As filed with the Securities and Exchange Commission on July 14, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
REPUBLIC SECURITY FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
FLORIDA 6120 59-2335075
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
4400 CONGRESS AVENUE
WEST PALM BEACH, FLORIDA 33407
(561) 840-1200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------
RUDY E. SCHUPP
4400 CONGRESS AVENUE
WEST PALM BEACH, FLORIDA 33407
(561) 840-1200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------
COPIES TO:
JOHN S. FLETCHER, ESQ. WILLIAM S. RUBENSTEIN, ESQ.
MORGAN, LEWIS & BOCKIUS LLP SKADDEN, ARPS, SLATE, MEAGHER
5300 FIRST UNION FINANCIAL CENTER & FLOM LLP
200 SOUTH BISCAYNE BOULEVARD 919 THIRD AVENUE
MIAMI, FLORIDA 33131 NEW YORK, NEW YORK 10022
(305) 579-0432 (212) 735-2642
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective and all
other conditions to the merger of First Palm Beach Bancorp, Inc. ("FPBB") with
and into Republic Security Financial Corporation ("RSFC") (the "Merger"),
pursuant to the Agreement and Plan of Merger dated May 27, 1998 (the "Merger
Agreement") described herein, have been satisfied or waived.
------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER UNIT (2) AGGREGATE OFFERING PRICE REGISTRATION FEE(4)
====================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, par value 21,542,309 not applicable not applicable $65,534.80
$.01 per share(3)
====================================================================================================================================
</TABLE>
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. o
--------------------
(1) Represents an estimate of the shares of the Registrant's Common Stock
issuable pursuant to the Merger Agreement.
(2) The Registration Statement relates to securities of the Registrant
issuable to holders of FPBB common stock, in the proposed merger of
FPBB into Registrant.
(3) Includes preferred share purchase rights. Prior to the occurrence of
certain events, the rights will not be exercisable or evidenced
separately from the Registrant's Common Stock.
(4) Estimated solely for purposes of calculating the registration fee under
Section 6(b) of the Securities Act and calculated pursuant to Rule
457(f)(1) under the Securities Act, based upon the number of shares of
FPBB oustanding on July 6, 1998 and the average of the high and low
sales prices reported for a share of FPBB's Common Stock on July 6,
1998, as reported on the Nasdaq National Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A)
OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
REPUBLIC SECURITY FINANCIAL CORPORATION
4400 CONGRESS AVENUE
WEST PALM BEACH, FLORIDA 33407
__________, 1998
Dear Shareholder:
You are cordially invited to attend the Special Meeting (the "Special
Meeting") of Shareholders of Republic Security Financial Corporation ("RSFC"),
which will be held on __________, ____________, 1998 at ___ local time, at
__________________________________________________.
As described in the enclosed Joint Proxy Statement/Prospectus, at the
Special Meeting, shareholders will be asked to act upon the following proposals:
1. Approval of the Agreement and Plan of Merger, dated as of May 27, 1998
(the "Merger Agreement"), by and between RSFC and First Palm Beach Bancorp,
Inc. ("FPBB"), providing for the merger of FPBB with and into RSFC (the
"Merger").
2. Approval of an amendment to RSFC's Articles of Incorporation (the
"Amendment to the Articles") increasing the authorized shares of its common
stock, par value $0.01 per share (the "RSFC Common Stock"), from
100,000,000 to 500,000,000, increasing the authorized shares of Series B
Junior Participating Preferred Stock from 1,000,000 to 5,000,000 and
deleting the 7% Cumulative Convertible Preferred Stock, Series C,
therefrom.
3. Approval of an amendment to the Republic Security Financial Corporation
1997 Performance Incentive Plan (the "Plan") increasing the number of
shares of RSFC Common Stock issuable under the Plan from 2,000,000 shares
to 5,000,000 shares (the "Amendment to the Plan").
Pursuant to the Merger Agreement, upon consummation of the Merger each
share of common stock of FPBB, par value $.01 per share (the "FPBB Common
Stock"), will be converted into 4.194 shares of RSFC Common Stock (the "Exchange
Ratio"), and cash in lieu of fractional shares, unless the Exchange Ratio is
otherwise adjusted in accordance with the terms of the Merger Agreement. The
Merger Agreement provides that the Exchange Ratio may be adjusted under certain
circumstances where the price of RSFC Common Stock drops below certain levels.
Such circumstances are further described in the accompanying Joint Proxy
Statement/Prospectus, which you are urged to read carefully. On _________, 1998,
the closing price of the RSFC Common Stock was $_______. If the Merger had been
consummated on that date, each share of FPBB Common Stock would have been
converted into _____ shares of RSFC Common Stock with an equivalent market value
of $________ and the aggregate dollar value of all RSFC shares to be issued in
the Merger would have been $_____________. The actual market value of the RSFC
Common Stock to be issued in the Merger may be different due to changes in the
market value of the RSFC Common Stock and possible changes to the Exchange
Ratio.
The Amendment to the Articles will provide a sufficient number of
authorized and unissued shares of RSFC Common Stock for RSFC to issue in any
future stock dividends, public offerings or acquisitions and for other corporate
purposes. Although RSFC has no present plans for any such stock dividend,
acquisition or offering, RSFC expects to continue to review acquisition
opportunities as they become available.
The Amendment to the Plan will provide additional RSFC shares available for
future grants under the Plan. Without the approval of the Amendment to the Plan,
the Plan may lack a sufficient number of shares available for future grants.
Consummation of the Merger is subject to certain conditions, including, but
not limited to, approval of the Merger by the requisite vote of the shareholders
of each of First Palm Beach Bancorp, Inc. and Republic Security Financial
Corporation and the approval by various regulatory agencies of the Merger and
the merger by and between Republic Security Bank and First Bank of Florida.
<PAGE>
THE BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF RSFC AND ITS SHAREHOLDERS. IN ADDITION, THE BOARD OF DIRECTORS HAS
RECEIVED THE OPINION OF ITS FINANCIAL ADVISER, SANDLER O'NEILL & PARTNERS, L.P.,
AS OF _________, 1998, TO THE EFFECT THAT THE EXCHANGE RATIO IS FAIR FROM A
FINANCIAL POINT OF VIEW TO RSFC. ACCORDINGLY, THE BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS THAT YOU VOTE AT THE SPECIAL
MEETING IN FAVOR OF THE MERGER AGREEMENT.
Only holders of RSFC Common Stock of record at the close of business on
__________, 1998 (the "Record Date"), are entitled to notice of and to vote at
the Special Meeting or any adjournments or postponements thereof.
Approval of the Merger Agreement requires the affirmative vote of a
majority of the shares of RSFC Common Stock issued and outstanding as of the
Record Date. Failure to return a properly executed proxy card or to vote at the
Special Meeting will have the same effect as a vote against the Merger
Agreement. Abstentions and broker non-votes will be included for purposes of
determining the presence of a quorum at the Special Meeting, but are the
equivalent of "against" votes for purposes of approval of the Merger Agreement.
Approval of the Amendment to the Articles and the Amendment to the Plan require
that the number of votes cast in favor exceed the number of votes cast against.
You are urged to read the enclosed Joint Proxy Statement/Prospectus, which
provides you with a description of the Amendment to the Articles, the Amendment
to the Plan and the Merger Agreement to be voted upon at the Special Meeting.
Because of the significance of the proposed Merger to RSFC, your
participation in this meeting, in person or by proxy, is especially important.
It is very important that your shares be represented at the Special Meeting.
Whether or not you plan to attend the Special Meeting, you are urged to
complete, date, sign and return the proxy card in the enclosed postage-paid
envelope. Your shares will be voted at the Special Meeting in accordance with
your instructions. You can revoke the proxy at any time prior to voting and the
delivery of a proxy will not affect your right to vote in the event you attend
the Special Meeting in person.
Thank you and I look forward to seeing you at the Special Meeting.
Sincerely,
Rudy E. Schupp
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
FIRST PALM BEACH BANCORP, INC.
450 SOUTH AUSTRALIAN AVENUE
WEST PALM BEACH, FLORIDA 33401
_________, 1998
Dear Stockholder:
You are cordially invited to attend the Special Meeting (the "Special
Meeting") of Stockholders of First Palm Beach Bancorp, Inc. ("FPBB"), which will
be held on __________, ____________, 1998 at ___ local time, at
__________________________________________________.
At the Special Meeting, stockholders will be asked to consider a proposal
to approve and adopt the Agreement and Plan of Merger, dated as of May 27, 1998
(the "Merger Agreement"), by and between Republic Security Financial Corporation
("RSFC") and FPBB, providing for the merger of FPBB with and into RSFC (the
"Merger").
Pursuant to the Merger Agreement, upon consummation of the Merger each
share of common stock of FPBB, par value $.01 per share (the "FPBB Common
Stock") will be converted into 4.194 (the "Exchange Ratio") shares of common
stock of RSFC ("RSFC Common Stock"), and cash in lieu of fractional shares. The
Merger Agreement provides that the Exchange Ratio may be increased under certain
circumstances where the price of RSFC Common Stock drops below certain levels.
Such circumstances are further described in the accompanying Joint Proxy
Statement/Prospectus and in the Merger Agreement, which you are urged to read
carefully. On _________, 1998, the closing price of RSFC Common Stock was
$_______. If the Merger had been consummated on that date, each share of FPBB
Common Stock would have been converted into _____ shares of RSFC Common Stock
with an aggregate market value of $________ and the aggregate dollar value of
all RSFC shares to be issued in the Merger would have been approximately
$________. The actual market value of the RSFC Common Stock to be received in
the Merger may be different due to changes in the market value of the RSFC
Common Stock and possible changes to the Exchange Ratio.
Consummation of the Merger is subject to certain conditions, including, but
not limited to, approval of the Merger by the requisite vote of the stockholders
of each of FPBB and RSFC and the approval by various regulatory agencies of the
Merger and related matters.
THE BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF FPBB AND ITS STOCKHOLDERS. IN ADDITION, THE BOARD OF DIRECTORS HAS
RECEIVED THE OPINION OF ITS FINANCIAL ADVISOR, KEEFE, BRUYETTE & WOODS, INC.,
DATED AS OF THE DATE OF THE JOINT PROXY STATEMENT/PROSPECTUS, THAT THE EXCHANGE
RATIO IS FAIR TO FPBB'S STOCKHOLDERS FROM A FINANCIAL POINT OF VIEW.
ACCORDINGLY, THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND
RECOMMENDS THAT YOU VOTE AT THE SPECIAL MEETING IN FAVOR OF THE MERGER
AGREEMENT.
Only holders of FPBB Common Stock of record at the close of business on
________, 1998 (the "Record Date") are entitled to notice of and to vote at the
Special Meeting or any adjournments or postponements thereof. Approval of the
Merger Agreement requires the affirmative vote of holders of a majority of the
shares of FPBB Common Stock issued and outstanding as of the Record Date. It is
very important that your shares are represented at the Special Meeting, whether
or not you plan to attend in person. Failure to return a properly executed proxy
card or to vote at the Special Meeting will have the same effect as a vote
against the Merger.
A Notice of the Special Meeting and a Joint Proxy Statement/Prospectus
containing detailed information concerning the proposed Merger is attached.
Please read this material carefully.
Your participation in the Special Meeting, in person or by proxy, is
important. Whether or not you plan to attend the Special Meeting, you are urged
to complete, date, sign and return the proxy card in the enclosed postage paid
envelope.
Thank you and I look forward to seeing you at the Special Meeting.
Sincerely,
Louis O. Davis, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
REPUBLIC SECURITY FINANCIAL CORPORATION
4400 CONGRESS AVENUE
WEST PALM BEACH, FLORIDA 33407
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ________________, 1998
A Special Meeting (the "Special Meeting") of Shareholders of Republic
Security Financial Corporation ("RSFC") will be held on __________,
____________, 1998 at ___ local time, at
___________________________________________, to consider the following matters:
1. Approval of the Agreement and Plan of Merger, dated as of May 27, 1998,
by and between RSFC and First Palm Beach Bancorp, Inc. ("FPBB"), providing
for the merger of FPBB with and into RSFC.
2. Approval of an amendment to RSFC's Articles of Incorporation increasing
the authorized shares of its common stock (the "RSFC Common Stock") from
100,000,000 to 500,000,000, increasing the authorized shares of Series B
Junior Participating Preferred Stock from 1,000,000 to 5,000,000 and
deleting the 7% Cumulative Convertible Preferred Stock, Series C,
therefrom.
3. Approval of an amendment to the Republic Security Financial Corporation
1997 Performance Incentive Plan (the "Plan") increasing the number of
shares of RSFC Common Stock issuable under the Plan from 2,000,000 shares
to 5,000,000 shares.
4. Such other business as may properly be brought before the Special
Meeting.
The Board of Directors has fixed the close of business on __________, 1998,
as the record date for determining shareholders of RSFC entitled to notice of
and to vote at the Special Meeting and at any adjournments or postponements
thereof. A list of shareholders entitled to notice of the meeting shall be
available for inspection by any shareholder, during regular business hours, for
a period of ten days prior to the meeting at the principal executive offices of
RSFC and at the Special Meeting.
You are cordially invited to attend the Special Meeting. Whether or not you
plan to attend the Special Meeting, you are urged to complete, date, sign and
return at your earliest convenience, in the postage-paid envelope provided, the
enclosed proxy card which is being solicited on behalf of RSFC's Board of
Directors. The proxy card shows the form in which your shares of RSFC Common
Stock are registered. Your signature must be in the same form. Your shares will
be voted at the Special Meeting in accordance with your instructions. You can
revoke the proxy at any time prior to voting, and the delivery of a proxy will
not affect your right to vote in the event you attend the Special Meeting in
person. We look forward to seeing you.
By Order of the Board of Directors,
H. Gearl Gore
SECRETARY
West Palm Beach, Florida
__________, 1998
<PAGE>
FIRST PALM BEACH BANCORP, INC.
450 SOUTH AUSTRALIAN AVENUE
WEST PALM BEACH, FLORIDA 33401
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ________________, 1998
A Special Meeting (the "Special Meeting") of Stockholders of First Palm
Beach Bancorp, Inc. ("FPBB") will be held on __________, ____________, 1998 at
___ local time, at __________________________________________________, to
consider and vote upon the following proposals:
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
May 27, 1998, by and between Republic Security Financial Corporation
("RSFC") and FPBB, providing for the merger of FPBB with and into
RSFC. A copy of the Merger Agreement is attached as Annex A to this
Joint Proxy Statement/Prospectus.
2. Such other business as may properly be brought before the Special
Meeting.
The Board of Directors has fixed the close of business on __________, 1998,
as the record date for determining stockholders of FPBB entitled to notice of
and to vote at the Special Meeting and at any adjournments or postponements
thereof. A list of stockholders entitled to notice of and to vote at the Special
Meeting will be available for inspection by any stockholder, for any purpose
germane to the Special Meeting, during regular business hours, for a period of
ten days prior to the meeting at the principal executive offices of FPBB and at
the Special Meeting.
Your vote is important regardless of the number of shares you own. Whether
or not you plan to attend the Special Meeting, you are urged to complete, date,
sign and return the enclosed proxy card in the envelope provided. The proxy card
is being solicited on behalf of FPBB's Board of Directors. The proxy card shows
the form in which your shares of FPBB Common Stock are registered. Your
signature must be in the same form. Your shares will be voted at the Special
Meeting in accordance with your instructions. You can revoke the proxy at any
time prior to voting, and the delivery of a proxy will not affect your right to
vote in the event you attend the Special Meeting in person. We look forward to
seeing you.
By Order of the Board of Directors,
John C. Trammel
SECRETARY
West Palm Beach, Florida
__________, 1998
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMETN RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 14, 1998
REPUBLIC SECURITY FINANCIAL CORPORATION
AND
FIRST PALM BEACH BANCORP, INC.
JOINT PROXY STATEMENT
-------------
REPUBLIC SECURITY FINANCIAL CORPORATION
PROSPECTUS
_________ SHARES OF COMMON STOCK
This Joint Proxy Statement/Prospectus ("Joint Proxy Statement/Prospectus")
is being furnished to shareholders of Republic Security Financial Corporation
("RSFC") and stockholders of First Palm Beach Bancorp, Inc. ("FPBB") in
connection with the solicitation of proxies by the Board of Directors of RSFC
from holders of RSFC's outstanding shares of common stock, par value $0.01 per
share (the "RSFC Common Stock"), for use at a Special Meeting of shareholders of
RSFC to be held on ___________, 1998, at ____ local time (together with any
adjournments or postponements thereof, the "RSFC Special Meeting") and in
connection with the solicitation of proxies by the Board of Directors of FPBB
from holders of FPBB's outstanding shares of common stock, par value $0.01 per
share (the "FPBB Common Stock"), for use at a special meeting of stockholders of
FPBB to be held on __________, 1998, at _____ local time (together with any
adjournments or postponements thereof, the "FPBB Special Meeting" and, together
with the RSFC Special Meeting, the "Special Meetings").
At the Special Meetings, the shareholders of RSFC and the stockholders of
FPBB will be asked to consider and vote upon a proposal to approve the proposed
merger (the "Merger") of FPBB with and into RSFC, pursuant to the Agreement and
Plan of Merger, dated as of May 27, 1998, between RSFC and FPBB (the "Merger
Agreement"). Pursuant to the Merger Agreement, upon consummation of the Merger
each share of FPBB Common Stock will be, with certain exceptions, converted into
4.194 shares of RSFC Common Stock (the "Exchange Ratio"), and cash in lieu of
fractional shares. See "THE MERGER--The Merger Agreement-Exchange Ratio." Upon
consummation of the Merger, RSFC will also convert all outstanding FPBB stock
options into RSFC stock options. Within five business days after the Merger,
RSFC will register shares which may be acquired upon exercise of such options on
a Registration Statement on Form S-8 under the Securities Act of 1933, as
amended (the "Securities Act").
The RSFC Common Stock is traded under the symbol "RSFC" on the Nasdaq
National Market. The FPBB Common Stock is traded on the Nasdaq National Market
under the symbol "FFPB." On May 27, 1998, the last trading day prior to the
execution of the Merger Agreement, the last reported sales price per share on
the Nasdaq National Market of RSFC Common Stock and FPBB Common Stock was $13
1/8 per share and $36 1/2 per share, respectively. On ____________, 1998, the
last trading day prior to the date of this Joint Proxy Statement/Prospectus, the
last reported sales price per share on the Nasdaq National Market of RSFC Common
Stock and FPBB Common Stock was $____ per share and $_____ per share,
respectively. If the Merger had been consummated on ___________, 1998, each
share of FPBB Common Stock would have been converted into ________ shares of
RSFC Common Stock with an aggregate market value of $________, and the aggregate
dollar value of all RSFC shares to be issued in the Merger would have been
approximately $_________.
Because the market price of RSFC Common Stock is subject to fluctuation,
the value of the shares of RSFC Common Stock that holders of FPBB Common Stock
would receive in the Merger may increase or decrease prior to and after the
Merger. See "MARKET PRICE AND DIVIDEND DATA."
This Joint Proxy Statement/Prospectus also constitutes a prospectus of RSFC
with respect to shares of the RSFC Common Stock issuable to FPBB stockholders
upon consummation of the Merger.
For shareholders of RSFC, this Joint Proxy Statement/Prospectus also
relates to proposals to approve an amendment to the RSFC Articles of
Incorporation (the "RSFC Articles") and an amendment of the Republic Security
Financial
<PAGE>
Corporation 1997 Performance Incentive Plan (the "Plan"). See "ADDITIONAL
PROPOSALS FOR CONSIDERATION AT THE RSFC SPECIAL MEETING."
This Joint Proxy Statement/Prospectus and the accompanying forms of proxy
are first being mailed to holders of RSFC Common Stock and FPBB Common Stock on
or about __________, 1998.
-------------------
THE SHARES OF RSFC COMMON STOCK OFFERED HEREBY HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------
THE SHARES OF RSFC COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY NOR ARE THEY GUARANTEED BY ANY
BANK OR BANK HOLDING COMPANY.
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS __________, 1998.
iii
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AND, IF SO GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS JOINT
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR THE
SALE OF ANY SECURITIES HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF RSFC OR FPBB SINCE
THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
RSFC and FPBB are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information concerning RSFC and FPBB may be
inspected and copied at the Commission's Public Reference Section, Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, where copies
may be obtained at prescribed rates, as well as at the following regional
offices: Northeast Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048; and Midwest Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. The Commission maintains a web site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding RSFC and FPBB. Shares of RSFC Common Stock and
FPBB Common Stock are listed on the Nasdaq National Market. Copies of reports,
proxy statements and other information concerning RSFC and FPBB may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
RSFC has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereof, the "Registration Statement") under the
Securities Act with respect to the shares of RSFC Common Stock to be issued by
it in the Merger. This Joint Proxy Statement/Prospectus constitutes the
Prospectus of RSFC that is filed as part of such Registration Statement. As
permitted by the rules and regulations of the Commission, this Joint Proxy
Statement/Prospectus omits certain information contained in the Registration
Statement and reference is hereby made to the Registration Statement for further
information with respect to RSFC and the RSFC Common Stock.
All information contained in this Joint Proxy Statement/Prospectus with
respect to RSFC and Republic Security Bank, a wholly owned subsidiary of RSFC
("Republic Security"), except certain financial information of FPBB described
under "THE MERGER--Opinion of Sandler O'Neill & Partners, L.P." has been
supplied by RSFC for inclusion herein and has not been independently verified by
FPBB. All information contained in this Joint Proxy Statement/Prospectus with
respect to FPBB and First Bank of Florida, a wholly owned subsidiary of FPBB
("First Bank"), except certain financial information of RSFC described under
"THE MERGER--Opinion of Keefe, Bruyette & Woods, Inc." has been supplied by FPBB
for inclusion herein and has not been independently verified by RSFC.
iv
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by RSFC and FPBB
pursuant to the Exchange Act are incorporated in this Joint Proxy
Statement/Prospectus by reference:
1. RSFC Annual Report on Form 10-K for the fiscal year ended December 31,
1997 filed with the Commission on March 25, 1998 (the "1997 RSFC Form
10-K").
2. RSFC Current Report on Form 8-K filed with the Commission on July 10,
1998.
3. RSFC Current Report on Form 8-K filed with the Commission on May 28,
1998.
4. RSFC Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
filed with the Commission on _____________, 1998.
5. RSFC Quarterly Report on Form 10-Q for the quarter ended March 31,
1998 filed with the Commission on May 15, 1998.
6. The description of RSFC Common Stock set forth in RSFC's Registration
Statement filed by RSFC pursuant to Section 12 of the Exchange Act
including any amendment or report filed for purposes of updating any
such description.
7. The portions of the RSFC's Proxy Statement for the Annual Meeting of
Shareholders held on April 29, 1998 that have been incorporated by
reference in the 1997 RSFC Form 10-K.
8. FPBB Registration Statement on Form 8-A dated January 25, 1995.
9. FPBB Annual Report on Form 10-K for the fiscal year ended September
30, 1997 filed with the Commission on December 23, 1997 (the "1997
FPBB Form 10-K").
10. FPBB Current Report on Form 8-K filed with the Commission on June 8,
1998.
11. FPBB Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
filed with the Commission on _____________, 1998.
12. FPBB Quarterly Report on Form 10-Q for the quarter ended March 31,
1998 filed with the Commission on May 8, 1998.
13. FPBB Quarterly Report on Form 10-Q for the quarter ended December 31,
1997 filed with the Commission on February 9, 1998.
14. The description of FPBB Common Stock set forth in FPBB's Registration
Statement filed by FPBB pursuant to Section 12 of the Exchange Act
including any amendment or report filed for purposes of updating any
such description.
15. The portions of FPBB's Proxy Statement for the Annual Meeting of
Stockholders held on January 21, 1998 that have been incorporated by
reference in the 1997 FPBB Form 10-K.
All reports and other documents filed by RSFC or FPBB after the date of
this Joint Proxy Statement/Prospectus pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act and prior to the date of the Special Meetings shall be
deemed to be incorporated by reference herein and to be a part hereof from the
dates of filing of such reports or documents. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this Joint
Proxy Statement/Prospectus to the extent that a statement contained herein or in
another document which also is or is deemed to be incorporated by
v
<PAGE>
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS RELATING
TO RSFC (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED HEREIN BY REFERENCE) ARE AVAILABLE WITHOUT CHARGE UPON
REQUEST FROM REPUBLIC SECURITY FINANCIAL CORPORATION, 4400 CONGRESS AVENUE, P.O.
BOX 4298, WEST PALM BEACH, FLORIDA 33402-4298, ATTENTION: SECRETARY, TELEPHONE:
(561) 840-7841. THOSE DOCUMENTS RELATING TO FPBB (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED HEREIN BY
REFERENCE) ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM FIRST PALM BEACH
BANCORP, INC., 450 SOUTH AUSTRALIAN AVENUE, WEST PALM BEACH, FLORIDA 33401,
ATTENTION: SECRETARY, TELEPHONE: (561) 655-8511. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY ___________, 1998.
CERTAIN FORWARD-LOOKING STATEMENTS
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS, INCLUDING STATEMENTS ABOUT THE BUSINESS, OPERATIONS, FINANCIAL
CONDITION AND PROSPECTS OF RSFC AND FPBB, OF RSFC FOLLOWING THE MERGER (THE
"COMBINED COMPANY"), OF REPUBLIC SECURITY AND FIRST BANK FOLLOWING THEIR MERGER
(THE "COMBINED BANK"), AND VARIOUS STATEMENTS CONTAINED UNDER THE CAPTIONS
"SUMMARY," "UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA" AND "THE
MERGER." THE ACTUAL RESULTS OF RSFC, FPBB, THE COMBINED COMPANY AND THE COMBINED
BANK COULD DIFFER MATERIALLY FROM SUCH FORWARD-LOOKING STATEMENTS.
AMONG THE FACTORS THAT COULD AFFECT THE COMBINED COMPANY'S ABILITY TO
ACHIEVE ITS GOALS, AND CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
EXPRESSED IN THE FORWARD-LOOKING STATEMENTS, INCLUDE, BUT ARE NOT LIMITED TO,
THE FOLLOWING:
- THE ABILITY OF THE COMBINED COMPANY TO SUCCESSFULLY INTEGRATE RSFC'S
AND FPBB'S OPERATIONS IN A TIMELY MANNER AND TO CONTAIN RESTRUCTURING
EXPENSES;
- THE ABILITY OF THE COMBINED BANK TO SUCCESSFULLY INTEGRATE REPUBLIC
SECURITY'S AND FIRST BANK'S OPERATIONS IN A TIMELY MANNER AND TO
CONTAIN RESTRUCTURING EXPENSES;
- RAPID CHANGES IN INTEREST RATES;
- ADVERSE ECONOMIC CONDITIONS IN PALM BEACH, BROWARD, MIAMI-DADE,
MARTIN AND LEE COUNTIES, FLORIDA AS WELL AS NATIONALLY;
- INTENSE COMPETITION FOR DEPOSITORS AND BORROWERS FROM FINANCIAL
INSTITUTIONS WITH GREATER RESOURCES THAN THE COMBINED BANK;
- ADVERSE CHANGES IN LAWS AND REGULATIONS WHICH MAY ADVERSELY AFFECT
THE BUSINESSES IN WHICH THE COMBINED COMPANY WOULD BE ENGAGED; AND
- DISRUPTIONS OF OPERATIONS OF THE COMBINED COMPANY AS A RESULT OF THE
"YEAR 2000 PROBLEM."
THESE AND OTHER RISKS AND UNCERTAINTIES AFFECTING THE COMBINED COMPANY AND
THE COMBINED BANK ARE DISCUSSED IN GREATER DETAIL IN THIS JOINT PROXY
STATEMENT/PROSPECTUS.
vi
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION........................................................ iv
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE..................................................... v
SUMMARY...................................................................... 1
The Companies.............................................................. 1
The Special Meetings....................................................... 2
No Dissenters' Rights of Appraisal......................................... 2
The Merger................................................................. 3
Selected Consolidated Financial Data--
Republic Security Financial Corporation.................................. 6
Selected Consolidated Financial Data--
First Palm Beach Bancorp, Inc. .......................................... 11
Selected Comparative Per Share Data........................................ 15
MARKET PRICE AND DIVIDEND DATA............................................... 16
THE SPECIAL MEETINGS......................................................... 18
VOTING AND PROXY INFORMATION................................................. 19
RSFC....................................................................... 19
FPBB....................................................................... 19
Proxies.................................................................... 20
NO DISSENTERS' RIGHTS OF APPRAISAL........................................... 21
THE MERGER................................................................... 22
Background to the Merger................................................... 22
Recommendation of FPBB Board of Directors;
FPBB's Reasons for the Merger............................................ 23
Opinion of Keefe, Bruyette & Woods, Inc.................................... 24
Recommendation of RSFC Board of Directors;
RSFC's Reasons for the Merger............................................ 29
Opinion of Sandler O'Neill & Partners, L.P................................. 30
The Merger Agreement....................................................... 34
Certain Federal Income Tax Consequences.................................... 41
Stock Option Agreement..................................................... 42
Restrictions on Resales of Securities...................................... 44
Anticipated Accounting Treatment........................................... 45
Regulatory Approvals....................................................... 45
Interests of Certain Persons in the Merger................................. 46
UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL DATA..................................................... 50
MANAGEMENT FOLLOWING THE MERGER.............................................. 57
Executive Compensation, Benefits and Related Matters....................... 58
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT........................................................ 60
COMPARISON OF RIGHTS OF HOLDERS OF RSFC AND
FPBB COMMON STOCK............................................................ 61
Authorized Capital Stock................................................... 61
Board of Directors......................................................... 61
Voting Limitations......................................................... 62
Special Meetings of Shareholders; Action Without
a Meeting................................................................ 62
Mergers, Share Exchanges and Sales of Assets............................... 62
Amendment of Articles of Incorporation and of Bylaws...................... 62
Rights of Dissenting Shareholders.......................................... 63
Dividends.................................................................. 63
Certain Anti-Takeover Provisions........................................... 64
Rights Plan................................................................ 65
Consideration of Other Constituencies...................................... 67
Directors' Liability....................................................... 67
PROXY SOLICITATION........................................................... 68
LEGAL MATTERS................................................................ 68
EXPERTS...................................................................... 68
ADDITIONAL PROPOSALS FOR CONSIDERATION
AT THE RSFC SPECIAL MEETING.................................................. 69
vii
<PAGE>
ANNEX A: Agreement and Plan of Merger...............................A-1
ANNEX B: Stock Option Agreement.....................................B-1
ANNEX C: Opinion of Sandler O'Neill &
Partners, L.P..........................................C-1
ANNEX D: Opinion of Keefe, Bruyette &
Woods, Inc.............................................D-1
ANNEX E: Text of proposed Amendment to
RSFC's Articles of Incorporation.......................E-1
ANNEX F: Republic Security Financial
Corporation 1997 Performance
Incentive Plan........................................F-1
viii
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS INTENDED ONLY TO HIGHLIGHT CERTAIN INFORMATION
CONTAINED ELSEWHERE IN THIS JOINT PROXY STATEMENT/PROSPECTUS AND MAY NOT CONTAIN
ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. THE SUMMARY IS NOT INTENDED TO
BE A COMPLETE STATEMENT OF ALL MATERIAL FEATURES OF THE MERGER AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS JOINT PROXY STATEMENT/PROSPECTUS AND THE ANNEXES ATTACHED
HERETO. TO UNDERSTAND THE MERGER FULLY AND FOR A MORE COMPLETE DESCRIPTION OF
THE LEGAL TERMS OF THE MERGER, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT
AND THE DOCUMENTS TO WHICH WE HAVE REFERRED YOU.
THE COMPANIES
RSFC. RSFC is a commercial bank holding company, headquartered in West
Palm Beach, Florida. Its principal business is the operation of its subsidiary,
Republic Security, a Florida commercial bank. As of March 31, 1998, RSFC had
consolidated assets of $1.0 billion, deposits of $753 million and shareholders'
equity of $88.3 million.
Republic Security commenced operations on November 19, 1984 as a stock
savings bank. On November 8, 1995, it converted its charter from a federal
savings bank to a state chartered commercial bank. Republic Security is a member
of the Federal Reserve Bank and the Federal Home Loan Bank System (the "FHLB"),
and its deposits are insured by the Federal Deposit Insurance Corporation (the
"FDIC") up to applicable limits.
Republic Security is one of the top 10 largest independent commercial
banks headquartered in Florida, with thirty-four full-service branches, of which
thirteen branches are located in Palm Beach County, Florida, thirteen in Broward
County, Florida and eight in Miami-Dade County, Florida. Republic Security's
main business activities include attracting deposits, originating loans, making
investments and servicing loans for Republic Security and for others. Republic
Security's loan portfolio is primarily comprised of residential and commercial
real estate loans, business loans and consumer loans, including automobile
loans. At March 31, 1998, Republic Security's loan portfolio was composed of 12%
commercial purpose loans, 44% commercial real estate loans, 31% residential real
estate loans (including construction loans) and 13% consumer loans. Earnings
depend primarily upon the difference between interest received on loans and
investments and interest paid on Republic Security's deposit base and borrowing.
On July 2, 1998, RSFC acquired Unifirst Federal Savings Bank ("Unifirst").
At that time, Unifirst had assets of $141.5 million, deposits of $128 million
and shareholders' equity of $9.2 million.
On December 2, 1997, RSFC acquired County National Bank of South Florida.
At that time, County had assets of $255 million, deposits of $226 million and
shareholders' equity of $24.4 million.
On June 30, 1997, Republic Security acquired Family Bank. At that time,
Family Bank had assets of $256 million, deposits of $219 million and
shareholders' equity of $21.8 million.
The address of RSFC's principal executive offices is 4400 Congress Avenue,
West Palm Beach, Florida 33407 and its telephone number is (561) 840-1200.
FPBB. FPBB is a Delaware chartered savings and loan holding company,
headquartered in West Palm Beach, Florida. Through its wholly owned subsidiary,
First Bank, FPBB operates 51 banking offices (of which 24 are supermarket
branches and 27 are stand-alone branches) located in Palm Beach, Broward,
Miami-Dade, Martin and Lee Counties in Florida, and two mortgage loan production
offices which are located in Palm Beach County. At March 31, 1998, FPBB had
total consolidated assets of approximately $1.8 billion, deposits of
approximately $1.3 billion and stockholders' equity of approximately $117
million. FPBB is the largest, based on total deposits, and oldest independent
financial institution based in Palm Beach County.
1
<PAGE>
First Bank's principal business is attracting retail deposits from the
general public and investing those deposits, together with funds generated from
operations and borrowings, primarily in one- to four-family, owner-occupied,
residential mortgage loans and, to a lesser extent, consumer loans, construction
loans, commercial real estate loans and multi-family residential mortgage loans.
In addition, First Bank invests in mortgage-backed and related securities,
securities issued by the U.S. Government agencies thereof, and other investments
in which First Bank is permitted to invest under federal laws and regulations.
The address of FPBB's principal executive offices is 450 South Australian
Avenue, West Palm Beach, Florida 33401, and its telephone number is (561)
655-8511.
THE SPECIAL MEETINGS
GENERAL. At the RSFC Special Meeting, to be held on __________,
___________, 1998, at __________________________________________, RSFC
shareholders will consider and vote upon a proposal to approve the Merger
Agreement, as well as proposals to approve amendments to the RSFC Articles and
the Plan. The FPBB Special Meeting will be held on __________, ____________,
1998 at ___ local time, at __________________________________________________.
The purpose of the FPBB Special Meeting is to consider and vote upon a proposal
to approve and adopt the Merger Agreement. See "THE SPECIAL MEETINGS."
RECORD DATES; SHARES ENTITLED TO VOTE ON THE MERGER. Holders of record of
shares of RSFC Common Stock at the close of business on____________, 1998 (the
"RSFC Record Date") and holders of record of shares of FPBB Common Stock at the
close of business on___________, 1998 (the "FPBB Record Date") will be entitled
to notice of and to vote at the respective Special Meetings. At the RSFC Record
Date, there were outstanding [ ] shares of RSFC Common Stock. At the FPBB Record
Date, there were outstanding [ ] shares of FPBB Common Stock. See "VOTING AND
PROXY INFORMATION."
REQUIRED VOTES. The proposal to approve the Merger Agreement must be
approved by the holders of at least a majority of the shares of RSFC Common
Stock outstanding at the RSFC Record Date and at least a majority of the shares
of FPBB Common Stock outstanding at the FPBB Record Date. Brokers who hold RSFC
Common Stock and/or FPBB Common Stock will not have discretionary authority to
vote such shares in the absence of instructions from the beneficial owners
thereof. Abstentions and broker non-votes are equivalent to votes "against" the
approval of the Merger Agreement.
At the respective Record Dates, directors and executive officers of RSFC
and FPBB and their affiliates had the right to vote, in the aggregate _______
shares and _______ shares, respectively, of RSFC Common Stock and FPBB Common
Stock, representing ____% and ____%, respectively, of the RSFC Common Stock and
FPBB Common Stock outstanding as of the respective Record Dates. All of such
persons have informed RSFC and FPBB, as the case may be, of their intent to vote
or direct the vote of all such shares for approval and adoption of the Merger
Agreement. See "VOTING AND PROXY INFORMATION."
NO DISSENTERS' RIGHTS OF APPRAISAL
The holders of RSFC Common Stock will not be entitled to dissenters'
rights of appraisal under Florida law in connection with the Merger because the
shares of RSFC Common Stock will be listed on the Nasdaq National Market as of
the RSFC Record Date. Holders of FPBB Common Stock will not be entitled to
appraisal rights under Delaware law in connection with the Merger because the
shares of FPBB Common Stock were listed on the Nasdaq National Market as of the
FPBB Record Date, and shares of RSFC Common Stock to be issued in the Merger
will be listed on the Nasdaq National Market. See "NO DISSENTERS' RIGHTS OF
APPRAISAL."
2
<PAGE>
THE MERGER
GENERAL. Under the terms of the Merger Agreement, FPBB will be merged with
and into RSFC, and FPBB will cease to exist as a separate legal entity. As a
consequence of the Merger, at the effective time of the Merger (the "Effective
Time"), each share of FPBB Common Stock issued and outstanding immediately prior
to the Effective Time, except for shares held directly or indirectly by RSFC or
FPBB (other than shares held by RSFC or FPBB in a fiduciary capacity ("Trust
Account Shares") or in respect of a debt previously contracted ("DPC Shares")),
will be converted into 4.194 shares of RSFC Common Stock (the "Exchange Ratio"),
subject to possible increase under certain circumstances. See "THE MERGER--The
Merger Agreement-Exchange Ratio." Based upon the number of shares of FPBB Common
Stock and RSFC Common Stock outstanding as of July 10, 1998 and the Exchange
Ratio, the holders of the then outstanding shares of FPBB Common Stock would own
securities representing approximately 46% of the outstanding shares of RSFC
Common Stock after consummation of the Merger. A copy of the Merger Agreement is
attached as Annex A to this Joint Proxy Statement/Prospectus. Pursuant to the
Merger Agreement, subsequent to the Merger, First Bank, a wholly owned
subsidiary of FPBB, will be merged with and into Republic Security, a wholly
owned subsidiary of RSFC (the "Bank Merger"), and First Bank will cease to exist
as a separate entity. See "THE MERGER."
THE VALUE OF RSFC COMMON STOCK THAT HOLDERS OF FPBB COMMON STOCK WILL
RECEIVE IN THE MERGER IS SUBJECT TO FLUCTUATION DUE TO CHANGES IN THE MARKET
PRICE OF RSFC COMMON STOCK. FPBB STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR RSFC COMMON STOCK. FOR CERTAIN RECENT STOCK PRICE DATA, SEE
"MARKET PRICE AND DIVIDEND DATA."
Additionally, at the Effective Time each outstanding option to purchase
shares of FPBB Common Stock issued pursuant to FPBB's stock option plans will be
assumed by RSFC and will constitute an option to acquire on the same terms and
conditions as were applicable under such FPBB stock option plan the same number
of shares of RSFC Common Stock into which such shares would have been converted
pursuant to the Merger had such options been exercised immediately prior to the
Effective Time at a price per share equal to the exercise price per share of
FPBB Common Stock pursuant to such options, divided by the Exchange Ratio.
Within five business days after the Merger, RSFC intends to register the shares
which may be acquired upon exercise of the options on a Registration Statement
on Form S-8 under the Securities Act.
RECOMMENDATION OF FPBB'S BOARD OF DIRECTORS. The FPBB Board of Directors
(the "FPBB Board") has unanimously approved the Merger Agreement and has
determined that the Merger is fair to, and in the best interests of, FPBB and
its stockholders. THE FPBB BOARD UNANIMOUSLY RECOMMENDS THAT THE FPBB
STOCKHOLDERS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT. For a discussion of
the factors considered by the FPBB Board in approving the Merger Agreement, see
"THE MERGER--Recommendation of FPBB Board of Directors; FPBB's Reasons for the
Merger."
OPINION OF KEEFE, BRUYETTE & WOODS, INC. On May 27, 1998, Keefe,
Bruyette & Woods, Inc. ("Keefe, Bruyette") delivered its oral opinion to the
FPBB Board to the effect that, as of such date, the Exchange Ratio was fair from
a financial point of view to the stockholders of FPBB. Keefe, Bruyette has
updated its opinion by delivery to the FPBB Board of a written opinion to the
same effect dated as of the date of this Joint Proxy Statement/Prospectus. The
full text of the written opinion of Keefe, Bruyette which sets forth the
assumptions made, matters considered and limitations on the review undertaken,
is attached as Annex D to this Joint Proxy Statement/Prospectus and should be
read carefully in its entirety. See "THE MERGER--Opinion of Keefe, Bruyette &
Woods, Inc."
RECOMMENDATION OF RSFC'S BOARD OF DIRECTORS. The RSFC Board of Directors
(the "RSFC Board") has unanimously approved the Merger Agreement and has
determined that the Merger is fair to, and in the best interests of, RSFC and
its shareholders. THE RSFC BOARD UNANIMOUSLY RECOMMENDS THAT THE RSFC
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT. For a discussion of
the factors considered by the RSFC Board in approving the Merger Agreement, see
"THE MERGER--Recommendation of RSFC Board of Directors; RSFC's Reasons for the
Merger."
3
<PAGE>
OPINION OF SANDLER O'NEILL & PARTNERS, L.P. On May 27, 1998, Sandler
O'Neill & Partners, L.P. ("Sandler O'Neill") delivered its oral opinion to the
RSFC Board to the effect that, as of such date, the Exchange Ratio was fair from
a financial point of view to the shareholders of RSFC. Sandler O'Neill has
updated its opinion by delivery to the RSFC Board of a written opinion to the
same effect dated as of the date of this Joint Proxy Statement/Prospectus. The
full text of the written opinion of Sandler O'Neill, which sets forth the
assumptions made, matters considered and limitations on the review undertaken,
is attached as Annex C to this Joint Proxy Statement/Prospectus and should be
read carefully in its entirety. See "THE MERGER--Opinion of Sandler O'Neill &
Partners, L.P."
CONDITIONS TO THE MERGER. Consummation of the Merger is subject to various
mutual conditions, including, among others: (i) receipt by RSFC and FPBB of all
governmental approvals required in connection with the Merger; (ii) approval of
the Merger Agreement by the shareholders of RSFC and the stockholders of FPBB;
(iii) receipt from respective counsel of RSFC and FPBB of tax opinions regarding
certain federal income tax consequences of the Merger; (iv) receipt of a letter
from RSFC's independent accountants that the Merger qualifies for
pooling-of-interests accounting treatment and receipt of a letter from FPBB's
independent accountants that FPBB qualifies as a party to a pooling-of-interests
business combination; (v) the shares of RSFC Common Stock to be issued to
holders of FPBB Common Stock pursuant to the Merger shall have been authorized
for quotation on the Nasdaq National Market subject to official notice of
issuance; and (vi) satisfaction of other customary closing conditions. See "THE
MERGER--The Merger Agreement-Conditions to the Merger."
REGULATORY APPROVALS. The Merger is subject to prior approval by the Board
of Governors of the Federal Reserve System (the "FRB"). Additionally, the Bank
Merger is subject to the prior approval of the Florida Department of Banking and
Finance ("Florida Banking Department"). Applications have been filed with both
the FRB and the Florida Banking Department. See "THE MERGER--Regulatory
Approvals."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The Merger is intended to qualify
as a reorganization under Section 368(a) of the Code. Accordingly, for federal
income tax purposes, it is intended that no gain or loss will be recognized by
FPBB stockholders who exchange all of their FPBB Common Stock solely for RSFC
Common Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in RSFC Common Stock). In this connection,
RSFC's obligation to consummate the Merger is conditioned upon the receipt by
RSFC of an opinion of Morgan, Lewis & Bockius LLP, counsel to RSFC, and FPBB's
obligation to consummate the Merger is conditioned upon the receipt by FPBB of
an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to FPBB,
substantially to this effect. Due to the individual nature of the tax
consequences of the Merger, it is recommended that each FPBB stockholder consult
his or her own tax adviser concerning the federal, state, local and foreign tax
consequences of the Merger. See "THE MERGER--Certain Federal Income Tax
Consequences."
ANTICIPATED ACCOUNTING TREATMENT. The Merger is expected to qualify as a
"pooling-of-interests" for accounting and financial reporting purposes. It is a
condition to each of RSFC's and FPBB's obligation to consummate the Merger that
RSFC and FPBB receive letters dated as of the closing date addressed to RSFC
from RSFC's independent accountants and to FPBB from FPBB's independent
accountants to the effect that the Merger qualifies for pooling of interests
accounting treatment. See "THE MERGER--The Merger Agreement-Conditions to the
Merger" and "--Anticipated Accounting Treatment."
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER. Following the
consummation of the Merger, the RSFC Board and the board of directors of the
Combined Bank (the "Combined Bank Board") will each consist of 21 members,
initially comprised of the current RSFC Board members (George M. Apelian, Paula
Berliner, Dr. Thomas F. Carney, Joseph D. Cesarotti, Mary Anna Fowler, H. Gearl
Gore, Richard J. Haskins, Eugene W. Hughes, Jr., Thomas L. Langan, Jr., Lennart
E. Lindahl, Jr., Mary McCarty, Carol R. Owen, Richard C. Rathke, Rudy E. Schupp,
Victor H. Siegel, William F. Spitznagel, Bruce E. Wiita and William Wolfson) and
three FPBB designees (Fred A. Greene, R. Randy Guemple and Daniel O. Sokoloff,
M.D.). See "MANAGEMENT FOLLOWING THE MERGER" and "THE MERGER--Interests of
Certain Persons in the Merger."
4
<PAGE>
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by RSFC
shareholders or FPBB stockholders, (i) by mutual consent of RSFC and FPBB; (ii)
by either RSFC or FPBB if the other party has materially breached any
representation, warranty or covenant of the Merger Agreement; (iii) by either
RSFC or FPBB if either of their respective shareholders or stockholders, as the
case may be, do not approve the Merger; (iv) by either party upon the failure to
receive any Requisite Regulatory Approval (as defined herein) 60 days after
request for such approval has been denied; (v) by either party if the Merger has
not been consummated prior to March 31, 1999; or (vi) by FPBB if the price of
RSFC Common Stock falls below a certain level as set forth in the Merger
Agreement. See "THE MERGER--The Merger Agreement-Termination."
STOCK OPTION AGREEMENT. Execution of the Stock Option Agreement, dated as
of May 27, 1998 (the "Stock Option Agreement"), by and between RSFC and FPBB was
a condition to RSFC's merger proposal. Pursuant to the Stock Option Agreement,
FPBB granted RSFC an option (the "Option") to purchase up to 1,009,725 shares of
FPBB Common Stock, representing approximately 19.9% of the issued and
outstanding shares of FPBB Common Stock without giving effect to the shares
issuable upon exercise of the Option, at an exercise price of $40.50, subject to
the terms and conditions set forth therein. The Option may only be exercised
upon the occurrence of certain events (none of which have occurred). The Stock
Option Agreement is attached as Annex B to this Joint Proxy
Statement/Prospectus. Also see "THE MERGER--Stock Option Agreement."
The Stock Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms of the Merger Agreement.
The Stock Option Agreement may have the effect of discouraging persons who might
now or prior to the Effective Time be interested in acquiring all or a
significant interest in FPBB from considering or proposing such an acquisition,
even if such persons were prepared to pay a higher price per share for FPBB
Common Stock than the price per share implicit in the Exchange Ratio.
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Certain members of FPBB's
management and the FPBB Board have interests in the Merger in addition to their
interests as stockholders generally. These include, among other things,
provisions in the Merger Agreement relating to indemnification and insurance,
the payment of certain retention bonuses to officers of FPBB and the appointment
of Fred A. Greene, R. Randy Guemple and Daniel O. Sokoloff, M.D., currently
directors of FPBB and First Bank, to the RSFC Board and the board of directors
of the Combined Bank as of the Effective Time. See "THE MERGER--Interests of
Certain Persons in the Merger."
5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA--REPUBLIC SECURITY FINANCIAL CORPORATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected financial data for the year ended December 31, 1997,
the year ended December 31, 1996, and the nine-month transition period ended
December 31, 1995, and the balance sheet data as of December 31, 1997 and
December 31, 1996, are derived from audited consolidated financial statements of
RSFC, incorporated by reference herein. The selected financial data for the
years ended March 31, 1995 and 1994 and the balance sheet data as of March 31,
1995 and 1994 have been derived from consolidated financial statements. The
financial data for the three month periods ended March 31, 1998 and 1997 are
derived from unaudited financial statements. The unaudited financial statements
include all adjustments, consisting of normal recurring accruals, which RSFC
considers necessary for a fair presentation of the financial position and the
results of operations for these periods. Operating results for the three months
ended March 31, 1998 are not necessarily indicative of the results that may be
expected for the entire year ending December 31, 1998. The data contained below
should be read in conjunction with RSFC's consolidated financial statements and
related notes thereto incorporated by reference in this Joint Proxy
Statement/Prospectus.
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA-RSFC
<TABLE>
<CAPTION>
=============================================================================================================================
NINE MONTHS
THREE MONTHS ENDED YEAR ENDED ENDED
MARCH 31, DECEMBER 31, DECEMBER 31, YEAR ENDED MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1998 1997 1997(a) 1996(b) 1995 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATING RESULTS:
INTEREST INCOME $17,054 $15,675 $65,667 $60,209 $41,890 $45,074 $38,387
INTEREST EXPENSE 6,584 5,858 24,820 21,674 15,924 15,879 12,900
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 10,470 9,817 40,847 38,535 25,966 29,195 25,487
PROVISION FOR LOAN LOSSES 30 31 1,717 379 434 319 867
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 10,440 9,786 39,130 38,156 25,532 28,876 24,620
NON-INTEREST INCOME 2,775 2,468 10,016 9,956 6,902 7,946 10,406
OPERATING EXPENSES 8,226 8,055 46,153 36,474 22,813 27,657 25,708
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND ACCOUNTING CHANGE 4,989 4,199 2,993 11,638 9,621 9,165 9,318
INCOME TAXES 1,845 1,115 1,187 3,874 3,389 3,305 3,282
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE ACCOUNTING CHANGE 3,144 3,084 1,806 7,764 6,232 5,860 6,036
CHANGE IN METHOD OF ACCOUNTING FOR INCOME TAXES 500
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $3,144 $3,084 $1,806 $7,764 $6,232 $5,860 $6,536
====================================================================================================================================
PER SHARE DATA:
BASIC EARNINGS PER COMMON SHARE:
INCOME BEFORE CHANGE IN ACCOUNTING FOR INCOME TAXES $.13 $.13 $.05 $.33 $.32 $.32 $.37
====================================================================================================================================
NET INCOME $.13 $.13 $.05 $.33 $.32 $.32 $.40
====================================================================================================================================
DILUTED EARNINGS PER COMMON SHARE:
INCOME BEFORE CHANGE IN ACCOUNTING FOR INCOME TAXES $.13 $.13 $.05 $.31 $.30 $.31 $.36
====================================================================================================================================
NET INCOME $.13 $.13 $.05 $.31 $.30 $.31 $.39
====================================================================================================================================
WEIGHTED AVERAGE COMMON SHARES AND COMMON STOCK
EQUIVALENTS OUTSTANDING:
BASIC 22,908 21,611 22,070 21,112 18,481 17,275 15,831
DILUTED 24,835 22,766 22,884 22,538 20,790 19,005 16,810
====================================================================================================================================
BOOK VALUE PER COMMON SHARE (c) $3.73 $3.75 $3.62 $3.48 $3.28 $2.93 $2.93
DIVIDENDS PER COMMON SHARE $.05 $.04 $.19 $.12 $.07 $.04 $.03
====================================================================================================================================
</TABLE>
(a) INCLUDES PRETAX MERGER RELATED EXPENSES OF $11.0 MILLION OF WHICH $10.4
MILLION IS INCLUDED IN OPERATING EXPENSES AND $0.6 MILLION IS INCLUDED IN
PROVISION FOR LOAN LOSSES.
(b) INCLUDES PRETAX LITIGATION SETTLEMENT OF $3.0 MILLION WHICH IS INCLUDED IN
OPERATING EXPENSES.
(c) BOOK VALUE PER SHARE IS CALCULATED BY DIVIDING COMMON SHAREHOLDERS' EQUITY
PLUS THE PROCEEDS OF THE ASSUMED CONVERSION OF "IN THE MONEY" OPTIONS,
WARRANTS AND CONVERTIBLE PREFERRED STOCK BY THE NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING AND CONVERSION OF ALL "IN THE MONEY" OPTIONS, WARRANTS
AND CONVERTIBLE PREFERRED STOCK.
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA--RSFC (Continued)
<TABLE>
<CAPTION>
====================================================================================================================================
NINE MONTHS
THREE MONTHS ENDED YEAR ENDED ENDED
MARCH 31, DECEMBER 31, DECEMBER 31, YEAR ENDED MARCH 31,
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE 1998 1997 1997 1996 1995 1995 1994
DATA)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
AT PERIOD END:
TOTAL ASSETS $1,016,106 $853,356 $949,280 $853,105 $743,184 $701,931 $636,347
INVESTMENTS 143,018 150,419 127,039 151,948 108,504 112,937 137,835
LOANS (d) 676,447 579,465 637,620 557,040 503,578 497,200 412,183
ALLOWANCE FOR LOAN LOSSES 6,619 6,095 6,663 6,400 6,785 6,757 5,075
TOTAL DEPOSITS 752,751 690,012 742,263 700,700 612,038 607,250 544,882
BORROWED MONEY 150,876 57,114 100,573 45,843 35,007 21,347 24,611
SHAREHOLDERS' EQUITY 88,398 89,261 86,156 87,303 82,463 55,766 50,586
SHARES OUTSTANDING 22,908 21,625 22,685 21,609 20,232 17,285 16,423
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES:
ASSETS $906,300 $823,200 $853,700 $775,600 $694,485 $648,258 $611,098
SHAREHOLDERS' EQUITY 87,100 88,600 89,300 86,000 63,663 52,104 44,459
INTEREST-EARNING ASSETS 801,600 744,500 770,400 705,700 638,249 584,898 548,456
INTEREST-BEARING LIABILITIES 634,700 572,800 591,000 534,000 502,554 459,484 429,925
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER DATA:
RETURN ON AVERAGE ASSETS (e) 1.39% 1.32% 1.04% 1.35% 0.90% 0.90% 1.08%
RETURN ON AVERAGE SHAREHOLDERS' EQUITY (e) 14.44% 12.30% 9.97% 12.17% 9.79% 11.20% 14.80%
AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE
TOTAL ASSETS 9.61% 10.76% 10.46% 11.09% 9.17% 8.04% 7.28%
SHAREHOLDERS' EQUITY TO TOTAL ASSETS 8.70% 10.46% 9.08% 10.23% 11.10% 7.93% 7.95%
NET INTEREST SPREAD 4.36% 4.33% 4.32% 4.47% 3.39% 4.25% 4.00%
NET INTEREST MARGIN 5.22% 5.27% 5.30% 5.46% 4.07% 4.99% 4.65%
NON-PERFORMING LOANS (f) $6,158 $5,274 $5,414 $7,143 $5,974 $4,132 $3,309
NON-PERFORMING ASSETS (f) $8,662 $11,001 $8,131 $12,176 $11,234 $9,790 $13,587
NON-PERFORMING LOANS TO TOTAL LOANS .91% .91% .85% 1.28% 1.19% .83% .80%
NON-PERFORMING ASSETS TO TOTAL ASSETS .85% 1.29% .86% 1.43% 1.51% 1.39% 2.14%
ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS .98% 1.05% 1.04% 1.15% 1.35% 1.36% 1.23%
NET CHARGE-OFFS TO AVERAGE LOANS .01% .02% .25% .21% .08% .02% .39%
EFFICIENCY RATIO (g) 62% 65% 72% 69% 69% 74% 72%
DIVIDEND PAYOUT RATIO (h) 38% 31% 51% 36% 28% 13% 8%
NUMBER OF FULL-SERVICE OFFICES 32 30 32 30 27 25 21
LOAN SERVICING PORTFOLIO (IN MILLIONS) $228 $261 $237 $277 $307 $323 $189
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(d) NET OF DEFERRED LOAN FEES, PURCHASED LOAN DISCOUNTS AND PREMIUMS AND
UNDISBURSED LOANS-IN-PROCESS. INCLUDES LOANS HELD FOR SALE.
(e) EXCLUDES MERGER RELATED EXPENSES OF $8.2 MILLION, NET OF TAXES, AND THE
EFFECT OF THE REDUCTION OF THE ALLOWANCE FOR DEFERRED TAX ASSETS OF $1.1
MILLION FOR THE YEAR ENDED DECEMBER 31, 1997. EXCLUDES A LITIGATION
SETTLEMENT AND FDIC ASSESSMENT OF $2.7 MILLION, NET OF TAXES, FOR THE YEAR
ENDED DECEMBER 31, 1996.
(f) NON-PERFORMING LOANS ARE LOANS CONTRACTUALLY PAST DUE 90 DAYS OR MORE
PLACED ON NON-ACCRUAL. NON-PERFORMING ASSETS INCLUDE NON-PERFORMING LOANS,
OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS.
(g) THE EFFICIENCY RATIO IS CALCULATED BY DIVIDING NON-INTEREST EXPENSE BY NET
INTEREST INCOME PLUS NON-INTEREST INCOME EXCLUDING REALIZED SECURITIES
GAINS/LOSSES AND NONRECURRING EXPENSES.
(h) DIVIDEND PAYOUT RATIO IS CALCULATED BY DIVIDING DIVIDENDS DECLARED PER
SHARE BY BASIC EARNINGS PER SHARE. AMOUNT FOR THE YEAR ENDED DECEMBER 31,
1997 IS ADJUSTED TO EXCLUDE MERGER RELATED EXPENSES (SEE NOTE (A)).
8
<PAGE>
RSFC QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
========================================================================================================================
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
FIRST SECOND THIRD FOURTH
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) QUARTER QUARTER (a) QUARTER QUARTER (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $15,675 $16,231 $16,766 $16,995
Interest expense 5,858 6,149 6,398 6,415
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 9,817 10,082 10,368 10,580
Provision for loan losses 31 806 31 849
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 9,786 9,276 10,337 9,731
Non-interest income 2,468 2,478 2,817 2,253
Operating expense 8,055 13,262 9,173 15,663
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 4,199 (1,508) 3,981 (3,679)
Provision (benefit) for income taxes 1,115 (818) 1,065 (175)
- ------------------------------------------------------------------------------------------------------------------------
Net income (loss) $3,084 $(690) $2,916 $(3,504)
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Basic earnings (loss) per common share $0.13 $(.04) $0.12 $(.16)
Diluted earnings (loss) per common share $0.13 $(.04) $0.12 $(.16)
Dividends per common share $0.04 $0.05 $0.05 $0.05
Weighted average common shares and common stock equivalents
outstanding 22,766 22,849 23,164 23,242
========================================================================================================================
</TABLE>
(a) Includes merger related expenses of $5.4 million and $2.8 million, net of
taxes, for the three months ended December 31, 1997 and June 30, 1997,
respectively.
9
<PAGE>
RSFC QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
========================================================================================================================
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
FIRST SECOND THIRD FOURTH
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER(a) QUARTER(b)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $14,647 $14,973 $15,299 $15,290
Interest expense 5,353 5,289 5,448 5,584
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 9,294 9,684 9,851 9,706
Provision for loan losses 81 86 106 106
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 9,213 9,598 9,745 9,600
Non-interest income 2,145 2,418 2,610 2,783
Operating expense 7,965 8,517 9,104 10,888
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 3,393 3,499 3,251 1,495
Provision for income taxes 915 975 785 1,199
- ------------------------------------------------------------------------------------------------------------------------
Net income $2,478 $2,524 $2,466 $296
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Basic earnings per common share $0.11 $0.11 $0.11 $0.01
Diluted earnings per common share $0.10 $0.10 $0.10 $0.01
Dividends per common share $0.03 $0.03 $0.03 $0.03
Weighted average common shares and common stock equivalents 21,594 21,662 22,410 22,613
outstanding
========================================================================================================================
</TABLE>
(a) Includes pre-tax FDIC assessment of $1.2 million.
(b) Includes pre-tax litigation settlement of $3.0 million.
10
<PAGE>
SELECTED FINANCIAL DATA--FPBB
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
The following selected financial data for each of the years ended September
31, 1997, 1996 and 1995 and the balance sheet data as of September 31, 1997 and
1996 are derived from financial statements of FPBB incorporated by reference
herein which have been audited by Deloitte & Touche LLP, independent auditors.
The selected financial data for the years ended September 31, 1994 and 1993 and
the balance sheets as of September 30, 1995, 1994 and 1993, have been derived
from audited financial statements. The financial data for the six-month periods
ended March 31, 1998 and 1997 are derived from unaudited financial statements.
The unaudited financial statements include all adjustments, consisting of only
normal recurring accruals, which FPBB considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the six months ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the entire year
ending September 30, 1998. The data contained below should be read in
conjunction with FPBB's consolidated financial statements and related notes
thereto incorporated by reference in this Joint Proxy Statement/Prospectus.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
=============================================================================================================================
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
(AMOUNTS IN THOUSANDS) 1998 1997 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATING RESULTS:
Interest income $65,292 $54,495 $116,930 $103,532 $80,964 $57,874 $50,580
Interest expense 43,382 33,130 72,851 61,300 48,900 30,049 28,783
- -----------------------------------------------------------------------------------------------------------------------------
Net Interest income 21,910 21,365 44,079 42,232 32,064 27,825 21,797
Provision for loan losses 3,851 1,369 3,281 15,704 261 135 149
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for 18,059 19,996 40,798 26,528 31,803 27,690 21,648
loan losses
Non-interest income 8,012 4,041 9,001 10,069 4,030 4,437 5,775
Operating expenses 18,766 16,455 34,406 35,602 26,609 22,826 19,609
- -----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 7,305 7,582 15,393 995 9,224 9,301 7,814
Provision for income taxes 2,905 3,034 6,037 446 3,578 3,502 2,597
- -----------------------------------------------------------------------------------------------------------------------------
Net income $4,400 $4,548 $9,356 $549 $5,646 $5,799 $5,217
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
- -----------------------------------------------------------------------------------------------------------------------------
Earnings per common share:
- -----------------------------------------------------------------------------------------------------------------------------
Basic 0.89 0.93 1.91 0.11 1.14 1.08 N/A
- -----------------------------------------------------------------------------------------------------------------------------
Diluted 0.85 0.91 1.86 0.11 1.11 1.05 N/A
- -----------------------------------------------------------------------------------------------------------------------------
Average common shares and potential common shares
outstanding:
- -----------------------------------------------------------------------------------------------------------------------------
Basic 4,952 4,874 4,894 4,963 4,955 5,387 N/A
- -----------------------------------------------------------------------------------------------------------------------------
Diluted 5,154 5,003 5,026 5,094 5,072 5,523 N/A
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) FPBB adopted the provisions of SFAS No. 128, "Earnings Per Share," as
of December 31, 1997 and restated all prior periods presented. Earnings
per share as previously reported in the financial statements of FPBB,
incorporated by reference herein were computed in accordance with APB
11. Earnings per share information for fiscal year ending September 30,
1993 is not meaningful because FPBB did not complete the conversion
until September 29, 1993. 11
<PAGE>
SELECTED FINANCIAL DATA--FPBB (CONTINUED)
<TABLE>
<CAPTION>
=============================================================================================================================
SIX MONTHS ENDED MARCH
31, YEAR ENDED SEPTEMBER 30,
(AMOUNTS IN THOUSANDS, 1998 1997 1997 1996 1995 1994 1993
EXCEPT SHARE DATA)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
AT PERIOD END:
Total assets $1,791,370 $1,558,235 $1,808,420 $1,490,020 $1,208,845 $1,076,583 $856,307
Investments 533,221 369,263 514,397 276,858 327,941 449,770 387,354
Loans 1,040,356 1,066,752 1,150,146 1,019,736 824,096 578,687 430,990
Allowance for loan losses 6,332 7,895 6,046 11,855 2,157 1,956 1,886
Total deposits 1,281,229 1,217,007 1,229,279 1,136,722 878,670 718,282 698,458
Borrowed money 354,756 210,975 428,710 211,025 189,582 229,892 26,325
Shareholders' equity 117,044 105,404 113,030 105,425 104,611 100,462 102,330
Shares outstanding 5,057,746 5,009,337 5,047,746 5,093,096 5,133,063 5,279,897 5,496,375
=============================================================================================================================
AVERAGE BALANCES:
Assets $1,813,388 $1,481,121 $1,584,862 $1,390,279 $1,174,179 $973,017 $820,679
Shareholders' equity 115,813 104,929 107,346 111,987 102,676 103,355 53,633
Interest-earning assets 1,738,646 1,409,103 1,514,274 1,327,292 1,131,729 936,613 783,058
Interest-bearing liabilities 1,599,105 1,305,152 1,398,558 1,208,084 1,012,079 807,652 712,008
=============================================================================================================================
OTHER DATA:
Return on average assets (b) 0.49% 0.62% 0.59% 0.04% 0.48% 0.60% 0.64%
Return on average 7.62% 8.66% 8.71% 0.49% 5.50% 5.61% 9.73%
shareholders' equity (b)
Average shareholders' equity 6.39% 7.08% 6.78% 8.06% 8.74% 10.62% 6.54%
to average total assets
Shareholders' equity to total 6.53% 6.76% 6.25% 7.08% 8.65% 9.33% 11.95%
assets
Net interest spread 2.09% 2.66% 2.51% 2.73% 2.32% 2.46% 2.42%
Net interest margin 2.53% 3.03% 2.91% 3.18% 2.83% 2.97% 2.78%
Non-performing loans $7,538 $14,006 $8,086 $12,831 $1,814 $1,931 $2,678
Non-performing assets $10,125 $16,908 $10,355 $16,059 $2,734 $2,473 $4,081
Non-performing loans to total 0.50% 1.03% 0.51% 1.02% 0.17% 0.21% 0.37%
loans and mortgage-backed
securities
Non-performing assets to total 0.57% 1.09% 0.57% 1.08% 0.23% 0.23% 0.48%
assets
Allowance for loan losses to 0.61% 0.74% 0.53% 1.18% 0.26% 0.34% 0.44%
total loans
Net charge-offs to average 0.31% 0.51% 0.85% 0.81% 0.01% 0.01% 0.14%
loans
Efficiency ratio (a) 76.89% 70.91% 71.82% 100.08% 70.81% 71.84% 72.27%
Number of full-service offices 50 40 45 33 23 20 16
</TABLE>
- ----------
(a) The efficiency ratio is calculated by dividing non-interest expense by net
interest income plus non-interest income excluding realized securities
gains/losses.
(b) For the six-month periods ended March 31, 1998 and 1997, ratio
computations are computed on an annualized basis.
12
<PAGE>
FPBB QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
========================================================================================================================
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED)
FIRST SECOND THIRD FOURTH
(AMOUNTS IN THOUSANDS EXCEPT SHARE PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $26,988 $27,507 $30,442 $31,993
Interest expense 16,568 16,562 18,711 21,010
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 10,420 10,945 11,731 10,983
Provision for loan losses 802 567 831 1,081
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 9,618 10,378 10,900 9,902
Non-interest income 1,907 2,134 1,952 3,008
Operating expense 7,738 8,717 8,897 9,054
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 3,787 3,795 3,955 3,856
Provision for income taxes 1,514 1,520 1,603 1,400
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 2,273 $ 2,275 $ 2,352 $ 2,456
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Net income per common share
Basic $0.46 $0.47 $0.48 $0.50
Diluted $0.45 $0.46 $0.47 $0.48
Weighted average common shares and potential
common shares outstanding
Basic 4,896 4,851 4,887 4,919
Diluted 5,039 4,985 5,011 5,051
========================================================================================================================
</TABLE>
13
<PAGE>
FPBB QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
========================================================================================================================
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) FOR THE YEAR ENDED SEPTEMBER 30, 1996
(UNAUDITED)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $23,161 $26,505 $26,932 $26,934
Interest expense 13,780 15,673 15,654 16,193
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 9,381 10,832 11,278 10,741
Provision for loan losses 627 957 1,429 12,691
- ------------------------------------------------------------------------------------------------------------------------
Net interest income (loss) after provision for loan losses 8,754 9,875 9,849 (1,950)
Non-interest income 1,557 1,495 1,560 5,457
Operating expense 6,109 6,912 6,884 15,697
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 4,202 4,458 4,525 (12,190)
Provision (benefit) for income taxes 1,678 1,783 1,835 (4,850)
- ------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2,524 $ 2,675 $ 2,690 $(7,340) (a)
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Earnings per common share
Basic $0.51 $0.53 $0.54 $(1.48)
Diluted $0.50 $0.52 $0.53 $(1.44)
Dividends per common share $0.10 $0.10 $0.10 $ 0.10
Weighted average common shares and potential common
shares outstanding
Basic 4,926 5,008 4,966 4,953
Diluted 5,062 5,140 5,097 5,081
========================================================================================================================
</TABLE>
(a) Includes one-time SAIF assessment expense of $4.0 million, net of income
tax.
14
<PAGE>
SELECTED COMPARATIVE PER SHARE DATA
The following table sets forth certain information concerning the RSFC
Common Stock and the FPBB Common Stock. The tables also include certain pro
forma per share combined information which is based on the historical data of
RSFC and FPBB adjusted to give effect to the Merger, excluding anticipated
cost-savings from operational efficiencies of the Combined Company. The data
contained below should be read in conjunction with the consolidated financial
statements and related notes thereto of RSFC and FPBB incorporated by reference
in this Joint Proxy Statement/Prospectus. See also "Unaudited Pro Forma Combined
Condensed Financial Data."
<TABLE>
<CAPTION>
RSFC FPBB
---- ----
EQUIVALENT
PRO FORMA PRO FORMA
PER SHARE PER SHARE
HISTORICAL DATA HISTORICAL DATA (1)
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
BOOK VALUE PER SHARE(2):
March 31 1998 $3.73 $4.55 $23.14 $19.08
December 31, 1997 / September 30, 1997 $3.62 $4.43 $22.43 $18.58
December 31, 1996 / September 30, 1996 $3.48 $4.17 $21.87 $17.49
CASH DIVIDENDS DECLARED PER SHARE:
Three months ended March 31, 1998 $.05 $.05 $.175 $.21
Year ended December 31, 1997 / September 30, 1997 $.19 $.19 $.60 $.80
Year ended December 31, 1996 / September 30, 1996 $.12 $.12 $.40 $.50
Nine months ended December 31, 1995 / September 30, 1995 $.07 $.07 $.15 $.29
INCOME PER COMMON AND COMMON EQUIVALENT SHARE:
Three months ended March 31, 1998 $.13 $.11 $.40 $.46
Year ended December 31, 1997 (3) / September 30, 1997 $.05 $.23 $1.86 $.96
Year ended December 31, 1996 / September 30, 1996 $.31 $.17 $.11 $.71
Nine months ended December 31, 1995 / September 30, 1995 $.30 $.26 $1.02 $1.09
</TABLE>
- ------------------
(1) The equivalent pro forma per share data represents the value of the pro
forma per share data multiplied by the Exchange Ratio.
(2) Book value per share is calculated by dividing common shareholders' equity
plus the proceeds of the assumed conversion of "in the money" options,
warrants and convertible preferred stock by the number of common stock
outstanding and conversion of all "in the money" options, warrants and
convertible preferred stock.
(3) Includes non-recurring merger expenses of $8.2 million, net of tax related
to the County and Family Bank mergers.
15
<PAGE>
MARKET PRICE AND DIVIDEND DATA
RSFC
The RSFC Common Stock is traded under the symbol "RSFC" on the Nasdaq
National Market. It is the present intention of the RSFC Board to continue to
pay regular quarterly cash dividends. However, the declaration and payment of
future dividends is at the sole discretion of the RSFC Board and the amount, if
any, depends upon the earnings, financial condition and capital needs of RSFC
and Republic Security and other factors, including restrictions arising from
federal and state banking laws and regulations to which RSFC and Republic
Security are subject.
The table below sets forth, for the fiscal quarters indicated, the high
and low bid prices for the RSFC Common Stock as reported by the Nasdaq National
Market.
<TABLE>
<CAPTION>
PRICE PER SHARE OF DIVIDEND PER SHARE
RSFC COMMON STOCK OF RSFC
----------------- COMMON STOCK
HIGH LOW ------------------
---- ---
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
First Quarter.......................... $6 $5 1/8 $.03
Second Quarter......................... 6 1/4 5 1/2 .03
Third Quarter.......................... 5 7/8 5 1/8 .03
Fourth Quarter......................... 6 1/8 5 1/4 .03
YEAR ENDING DECEMBER 31, 1997
First Quarter.......................... 8 5 7/8 .04
Second Quarter......................... 9 5/8 6 7/8 .05
Third Quarter.......................... 11 1/2 8 1/16 .05
Fourth Quarter......................... 10 5/8 8 3/8 .05
YEAR ENDING DECEMBER 31, 1998
First Quarter.......................... 11 1/2 8 1/4 .05
Second Quarter......................... 13 7/8 10 5/8 .05
Third Quarter (through July 10, 1998).. 11 5/8 11 3/16
</TABLE>
- ----------------------------
The following table sets forth the closing sale price per share of RSFC
Common Stock and the FPBB Common Stock and the equivalent per share price for
FPBB Common Stock giving effect to the Merger on (i) May 27, 1998, the last
business day preceding public announcement of the proposed Merger; and (ii)
___________, 1998, the last practicable trading day prior to the printing of
this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
RSFC FPBB EQUIVALENT PRICE PER
COMMON STOCK COMMON STOCK FPBB SHARE(1)
------------ ------------ --------------------
<S> <C> <C> <C> <C> <C>
May 27, 1998......................................... $13 1/8 $36 1/2 $55.05
____________, 1998................................... $____ $____ $____
</TABLE>
- -------------------
(1) The equivalent price per share of FPBB Common Stock at each specified
date was determined by multiplying the last reported closing sale price
of RSFC Common Stock on each specified date by the Exchange Ratio of
4.194.
RSFC shareholders and FPBB stockholders are advised to obtain current
market quotations for the FPBB Common Stock and RSFC Common Stock. It is
expected that the market price of RSFC Common Stock will fluctuate between the
date of this Joint Proxy Statement/Prospectus and the date on which the Merger
is consummated and thereafter. Because the number of shares of RSFC Common Stock
to be received by FPBB stockholders in the Merger
16
<PAGE>
for each share of FPBB Common Stock is fixed (subject to possible increase in
certain circumstances) and because the market price of the RSFC Common Stock is
subject to fluctuation, the value of the shares of RSFC Common Stock that
holders of FPBB Common Stock would receive in the Merger may increase or
decrease prior to the Merger. No assurance can be given concerning the market
price of RSFC Common Stock before or after the Effective Time. See "THE
MERGER--The Merger Agreement--Exchange Ratio and --Termination."
FPBB
FPBB's common stock is traded on the Nasdaq National Market under the
symbol "FFPB." Newspaper stock tables list the Company as First Palm (FstPalm).
As of ____________, 1998, there were __________ shares of common stock
outstanding and _____ stockholders of record, not including the number of
persons or entities whose stock is held in nominee or "street" name through
various brokerage firms or banks.
The table below sets forth, for the fiscal quarters indicated, the high
and low bid prices for the FPBB Common Stock as reported by Nasdaq National
Market.
<TABLE>
<CAPTION>
PRICE PER SHARE OF DIVIDENDS PER SHARE
FPBB COMMON STOCK OF
----------------- FPBB COMMON STOCK
HIGH LOW -------------------
---- ---
YEAR ENDED SEPTEMBER 30, 1996
<S> <C> <C> <C>
First Quarter......................... $24 5/8 $21 1/8 $0.10
Second Quarter........................ 23 5/8 20 3/4 0.10
Third Quarter......................... 23 3/4 20 7/8 0.10
Fourth Quarter........................ 23 1/2 19 1/2 0.10
YEAR ENDED SEPTEMBER 30, 1997
First Quarter......................... 25 7/8 22 3/4 0.15
Second Quarter........................ 30 1/4 23 1/4 0.15
Third Quarter......................... 34 3/8 26 1/2 0.15
Fourth Quarter........................ 35 5/8 30 1/4 0.15
YEAR ENDING SEPTEMBER 30, 1998
First Quarter......................... 43 1/8 35 1/8 0.175
Second Quarter........................ 46 36 3/4 0.175
Third Quarter ........................ 50 35 1/4 0.175
Fourth Quarter (through July 10, 1998) 43 42 7/8
</TABLE>
17
<PAGE>
THE SPECIAL MEETINGS
This Joint Proxy Statement/Prospectus is being furnished to the holders
of RSFC Common Stock in connection with the solicitation of proxies by the RSFC
Board for use at the RSFC Special Meeting to be held on ______, __________,
1998, at 10:00 a.m., local time, at the Palm Beach Airport Hilton, 150
Australian Avenue, West Palm Beach, Florida 33406 and at all adjournments and
postponements thereof, and to the holders of FPBB Common Stock in connection
with the solicitation of proxies by the FPBB Board for use at the FPBB Special
Meeting to be held on ________, __________, 1998, at 3:00 p.m., local time, at
the offices of First Bank of Florida, 450 S. Australian Avenue, West Palm Beach,
Florida 33401, and at all adjournments and postponements thereof.
At the respective Special Meetings, the holders of RSFC Common Stock
and FPBB Common Stock will separately consider and vote upon proposals to
approve and adopt the Merger Agreement. A copy of the Merger Agreement is
attached as Annex A to this Joint Proxy Statement/Prospectus. Pursuant to the
Merger Agreement, upon satisfaction or waiver of certain conditions described in
the Merger Agreement, (i) FPBB will be merged with and into RSFC, (ii) each
outstanding share of FPBB Common Stock except for shares held directly or
indirectly by RSFC or FPBB (other than Trust Account Shares or DPC Shares) will
be converted into the right to receive 4.194 shares of RSFC Common Stock,
subject to possible adjustment in accordance with the terms of the Merger
Agreement and (iii) FPBB will cease to exist as a separate legal entity. The
Merger Agreement contemplates that, subsequent to the Merger, (i) First Bank
will be merged with and into Republic Security and (ii) First Bank will cease to
exist as a separate entity.
In addition, at the RSFC Special Meeting, the RSFC shareholders will be asked to
vote on certain other matters. See "ADDITIONAL PROPOSALS FOR CONSIDERATION AT
THE RSFC SPECIAL MEETING."
A representative of Ernst & Young LLP, independent certified public
accountants of RSFC, will be present at the RSFC Special Meeting, and a
representative of Deloitte & Touche LLP, independent auditors of FPBB, will be
present at the FPBB Special Meeting, and each will have an opportunity to make a
statement, if such representative so desires, and to respond to appropriate
questions raised at such Special Meeting.
18
<PAGE>
VOTING AND PROXY INFORMATION
RSFC
The RSFC Board has fixed the close of business on _________ __, 1998 as
the RSFC Record Date for determining the holders of RSFC Common Stock entitled
to receive notice of and to vote at the RSFC Special Meeting. At the close of
business on the RSFC Record Date, there were __________ shares of RSFC Common
Stock outstanding. As of such date, such shares of RSFC Common Stock were held
by approximately _____ shareholders of record. The presence in person or by
proxy of holders of record of shares representing a majority of the total issued
and outstanding shares of the RSFC Common Stock will constitute a quorum at the
RSFC Special Meeting.
Under Florida law, the affirmative vote of the holders of at least a
majority of the shares of RSFC Common Stock outstanding at the RSFC Record Date
is required in order to adopt the Merger Agreement. Approval of the amendment to
the RSFC Articles and the amendment to the Plan require that the number of votes
cast in favor exceed the number of votes cast against. The holders of RSFC
Common Stock are entitled to one vote on all matters properly brought before the
RSFC Special Meeting for each share of RSFC Common Stock held by such persons.
Votes may be cast in person at the RSFC Special Meeting or by proxy.
As of the RSFC Record Date, directors and executive officers of RSFC
and their affiliates had the right to vote __________ shares of RSFC Common
Stock in the aggregate (representing approximately ___% of the outstanding
shares of RSFC Common Stock as of the RSFC Record Date). Such persons have
informed RSFC that they intend to vote or direct the vote of all such shares of
RSFC Common Stock for the approval and adoption of the Merger Agreement.
Any RSFC shareholder who signs and returns a proxy may revoke it at any
time before it has been voted at the RSFC Special Meeting by (i) delivering to
the Secretary of RSFC written notice of its revocation, (ii) executing and
delivering to the Secretary of RSFC a proxy bearing a later date or (iii)
attending the RSFC Special Meeting and voting in person. Attendance at the RSFC
Special Meeting will not in and of itself constitute a revocation of any proxy
given to RSFC. Written notice of revocation should be sent to Republic Security
Financial Corporation, P.O. Box 4298, West Palm Beach, Florida 33402-4298,
Attention: Secretary. All properly executed proxies, if received in time for
voting and not revoked, will be voted in accordance with the instructions
specified, or, if no instructions are specified, will be voted FOR the approval
of the Merger Agreement and the amendments to the RSFC Articles and the Plan.
FPBB
The FPBB Board has fixed the close of business on ____________, 1998 as
the FPBB Record Date for determining the holders of FPBB Common Stock entitled
to receive notice of and to vote at the FPBB Special Meeting. At the close of
business on the FPBB Record Date, there were __________ shares of FPBB Common
Stock outstanding. As of such date, the shares of FPBB Common Stock were held by
approximately ___ stockholders of record. The presence in person or by proxy of
holders of record of shares representing a majority of the total outstanding
shares of FPBB Common Stock will constitute a quorum at the FPBB Special
Meeting.
Under Delaware law, the affirmative vote of the holders of at least a
majority of the shares of FPBB Common Stock outstanding at the FPBB Record Date
is required in order to approve the Merger Agreement. The holders of FPBB Common
Stock are entitled to one vote on all matters properly brought before the FPBB
Special Meeting for each share of FPBB Common Stock held by such persons. Votes
may be cast in person at the FPBB Special Meeting or by proxy.
As of the FPBB Record Date, directors and executive officers of FPBB
and their affiliates had the right to vote __________ shares of FPBB Common
Stock in the aggregate representing approximately ___% of the outstanding shares
of FPBB Common Stock as of the FPBB Record Date. Such persons have informed FPBB
that they intend to
19
<PAGE>
vote or direct the vote of all such shares of FPBB Common Stock for the approval
and adoption of the Merger Agreement.
Any FPBB stockholder who signs and returns a proxy may revoke it at any
time before it has been voted at the FPBB Special Meeting by (i) delivering to
the Secretary of FPBB written notice of its revocation, (ii) executing and
delivering to the Secretary of FPBB a proxy bearing a later date or (iii)
attending the FPBB Special Meeting and voting in person. Attendance at the FPBB
Special Meeting will not in and of itself constitute a revocation of any proxy
given to FPBB. Written notice of revocation should be sent to First Palm Beach
Bancorp, Inc., 450 S. Australian Avenue, West Palm Beach, Florida 33401
Attention: Secretary. All properly executed proxies, if received in time for
voting and not revoked, will be voted in accordance with the instructions
specified, or, if no instructions are specified, will be voted FOR the approval
and adoption of the Merger Agreement.
PROXIES
All shares represented by properly executed proxies received prior to
or at the respective Special Meetings and not revoked will be voted in
accordance with the instructions indicated in such proxies. If no instructions
are indicated on a properly executed returned proxy, such proxies will be voted
(i) FOR approval of the proposals set forth thereon (the "Proposals") and (ii)
otherwise in the discretion of the proxy holders as to any other matter which
may come before the applicable Special Meeting or any adjournment or
postponement thereof, including, among other things, a motion to adjourn or
postpone such Special Meeting to another time and/or place, for the purpose of
soliciting additional proxies or otherwise; provided, however, that no proxy
which is voted against the proposal to approve and adopt the Merger Agreement
will be voted in favor of any such adjournment or postponement. Any proxy card
not returned will have the same effect as a vote "against" the Merger. A
properly executed proxy marked "ABSTAIN," although counted for purposes of
determining whether there is a quorum and for purposes of determining the
aggregate voting power and number of shares represented and entitled to vote at
the Special Meetings, will not be voted and will have the effect of a vote
"against" the Merger. Brokers and nominees are precluded from exercising their
voting discretion with respect to the approval and adoption of the Proposals and
thus, absent specific instructions from the beneficial owner of such shares, are
not empowered to vote such shares with respect to the approval and adoption of
such Proposals. Therefore, because the affirmative vote of a majority of the
shares of RSFC and FPBB Common Stock outstanding on the Record Dates is required
to approve the Merger, a "broker non-vote" (i.e., shares held by brokers or
nominees that are represented at a meeting but with respect to which the broker
or nominee is not empowered to vote on a particular Proposal) will have the
effect of a vote against the Merger. Shares represented by "broker non-votes"
will, however, be counted for purposes of determining whether there is a quorum
at the Special Meetings. "Broker non-votes" for the RSFC Special Meeting will
not be treated as shares voted for purposes of the approval of the amendment to
the RSFC Articles and the amendment to the Plan.
Neither the management of RSFC nor of FPBB, as the case may be, knows
of any business to be presented at its respective Special Meeting other than
such business described in this Joint Proxy Statement/Prospectus. Should
additional business properly come before either of the Special Meetings, the
persons acting as the proxies will have discretion to vote in accordance with
their own judgment on such business; provided, however, that such discretionary
authority will only be exercised to the extent possible under applicable federal
and state securities and corporation laws.
20
<PAGE>
NO DISSENTERS' RIGHTS OF APPRAISAL
RSFC. Under Florida law, shareholders' right to dissent from a plan of
merger does not apply if the security they hold is registered on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or held of record by more than 2,000 holders as of the record date for
determining shareholders entitled to vote upon the plan of merger. The holders
of RSFC Common Stock will not be entitled to dissenters' rights of appraisal
under Florida law in connection with the Merger because the RSFC Common Stock
will be listed on the Nasdaq National Market as of the RSFC Record Date.
FPBB. With respect to holders of FPBB Common Stock, under Delaware law,
stockholders in a public company are not entitled to appraisal rights in a
merger if the consideration they receive in the merger consists only of shares
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 holders and
cash in lieu of fractional shares. Accordingly, holders of FPBB Common Stock are
not entitled to appraisal rights in connection with the Merger because the
shares of FPBB Common Stock will be listed on the Nasdaq National Market as of
the FPBB Record Date and shares of RSFC Common Stock to be issued in the Merger
will be listed on the Nasdaq National Market. See "COMPARISON OF RIGHTS OF
HOLDERS OF RSFC AND FPBB COMMON STOCK--Rights of Dissenting Shareholders."
21
<PAGE>
THE MERGER
BACKGROUND TO THE MERGER
First Bank, formerly First Federal Savings and Loan Association of the
Palm Beaches, converted from the mutual to the stock form of organization in
1993, and simultaneously therewith was acquired by FPBB in a holding company
formation transaction. The period since the First Bank conversion has been one
of continuous and significant change in the financial services industry, marked
by steadily increasing competition and widespread consolidation. Based on the
FPBB Board's belief that continued consolidation and competition in the
financial services industry would make it increasingly difficult for smaller
thrifts or thrift holding companies such as FPBB to maintain their competitive
position and market share, the FPBB Board has from time to time considered and
analyzed, with the assistance of Keefe, Bruyette, FPBB's strategic alternatives,
including prospects for FPBB continuing as an independent entity and possible
business combination transactions with financial institutions of varying sizes
and the effects of such transactions on FPBB and its stockholders, employees and
the communities it serves.
In April 1998, the FPBB Board formally retained Keefe, Bruyette to
serve as its financial advisor in connection with its review of its strategic
alternatives and potential merger and acquisition transactions. Keefe, Bruyette
reviewed with the FPBB Board FPBB's strategic alternatives and the current
condition of the financial institution merger and acquisition market. Based on
Keefe, Bruyette's analysis and recommendations and based on the values that the
FPBB Board believed might be obtainable in a business combination transaction,
the FPBB Board authorized Keefe, Bruyette to contact representatives of certain
selected financial institutions to ascertain their interest in engaging in a
business combination transaction with FPBB. These institutions were selected by
Keefe, Bruyette based on their suitability with respect to certain
characteristics, including size, location, performance, operating strategy,
share value, pro forma impact, and the possibility that a merger of FPBB with
such institution could result in a subsequent acquisition of the combined entity
by another financial institution.
In late April and early May 1998, Keefe, Bruyette communicated with 19
financial institutions regarding their interest in engaging in a business
combination transaction with FPBB. A number of these institutions expressed
interest, and each of such companies was requested to deliver to Keefe, Bruyette
on May 12, 1998 a written proposal containing the per share price and other
proposed terms upon which such party would be willing to enter into a business
combination transaction with FPBB. On May 12, 1998, the RSFC Board met by
teleconference to review a possible combination with FPBB and to authorize RSFC
management to submit a proposal. Three companies, including RSFC, submitted
preliminary proposals for a business combination transaction. Shortly
thereafter, representatives of Keefe, Bruyette offered each of the three
companies that had submitted a proposal an opportunity to conduct comprehensive
on-site due diligence and to improve the terms of its proposal. Two of the three
companies conducted on-site due diligence of FPBB, and on May 26, 1998 both of
these companies submitted revised proposals. The third company was not prepared
to proceed with its due diligence investigation or to submit a revised proposal
within the time frame proposed by FPBB. Of the two proposals received, RSFC's
proposal, in which each share of FPBB Common Stock would be exchanged for 4.194
shares of RSFC Common Stock (having an indicated value of $55.05 based on the
closing price of RSFC Common Stock on May 26, 1998), offered the highest per
share consideration to the holders of FPBB Common Stock.
In the afternoon and evening of May 26 and continuing through the next
day, FPBB's management together with its legal and financial advisors held
discussions with RSFC's management and its legal and financial advisors
concerning the terms of a proposed business combination between the parties. On
May 27, 1998, the terms of the Merger Agreement and the Stock Option Agreement
to be presented to the FPBB Board were finalized.
At a meeting held on May 27, 1998, the FPBB Board reviewed the terms of
the revised proposals received by Keefe, Bruyette. The FPBB Board then reviewed
and discussed, with the assistance of its legal and financial advisors, the
Merger Agreement and the Stock Option Agreement. FPBB's management and legal and
financial advisors also reviewed with the FPBB Board their due diligence
findings concerning RSFC. Representatives of Keefe, Bruyette
22
<PAGE>
reviewed financial information concerning RSFC, FPBB and the proposed
transaction, and delivered to the FPBB Board Keefe, Bruyette's oral opinion
(which was subsequently confirmed in writing) that, as of such date, the
Exchange Ratio was fair, from a financial point of view, to the holders of FPBB
Common Stock. See "--Opinion of Keefe, Bruyette & Woods, Inc." Based upon the
FPBB Board's review and discussion of the definitive terms of the transaction,
the opinion of Keefe, Bruyette and other relevant factors, the FPBB Board, by
unanimous vote of all directors, authorized and approved the execution of the
Merger Agreement and the Stock Option Agreement.
At a meeting held on May 27, 1998, the RSFC Board considered a
combination with FPBB. Among other things, the RSFC Board received a
presentation from its legal counsel regarding the directors' obligations with
respect to the proposed transaction, a presentation from management describing
FPBB and First Bank, the results of due diligence and the business terms of the
proposed transaction, and an extensive presentation from Sandler O'Neill
analyzing financial information and ratios with respect to each of RSFC, FPBB
and the Combined Company. Sandler O'Neill then delivered its oral opinion
(subsequently confirmed in writing) that, as of such date, the Exchange Ratio
was fair, from a financial point of view, to the holders of RSFC Common Stock.
See "--Opinion of Sandler O'Neill & Partners, L.P." Based on its review of the
information presented at the meeting and other relevant factors, the RSFC Board
unanimously approved the Merger Agreement and the Stock Option Agreement and
recommended approval of the Merger Agreement to the RSFC shareholders.
Following the meetings, the Merger Agreement and the Stock Option
Agreement were executed by the parties.
RECOMMENDATION OF FPBB BOARD OF DIRECTORS; FPBB'S REASONS FOR THE MERGER
The FPBB Board believes that the Merger is fair to, and in the best
interests of, FPBB and its stockholders. ACCORDINGLY, THE FPBB BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT THE HOLDERS OF
FPBB COMMON STOCK VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT
AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY. See "--Background
to the Merger" above and "--Opinion of Keefe, Bruyette & Woods, Inc." below.
The terms of the Merger, including the Exchange Ratio, are the result
of arm's-length negotiations between representatives of FPBB and RSFC. In
reaching its decision to approve the Merger Agreement and the Stock Option
Agreement, the FPBB Board consulted with its legal and financial advisors and
with management of FPBB, and, without assigning any relative or specific
weights, considered a number of factors, both from a short-term and long-term
perspective, including, without limitation, the following:
(i) the FPBB Board familiarity with and review of FPBB's business,
financial condition, results of operations and prospects, including, without
limitation, its potential growth and profitability and the business risks
associated therewith;
(ii) the current and prospective environment in which FPBB operates,
including national and local economic conditions, the competitive environment
for savings banks and other financial institutions generally, the increasing
consolidation in the financial services industry and the competitive effects of
such increased consolidation on smaller financial institutions such as FPBB;
(iii) information concerning the business, financial condition, results of
operations and prospects of RSFC, including the recent performance of RSFC
Common Stock, the historical financial data of RSFC, customary statistical
measurements of RSFC's financial performance and the future prospects for RSFC
Common Stock following the Merger;
(iv) the value to be received by holders of FPBB Common Stock pursuant to
the Merger Agreement in relation to the historical trading prices of FPBB Common
Stock;
23
<PAGE>
(v) the information presented by Keefe, Bruyette to the FPBB Board with
respect to the Merger and the opinion of Keefe, Bruyette that, as of the date of
such opinion, the Exchange Ratio was fair to the holders of FPBB Common Stock
from a financial point of view (see "--Opinion of Keefe, Bruyette & Woods, Inc."
below);
(vi) the process conducted by FPBB's management and its financial advisor
in exploring and determining the potential value which could be realized by FPBB
stockholders in a business combination transaction, including the contacts
between FPBB's financial advisor and certain financial institutions, the fact
that each of such financial institutions which expressed interest in a business
combination transaction with FPBB was afforded an opportunity to submit
proposals for such a transaction to FPBB, the terms of the proposals received by
FPBB from such financial institutions and the fact that the indicated value of
the Exchange Ratio in the RSFC proposal was higher as of May 26, 1998 than the
indicated values of the per share consideration offered in the other proposal
submitted to FPBB (see "--Background to the Merger");
(vii) the financial and other significant terms of the proposed Merger with
RSFC, and the review by FPBB with its legal and financial advisors of the
provisions of the Merger Agreement and the Stock Option Agreement;
(viii)the expected impact of the Merger on FPBB's business, employees,
customers and communities, the compatibility of the respective businesses and
management philosophies of RSFC and FPBB, and the expectation that RSFC will
continue to provide quality service to the customers and the communities served
by FPBB;
(ix) the FPBB Board belief that the receipt of RSFC Common Stock in the
Merger generally will permit holders of FPBB Common Stock to defer any federal
income tax liability associated with the increase in the value of their stock as
a result of the Merger (see "--Certain Federal Income Tax Consequences" below);
and
(x) the alternative strategic courses available to FPBB, including
remaining independent and exploring other potential business combination
transactions.
OPINION OF KEEFE, BRUYETTE & WOODS, INC.
At the May 27, 1998 meeting of the FPBB Board, during which the FPBB Board
approved the Merger Agreement, Keefe, Bruyette delivered to the FPBB Board an
oral opinion (which opinion was subsequently confirmed by delivery of a written
opinion, dated May 27, 1998) to the effect that, as of the date of such opinion
and based upon and subject to certain matters stated therein, the Exchange Ratio
was fair, from a financial point of view, to the holders of the FPBB Common
Stock. In connection with its opinion dated the date of this Joint Proxy
Statement/Prospectus, Keefe, Bruyette updated certain analyses performed in
connection with its opinion and reviewed the assumptions on which such analyses
were based and the factors considered in connection therewith.
Keefe, Bruyette has delivered to the FPBB Board its updated written opinion
dated the date of this Joint Proxy Statement/Prospectus to the effect that as of
such date the Exchange Ratio is fair, from a financial point of view, to the
holders of FPBB Common Stock. Keefe, Bruyette's opinion is addressed to the FPBB
Board and does not constitute a recommendation as to how any stockholder of FPBB
should vote with respect to the Merger Agreement.
THE FULL TEXT OF THE OPINION OF KEEFE, BRUYETTE, WHICH SETS FORTH A
DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED TO THIS JOINT PROXY STATEMENT
PROSPECTUS AS ANNEX D AND IS INCORPORATED HEREIN BY REFERENCE. FPBB STOCKHOLDERS
ARE URGED TO READ THE OPINION IN ITS ENTIRETY. THE FOLLOWING SUMMARY OF THE
OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION.
In rendering its opinion, Keefe, Bruyette (i) reviewed, among other things,
the Merger Agreement, Annual Reports to stockholders and Annual Reports on Form
10-K of FPBB and Annual Reports on Form 10-K of RSFC, certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of FPBB and Quarterly Reports on
Form 10-Q of RSFC
24
<PAGE>
and certain internal financial analyses and forecasts for FPBB prepared by
management; (ii) held discussions with members of senior management of FPBB and
RSFC regarding past and current business operations, regulatory relationships,
financial condition and future prospects of the respective companies; (iii)
compared certain financial and stock market information for FPBB and RSFC with
similar information for certain other companies the securities of which are
publicly traded; (iv) reviewed the financial terms of certain recent business
combinations in the banking industry; and (v) performed such other studies and
analyses as it considered appropriate.
In conducting its review and arriving at its opinion, Keefe, Bruyette
relied upon and assumed the accuracy and completeness of all of the financial
and other information provided to it or publicly available, and Keefe, Bruyette
did not attempt to verify such information independently. Keefe, Bruyette relied
upon the management of FPBB as to the reasonableness and achievability of the
financial and operating forecasts and projections (and assumptions and bases
therefor) provided to Keefe, Bruyette and assumed that such forecasts and
projections reflected the best available estimates and judgments of such
management and that such forecasts and projections will be realized in the
amounts and in the time periods estimated by such management. Keefe, Bruyette
also assumed, without independent verification, that the aggregate allowances
for loan losses for FPBB and RSFC are adequate to cover such losses. Keefe,
Bruyette did not make or obtain any evaluations or appraisals of the property of
FPBB or RSFC, nor did Keefe, Bruyette examine any individual credit files.
The following is a summary of the material financial analyses employed by
Keefe, Bruyette in connection with providing its opinion.
(a) FINANCIAL SUMMARY OF THE RSFC OFFER. Keefe, Bruyette calculated the
multiple which the $55.05 per share offer (derived by multiplying the Exchange
Ratio of 4.194 times $13.125, the last reported sale price of Republic Security
on May 26, 1998) represents when compared to FPBB's March 31, 1998 stated book
value per share of $23.14, its March 31, 1998 estimated tangible book value per
share of $22.64, its trailing 12 months (March 31, 1997 to March 31, 1998)
earnings per share of $1.84 and its estimated 1998 earnings per share (provided
by management) of $1.71. The price to book value multiple was 238 percent, the
price to tangible book value was 243 percent, the price to the trailing 12
months earnings per share was 29.92 times and the price to the 1998 earnings
estimates per share was 32.19.
(b) ANALYSIS OF SELECTED MERGER TRANSACTIONS. Keefe, Bruyette reviewed
certain financial data related to a set of recent comparable nationwide thrift
holding company acquisitions with transaction values over $100 million since
January 1, 1998. These transactions were: the First Charter Corporation
acquisition of HFNC Financial Corp., the Second Bancorp, Inc. acquisition of
Trumbull Financial Corp., the UCBH Holdings, Inc. acquisition of USB Holdings,
the FirstMerit Corp. acquisition of Security First Corp., the Astoria Financial
Corporation acquisition of Long Island Bancorp, the HUBCO Inc. acquisition of
Dime Financial Corp., the HUBCO Inc. acquisition of ISB Financial Corp., the
Washington Mutual acquisition of HF Ahmanson & Co., the FIRSTPLUS Financial
acquisition of Life Financial Corp., the Commercial Federal acquisition of First
Colorado Bancorp, the BB&T Corp. acquisition of Maryland Federal Bancorp, the
Commercial Federal acquisition of AmerUs Bank, the FirstFed Financial Services
acquisition of First Shenango Bancorp, the 1855 Bancorp acquisition of Sandwich
Bancorp, the Fifth Third Bancorp acquisition of CitFed Bancorp, Inc., and the
Fifth Third Bancorp acquisition of State Savings Company.
Keefe, Bruyette calculated an average of the comparable group's multiple of
price to the targets' future and trailing 12 months earnings as 22.36 times and
23.33 times, respectively, compared to a multiple of price to future and
trailing 12 months earnings of 32.19 times and 29.92 times, respectively, for
the Merger; an average multiple of price to the targets' stated book value of
2.61 times compared to a multiple of 2.38 times associated with the Merger; an
average multiple of price to the targets' estimated tangible book value of 2.70
times compared to a multiple of 2.43 times associated with the Merger; and an
average multiple of price to the targets' asset value of 25.58 times compared to
a multiple of 16.39 times associated with the Merger; an average multiple of
price to the targets' tangible book premium to core deposits value of 26.32
times compared to a multiple of 13.90 times associated with the Merger. In
addition, Keefe, Bruyette's analysis showed the following concerning FPBB's
financial performance: that the return on equity on a year-to-date basis was
7.60 percent, compared with an average of 13.68 percent for the targets' group;
that the
25
<PAGE>
return on assets on a year-to-date basis was 0.49 percent, compared with an
average of 1.24 percent for the targets' group; that the equity to assets ratio
was 6.53 percent, compared to an average of 9.89 percent; that the ratio of
nonperforming assets to total assets was 0.57 percent, compared to an average of
0.75 percent.
Keefe, Bruyette reviewed a second category of certain financial data
related to a set of recent comparable nationwide thrift holding company
acquisitions with transaction values over $100 million from January 1, 1997 to
December 31, 1997. Keefe, Bruyette calculated an average of the comparable
group's multiple of price to the targets' future and trailing 12 months earnings
as 17.52 times and 25.35 times, respectively, compared to a multiple of price to
future and trailing 12 months earnings of 32.19 times and 29.92 times,
respectively, for the Merger; an average multiple of price to the targets'
stated book value of 2.10 times compared to a multiple of 2.38 times associated
with the Merger; an average multiple of price to the targets' estimated tangible
book value of 2.27 times compared to a multiple of 2.43 times associated with
the Merger; and an average multiple of price to the targets' asset value of
19.73 times compared to a multiple of 16.39 times associated with the Merger; an
average multiple of price to the targets' tangible book premium to core deposits
value of 18.40 times compared to a multiple of 13.90 times associated with the
Merger. In addition, Keefe, Bruyette's analysis showed the following concerning
FPBB's financial performance: that the return on equity on a year-to-date basis
was 7.60 percent, compared with an average of 9.60 percent for the targets'
group; that the return on assets on a year-to-date basis was 0.49 percent,
compared with an average of 0.86 percent for the targets' group; that the equity
to assets ratio was 6.53 percent, compared to an average of 9.44 percent; that
the ratio of nonperforming assets to total assets was 0.57 percent, compared to
an average of 1.24 percent.
No company or transaction used as a comparison in the above analysis is
identical to FPBB, RSFC or the Merger. Accordingly, an analysis of the results
of the foregoing is not mathematical; rather, it involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the companies and other factors that could affect the public trading value of
the companies to which they are being compared.
(c) SELECTED PEER GROUP ANALYSIS. Keefe, Bruyette compared the financial
performance and market performance of RSFC based on various financial measures
of earnings performance, operating efficiency, capital adequacy and asset
quality and various measures of market performance, including market/book
values, price to earnings and dividend yields to those of a group of comparable
holding companies. For purposes of such analysis, the financial information used
by Keefe, Bruyette was as of and for the quarter ended March 31, 1998 and the
market price information was as of May 26, 1998. The companies in the peer group
were Southeastern banks which had total assets ranging from approximately $1
billion to $5 billion. The companies were: BancorpSouth, Inc., United
Bankshares, Inc., Hancock Holding Company, F&M National Corporation, First
United Bancshares, Inc., Carolina First Corporation, MainStreet BankGroup Inc.,
Republic Bancshares, Inc., Triangle Bancorp, Inc., Republic Banking Corporation
of Florida, Hamilton Bancorp, Inc., Simmons First National Corporation, Alabama
National BanCorporation, Century South Banks, Inc., and Peoples Holding Company.
Keefe, Bruyette's analysis showed the following concerning RSFC financial
performance: that the return on equity on an annualized basis was 14.44%,
compared with an average of 12.96% for the peer group; that the return on assets
on an annualized basis was 1.39%, compared with an average of 1.16% for the
group; that the net interest margin on an annualized basis was 5.22%, compared
with an average of 4.36%; that the efficiency ratio on an annualized basis was
62.54%, compared with an average of 59.35%; that the equity to assets ratio was
8.7%, compared to an average of 9.03%; that the ratio of nonperforming assets to
total loans and other real estate owned was 1.29%, compared to an average of
0.93%; that the ratio of loan loss reserve to nonperforming loans was 107%,
compared to an average of 342%.
Keefe, Bruyette's analysis further showed the following concerning RSFC
market performance: that RSFC price to earnings multiple based on 1998 estimated
earnings was 23.86 times, compared to an average for the group of 18.95 times;
that their price to book value multiples were 3.52 and, compared to a group
average of 2.54 times; the dividend yield was 1.52%, compared to an average for
the group of 1.57%. For purposes of the above calculations, all earnings
estimates are based upon the I/B/E/S published estimates for RSFC.
26
<PAGE>
Keefe, Bruyette analyzed the pro forma market multiples of RSFC Common
Stock based on estimated EPS, book value and tangible book value per share for
RSFC after the transaction. Based on this analysis of RSFC's pro forma trading
multiples, the pro forma price to earnings multiple based on 1999 estimated
earnings was 17.59 times, the pro forma price to book value multiples was 3.06
and the pro forma price to tangible book value multiples was 3.15.
(d) CONTRIBUTION ANALYSIS. Keefe, Bruyette analyzed the relative
contribution of each of RSFC and FPBB to certain pro forma balance sheet and
income statement items of the combined entity. The contribution analysis showed
that FPBB would contribute approximately 55.0% of the combined common equity and
38.9% of the combined estimated 1998 net income, 60.6% of the combined total
assets and 36.9% of the total combined market capitalization of the pro forma
combined entity. Keefe, Bruyette compared the relative contribution of such
balance sheet and income statement items with the estimated pro forma ownership
of 46.21% for FPBB stockholders based on an Exchange Ratio of 4.194.
(e) PRO FORMA EPS, BOOK VALUE AND DIVIDENDS PER SHARE. Keefe, Bruyette
analyzed the pro forma EPS, book value and dividends per share of FPBB Common
Stock assuming an exchange of 4.194 shares of RSFC Common Stock for each share
of FPBB Common Stock. Based on 1999 earnings per share of $2.49 for FPBB and
$.63 for RSFC, FPBB's 1999 pro forma EPS would have increased to $3.13,
reflecting a 25.7 percent increase. FPBB's pro forma March 31, 1999 stated book
value per share would be $19.97, a 13.7 percent decrease from FPBB's stated book
value per share of $23.14. FPBB's pro forma annualized dividends per share would
be $.84, a 20 percent increase from FPBB's annualized dividend per share of
$.70.
(f) FINANCIAL IMPACT ANALYSIS. Keefe, Bruyette performed pro forma merger
analysis that combined projected income statement and balance sheet information.
Assumptions regarding the accounting treatment, acquisition adjustments, and
cost savings were used to calculate the financial impact that the Merger would
have on certain projected financial results of RSFC. This analysis was based on
analyst and the respective managements' estimates of FPBB and RSFC's 1999
earnings per share and on managements' estimates of expected cost savings and a
non-recurring merger and restructuring charge to be realized or incurred in
connection with the Merger. These projections were discussed with the management
of each of FPBB and RSFC. The actual results achieved following the Merger will
vary from the projected results, and the variations may be material.
Keefe, Bruyette calculated the impact of the Merger on RSFC's earnings per
share, book value, return on equity and leverage ratio. Keefe, Bruyette analyzed
the pro forma EPS, book value and dividends per share of RSFC Common Stock
assuming an exchange of 4.194 shares of RSFC Common Stock for each share of FPBB
Common Stock. This analysis indicated that the Merger is expected to increase
Republic Security's projected 1999 earnings per share, book value, tangible book
value and leverage ratio.
(g) SHAREHOLDER PRESENT VALUE ANALYSIS. Keefe, Bruyette estimated the
present value of future cash flows that would accrue to a holder of a share of
FPBB Common Stock assuming that the stockholder held the stock for between one
and five years and then sold it. The analysis was based on earnings forecasts
prepared by management for the years 1998 through 2000 and an annual net income
growth rate of 13.33 % for the years 2000 through 2002. A 40 % dividend payout
ratio was assumed for FPBB through the year 2002. An estimated year end stock
price was estimated for each year by multiplying the projected annual earnings
by a price to trailing twelve months earnings multiple of 18.00 times. The
estimated stock price for each year and the estimated dividends were discounted
at a rate of 14.00 % producing present values ranging from $34.34 to $37.14.
These values were compared to the $55.05 offer from RSFC.
Keefe, Bruyette repeated this analysis using a price to trailing twelve
months earnings multiple of 22.00 times. The estimated stock price for each year
and the estimated dividends were discounted at a rate of 15.00 % producing
present values ranging from $37.54 to $43.88. These values were compared to the
$55.05 offer from RSFC.
Keefe, Bruyette repeated the analysis was based on earnings forecasts
prepared by management for the years 1998 through 2000 and with a lower annual
net income growth rate scenario of 9.04 % for the years 2000 through 2002. A
27
<PAGE>
40 % dividend payout ratio was assumed for FPBB through the year 2002. An
estimated year end stock price was estimated for each year by multiplying the
projected annual earnings by a price to trailing twelve months earnings multiple
of 18.00 times. The estimated stock price for each year and the estimated
dividends were discounted at a rate of 14.00 % producing present values ranging
from $30.59 to $34.34. These values were compared to the $55.05 offer from RSFC.
Keefe, Bruyette repeated this analysis using a price to trailing twelve
months earnings multiple of 22.00 times. The estimated stock price for each year
and the estimated dividends were discounted at a rate of 15.00 % producing
present values ranging from $35.30 to $37.54. These values were compared to the
$55.05 offer from RSFC.
Keefe, Bruyette stated that the discounted cash flow present value analysis
is a widely-used valuation methodology but noted that it relies on numerous
assumptions, including asset and earnings growth rates, terminal values and
discount rates. The analysis did not purport to be indicative of the actual
values or expected values of FPBB Common Stock.
(h) OTHER ANALYSIS. Keefe, Bruyette also reviewed selected investment
research reports, earnings estimates, historical stock price performance
relative to the Standard & Poors 500 and to an index of bank and thrift stocks,
and other financial data for FPBB and RSFC.
The summary contained herein provides a description of the material
analyses prepared by Keefe, Bruyette in connection with the rendering of its
opinion. The summary set forth above does not purport to be a complete
description of the analyses performed by Keefe, Bruyette in connection with the
rendering of its opinion. The preparation of a fairness opinion is not
necessarily susceptible to partial analysis or summary description. Keefe,
Bruyette believes that its analyses and the summary set forth above must be
considered as a whole and that selecting portions of its analyses without
considering all analyses, or selecting part of the above summary, without
considering all factors and analyses, would create an incomplete view of the
processes underlying the analyses set forth in Keefe, Bruyette's presentations
and opinion. The fact that any specific analysis has been referred to in the
summary above is not meant to indicate that such analysis was given greater
weight than any other analyses.
In performing its analyses, Keefe, Bruyette made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of FPBB and RSFC. The
analyses performed by Keefe, Bruyette are not necessarily indicative of actual
values or actual future results which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely as
part of Keefe, Bruyette's analysis of the fairness, from a financial point of
view, of the Exchange Ratio in the Merger. These analyses were provided to the
FPBB Board in connection with the delivery of Keefe, Bruyette's opinion. The
analyses do not purport to be appraisals or to reflect the prices at which a
company actually might be sold or the prices at which any securities may trade
at the present time or at any time in the future. In addition, as described
above, Keefe, Bruyette's opinion, along with its presentation to the FPBB Board,
was just one of many factors taken into consideration by the FPBB Board in
unanimously approving the Merger Agreement.
Keefe, Bruyette, as part of its investment banking business, is continually
engaged in the valuation of banking businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. As
specialists in the securities of banking companies, Keefe, Bruyette has
experience in, and knowledge of, the valuation of banking enterprises. In the
ordinary course of its business as a broker-dealer, Keefe, Bruyette may, from
time to time, purchase securities from, and sell securities to, FPBB and RSFC
and as a market maker in securities Keefe, Bruyette may from time to time have a
long or short position in, and buy or sell, debt or equity securities of FPBB
and RSFC for Keefe, Bruyette's own account and for the accounts of its
customers.
FPBB has agreed to pay Keefe, Bruyette concurrently with the first to be
executed of an agreement in principle or a definitive agreement contemplating
the consummation of a Transaction a cash fee of $100,000. An additional cash fee
of $100,000 will be paid promptly after the mailing of any proxy statement or
registration statement relating to the
28
<PAGE>
Transaction. In addition, FPBB has agree to pay Keefe, Bruyette, at the time of
closing, a cash fee ("Contingent Fee") equal to 1.0% of the market value of the
aggregate consideration offered in exchange for the outstanding shares of common
stock of FPBB in the Transaction. Based on the closing price of RSFC Common
Stock on ____ __, 1998, the amount of the Contingent Fee would have been
$______. The fee paid prior to the Contingent Fee payment will be credited
against the Contingent Fee. Pursuant to the Keefe, Bruyette engagement
agreement, FPBB also agreed to reimburse Keefe, Bruyette for reasonable
out-of-pocket expenses and disbursements incurred in connection with its
retention and to indemnify against certain liabilities, including liabilities
under the federal securities laws.
RECOMMENDATION OF RSFC'S BOARD OF DIRECTORS; RSFC'S REASONS FOR THE MERGER
Since 1992, the RSFC Board has been pursuing a Shareholder Value Plan, a
key strategic element of which includes growth through mergers and acquisitions.
In the last five years, RSFC has completed seven acquisitions. If the Merger is
consummated, it will be RSFC's eighth acquisition over such time period. The
RSFC Board believes that a merger with FPBB represents an opportunity for RSFC
to enhance its long-term growth prospects by expanding Republic Security's
geographical presence, diversifying its loan portfolio and providing for the
potential to increase earnings per share over the long term.
The RSFC Board considered the fact that by acquiring FPBB, Republic
Security will significantly expand and enhance its Southeast banking franchise,
thereby enhancing long-term growth opportunities. The RSFC Board believes the
in-market combination of RSFC and FPBB will present an opportunity to further
leverage RSFC's cost base. RSFC anticipates that the Combined Bank will have at
least 85 full-service banking centers from which to serve the attractive Florida
market. In addition, the RSFC Board believes that the Merger will allow RSFC to
utilize its commercial banking platform and technological expertise to enhance
the performance of FPBB's operations while FPBB provides an entrance into
supermarket banking for RSFC.
Furthermore, in determining its decision to approve the Merger and whether
the consideration being paid to the stockholders of FPBB in connection with the
Merger is fair to RSFC and its shareholders from a financial point of view, the
RSFC Board considered the anticipated financial benefits of the Merger. The
Merger is expected to be accretive to RSFC's earnings per share and book value
per share. On a pro forma basis, the Combined Bank's return-on-average-assets
(ROAA), return-on-average-equity (ROAE) and efficiency ratio will compare
favorably to its peer group. The RSFC Board reviewed and analyzed internally and
externally prepared financial analyses of the Combined Company considering
post-merger cost savings in arriving at anticipated financial benefits. The RSFC
Board also reviewed and considered transaction values of recent thrift mergers.
In addition, in reaching its decision, the RSFC Board considered the opinion of
Sandler O'Neill.
In reaching its decision to approve and adopt the Merger Agreement, the
RSFC Board also considered factors that are not favorable to the Merger,
including (i) the potential adverse impact of FPBB's high concentration of
certificates of deposit and higher interest-bearing savings accounts on the
Combined Bank's net-interest margin, (ii) the likelihood that significant
certificates of deposit will run off as RSFC conforms FPBB's deposit pricing to
its own levels and (iii) the potential adverse impact of integrating the
operations of an institution larger than RSFC. In reaching its determination to
approve the Merger, the RSFC Board did not assign any relative or specific
weights to the foregoing factors, and individual directors may have given
differing weights to different factors. After deliberating with respect to the
Merger and the other transactions contemplated by the Merger Agreement, and
considering the matters discussed above, the RSFC Board unanimously approved the
Merger Agreement and the transactions contemplated thereby as being in the best
interests of RSFC and its shareholders.
AFTER EVALUATING THE FAVORABLE AND UNFAVORABLE FACTORS DISCUSSED ABOVE AS
WELL AS OTHERS, THE RSFC BOARD UNANIMOUSLY DETERMINED TO APPROVE THE MERGER
AGREEMENT AND RECOMMENDS THAT THE RSFC SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
MERGER AGREEMENT.
29
<PAGE>
OPINION OF SANDLER O'NEILL & PARTNERS, L.P.
Pursuant to a letter agreement dated as of May 14, 1998 (the "Sandler
O'Neill Agreement"), RSFC retained Sandler O'Neill as an independent financial
advisor in connection with RSFC's consideration of a possible business
combination with FPBB. Sandler O'Neill is a nationally recognized investment
banking firm whose principal business specialty is banks and savings
institutions. In the ordinary course of its investment banking business, Sandler
O'Neill is regularly engaged in the valuation of such businesses and their
securities in connection with mergers and acquisitions and other corporate
transactions.
In connection with its consideration of the Merger, the RSFC Board
requested Sandler O'Neill to render its opinion as to the fairness of the
Exchange Ratio to RSFC from a financial point of view. On May 27, 1998, Sandler
O'Neill delivered to RSFC's Board its opinion that, as of such date, the
Exchange Ratio was fair to RSFC from a financial point of view. Sandler O'Neill
has also delivered to RSFC's Board a written opinion dated the date of this
Joint Proxy Statement/Prospectus (the "Sandler O'Neill Fairness Opinion") which
is substantially identical to the May 27, 1998 opinion.
THE FULL TEXT OF THE SANDLER O'NEILL FAIRNESS OPINION, WHICH SETS FORTH THE
PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH RENDERING SUCH OPINION,
IS ATTACHED AS ANNEX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION OF THE OPINION SET FORTH
HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ANNEX C. RSFC'S SHAREHOLDERS
ARE URGED TO READ THE SANDLER O'NEILL FAIRNESS OPINION IN ITS ENTIRETY IN
CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
THE SANDLER O'NEILL FAIRNESS OPINION WAS PROVIDED TO RSFC'S BOARD FOR ITS
INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF
VIEW, OF THE EXCHANGE RATIO TO RSFC. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS
DECISION OF RSFC TO ENGAGE IN THE MERGER OR ANY OTHER ASPECT OF THE MERGER AND
DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF SHARES OF RSFC COMMON
STOCK AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE RSFC SPECIAL MEETING WITH
RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED THERETO.
In connection with rendering its May 27, 1998 opinion, Sandler O'Neill
performed a variety of financial analyses. The following is a summary of such
analyses, but does not purport to be a complete description of all the analyses
underlying Sandler O'Neill's opinion. The preparation of a fairness opinion is a
complex process involving subjective judgments and is not necessarily
susceptible to a partial analysis or summary description. Sandler O'Neill
believes that its analyses must be considered as a whole and that selecting
portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and processes underlying its opinion. In performing its analyses,
Sandler O'Neill made numerous assumptions with respect to industry performance,
business and economic conditions and various other matters, many of which cannot
be predicted and are beyond the control of RSFC, FPBB and Sandler O'Neill. Any
estimates contained in Sandler O'Neill's analyses are not necessarily indicative
of future results or values, which may be significantly more or less favorable
than such estimates. Estimates on the values of companies do not purport to be
appraisals or necessarily reflect the prices at which companies or their
securities may actually be sold. Because such estimates are inherently subject
to uncertainty, none of RSFC, FPBB or Sandler O'Neill assumes responsibility for
their accuracy.
SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial terms of the
proposed transaction. Based on the closing price of RSFC Common Stock on May 26,
1998 of $13.125 and an Exchange Ratio of 4.194, Sandler O'Neill calculated an
implied transaction value per share of FPBB of $55.05. Based upon FPBB's March
31, 1998 financial information and an Exchange Ratio of 4.194, Sandler O'Neill
calculated the price to tangible book value, price to last twelve months'
normalized earnings and deposit premium. This analysis yielded a price to
tangible book value multiple of 243%, a price to last twelve months' earnings
multiple of 30.75x and a deposit premium of 12.6%.
30
<PAGE>
STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the reported
trading prices and volume of RSFC Common Stock and FPBB Common Stock, and the
relationship between the movements in the prices of RSFC Common Stock and FPBB
Common Stock, respectively, to movements in certain stock indices, including
Standard & Poor's 500 Index, the Nasdaq Banking Index and a selected composite
group of publicly traded commercial banking institutions (in the case of RSFC)
and savings institutions (in the case of FPBB). During the one-year period ended
May 22, 1998, RSFC Common Stock outperformed the Standard & Poors Index and the
Nasdaq Banking Index and performed on par with the selected peer group. During
the one-year period ended May 22, 1998, FPBB Common Stock performed on a par
with the Standard & Poors Index and underperformed the Nasdaq Banking Index and
the selected peer group.
COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to compare selected financial and market trading information,
including balance sheet composition, asset quality ratios, loan loss reserve
levels, profitability, capital adequacy, dividends and trading multiples, for
FPBB and two groups of selected institutions. The first group consisted of FPBB
and the following nine publicly traded regional savings institutions (the
"Regional Group"): BankAtlantic Bancorp, Inc., BankUnited Financial Corp., CENIT
Bancorp, Inc., Community Savings Bankshares (MHC), Fidelity Bankshares, Inc.
(MHC), First Financial Holdings, Inc., First Liberty Financial Corp., Harbor
Florida Bancshares, Inc. and Eagle Bancshares. Sandler O'Neill also compared
FPBB to a group of seven savings institutions which had a return on equity of
greater than 15% (based on last twelve months' earnings) and a price-to-tangible
book value of greater than 240% (the "Highly-Valued Group"). The Highly-Valued
Group was comprised of Anchor BanCorp Wisconsin, Flagstar Bancorp, Inc., D&N
Financial Corp., First Federal Capital Corp., Metropolitan Financial Corp.,
People's Bancshares, Inc. and WSFS Financial Corp. The analysis compared
publicly available financial information for FPBB and the median data for each
of the Regional Group and the Highly-Valued Group as of and for each of the
years ended December 31, 1993 through December 31, 1997 and as of and for the
twelve months ended March 31, 1998.
Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market trading information for RSFC
and two different groups of commercial banks. The first group consisted of RSFC
and the following fifteen publicly traded regional commercial banks (the
"Commercial Regional Group"): ABC Bancorp, Alabama National BanCorp., Capital
City Bank Group, Inc., Century South Banks, Inc., City Holding Co., First
Charter Corp., Hamilton Bancorp, Inc., Horizon Bancorp, Inc., Peoples Holding
Co., Premier Bancshares, Inc., Republic Banking Corp. of Florida, Seacoast
Banking Corp. of Florida, Simmons First National Corp., Triangle Bancorp, Inc.,
and Union Bankshares Corp. Sandler O'Neill also compared RSFC to a group of
twelve commercial banks which had a return on equity of greater than 16% (based
on last twelve months' earnings) and a price-to-tangible book value of greater
than 300% (the "Commercial Highly-Valued Group"). The Commercial Highly-Valued
Group was comprised of CVB Financial Corp., Hamilton Bancorp, Inc., Investors
Financial Services, Irwin Financial Corp., Independent Bank Corp., Lakeland
Financial Corp., Mississippi Valley Bancshares, Oriental Financial Group, Inc.,
Premier Bancshares, Inc., Prime Bancshares, Inc., Sterling Bancshares, Inc. and
U.S.B. Holding Corp. The analysis compared publicly available financial
information for RSFC and the median data for each of the Commercial Regional
Group and the Commercial Highly-Valued Group as of and for each of the years
ended December 31, 1993 through December 31, 1997 and as of and for the twelve
months ended March 31, 1998.
ANALYSES OF SELECTED MERGER TRANSACTIONS. Sandler O'Neill reviewed 23
transactions announced from January 1, 1998 to May 22, 1998 involving publicly
traded savings institutions as acquired institutions with transaction values
over $15 million ("Nationwide Transactions") and 25 transactions announced from
January 1, 1997 to May 22, 1998 involving publicly traded savings institutions
in the Southeast Region (Arkansas, Florida, Georgia, Louisiana, Mississippi,
North Carolina, South Carolina, Virginia, West Virginia) as acquired
institutions with transaction values over $15 million ("Regional Transactions").
Sandler O'Neill reviewed the ratios of transaction value to last twelve months'
net income, transaction value to tangible book value, transaction value to book
value, tangible book premium to core deposits, transaction value to total
deposits and transaction value to total assets and computed high, low, mean and
median ratios and premiums for the respective groups of transactions. These
multiples were applied to FPBB's financial information as of and for the twelve
months ended March 31, 1998. Based upon the median multiples for Nationwide
Transactions, Sandler O'Neill derived an imputed range of values per share of
FPBB Common Stock of
31
<PAGE>
$40.51 to $86.29. Based upon the median multiples for Regional Transactions,
Sandler O'Neill derived an imputed range of values per share of FPBB Common
Stock of $41.18 to $68.56.
No company involved in the transactions included in the above analysis is
identical to RSFC or FPBB and no transaction included in the above analysis is
identical to the Merger. Accordingly, an analysis of the results of the
foregoing analysis is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of RSFC and FPBB and the companies to which they are being
compared.
DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of FPBB through the year 2004 under various circumstances,
assuming FPBB performed in accordance with the earnings forecasts of its
management and certain variations thereof. To approximate the terminal value of
FPBB Common Stock at December 31, 2004, Sandler O'Neill applied price to
earnings multiples ranging from 15x to 35x and applied multiples of tangible
book value ranging from 150% to 400%. The dividend income streams and terminal
values were then discounted to present values using different discount rates
(ranging from 9% to 15%) chosen to reflect different assumptions regarding
required rates of return of holders or prospective buyers of FPBB Common Stock.
This analysis, assuming the current dividend payout ratio and management's
earnings forecasts, indicated an imputed range of values per share of FPBB
Common Stock of between $17.28 and $48.85 when applying the price to earnings
multiples, and an imputed range of values per share of FPBB Common Stock of
between $21.08 and $71.27 when applying multiples of tangible book value. In
connection with its analysis, Sandler O'Neill used sensitivity analyses to
consider the effects changes in the underlying assumptions (including variations
with respect to the growth rate of assets, net interest spread, non-interest
income, non-interest expenses and dividend payout ratio) would have on the
resulting present value.
PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential pro
forma effects of the Merger on RSFC, based upon an Exchange Ratio of 4.194,
RSFC's and FPBB's current and projected income statements and balance sheets,
and assumptions regarding the economic environment, accounting and tax treatment
of the Merger, charges associated with the Merger, operating efficiencies and
other adjustments, including certain balance sheet restructuring transactions,
discussed with the senior managements of RSFC and FPBB. This analysis indicated
that the Merger would be accretive to RSFC's earnings per share in all periods
analyzed, and accretive to tangible book value per share of RSFC Common Stock
for all periods analyzed. The actual results achieved by RSFC may vary from
projected results and the variations may be material.
Sandler O'Neill, as part of its investment banking business, is regularly
engaged in the valuation of financial institutions and their securities in
connection with mergers and acquisitions and other corporate transactions. In
connection with this opinion, we have reviewed, among other things: (i) the
Merger Agreement and exhibits thereto; (ii) the Stock Option Agreement, dated as
of May 27, 1998, by and between RSFC and FPBB; (iii) certain publicly available
financial statements of RSFC and other historical financial information provided
by RSFC that we deemed relevant; (iv) certain publicly available financial
statements of FPBB and other historical financial information provided by FPBB
that we deemed relevant; (v) certain financial analyses and forecasts of RSFC
prepared by and reviewed with management of RSFC and the views of senior
management of RSFC regarding RSFC's past and current business operations,
results thereof, financial condition and future prospects, including the pro
forma impact of RSFC's acquisition of Unifirst Federal Savings Bank; (vi)
certain financial analyses and forecasts of FPBB prepared by and reviewed with
management of FPBB and the views of senior management of FPBB regarding FPBB's
past and current business operations, results thereof, financial condition and
future prospects; (vii) the pro forma impact of the Merger on RSFC; (viii) the
publicly reported historical price and trading activity for RSFC and FPBB's
common stock, including a comparison of certain financial and stock market
information for RSFC and FPBB with similar publicly available information for
certain other companies the securities of which are publicly traded; (ix) the
financial terms of recent business combinations in the savings institution
industry, to the extent publicly available; (x) the current market environment
generally and the banking environment in particular; and (xi) such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as Sandler O'Neill considered relevant.
32
<PAGE>
In connection with rendering the Sandler O'Neill Fairness Opinion, Sandler
O'Neill confirmed the appropriateness of its reliance on the analyses used to
render its May 27, 1998 opinion by performing procedures to update certain of
such analyses and by reviewing the assumptions upon which such analyses were
based and the factors considered in connection therewith.
In performing its reviews and analyses, Sandler O'Neill assumed and relied
upon, without independent verification, the accuracy and completeness of all the
financial information, analyses and other information that was publicly
available or otherwise furnished to, reviewed by or discussed with it, and
Sandler O'Neill does not assume any responsibility or liability therefor.
Sandler O'Neill did not make an independent evaluation or appraisal of the
specific assets, the collateral securing assets or the liabilities (contingent
or otherwise) of RSFC or FPBB or any of their subsidiaries, or the
collectibility of any such assets, nor was it furnished with any such
evaluations or appraisals (relying, where relevant, on the analyses and
estimates of RSFC and FPBB). Sandler O'Neill is not an expert in the evaluation
of allowances for loan losses and it has not made an independent evaluation of
the adequacy of the allowance for loan loses of RSFC or FPBB, nor has it
reviewed any individual credit files relating to RSFC or FPBB. With RSFC's
consent, Sandler O'Neill has assumed that the respective aggregate allowances
for loan losses for both RSFC and FPBB are adequate to cover such losses and
will be adequate on a pro forma basis for the combined entity. In addition,
Sandler O'Neill has not conducted any physical inspection of the properties or
facilities of RSFC or FPBB. With respect to all financial information and
projections reviewed with each company's management, Sandler O'Neill assumed,
with RSFC's consent, that they had been reasonably prepared on bases reflecting
the best currently available estimates and judgments of the respective
managements of the respective future financial performances of RSFC and FPBB and
that such performances will be achieved. Sandler O'Neill expressed no opinion as
to such financial projections or the assumptions on which they were based.
Sandler O'Neill's opinion was necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
such opinion. Sandler O'Neill assumed, in all respects material to its analysis,
that all of the representations and warranties contained in the Merger Agreement
and all related agreements are true and correct, that each party to such
agreements will perform all of the covenants required to be performed by such
party under such agreements and that the conditions precedent in the Merger
Agreement are not waived. Sandler O'Neill also assumed, with RSFC's consent,
that there has been no material change in RSFC's and FPBB's assets, financial
condition, results of operations, business, or prospects since the date of the
most recent financial statements made available to them, that the Merger will be
accounted for as a pooling of interests, that RSFC and FPBB will remain as going
concerns for all periods relevant to its analyses and that the Merger will
qualify as a tax-free reorganization for federal income tax purposes.
Under the Sandler O'Neill Agreement, RSFC will pay Sandler O'Neill a
transaction fee in connection with the Merger, a substantial part of which is
contingent upon the consummation of the Merger. Under the terms of the Sandler
O'Neill Agreement, RSFC will pay Sandler O'Neill a transaction fee of
$2,904,000, of which $726,011 has been paid and the remainder of which will be
paid when the Merger is consummated. Sandler O'Neill has also received a fee of
$75,000 for rendering its fairness opinion, which will be credited against that
portion of the transaction fee payable upon consummation of the Merger. RSFC has
also agreed to indemnify Sandler O'Neill and its affiliates and their respective
partners, directors, officers, employees, agents and controlling persons against
certain expenses and liabilities, including liabilities under securities laws.
In the ordinary course of its business, Sandler O'Neill may actively trade
the equity and debt securities of RSFC and FPBB and their respective affiliates
for its own account and for the accounts of its customers and, accordingly, may
at any time hold a long or short position in such securities.
33
<PAGE>
THE MERGER AGREEMENT
THE FOLLOWING INFORMATION CONCERNING THE MERGER INSOFAR AS IT RELATES TO
MATTERS CONTAINED IN THE MERGER AGREEMENT DESCRIBES THE MATERIAL ASPECTS OF THE
MERGER BUT DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION THEREOF AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT, WHICH IS
INCORPORATED HEREIN BY REFERENCE AND ATTACHED HERETO AS ANNEX A. RSFC
SHAREHOLDERS AND FPBB STOCKHOLDERS ARE URGED TO READ THE MERGER AGREEMENT IN ITS
ENTIRETY.
THE MERGER. The Merger Agreement provides that, following the satisfaction
or waiver (where permissible) of certain conditions set forth therein,
including, among other things, the receipt of all necessary regulatory
approvals, the expiration of all waiting periods in respect thereto and the
approval of the Merger Agreement by the requisite vote of the shareholders of
RSFC and the stockholders of FPBB, at the Effective Time, FPBB will be merged
with and into RSFC, the separate existence of FPBB will thereupon cease and RSFC
will continue as the surviving corporation (the "Combined Company").
The Merger Agreement provides that as soon as practicable after the
Effective Time on the Effective Date, First Bank will be merged with and into
Republic Security, the separate existence of First Bank will thereupon cease,
and Republic Security will continue as the resulting corporation (the "Combined
Bank").
COMBINED COMPANY. At the Effective Time, each issued and outstanding share
of RSFC Common Stock shall remain issued and outstanding and unaffected by the
Merger. The Articles of Incorporation and Bylaws of RSFC as in effect
immediately prior to the Effective Time will be the Articles of Incorporation
and Bylaws of the Combined Company after the Effective Time, until thereafter
changed or amended as provided therein or by applicable law.
COMBINED BANK. At the Effective Time, each issued and outstanding share of
Republic Security's common stock shall remain issued and outstanding and
unaffected by the Merger. The Articles of Incorporation and Bylaws of Republic
Security as in effect immediately prior to the Effective Time will be the
Articles of Incorporation and Bylaws of the Combined Bank after the Effective
Time, until thereafter changed or amended as provided therein or by applicable
law.
EXCHANGE RATIO. At the Effective Time, by virtue of the Merger and without
any action by any holder of FPBB Common Stock, each outstanding share of FPBB
Common Stock except for shares held directly or indirectly by RSFC or FPBB
(other than Trust Account Shares or DPC Shares) will be converted into 4.194
shares of RSFC Common Stock (the "Exchange Ratio"). The Exchange Ratio may be
subject to adjustment if either:
(x) both of the following conditions are satisfied: (1) the Average
Closing Price (as defined below) is less than $11.15625; and (2) (i) the
number obtained by dividing the Average Closing Price by $13.125 (such
number being referred to herein as the "Parent Ratio") is less than (ii)
the number obtained by dividing the Index Price (as defined below) on the
Determination Date (as defined below) by the Index Price on May 27, 1998,
and subtracting 0.15 from such quotient (such number being referred to
herein as the "Index Ratio"); or
(y) the Average Closing Price is less than $9.84375.
If either (x) or (y) above occurs, FPBB will have the right, during a specified
period of time, to terminate the Merger Agreement by delivering prompt written
notice to RSFC. RSFC, however, will have the option during a five-day period
after receipt of FPBB's notice of termination, in the case of a termination
invoked under clause (x), of adjusting the Exchange Ratio to equal the lesser of
(i) a number equal to a quotient, the numerator of which is the product of 0.85,
$13.125 and the Exchange Ratio (as then in effect) and the denominator of which
is the Average Closing Price, and (ii) a number equal to a quotient, the
numerator of which is the Index Ratio multiplied by the Exchange Ratio (as then
in effect) and the denominator of which is the Parent Ratio, or, in the case of
a termination invoked under clause (y), to elect to increase the Exchange Ratio
to equal a number equal to a quotient, the numerator of which is the product of
0.75, $13.125 and the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price.
34
<PAGE>
If RSFC makes this election, no termination will have occurred and the Merger
Agreement will remain in effect in accordance with its terms (except as the
Exchange Ratio will have been so modified). For purpose of the foregoing,
capitalized terms have the following definitions:
"Average Closing Price" means the average of the last reported sale
prices per share of Parent Common Stock as reported on the Nasdaq National
Market (as reported in THE WALL STREET JOURNAL or, if not reported therein,
in another mutually agreed upon authoritative source) for the 20
consecutive trading days on the Nasdaq National Market ending at the close
of trading on the Determination Date.
"Determination Date" means the fifth business day prior to the date on
which the last of the Requisite Regulatory Approvals shall be received,
without regard to any requisite waiting periods in respect thereof.
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the
common stock of 15 bank holding companies, as listed in the Merger
Agreement.
As a result of the foregoing, it is possible that the Exchange Ratio may be
increased after the holders of RSFC and FPBB Common Stock have voted to approve
the Merger Agreement. See "--The Merger Agreement - Termination."
Additionally, at the Effective Time, each outstanding option to purchase
shares of FPBB Common Stock issued pursuant to FPBB's stock option plans will be
assumed by RSFC and will constitute an option to acquire on the same terms and
conditions as were applicable to such FPBB stock option, the same number of
shares of RSFC Common Stock into which such shares would have been converted
pursuant to the Merger had such options been exercised immediately prior to the
Effective Time at a price per share equal to the exercise price for the shares
of FPBB Common Stock otherwise purchasable pursuant to such options, divided by
the Exchange Ratio.
At the Effective Time, the stock transfer books of FPBB shall be closed and
there shall be no further registration of transfers of FPBB Common Stock.
Immediately after the Effective Time, transmittal letters will be mailed to each
holder of record of FPBB Common Stock to be used in forwarding his or her
certificates evidencing such shares for surrender and exchange for certificates
evidencing the shares of RSFC Common Stock to which he or she has become
entitled. After receipt of such transmittal form, each holder of certificates
formerly representing FPBB Common Stock should surrender such certificates to
the transfer agent, and each such holder will receive in exchange therefor
certificates evidencing the number of shares of RSFC Common Stock to which such
holder is entitled. Such transmittal letters will be accompanied by instructions
specifying other details of the exchange. FPBB STOCKHOLDERS SHOULD NOT SEND IN
THEIR STOCK CERTIFICATES TO THE TRANSFER AGENT UNTIL THEY RECEIVE A TRANSMITTAL
LETTER FOLLOWING THE EFFECTIVE TIME.
NO FURTHER RIGHTS. From and after the Effective Time, holders of
certificates representing shares of FPBB Common Stock will cease to have any
rights with respect to FPBB Common Stock. The sole right of holders of such
certificates shall be the right to receive the number of shares of RSFC Common
Stock which the holder of such certificate is entitled to receive. The holder of
such unexchanged certificate will not be entitled to receive any dividends or
other distributions declared or made after the Effective Time with respect to
RSFC Common Stock until the certificate is surrendered. Subject to applicable
laws, such dividends and distributions, if any, will be accumulated and, at the
time of such surrender, all such unpaid dividends and distributions will be
paid, without interest. None of RSFC, FPBB, the transfer agent or any other
person will be liable to any holder of shares of FPBB Common Stock for any
amount delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar laws.
If a certificate for FPBB Common Stock has been lost, stolen or destroyed,
the transfer agent will issue RSFC Common Stock in accordance with the Merger
Agreement upon receipt of appropriate evidence as to such loss, theft
35
<PAGE>
or destruction, appropriate evidence as to the ownership of such certificate by
the claimant and appropriate and customary indemnification.
For a description of the differences between the rights of the holders of
RSFC Common Stock and FPBB Common Stock, see "COMPARISON OF RIGHTS OF HOLDERS OF
RSFC AND FPBB COMMON STOCK."
GOVERNANCE OF THE COMBINED COMPANY. The Merger Agreement sets forth certain
matters related to the board of directors and the executive officers of the
Combined Company and the Combined Bank, from and after the Effective Time. For a
description of such matters, see "MANAGEMENT FOLLOWING THE MERGER."
CONDITIONS TO THE MERGER. The respective obligations of RSFC and FPBB to
consummate the Merger are subject to the satisfaction (or waiver, where legally
allowed), at or prior to the Effective Time, of a number of conditions set forth
in the Merger Agreement, including: (i) approval and adoption of the Merger
Agreement by the requisite votes of the RSFC shareholders and FPBB stockholders;
(ii) authorization for quotation on the Nasdaq National Market of the shares of
RSFC Common Stock to be issued in the Merger, subject to official notice of
issuance; (iii) the receipt of the requisite local, state and federal regulatory
approvals (the "Requisite Regulatory Approvals"), with such Requisite Regulatory
Approvals remaining in full force as of the Effective Time; (iv) the
Registration Statement (as defined herein) of which this Joint Proxy
Statement/Prospectus forms a part shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission; (v) the
absence of any order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
which prohibits the consummation of the Merger or any of the other transactions
contemplated by the Merger Agreement, and the absence of any statute, rule,
regulation, order, injunction or decree having been enacted, entered,
promulgated or enforced by any governmental entity prohibiting, restricting or
making illegal consummation of the Merger; (vi) the absence of any proceeding
initiated by any governmental entity seeking an Injunction; (vii) the accuracy
of the representations of the other party to the Merger Agreement as of the
Closing Date as though made thereon and as of the date of the Merger Agreement,
subject to the materiality standards set forth in the Merger Agreement, and the
receipt of a certificate to the foregoing effect signed on behalf of such other
party by the chief executive officer and chief financial officer thereof; (viii)
the performance by the other party to the Merger Agreement in all material
respects of all of the obligations required to be performed by it under the
Merger Agreement at or prior to the Closing Date, and the receipt of a
certificate to the foregoing effect signed on behalf of such other party by the
chief executive officer and chief financial officer thereof; (ix) the receipt of
an opinion from Morgan, Lewis & Bockius LLP, counsel to RSFC (in the case of the
obligations of RSFC to consummate the Merger) and the receipt of an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, counsel to FPBB (in the case of the
obligations of FPBB to consummate the Merger), in form and substance reasonably
satisfactory to the party receiving such opinion, 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 Internal Revenue Code
of 1986, as amended (the "Code"), and that, accordingly, for federal income tax
purposes (a) no gain or loss will be recognized by RSFC or FPBB as a result of
the Merger, (b) no gain or loss will be recognized by the FPBB stockholders who
exchange all of their FPBB Common Stock solely for RSFC Common Stock pursuant to
the Merger (except with respect to cash received in lieu of a fractional share
interest in RSFC Common Stock), and (c) the aggregate tax basis of the RSFC
Common Stock received by the FPBB stockholders who exchange all of their FPBB
Common Stock solely for RSFC Common Stock pursuant to the Merger will be the
same as the aggregate tax basis of the FPBB Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share interest for
which cash is received); and, in rendering such opinion, such counsel may
require and rely upon representations and covenants, including those contained
in certificates of officers of RSFC, FPBB and others, reasonably satisfactory in
form and substance to such counsel; and (x) the receipt of a letter from Ernst &
Young LLP, addressed to RSFC, to the effect that the Merger will qualify for
"pooling-of-interests" accounting treatment.
36
<PAGE>
No assurance can be provided as to if or when the Requisite Regulatory
Approvals will be obtained or whether all of the other conditions precedent to
the Merger will be satisfied or, where legally permitted, waived by the party
permitted to do so.
CONDUCT OF BUSINESS PRIOR TO THE MERGER AND OTHER COVENANTS. In the Merger
Agreement, FPBB has agreed that, prior to the Effective Time and except as
previously disclosed to RSFC, expressly contemplated or permitted by the Merger
Agreement or the Stock Option Agreement, dated as of May 27, 1998, by and
between RSFC and FPBB, (i) FPBB and its subsidiaries will carry on their
businesses in the ordinary course consistent with past practice, and (ii)
without limiting the generality of clause (i) FPBB will not, and will not permit
any of its subsidiaries to: (a) solely in the case of FPBB, declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock, other than normal quarterly dividends not in excess of $0.175 per share
of FPBB Common Stock; (b) (1) repurchase, redeem or otherwise acquire (except
for the acquisition of Trust Account Shares and DPC Shares) any shares of the
capital stock of FPBB or any subsidiary thereof, or any securities convertible
into or exercisable for any capital stock of FPBB or any subsidiary thereof,
subject to the terms and conditions of the Merger Agreement, in each case,
consistent with past practice, (2) 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 (3) 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, except, in the case of subclauses (2) and (3), for the issuance of
FPBB Common Stock upon the exercise or fulfillment of rights or options issued
or existing pursuant to employee benefit plans, programs or arrangements, all to
the extent outstanding and in existence on May 27, 1998 and in accordance with
their terms as of such date, (c) amend the certificate of incorporation of FPBB
("FPBB Articles"), the bylaws of FPBB (the "FPBB Bylaws") or other similar
governing documents; (d) make any capital expenditures other than those which
(1) are made in the ordinary course of business or are necessary to maintain
existing assets in good repair and (2) in any event are in an amount of no more
than $500,000 in the aggregate; (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, which would be material, individually or in the aggregate, to FPBB, or
which could reasonably be expected to impede or delay consummation of the
Merger, other than in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings 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 FPBB's representations and
warranties in the Merger Agreement being or becoming untrue, or in any of the
conditions to the Merger set forth in the Merger Agreement not being satisfied;
(h) change its methods of accounting in effect at March 31, 1998, except as
required by changes in generally accepted accounting principles ("GAAP") or
regulatory accounting principles as concurred to by FPBB's independent auditors;
(i) (1) except as otherwise provided in the Merger Agreement, as required by
applicable law or as required to maintain qualification pursuant to the Code,
adopt, amend, or terminate any employee benefit plan or any agreement,
arrangement, plan or policy between FPBB or any of its subsidiaries and one or
more of its current or former directors, officers or employees (except that FPBB
may adopt the amendments to its deferred benefit plan as agreed to by RSFC in
the Merger Agreement), or (2) 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 of FPBB's benefit,
pension or compensation plans or agreements as in effect as of May 27, 1998
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares), provided, however, that nothing contained in the Merger
Agreement will prohibit FPBB (A) from paying fiscal 1998 bonuses in an aggregate
amount not to exceed $300,000 or (B) from paying retention bonuses in an amount
not to exceed $735,000; (j) take or cause to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes or a
reorganization under Section 368(a) of the Code; (k) 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; (l) 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
37
<PAGE>
accommodation become responsible for the obligations of any other individual,
corporation or other entity; (m) file any application to relocate or terminate
the operations of any banking office of it or any of its subsidiaries; (n)
create, renew, amend or terminate, or give notice of a proposed renewal,
amendment or termination of, any material contract, agreement or lease for
goods, services or office space to which FPBB or any of its subsidiaries is a
party or by which FPBB or any of its subsidiaries or their respective 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; or (o) agree or commit to
do any of the foregoing.
In the Merger Agreement, FPBB has agreed that, prior to the Effective Time,
it will not, and will not permit any of its subsidiaries to, authorize or permit
any of its officers, directors, employees or agents to directly or indirectly
solicit, initiate or encourage any inquiries relating to, or the making of any
proposal which constitutes, a "takeover proposal" (as defined below), or,
subject to the fiduciary duties of the FPBB Board, recommend or endorse any
takeover proposal, or participate in any discussions or negotiations, or provide
third parties with any nonpublic information, relating to any such inquiry or
proposal or otherwise facilitate any effort or attempt to make or implement a
takeover proposal. FPBB may communicate information about any such takeover
proposal to its stockholders if, in the judgment of the FPBB's Board, based upon
the advice of outside counsel, such communication is required under applicable
law. FPBB will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than RSFC with respect to any of the foregoing. FPBB will take all actions
necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence of this paragraph of their obligations. FPBB
will notify RSFC immediately if any such inquiries or takeover proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, FPBB, and FPBB will
promptly inform RSFC in writing of all of the relevant details with respect to
such inquiries or proposals. As used in the Merger Agreement, "takeover
proposal" shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving FPBB or any subsidiary of
FPBB or any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of, FPBB or any subsidiary
of FPBB other than the transactions contemplated or permitted by the Merger
Agreement.
In the Merger Agreement, RSFC has agreed that, prior to the Effective Time
and except as previously disclosed to FPBB, as contemplated by the Merger
Agreement or consented to in writing by FPBB, RSFC will not, and will not permit
any of its subsidiaries to (i) solely in the case of RSFC, declare or pay any
dividends on or make any other distributions in respect of any of its capital
stock other than its current quarterly dividends, provided that RSFC may
increase the quarterly cash dividend on RSFC Common Stock in a manner consistent
with past practice; (ii) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in the
Merger Agreement being or becoming untrue, or in any of the conditions to the
Merger not being satisfied; (iii) 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; (iv) change its methods of accounting in
effect at March 31, 1998, except in accordance with changes in GAAP or
regulatory accounting principles as concurred with by RSFC's independent
auditors; (v) take or cause to be taken any action which would disqualify the
Merger as a "pooling of interests" for accounting purposes or a reorganization
under Section 368(a) of the Code; or (vi) agree to do any of the foregoing. In
addition, RSFC has agreed that, prior to the Effective Time, except as expressly
contemplated or permitted by the Merger Agreement, or with the prior written
consent of FPBB, it will, and will cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice.
The Merger Agreement also contains certain other agreements relating to the
conduct of the parties prior to the Effective Time, including, among other
things, those requiring each party (i) to use its reasonable best efforts to
promptly apply for and obtain all permits, consents, approvals and
authorizations of all third parties and governmental entities necessary or
advisable to consummate the transactions contemplated by the Merger Agreement;
(ii) subject to certain limitations regarding privileged or confidential
information and otherwise, to afford to the officers, employees, accountants,
counsel and other representatives of the other party to the Merger Agreement
access during normal business hours to all of such party's properties, books,
contracts, commitments, records, officers, employees, accountants, counsel
38
<PAGE>
and make available all information concerning its business, properties and
personnel as such other party may reasonably request; (iii) to call, give notice
of, convene and hold the RSFC Special Meeting, in the case of RSFC, and the FPBB
Special Meeting, in the case of FPBB, and each party has agreed to recommend to
its shareholders or stockholders, as the case may be, through its board of
directors, subject, in the case of FPBB, to the fiduciary duties of its board of
directors, the Merger Agreement and the transactions contemplated thereby and
related matters; (iv) to use and cause its subsidiaries to use reasonable best
efforts to take all actions necessary, proper or advisable to comply with any
legal requirements in connection with the Merger and, subject to the conditions
described under "--The Merger Agreement - Conditions to the Merger," to
consummate the Merger, and to obtain all required governmental and third party
approvals; (v) in the case of RSFC, to use reasonable best efforts to cause the
shares of RSFC Common Stock to be issued in the Merger to be approved for
quotation on the Nasdaq National Market, subject to official notice of issuance,
as of the Effective Time; and (vi) to coordinate the payment of dividends with
respect to RSFC Common Stock and FPBB Common Stock such that RSFC shareholders
and FPBB stockholders will not receive more than one dividend, or fail to
receive one dividend, for any single calendar quarter due to the exchange of
RSFC Common Stock for FPBB Common Stock.
In addition, RSFC has agreed to provide indemnification to the officers,
directors and employees of FPBB to the full extent permitted by law from and
after the Effective Time and to provide, for a period of three years after the
Effective Time, directors' and officers' liability insurance for the directors
and officers of FPBB to the maximum extent available at an annual premium not to
exceed 200% of the amount expended by FPBB as of the date of the Merger
Agreement. See "--Interests of Certain Persons in the Merger."
Pursuant to the Merger Agreement, RSFC has agreed to assume FPBB's
indemnification obligations under the Agreement and Plan of Merger, dated as of
May 31, 1995, by and between FPBB and PBS Financial Corporation.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, each of RSFC and
FPBB has made certain customary representations and warranties relating to,
among other things, the parties' respective organization, authority relative to
the Merger Agreement, capitalization, subsidiaries, required consents and
approvals, taxes, employee benefit plans, material contracts, litigation,
compliance with applicable laws, environmental matters, reliability of financial
statements and the absence of material adverse changes in the parties'
businesses, financial condition or results of operations. For detailed
information on such representations and warranties, see the Merger Agreement
attached hereto as Annex A and incorporated by reference herein. Pursuant to the
Merger Agreement, it is a condition to each party's obligation to consummate the
Merger that the representations and warranties of the other party contained in
the Merger Agreement be true and correct in all material respects as of the date
of the Merger Agreement and as of the Effective Time; provided, however, that
such representations and warranties will be deemed to be true and correct in all
material respects unless the failure to be true and correct, individually or in
the aggregate, has had (i) a material adverse change from the business,
financial condition or results of operations of the party making such
representations and warranties and its subsidiaries, taken as a whole, any such
effect attributable to or resulting from (w) any change in banking or similar
laws, rules or regulations of general applicability or interpretations thereof
by courts or governmental authorities, (x) any change in GAAP or regulatory
accounting principles applicable to banks, thrifts or their holding companies
generally, (y) any action or omission of FPBB or RSFC or any subsidiary of
either of them taken with the prior written consent of the other party hereto,
or (z) any expenses incurred by such party in connection with the Merger
Agreement or the transactions contemplated thereby as represented in the Merger
Agreement or (ii) has a material adverse effect on the ability of RSFC or FPBB
to consummate the transactions contemplated by the Merger Agreement. See
"--The Merger Agreement - Conditions to the Merger."
TERMINATION. The Merger 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 both the FPBB stockholders and the RSFC
shareholders: (i) by mutual written consent of FPBB and RSFC, if the board of
directors of each so determines by a vote of a majority of the members of its
entire board of directors; (ii) by either RSFC or FPBB upon written notice to
the other party (a) 60 days after the date on which any request or application
for a Requisite Regulatory Approval has been denied or withdrawn at the request
or recommendation of the governmental entity that must grant such Requisite
Regulatory Approval, unless, within the 60-day period following such denial or
withdrawal, a petition for rehearing or
39
<PAGE>
an amended application has been filed with the applicable governmental entity,
provided that no party has the right to terminate the Merger Agreement for such
reason if such denial, request or recommendation for withdrawal is due to the
failure of the party seeking to terminate the Merger Agreement to perform or
observe the covenants and agreements of such party set forth therein or (b) if
any governmental entity of competent jurisdiction issues a final nonappealable
order enjoining or otherwise prohibiting the Merger; (iii) by either RSFC or
FPBB if the Merger is not consummated on or before March 31, 1999, unless the
failure of the Merger to be consummated by such date is due to the failure of
the party seeking to terminate the Merger Agreement to perform or observe the
covenants and agreements of such party set forth therein; (iv) by either RSFC or
FPBB (provided that the terminating party shall not be in material breach of any
of its obligations with respect to obtaining the approval of its shareholders
under the Merger Agreement) if any approval of either of the FPBB stockholders
or RSFC shareholders required for the consummation of the Merger is not obtained
by reason of the failure to obtain the required vote at a duly held meeting of
the RSFC shareholders or the FPBB stockholders, as the case may be, or at any
adjournment or postponement thereof; (v) by either RSFC or FPBB (provided that
the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in the Merger Agreement) if
there is a material breach of any of the representations or warranties set forth
in the Merger Agreement on the part of the other party and that breach is not
cured within 30 days following written notice to the party committing the
breach, or which breach, by its nature, cannot be cured prior to the Closing (as
defined in the Merger Agreement), provided that neither party shall have the
right to terminate the Merger Agreement for this reason 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 the standard set forth in the section of the Merger
Agreement described in "--Merger Agreement-Representations and Warranties"; (vi)
by either RSFC or FPBB (provided that the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained in the Merger Agreement) if there is a material breach of any of the
covenants or agreements set forth in the Merger 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 thereto, or which breach, by its nature, cannot be cured prior to the
Closing; or (vii) by FPBB at any time during the ten-day period commencing two
days after the Determination Date if either
(x) both of the following conditions are satisfied: (1) the Average
Closing Price is less than $11.15625; and (2) the Parent Ratio is less than
the Index Ratio; or
(y) the Average Closing Price is less than $9.84375.
If either (x) or (y) above occurs, FPBB will have the right to terminate the
Merger Agreement by delivering prompt written notice to RSFC. RSFC, however,
will have the option during a five-day period after receipt of FPBB's notice of
termination, in the case of a termination invoked under clause (x), of adjusting
the Exchange Ratio to equal the lesser of (i) a number equal to a quotient, the
numerator of which is the product of 0.85, $13.125 and the Exchange Ratio (as
then in effect) and the denominator of which is the Average Closing Price, and
(ii) a number equal to a quotient, the numerator of which is the Index Ratio
multiplied by the Exchange Ratio (as then in effect) and the denominator of
which is the Parent Ratio. During the five-day period after receipt of FPBB's
notice of termination, RSFC shall have the option, in the case of a termination
invoked under clause (y), to elect to increase the Exchange Ratio to equal a
number equal to a quotient, the numerator of which is the product of 0.75,
$13.125 and the Exchange Ratio (as then in effect) and the denominator of which
is the Average Closing Price. If RSFC makes this election, no termination will
have occurred and the Merger Agreement will remain in effect in accordance with
its terms (except as the Exchange Ratio will have been so modified).
If any company belonging to the Index Group or RSFC declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between May 26, 1998 and the
Determination Date, the prices for the common stock of such company or RSFC will
be appropriately adjusted for the purposes of determining whether a Termination
Event (as defined in the Merger Agreement) has occurred.
40
<PAGE>
Whether a Termination Event will occur will not be known until the
Determination Date. If such date were the date of this Joint Proxy
Statement/Prospectus, no such right of termination would exist based on the
prevailing market price of RSFC Common Stock. The FPBB Board has made no
decision as to whether it would exercise its termination right in the event of a
Termination Event and the RSFC Board has made no decision as to whether it would
exercise its correlative right to increase the Exchange Ratio. In the event a
Termination Event occurs, each of the RSFC Board and the FPBB Board would,
consistent with its fiduciary duties, take into account all relevant facts and
circumstances as they exist at such time, and would consult with its respective
financial advisors and legal counsel. Approval of the Merger Agreement by the
FPBB stockholders at the FPBB Special Meeting, and by the RSFC shareholders at
the RSFC Annual Meeting, will confer on the FPBB Board and the RSFC Board,
respectively, the power, consistent with the fiduciary duties of such boards of
directors, to elect to consummate the Merger notwithstanding the occurrence of a
Termination Event (in the case of the FPBB Board) or to elect to increase the
Exchange Ratio should FPBB exercise its termination right (in the case of the
RSFC Board) without any further action by, or resolicitation of the votes of,
FPBB stockholders or RSFC shareholders, as the case may be.
In the event of termination of the Merger Agreement, pursuant to its terms
the Merger Agreement will become void and have no effect, except with respect to
the parties' obligations with respect to confidential information and expenses
set forth in the Merger Agreement and except that termination will not relieve
or release a breaching party from liability or damages for its willful breach of
the Merger Agreement.
WAIVER; AMENDMENT; FEES; EXPENSES. Subject to compliance with applicable
law, the Merger Agreement may be amended by the parties thereto, 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 either
FPBB stockholders or RSFC shareholders; provided, however, that after any
approval of the transactions contemplated by the Merger Agreement by FPBB
stockholders, there may not be, without further approval of such stockholders,
any amendment of the Merger Agreement which reduces the amount or changes the
form of the Merger consideration other than as contemplated by the Merger
Agreement. The Merger Agreement may not be amended except by an instrument in
writing signed by each of the parties thereto.
Prior to the Effective Time, each of the parties to the Merger Agreement
may, to the extent legally allowed and only in a written instrument, extend the
time for the performance of any of the obligations or other acts of the other
party to the Merger Agreement, waive any inaccuracies in the representations or
warranties of the other party contained in the Merger Agreement or in any
document delivered pursuant to the Merger Agreement or waive compliance with any
of the agreements or conditions of the other party contained in the Merger
Agreement. In addition, the Merger Agreement permits RSFC at any time to change
the method of effecting the combination with FPBB if and to the extent that RSFC
deems such change desirable provided that no such change may alter or change the
Merger consideration, adversely affect the tax treatment of FPBB stockholders as
a result of receiving the Merger consideration or materially impede or delay
consummation of the transactions contemplated by the Merger Agreement. Each
party to the Merger Agreement will bear all expenses incurred by it in
connection with the Merger Agreement and the transactions contemplated thereby.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
This section summarizes certain material federal income tax considerations
of general application that should be considered by shareholders of RSFC and the
stockholders of FPBB in evaluating the Merger. This discussion is based upon the
Code, Treasury Department regulations promulgated thereunder, court decisions
and administrative pronouncements published to date. Any or all of the above are
subject to change, possibly with retroactive effect. Subsequent statutory or
administrative changes or clarifications or court decisions could cause this
discussion to become inaccurate or incomplete. This discussion does not address
all tax matters that may affect RSFC, FPBB or their respective stockholders and
does not consider various factual circumstances applicable to any particular
stockholder. In particular, it does not address federal income tax
considerations to investors who are dealers in securities, mutual funds,
insurance companies, nonresident aliens, foreign entities, tax-exempt entities,
or holders who do not hold their
41
<PAGE>
shares as capital assets or who hold their shares as part of a hedge, straddle
or conversion transaction, and does not address particular situations where
shares are received in exchange for services rendered. In addition, the
following discussion does not address the tax consequences of the Merger under
foreign, state or local tax laws. Holders of FPBB Common Stock are advised and
expected to consult their own tax advisors regarding the federal income tax
consequences of the Merger in light of their personal circumstances and the
consequences under state, local and foreign tax laws.
RSFC's obligation to consummate the Merger is conditioned upon the receipt
by RSFC of an opinion of Morgan, Lewis & Bockius LLP, counsel to RSFC, and
FPBB's obligation to consummate the Merger is conditioned upon the receipt by
FPBB of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to FPBB,
each opinion dated the Effective Time, in form and substance reasonably
satisfactory to its client, substantially to the effect that, on the basis of
facts, representations and assumptions set forth or referred to in such opinions
which are consistent with the state of facts existing at the Effective Time, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that, accordingly, for
federal income tax purposes:
(a) No gain or loss will be recognized by RSFC or FPBB as a result of
the Merger.
(b) No gain or loss will be recognized by the FPBB stockholders who
exchange all of their FPBB Common Stock solely for RSFC Common Stock pursuant to
the Merger (except with respect to cash received in lieu of a fractional share
interest in RSFC Common Stock).
(c) The aggregate tax basis of the RSFC Common Stock received by FPBB
stockholders who exchange all of their FPBB Common Stock solely for RSFC Common
Stock pursuant to the Merger will be the same as the aggregate tax basis of the
FPBB Common Stock surrendered in exchange therefor (reduced by any amount
allocable to the fractional share interest in RSFC Common Stock for which cash
is received).
Neither RSFC nor FPBB has requested or received a ruling from the Internal
Revenue Service (the "IRS") on the matters discussed herein. The IRS may
disagree with some of the conclusions set forth below, and no assurance can be
given that such conclusions would be sustained by a court if challenged by the
IRS. In addition, each counsel's opinion is subject to certain assumptions and
qualifications and is conditioned upon the accuracy of certain factual
information, representations and covenants provided to such counsel by RSFC,
FPBB and others. Any inaccuracy in such factual information, representations and
covenants could adversely affect the conclusions identified herein and, in
particular, could result in RSFC, FPBB or FPBB stockholders recognizing gain as
a result of the Merger.
Based upon the current ruling position of the IRS, cash received by a FPBB
stockholder in lieu of a fractional share interest in RSFC Common Stock will be
treated as received in redemption of such fractional share interest, and a FPBB
stockholder should generally recognize capital gain or loss for federal income
tax purposes measured by the difference between the amount of cash received and
the portion of the tax basis of the share of FPBB Common Stock allocable to such
fractional share interest. Such gain or loss should be long-term capital gain or
loss if the holding period for such share of FPBB Common Stock is greater than
one year at the Effective Time. The holding period of a share of RSFC Common
Stock received in the Merger (including a fractional share interest deemed
received and redeemed as described above) will include the holder's holding
period in the FPBB Common Stock surrendered in exchange therefor.
STOCK OPTION AGREEMENT
Pursuant to the Stock Option Agreement, FPBB has granted RSFC an option to
acquire, under certain circumstances, a number of shares equivalent to 19.9% of
the issued and outstanding FPBB Common Stock as of May 27, 1998. A copy of the
Stock Option Agreement is attached hereto as Annex B and shareholders of RSFC
and stockholders of FPBB are urged to read the Stock Option Agreement in its
entirety for a more complete description of the rights and parties thereunder.
42
<PAGE>
Execution of the Stock Option Agreement was a condition to RSFC's merger
proposal. The Stock Option Agreement is intended to increase the likelihood that
the Merger will be consummated in accordance with the terms of the Merger
Agreement. Consequently, certain aspects of the Stock Option Agreement may have
the effect of discouraging persons who might now or at any other time prior to
the Effective Time be interested in acquiring all of or a significant interest
in FPBB from considering or proposing such an acquisition, even if such persons
were prepared to offer to pay consideration to the FPBB stockholders which had a
higher current market price than the shares of RSFC Common Stock to be received
per share of FPBB Common Stock pursuant to the Merger Agreement. The acquisition
of FPBB (other than pursuant to the Merger Agreement) could cause the Option to
become exercisable. The existence of the Option could significantly increase the
cost to a potential acquiror of acquiring FPBB compared to its cost had the
Stock Option Agreement and the Merger Agreement not been entered into. Such
increased cost might discourage a potential acquiror from considering or
proposing an acquisition or might result in a potential acquiror proposing to
pay a lower per share price to acquire FPBB than it might otherwise have
proposed to pay. FPBB and RSFC believe that the exercise or repurchase of the
Option is likely to prohibit any other acquiror of FPBB from accounting for an
acquisition thereof using the "pooling of interests" accounting method for a
period of two years. Accordingly, the existence of the Stock Option Agreement
may deter significantly or completely preclude an acquisition of FPBB by certain
other financial services organizations.
Under the terms of the Stock Option Agreement, the exercise price is $40.50
per share and payable in cash. The number of shares of FPBB Common Stock
issuable under the Stock Option Agreement, and the exercise price, are subject
to adjustment in the event of certain changes in FPBB's capitalization.
Subject to certain limitations, the option is exercisable, in whole or in
part, at any time or from time to time after the occurrence of both an Extension
Event (as defined in the Stock Option Agreement) and a Purchase Event (as
defined in the Stock Option Agreement) prior to the occurrence of an Exercise
Termination Event (as defined in the Stock Option Agreement), provided that RSFC
has sent written notice of such exercise within 90 days following such Purchase
Event. Extension Events and Purchase Events are events which primarily involve
attempts by (i) FPBB to merge, consolidate or otherwise sell substantially all
of its common stock or assets to an entity other than RSFC or (ii) another
entity to acquire 20% or more of the voting power of FPBB or any subsidiary
thereof.
The Stock Option Agreement also contains a provision allowing RSFC to
require FPBB upon the occurrence of a Repurchase Event (as defined below) to
repurchase the Option as well as all shares of FPBB Common Stock previously
purchased pursuant to the Stock Option Agreement, at such prices as are set
forth in the Stock Option Agreement. The Stock Option Agreement also provides
FPBB the right after the termination of the option to repurchase FPBB Common
Stock acquired pursuant to the Stock Option Agreement, subject to certain
conditions and limitations.
A Repurchase Event will deemed to have occurred (i) upon the consummation
of any merger, consolidation or similar transaction involving FPBB or any
purchase, lease or other acquisition of all or a substantial portion of the
assets of FPBB, other than any such transaction which would not constitute an
Acquisition Transaction (as defined in the Stock Option Agreement) or (ii) upon
the acquisition by any person of beneficial ownership of 50% or more of the then
outstanding shares of FPBB Common Stock, provided that no such event shall
constitute a Repurchase Event unless an Extension Event shall have occurred
prior to an Exercise Termination Event.
Except to the extent that RSFC has previously exercised its rights to
require repurchase of the Option or shares purchased pursuant to the Option,
during the six-month period commencing following the first occurrence of an
Exercise Termination Event, FPBB may repurchase from RSFC at a price set forth
in the Stock Option Agreement all (but not less than all, subject to certain
conditions set forth in the Stock Option Agreement) of the FPBB Common Stock
acquired by RSFC pursuant to the Stock Option Agreement and with respect to
which RSFC has beneficial ownership at the time of such repurchase. The
repurchase price takes into account such factors as interest on the price paid
for the shares of FPBB Common Stock repurchased and RSFC's out-of-pocket
expenses incurred in connection with the transactions contemplated by the Merger
Agreement.
43
<PAGE>
RSFC may request FPBB to prepare, file and keep current with respect to the
Option Shares, a registration statement with the Commission. FPBB is required to
use its reasonable best efforts to cause such registration statement to be filed
as expeditiously as possible and to become effective and then to remain
effective for 180 days or such shorter time as may be reasonably necessary to
effect such sales or other disposition of shares underlying the Option. RSFC has
the right to demand two such registrations.
Neither FPBB nor RSFC may assign any of its rights and obligations under
the Stock Option Agreement or the Option to any other person without the express
written consent of the other party, except that if a Purchase Event occurs prior
to an Exercise Termination Event, RSFC, subject to the terms of the Stock Option
Agreement, may sell, assign, transfer or otherwise dispose of the Option or all
or any of the shares of FPBB Common Stock acquired by it pursuant to the Option
if it gives FPBB written notice of the proposed transaction setting forth the
terms of the proposed transaction. This notice will be deemed an offer to
purchase such Option by RSFC to FPBB, which may be accepted within 10 business
days of the receipt of such notice, on the same terms and conditions and at the
same price at which RSFC is proposing to transfer the Option or such shares to a
third party. In the event of the failure or refusal of the Company to purchase
the Option or all the shares covered by notice or if any governmental entity
disapproves FPBB's proposed purchase of the Option or such shares, RSFC may,
within 60 days from the date of notice, sell all, but not less than all, of the
Option or such shares to such third party at no less than the price specified in
the prior notice and on terms no more favorable to the purchaser than those set
forth in the notice. The restrictions on the sale of the Option or any of the
shares of FPBB Common Stock acquired pursuant to the Option do not apply to (i)
any disposition as a result of which such proposed transferee would beneficially
own not more than 2% of the voting power of FPBB, (ii) any disposition of FPBB
Common Stock by a person to whom FPBB has sold shares of FPBB Common Stock
issued upon exercise of the Option or (iii) any sale by means of a public
offering registered under the Securities Act.
RESTRICTIONS ON RESALES OF SECURITIES
The shares of RSFC Common Stock to be issued in the Merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act, except for shares issued to any FPBB stockholder who may be
deemed to be an "affiliate" of FPBB for purposes of Rule 145 under the
Securities Act. Affiliates may not sell their shares of RSFC Common Stock
acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act covering such shares or in
compliance with Rule 145 or another applicable exemption from the registration
requirements of the Securities Act. This Joint Proxy Statement/Prospectus does
not cover any resales of RSFC Common Stock received in the Merger by persons who
may deemed to be affiliates of FPBB. Persons who may be deemed to be affiliates
of FPBB generally include individuals or entities that control, are controlled
by or are under common control with FPBB, and may include certain officers and
directors as well as principal stockholders of FPBB.
Commission guidelines regarding qualifying for the pooling of interests
method of accounting also limit sales by affiliates of the acquiring and
acquired company in a business combination. Commission guidelines indicate
further that the pooling of interests method of accounting will generally not be
challenged on the basis of sales by affiliates for the acquiring or acquired
company if they do not dispose of any of the shares of the corporation they own
or shares of a corporation they receive in connection with a merger during the
period beginning 30 days before the effective date of the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published.
RSFC and FPBB have each agreed in the Merger Agreement to use their best
efforts to cause each person who is an affiliate (for purposes of Rule 145 of
the Securities Act and for purposes of qualifying the Merger for pooling of
interests accounting treatment) of such party to deliver to the other party a
written agreement intended to ensure compliance with the Securities Act and
preserve the ability to treat the Merger as a pooling of interests. In addition,
RSFC has agreed in the Merger Agreement to use all reasonable efforts to
publish, not later than 15 days after the end of the first full calendar month
following the Effective Time, financial results covering at least 30 days of
post-Merger combined operations.
44
<PAGE>
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to qualify as a "pooling of interests" for
accounting and financial reporting purposes. As a result of pooling-of-interests
accounting, the consolidated financial statements of RSFC after the Merger will
combine the accounts of FPBB with those of RSFC.
It is a condition to each of RSFC's and FPBB's obligation to consummate the
Merger that RSFC and FPBB receive a letter dated as of the closing date
addressed to RSFC from RSFC's independent accountants and to FPBB from FPBB's
independent accountants to the effect that the Merger qualifies for
pooling-of-interests accounting treatment. See "THE MERGER--The Merger
Agreement-Conditions to the Merger."
REGULATORY APPROVALS
Under the Merger Agreement, RSFC and FPBB have agreed to use their best
efforts to obtain all necessary actions or nonactions, waivers, consents and
approvals from any governmental authority necessary, proper or advisable to
consummate and make effective the proposed transaction. The Requisite Regulatory
Approvals include approvals of the FRB under the Bank Holding Company Act with
respect to the Merger and the Florida Banking Department in connection with the
Bank Merger. As a bank holding company, RSFC's activities and those of its
banking and nonbanking subsidiaries are limited to the business of banking and
activities closely related to banking. The subsidiary depository institutions of
RSFC (the "banking subsidiaries"), including its principal bank subsidiary,
Republic Security, are subject to supervision and examination by their
respective federal and state banking authorities. The banking subsidiaries are
supervised by the FRB as member banks and the Florida Banking Department as
Florida-chartered institutions. In addition, the FDIC has broad enforcement
authority over federally-insured depository institutions, such as the banking
subsidiaries.
In reviewing the proposed transaction under the applicable statutes, FRB
will consider the financial and managerial resources and future prospects of the
existing and proposed organizations and the convenience and needs of the
communities to be served, including but not limited to the capital adequacy, the
Year 2000 readiness and the status of electronic data processing systems. In
addition, the FRB is prohibited from approving any transaction if it would
result in a monopoly or would be in furtherance of any combination or conspiracy
to monopolize or to attempt to monopolize the business of banking in any part of
the United States or if its effect in any section of the United States would be
substantially to lessen competition, or to tend to create a monopoly, or result
in a restraint of trade, unless the FRB finds that the anti-competitive effects
of the transaction are clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of the
communities to be served. Assuming FRB approval, the Merger may not be
consummated for a time, during which time the Department of Justice may
challenge the Merger on antitrust grounds and seek the divestitures of certain
assets and operations. In addition, under the Community Reinvestment Act of
1977, as amended (the "CRA"), the FRB must take into account the record of
performance of each of the depository institution subsidiaries of RSFC and FPBB
in meeting the credit needs of the entire community of each institution,
including low and moderate income neighborhoods. FRB regulations require
publication of, notice of, and the opportunity for public comment on, the
proposed transaction and may hold a public hearing, if deemed appropriate. The
Florida Banking Department must also approve the proposed transaction and
applies similar standards and requirements for such approval.
Assuming that all relevant regulatory bodies approve the proposed
transaction, the resulting company and institutions will continue to be subject
to the regulation of the FRB, the Florida Banking Department and the FDIC. Such
regulation includes but is not limited to activities restrictions, limitations
on transactions with affiliates, cross-guarantee and holding company liability
requirements, capital adequacy and prompt corrective action requirements,
dividend restrictions, change in bank control requirements, banking agency
enforcement, and potential new restrictions or controls mandated by future
legislation or regulations.
45
<PAGE>
RSFC is not aware of any regulatory approvals that would be required for
consummation of the Merger or the Bank Merger, except as described above. Should
any other approvals be required, it is presently contemplated that such
approvals would be sought. There can be no assurance that any other approvals,
if required, will be obtained.
The Merger cannot proceed in the absence of the Requisite Regulatory
Approvals. See "--The Merger Agreement - Conditions to the Merger" and "--The
Merger Agreement - Termination." There can be no assurance that such regulatory
approvals will be obtained, and if obtained, there can be no assurance as to the
date of any such approval. There can likewise be no assurance that the
Department of Justice will not challenge the Merger or, if such a challenge is
made, as to the result thereof.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain executive officers and certain members of the FPBB Board
may be deemed to have interests in the Merger that are in addition to their
interests as stockholders of FPBB generally. The FPBB Board was aware of these
interests and considered them, among other matters, in approving the Merger
Agreement and the transactions contemplated thereby.
FPBB DIRECTORS AND OFFICERS. The Merger Agreement provides that at the
Effective Time certain FPBB directors and officers will be appointed to the RSFC
Board. See "MANAGEMENT FOLLOWING THE MERGER."
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides that, in the
event of any threatened or actual claim, action, suit, proceeding or
investigation in which any person who is or has been a director, officer or
employee of FPBB or First Bank is or is threatened to be, made a party based in
whole or in part on, or pertaining to (i) the fact that such person was a
director, officer or employee of FPBB or First Bank; or (ii) the Merger
Agreement or the transactions contemplated thereby, RSFC will, subject to the
conditions set forth in the Merger Agreement, indemnify such person to the
fullest extent permitted by law against any liability or expense incurred in
connection with any such claim or proceeding. In addition, pursuant to the
Merger Agreement, RSFC will be required to maintain directors' and officers
liability insurance for the benefit of persons serving as officers and directors
of FPBB immediately prior to the Effective Time for a period of three (3) years
following the Effective Time with respect to acts or omissions occurring prior
to the Effective Time which were committed by such officers and directors in
their capacity as such, provided that in no event shall RSFC be required to
expend on an annual basis more than 200% of the amount which FPBB currently
expends for such insurance.
EMPLOYMENT AGREEMENTS. Each of FPBB and First Bank is a party to employment
agreements with each of Louis O. Davis, Jr. and R. Randy Guemple (each, an
"Executive" and the agreements, the "Employment Agreements"), which Employment
Agreements were entered into on May 20, 1997 and pursuant to which, for an
initial term of three years (the "Term"), Mr. Davis will serve as President and
Chief Executive Officer and Mr. Guemple will serve as Executive Vice President
and Chief Operating Officer of FPBB.
In accordance with the terms of the Employment Agreements, if the
applicable Executive's employment is terminated in certain circumstances
following a Change of Control (as defined in the Employment Agreements), FPBB
will pay to the Executive the severance payments and will provide to the
Executive the severance benefits as follows: each Executive will be entitled to
receive, in lieu of any other payments due to the Executive: (1) a lump sum cash
payment equal to three times the Executive's highest annual base salary achieved
during the Term, (2) a lump sum cash payment equal to the aggregate value of all
cash bonus or long-term or short-term incentive compensation awards that would
have been paid to the Executive for the thirty-six months following the
termination of his employment (the "Payment Period"), assuming that he would
have earned a bonus equal to the highest bonus actually paid to him during the
Term, (3) the continuation of employee welfare benefits during the Payment
Period, reduced to the extent the Executive receives such benefits from a
subsequent employer, (4) a lump sum cash payment equal to the excess, if any, of
(a) the present value of the aggregate benefits to which the Executive would
have been entitled under all defined benefit pension plans of FPBB (whether or
not qualified) had he continued to be employed during the Payment Period,
calculated (i) by adding to the service level actually determined under any such
plan an additional service amount equal to the Payment Period and (ii) by adding
to the compensation level determined under any such plan the amounts payable
46
<PAGE>
under clauses (1) and (2) above, over (ii) the present value of the benefits to
which the Executive is actually entitled under such defined benefit pension
plans as of the date of the termination of his employment and (5) the
reimbursement of legal fees and expenses, if any, incurred by the Executive in
disputing any issue relating to the termination of his employment. The
Employment Agreements also provide that if any payment to be made to the
Executive or any benefit to be received by the Executive would be rendered
non-deductible by reason of the application of Section 280G of the Code, such
payments and, if necessary, such benefits will be reduced to the extent
necessary to allow such payments and benefits to be deductible. Approval by the
stockholders of FPBB of the Merger Agreement will constitute a Change of Control
for purposes of the Employment Agreements. The Merger Agreement provides that
consummation of the Merger is deemed to be "Good Reason" under the Employment
Agreements.
Pursuant to the terms of the Employment Agreements, it is presently
estimated (based upon information currently available) that if each Executive's
employment is terminated following approval by the stockholders of FPBB of the
Merger Agreement, the Executive will be entitled to a lump sum cash severance
payment approximately in the following amount: Mr. Davis, $981,000; and Mr.
Guemple, $497,000.
CHANGE OF CONTROL AGREEMENTS. Each of FPBB and First Bank is also a party
to Change of Control agreements with each of Calvin L. Cearley, Alissa Ballot,
Suzanne Brenner, William R. Martin, Rodney J. Bayliff, John Rudy, John Trammel,
Rita Zambuto and one other employee (each, an "Employee" and each agreement, a
"Change of Control Agreement"), which Change of Control Agreements remain in
effect until May 19, 2001 (the "Current Term"). On May 20, 1999, and on each May
20 thereafter, the term of the Change of Control Agreement will be extended for
one additional year, unless earlier terminated pursuant to the terms of the
Change of Control Agreements (such additional years, together with the Current
Term, the "Protective Period").
In accordance with the terms of the Change of Control Agreements, if the
applicable Employee's employment is terminated following a Change of Control and
during the Protective Period by FPBB or First Bank other than for Cause or by
the Employee with Good Reason (each term, as defined in the Change of Control
Agreements), First Bank will pay to the Employee the severance payments and will
provide to the Employee the severance benefits as follows: each Employee will be
entitled to receive: (1) a lump sum cash payment equal to three times the sum of
(a) the higher of (i) such Employee's annual base salary in effect at the time
of termination and (ii) such Employee's annual base salary in effect immediately
prior to the Change of Control and (b) the higher of (i) the annual bonus
awarded to such Employee in any of the three years ended prior to the date of
termination and (ii) the annual bonus awarded to such Employee in any of the
three years ended prior to the Change of Control, (2) the continuation of
employee welfare benefits for three years following the date of termination or,
if earlier, until the Employee receives substantially similar benefits from a
subsequent employer (the "Continuation Period"), (3) a lump sum cash payment
equal to the excess, if any, of (a) the present value of the aggregate benefits
to which the Employee would have been entitled under all defined benefit pension
plans of First Bank (whether or not qualified) had he or she continued to be
employed during the Continuation Period, calculated (i) by adding to the service
level actually determined under any such plan an additional service amount equal
to the remaining term of the Change of Control Agreements and (ii) by adding to
the compensation level determined under any such plan the amounts payable under
clauses (1) and (2) above, over (ii) the present value of the benefits to which
the Employee is actually entitled under such defined benefit pension plans as of
the date of the termination of his or her employment and (4) the reimbursement
of legal fees and expenses, if any, incurred by the Executive in disputing any
issue relating to the termination of his or her employment. The Change of
Control Agreements also provide that if any payment to be made to the Executive
or any benefit to be received by the Executive would be rendered non-deductible
by reason of the application of Section 280G of the Code, such payments and, if
necessary, such benefits will be reduced to the extent necessary to allow such
payments and benefits to be deductible. Approval by the stockholders of FPBB of
the Merger Agreement will constitute a Change of Control for purposes of the
Change of Control Agreements. The Merger Agreement provides that consummation of
the Merger is deemed to be "Good Reason" under the Change of Control Agreements.
Pursuant to the terms of the Change of Control Agreements, it is presently
estimated (based upon information currently available) that if each Employee's
employment is terminated following approval by the stockholders of FPBB of the
Merger Agreement, the Employee will be entitled to a lump sum cash severance
payment approximately in the
47
<PAGE>
following amount: Mr. Cearley, $322,500; Ms. Ballot, $355,000; Ms. Brenner,
$295,000; Mr. Martin, $285,000; Mr. Bayliff, $231,500; Mr. Rudy, $438,000; Mr.
Trammel, $314,500; and Ms. Zambuto, $335,000.
OPTIONS. FPBB maintains the 1993 Incentive Stock Option Plan (the "Option
Plan"). Pursuant to the Option Plan, upon a Change of Control of FPBB, all
outstanding unvested options and limited rights to acquire shares of FPBB Common
Stock will become exercisable immediately in full. Consummation of the Merger
will constitute a "change of control" for this purpose. The following executives
hold options to purchase the following number of shares of FPBB Common Stock
whose vesting will accelerate and which will first become exercisable upon the
consummation of the Merger: Mr. Davis, 200; Mr. Guemple, 200; Mr. Cearley,
5,334; Ms. Brenner, 2,500; and Mr. Martin, 2,500.
At the Effective Time, each option granted by FPBB to purchase shares of
FPBB Common Stock shall be converted automatically into an option to purchase
shares of RSFC Common Stock in an amount and at an exercise price determined as
follows: (a) the number of shares of RSFC Common Stock to be subject to the
option immediately after the Effective Time shall be equal to the product of the
number of shares of FPBB Common Stock subject to the option immediately before
the Effective Time, multiplied by the Exchange Ratio, provided that any
fractional shares of RSFC Common Stock resulting from such multiplication shall
be rounded down to the nearest share; and (b) the exercise price per share of
RSFC Common Stock under the option immediately after the Effective Time shall be
equal to the exercise price per share of FPBB Common Stock under the option
immediately before the Effective Time divided by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest cent. The vesting
provisions and other terms of the option immediately after the Effective Time
shall be the same as the corresponding terms in effect immediately before the
Effective Time.
The following table sets forth, with respect to (i) each Executive Officer,
(ii) a group consisting of all the Executive Officers (the "Executive Officer
Group") and (iii) the FPBB Board as a group (the "Non-Executive Director Officer
Group"), the number of shares of FPBB Common Stock subject to outstanding
options held by such persons as of the Effective Time.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTIONS CURRENTLY EXERCISE PRICE
OPTIONS HELD EXERCISABLE PER OPTION
--------------------- ------------------------- ---------------------------
<S> <C> <C> <C>
Louis O. Davis, Jr. 105,334 105,134 $ 25.44
R. Randy Guemple 55,100 54,900 $ 28.24
Alissa Ballot 7,500 7,500 $ 27.375
Rodney Bayliff 0 0 N/A
Suzanne Brenner 2,500 0 $ 38.125
Calvin Cearley 8,000 2,666 $ 33.1875
William R. Martin 2,500 0 $ 38.4375
John A. Rudy 15,000 15,000 $ 29.0625
John Trammel 23,400 23,400 $ 22.22
Rita Zambuto 15,000 15,000 $ 29.0625
Executive Officer Group 234,334 223,600 $ 26.84
(10 persons)
Non-Executive Officer. 68,726 68,726 $ 14.99
Director Group (6 persons)
</TABLE>
48
<PAGE>
RECOGNITION AND RETENTION PLANS. First Bank maintains the Recognition
and Retention Plan for Officers and Employees (the "Employees' RRP") and also
maintains the Recognition and Retention Plan for Outside Directors (the
"Directors' RRP" and, together with the Employees' RRP, the "RRP Plans").
Pursuant to the terms of the RRP Plans, a participant may be awarded Plan
Shares, which are FPBB Common Stock equivalents and which vest in accordance
with the individual award agreements. Notwithstanding any vesting schedule to
the contrary, upon a termination of employment (or separation from service, as
applicable) following a Change in Control (as defined in the RRP Plans), each
Plan Share award will be fully vested and will be paid in FPBB Common Stock as
soon as practicable thereafter. Consummation of the Merger will constitute a
Change in Control for purposes of the Employees' RRP and approval by the
stockholders of FPBB of the Merger Agreement will constitute a Change in Control
for purposes of the Directors' RRP. The following executives and directors hold
the following Plan Shares which will vest upon, and be paid as soon as
practicable following, termination of employment (or service as a director)
following the consummation of the Merger: Mr. Cearley, 500; Ms. Brenner, 250;
and Mr. Martin, 250 (executives); and Dr. Hadley, 3,534; Dr. Sokoloff, 3,534
(directors).
PENSION PLAN AND ESOP. The First Bank of Florida Employees' Pension
Plan ("First Bank Pension Plan") is expected to be terminated and/or frozen at
or shortly following the consummation of the Merger. Such action will cause the
accrued benefits of each participant employed by First Bank to be 100% vested
without regard to length of service. In addition, the First Bank of Florida
Employee Stock Ownership Plan provides for 100% vesting for all participants on
the date that FPBB's stockholders approve the Merger. All of the executive
officers of FPBB and First Bank are already fully vested in both plans, except
for Ms. Brenner and Mr. Martin, who are not participants in either plan, and Ms.
Ballot and Mr. Cearley, who are participants but not vested in either plan. The
Merger will result in the vesting of the benefits of Ms. Ballot and Mr. Cearley
under both plans.
49
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The accompanying unaudited pro forma combined condensed statement of
financial condition presents the combined financial position of RSFC and FPBB at
March 31, 1998, assuming that the proposed Merger had occurred as of March 31,
1998. Such pro forma information is based upon the historical statements of
financial condition data of the respective companies, at that date, giving
effect to the proposed Merger using the pooling-of-interests method of
accounting described in the accompanying notes to the unaudited pro forma
combined condensed financial data.
The accompanying unaudited pro forma combined condensed statements of
income give effect to the proposed Merger by combining the results of operations
of RSFC and FPBB for the three months ended March 31, 1998 using the
pooling-of-interests method of accounting described in the accompanying notes.
The accompanying unaudited pro forma combined condensed statements of income
give effect to the proposed Merger by combining the results of operations of
RSFC for the years ended December 31, 1997 and 1996 and the nine months ended
December 31, 1995 with the results of operations of FPBB for the years ended
September 30, 1997 and 1996 and the nine months ended September 30, 1995,
respectively, using the pooling-of-interests method of accounting described in
the accompanying notes to the unaudited pro forma combined condensed financial
data.
The accompanying unaudited pro forma combined condensed financial data
should be read in conjunction with the separate historical financial statements
and notes thereto of RSFC and FPBB. The following unaudited pro forma combined
condensed financial data is presented for information purposes only and is not
necessarily indicative of the results of future operations of the combined
entity or the actual results that would have been achieved had the Merger been
consummated on the dates presented.
50
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF FINANCIAL CONDITION
AT MARCH 31, 1998
<TABLE>
<CAPTION>
==========================================================================================================================
RSFC FPBB PRO FORMA PRO FORMA
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) (HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and amounts due from depository institutions $33,817 $29,170 $62,987
Interest-bearing deposits in other financial
institutions 109,185 144,477 $(10,700)(a) 242,962
Federal funds sold 850 850
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 143,852 173,647 (10,700) 306,799
Investments held to maturity 9,735 201,083 210,818
Investments available-for-sale 133,283 313,093 446,376
Loans - net 669,828 1,034,024 1,703,852
Property and equipment - net 22,461 28,573 (5,300)(a) 45,734
Other real estate owned 2,333 2,199 4,532
Goodwill - net 6,970 2,534 9,504
Other assets 27,644 36,217 (2,600)(a) 61,261
- --------------------------------------------------------------------------------------------------------------------------
TOTAL $1,016,106 $1,791,370 $(18,600) $2,788,876
==========================================================================================================================
LIABILITIES:
Deposits $752,751 $1,281,229 $2,033,980
Securities sold under agreements to repurchase 9,771 9,771
Federal Home Loan Bank advances 140,000 320,875 460,875
Other liabilities 25,186 72,222 97,408
- --------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 927,708 1,674,326 2,602,034
- --------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Preferred stock 8,674 8,674
Common stock 229 55 441
Additional paid-in capital 54,944 44,628 $(157)(b) 99,415
Employee stock ownership plan (531) (531)
Recognition and retention plans (57) (57)
Retained earnings 23,943 74,027 $(18,600)(b) 79,370
Unrealized gain (loss) on investments
available for sale, net of taxes 608 (1,078) (470)
- --------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 88,398 117,044 (18,600) 186,842
- --------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,016,106 $1,791,370 $(18,600) $2,788,876
==========================================================================================================================
Stated book value per share (c) $3.73 $23.14 $4.55
==========================================================================================================================
Tangible book value per share (c) $3.42 $22.64 $4.35
==========================================================================================================================
Total risk based capital ratio 11.19% 16.72% 13.48%
==========================================================================================================================
Tier 1 risk based capital ratio 10.19% 16.01% 12.67%
==========================================================================================================================
Leverage capital ratio 7.89% 7.55% 7.05%
==========================================================================================================================
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
51
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
==========================================================================================================================
RSFC FPBB COMBINED
(amounts in thousands except per share data) (HISTORICAL) (HISTORICAL) PRO FORMA
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $14,765 $23,066 $37,831
Interest and dividends on investments 2,289 9,730 12,019
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 17,054 32,796 49,850
- --------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 5,686 15,241 20,927
Interest on borrowings 898 6,498 7,396
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 6,584 21,739 28,323
- --------------------------------------------------------------------------------------------------------------------------
Net interest income 10,470 11,057 21,527
Provision for loan losses 30 2,883 2,913
- --------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 10,440 8,174 18,614
- --------------------------------------------------------------------------------------------------------------------------
Service charge on deposit accounts 1,637 1,104 2,741
Gain on sale of loans and servicing 245 2,391 2,636
Other income 893 1,143 2,036
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 2,775 4,638 7,413
- --------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Employee compensation and benefits 4,183 5,311 9,494
Occupancy and equipment 1,684 1,783 3,467
Data processing 409 337 746
Communications 296 185 481
Professional fees 231 74 305
Insurance 132 289 421
Goodwill amortization 180 40 220
Other 1,111 1,299 2,410
- --------------------------------------------------------------------------------------------------------------------------
TOTAL 8,226 9,318 17,544
- --------------------------------------------------------------------------------------------------------------------------
Income before income taxes 4,989 3,494 8,483
Income taxes 1,845 1,408 3,253
- --------------------------------------------------------------------------------------------------------------------------
NET INCOME $3,144 $2,086 $5,230
==========================================================================================================================
Earnings per common share:
Basic $.13 $.42 $.12
Diluted $.13 $.40 $.11
==========================================================================================================================
Weighted average common shares and potential common share
equivalents outstanding:
Basic 22,908 4,967 42,781
Diluted 24,835 5,167 47,001
==========================================================================================================================
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
52
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1997
- -------------------------------------------------------------------------------------------------------------------------
RSFC FPBB COMBINED
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) (HISTORICAL) (HISTORICAL) PRO FORMA
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME:
INTEREST AND FEES ON LOANS $53,995 $87,746 $141,741
INTEREST AND DIVIDENDS ON INVESTMENTS 11,672 29,184 40,856
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 65,667 116,930 182,597
- -------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 22,477 57,535 80,012
INTEREST ON BORROWINGS 2,343 15,316 17,659
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 24,820 72,851 97,671
- ------------------------------------------------------------- --------------------- ------------------ ------------------
NET INTEREST INCOME 40,847 44,079 84,926
PROVISION FOR LOAN LOSSES 1,717 3,281 4,998
- -------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 39,130 40,798 79,928
- -------------------------------------------------------------------------------------------------------------------------
SERVICE CHARGE ON DEPOSIT ACCOUNTS 6,209 4,106 10,315
GAIN ON SALE OF LOANS AND SERVICING 379 -- 379
OTHER INCOME 3,428 4,895 8,323
- -------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 10,016 9,001 19,017
- -------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
EMPLOYEE COMPENSATION AND BENEFITS 18,715 18,511 37,226
OCCUPANCY AND EQUIPMENT 6,767 6,729 13,496
DATA PROCESSING 1,165 660 1,825
COMMUNICATIONS 1,160 766 1,926
PROFESSIONAL FEES 2,300 396 2,696
ADVERTISING AND PROMOTION 620 1,005 1,625
INSURANCE 425 977 1,402
OTHER REAL ESTATE OWNED - NET 1,241 329 1,570
GOODWILL AMORTIZATION 565 194 759
OTHER 3,910 4,839 8,749
MERGER EXPENSES 9,285 9,285
- -------------------------------------------------------------------------------------------------------------------------
TOTAL 46,153 34,406 80,559
- -------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,993 15,393 18,386
INCOME TAXES 1,187 6,037 7,224
- -------------------------------------------------------------------------------------------------------------------------
NET INCOME $1,806 $9,356 $11,162
=========================================================================================================================
EARNINGS PER COMMON SHARE:
BASIC $.05 $1.91 $.24
DILUTED $.05 $1.86 $.23
=========================================================================================================================
WEIGHTED AVERAGE COMMON SHARES AND POTENTIAL COMMON SHARES
OUTSTANDING:
BASIC 22,070 4,894 43,240
DILUTED 22,884 5,026 44,842
=========================================================================================================================
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
53
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1996
- -------------------------------------------------------------------------------------------------------------------------
RSFC FPBB COMBINED
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) (HISTORICAL) (HISTORICAL) PRO FORMA
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME:
INTEREST AND FEES ON LOANS $50,643 $84,090 $134,733
INTEREST AND DIVIDENDS ON INVESTMENTS 9,566 19,442 29,008
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 60,209 103,532 163,741
- -------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 21,079 48,614 69,693
INTEREST ON BORROWINGS 595 12,686 13,281
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 21,674 61,300 82,974
- -------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 38,535 42,232 80,767
PROVISION FOR LOAN LOSSES 379 15,704 16,083
- -------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 38,156 26,528 64,684
- -------------------------------------------------------------------------------------------------------------------------
SERVICE CHARGE ON DEPOSIT ACCOUNTS 5,618 3,206 8,824
GAIN ON SALE OF LOANS AND SERVICING 1,053 3,494 4,547
OTHER INCOME 3,285 3,369 6,654
- -------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 9,956 10,069 20,025
- -------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
EMPLOYEE COMPENSATION AND BENEFITS 15,702 15,905 31,607
OCCUPANCY AND EQUIPMENT 6,113 4,830 10,943
DATA PROCESSING 1,011 470 1,481
COMMUNICATIONS 1,067 640 1,707
PROFESSIONAL FEES 2,655 203 2,858
ADVERTISING AND PROMOTION 722 663 1,385
INSURANCE 1,966 8,848 10,814
OTHER REAL ESTATE OWNED - NET 530 451 981
GOODWILL AMORTIZATION 471 145 616
LITIGATION SETTLEMENT 3,000 3,000
OTHER 3,237 3,447 6,684
- -------------------------------------------------------------------------------------------------------------------------
TOTAL 36,474 35,602 72,076
- -------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 11,638 995 12,633
INCOME TAXES 3,874 446 4,320
- -------------------------------------------------------------------------------------------------------------------------
NET INCOME $7,764 $549 $8,313
=========================================================================================================================
EARNINGS PER COMMON SHARE:
BASIC $0.33 $0.11 $0.17
DILUTED $0.31 $0.11 $0.17
=========================================================================================================================
WEIGHTED AVERAGE COMMON SHARES AND POTENTIAL COMMON SHARES
OUTSTANDING:
BASIC 21,112 4,963 42,472
DILUTED 22,538 5,094 44,496
=========================================================================================================================
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
54
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1995
- -------------------------------------------------------------------------------------------------------------------------
RSFC FPBB COMBINED
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) (HISTORICAL) (HISTORICAL) PRO FORMA
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME:
INTEREST AND FEES ON LOANS $35,713 $43,049 $78,762
INTEREST AND DIVIDENDS ON INVESTMENTS 6,177 19,935 26,112
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 41,890 62,984 104,874
- -------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 14,873 29,794 44,667
INTEREST ON BORROWINGS 1,051 8,665 9,716
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 15,924 38,459 54,383
- -------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 25,966 24,525 50,491
PROVISION FOR LOAN LOSSES 434 244 678
- -------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 25,532 24,281 49,813
- ------------------------------------------------------------- --------------------- --------------------- ---------------
SERVICE CHARGE ON DEPOSIT ACCOUNTS 4,222 1,929 6,151
GAIN ON SALE OF LOANS AND SERVICING 625 82 707
OTHER INCOME 2,055 181 2,236
- -------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 6,902 2,192 9,094
- -------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
EMPLOYEE COMPENSATION AND BENEFITS 10,888 10,171 21,059
OCCUPANCY AND EQUIPMENT 4,153 3,050 7,203
DATA PROCESSING 576 424 1,000
COMMUNICATIONS 744 314 1,058
PROFESSIONAL FEES 2,042 332 2,374
ADVERTISING AND PROMOTION 450 496 946
INSURANCE 817 1,412 2,229
OTHER REAL ESTATE OWNED - NET 623 63 686
GOODWILL AMORTIZATION 165 165
OTHER 2,355 1,683 4,038
- -------------------------------------------------------------------------------------------------------------------------
TOTAL 22,813 17,945 40,758
- -------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 9,621 8,528 18,149
INCOME TAXES 3,389 3,313 6,702
- -------------------------------------------------------------------------------------------------------------------------
NET INCOME $6,232 $5,215 $11,447
=========================================================================================================================
EARNINGS PER COMMON SHARE:
BASIC $0.32 $1.05 $0.27
DILUTED $0.30 $1.02 $0.26
=========================================================================================================================
WEIGHTED AVERAGE COMMON SHARES AND POTENTIAL COMMON SHARES
OUTSTANDING:
BASIC 18,481 4,980 40,583
DILUTED 20,790 5,096 43,012
=========================================================================================================================
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
55
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The accompanying unaudited pro forma combined condensed statement of
financial condition presents the combined financial position of RSFC and FPBB as
of March 31, 1998, assuming that the proposed Merger had occurred as of March
31, 1998. The accompanying unaudited combined condensed pro forma statements of
income give effect to the proposed Merger by combining the results of operations
of the respective companies for the three months ended March 31, 1998, the years
ended December 31, 1997 and 1996, and the nine months ended December 31, 1995,
assuming that the proposed Merger, which is expected to be accounted for as a
pooling of interests, had occurred as of the beginning of each period presented.
No adjustments for cost synergies are reflected in the pro forma combined
condensed statements of income. The following pooling-of-interests adjustments
were made:
(a) Non-recurring costs estimated to be approximately $18.6 million, net of
taxes, will be recorded in connection with the Merger. These costs
consist of approximately $7.2 million in professional fees, $6.3
million in employee severance payments and payments associated with
employee change in control agreements, $5.3 million in write-offs of
fixed assets primarily associated with FPBB's inhouse data processing
system and signs, $2.6 million in the write-off of certain prepaid
assets and other assets not useful to the Combined Company, $1.8
million in electronic data processing and personnel costs to combine
the operations and $1.9 million in lease and other contract buy-outs
and miscellaneous expenses associated with the integration of the two
companies. Because such costs are non-recurring, they have not been
recorded in the accompanying unaudited pro forma combined condensed
statements of income. However, such costs will be charged to income in
the period in which the merger is consummated. In addition, upon
consummation of the Merger, RSFC expects to record adjustments of
approximately $6 million to the allowance for loan losses to conform
FPBB's accounting and credit policies regarding loan valuations to
those of RSFC.
(b) To reflect issuance of approximately 21.2 million shares of RSFC Common
Stock in exchange for all of the outstanding shares of FPBB Common
Stock based upon applying the Exchange Ratio fixed at 4.194 multiplied
by the number of shares of FPBB Common Stock outstanding at March 31,
1998.
(c) Stated book value per share is calculated by dividing common
shareholders' equity plus the proceeds of the assumed conversion of "in
the money" options, warrants and convertible preferred stock by the
number of shares of RSFC Common Stock outstanding plus the equivalent
common shares from the assumed conversion of "in the money" options,
warrants and convertible preferred stock. Tangible book value per share
is calculated by dividing common shareholders' equity plus the proceeds
of the assumed conversion of "in the money" options, warrants and
convertible preferred stock less goodwill by the number of shares of
RSFC Common Stock outstanding plus the equivalent common shares from
the assumed conversion of "in the money" options, warrants and
convertible preferred stock.
56
<PAGE>
MANAGEMENT FOLLOWING THE MERGER
Following the consummation of the Merger, the composition of the RSFC Board
and the Republic Security Board of Directors will each consist of 21 members,
initially comprised of the current RSFC and Republic Security Boards of
Directors' members (George M. Apelian, Paula Berliner, H. Gearl Gore, Joseph D.
Cesarotti, Mary Anna Fowler, Richard J. Haskins, Eugene W. Hughes, Lennart E.
Lindahl, Jr., Carol R. Owen, Richard C. Rathke, Rudy E. Schupp, Victor H.
Siegel, William F. Spitznagel, Bruce E. Wiita and William Wolfson, Jr.) and
three FPBB designees (Fred A. Greene, R. Randy Guemple and Daniel O. Sokoloff,
M.D.), to be elected as directors of RSFC upon consummation of the Merger (the
"Designees"). The RSFC Board is divided into three classes, each of which has a
term of three years.
Certain information with respect to each director and Designees to the RSFC
Board is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMBINED COMPANY
- ---- --- ----------------------------------
<S> <C> <C>
Rudy E. Schupp 47 Chairman of the Board and Chief Executive Officer
Lennart E. Lindahl, Jr. 54 Vice Chairman of the Board and Director
Carol R. Owen 62 Chairman - Broward County and Director
Richard J. Haskins 48 Executive Vice President and Director
George M. Apelian 66 Executive Vice President - Miami-Dade County
and Director
Paula Berliner 54 Director
Dr. Thomas F. Carney 71 Director
Joseph D. Cesarotti 69 Director
Mary Anna Fowler 70 Director
H. Gearl Gore 50 Director
Fred A. Greene 66 Director
R. Randy Guemple 46 Director
Eugene W. Hughes, Jr. 65 Director
Thomas J. Langan, Jr. 77 Director
Mary McCarty 43 Director
Richard C. Rathke 66 Director
Victor H. Siegel 50 Director
Daniel O. Sokoloff, M.D. 46 Director
William F. Spitznagel 71 Director
Bruce E. Wiita 60 Director
William Wolfson 69 Director
</TABLE>
57
<PAGE>
DIRECTORS OF THE RSFC AND BANK BOARDS OF DIRECTORS
George M. Apelian, 66, has served as President and director of County
Financial Corporation ("CFC") since 1984, and as President, Chief Executive
Officer and director of County since 1984. From 1983 to 1984 he was Executive
Vice President of both CFC and County. From 1979 to 1983, Mr. Apelian held
various offices with the National Bank of Florida, Miami, Florida, including the
office of President from 1982 to 1983. Mr. Apelian has been in the banking
industry since 1958.
Paula Berliner, 54, has been a Director of RSFC since June 1997, when RSFC
purchased Family and was a Director of Family since its inception. Ms. Berliner
has been Vice President and Director of Acorn Venture Capital Corp., a public
venture capital company traded on the Nasdaq Small-Cap Market, since June 1992.
During the two years prior to her employment with Acorn Venture Capital Corp.,
Ms. Berliner was Vice President and a director of Broward Window Products, Inc.,
a company specializing in the sale of window-related products.
Dr. Thomas F. Carney, 71, has served as a member of the Board of Directors
of CFC since 1962 and as Chairman of the Board of County since 1967. Dr. Carney
has served as a member of the Board of Directors of County since 1984 and
continues now to serve as the Chairman of the Board. Dr. Carney also served as a
director of Carney Bank, Boynton Beach, Florida. His brother, Joseph E. Carney,
Jr., and his son, Peter Carney, also serve as directors of CFC and County. Dr.
Carney also served as Chairman of the Board of the former Dixie National Bank of
Dade County.
Joseph D. Cesarotti, 69, has been a Director of RSFC since June 1997, when
RSFC purchased Family and was a Director of Family since its inception. Mr.
Cesarotti has been retired since June 1992. Prior to his retirement and from
1956, Mr. Cesarotti served as President and Chief Executive Officer of Sungraf
Inc., a sign manufacturing company.
Mary Anna Fowler, 70, has been a Director of RSFC since June 1997, when
RSFC purchased Family and was a Director of Family since its inception. Since
1991, Ms. Fowler has been Vice President of Exotic Gardens, Inc., a florist
company.
H. Gearl Gore, 50, has been a Director and the Secretary of RSFC since its
inception. He has been the President of H. Gearl Gore, Inc., a real estate
appraisal firm in Jupiter, Florida since 1983. In 1996, approximately 43% of
that firm's gross revenues were derived from appraisal services provided to
Republic Security. Mr. Gore has been the President and Chief Operating Officer
of Northco Investment Properties, Inc., a real estate brokerage firm in Jupiter,
Florida, from 1981 to present. From 1975 to 1980 he was Florida state sales
director for United Sun Life Insurance Co. He served as a Councilman for the
Town of Jupiter from 1981 to 1983.
Richard J. Haskins, 48, has been Executive Vice President and Chief
Financial Officer of RSFC and Republic Security since 1989, Senior Vice
President of RSFC and Republic Security since August 1984, and a Director of
RSFC and Republic Security since 1986. For ten years prior to 1984, he had been
an accountant with the West Palm Beach, Florida office of Deloitte Haskins &
Sells, certified public accountants, where he held the position of Manager.
Eugene W. Hughes, Jr., 65, has been a Director of RSFC since June 1997,
when RSFC purchased Family and was a Director of Family since its inception. Mr.
Hughes served as Vice President of Family from August 1988 to December 31, 1994
and as Controller from 1992 to December 31, 1994. Mr. Hughes is currently
retired.
Thomas J. Langan, Jr., 77, served as a Director of Carney from 1991 until
the merger with County in 1996. He became a director of CFC following the
consummation of the merger. Mr. Langan was in the banking profession from 1949
to 1983.
Lennart E. Lindahl, Jr., 54, has been a Director of RSFC since its
inception. From 1970 through 1994, he was President of Lindahl, Browning,
Ferrari & Hellstrom, Inc., Consulting Engineers in Jupiter, Florida, and
currently serves as its Chairman of the Board. He is past chairman of the
Economic Council of Palm Beach County and past president
58
<PAGE>
of the Palm Beach County Development Board. Additionally, he currently serves as
a member and was a past Chairman of the Florida Inland Navigation District.
Mary McCarty, 43, has served as a Director of CFC since May 1997. She was
Vice Mayor of the City of Delray Beach and a Member of the City Commission in
1987. She was elected to District IV Palm Beach County Commission in November
1990 and continues to serve in such position. She was voted Chair of the Palm
Beach Commission in November of 1992. Mrs. McCarty was self-employed as a
promotional consultant until November 1990.
Carol R. Owen, 62, has been a Director of RSFC since June 1997, when RSFC
purchased Family and was a Director, Chief Executive Officer and President of
Family since its inception.
Richard C. Rathke, 66, has been a Director of RSFC since its inception. He
has been the President of RCR Enterprises, Inc., a real estate development firm
in Jupiter, Florida, since 1979. From 1966 to 1979 he was the President and
owner of Trans Pacific Trading Co. of Fort Lauderdale, Florida, a firm engaged
in importing and retail sales.
Rudy E. Schupp, 47, has been President and Chief Executive Officer of RSFC
since 1985, and the President and Chief Executive Officer of Republic Security
since its inception. From 1980 to 1984, Mr. Schupp was employed by AmeriFirst
Bank, FSB, Miami, Florida, where he held the position of Division Vice President
and, previously, was Senior Vice President and Division Manager of the Orlando
Division of AmeriFirst Bank, FSB. Mr. Schupp was a Manager in Consumer Bank
Planning and Marketing at First Union National Bank, Charlotte, North Carolina,
from 1977 to 1980.
Victor Siegel, M.D., 50, has been a Director of RSFC since 1989. He is a
physician and surgeon specializing in Obstetrics and Gynecology and has been
practicing in Palm Beach County since January 1982. Dr. Siegel was a member of
the Florida and Palm Beach County Medical Associations and was Executive
Director of Finance for the Palm Beach County Medical Society in 1986. He has
been Chief of the Department of Obstetrics and Gynecology at Wellington Hospital
since 1993. He is also on the board of directors for the nonprofit Jupiter
Theater of the Performing Arts.
William F. Spitznagel, 71, has been a Director of RSFC since its inception
through December 31, 1986 and from February 21, 1987 to present. He was Chairman
and President of Roadway Services, Inc., a motor freight company, from 1978
until his retirement in 1981. He presently serves as a consultant to that
company.
Bruce E. Wiita, M.D., 60, has been a Director of RSFC since its inception.
He is a surgeon and urologist practicing in Jupiter and Palm Beach Gardens since
1973. He is the former Chief of Staff of the Jupiter Hospital and Chief of
Surgery of the Palm Beach Gardens Hospital and Jupiter Hospital. Currently, he
is a Director of the American Heritage Management and Development Corporation, a
real estate development company, and Chairman of the DevMed Group Inc., a
medical device manufacturing corporation.
William Wolfson, 69, has been a Director of RSFC since 1993. He has been a
certified public accountant since 1960 and in 1994 retired as senior partner in
the accounting firm of Wolfson, Milowsky, Melzer, Ettinger & Wieselthier, P.C.
DESIGNEES OF FPBB TO RSFC BOARD OF DIRECTORS
Fred A. Greene, 66, has served as a director of FPBB since 1984. He has
served as Chairman of the Board of Gee & Jenson Engineers, Architects &
Planners, Inc. since 1990 and acted as President and Chief Executive Officer of
such company since 1990.
R. Randy Guemple, 46, has served as a director of FPBB since 1997, and as
Executive Vice President, Chief Operating Officer from July 1991 to the present.
He was also Treasurer and Chief Financial Officer of FPBB until January 21,
1998. From 1992 to 1996, Mr. Guemple was Senior Vice President, Treasurer and
Chief Financial Officer.
Daniel O. Sokoloff, M.D., 46, has served as a director of FPBB since 1996.
He has been a dermatologist since 1982.
59
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
RSFC
As of July 3, 1998, directors and executive officers of RSFC were the
beneficial owners of 3,847,793 shares (approximately 14.7%) of the RSFC Common
Stock then outstanding. The following table sets forth certain information
regarding the beneficial ownership of the RSFC Common Stock as of July 3, 1998
(including options exercisable within 60 days) by (1) each RSFC director
remaining in office after the Merger, (2) the executive officers of RSFC, (3)
all directors and executive officers of RSFC as a group, and (4) each person
known by RSFC to be the beneficial owner of more than 5% of the outstanding
class of RSFC Common Stock. Subject to applicable community property and similar
statutes and except as otherwise noted in the footnotes below, each of the
persons named in the table has sole voting and dispositive power with respect to
the shares beneficially owned by such person.
<TABLE>
<CAPTION>
PRE-MERGER POST-MERGER (8)
PERCENTAGE OF AMOUNT AND NATURE PERCENTAGE OF
AMOUNT AND NATURE OF OUTSTANDING RSFC OF BENEFICIAL OUTSTANDING
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK OWNERSHIP COMMON STOCK
------------------------ --------------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
George M. Apelian 37,278 * 37,278 *
Paula Berliner 263,337(1)(6) 1.0 267,531(9) *
Dr. Thomas F. Carney 1,433,481 5.6 1,433,481 3.1
Joseph D. Cesarotti, Sr. 153,335(1)(6) * 153,335 *
Mary Anna Fowler 104,297 * 104,297 *
H. Gearl Gore 142,424(2)(3)(4) * 142,424 *
Fred A. Greene -- * 125,313 *
R. Randy Guemple -- * 357,702 *
Richard J. Haskins 65,788(3) * 65,788 *
Eugene W. Hughes, Jr. 188,619(1)(6) * 188,619 *
Thomas J. Langan, Jr. 3,701 * 3,701 *
Lennart E. Lindahl, Jr. 132,034(2)(3)(4) * 132,034 *
Mary McCarty 288 * 288 *
Carol R. Owen 301,485(1)(6) 1.2 301,485 *
Richard C. Rathke 140,599(2)(3)(4) * 140,599 *
Roger Savage 2,425 * 2,425 *
Rudy E. Schupp 119,568(3)(5) * 119,568 *
Victor H. Siegel, M.D. 267,706(2)(3) 1.0 267,706 *
Daniel O. Sokoloff, M.D. -- * 77,799(10) *
William F. Spitznagel 241,868(2)(3) 1.0 280,076 *
Bruce E. Wiita, M.D. 150,325(2)(3)(4) * 150,325 *
William Wolfson 9,274(2) * 9,274 *
All directors and executive
officers as a group
(28 persons) 3,847,793(7) 14.7 4,412,800 9.3
</TABLE>
- ----------
* Less than 1%.
(1) Includes 7,150 shares issuable upon the exercise of options, at an
exercise price of $1.65 per share.
(2) Includes 5,250 shares issuable upon the exercise of options, at an
exercise price of $3.33 per share.
(3) Includes 12,128 shares issuable upon exercise of options, at an exercise
price of $2.48 per share.
(4) Includes 27,536 shares issuable upon exercise of warrants, at an exercise
price of $5.00 per share.
(5) Includes 5,524 shares issuable upon exercise of options, at an exercise
price of $2.50 per share.
(6) Includes 75,647 shares issuable upon exercise of options, at an exercise
price of $2.078 per share.
(7) Includes options and warrants for 616,280 shares of Common Stock. Actual
Common Stock owned is 12.6% of the total outstanding.
(8) Assumes each share of FPBB common stock is converted into 4.194 shares of
RSFC common stock.
(9) Includes 1,000 shares of FPBB Common Stock held by Ms. Berliner, which
shares will be converted into 4,194 shares of RSFC Common Stock at the
Effective Time.
(10) Includes 14,821 unvested RRP Plan shares as to which Dr. Sokoloff has
voting rights.
60
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF RSFC AND FPBB COMMON STOCK
The rights of holders of FPBB Common Stock are governed by the FPBB
Charter, the Bylaws of FPBB and the Delaware General Corporation Law (the
"DGCL"). As a result of the Merger, the rights of the holders of FPBB Common
Stock, which will be converted into shares of RSFC Common Stock, will be
governed by the RSFC Articles, the Bylaws of RSFC and the Florida Business
Corporation Act (the "FBCA").
The following is a summary of the material differences in the rights of the
shareholders of RSFC and the stockholders of FPBB. This summary does not purport
to be a complete discussion of, and is qualified in its entirety by reference
to, the FPBB Charter and Bylaws, the RSFC Articles and Bylaws, the Bank Holding
Company Act, the FBCA and the DGCL.
AUTHORIZED CAPITAL STOCK
RSFC. The RSFC Articles authorize the issuance of up to 100,000,000 shares
of RSFC Common Stock, par value $0.01 per share, of which, as of March 31, 1998,
23,935,709 shares were issued and outstanding, 1,344,388 shares were reserved
for issuance upon conversion of RSFC's 7% Cumulative Convertible Preferred
Stock, Series C (the "Series C Preferred"), 2,000,000 shares were reserved for
issuance under the RSFC 1997 Performance Incentive Plan, 396,425 shares were
reserved for issuance pursuant to other RSFC stock options and warrants, and
950,000 shares were reserved for issuance pursuant to the RSFC dividend
reinvestment plan and employee stock purchase plan. Under the RSFC Articles, the
RSFC Board has the authority to divide the 20,000,000 authorized shares of
preferred stock, par value $.01 per share, into series and to fix the rights and
preferences of any series so established. Of the series of preferred stock
currently authorized: 1,000,000 shares of Series B Junior Participating
Preferred Stock (the "Series B Preferred"), no shares of which are outstanding
and 1,035,000 shares of the Series C Preferred of which 867,347 shares were
issued and outstanding. A full description of the RSFC Common Stock and the
Series C Preferred is incorporated herein by reference from the section under
the caption "Description of Securities" in RSFC's Registration Statement on Form
S-1 (No. 33- 62847), effective on November 6, 1995. For a description of the
Series B Preferred issuable in connection with the RSFC Rights Plan, see
"-Certain Anti-Takeover Provisions."
FPBB. The FPBB Charter authorizes the issuance of up to 10,000,000 shares
of FPBB Common Stock, of which, as of March 31, 1998, 5,057,746 shares were
issued and outstanding, and 450,157 shares were reserved for issuance upon the
exercise of outstanding options pursuant to FPBB's stock option plans. The FPBB
Charter authorizes the issuance of up to 1,000,000 shares of preferred stock,
par value $0.01 per share, of which, as of March 31, 1998, no shares were
issued and outstanding. Under the FPBB Charter, the FPBB Board has the authority
to divide the 1,000,000 authorized shares of preferred stock into series and to
fix the rights and preferences of any series so established. Of the 1,000,000
shares of preferred stock currently authorized, 100,000 shares have been
designated as Series A Junior Participating Preferred Stock (the "Series A
Preferred"), none of which are currently outstanding.
BOARD OF DIRECTORS
RSFC. The RSFC Bylaws currently provide that the RSFC Board will consist of
18 members. The RSFC Articles divide the RSFC Board into three classes of as
equal size as possible, with the term of each class expiring in consecutive
years so that only one class is elected in any given year. Under the RSFC
Articles and Bylaws, directors may only be removed for cause upon the
affirmative vote of not less than 80% of the outstanding shares of RSFC Common
Stock. The RSFC Bylaws will be amended as of the Effective Time of the Merger to
increase the number of directors to 21.
FPBB. The FPBB Charter provides that the number of members of the FPBB
Board will be established from time to time exclusively by the Board pursuant to
a resolution adopted by a majority of the whole board. The FPBB Board currently
consists of eight members. The FPBB Charter divides the FPBB Board into three
classes of as equal size as possible, with the term of each class expiring in
consecutive years so that only one class is elected in any given year. Under the
FPBB Charter, directors may only be removed for cause upon the affirmative vote
of not less than 80% of the outstanding shares of FPBB entitled to vote
generally in the election of directors.
61
<PAGE>
VOTING LIMITATIONS
RSFC. Pursuant to the RSFC Articles, holders of RSFC Common Stock are
entitled to one vote for each share held.
FPBB. Pursuant to the FPBB Charter, holders of FPBB Common Stock are
entitled to one vote for each share held, except that a record holder of any
FPBB Common Stock which is beneficially owned, directly or indirectly, by a
person who, as of any record date for the determination of FPBB stockholders
entitled to vote on any matter, beneficially owns in excess of 10% of the
then-outstanding shares of FPBB Common Stock (the "Limit") shall generally not
be permitted to vote the shares held in excess of the Limit.
SPECIAL MEETINGS OF SHAREHOLDERS; ACTION WITHOUT A MEETING
RSFC. The RSFC Bylaws provide that a special meeting of RSFC shareholders
may only be called by a majority of the directors for such purposes as
determined by the RSFC Board at any time. The RSFC Articles deny shareholders
the power to call a special meeting and prohibit actions by shareholders by
written consent without a meeting. The FBCA provides that special meetings of
shareholders can be called at the request of the holders of not less than 10% of
all votes entitled to be cast on any issue proposed to be considered at the
proposed special meeting, unless a greater percentage, not to exceed 50%, is
required by the corporation's articles of incorporation.
FPBB. The FPBB Charter provides that no action required or permitted to be
taken at any annual or special meeting of stockholders of FPBB may be taken
without a meeting, and the power of stockholders to act by written consent is
specifically denied. Special meetings of the FPBB stockholders may be called
only by a resolution adopted by a majority of the total number of authorized
directors, or as otherwise provided in the FPBB Bylaws. The FPBB Bylaws do not
provide otherwise.
MERGERS, SHARE EXCHANGES AND SALES OF ASSETS
RSFC. The FBCA requires that plans of merger and share exchange must be
adopted by the boards of directors of each corporation and (except in certain
limited circumstances) approved by a majority of all the votes entitled to be
cast by each voting group of each corporation entitled to vote on the plan of
merger or share exchange, unless the corporation's board of directors requires,
or the articles of incorporation provide for, a greater vote. The RSFC Articles
do not require a greater vote. In addition, the FBCA provides that a corporation
may sell or otherwise dispose of all or substantially all of its property, other
than in the usual and regular course of business, if recommended by the board of
directors and if the holders of the majority of all votes entitled to be cast on
the transaction approve such transaction.
The FBCA also provides, however, that the shareholders of the corporation
surviving a merger need not approve the transaction if (i) the corporation's
articles of incorporation will not differ after the Merger (other than in
certain specified provisions) and (ii) the corporation's shareholders will hold
the same number of shares with identical designations, preferences, limitations
and relative rights immediately after the merger as they held before the merger.
FPBB. The DGCL generally provides that a merger, consolidation, sale, lease
or exchange of all or substantially all of a corporation's assets may be
effected upon a vote of the holders of a majority of a corporation's outstanding
shares. Generally, the DGCL does not require a stockholder vote of the surviving
corporation in a merger if (i) the merger does not amend the existing
certificate of incorporation, (ii) each outstanding share of the surviving
corporation before the merger is unchanged or, in the case of the DGCL, becomes
a treasury share of the surviving corporation and (iii) in the case of the DGCL,
the number of shares to be issued by the surviving corporation in the merger
does not exceed 20% of the shares outstanding immediately prior to such
issuance.
AMENDMENT OF ARTICLES OF INCORPORATION AND OF BYLAWS
RSFC. Pursuant to the FBCA and the RSFC Articles, amendments to the RSFC
Articles must be recommended by the RSFC Board and approved by a majority of
votes entitled to be cast by each voting group entitled to vote on the
amendment. Under the RSFC Articles and the RSFC Bylaws, the RSFC Board may
adopt, alter, amend or repeal the RSFC Bylaws by a majority vote.
62
<PAGE>
FPBB. The DGCL provides that amendments to the certificate of incorporation
must be approved by a resolution of the board of directors declaring the
advisability of the amendment, and by the affirmative vote of a majority of the
outstanding shares entitled to vote and by a majority of the outstanding shares
of each class entitled to vote separately as a class on the amendment, except
where the certificate of incorporation requires the vote of a greater proportion
of the outstanding shares or of a greater proportion of the outstanding shares
of any class of stock. If an amendment would increase or decrease the number of
authorized shares of a class, increase or decrease the par value of the shares
of a class or alter or change the powers, preferences or other special rights of
a class of outstanding shares so as to adversely affect the class, then a
majority of shares of that class also must approve the amendment, whether or not
entitled to vote thereon by the certificate of incorporation. The DGCL provides
that a provision in a corporation's certificate of incorporation which requires
a super-majority vote of the stockholders may only be amended by such
super-majority vote.
Pursuant to the DGCL and the FPBB Charter, amendments to the FPBB Charter
must be recommended by the FPBB Board and approved by at least a majority of the
then-outstanding shares of capital stock entitled to vote generally in the
election of directors, except that at least 80% of the then-outstanding shares
of capital stock entitled to vote is required to amend or repeal FPBB Charter
provisions relating to amendment of the FPBB Charter, the Limit, FPBB
stockholder action, calling of special meetings of stockholders of FPBB, the
directors of FPBB, amendment or repeal of the FPBB Bylaws, supermajority vote
requirements with respect to certain business combinations, and indemnification
of officers, directors and employees.
RIGHTS OF DISSENTING SHAREHOLDERS
RSFC. Shareholders of a Florida corporation have the right, in certain
circumstances, to dissent from certain corporate actions, including the
consummation of a plan of merger to which a Florida corporation is a party and
which requires the approval of such corporation's shareholders. However, this
right to dissent does not apply with respect to a plan of merger to holders of a
security that on the record date is either registered on a national securities
exchange or designated as a national market system security on an inter-dealer
quotation system by the National Association of Securities Dealers, Inc. or held
of record by not fewer than 2,000 shareholders. Shareholders who are entitled to
dissent are also entitled to obtain payment in the amount of the fair value of
their shares. The holders of RSFC Common Stock are not entitled to dissenters'
rights in connection with the Merger because RSFC Common Stock is, and was as of
the RSFC Record Date, listed on the Nasdaq National Market. See "NO DISSENTERS'
RIGHTS OF APPRAISAL."
FPBB. Pursuant to Section 262 of the DGCL, a holder of capital stock of a
Delaware corporation is generally entitled to receive payment of the appraised
value of his or her shares if such stockholder dissents from a merger or
consolidation and complies with the procedures set forth in Section 262 of the
DGCL for exercising such rights. However, appraisal rights are not available in
merger or consolidation transactions to holders of: (a) shares of stock that
are, as of the record date for determining stockholders entitled to vote on the
transaction, either listed on a national securities exchange or designated as a
national market system security on an inter-dealer quotation system by the
National Association of Securities Dealers, Inc., or held of record by more than
2,000 persons, or (b) shares of the corporation surviving a merger if the merger
did not require for its approval the vote of such stockholders, unless, in
either case, holders of such stock are required by the terms of the merger or
consolidation to accept anything other than: (i) shares of the surviving or
resulting corporation; (ii) shares of stock of another corporation which are so
listed or designated, or held of record by not fewer than 2,000 persons; and/or
(iii) cash in lieu of fractional shares of such stock. Appraisal rights are not
available for a sale of assets or an amendment to the certificate.
DIVIDENDS
RSFC. The FBCA provides that, subject to restrictions in a corporation's
articles of incorporation, a corporation's board of directors may authorize and
the corporation may make a distribution to its shareholders unless after giving
effect to the distribution, (i) the corporation would not be able to pay its
debts as they become due in the usual course of business, or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus (unless the RSFC Articles permit otherwise) the amount that would be
needed, if the corporation were to dissolve at the time of distribution, to
satisfy the preferential rights of shareholders upon distribution whose
preferential rights are superior to those receiving the dividend.
63
<PAGE>
FPBB. The DGCL provides that a corporation, subject to any restrictions in
its certificate of incorporation, may declare and pay dividends upon its shares
of capital stock either out of its surplus (as determined under the statute) or,
in the event there is no such surplus, out of its net profits for the fiscal
year in which the dividend is declared and/or for the preceding fiscal year.
Further restrictions on dividends may apply in the event a corporation has
issued shares possessing a preference upon the distribution of assets.
CERTAIN ANTI-TAKEOVER PROVISIONS
RSFC. Section 607.0901 of the FBCA provides that the approval of the
holders of two-thirds of the voting shares of a corporation, other than the
shares owned by an Interested Shareholder (generally, any person who is the
beneficial owner of 10% or more of the outstanding voting stock of the
corporation), would be required in order to effectuate certain transactions,
including, among others, a merger, sale of assets, sale of shares and
reclassification of securities involving the corporation and an Interested
Shareholder (an "Affiliate Transaction").
The special voting requirement does not apply in any of the following five
circumstances: (i) the Affiliated Transaction is approved by a majority of the
corporation's disinterested directors; (ii) the corporation has not had more
than 300 shareholders of record at any time during the preceding three years;
(iii) the Interested Shareholder has beneficially owned 80% of the corporation's
voting shares for five years; (iv) the Interested Shareholder beneficially owns
90% of the corporation's voting shares; or (v) all of the following conditions
are met (a) the cash and fair value of other consideration to be paid per share
to all holders of the voting shares equals the highest per share price
calculated pursuant to various methods set forth in Section 607.0901 of the
FBCA, (b) the consideration to be paid in the Affiliated Transaction is in the
same form as previously paid by the Interested Shareholder, and (c) during the
portion of the three years preceding the announcement date that the Interested
Shareholder has been an Interested Shareholder, except as approved by a majority
of the disinterested directors, there shall have been no failure to pay at the
regular date therefor any full periodic dividends, whether or not cumulative, on
any outstanding shares of the corporation, no increase in the voting shares
owned by the Interested Shareholder, and no benefit to the Interested
Shareholder from loans, guarantees or other financial assistance or tax
advantages provided by the corporation.
A corporation may "opt-out" of the provisions of Section 607.0901 by
electing to do so in its articles of incorporation. RSFC has not elected to
"opt-out" of Section 607.0901 of the FBCA.
In addition, Section 607.0902 of the FBCA provides that the voting rights
to be accorded Control Shares (as defined below) a Florida corporation that has
(i) 100 or more shareholders, (ii) its principal place of business, its
principal office, or substantial assets in Florida, and (iii) either (a) more
than 10% of its shareholders residing in Florida, (b) more than 10% of its
shares owned by Florida residents, or (c) 1,000 shareholders residing in
Florida, must be approved by a majority of each class of voting securities of
the corporation, excluding those shares held by interested persons, before the
Control Shares will be granted any voting rights.
"Control Shares" are defined in the FBCA to be shares acquired by a person,
either directly or indirectly, that when added to all other shares of the
issuing corporation owned by such person, would entitle such person to exercise,
either directly or indirectly, voting power within any of the following ranges:
(i) 20% or more but less than 33% of all voting power of the corporation's
voting securities, (ii) 33% of more but less than a majority all voting power of
the corporation's voting securities, or (iii) a majority or more of all of the
voting power of the corporation's voting securities. Such provisions doe not
apply to shares acquired pursuant to, among other things, an agreement or plan
of merger or share exchange effected in compliance with the relevant provisions
of the FBCA and to which the corporation is a party or an acquisition of shares
previously approved by the board of directors of the corporation.
In addition, unless otherwise provided in a corporation's articles of
incorporation or bylaws, in the event Control Shares acquired in a Control-Share
acquisition are accorded full voting rights and the acquiring person has
acquired Control Shares with a majority or more of all voting power, all
shareholders of the issuing public corporation shall have dissenters' rights.
64
<PAGE>
FPBB. Section 203 of the DGCL ("Section 203") restricts a corporation's
ability to engage in certain transactions involving the corporation (or its
majority-owned subsidiaries) and any person holding 15% or more of such
corporation's outstanding voting stock together with the affiliates or
associates of such person (an "Interested Stockholder"). Section 203 prohibits,
for a period of three years following the date that a person became an
Interested Shareholder, the following types of transactions between the
corporation and the Interested Stockholder (unless certain conditions, described
below, are met): (i) mergers or consolidations; (ii) sales, leases, exchanges or
other transfers of 10% or more of the aggregate assets of the corporation; (iii)
issuances or transfers by the corporation of any stock of the corporation which
would have the effect of increasing the Interested Stockholder's proportionate
share of the stock of any class or series of the corporation; (iv) any other
transaction which has the effect of increasing the proportionate share of the
stock of any class or series of the corporation which is owned by the Interested
Stockholder; and (v) receipt by the Interested Stockholder of the benefit
(except proportionately as a stockholder) of loans, advances, guarantees, or
other financial benefits provided by the corporation.
The three year ban does not apply if either the proposed transaction or the
transaction by which the Interested Stockholder becomes an Interested
Stockholder is approved by the board of directors of the corporation prior to
the time such stockholder becomes an Interested Stockholder. In addition, an
Interested Stockholder may avoid the statutory restriction if, upon consummation
of the transaction whereby such stockholder becomes an Interested Stockholder,
the stockholder owns at least 85% of the outstanding voting stock of the
corporation without regard to those shares owned by the corporation's officers
and directors or certain employee stock plans. Business combinations are also
permitted within the three-year period if approved by the board of directors and
authorized at an annual or special meeting of stockholders by the holders of at
least 66-2/3% of the outstanding voting stock not owned by the Interested
Stockholder.
Delaware corporations were given the option to exclude themselves from the
coverage of Section 203 by taking board action prior to May 2, 1988.
Additionally, a Delaware corporation may exclude itself by amending its
certificate of incorporation or bylaws at any time to exempt itself from
coverage of Section 203, provided that any certificate or bylaw amendment
adopted on or after May 2, 1988 may not become effective for 12 months after the
date such amendment is adopted. In addition, any transaction is exempt from the
statutory ban if it is proposed at a time when the corporation has proposed, and
a majority of certain continuing directors of the corporation has approved, a
transaction with a party who is not an Interested Stockholder of the corporation
(or who became such with board approval) if the proposed transaction involves
(i) certain mergers or consolidations involving the corporation; (ii) a sale or
other transfer of over 50% of the aggregate assets of the corporation or (iii) a
tender or exchange offer for 50% or more of the outstanding voting stock of the
corporation.
FPBB has not excluded itself from the coverage of Section 203.
In addition, the FPBB Articles also contain a "supermajority provision"
which requires the affirmative vote of not less than 80% of the outstanding
shares of FPBB Common Stock for the approval or authorization of any "business
combination" between FPBB and a Related Person, which includes a merger or
consolidation of FPBB, sale of a significant amount of the assets and certain
other types of transactions. A "Related Person" means any individual,
corporation, partnership or other person or entity which, together with their
affiliates and associates (as defined in the FPBB Articles), beneficially owns
in the aggregate 10% or more of the outstanding shares of FPBB Common Stock. The
supermajority provision is not applicable if the business combination was
approved by a majority of the entire FPBB Board prior to the acquisition by such
Related Person of the beneficial ownership of 10% or more of the outstanding
shares of FPBB Common Stock, or after such acquisition, but only so long as such
Related Person has sought and obtained the unanimous approval by the FPBB Board
of such acquisition of 10% or more of FPBB Common Stock prior to such
acquisition being consummated.
The supermajority provision is also inapplicable if certain fair price and
procedural criteria are met. The fair price criteria are designed to ensure that
the consideration received by holders of FPBB Common Stock in a business
combination will be not less than the fair value of the FPBB Common Stock or
determined pursuant to a specified formula. The procedural criteria of the fair
price provision require the approval by a majority of the FPBB Board of the
business combination, as well as the obtainment of full information by the
holders of FPBB Common Stock in the form of a proxy or information statement
regarding the proposed transaction.
The RSFC Articles contain no such supermajority provisions.
RIGHTS PLAN
RSFC. On March 29, 1995, the RSFC Board declared a dividend on the RSFC
Common Stock of one right (a "Right") for each outstanding share of RSFC Common
Stock to shareholders of record at the close of business on April 14, 1995. Each
Right entitles the registered holder to purchase from RSFC a unit consisting of
one-hundredth of a share (a "Unit") of the Series B Preferred, or a combination
of securities and assets of equivalent value, at a purchase price of $18 per
Unit, subject to adjustment. Each fractional share of Series B Preferred is
designed to be equivalent in voting and dividend rights to one share of RSFC
Common Stock. A full description and terms of the Rights are set forth in the
Rights Agreement, dated as of April 14, 1995 (the "Rights Agreement"), between
RSFC and IBJ Schroder Bank & Trust Company, as Rights Agent.
The Rights Agreement is designed to protect shareholder interests in the
event that RSFC is confronted with coercive or unfair takeover tactics,
including offers that do not treat all shareholder interests fairly or do not
maximize the value of RSFC. Acquisition offers that reflect RSFC's fair value
and that are made to all shareholders would not be affected by the Rights
Agreement. Initially, ownership of the Rights are evidenced only by the RSFC
Common Stock certificates. The Rights will separate from the RSFC Common Stock
and a "Distribution Date" will occur upon the earlier of (i) 10
65
<PAGE>
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding RSFC Common
Stock (the "Stock Acquisition Date"), or (ii) the close of business on such date
as may be fixed by the board of directors, which date shall not be more than 65
days following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 30% or more of the outstanding
RSFC Common Stock. The Rights are not exercisable until the Distribution Date
and will expire at the close of business on April 14, 2005, unless earlier
redeemed by RSFC or unless certain events have occurred. Except in the
circumstances described below, after the Distribution Date each Right will be
exercisable into one-hundredth of a Preferred Share (a "Preferred Share
Fraction"). Each Preferred Share Fraction carries voting and dividend rights
that are intended to produce the equivalent of one RSFC Common Stock. The voting
and dividend rights of the Preferred Shares are subject to adjustment in the
event of dividends, subdivisions and combinations with respect to the RSFC
Common Stock of RSFC.
In the event that any time following the Stock Acquisition Date, (i) RSFC
is the surviving corporation in a merger with an Acquiring Person and its RSFC
Common Stock remain outstanding, (ii) a Person becomes the beneficial owner of
more than 25% of the then outstanding RSFC Common Stock other than pursuant to a
tender offer that provides fair value to all shareholders, (iii) an Acquiring
Person engages in one or more "self-dealing" transactions as set forth in the
Rights Agreement or (iv) during such time as there is an Acquiring Person an
event occurs that results in such Acquiring Person's ownership interest being
increased by more than 1% (E.G., a reverse stock split), each holder of a Right
will thereafter have the right to receive, upon exercise, RSFC Common Stock (or,
in certain circumstances, cash, property or other securities of RSFC) having a
value equal to two times the exercise price of the Right. Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in
clauses (i), (ii), (iii) or (iv) of this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person who was involved in the transaction
giving rise to any such event will be null and void. However, Rights are not
exercisable following the occurrence of any of the events set forth above until
such time as the Rights are no longer redeemable by RSFC as set forth below. In
the event that, at any time following the Stock Acquisition Date, (i) RSFC is
acquired in a merger or other business combination transaction in which RSFC is
not the surviving corporation (other than a merger that is described in, or that
follows a tender offer or exchange offer described in, the second preceding
paragraph), or (ii) 50% or more of RSFC's assets or earning power is sold or
transferred, each holder of a Right (except Rights that previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common shares of the acquiring company having a value equal to two
times the exercise price of the Right. The events set forth in this paragraph
are referred to as the "Triggering Events." At any time until 10 days following
the Stock Acquisition Date, RSFC may redeem the Rights in whole, but not in
part, at a price of $.01 per Right. That 10-day redemption period may be
extended by the board of directors so long as the Rights are still redeemable.
Under certain circumstances set forth in the Rights Agreement, the decision to
redeem will require the concurrence of a majority of the continuing directors.
Immediately upon the action of the board of directors ordering redemption of the
Rights, with, where required, the concurrence of the continuing directors, the
Rights will terminate and the only right of the holders of Rights will be able
to receive the $.01 redemption price.
FPBB. On January 23, 1995, FPBB declared a distribution of one preferred
share purchase right (an "FPBB Right") for each outstanding share of FPBB Common
Stock to stockholders of record at the close of business on February 3, 1995.
Upon the occurrence of certain events, none of which has occurred as of the date
hereof, the FPBB Rights may become exercisable for shares of FPBB Common Stock
at a substantial discount. The description and terms of the FPBB Rights are set
forth in the FPBB Rights Agreement, a copy of which was filed as an exhibit to
FPBB's Registration Statement on Form 8-A dated January 25, 1995, which is
incorporated by reference herein. See "AVAILABLE INFORMATION" and "INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE."
66
<PAGE>
The FPBB Rights have certain anti-takeover effects. The FPBB Rights will
cause substantial dilution to a person or group that attempts to acquire FPBB in
a manner which causes the FPBB Rights to become discount rights unless the offer
is conditional on a substantial number of FPBB Rights being acquired. The FPBB
Rights, however, should not affect any prospective offeror willing to make an
offer at a fair price and otherwise in the best interests of FPBB and its
stockholders as determined by the FPBB Board. The Rights should not interfere
with any merger or other business combination approved by the FPBB Board since
the FPBB Board may, at its option, redeem all but not less than all the then
outstanding FPBB Rights at the redemption price set forth in the Rights
Agreement.
CONSIDERATION OF OTHER CONSTITUENCIES
FPBB. The FPBB Charter provides that the FPBB Board, when evaluating any
offer of another party to (a) make a tender or exchange offer for any
outstanding equity securities of FPBB, (b) merge or consolidate FPBB with
another corporation, or (c) purchase or otherwise acquire all or substantially
all of the properties and assets of FPBB, may, in connection with the exercise
of its judgment in determining what is in the best interests of FPBB and its
stockholders, give due consideration to all relevant factors including, without
limitation, those factors that Directors of any subsidiary of the Corporation
may consider in evaluating any action that may result in a change or potential
change in the control of the subsidiary, and the social and economic effect of
acceptance of such offer: on the Corporation's present and future customers and
employees and those of its Subsidiaries (as defined in the FPBB Articles); on
the communities in which the Corporation and its Subsidiaries operate or are
located; on the ability of the Corporation to fulfill its corporate objective as
a savings and loan holding company under applicable laws and regulations; and on
the ability of its subsidiary savings and loan association to fulfill the
objectives of a stock form savings and loan association under applicable
statutes and regulations.
RSFC. Neither the RSFC Articles nor its By-Laws contain similar provisions.
These provisions of RSFC's Articles discussed above could delay or
frustrate the removal of incumbent directors and could make a merger, tender
offer or proxy contest involving RSFC more difficult, even if such events were
perceived by shareholders as beneficial to their interests. In addition, certain
provisions of state and federal law discussed below may also have the effect of
discouraging or prohibiting a future takeover attempt in which shareholders of
RSFC might otherwise receive a substantial premium for their shares over
then-current market prices.
DIRECTORS' LIABILITY
RSFC. The FBCA generally provides that a director is not personally liable
for monetary damages to the corporation or any other person for any statement,
vote, decision or failure to act regarding corporate management or policy,
unless: (1) the director breached or failed to perform his duties as a director
and (2) the director's breach of or failure to perform those duties constitutes:
(i) a violation of the criminal law, unless the director had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his conduct
was unlawful; (ii) a transaction from which the director derived an improper
personal benefit, either directly or indirectly; (iii) an unlawful distribution;
(iv) in a proceeding by or in the right of the corporation or a shareholder,
conscious disregard for the best interest of the corporation, or willful
misconduct; or (v) in a proceeding by or in the right of someone other than the
corporation or a shareholder, recklessness or an act or omission which was
committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety or property.
FPBB. The DGCL allows a corporation, through its certificate of
incorporation, to limit or eliminate the personal liability of directors to the
corporation and its stockholders for monetary damages for breach of fiduciary
duty. However, this provision excludes any limitation on liability (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for willful or negligent
violation of the laws governing the payment of dividends or the purchase or
redemption of stock or (iv) for any transaction from which the director derives
an improper benefit. The FPBB Charter eliminate directors' liability for
monetary damages for breach of fiduciary duty to the fullest extent permitted by
the DGCL.
67
<PAGE>
SHAREHOLDER PROPOSALS
Proposals of shareholders of RSFC intended to be presented at RSFC's 1999
Annual Meeting of Shareholders must have been received in writing no later than
December 1, 1998 for inclusion in RSFC's Proxy Statement relating to that
meeting. Any such proposals must be in compliance with SEC rules and regulations
then in effect.
PROXY SOLICITATION
Proxies are being solicited from RSFC shareholders and FPBB stockholders by
and on behalf of the respective Boards of Directors of each of RSFC and FPBB.
Each of RSFC and FPBB will bear their own expenses for the solicitations,
including the costs of preparing and mailing this Joint Proxy
Statement/Prospectus to their respective shareholders. In addition to
solicitation by mail, proxies may be solicited from RSFC shareholders and FPBB
stockholders by directors, officers and regular employees of RSFC and FPBB,
respectively, in person, by telecopy or by telephone. Such directors,
officers and employees will not receive any additional compensation for such
services but may be reimbursed for reasonable expenses incurred by them in
forwarding the proxy soliciting materials to the beneficial owners of RSFC
Common Stock and FPBB Common Stock. Although there is no formal agreement to do
so, RSFC and FPBB, respectively, will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for the forwarding of proxy solicitation
materials to beneficial owners of RSFC Common Stock and FPBB Common Stock held
of record by such persons.
LEGAL MATTERS
The validity of the RSFC Common Stock issuable in the Merger will be passed
upon by Morgan, Lewis & Bockius LLP, Miami, Florida.
EXPERTS
The consolidated financial statements of RSFC at December 31, 1997 and
1996, and for the two years in the period ended December 31, 1997, and the
nine-month transition period ended December 31, 1995, appearing in RSFC's Annual
Report on Form 10-K for the year ended December 31, 1997, have been audited by
Ernst & Young LLP, independent certified public accountants, as set forth in
their report thereon included therein and incorporated herein by reference,
which is based in part on the report of other certified public accountants
Deloitte & Touche LLP. Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
The consolidated financial statements of FPBB incorporated in this Joint
Proxy Statement/Prospectus by reference from FPBB's Annual Report on Form 10-K
for the year ended September 30, 1997 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
68
<PAGE>
ADDITIONAL PROPOSALS FOR CONSIDERATION AT THE RSFC SPECIAL MEETING
Approval of Proposals 2 and 3 require that the number of votes cast in favor by
the RSFC shareholders exceed the number voting against.
PROPOSAL 2:
AMENDMENT TO
ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
DESCRIPTION
The RSFC Board proposes and recommends to the shareholders an amendment to
the RSFC Articles increasing the number of authorized shares of RSFC Common
Stock from 100,000,000 shares to 500,000,000, increasing the authorized shares
of Series B Junior Participating Preferred Stock from 1,000,000 to 5,000,000 and
deleting the 7% Cumulative Convertible Preferred Stock, Series C ("Series C
Preferred"), therefrom.
THE TEXT OF THE PROPOSED AMENDMENT TO THE RSFC ARTICLES IS SET FORTH ON
ANNEX E TO THIS JOINT PROXY STATEMENT/PROSPECTUS.
PURPOSES AND EFFECTS
The RSFC Board determined that additional shares of RSFC Common Stock
should be authorized to provide shares available for future stock dividends,
acquisitions, public offerings and for other corporate purposes and to provide
shares available for issuance under the 1997 Performance Incentive Plan. RSFC
has no present plans for any such stock dividend, acquisition or offering but
expects to continue to review acquisition opportunities as they may become
available. Having additional shares of authorized stock available for issuance
will give RSFC greater flexibility and may result in future acquisitions or
offerings being effected without shareholder approval. Future issuances of such
shares could have the effect of diluting existing shareholders.
The number of authorized shares of the Series B Preferred is to be
increased from 1,000,000 to 5,000,000 to correspond to the increase in the
number of authorized shares of RSFC Common Stock. The Series B Preferred shares
are only issuable upon the exercise of Rights issued under the Shareholders
Rights Plan at the rate of one one-hundredth of a share of Series B Preferred
for each Right. See "COMPARISON OF RIGHTS OF HOLDERS OF RSFC AND FPBB COMMON
STOCK--Certain Anti-Takeover Provisions."
The provisions of the RSFC Articles providing the preferences, limitations
and relative rights of the Series C Preferred are being deleted because all of
the Series C Preferred shares have been redeemed. The number of shares of Series
C Preferred which had been authorized is 1,035,000. The effect of the deletion
of the provisions is to increase the number of shares of Preferred Stock
available for future designation by 1,035,000. The RSFC Board does not have any
present plans to designate another series of Preferred Stock.
THE RSFC BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE RSFC
ARTICLES.
69
<PAGE>
PROPOSAL 3:
AMENDMENT TO
REPUBLIC SECURITY FINANCIAL CORPORATION
1997 PERFORMANCE INCENTIVE PLAN
PROPOSED AMENDMENT TO THE PLAN
At the RSFC Special Meeting, the shareholders will consider and act upon a
proposal to approve the amendment to the Republic Security Financial Corporation
1997 Performance Incentive Plan (the "Plan") increasing the number of shares of
RSFC Common Stock issuable under the Plan from 2,000,000 shares to 5,000,000
shares.
The Plan provides for grants of stock options, restricted stock, stock
appreciation rights, performance units, performance shares, phantom stock and
dividend equivalents to key employees (including employees who are officers or
directors) and Non-employee Directors (as defined below). The directors approved
the amendment to the Plan because they determined that the Plan lacked a
sufficient number of shares available for future grants, in particular as a
result of an approximately 80% increase in the number of officers and employees
to result from the Merger.
THE RSFC BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE PLAN.
THE PLAN IS SET FORTH AS ANNEX F TO THIS JOINT PROXY STATEMENT/PROSPECTUS.
DESCRIPTION OF THE PLAN
GENERAL. The aggregate number of shares of RSFC Common Stock that may be
issued or transferred under the Plan prior to the amendment is 2,000,000. If and
to the extent grants under the Plan terminate, expire or are canceled,
forfeited, exchanged or surrendered for any reason without being exercised, the
shares of RSFC Common Stock subject to such grants again will be available for
grants under the Plan.
ADMINISTRATION OF THE PLAN. The Plan is administered and interpreted by a
Committee (the "Committee") consisting of three or more persons appointed by the
RSFC Board, each of whom must be an "outside director" as defined by Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and a
"non-employee director" as defined in Rule 16b-3 under the Exchange Act. The
Committee has the authority to (i) recommend the individuals to whom grants may
be made under the Plan, (ii) recommend the type, size and other terms and
conditions of each grant, (iii) recommend the time when the grants will be made
and the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv)
recommend amendments to the terms of any previously issued grant, and (v) deal
with any other matters arising under the Plan. All recommendations and decisions
of the Committee shall be subject to final approval by majority vote of the
directors of RSFC who are not employees of RSFC ("Non-employee Directors"). The
Committee has full power and authority to administer and interpret the Plan, to
make factual determinations and to recommend amendment to such rules,
regulations, agreements and instruments for implementing the Plan and for
conduct of its business as it deems necessary or advisable, in its sole
discretion.
GRANTS. Grants under the Plan may consist of (i) options intended to
qualify as incentive stock options ("ISOs") within the meaning of section 422 of
the Code, (ii) "nonqualified stock options" that are not intended to so qualify
("NQSOs"), (iii) Restricted Stock, (iv) SARs, (v) Performance Units, (vi)
Performance Shares, (vii) Phantom Stock and (viii) Dividend Equivalents. All
grants are subject to such terms and conditions set forth in the Plan as the
Committee deems appropriate and as are specified in writing by the Committee to
the Grantee (the "Grant Instrument"). The Committee must approve the form and
provisions of each Grant Instrument. Grants under the Plan need not be uniform
as among other recipients of the same type of grant.
70
<PAGE>
ELIGIBILITY FOR PARTICIPATION. Grants may be made to any key employee
(including officers and directors) of RSFC and its subsidiaries and Non-employee
Directors. As of March 31, 1998, 465 employees and fifteen Non-employee
Directors were eligible for grants under the Plan.
INDIVIDUAL LIMIT ON GRANTS. During any calendar year, no individual may be
granted Options or other grants under the Plan that, in the aggregate, may be
settled by delivery of more than 100,000 shares of RSFC Common Stock. In
addition, with respect to grants the value of which is based on the fair market
value of RSFC Common Stock and that may be settled in cash (in whole or in
part), no individual may be paid during any calendar year cash amounts relating
to such grants that exceed the greater of the fair market value (as defined in
the Plan) of the number of shares of RSFC Common Stock set forth in the
preceding sentence either at the date of grant or at the date of settlement.
Grants that may be settled solely by delivery of RSFC Common Stock will not
operate to reduce the amount or value of cash-only grants, and vice versa;
nevertheless, grants that may be settled in RSFC Common Stock or cash must not
exceed either limitation.
With respect to grants, the value of which is not based on the fair market
value of RSFC Common Stock, no individual may receive during any calendar year
cash or shares of RSFC Common Stock with a fair market value at date of
settlement that, in the aggregate, exceeds $1,000,000.
OPTIONS. The Committee fixes the option price per share at the date of
grant. The option price of any Option granted under the Plan may be equal to or
greater than the fair market value of the underlying shares of RSFC Common Stock
on the date of grant, except that the option price of an ISO granted to an
employee who owns more than 10% of the total combined voting power of all
classes of stock of RSFC, or any parent or subsidiary of RSFC, may not be less
than 110% of the fair market value of the underlying shares of RSFC Common Stock
on the date of grant. The measure of fair market value of a share of RSFC Common
Stock on a particular date is the closing sale price of a share of RSFC Common
Stock as reported on the Nasdaq National Market on that date, or if there is not
such a sale on that date, then on the last previous date on which such a sale
was reported.
The Committee determines the term of each option; provided, however, that
the exercise period may not exceed ten years from the date of grant, and the
exercise period of an ISO granted to an employee who owns more than 10% of the
total combined voting power of all classes of stock of RSFC, or any parent or
subsidiary of RSFC, may not exceed five years from the date of grant. To the
extent that the aggregate fair market value of shares of RSFC Common Stock,
determined on the date of grant, with respect to which ISOs become exercisable
for the first time by a Grantee during any calendar year exceeds $100,000, such
ISOs will be treated as NQSOs.
The exercisability of stock options will be as determined by the Committee,
in its sole discretion, and specified in the Grant Instrument. The Committee, in
its sole discretion, may accelerate the exercisability of any Option at any time
for any reason. A Grantee may exercise an Option by delivering notice of
exercise to the Committee with accompanying payment of the option price.
A Grantee may pay the option price (i) in cash, (ii) with the approval of
the Committee, by delivering shares of RSFC Common Stock owned by the Grantee
(including RSFC Common Stock acquired in connection with the exercise of a stock
option, subject to such restrictions as the Committee deems appropriate) and
having a fair market value on the date of exercise equal to the option price, or
(iii) by such other method as the Committee may approve, including attestation
(on a form prescribed by the Committee) to ownership of shares of RSFC Common
Stock having a fair market value equal to the exercise price or payment through
a designated broker. In addition, the Committee may authorize loans by RSFC to
Grantees in connection with the exercise of an Option, upon such terms and
conditions that the Committee, in its sole discretion, deems appropriate. The
Grantee must pay the option price and the amount of any withholding tax due at
the time of exercise. Shares of the RSFC Common Stock will not be issued upon
exercise of an Option until the option price is fully paid and any required
withholding is made.
If a Grantee ceases to be an employee of RSFC or its subsidiaries for any
reason other than disability, death, retirement, or termination by RSFC (or
ceases to be a member of the RSFC Board), the Grantee's Option will terminate
71
<PAGE>
at the close of business on the Grantee's last day of employment or service as a
director. If a Grantee ceases to be an employee of RSFC because the Grantee is
disabled (within the meaning of section 22(e)(3) of the Code) or the Grantee
dies or retires, any Option that is otherwise exercisable by the Grantee, will
terminate unless exercised within one year after the date on which the Grantee
ceases to be an employee or a director. If a Grantee ceases to be an employee of
RSFC because the Grantee's employment is terminated by RSFC, any Option that is
otherwise exercisable by the Grantee shall terminate unless exercised within 90
days after the date on which the Grantee ceases to be an employee. In all cases
described above, such Options will terminate within any shorter period of time
as may be specified by the Committee, but in any event no later than the date of
expiration of the Option term. Any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by RSFC (or ceases to be a director) shall terminate as of such date.
RESTRICTED STOCK. The Committee may make grants of Restricted Stock. The
Committee, in its sole discretion, may determine that RSFC not issue any
certificates for shares subject to a Restricted Stock Grant or that RSFC retain
possession of any certificates for shares issued pursuant to a Restricted Stock
Grant, until all restrictions have lapsed. Shares may be issued for
consideration or for no consideration, as the Committee determines. The number
of shares of RSFC Common Stock granted to each Grantee shall be determined by
the Committee. Grants of Restricted Stock will be made subject to such
restrictions and conditions as the Committee may determine in its sole
discretion. The Grant Instrument may provide for a period during which the grant
will remain subject to certain restrictions, including restrictions on
transferability (the "Restriction Period"). During the Restriction Period the
Grantee will have the right to receive any dividends or other distributions paid
thereon, subject to any restrictions deemed appropriate by the Committee. Unless
the Committee otherwise determines, during the Restriction Period a Grantee will
not have the right to vote the shares subject to the Restricted Stock Grant. The
Grantee may not sell, assign, transfer, pledge or otherwise dispose of such
shares except by will or the laws of descent and distribution. If the Grantee
ceases to be employed by RSFC during the Restriction Period (or ceases to be a
member of the RSFC Board) or if other specified conditions are not met, the
Restricted Stock Grant will terminate with respect to all shares as to which the
restrictions have not lapsed and those shares must be returned to RSFC.
STOCK APPRECIATION RIGHTS. The Committee may grant SARs separately or in
tandem with any Option. An SAR entitles the Grantee, upon exercise, to receive
the amount by which the fair market value of RSFC Common Stock on the date of
exercise exceeds the exercise price established by the Committee for the SAR.
Such appreciation may be paid in cash, in shares of RSFC Common Stock or a
combination of the two, as determined by the Committee. The exercise price of an
SAR will be the exercise price of the related Option or, if none, the fair
market value of a share of RSFC Common Stock on the date of grant of the SAR,
unless the Committee determines otherwise. When a Grantee exercises an SAR, the
related Option, if any, will terminate to the extent of an equal number of
shares of RSFC Common Stock. Similarly, upon exercise of the related Option, if
any, the SARs relating to RSFC Common Stock covered by such exercise will
terminate.
PERFORMANCE UNIT AND PERFORMANCE SHARES. The Committee may grant
Performance Units or Performance Shares, which will represent the right of the
Grantee to receive an amount based on the value of the Performance Units/Shares
if certain performance goals are met. A Performance Unit will have a value based
on such measurements or criteria as the Committee determines. A Performance
Share will have a value equal to the fair market value of a share of RSFC Common
Stock. Such awards will be contingent upon the attainment of such performance
goals over a period to be determined by the Committee (the "Performance
Period"). The performance goals to be achieved during a Performance Period and
the measure of whether and to what degree such goals have been attained will
also be determined by the Committee. If the Grantee ceases to be employed by
RSFC during the Performance Period or if other specified conditions are not met,
the Performance Unit/Share Grant will be forfeited at the close of business on
the Grantee's last day of employment. The Committee may, however, provide for
complete or partial exceptions to this requirement as it deems appropriate. If
the Grantee ceases to be employed by RSFC after the expiration of a Performance
Period but prior to payment, payment will be made to the Grantee or the
successor grantee, if applicable. Non-employee Directors are not eligible to
receive Performance Units or Performance Shares.
72
<PAGE>
PHANTOM STOCK. The Committee may grant Phantom Stock to a Grantee in such
amounts and upon such terms, and at any time and from time to time, as
determined by the Committee. The initial value of the Phantom Stock will be
determined by the Committee at the time of grant and may be greater than, equal
to or less than the fair market value of a share of RSFC Common Stock. The
Committee may grant dividend equivalents in connection with Phantom Stock
granted under the Plan. Such dividends may be paid currently or accrued as
contingent cash obligations and may be payable in cash or shares of RSFC Common
Stock, upon such terms as the Committee may establish, including the achievement
of specific performance goals.
The Committee will determine whether the Phantom Stock will be paid in the
form of cash, shares of RSFC Common Stock or a combination of the two. Cash
payments will be in an amount equal to the fair market value on the payment date
of the number of shares of RSFC Common Stock equal to the number of shares of
Phantom Stock with respect to which payment is made. The number of shares of
RSFC Common Stock distributed in settlement of a Phantom Stock Grant will equal
the number of shares of Phantom Stock with respect to which settlement is made.
Payment will be made in accordance with the terms and at such times as
determined by the Committee at the time of grant. If the Grantee ceases to be
employed by RSFC (or a member of the RSFC Board) prior to becoming vested or
otherwise entitled to payment, the Grantee's Phantom Stock shall be forfeited at
the close of business on the Grantee's last day of employment or service as a
director. The Committee may, however, provide for complete or partial exceptions
to this requirement as it deems appropriate.
DIVIDEND EQUIVALENTS. The Committee may grant Dividend Equivalents to a
Grantee in such number and upon such other terms, including in either case the
achievement of specific performance goals, and at any time and from time to
time, as may be determined by the Committee. Each Dividend Equivalent will
represent the right to receive an amount in cash, or shares of RSFC Common Stock
having a fair market value, equal to the amount of dividends paid on one share
of RSFC Common Stock during such period as may be established by the Committee.
Dividend Equivalents may be paid currently or accrued as contingent cash
obligations, upon such terms as the Committee may establish. The Committee will
determine whether Dividend Equivalents will be paid in the form of cash, shares
of RSFC Common Stock or a combination of the two. The number of any shares of
RSFC Common Stock payable in satisfaction of Dividend Equivalents will be
determined by dividing the amount credited to the Grantee with respect to such
Dividend Equivalents by the fair market value of a share of RSFC Common Stock on
the day instructions are given to RSFC's Chief Financial Officer or transfer
agent to issue or purchase such shares. Payment shall be made at such times as
determined by the Committee at the time of grant. If the Grantee ceases to be
employed by RSFC (or ceases to be a member of the RSFC Board) prior to becoming
entitled to payment, the Grantee's Dividend Equivalents shall be forfeited at
the close of business on the Grantee's last day of employment or service as a
director. The Committee may, however, provide for complete or partial exceptions
to this requirement as it deems appropriate.
RESTRICTIONS ON TRANSFERABILITY OF GRANTS. No grants under the Plan may be
transferred, except by will or the laws of descent and distribution. However, if
permitted by the Committee, grants other than ISOs may be transferred pursuant
to a domestic relations order, within the meaning of the Code or of Title I of
the Employee Retirement Income Security Act of 1974, as amended. Notwithstanding
the foregoing, the Committee may provide in a Grant Instrument that a Grantee
may transfer NQSOs to family members or other persons or entities according to
such terms as the Committee may determine; provided that the Grantee receives no
consideration for the transfer of the NQSO and the transferred NQSO continues to
be subject to the same terms and conditions as were applicable to the NQSO
immediately before the transfer.
AMENDMENT, TERM AND TERMINATION OF THE PLAN. The Committee may amend or
terminate the Plan at any time; provided, however, that the Committee may not
amend the Plan without shareholder approval if such approval is required by
Section 162(m) of the Code or the rules of any stock exchange on which the RSFC
Common Stock is listed. The Plan became effective on June 27, 1997 and will
terminate on June 26, 2007, unless terminated earlier by the Committee or
extended by the Committee with approval of the shareholders. No award may be
made under the Plan after its termination, but awards made prior thereto may
extend beyond the date of termination.
73
<PAGE>
ADJUSTMENT PROVISIONS. If there is any change in the number or kind of
shares of RSFC Common Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split, or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which RSFC is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding RSFC Common Stock as a class without RSFC's receipt of
consideration, or if the value of outstanding shares of RSFC Common Stock is
substantially reduced as a result of a spinoff or RSFC's payment of an
extraordinary dividend or distribution, the maximum number of shares of RSFC
Common Stock available for grants, the maximum number of shares of RSFC Common
Stock that any individual participating in the Plan may be granted in any year,
the number of shares covered by outstanding grants, the kind of shares issued
under the Plan, and the price per share or the applicable market value of such
grants may be appropriately adjusted by the Committee to reflect any increase or
decrease in the number of, or change in the kind or value of, issued shares of
RSFC Common Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under such grants; provided, however, that any
fractional shares resulting from such adjustment will be eliminated. If and to
the extent that any such change in the number or kind of shares of RSFC Common
Stock outstanding is effected solely by application of a mathematical formula
(E.G., a 2-for-1 stock split), the adjustment described above will be automatic,
without action by the Committee.
SECTION 162(M). Under Section 162(m) of the Code, RSFC may be precluded
from claiming a federal income tax deduction for total remuneration in excess of
$1,000,000 paid to the chief executive officer or to any of the other four most
highly compensated officers in any one year. An exception exists, however, for
"performance-based compensation," including amounts received upon the exercise
of stock options (the exercise price for which is at or above the fair market
value of the underlying shares at the date of grant) or stock appreciation
rights, if such options or stock appreciation rights are granted pursuant to a
plan approved by shareholders that meets certain requirements. The Plan, when
approved by shareholders, is intended to make grants of stock options and stock
appreciation rights thereunder meet the requirements of "performance-based
compensation."
"Performance-based compensation" also includes remuneration paid upon the
attainment of performance goals if specified requirements are met. Section
162(m) of the Code requires that a compensation committee consisting of two or
more "outside directors" establish performance goals that must be met before
such remuneration may be awarded. The committee also must certify that the
performance goals have actually been met before payment of the remuneration.
Finally, the business criteria on which performance goals may be based must be
disclosed to and approved by the shareholders.
The Plan provides that any grant to a Grantee who is a "covered employee"
within the meaning of Section 162(m), the exercisability or settlement of which
is subject to the achievement of performance goals, will qualify as "qualified
performance-based compensation" within the meaning of Section 162(m) of the Code
and the regulations thereunder. The Committee will specify the performance goals
in writing, prior to (or within 90 days after commencement of ) the applicable
performance period.
FEDERAL INCOME TAX CONSEQUENCES. There are no federal income tax
consequences to Grantees or to RSFC upon the grant of an NQSO under the Plan.
Upon the exercise of NQSOs, a Grantee will recognize ordinary compensation
income in an amount equal to the excess of the fair market value of the shares
of RSFC Common Stock at the time of exercise over the exercise price of the
NQSO, and RSFC generally will be entitled to a corresponding federal income tax
deduction. Upon the sale of shares of RSFC Common Stock acquired by exercise of
an NQSO, a Grantee will have a capital gain or loss (long-term or short-term
depending upon the length of time the shares of RSFC Common Stock were held) in
an amount equal to the difference between the amount realized upon the sale and
the Grantee's adjusted tax basis in the shares of RSFC Common Stock (the
exercise price plus the amount of ordinary income recognized by the Grantee at
the time of exercise of the NQSO).
A Grantee of an ISO will not recognize taxable income upon either the grant
or exercise of the ISO. A Grantee who disposes of the shares of RSFC Common
Stock acquired upon exercise of an ISO after two years from the date the ISO was
granted and after one year from the date such shares were transferred to him
will recognize long-term capital gain
74
<PAGE>
or loss in the amount of the difference between the amount realized on the sale
and the option price (or the Grantee's other tax basis in the shares), and RSFC
will not be entitled to any tax deduction by reason of the grant or exercise of
the ISO, or the Grantee's disposition of the shares. As a general rule, if a
Grantee disposes of the shares of RSFC Common Stock acquired upon exercise of an
ISO before satisfying both holding period requirements (a "disqualifying
disposition"), his or her gain recognized on such a disposition will be taxed as
ordinary income to the extent of the difference between the fair market value of
such shares on the date of exercise and the option price, and RSFC will be
entitled to a deduction in that amount. The gain, if any, in excess of the
amount recognized as ordinary income on such a disqualifying disposition will be
long-term or short-term capital gain, depending upon the length of time the
Grantee held his or her shares of RSFC Common Stock prior to the disposition.
A Grantee normally will not recognize taxable income upon receiving a
Restricted Stock Grant, and RSFC will not be entitled to a deduction, until such
RSFC Common Stock is transferable by the Grantee or is no longer subject to a
substantial risk of forfeiture for federal income tax purposes, whichever occurs
earlier. When the RSFC Common Stock either is transferable or is no longer
subject to a substantial risk of forfeiture, the Grantee will recognize ordinary
compensation income in an amount equal to the fair market value of the RSFC
Common Stock subject to the Restricted Stock Grant (less any amounts paid for
such shares) at that time, and RSFC will be entitled to a deduction in the same
amount. A Grantee may, however, elect to recognize ordinary compensation income
in the year the Restricted Stock Grant is awarded in an amount equal to the fair
market value of the RSFC Common Stock (less any amounts paid for such shares) at
that time, determined without regard to the restrictions. In such event, RSFC
will be entitled to a deduction in the same year. Any gain or loss recognized by
the Grantee upon subsequent disposition of the RSFC Common Stock will be capital
gain or loss. If, after making the election, any RSFC Common Stock subject to a
Restricted Stock Grant is forfeited, or if the market value declines during the
Restriction Period, the Grantee is not entitled to any tax deduction or tax
refund.
A Grantee will not recognize any income upon the grant of an SAR. Upon the
exercise of an SAR, a Grantee will recognize ordinary compensation income in an
amount equal to the difference between the exercise price of shares and the fair
market value of the shares on the date of exercise, and RSFC will be entitled to
a corresponding deduction.
A Grantee of Performance Units, Performance Shares or Phantom Stock will
not have taxable income at the time of the grant, and RSFC will not be entitled
to a deduction at such time. A Grantee will have ordinary income at the time the
grant is paid, in the amount of such payment, and RSFC will have a corresponding
deduction.
A Grantee of Dividend Equivalents will recognize ordinary compensation
income when paid, in the amount of such payment, and RSFC will have a
corresponding deduction.
Local and state tax authorities may also tax incentive compensation awarded
under the Plan.
TAX WITHHOLDING. RSFC will have the right to deduct from all grants paid in
cash, or from other wages paid to the Grantee, any federal, state or local taxes
required by law to be withheld with respect to such grants. In the case of
Options and other grants paid in RSFC Common Stock, RSFC may require the Grantee
or other person receiving such shares to pay to RSFC the amount of any such
taxes that RSFC is required to withhold with respect to such grants, or RSFC may
deduct from other wages paid by RSFC the amount of any withholding taxes due
with respect to such grants. If the Committee so permits, a Grantee may elect to
satisfy RSFC's income tax withholding obligation with respect to an Option, SAR,
Restricted Stock, Performance Units, Performance Shares, Phantom Stock or
Dividend Equivalents, any of which is paid in RSFC Common Stock, by having
shares withheld having a fair market value up to an amount that does not exceed
the Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The election must be in a form and manner prescribed by
the Committee and shall be subject to the prior approval of the Committee.
NEW PLAN BENEFITS. Because grants are made from time to time by the
Committee to those persons whom the Committee determines in its discretion
should receive grants, the benefits and amounts that may be received in the
future by persons eligible to participate in the Plan are not presently
determinable.
75
<PAGE>
ANNEX A
================================================================================
AGREEMENT AND PLAN OF MERGER
Between
REPUBLIC SECURITY FINANCIAL CORPORATION
and
FIRST PALM BEACH BANCORP, INC.
Dated as of May 27, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE MERGER
1.1 The Merger............................................................2
1.2 Effective Time........................................................2
1.3 Effects of the Merger.................................................2
1.4 Conversion of Company Common Stock....................................2
1.5 Stock Options.........................................................4
1.6 Parent Common Stock...................................................5
1.7 Articles of Incorporation.............................................5
1.8 By-Laws...............................................................5
1.9 Directors and Officers................................................5
1.10 Tax Consequences; Accounting Treatment................................5
1.11 Bank Plan of Merger and Merger Agreement..............................5
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available.......................................6
2.2 Exchange of Shares....................................................6
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules..................................................9
3.2 Standards.............................................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization...............................................10
4.2 Capitalization.......................................................11
4.3 Authority; No Violation..............................................13
4.4 Consents and Approvals...............................................14
4.5 Reports..............................................................14
4.6 Financial Statements.................................................15
4.7 Broker's Fees........................................................16
4.8 Absence of Certain Changes or Events.................................16
4.9 Legal Proceedings....................................................16
4.10 Taxes................................................................17
4.11 Employees............................................................17
4.12 SEC Reports..........................................................19
4.13 Company Information..................................................19
4.14 Compliance with Applicable Law.......................................19
4.15 Certain Contracts....................................................19
4.16 Agreements with Regulatory Agencies..................................20
4.17 Environmental Matters................................................21
A-1
<PAGE>
PAGE
----
4.18 Opinion..............................................................22
4.19 Approvals............................................................22
4.20 Loan Portfolio.......................................................22
4.21 Property.............................................................23
4.22 Accounting for the Merger; Reorganization............................23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
5.1 Corporate Organization...............................................24
5.2 Capitalization.......................................................25
5.3 Authority; No Violation..............................................26
5.4 Consents and Approvals...............................................27
5.5 Reports..............................................................27
5.6 Financial Statements.................................................28
5.7 Broker's Fees........................................................29
5.8 Absence of Certain Changes or Events.................................29
5.9 Legal Proceedings....................................................29
5.10 Taxes................................................................29
5.11 Employees............................................................30
5.12 SEC Reports..........................................................31
5.13 Parent Information...................................................31
5.14 Compliance with Applicable Law.......................................31
5.15 Ownership of Company Common Stock; Affiliates and Associates.........31
5.16 Agreements with Regulatory Agencies..................................32
5.17 Environmental Matters................................................32
5.18 Opinion..............................................................33
5.19 Approvals............................................................33
5.20 Loan Portfolio.......................................................33
5.21 Property.............................................................34
5.22 Accounting for the Merger; Reorganization............................35
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company.............................................35
6.2 Covenants of Parent..................................................38
6.3 Conduct of Parent's Business.........................................39
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters...................................................39
7.2 Access to Information................................................40
7.3 Stockholder Meetings.................................................41
7.4 Legal Conditions to Merger...........................................42
7.5 Affiliates...........................................................42
7.6 Stock Exchange Listing...............................................42
7.7 Employee Benefit Plans; Existing Agreements..........................42
A-2
<PAGE>
PAGE
----
7.8 Indemnification......................................................44
7.9 Additional Agreements................................................45
7.10 Coordination of Dividends............................................46
7.11 Assumption of Indemnification Obligations............................46
7.12 Parent Rights Agreement..............................................46
7.13 Amendment of Company Option Plans....................................46
7.14 Stock Option Agreement...............................................47
7.15 Directorships........................................................47
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger...........47
8.2 Conditions to Obligations of Parent..................................48
8.3 Conditions to Obligations of the Company.............................50
A-3
<PAGE>
PAGE
----
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination..........................................................51
9.2 Effect of Termination................................................56
9.3 Amendment............................................................56
9.4 Extension; Waiver....................................................56
ARTICLE X
GENERAL PROVISIONS
10.1 Closing..............................................................56
10.2 Nonsurvival of Representations, Warranties and Agreements............57
10.3 Expenses.............................................................57
10.4 Notices..............................................................57
10.5 Interpretation.......................................................58
10.6 Counterparts.........................................................58
10.7 Entire Agreement.....................................................59
10.8 Governing Law........................................................59
10.9 Enforcement of Agreement.............................................59
10.10 Severability.........................................................59
10.11 Publicity............................................................59
10.12 Assignment; No Third Party Beneficiaries.............................59
A-4
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 27, 1998,
between Republic Security Financial Corporation, a Florida corporation
("Parent"), and First Palm Beach Bancorp, Inc., a Delaware corporation (the
"Company"). (Parent and the Company are sometimes collectively referred to
herein as the "Constituent Corporations".)
WHEREAS, the Boards of Directors of Parent and the Company
have determined that it is in the best interests of their respective companies
and their stockholders to consummate the business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into Parent and the
merger (the "Bank Merger") of First Bank of Florida into Republic Security Bank;
and
WHEREAS, as soon as practicable after the execution and
delivery of this Agreement, Republic Security Bank, a Florida chartered stock
commercial bank and a wholly owned subsidiary of Parent ("Parent Bank", and
sometimes referred to herein as the "Surviving Bank"), and First Bank of
Florida, a federally chartered stock savings bank and a wholly owned subsidiary
of the Company (the "Company Bank"), will enter into a Subsidiary Agreement and
Plan of Merger (the "Plan of Merger") providing for the merger (the "Bank
Merger") of the Company Bank with and into Parent Bank, and it is intended that
the Subsidiary Merger be consummated immediately following the consummation of
the Merger; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, 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
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
in accordance with the Delaware General Corporation Law (the "DGCL") and the
Florida Business Corporation Act ("FBCA"), at the Effective Time (as defined in
Section 1.2 hereof), the Company shall merge with and into Parent. Parent shall
be the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger, and shall continue its corporate existence under
the laws of the State of Florida. The name of the Surviving Corporation shall
continue to be Republic Security Financial Corporation. Upon consummation of the
Merger, the separate corporate existence of the Company shall terminate.
1.2 EFFECTIVE TIME. The Merger shall become effective on 10:00 a.m. on
the Closing Date as set forth in the certificate of merger (the "Certificate of
Merger") which shall be filed with the Secretary of State of the State of
Delaware (the "Delaware Secretary") and Articles of Merger which will be filed
with the Florida Secretary of State (the "Florida Secretary") on the Closing
Date (as defined in Section 10.1 hereof). The term "Effective Time" shall be the
date and time when the Merger becomes effective, as set forth in the Certificate
of Merger.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL and as
provided in the FBCA.
1.4 CONVERSION OF COMPANY COMMON STOCK. (a) At the Effective Time,
subject to Section 2.2(e) and Section 9.1(g) hereof, each share of the common
stock, par value $0.01 per share, of the Company (the "Company
A-5
<PAGE>
Common Stock") issued and outstanding immediately prior to the Effective Time
(other than (i) shares of Company Common Stock held in the Company's treasury,
(ii) shares of Company Common Stock held directly or indirectly by Parent or the
Company or any of their respective Subsidiaries (as defined below) (except for
Trust Account Shares and DPC Shares, as such terms are defined in Section 1.4(b)
hereof), and (iii) unallocated shares of Company Common Stock held in the
Company Bank's Recognition and Retention Plan for Officers and Employees and the
Company Bank's Recognition and Retention Plan for Outside Directors
(collectively, the "Unallocated RRP Shares")), together with the rights (the
"Company Rights") attached thereto issued pursuant to the Rights Agreement,
dated as of January 23, 1995, between the Company and Mellon Bank, N.A., as
Rights Agent (the "Company Rights Agreement"), shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be converted
into and exchangeable for 4.194 shares (the "Exchange Ratio") of the common
stock, par value $.01 per share, of Parent ("Parent Common Stock") (together
with the number of Parent Rights (as defined in Section 5.2 hereof) associated
therewith). All of the shares of Company Common Stock converted into Parent
Common Stock pursuant to this Article I shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each certificate (each
a "Certificate") previously representing any such shares of Company Common Stock
shall thereafter only represent the right to receive (i) the number of whole
shares of Parent Common Stock and (ii) the cash in lieu of fractional shares
into which the shares of Company Common Stock represented by such Certificate
have been converted pursuant to this Section 1.4(a) and Section 2.2(e) hereof.
Certificates previously representing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Parent Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If, between the date of this Agreement and the Effective
Time, the shares of Parent Common Stock shall be changed into a different number
or class of shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within said period, the Exchange
Ratio shall be adjusted accordingly.
(b) At the Effective Time, (i) all shares of Company Common
Stock that are owned by the Company as treasury stock, (ii) all shares of
Company Common Stock that are owned directly or indirectly by Parent or the
Company or any of their respective Subsidiaries (other than shares of Company
Common Stock (x) held directly or indirectly in trust accounts, managed accounts
and the like or otherwise held in a fiduciary capacity for the benefit of third
parties (any such shares, and shares of Parent Common Stock which are similarly
held, whether held directly or indirectly by Parent or the Company, as the case
may be, being referred to herein as "Trust Account Shares") and (y) held by
Parent or the Company or any of their respective Subsidiaries in respect of a
debt previously contracted (any such shares of Company Common Stock, and shares
of Parent Common Stock which are similarly held, whether held directly or
indirectly by Parent or the Company, being referred to herein as "DPC Shares"))
and (iii) all Unallocated RRP Shares shall be cancelled and shall cease to exist
and no stock of Parent or other consideration shall be delivered in exchange
therefor. All shares of Parent Common Stock that are owned by the Company or any
of its Subsidiaries (other than Trust Account Shares and DPC Shares) shall
become treasury stock of Parent.
1.5 STOCK OPTIONS. (a) At the Effective Time, each option granted by
the Company to purchase shares of Company Common Stock (each a "Company Option")
which is outstanding and unexercised immediately prior thereto shall cease to
represent a right to acquire shares of Company Common Stock and shall be
converted automatically into an option to purchase shares of Parent Common Stock
in an amount and at an exercise price determined as provided below (and
otherwise subject to the terms of the Company's 1993 Incentive Stock Option Plan
and the Company's 1993 Stock Option Plan for Outside Directors (collectively,
the "Company Option Plans"), the agreements evidencing grants thereunder and any
other agreements between the Company and an optionee regarding Company Options):
(1) the number of shares of Parent Common Stock to be subject
to the new option shall be equal to the product of the number of shares
of Company Common Stock subject to the original option and the Exchange
Ratio, provided that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded down to the nearest
whole share; and
A-6
<PAGE>
(2) the exercise price per share of Parent Common Stock under
the new option shall be equal to the exercise price per share of
Company Common Stock under the original option divided by the Exchange
Ratio, provided that such exercise price shall be rounded up to the
nearest cent.
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code and, to the extent it is not
so consistent, such Section 424(a) shall override anything to the contrary
contained herein. The duration and other terms of the new option shall be the
same as the original option except that all references to the Company shall be
deemed to be references to Parent.
(b) Prior to the Effective Time, Parent shall reserve for
issuance the number of shares of Parent Common Stock necessary to satisfy
Parent's obligations under this Section 1.5. Promptly after the Effective Time
(but in no event later than five business days thereafter), Parent shall file
with the Securities and Exchange Commission (the "SEC") a registration statement
on an appropriate form under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Parent Common Stock subject to
options to acquire Parent Common Stock issued pursuant to Section 1.5(a) hereof,
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.
1.6 PARENT COMMON STOCK. Except for shares of Parent Common Stock owned
by the Company or any of its Subsidiaries (other than Trust Account Shares and
DPC Shares), which shall be converted into treasury stock of Parent as
contemplated by Section 1.4 hereof, the shares of Parent 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.
1.7 ARTICLES OF INCORPORATION. At the Effective Time, the Articles of
Incorporation of Parent, as in effect at the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation.
1.8 BY-LAWS. At the Effective Time, the By-Laws of Parent, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.9 DIRECTORS AND OFFICERS. Except as provided in Section 7.15 hereof,
the directors and officers of Parent immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and By-Laws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
1.10 TAX CONSEQUENCES; ACCOUNTING TREATMENT. It is intended that the
Merger shall (i) constitute a reorganization within the meaning of Section
368(a) of the Code and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code , and (ii) be
accounted for as a "pooling-of-interests" under GAAP (as defined herein).
1.11 BANK PLAN OF MERGER AND MERGER AGREEMENT. As promptly as
practicable following the execution of this Agreement, each of Parent and the
Company shall cause Parent Bank and the Company Bank, respectively, to enter
into the Plan of Merger in accordance with the requirements of Section 658.42,
Florida Statutes, and in form and substance usually acceptable to both Parent
and the Company, and to submit the Plan of Merger to the Florida Department of
Banking and Finance (the "Department") for approval. Subject to and in
accordance with the terms and conditions of this Agreement, at the Closing, each
of Parent and the Company shall cause Parent Bank and the Company Bank to again
execute the Plan of Merger, if it differs in any respect from the counterpart
thereof theretofore filed with the Department, and to execute certified copies
of the resolutions approving the Plan of Merger by the shareholders of each
bank. The Plan of Merger and certified resolutions shall be delivered for filing
with the Department. The Plan of Merger shall provide that the Company Bank
shall be merged with and into Parent Bank (which shall be the resulting bank in
the Bank Merger) at 3:00 p.m. on the afternoon of the Effective Date. Upon
effectiveness of the Bank Merger,
A-7
<PAGE>
all of the issued and outstanding shares of the common stock of the Company Bank
shall be extinguished and cancelled, and Parent shall be issued a number of
shares of the common stock of Parent Bank in such amount as agreed on or before
such date by Parent and Parent Bank. The shares of common stock of Parent Bank
issued and outstanding immediately prior to effectiveness of the Bank Merger
shall remain issued and outstanding and unaffected by the Bank Merger.
ARTICLE II
EXCHANGE OF SHARES
2.1 PARENT TO MAKE SHARES AVAILABLE. At or prior to the Effective Time,
Parent shall deposit, or shall cause to be deposited, with a bank or trust
company (which may be a Subsidiary of Parent) (the "Exchange Agent") selected by
Parent and reasonably satisfactory to the Company, for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Parent Common Stock and the cash in lieu
of fractional shares (such cash and certificates for shares of Parent Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding shares of
Company Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the Effective
Time, and in no event more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of Parent Common Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. The Company
shall have the right to review both the letter of transmittal and the
instructions prior to the Effective Time and provide reasonable comments
thereon. Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Parent Common Stock to
which such holder of Company Common Stock shall have become entitled pursuant to
the provisions of Article I hereof and (y) a check representing the amount of
cash in lieu of fractional shares, if any, which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions of
this Article II, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to holders of
Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock and payable to the holders of
record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a 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 Parent Common Stock
represented by such Certificate.
(c) If any certificate representing shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the 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 Parent Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
A-8
<PAGE>
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common Stock
which were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Parent Common Stock as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent 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 stockholder of
Parent. In lieu of the issuance of any such fractional share, Parent shall pay
to each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of Parent Common Stock an amount in cash determined
by multiplying (i) the average of the last reported sale prices per share of
Parent Common Stock on the Nasdaq Stock Market's National Market (the
"NASDAQ/NMS") as reported by THE WALL STREET JOURNAL for the ten trading days
immediately preceding the date on which the Effective Time shall occur by (ii)
the fraction of a share of Parent Common Stock which such holder would otherwise
be entitled to receive pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of the Company for six months after the Effective Time shall be
paid to Parent. Any stockholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their shares of Parent Common Stock, cash in lieu of fractional shares and
unpaid dividends and distributions on the Parent Common Stock deliverable in
respect of each share of Company Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Parent, the Company, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Company 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 Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such amount as Parent may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 DISCLOSURE SCHEDULES. Prior to the execution and delivery of this
Agreement, the Company has delivered to Parent, and Parent has delivered to the
Company, a schedule (in the case of the Company, the "Company Disclosure
Schedule," and in the case of Parent, the "Parent 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 the
Company, or Article V, in the case of Parent, or to one or more of such party's
covenants contained in Article VI; 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 (as defined herein) with respect to either the Company or Parent,
respectively.
A-9
<PAGE>
3.2 STANDARDS. (a) No representation or warranty of the Company
contained in Article IV or of Parent 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 the Company, or Article V, in the case of Parent, has had a
Material Adverse Effect with respect to the Company or Parent, respectively.
(b) As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Parent or the Company, as the case may be, a
material adverse effect on (i) the business, results of operations or financial
condition of such party and its Subsidiaries taken as a whole, other than any
such effect attributable to or resulting from (w) any change in banking or
similar laws, rules or regulations of general applicability or interpretations
thereof by courts or governmental authorities, (x) any change in GAAP (as
defined herein) or regulatory accounting principles applicable to banks, thrifts
or their holding companies generally, (y) any action or omission of the Company
or Parent or any Subsidiary of either of them taken with the prior written
consent of the other party hereto, or (z) any expenses incurred by such party in
connection with this Agreement or the transactions contemplated hereby or (ii)
the ability of such party and its Subsidiaries to consummate the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, and except as disclosed in the Company
Disclosure Schedule, the Company hereby represents and warrants to Parent as
follows:
4.1 CORPORATE ORGANIZATION. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company 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 Company is duly registered as a unitary savings and
loan holding company under the Home Owners' Loan Act, as amended (the "HOLA").
The Certificate of Incorporation and By-laws of the Company, copies of which
have previously been made available to Parent, are true and correct copies of
such documents as in effect as of the date of this Agreement. As used in this
Agreement, the word "Subsidiary" when used with respect to any party means any
corporation, partnership or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes.
(b) The Company Bank is a stock savings bank duly organized,
validly existing and in good standing under the laws of the United States of
America. The deposit accounts of the Company Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") through the Savings Association
Insurance Fund to the fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been paid when due.
Each of the Company's other Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company's Subsidiaries 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 the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
Except as set forth on Section 4.1(b) of the Company Disclosure Schedule, the
certificate of incorporation, by-laws and similar governing documents of each
Subsidiary of the Company, copies of which have previously been made available
to Parent, are true and correct copies of such documents as in effect as of the
date of this Agreement.
A-10
<PAGE>
(c) The minute books of the Company and each of its
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1995 of their respective
stockholders and Boards of Directors (including committees of their respective
Boards of Directors).
4.2 CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 10,000,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, par value $.01 per share (the "Company Preferred Stock"). As of
May 27, 1998, there were 5,076,996 shares of Company Common Stock outstanding
and 419,379 shares of Company Common Stock held by the Company as treasury
stock. As of May 27, 1998, there were (i) no shares of Company Common Stock
reserved for issuance upon exercise of outstanding stock options or otherwise
except for (x) 435,907 shares of Company Common Stock reserved for issuance
pursuant to the Company Option Plans and described in Section 4.2(a) of the
Company Disclosure Schedule and (y) 1,010,322 shares of Company Common Stock
reserved for issuance upon exercise of the option (the "Option") to be issued to
Parent pursuant to the Stock Option Agreement to be entered into on the date
hereof, between Parent and Company (the "Stock Option Agreement") and (ii) no
shares of Company Preferred Stock issued or outstanding, held in the Company's
treasury or reserved for issuance upon exercise of outstanding stock options or
otherwise, except for 100,000 shares designated as Series A Junior Participating
Preferred Stock reserved for issuance upon exercise of the Company Rights. All
of the issued and outstanding shares of Company 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 referred to above or reflected in Section 4.2(a) of the
Company Disclosure Schedule, and except for the Stock Option Agreement, the
Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Company Common Stock or Company
Preferred Stock or any other equity security of the Company or any securities
representing the right to purchase or otherwise receive any shares of Company
Common Stock or any other equity security of the Company. The names of the
optionees, the date of each option to purchase Company Common Stock granted, the
number of shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised under the
Company Option Plans are set forth in Section 4.2(a) of the Company Disclosure
Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule sets
forth a true and correct list of all of the Subsidiaries of the Company. Except
as set forth in Section 4.2(b) of the Company Disclosure Schedule, the Company
owns, directly or indirectly, all of the issued and outstanding shares of the
capital stock of each of such Subsidiaries, free and clear of all liens,
charges, encumbrances and security interests whatsoever, and all of such shares
are duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof. No Subsidiary of the Company has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary. Assuming compliance by Parent with Section
1.5 hereof, and except as provided in Section 4.2(b) of the Company Disclosure
Schedule, at the Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character by which the Company or any of its Subsidiaries will be bound calling
for the purchase or issuance of any shares of the capital stock of the Company
or any of its Subsidiaries.
4.3 AUTHORITY; NO VIOLATION. (a) The Company 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 the Company. The Board of
Directors of the Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's stockholders for approval at a
meeting of such stockholders and, except for the adoption of this Agreement by
the requisite vote of the Company's stockholders, no other corporate proceedings
on the part of the Company are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company and (assuming due
authorization, execution and delivery by Parent) this Agreement constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as
A-11
<PAGE>
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) Except as set forth in Section 4.3(b) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the terms or provisions
hereof, will (i) violate any provision of the Certificate of Incorporation or
By-Laws of the Company or the certificate of incorporation, by-laws or similar
governing documents of any of its Subsidiaries, 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 the Company 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 the Company 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 the Company 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.
4.4 CONSENTS AND APPROVALS. Except for (a) the filing of applications
and notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the Bank Holding Company Act of 1956,
as amended (the "BHC Act"), the Home Owners' Loan Act (the "HOLA") and the Bank
Merger Act and approval of such applications and notices, (b) the approval of
the Department pursuant to ss.ss. 655.412, 658.41-.45 Florida Statutes (the
"State Banking Approval"), (c) the filing with the SEC of a joint proxy
statement in definitive form relating to the meetings of the Company's
stockholders and Parent's stockholders to be held in connection with this
Agreement and the transactions contemplated hereby (the "Proxy Statement") and
the filing and declaration of effectiveness of the registration statement on
Form S-4 (the "S-4") in which the Proxy Statement will be included as a
prospectus, (d) the approval of this Agreement by the requisite vote of the
stockholders of the Company, (e) the filing of the Certificate of Merger with
the Delaware Secretary pursuant to the DGCL and the filing of the Articles of
Merger with the Florida Secretary, (f) approval for quotation of the Parent
Common Stock to be issued in the Merger on the NASDAQ/NMS, and (g) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the Company
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or with any third
party are necessary in connection with (1) the execution and delivery by the
Company of this Agreement and (2) the consummation by the Company of the Merger
and the other transactions contemplated hereby.
4.5 REPORTS. The Company and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since December
31, 1995 with (i) the OTS, (ii) the FDIC, (iii) the Department (each a "State
Regulator") and (iv) any other self-regulatory organization ("SRO")
(collectively with the Federal Reserve Board, the "Regulatory Agencies"), and
have 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 the Company and its Subsidiaries, and except as set
forth in Section 4.5 of the Company Disclosure Schedule, no Regulatory Agency
has initiated any proceeding or, to the knowledge of the Company, investigation
into the business or operations of the Company or any of its Subsidiaries since
December 31, 1995. There is no unresolved violation, criticism, or exception by
any Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries.
4.6 FINANCIAL STATEMENTS. The Company has previously made available to
Parent copies of (a) the consolidated statements of financial condition of the
Company and its Subsidiaries as of September 30, for the fiscal years 1996 and
1997, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the fiscal years 1995 through 1997,
inclusive, as reported in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997 filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in each case accompanied
by the audit report of Deloitte & Touche LLP, independent public
A-12
<PAGE>
accountants with respect to the Company, and (b) the unaudited consolidated
statements of financial condition of the Company and its Subsidiaries as of
March 31, 1998 and March 31, 1997 and the related unaudited consolidated
statements of operations, cash flows and changes in stockholders' equity for the
six-month periods then ended as reported in the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 1998 filed with the SEC under the
Exchange Act. The September 30, 1997 consolidated statement of financial
condition of the Company (including the related notes, where applicable) fairly
presents the consolidated financial position of the Company and its Subsidiaries
as of the date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present, and
the financial statements to be filed with the SEC after the date hereof will
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial position of the Company and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies, and the financial statements to be filed with the SEC
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 the financial statements to be filed with the SEC after the date
hereof will be, prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements.
4.7 BROKER'S FEES. Neither the Company nor any Subsidiary of the
Company nor any of their respective 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 the Company has engaged, and will pay a fee or commission
to, Keefe, Bruyette & Woods, Inc. ("KBW") in accordance with the terms of a
letter agreement between KBW and the Company, a true and correct copy of which
has been previously made available by the Company to Parent.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as may be set
forth in Section 4.8(a) of the Company Disclosure Schedule, or as disclosed in
any Company Report (as defined in Section 4.12) filed with the SEC prior to the
date of this Agreement, since September 30, 1997, 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 the Company.
(b) Except as set forth in Section 4.8(b) of the Company
Disclosure Schedule or as disclosed in any Company Report filed with the SEC
prior to the date of this Agreement, since September 30, 1997, the Company and
its Subsidiaries have carried on their respective businesses in the ordinary
course consistent with their past practices.
(c) Except as set forth in Section 4.8(c) of the Company
Disclosure Schedule, since March 31, 1998, neither the Company nor any of its
Subsidiaries has (i) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive officer, employee,
or director from the amount thereof in effect as of March 31, 1998 (which
amounts have been previously disclosed to Parent), granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus (except for salary increases and bonus
payments made in the ordinary course of business consistent with past
practices), (ii) suffered any strike, work stoppage, slow-down, or other labor
disturbance, (iii) been a party to a collective bargaining agreement, contract
or other agreement or understanding with a labor union or organization, or (iv)
had any union organizing activities.
4.9 LEGAL PROCEEDINGS. (a) Except as set forth in Section 4.9(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any, and there are no pending or, to the Company's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against the
Company or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement.
A-13
<PAGE>
(b) Except as set forth in Section 4.9(b) of the Company
Disclosure Schedule, there is no injunction, order, judgment, decree, or
regulatory restriction imposed upon the Company, any of its Subsidiaries or the
assets of the Company or any of its Subsidiaries.
4.10 TAXES. (a) Except as set forth in Section 4.10(a) of the Company
Disclosure Schedule, each of the Company and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted without penalty) all
material Tax Returns (as hereinafter defined) required to be filed at or prior
to the Effective Time, and such Tax Returns are true and correct in all material
respects, and (ii) paid in full or made adequate provision in the financial
statements of the Company (in accordance with GAAP) for all material Taxes (as
hereinafter defined) shown to be due on such Tax Returns. Except as set forth in
Section 4.10(a) of the Company Disclosure Schedule, (i) as of the date hereof
neither the Company nor any of its Subsidiaries has 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 the Company and its Subsidiaries, the federal and
state income Tax Returns of the Company and its Subsidiaries have been audited
by the Internal Revenue Service or appropriate state tax authorities or the time
for assessing and collecting income Tax with respect to such taxable period has
closed and such taxable period is not subject to review.
(b) For the purposes of this Agreement, "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. For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other document (including
any related or supporting information) with respect to Taxes.
4.11 EMPLOYEES. (a) Section 4.11(a) of the Company 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 the Employee Retirement Income Security
Act of 1974, as amended ("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 (the "Plans") by the Company, any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), for the benefit of any employee or
former employee of the Company, any Subsidiary or any ERISA Affiliate.
(b) The Company has heretofore made available to Parent 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 actuarial report for
such Plan for each of the last two years, (iii) the most recent determination
letter from the Internal Revenue Service for such Plan and (iv) the most recent
summary plan description and related summaries of material modifications.
(c) Except as set forth in Section 4.11(c) of the Company
Disclosure Schedule: 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; no Plan has an accumulated or waived funding
deficiency within the meaning of section 412 of the Code; neither the Company
nor any ERISA Affiliate has incurred, directly or indirectly, any liability to
or on account of a Plan pursuant to Title IV of ERISA (other than PBGC
premiums); to the knowledge of the Company no proceedings have been instituted
to terminate any Plan that is subject to Title IV of ERISA; no "reportable
event," as such term is defined in section 4043(c) of ERISA, has occurred with
respect to any Plan (other than a reportable event with respect to which the
thirty day notice period has been waived); and no condition exists that presents
a material risk to the Company of incurring a 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
as defined in Section 413 of the Code; and there
A-14
<PAGE>
are no pending, or to the knowledge of the Company, 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.
4.12 SEC REPORTS. The Company has previously made available to Parent a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 1995 by
the Company with the SEC pursuant to the Securities Act or the Exchange Act (the
"Company Reports") and (b) communication mailed by the Company to its
stockholders since December 31, 1995, and no such registration statement,
prospectus, report, schedule, proxy statement or communication 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. The Company has timely filed all Company Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Company Reports complied
with the published rules and regulations of the SEC with respect thereto.
4.13 COMPANY INFORMATION. The information relating to the Company and
its Subsidiaries which is provided to Parent by the Company for inclusion in the
Proxy Statement 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.
4.14 COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, 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 the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries has received notice of any violations of any of the above.
4.15 CERTAIN CONTRACTS. (a) Except as set forth in Section 4.15(a) of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to or bound by any contract (whether written or oral) (i) with
respect to the employment of any directors 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 Parent,
the Company, the Surviving Corporation or any of their respective Subsidiaries
to any director or consultant thereof, (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 of this Agreement that has not been filed or incorporated by reference
in the Company Reports, (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 $250,000 per annum, or
(v) which materially restricts the conduct of any line of business by the
Company or any of its Subsidiaries. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.15(a), whether or not set
forth in Section 4.15(a) of the Company Disclosure Schedule, is referred to
herein as a "Company Contract". The Company has previously delivered or made
available to Parent true and correct copies of each Company Contract.
(b) Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, (i) each Company Contract described in clause (iii) of
Section 4.15(a) is valid and binding and in full force and effect, (ii) the
Company and each of its Subsidiaries has performed all obligations required to
be performed by it to date under each Company Contract described in clause (iii)
of Section 4.15(a), (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 the Company or any of its Subsidiaries under any Company Contract described
in clause (iii) of Section 4.15(a), and (iv) no other party to any Company
Contract described in clause (iii) of Section 4.15(a) is, to the knowledge of
the Company, in default in any respect thereunder.
4.16 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in
Section 4.16 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by,
A-15
<PAGE>
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 4.16 of the Company
Disclosure Schedule, a "Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity 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 the Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.17 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.17 of the
Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries and, to the
knowledge of the Company, each of the Participation Facilities and the Loan
Properties (each as hereinafter defined), are in compliance with all applicable
federal, state and local laws, including common law, regulations and ordinances,
and with all applicable decrees, orders and contractual obligations relating to
pollution or the discharge of, or exposure to, Hazardous Materials (as
hereinafter defined) in the environment or workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending or,
to the knowledge of the Company, threatened, before any Governmental Entity or
other forum in which the Company, any of its Subsidiaries, any Participation
Facility or 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 the Company or any of
its Subsidiaries, any Participation Facility or any Loan Property;
(c) To the knowledge of the Company, during the period of (x)
the Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' 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 the Company, prior to the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
was no release of Hazardous Materials in, on, under or affecting any such
property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this
Section 4.17: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated substances
or materials, (y) "Loan Property" means any property in which the Company or any
of its Subsidiaries holds a security interest, and, where required by the
context, said term means the owner or operator of such property; and (z)
"Participation Facility" means any facility in which the Company or any of its
Subsidiaries participates in the management and, where required by the context,
said term means the owner or operator of such property.
4.18 OPINION. Prior to the execution of this Agreement, the Company 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 Exchange Ratio is fair to
the stockholders of the Company from a financial point of view. Such opinion has
not been amended or rescinded as of the date of this Agreement.
4.19 APPROVALS. As of the date of this Agreement, the Company knows of
no reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
4.20 LOAN PORTFOLIO. (a) Except as set forth in Section 4.20 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any written or oral (i) loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements, commitments,
guarantees and interest-bearing
A-16
<PAGE>
assets) (collectively, "Loans"), other than Loans the unpaid principal balance
of which does not exceed $250,000, under the terms of which the obligor was, as
of April 30, 1998, 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 five percent or greater stockholder of the Company or any of its
Subsidiaries, or to the knowledge of the Company, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. Section 4.20 of the Company Disclosure Schedule sets forth (i) all of
the Loans in original principal amount in excess of $250,000 of the Company or
any of its Subsidiaries that as of April 30, 1998, 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, (ii) by
category of Loan (i.e., commercial, consumer, etc.), all of the other Loans of
the Company and its Subsidiaries that as of April 30, 1998, were classified as
such, together with the aggregate principal amount of and accrued and unpaid
interest on such Loans by category and (iii) each asset of the Company that as
of April 30, 1998, was classified as "Other Real Estate Owned" and the book
value thereof.
(b) Each Loan in original principal amount in excess of
$250,000 (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.
4.21 PROPERTY. Each of the Company and its Subsidiaries 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 statement of financial condition of the Company as of March 31,
1998 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 of this Agreement, (iv) for dispositions and encumbrances of, or 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 the Company or any Subsidiary of the Company, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms and neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any other party thereto, is in default
thereunder.
4.22 ACCOUNTING FOR THE MERGER; REORGANIZATION. The Company has no
reason to believe that the Merger will fail to qualify (i) for
pooling-of-interests treatment under GAAP or (ii) as a reorganization under
Section 368(a) of the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Subject to Article III, Parent hereby represents and warrants
to the Company as follows:
5.1 CORPORATE ORGANIZATION. (a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
Parent 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. Parent is duly registered as a bank holding company
under the BHC Act. The Articles of Incorporation and By-laws of Parent, copies
of which
A-17
<PAGE>
have previously been made available to the Company, are true and correct copies
of such documents as in effect as of the date of this Agreement.
(b) Parent Bank is a bank duly organized, validly existing and
in good standing under the laws of the State of Florida. The deposit accounts of
the Parent Bank are insured by the FDIC through the Bank Insurance Fund and 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. Each of Parent's other Subsidiaries which is a "Significant
Subsidiary" (each a "Significant Subsidiary" and together the "Significant
Subsidiaries") as such term is defined in Regulation S-X promulgated by the SEC
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Significant Subsidiary of Parent 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 by-laws of the Parent Bank, copies of which
have previously been made available to the Company, are true and correct copies
of such documents as in effect as of the date of this Agreement.
(c) The minute books of Parent and each of its Significant
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1995 of their respective
stockholders and Boards of Directors (including committees of their respective
Boards of Directors).
5.2 CAPITALIZATION. (a) As of the date of this Agreement, the
authorized capital stock of Parent consists of 100,000,000 shares of Parent
Common Stock and 10,000,000 shares of preferred stock, par value $0.01 per share
("Parent Preferred Stock"). As of May 27, 1998, there were 24,288,036 shares of
Parent Common Stock and no shares of Parent Preferred Stock issued and
outstanding, and no shares of Parent Common Stock held in Parent's treasury. As
of the date of this Agreement, no shares of Parent Common Stock or Parent
Preferred Stock were reserved for issuance, except that (i) 1,190,017 shares of
Parent Common Stock were reserved for issuance upon the exercise of stock
options and warrants pursuant to the stock option plans listed in Section 5.11
of the Parent Disclosure Schedule (collectively, the "Parent Stock Plans"), (ii)
1,000,000 shares of Parent Series B Preferred Stock were reserved for issuance
upon exercise of the rights (the "Parent Rights") distributed to holders of
Parent Common Stock pursuant to the Rights Agreement, dated as of April 14,
1995, between Parent and IBJ Schroder Bank and Trust Company, as Rights Agent
(the "Parent Rights Agreement") and (iii) 1,040,000 shares of Parent Common
Stock were reserved for issuance upon consummation of the transaction
contemplated by the Agreement and Plan of Merger, dated as of March 26, 1998, by
and between Parent and Unifirst Federal Savings Bank (the "Unifirst Merger
Agreement"). All of the issued and outstanding shares of Parent Common Stock and
Parent Preferred 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. As of the date of this Agreement,
except as referred to above or reflected in Section 5.2(a) of the Parent
Disclosure Schedule, Parent does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Parent Common
Stock or Parent Preferred Stock or any other equity securities of Parent or any
securities representing the right to purchase or otherwise receive any shares of
Parent Common Stock or Parent Preferred Stock. The shares of Parent 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.
(b) Section 5.2(b) of the Parent Disclosure Schedule sets
forth a true and correct list of all of the Parent Subsidiaries as of the date
of this Agreement. Except as set forth in Section 5.2(b) of the Parent
Disclosure Schedule, as of the date of this Agreement, Parent owns, directly or
indirectly, all of the issued and outstanding shares of capital stock of each of
the Subsidiaries of Parent, free and clear of all liens, charges, encumbrances
and security interests whatsoever, and all of such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As of the
date of this Agreement, no Subsidiary of Parent has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character with any party that is not a direct or indirect Subsidiary of
Parent calling for the purchase
A-18
<PAGE>
or issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
5.3 AUTHORITY; NO VIOLATION. (a) Parent 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 Parent. The Board of Directors of
Parent has directed that this Agreement and the transactions contemplated hereby
be submitted to Parent's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of Parent's stockholders, no other corporate proceedings on the part of
Parent are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and (assuming due authorization, execution and
delivery by the Company) this Agreement constitutes a valid and binding
obligation of Parent, enforceable against Parent 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) Except as set forth in Section 5.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of this Agreement by
Parent, nor the consummation by Parent of the transactions contemplated hereby,
nor compliance by Parent with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or By-Laws of Parent, or
the articles of incorporation or by-laws 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
Parent 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 Parent 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
Parent 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 notices, as applicable, with the Federal Reserve Board under the BHC Act,
the HOLA and the Bank Merger Act, and approval of such applications and notices,
(b) the State Banking Approval, (c) the filing with the SEC of the Proxy
Statement and the filing and declaration of effectiveness of the S-4, (d) the
approval of this Agreement by the requisite vote of the stockholders of Parent,
(e) the filing of the Certificate of Merger with the Delaware Secretary and the
Articles of Merger with the Florida Secretary, (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 Parent Common
Stock pursuant to this Agreement, (g) approval for quotation of the Parent
Common Stock to be issued in the Merger on the NASDAQ/NMS, and (h) such filings,
authorizations or approvals as may be set forth in Section 5.4 of the Parent
Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in connection
with (1) the execution and delivery by Parent of this Agreement and (2) the
consummation by Parent of the Merger and the other transactions contemplated
hereby.
5.5 REPORTS. Parent and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1995 with any Regulatory Agency, and have 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 Parent and its
Subsidiaries, and except as set forth in Section 5.5 of Parent Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the knowledge
of Parent, investigation into the business or operations of Parent or any of its
Subsidiaries since December 31, 1995. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Parent or any of its Subsidiaries.
A-19
<PAGE>
5.6 FINANCIAL STATEMENTS. Parent has previously made available to the
Company copies of (a) the consolidated statements of financial condition of
Parent and its Subsidiaries as of December 31 for the fiscal years 1996 and 1997
and the related consolidated statements of income, changes in shareholders'
equity and cash flows for the fiscal years 1995 through 1997, inclusive, as
reported in Parent's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of Ernst & Young LLP, independent public
accountants with respect to Parent, and (b) the unaudited consolidated
statements of financial condition of Parent and its Subsidiaries as of March 31,
1998 and March 31, 1997 and the related unaudited consolidated statements of
income, changes in shareholders' equity and cash flows for the three-month
periods then ended as reported in Parent's Quarterly Report on Form 10-Q for the
period ended March 31, 1998 filed with the SEC under the Exchange Act. The
December 31, 1997 consolidated balance sheet of Parent (including the related
notes, where applicable) fairly presents the consolidated financial position of
Parent and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 5.6 (including the related notes, where
applicable) fairly present and the financial statements to be filed with the SEC
after the date hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and changes in stockholders' equity and
consolidated financial position of Parent and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) complies, and
the financial statements to be filed with the SEC 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 the financial
statements to be filed with the SEC after the date hereof will be, prepared in
accordance with GAAP consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Parent and its Significant
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements.
5.7 BROKER'S FEES. Neither Parent nor any Subsidiary of Parent, nor any
of their respective 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 Parent has engaged, and will pay a fee or commission to, Sandler, O'Neill &
Partners, L.P., ("Sandler O'Neill").
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be set forth in
Section 5.8 of the Parent Disclosure Schedule, or as disclosed in any Parent
Report (as defined in Section 5.12) filed with the SEC prior to the date of this
Agreement, since December 31, 1997, 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 Parent.
5.9 LEGAL PROCEEDINGS. (a) Except as set forth in Section 5.9(a) of the
Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to any and there are no pending or, to Parent's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Parent 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, decree, or
regulatory restriction imposed upon Parent, any of its Subsidiaries or the
assets of Parent or any of its Subsidiaries.
5.10 TAXES. Except as set forth in Section 5.10 of the Parent
Disclosure Schedule, each of Parent and its Subsidiaries 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 such Tax
Returns are true and correct in all material respects, and (ii) paid in full or
made adequate provision in the financial statements of Parent (in accordance
with GAAP) for all material Taxes shown to be due on such Tax Returns. Except as
set forth in Section 5.10 of the Parent Disclosure Schedule, (i) as of the date
hereof, neither Parent nor any of its Subsidiaries has 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 Parent and its Subsidiaries, the federal and state
income Tax Returns of Parent and its Subsidiaries
A-20
<PAGE>
have been audited by the Internal Revenue Service or appropriate state tax
authorities or the time for assessing and collecting income Tax with respect to
such taxable period has closed and such taxable period is not subject to review.
5.11 EMPLOYEES. (a) Section 5.11(a) of the Parent 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 the 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 as of the date of this
Agreement (the "Parent Plans") by Parent, any of its Subsidiaries or by any
trade or business, whether or not incorporated (a "Parent ERISA Affiliate"), all
of which together with Parent would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of any employee or former
employee of Parent, any Subsidiary or any Parent ERISA Affiliate.
(b) Except as set forth in Section 5.11(b) of the Parent
Disclosure Schedule: each of the Parent Plans is in compliance with the
applicable provisions of the Code and ERISA; each of the Parent Plans intended
to be "qualified" within the meaning of section 401(a) of the Code has received
a favorable determination letter from the IRS; no Parent Plan has an accumulated
or waived funding deficiency within the meaning of section 412 of the Code;
neither Parent nor any Parent ERISA Affiliate has incurred, directly or
indirectly, any liability to or on account of a Parent Plan pursuant to Title IV
of ERISA (other than PBGC premiums); to the knowledge of Parent no proceedings
have been instituted to terminate any Parent Plan that is subject to Title IV of
ERISA; no "reportable event," as such term is defined in section 4043(c) of
ERISA, has occurred with respect to any Parent Plan (other than a reportable
event with respect to which the thirty day notice period has been waived); and
no condition exists that presents a material risk to Parent of incurring a
liability to or on account of a Parent Plan pursuant to Title IV of ERISA; no
Parent Plan is a multiemployer plan (within the meaning of section 4001(a)(3) of
ERISA and no Parent Plan is a multiple employer plan as defined in Section 413
of the Code; and there are no pending, or, to the knowledge of Parent,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Parent Plans or any trusts related thereto.
5.12 SEC REPORTS. Parent has previously made available to the Company a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 1995 by
Parent with the SEC pursuant to the Securities Act or the Exchange Act (the
"Parent Reports") and (b) communication mailed by Parent to its stockholders
since December 31, 1995, and no such registration statement, prospectus, report,
schedule, proxy statement or communication 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.
Parent has timely filed all Parent Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Parent Reports complied with the published rules and
regulations of the SEC with respect thereto.
5.13 PARENT INFORMATION. The information relating to Parent and its
Subsidiaries to be contained in the Proxy Statement 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 (except for such portions
thereof that relate only to the Company or any of its Subsidiaries) 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.
5.14 COMPLIANCE WITH APPLICABLE LAW. Parent and each of its
Subsidiaries holds, and has at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, 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
Parent or any of its Subsidiaries
A-21
<PAGE>
and neither Parent nor any of its Subsidiaries knows of, or has received notice
of violation of, any violations of any of the above.
5.15 OWNERSHIP OF COMPANY COMMON STOCK; AFFILIATES AND ASSOCIATES. (a)
Neither Parent 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 the Company (other than Trust Account Shares and DPC Shares); and
(b) Neither Parent nor any of its Subsidiaries is an
"affiliate" (as such term is defined in DGCL ss.203(c)(1)) or an "associate" (as
such term is defined in DGCL ss.203(c)(2)) of the Company or an "Interested
Stockholder" (as such term is defined in Article Eighth of the Company's
Certificate of Incorporation).
5.16 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in
Section 5.16 of the Parent Disclosure Schedule, neither Parent 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 in Section 5.16 of the Parent
Disclosure Schedule, a "Parent Regulatory Agreement"), any Regulatory Agency or
other Governmental Entity 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 Parent or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Parent Regulatory Agreement.
5.17 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.17 of the
Parent Disclosure Schedule:
(a) Each of Parent and its Subsidiaries and, to the knowledge
of Parent, each of the Participation Facilities and the Loan Properties (each as
hereinafter defined), are in compliance with all Environmental Laws;
(b) There is no suit, claim, action or proceeding, pending or,
to the knowledge of Parent, threatened, before any Governmental Entity or other
forum in which Parent, any of its Subsidiaries, any Participation Facility or
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 Parent or any of its
Subsidiaries, any Participation Facility or any Loan Property;
(c) To the knowledge of Parent during the period of (x)
Parent's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) Parent's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) Parent's or any of its Subsidiaries' 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 Parent, prior to the period of (x) Parent's or any
of its Subsidiaries' ownership or operation of any of their respective current
or former properties, (y) Parent's or any of its Subsidiaries' participation in
the management of any Participation Facility, or (z) Parent's or any of its
Subsidiaries' interest in a Loan Property, there was no release of Hazardous
Materials in, on, under or affecting any such property, Participation Facility
or Loan Property; and
(d) The following definitions apply for purposes of this
Section 5.17: (x) "Loan Property" means any property in which Parent or any of
its Subsidiaries holds a security interest, and, where required by the context,
said term means the owner or operator of such property; and (y) "Participation
Facility" means any facility in which Parent or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
5.18 OPINION. Prior to the execution of this Agreement, Parent has
received an opinion from Sandler O'Neill to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange
A-22
<PAGE>
Ratio pursuant to this Agreement is fair from a financial point of view to
Parent. Such opinion has not been amended or rescinded as of the date of this
Agreement.
5.19 APPROVALS. As of the date of this Agreement, Parent knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
5.20 LOAN PORTFOLIO. (a) Except as set forth in Section 5.20 of Parent
Disclosure Schedule, neither Parent nor any of its Subsidiaries is a party to
any written or oral (i) Loan, other than Loans the unpaid principal balance of
which does not exceed $250,000, under the terms of which the obligor was, as of
April 30, 1998, 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 five percent or greater stockholder of Parent or any of its
Subsidiaries, or to the knowledge of Parent, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. Section 5.20 of Parent Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $250,000 of Parent or any of its
Subsidiaries that as of April 30, 1998, 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, (ii) by category of Loan
(i.e., commercial, consumer, etc.), all of the other Loans of Parent and its
Subsidiaries that as of April 30, 1998, were classified as such, together with
the aggregate principal amount of and accrued and unpaid interest on such Loans
by category and (iii) each asset of Parent that as of April 30, 1998, was
classified as "Other Real Estate Owned" and the book value thereof.
(b) Each Loan in original principal amount in excess of
$250,000 (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.
5.21 PROPERTY. Each of Parent and its Subsidiaries 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, and which are reflected on the
consolidated statement of financial condition of Parent as of March 31, 1998 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 of
this Agreement, (iv) for dispositions and encumbrances of, or 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 Parent or any Subsidiary of Parent, as lessee, leases
real or personal property are valid and enforceable in accordance with their
respective terms and neither Parent nor any of its Subsidiaries nor, to the
knowledge of Parent, any other party thereto is in default thereunder.
5.22 ACCOUNTING FOR THE MERGER; REORGANIZATION. As of the date of this
Agreement, Parent has no reason to believe that the Merger will fail to qualify
(i) for pooling-of-interests treatment under GAAP or (ii) as a reorganization
under Section 368(a) of the Code.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
A-23
<PAGE>
6.1 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or the Stock Option Agreement or
with the prior written consent of Parent, the Company and its Subsidiaries shall
carry on their respective businesses 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 Company Disclosure Schedule or as otherwise
contemplated by this Agreement or the Stock Option Agreement or consented to in
writing by Parent, the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) solely in the case of the Company, declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock, other than normal quarterly dividends not in excess of $0.175 per share
of Company Common Stock;
(b) (i) repurchase, redeem or otherwise acquire (except for
the acquisition of Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(b) hereof) any shares of the capital stock of the Company
or any Subsidiary of the Company, or any securities convertible into or
exercisable for any shares of the capital stock of the Company or any Subsidiary
of the Company,(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)
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, except, in the
case of clauses (ii) and (iii), for the issuance of Company Common Stock upon
the exercise or fulfillment of rights or options issued or existing pursuant to
the Company Option Plans or any employee benefit plans, programs or
arrangements, all to the extent outstanding and in existence on the date of this
Agreement and in accordance with their present terms;
(c) amend its Certificate of Incorporation, By-laws or other
similar governing documents;
(d) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate or encourage any
inquiries relating to, or the making of any proposal which constitutes, a
"takeover proposal" (as defined below), or, subject to the fiduciary duties of
the Board of Directors of the Company, recommend or endorse any takeover
proposal, or participate in any discussions or negotiations, or provide third
parties with any nonpublic information, relating to any such inquiry or proposal
or otherwise facilitate any effort or attempt to make or implement a takeover
proposal; PROVIDED, HOWEVER, that the Company may communicate information about
any such takeover proposal to its stockholders if, in the judgment of the
Company's Board of Directors, based upon the advice of outside counsel, such
communication is required under applicable law. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations previously conducted with any parties other than Parent with
respect to any of the foregoing. The Company will take all actions necessary or
advisable to inform the appropriate individuals or entities referred to in the
first sentence hereof of the obligations undertaken in this Section 6.1(d). The
Company will notify Parent immediately if any such inquiries or takeover
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, the
Company, and the Company will promptly inform Parent in writing of all of the
relevant details with respect to the foregoing. As used in this Agreement,
"takeover proposal" shall mean any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving the Company or any
Subsidiary of the Company or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of, the
Company or any Subsidiary of the Company other than the transactions
contemplated or permitted by this Agreement;
(e) 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 and (ii) in any event are in an amount of no more
than $500,000 in the aggregate;
(f) enter into any new line of business;
A-24
<PAGE>
(g) 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, which would be material, individually or in the
aggregate, to the Company, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with past practices;
(h) 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;
(i) change its methods of accounting in effect at March 31,
1998, except as required by changes in GAAP or regulatory accounting principles
as concurred to by the Company's independent auditors;
(j) (i) except as set forth in Section 7.13 hereof, as
required by applicable law 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, arrangement, plan or policy
between the Company or any Subsidiary of the Company and one or more of its
current or former directors, officers or employees 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 stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares);
PROVIDED, HOWEVER, that nothing contained herein shall prohibit the Company from
(x) paying retention bonuses as described in Section 6.1(j) of the Company
Disclosure Schedule, or (y) paying, on or immediately prior to the Closing Date,
discretionary bonuses in respect of fiscal 1998 in a manner consistent with past
practice and in an aggregate amount not to exceed $300,000;
(k) take or cause to be taken any action which would
disqualify the Merger as a "pooling-of-interests" for accounting purposes or a
reorganization under Section 368(a) of the Code;
(l) 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;
(m) 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;
(n) file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(o) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
their respective 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; or
(p) agree to do any of the foregoing.
6.2 COVENANTS OF PARENT. Except as set forth in Section 6.2 of the
Parent Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by the Company, Parent shall not, and shall not permit
any of its Subsidiaries to:
A-25
<PAGE>
(a) solely in the case of Parent, declare or pay any dividends
on or make any other distributions in respect of any of its capital stock other
than its current quarterly dividends; PROVIDED, HOWEVER, that nothing contained
herein shall prohibit Parent from increasing the quarterly cash dividend on the
Parent Common Stock in a manner consistent with past practice;
(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 delay the receipt of any Requisite
Regulatory Approval (as defined in Section 8.1(c));
(d) change its methods of accounting in effect at March 31,
1998, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Parent's independent auditors;
(e) take or cause to be taken any action which would
disqualify the Merger as a "pooling-of-interests" for accounting purposes or a
reorganization under Section 368(a) of the Code; or
(f) agree to do any of the foregoing.
6.3 CONDUCT OF PARENT'S BUSINESS. Parent shall, and Parent shall cause
the Parent Banks to, conduct its business in substantially the same manner as
heretofore conducted.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGULATORY MATTERS. (a) Parent and the Company shall promptly
prepare and file with the SEC the Proxy Statement and Parent shall promptly
prepare and file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Company and Parent 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 each of the Company and
Parent shall thereafter mail the Proxy Statement to its respective stockholders.
Parent 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). The Company and Parent
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 the Company or
Parent, as the case may be, and any of their respective 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) Parent and the Company shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be
A-26
<PAGE>
reasonably necessary or advisable in connection with the Proxy Statement, the
S-4 or any other statement, filing, notice or application made by or on behalf
of Parent, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement.
(d) Parent and the Company shall promptly furnish each other
with copies of written communications received by Parent or the Company, as the
case may be, or any of their respective Subsidiaries, Affiliates or Associates
(as such terms are defined in Rule 12b-2 under the Exchange Act as in effect on
the date of this Agreement) 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) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each party shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, it
shall, and shall cause its Subsidiaries to, make available to the other party
all information concerning its business, properties and personnel as the other
party may reasonably request. 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, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All information furnished to Parent pursuant to Section
7.2(a) shall be subject to, and Parent shall hold all such information in
confidence in accordance with, the provisions of the confidentiality agreement,
(the "Confidentiality Agreement"), between Parent and the Company. The Company
shall have the same obligations to Parent under the Confidentiality Agreement
with respect to information furnished to the Company pursuant to Section 7.2(a)
as if the Company were the receiving party under such 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 STOCKHOLDER MEETINGS. The Company and Parent each 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 and
adoption of this Agreement and the consummation of the transactions contemplated
hereby. The Company and Parent each will, through its Board of Directors,
subject, in the case of the Company, to the fiduciary duties of such board,
recommend to its stockholders approval of this Agreement and the transactions
contemplated hereby and such other matters as may be submitted to its
stockholders in connection with this Agreement. The Company and Parent shall
coordinate and cooperate with respect to the foregoing matters, with a view
towards, among other things, holding the respective meetings of each party's
stockholders on the same day.
7.4 LEGAL CONDITIONS TO MERGER. Each of Parent and the Company 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 or the Bank 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 the Company or Parent or any of their respective
Subsidiaries in connection with the Merger or the Bank Merger and the other
transactions contemplated by this Agreement, and to comply with the terms and
conditions of such consent, authorization, order or approval.
A-27
<PAGE>
7.5 AFFILIATES. (a) Each of Parent and the Company shall use its
reasonable best efforts to cause each director, executive officer and other
person who is an "affiliate" (for purposes of Rule 145 under the Securities Act
and for purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment) of such party to deliver to the other party, as soon as practicable
after the date of this Agreement, a written agreement, in the form of EXHIBIT
7.5(A) hereto (in the case of affiliates of Parent) or EXHIBIT 7.5(B) hereto (in
the case of affiliates of the Company).
(b) Parent shall publish, not later than 15 days after the end
of the first full calendar month following the month in which the Effective Time
occurs, financial results covering at least 30 days of post-Merger combined
operations as contemplated by SEC Accounting Series Release No. 135.
7.6 STOCK EXCHANGE LISTING. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to
be approved for quotation on the NASDAQ/NMS, subject to official notice of
issuance, as of the Effective Time.
7.7 EMPLOYEE BENEFIT PLANS; EXISTING AGREEMENTS. (a) As of the
Effective Time, the employees of the Company and its Subsidiaries (the "Company
Employees") shall be eligible to participate in the employee benefit plans of
Parent and its Subsidiaries in which similarly situated employees of Parent or
Parent Bank participate, to the same extent as similarly situated employees of
Parent or Parent Bank (it being understood that inclusion of Company Employees
in such employee benefit plans may occur at different times with respect to
different plans).
(b) With respect to each Parent Plan, for purposes of
determining eligibility to participate, vesting, and entitlement to benefits,
including for severance benefits and vacation entitlement (but not for accrual
of pension benefits), service with the Company (or predecessor employers to the
extent the Company provides past service credit) shall be treated as service
with Parent; 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 Parent Plan shall waive pre-existing condition
limitations to the same extent waived under the applicable Plan. Company
Employees shall be given credit for amounts paid under a corresponding benefit
plan during the same period for purposes of applying deductibles, copayments and
out-of-pocket maximums as though such amounts had been paid in accordance with
the terms and conditions of the Parent Plan.
(c) As of the Effective Time, Parent shall assume and honor
and shall cause the appropriate Subsidiaries of Parent to assume and to honor in
accordance with their terms all employment, severance and other compensation
agreements, plans and arrangements existing prior to the execution of this
Agreement which are between the Company or any of its Subsidiaries and any
director, officer or employee thereof and which have been disclosed in the
Company Disclosure Schedule. Parent acknowledges and agrees that (i) the Merger
constitutes a "Change of Control" for all purposes pursuant to such agreements
and arrangements and (ii) in light of Parent's plans relating to management
assignments and responsibilities with respect to the business of Parent from and
after the Effective Time, each director, officer or employee who is a party to,
or is otherwise subject to, any such agreement or arrangement will, upon
consummation of the Merger, have "Good Reason" to terminate employment
thereunder. The provisions of this Section 7.7(c) are intended to be for the
benefit of, and shall be enforceable by, each such director, officer or
employee.
(d) Parent agrees that, during the three-month period
following the Effective Time, no Company Employee shall be terminated for
"cause" (as defined in the Company Option Plans) unless such Company Employee
has been given written notice of such termination at least ten business days
prior to the date of termination. This Section 7.7(d) is intended to be for the
benefit of, and shall be enforceable by, each such Company Employee.
7.8 INDEMNIFICATION. (a) In the event of any threatened or actual
claim, action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the Effective
Time, a director, officer or employee of the Company or any of its Subsidiaries
(the "Indemnified Parties") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or
A-28
<PAGE>
in part out of, or pertaining to (i) the fact that he is or was a director,
officer or employee of the Company, any of the Subsidiaries of the Company or
any of their respective predecessors or affiliates or (ii) this Agreement or any
of the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto. It is understood
and agreed that after the Effective Time, Parent shall indemnify and hold
harmless, as and to the extent permitted by law, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Parent; PROVIDED, HOWEVER, that (1)
Parent shall have the right to assume the defense thereof and upon such
assumption Parent shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if Parent
elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises that there are issues which raise conflicts of interest
between Parent and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with Parent, and
Parent shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Parent shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties, (3)
Parent shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld) and (4) Parent shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this Section 7.8, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify Parent thereof, provided that the failure to so notify shall not
affect the obligations of Parent under this Section 7.8 except to the extent
such failure to notify materially prejudices Parent. Parent's obligations under
this Section 7.8 shall continue in full force and effect without time limit from
and after the Effective Time.
(b) Parent shall cause the persons serving as officers and
directors of the Company immediately prior to the Effective Time to be covered
for a period of three years from the Effective Time by the directors' and
officers' liability insurance policy maintained by the Company (provided that
Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are not less advantageous than
such policy) with respect to acts or omissions occurring prior to the Effective
Time which were committed by such officers and directors in their capacity as
such; PROVIDED, HOWEVER, that in no event shall Parent be required to expend on
an annual basis more than 200% of the current amount expended by the Company
(the "Insurance Amount") to maintain or procure insurance coverage, and further
provided that if Parent is unable to maintain or obtain the insurance called for
by this Section 7.8(b), Parent shall use all reasonable efforts to obtain as
much comparable insurance as is available for the Insurance Amount.
(c) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
assume the obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
7.9 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 the Plan Merger or to vest the Surviving Corporation or the
Surviving Bank with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties
A-29
<PAGE>
to the Merger or the Bank Merger, the proper officers and directors of each
party to this Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by Parent.
7.10 COORDINATION OF DIVIDENDS. After the date of this Agreement each
of Parent and the Company shall coordinate with the other the declaration of any
dividends in respect of the Parent Common Stock and the Company Common Stock and
the record dates and payments dates relating thereto, it being the intention of
the parties that the holders of Parent Common Stock or Company Common Stock
shall not receive more than one dividend, or fail to receive one dividend, for
any single calendar quarter with respect to their shares of Parent Common Stock
and/or Company Common Stock and any shares of Parent Common Stock any holder of
Company Common Stock receives in exchange therefor in the Merger.
7.11 ASSUMPTION OF INDEMNIFICATION OBLIGATIONS. As of the Effective
Time, Parent shall assume all of the Company's obligations under Section 9.9 of
the Agreement and Plan of Merger, dated as of May 31, 1995, by and between the
Company and PBS Financial Corp. (the "PBS Merger Agreement"). If Parent or any
of its successors or assigns consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or transfers all or substantially all of its assets to
any person, then and in each case, proper provision shall be made so that the
successors and assigns of Parent assume the obligations set forth in Section 9.9
of the PBS Merger Agreement.
7.12 PARENT RIGHTS AGREEMENT. Parent agrees that Parent Rights shall be
issued with respect to each share of Parent Common Stock issued pursuant to the
terms hereof regardless of whether there has occurred a "Distribution Date"
under the terms of the Parent Rights Agreement prior to the Effective Time, and
Parent shall take all action necessary or advisable to enable the holder of each
share of Parent Common Stock issued pursuant to this Agreement to obtain the
benefit of such Parent Rights notwithstanding their prior distribution,
including, without limitation, amendment of the Parent Rights Agreement.
7.13 AMENDMENT OF COMPANY OPTION PLANS. With respect to any Company
Option which provides the holder thereof with the right to surrender such
Company Option in exchange for a cash payment under certain circumstances
following a "Change of Control" (as defined in the Company Option Plans), the
Company shall use its reasonable best efforts to obtain, as soon as practicable
following the date of this Agreement, the consent of such option holder to an
amendment of the Company Option Plan under which such Company Option was granted
providing for the replacement of such cash-out right with a right to surrender
all or part of such Company Option in exchange for a number of shares of Company
Common Stock having an aggregate value equal to the excess of (x) the aggregate
Fair Market Value (as defined in the Company Option Plans), as of the date of
surrender of such Company Option, of the shares of Company Common Stock
underlying the portion of such Company Option being surrendered over (y) the
aggregate exercise price of such portion of the Company Option.
7.14 STOCK OPTION AGREEMENT. Concurrently with the execution and
delivery of this Agreement, Parent and the Company agree to execute and deliver
the Stock Option Agreement in the form attached hereto as Annex A.
7.15 DIRECTORSHIPS. Parent shall cause its Board of Directors to be
expanded by three members and shall appoint those persons selected by the
Company from among those persons currently serving on the Company's Board of
Directors (such persons, and any substitute person as provided in the last
sentence of this paragraph, the "Nominees") to fill the vacancies on Parent's
Board of Directors created by such increase at the Effective Time. In the event
any Nominee shall be appointed or elected to a class of directors of Parent the
term of which class of directors expires prior to December 31, 2000, Parent
shall include such person on the list of nominees for director presented by the
Board of Directors of Parent and for which said Board shall solicit proxies at
the annual meeting of stockholders of Parent following the Effective Time at
which directors are elected for such class. In the event that any Nominee is
unable to serve as a director of Parent as a result of death, illness,
resignation or any other reason, Parent shall elect another member of the
Company's Board of Directors as a substitute nominee in accordance with this
Section 7.15.
A-30
<PAGE>
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 APPROVALS. This Agreement shall have been
approved and adopted by the requisite votes of the holders of the outstanding
shares of Company Common Stock and Parent Common Stock under applicable law.
(b) LISTING OF SHARES. The shares of Parent Common Stock which
shall be issued to the stockholders of the Company upon consummation of the
Merger shall have been authorized for quotation on the NASDAQ/NMS, subject to
official notice of issuance.
(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 (an "Injunction") preventing the
consummation of the Merger or the Bank Merger 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 or the Bank Merger.
8.2 CONDITIONS TO OBLIGATIONS OF PARENT. The obligation of Parent to
effect the Merger is also subject to the satisfaction or waiver by Parent 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 the Company set forth in this
Agreement (other than those set forth in Section 4.2 and Section 4.10) shall be
true and correct as of the date of this Agreement 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 the Company set forth in Section 4.2 and Section 4.10 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 of this Agreement 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.
Parent shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
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 Parent
shall have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such effect.
(c) NO PENDING GOVERNMENTAL ACTIONS. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
A-31
<PAGE>
(d) FEDERAL TAX OPINION. Parent shall have received an opinion
from Morgan, Lewis & Bockius LLP, counsel to Parent ("Parent's Counsel"), in
form and substance reasonably satisfactory to Parent, 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 and that,
accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by
Parent or the Company as a result of the Merger;
(ii) No gain or loss will be recognized by the
stockholders of the Company who exchange all of their Company Common
Stock solely for Parent Common Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share interest
in Parent Common Stock); and
(iii) The aggregate tax basis of the Parent
Common Stock received by stockholders who exchange all of their
Company Common Stock solely for Parent Common Stock pursuant to the
Merger will be the same as the aggregate tax basis of the Company
Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received).
In rendering such opinion, Parent's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form and
substance to such counsel.
(e) POOLING OF INTERESTS. Parent shall have received a letter
from Ernst & Young LLP addressed to Parent, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company 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 Parent set forth in this Agreement
(other than those set forth in Section 5.2 and Section 5.10) shall be true and
correct as of the date of this Agreement 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 Parent set forth in Section 5.2 and Section 5.10 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 of this Agreement 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. The
Company shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent to the
foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent 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 the Company shall
have received a certificate signed on behalf of Parent by the Chief Executive
Officer and the Chief Financial Officer of Parent to such effect.
(c) NO PENDING GOVERNMENTAL ACTIONS. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
(d) FEDERAL TAX OPINION. The Company shall have received an
opinion from Skadden, Arps, Slate, Meagher & Flom LLP (the "Company's Counsel"),
in form and substance reasonably satisfactory to the Company, 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 and
that, accordingly, for federal income tax purposes:
A-32
<PAGE>
(i) No gain or loss will be recognized by Parent or
the Company as a result of the Merger;
(ii) No gain or loss will be recognized by the
stockholders of the Company who exchange all of their Company Common
Stock solely for Parent Common Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share interest in
Parent Common Stock); and
(iii) The aggregate tax basis of the Parent Common
Stock received by stockholders who exchange all of their Company Common
Stock solely for Parent Common Stock pursuant to the Merger will be the
same as the aggregate tax basis of the Company Common Stock surrendered
in exchange therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form and
substance to such counsel.
(e) POOLING OF INTERESTS. The Company shall have received a
letter from Ernst &Young LLP addressed to Parent, to the effect that the Merger
will qualify for "pooling of interests" accounting treatment.
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 both the Company and Parent:
(a) by mutual consent of the Company and Parent 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 Parent or the Company upon written notice to the
other party (i) 60 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 60-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 Parent or the Company if the Merger shall not
have been consummated on or before March 31, 1999, 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 Parent or the Company (provided that the
terminating party shall not be in material breach of any of its obligations
under Section 7.3) if any approval of the stockholders of either of the Company
or Parent 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 Parent or the Company (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
thirty days following written notice to the party committing such breach, or
which breach, by its
A-33
<PAGE>
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 the Company) or Section 8.3(a)
(in the case of a breach of representation or warranty by Parent);
(f) by either Parent or the Company (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 thirty 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 the Company at any time during the ten-day period
commencing two days after the Determination Date (as defined below), if either
(x) both of the following conditions are satisfied:
(1) the Average Closing Price (as defined below)
shall be less than the product of 0.85 and the Starting Price; and
(2) (i) the number obtained by dividing the Average
Closing Price by the Starting Price (such number being referred to
herein as the "Parent Ratio") shall be less than (ii) the number
obtained by dividing the Index Price on the Determination Date by the
Index Price on the Starting Date and subtracting 0.15 from such
quotient (such number being referred to herein as the "Index Ratio");
or (y) the Average Closing Price shall be less than the product of 0.75 and the
Starting Price;
subject to the following four sentences. If the Company elects to exercise its
termination right pursuant to the immediately preceding sentence, it shall give
prompt written notice to Parent which notice shall specify which of clauses (x)
or (y) is applicable (or if both would be applicable, which clause is being
invoked); provided that such notice of election to terminate may be withdrawn at
any time within the aforementioned ten-day period. During the five-day period
commencing with its receipt of such notice, Parent shall have the option, in the
case of a termination invoked under clause (x), of adjusting the Exchange Ratio
to equal the lesser of (i) a number equal to a quotient (rounded to the nearest
one-ten-thousandth), the numerator of which is the product of 0.85, the Starting
Price and the Exchange Ratio (as then in effect) and the denominator of which is
the Average Closing Price, and (ii) a number equal to a quotient (rounded to the
nearest one-ten-thousandth), the numerator of which is the Index Ratio
multiplied by the Exchange Ratio (as then in effect) and the denominator of
which is the Parent Ratio. During such five-day period, Parent shall have the
option, in the case of a termination invoked under clause (y), to elect to
increase the Exchange Ratio to equal a number equal to a quotient (rounded to
the nearest one-ten-thousandth), the numerator of which is the product of 0.75,
the Starting Price and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Closing Price. If Parent makes an election
contemplated by either of the two preceding sentences, within such five-day
period it shall give prompt written notice to the Company of such election and
the revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 9.1(g) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to "Exchange Ratio" shall
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 9.1(g). For purposes of this Section 9.1(g), the following terms shall
have the meanings indicated:
"Average Closing Price" means the average of the last reported sale
prices per share of Parent Common Stock as reported on the NASDAQ/NMS (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
mutually agreed upon authoritative source) for the 20 consecutive trading days
on the NASDAQ/NMS ending at the close of trading on the Determination Date.
"Determination Date" means the fifth business day prior to the date on
which the last of the Requisite Regulatory Approvals shall be received, without
regard to any requisite waiting periods in respect thereof.
A-34
<PAGE>
"Index Group" means the group of each of the 15 bank holding companies
listed below, the common stock of all of which shall be publicly traded and as
to which there shall not have been, since the Starting Date and before the
Determination Date, an announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market capitalization
as of the Starting Date. In the event that the common stock of any such company
ceases to be publicly traded or any such announcement is made with respect to
any such company, such company will be removed from the Index Group, and the
weights (which have been determined based on the number of outstanding shares of
common stock) redistributed proportionately for purposes of determining the
Index Price. The 15 bank holding companies and the weights attributed to them
are as follows:
BANK HOLDING COMPANY WEIGHTING
- -------------------- ---------
CNB Bancshares, Inc.....................................................0.10%
BancorpSouth, Inc.......................................................0.42%
Commerce Bancorp, Inc...................................................1.14%
Provident Bankshares Corporation........................................7.94%
First Commonwealth Financial Corporation................................6.86%
Banknorth Group, Inc....................................................5.99%
United Bankshares, Inc..................................................7.89%
Hancock Holding Company.................................................7.08%
F&M National Corporation................................................6.69%
Carolina Fist Corporation...............................................5.35%
MainStreet BankGroup Incorporated.......................................4.61%
BT Financial Corporation................................................3.81%
Triangle Bancorp, Inc...................................................4.32%
National City Bancshares, Inc...........................................4.77%
United National Bancorp.................................................3.02%
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the companies
comprising the Index Group.
"Starting Date" means May 26, 1998.
"Starting Price" shall mean the last reported sale price per share of
Parent Common Stock on the Starting Date, as reported by the NASDAQ/NMS (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
mutually agreed upon authoritative source).
If any company belonging to the Index Group or Parent declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting Date
and the Determination Date, the prices for the common stock of such company or
Parent shall be appropriately adjusted for the purposes of applying this Section
9.1(g).
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company 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.
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 the Company or Parent; PROVIDED, HOWEVER, that after any approval of the
transactions contemplated by this Agreement by the Company's stockholders, there
may not be, without further approval of such stockholders, any amendment of this
Agreement which reduces the
A-35
<PAGE>
amount or changes the form of the consideration to be delivered to the Company
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
first day which is (a) the last business day of month and (b) at least two
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VIII hereof (other
than those conditions which relate to actions to be taken at the Closing)(the
"Closing Date"), at the offices of Morgan, Lewis & Bockius LLP, Miami, Florida,
unless another time, date or place is agreed to in writing by the parties
hereto.
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.
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 (with
confirmation), or delivered by an express courier (with confirmation) 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 Parent, to:
Republic Security Financial Corporation
4400 Congress Avenue
West Palm Beach, Florida 33407
facsimile: (561) 881-9225
Attention: Chief Executive Officer
with a copy to:
Morgan, Lewis & Bockius LLP
5300 First Union Financial Center
Miami, Florida 33131
facsimile: (305) 579-0321
Attn: John S. Fletcher, Esq.
A-36
<PAGE>
and
(b) if to the Company, to:
First Palm Beach Bancorp, Inc.
450 South Australian Avenue
West Palm Beach, Florida 33402-2326
facsimile: (561) 650-2336
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
facsimile: (212) 735-2000
Attn: William S. Rubenstein, Esq.
10.5 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 table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. 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 of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to May 27, 1998. No provision of this Agreement shall be construed to
require the Company, Parent or any of their respective Subsidiaries or
affiliates to take any action that would violate any applicable law, rule or
regulation.
10.6 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.
10.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein), together with the Confidentiality Agreement,
the Bank Merger Agreement and the Stock Option Agreement 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.
10.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida, without regard to any
applicable conflicts of law.
10.9 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
7.2(b) of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of Section
7.2(b) of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.10 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.
A-37
<PAGE>
10.11 PUBLICITY. Except as otherwise required by law or the rules of
the NASDAQ/NMS, so long as this Agreement is in effect, neither Parent nor the
Company 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.
10.12 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, 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, Parent and the Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
REPUBLIC SECURITY FINANCIAL
CORPORATION
By /S/ RUDY E. SCHUPP
------------------------------
Name: Rudy E. Schupp
Title: Chairman and CEO
FIRST PALM BEACH BANCORP, INC.
By /S/ LOUIS O. DAVIS, JR.
------------------------------
Name: Louis O. Davis, Jr.
Title: President and CEO
A-38
<PAGE>
ANNEX B
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN PROVISIONS CONTAINED HEREIN
AND TO RESALE RESTRICTIONS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Option Agreement") dated May 27,
1998, by and between REPUBLIC SECURITY FINANCIAL CORPORATION, a Florida
corporation (the "Parent"), and FIRST PALM BEACH BANCORP, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Parent and the Board of
Directors of the Company have approved an Agreement and Plan of Merger dated as
of even date herewith (the "Merger Agreement") providing, among other things,
for the merger of the Company with and into the Parent;
WHEREAS, as a condition and inducement to the Parent's
entering into the Merger Agreement, the Parent has required that the Company
agree, and the Company has agreed, to grant to the Parent the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the premises contained
herein and in the Merger Agreement, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein
shall have the same meanings as in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set
forth herein, the Company hereby grants to the Parent an option (the "Option")
to purchase up to 1,009,725 fully paid and nonassessable, authorized and
unissued shares of the Company's common stock ("Company Common Stock") at a
price of $40.50 per share (the "Purchase Price") payable in cash as provided in
Section 4 hereof; PROVIDED, HOWEVER, that in no event shall the number of shares
of Company Common Stock for which this Option is exercisable exceed 19.9% of the
Company's issued and outstanding shares of Company Common Stock (without giving
effect to any shares subject to or issued pursuant to the Option). The number of
shares of Company Common Stock that may be received upon the exercise of the
Option and the Purchase Price are subject to adjustment as herein set forth.
3. EXERCISE OF OPTION.
(a) The Parent may exercise the Option, in whole or in part,
and from time to time, if, but only if, both an Extension Event (as hereinafter
defined) and a Purchase Event (as hereinafter defined) shall have occurred prior
to the occurrence of an Exercise Termination Event (as hereinafter defined),
provided that the Parent shall have sent the written notice of such exercise (as
provided in subsection (e) of this Section 3) within 90 days following such
Purchase Event. Each of the following shall be an "Exercise Termination Event":
(i) the Effective Time of the Merger; (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of an Extension Event, except a termination by Parent pursuant to
Section 9.1(f) of the Merger Agreement (unless the breach by the Company giving
rise to such right of termination is non-volitional); or (iii) the passage of 12
months after termination of the Merger Agreement if such termination follows the
occurrence of an Extension Event or is a termination by Parent pursuant to
Section 9.1(f) of the Merger Agreement (unless the breach
B-1
<PAGE>
by the Company giving rise to such right of termination is non-volitional).
Notwithstanding the foregoing, if the Option cannot be exercised on such day
because of any injunction, order or similar restraint issued by a Governmental
Entity of competent jurisdiction, the Option shall expire on the 10th business
day after such injunction, order or restraint shall have been dissolved or when
such injunction, order or restraint shall have become permanent and no longer
subject to appeal, as the case may be. Any exercise of the Option shall be
subject to compliance with applicable law.
(b) As used herein, a "Purchase Event" shall mean any of the
following events:
(i) The Company or any Company Subsidiary, without
having received prior written consent from the Parent, shall have
entered into, authorized, recommended, proposed or publicly announced
its intention to enter into, authorize, recommend, or propose, an
agreement, arrangement or understanding with any Person (other than the
Parent or any Parent Subsidiary) to (A) effect a merger or
consolidation or similar transaction involving the Company or any
Company Subsidiary (other than internal mergers, reorganizing actions,
consolidations or dissolutions involving only existing Company
Subsidiaries), (B) purchase, lease or otherwise acquire all or a
substantial portion of the assets of the Company or any Company
Subsidiary or (C) purchase or otherwise acquire (including by way of
merger, consolidation, share exchange or similar transaction)
beneficial ownership of securities representing 20% or more of the
voting power of the Company or any Company Subsidiary (any such
transaction in clause (A), (B) or (C) hereof, an "Acquisition
Transaction"); PROVIDED, HOWEVER, that in no event shall (i) any
merger, consolidation, purchase or similar transaction involving only
the Company and one or more of its Subsidiaries, or involving only any
two or more of such Subsidiaries, or (ii) any merger, consolidation or
similar transaction as to which the common stockholders of the Company
immediately prior thereto own in the aggregate at least 60% of the
common stock of the surviving corporation or its publicly held parent
corporation immediately following consummation thereof to be deemed to
be an Acquisition Transaction, provided that any such transaction is
not entered into in violation of the terms of the Merger Agreement; or
(ii) any Person (other than the Parent or any Parent
Subsidiary or any Person acting in concert with the Parent; or the
Company or any Company Subsidiary acting in a fiduciary capacity) shall
have acquired Beneficial Ownership of 20% or more of the voting power
of the Company or any Company Subsidiary.
(c) As used herein, the term "Extension Event" shall mean any
of the following events:
(i) a Purchase Event of the type specified in clauses
(b)(i) and (b)(ii) above;
(ii) any Person (other than the Parent or any Parent
Subsidiary) shall have "commenced" (as such term is defined in Rule
14d-2 under the Exchange Act), or shall have filed a registration
statement under the Securities Act with respect to, a tender offer or
exchange offer to purchase shares of Company Common Stock such that,
upon consummation of such offer, such Person would have Beneficial
Ownership (as defined below) or the right to acquire Beneficial
Ownership of 20% or more of the voting power of the Company or any
Company Subsidiary;
(iii) any Person (other than the Parent or any Parent
Subsidiary; or the Company or any Company Subsidiary in a fiduciary
capacity) shall have publicly announced its willingness, or shall have
publicly announced a bona fide proposal, or publicly disclosed an
intention to make a bona fide proposal, (x) to make an offer described
in clause (ii) above or (y) to engage in an Acquisition Transaction; or
(iv) the Company's Board of Directors shall have
withdrawn, modified or changed in a manner adverse to the Parent the
recommendation of the Company's Board of Directors with respect to the
Merger, the Merger Agreement or the transactions contemplated thereby.
B-2
<PAGE>
(d) As used herein, the terms "Beneficial Ownership,"
"Beneficially Own" and "Beneficial Owner" shall have the meanings ascribed to
them in Rule 13d-3 under the Exchange Act.
(e) In the event that the Parent wishes to exercise the
Option, it shall deliver to the Company a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i) the total number
of shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 60 calendar days from
the Notice Date for the closing of such purchase (the "Closing Date").
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At the closing referred to in Section 3 hereof, the Parent
shall (i) pay to the Company the aggregate Purchase Price for the shares of
Company Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by the
Company and (ii) present and surrender this Agreement to the Company at its
principal executive offices.
(b) At such closing, simultaneously with the delivery of cash
as provided in Section 4(a), the Company shall deliver to the Parent a
certificate or certificates representing the number of shares of Company Common
Stock purchased by the Parent, registered in the name of the Parent or a nominee
designated in writing by the Parent and, if the Option should be exercised in
part only, a new Option evidencing the rights of the holder thereof to purchase
the balance of the shares purchasable hereunder, and the Parent shall deliver to
the Company a letter agreeing that the Parent shall not offer to sell, pledge or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Option Agreement.
(c) If at the time of issuance of any Company Common Stock
pursuant to any exercise of the Option, the Company shall have issued any share
purchase rights or similar securities to holders of Company Common Stock, then
each such share of Company Common Stock shall also represent rights with terms
substantially the same as and at least as favorable to the Parent as those
issued to other holders of Company Common Stock.
(d) Certificates for Company Common Stock delivered at any
closing hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and _____________________, a copy of
which is on file at the principal office of
_________________________, and to resale restrictions arising
under the Securities Act of 1933 and any applicable state
securities laws. A copy of such agreement will be provided to
the holder hereof without charge upon receipt by
__________________ of a written request therefor.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if the Parent shall have
delivered to the Company an opinion of counsel, in form and substance reasonably
satisfactory to the Company and its counsel, to the effect that such legend is
not required for purposes of the Securities Act and any applicable state
securities laws.
5. AUTHORIZATION, ETC.
(a) The Company hereby represents and warrants to the Parent
that:
(i) the Company has full corporate authority to
execute and deliver this Option Agreement and, subject to Section
11(i), to consummate the transactions contemplated hereby;
B-3
<PAGE>
(ii) such execution, delivery and consummation have
been authorized by the Board of Directors of the Company, and no other
corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered; and
(iv) the Company has taken all necessary corporate
action to authorize and reserve and, subject to Section 11(i), permit
it to issue and, at all times from the date hereof through the date of
the exercise in full or the expiration or termination of the Option,
shall have reserved for issuance upon exercise of the Option, that
number of shares of Company Common Stock equal to the maximum number of
shares of Company Common Stock at any time and from time to time
issuable hereunder, all of which, upon issuance pursuant hereto, shall
be duly authorized, validly issued, fully paid and nonassessable, and
shall be delivered free and clear of all claims, liens, encumbrances,
restrictions (other than federal and state securities restrictions and
other than as set forth in Section C of Article Fourth of the Company's
Certificate of Incorporation) and security interests and not subject to
any preemptive rights.
(b) The Parent hereby represents and warrants to the Company
that:
(i) the Parent has full corporate authority to
execute and deliver this Option Agreement and, subject to Section
11(i), to consummate the transactions contemplated hereby;
(ii) such execution, delivery and consummation have
been authorized by all requisite corporate action by the Parent and no
other corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered; and
(iv) any Company Common Stock or other securities
acquired by the Parent upon exercise of the Option will not be taken
with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in compliance with the
Securities Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of
any change in Company Common Stock by reason of stock dividends, split-ups,
recapitalizations or the like, the type and number of shares subject to the
Option, and the Purchase Price per share, as the case may be, shall be adjusted
appropriately. In the event that any additional shares of Company Common Stock
are issued after the date of this Option Agreement (other than pursuant to an
event described in the preceding sentence or pursuant to this Option Agreement),
the number of shares of Company Common Stock subject to the Option shall be
adjusted so that, after such issuance, it equals at least 19.9% of the number of
shares of Company Common Stock then issued and outstanding (without considering
any shares subject to or issued pursuant to the Option).
7. REPURCHASE.
(a) Subject to Section 11(i), at the request of the Parent
given prior to an Exercise Termination Event, at any time commencing upon the
occurrence of a Repurchase Event (as defined below), the Company (or any
successor entity thereof) shall repurchase the Option from the Parent together
with all (but not less than all, subject to Section 10) shares of Company Common
Stock purchased by the Parent pursuant thereto with respect to which the Parent
then has Beneficial Ownership, at a price (on a per share basis, the "Per Share
Repurchase Price") equal to the sum of:
(i) The aggregate Purchase Price paid by the Parent
for any shares of Company Common Stock acquired pursuant to the Option;
(ii) The difference between (A) the "Market/Tender
Offer Price" for shares of Company Common Stock (defined as the higher
of (x) the highest price per share at which a tender or exchange offer
B-4
<PAGE>
has been made for shares of Company Common Stock or (y) the highest
closing mean of the 'bid' and the 'ask' price per share of Company
Common Stock reported on the Nasdaq National Market for any day within
the six-month period immediately preceding the date the Parent gives
notice of the required repurchase under this Section 7) and (B) the
Purchase Price as determined pursuant to Section 2 hereof (subject to
adjustment as provided in Section 6), multiplied by the number of
shares of Company Common Stock with respect to which the Option has not
been exercised, but only if the Market/Tender Offer Price is greater
than such Purchase Price; and
(iii) The difference between the Market/Tender Offer
Price and the Purchase Price paid by the Parent for any shares of
Company Common Stock purchased pursuant to the exercise of the Option,
multiplied by the number of shares so purchased, but only if the
Market/Tender Offer Price is greater than such Purchase Price;
PROVIDED, HOWEVER, that if the sum of clauses (i), (ii) and (iii) is
greater than an amount (the "Maximum Repurchase Price") equal to the
sum of (x) $15,000,000 and (y) the amount set forth in (i) above, then
such price shall be deemed to be the Maximum Repurchase Price for all
purposes hereunder.
(b) In the event the Parent exercises its rights under this
Section 7, the Company shall, within 10 business days thereafter, pay the
required amount to the Parent by wire transfer of immediately available funds to
an account designated by the Parent and the Parent shall surrender to the
Company the Option and the certificates evidencing the shares of Company Common
Stock purchased thereunder with respect to which the Parent then has Beneficial
Ownership, and the Parent shall warrant that it has sole record ownership and
Beneficial Ownership of such shares and that the same are free and clear of all
liens, claims, charges, restrictions and encumbrances of any kind whatsoever.
(c) In determining the Market/Tender Offer Price, the value of
any consideration other than cash shall be determined by an independent
nationally recognized investment banking firm selected by the Parent and
reasonably acceptable to the Company.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any merger,
consolidation or similar transaction involving the Company or any purchase,
lease or other acquisition of all or a substantial portion of the assets of the
Company, other than any such transaction which would not constitute an
Acquisition Transaction pursuant to the provisos to Section 3(b)(i) hereof or
(ii) upon the acquisition by any person of beneficial ownership of 50% or more
of the then outstanding shares of Company Common Stock, provided that no such
event shall constitute a Repurchase Event unless an Extension Event shall have
occurred prior to an Exercise Termination Event. The parties hereto agree that
the Company's obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise Termination
Event unless no Extension Event shall have occurred prior to the occurrence of
an Exercise Termination Event.
8. REPURCHASE AT OPTION OF THE COMPANY AND RIGHT OF FIRST
REFUSAL.
(a) Except to the extent that the Parent shall have previously
exercised its rights under Section 7, at the request of the Company during the
six-month period commencing following the first occurrence of an Exercise
Termination Event, the Company may repurchase from the Parent and the Parent
shall sell to the Company all (but not less than all, subject to Section 10) of
the Company Common Stock acquired by the Parent pursuant hereto and with respect
to which the Parent has Beneficial Ownership at the time of such repurchase at a
price per share equal to the greater of (i) 110% of the Market/Tender Offer
Price, (ii) the Per Share Repurchase Price or (iii) the quotient obtained by
dividing (x) the sum of (A) the aggregate Purchase Price paid for the shares so
repurchased plus (B) interest on the aggregate Purchase Price paid for the
shares so repurchased from the date of purchase to the date of repurchase at the
highest rate of interest announced by the Parent as its prime or base lending or
reference rate during such period, less any dividends received on the shares so
repurchased, plus (C) the Parent's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by the Merger Agreement,
including, without limitation, legal, accounting and investment banking fees by
(y) the number of shares so repurchased. Any repurchase under this Section 8(a)
shall be consummated in accordance with Section 7(b).
B-5
<PAGE>
(b) If at any time after the occurrence of a Purchase Event
and prior to the expiration of the Option the Parent shall desire to sell,
assign, transfer or otherwise dispose of the Option or all or any of the shares
of Company Common Stock acquired by it pursuant to the Option, it shall give the
Company written notice of the proposed transaction (an "Offeror's Notice"),
identifying the proposed transferee, and setting forth the terms of the proposed
transaction. An Offeror's Notice shall be deemed an offer by the Parent to the
Company, which may be accepted within 10 business days of the receipt of such
Offeror's Notice, on the same terms and conditions and at the same price at
which the Parent is proposing to transfer the Option or such shares to a third
party. The purchase of the Option or any such shares by the Company shall be
closed within 10 business days of the date of the acceptance of the offer and
the purchase price shall be paid to the Parent by wire transfer of immediately
available funds to an account designated by the Parent. In the event of the
failure or refusal of the Company to purchase the Option or all the shares
covered by the Offeror's Notice or if any Governmental Entity disapproves the
Company's proposed purchase of the Option or such shares, the Parent may, within
60 days from the date of the Offeror's Notice, sell all, but not less than all,
of the Option or such shares to such third party at no less than the price
specified and on terms no more favorable to the purchaser than those set forth
in the Offeror's Notice. The requirements of this Section 8(b) shall not apply
to (A) any disposition as a result of which the proposed transferee would
Beneficially Own not more than 2% of the voting power of the Company, (B) any
disposition of Company Common Stock by a Person to whom the Parent has sold
shares of Company Common Stock issued upon exercise of the Option or (C) any
sale by means of a public offering registered under the Securities Act.
9. REGISTRATION RIGHTS. Upon the occurrence of a Purchase
Event that occurs prior to an Exercise Termination Event, the Company shall, if
requested by any holder or Beneficial Owner of shares of Company Common Stock
issued upon exercise of the Option (except any Beneficial Owner or holder who
acquired all of such Beneficial Owner's or holder's shares in a transaction
exempt from the requirements of Section 8(b) by reason of clause (A) thereof)
(each a "Holder"), delivered within six months of such Purchase Event, as
expeditiously as possible file a registration statement on a form for general
use under the Securities Act if necessary in order to permit the sale or other
disposition of the shares of Company Common Stock that have been acquired upon
exercise of the Option in accordance with the intended method of sale or other
disposition requested by any such Holder (it being understood and agreed that
any such sale or other disposition shall be effected on a widely distributed
basis so that, upon consummation thereof, no purchaser or transferee shall
Beneficially Own more than 2% of the shares of Company Common Stock then
outstanding). Each such Holder shall provide all information reasonably
requested by the Company for inclusion in any registration statement to be filed
hereunder. The Company shall use its best efforts to cause such registration
statement first to become effective and then to remain effective for such period
not in excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. The registration effected under this Section 9 shall be at the
Company's expense except for underwriting commissions and the fees and
disbursements of such Holders' counsel attributable to the registration of such
Company Common Stock. In no event shall the Company be required to effect more
than two registrations hereunder. The filing of the registration statement
hereunder may be delayed for such period of time as may reasonably be required
to facilitate any public distribution by the Company of Company Common Stock or
if a special audit of the Company would otherwise be required in connection
therewith. The foregoing notwithstanding, if at the time of any request by any
Holder for registration of Option Shares as provided above the Company is in
registration with respect to an underwritten public offering by the Company of
shares of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters or, if none, the sole underwriter or
underwriters, of such offering the offer and sale of the Option Shares would
interfere with the successful marketing of the shares of Common Stock offered by
the Company, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; PROVIDED, HOWEVER,
that after any such required reduction the number of Option Shares to be
included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and the Company
in the aggregate; and PROVIDED FURTHER, HOWEVER, that if such reduction occurs,
then the Company shall file a registration statement for the balance as promptly
as practicable thereafter as to which no reduction pursuant to this Section 9
shall be permitted or occur and the Holder shall thereafter be entitled to one
additional registration and the six-month period referred to in the first
sentence of this Section 9 shall be increased to 12 months. If requested by any
such Holder in connection with such registration, the Company shall become a
party
B-6
<PAGE>
to any underwriting agreement relating to the sale of such shares, but only to
the extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for parties similarly situated. Upon receiving any request for
registration under this Section 9 from any Holder, the Company agrees to send a
copy thereof to any other Person known to the Company to be entitled to
registration rights under this Section 9, in each case by promptly mailing the
same, postage prepaid, to the address of record of the Persons entitled to
receive such copies, and each such other Person, whether or not known by the
Company to be entitled thereto, shall be permitted to include shares of Company
Common Stock with respect to which such Person is entitled to such registration
rights in such registration requested by such Holder, to the extent reasonably
practicable.
10. SEVERABILITY. Any term, provision, covenant or restriction
contained in this Option Agreement held by a Governmental Entity of competent
jurisdiction to be invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this Option
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Option Agreement that is found to be so broad as
to be unenforceable shall be interpreted to be as broad as is enforceable. If
for any reason such Governmental Entity determines that applicable law will not
permit the Parent or any other Person to acquire, or the Company to repurchase
or purchase, the full number of shares of Company Common Stock provided in
Section 2 hereof (as adjusted pursuant to Section 6 hereof), it is the express
intention of the parties hereto to allow the Parent or such other Person to
acquire, or the Company to repurchase or purchase, such lesser number of shares
as may be permissible, without any amendment or modification hereof.
11. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto shall pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel, except as otherwise
provided herein.
(b) ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Option Agreement and the Merger Agreement contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereto, written or oral.
(c) SUCCESSORS; NO THIRD-PARTY BENEFICIARIES. The terms and
conditions of this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Option Agreement, except as expressly provided herein.
(d) ASSIGNMENT. Other than as provided in Sections 8 and 9
hereof, neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Option Agreement or the
Option created hereunder to any other Person (whether by operation of law or
otherwise), without the express written consent of the other party.
(e) NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
in accordance with Section 10.4 of the Merger Agreement (which is incorporated
herein by reference).
(f) COUNTERPARTS. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(g) SPECIFIC PERFORMANCE. The parties hereto agree that if for
any reason the Parent or the Company shall have failed to perform its
obligations under this Option Agreement, then either party hereto seeking to
B-7
<PAGE>
enforce this Option Agreement against such non-performing party shall be
entitled to specific performance and injunctive and other equitable relief, and
the parties hereto further agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such injunctive or
other equitable relief. This provision is without prejudice to any other rights
that either party hereto may have against the other party hereto for any failure
to perform its obligations under this Option Agreement.
(h) GOVERNING LAW. This Option Agreement shall be governed by
and construed in accordance with the laws of the State of Florida applicable to
agreements made and entirely to be performed within such state. Nothing in this
Option Agreement shall be construed to require any party (or any subsidiary or
affiliate of any party) to take any action or fail to take any action in
violation of applicable law, rule or regulation.
(i) REGULATORY APPROVALS; SECTION 16(B). If, in connection
with (A) the exercise of the Option under Section 3 or a sale by the Parent to a
third party under Section 8, (B) a repurchase by the Company under Section 7 or
a repurchase or purchase by the Company under Section 8, prior notification to
or approval of any Governmental Entity is required, then the required notice or
application for approval shall be promptly filed and expeditiously processed and
periods of time that otherwise would run pursuant to such Sections shall run
instead from the date on which any such required notification period has expired
or been terminated or such approval has been obtained, and in either event, any
requisite waiting period shall have passed. In the case of clause (A) of this
subsection (i), such filing shall be made by the Parent and in the case of
clause (B) of this subsection (i), such filing shall be made by the Company
provided that each of the Parent and the Company shall use its best efforts to
make all filings with, and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the transactions
contemplated hereby. Periods of time that otherwise would run pursuant to
Sections 3, 7 or 8 shall also be extended to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act.
(j) NO BREACH OF MERGER AGREEMENT. Nothing contained in this
Option Agreement shall, and performance by any party hereto of any of its
obligations under this Option Agreement in accordance with their terms shall
not, constitute a breach of any of the provisions of the Merger Agreement.
(k) WAIVER AND AMENDMENT. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision, but only by delivery of a written instrument executed by such party.
This Option Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Option Agreement as of the date first written above.
REPUBLIC SECURITY FINANCIAL
CORPORATION
By /S/ RUDY E. SCHUPP
-------------------------
Name: Rudy E. Schupp
Title: Chairman and CEO
FIRST PALM BEACH BANCORP, INC.
By /S/ LOUIS O. DAVIS, JR.
-------------------------
Name: Louis O. Davis, Jr.
Title: President and CEO
B-8
<PAGE>
ANNEX C
[LETTERHEAD OF SANDLER O'NEILL & PARTNERS, L.P.]
________________, 1998
Board of Directors
Republic Security Financial Corporation
4400 Congress Avenue
West Palm Beach, FL 33402-4298
Ladies and Gentlemen:
Republic Security Financial Corporation ("Republic Security") and First
Palm Beach Bancorp, Inc. ("First Palm Beach") have entered into an Agreement and
Plan of Merger, dated as May 27, 1998 (the "Agreement"), pursuant to which First
Palm Beach will be merged with and into Republic (the "Merger"). Upon
consummation of the Merger, each share of First Palm Beach common stock, par
value $0.01 per share, issued and outstanding immediately prior to the Merger
(together with the rights attached thereto issued pursuant to the Rights
Agreement dated as of January 23, 1995 between First Palm Beach and Mellon Bank,
N.A., as Rights Agent), other than certain shares specified in the Agreement,
will be converted into the right to receive 4.194 shares (the "Exchange Ratio")
of the common stock, par value $0.01 per share (together with the rights
attached thereto to be issued pursuant to the Rights Agreement dated as of April
14, 1995 between Republic and IBJ Schroder Bank and Trust Company, as Rights
Agent), of Republic. The terms and conditions of the Merger are more fully set
forth in the Agreement. You have requested our opinion as to the fairness of the
Exchange Ratio to Republic from a financial point of view.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option Agreement,
dated as of May 27, 1998, by and between Republic and First Palm Beach; (iii)
certain publicly available financial statements of Republic and other historical
financial information provided by Republic that we deemed relevant; (iv) certain
publicly available financial statements of First Palm Beach and other historical
financial information provided by First Palm Beach that we deemed relevant; (v)
certain financial analyses and forecasts of Republic prepared by and reviewed
with management of Republic and the views of senior management of Republic
regarding Republic's past and current business operations, results thereof,
financial condition and future prospects, including the pro forma impact of
Republic's acquisition of Unifirst Federal Savings Bank; (vi) certain financial
analyses and forecasts of First Palm Beach prepared by and reviewed with
management of First Palm Beach and the views of senior management of First Palm
Beach regarding First Palm Beach's past and current business operations, results
thereof, financial condition and future prospects; (vii) the pro forma impact of
the Merger on Republic; (viii) the publicly reported historical price and
trading activity for Republic and First Palm Beach's common stock, including a
comparison of certain financial and stock market information for Republic and
First Palm Beach with similar publicly available information for certain other
companies the securities of which are publicly traded; (ix) the financial terms
of recent business combinations in the savings institution industry, to the
extent publicly available; (x) the current market environment generally and the
banking environment in particular; and (xi) such other information, financial
studies, analyses and investigations and financial, economic and market criteria
as we considered relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability for the
C-1
<PAGE>
Board of Directors
Republic Security Financial Corporation
_______________, 1998
Page 2
accuracy or completeness thereof. We did not make an independent evaluation or
appraisal of the specific assets, the collateral securing assets or the
liabilities (contingent or otherwise) of Republic or First Palm Beach or any of
their subsidiaries, or the collectibility of any such assets, nor have we been
furnished with any such evaluations or appraisals. With respect to the financial
projections reviewed with management, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the respective managements of the respective future financial
performances of Republic and First Palm Beach and that such performances will be
achieved, and we express no opinion as to such financial projections or the
assumptions on which they are based. We have also assumed that there has been no
material change in Republic's or First Palm Beach's assets, financial condition,
results of operations, business or prospects since the date of the last
financial statements made available to us. We have assumed in all respects
material to our analysis that Republic and First Palm Beach will remain as going
concerns for all periods relevant to our analyses, that all of the
representations and warranties contained in the Agreement and all related
agreements are true and correct, that each party to such agreements will perform
all of the covenants required to be performed by such party under such
agreements, that the conditions precedent in the Agreement are not waived and
that the Merger will be accounted for as a pooling of interests.
Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise or reaffirm this
opinion or otherwise comment upon events occurring after the date hereof. We are
expressing no opinion herein as to what the value of Republic common stock will
be when issued to First Palm Beach's shareholders pursuant to the Agreement or
the prices at which Republic's or First Palm Beach's common stock will trade at
any time.
We have acted as Republic's financial advisor in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Merger. We will also receive a fee for
rendering this opinion.
In the ordinary course of our business, we may actively trade the debt
and equity securities of Republic and First Palm Beach for our own account and
for the accounts of our customers and, accordingly, may at any time hold a long
or short position in such securities.
Our opinion is directed solely to the Board of Directors of Republic in
connection with its consideration of the Merger and is not to be quoted or
referred to, in whole or in part, in a registration statement, prospectus, proxy
statement or in any other document, nor shall this opinion be used for any other
purposes, without Sandler O'Neill's prior written consent; PROVIDED, HOWEVER,
that we hereby consent to the inclusion of this opinon as an appendix to
Republic's and First Palm Beach's Joint Proxy Statement/Prospectus dated the
date hereof and to the references to this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Exchange Ratio is fair to Republic from a financial point
of view.
Very truly yours,
C-2
<PAGE>
ANNEX D
[LETTERHEAD OF KEEFE, BRUYETTE & WOODS]
___ __, 1998
The Board of Directors
First Palm Beach Bancorp, Inc.
450 South Australian Avenue
West Palm Beach, FL 33402-2326
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the common stockholders of First
Palm Beach Bancorp, Inc. ("FFPB") of the exchange ratio in the proposed merger
("the Merger") of FFPB with and into Republic Security Financial Corporation
("RSFC") pursuant to the Agreement and Plan of Merger ("Agreement") dated as of
May 27, 1998 between FFPB and RSFC. It is our understanding that the Merger will
be structured as a pooling of interests under generally accepted accounting
principles and will be a tax-free reorganization under the Internal Revenue
Code.
As is more specifically set forth in the Merger Agreement, upon
consummation of the Merger, each outstanding share of the common stock of FFPB,
par value $.01 per share ("FFPB Common Stock"), will be converted into and
exchanged for 4.194 (the "Exchange Ratio") shares of RSFC ("RSFC Common Stock"),
$.01 par value per share.
Keefe, Bruyette & Woods, Inc. ("Keefe Bruyette"), as part of its
investment banking business, is continually engaged in the valuation of bank
holding companies and banks, thrift holding companies and thrifts and their
securities in connection with mergers and acquisitions, underwriting, private
placements, competitive bidding processes, market making as a NASD market maker,
and valuations for various other purposes. As specialists in the securities of
banking companies we have experience in, and knowledge of, the valuation of
banking enterprises. In the ordinary course of our business as a broker-dealer,
we may, from time to time, trade the securities of RSFC or FFPB, for our own
account, and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities. To the extent we have any such
positions as of the date of this opinion it has been disclosed to FFPB. KBW has
served as financial advisor to FFPB in the negotiation of the Merger Agreement
and in rendering this fairness opinion and will receive a fee from FFPB for
those services.
In arriving at our opinion, we have reviewed, analyzed and relied
upon material bearing upon the financial and operating condition of RSFC and
FFPB and the Merger, including among other things, the following:
i. Reviewed the Merger Agreement;
ii. Reviewed certain historical financial and other information
concerning FFPB for the four years ending September 30, 1997,
including FFPB's Annual Report to Stockholders and Annual Reports
on Forms 10-K, and interim quarterly reports on Form 10-Q;
D-1
<PAGE>
iii. Reviewed certain historical financial and other information
concerning RSFC for the three years ending December 31, 1997,
including RSFC's Annual Report to Stockholders and Annual Reports
on Forms 10-K, and interim quarterly reports on Form 10-Q;
iv. Reviewed and studied the historical stock prices and trading
volumes of the common stock of both FFPB and RSFC;
v. Held discussions with senior management of FFPB and RSFC with
respect to their past and current financial performance, financial
condition and future prospects;
vi. Reviewed certain internal financial data, projections and other
information of FFPB and RSFC, including financial projections
prepared by management;
vii. Analyzed certain publicly available information of other financial
institutions that we deemed comparable or otherwise relevant to
our inquiry, and compared FFPB and RSFC from a financial point of
view with certain of these institutions;
viii. Reviewed the financial terms of certain recent business
combinations in the banking industry that we deemed comparable or
otherwise relevant to our inquiry; and
ix. Conducted such other financial studies, analyses and
investigations and reviewed such other information as we deemed
appropriate to enable us to render our opinion.
In conducting our review and arriving at our opinion, we have
relied upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and we have not assumed any
responsibility for independently verifying the accuracy or completeness of any
such information. We have relied upon the management of FFPB and RSFC as to the
reasonableness and achievability of the financial and operating forecasts and
projections (and the assumptions and bases therefor) provided to us, and we have
assumed that such forecasts and projections reflect the best currently available
estimates and judgments of such managements and that such forecasts and
projections will be realized in the amounts and in the time periods currently
estimated by such managements. We are not experts in the independent
verification of the adequacy of allowances for loan and lease losses and we have
assumed that the current and projected aggregate reserves for loan and lease
losses for FFPB and RSFC are adequate to cover such losses. We did not make or
obtain any independent evaluations or appraisals of any assets or liabilities of
FFPB, RSFC, or any of their respective subsidiaries nor did we verify any of
FFPB's or RSFC's books or records or review any individual loan or credit files.
We have considered such financial and other factors as we have
deemed appropriate under the circumstances, including, among others, the
following: (i) the historical and financial position and results of operations
of FFPB and RSFC; (ii) the assets and liabilities of FFPB and RSFC; and (iii)
the nature and terms of certain other merger transactions involving banks and
bank holding companies. We have also taken into account our assessment of
general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and knowledge of
the banking industry generally. Our opinion is necessarily based upon conditions
as they exist and can be evaluated on the date hereof and the information made
available to us through the date hereof.
D-2
<PAGE>
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Exchange Ratio is fair, from a financial point of
view, to FFPB and its stockholders.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
D-3
<PAGE>
ANNEX E
TEXT OF AMENDMENT TO RSFC'S ARTICLES OF INCORPORATION
The Articles of Incorporation of this corporation are to be amended as follows:
1. Article IV thereof is amended in its entirety to read
as follows:
The aggregate number of shares the corporation shall
have authority to issue is 520,000,000 shares, consisting of
500,000,000 shares of Common Stock, par value $.01 per share,
and 20,000,000 shares of Preferred Stock, par value $.01 per
share. The Preferred Stock consists of 5,000,000 shares of
Series B Junior Participating Preferred Stock and 15,000,000
shares authorized for designation into series.
2. Article V. Section 6. CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES C. is deleted in its entirety.
E-1
<PAGE>
ANNEX F
REPUBLIC SECURITY FINANCIAL CORPORATION
1997 PERFORMANCE INCENTIVE PLAN
The purpose of the Republic Security Financial Corporation 1997
Performance Incentive Plan (the "Plan") is to encourage designated directors,
officers and employees of Republic Security Financial Corporation (the
"Company") and its subsidiaries to contribute materially to the growth of the
Company, thereby benefitting the Company's shareholders, and aligning the
economic interests of the participants with those of the shareholders.
12. ADMINISTRATION
(a) COMMITTEE. The Plan shall be administered and interpreted by a
committee (the "Committee") appointed by the Board of Directors of the Company
(the "Board"). The Committee shall consist of three or more persons appointed by
the Board, all of whom shall be "outside directors" as defined under section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and
related Treasury regulations, and "non-employee directors" as defined under Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
("Non-employee Directors").
(b) COMMITTEE AUTHORITY. The Committee shall have the sole authority to
(i) determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued Grant and (v) deal with any other matters
arising under the Plan.
(c) COMMITTEE DETERMINATIONS. The Committee shall have full power and
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals.
13. GRANTS
Awards under the Plan may consist of grants of incentive stock options
as described in Section 5 ("Incentive Stock Options"), nonqualified stock
options as described in Section 5 ("Nonqualified Stock Options") (Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options"), restricted stock as described in Section 6 ("Restricted Stock"),
stock appreciation rights as described in Section 7 ("SARs"), performance units
as described in Section 8 ("Performance Units"), performance shares as described
in Section 8 ("Performance Shares"), phantom stock as described in Section 9
("Phantom Stock"), and dividend equivalents as described in Section 10
("Dividend Equivalents") (hereinafter collectively referred to as "Grants"). All
Grants shall be subject to the terms and conditions set forth herein and to such
other terms and conditions consistent with this Plan as the Committee deems
appropriate and as are specified in writing by the Committee to the individual
in a grant instrument (the "Grant
F-1
<PAGE>
Instrument") or an amendment to the Grant Instrument. The Committee shall
approve the form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the grantees.
F-2
<PAGE>
14. SHARES SUBJECT TO THE PLAN
(a) SHARES AUTHORIZED. Subject to the adjustment specified in Section
3(c) below, the aggregate number of shares of common stock of the Company
("Common Stock") that may be issued or transferred under the Plan is 2,000,000.
The shares may be authorized but unissued shares of Common Stock or reacquired
shares of Common Stock, including shares purchased by the Company on the open
market for purposes of the Plan. If and to the extent Options or SARs granted
under the Plan terminate, expire, or are canceled, forfeited, exchanged or
surrendered without having been exercised or if any shares of Restricted Stock,
Performance Units, Performance Shares or Phantom Stock are forfeited, the shares
(if any) subject to such Grants shall again be available for purposes of the
Plan.
(b) INDIVIDUAL LIMIT. During any calendar year, no individual may be
granted Options or other Grants under the Plan that, in the aggregate, may be
settled by delivery of more than 100,000 shares of Common Stock, subject to
adjustment as provided in Section 3(c). In addition, with respect to Grants the
value of which is based on the Fair Market Value of Common Stock and that may be
settled in cash (in whole or in part), no individual may be paid during any
calendar year cash amounts relating to such Grants that exceed the greater of
the Fair Market Value (as defined in Section 5(b)(iii)) of the number of shares
of Common Stock set forth in the preceding sentence either at the date of grant
or at the date of settlement. This provision sets forth two separate
limitations, so that Grants that may be settled solely by delivery of Common
Stock will not operate to reduce the amount or value of cash-only Grants, and
vice versa; nevertheless, Grants that may be settled in Common Stock or cash
must not exceed either limitation.
With respect to Grants, the value of which is not based on the Fair
Market Value of Common Stock, no individual may receive during any calendar year
cash or shares of Common Stock with a Fair Market Value at date of settlement
that, in the aggregate, exceeds $1,000,000.
(c) ADJUSTMENTS. If there is any change in the number or kind of shares
of Common Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Common Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Common Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Common
Stock available for Grants, the maximum number of shares of Common Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share or the applicable market value of such Grants may
be appropriately adjusted by the Committee to reflect any increase or decrease
in the number of, or change in the kind or value of, issued shares of Common
Stock to preclude, to the extent practicable, the enlargement or dilution of
rights and benefits under such Grants; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated. Any adjustments
determined by the Committee shall be final, binding and conclusive. If and to
the extent that any such change in the number or kind of shares of Common Stock
outstanding is effected solely by application of a mathematical formula (E.G., a
2-for-1 stock split), the adjustment described in this Section 3(c) shall be
made and shall occur automatically by application of such formula, without
further action by the Committee.
15. ELIGIBILITY FOR PARTICIPATION
(a) ELIGIBLE PERSONS. All directors, officers and employees of the
Company and its subsidiaries ("Participants"), including Non-employee Directors
of the Company, shall be eligible to participate in the Plan.
F-3
<PAGE>
(b) SELECTION OF GRANTEES. The Committee shall select the Participants
to receive Grants and shall determine the number of shares of Common Stock
subject to a particular Grant, and/or shall establish such other terms and
conditions applicable to such Grant, in such manner as the Committee determines.
Participants who receive Grants under this Plan shall hereinafter be referred to
as "Grantees."
16. GRANTING OF OPTIONS
(a) NUMBER OF SHARES. The Committee shall determine the number of
shares of Common Stock that will be subject to each Grant of Options.
(b) TYPE OF OPTION AND PRICE.
(i) The Committee may grant Incentive Stock Options that are
intended to qualify as "incentive stock options" within the meaning of section
422 of the Code or Nonqualified Stock Options that are not intended so to
qualify or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.
Non-employee Directors shall not be eligible to receive Incentive Stock Options.
(ii) The purchase price (the "Exercise Price") of Common Stock
subject to an Option shall be determined by the Committee and may be equal to or
greater than the Fair Market Value (as defined below) of a share of Common Stock
on the date the Option is granted; provided, however, that an Incentive Stock
Option may not be granted to a Participant who, at the time of grant, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary of the Company,
unless the Exercise Price per share is not less than 110% of the Fair Market
Value of Common Stock on the date of grant.
(iii) The Fair Market Value per share shall be the closing sale
price of a share of Common Stock on the NASDAQ National Market (or such other
exchange on which the Common Stock may hereafter be listed), or if there is no
such sale on the relevant date, then on the last previous day on which a sale
was reported.
(c) OPTION TERM. The Committee shall determine the term of each Option.
The term of any Option shall not exceed ten years from the date of grant.
However, an Incentive Stock Option that is granted to a Participant who, at the
time of grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or any parent or subsidiary
of the Company, may not have a term that exceeds five years from the date of
grant.
(d) EXERCISABILITY OF OPTIONS. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee and specified in the Grant Instrument or an
amendment to the Grant Instrument. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.
(e) TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH.
(i) Except as provided below, an Option may only be exercised
while the Grantee is employed by the Company or a member of the Board of
Directors. In the event that a Grantee ceases to be so employed (or a member of
the Board of Directors) for any reason other than a "disability," death,
retirement, or termination by the Company (or, in the case of a Non-employee
Director who is nominated for reelection, failure to be reelected by the
shareholders), any Option held by the Grantee shall terminate at the close of
business on the Grantee's last day of employment (or service as a director).
F-4
<PAGE>
(ii) In the event the Grantee ceases to be employed by the
Company because the Grantee is "disabled," or the Grantee dies or retires in
accordance with the Company's retirement policies, any Nonqualified Stock Option
or any Incentive Stock Option in the case of the Grantee's death, which is
otherwise exercisable by the Grantee shall terminate unless exercised within two
years after the date on which the Grantee ceases to be employed by the Company
(or within such shorter period of time as may be specified by the Committee),
but in any event no later than the date of expiration of the Option term. Any of
the Grantee's Options which are not otherwise exercisable as of the date on
which the Grantee ceases to be employed by the Company shall terminate as of
such date.
(iii) In the event the Grantee ceases to be employed by the
Company because the Grantee is "disabled," any Incentive Stock Option that is
otherwise exercisable by the Grantee shall terminate unless exercised within one
year after the date on which the Grantee ceases to be employed by the Company
(or within such shorter period of time as may be specified by the Committee),
but in any event no later than the date of expiration of the Option term. Any of
the Grantee's Options that are not otherwise exercisable as of the date on which
the Grantee ceases to be employed by the Company shall terminate as of such
date.
(iv) In the event the Grantee ceases to be employed by the
Company because the Grantee retires in accordance with the Company's retirement
policies or because the Grantee's employment is terminated by the Company, with
or without cause (or, in the case of a Non-employee Director, because of the
Grantee's failure to be reelected as a director by the shareholders), any Option
that is otherwise exercisable by the Grantee shall terminate unless exercised
within 90 days after the date on which the Grantee ceases to be employed by the
Company (or within such shorter period of time as may be specified by the
Committee), but in any event no later than the date of expiration of the Option
term. Any of the Grantee's Options that are not otherwise exercisable as of the
date on which the Grantee ceases to be employed by the Company or a member of
the Board of Directors shall terminate as of such date.
(v) For purposes of this Section 5(e) and Sections 6, 7 and 8:
(A) The term "Company" shall mean the Company and its
subsidiary corporations.
(B) "Disability" or "disabled" shall mean a Grantee's
becoming disabled within the meaning of section 22(e)(3) of the Code.
(f) EXERCISE OF OPTIONS. A Grantee may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Company with payment of the Exercise Price. The Grantee shall pay the
Exercise Price for an Option as specified by the Committee (x) in cash, (y) with
the approval of the Committee, by delivering shares of Common Stock owned by the
Grantee (including Common Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the Exercise Price
or (z) by such other method as the Committee may approve, including attestation
(on a form prescribed by the Committee) to ownership of shares of Common Stock
having a Fair Market Value on the date of exercise equal to the Exercise Price,
or payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board. In addition, the Committee may
authorize loans by the Company to Grantees in connection with the exercise of an
Option, upon such terms and conditions that the Committee, in its sole
discretion, deems appropriate. Shares of Common Stock used to exercise an Option
shall have been held by the Grantee for the requisite period of time to avoid
adverse accounting consequences to the Company with respect to the Option. The
Grantee shall pay the Exercise Price and the amount of any withholding tax due
(pursuant to Section 11) at the time of exercise. Shares of Common Stock shall
not be issued upon exercise of an Option until the Exercise Price is fully paid
and any required withholding is made.
F-5
<PAGE>
(g) LIMITS ON INCENTIVE STOCK OPTIONS. Each Incentive Stock Option
shall provide that, if the aggregate Fair Market Value of the stock on the date
of grant with respect to which Incentive Stock Options are exercisable for the
first time by a Grantee during any calendar year, under the Plan or any other
stock option plan of the Company or a parent or subsidiary, exceeds $100,000,
then the Option, as to the excess, shall be treated as a Nonqualified Stock
Option.
(h) DIVIDEND EQUIVALENTS. The Committee may grant dividend equivalents
in connection with Options granted under the Plan. Such dividends may be paid
currently or accrued as contingent cash obligations and may be payable in cash
or shares of Common Stock, upon such terms as the Committee may establish,
including the achievement of specific performance goals.
F-6
<PAGE>
17. RESTRICTED STOCK GRANTS
The Committee may issue or transfer shares of Common Stock to a Grantee
under a Grant of Restricted Stock, upon such terms as the Committee deems
appropriate. The following provisions are applicable to Restricted Stock:
(a) GENERAL REQUIREMENTS. Shares of Common Stock issued or transferred
pursuant to Restricted Stock Grants may be issued or transferred for
consideration or for no consideration, as determined by the Committee. The
Committee may establish conditions under which restrictions on shares of
Restricted Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate including, without limitation,
restrictions based upon the achievement of specific performance goals. The
period of time during which the Restricted Stock will remain subject to
restrictions will be designated in the Grant Instrument as the "Restriction
Period."
(b) NUMBER OF SHARES. The Committee shall determine the number of
shares of Common Stock to be issued or transferred pursuant to a Restricted
Stock Grant and the restrictions applicable to such shares.
(c) REQUIREMENT OF EMPLOYMENT. If the Grantee ceases to be employed by
the Company during the Restriction Period (or, in the case of a Non-employee
Director, ceases to be a member of the Board of Directors), or if other
specified conditions are not met, the Restricted Stock Grant shall terminate as
to all shares covered by the Grant as to which the restrictions have not lapsed
at the close of business on the Grantee's last day of employment, and those
shares of Common Stock must be immediately returned to the Company. The
Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.
(d) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK CERTIFICATE. During
the Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 12(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares subject to restrictions when all restrictions on
such shares have lapsed. The Committee may determine that the Company will not
issue certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.
(e) RIGHT TO VOTE AND TO RECEIVE DIVIDENDS. Unless the Committee
determines otherwise, during the Restriction Period the Grantee shall not have
the right to vote shares of Restricted Stock. During the Restriction Period the
Grantee shall have the right to receive any dividends or other distributions
paid on such shares, subject to any restrictions deemed appropriate by the
Committee. Such dividends may be paid currently, accrued as contingent cash
obligations, or converted into additional shares of Restricted Stock, upon such
terms as the Committee may establish, including the achievement of specific
performance goals.
(f) LAPSE OF RESTRICTIONS. All restrictions imposed on Restricted Stock
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions imposed by the Committee. The Committee may
determine, as to any or all Restricted Stock Grants, that the restrictions shall
lapse without regard to any Restriction Period.
18. STOCK APPRECIATION RIGHTS
(a) GENERAL REQUIREMENTS. The Committee may grant SARs to a Grantee
separately or in tandem with any Option (for all or a portion of the applicable
Option). Tandem SARs may be granted either at the time the Option is
F-7
<PAGE>
granted or at any time thereafter while the Option remains outstanding;
provided, however, that, in the case of an Incentive Stock Option, SARs may be
granted only at the time of grant of the Incentive Stock Option. The Committee
shall establish the base amount of the SAR at the time the SAR is granted.
Unless the Committee determines otherwise, the base amount of each SAR shall be
equal to the per share Exercise Price of the related Option or, if there is no
related Option, the Fair Market Value of a share of Common Stock as of the date
of grant of the SAR.
(b) TANDEM SARS. In the case of tandem SARs, the number of SARs granted
to a Grantee that shall be exercisable during a specified period shall not
exceed the number of shares of Common Stock that the Grantee may purchase upon
the exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Common Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the
extent of an equal number of shares of Common Stock.
(c) EXERCISABILITY. An SAR shall be exercisable during the period
specified by the Committee in the Grant Instrument and shall be subject to such
vesting and other restrictions as may be specified in the Grant Instrument;
provided, however, that the term of the SAR shall not exceed ten years. The
Committee may accelerate the exercisability of any or all outstanding SARs at
any time for any reason. SARs may only be exercised while the Grantee is
employed by the Company (or, in the case of a Non-employee Director, ceases to
be a member of the Board of Directors) or during the applicable period after
termination of employment (or Board of Directors' service) as described in
Section 5(e) for Options. For purposes of the preceding sentence, the rules
applicable to a tandem SAR shall be the rules applicable under Section 5(e) to
the Option to which it relates, and the rules applicable to any other SAR shall
be the rules applicable under Section 5(e) and a Nonqualified Stock Option. A
tandem SAR shall be exercisable only during the period when the Option to which
it is related is also exercisable.
(d) VALUE OF SARS. When a Grantee exercises SARs, the Grantee shall
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised, payable in cash, Common Stock or
a combination thereof. The stock appreciation for an SAR is the amount by which
the Fair Market Value of the underlying Common Stock on the date of exercise of
the SAR exceeds the base amount of the SAR as described in subsection (a).
(e) FORM OF PAYMENT. The Committee shall determine whether the
appreciation in an SAR shall be paid in the form of cash, shares of Common
Stock, or a combination of the two, in such proportion as the Committee deems
appropriate. For purposes of calculating the number of shares of Common Stock to
be received, shares of Common Stock shall be valued at their Fair Market Value
on the date of exercise of the SAR. If shares of Common Stock are to be received
upon exercise of an SAR, cash shall be delivered in lieu of any fractional
share.
19. PERFORMANCE UNITS AND PERFORMANCE SHARES
(a) GENERAL REQUIREMENTS. The Committee may grant Performance Units or
Performance Shares to a Grantee (other than Non-employee Directors). Each
Performance Unit/Share shall represent the right of the Grantee to receive an
amount based on the value of the Performance Unit/Share, if performance goals
established by the Committee are met. A Performance Unit shall have a value
based on such measurements or criteria as the Committee determines. A
Performance Share shall have a value equal to the Fair Market Value of a share
of Common Stock. The Committee shall determine the number of Performance
Units/Shares to be granted and the requirements applicable to such Units/Shares.
(b) PERFORMANCE PERIOD AND PERFORMANCE GOALS. When Performance
Units/Shares are granted, the Committee shall establish the performance period
during which performance shall be measured (the "Performance
F-8
<PAGE>
Period"), performance goals applicable to the Units/Shares ("Performance Goals")
and such other conditions of the Grant as the Committee deems appropriate.
(c) PAYMENT WITH RESPECT TO PERFORMANCE UNITS/SHARES. At the end of
each Performance Period, the Committee shall determine to what extent the
Performance Goals and other conditions of the Performance Units/Shares are met,
the value of the Performance Units (if applicable) and the amount, if any, to be
paid with respect to the number of Performance Units/Shares that have been
earned. Payments with respect to Performance Units/Shares shall be made in cash,
in Common Stock, or in a combination of the two, as determined by the Committee.
(d) REQUIREMENT OF EMPLOYMENT. If the Grantee ceases to be employed by
the Company during a Performance Period, or if other conditions established by
the Committee are not met, the Grantee's Performance Units/Shares shall be
forfeited at the close of business on the Grantee's last day of employment. The
Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate. If the Grantee ceases to be employed by the
Company after the expiration of a Performance Period but prior to payment,
payment shall be made to the Grantee or the Successor Grantee, if applicable.
20. PHANTOM STOCK
(a) GENERAL REQUIREMENTS. The Committee may grant Phantom Stock to a
Grantee in such amounts and upon such terms, and at any time and from time to
time, as shall be determined by the Committee.
(b) VALUE OF PHANTOM STOCK. The Committee shall establish the initial
value of the Phantom Stock at the time of grant which may be greater than, equal
to or less than the Fair Market Value of a share of Common Stock.
(c) DIVIDEND EQUIVALENTS. The Committee may grant dividend equivalents
in connection with Phantom Stock granted under the Plan. Such dividends may be
paid currently or accrued as contingent cash obligations and may be payable in
cash or shares of Common Stock, upon such terms as the Committee may establish,
including the achievement of specific performance goals.
(d) FORM AND TIMING OF PAYMENT. The Committee shall determine whether
the Phantom Stock shall be paid in the form of cash, shares of Common Stock or a
combination of the two, in such proportion as the Committee deems appropriate.
Cash payments shall be in an amount equal to the Fair Market Value on the
payment date of the number of shares of Common Stock equal to the number of
shares of Phantom Stock with respect to which payment is made. The number of
shares of Common Stock distributed in settlement of a Phantom Stock Grant shall
equal the number of shares of Phantom Stock with respect to which settlement is
made. Payment shall be made in accordance with the terms and at such times as
determined by the Committee at the time of grant.
(e) REQUIREMENT OF EMPLOYMENT. If the Grantee ceases to be employed by
the Company (or, in the case of a Non-employee Director, ceases to be a member
of the Board of Directors) prior to becoming vested or otherwise entitled to
payment, the Grantee's Phantom Stock shall be forfeited at the close of business
on the Grantee's last day of employment. The Committee may, however, provide for
complete or partial exceptions to this requirement as it deems appropriate.
21. DIVIDEND EQUIVALENTS.
(a) GENERAL REQUIREMENTS. The Committee may grant Dividend Equivalents
to a Grantee in such number and upon such other terms, including in either case
the achievement of specific performance goals, and at any time and
F-9
<PAGE>
from time to time, as shall be determined by the Committee. Each Dividend
Equivalent shall represent the right to receive an amount in cash, or shares of
Common Stock having a Fair Market Value, equal to the amount of dividends paid
on one share of Common Stock during such period as may be established by the
Committee.
(b) FORM AND TIMING OF PAYMENT. Dividend Equivalents may be paid
currently or accrued as contingent cash obligations, upon such terms as the
Committee may establish. The Committee shall determine whether Dividend
Equivalents shall be paid in the form of cash, shares of Common Stock or a
combination of the two, in such proportion as the Committee deems appropriate.
The number of any shares of Common Stock payable in satisfaction of Dividend
Equivalents shall be determined by dividing the amount credited to the Grantee
with respect to such Dividend Equivalents by the Fair Market Value on the day
instructions are given to the Company's Chief Executive Officer or transfer
agent to issue or purchase such shares. Cash shall be delivered in lieu of any
fractional shares. Payment shall be made at such times as determined by the
Committee at the time of grant.
(c) REQUIREMENT OF EMPLOYMENT. If the Grantee ceases to be employed by
the Company (or, in the case of a Non-employee Director, ceases to be a member
of the Board of Directors) prior to becoming entitled to payment, the Grantee's
Dividend Equivalents shall be forfeited at the close of business on the
Grantee's last day of employment. The Committee may, however, provide for
complete or partial exceptions to this requirement as it deems appropriate.
22. WITHHOLDING OF TAXES
(a) REQUIRED WITHHOLDING. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company shall have the right to deduct from all Grants paid in
cash, or from other wages paid to the Grantee, any federal, state or local taxes
required by law to be withheld with respect to such Grants. In the case of
Options and other Grants paid in Common Stock, the Company may require the
Grantee or other person receiving such shares to pay to the Company the amount
of any such taxes that the Company is required to withhold with respect to such
Grants, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.
(b) ELECTION TO WITHHOLD SHARES. If the Committee so permits, a Grantee
may elect to satisfy the Company's income tax withholding obligation with
respect to an Option, SAR, Restricted Stock, Performance Units, Performance
Shares, Phantom Stock or Dividend Equivalents, any of which is paid in Common
Stock, by having shares withheld having a Fair Market Value up to an amount that
does not exceed the Grantee's maximum marginal tax rate for federal (including
FICA), state and local tax liabilities. The election must be in a form and
manner prescribed by the Committee and shall be subject to the prior approval of
the Committee.
23. TRANSFERABILITY OF GRANTS
(a) NONTRANSFERABILITY OF GRANTS. Except as provided below, only the
Grantee may exercise rights under a Grant during the Grantee's lifetime. A
Grantee may not transfer those rights except by will or by the laws of descent
and distribution or, with respect to Grants other than Incentive Stock Options,
if permitted in any specific case by the Committee, pursuant to a domestic
relations order (as defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the regulations thereunder). When a
Grantee dies, the personal representative or other person entitled to succeed to
the rights of the Grantee ("Successor Grantee") may exercise such rights which
have not been extinguished by the Grantee's death. A Successor Grantee must
furnish proof satisfactory to the Company of his or her right to receive the
Grant under the Grantee's will or under the applicable laws of descent and
distribution.
F-10
<PAGE>
(b) TRANSFER OF NONQUALIFIED STOCK OPTIONS. Notwithstanding the
foregoing, the Committee may provide in a Grant Instrument that a Grantee may
transfer Nonqualified Stock Options to family members or other persons or
entities according to such terms as the Committee may determine; provided that
the Grantee receives no consideration for the transfer of an Option and the
transferred Option shall continue to be subject to the same terms and conditions
as were applicable to the Option immediately before the transfer.
24. GRANTS SUBJECT TO CODE SECTION 162(M)
(a) PERFORMANCE BASED GRANTS. Any Grant to a Grantee who is a "covered
employee" within the meaning of Code Section 162(m), the exercisability or
settlement of which is subject to the achievement of performance goals, shall
qualify as "qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder. The performance goals for such a
Grant shall consist of one or more of the business criteria set forth in Section
13(b), below, and a targeted level or levels of performance with respect to such
criteria, as specified by the Committee in writing prior to (or within 90 days
after commencement of) the applicable performance period. Performance goals
shall be objective and shall otherwise meet the requirements of Section
162(m)(4)(C) of the Code and regulations thereunder. Performance goals may
differ for such Grants to different Grantees. The Committee shall specify the
weighting to be given to each performance goal for purposes of determining the
final amount payable with respect to any such Grant. The Committee may, in its
discretion, reduce the amount of a payout otherwise to be made in connection
with such a Grant, but may not exercise discretion to increase such amount. All
determinations by the Committee as to the achievement of performance goals shall
be certified in writing prior to payment under the Plan, in the form of minutes
of a meeting of the Committee or otherwise.
(b) BUSINESS CRITERIA. Unless and until the Committee proposes for
shareholder approval and the Company's shareholders approve a change in the
general business criteria set forth in this Section, the attainment of which may
determine the amount and/or vesting with respect to Grants, the business
criteria to be used for purposes of establishing performance goals for such
Grants shall be selected from among the following alternatives, each of which
may be based on absolute standards or peer industry group comparatives and may
be applied at various organizational levels (E.G., corporate, business unit,
branch):
(i) Total shareholder return
(ii) Common Stock price
(iii) Earnings per share
(iv) Dividend payout percentages
(v) Book values
(vi) Return on equity
(vii) Return on capital
(viii) Expense ratios
(ix) Regulatory ratings
(x) Loan production and loan portfolio amounts and mix
(xi) Non-performing assets levels or percentages
(xii) Efficiency ratios
(xiii) Deposit levels or mix
(xiv) CRA achievements
(xv) Employee performance as measured by "shoppers"
(xvi) Customer satisfaction as measured by surveys
(xvii) Market share
(xviii) Personal performance
F-11
<PAGE>
(xix) Productivity measures
(xx) Completion of key projects
In the event that Code Section 162(m) or applicable tax and/or
securities laws change to permit Committee discretion to alter the governing
performance measures without disclosing to shareholders and obtaining
shareholder approval of such changes and without thereby exposing the Company to
potentially adverse tax or other legal consequences, the Committee shall have
sole discretion to make such changes without obtaining shareholder approval.
25. DEFERRALS
The Committee may permit or require a Grantee to defer receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such
Grantee by virtue of the exercise of any Option or SAR, the lapse or waiver of
restrictions applicable to Restricted Stock, the satisfaction of any
requirements or objectives with respect to Performance Units/Shares or the
vesting or satisfaction of any terms applicable to Phantom Stock or Dividend
Equivalents. If any such deferral election is permitted or required, the
Committee shall, in its sole discretion, establish rules and procedures for such
deferrals.
26. REQUIREMENTS FOR ISSUANCE OR TRANSFER OF SHARES
No Common Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Common Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Common Stock as the Committee shall deem necessary or advisable as a
result of any applicable law, regulation or official interpretation thereof, and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Common Stock issued or
transferred under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.
27. AMENDMENT AND TERMINATION OF THE PLAN
(a) AMENDMENT. The Committee may amend or terminate the Plan at any
time; provided, however, that the Committee shall not amend the Plan without
shareholder approval if such approval is required by Section 162(m) of the Code
or the rules of any stock exchange on which Common Stock is listed.
(b) TERMINATION OF PLAN. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date, unless the
Plan is terminated earlier by the Committee or is extended by the Committee with
the approval of the shareholders.
(c) TERMINATION AND AMENDMENT OF OUTSTANDING GRANTS. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 22(b). The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated
or amended under Section 22(b) or may be amended by agreement of the Company and
the Grantee consistent with the Plan.
F-12
<PAGE>
(d) GOVERNING DOCUMENT. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
28. FUNDING OF THE PLAN
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
29. RIGHTS OF PARTICIPANTS
Nothing in this Plan shall entitle any Participant or other person to
any claim or right to be granted a Grant under this Plan, and no Grant shall
entitle any Participant or other person to any future Grant. Neither this Plan
nor any action taken hereunder shall be construed as giving any individual any
rights to be retained by or in the employ of the Company or any other employment
rights.
30. NO FRACTIONAL SHARES
No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
31. HEADINGS
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
F-13
<PAGE>
32. EFFECTIVE DATE OF THE PLAN.
This Plan shall be effective on the date of its approval by the
shareholders of the Company.
33. MISCELLANEOUS
(a) GRANTS IN CONNECTION WITH CORPORATE TRANSACTIONS AND OTHERWISE.
Nothing contained in this Plan shall be construed to (i) limit the right of the
Committee to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of any bank or corporation,
or assets thereof, including Grants to employees thereof who become
Participants, or for other proper corporate purposes, or (ii) limit the right of
the Company to grant stock options or make other awards outside of this Plan.
Without limiting the foregoing, the Committee may make a Grant to an employee of
another corporation who becomes a Participant by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation. The terms and
conditions of the substitute grants may vary from the terms and conditions
required by the Plan and from those of the substituted stock incentives. The
Committee shall prescribe the provisions of the substitute grants.
(b) COMPLIANCE WITH LAW. The Plan, the exercise of Options and SARs and
the obligations of the Company to issue or transfer shares of Common Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. In
particular, and without otherwise limiting the provisions of this Section 21(b),
no Grantee subject to section 16 of the Exchange Act may exercise any Option or
SAR except in accordance with applicable requirements of Rule 16b-3 or its
successors under the Exchange Act. The Committee may revoke any Grant if it is
contrary to law or modify a Grant to bring it into compliance with any valid and
mandatory government regulation. The Committee may also adopt rules regarding
the withholding of taxes on payments to Grantees. The Committee may, in its sole
discretion, agree to limit its authority under this Section.
(c) GOVERNING LAW. The validity, construction, interpretation and
effect of the Plan and Grant Instruments issued under the Plan shall exclusively
be governed by and determined in accordance with the law of the State of
Florida.
F-14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850 of the Florida Business Corporation Act empowers a
corporation, subject to certain limitations, to indemnify any person who was or
is a party to any proceeding by reason of the fact that he was or is a director,
officer, employee or agent of the corporation, against liability and expenses
actually and reasonably incurred by him in connection with such proceeding,
including any appeal thereof, if such party acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to a criminal action or proceeding, had no
reasonable cause to believe his conduct to have been unlawful.
RSFC's Bylaws provide as follows:
ARTICLE VII
Indemnification of Directors, Officers,
Employees and Agents
SECTION 7.01. DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The corporation shall
indemnify any person who was or is a party or is threatened to be made a party
(which shall include the giving of testimony or similar involvement) to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by, or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of any
other corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding, including any appeal thereof, if he or she
acted in good faith in a manner he or she reasonably believed to be in, or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceedings, had no reasonable cause to believe that his or
her conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its
equivalent shall not create, of itself, a presumption that the person did not
act in good faith or in a manner which he or she reasonably believed to be in,
or not opposed to, the best interest of the corporation or, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
The corporation shall indemnify any person who was or is a party, or is
threatened to be made a party (which shall include the giving of testimony or
similar involvement), to any threatened, pending or completed action or suit by
or in the right of the corporation to procure a judgment in its favor by reason
of the fact that he or she is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (to the extent permitted by
law), including any appeal thereof. Such indemnification shall be authorized if
such person acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable unless, and only to the
extent that, the court in which such proceeding was brought, or any other court
of competent jurisdiction,
II-1
<PAGE>
shall determine upon application that, despite the adjudication of liability but
in view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
SECTION 7.02. EXPENSES. To the extent that a director, officer, employee or
agent of the corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to above, or in any defense
of any claim, issue or matter therein, the corporation shall indemnify such
person against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
SECTION 7.03. DETERMINATION OF STANDARD OF CONDUCT. Any indemnification
hereunder, unless pursuant to a determination by a court, shall be made by the
corporation as authorized upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct set forth above. Such
determination shall be made either (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
proceeding, (2) by majority vote of a committee duly designated by the board of
directors consisting of two or more directors not at the time parties to the
proceeding, (3) by the shareholders who were not parties to such action, suit or
proceedings, or (4) by independent legal counsel selected in accordance with the
provisions of the Florida Business Corporation Act in a written opinion.
SECTION 7.04. ADVANCE EXPENSES. Expenses including attorney's fees incurred in
defending any action, suit or pro ceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized in the manner provided above or upon receipt of any undertaking by or
on behalf of the director, officer, employee or agent to repay such amount,
unless it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation as authorized herein.
SECTION 7.05. BENEFIT. The indemnification provided by this Article VII shall be
in addition to the indemnification rights provided pursuant to the Florida
Business Corporation Act and shall not be deemed exclusive of any other rights
to which person seeking indemnification may be entitled under any by law,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent of the corporation and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 7.06. INSURANCE. The corporation shall be empowered to purchase and
maintain insurance on behalf of any per son who is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against liability asserted
against such person and incurred by him or her in any such capacity or arising
out of his or her status as such, whether or not the corporation would have the
power to indemnify such person against such liability under the provisions
contained herein.
SECTION 7.07. NO RIGHTS OF SUBROGATION. Indemnification herein shall be a
personal right and, the corporation shall have no liability under this Article
VII to any insurer or any person, corporation, partnership, association, trust
or other entity (other than the heirs, executors or administrators of such
person) by reason of subrogation, assignment or succession by any other means to
the claim of any person to indemnification hereunder.
SECTION 7.08. INDEMNIFICATION FOR PAST DIRECTORS. Indemnification as provided in
this section shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
II-2
<PAGE>
SECTION 7.09. AFFILIATES. For the purposes of this Article VII, references to
the "corporation" include all constituent corporations absorbed in a
consolidation or merger, as well as the resulting or surviving corporation, so
that any person who is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article VII with respect to the resulting
or surviving corporation as such person would if he or she had served the
resulting or surviving corporation in the same capacity.
SECTION 7.10. RELIANCE AND NON-EXCLUSIVITY. Each person who shall act as an
authorized representative of the cor poration shall be deemed to be doing so in
reliance upon such rights of indemnification as are provided in this Article
VII.
SECTION 7.11. OTHER INDEMNIFICATIONS. The corporation shall have the power to
make any other or further indemnification, except an indemnification against
gross negligence or willful misconduct, under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office.
SECTION 7.12. AMENDMENTS. The provisions of this Article VII relating to
indemnification and to the advancement of expenses shall constitute a contract
between the corporation and each of its directors and officers which may be
modified as to any director or officer only with that person's consent or as
specifically provided in this section. Notwithstanding any other provision of
these bylaws relating to their amendment generally, any repeal or amendment of
this Article VII which is adverse to any director or officer shall apply to such
director or officer only on a prospective basis, and shall not limit the rights
of a director or officer to indemnification or to the advancement of expenses
with respect to any action or failure to act occurring prior to the time of such
repeal or amendment.
The Bylaws are not exclusive of any other rights to which any person
seeking indemnification from the registrant may be entitled.
Pursuant to Florida law, the registrant may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the registrant, or is or was serving at the request of the registrant
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the registrant would have the power to indemnify him
against such liability under the applicable provisions of the bylaws of the
registrant or applicable law. RSFC currently has in place an insurance contract
covering the liability of directors and officers as permitted under Florida law.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT
NO. DESCRIPTION
2(f) Agreement and Plan of Merger, dated as of May 27,
1998, between Republic Security Financial
Corporation and First Palm Beach Bancorp, Inc.
(included as Annex A to the Joint Proxy
Statement/Prospectus) (1)
3(a) Articles of Incorporation, as amended, of Republic
Security Financial Corporation (2)
(b) Bylaws, as amended, of Republic Security Financial
Corporation (2)
4(a) Form of Common Stock certificate of Republic
Security Financial Corporation (2)
(c) Rights Agreement by and between Republic Security
Financial Corporation and IBJ Schroder Bank and
Trust Company (3)
5 Opinion of Morgan, Lewis & Bockius LLP regarding
the legality of the shares being registered
10(l) Republic Security Financial Corporation 1997
Performance Incentive Plan (included as Annex F to
the Joint Proxy Statement/Prospectus)
13 Annual report to security holders of Republic
Security Financial Corporation (4)
21 Subsidiaries of Republic Security Financial
Corporation (4)
23(a) Consent of Ernst & Young LLP
(b) Consent of Deloitte & Touche LLP
(c) Consent of Deloitte & Touche LLP
(d) Consent of Keefe, Bruyette & Woods, Inc.
(e) Consent of Morgan, Lewis & Bockius LLP (included
in its opinion in Exhibit 5 hereof)
(f) Consent of Sandler O'Neill & Partners, L.P.
24 Powers of Attorney (included on the signature page
of the Registration Statement)
II-4
<PAGE>
EXHIBIT
NO. DESCRIPTION
99(a) Form of Proxy of Republic Security Financial
Corporation
(b) Form of Proxy of First Palm Beach Bancorp, Inc.
(c) Form of Transmittal Letter and Confidential Voting
Instruction Card of First Palm Beach Bancorp, Inc.
(Employee Stock Ownership Plan)
(d) Form of Transmittal Letter and Voting Instruction
Card of First Palm Beach Bancorp, Inc.
(Recognition and Retention Plans)
All other Exhibits are omitted because they are not applicable.
- ---------------------------
* TO BE FILED AS AMENDMENTS
(1) Incorporated by reference to Form 8-K as filed with the Securities and
Exchange Commission on May 28, 1998.
(2) Incorporated by reference to Registration Statement on Form S-1, File No.
2-99505.
(3) Incorporated by reference to Form 8-A as filed with the Securities and
Exchange Commission on April 27, 1995.
(4) Incorporated by reference to Form 10-K as filed with the Securities and
Exchange Commission on March 25, 1998.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished to and meeting the requirements of
Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(c) (1) The undersigned registrant hereby undertakes as follows:
prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is part of this
registration statement, by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form.
II-5
<PAGE>
(2) The registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of
the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(g) The undersigned registrant undertakes to furnish supplementally a copy
of any omitted schedule to the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of West Palm Beach, State of
Florida on the 13th day of July, 1998.
REPUBLIC SECURITY FINANCIAL CORPORATION
By:_________________________________________
Rudy E. Schupp, Chairman of the Board,
President, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
EACH PERSON IN SO SIGNING ALSO MAKES, CONSTITUTES AND APPOINTS RUDY E.
SCHUPP AND RICHARD J. HASKINS, AND EACH OF THEM, HIS OR HER TRUE AND LAWFUL
ATTORNEY-IN-FACT,
<PAGE>
WITH FULL POWER OF SUBSTITUTION, TO EXECUTE AND CAUSE TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, ANY AND ALL AMENDMENTS AND POST-EFFECTIVE
AMENDMENTS TO THIS REGISTRATION STATEMENT, AND INCLUDING ANY REGISTRATION
STATEMENT FOR THE SAME OFFERING THAT IS TO BE EFFECTIVE UPON FILING PURSUANT TO
RULE 462(B) UNDER THE SECURITIES ACT, WITH EXHIBITS THERETO AND OTHER DOCUMENTS
IN CONNECTION THEREWITH, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID
ATTORNEY-IN-FACT OR HIS OR HER SUBSTITUTE OR SUBSTITUTES MAY DO OR CAUSE TO BE
DONE BY VIRTUE THEREOF.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/S/ RUDY E. SCHUPP
- -------------------------- Chairman of the Board, July 13, 1998
Rudy E. Schupp President, Chief Executive
Officer and Director
/S/ RICHARD J. HASKINS
- -------------------------- Executive Vice President, July 13, 1998
Richard J. Haskins Principal Financial and
Accounting Officer and
Director
/S/ GEORGE M. APELIAN
- -------------------------- Director July 13, 1998
George M. Apelian
/S/ PAULA BERLINER
- -------------------------- Director July 13, 1998
Paula Berliner
/S/ DR. THOMAS F. CARNEY
- -------------------------- Director July 13, 1998
Dr. Thomas F. Carney
/S/ JOSEPH D. CESAROTTI
- -------------------------- Director July 13, 1998
Joseph D. Cesarotti
/S/ MARY ANNA FOWLER
- -------------------------- Director July 13, 1998
Mary Anna Fowler
/S/ H. GEARL GORE
- -------------------------- Director July 13, 1998
H. Gearl Gore
/S/ EUGENE W. HUGHES, JR.
- -------------------------- Director July 13, 1998
Eugene W. Hughes, Jr.
/S/ THOMAS J. LANGAN, JR.
- -------------------------- Director July 13, 1998
Thomas J. Langan, Jr.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/S/ LENNART E. LINDAHL, JR.
- -------------------------- Director July 13, 1998
Lennart E. Lindahl, Jr.
/S/ MARY MCCARTY
- -------------------------- Director July 13, 1998
Mary McCarty
/S/ CAROL R. OWEN
- -------------------------- Director July 13, 1998
Carol R. Owen
/S/ RICHARD C. RATHKE
- -------------------------- Director July 13, 1998
Richard C. Rathke
/S/ VICTOR H. SIEGEL
- -------------------------- Director July 13, 1998
Victor H. Siegel
/S/ WILLIAM F. SPITZNAGEL
- -------------------------- Director July 13, 1998
William F. Spitznagel
/S/ BRUCE E. WIITA
- -------------------------- Director July 13, 1998
Bruce E. Wiita
/S/ WILLIAM WOLFSON
- -------------------------- Director July 13, 1998
William Wolfson
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
5 Opinion of Morgan, Lewis & Bockius LLP
23(a) Consent of Ernst & Young LLP
(b) Consent of Deloitte & Touche LLP
(c) Consent of Deloitte & Touche LLP
(d) Consent of Keefe, Bruyette & Woods, Inc.
(f) Consent of Sandler O'Neill & Partners, L.P.
99(a) Form of Proxy of Republic Security Financial
Corporation
99(b) Form of Proxy of First Palm Beach Bancorp, Inc.
99(c) Form of Transmittal Letter and Confidential Voting
Instruction Card of First Palm Beach Bancorp, Inc.
(Employee Stock Ownership Plan)
99(d) Form of Transmittal Letter and Voting Instruction
Card of First Palm Beach Bancorp, Inc.
(Recognition and Retention Plans)
EXHIBIT 5
[LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP]
July ___, 1998
Republic Security Financial Corporation
4400 Congress Avenue
West Palm Beach, FL 33407
Re: REGISTRATION STATEMENT ON FORM S-4
Ladies and Gentlemen:
We have acted as counsel to Republic Security Financial Corporation, a Florida
corporation ("RSFC") in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
a Registration Statement on Form S-4 (the "Registration Statement") relating to
the registration of 21,542,309 shares (the "Shares") of RSFC's common stock,
$.01 par value per share. The Shares are being registered in connection with the
transactions contemplated by that certain Agreement and Plan of Merger, dated as
of May 27, 1998, between RSFC and First Palm Beach Bancorp, Inc.
We have examined and are familiar with such documents and instruments, and have
participated in such meetings of the Board of Directors of RSFC, as we deem
necessary in order to give the opinion set forth below.
Based on the foregoing, we are of the opinion that the Shares will, when issued
in the manner described in the Registration Statement, be legally issued, fully
paid and nonassessable.
We hereby consent to the reference to our firm under the caption "Legal Matters"
in the Registration Statement.
Very truly yours,
/s/ MORGAN, LEWIS & BOCKIUS LLP
EXHIBIT 23(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the Joint
Proxy Statement/Prospectus of Republic Security Financial Corporation and First
Palm Beach Bancorp, Inc. which is made part of the Registration Statement (Form
S-4) for the registration of shares of Republic Security Financial Corporation
common stock and to the incorporation by reference therein of our report dated
February 16, 1998, except for the first and second paragraphs of Note 20 as to
which dates are March 9, 1998 and March 19, 1998, respectively, with respect to
the consolidated financial statements of Republic Security Financial Corporation
and Subsidiaries included in its Annual Report on Form 10-K for the year ended
December 31, 1997, filed with the Securities and Exchange Comission.
/s/ ERNST & YOUNG LLP
West Palm Beach, Florida
July 8, 1998
EXHIBIT 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Republic Security Financial Corporation on Form S-4 of our report dated February
21, 1997 (relating to the consolidated balance sheet and consolidated statements
of income, stockholders' equity and cash flows of County Financial Corporation
as of and for the year ended December 31, 1996 and the nine months ended
December 31, 1995, not presented seperately herein) appearing in the Annual
Report on Form 10-K of Republic Security Financial Corporation for the year
ended December 31, 1997.
/s/ DELOITTE & TOUCHE LLP
Miami, Florida
July 13, 1998
EXHIBIT 23(c)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Republic Security Financial Corporation on Form S-4 of our report dated December
5, 1997, appearing in the Annual Report on Form 10-K of First Palm Beach
Bancorp, Inc. for the year ended September 30, 1997, and to the reference to us
under the headings "Selected Financial Data-FPBB" and "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
West Palm Beach, Florida
July 13, 1998
EXHIBIT 23(d)
CONSENT OF KEEFE, BRUYETTE & WOODS, INC.
We hereby consent to the use of our opinion letter dated May 27, 1998, to
the Board of Directors of First Palm Beach Bancorp., Inc., included as Annex D
to the Proxy Statement/Prospectus of July 13, 1998 which forms part of the
Registration Statement dated as of the date hereof on Form S-4 relating to the
proposed merger of First Palm Beach Bancorp., Inc. and Republic Security
Financial Corporation and to the references to such opinion therein.
In giving such consent, we do not admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder, nor do we hereby admit that we are experts with respect
to any part of such Registration Statement within the meaning of the term
"experts" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
KEEFE, BRUYETTE & WOODS, INC.
By: /S/ FRANK S. CICERO
-----------------------------------
Name: Frank S. Cicero
Title: Vice President
Dated: July 13, 1998
EXHIBIT 23(f)
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Republic Security Financial Corporation ("Republic Security") as
Appendix C to the Joint Proxy Statement/Prospectus relating to the proposed
merger of First Palm Beach Bancorp, Inc. with and into Republic Security
contained in the Registration Statement on Form S-4, as amended (File No.
333-_______), and to the references to our firm and such opinion in such Joint
Proxy Statement/Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended (the "Act"), or the rules and regulations of
the Securities and Exchange Commission thereunder (the "Regulations"), nor do we
admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Act or the
Regulations.
SANDLER O'NEILL & PARTNERS, L.P.
July 13, 1998
EXHIBIT 99(a)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
REPUBLIC SECURITY FINANCIAL CORPORATION
4400 CONGRESS AVENUE
WEST PALM BEACH, FLORIDA 33407
The undersigned hereby appoints Rudy E. Schupp and Richard J. Haskins,
and each of them acting alone, with the power to appoint his substitute, proxy
to represent the undersigned and vote as designated below all of the shares of
common stock of Republic Security Financial Corporation (the "RSFC") held of
record by the undersigned on _____ 1998, at the Special Meeting of Shareholders
to be held on ______________, 1998 and at any adjournment or postponement
thereof.
1. Approval of an amendment to RSFC's Articles of Incorporation increasing the
authorized shares of its common stock (the "RSFC Common Stock") from 100,000,000
to 500,000,000, increasing the authorized shares of Series B Junior
Participating Preferred Stock from 1,000,000 to 5,000,000 and deleting the 7%
Cumulative Convertible Preferred Stock, Series C.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
2. Approval of an amendment to the Republic Security Financial Corporation 1997
Performance Incentive Plan (the "Plan") increasing the number of shares of RSFC
Common Stock issuable under the Plan from 2,000,000 shares to 5,000,000 shares.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. Approval of the Agreement and Plan of Merger, dated as of May 27, 1998, by
and between RSFC and First Palm Beach Bancorp, Inc. ("FPBB"), providing for the
merger of FPBB with and into RSFC.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
4. In his discretion, the proxy is authorized to vote upon such other matters as
may properly come before the meeting.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSAL 1, "FOR" PROPOSAL 2, AND "FOR" PROPOSAL 3.
Dated: _________________
--------------------------------
Signature
--------------------------------
Signature if held jointly
Please sign exactly as name appears to the left. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
EXHIBIT 99(b)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FIRST PALM BEACH BANCORP, INC.
450 SOUTH AUSTRALIAN AVENUE
WEST PALM BEACH, FLORIDA 33401
The undersigned hereby appoints and , and each of them acting alone, with the
power to appoint his substitute, proxy to represent the undersigned and vote as
designated below all of the shares of common stock of First Palm Beach Bancorp,
Inc. ("FPBB") held of record by the undersigned on ________________, 1998, at
the Special Meeting of Stockholders to be held on ____________, 1998 and at any
adjournment or postponement thereof.
1. Approval of the Agreement and Plan of Merger, dated as of May 27, 1998, by
and between RSFC and First Palm Beach Bancorp, Inc. ("FPBB"), providing for the
merger of FPBB with and into RSFC.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
2. In his discretion, the proxy is authorized to vote upon such other matters as
may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSAL 1.
Dated: _________________
--------------------------------
Signature
--------------------------------
Signature if held jointly
Please sign exactly as name appears to the left. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
PLEASEMARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
EXHIBIT 99(c)
________________, 1998
Dear ESOP Account Holder:
As you may know, in connection with the conversion of First Bank of Florida
("First Bank") from a mutual to a stock form of organization in September 1993,
and the formation of First Palm Beach Bancorp, Inc. ("FPBB") as the parent
holding company for First Bank, 423,200 shares of Common Stock of FPBB were
acquired by the Employee Stock Ownership Plan ("ESOP") for the benefit of
participating employees. These shares of Common Stock were purchased with
borrowed funds and placed in a suspense account for future transfer to the
allocated accounts of individual participating employees as the borrowed funds
are repaid.
A total of _________ shares of Common Stock of FPBB were held in the allocated
and suspense accounts by the ESOP as of ______________, 1998, which is the
voting record date (the "Record Date") for FPBB's Special Meeting of
Stockholders to be held on ____________ 1998 (the "Special Meeting"). As a
participant in the ESOP, you may direct the voting, at the Special Meeting, of
the shares of FPBB's Common Stock held by the ESOP Trust and allocated to your
account as of the Record Date. At the Special Meeting, stockholders will be
asked
to vote on the following proposals:
Proposal 1: Approval of the Agreement and Plan of Merger,
dated as of May 27, 1998, by and between Republic
Security Financial Corporation and FPBB.
Proposal 2: Any other matter or proposal which may be
presented for a vote at the Special Meeting.
A committee consisting of Messrs. Greene, Davis and Guemple administers the ESOP
(the "ESOP Committee"). An unrelated corporate trustee for the ESOP has been
appointed, Marine Midland Bank (the "ESOP Trustee").
HOW YOU EXERCISE YOUR VOTING RIGHTS
Because the ESOP Trustee is the owner of record of all of the Common Stock held
in the ESOP Trust, only it may submit an official proxy card or ballot to cast
votes for this Common Stock. You exercise your right to direct the vote of
Common Stock that has been allocated to your account by submitting a
Confidential Voting Instruction Card that will tell the ESOP Trustee how to
complete the proxy card or ballot for your shares. The ESOP Committee is
furnishing to you the enclosed Confidential Voting Instruction Card, together
with a copy of the Joint Proxy Statement/Prospectus of FPBB and Republic
Security Financial Corporation for the Special Meeting, so that you may exercise
your right to direct the voting of shares of Common Stock allocated to your
account. The Confidential Voting Instruction Card indicates how many shares of
Common Stock were allocated to your account, and thus how many votes you have,
as of the Record Date. The Confidential Voting Instruction Card also lists the
specific proposals to be voted on at the Special Meeting.
In order to direct the voting of shares allocated to your account under the
ESOP, you must fill-out and sign the enclosed Confidential Voting Instruction
Card and return it in the accompanying envelope by _________________, 1998.
The Confidential Voting Instruction Card will be delivered directly to the ESOP
Trustee who will tally all the instructions received. If your Confidential
Voting Instruction Card is received on or before ______________, 1998, the ESOP
Trustee will vote the number of shares of Common Stock indicated on your
Confidential Voting Instruction
<PAGE>
Card in the manner you direct. The contents of your Confidential Voting
Instruction Card will be kept confidential. No one at First Bank or FPBB will
have access to information about anyone's individual choices.
UNALLOCATED SHARES
As of _____________, 1998, _________ shares were held in the ESOP suspense
account. The ESOP Trustee has a legal duty to decide how to vote these shares.
In making a decision, it will act solely in the interest of participating
employees and their beneficiaries.
UNSPECIFIED PROPOSALS
At the Special Meeting, it is possible, although very unlikely, that
stockholders will be asked to vote on matters other than those specified on the
attached Confidential Voting Instruction Card. In such a case, there may not be
time to ask you for further voting directions. If this situation arises, the
ESOP Trustee has a legal duty to decide how to vote all of the shares held in
the ESOP Trust. In making a decision, it will act solely in the interest of
participating employees and their beneficiaries.
IF YOU ABSTAIN
You may direct the ESOP Trustee to abstain from voting your shares by checking
the appropriate box on the Confidential Voting Instruction Card. Please note
that Proposal 1 requires the affirmative vote of the holders of a majority of
the outstanding shares of FPBB entitled to vote. An abstention on Proposal 1 (or
any other matter requiring approval by a specified percentage of all outstanding
shares of FPBB) is the same as voting against the proposal. IF YOU DO NOT VOTE
IF YOU DO NOT VOTE
The ESOP Trustee has a legal duty to see that all voting rights for shares of
Common Stock held in the ESOP Trust are exercised. If you do not file a
Confidential Voting Instruction Card, or if the independent tabulator receives
your Confidential Voting Instruction Card after the deadline, the ESOP Trustee
will decide how to exercise the votes for your shares. In making a decision, it
will act solely in the interest of participating employees and their
beneficiaries.
This voting direction procedure is your opportunity to participate in decisions
that will affect the future of the Bank and Company. Please take advantage of it
by completing and signing the Confidential Voting Instruction Card using the
self-addressed envelope provided.
Sincerely,
ESOP Committee
Enclosure: Joint Proxy Statement/Prospectus
<PAGE>
CONFIDENTIAL VOTING INSTRUCTION CARD
NAME: ___________________________
ALLOCATED SHARES: ____________
I, THE UNDERSIGNED, UNDERSTAND THAT THE ESOP TRUSTEE IS THE HOLDER
OF RECORD AND CUSTODIAN OF ALL SHARES OF FIRST PALM BEACH BANCORP, INC. ("FPBB")
COMMON STOCK ALLOCATED TO MY ACCOUNT UNDER THE FIRST BANK OF FLORIDA EMPLOYEE
STOCK OWNERSHIP PLAN. FURTHER, I UNDERSTAND THAT MY VOTING DIRECTIONS ARE
SOLICITED ON BEHALF OF THE ESOP TRUSTEE FOR THE SPECIAL MEETING OF STOCKHOLDERS
ON ________________, 1998.
AS A NAMED FIDUCIARY WITH RESPECT TO FPBB COMMON STOCK ALLOCATED
TO ME, I DIRECT YOU TO VOTE ALL SUCH FPBB COMMON STOCK AS FOLLOWS:
1. APPROVAL OF THE AGREEMENT AND PLAN OF MERGER, DATED AS OF MAY 27,
1998, BY AND BETWEEN REPUBLIC SECURITY FINANCIAL CORPORATION
("RSFC") AND FPBB, PROVIDING FOR THE MERGER OF FPBB WITH AND INTO
RSFC.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
2. In the discretion of the ESOP Trustee, as to any other matter or
proposal to be voted on by FPBB's stockholders at the Special
Meeting of Stockholders.
*Abstention is equivalent to voting AGAINST Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE LISTED PROPOSALS.
The ESOP Trustee is hereby directed to vote any shares allocated to me.
I understand that if I sign this form without indicating specific instructions,
shares attributable to me will be voted FOR all nominees and all of the listed
proposals.
By signing below, I acknowledge receipt of a copy of the Joint Proxy
Statement/Prospectus dated _____________, 1998 that was furnished to
stockholders of FPBB in connection with the Special Meeting of Stockholders and
the accompanying letter dated __________________, 1998 from the Committee
appointed to administer the ESOP.
Dated: __________________, 1998.
---------------------------------------
PRINT NAME OF ESOP ACCOUNT HOLDER
--------------------------------------
SIGNATURE OF ESOP ACCOUNT HOLDER
PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED ENVELOPE TO BE RECEIVED
NO LATER THAN _______________, 1998.
EXHIBIT 99(d)
____________________, 1998
Dear Directors and Employees:
As you may know, in connection with the conversion of First Bank of Florida
("First Bank") from a mutual to a stock form of organization in September 1993
and the formation of First Palm Beach Bancorp, Inc. ("FPBB") as the parent
holding company for First Bank, 211,600 shares of Common Stock of FPBB were
acquired by the First Bank Recognition and Retention Plan for Officers and
Employees and the Recognition and Retention Plan for Outside Directors (the
"RRPs") for the benefit of the directors and employees of First Bank. As a
participant in the RRPs, you may direct the voting, at FPBB's Special Meeting of
Stockholders to be held on _______________, 1998 (the "Special Meeting"), of the
shares of FPBB's Common Stock held by the RRPs Trust allocated to your account
as of _________________, 1998, the voting record date for the Special Meeting
(the "Record Date"). At the Special Meeting stockholders will be asked to vote
on the following proposals:
Proposal 1: Approval of the Agreement and Plan of Merger,
dated as of May 27, 1998, by and between Republic
Security Financial Corporation and FPBB.
Proposal 2: Any other matter or proposal which may be
presented for a vote at the Special Meeting.
A committee consisting of non-employee directors administers the RRPs. An
unrelated corporate trustee for the RRPs has been appointed, Marine Midland Bank
(the "RRPs Trustee"). The RRPs Trustee will vote those shares of FPBB's Common
Stock held in the RRPs Trust and allocated to participants in accordance with
instructions of the participants.
We, the Committee responsible for operating the RRPs, are forwarding to you the
attached Voting Instruction Card, provided for the purpose of conveying your
voting instructions to the RRPs Trustee.
As of the Record Date, 10,645 shares are held in the RRPs which have not been
allocated to any participant. These shares will be voted on each proposal
specified on the Voting Instruction Card to reflect the same proportions of
affirmative and negative votes as the aggregate affirmative and negative votes
reflected for such proposal on the Voting Instruction Cards. If you do not file
a Voting Instruction Card or if your Voting Instruction Card is received too
late to be included in the tally, any shares allocated to you will be voted in
the same manner as the unallocated shares.
You may direct the RRPs Trustee to abstain from voting your shares by checking
the appropriate box on the Voting Instruction Card. Please note that Proposal 1
requires the affirmative vote of the holders of a majority of the outstanding
shares of FPBB entitled to vote. An abstention on Proposal 1 (or any other
matter requiring approval by a specified percentage of all outstanding shares of
FPBB) is the same as voting against the proposal.
At this time, in order to direct the voting of shares allocated to your account
under the RRPs, you must fill out and sign the enclosed Voting Instruction Card
and return it in the accompanying envelope by ____________________, 1998. The
RRPs Trustee will tally the instructions and use the tally in voting all of the
shares in the RRPs Trust on the proposals specified on the Voting Instruction
Card.
Please mail the Voting Instruction Card to the RRPs Trustee, Marine Midland
Bank, using the self-addressed envelope provided.
<PAGE>
At the Special Meeting, it is possible, although very unlikely, that
stockholders will be asked to vote on matters other than those specified on the
attached Voting Instruction Card. In such a case, there may not be time to ask
you for further voting directions. If this situation arises, the RRPs Trustee
will decide how to vote all of the shares held in the RRPs Trust.
Sincerely,
RRPs Committee
<PAGE>
VOTING INSTRUCTION CARD
I, the undersigned, understand that the RRPs Trustee is the holder of record and
custodian of all shares allocated to me of First Palm Beach Bancorp, Inc.
("FPBB") Common Stock under the First Bank of Florida Recognition and Retention
Plan for Officers and Employees and the Recognition and Retention Plan for
Outside Directors. Further, I understand that my voting instructions are
solicited on behalf of the RRPs Trustee for the Special Meeting of Stockholders
on _______________, 1998.
Accordingly, you are instructed to vote all shares allocated to me as follows:
1. Approval of the Agreement and Plan of Merger dated as of May 27,
1998, by and between Republic Security Financial Corporation
("RSFC") and FPBB, providing for the merger of FPBB with and into
RSFC.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
*Abstention is equivalent of voting AGAINST Proposal 1.
2. In the discretion of the RRPs Trustee, as to any other matter or
proposal to be voted on by the Company's stockholders at the
Special Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSALS.
The RRPs Trustee is hereby authorized to vote any shares allocated to me as
indicated above. I understand that if I sign this form without indicating
specific instructions, shares allocated to me will be voted FOR all of the
listed proposals. By signing below, I acknowledge receipt of a copy of the Joint
Proxy Statement/Prospectus dated ______________, 1998 that was furnished to
stockholders of FPBB in connection with the Special Meeting of Stockholders and
the accompanying letter dated ___________________, 1998 from the Committee
appointed to administer the RRPs.
Dated _____________________ 199__
--------------------------------
Signature
PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED ENVELOPE BY
_______________, 1998.
