AGREEMENT AND PLAN OF MERGER
between
THE SOUTH FINANCIAL GROUP, INC.
and
POINTE FINANCIAL CORPORATION
Dated as of October 27, 2004
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 27,
2004, between The South Financial Group, Inc., a South Carolina corporation
("TSFG") and Pointe Financial Corporation, a Florida corporation ("PFC").
Recitals
The Boards of Directors of TSFG and PFC have determined that it is in the
best interests of their respective companies and their shareholders to
consummate the business combination transaction provided for herein in which PFC
will, subject to the terms and conditions set forth herein, merge (the "Merger")
with and into TSFG.
The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
Agreement
In consideration of the mutual covenants, representations, warranties and
agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. The following terms shall have the indicated definitions.
Acquisition Proposal. Any tender offer or exchange offer or any
proposal for a merger, reorganization, consolidation, share exchange,
recapitalization, liquidation, dissolution or other business combination
involving PFC or any proposal or offer to acquire a substantial equity interest
in, or a substantial portion of the assets of, PFC, other than the transaction
contemplated by this Agreement.
Articles of Merger. The articles of merger complying with the FBCA and
the SCBCA reflecting the merger of PFC with and into TSFG.
BHC Act. The Bank Holding Company Act of 1956, as amended.
DPC Shares. Shares of PFC Common Stock held by PFC, TSFG or any of
TSFG's Subsidiaries in respect of a debt previously contracted.
Environmental Laws. Any applicable federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
governmental entity relating to (1) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Materials. The term
Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et seq; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et seq; the
Toxic Substances Control Act, as amended, 15 U.S.C. ss.2601, et seq; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.11001, et seq;
the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; and all comparable state
and local laws, and (b) any common law (including without limitation common law
that may impose strict liability) that may impose liability or obligations for
injuries or damages due to the presence of or exposure to any Hazardous
Materials.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
Exchange Act. The Securities Exchange Act of 1934, as amended.
Exchange Agent. Registrar & Transfer Company or the successor stock
transfer agent of TSFG, which shall be responsible for the exchange of the
Merger Consideration for the PFC Common Stock.
FBCA. The Florida Business Corporation Act, as amended. FDIC. The
Federal Deposit Insurance Corporation.
Fair Market Value. The average of the last reported sale price per
share of the TSFG Common Stock as reported on the NASDAQ/NMS, or such other
national securities exchange on which the TSFG Common Stock is then traded if
not then reported on the NASDAQ/NMS (as reported in the Wall Street Journal or
another mutually agreeable authoritative source) for the ten consecutive trading
days immediately prior to the fifth business day prior to the Effective Time.
Federal Reserve Board. The Board of Governors of the Federal Reserve
System.
Federal Reserve Consent. The consent of the Federal Reserve Board
necessary to consummation of the Merger.
GAAP. Accounting principles generally accepted in the United States
consistently applied during the periods involved.
Governmental Entity. Any court, administrative agency or commission or
other governmental authority or instrumentality.
Hazardous Materials. Any chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or any other regulated substances or materials
regulated under Environmental Laws, which is or could be detrimental to human
health, safety or the environment.
IRS. The Internal Revenue Service.
Knowledge. With respect to PFC or TSFG, as the case may be, the actual
knowledge of any of the executive officers of such entity.
Loan Property. Any property in which PFC holds a security interest
(directly or indirectly through a participation), and, where required by the
context, such term means the owner or operator of such property.
Material Adverse Effect. With respect to TSFG or PFC, as the case may
be, a condition, event, change or occurrence that has a material adverse effect
on the business, results of operations or financial condition of such party and
its Subsidiaries taken as a whole, or the ability of the parties to consummate
the transactions contemplated hereby, in ease case other than any such effect
attributable to or resulting from (t) any change in banking or similar laws,
rules or regulations of general applicability or interpretations thereof by a
Governmental Entity, (u) any change in GAAP or regulatory accounting principles
applicable to banks, thrifts or their holding companies generally, (v) any
action or omission of the parties taken with the prior written consent of the
other parties hereto, (w) any events, conditions or trends in business or
financial conditions affecting the banking industry, (x) any change or
development in financial or securities markets or the economy in general,
including changes in interest rates, or (y) the announcement or execution of
this Agreement, including the consummation of the transactions contemplated
hereby.
Mercantile Bank. Mercantile Bank, a state-chartered, non-member bank
and wholly owned subsidiary of TSFG.
Merger Consideration. The Total Stock Amount and the Total Cash
Amount to be issued by TSFG upon conversion of the PFC Common Stock as provided
herein.
PFC Common Stock. The common stock, par value $0.01 per share, of PFC.
PFC Option Plans. Collectively, the 1994 Non-Statutory Stock Option
Plan and the 1998 Incentive Compensation and Stock Award Plan, as referenced in
PFC's SEC filings.
PFC Stock Certificate. A certificate, which previous to the Merger
represented any shares of PFC Common Stock.
Pointe Bank. Pointe Bank, a state-chartered, member bank and wholly-
owned subsidiary of PFC.
Regulatory Agencies. The Federal Reserve Board, the FDIC, any
applicable state banking commissions or any other state bank regulatory
authority and any applicable self-regulatory organization with jurisdiction
over the parties hereto or transactions contemplated herein.
Rights. Subscriptions, options, warrants, calls, commitments or
agreements of any character to purchase capital stock.
SCBCA. The South Carolina Business Corporation Act, as amended.
SEC. The Securities and Exchange Commission.
Subsidiary. The word "Subsidiary" (1) when used with respect to PFC
shall mean any corporation, partnership or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes, and (2) when used with respect to TSFG shall
mean each Subsidiary of TSFG that is a "Significant Subsidiary" within the
meaning of Rule 1-02 of Regulation S-X of the SEC.
Superior Proposal. With respect to PFC, any written Acquisition
Proposal made by a person other than TSFG which is for (i) (a) a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization or similar transaction involving PFC, (b) a sale, lease,
exchange, transfer, or other disposition of at least 50% of the assets of PFC,
in a single transaction or a series of related transactions, or (c) the
acquisition, directly or indirectly, by a person of beneficial ownership of 50%
or more of PFC Common Stock whether by merger, consolidation, share exchange,
business combination, tender, or exchange offer or otherwise, and (ii) which is
on terms which the Board of Directors of PFC in good faith concludes (after
consultation with its financial advisors and outside counsel) would, if
consummated, result in a transaction that (a) is more favorable to its
stockholders from a financial point of view, than the transactions contemplated
by this Agreement (b) is reasonably capable of being completed, and (c) that if
not accepted by PFC's Board of Directors, would result in a breach of the
fiduciary duties of the PFC Board of Directors.
Surviving Corporation. The surviving corporation to the Merger, which
shall be TSFG.
Taxes. Taxes shall mean all taxes, charges, fees, levies, penalties or
other assessments imposed by any United States federal, state, local or foreign
taxing authority, including, but not limited to income, excise, property, sales,
transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto.
Tax Return. Any return, report, information return or other document
(including any related or supporting information) with respect to Taxes.
Trust Account Shares. Shares of PFC Common Stock or TSFG Common Stock
held directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity by PFC, TSFG or their respective
subsidiaries for the benefit of third parties.
TSFG Common Stock. The common stock, par value $1.00 per share, of
TSFG.
1.2 Terms Defined Elsewhere. The capitalized terms set forth below are
defined in the following sections:
"Agreement" Preamble
"Benefit Agreements" Section 7.8(c)
"Closing" Section 10.1
"Closing Date" Section 10.1
"Code" Section 2.3
"Effective Time" Section 2.2
"Employment Agreements" Section 7.8(a)
"EP Agreement" Section 7.8(c)
"ERISA Affiliate" Section 4.13(a)
"Exchange Fund" Section 2.9
"Injunction" Section 8.1(e)
"KBW" Section 4.9
"Loans" Section 4.21(a)
"Maximum Amount" Section 7.9
"Merger" Recitals
"NASDAQ/NMS" Section 2.5(a)
"Plans" Section 4.13(a)
"PFC" Preamble
"PFC Contract" Section 4.16(a)
"PFC Director" Section 7.12
"PFC Disclosure Schedule" Section 3.1
"PFC Financial Statements" Section 4.8
"PFC Reports" Section 4.6
"Proxy Statement/Prospectus" Section 4.4
"Regulatory Agreement" Section 4.17
"Representatives" Section 7.3(a)
"Requisite Regulatory Approvals" Section 8.1(c)
"S-4" Section 4.14
"Securities Act" Section 2.12(b)
State Banking Approvals Section 4.4
"TSFG" Preamble
"TSFG's Counsel" Section 8.2(d)
"TSFG Disclosure Schedule" Section 3.1
"TSFG Financial Statements" Section 5.7
"TSFG Preferred Stock" Section 5.2
"TSFG Reports" Section 5.5
"Termination Fee Amount" Section 9.2(b)
"Transmittal Material" Section 2.5(b)
1.3 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrases "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date of this Agreement. No provision of this Agreement shall be
construed to require PFC, TSFG or any of their respective affiliates to take any
action that would violate any applicable law (including common law), rule or
regulation.
ARTICLE II
PLAN OF MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the FBCA and SCBCA, at the Effective Time, PFC shall merge with
and into TSFG. TSFG shall be the Surviving Corporation, and shall continue its
corporate existence under the laws of the State of South Carolina. The name of
the Surviving Corporation shall continue to be "The South Financial Group, Inc."
Upon consummation of the Merger, the separate corporate existence of PFC shall
terminate.
2.2 Effective Time and Effects of the Merger. Subject to the provisions of
this Agreement, on the Closing Date, the Articles of Merger shall be duly
prepared, executed and delivered for filing with the Secretaries of State of the
State of Florida and the State of South Carolina. The Merger shall occur no
later than five business days following the latest to be received of (i) the
Requisite Regulatory Approvals from applicable federal and state bank regulatory
authorities and expiration of applicable statutory waiting periods as a result
thereof and (ii) PFC stockholder approval of this Agreement (collectively, the
"PFC Approvals"); but in no event earlier than April 1, 2004 (the "Effective
Time"). The date which is the latest to occur of (i) or (ii) above shall be the
"PFC Approval Date." At and after the Effective Time, the Merger shall have the
effects set forth in the FBCA and SCBCA.
2.3 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code") and that this Agreement shall constitute a plan
of reorganization for the purposes of Sections 354 and 361 of the Code.
2.4 Conversion of PFC Common Stock.
(a) At the Effective Time, subject to Section 2.10(e), each share of
PFC Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares of PFC Common Stock held directly or indirectly by PFC, TSFG
or any of TSFG's Subsidiaries (except for Trust Account Shares and DPC Shares))
shall, by virtue of this Agreement and without any action on the part of the
holder thereof, be converted into and exchangeable for the right to receive, at
the election of the holder thereof as provided in and subject to the provisions
of Section 2.5, either (i) a number of shares of TSFG common stock equal to the
Per Share Stock Consideration or (ii) cash in an amount equal to the Per Share
Consideration (the "Per Share Cash Consideration".
For purposes of Section 2.4(a), 2.5 and otherwise in this Agreement:
Aggregate Consideration means the sum of (x) the Total Stock
Consideration and (y) the Total Cash Amount.
Cash Percentage means the quotient, rounded to the nearest thousandth,
obtained by dividing (A) the quotient obtained by dividing the Total Cash
Amount by the Per Share Consideration, by (B) the total number of shares of PFC
Common Stock outstanding as of the close of business on the Determination Date.
Common Stock Deemed Outstanding means the sum of (x) the total number
of shares of PFC Common Stock outstanding as of the close of business on the
Determination Date and (y) the Total Outstanding Options.
Final TSFG Stock Price means the average of the closing sale prices of
TSFG Common Stock as reported on the Nasdaq Stock Market's National Market (the
"NASDAQ/NMS"), or such other national securities exchange on which the TSEG
Common Stock is then traded if not then reported on the NASDAQ/NMS, during the
Valuation Period.
Per Share Stock Consideration means the quotient, rounded to the
nearest ten-thousandth, obtained by dividing the Per Share Consideration by the
Final TSFG Stock Price.
Per Share Consideration means the quotient, rounded to the nearest
ten-thousandth, obtained by dividing the Aggregate Consideration by the Common
Stock Deemed Outstanding.
Stock Percentage means the amount equal to one (1) minus the Cash
Percentage.
Total Stock Consideration means the product obtained by multiplying (x)
the Total Stock Amount and (y) the Final TSFG Stock Price.
Total Cash Amount means an amount equal to $24,493,075.
Total Outstanding Options means the number of shares of PFC Common
Stock issuable upon exercise of all options granted by the Company to purchase
shares of PFC Common Stock pursuant to the PFC Option Plan and outstanding as of
the close of business on the Determination Date.
Total Stock Amount means 2,554,022 shares.
Valuation Period means the ten consecutive trading days during which
the shares of TSFG Common Stock are traded on the NASDAQ/NMS ending on the third
calendar day immediately prior to the Effective Time (such day, the
"Determination Date").
(b) All of the shares of PFC Common Stock converted into the Per Share
Consideration pursuant to this Article II shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist, and each holder of
PFC Stock Certificates shall thereafter cease to have any rights with respect to
such securities, except the right to receive for each share (i) the Per Share
Consideration, (ii) any dividends and other distributions in accordance with
Section 2.10(b) hereof, and (iii) any cash in lieu of fractional shares pursuant
to Section 2.10(e).
(c) If, between the date hereof and the Effective Time, (i) the shares
of TSFG Common Stock shall be changed (or TSFG establishes a record date for
changing such shares which is prior to the Effective Time) into a different
number or class of shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, (ii) a stock dividend
shall be declared (or TSFG establishes a record date for such dividend which is
prior to the Effective Time) in respect of TSFG Common Stock, or (iii) any
distribution is made (or TSFG establishes a record date for such distribution
which is prior to the Effective Time) in respect of TSFG Common Stock other than
a regular quarterly cash dividend consistent with past practice, proportionate
adjustments shall be made to the Per Share Cash Consideration and the Per Share
Stock Consideration.
(d) At the Effective Time, all shares of PFC Common Stock that are
owned directly or indirectly by PFC, TSFG or any of TSFG's Subsidiaries (other
than Trust Account Shares and DPC Shares) shall be cancelled and shall cease to
exist and no stock of TSFG, cash or other consideration shall be delivered in
exchange therefor. All shares of TSFG Common Stock that are owned by PFC (other
than Trust Account Shares and DPC Shares) shall be cancelled.
2.5 Election Procedures.
(a) An election form in such form as TSFG and PFC shall mutually agree
(the "Election Form") shall be mailed concurrent with the Proxy
Statement/Prospectus. Customary transmittal materials (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of PFC Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent) in such form as TSFG and
PFC shall mutually agree (the "Transmittal Materials") shall be mailed at least
35 days prior to the Election Deadline (as defined below) or on such other date
as PFC and TSFG shall mutually agree (the "Mailing Date") to each holder of
record of PFC Common Stock as of the close of business on the fifth business day
prior to the Mailing Date (the "Election Form Record Date").
(b) Each Election Form shall permit the holder (or the beneficial owner
through appropriate and customary documentation and instructions) to elect to
receive (i) the Per Share Stock Consideration in respect of all of such holder's
PFC Common Stock ("Stock Election Shares"), (ii) the Per Share Cash
Consideration in respect of all of such holder's PFC Common Stock ("Cash
Election Shares"), (iii) the Per Share Stock Consideration in respect of that
portion of such holder's shares of PFC Common Stock equal to the Stock
Percentage, rounded to the nearest whole share (the "Mixed Stock Shares"), and
the Per Share Cash Consideration in respect of that portion of such holder's
shares of PFC Common Stock equal to the Cash Percentage, rounded to the nearest
whole share (the "Mixed Cash Shares," and together with the Mixed Stock Shares,
the "Mixed Election Shares"), or (iv) to make no election with respect to such
holder's PFC Common Stock ("No Election Shares"). Any PFC Common Stock with
respect to which the Exchange Agent has not received an effective, properly
completed Election Form on or before 5:00 p.m., on the Election Deadline shall
also be deemed to be "No Election Shares". The "Election Deadline" shall be 5:00
p.m. on the first business day following the date on which the PFC stockholder
meeting at which this Agreement will be considered is called to occur (or such
other date as TSFG and PFC may mutually agree).
(c) TSFG shall make available one or more Election Forms as may
reasonably be requested from time to time by all persons who become holders (or
beneficial owners) of PFC Common Stock between the Election Form Record Date and
the close of business on the business day prior to the Election Deadline, and
PFC shall provide to the Exchange Agent all information reasonably necessary for
it to perform as specified herein.
(d) Any such election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election Form
by the Election Deadline. An Election Form shall be deemed properly completed
only if accompanied by one or more certificates (or customary affidavits and
indemnification regarding the loss or destruction of such certificates or the
guaranteed delivery of such certificates) representing all shares of PFC Common
Stock covered by such Election Form, together with duly executed transmittal
materials included in the Election Form. Any Election Form may be revoked or
changed by the person submitting such Election Form at or prior to the Election
Deadline. In the event an Election Form is revoked prior to the Election
Deadline and a replacement Election Form as to the applicable PFC Common Stock
is not submitted prior to the Election Deadline, the shares of PFC Common Stock
represented by such Election Form shall become No Election Shares and TSFG shall
cause the certificates representing PFC Common Stock to be promptly returned
without charge to the Person submitting the Election Form upon written request
to that effect from the holder who submitted the Election Form. Subject to the
terms of this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in the
Election Forms, and any good faith decisions of TSFG regarding such matters
shall be binding and conclusive. None of PFC, TSFG or the Exchange Agent shall
be under any obligation to notify any person of any defect in an Election Form.
(e) Within ten business days after the Election Deadline, unless the
Effective Time has not yet occurred, in which case as soon thereafter as
practicable, TSFG shall cause the Exchange Agent to effect the allocation among
the holders of PFC Common Stock of rights to receive TSFG Common Stock or cash
in the Merger in accordance with the Election Forms as follows:
(i) Cash Election Shares and Mixed Cash Shares More Than Total
Cash Amount. If the aggregate cash amount that would be paid upon the
conversion in the Merger of the Cash Election Shares and the Mixed Cash
Shares is greater than the Total Cash Amount, then:
(A) all Mixed Stock Shares, Stock Election Shares and
No Election Shares shall be converted into the right to
receive the Per Share Stock Consideration,
(B) the Exchange Agent shall then select from among
the Cash Election Shares, by a pro rata selection process, a
sufficient number of shares ("Stock Designated Shares") such
that the aggregate cash amount that will be paid in the Merger
equals as closely as practicable the Total Cash Amount, and
all Stock Designated Shares shall be converted into the right
to receive the Per Share Stock Consideration, and
(C) the Cash Election Shares that are not Stock
Designated Shares and all Mixed Cash Shares will be converted
into the right to receive the Per Share Cash Consideration.
(ii) Cash Election Shares Plus Mixed Cash Shares Less Than
Total Cash Amount. If the aggregate cash amount that would be paid upon
conversion in the Merger of the Cash Election Shares and the Mixed Cash
Shares is less than the Total Cash Amount, then:
(A) all Cash Election Shares and Mixed Cash Shares
shall be converted into the right to receive the Per Share
Cash Consideration,
(B) the Exchange Agent shall then select first from
among the No Election Shares and then (if necessary) from
among the Stock Election Shares, by a pro rata selection
process, a sufficient number of shares ("Cash Designated
Shares") such that the aggregate cash amount that will be paid
in the Merger equals as closely as practicable the Total Cash
Amount, and all Cash Designated Shares shall be converted into
the right to receive the Per Share Cash Consideration, and
(C) the Stock Election Shares and the No Election
shares that are not Cash Designated Shares and all Mixed Stock
Shares shall be converted into the right to receive the Per
Share Stock Consideration.
(iii) Cash Election Shares and Mixed Cash Shares Equal to
Total Cash Amount. If the aggregate cash amount that would be paid upon
conversion in the Merger of the Cash Election Shares and the Mixed Cash
Shares is equal or nearly equal (as determined by the Exchange Agent)
to the Total Cash Amount, then subparagraphs (i) and (ii) above shall
not apply and all Cash Election Shares and Mixed Cash Shares shall be
converted into the right to receive the Per Share Cash Consideration
and all Stock Election Shares, Mixed Stock Shares and No Election
Shares shall be converted into the right to receive the Per Share Stock
Consideration.
(f) The pro rata selection process to be used by the Exchange Agent
shall consist of such equitable pro ration processes as shall be mutually
determined by TSFG and PFC.
2.6 TSFG Common Stock. Except for shares of TSFG Common Stock owned by PFC
(other than Trust Account Shares and DPC Shares), which shall be cancelled as
contemplated by Section 2.4 hereof, the shares of TSFG Common Stock issued and
outstanding immediately prior to the Effective Time shall be unaffected by the
Merger and such shares shall remain issued and outstanding.
2.7 Articles of Incorporation and Bylaws. At the Effective Time, the
Articles of Incorporation of TSFG, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation. At the Effective Time, the Bylaws of TSFG, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended in accordance with applicable law.
2.8 Directors and Executive Officers. At and after the Effective Time, the
directors of TSFG shall consist of all of the directors of TSFG serving
immediately prior to the Effective Time, each to hold office in accordance with
the Articles of Incorporation and Bylaws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified. The
executive officers of TSFG immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, each to hold office in accordance with
the Articles of Incorporation and Bylaws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified.
2.9 TSFG to Make Shares Available. At or prior to the Effective Time, TSFG
shall deposit, or shall cause to be deposited with the Exchange Agent, for
exchange in accordance with this Article II, (i) certificates representing the
shares of TSFG Common Stock to be issued pursuant to Section 2.4 and Section
2.10(a) in exchange for outstanding shares of PFC Common Stock, (ii) such cash
as shall be necessary to pay the Per Share Cash Consideration in accordance with
Section 2.4 and 2.10(a) hereof, and (iii) the cash in lieu of fractional shares
to be paid in accordance with Section 2.10(e) hereof. Such cash and certificates
for shares of TSFG Common Stock, together with any dividends or distributions
with respect thereto, are hereinafter referred to as the "Exchange Fund."
2.10 Exchange of Shares.
(a) As soon as practicable after the Effective Time, and in any event
within seven business days after the Effective Time, or otherwise as may be
agreed upon by the parties, the Exchange Agent shall mail to each holder of
record of PFC Stock Certificates at the Effective Time, a form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the PFC Stock Certificates shall pass, only upon delivery of
the PFC Stock Certificates, to the Exchange Agent, and (ii) shall be subject to
the reasonable approval of PFC) and instructions for use in effecting the
surrender of the PFC Stock Certificates in exchange for Merger Consideration.
Upon surrender of PFC Stock Certificates for exchange and cancellation to the
Exchange Agent, together with a properly executed letter of transmittal, the
holder of such PFC Stock Certificates shall be entitled to receive in exchange
therefor (x) a certificate representing that number of whole shares of TSFG
Common Stock which such holder of PFC Common Stock became entitled to receive
pursuant to the provisions of Article II hereof and (y) a check representing the
aggregate Per Share Cash Consideration and/or the amount of cash in lieu of
fractional shares, if any, which such holder has the right to receive in respect
of the PFC Stock Certificates surrendered pursuant to the provisions of Article
I hereof, and the PFC Stock Certificates so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the Per Share Cash
Consideration, on the cash in lieu of fractional shares or the unpaid dividends
and distributions, if any, payable to holders of PFC Stock Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to TSFG Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered PFC Stock Certificate
until the holder thereof shall surrender such PFC Stock Certificate in
accordance with this Article II. After the surrender of a PFC Stock Certificate
in accordance with this Article II, the record holder thereof shall be entitled
to receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to shares of TSFG
Common Stock represented by such PFC Stock Certificate.
(c) If any certificate representing shares of TSFG Common Stock is to
be issued in a name other than that in which the PFC Stock Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the PFC Stock Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer) and otherwise
in proper form for transfer, and that the person requesting such exchange shall
pay to the Exchange Agent in advance any transfer or other taxes required by
reason of the issuance of a certificate representing shares of TSFG Common Stock
in any name other than that of the registered holder of the PFC Stock
Certificate surrendered, or required for any other reason connected to such
transfer, or shall establish to the reasonable satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of PFC of the shares of PFC Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, PFC Stock Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of TSFG Common Stock, as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of TSFG Common Stock shall
be issued upon the surrender for exchange of PFC Stock Certificates, no dividend
or distribution with respect to TSFG Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
TSFG. In lieu of the issuance of any such fractional share, TSFG shall pay to
each former stockholder of PFC who otherwise would be entitled to receive a
fractional share of TSFG Common Stock an amount in cash determined by
multiplying (i) the Fair Market Value by (ii) the fraction of a share of TSFG
Common Stock which such holder would otherwise be entitled to receive pursuant
to Section 2.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of PFC for twelve months after the Effective Time shall be paid to
TSFG. Any stockholders of PFC who have not theretofore complied with this
Article II shall thereafter look only to TSFG for payment of the Per Share
Consideration and/or the unpaid dividends and distributions on the TSFG Common
Stock deliverable in respect of each share of PFC Common Stock such stockholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding the foregoing, none of TSFG, PFC, the Exchange
Agent or any other person shall be liable to any former holder of shares of PFC
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) In the event any PFC Stock Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such PFC Stock Certificate to be lost, stolen or destroyed and the
posting by such person of a bond in such amount as the Exchange Agent may direct
as indemnity against any claim that may be made against it with respect to such
PFC Stock Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed PFC Stock Certificate the Per Share Consideration
deliverable in respect thereof pursuant to this Agreement.
2.11 [Reserved]
2.12 Stock Options and Restricted Stock.
(a) At the Effective Time, each option granted by PFC under the PFC
Option Plans, which is outstanding and unexercised immediately prior thereto
shall cease to represent a right to acquire shares of PFC Common Stock and shall
be converted automatically into a fully-vested option to purchase shares of TSFG
Common Stock in an amount and at an exercise price determined as provided below
(and in accordance with the terms of the applicable PFC Option Plan), the
agreements evidencing grants thereunder, and any other agreements between PFC
and an optionee regarding PFC Options):
(1) the number of shares of TSFG Common Stock to be subject to
the new option shall be equal to the product of the number of shares of
PFC Common Stock subject to the original option immediately prior to
the Effective Time and the Per Share Stock Consideration, provided that
any fractional shares of TSFG Common Stock resulting from such
multiplication shall be rounded down to the nearest whole share; and
(2) the exercise price per share of TSFG Common Stock under
the new option shall be equal to the exercise price per share of PFC
Common Stock under the original option immediately prior to the
Effective Time divided by the Per Share Stock Consideration, provided
that such exercise price shall be rounded up to the nearest cent.
(b) Immediately prior to the Effective Time, each restricted stock
award granted by PFC that is held by any PFC employee or director will be deemed
fully vested, all restrictions deemed to lapse and all performance conditions
deemed fully achieved.
(c) Prior to the Effective Time, TSFG shall reserve for issuance the
number of shares of TSFG Common Stock necessary to satisfy TSFG's obligations
under this Section. TSFG shall file with the SEC no later than ten business days
after the Effective Time, a registration statement on an appropriate form under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of TSFG Common Stock subject to options to acquire TSFG Common Stock
issued pursuant to this Section, and shall use its best efforts to maintain the
current status of the prospectus contained therein, as well as comply with
applicable state securities or "blue sky" laws, for so long as such options
remain outstanding; provided, however, that TSFG shall only be required to file
and maintain the effectiveness of such registration statement with respect to
options that are eligible to be registered on a Form S-8.
(d) Prior to the Effective Time, TSFG and PFC shall take all such steps
as may be required to cause any acquisitions of TSFG equity securities
(including derivative securities with respect to any TSFG equity securities) and
dispositions of PFC equity securities (including derivative securities with
respect to any PFC equity securities) resulting from the transactions
contemplated by this Agreement by each individual who is anticipated to be
subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to TSFG or who is subject to the reporting requirements of Section 16(a)
of the Exchange Act with respect to PFC, to be exempt under Rule 16b-3
promulgated under the Exchange Act.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules. Prior to the execution and delivery of this
Agreement, PFC has delivered to TSFG, and TSFG has delivered to PFC, a schedule
(in the case of PFC, the "PFC Disclosure Schedule," and in the case of TSFG, the
"TSFG Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one
or more of such party's representations or warranties contained in Article IV,
in the case of PFC, or Article V, in the case of TSFG, or to one or more of such
party's covenants contained in Article VI (it being understood and agreed that
(i) if an item is properly set forth in one PFC Disclosure Schedule, it shall be
deemed to be set forth in any other relevant PFC Disclosure Schedule, and (ii)
if an item is properly set forth in one TSFG Disclosure Schedule, it shall be
deemed to be set forth in any other relevant TSFG Disclosure Schedule);
provided, however, that notwithstanding anything in this Agreement to the
contrary (a) no such item is required to be set forth in the Disclosure Schedule
as an exception to a representation or warranty if its absence would not result
in the related representation or warranty being deemed untrue or incorrect under
the standard established by Section 3.2, and (b) the mere inclusion of an item
in a Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by a party that such item represents a material
exception or material fact, event or circumstance or that such item has had or
would have a Material Adverse Effect with respect to either PFC or TSFG,
respectively.
3.2 Standards. No representation or warranty of PFC contained in Article IV
or of TSFG contained in Article V shall be deemed untrue or incorrect for any
purpose under this Agreement, and no party hereto shall be deemed to have
breached a representation or warranty for any purpose under this Agreement, in
any case as a consequence of the existence or absence of any fact, circumstance
or event unless such fact, circumstance or event, individually or when taken
together with all other facts, circumstances or events inconsistent with any
representations or warranties contained in Article IV, in the case of PFC, or
Article V, in the case of TSFG, has had or would have a Material Adverse Effect
with respect to PFC or TSFG, respectively.
3.3 Subsidiaries. Where the context permits, "TSFG" shall refer to TSFG and
each of its Subsidiaries and "PFC" shall refer to PFC and each of its
Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, PFC hereby represents and warrants to TSFG as
follows:
4.1 Corporate Organization. (a) PFC is a bank holding company duly
organized, validly existing and in good standing under the laws of the State of
Florida. PFC has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Articles of Incorporation and Bylaws of PFC, copies
of which have previously been made available to TSFG, are true and correct
copies of such documents as in effect as of the date hereof.
(b) Each Subsidiary of PFC is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization. Each Subsidiary of PFC has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary. The deposit accounts of each
Subsidiary of PFC that is a bank are insured by the FDIC through the Bank
Insurance Fund or the Savings Association Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid when due.
(c) PFC has no, and since December 31, 1998 PFC has not had any,
Subsidiaries other than those listed in Section 4.1(c) of the PFC Disclosure
Schedule, all of which are 100% owned. PFC neither owns nor controls, directly
or indirectly 5% or more of the outstanding equity securities, either directly
or indirectly, of any Person.
(d) Except as set forth on Section 4.1(d) of the PFC Disclosure
Schedule, the minute books of PFC contain true and correct records of all
meetings and other corporate actions held or taken since December 31, 2001 of
its stockholders and Board of Directors (including committees of the Board of
Directors).
4.2 Capitalization. The authorized capital stock of PFC consists of
5,000,000 shares of common stock, par value $0.01 per share, and 1,000,000
shares of preferred stock, par value $0.01 per share. As of the date hereof, (1)
there are 2,274,610 shares of PFC Common Stock issued and outstanding, (2) no
shares of preferred stock outstanding, and (3) 297,000 shares of PFC Common
Stock held by PFC as treasury stock. Except as set forth on Section 4.2 of the
PFC Disclosure Schedule, as of the date hereof, there were no shares of PFC
Common Stock reserved for issuance for any reason or purpose. All of the issued
and outstanding shares of PFC Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as set forth on
Section 4.2 of the PFC Disclosure Schedule, PFC does not have and is not bound
by any outstanding Rights calling for the purchase or issuance of any shares of
PFC Common Stock or any other equity security of PFC or any securities
representing the right to purchase or otherwise receive any shares of PFC Common
Stock or any other equity security of PFC. On September 30, 2004, PFC had
approximately 148 shareholders of record.
4.3 Authority. PFC has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of PFC. The Board of Directors of PFC has directed that this
Agreement and the transactions contemplated hereby be submitted to PFC's
stockholders for approval at a meeting of such stockholders and, except for the
adoption of this Agreement by the requisite vote of PFC's stockholders, no other
corporate proceedings on the part of PFC are necessary to approve this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by PFC and (assuming due authorization,
execution and delivery by TSFG) this Agreement constitutes a valid and binding
obligation of PFC, enforceable against PFC in accordance with its terms, except
as enforcement may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally.
4.4 Consents and Approvals. Except for (a) the filing with the SEC of the
S-4, including the proxy statement/prospectus therein relating to the meeting of
PFC's stockholders to be held in connection with the transactions contemplated
herein (the "Proxy Statement/Prospectus") and to register the shares of TSFG
Common Stock to be issued in connection with the transactions contemplated
hereto (including the shares of TSFG Common Stock to be issued in connection
with the new options referred to in Section 2.11 hereof and the SEC's
declaration of the effectiveness of the S-4, (b) the approval of this Agreement
by the requisite vote of the stockholders of PFC, (c) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act and
with the FDIC under the Bank Merger Act, Federal Deposit Insurance Act and the
rules and regulations of the FDIC, and approval of such applications and
notices, (d) the filing of such applications, filings, authorizations, orders
and approvals as may be required under applicable state law (the "State Banking
Approvals") and (e) any consents or approvals listed in Section 4.4 of the PFC
Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are required to be made by
PFC in connection with (1) the execution and delivery by PFC of this Agreement
or (2) the consummation by PFC of the Merger and the other transactions
contemplated hereby.
4.5 No Violations. Except as may be set forth in Section 4.5 of the PFC
Disclosure Schedule, neither the execution and delivery of this Agreement by
PFC, nor the consummation by PFC of the transactions contemplated hereby, nor
compliance by PFC with any of the terms or provisions hereof, will (i) violate
any provision of the Articles of Incorporation or Bylaws of PFC, or (ii)
assuming that the consents and approvals referred to in Section 4.4 hereof are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to PFC or any of its
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of PFC under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which PFC is a party, or by which it or its
properties or assets may be bound or affected.
4.6 SEC Reports. PFC has previously made available to TSFG a true and
correct copy of each (a) final registration statement, prospectus, report,
schedule and definitive proxy statement filed since December 31, 2001 by PFC
with the SEC pursuant to the Securities Act or the Exchange Act (the "PFC
Reports") and (b) communication mailed by PFC to its shareholders since December
31, 2001, and no such PFC Report (when filed and at their respective effective
time, if applicable) or communication (when mailed) contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of an
earlier date. PFC has timely filed all PFC Reports and other documents required
to be filed by it under the Securities Act and the Exchange Act since December
31, 2001, and each such PFC Report and other documents complied in all material
respects with the rules and regulations applicable thereto when filed.
4.7 Regulatory Reports. PFC has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file since December 31, 2001 with the
Regulatory Agencies and has paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of PFC, no Regulatory Agency has
initiated any proceeding or, to the knowledge of PFC, investigation into the
business or operations of PFC since December 31, 2001. There is no unresolved
violation or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of PFC.
4.8 Financial Statements. PFC has previously made available to TSFG (1)
copies of the balance sheets of PFC as of December 31 for the fiscal years 2002
and 2003, and the related statements of earnings, stockholders' equity and cash
flows for the fiscal years 2001 through 2003, inclusive, as reported in PFC's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 with the
SEC under the Exchange Act, accompanied by the audit report of Hacker, Xxxxxxx &
Xxxxx, P.A., independent public accountants with respect to PFC, and (2) copies
of unaudited balance sheets and the related statements of earnings,
stockholders' equity and cash flows of PFC at and for the quarters ended March
31, 2003 and June 30, 2003 as reported in PFC's Quarterly Reports on Form 10-Q
for such quarters filed with the SEC under the Exchange Act, and will make
available on or before November 14 2004 copies of unaudited balance sheets and
the related statements of earnings, stockholders' equity and cash flows of PFC
at and for the three months ended September 30, 2004 (collectively, the "PFC
Financial Statements"). Subject, in the case of the unaudited statements, to
audit adjustments reasonable in nature and amount, the PFC Financial Statements
fairly present the financial position of PFC as of the dates indicated therein,
and when included in the Proxy Statement/Prospectus will fairly present the
results of the operations and financial position of PFC for the respective
fiscal periods or as of the respective dates therein set forth. Subject, in the
case of the unaudited statements, to audit adjustments reasonable in nature and
amount, each of the PFC Financial Statements (including the related notes, where
applicable) complies, and PFC's Financial Statements to be included in the Proxy
Statement/Prospectus after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been, and PFC's Financial Statements to be included in the
Proxy Statement/Prospectus will be, prepared in accordance with GAAP, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by the SEC. The books and records of PFC have been, and are being,
maintained in accordance with GAAP and any other applicable legal and accounting
requirements.
4.9 Broker's Fees. Neither PFC nor any of its officers or directors has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement, except that PFC has engaged, and will pay a fee
or commission to Xxxxx, Xxxxxxxx & Xxxxx ("KBW") in accordance with the terms of
a letter agreement between KBW and PFC, a true and correct copy of which has
been previously made available by PFC to TSFG.
4.10 Absence of Certain Changes or Events. (a) Except as disclosed in any
PFC Report filed with the SEC prior to the date hereof, since December 31, 2003,
(i) there has been no change or development or combination of changes or
developments which, individually or in the aggregate, has had a Material Adverse
Effect on PFC, and (ii) PFC has carried on its business in the ordinary course
of business consistent with past practices.
(b) Except as may be set forth in Section 4.10(b) of the PFC Disclosure
Schedule, since December 31, 2003 and solely with respect to executive officers
(senior vice president or above) and PFC directors, PFC has not (1) increased
the base salary, incentive compensation targets, or pension benefits, or
materially increased other fringe benefits or perquisites payable to any such
person from the amount thereof in effect as of December 31, 2003, (2) granted
any severance or termination pay to any such person or entered into any contract
to make or grant any severance or termination pay to such person, (3) paid any
bonus to any such person or (4) entered into any employment- or
compensation-related agreement with any such person.
4.11 Legal Proceedings. Except as disclosed in any PFC Report, (a) PFC is
not a party to any, and there are no pending or, to PFC's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against PFC or
challenging the validity or propriety of the transactions contemplated by this
Agreement and (b) there is no injunction, order, judgment or decree imposed upon
PFC or its assets.
4.12 Taxes. PFC has (i) duly and timely filed (including applicable
extensions granted without penalty) all material Tax Returns required to be
filed at or prior to the Effective Time, and all such Tax Returns are true and
correct, and (ii) paid in full or made adequate provision in the financial
statements of PFC (in accordance with GAAP) for all material Taxes shown to be
due on such Tax Returns other than taxes (a) which (x) are not yet delinquent or
(y) are being contested in good faith and set forth in Section 4.12 of the PFC
Disclosure Schedule and (b) which have not been finally determined. (i) As of
the date hereof PFC has not requested any extension of time within which to file
any Tax Returns in respect of any fiscal year which have not since been filed
and no request for waivers of the time to assess any Taxes are pending or
outstanding, and (ii) as of the date hereof, with respect to each taxable period
of PFC, the federal and state income Tax Returns of PFC have not been audited by
the IRS or appropriate state tax authorities.
4.13 Employees. (a) Section 4.13(a) of the PFC Disclosure Schedule sets
forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of ERISA; "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment, termination or
severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by PFC, any of its Subsidiaries
or by any trade or business, whether or not incorporated (an "ERISA Affiliate"),
all of which together with PFC would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of any employee or former
employee of PFC, any Subsidiary or any ERISA Affiliate (the "Plans"). No Plan is
subject to Title IV or Section 302 of ERISA or Section 412 of the Code.
(b) PFC has heretofore made available to TSFG with respect to each of
the Plans true and correct copies of each of the following documents, if
applicable: (i) the Plan document; (ii) the annual report (Form 5500 Series) for
such Plan for each of the last two years, (iii) the most recent determination
letter from the IRS for such Plan and (iv) the most recent summary plan
description and related summaries of material modifications.
(c) Each of the Plans is in compliance with the applicable provisions
of the Code and ERISA; each of the Plans intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable determination
letter from the IRS; neither PFC nor any ERISA Affiliate has incurred, directly
or indirectly, any liability to or on account of a Plan pursuant to Title IV of
ERISA; no Plan is a multiemployer plan within the meaning of section 4001(a)(3)
of ERISA and no Plan is a multiple employer plan within the meaning of Section
413 of the Code; and there are no pending, or to the knowledge of PFC,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto.
(d) Since December 31,2003, PFC has not (i) suffered any strike, work
stoppage, slow-down, or other labor disturbance, (ii) been a party to a
collective bargaining agreement, contract or other agreement or understanding
with a labor union or organization, or (iii) had any union organizing
activities.
(e) Section 4.13(e) of the PFC Disclosure Schedule sets forth all
employment contracts, plans, programs, agreements or other benefits that PFC is
a party to or bound by and which could be subject to Section 280G of the Code.
4.14 PFC Information. The information relating to PFC which is provided to
TSFG by PFC for inclusion in the registration statement on Form S-4 (the "S-4")
in which the Proxy Statement/Prospectus will be included as a prospectus, or in
any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy
Statement/Prospectus (to the extent it relates to PFC) will comply with the
provisions of the Exchange Act and the rules and regulations thereunder.
4.15 Compliance with Applicable Law. PFC holds, and at all times during the
past three years has held, all licenses, franchises, permits and authorizations
necessary for the lawful conduct of its businesses and has complied with and is
not in default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to PFC,
and PFC has not received notice of any violations of any of the above.
4.16 Certain Contracts. (a) Except as set forth in Section 4.16(a) of the
PFC Disclosure Schedule, PFC is not a party to or bound by any contract (whether
written or oral) (i) with respect to the employment of any directors, officers,
employees or consultants, (ii) which, upon the consummation of the transactions
contemplated by this Agreement, will (either alone or upon the occurrence of any
additional acts or events) result in any payment or benefits (whether of
severance pay or otherwise) becoming due, or the acceleration or vesting of any
rights to any payment or benefits, from TSFG, PFC, the Surviving Corporation or
any of their respective Subsidiaries to any officer, director, employee or
consultant of PFC, (iii) which is a material contract (as defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date hereof,
(iv) which is a consulting agreement (including data processing, software
programming and licensing contracts) not terminable on 90 days or less notice
involving the payment of more than $50,000 per annum, or (v) which materially
restricts the conduct of any line of business by PFC. Each contract,
arrangement, commitment or understanding of the type described in this Section
4.16(a), whether or not set forth in Section 4.16(a) of the PFC Disclosure
Schedule, is referred to herein as a "PFC Contract." PFC has previously
delivered or made available to TSFG true and correct copies of each contract,
arrangement, commitment or understanding of the type described in this Section
4.16(a).
(b) Each PFC Contract is valid and binding and in full force and
effect, (ii) PFC has performed all obligations required to be performed by it to
date under each PFC Contract, (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of PFC under any PFC Contract, and (iv) no other party to
any PFC Contract is, to the knowledge of PFC, in default in any respect
thereunder.
4.17 Agreements with Regulatory Agencies. Except as may be set forth in
Section 4.17 of the PFC Disclosure Schedule, PFC is not subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letter from,
or has adopted any board resolutions at the request of (each, whether or not set
forth on Section 4.17 of the PFC Disclosure Schedule, a "Regulatory Agreement"),
nor any Regulatory Agency that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has PFC been advised by any Regulatory Agency that it is
considering issuing or requesting any Regulatory Agreement.
4.18 Environmental Matters. Except as may be set forth in Section 4.18 of
the PFC Disclosure Schedule:
(a) PFC and, to the knowledge of PFC, each of the Loan Properties, are
in compliance with all Environmental Laws.
(b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of PFC, threatened, before any Governmental Entity or other forum in
which PFC, any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y) relating to
the release, threatened release or exposure to any Hazardous Material whether or
not occurring at or on a site owned, leased or operated by PFC or any Loan
Property.
(c) To the knowledge of PFC, during the period of (x) PFC's ownership
or operation of any of its current or former properties or (y) PFC's interest in
a Loan Property, there has been no release of Hazardous Materials in, on, under
or affecting any such property. To the knowledge of PFC, prior to the period of
(x) PFC's ownership or operation of any of its current or former properties or
(y) PFC's interest in a Loan Property, there was no release of Hazardous
Materials in, on, under or affecting any such property or Loan Property.
4.19 Opinion. Prior to the execution of this Agreement, PFC has received an
opinion from KBW to the effect that, as of the date thereof and based upon and
subject to the matters set forth therein, the Merger Consideration to be
received by the stockholders of PFC is fair to such stockholders from a
financial point of view. Such opinion has not been amended or rescinded as of
the date hereof.
4.20 Approvals. As of the date hereof, PFC knows of no fact or condition
relating to PFC that would prevent all regulatory approvals required for the
consummation of the transactions contemplated hereby (including, without
limitation, the Merger) from being obtained.
4.21 Loan Portfolio. (a) PFC is not a party to any written or oral (i) loan
agreement, note or borrowing arrangement (including, without limitation, leases,
credit enhancements, commitments, guarantees or interest-bearing assets)
(collectively, "Loans"), other than Loans the unpaid principal balance of which
does not exceed $100,000, under the terms of which the obligor was, as of
September 30, 2004, over 90 days delinquent in payment of principal or interest
or in default of any other provision, or (ii) Loan with any director, executive
officer or 5% or greater stockholder of PFC, or to the knowledge of PFC, any
person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.21 of the PFC Disclosure Schedule
sets forth (i) all of the Loans of PFC that as of September 30, 2004, were
classified by any bank examiner (whether regulatory or internal) as "Other Loans
Specially Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss,"
"Classified," "Criticized," "Credit Risk Assets," "Concerned Loans," "Watch
List" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the borrower
thereunder, and (ii) each asset of PFC that as of September 30, 2004, was
classified as "Other Real Estate Owned" and the book value thereof.
(b) Each Loan in original principal amount in excess of $100,000 (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
4.22 Property. Except as set forth in Section 4.22 of the PFC Disclosure
Schedule, PFC has good and marketable title free and clear of all liens,
encumbrances, mortgages, pledges, charges, defaults or equitable interests to
all of the properties and assets, real and personal, tangible or intangible,
which are reflected on the consolidated balance sheet of PFC as of December 31,
2003 or acquired after such date, except (i) liens for taxes not yet due and
payable or contested in good faith by appropriate proceedings, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the respective property as such property is used on
the date hereof, (iv) for dispositions of or encumbrances on such properties or
assets in the ordinary course of business or (v) mechanics', materialmen's,
workmen's, repairmen's, warehousemen's, carrier's and other similar liens and
encumbrances arising in the ordinary course of business. All leases pursuant to
which PFC, as lessee, leases real or personal property are valid and enforceable
in accordance with their respective terms and PFC is not, nor, to the knowledge
of PFC, is any other party thereto, in default thereunder.
4.23 Reorganization. As of the date hereof, PFC has no reason to believe
that the Merger will fail to qualify as a reorganization under Section 368(a) of
the Code.
4.24 State Takeover Laws and Charter Provisions. PFC has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any restrictive provision of (i) any applicable moratorium, control share, fair
price, business combination, or other anti-takeover laws and regulations, or
(ii) the Articles of Incorporation or Bylaws of PFC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TSFG
Subject to Article III, TSFG hereby represents and warrants to PFC as
follows:
5.1 Corporate Organization. (a) TSFG is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
Carolina. TSFG has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. TSFG is duly registered as a bank holding company under
the BHC Act. The Articles of Incorporation and Bylaws of TSFG, copies of which
have previously been made available to PFC, are true and correct copies of such
documents as in effect as of the date hereof.
(b) Each Subsidiary of TSFG is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization. Each Subsidiary of TSFG has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary. The deposit accounts of each
Subsidiary of TSFG that is a bank are insured by the FDIC through the Bank
Insurance Fund or the Savings Association Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid when due.
(c) The minute books of TSFG contain true and correct records of all
meetings and other corporate actions held or taken since December 31, 2001 of
its stockholders and Board of Directors (including committees of its Board of
Directors).
5.2 Capitalization. The authorized capital stock of TSFG consists of
200,000,000 shares of TSFG Common Stock and 10,000,000 shares of preferred
stock, no par value per share ("TSFG Preferred Stock"). As of the date hereof,
there were approximately 70,990,199 shares of TSFG Common Stock and no shares of
TSFG Preferred Stock issued and outstanding, and no shares of TSFG Common Stock
held in TSFG's treasury. All of the issued and outstanding shares of TSFG Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. The shares of TSFG Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at the
Effective Time, all such shares will be fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
5.3 Authority; No Violation. (a) TSFG has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of TSFG, and no other corporate
proceedings on the part of TSFG are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by TSFG and (assuming due authorization,
execution and delivery by PFC) this Agreement constitutes a valid and binding
obligation of TSFG, enforceable against TSFG in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by TSFG, nor
the consummation by TSFG of the transactions contemplated hereby, nor compliance
by TSFG with any of the terms or provisions hereof, will (i) violate any
provision of the Articles of Incorporation or Bylaws of TSFG, or the articles of
incorporation or bylaws or similar governing documents of any of its
Subsidiaries or (ii) assuming that the consents and approvals referred to in
Section 5.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to TSFG or
any of its Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
TSFG or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which TSFG or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected.
5.4 Consents and Approvals. Except for (a) the filing of applications
and/or notices, as applicable, with the Federal Reserve Board under the BHC Act,
and approval of such applications and notices, (b) the filing with the SEC and
declaration of effectiveness of the S-4, (c) the filing of the Articles of
Merger with the Florida Secretary of State and the South Carolina Secretary of
State, (d) the State Banking Approvals, including a merger application pursuant
to Chapter 655 of the Florida Code of Laws, (f) such filings and approvals as
are required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of TSFG Common
Stock pursuant to this Agreement, and (g) approval of the listing of the TSFG
Common Stock to be issued in the Merger on the NASDAQ/NMS, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are required to be made by TSFG in connection with (1) the
execution and delivery by TSFG of this Agreement and (2) the consummation by
TSFG of the Merger and the other transactions contemplated hereby.
5.5 SEC Reports. TSFG has previously made available to PFC a true and
correct copy of each (a) final registration statement, prospectus, report,
schedule and definitive proxy statement filed since December 31, 2001 by TSFG
with the SEC pursuant to the Securities Act or the Exchange Act (the "TSFG
Reports") and (b) communication mailed by TSFG to its shareholders since
December 31, 2001, and no such TSFG Report (when filed and at their respective
effective time, if applicable) or communication (when mailed) contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. TSFG has timely filed all TSFG Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act since December 31, 2001, and each such TSFG Report and other documents
complied in all material respects with the rules and regulations applicable
thereto when filed.
5.6 Regulatory Reports. TSFG has timely filed all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that it was required to file since December 31, 2001 with the
Regulatory Agencies and has paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of TSFG, no Regulatory Agency has
initiated any proceeding or, to the knowledge of TSFG, investigation into the
business or operations of TSFG since December 31, 2001. There is no unresolved
violation or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of TSFG.
5.7 Financial Statements. TSFG has previously made available to PFC (1)
copies of the consolidated balance sheets of TSFG and its Subsidiaries as of
December 31 for the fiscal years 2002 and 2003 and the related consolidated
statements of income, changes in shareholders' equity and comprehensive income,
and cash flows for the fiscal years 2001 through 2003, inclusive, as reported in
TSFG's Annual Report on Form 10-K for the fiscal year ended December 31, 2003
filed with the SEC under the Exchange Act, accompanied by the audit report of
KPMG LLP, independent public accountants with respect to TSFG, and (2) copies of
unaudited consolidated balance sheets and the related consolidated statements of
earnings, stockholders' equity and cash flows of TSFG at and for the quarters
ended March 31, 2003 and June 30, 2003 as reported in TSFG's Quarterly Reports
on Form 10-Q for such quarters filed with the SEC under the Exchange Act, and
will make available on or before November 9, 2004 copies of unaudited balance
sheets and the related statements of earnings, stockholders' equity and cash
flows of TSFG at and for the three months ended and September 30, 2004
(collectively, the "TSFG Financial Statements"). Subject, in the case of the
unaudited statements, to audit adjustments reasonable in nature and amount, the
TSFG Financial Statements fairly present the financial position of TSFG as of
the dates indicated therein, and when included in the Proxy Statement/Prospectus
will fairly present the results of the operations and financial position of TSFG
for the respective fiscal periods or as of the respective dates therein set
forth. Subject, in the case of the unaudited statements, to audit adjustments
reasonable in nature and amount, each of the TSFG Financial Statements
(including the related notes, where applicable) complies, and TSFG's Financial
Statements to be included in the Proxy Statement/Prospectus after the date
hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and
TSFG's Financial Statements to be included in the Proxy Statement/Prospectus
will be, prepared in accordance with GAAP, except as indicated in the notes
thereto or, in the case of unaudited statements, as permitted by the SEC. The
books and records of TSFG have been, and are being, maintained in accordance
with GAAP and any other applicable legal and accounting requirements.
5.8 Broker's Fees. TSFG has not employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, except that TSFG
has engaged Xxxxxxx Xxxxx in accordance with the terms of a letter agreement
between Xxxxxxx Sachs and TSFG, a true and correct copy of which has been
previously made available by TSFG to PFC.
5.9 Absence of Certain Changes or Events. Except as disclosed in any TSFG
Report filed with the SEC prior to the date hereof, since December 31, 2003,
there has been no change or development or combination of changes or
developments which, individually or in the aggregate, has had a Material Adverse
Effect on TSFG.
5.10 Legal Proceedings. (a) Except as disclosed in any TSFG Report, neither
TSFG nor any of its Subsidiaries is a party to any and there are no pending or,
to TSFG's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against TSFG or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment or decree imposed upon
TSFG, any of its Subsidiaries or the assets of TSFG or any of its Subsidiaries.
5.11 TSFG Information. The information relating to TSFG and its
Subsidiaries to be contained in the Proxy Statement/Prospectus and the S-4, or
in any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy
Statement/Prospectus (except for such portions thereof that relate to PFC) will
comply with the provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply with the provisions of the Securities Act and
the rules and regulations thereunder.
5.12 Compliance with Applicable Law. TSFG and each of its Subsidiaries
holds, and at all times during the past three years has held, all licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to TSFG or any of its
Subsidiaries and neither TSFG nor any of its Subsidiaries has received notice of
any violations of any of the above.
5.13 Ownership of PFC Common Stock. Neither TSFG nor any of its affiliates
or associates (as such terms are defined under the Exchange Act) (i)
beneficially owns, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of PFC (other than Trust Account
Shares).
5.14 Approvals. As of the date hereof, TSFG knows of no fact or condition
relating to TSFG that would prevent all regulatory approvals required for the
consummation of the transactions contemplated hereby (including, without
limitation, the Merger) from being obtained.
5.15 Reorganization. As of the date hereof, TSFG has no reason to believe
that the Merger will fail to qualify as a reorganization under Section 368(a) of
the Code.
5.16 Agreements with Regulatory Agencies. Except as may be set forth in
Section 5.16 of the TSFG Disclosure Schedule, neither TSFG nor any of its
subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth on Section 5.16 of the TSFG
Disclosure Schedule, a "Regulatory Agreement"), nor any Regulatory Agency that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
TSFG or any of its subsidiaries been advised by any Regulatory Agency that it is
considering issuing or requesting any Regulatory Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of PFC. During the period from the date hereof and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of TSFG, PFC shall carry on its
business in the ordinary course consistent with past practice. Without limiting
the generality of the foregoing, and except as set forth in Section 6.1 of the
PFC Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by TSFG, PFC shall not:
(a) except for regular quarterly dividends of $0.09 consistent with past
practice (provided that the declaration of the last quarterly dividend by PFC
prior to the Effective Time and the payment thereof shall be coordinated with
TSFG so that holders of PFC Common Stock do not receive dividends on both PFC
Common Stock and TSFG Common Stock received in the Merger in respect of such
quarter or fail to receive a dividend on at least one of the PFC Common Stock or
TSFG Common Stock received in the Merger in respect of such quarter), declare or
pay any dividends on, or make other distributions in respect of, any of its
capital stock;
(b) (i) repurchase, redeem or otherwise acquire (except for the acquisition
of Trust Account Shares and DPC Shares) any shares of the capital stock of PFC,
or any securities convertible into or exercisable for any shares of the capital
stock of PFC, (ii) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
except pursuant to Rights referenced on the PFC Disclosure Schedule, issue,
deliver or sell, or authorize or propose the issuance, delivery or sale of, any
shares of its capital stock or any securities convertible into or exercisable
for, or any rights, warrants or options to acquire, any such shares, or enter
into any agreement with respect to any of the foregoing (including additional
Rights similar to those set forth on the PFC Disclosure Schedule;
(c) amend its Articles of Incorporation, Bylaws or other similar governing
documents;
(d) make any capital expenditures other than those which (i) are made in
the ordinary course of business or are necessary to maintain existing assets in
good repair or (ii) are in an amount of no more than $100,000;
(e) enter into any new line of business;
(f) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire any assets, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings or in the ordinary
course of business consistent with past practices;
(g) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
(h) change its methods of accounting in effect at December 31, 2003, except
as required by changes in GAAP or regulatory accounting principles as concurred
to by PFC's independent auditors;
(i) (i) except as required by applicable law, as set forth in Section 7.8,
or as required to maintain qualification pursuant to the Code, adopt, amend, or
terminate any employee benefit plan (including, without limitation, any Plan) or
any agreement, plan or policy between PFC or one or more of its current or
former directors, officers or employees or any "affiliate" of any such person
(as such term is used in Rule 12b-2 under the Exchange Act), or (ii) except for
normal increases in the ordinary course of business consistent with past
practice or except as required by applicable law, increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any Plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of any stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares);
(j) other than activities in the ordinary course of business consistent
with past practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements;
(k) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(l) file any application to relocate or terminate the operations of any of
its banking offices;
(m) create, renew, amend or terminate or give notice of a proposed renewal,
amendment or termination of, any contract, agreement or lease for goods,
services or office space, involving payments thereunder by PFC in excess of
$100,000 per year, to which PFC is a party or by which PFC or its properties is
bound, other than the renewal in the ordinary course of business of any lease
the term of which expires prior to the Closing Date;
(n) take or cause to be taken any action which would or could reasonably be
expected to prevent the Merger from qualifying as a reorganization under Section
368(a) of the Code; or
(o) agree to do any of the foregoing.
6.2 Covenants of TSFG. Except as otherwise contemplated by this Agreement
or consented to in writing by PFC, TSFG shall not, and shall not permit any of
its Subsidiaries to:
(a) except for regular quarterly dividends consistent with past practice,
declare or pay any dividends on or make any other distributions in respect of
any of its capital stock;
(b) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
(c) take any action or enter into any agreement that could reasonably be
expected to jeopardize or materially delay the receipt of any Requisite
Regulatory Approval (as defined in Section 8.1(c));
(f) take or cause to be taken any action which would or could reasonably be
expected to prevent the Merger from qualifying as a reorganization under Section
368(a) of the Code; or
(g) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. TSFG, with the cooperation of PFC, shall promptly
prepare and file with the SEC the S-4. Each of PFC and TSFG shall use its
reasonable best efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable after such filing, and PFC shall thereafter mail
the Proxy Statement/Prospectus to its stockholders. TSFG shall also use its
reasonable best efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). PFC and TSFG shall have the
right to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to PFC or TSFG, as the case may be,
and any of TSFG's Subsidiaries, which appears in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) TSFG and PFC shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement/Prospectus, the S-4 or any other
statement, filing, notice or application made by or on behalf of TSFG, PFC or
their Subsidiaries to any Governmental Entity in connection with the Merger and
the other transactions contemplated by this Agreement.
(d) TSFG and PFC shall promptly furnish each other with copies of written
communications received by TSFG or PFC, as the case may be, or any of their
respective Affiliates or Associates (as such terms are defined in Rule 12b-2
under the Exchange Act as in effect on the date hereof) from, or delivered by
any of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
7.2 Access to Information. (a) PFC and TSFG will each keep the other
advised of all material developments relevant to their respective businesses,
and to the consummation of the Merger, and each shall provide to the other, upon
request, reasonable details of any such development. Upon reasonable notice,
each party shall afford to representatives of the other party reasonable access,
during normal business hours during the period prior to the Effective Time, to
all of their respective properties, books, contracts, commitments and records,
and during such period, shall make available all information concerning their
respective businesses as may be reasonably requested (except that the parties
shall take into account in determining the reasonableness of due diligence
requests and the fact that TSFG is a public company which is substantially
larger than PFC and that TSFG is issuing shares to PFC shareholders as compared
to selling its business). The other provisions of this Section notwithstanding,
neither party nor any of its Subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize any attorney-client privilege
or contravene any law (including without limitation laws regarding exchange of
information), rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date hereof.
(b) All non-public information furnished to TSFG or PFC by the other party
hereto pursuant to Section 7.2(a) (other than (i) information already in the
receiving party's possession, or (ii) information that is or becomes generally
available to the public other than as a result of a disclosure by the receiving
party or any of its directors, officers, employees, agents or advisors, or (iii)
information that becomes available to the receiving party on a non-confidential
basis from a source other than the disclosing party or its advisors, provided
that such source is not known by the receiving party after due inquiry to be
bound by a confidentiality agreement with or other obligation of secrecy to the
disclosing party) shall be kept confidential, and the parties shall maintain,
and shall cause each of their respective directors, officers, attorneys and
advisors to maintain, the confidentiality of all information obtained hereunder
which is not otherwise publicly disclosed by the other party, said undertakings
with respect to confidentiality to survive any termination of this Agreement. In
the event of the termination of this Agreement, each party shall return to the
other party upon request all confidential information previously furnished in
connection with the transactions contemplated by this Agreement.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
7.3 Certain Actions. (a) Except with respect to this Agreement and the
transactions contemplated hereby, neither PFC nor any of its directors,
officers, agents, affiliates (as such term is used in Rule 12b-2 under the
Exchange Act) or representatives (collectively, "Representatives") shall,
directly or indirectly, initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries with respect to or
the making of any Acquisition Proposal.
(b) Notwithstanding anything herein to the contrary, PFC and its Board of
Directors and Representatives shall be permitted (i) to comply with Rule 14d-9
and Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal, (ii) to engage in any discussions or negotiations with, or provide any
information to, any person in response to an unsolicited written Acquisition
Proposal by any such person, if and only to the extent that (a) PFC's Board of
Directors concludes in good faith and consistent with its fiduciary duties to
PFC's stockholders under applicable law that such Acquisition Proposal would
reasonably be expected to result in a Superior Proposal, (b) prior to providing
any information or data to any person in connection with such Acquisition
Proposal by any such person, PFC's Board of Directors receives from such person
an executed confidentiality agreement, and (c) prior to providing any
information or data to any person or entering into discussions or negotiations
with any person, PFC's Board of Directors notifies TSFG promptly of any
inquiries, proposals, or offers respecting such Acquisition Proposal received
by, any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, any of its Representatives indicating,
in connection with such notice, the name of such person and the material terms
and conditions of any inquiries, proposals or offers respecting such Acquisition
Proposal.
(c) PFC agrees that it will, and will cause its Representatives to,
immediately cease and cause to be terminated any activities, discussions, or
negotiations existing as of the date hereof with any parties conducted
heretofore with respect to any Acquisition Proposal.
7.4 Stockholder Meeting. PFC shall take all steps necessary to duly call,
give notice of, convene and hold a meeting of its stockholders to be held as
soon as is reasonably practicable after the date on which the S-4 becomes
effective for the purpose of voting upon the approval of this Agreement. PFC
shall, through its Board of Directors, subject to the fiduciary duties of such
board (including those with respect to a Superior Proposal), recommend to its
stockholders approval of this Agreement and such other matters as may be
submitted to its stockholders in connection with this Agreement.
7.5 Legal Conditions to Merger. Each of TSFG and PFC shall, and shall cause
its Subsidiaries to, use their reasonable best efforts (a) to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger and, subject to the conditions set forth in Article VIII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by PFC or TSFG
in connection with the Merger and the other transactions contemplated by this
Agreement, and to comply with the terms and conditions of such consent,
authorization, order or approval.
7.6 Affiliates. The parties shall cooperate to cause each director,
executive officer and other person who is an "affiliate" (for purposes of Rule
145 under the Securities Act) of PFC to deliver to TSFG, as soon as practicable
after the date hereof, a written agreement, in the form of Exhibit A hereto.
7.7 Nasdaq Listing. TSFG shall use its best efforts to cause the shares of
TSFG Common Stock to be issued in the Merger to be approved for listing on the
NASDAQ/NMS as of the Effective Time.
7.8 Employee Benefit Plans; Existing Agreements. (a) As of the Effective
Time, the employees of PFC shall be eligible to participate in employee benefit
plans and severance plans of TSFG or its Subsidiaries in which similarly
situated employees of TSFG or its Subsidiaries participate, to the same extent
that similarly situated employees of TSFG or its Subsidiaries participate (it
being understood that inclusion of PFC's employees in TSFG's employee benefit
plans may occur at different times with respect to different plans).
(b) With respect to each TSFG pension and welfare benefit plan for which
length of service is taken into account for any purpose (including TSFG's
severance plan), service with PFC (or predecessor employers to the extent PFC
provides past service credit) shall be treated as service with TSFG for purposes
of determining eligibility to participate, vesting, and entitlement to benefits,
including for severance benefits and vacation entitlement (but not for accrual
of defined benefit pension benefits); provided however, that such service shall
not be recognized to the extent that such recognition would result in a
duplication of benefits. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations. Each TSFG welfare benefit
plan shall waive pre-existing condition limitations to the same extent waived
under the applicable PFC Plan. PFC's employees shall be given credit for amounts
paid under a corresponding benefit plan during the same period for purposes of
applying deductibles, co-payments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the TSFG
welfare benefit plan.
(c) As of the Effective Time, TSFG shall assume and honor and shall cause
the appropriate Subsidiaries of TSFG to assume and to honor in accordance with
their terms all written agreements listed in Section 4.13(a) of the PFC
Disclosure Schedule (the "Benefit Agreements"). TSFG acknowledges and agrees
that the Merger will constitute a merger, sale or a change in control of PFC for
all purposes under such agreements. The provisions of this Section 7.8(c) are
intended to be for the benefit of, and shall be enforceable by, each director,
officer or employee that is a party to any Benefit Agreement.
(d) Employees of PFC who are terminated by TSFG following the Closing shall
receive severance benefits under the current terms of TSFG's severance plan.
7.9 Indemnification of PFC Directors and Officers. TSFG or a TSFG
Subsidiary shall provide and keep in force for a period of six years after the
Effective Time directors' and officers' liability insurance providing coverage
to directors and officers of PFC for acts or omissions occurring prior to the
Effective Time. Such insurance shall provide at least the same coverage and
amounts as contained in PFC's policy on the date hereof; provided, that in no
event shall the annual premium on such policy exceed 200% of the annual premium
payments on PFC's policy in effect as of December 31, 2003 (the "Maximum
Amount"). If the amount of the premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, TSFG shall use its reasonable
best efforts to maintain the most advantageous policies of directors' and
officers' liability insurance obtainable for a premium equal to the Maximum
Amount and PFC shall cooperate with TSFG in such efforts in all reasonable
respects. Notwithstanding the foregoing, TSFG further agrees to indemnify all
individuals who are or have been officers, directors or employees of PFC prior
to the Effective Time from any acts or omissions in such capacities prior to the
Effective Time, to the extent that such indemnification is provided pursuant to
the Articles of Incorporation or Bylaws of PFC on the date hereof and is
permitted under the FBCA and SCBCA.
7.10 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement shall take all such necessary action as may be reasonably requested by
TSFG or PFC.
7.11 Appointment of Director. Effective as of the Effective Time, TSFG
shall cause the Board of Directors of Mercantile Bank to be expanded by one
member, and shall appoint R. Xxxx Xxxxxx, Jr. (the "PFC Director") to fill the
vacancy created by such increase.
7.12 Pointe Bank Board. For at least three years following Closing, TSFG
shall cause each individual who is currently serving as a director of PFC (other
than the PFC Director), if such persons are willing to so serve, to be elected
or appointed as Mercantile Bank Advisory Board members. Service on the
Mercantile Bank Advisory Board shall be deemed to be service with TSFG for the
purpose of any options held under any PFC Option Plan and PFC's existing
Director Deferred Compensation Plan.
7.13 Accounting Matters. PFC shall cooperate with TSFG concerning (i)
accounting and financial matters necessary or appropriate to facilitate the
Merger (taking into account TSFG's policies, practices and procedures),
including, without limitation, issues arising in connection with record keeping,
loan classification, valuation adjustments, levels of loan loss reserves and
other accounting practices, and (ii) PFC's lending, investment or
asset/liability management policies; provided, that any action taken pursuant to
this Section 7.14 shall not be deemed to constitute or result in the breach of
any representation or warranty of PFC contained in this Agreement.
7.14 Employment Agreements.
(a) TSFG acknowledges and agrees that the Merger will constitute Change in
Control, as defined in the employment protection agreements listed in Section
7.14(a) of the PFC Disclosure Schedule ("EP Agreements") and pursuant to the EP
Agreements, TSFG shall (1) pay, or cause to be paid, immediately prior to the
Effective Time or if necessary, as soon as practicable following the Effective
Time, a lump sum amount in accordance with the EP Agreements listed in Section
7.14(a) of the PFC Disclosure Schedule and (2) provide for continuation of
benefits to the extent applicable as set forth in the EP Agreements listed in
Section 7.14(a) of the PFC Disclosure Schedule. This Section 7.14(a) is intended
to be for the benefit of, and shall be enforceable by, each director, officer or
employee that is a party to any Employment Agreements.
(b) TSFG shall assume and honor and shall cause the appropriate
Subsidiaries of TFSG to assume and honor in accordance with their terms all
written agreements listed on Section 7.14(b) of the PFC Disclosure Schedule (the
"TSFG Employment Agreement(s)"). This Section 7.14(b) is intended to be for the
benefit of, and shall be enforceable by, each director, officer or employee that
is a party to any TSFG Employment Agreement.
7.15 Tax Opinion. TSFG and PFC shall use their respective reasonable best
efforts to obtain the tax opinion contemplated by Section 8.1(f).
7.16 Exemption from Section 16. Prior to the Effective Time, the Board of
Directors of TSFG, or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the interpretive guidance of
the SEC so that the acquisition by any officer or director of PFC who may become
a covered person of TSFG for purposes of Section 16 of the Exchange Act and the
rules and regulations thereunder ("Section 16") of TSFG Common Stock or options
to acquire TSFG Common Stock pursuant to this Agreement and the Merger shall be
an exempt transaction for purposes of Section 16.
7.17 Execution and Authorization of Bank Merger Agreement. Prior to the
Effective Time, (a) TSFG shall (i) cause the Board of Directors of Mercantile
Bank to approve a merger agreement providing for the merger of Pointe Bank into
Mercantile Bank (the "Bank Merger Agreement"), (ii) cause Mercantile Bank to
execute and deliver the Bank Merger Agreement, and (iii) approve the Bank Merger
Agreement as the sole stockholder of Mercantile Bank, and (b) PFC shall (i)
cause the Board of Directors of Pointe Bank to approve the Bank Merger
Agreement, (ii) cause Pointe Bank to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole stockholder
of Pointe Bank.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the outstanding shares of PFC
Common Stock under applicable law.
(b) Listing of Shares. The shares of TSFG Common Stock which shall be
issued to the stockholders of PFC upon consummation of the Merger shall have
been authorized for listing on the NASDAQ/NMS.
(c) Other Approvals. All regulatory approvals required to consummate the
transactions contemplated hereby (including the Merger) shall have been obtained
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger (an
"Injunction") shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger.
(f) Federal Tax Opinion. TSFG and PFC shall have received a written opinion
from Xxxxx & Xxxxxxx, LLP, counsel to PFC ("PFC's counsel"), in form and
substance reasonably satisfactory to TSFG and PFC, dated the Effective Time,
substantially to the effect that on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, PFC's Counsel may require and rely upon representations and
covenants, including those contained in certificates of officers of TSFG, PFC
and others, reasonably satisfactory in form and substance to such counsel. If
Xxxxx & Xxxxxxx L.L.P. does not render such opinion, this condition may be
satisfied if other legal counsel selected by PFC and reasonably acceptable to
TSFG renders such opinion, relying on such representations and covenants.
8.2 Conditions to Obligations of TSFG. The obligation of TSFG to effect the
Merger is also subject to the satisfaction or waiver by TSFG at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of PFC set forth in this Agreement (other than
those set forth in Section 4.2) shall be true and correct as of the date hereof
and (except to the extent such representations and warranties speak as of an
earlier date) as of the PFC Approval Date as though made on and as of the PFC
Approval Date; and (ii) the representations and warranties of PFC set forth in
Section 4.2 of this Agreement shall be true and correct in all material respects
(without giving effect to Section 3.2 of this Agreement) as of the date hereof
and (except to the extent such representations and warranties speak as of an
earlier date) as of the PFC Approval Date as though made on and as of the PFC
Approval Date. TSFG shall have received a certificate signed on behalf of PFC by
the Chief Executive Officer or the Chief Financial Officer of PFC to the
foregoing effect no later than five business days after the PFC Approval Date.
(b) Performance of Obligations of PFC. PFC shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and TSFG shall have received a
certificate signed on behalf of PFC by the Chief Executive Officer or the Chief
Financial Officer of PFC to such effect.
(c) Conditions Met. TSFG shall have received a certificate of an executive
officer of PFC stating that to his knowledge, each of the conditions set forth
in this Article VIII applicable to PFC have been met.
8.3 Conditions to Obligations of PFC. The obligation of PFC to effect the
Merger is also subject to the satisfaction or waiver by PFC at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of TSFG set forth in this Agreement (other than
those set forth in Section 5.2) shall be true and correct as of the date hereof
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; and (ii) the representations and warranties of TSFG set forth in Section
5.2 of this Agreement shall be true and correct in all material respects
(without giving effect to Section 3.2 of this Agreement) as of the date hereof
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date. PFC shall have received a certificate signed on behalf of TSFG by the
Chief Executive Officer or the Chief Financial Officer of TSFG to the foregoing
effect.
(b) Performance of Obligations of TSFG. TSFG shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and PFC shall have received a
certificate signed on behalf of TSFG by the Chief Executive Officer or the Chief
Financial Officer of TSFG to such effect.
(c) Conditions Met. PFC shall have received a certificate of an executive
officer of TSFG stating that to his knowledge, each of the conditions set forth
in this Article VIII applicable to TSFG have been met.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of PFC:
(a) by mutual consent of PFC and TSFG in a written instrument, if the Board
of Directors of each so determines by a vote of a majority of the members of its
entire Board;
(b) by either TSFG or PFC upon written notice to the other party (i) 30
days after the date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 30-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
(c) by either TSFG or PFC if the Merger shall not have been consummated on
or before the later of (i) June 30, 2005, or (ii) if the S-4 is given a full
review by the SEC, July 31, 2005, unless the failure of the Closing to occur by
such date shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party set
forth herein;
(d) by either TSFG or PFC if the approval of the stockholders of PFC
required for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the required vote at a duly held meeting of such
stockholders or at any adjournment or postponement thereof;
(e) by either TSFG or PFC (provided that the terminating party is not then
in material breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within 30 days following written notice
to the party committing such breach, or which breach, by its nature, cannot be
cured prior to the Closing; provided, however, that neither party shall have the
right to terminate this Agreement pursuant to this Section 9.1(e) unless the
breach of representation or warranty, together with all other such breaches,
would entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 8.2(a) (in the case of a breach
of representation or warranty by PFC) or Section 8.3(a) (in the case of a breach
of representation or warranty by TSFG);
(f) by either TSFG or PFC (provided that the terminating party is not then
in material breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of the other
party, which breach shall not have been cured within 30 days following receipt
by the breaching party of written notice of such breach from the other party
hereto, or which breach, by its nature, cannot be cured prior to the Closing; or
(g) by PFC, in the event that the Board of Directors of PFC determines in
good faith, after consultation with outside counsel, that in light of a Superior
Proposal it is necessary to terminate this Agreement in order to comply with its
fiduciary duties to PFC and to PFC's shareholders under applicable law;
provided, however, that the Board of Directors of PFC may terminate this
Agreement pursuant to this Section 9.1(g) solely in order to concurrently enter
into a letter of intent, agreement in principle or an acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") related to a Superior
Proposal; provided further, however, that this Agreement may be terminated
pursuant to this Section 9.1(g) only after the fifth day following TSFG's
receipt of written notice advising TSFG that the Board of Directors of PFC is
prepared to accept a Superior Proposal, and only if, during such five-day
period, if TSFG so elects, PFC and its advisors shall have negotiated in good
faith with TSFG to make such adjustments in the terms and conditions of this
Agreement as would enable PFC to proceed with the transactions contemplated
herein on such adjusted terms.
9.2 Effect of Termination.
(a) In the event of termination of this Agreement by either TSFG or PFC as
provided in Section 9.1, this Agreement shall forthwith become void and have no
effect except (i) Sections 7.2(b), 9.2 and 10.3 shall survive any termination of
this Agreement and (ii) that, notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved or released from any liabilities
or damages arising out of its willful breach of any provision of this Agreement.
(b) If PFC terminates this Agreement pursuant to Section 9.1(g), PFC shall
pay to TSFG a termination fee equal to $3.5 million (the "Termination Fee
Amount") by wire transfer of same day funds on the date of termination.
(c) In the event that an Acquisition Proposal with respect to PFC shall
have been made known to PFC and shall have been publicly announced or otherwise
become public, or shall have been made to the shareholders of PFC, and
thereafter (x) this Agreement is terminated by either TSFG or PFC pursuant to
either (i) Section 9.1(c) hereof and prior to such termination the stockholders
of PFC shall not have previously approved the Merger, or (ii) Section 9.1(d)
hereof as a result of the failure of the stockholders of PFC to approve the
Merger, and (y) within twelve months of such termination (A) PFC enters into any
Acquisition Agreement providing for any transaction described in clause (i)(a)
or clause (i)(b) of the definition of "Superior Proposal.," other than any such
transaction involving a merger, consolidation or similar transaction as to which
the common stockholders of PFC immediately prior thereto own in the aggregate
more than 50% of the common stock of the surviving or transferee corporation or
its publicly-held parent corporation immediately following consummation thereof,
or (B) any person shall acquire beneficial ownership of or the right to acquire
25% or more of the outstanding shares of PFC Common Stock, then upon the first
occurrence of either of the events contemplated by clause (y) PFC shall pay TSFG
a termination fee equal to the Termination Fee Amount by wire transfer of same
day funds.
(d) PFC agrees that the agreements contained in Section 9.2(b) and 9.2(c)
are integral parts of the transactions contemplated by this Agreement and
constitute liquidated damages and not a penalty.
9.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of either
PFC or TSFG; provided, however, that after any approval of the transactions
contemplated by this Agreement by PFC's stockholders, there may not be, without
further approval of such stockholders, any amendment of this Agreement which
reduces the amount or changes the form of the consideration to be delivered to
PFC stockholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time, each of the
parties hereto, by action taken or authorized by its Board of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on the
Effective Date.
10.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time provided
that no such representations, warranties or covenants shall be deemed to be
terminated or extinguished so as to deprive TSFG or PFC (or any director,
officer or controlling person thereof) of any defense at law or in equity which
otherwise would be available against the claims of any third party, including,
without limitation, any shareholder or former shareholder of either TSFG or PFC.
10.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
10.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied, mailed by
registered or certified mail (return receipt requested) or delivered by an
express courier to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to TSFG, to:
The South Financial Group, Inc.
000 X. Xxxx Xx.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Executive Vice President
and
(b) if to PFC, to:
Pointe Financial Corporation
0000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: R. Xxxx Xxxxxx, Jr.
Chief Executive Officer
with a copy to:
Xxxxx & Xxxxxxx, LLP
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
10.5 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
10.6 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
10.7 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of South Carolina, without regard to any
applicable conflicts of law, except to the extent that various matters under
this Agreement must be necessarily governed by Florida corporate law.
10.8 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.9 Publicity. Except as expressly permitted by this Agreement or
otherwise required by law or the rules of the Nasdaq Stock Market so long as
this Agreement is in effect, neither TSFG nor PFC shall, or shall permit any of
its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not be unreasonably
withheld.
10.10 Assignment; No Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein or under Sections 7.8, 7.9, 7.12, 7.14 and 7.16, this
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
IN WITNESS WHEREOF, TSFG and PFC have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
THE SOUTH FINANCIAL GROUP, INC.
By: /s/ Xxxxxxx X. Hummers III
------------------------------------
Name: Xxxxxxx X. Hummers III
Title: Executive Vice President
POINTE FINANCIAL CORPORATION
By: /s/ R. Xxxx Xxxxxx, Jr.
------------------------------------
Name: R. Xxxx Xxxxxx, Jr.
Title: Chief Executive Officer
EXHIBIT A
_________________, 2005
The South Financial Group, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
Pointe Financial Corporation, a Florida corporation (the "Company"), for
purposes of paragraphs (c) and (d) of Rule 145 promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Act").
The South Financial Group, Inc., a South Carolina corporation ("TSFG")
and the Company have entered into an Agreement and Plan of Merger, dated as of
October 27, 2004 (the "Merger Agreement"), pursuant to which, among other
things, the Company will merge with and into TSFG (the "Transaction"). Upon
consummation of the Transaction, I will receive shares of common stock, $1.00
par value per share, of TSFG ("TSFG Common Stock"). This agreement is
hereinafter referred to as the "Letter Agreement."
A. I represent and warrant to, and agree with, TSFG as follows:
1. I have read this Letter Agreement and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, pledge, transfer or otherwise dispose of shares of TSFG Common Stock, to
the extent I felt necessary, with my counsel or counsel for the Company.
2. I shall not make any offer, sale, pledge, transfer or other
disposition in violation of the Act or the rules and regulations of the SEC
thereunder of the shares of TSFG Common Stock I receive pursuant to the
Transaction.
B. I understand and agree that:
1. I have been advised that any issuance of shares of TSFG Common Stock
to me pursuant to the Transaction will be registered with the SEC. I have also
been advised, however, that, because I maybe an "affiliate" of the Company at
the time the Transaction will be submitted for a vote of the stockholders of the
Company and my disposition of such shares has not been registered under the Act,
I must hold such shares indefinitely unless (i) such disposition of such shares
is subject to an effective registration statement and to the availability of a
prospectus under the Act, (ii) a sale of such shares is made in conformity with
the provisions of Rule 145(d) under the Act or (iii) in an opinion of counsel,
in form and substance reasonably satisfactory to TSFG, some other exemption from
registration is available with respect to any such proposed disposition of such
shares.
2. Stop transfer instructions will be given to the transfer agent of
TSFG with respect to the shares of TSFG Common Stock I receive pursuant to the
Transaction in connection with the restrictions set forth herein, and there will
be placed on the certificate representing shares of TSFG Common Stock I receive
pursuant to the Transaction, or any certificates delivered in substitution
therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933, as amended (the
"Act"), applies and may only be sold or otherwise transferred in compliance with
the requirements of Rule 145 or pursuant to a registration statement under the
Act or an exemption from such registration."
3. Unless a transfer of my shares of TSFG Common Stock is a sale made
in conformity with the provisions of Rule 145(d), or made pursuant to an
effective registration statement under the Act, TSFG reserves the right to put
an appropriate legend on the certificates issued to my transferee.
4. I recognize and agree that the foregoing provisions also apply to
(i) my spouse, (ii) any relative of mine or my spouse occupying my home, (iii)
any trust or estate in which I, my spouse or any such relative owns at least 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (iv) any corporation or other organization in which I, my
spouse or any such relative owns at least 10% of any class of equity securities
or of the equity interest.
5. I agree that at the time that I make an offer to or otherwise sell,
pledge transfer or dispose of any TSFG Common Stock that I own after the
Transaction, I will notify my broker, dealer or nominee in whose name my shares
are held or registered that such TSFG Common Stock is subject to this Letter
Agreement.
6. Execution of this Letter Agreement should not be construed as an
admission on my part that I am an "affiliate" of the Company as described in the
first paragraph of this letter or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this letter.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect and the stop
transfer instructions set forth in Paragraph B.2. above shall be lifted and the
legend set forth in Paragraph B.2 above shall be removed forthwith from the
certificate or certificates representing my shares of TSFG Common Stock upon the
delivery by the undersigned to TSFG of a copy of a letter from the staff of the
SEC, an opinion of counsel in form and substance reasonably satisfactory to
TSFG, or other evidence reasonably satisfactory to TSFG, to the effect that a
transfer of my shares of TSFG Common Stock will not violate the Act or any of
the rules and regulations of the SEC thereunder.
This Letter Agreement shall be binding on my heirs, legal
representative and successors.
Very truly yours,
--------------------------------
Name:
Accepted this_____ day of____________ , 2005
The South Financial Group, Inc.
By: _____________________________
Name: Xxxxxxx X. Hummers III
Title: Executive Vice President
