of December 31, 2006.
(d) Computer
Hardware and Software.
Schedule 5.6(d) contains a description of all agreements relating to data
processing computer software and hardware now being used in the business
operations of any Acquired Corporation Company and providing for annual payments
in excess of $50,000 per year. Acquired Corporation is not aware of any defects,
irregularities or problems with any of its computer hardware or software which
renders such hardware or software unable to satisfactorily perform the tasks
and
functions to be performed by them in the business of any Acquired Corporation
Company. Complete and accurate copies of all Contracts, plans and other items
so
listed have been attached to a Schedule to this Agreement.
19
5.7 Commitments.
Except
as set forth in Schedule 5.7, no Acquired Corporation Company is a party to
any
oral or written (i) Contract for the employment of any officer or employee
which
is not terminable on 30 days' (or less) notice, (ii) profit sharing, bonus,
deferred compensation, savings, stock option, severance pay, pension or
retirement plan, agreement or arrangement, (iii) loan agreement, indenture
or
similar agreement relating to the borrowing of money by such party, (iv)
guaranty of any obligation for the borrowing of money or otherwise, excluding
endorsements made for collection, and guaranties made in the ordinary course
of
business, (v) consulting or other similar material Contracts, (vi) collective
bargaining agreement, (vii) other than made in the ordinary course of business,
agreement with any present or former officer, director or shareholder of such
party, (viii) other than made in the ordinary course of business, any contract
that is not terminable within ninety (90) days or (ix) other than made in the
ordinary course of business, other Contract, agreement or other commitment
which
is material to the business, operations, property, prospects or Assets or to
the
condition, financial or otherwise, of any Acquired Corporation Company. Complete
and accurate copies of all Contracts, plans and other items so listed have
been
attached to a Schedule to this Agreement.
5.8 Charter
and Bylaws.
Schedule 5.8 contains true and correct copies of the articles of incorporation
and bylaws of each Acquired Corporation Company, including all amendments
thereto, as currently in effect. Except as may be required by any regulatory
agency (and Acquired Corporation has no Knowledge of any regulatory action
that
might require such a change), there will be no changes in such articles of
incorporation or bylaws prior to the Effective Time, without the prior written
consent of BancGroup.
5.9 Litigation.
Except
as set forth in the Acquired Corporation’s SEC filings made prior to the date of
this Agreement or except as set forth on Schedule 5.9, there is no Litigation
(whether or not purportedly on behalf of Acquired Corporation) pending or,
to
the Knowledge of Acquired Corporation, threatened against or to which any
Acquired Corporation Company is a party (nor does Acquired Corporation have
Knowledge of any facts which are likely to give rise to any such Litigation)
at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind, which involves the possibility of any judgment or
Liability not fully covered by insurance in excess of a reasonable deductible
amount or which is reasonably likely to have a Material Adverse Effect on
Acquired Corporation, and no Acquired Corporation Company is in Default with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality, which Default would be reasonably
likely to have a Material Adverse Effect on Acquired Corporation. To the
Knowledge of Acquired Corporation, each Acquired Corporation Company has
complied in all material respects with all material applicable Laws and
Regulations including those imposing Taxes, of any applicable jurisdiction
and
of all states, municipalities, other political subdivisions and Agencies, in
respect of the ownership of its properties and the conduct of its business,
which, if not complied with, would be reasonably likely to have a Material
Adverse Effect on Acquired Corporation.
20
5.10 Material
Contract Defaults.
No
Acquired Corporation Company is in Default in any material respect under the
terms of any material Contract and, to the Knowledge of Acquired Corporation,
there is no event which, with notice or lapse of time, or both, may be or become
an event of Default on the part of an Acquired Corporation Company under any
such material Contract in respect of which adequate steps have not been taken
to
prevent such a Default from occurring, which in each case or in the aggregate,
could be reasonably likely to result in a Material Adverse Effect on the
Acquired Corporation. Acquired Corporation will use commercially reasonable
efforts to obtain consents to the Merger under any the agreements listed on
Schedule 5.11 hereto, provided that Acquired Corporation’s failure to obtain
such consents as of the closing shall not be deemed a breach of this Section
5.10.
5.11 No
Conflict with Other Instrument.
The
consummation of the transactions contemplated by this Agreement will not result
in the breach of any term or provision of or constitute a Default under any
material Contract which Default could be reasonably likely to result in a
Material Adverse Effect on the Acquired Corporation, to which any Acquired
Corporation Company is a party and will not conflict with any provision of
the
charter or bylaws of any Acquired Corporation Company. Acquired Corporation
will
use commercially reasonable efforts to obtain consents to the Merger under
the
agreements listed on Schedule 5.11 hereto, provided that Acquired Corporation’s
failure to obtain such consents as of the Closing shall not be deemed a breach
of this Section 5.11 representation.
5.12 Governmental
Authorization.
Each
Acquired Corporation Company has all Permits that, to the Knowledge of Acquired
Corporation, are or will be legally required to enable any Acquired Corporation
Company to conduct its business in all material respects as now conducted by
each Acquired Corporation Company.
5.13 Absence
of Regulatory Communications.
No
Acquired Corporation Company is subject to, nor has any Acquired Corporation
Company received during the past three years, any written communication directed
specifically to it from any Agency to which it is subject or pursuant to which
such Agency has imposed or has indicated it may impose any material restrictions
on the operations of it or the business conducted by it or in which such Agency
has raised any material question concerning the condition, financial or
otherwise, of such company. The Acquired Corporation represents that it is
not
the subject of any regulatory investigation or the subject of any regulatory
sanction as of the date of this Agreement.
5.14 Absence
of Material Adverse Change.
To the
Knowledge of Acquired Corporation, since the date of the most recent balance
sheet provided under section 5.4(a)(i), there have been no adverse events,
changes or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Acquired
Corporation.
5.15 Insurance.
Each
Acquired Corporation Company has in effect insurance coverage and bonds with
reputable insurers which, in respect to amounts, types and risks insured,
management of Acquired Corporation reasonably believes to be adequate for the
type of business conducted by such company. No Acquired Corporation Company
is
liable for any material retroactive premium adjustment. To the Knowledge of
Acquired Corporation, all insurance policies and bonds are valid, enforceable
and in full force and effect, and no Acquired Corporation Company has received
any notice of any material premium increase or cancellation with respect to
any
of its insurance policies or bonds. Within the last three years, no Acquired
Corporation Company has been refused any insurance coverage which it has sought
or applied for, and nothing has come to its attention which would lead it to
believe that existing insurance coverage cannot be renewed as and when the
same
shall expire, upon terms and conditions as favorable as those presently in
effect, other than possible increases in premiums that do not result from any
extraordinary loss experience. To the Knowledge of Acquired Corporation, all
policies of insurance presently held or policies containing substantially
equivalent coverage will be outstanding and in full force with respect to each
Acquired Corporation Company at all times from the date hereof to the Effective
Time.
21
5.16 Pension
and Employee Benefit Plans.
(a) To
the
Knowledge of Acquired Corporation, all employee benefit plans of each Acquired
Corporation Company have been established in compliance with, and such plans
have been operated in material compliance with, all applicable Laws, except
in
each case or in the aggregate, to the extent the same could not reasonably
be
expected to have a Material Adverse Effect on Acquired Corporation. No Acquired
Corporation Company sponsors or otherwise maintains a “pension plan” within the
meaning of section 3(2) of ERISA or any other retirement plan other than the
Section 401K plan of Acquired Corporation that is intended to qualify under
section 401 of the Code, nor do any unfunded (or improperly accrued for)
Liabilities exist with respect to any employee benefit plan, past or present.
To
the Knowledge of Acquired Corporation, no employee benefit plan, any trust
created thereunder or any trustee or administrator thereof has engaged in a
“prohibited transaction,” as defined in section 4975 of the Code, which may have
a Material Adverse Effect on the condition, financial or otherwise, of any
Acquired Corporation Company. Any pension plan reflected on Schedule 5.16 will
be fully funded (or properly accrued for) by Acquired Corporation prior to
the
Effective Time.
(b) To
the
Knowledge of Acquired Corporation, no amounts payable to any employee of any
Acquired Corporation Company as a result of the transactions contemplated hereby
will fail to be deductible for federal income tax purposes by virtue of Section
280G of the Code and regulations thereunder; provided however, no representation
is made under this Section 5.16(b) with respect to payments made under the
Contracts otherwise disclosed in any Schedule hereto. Notwithstanding the
introductory language to this Article 5, the representation contained in Section
5.16(b) shall not be deemed to be true even if such amounts payable would not
be
reasonably likely to cause a Material Adverse Effect to Acquired
Corporation.
5.17 Buy-Sell
Agreements.
To the
Knowledge of Acquired Corporation, there are no agreements among any of its
shareholders granting to any person or persons a right of first refusal in
respect of the sale, transfer, or other disposition of any shares of outstanding
securities by any shareholder of Acquired Corporation, any similar agreement
or
any voting agreement or voting trust in respect of any such shares.
5.18 Brokers.
Except
for services provided to Acquired Corporation by Xxxxx, negotiations relative
to
this Agreement and the transactions contemplated by this Agreement have been
carried on by Acquired Corporation directly with BancGroup, or its advisors,
and
without the intervention of any other person, either as a result of any act
of
Acquired Corporation, or otherwise, in such manner as to give rise to any valid
claim against Acquired Corporation for a finder's fee, brokerage commission
or
other like payment. The general terms and the exact fee which will be paid
to
Xxxxx by Acquired Corporation at or prior to the Effective Time is described
in
Schedule 5.18.
22
5.19 Approval
of Agreements.
The
board of directors of Acquired Corporation has approved this Agreement and
the
transactions contemplated by this Agreement and has authorized the execution
and
delivery by Acquired Corporation of this Agreement. Subject to the matters
referred to in Section 8.2(a), Acquired Corporation has full power, authority
and legal right to enter into this Agreement, and, upon appropriate vote of
the
shareholders of Acquired Corporation in accordance with this Agreement, Acquired
Corporation shall have full power, authority and legal right to consummate
the
transactions contemplated by this Agreement.
5.20 Disclosure.
No
representation or warranty, nor any statement or certificate furnished or to
be
furnished to BancGroup by Acquired Corporation, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained in this Agreement or in any
such
statement or certificate not misleading. Except for the representations and
warranties made by the Acquired Corporation in this Agreement, its Schedules
and
its public filings with the SEC, the Acquired Corporation makes no
representations or warranties, and the Acquired Corporation hereby disclaims
any
other representations or warranties, with respect to the Acquired Corporation
Companies, or its or their businesses, operations, assets, liabilities,
condition (financial or otherwise) or prospects or the negotiation, execution,
delivery or performance of this Agreement by the Acquired
Corporation.
5.21 Registration
Statement.
At the
time the Registration Statement becomes effective and at the time of the
Shareholders Meeting, the Registration Statement, including the proxy statement
which shall constitute part thereof (the “Proxy Statement”), will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under
which they were made, not misleading; provided, however, that the
representations and warranties in this section shall only apply to statements
in
or omissions from the Proxy Statement relating to descriptions of the business
of Acquired Corporation, its Assets, properties, operations, and capital stock
or to information furnished in writing by Acquired Corporation or its
representatives expressly for inclusion in the Proxy Statement.
5.22 Loans;
Adequacy of Allowance for Loan Losses.
All
reserves for loan losses shown on the most recent financial statements furnished
by Acquired Corporation have been calculated in accordance with prudent and
customary banking practices and are reasonably adequate in all material respects
to reflect the inherent and actual risks in the loans of the Acquired
Corporation. Acquired Corporation has no Knowledge of any fact which is likely
to require a future material increase in the provision for loan losses or a
material decrease in the loan loss reserve reflected in such financial
statements, to the extent such increase or decrease would be reasonably likely
to have a Material Adverse Effect on Acquired Corporation. To the Knowledge
of
Acquired Corporation, each loan reflected as an Asset on the financial
statements of Acquired Corporation is the legal, valid and binding obligation
of
the obligor of each loan, enforceable in accordance with its terms subject
to
the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors' rights generally and to general equitable
principles and complies in all material respects with all Laws to which it
is
subject, except to the extent such unenforceability could not be reasonably
likely to have a Material Adverse Effect on Acquired Corporation. Acquired
Corporation does not have in its portfolio any loan exceeding its legal lending
limit. Except as disclosed on Schedule 5.22, as of the date of this Agreement
(and to be updated at the Closing) Acquired Corporation, has no known
significant delinquent, substandard, doubtful, loss, nonperforming or problem
loans.
23
5.23 Environmental
Matters.
Except
for such matters that, individually or in the aggregate, would not have a
Material Adverse Effect on the Acquired Corporation, to the Knowledge of
Acquired Corporation, each Acquired Corporation Company is in material
compliance with all Laws and other governmental requirements relating to the
generation, management, handling, transportation, treatment, disposal, storage,
delivery, discharge, release or emission of any waste, pollution, or toxic,
hazardous or other substance (the “Environmental Laws”), and Acquired
Corporation has no Knowledge that any Acquired Corporation Company has not
complied with all regulations and requirements promulgated by the Occupational
Safety and Health Administration that are applicable to any Acquired Corporation
Company. To the Knowledge of Acquired Corporation, there is no Litigation
pending or threatened with respect to any violation or alleged violation by
any
Acquired Corporation Company of the Environmental Laws, except to the extent
such litigation is not reasonably likely to have a Material Adverse Effect
on
any Acquired Corporation Company. Except as disclosed on Schedule 5.23 (and
such
schedule to be updated at the Closing), to the Knowledge of Acquired Corporation
(a) there has been no spillage, leakage, contamination or release of any
hazardous substances or waste on any owned or leased property of any Acquired
Corporation Company for which the appropriate remedial action has not been
completed; (b) there are no underground storage tanks on any premises owned
or
leased by any Acquired Corporation Company; and (c) the Bank’s loan committee
has not identified any currently outstanding loan or extension of credit on
an
“policy exception” or “watch” basis as a result of any violation of, or required
remediation under, any Environmental Laws.
5.24 Collective
Bargaining.
There
are no labor contracts, collective bargaining agreements, letters of
undertakings or other arrangements, formal or informal, between any Acquired
Corporation Company and any union or labor organization covering any Acquired
Corporation Company's employees and none of said employees are represented
by
any union or labor organization.
5.25 Labor
Disputes.
To the
Knowledge of Acquired Corporation, each Acquired Corporation Company is in
material compliance with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours.
No
Acquired Corporation Company is or has been engaged in any unfair labor
practice, and, to the Knowledge of Acquired Corporation, no unfair labor
practice complaint against any Acquired Corporation Company is pending before
the National Labor Relations Board. There have not been, nor to the Knowledge
of
Acquired Corporation, are there presently, any attempts to organize employees,
nor to the Knowledge of Acquired Corporation, are there plans for any such
attempts.
5.26 Derivative
Contracts.
No
Acquired Corporation Company is a party to or has agreed to enter into a swap,
forward, future, option, cap, floor or collar financial contract, or any other
interest rate or foreign currency protection contract or derivative security
not
included in Acquired Corporation's financial statements delivered under Section
5.4 hereof which is a financial derivative contract (including various
combinations thereof).
24
5.27 SEC
Filings.
(a)
Acquired Corporation has heretofore delivered to BancGroup copies of Acquired
Corporation's: (i) Annual Report on Form 10-K for the fiscal year ended December
31, 2005; (ii) 2005 Annual Report to Shareholders; (iii) Quarterly Reports
on
Form 10-Q for the quarters ended March 31, 2006, June 30, 2006, and September
30, 2006; and (iv) any reports on Form 8-K, filed by Acquired Corporation with
the SEC since December 31, 2005. Since December 31, 2003, Acquired Corporation
has timely filed all reports and registration statements and the documents
required to be filed with the SEC under the rules and regulations of the SEC
and
all such reports and registration statements or other documents have complied
in
all material respects, as of their respective filing dates and effective dates,
as the case may be, with all the applicable requirements of the 1933 Act, the
1934 Act and the Xxxxxxxx-Xxxxx Act of 2002. As of the respective filing and
effective dates, none of such reports or registration statements or other
documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b)
The
documents to be incorporated by reference into the Registration Statement,
at
the time they were filed with the SEC, complied in all material respects with
the requirements of the 1934 Act and Regulations thereunder and when read
together and with the other information in the Registration Statement will
not
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein not
misleading at the time the Registration Statement becomes effective or at the
time of the Shareholders’ Meeting.
ADDITIONAL
COVENANTS
6.1 Additional
Covenants of BancGroup.
BancGroup covenants to and with Acquired Corporation as follows:
(a) Registration
Statement and Other Filings.
As soon
as reasonably practicable after the execution of this Agreement, BancGroup
shall
prepare and file with the SEC the Registration Statement on Form S-4 (or such
other form as may be appropriate) and all amendments and supplements thereto,
in
form reasonably satisfactory to Acquired Corporation and its counsel, with
respect to the Common Stock to be issued pursuant to this Agreement. BancGroup
shall use commercially reasonable efforts to prepare all necessary filings
with
any Agencies which may be necessary for approval to consummate the transactions
contemplated by this Agreement and shall use its reasonable efforts to cause
the
Registration Statement to become effective under the 1933 Act as soon as
reasonably practicable after the filing thereof and take any action required
to
be taken under other applicable securities Laws in connection with the issuance
of the shares of BancGroup Common Stock upon consummation of the Merger. Copies
of all such filings shall be furnished to Acquired Corporation and its counsel,
sufficiently in advance to permit Acquired Corporation and its counsel to
provide substantive review and comment. BancGroup will advise Acquired
Corporation and its counsel promptly after it receives notice and/or knowledge
thereof, of the time when the Registration Statement has become effective or
any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the BancGroup Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Registration Statement (or Proxy
Statement) and responses thereto or requests by the SEC for additional
information.
25
(b) Blue
Sky Permits.
BancGroup shall use its best efforts to obtain, prior to the effective date
of
the Registration Statement, all necessary state securities Law or “blue sky”
Permits and approvals required to carry out the transactions contemplated by
this Agreement.
(c) No
Control of Acquired Corporation by BancGroup.
Notwithstanding any other provision hereof, until the Effective Time, the
authority to operate the Acquired Corporation and the Bank and establish and
implement the business policies of Acquired Corporation and the Bank shall
continue to reside solely in Acquired Corporation’s and Bank’s officers and
boards of directors.
(d) Listing.
Prior
to the Effective Time, BancGroup shall use commercially reasonable efforts
to
cause the shares of BancGroup Common Stock to be issued in the Merger to be
listed on the NYSE or other quotations system on which such shares are primarily
traded.
(e) Employee
Benefit Matters.
(i) At
the Effective Time, all employees of any Acquired Corporation Company shall,
at
BancGroup's option, either become employees of the Resulting Corporation or
its
Subsidiaries or be entitled to severance benefits in accordance with Colonial
Bank, N.A.'s severance policy as of the date of this Agreement, which is
attached hereto as Schedule 6.1(e). All employees of any Acquired Corporation
Company who become employees of the Resulting Corporation or its Subsidiaries
at
the Effective Time shall be entitled, to the extent permitted by applicable
Law,
to participate in all benefit plans of Colonial Bank, N.A., including retirement
plans, to the same extent as Colonial Bank, N.A. employees, except as stated
otherwise in this section. Employees of any Acquired Corporation Company who
become employees of the Resulting Corporation or its Subsidiaries at the
Effective Time shall be allowed to participate as of the Effective Time in
the
medical and dental benefits plan of Colonial Bank, N.A. as new employees of
Colonial Bank, N.A., and the time of employment of such employees who are
employed at least 30 hours per week with any Acquired Corporation Company as
of
the Effective Time shall be counted as employment under such dental and medical
plans of Colonial Bank, N.A. for purposes of calculating any 30 day waiting
period and pre-existing condition limitations. To the extent permitted by
applicable Law and for all active plans and benefits, the period of service
with
the appropriate Acquired Corporation Company of all employees who become
employees of the Resulting Corporation or its Subsidiaries at the Effective
Time
shall be recognized for vesting, eligibility and period of service requirements.
In addition, if the Effective Time falls within an annual period of coverage
under the medical plan of the Resulting Corporation and its Subsidiaries, each
such Acquired Corporation Company employee shall be given credit for covered
expenses paid by that employee under comparable employee benefit plans of the
Acquired Corporation Company during the applicable coverage period through
the
Effective Time towards satisfaction of any annual deductible limitation and
out-of-pocket maximum that may apply under that group health plan of the
Resulting Corporation and its Subsidiaries; (ii) for a period of six months
following the Effective Time, BancGroup shall provide all employees of the
Company and its Subsidiaries whose employment was terminated other than for
cause, disability or retirement at or following the Effective Time, and who
so
desires, job counseling and outplacement assistance services in accordance
with
BancGroup’s employment policies and practices, shall assist each employee in
locating new employment and shall notify all such employees who want to be
so
notified of opportunities for positions with BancGroup or any of its
Subsidiaries for which BancGroup reasonably believes such persons are qualified
and shall consider any application for such positions submitted by such persons,
provided, however, that any decisions to offer employment to any such person
shall be made in the sole discretion of BancGroup.
26
(f) BancGroup
will take no action that would prevent or impede the merger from qualifying
as a
tax-free reorganization within the meaning of Section 368 of the Code, and
BancGroup will treat the merger consistently with such qualification for all
income Tax purposes. BancGroup will comply with all reporting requirements
applicable to reorganizations within the meaning of Section 368 of the
Code.
(g) Indemnification.
(i)
Subject to the conditions set forth in the succeeding paragraphs, for a period
of six years after the Effective Time BancGroup shall, and shall cause Colonial
Bank, N.A. to, indemnify, defend and hold harmless each director and officer
of
each Acquired Corporation Company (each being an “Indemnified Party”) against
all Liabilities arising out of actions or omissions occurring upon or prior
to
the Effective Time (including without limitation the transactions contemplated
by this Agreement) to the extent required under the bylaws and any existing
indemnification agreements, each as in effect on the date hereof, of the of
Acquired Corporation and to the extent permitted or required under the DGCL
and
other applicable Laws, and subject to the limitations contained in 12 U.S.C.
§1828(K) and 12 CFR Part 359 of the FDIC regulations.
(ii) BancGroup
shall use commercially reasonable efforts to cause individuals serving as
directors and officers of any Acquired Corporation Company on the Closing Date
to be covered for at least two years from the Closing Date by either (i) the
directors’ and officers’ liability insurance policy maintained by the Acquired
Corporation immediately prior to the Closing Date with respect to acts or
omissions occurring on or prior to the Effective Time that were committed by
such officers and directors as such; or (ii) “tail” insurance policies with a
claims period of at least two years from the Effective Time with respect to
directors and officers’ liability insurance in an amount and scope at least as
favorable as the Acquired Corporation's existing policies for claims arising
from facts or events that occurred on or prior to the Effective
Time.
(iii) Any
Indemnified Party wishing to claim indemnification under this subsection (h),
upon learning of any such Liability or Litigation, shall promptly notify
BancGroup thereof. In the event of any such Litigation (whether arising before
or after the Effective Time) (A) BancGroup or Colonial Bank, N.A. shall have
the
right to assume the defense thereof with counsel reasonably acceptable to such
Indemnified Party and, upon assumption of such defense, BancGroup shall not
be
liable to such Indemnified Parties for any legal expenses of other counsel
or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if BancGroup or Colonial Bank,
N.A. elects not to assume such defense or counsel for the Indemnified Parties
advises that there are substantive issues which raise conflicts of interest
between BancGroup and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and BancGroup or Colonial Bank, N.A. shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, that BancGroup shall
be
obligated pursuant to this subsection to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction, (B) the Indemnified Parties will
cooperate in the defense of any such Litigation; and (C) BancGroup shall not
be
liable for any settlement effected without its prior consent (which consent
shall not be unreasonably withheld or delayed); and provided further that
BancGroup and Colonial Bank, N.A. shall not have any obligation hereunder to
any
Indemnified Party (i) when and if a court of competent jurisdiction shall
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby
is
prohibited by applicable Law, or (ii) it is determined that indemnification
is
prohibited under 12 USC §1828(K) or 12 CFR Part 359.
27
(iv)
In
consideration of and as a condition precedent to the effectiveness of the
indemnification obligations provided by BancGroup in this section to a director
or officer of the Acquired Corporation, such director or officer of the Acquired
Corporation shall have delivered to BancGroup on or prior to the Effective
Time
a letter in form reasonably satisfactory to BancGroup concerning claims such
directors or officers may have against Acquired Corporation. In the letter,
the
directors or officers shall: (A) acknowledge the assumption by BancGroup as
of
the Effective Time of all Liability (to the extent Acquired Corporation is
so
liable) for claims for indemnification arising under section 6.1(h) hereof;
(B)
affirm that they are unaware of any claims they have or might have (other than
those referred to in the following clause (C)) against Acquired Corporation;
(C)
identify any claims or any facts or circumstances of which they are aware that
could give rise to a claim for indemnification under section 6.1(h)(i) hereof;
and (D) release as of the Effective Time any and all claims that they may have
against any Acquired Corporation Company other than (W) those referred to in
the
foregoing clause (C) and disclosed in the letter of the director or officer,
(X)
claims by third parties which have not yet been asserted against such director
or officer (other than claims arising from facts and circumstances of which
such
director or officer is aware but which are not disclosed in such director or
executive officer's letter), (Y) claims by third parties arising from any
transaction contemplated by this Agreement or disclosed in any schedule to
this
Agreement, and (Z) claims by third parties arising in the ordinary course of
business of any Acquired Corporation Company after the date of the
letter.
(v)
Acquired
Corporation hereby represents and warrants to BancGroup that it has no Knowledge
of any claim, pending or threatened, or of any facts or circumstances that
could
give rise to any obligation by BancGroup to provide the indemnification required
by this section 6.1(g) other than as disclosed in the letters of the directors
and executive officers referred to in section 6.1(g)(iii) hereof or described
in
any schedule to this Agreement and claims arising from any transaction
contemplated by this Agreement.
(vi) In
the
event the Resulting Corporation or Colonial Bank, N.A., or any of their
respective successors or assigns transfers all or substantially all of its
respective properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Resulting Corporation or Colonial Bank, N.A., as the case may be, shall succeed
to or otherwise be bound by the obligations set forth in this Section
6.1(g).
28
6.2 Additional
Covenants of Acquired Corporation.
Acquired Corporation covenants to and with BancGroup as follows:
(a) Operations.
Acquired Corporation will conduct its business and the business of each Acquired
Corporation Company in a proper and prudent manner and will use its commercially
reasonable efforts to maintain its relationships with its depositors, customers
and employees. Without the prior written consent of BancGroup, no Acquired
Corporation Company will engage in any material transaction outside the ordinary
course of business or make any material change in its accounting policies or
methods of operation, nor will Acquired Corporation willingly permit the
occurrence of any change or event which would render any of the representations
and warranties in Article 5 hereof untrue in any material respect at and as
of
the Effective Time with the same effect as though such representations and
warranties had been made at and as of such Effective Time, unless such
representation or warranty is made as of a specific date. Except as set
described in detail on Schedule 6.2(a), Acquired Corporation shall cause the
Bank to postpone all branch relocation and/or expansion plans prior to the
Effective Time or the date of termination pursuant to this Agreement. Acquired
Corporation will take no action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the Code,
and Acquired Corporation will treat the merger consistently with such
qualification for all income Tax purposes. Acquired Corporation will comply
with
all reporting requirements applicable to reorganizations within the meaning
of
Section 368 of the Code.
(b)
Shareholders’ Meeting; Commercially Reasonable Efforts.
Acquired Corporation will cooperate with BancGroup in the preparation of the
Registration Statement and any regulatory filings and will use commercially
reasonable efforts (including with reference to the anticipated timing of any
regulatory approvals) to cause the Shareholders’ Meeting to be held for the
purpose of approving the Merger as soon as practicable after the latter of
the
effective date of the Registration Statement or clearance by the SEC of the
Proxy Statement for mailing, and will use commercially reasonable efforts to
bring about the transactions contemplated by this Agreement, including
shareholder approval of this Agreement, as soon as practicable unless this
Agreement is terminated as provided herein.
(c) Prohibited
Negotiations.
(i)
Except with respect to this Agreement and the transactions contemplated hereby,
no Acquired Corporation Company nor any affiliate thereof nor any investment
banker, attorney, accountant, or other representative (collectively,
“Representatives”) retained by an Acquired Corporation Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
the Acquired Corporation’s Board of Directors, after consultation with counsel,
determines in good faith it necessary to comply with its fiduciary duties,
no
Acquired Corporation Company or any Representative thereof shall furnish any
non-public information that it is not legally obligated to furnish, negotiate
with respect to, or enter into any Contract with respect to, any Acquisition
Proposal, and each Acquired Corporation Company shall direct and use its
reasonable efforts to cause all of its Representatives not to engage in any
of
the foregoing, but Acquired Corporation may communicate information about such
an Acquisition Proposal to its shareholders if and to the extent, after
consultation with counsel, that it determines in good faith that it is required
to do so in order to comply with its legal obligations. Acquired Corporation
shall promptly notify BancGroup orally and in writing in the event that any
Acquired Corporation Company receives after the date hereof any written inquiry
or proposal relating to any such Acquisition Proposal. Acquired Corporation
shall immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons other than BancGroup conducted
heretofore with respect to any of the foregoing.
29
(ii) If
Acquired Corporation (A) willfully breaches this Agreement and the Merger is
not
consummated, (B) enters into a letter of intent or definitive agreement
regarding an Acquisition Proposal with any third party (other than BancGroup
or
any of its Subsidiaries) prior to the earlier of (i) the Effective Time or
(ii)
the termination of this Agreement pursuant to Article 13 hereof (other than
a
termination pursuant to paragraph (a) of section 13.2 hereof or by Acquired
Corporation pursuant to paragraphs (b), (c) or (d) of section 13.2 hereof),
or
(C) if Acquired Corporation receives or is the subject of an Acquisition
Proposal from a third party (other than BancGroup or its Subsidiaries) prior
to
the termination of this Agreement pursuant to Article 13 hereof (other than
a
termination pursuant to paragraph (a) of section 13.2 hereof or by Acquired
Corporation pursuant to paragraphs (b), (c) or (d) of section 13.2 hereof),
and
within twelve (12) months after termination of this Agreement pursuant to
Article 13 hereof (other than a termination pursuant to paragraph (a) of section
13.2 hereof or by Acquired Corporation pursuant to paragraphs (b), (c) or (d)
of
section 13.2 hereof) an Acquisition Proposal is consummated with such third
party, Acquired Corporation covenants and agrees that it shall pay to BancGroup
upon written demand at any time (Y) after Acquired Corporation enters into
an
agreement which is legally binding on Acquired Corporation regarding an
Acquisition Proposal or (Z) at any time on or after the date of consummation
of
such Acquisition Proposal, which ever is the first to occur, the principal
sum
of $12,500,000. Such payment shall compensate BancGroup for its direct and
indirect costs and expenses in connection with the transactions contemplated
by
this Agreement, including BancGroup's management time devoted to negotiation
and
preparation for the Merger and BancGroup's loss as a result of the Merger not
being consummated. The Parties acknowledge and agree that it would be
impracticable or extremely difficult to fix the actual damages resulting from
the foregoing events and, therefore, the Parties have agreed upon the foregoing
payment as liquidated damages which shall not be deemed to be in the nature
of a
penalty. Other than the payment provided for in this section 6.2(c)(ii) and
any
Liability for expenses as set forth in Section 15.10 hereof, there shall be
no
other Liability or obligation on the part of any Acquired Corporation Company
or
their respective directors or officers resulting from any of the events
described in this section 6.2(c)(ii).
(d) Director
Recommendation.
Except
to the extent the Board of Directors of Acquired Corporation determines in
good
faith that it is required to do otherwise in order to comply with their
fiduciary duties, the members of the Board of Directors of Acquired Corporation
agree to support publicly the Merger and to recommend that Acquired Corporation
shareholders vote to approve the Merger at any meeting of the shareholders
in
which the Merger is considered. Nothing contained in this Agreement shall
prohibit the Acquired Corporation from taking and disclosing to its stockholders
a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the 1933
Act or from making any disclosure to the Acquired Corporation's stockholders
if
the Board of Directors of the Acquired Corporation (or any committee thereof)
determines in good faith (after consultation with its outside legal counsel)
that it is required to do so under applicable Law.
30
(e) Voting.
Acquired Corporation shall on the date of execution of this Agreement obtain
and
submit to BancGroup an agreement from its directors and Executive Officers
substantially in the form set forth in Exhibit A (but without any provisions
listed in such form as inapplicable to such persons).
(f) Financial
Statements and Monthly Status Reports.
Acquired Corporation shall furnish to BancGroup:
(i) As
soon
as practicable and in any event within 45 days after the end of each quarterly
period in each fiscal year (other than the last quarterly period), consolidated
statements of operations of Acquired Corporation for such period and for the
period beginning at the commencement of the fiscal year and ending at the end
of
such quarterly period, and a consolidated statement of financial condition
of
Acquired Corporation as of the end of such quarterly period, setting forth
in
each case in comparative form figures for the corresponding periods ending
in
the preceding fiscal year, subject to changes resulting from year-end
adjustments;
(ii) With
reasonable promptness, such additional financial data as BancGroup may
reasonably request (including a schedule of any classified loans or loans
subject to a “policy exception” or “watch” status as a result of any matters
related to compliance with Environmental Laws); and
(iii)
Within
10
calendar days after the end of each month (or, if the financial statements
referred to in clause (d) are not then available, as soon as possible
thereafter) commencing with the next calendar month following the date of this
Agreement and ending at the Effective Time, a written description of (a) any
non-compliance with the terms of this Agreement, together with its then current
estimate of the out-of-pocket costs and expenses incurred or reasonably
accruable in connection with the transactions contemplated by this Agreement;
(b) the status, as of the date of the report, of all existing or threatened
litigation against any Acquired Corporation Company; (c) copies of minutes
of
any meeting of the board of directors of any Acquired Corporation Company and
any committee thereof occurring in the month for which such report is made,
including all documents presented to the directors at such meetings, provided
that, subject to the provisions of Section 6.2(c) hereof, such minutes and
documents may exclude discussions relating to BancGroup, the Merger or any
other
offer or indications of interest to acquire the stock or assets of any Acquired
Corporation Company; and (d) monthly financial statements, including a balance
sheet and income statement.
(iv) All
information obtained by BancGroup or its representatives pursuant to this
Section 6.2(f) shall be kept confidential in accordance with that certain
confidentiality agreement dated November 13, 2006 unless required by Law or
an Order to be disclosed.
31
(g) Fiduciary
Duties.
Except
as disclosed in Schedule 6.2(g), prior to the Effective Time, Acquired
Corporation will use its commercially reasonable efforts so that (i) no director
or officer (each an “Executive”) of any Acquired Corporation Company shall,
directly or indirectly, own, manage, operate, join, control, be employed by
or
participate in the ownership, proposed ownership, management, operation or
control of or be connected in any manner with, any business, corporation or
partnership which is competitive to the business of any Acquired Corporation
Company; provided that the ownership of such Executive as an investor of not
more than one percent of the outstanding securities of stock of any corporation
whose stock is listed for trading on any securities exchange or is quoted on
the
automated quotation system of the National Association of Securities Dealers,
Inc., or the shares of any investment company as defined in Section 3 of the
Investment Company Act of 1940, as amended, shall not in itself constitute
a
violation of Executive’s obligations under this Section 6.2(g); (ii) all
Executives, at all times, shall satisfy their fiduciary duties to Acquired
Corporation and its Subsidiaries, and (iii) such Executives shall not (except
as
required in the course of his or her employment with any Acquired Corporation
Company) communicate or divulge to, or use for the benefit of himself or herself
or any other person, firm, association or corporation, without the express
written consent of Acquired Corporation, any confidential information which
is
possessed, owned or used by or licensed by or to any Acquired Corporation
Company or confidential information belonging to third parties which any
Acquired Corporation Company shall be under obligation to keep secret or which
may be communicated to, acquired by or learned of by the Executive in the course
of or as a result of his or her employment with any Acquired Corporation
Company.
(h) Certain
Practices.
At the
request of BancGroup, (i) Acquired Corporation shall consult with BancGroup
and
advise BancGroup through Xxxxx Xxxx (334-676-5002) or her designee of all of
the
Bank’s loan requests (excluding renewals) over $1,000,000 that are not
single-family residential loan requests or of any other loan request outside
the
normal course of business, and (ii) Acquired Corporation will consult with
BancGroup on a reasonable basis to coordinate various business issues. Acquired
Corporation and the Bank shall not be required to undertake any of such
activities, however, except as such activities may be in compliance with
existing Law and Regulations.
(i) Sale
of Subsidiary Bank Charter.
BancGroup contemplates that it may enter into agreements with another financial
institution to undertake a transaction or a series of transactions that occur
as
of or after the Effective Time and would have the effect of transferring the
Bank’s Charter to such other financial institution (a “Charter Sale”). Acquired
Corporation agrees that it will take all commercially reasonable actions to
assist BancGroup in such a Charter Sale, including, without limitation,
approving such transactions as shareholder of the Bank, causing the Bank to
prepare and execute such regulatory applications as may be required and to
enter
into such merger or other agreements as may be required to effectuate a Charter
Sale; provided however, that in the event this Agreement is not consummated,
BancGroup will promptly reimburse Acquired Corporation and Bank all of their
expenses incurred in satisfaction of their obligations under this
Section 6.2(i).
(j) Losses
and Loss of Business.
Acquired Corporation shall promptly notify BancGroup if it suffers any Losses
other than in the ordinary course of business, and Acquired Corporation shall
promptly notify BancGroup if it has received notice or had Knowledge or reason
to believe that any of its or the Bank’s substantial customers has terminated or
intends to terminate its relationship.
32
MUTUAL
COVENANTS AND AGREEMENTS
7.1 Commercially
Reasonable Efforts; Cooperation.
Subject
to the terms and conditions herein provided, BancGroup and Acquired Corporation
each agrees to use its commercially reasonable efforts promptly to take, or
cause to be taken, all actions and do, or cause to be done, all things
necessary, proper or advisable under applicable Laws or otherwise, including,
without limitation, promptly making required deliveries of stockholder lists
and
stock transfer reports and attempting to obtain all necessary Consents and
waivers and regulatory approvals, including the holding of any regular or
special board meetings, to consummate and make effective, as soon as
practicable, the transactions contemplated by this Agreement. Each Party to
this
Agreement shall use commercially reasonable efforts to cause its respective
officers to fully cooperate with officers and employees, accountants, counsel
and other representatives of the other Parties not only in fulfilling the duties
hereunder of the Party of which they are officers but also in assisting,
directly or through direction of employees and other persons under their
supervision or control, such as stock transfer agents for the Party, the other
Parties requiring information which is reasonably available from such Party.
7.2 Press
Release.
Each
Party hereto agrees that, unless approved by the other Party in advance, such
Party will not make any public announcement, issue any press release or other
publicity or confirm any statements by any person not a party to this Agreement
concerning the transactions contemplated hereby. Notwithstanding the foregoing,
each Party hereto reserves the right to make any disclosure if such Party,
in
its reasonable discretion, deems such disclosure required by Law. In that event,
such Party shall use reasonable efforts to provide to the other Party the text
of such disclosure sufficiently in advance to enable the other Party to have
a
reasonable opportunity to comment thereon.
7.3 Mutual
Disclosure.
(a) Each
Party hereto agrees, upon request from the other Party, to promptly furnish
to
each other Party hereto its public disclosures and filings not precluded from
disclosure by Law including but not limited to call reports, Form 8-K, Form
10-Q
and Form 10-K filings, Y-3 applications, reports on Form Y-6, quarterly or
special reports to shareholders, Tax returns, Form S-4 and S-8 registration
statements and similar documents;
(b) promptly
upon receipt thereof, each Party agrees to furnish to the other Party copies
of
all audit reports submitted to such Party by independent auditors in connection
with each annual, interim or special audit of the books of such Party made
by
such accountants; and
(c) as
soon a
practicable, copies of all such financial statements and reports as each Party
shall send to its stockholders and of such regular and periodic reports as
each
Party may file with the SEC or any other Agency shall be delivered to the other
Party.
33
7.4 Access
to Properties and Records.
Each
Party hereto shall afford the officers and authorized representatives of the
other Party reasonable access to the Assets, books and records of such Party
in
order that such other Parties may have full opportunity to make such
investigation as they shall desire of the affairs of such Party and shall
furnish to such Parties such additional financial and operating data and other
information as to its businesses and Assets as shall be from time to time
reasonably requested. All such information that may be obtained by any such
Party will be held in confidence by such party, will not be disclosed by such
Party or any of its representatives except in accordance with this Agreement,
and will not be used by such Party for any purpose other than the accomplishment
of the Merger as provided herein.
7.5 Notice
of Adverse Changes.
Each
Party agrees to give written notice promptly to the other Party upon becoming
aware of the occurrence or impending occurrence of any event or circumstance
relating to it or any of its Subsidiaries which (i) is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on it or
(ii)
would cause or constitute a material breach of any of its representations,
warranties, or covenants contained herein, and to use its reasonable efforts
to
prevent or promptly to remedy the same.
CONDITIONS
TO OBLIGATIONS OF ALL PARTIES
The
obligations of BancGroup and Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction, in the sole discretion of the Party relying upon such conditions,
on or before the Effective Time of all the following conditions, except as
such
Parties may waive such conditions in writing:
8.1 Approval
by Shareholders.
At the
Shareholders Meeting, this Agreement and the matters contemplated by this
Agreement shall have been duly approved by the vote of the holders of not less
than the requisite number of the issued and outstanding voting securities of
Acquired Corporation as is required by applicable Law and Acquired Corporation's
articles of incorporation and bylaws.
8.2 Regulatory
Authority Approval.
(a)
Orders, Consents and approvals, in form and substance reasonably satisfactory
to
BancGroup and Acquired Corporation, shall have been entered by the Board of
Governors of the Federal Reserve System and other appropriate bank regulatory
Agencies (i) granting the authority necessary for the consummation of the
transactions contemplated by this Agreement, including the possible merger
of
the Bank with Colonial Bank, N.A., if such merger is desired by Colonial Bank,
N.A., as contemplated pursuant to section 2.8 hereof, but excluding the Charter
Sale, and (ii) satisfying all other requirements prescribed by Law. No Order,
Consent or approval so obtained which is necessary to consummate the
transactions as contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable good faith judgment of the Board of Directors
of
BancGroup would so materially adversely impact the economic benefits of the
transaction as contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
34
(b)
Each
Party shall have obtained any and all other Consents (other than those referred
to in Section 8.2(a) of this Agreement), if any, necessary for the preventing
of
any Default under any Contract or Permit of such Party which, if not obtained
or
made, is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on such Party. No Consent obtained which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable judgment of the Board of
Directors of BancGroup would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement so as
to
render inadvisable the consummation of the Merger.
8.3 Litigation.
There
shall be no pending or threatened Litigation in any court or any pending or
threatened proceeding by any governmental commission, board or Agency, with
a
view to seeking or in which it is sought to restrain or prohibit consummation
of
the transactions contemplated by this Agreement or in which it is sought to
obtain divestiture, rescission or damages in connection with the transactions
contemplated by this Agreement and no investigation by any Agency shall be
pending or threatened which might result in any such suit, action or other
proceeding.
8.4 Registration
Statement.
The
Registration Statement shall be effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
or
threatened; no proceedings for such purpose, or under the proxy rules of the
SEC
or any bank regulatory authority pursuant to the 1934 Act, with respect to
the
transactions contemplated hereby, shall be pending before or threatened by
the
SEC or any bank regulatory authority; and all approvals or authorizations for
the offer of BancGroup Common Stock shall have been received or obtained
pursuant to any applicable state securities Laws, and no stop order or
proceeding with respect to the transactions contemplated hereby shall be pending
or threatened under any such state Law.
8.5 Tax
Opinion.
An
opinion of PricewaterhouseCoopers LLP or such other reputable firm, shall have
been received in form and substance reasonably satisfactory to the Acquired
Corporation and BancGroup to the effect that (i) the Merger will constitute
a
“reorganization” within the meaning of section 368 of the Code; (ii) no gain or
loss will be recognized by BancGroup or Acquired Corporation; (iii) no gain
or
loss will be recognized by the shareholders of Acquired Corporation who receive
shares of BancGroup Common Stock except to the extent of any taxable “boot”
received by such persons from BancGroup, and except to the extent of any
dividends received from Acquired Corporation prior to the Effective Time; (iv)
the basis of the BancGroup Common Stock received in the Merger will be equal
to
the sum of the basis of the shares of Acquired Corporation common stock
exchanged in the Merger and the amount of gain, if any, which was recognized
by
the exchanging Acquired Corporation shareholder, including any portion treated
as a dividend, less the value of taxable boot, if any, received by such
shareholder in the Merger; (v) the holding period of the BancGroup Common Stock
will include the holding period of the shares of Acquired Corporation common
stock exchanged therefore if such shares of Acquired Corporation common stock
were capital assets in the hands of the exchanging Acquired Corporation
shareholder; and (vi) cash received by an Acquired Corporation shareholder
in
lieu of a fractional share interest of BancGroup Common Stock will be treated
as
having been received as a distribution in full payment in exchange for the
fractional share interest of BancGroup Common Stock which he or she would
otherwise be entitled to receive and will qualify as capital gain or loss
(assuming the Acquired Corporation common stock was a capital asset in his
or
her hands as of the Effective Time).
35
CONDITIONS
TO OBLIGATIONS OF ACQUIRED CORPORATION
The
obligations of Acquired Corporation to cause the transactions contemplated
by
this Agreement to be consummated shall be subject to the satisfaction on or
before the Effective Time of all the following conditions except as Acquired
Corporation may waive such conditions in writing:
9.1 Representations
and Warranties.
The
representations and warranties of BancGroup set forth herein shall be true
and
correct at and as of the date hereof and at and as of the Closing Date, as
if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), provided that no representation
or
warranty of BancGroup shall be deemed untrue or incorrect for purposes hereunder
as a consequence of the existence of any fact, event or circumstance
inconsistent with such representation or warranty, unless (i) such fact, event
or circumstance was the result of an intentional act of BancGroup or (ii) such
fact, event or circumstance, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
of BancGroup, has had or would reasonably be expected to result in a Material
Adverse Effect on BancGroup, disregarding for these purposes (x) any other
qualification or exception for, or reference to, materiality in any such
representation or warranty or (y) any other use of the terms “material,”
“materially,” “in all material respects,” “Material Adverse Change,” “Material
Adverse Effect” or similar terms or phrases in any such representation or
warranty, and the Acquired Corporation shall have received a certificate, dated
the Closing Date, signed on behalf of BancGroup by the Chief Executive Officer
and the Chief Financial Officer of BancGroup, to such effect.
9.2 Performance
of Obligations of BancGroup. BancGroup
shall have performed in all material respects all obligations required to be
performed by it at or prior to the Closing Date under this Agreement; and the
Acquired Corporation shall have received a certificate, dated the Closing Date,
signed on behalf of BancGroup by the Chief Executive Officer and the Chief
Financial Officer of BancGroup, to such effect.
9.3 Closing
Certificate.
In
addition to any other deliveries required to be delivered hereunder, Acquired
Corporation shall have received a certificate from the President or an Executive
Vice President and from the Secretary or Assistant Secretary of BancGroup dated
as of the Closing certifying that:
(a) the
Board
of Directors of BancGroup has duly adopted resolutions approving the substantive
terms of this Agreement and authorizing the consummation of the transactions
contemplated by this Agreement and such resolutions have not been amended or
modified and remain in full force and effect;
36
(b) each
person executing this Agreement on behalf of BancGroup is an officer of
BancGroup holding the office or offices specified therein and the signature
of
each person set forth on such certificate is his or her genuine
signature;
(c) the
certificate of incorporation and bylaws of BancGroup referenced in section
4.4
hereof remain in full force and effect;
9.4 [Reserved]
9.5 NYSE
Listing.
The
shares of BancGroup Common Stock to be issued under this Agreement shall have
been approved for listing on the NYSE.
9.6 Other
Matters.
There
shall have been furnished to such counsel for Acquired Corporation certified
copies of such corporate records of BancGroup and copies of such other documents
as such counsel may reasonably have requested for such purpose.
9.7 Material
Events.
There
shall have been no determination by the board of directors of Acquired
Corporation that the transactions contemplated by this Agreement have become
impracticable because of any declaration of a banking moratorium in the United
States or a general suspension of trading on the NYSE or any other exchange
on
which BancGroup Common Stock may be traded.
9.8 Fairness
Opinion.
Acquired
Corporation shall have received from Xxxxx Financial, Inc. a letter, dated
as of
the date of this Agreement, setting forth its opinion that the Merger
Consideration to be received by the shareholders of Acquired Corporation under
the terms of this Agreement is fair to them from a financial point of
view.
9.9 Merger
Consideration.
BancGroup shall have deposited with the Exchange Agent sufficient cash to pay
the Merger Consideration Cash Component.
CONDITIONS
TO OBLIGATIONS OF BANCGROUP
The
obligations of BancGroup to cause the transactions contemplated by this
Agreement to be consummated shall be subject to the satisfaction on or before
the Effective Time of all of the following conditions except as BancGroup may
waive such conditions in writing:
37
10.1 Representations
and Warranties.
The
representations and warranties of the Acquired Corporation set forth herein
shall be true and correct at and as of the date hereof and at and as of the
Closing Date, as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such date), provided that no
representation or warranty of the Acquired Corporation shall be deemed untrue
or
incorrect for purposes hereunder as a consequence of the existence of any fact,
event or circumstance inconsistent with such representation or warranty, unless,
(i) such fact, event or circumstance was the result of an intentional act of
Acquired Corporation or (ii) such fact, event or circumstance, individually
or
taken together with all other facts, events or circumstances inconsistent with
any representation or warranty of the Acquired Corporation, has had or would
reasonably be expected to result in a Material Adverse Effect on the Acquired
Corporation, disregarding for these purposes (x) any other qualification or
exception for, or reference to, materiality in any such representation or
warranty or (y) any other use of the terms “material,” “materially,” “in all
material respects,” “Material Adverse Change,” “Material Adverse Effect” or
similar terms or phrases in any such representation or warranty, and BancGroup
shall have received a certificate, dated the Closing Date, signed on behalf
of
the Acquired Corporation by the Chief Executive Officer and the Chief Financial
Officer of the Acquired Corporation, to such effect.
10.2
Performance of Obligations of the Acquired Corporation.
The
Acquired Corporation shall have performed in all material respects all
obligations required to be performed by it at or prior to the Closing Date
under
this Agreement; and BancGroup shall have received a certificate, dated the
Closing Date, signed on behalf of the Acquired Corporation by the Chief
Executive Officer and the Chief Financial Officer of the Acquired Corporation,
to such effect.
10.3 Closing
Certificate.
In
addition to any other deliveries required to be delivered hereunder, BancGroup
shall have received a certificate from Acquired Corporation executed by the
President or Vice President and from the Secretary or Assistant Secretary of
Acquired Corporation dated as of the Closing certifying that:
(a) the
Board
of Directors of Acquired Corporation has duly adopted resolutions approving
the
substantive terms of this Agreement and authorizing the consummation of the
transactions contemplated by this Agreement and such resolutions have not been
amended or modified and remain in full force and effect;
(b) the
shareholders of Acquired Corporation have duly adopted resolutions approving
the
substantive terms of the Merger and the transactions contemplated thereby and
such resolutions have not been amended or modified and remain in full force
and
effect;
(c) each
person executing this Agreement on behalf of Acquired Corporation is an officer
of Acquired Corporation holding the office or offices specified therein and
the
signature of each person set forth on such certificate is his or her genuine
signature;
(d) the
articles of incorporation and bylaws of Acquired Corporation and the Bank
referenced in section 5.8 hereof remain in full force and effect and have not
been amended or modified since the date hereof;
38
10.4 [Reserved]
10.5 Controlling
Shareholders.
Each
outside director and each person listed on Schedule 6.2(e) hereof shall have
executed and delivered an agreement satisfactory to BancGroup to the effect
that
such person shall not make a “distribution” (within the meaning of Rule 145) of
the Common Stock which he receives at the Effective Time and that such Common
Stock will be held subject to all applicable provisions of the 1933 Act and
the
rules and regulations of the SEC thereunder. Acquired Corporation recognizes
and
acknowledges that BancGroup Common Stock issued to such persons may bear a
legend evidencing the agreement described above.
10.6 Other
Matters.
There
shall have been furnished to counsel for BancGroup certified copies of such
corporate records of Acquired Corporation and copies of such other documents
as
such counsel may reasonably have requested for such purpose.
10.7 Material
Events.
There
shall have been no determination by the board of directors of BancGroup that
the
transactions contemplated by this Agreement have become impracticable because
of
any state of war, declaration of a banking moratorium in the United States
or
general suspension of trading on the NYSE or any exchange on which BancGroup
Common Stock may be traded.
10.8 Landlord’s
Consents.
Except
as set forth on Schedule 10.8, BancGroup shall have received any required
consents from any landlords to any property leased by any Acquired Corporation
Company.
TERMINATION
OF REPRESENTATIONS AND WARRANTIES
All
representations and warranties provided in Articles 4 and 5 of this Agreement
or
in any closing certificate pursuant to Articles 9 and 10 shall terminate and
be
extinguished at and shall not survive the Effective Time. All covenants,
agreements and undertakings required by this Agreement to be performed by any
Party hereto following the Effective Time shall survive such Effective Time
and
be binding upon such Party. If the Merger is not consummated, all
representations, warranties, obligations, covenants, or agreements hereunder
or
in any certificate delivered hereunder relating to the transaction which is
not
consummated shall be deemed to be terminated or extinguished, except that the
last sentence of Section 7.4, and Sections 6.2(c)(ii), 6.2(f)(iv), 7.2, 13.3,
Article 11, Article 12, Article 15, any applicable definitions of Article 14
and
the Confidentiality Agreement shall survive. Items disclosed in the Exhibits
and
Schedules attached hereto are incorporated into this Agreement and form a part
of the representations, warranties, covenants or agreements to which they
relate.
39
NOTICES
All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered by hand, by facsimile transmission,
by
registered or certified mail, postage pre-paid, or by courier or overnight
carrier, to the persons at the addresses set forth below (or at such other
address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so received:
(a) If
to
Acquired Corporation, to Xxxxxx X. Xxxxxx, Chairman and CEO, Commercial
Bankshares, Inc., 0000 Xxxxxxxxx 00xx
Xxxxxx,
Xxxxx, Xxxxxxx 00000, facsimile (000) 000-0000, with a copy to Xxxxxxx Xxxxxxx,
Akerman Senterfitt, Xxx Xxxxxxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx
00000, facsimile (000) 000-0000, or as may otherwise be specified in writing
by
Acquired Corporation to BancGroup.
(b) If
to
BancGroup, to Xxxxxx X. Xxxxxx, Chairman and CEO, and Xxxxx X. Xxxxx, Xx.
EVP-CFO, Colonial Corporate Campus, 000 Xxxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxxxx,
Xxxxxxx 00000, facsimile (000) 000-0000 , with copies to Xxxxx X. Xxxxx, Xx.,
EVP-General Counsel, Colonial Corporate Campus, 000 Xxxxxxxx Xxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxxxx 00000, facsimile (000) 000-0000, telephone (000) 000-0000
and to Xxxx X. Xxxxxxx, III, Esq., Miller, Hamilton, Xxxxxx & Xxxx, L.L.C.,
000 Xxxxxxxx Xxxx Xxxxxxxxx, Xxxxx X000, Xxxxxxxxxx, Xxxxxxx 00000, facsimile
(000) 000-0000, telephone (000) 000-0000, email XxxxXxxxxxx@xxxxxxx.xxx,
or as
may otherwise be specified in writing by BancGroup to Acquired
Corporation.
AMENDMENT
OR TERMINATION
13.1 Amendment.
This
Agreement may be amended by the mutual consent of BancGroup and Acquired
Corporation before or after approval of the transactions contemplated herein
by
the shareholders of Acquired Corporation.
13.2 Termination.
This
Agreement may be terminated at any time prior to or at the Effective Time
whether before or after action thereon by the shareholders of Acquired
Corporation, as follows:
(a) by
the
mutual consent of the respective boards of directors of Acquired Corporation
and
BancGroup;
(b) by
the
board of directors of either Party (provided that the terminating Party is
not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the
other Party of any representation or warranty contained in this Agreement which
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach and which breach would
provide the non-breaching Party the ability to refuse to consummate the Merger
under the standard set forth in section 10.1 of this Agreement in the case
of
BancGroup and section 9.1 of this Agreement in the case of Acquired
Corporation;
40
(c) by
the
board of directors of either Party (provided that the terminating Party is
not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the
other Party of any covenant or agreement contained in this Agreement which
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach, or if any of the
conditions to the obligations of such Party contained in this Agreement in
Article 9 as to Acquired Corporation or Article 10 as to BancGroup shall not
have been satisfied in full or waived; or
(d) by
the
board of directors of either BancGroup or Acquired Corporation if all
transactions contemplated by this Agreement shall not have been consummated
on
or prior to October 31, 2007, if the failure to consummate the transactions
provided for in this Agreement on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 13.2(d).
(e) without
further action by either Party, upon the execution by Acquired Corporation
of an
agreement which is legally binding on Acquired Corporation with any third party
(other than BancGroup or its Subsidiaries) with respect to an Acquisition
Proposal if, in connection therewith, BancGroup will have the right to demand
the payment of the sum described in section 6.2(c)(ii) by the Acquired
Corporation.
13.3 Damages.
In the
event of termination pursuant to section 13.2, this Agreement shall become
void
and have no effect other than as set forth in section 6.2(c)(ii) and except
as
provided in Article 11, and except that Acquired Corporation and BancGroup
shall
be liable for actual damages (but not indirect, special or consequential
damages) for any willful breach of a warranty, representation, covenant or
other
agreement contained in this Agreement.
DEFINITIONS
(a) The
following terms, which are capitalized in this Agreement, shall have the
meanings set forth below for the purpose of this Agreement:
|
Acquired
Corporation
|
Commercial
Bankshares, Inc.
|
|
Acquired
Corporation Company
|
Shall
mean Acquired Corporation, the Bank, any Subsidiary of Acquired
Corporation or the Bank, or any person or entity acquired as a Subsidiary
of Acquired Corporation or the Bank in the future and owned by Acquired
Corporation or the Bank at the Effective
Time.
|
|
Acquired
Corporation Options
|
Options
respecting the issuance of a maximum of 587,106 shares of Acquired
Corporation common stock pursuant to Acquired Corporation's stock
option
plans.
|
41
|
Acquired
Corporation Stock
|
Shares
of common stock, par value $0.08 per share, of Acquired
Corporation.
|
|
Acquisition
Proposal
|
Shall
mean, with respect to a Party, any tender offer or exchange offer
or any
proposal for a merger, acquisition of all of the stock or assets
of, or
other business combination involving such Party or any of its Subsidiaries
or the acquisition of a substantial equity interest in, or substantial
portion of the assets of, such Party or any of its Subsidiaries.
|
|
Agencies
|
Shall
mean, collectively, the Federal Trade Commission, the United States
Department of Justice, the Board of the Governors of the Federal
Reserve
System, the Federal Deposit Insurance Corporation, the Office of
Thrift
Supervision, all state regulatory agencies having jurisdiction over
the
Parties and their respective Subsidiaries, HUD, the VA, the FHA,
the GNMA,
the FNMA, the FHLMC, the NYSE, and the
SEC.
|
|
Agreement
|
Shall
mean this Agreement and Plan of Merger and the Exhibits and Schedules
delivered pursuant hereto and incorporated herein by reference.
|
|
Assets
|
Of
a Person shall mean all of the assets, properties, businesses and
rights
of such Person of every kind, nature, character and description,
whether
real, personal or mixed, tangible or intangible, accrued or contingent,
or
otherwise relating to or utilized in such Person's business, directly
or
indirectly, in whole or in part, whether or not carried on the books
and
records of such Person, and whether or not owned in the name of such
Person or any Affiliate of such Person and wherever
located.
|
|
BancGroup
|
The
Colonial BancGroup, Inc., a Delaware corporation with its principal
offices in Montgomery, Alabama.
|
|
Bank
|
Commercial
Bank of Florida, a state chartered commercial
bank.
|
|
Closing
|
The
submission of the certificates of officers, legal opinions and other
actions required to be taken in order to consummate the Merger in
accordance with this Agreement.
|
42
|
Code
|
The
Internal Revenue Code of 1986, as
amended.
|
|
Common
Stock
|
BancGroup's
Common Stock authorized and defined in the restated certificate of
incorporation of BancGroup, as
amended.
|
|
Confidentiality
Agreement
|
Confidentiality
Agreement executed by BancGroup and Acquired Corporation on or around
November 14, 2006.
|
|
Consent
|
Any
consent, approval, authorization, clearance, exemption, waiver, or
similar
affirmation by any Person pursuant to any Contract, Law, Order, or
Permit.
|
|
Contract
|
Any
written or oral agreement, arrangement, authorization, commitment,
contract, indenture, instrument, lease, obligation, plan, practice,
restriction, understanding or undertaking of any kind or character,
or
other document to which any Person is a party or that is binding
on any
Person or its capital stock, Assets or
business.
|
|
Default
|
Shall
mean (i) any breach or violation of or default under any Contract,
Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute
a breach
or violation of or default under any Contract, Order or Permit, or
(iii) any occurrence of any event that with or without the passage of
time or the giving of notice would give rise to a right to terminate
or
revoke, change the current terms of, or renegotiate, or to accelerate,
increase, or impose any Liability under, any Contract, Order or
Permit.
|
|
DGCL
|
The
Delaware General Corporation Law.
|
|
Effective
Time
|
Means
the date and time at which the Merger becomes effective as defined
in
section 2.7 hereof.
|
|
Environmental
Laws
|
Means
the laws, regulations and governmental requirements referred to in
section
5.23 hereof.
|
|
ERISA
|
The
Employee Retirement Income Security Act of 1974, as
amended.
|
|
Executive
Officers
|
Shall
mean the “Named Executive Officers” as that term is defined by SEC
regulation and Schedule 14(a).
|
43
|
Exhibits
|
A
through C, inclusive, shall mean the Exhibits so marked, copies of
which
are attached to this Agreement. Such Exhibits are hereby incorporated
by
reference herein and made a part hereof, and may be referred to in
this
Agreement and any other related instrument or document without being
attached hereto.
|
|
FBCA
|
Florida
Business Corporation Act
|
|
GAAP
|
Means
generally accepted accounting principles applicable to banks and
bank
holding companies consistently applied during the periods
involved.
|
|
Knowledge
|
Means
the actual knowledge of the Executive Officers of BancGroup, in the
case
of knowledge of BancGroup. In the case of Acquired Corporation it
means
the actual knowledge of the Executive Officers of Acquired
Corporation.
|
|
Law
|
Any
code, law, ordinance, regulation, reporting or licensing requirement,
rule, or statute applicable to a Person or its Assets, Liabilities
or
business, including, without limitation, those promulgated, interpreted
or
enforced by any Agency.
|
|
Liability
|
Any
direct or indirect, primary or secondary, liability, indebtedness,
obligation, penalty, cost or expense (including, without limitation,
costs
of investigation, collection and defense), deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes,
bills,
checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or
otherwise.
|
44
|
Lien
|
Any
conditional sale agreement, default of title, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other
security arrangement, or any adverse right or interest, charge, or
claim
of any nature whatsoever of, on, or with respect to any property
or
property interest, other than (i) Liens for current property Taxes
not yet due and payable, (ii) for depository institution Subsidiaries
of a Party, pledges to secure deposits and other Liens incurred in
the
ordinary course of the banking business, (iii) Liens in the form of
easements and restrictive covenants on real property which do not
materially adversely affect the use of such property by the current
owner
thereof, and (iv) Liens which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on a
Party.
|
|
Litigation
|
Any
action, arbitration, complaint, criminal prosecution, governmental
or
other examination or investigation, hearing, inquiry, administrative
or
other proceeding but shall not include regular, periodic examinations
of
depository institutions and their Affiliates by Regulatory Authorities,
relating to or affecting a Party, its business, its Assets (including
Contracts related to it), or the transactions contemplated by this
Agreement.
|
|
Loan
Property
|
Any
property owned by the Party in question or by any of its Subsidiaries
or
in which such Party or Subsidiary holds a security interest, and,
where
required by the context, includes the owner or operator of such property,
but only with respect to such
property.
|
|
Loss
|
Any
and all direct or indirect payments, obligations, recoveries,
deficiencies, fines, penalties, interest, assessments, losses, diminution
in the value of Assets, damages, punitive, exemplary or consequential
damages (including, but not limited to, lost income and profits and
interruptions of business), liabilities, costs, expenses (including
without limitation, reasonable attorneys' fees and expenses,
and consultant's fees and other costs of defense or investigation),
and interest on any amount payable to a third party as a result of
the
foregoing.
|
|
Material
|
For
purposes of this Agreement shall be determined in light of the facts
and
circumstances of the matter in question; provided that any specific
monetary amount stated in this Agreement shall determine materiality
in
that instance.
|
45
|
Material
Adverse Effect
|
On
a Party shall mean an event, change or occurrence which has a material
adverse impact on (i) the financial position, Assets, business, or
results
of operations of such Party and its Subsidiaries, taken as a whole,
or
(ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "material adverse effect"
shall not be deemed to include the impact of commercially reasonable:
(a)
expenses incurred, accrued or to be incurred in connection with the
transaction contemplated hereby (b) changes in banking and similar
laws of
general applicability or interpretations thereof by courts or governmental
authorities, (c) changes in generally accepted accounting principles
or
regulatory accounting principles generally applicable to banks and
their
holding companies, (d) actions and omissions of a Party (or any of
its
Subsidiaries) taken with the prior informed consent of the other
Party in
contemplation of the transactions contemplated hereby, (e) the Merger
(including the announcement thereof) and compliance with the provisions
of
this Agreement on the operating performance of the Parties, (f) changes
in
conditions in the U.S. or global economy or capital or financial
markets
generally, or (g) acts of war, sabotage or terrorism, or any
escalation or worsening of any such acts of war, sabotage or terrorism
threatened or underway as of the date of this
Agreement.
|
|
Merger
|
The
merger of Acquired Corporation with BancGroup as contemplated in
this
Agreement.
|
|
Merger
Consideration
|
The
consideration as provided in Section 3.1(a).
|
|
NYSE
|
The
New York Stock Exchange.
|
|
Order
|
Any
administrative decision or award, decree, injunction, judgment, order,
quasi-judicial decision or award, ruling, or writ of any federal,
state,
local or foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Agency.
|
46
|
Party
|
Shall
mean Acquired Corporation or BancGroup, and “Parties” shall mean both
Acquired Corporation and BancGroup.
|
|
Permit
|
Any
federal, state, local, and foreign governmental appro-val, authorization,
certificate, easement, filing, franchise, license, notice, permit,
or
right to which any Person is a party or that is or may be binding
upon or
inure to the benefit of any Person or its securities, Assets or
business.
|
|
Person
|
A
natural person or any legal, commercial or governmental entity, such
as,
but not limited to, a corporation, general partnership, joint venture,
limited partnership, limited liability company, trust, business
association, group acting in concert, or any person acting in a
representative capacity.
|
|
Proxy
Statement
|
The
proxy statement used by Acquired Corporation to solicit the approval
of
its shareholders of the transactions contemplated by this Agreement,
which
shall include the prospectus of BancGroup relating to the issuance
of the
BancGroup Common Stock to the shareholders of Acquired
Corporation.
|
|
Registration
Statement
|
The
registration statement on Form S-4, or such other appropriate form,
to be
filed with the SEC by BancGroup, to register the shares of BancGroup
Common Stock offered to shareholders of Acquired Corporation pursuant
to
this Agreement, including the Proxy
Statement.
|
|
Resulting
Corporation
|
BancGroup,
as the surviving corporation resulting from the Merger.
|
|
SEC
|
United
States Securities and Exchange
Commission.
|
|
Shareholders
Meeting
|
The
special meeting of shareholders of Acquired Corporation called to
approve
the transactions contemplated by this
Agreement.
|
|
Significant
Subsidiaries
|
Shall
have the same definition as it does in Section 1-02 of Regulation
S-X
under the Securities Act of 1933, as amended.
|
47
|
Subsidiaries
|
Shall
mean all those corporations, banks, associations, or other entities
of
which the entity in question owns or controls 5% or more of the
outstanding equity securities either directly or through an unbroken
chain
of entities as to each of which 5% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided,
however, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are
owned or
controlled in a fiduciary capacity.
|
|
Tax
or Taxes
|
Means
any federal, state, county, local, foreign, and other taxes, assessments,
charges, fares, and impositions, including interest and penalties
thereon
or with respect thereto.
|
|
1933
Act
|
The
Securities Act of 1933, as amended.
|
|
1934
Act
|
The
Securities Exchange Act of 1934, as
amended.
|
MISCELLANEOUS
15.1 Expenses.
(a)
Except as otherwise provided in this Section 15.1, each of the Parties shall
bear and pay all direct costs and expenses incurred by it or on its behalf
in
connection with the transactions contemplated hereunder, including filing,
registration and application fees, printing fees, and fees and expenses of
its
own financial or other consultants, investment bankers, accountants, and
counsel, except that BancGroup shall bear and pay the filing fees payable in
connection with any Agency approvals and the Registration Statement and printing
costs incurred in connection with the printing of the Registration
Statement.
(b) Nothing
contained in this Section 15.1 shall constitute or shall be deemed to constitute
liquidated damages for the willful breach by a Party of the terms of this
Agreement or otherwise limit the rights of the nonbreaching Party.
15.2 Benefit
and Assignment.
Except
as expressly contemplated hereby, neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any Party hereto
(whether by operation of Law or otherwise) without the prior written consent
of
the other Party. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the Parties and
their respective successors and assigns.
15.3 Governing
Law.
Except
to the extent the Laws of the State of Delaware apply to the Merger, this
Agreement shall be governed by, and construed in accordance with the Laws of
the
State of Florida without regard to any conflict of Laws.
15.4 Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed to
constitute an original. Each such counterpart shall become effective when one
counterpart has been signed by each Party thereto.
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15.5 Headings.
The
headings of the various articles and sections of this Agreement are for
convenience of reference only and shall not be deemed a part of this Agreement
or considered in construing the provisions thereof.
15.6 Severability.
Any
term or provision of this Agreement that is prohibited or unenforceable in
any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining terms
and provisions thereof or affecting the validity or enforceability of such
provision in any other jurisdiction, and if any term or provision of this
Agreement is held by any court of competent jurisdiction to be void, voidable,
invalid or unenforceable in any given circumstance or situation, then all other
terms and provisions, being severable, shall remain in full force and effect
in
such circumstance or situation and the term or provision shall remain valid
and
in effect in any other circumstances or situation, except if such omitted term
or provision would so materially adversely impact the economic benefits of
the
transaction to a Party as contemplated by this Agreement so as to render
inadvisable the consummation of the Merger.
15.7 Construction.
Use of
the masculine pronoun herein shall be deemed to refer to the feminine and neuter
genders and the use of singular references shall be deemed to include the plural
and vice versa, as appropriate. No inference in favor of or against any Party
shall be drawn from the fact that such Party or such Party's counsel has drafted
any portion of this Agreement.
15.8 Return
of Information.
In the
event of termination of this Agreement prior to the Effective Time, each Party
shall return to the other, without retaining copies thereof, all confidential
or
non-public documents, work papers and other materials obtained from the other
Party in connection with the transactions contemplated in this Agreement and
shall keep such information confidential, not disclose such information to
any
other person or entity, and not use such information in connection with its
business.
15.9 Equitable
Remedies.
The
parties hereto agree that, in the event of a breach of this Agreement by either
Party, the other Party may be without an adequate remedy at law owing to the
unique nature of the contemplated transactions. In recognition thereof, in
addition to (and not in lieu of) any remedies at law that may be available
to
the non-breaching Party, the non-breaching Party shall be entitled to obtain
equitable relief, including the remedies of specific performance and injunction,
in the event of a breach of this Agreement by the other Party, and no attempt
on
the part of the non-breaching Party to obtain such equitable relief shall be
deemed to constitute an election of remedies by the non-breaching Party that
would preclude the non-breaching Party from obtaining any remedies at law to
which it would otherwise be entitled.
15.10 Attorneys’
Fees.
If any
Party hereto shall bring an action at law or in equity to enforce its rights
under this Agreement (including an action based upon a misrepresentation or
the
breach of any warranty, covenant, agreement or obligation contained herein),
the
prevailing Party in such action shall be entitled to recover from the other
Party its costs and expenses incurred in connection with such action (including
fees, disbursements and expenses of attorneys and costs of
investigation).
49
15.11 No
Waiver.
No
failure, delay or omission of or by any Party in exercising any right, power
or
remedy upon any breach or Default of any other Party shall impair any such
rights, powers or remedies of the Party not in breach or Default, nor shall
it
be construed to be a wavier of any such right, power or remedy, or an
acquiescence in any similar breach or Default; nor shall any waiver of any
single breach or Default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of
any kind or character on the part of any Party of any provisions of this
Agreement must be in writing and be executed by the Parties to this Agreement
and shall be effective only to the extent specifically set forth in such
writing.
15.12 Remedies
Cumulative.
All
remedies provided in this Agreement, by law or otherwise, shall be cumulative
and not alternative.
15.13 Entire
Contract.
This
Agreement, the Confidentiality Agreement and the documents and instruments
referred to herein constitute the entire contract between the parties to this
Agreement and supersede all other understandings with respect to the subject
matter of this Agreement
[Signatures
are on next page.]
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IN
WITNESS WHEREOF, Acquired Corporation and BancGroup have caused this Agreement
to be signed by their respective duly authorized officers as of the date first
above written.
|
ATTEST:
By:
Xxxxx X. Xxxxxxxxxxx
Its:
President and Secretary
(CORPORATE
SEAL)
|
COMMERCIAL
BANKSHARES, INC.
By:
Xxxxxx X. Xxxxxx
Its:
Chairman and CEO
|
|
ATTEST:
By:
Xxxxx X. Xxxxx, Xx.
Its:
Secretary
(CORPORATE
SEAL)
|
THE
COLONIAL BANCGROUP, INC.
By:
Xxxxxx X. Xxxxxx
Its:
Chairman and CEO
|
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