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EXHIBIT 2.1
SOUTHERN COMMUNITY BANCORP
250 North Orange Avenue
Orlando, Florida 32801
September 22, 2000
Dr. P. T. Fleuchaus
Chairman of the Board
Peninsula Bancorp, Inc.
1030 International Speedway Boulevard
Daytona Beach, Florida 32114
Mr. Thomas H. Dargan, Jr.
Chief Executive Officer
Peninsula Bank of Central Florida
1030 International Speedway Boulevard
Daytona Beach, Florida 32114
RE: MERGER OF PENINSULA BANCORP, INC., WITH
SOUTHERN COMMUNITY BANCORP
Gentlemen:
On behalf of the Board of Directors of Southern Community Bancorp, a
Florida corporation ("Southern"), I am pleased to submit this letter (the
"Letter") to you setting forth certain understandings and agreements by and
among Southern and Peninsula Bancorp, Inc., a Florida corporation ("Peninsula"),
and Peninsula Bank of Central Florida, a Florida banking corporation (the
"Bank"). In accordance with these understandings, Southern proposes to issue
0.625 shares of its common stock, par value $1.00 per share, in exchange for
each issued and outstanding share of the common stock of Peninsula (the
"Exchange Ratio"), in a transaction in which Peninsula would be merged with and
into Southern, subject to the terms and conditions set forth in this Letter (the
"Merger"). As a result of the Merger, the Bank would become a wholly-owned
subsidiary of Southern.
1. DUE DILIGENCE REVIEW. The Merger is subject to the opportunity for
each party to conduct a due diligence investigation. Each party (including the
bank subsidiaries of Southern and Peninsula) agrees to provide the other party
and its authorized representatives, during a period of thirty (30) days,
commencing on Monday, October 2, 2000 (the "Inspection Period"), with reasonable
access to their respective books, records and operations and to make its senior
management officials and authorized representatives (including counsel and
independent public accountants) available to confer with the other party and its
authorized representatives regarding
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Dr. P. T. Fleuchaus
Mr. Thomas H. Dargan, Jr.
September 22, 2000
Page 2
their respective properties and business. In this connection, each party agrees
to disclose and make available to the other party all books, papers and records
relating to the assets, properties, operations, obligations and liabilities, as
such other party may from time to time reasonably request during the Inspection
Period. Such due diligence inspection may take place at a location other than on
the premises of the parties' bank subsidiaries, at an alternative site or sites
to be mutually agreed upon. Such due diligence inspections will be at the
expense of the party conducting the investigation; provided, however, that any
extraordinary copying or other expenses associated with the conduct of the due
diligence investigation off-site will be assumed by party requiring such
arrangements. Each party and its representatives will exercise their best
efforts to conduct the examination of the books and records of the other party
in a manner that will not be disruptive to the daily operations of the other
party.
Each party shall notify the other party within five days of the
discovery of any fact, circumstance or condition or combination thereof,
financial or otherwise, discovered during its due diligence which might impact
that party's willingness to conclude the Merger on the terms and conditions set
forth in this Letter.
If either party determines, in its sole and absolute discretion, at any
time prior to the execution of the Definitive Agreement described in paragraph
2, that the condition, financial or otherwise, of the other party is
unsatisfactory, then such party may terminate its obligations under this Letter
by giving written notice to that effect to the other party, and none of
Southern, Peninsula, the Bank or their respective directors, officers,
employees, agents or shareholders will have any further obligations or liability
under this Letter, except as provided in paragraphs 8, 9 and 10 hereof.
2. EXECUTION OF DEFINITIVE AGREEMENT. If neither party finds any
adverse condition with respect to the other party during the Inspection Period,
Peninsula, the Bank and Southern will negotiate in good faith to enter into a
fully integrated definitive agreement (the "Definitive Agreement") setting forth
in detail the terms and conditions governing the Merger, which terms and
conditions will not be inconsistent with this Letter. If Peninsula, the Bank and
Southern are unable to negotiate and execute a mutually agreeable Definitive
Agreement within sixty (60) calendar days following the expiration of the
Inspection Period, this Letter will terminate and none of Peninsula, Southern,
the Bank or their respective directors, officers, employees, agents or
shareholders will have any further obligations or liability whatsoever under
this Letter, except as provided in paragraphs 8 and 9 hereof.
3. CLOSING. It is expected that the closing of the transactions
contemplated by the Definitive Agreement will take place as soon as possible
after the execution of the Definitive Agreement at the earliest date that all of
the conditions to closing have been satisfied, but in no event may the date of
the closing (the "Closing Date") be later than fifteen (15) days following
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Dr. P. T. Fleuchaus
Mr. Thomas H. Dargan, Jr.
September 22, 2000
Page 3
receipt of all necessary government and regulatory approvals and consents from
any relevant government authorities, including the Board of Governors of the
Federal Reserve System and the Florida Department of Banking and Finance (each,
a "Government Authority, and collectively, the "Government Authorities").
4. MERGER CONSIDERATION. The total consideration for the Merger shall
be the obligation of Southern to issue shares of its common stock to the holders
of shares of Peninsula's common stock in accordance with the Exchange Ratio;
provided, however, that Southern's obligation to consummate the Merger shall be
conditioned upon the sale by Southern of the minimum number of shares offered by
its prospectus dated July 17, 2000, including any amendment thereto relating to
the Merger, prior to the expiration date of such offering.
5. REPRESENTATIONS, WARRANTIES, CONDITIONS AND COMMITMENTS. The
Definitive Agreement will contain such representations, warranties, conditions
and commitments as are customary or appropriate for a transaction of this kind.
The Definitive Agreement will also contain customary covenants governing the
conduct of the business of the Bank during the period between execution of the
Definitive Agreement and the Closing Date, including, without limitation, that
no material adverse change will occur in connection with the business,
operations, working capital, assets, liabilities or financial condition or
prospects of the Bank. The Definitive Agreement will provide that neither
Peninsula nor the Bank will be involved in (or threatened by) litigation which
creates any reasonable possibility that the Bank may incur a substantial loss.
6. PARTICIPATION IN SOUTHERN'S BOARD OF DIRECTORS AND STOCK OPTION
PLANS. The Definitive Agreement will provide that upon consummation of the
Merger the Bank shall be entitled to designate four members of its board of
directors, including its chief executive officer, to serve as members of
Southern's board of directors. The Definitive Agreement will also provide that
the benefits and rights currently outstanding under Peninsula's existing stock
option plans will be preserved and continued, and the Bank's board of directors
will be entitled to designate and direct the grant of additional stock options
to the Bank's directors, executive officers and key employees up to an aggregate
of 20% of the number of Southern's shares issued in the Merger, inclusive of the
number of such options that would be outstanding on the effective date of the
Merger pursuant to the terms of the Definitive Agreement.
7. REGULATORY APPROVAL. The Definitive Agreement will provide that the
Merger will be expressly conditioned upon the prior receipt of all necessary
regulatory approvals or consents from all applicable Government Authorities.
Peninsula and the Bank agree to cooperate and aid Southern in its applications
or notices and agree to provide Southern with access to any records or
information relative to the Bank that is reasonably necessary for or is required
to be included in such applications or notices or that is required or requested
by any such Government
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Dr. P. T. Fleuchaus
Mr. Thomas H. Dargan, Jr.
September 22, 2000
Page 4
Authority. The Definitive Agreement will provide that Southern will file all
necessary governmental notices and/or applications no later than thirty (30)
calendar days after execution of the Definitive Agreement.
8. EXCLUSIVE DEALING. For a period equal to the longer of (i)
seventy-five (75) days from the date hereof, or (ii) if the Definitive Agreement
has been executed, during the term thereof, and in each case except to the
extent necessary for the directors of each of Peninsula and the Bank to comply
with their fiduciary duties, neither Peninsula nor the Bank shall, directly or
indirectly, through any representative or otherwise, solicit or entertain offers
from, negotiate with or in any manner encourage, discuss, accept or consider any
proposal of any other person relating to the acquisition of the shares of
Peninsula or the Bank, their assets or business, in whole or in part, whether
through direct purchase, merger, consolidation or other business combination.
9. CONFIDENTIALITY; NON-SOLICITATION. Each party hereto will, and will
cause their respective representatives, officers, directors, agents or
affiliates to, hold in confidence and not disclose, without the prior written
consent of the other party, any material information about each other (the
"Subject Information"), whether written or oral, that the one party, its
representatives, officers, directors, agents or affiliates, has received from
the other party or is or was privy to, which is not publicly available,
including, without limitation, any information concerning the terms or substance
of this Letter, except as may be required by law. The term "Subject Information"
does not include any information that (i) at the time of disclosure is generally
available to and known by the public, (ii) was available on a nonconfidential
basis from a source other than one of the parties, or (iii) was independently
acquired or developed without violating any obligation under this Letter.
Southern agrees that, for a period of two years from the date hereof, neither
Southern nor any of its affiliates will employ or solicit to employ any of the
current officers or employees of Peninsula or the Bank, so long as they are
employed by Peninsula or the Bank, without obtaining the prior written consent
of Peninsula or the Bank. The provisions of this paragraph will survive any
termination of this Letter or the Definitive Agreement.
10. PUBLIC ANNOUNCEMENT; PRESS RELEASES. The parties agree that they
will jointly make a public announcement with respect to the execution of this
Letter and the transactions contemplated hereby promptly after any acceptance of
the terms of this Letter by Peninsula and the Bank. Any press releases or other
public disclosures relating to the execution of this Letter or the Definitive
Agreement shall be mutually agreed upon by the parties before their
dissemination to the public.
11. EXPENSES; BROKERS. Whether or not the Merger is consummated, each
party hereto shall pay its own expenses incident to the negotiations,
preparation of agreements and consummation of the Merger, including attorneys
fees. Each party represents to the others that it has dealt with no finder or
broker in connection with this Letter or the Merger, and agrees to indemnify and
hold the others harmless from any loss, liability or expense (including without
limitation attorneys' fees) resulting from the indemnifying party's breach of
such representation.
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Dr. P. T. Fleuchaus
Mr. Thomas H. Dargan, Jr.
September 22, 2000
Page 5
12. AMENDMENT, MODIFICATION OR EXTENSION. This Letter may not be
amended, modified or extended, except by a written instrument signed by all of
the parties hereto.
13. ASSIGNMENT. The parties agree that their respective rights and
obligations under this Letter may not be assigned to any other person or entity
without the prior written consent of each of the parties.
14. MULTIPLE COUNTERPARTS. For the convenience of the parties hereto,
this Letter may be executed in multiple counterparts, each of which will be
deemed an original, and all counterparts hereof so executed by the parties
hereto, whether or not such counterpart will bear the execution of each of the
parties hereto, will be deemed to be, and will be construed as, one and the
same. A telecopy or facsimile transmission of a signed counterpart of this
Letter shall be sufficient to bind the parties whose signature(s) appear
thereon.
15. EFFECTIVE DATE. This Letter will be effective only if (i) it is
executed by Southern and (ii) a fully executed copy of this Letter is returned
to Southern on or before 5:00 p.m. Eastern time on Friday, September 29, 2000.
16. NO BREACH OF CONTRACT. By executing this Letter, Southern,
Peninsula and the Bank represent and warrant to each other that neither is a
party to any contract or obligation inconsistent with performance of its
obligations under this Letter.
17. NON-BINDING NATURE OF LETTER. Except with respect to paragraphs 8,
9 and 10, this Letter is not intended to be a binding contract. Your acceptance
of the general principles set forth in this Letter shall not constitute an
agreement by any of the parties hereto to consummate the transactions described
herein. Such an agreement will be contained only in the Definitive Agreement and
this Letter shall not constitute an agreement by any of the parties hereto to
enter into the Definitive Agreement.
We and our advisors are prepared to meet with you and your advisors at
your earliest convenience to discuss all aspects of our offer and believe that
the Definitive Agreement can be reached without delay. We will do everything
possible to bring the transaction to a prompt completion and look forward to
working with you to achieve this objective.
Very truly yours,
SOUTHERN COMMUNITY BANCORP
By: /s/ Charlie W. Brinkley, Jr.
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Name: Charlie W. Brinkley, Jr.
Title: Chairman and CEO
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Dr. P. T. Fleuchaus
Mr. Thomas H. Dargan, Jr.
September 22, 2000
Page 6
Accepted and Agreed to
as of the 22nd day of September, 2000.
PENINSULA BANCORP, INC.
By: /s/ P. T. Fleuchaus
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Name: P. T. Fleuchaus
Title: Chairman of the Board
PENINSULA BANK OF CENTRAL FLORIDA
By: /s/ Thomas H. Dargan, Jr.
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Name: Thomas H. Dargan, Jr.
Title: President and CEO
