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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 19, 1996
FIRST FAMILY FINANCIAL CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Florida 59-3277352
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(State of other jurisdiction) (IRS Employer Identification No.)
33-81818
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(Commission File Number)
2801 South Bay Street, Eustis, Florida 32726-6503
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(Address of Principal Executive Offices) (Zip Code)
(352) 357-4171
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
A. Agreement and Plan of Merger. On July 19, 1996, First Family
Financial Corporation, a one-bank holding company located in Eustis, Florida
("First Family"), entered into an Agreement and Plan of Merger ("Merger
Agreement") with Colonial BancGroup, Inc. ("Colonial BancGroup") Montgomery,
Alabama, a bank holding company, with assets of $4.5 billion in total assets and
127 full service offices in Alabama, Florida, Georgia and Tennessee.
The acquisition will involve First Family being merged with and
into Colonial BancGroup, continuing with Colonial BancGroup as the surviving
corporation ("Merger"). Under the terms of the Merger Agreement, Colonial
BancGroup is proposing to acquire all of the outstanding capital stock of First
Family (545,000 shares of common stock and 35,500 shares of Common Stock for
which options have been granted) in a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. Each share of First Family's common
stock, par value $.01 ("First Family Stock"), issued and outstanding immediately
prior to the effective time shall, by virtue of the Merger Agreement and without
any action on the part of the holder thereof, be converted into and represent
the right to receive shares of Colonial BancGroup's Common Stock, par value
$2.50 per share ("BancGroup Common Stock") and cash with a total value equal to
$23.50 per share of First Family Stock ("Merger Consideration"), as follows.
Each holder of First Family Stock shall, for each such share, receive Merger
Consideration of $11.75 in cash and BancGroup Common Stock with a value of
$11.75, as determined in the Merger Agreement. The number of shares of BancGroup
Common Stock into which each outstanding share of First Family Stock will be
converted will be equal to $11.75 divided by the "Market Value" (as defined in
the Merger Agreement). Pursuant to the Merger Agreement, Market Value is the
market value of the BancGroup Common Stock on the effective date of the Merger
as determined by the closing prices reported by the New York Stock Exchange on
each of the ten (10) trading days, ending on the trading day immediately
proceeding the effective date of the Merger. Colonial BancGroup will assume all
First Family stock options outstanding and each option will represent the right
to obtain BancGroup Common Stock on substantially the same terms applicable to
the First Family options. The details of the Merger are more fully described in
the Merger Agreement attached hereto as Exhibit 1.
The transaction will be accounted for as a "purchase" and is
subject to the approval of First Family's shareholders and regulatory approvals
from the Federal Reserve Board and Florida Department of Banking and Finance. In
addition, First Family has received an oral opinion from Mercer Capital that the
consideration to be received by First Family's shareholders is "fair" to the
shareholders from a financial point of view. Prior to the distribution of the
Proxy Statement to the shareholders of First Family, Mercer Capital is to
prepare a written fairness opinion to confirm that the consideration to be
received by First Family's shareholders is fair as of that date.
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At June 30, 1996, First Family had total consolidated assets of
$155,890,000 total consolidated deposits of $143,362,000 and total consolidated
stockholders' equity of $9,222,000. The common stock of First Family is listed
on the NASDAQ-NMS under the symbol "FFML". On June 30, 1996, First Family's
common stock was traded at $21 per share.
B. Press Release. On July 25, 1996, First Family issued a joint
Press Release with Colonial BancGroup announcing the signing of a definitive
agreement whereby First Family will be acquired by Colonial BancGroup, a $4.5
billion bank holding company headquartered in Montgomery, Alabama. The specific
terms of the merger and consideration for the transaction are contained in the
Merger Agreement.
C. Correction to Letter to Shareholders. On July 25, 1996, a
letter to the shareholders was issued by First Family. This letter made the
statement that Colonial BancGroup, the parent company of Colonial Mortgage, was
"one of the ten largest mortgage banking companies in the United States". This
was incorrect. The letter should have indicated that at the time that Colonial
acquires First Family that Colonial Mortgage will be one of the ten largest
private mortgage companies in the United States.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
First Family Financial Corporation
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(Registrant)
Dated this 25th day of July, 1996 By: /s/David M. Shepherd
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David M. Shepherd
President
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AGREEMENT AND PLAN OF MERGER
by and between
THE COLONIAL BANCGROUP, INC.,
and
FIRST FAMILY FINANCIAL CORPORATION
dated as of
July 19, 1996
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TABLE OF CONTENTS
Caption Page
ARTICLE 1 -- NAME
1.1 Name........................................................1
ARTICLE 2 -- MERGER -- TERMS AND CONDITIONS
2.1 Applicable Law..............................................1
2.2 Corporate Existence.........................................1
2.3 Articles of Incorporation and Bylaws........................2
2.4 Resulting Corporation's Officers and Board..................2
2.5 Shareholder Approval........................................2
2.6 Further Acts................................................2
2.7 Effective Date and Closing..................................2
ARTICLE 3 -- CONVERSION OF FIRST FAMILY STOCK
3.1 Conversion of First Family Stock............................3
3.2 Surrender of First Family Stock.............................4
3.3 Fractional Shares...........................................5
3.4 Adjustments.................................................5
3.5 BancGroup Stock.............................................5
ARTICLE 4 -- REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BANCGROUP
4.1 Organization................................................5
4.2 Capital Stock...............................................5
4.3 Financial Statements; Taxes.................................6
4.4 No Conflict with Other Instrument...........................7
4.5 Absence of Material Adverse Change..........................7
4.6 Approval of Agreements......................................7
4.7 Tax Treatment...............................................8
4.8 Title and Related Matters...................................8
4.9 Subsidiaries................................................8
4.10 Contracts...................................................8
4.11 Litigation..................................................8
4.12 Compliance..................................................9
4.13 Registration Statement......................................9
4.14 SEC Filings ................................................9
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4.15 Form S-4....................................................10
4.16 Brokers.....................................................10
4.17 Government Authorization....................................10
4.18 Absence of Regulatory Communications........................10
4.19 Disclosure..................................................10
ARTICLE 5 -- REPRESENTATIONS, WARRANTIES AND
COVENANTS OF FIRST FAMILY
5.1 Organization................................................10
5.2 Capital Stock...............................................11
5.3 Subsidiaries................................................11
5.4 Financial Statements; Taxes.................................11
5.5 Absence of Certain Changes or Events........................13
5.6 Title and Related Matters...................................15
5.7 Commitments.................................................15
5.8 Charter and Bylaws..........................................16
5.9 Litigation..................................................16
5.10 Material Contract Defaults..................................16
5.11 No Conflict with Other Instrument...........................16
5.12 Governmental Authorization..................................16
5.13 Absence of Regulatory Communications........................17
5.14 Absence of Material Adverse Change..........................17
5.15 Insurance...................................................17
5.16 Pension and Employee Benefit Plans..........................17
5.17 Buy-Sell Agreement..........................................18
5.18 Brokers.....................................................18
5.19 Approval of Agreements......................................18
5.20 Disclosure..................................................18
5.21 Registration Statement......................................18
5.22 Loans; Adequacy of Allowance for Loan Losses................18
5.23 Environmental Matters.......................................19
5.24 Transfer of Shares..........................................19
5.25 Collective Bargaining.......................................20
5.26 Labor Disputes..............................................20
5.27 Derivative Contracts........................................20
ARTICLE 6 -- ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup...........................20
6.2 Additional Covenants of First Family .......................22
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ARTICLE 7 -- MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation...................................25
7.2 Press Release...............................................25
7.3 Mutual Disclosure...........................................25
7.4 Access to Properties and Records............................25
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF ALL PARTIES
8.1 Approval by Shareholders....................................26
8.2 Regulatory Authority Approval...............................26
8.3 Litigation..................................................26
8.4 Registration Statement......................................26
8.5 Tax Opinion.................................................27
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF FIRST FAMILY
9.1 Representations, Warranties and Covenants...................27
9.2 Adverse Changes.............................................27
9.3 Closing Certificate.........................................27
9.4 Opinion of Counsel..........................................28
9.5 Fairness Opinion............................................28
9.6 NYSE Listing................................................28
9.7 Material Events.............................................29
ARTICLE 10 -- CONDITIONS TO OBLIGATIONS OF BANCGROUP
10.1 Representations, Warranties and Covenants...................29
10.2 Adverse Changes.............................................29
10.3 Closing Certificate.........................................29
10.4 Opinion of Counsel..........................................30
10.5 Controlling Shareholders....................................30
10.6 Material Events.............................................30
10.7 Employee Benefit Matters....................................30
10.8 Shareholders' Equity........................................31
ARTICLE 11 -- TERMINATION OF REPRESENTATIONS
AND WARRANTIES.........................................31
ARTICLE 12 -- NOTICES.........................................................31
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ARTICLE 13 -- AMENDMENT OR TERMINATION
13.1 Amendment...................................................32
13.2 Termination.................................................32
13.3 Damages.....................................................33
ARTICLE 14 -- DEFINITIONS.....................................................33
ARTICLE 15 -- MISCELLANEOUS
15.1 Expenses....................................................39
15.2 Benefit.....................................................40
15.3 Governing Law...............................................40
15.4 Counterparts................................................40
15.5 Headings....................................................40
15.6 Severability................................................40
15.7 Construction................................................40
15.8 Return of Information.......................................40
15.9 Equitable Remedies..........................................40
15.10 Arbitration.................................................41
15.11 Attorneys' Fees.............................................41
15.12 No Waiver...................................................41
15.13 Remedies Cumulative.........................................41
15.14 Entire Contract.............................................41
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this
the 19th day of July 1996, by and between FIRST FAMILY FINANCIAL CORPORATION
("First Family"), a Florida corporation, and THE COLONIAL BANCGROUP, INC.
("BancGroup"), a Delaware corporation.
WITNESSETH
WHEREAS, First Family operates as a unitary savings and loan holding
company for its wholly owned subsidiary, First Family Bank, FSB (the "Bank"),
with its principal office in Eustis, Florida; and
WHEREAS, BancGroup is a bank holding company with subsidiary banks in
Alabama, Florida, Georgia and Tennessee; and
WHEREAS, First Family wishes to merge with BancGroup; and
WHEREAS, it is the intention of BancGroup and First Family that such
merger shall qualify for federal income tax purposes as a "reorganization"
within the meaning of section 368(a) of the Code, as defined herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Parties hereto agree as follows:
ARTICLE 1
NAME
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1.1 Name. The name of the corporation resulting from the Merger shall
be "The Colonial BancGroup, Inc."
ARTICLE 2
MERGER -- TERMS AND CONDITIONS
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2.1 Applicable Law. On the Effective Date, First Family shall be merged
with and into BancGroup (herein referred to as the "Resulting Corporation"
whenever reference is made to it as of the time of merger or thereafter). The
Merger shall be undertaken pursuant to the provisions of and with the effect
provided in the DGCL and the FBCA. The offices and facilities of First Family
and of BancGroup shall become the offices and facilities of the Resulting
Corporation.
2.2 Corporate Existence. On the Effective Date, the corporate existence
of First Family and of BancGroup shall, as provided in the DGCL and the FBCA, be
merged into
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and continued in the Resulting Corporation. All rights, franchises and interests
of First Family and BancGroup, respectively, in and to every type of property
(real, personal and mixed) and choses in action shall be transferred to and
vested in the Resulting Corporation by virtue of the Merger without any deed or
other transfer. The Resulting Corporation on the Effective Date, and without any
order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interests, including appointments,
designations and nominations and all other rights and interests as trustee,
executor, administrator, transfer agent and registrar of stocks and bonds,
guardian of estates, assignee, and receiver and in every other fiduciary
capacity and in every agency, and capacity, in the same manner and to the same
extent as such rights, franchises and interests were held or enjoyed by First
Family and BancGroup, respectively, on the Effective Date.
2.3 Articles of Incorporation and Bylaws. On the Effective Date, the
certificate of incorporation and bylaws of the Resulting Corporation shall be
the restated certificate of incorporation and bylaws of BancGroup as they exist
immediately before the Effective Date.
2.4 Resulting Corporation's Officers and Board. The board of directors
and the officers of the Resulting Corporation on the Effective Date shall
consist of those persons serving in such capacities of BancGroup as of the
Effective Date.
2.5 Shareholder Approval. This Agreement shall be submitted to the
shareholders of First Family at the Stockholders Meeting to be held as promptly
as practicable consistent with the satisfaction of the conditions set forth in
this Agreement. Upon approval by the requisite vote of the shareholders of First
Family as required by applicable Law, this Agreement shall become effective as
soon as practicable thereafter in the manner provided in section 2.7 hereof.
2.6 Further Acts. If, at any time after the Effective Date, the
Resulting Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (i) to vest,
perfect, confirm or record, in the Resulting Corporation, title to and
possession of any property or right of First Family or BancGroup, acquired as a
result of the Merger, or (ii) otherwise to carry out the purposes of this
Agreement, First Family or BancGroup and its officers and directors shall
execute and deliver all such proper deeds, assignments and assurances in law and
do all acts necessary or proper to vest, perfect or confirm title to, and
possession of, such property or rights in the Resulting Corporation and
otherwise to carry out the purposes of this Agreement; and the proper officers
and directors of the Resulting Corporation are fully authorized in the name of
First Family or BancGroup, or otherwise, to take any and all such action.
2.7 Effective Date and Closing. Subject to the terms of all
requirements of Law and the conditions specified in this Agreement, the Merger
shall become effective on the date specified in the Certificate of Merger to be
issued by the Secretary of State of the State
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of Delaware (such time being herein called the "Effective Date"). The Closing
shall take place at the offices of BancGroup, in Orlando, Florida, at 11:00 a.m.
on the date that the Effective Date occurs or at such other place and time that
the Parties may mutually agree.
ARTICLE 3
CONVERSION OF FIRST FAMILY STOCK
--------------------------------
3.1 Conversion of First Family Stock. (a) On the Effective Date, each
share of common stock of First Family outstanding and held by First Family's
shareholders (the "First Family Stock"), shall be converted by operation of law
and without any action by any holder thereof into shares of BancGroup Common
Stock and cash with a total value equal to $23.50 per share of First Family
Stock (the "Merger Consideration") as specified below. On the Effective Date,
each outstanding share of First Family Stock shall receive $11.75 in cash and
BancGroup Common Stock with a value of $11.75 as determined below. The number of
shares, or fractions of a share (subject to section 3.3 hereof), of BancGroup
Common Stock into which each outstanding share of First Family Stock on the
Effective Date shall be converted shall be equal to $11.75 divided by the Market
Value. The Market Value shall represent the per share market value of the
BancGroup Common Stock at the Effective Date and shall be determined by
calculating the average of the closing prices of the Common Stock of BancGroup
as reported by the NYSE on each of the ten (10) trading days ending on the
trading day immediately preceding the Effective Date.
(b)(i) On the Effective Date, BancGroup shall assume all First Family
Options outstanding, and each such option shall represent the right to acquire
BancGroup Common Stock on substantially the same terms applicable to the First
Family Options except as specified below in this section. The number of shares
of BancGroup Common Stock to be issued pursuant to such options shall equal the
number of shares of First Family common stock subject to such First Family
Options multiplied by the Exchange Ratio, provided that no fractions of shares
of BancGroup Common Stock shall be issued and the number of shares of BancGroup
Common Stock to be issued upon the exercise of First Family Options, if a
fractional share exists, shall equal the number of whole shares obtained by
rounding to the nearest whole number, giving account to such fraction. The
exercise price for the acquisition of BancGroup Common Stock shall be the
exercise price for each share of First Family common stock subject to such
options divided by the Exchange Ratio, adjusted appropriately for any rounding
to whole shares that may be done. For purposes of this section 3.1(b)(i), the
"Exchange Ratio" shall mean the result obtained by dividing $23.50 by the Market
Value. Schedule 3.1 hereto sets forth the names of all persons holding First
Family Options, the number of shares of First Family common stock subject to
such options, the exercise price and the expiration date of such options.
(ii) As soon as practicable after the Effective Date, BancGroup shall
file at its expense a registration statement with the SEC on Form S-8 or such
other appropriate form with respect to the shares of BancGroup Common Stock to
be issued pursuant to such
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options and shall use its reasonable best efforts to maintain the effectiveness
of such registration statement for so long as such options remain outstanding.
Such shares shall also be registered or qualified for sale under the securities
laws of any state in which registration or qualification is necessary.
3.2 Surrender of First Family Stock.
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(a) After the Effective Date, each holder of an outstanding certificate
or certificates which prior thereto represented shares of First Family Stock who
is entitled to receive BancGroup Common Stock and cash shall be entitled, upon
surrender to BancGroup of their certificate or certificates representing shares
of First Family Stock, to receive in exchange therefor a certificate or
certificates representing the number of whole shares of BancGroup Common Stock
and cash into and for which the shares of First Family Stock so surrendered
shall have been converted, such certificates to be of such denominations and
registered in such names as such holder may reasonably request. Until so
surrendered and exchanged, each such outstanding certificate which, prior to the
Effective Date, represented shares of First Family Stock and which is to be
converted into BancGroup Common Stock and cash shall for all purposes evidence
ownership of the BancGroup Common Stock and cash into and for which such shares
shall have been so converted, except that when dividends or other distributions
with respect to such BancGroup Common Stock distributed in the Merger shall be
paid, such dividends or distributions shall not be distributed until the
certificates previously representing shares of First Family Stock shall have
been properly tendered in accordance with this section and Section 3.2(b).
(b) Promptly after the Effective Date, SunTrust Bank (the "Exchange
Agent") shall mail to each record holder of an outstanding certificate or
certificates which as of the Effective Date represented First Family Stock, (the
"Certificates"), a form letter of transmittal approved by First Family and
BancGroup (which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates, or proof of loss thereof, for payment therefor
(the "Letter of Transmittal"). Upon surrender to the Exchange Agent of a
Certificate, together with such Letter of Transmittal duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor cash and
BancGroup Common Stock in the amount provided in Section 3.1 and such
Certificate shall forthwith be canceled. No interest will be paid or accrued on
the cash payable upon surrender of the Certificate. If payment or delivery of
BancGroup Common Stock is to be made to a person other than the person in whose
name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
and delivery of BancGroup Common Stock to a person other than the registered
holder of the Certificate surrendered or established to the satisfaction of the
Resulting Corporation that such tax has been paid or is not applicable.
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3.3 Fractional Shares. No fractional shares of BancGroup Common Stock
shall be issued, and each holder of shares of First Family Stock having a
fractional interest arising upon the conversion of such shares into shares of
BancGroup Common Stock shall, at the time of surrender of the certificates
previously representing First Family Stock, be paid by BancGroup an amount in
cash equal to the Market Value of such fractional share.
3.4 Adjustments. In the event that prior to the Effective Date
BancGroup Common Stock shall be changed into a different number of shares or a
different class of shares by reason of any recapitalization or reclassification,
stock dividend, combination, stock split, or reverse stock split of the Common
Stock, an appropriate and proportionate adjustment shall be made in the number
of shares of BancGroup Common Stock into which the First Family Stock and First
Family Options shall be converted.
3.5 BancGroup Stock. The shares of Common Stock of BancGroup issued and
outstanding immediately before the Effective Date shall continue to be issued
and outstanding shares of the Resulting Corporation.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
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BancGroup represents, warrants and covenants to and with First Family
as follows:
4.1 Organization. BancGroup is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. BancGroup
has the necessary corporate powers to carry on its business as presently
conducted and is qualified to do business in every jurisdiction in which the
character and location of the Assets owned by it or the nature of the business
transacted by it requires qualification or in which the failure to qualify
could, individually or in the aggregate, have a Material Adverse Effect on the
condition (financial or other), earnings, business, affairs, Assets, properties,
prospects or results of operations of BancGroup or of BancGroup and its
Subsidiaries taken as a whole.
4.2 Capital Stock.
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(a) The authorized capital stock of BancGroup consists of (A)
44,000,000 shares of Common Stock, $2.50 par value per share, of which as of May
31, 1996, 13,590,085 shares were validly issued and outstanding, fully paid and
nonassessable and are not subject to preemptive rights, and (B) 1,000,000 shares
of Preference Stock, $2.50 par value per share, none of which are issued and
outstanding. The shares of Common Stock to be issued upon the Merger are duly
authorized and, when so issued, will be validly issued and outstanding, fully
paid and nonassessable, will have been registered under the 1933 Act, and will
have been registered or qualified under the securities laws of all jurisdictions
in which such registration or qualification is required, based upon information
provided by First Family.
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(b) The authorized capital stock of each Subsidiary of
BancGroup is validly issued and outstanding, fully paid and nonassessable, and
each Subsidiary is wholly owned, directly or indirectly, by BancGroup.
4.3 Financial Statements; Taxes. (a) BancGroup has delivered to First
Family copies of the following financial statements of BancGroup.
(i) Consolidated balance sheets as of December 31, 1994,
and December 31, 1995, and for the three months ending March 31, 1996;
(ii) Consolidated statements of operations for each of the
three years ended December 31, 1993, 1994 and 1995, and for the three months
ending March 31, 1996;
(iii) Consolidated statements of cash flows for each of the
three years ended December 31, 1993, 1994 and 1995, and for the three months
ending March 31, 1996;
and
(iv) Consolidated statements of changes in shareholders'
equity for the three years ended December 31, 1993, 1994 and 1995, and for
the three months ending March 31, 1996.
All such financial statements are in all material respects in accordance with
the books and records of BancGroup and have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated, all as more
particularly set forth in the notes to such statements. Each of the consolidated
balance sheets presents fairly as of its date the consolidated financial
condition of BancGroup and its Subsidiaries. Except as and to the extent
reflected or reserved against in such balance sheets (including the notes
thereto), BancGroup did not have, as of the dates of such balance sheets, any
material Liabilities or obligations (absolute or contingent) of a nature
customarily reflected in a balance sheet or the notes thereto, other than
Liabilities (including reserves) in the amount set forth in such balance sheets
and the notes thereto. The statements of consolidated income, shareholders'
equity and changes in consolidated financial position present fairly the results
of operations and changes in financial position of BancGroup and its
Subsidiaries for the periods indicated. The foregoing representations, insofar
as they relate to the unaudited interim financial statements of BancGroup for
the three months ended March 31, 1996, are subject in all cases to normal
recurring year-end adjustments and the omission of footnote disclosure.
(b) All Tax returns required to be filed by or on behalf of
BancGroup have been timely filed (or requests for extensions therefor have been
timely filed and granted and have not expired), and all returns filed are
complete and accurate in all material respects. All Taxes shown on said returns
to be due and all additional assessments received have been paid. The amounts
recorded for Taxes on the balance sheets provided under section 4.3(a) are, to
the Knowledge of BancGroup, sufficient in all material respects for the
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payment of all unpaid federal, state, county, local, foreign or other Taxes
(including any interest or penalties) of BancGroup accrued for or applicable to
the period ended on the dates thereof, and all years and periods prior thereto
and for which BancGroup may at said dates have been liable in its own right or
as transferee of the Assets of, or as successor to, any other corporation or
other party. No audit, examination or investigation is presently being conducted
or, to the Knowledge of BancGroup, threatened by any taxing authority which is
likely to result in a material Tax Liability, no material unpaid Tax
deficiencies or additional liabilities of any sort have been proposed by any
governmental representative and no agreements for extension of time for the
assessment of any material amount of Tax have been entered into by or on behalf
of BancGroup. BancGroup has withheld from its employees (and timely paid to the
appropriate governmental entity) proper and accurate amounts for all periods in
material compliance with all Tax withholding provisions of applicable federal,
state, foreign and local Laws (including without limitation, income, social
security and employment Tax withholding for all types of compensation).
4.4 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in a breach of or
constitute a Default (without regard to the giving of notice or the passage of
time) under any material indenture, mortgage, deed of trust or other material
agreement or instrument to which BancGroup or any of its Subsidiaries is a party
or by which they or their Assets may be bound; will not conflict with any
provision of the restated certificate of incorporation or bylaws of BancGroup or
the articles of incorporation or bylaws of any of its Subsidiaries; and will not
violate any provision of any Law, regulation, judgment or decree binding on them
or any of their Assets.
4.5 Absence of Material Adverse Change. Since the date of the most
recent balance sheet provided under section 4.3(a)(i) above, there have been no
events, changes or occurrences which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BancGroup.
4.6 Approval of Agreements. The board of directors of BancGroup has, or
will have prior to July 18, 1996, approved this Agreement and the transactions
contemplated by it and have, or will have prior to July 18, 1996, authorized the
execution and delivery by BancGroup of this Agreement. This Agreement
constitutes the legal, valid and binding obligation of BancGroup, enforceable
against it in accordance with its terms. Approval of this Agreement by the
stockholders of BancGroup is not required by applicable law. Subject to the
matters referred to in section 8.2, BancGroup has full power, authority and
legal right to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. BancGroup has no Knowledge of any fact or
circumstance under which the appropriate regulatory approvals required by
section 8.2 will not be granted without the imposition of material conditions or
material delays.
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4.7 Tax Treatment. BancGroup has no present plan to sell or otherwise
dispose of any of the Assets of First Family, or to liquidate any Subsidiaries,
subsequent to the Merger, and BancGroup intends to continue the historic
business of First Family.
4.8 Title and Related Matters. BancGroup has good and marketable title
to all the properties, interests in properties and Assets, real and personal,
reflected in the most recent balance sheet referred to in section 4.3(a), or
acquired after the date of such balance sheet (except properties, interests and
Assets sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes of such balance sheet, (ii) liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the Knowledge of BancGroup, the material structures and
equipment of BancGroup comply in all material respects with the requirements of
all applicable Laws.
4.9 Subsidiaries. Each Subsidiary of BancGroup has been duly
incorporated and is validly existing as a corporation in good standing under the
Laws of the jurisdiction of its incorporation and each Subsidiary has been duly
qualified as a foreign corporation to transact business and is in good standing
under the Laws of each other jurisdiction in which it owns or leases properties,
or conducts any business so as to require such qualification and in which the
failure to be duly qualified could have a Material Adverse Effect upon BancGroup
and its Subsidiaries considered as one enterprise; each of the banking
Subsidiaries of BancGroup has its deposits fully insured by the Federal Deposit
Insurance Corporation to the extent provided by the Federal Deposit Insurance
Act; and the businesses of the non-bank Subsidiaries of BancGroup are permitted
to subsidiaries of registered bank holding companies.
4.10 Contracts. Neither BancGroup nor any of its Subsidiaries is in
violation of its respective certificate of incorporation or by-laws or in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any Contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by which it
or its property may be bound.
4.11 Litigation. Except as disclosed in or reserved for in BancGroup's
financial statements, there is no Litigation before or by any court or Agency,
domestic or foreign, now pending, or, to the Knowledge of BancGroup, threatened
against or affecting BancGroup or any of its Subsidiaries (nor is BancGroup
aware of any facts which could give rise to any such Litigation) which is
required to be disclosed in the Registration Statement (other than as disclosed
therein), or which is likely to have any Material Adverse Effect or prospective
Material Adverse Effect in the condition, financial or otherwise, or in the
general affairs, management, stockholders' equity or results of operations of
BancGroup and its Subsidiaries considered as one enterprise, or which is likely
to materially and adversely
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affect the properties or Assets thereof or which is likely to materially affect
or delay the consummation of the transactions contemplated by this Agreement;
all pending legal or governmental proceedings to which BancGroup or any
Subsidiary is a party or of which any of their properties is the subject which
are not described in the Registration Statement, including ordinary routine
litigation incidental to the business, are, considered in the aggregate, not
material; and neither BancGroup nor any of its Subsidiaries have any contingent
obligations which could be considered material to BancGroup and its Subsidiaries
considered as one enterprise which are not disclosed in the Registration
Statement as it may be amended or supplemented.
4.12 Compliance. BancGroup and its Subsidiaries, in the conduct of
their businesses, are to the Knowledge of BancGroup, in material compliance with
all material federal, state or local Laws applicable to their or the conduct of
their businesses.
4.13 Registration Statement. At the time the Registration Statement
becomes effective and at the time of the Stockholders' Meeting, the Registration
Statement, including the Proxy Statement which shall constitute a part thereof,
will comply in all material respects with the requirements of the 1933 Act and
the rules and regulations thereunder, will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity with information furnished in
writing to BancGroup by First Family or any of its representatives expressly for
use in the Proxy Statement or information included in the Proxy Statement
regarding the business of First Family, its operations, Assets and capital.
4.14 SEC Filings. (a) BancGroup has heretofore delivered to First
Family copies of BancGroup's: (i) Annual Report on Form 10-K for the fiscal year
ended December 31, 1995; (ii) 1995 Annual Report to Shareholders; (iii)
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996; and
(iv) all other reports, registration statements and other documents filed by
BancGroup with the SEC since December 31, 1995. Since December 31, 1995,
BancGroup has timely filed all reports and registration statements and the
documents required to be filed with the SEC under the rules and regulations of
the SEC and all such reports and registration statements or other documents have
complied in all material respects, as of their respective filing dates and
effective dates, as the case may be, with all the applicable requirements of the
1933 Act and the 1934 Act. As of the respective filing and effective dates, none
of such reports or registration statements or other documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) The documents incorporated by reference into the Registration
Statement, at the time they were filed with the SEC, complied in all material
respects with the requirements
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of the 1934 Act and Regulations thereunder and when read together and with the
other information in the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading at the
time the Registration Statement becomes effective or at the time of the
Stockholders Meeting.
4.15 Form S-4. The conditions for use of a registration statement on
SEC Form S-4 set forth in the General Instructions on Form S-4 have been or will
be satisfied with respect to BancGroup and the Registration Statement.
4.16 Brokers. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried on by BancGroup
directly with First Family and without the intervention of any other person,
either as a result of any act of BancGroup or otherwise in such manner as to
give rights to any valid claim against BancGroup for finders fee, brokerage
commissions or other like payment.
4.17 Government Authorization. BancGroup and its Subsidiaries have all
Permits that, to the Knowledge of BancGroup and its Subsidiaries, are or will be
legally required to enable BancGroup or any of its Subsidiaries to conduct their
businesses in all material respects as now conducted by each of them.
4.18 Absence of Regulatory Communications. Neither BancGroup nor any of
its Subsidiaries is subject to, or has received during the past three (3) years,
any written communication directed specifically to it from any Agency to which
it is subject or pursuant to which such Agency has imposed or has indicated it
may impose any material restrictions on the operations of it or the business
conducted by it or in which such Agency has raised a material question
concerning the condition, financial or otherwise, of such company.
4.19 Disclosure. No representation or warranty, or any statement or
certificate furnished or to be furnished to First Family by BancGroup, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements contained in this
Agreement or in any such statement or certificate not misleading.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF FIRST FAMILY
First Family represents, warrants and covenants to and with BancGroup,
as follows:
5.1 Organization. First Family is a Florida corporation, and the Bank
is a federal savings bank. Each First Family Company is duly organized, validly
existing and in good standing under the respective Laws of its jurisdiction of
incorporation and has all requisite power and authority to carry on its business
as it is now being conducted and is qualified to do business in every
jurisdiction in which the character and location of the Assets owned
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by it or the nature of the business transacted by it requires qualification or
in which the failure to qualify could, individually, or in the aggregate, have a
Material Adverse Effect on the condition (financial or other) earnings,
business, affairs, Assets, properties, prospects or results of operations of
First Family or of First Family and its Subsidiaries taken as a whole.
5.2 Capital Stock. As of March 31, 1996, the authorized capital stock
of First Family consists of 8,000,000 shares of common stock, $.01 par value per
share, 545,000 shares of which are issued and outstanding and 2,000,000 shares
of preferred stock, par value $.01, none of which is issued or outstanding. All
of such shares which are outstanding are validly issued, fully paid and
nonassessable and not subject to preemptive rights. First Family has 35,500
shares of its common stock subject to exercise at any time pursuant to stock
options under its stock option plans. Except for the foregoing, First Family
does not have any other arrangements or commitments obligating it to issue
shares of its capital stock or any securities convertible into or having the
right to purchase shares of its capital stock.
5.3 Subsidiaries. First Family has no direct Subsidiaries other than
the Bank. First Family owns all of the issued and outstanding capital stock of
the Bank free and clear of any liens, claims or encumbrances of any kind. All of
the issued and outstanding shares of capital stock of the Subsidiaries have been
validly issued and are fully paid and non-assessable. As of March 31, 1996,
there were 1,000 shares of the common stock, par value $.01 per share,
authorized of the Bank, all of which are issued and outstanding and wholly owned
by First Family. The Bank has three subsidiaries. As of March 31, 1996 there
were 1,000 shares of common stock authorized with a par value of $100 per share
of which 10 shares are issued and outstanding of First of Eustis, Inc., all of
which are wholly owned by the Bank. As of March 31, 1996 there were 50 shares of
common stock authorized with a par value of $100 per share of which 10 shares
are issued and outstanding of First Family Real Estate & Investments, Inc., all
of which are wholly owned by the Bank. As of March 31, 1996 there were 500
shares of common stock authorized with a par value of $100 per share of which 10
shares are issued and outstanding of First Family Ventures, Inc., all of which
are wholly owned by the Bank.
5.4 Financial Statements; Taxes (a) First Family has delivered to
BancGroup copies of the following financial statements of First Family:
(i) Consolidated statements of financial condition for
the years ending June 30, 1994 and 1995, and for the nine months ending March
31, 1996;
(ii) Consolidated statements of income for each of the
three years ended June 30, 1993, 1994 and 1995, and for the nine months ending
March 31, 1996;
(iii) Consolidated statements of stockholders' equity for
each of the three years ended June 30, 1993, 1994, and 1995, and for the nine
months ending March 31, 1996;
and
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(iv) Consolidated statements of cash flows for each of the
three years ended June 30, 1993, 1994 and 1995, and for the nine months ending
March 31, 1996.
All of the foregoing financial statements are in all material respects
in accordance with the books and records of First Family and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except for changes required
by GAAP, all as more particularly set forth in the notes to such statements.
Each of such balance sheets presents fairly as of its date the financial
condition of First Family. Except as and to the extent reflected or reserved
against in such balance sheets (including the notes thereto), First Family did
not have, as of the date of such balance sheets, any material Liabilities or
obligations (absolute or contingent) of a nature customarily reflected in a
balance sheet or the notes thereto, other than Liabilities (including reserves)
in the amount set forth in such balance sheets and the notes thereto. The
statements of income, stockholders' equity and cash flows present fairly the
results of operation, changes in shareholders equity and cash flows of First
Family for the periods indicated. The foregoing representations, insofar as they
relate to the unaudited interim financial statements of First Family for the
nine months ended March 31, 1996, are subject in all cases to normal recurring
year-end adjustments and the omission of footnote disclosure.
(b) Except as set forth on Schedule 5.4(b), all Tax returns
required to be filed by or on behalf of First Family have been timely filed (or
requests for extensions therefor have been timely filed and granted and have not
expired), and all returns filed are complete and accurate in all material
respects. All Taxes shown on said returns to be due and all additional
assessments received have been paid. The amounts recorded for Taxes on the
balance sheets provided under section 5.4(a) are, to the Knowledge of First
Family, sufficient in all material respects for the payment of all unpaid
federal, state, county, local, foreign and other Taxes (including any interest
or penalties) of First Family accrued for or applicable to the period ended on
the dates thereof, and all years and periods prior thereto and for which First
Family may at said dates have been liable in its own right or as a transferee of
the Assets of, or as successor to, any other corporation or other party. No
audit, examination or investigation is presently being conducted or, to the
Knowledge of First Family, threatened by any taxing authority which is likely to
result in a material Tax Liability, no material unpaid Tax deficiencies or
additional liability of any sort has been proposed by any governmental
representative and no agreements for extension of time for the assessment of any
material amount of Tax have been entered into by or on behalf of First Family.
First Family has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due that is currently in
effect.
(c) Each First Family Company has withheld from its employees
(and timely paid to the appropriate governmental entity) proper and accurate
amounts for all periods in material compliance with all Tax withholding
provisions of applicable federal, state, foreign and local Laws (including
without limitation, income, social security and employment Tax withholding for
all types of compensation). Each First Family Company
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is in compliance with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under federal,
state and local Tax Laws, and such records identify with specificity all
accounts subject to backup withholding under section 3406 of the Code.
5.5 Absence of Certain Changes or Events. Except as set forth on
Schedule 5.5, since the date of the most recent balance sheet provided under
section 5.4(a)(i) above, no First Family Company has
(a) issued, delivered or agreed to issue or deliver any stock,
bonds or other corporate securities (whether authorized and unissued or held in
the treasury) except shares of common stock issued upon the exercise of First
Family Options and shares issued as director's qualifying shares;
(b) borrowed or agreed to borrow any funds or incurred, or
become subject to, any Liability (absolute or contingent) except borrowings,
obligations and Liabilities incurred in the ordinary course of business and
consistent with past practice;
(c) paid any material obligation or Liability (absolute or
contingent) other than current Liabilities reflected in or shown on the most
recent balance sheet referred to in section 5.4(a)(i) and current Liabilities
incurred since that date in the ordinary course of business and consistent with
past practice;
(d) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any Assets of any kind whatsoever to
shareholders, or purchased or redeemed, or agreed to purchase or redeem, any of
its outstanding securities, provided that a dividend in cash of $.04 per share
may be paid for the quarter ending June 30, 1996, and provided further that if
the Effective Date has not occurred by February 28, 1997, First Family may
thereafter pay a dividend in cash of $.04 per share for the quarter ending March
31, 1997;
(e) except in the ordinary course of business, sold or
transferred, or agreed to sell or transfer, any of its Assets, or canceled, or
agreed to cancel, any debts or claims;
(f) except in the ordinary course of business, entered or
agreed to enter into any agreement or arrangement granting any preferential
rights to purchase any of its Assets, or requiring the consent of any party to
the transfer and assignment of any of its Assets;
(g) suffered any Losses or waived any rights of value which in
either event in the aggregate are material considering its business as a whole;
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(h) except in the ordinary course of business, made or
permitted any amendment or termination of any Contract, agreement or license to
which it is a party if such amendment or termination is material considering its
business as a whole;
(i)except in accordance with normal and usual practice, made
any accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former officer or
employee;
(j)except in accordance with normal and usual practice,
increased the rate of compensation payable to or to become payable to any of its
officers or employees or made any material increase in any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement or other
employee benefit plan, payment or arrangement made to, for or with any of its
officers or employees;
(k) received notice or had Knowledge or reason to believe that
any of its substantial customers has terminated or intends to terminate its
relationship, which termination would have a Material Adverse Effect on its
financial condition, results of operations, business, Assets or properties;
(l)failed to operate its business in the ordinary course so as
to preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations;
(m) entered into any other transaction in excess of $50,000
without prior notice to and approval by BancGroup which will not be unreasonably
withheld; or
(n) agreed in writing, or otherwise, to take any action
described in clauses (a) through (m) above.
Between the date hereof and the Effective Date, no First Family
Company, without the express written approval of BancGroup, will do any of the
things listed in clauses (a) through (n) of this section 5.5 except as permitted
therein or as contemplated in this Agreement, and no First Family Company will
enter into or amend any material Contract without the express written consent of
BancGroup. First Family may request the consent of BancGroup to any of the
foregoing actions by furnishing BancGroup with a written request which describes
the action proposed to be taken by First Family. BancGroup, at its sole option,
shall have a period of 5 business days from the date on which it receives such
request within which to notify First Family of either its consent or refusal to
consent to the proposed action except for matters referenced in clause (m) for
which BancGroup agrees not to unreasonably withhold consent. BancGroup's failure
to respond to any such request within such 5 business days period shall be
deemed to constitute a consent to the action proposed in First Family's request.
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5.6 Title and Related Matters.
--------------------------
(a) Title. First Family has good and marketable title to all
the properties, interest in properties and Assets, real and personal, reflected
in the most recent balance sheet referred to in section 5.4(a)(i), or acquired
after the date of such balance sheet (except properties, interests and Assets
sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes to such balance sheet, (ii) Liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the Knowledge of First Family, the material structures
and equipment of each First Family Company comply in all material respects with
the requirements of all applicable Laws.
(b) Leases. Schedule 5.6(b) sets forth a list and description
of all real and personal property owned or leased by any First Family Company,
either as lessor or lessee.
(c) Personal Property. Schedule 5.6(c) sets forth a
depreciation schedule of each First Family Company's fixed Assets as of June 30,
1996.
(d) Computer Hardware and Software. Schedule 5.6(d) contains a
description of all agreements relating to data processing computer software and
hardware now being used in the business operations of any First Family Company.
First Family is not aware of any defects, irregularities or problems with any of
its computer hardware or software which renders such hardware or software unable
to satisfactorily perform the tasks and functions to be performed by them in the
business of any First Family Company.
5.7 Commitments. Except as set forth in Schedule 5.7, no First Family
Company is a party to any oral or written (i) Contracts for the employment of
any officer or employee which is not terminable on 30 days' (or less) notice,
(ii) profit sharing, bonus, deferred compensation, savings, stock option,
severance pay, pension or retirement plan, agreement or arrangement, (iii) loan
agreement, indenture or similar agreement relating to the borrowing of money by
such party, (iv) guaranty of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection, and guaranties made in
the ordinary course of business, (v) consulting or other similar material
Contracts, (vi) collective bargaining agreement, (vii) agreement with any
present or former officer, director or shareholder of such party, or (viii)
other Contract, agreement or other commitment which is material to the business,
operations, property, prospects or Assets or to the condition, financial or
otherwise, of any First Family Company. Complete and accurate copies of all
Contracts, plans and other items so listed have been made or will be made
available to BancGroup for inspection.
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5.8 Charter and Bylaws. Schedule 5.8 contains true and correct copies
of the articles of incorporation and bylaws of each First Family Company,
including all amendments thereto, as currently in effect. There will be no
changes in such articles of incorporation or bylaws prior to the Effective Date,
without the prior written consent of BancGroup.
5.9 Litigation. Except as disclosed on Schedule 5.9, there is no
Litigation (whether or not purportedly on behalf of First Family) pending or, to
the Knowledge of First Family, threatened against or affecting any First Family
Company (nor is First Family aware of any facts which are likely to give rise to
any such Litigation) at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, which involves the possibility of
any judgment or Liability not fully covered by insurance in excess of a
reasonable deductible amount or which may have a Material Adverse Effect on the
business operations, properties or Assets or in the condition, financial or
otherwise, of any First Family Company, and no First Family Company is in
Default with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitrator or governmental department,
commission, board, bureau, agency or instrumentality, which Default would have a
Material Adverse Effect on the business operations, properties or Assets or in
the condition, financial or otherwise, of such party. To the Knowledge of First
Family, each First Family Company has complied in all material respects with all
material applicable Laws and Regulations including those imposing Taxes, or any
applicable jurisdiction and of all states, municipalities, other political
subdivisions and Agencies, in respect of the ownership of its properties and the
conduct of its business, which, if not complied with, would have a Material
Adverse Effect in the business operations, properties or Assets or in the
condition, financial or otherwise, of any such First Family Company.
5.10 Material Contract Defaults. Except as disclosed on Schedule 5.10,
no First Family Company is in Default in any material respect under the terms of
any material Contract, agreement, lease or other commitment which is or may be,
material to the business, operations, properties or Assets, or the condition,
financial or otherwise, of such company and, to the Knowledge of First Family,
there is no event which, with notice or lapse of time, or both, may be or become
an event of Default under any such material Contract, agreement, lease or other
commitment in respect of which adequate steps have not been taken to prevent
such a Default from occurring.
5.11 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of or constitute a Default under any Contract, indenture,
mortgage, deed of trust or other material agreement or instrument to which any
First Family Company is a party and will not conflict with any provision of the
charter or bylaws of any First Family Company.
5.12 Governmental Authorization. Each First Family Company has
all Permits that, to the Knowledge of First Family, are or will be legally
required to enable any First
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Family Company to conduct its business in all material respects as now conducted
by each First Family Company.
5.13 Absence of Regulatory Communications. Except as provided in
Schedule 5.13, no First Family Company is subject to, nor has any First Family
Company received during the past three years, any written communication directed
specifically to it from any Agency to which it is subject or pursuant to which
such Agency has imposed or has indicated it may impose any material restrictions
on the operations of it or the business conducted by it or in which such Agency
has raised any material question concerning the condition, financial or
otherwise, of such company.
5.14 Absence of Material Adverse Change. To the Knowledge of First
Family, since the date of the most recent balance sheet provided under section
5.4(a)(i), there have been no events, changes or occurrences which have had, or
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Family.
5.15 Insurance. Each First Family Company has in effect insurance
coverage and bonds with reputable insurers which, in respect to amounts, types
and risks insured, management of First Family reasonably believes to be adequate
for the type of business conducted by such company. No First Family Company is
liable for any material retroactive premium adjustment. All insurance policies
and bonds are valid, enforceable and in full force and effect, and no First
Family Company has received any notice of any material premium increase or
cancellation with respect to any of its insurance policies or bonds. Within the
last three years, no First Family Company has been refused any insurance
coverage which it has sought or applied for, and it has no reason to believe
that existing insurance coverage cannot be renewed as and when the same shall
expire, upon terms and conditions as favorable as those presently in effect,
other than possible increases in premiums that do not result from any
extraordinary loss experience. All policies of insurance presently held or
policies containing substantially equivalent coverage will be outstanding and in
full force with respect to each First Family Company at all times and in all
material respects from the date hereof to the Effective Date provided that this
sentence will not apply to policies that are not reasonably available due to
circumstance beyond the control of First Family.
5.16 Pension and Employee Benefit Plans. To the Knowledge of First
Family, all employee benefit plans of each First Family Company have been
established in compliance with, and such plans have been operated in material
compliance with, all applicable Laws. Except as set forth in Schedule 5.16, no
First Family Company sponsors or otherwise maintains a "pension plan" within the
meaning of section 3(2) of ERISA or any other retirement plan of First Family
that is intended to qualify under section 401 of the Code, nor do any unfunded
Liabilities exist with respect to any employee benefit plan, past or present. To
the Knowledge of First Family, no employee benefit plan, any trust created
thereunder or any trustee or administrator thereof has engaged in a "prohibited
transaction,"
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as defined in section 4975 of the Code, which may have a Material Adverse Effect
on the condition, financial or otherwise, of any First Family Company.
5.17 Buy-Sell Agreement. To the Knowledge of First Family, there are no
agreements among any of its shareholders granting to any person or persons a
right of first refusal in respect of the sale, transfer, or other disposition of
shares of outstanding securities by any shareholder of First Family, any similar
agreement or any voting agreement or voting trust in respect of any such shares.
5.18 Brokers. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried on by First Family
directly with BancGroup and without the intervention of any other person, either
as a result of any act of First Family, or otherwise, in such manner as to give
rise to any valid claim against First Family for a finder's fee, brokerage
commission or other like payment.
5.19 Approval of Agreements. The board of directors of First Family has
approved this Agreement and the transactions contemplated by this Agreement and
has authorized the execution and delivery by First Family of this Agreement.
Subject to the matters referred to in section 8.2, First Family has full power,
authority and legal right to enter into this Agreement, and, upon appropriate
vote of the shareholders of First Family in accordance with this Agreement,
First Family shall have full power, authority and legal right to consummate the
transactions contemplated by this Agreement.
5.20 Disclosure. No representation or warranty, nor any statement or
certificate furnished or to be furnished to BancGroup by First Family, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements contained in this
Agreement or in any such statement or certificate not misleading.
5.21 Registration Statement. At the time the Registration Statement
becomes effective and at the time of the Stockholders Meeting, the Registration
Statement, including the Proxy Statement which shall constitute part thereof,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this section shall only apply to
statements in or omissions from the Proxy Statement relating to descriptions of
the business of First Family, its Assets, properties, operations, and capital
stock or to information furnished in writing by First Family or its
representatives expressly for inclusion in the Proxy Statement.
5.22 Loans; Adequacy of Allowance for Loan Losses. All reserves for
loan losses shown on the most recent financial statements furnished by First
Family have been calculated in accordance with First Family's policies and are
adequate to reflect the risk inherent in the loans of First Family. First Family
has no Knowledge of any fact which is
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likely to require a future material increase in the provision for loan losses or
a material decrease in the loan loss reserve reflected in such financial
statements. Each loan reflected as an Asset on the financial statements of First
Family is the legal, valid and binding obligation of the obligor of each loan,
enforceable in accordance with its terms subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to
creditors' rights generally and to general equitable principles. First Family
does not have in its portfolio any loan exceeding its legal lending limit, and
except as disclosed on Schedule 5.22, First Family has no known significant
delinquent, substandard, doubtful, loss, nonperforming or problem loans.
5.23 Environmental Matters. Except as provided in Schedule 5.23, to the
best of First Family's knowledge, each First Family Company is in material
compliance with all applicable Laws and other governmental requirements relating
to the generation, management, handling, transportation, treatment, disposal,
storage, delivery, discharge, release or emission of any waste, pollution, or
toxic, hazardous or other substance (the "Environmental Laws") which pertain to
any real property owned by First Family; and to the best of First Family's
Knowledge, there is no Litigation pending or threatened with respect to any
purported violation or alleged violation of the Environmental Laws. Also, to the
best of First Family's Knowledge, with respect to the Assets of any First Family
Company, including any Loan Property, (i) there has been no spillage, leakage,
contamination or release of any substances for which the appropriate remedial
action has not been completed; (ii) no property owned by First Family is
contaminated with, or contains any, hazardous substance or waste as defined in
the Resource Conservation and Recovery Act of 1976 (42 U.S.C.A. 6901, et seq.);
and (iii) there are no underground storage tanks of any property owned by any
First Family Company as defined by the Resource Conservation Recovery Act of
1976. First Family also has no Knowledge of any facts which might suggest that
any First Family Company has engaged in any management practice with respect to
any of its past or existing borrowers which could reasonably be expected to
subject any First Family Company to any Liability, either directly or
indirectly, under the principles of law as set forth in United States v. Fleet
Factors Corp., 901 F.2d 1550 (11th Cir. 1990). Moreover, to the best of First
Family's Knowledge, no First Family Company has extended credit, either on a
secured or unsecured basis, to any person or other entity engaged in any
activities which would require or requires such person or entity to obtain any
Permits which are required under any Environmental Law which has not been
obtained. Finally, to the best of First Family's Knowledge, all First Family
Companies have substantially complied with all regulations and requirements
promulgated by the Occupational Safety and Health Administration that are
applicable to any First Family Company.
5.24 Transfer of Shares. First Family has no Knowledge of any plan or
intention on the part of First Family's shareholders to sell or otherwise
dispose of any of the BancGroup Common Stock to be received by them in the
Merger that would reduce such shareholders' ownership to a number of shares
having, in the aggregate, a fair market value of less than fifty (50%) percent
of the total fair market value of First Family common stock outstanding
immediately before the Merger.
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5.25 Collective Bargaining. There are no labor contracts, collective
bargaining agreements, letters of undertakings or other arrangements, formal or
informal, between any First Family Company and any union or labor organization
covering any of any First Family Company's employees and none of said employees
are represented by any union or labor organization.
5.26 Labor Disputes. To the Knowledge of First Family, each First
Family Company is in material compliance with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours. No First Family Company is or has been engaged in
any unfair labor practice, and, to the Knowledge of First Family, no unfair
labor practice complaint against any First Family Company is pending before the
National Labor Relations Board. Relations between management of each First
Family Company and the employees are amicable and there have not been, nor to
the Knowledge of First Family, are there presently, any attempts to organize
employees, nor to the Knowledge of First Family, are there plans for any such
attempts.
5.27 Derivative Contracts. No First Family Company is a party to or has
agreed to enter into a swap, forward, future, option, cap, floor or collar
financial contract, or any other interest rate or foreign currency protection
contract or derivative security not included in First Family's financial
statements delivered under section 5.4 hereof.
ARTICLE 6
ADDITIONAL COVENANTS
--------------------
6.1 Additional Covenants of BancGroup. BancGroup covenants to and with
First Family as follows:
(a) Registration Statement and Other Filings. BancGroup shall
promptly prepare and file with the SEC the Registration Statement on Form S-4
(or such other form as may be appropriate) and all amendments and supplements
thereto, in form reasonably satisfactory to First Family and its counsel, with
respect to the Common Stock to be issued pursuant to this Agreement. BancGroup
shall use reasonable good faith efforts to prepare promptly all necessary
filings with any Agencies which may be necessary for approval to consummate the
transactions contemplated by this Agreement. Within 60 days of the date hereof,
all bank regulatory applications with appropriate Agencies will be filed by
BancGroup, provided that BancGroup has received in a timely manner the
information from First Family necessary for such applications.
(b) Blue Sky Permits. BancGroup shall use its best efforts to
obtain, prior to the effective date of the Registration Statement, all necessary
state securities Law or "blue sky" Permits and approvals required to carry out
the transactions contemplated by this Agreement.
(c) Financial Statements. BancGroup shall furnish to First
Family:
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(i) As soon as practicable and in any event within
forty-five (45) days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated statements of operations of
BancGroup for such period and for the period beginning at the commencement of
the fiscal year and ending at the end of such quarterly period, and a
consolidated statement of financial condition of BancGroup as of the end of such
quarterly period, setting forth in each case in comparative form figures for the
corresponding periods ending in the preceding fiscal year, subject to changes
resulting from year-end adjustments;
(ii) Promptly upon receipt thereof, copies of all audit
reports submitted to BancGroup by independent auditors in connection with each
annual, interim or special audit of the books of BancGroup made by such
accountants;
(iii) As soon as practicable, copies of all such financial
statements and reports as it shall send to its stockholders and of such regular
and periodic reports as BancGroup may file with the SEC or any other Agency; and
(iv) With reasonable promptness, such additional financial
data as First Family may reasonably request.
(d) No Control of First Family by BancGroup. Notwithstanding
any other provision hereof, until the Effective Date, the authority to establish
and implement the business policies of First Family shall continue to reside
solely in First Family's officers and board of directors.
(e) Listing. Prior to the Effective Date, BancGroup shall use
its reasonable efforts to list the shares of BancGroup Common Stock to be issued
in the Merger on the NYSE or other quotations system on which such shares are
primarily traded.
(f)(i) Employee Benefit Matters. On the Effective Date, all
employees of any First Family Company shall, at BancGroup's option, either
become employees of the Resulting Corporation or its Subsidiaries or be entitled
to severance benefits in accordance with Colonial Bank's severance policy in
accordance with its terms in effect as of the date of this Agreement; provided,
the employees whose names are set forth on Schedule 6.1(f)(i) shall be entitled
to such severance and other post-employment benefits to the extent, but only to
the extent, provided in each of their respective individual agreements with any
First Family Company, copies of which are included as part of Schedule
6.1(f)(i). First Family Company employees who become eligible for payments under
Colonial Bank's severance policy shall be credited for all periods of service
with the applicable First Family Company for purposes of calculating payments to
such employees under the severance policy.
(ii) All Employees of any First Family Company who become
employees of the Resulting Corporation or its Subsidiaries on the Effective Date
shall be entitled, to the extent permitted by applicable Law and subject to the
terms and limits of this subsection
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(f)(ii), to participate in all employee benefit plans of Colonial Bank to the
same extent as Colonial Bank employees. Employees of any First Family Company
who become employees of the Resulting Corporation or its Subsidiaries shall be
allowed, as of the Effective Date and in the sole discretion of Colonial Bank,
either (A) to continue to participate in the First Family Company group dental
and medical benefits plans (to the extent provided by First Family Company as of
the date preceding the Effective Date); or (B) to be eligible to participate in
the group medical and dental benefits plan of Colonial Bank as new employees of
Colonial Bank, and the time of employment of such employees who are employed at
least 30 hours per week with any First Family Company shall be counted as
employment under such dental and medical benefits plans of Colonial Bank for
purposes of calculating any 30 day waiting period and pre-existing condition
limitations. In addition, if the Effective Date falls within an annual period of
coverage under the Colonial Bank group medical and dental benefits plans in
which such First Family Company employees become eligible to participate as of
the Effective Date, each such First Family Company employee shall be given
credit for covered expenses paid by that employee under comparable employee
benefits plans of the First Family Company during the applicable coverage period
through the Effective Date towards satisfaction of any annual deductible
limitation and out-of-pocket maximum that may apply under such Colonial Bank
plans. To the extent permitted by applicable Law, the period of service with the
appropriate First Family Company of all employees who become employees of the
Resulting Corporation or its Subsidiaries on the Effective Date shall be
recognized only for vesting and eligibility purposes under Colonial Bank's
tax-qualified retirement plans.
6.2 Additional Covenants of First Family. First Family covenants to and
with BancGroup as follows:
(a) Operations. First Family will conduct its business and the
business of each First Family Company in a proper and prudent manner and will
use its best efforts to maintain its relationships with its depositors,
customers and employees. No First Family Company will engage in any material
transaction outside the ordinary course of business or make any material change
in its accounting policies or methods of operation, nor will First Family permit
the occurrence of any change or event which would render any of the
representations and warranties in Article 5 hereof untrue in any material
respect at and as of the Effective Date with the same effect as though such
representations and warranties had been made at and as of such Effective Date.
First Family may request the consent of BancGroup to any of the foregoing
actions by furnishing BancGroup with a written request which describes the
action proposed to be taken by First Family. BancGroup, at its sole option,
shall have a period of 5 business days from the date on which it receives such
request within which to notify First Family of either its consent or refusal to
consent, to the proposed action. BancGroup's failure to respond to any such
request within such 5 business day period shall be deemed to constitute a
consent to the action proposed in First Family's request.
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(b) Stockholders Meeting; Best Efforts. First Family will
cause the Stockholders Meeting to be held for the purpose of approving the
Merger as soon as practicable after the effective date of the Registration
Statement, and will use its best efforts to bring about the transactions
contemplated by this Agreement, including stockholder approval of this
Agreement, as soon as practicable unless this Agreement is terminated as
provided herein.
(c) Prohibited Negotiations. Until the termination of this
Agreement, neither First Family nor any of First Family's directors or officers
(or any person representing any of the foregoing) shall solicit or encourage
inquiries or proposals with respect to, furnish any information relating to or
participate in any negotiations or discussions concerning, any acquisition or
purchase of all or of a substantial portion of the Assets of, or of a
substantial equity interest in, First Family or any business combination
involving First Family or any First Family Company other than as contemplated by
this Agreement. First Family will notify BancGroup immediately if any such
inquiries or proposals are received by First Family, if any such information is
requested from First Family, or if any such negotiations or discussions are
sought to be initiated with First Family, and First Family shall instruct First
Family's officers, directors, agents or affiliates or their subsidiaries to
refrain from doing any of the above; provided, however, that nothing contained
herein shall be deemed to prohibit any officer or director of First Family from
fulfilling his fiduciary duty or from taking any action that is required by Law.
(d) Director Recommendation. The members of the Board of
Directors of First Family agree to support publicly the Merger, provided,
however, that nothing contained herein shall be deemed to prohibit any officer
or director of First Family from fulfilling his fiduciary duty or from taking
any action that is required by Law.
(e) Shareholder Voting. First Family shall no later than the
date of execution of this Agreement obtain and submit to BancGroup an agreement
from its directors substantially in the form set forth in Exhibit A.
(f) Financial Statements. First Family shall furnish to
BancGroup:
(i) As soon as practicable and in any event within 30 days
after the end of each quarterly period (other than the last quarterly period) in
each fiscal year, consolidated statements of operations of First Family for such
period and for the period beginning at the commencement of the fiscal year and
ending at the end of such quarterly period, and a consolidated statement of
financial condition of First Family as of the end of such quarterly period,
setting forth in each case in comparative form figures for the corresponding
periods ending in the preceding fiscal year, subject to changes resulting from
year-end adjustments;
(ii) Promptly upon receipt thereof, copies of all audit
reports submitted to First Family by independent auditors in connection with
each annual, interim or special audit of the books of First Family made by such
accountants;
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(iii) As soon a practicable, copies of all such financial
statements and reports as it shall send to its stockholders and of such regular
and periodic reports as First Family may file with the SEC or any other Agency;
and
(iv) With reasonable promptness, such additional financial
data as BancGroup may reasonably request.
(g) Fiduciary Duties. Prior to the Effective Date, no director
or officer (each an "Executive") of any First Family Company shall, directly or
indirectly, own, manage, operate, join, control, be employed by or participate
in the ownership, proposed ownership, management, operation or control of or be
connected in any manner with, any business, corporation or partnership which is
competitive to the business of any First Family Company. All Executives, at all
times, shall satisfy their fiduciary duties to each First Family Company, and
such Executives shall not (except as required in the course of his or her
employment with any First Family Company) communicate or divulge to, or use for
the benefit of himself or herself or any other person, firm, association or
corporation, without the express written consent of First Family, any
confidential information which is possessed, owned or used by or licensed by or
to any First Family Company or confidential information belonging to third
parties which any First Family Company shall be under obligation to keep secret
or which may be communicated to, acquired by or learned of by the Executive in
the course of or as a result of his or her employment with any First Family
Company.
(h) Certain Practices. At the request of BancGroup, (i) First
Family shall use its best efforts to hire such additional loan officers for the
Bank as may be mutually satisfactory to BancGroup and First Family, (ii) the
Bank shall offer deposit products upon terms, including pricing, that are
consistent on a mutually satisfactory basis with those of BancGroup and its
subsidiary, (iii) First Family will consult with BancGroup concerning non
single-family residential loan requests over $100,000 and (iv) First Family will
consult with BancGroup to coordinate various other business issues on a basis
mutually satisfactory to First Family and BancGroup. First Family and the Bank
shall not be required to undertake any of such activities, however, except as
such activities may be in compliance with existing Law and Regulations. First
Family's representations, warranties, and covenants contained in this Agreement
shall not be deemed to be untrue or breached in any respect as a consequence of
any modifications or changes undertaken solely on account of this section
6.2(h). First Family and the Bank shall not be required to undertake the
activities enumerated in clauses (i) and (ii) of this subparagraph (h) until
such time as the conditions set forth in Section 8.2 of this Agreement have been
satisfied. If the Merger is not consummated, BancGroup or its Subsidiaries will
hire any persons hired by First Family under this section.
(i)Health Plan. First Family shall maintain its current health
and medical insurance policy with the Florida Bankers Insurance Trust. Such plan
shall be effective as of the Effective Date, and no notice of discontinuance or
non-renewal of such plan shall have been received by First Family or the Bank,
and First Family and the Bank shall take
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all steps necessary to insure that such plan shall continue in place following
the Effective Date.
(j)Executive Cooperation. First Family agrees that it and its
Executives shall cooperate fully with BancGroup to ensure that all
representations and warranties of this Article V of this Agreement will be
complied with in a timely and expeditious manner.
ARTICLE 7
MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation. Subject to the terms and conditions
herein provided, BancGroup and First Family each agrees to use its best efforts
promptly to take, or cause to be taken, all actions and do, or cause to be done,
all things necessary, proper or advisable under applicable Laws or otherwise,
including, without limitation, promptly making required deliveries of
stockholder lists and stock transfer reports and attempting to obtain all
necessary Consents and waivers and regulatory approvals, to consummate and make
effective, as soon as practicable, the transactions contemplated by this
Agreement. The officers of each Party to this Agreement shall fully cooperate
with officers and employees, accountants, counsel and other representatives of
the other Parties not only in fulfilling the duties hereunder of the Party of
which they are officers but also in assisting, directly or through direction of
employees and other persons under their supervision or control, such as stock
transfer agents for the Party, the other Parties requiring information which is
reasonably available from such Party.
7.2 Press Release. Each Party hereto agrees that, unless approved by
the other Parties in advance, such Party will not make any public announcement,
issue any press release or other publicity or confirm any statements by any
person not a party to this Agreement concerning the transactions contemplated
hereby. Notwithstanding the foregoing, each Party hereto reserves the right to
make any disclosure if such Party, in its reasonable discretion, deems such
disclosure required by Law. In that event, such Party shall provide to the other
Party the text of such disclosure sufficiently in advance to enable the other
Party to have a reasonable opportunity to comment thereon.
7.3 Mutual Disclosure. Each Party hereto agrees to promptly furnish to
each other Party hereto its public disclosures and filings not precluded from
disclosure by Law including but not limited to call reports, Thrift Financial
Reports, Form 8-K, Form 10-Q and Form 10-K filings, Form HB-11 filings, Y-2
applications, reports on Form Y-6, quarterly or special reports to shareholders,
Tax returns, Form S-8 registration statements and similar documents.
7.4 Access to Properties and Records. Each Party hereto shall afford
the officers and authorized representatives of each of the other Parties full
access to the Assets, books and records of such Party in order that such other
Parties may have full opportunity to make such investigation as they shall
desire of the affairs of such Party and shall furnish to
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such Parties such additional financial and operating data and other information
as to its businesses and Assets as shall be from time to time reasonably
requested.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligations of BancGroup and First Family to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction, in the sole discretion of the Party relying upon such conditions,
on or before the Effective Date of all the following conditions, except as such
Parties may waive such conditions in writing:
8.1 Approval by Shareholders. At the Stockholders Meeting, this
Agreement and the matters contemplated by this Agreement shall have been duly
approved by the vote of the holders of not less than the requisite number of the
issued and outstanding voting securities of First Family as is required by
applicable Law and First Family's articles of incorporation and by-laws.
8.2 Regulatory Authority Approval. Orders, Consents and approvals, in
form and substance reasonably satisfactory to BancGroup and First Family shall
have been entered by the Board of Governors of the Federal Reserve System and
other appropriate bank regulatory Agencies (i) granting the authority necessary
for the consummation of the transactions contemplated by this Agreement and (ii)
satisfying all other requirements prescribed by Law.
8.3 Litigation. There shall be no pending or threatened Litigation in
any court or any pending or threatened proceeding by any governmental
commission, board or Agency, with a view to seeking or in which it is sought to
restrain or prohibit consummation of the transactions contemplated by this
Agreement or in which it is sought to obtain divestiture, rescission or damages
in connection with the transactions contemplated by this Agreement and no
investigation by any Agency shall be pending or threatened which might result in
any such suit, action or other proceeding.
8.4 Registration Statement. The Registration Statement shall be
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement shall be in effect; no proceedings for such purpose,
or under the proxy rules of the SEC or any bank regulatory authority pursuant to
the 1934 Act, as amended, and with respect to the transactions contemplated
hereby, shall be pending before or threatened by the SEC or any bank regulatory
authority; and all approvals or authorizations for the offer of BancGroup Common
Stock shall have been received or obtained pursuant to any applicable state
securities Laws, and no stop order or proceeding with respect to the
transactions contemplated hereby shall be pending or threatened under any such
state Law.
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8.5 Tax Opinion. An opinion of Miller, Hamilton, Snider & Odom, L.L.C.,
counsel to BancGroup, shall have been received in form and substance reasonably
satisfactory to First Family and BancGroup to the effect that (i) the Merger
will constitute a "reorganization" within the meaning of section 368 of the
Code; (ii) no gain or loss will be recognized by First Family; (iii) no gain or
loss will be recognized by the shareholders of First Family who receive shares
of BancGroup Common Stock except to the extent of any taxable "boot" received by
such persons from BancGroup, and except to the extent of any dividends received
from First Family prior to the Effective Date; (iv) the basis of the BancGroup
Common Stock received in the Merger will be equal to the sum of the basis of the
shares of First Family common stock exchanged in the Merger and the amount of
gain, if any, which was recognized by the exchanging First Family shareholder,
including any portion treated as a dividend, less the value of taxable boot, if
any, received by such shareholder in the Merger; (v) the holding period of the
BancGroup Common Stock will include the holding period of the shares of First
Family common stock exchanged therefor if such shares of First Family common
stock were capital assets in the hands of the exchanging First Family
shareholder; and (vi) cash received by a First Family shareholder in lieu of a
fractional share interest of BancGroup Common Stock will be treated as having
been received as a distribution in full payment in exchange for the fractional
share interest of BancGroup Common Stock which he or she would otherwise be
entitled to receive and will qualify as capital gain or loss (assuming the First
Family common stock was a capital asset in his or her hands as of the Effective
Date).
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF FIRST FAMILY
The obligations of First Family to cause the transactions contemplated
by this Agreement to be consummated shall be subject to the satisfaction on or
before the Effective Date of all the following conditions except as First Family
may waive such conditions in writing:
9.1 Representations, Warranties and Covenants. All representations and
warranties of BancGroup contained in this Agreement shall be true in all
material respects on and as of the Effective Date as if such representations and
warranties were made on and as of such Effective Date, and BancGroup shall have
performed in all material respects all agreements and covenants required by this
Agreement to be performed by it on or prior to the Effective Date.
9.2 Adverse Changes. BancGroup and its subsidiaries shall have incurred
no Loss or Losses which, in the aggregate, exceed $14,000,000, and there shall
have been no material changes in the Laws governing the business of BancGroup or
which would impair the rights of First Family or its shareholders pursuant to
this Agreement.
9.3 Closing Certificate. In addition to any other deliveries required
to be delivered hereunder, First Family shall have received a certificate from
the President or a Vice President and from the Secretary or Assistant Secretary
of BancGroup dated as of the Closing certifying that:
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(a) the Board of Directors of BancGroup has duly adopted
resolutions approving the substantive terms of this Agreement and authorizing
the consummation of the transactions contemplated by this Agreement and such
resolutions have not been amended or modified and remain in full force and
effect;
(b) each person executing this Agreement on behalf of
BancGroup is an officer of BancGroup holding the office or offices specified
therein and the signature of each person set forth on such certificate is his or
her genuine signature;
(c) the certificate of incorporation and bylaws of BancGroup
referenced in section 4.4 hereof remain in full force and effect;
(d) such persons have no knowledge of a basis for any material
claim, in any court or before any Agency or arbitration and or otherwise
against, by or affecting BancGroup or the business, prospects, condition
(financial or otherwise), or Assets of BancGroup or which would prevent the
performance of this Agreement or the transactions contemplated by this Agreement
or declare the same unlawful or cause the recision thereof;
(e) to such persons' knowledge, the Proxy Statement delivered
to First Family's shareholders, or any amendments or revisions thereto so
delivered, as of the date thereof, did not contain or incorporate by reference,
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, not
misleading in light of the circumstances under which they were made (it being
understood that such persons need not express a statement as to information
concerning or provided by First Family for inclusion in such Proxy Statement);
and
(f) the conditions set forth in this Article 9 insofar as they
relate to BancGroup have been satisfied.
9.4 Opinion of Counsel. First Family shall have received an opinion of
Miller, Hamilton, Snider & Odom, L.L.C., counsel to BancGroup, dated as of the
Closing, in form reasonably satisfactory to First Family, as to matters set
forth in Exhibit B hereto.
9.5 Fairness Opinion. First Family shall have received prior to the
mailing of the Proxy Statement from Mercer Capital Management, Inc. a letter
setting forth its opinion that the consideration to be received by the
shareholders of First Family under the terms of this Agreement is fair to them
from a financial point of view.
9.6 NYSE Listing. The shares of BancGroup Common Stock to be issued
under this Agreement shall have been approved for listing on the NYSE.
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9.7 Material Events. There shall have been no determination by the
board of directors of First Family that the transactions contemplated by this
Agreement have become impractical because of any state of war, declaration of a
banking moratorium in the United States or a general suspension of trading on
the NYSE or any other exchange on which BancGroup Common Stock may be traded.
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BANCGROUP
The obligations of BancGroup to cause the transactions contemplated by
this Agreement to be consummated shall be subject to the satisfaction on or
before the Effective Date of all of the following conditions except as BancGroup
may waive such conditions in writing:
10.1 Representations, Warranties and Covenants. All representations and
warranties of First Family contained in this Agreement shall be true in all
material respects on and as of the Effective Date as if such representations and
warranties were made on and as of the Effective Date, and First Family shall
have performed in all material respects all agreements and covenants required by
this Agreement to be performed by it on or prior to the Effective Date.
10.2 Adverse Changes. First Family and its Subsidiaries shall have
incurred no Loss or Losses which, in the aggregate, exceed $450,000 and there
shall have been no material changes in the Laws governing the business of First
Family which would impair BancGroup's rights pursuant to this Agreement. For
purposes of this section 10.2 any one-time assessment by the Federal Deposit
Insurance Corporation's Savings Association Fund after the date of this
Agreement shall not constitute an adverse change, nor shall such assessment be
included for the purpose of calculating a Loss or Losses hereunder.
10.3 Closing Certificate. In addition to any other deliveries required
to be delivered hereunder, BancGroup shall have received a certificate from the
President or Vice President and from the Secretary or Assistant Secretary of
First Family dated as of the Closing certifying that:
(a) the Board of Directors of First Family has duly adopted
resolutions approving the substantive terms of this Agreement and authorizing
the consummation of the transactions contemplated by this Agreement and such
resolutions have not been amended or modified and remain in full force and
effect;
(b) the shareholders of First Family have duly adopted
resolutions (copies of which shall be attached to such certificate) approving
the substantive terms of the Merger and the transactions contemplated thereby
and such resolutions have not been amended or modified and remain in full force
and effect;
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(c) each person executing this Agreement on behalf of First
Family is an officer of First Family holding the office or offices specified
therein and the signature of each person set forth on such certificate is his or
her genuine signature;
(d) the charter documents of First Family and the Bank
referenced in section 5.8 hereof were in full force and effect and have not been
amended or modified since the date hereof;
(e) to such persons' knowledge, the Proxy Statement delivered
to First Family's shareholders, or any amendments or revisions thereto so
delivered, as of the date thereof, did not contain or incorporate by reference
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, not
misleading in light of the circumstances under which they were made (it being
understood that such persons need only express a statement as to information
concerning or provided by First Family for inclusion in such Proxy Statement);
and
(f) the conditions set forth in this Article 10 insofar as
they relate to First Family have been satisfied.
10.4 Opinion of Counsel. BancGroup shall have received an opinion of
Igler & Dougherty, P.A., counsel to First Family, dated as of the Closing, in
form reasonably satisfactory to BancGroup, as to matters set forth in Exhibit C
hereto.
10.5 Controlling Shareholders. Each shareholder of First Family who may
be an "affiliate" of First Family, within the meaning of Rule 145 of the general
rules and regulations under the 1933 Act shall have executed and delivered an
agreement satisfactory to BancGroup to the effect that such person shall not
make a "distribution" (within the meaning of Rule 145) of the Common Stock which
he receives upon the Effective Date and that such Common Stock will be held
subject to all applicable provisions of the 1933 Act and the rules and
regulations of the SEC thereunder. First Family recognizes and acknowledges that
BancGroup Common Stock issued to such persons may bear a legend evidencing the
agreement described above.
10.6 Material Events. There shall have been no determination by the
board of directors of BancGroup that the transactions contemplated by this
Agreement have become impractical because of any state of war, declaration of a
banking moratorium in the United States or general suspension of trading on the
NYSE or any exchange on which BancGroup Common Stock may be traded.
10.7 Employee Benefit Matters. On or before the execution of this
Agreement, David Shepherd and First Family shall have duly executed the letter
agreement dated July 19, 1996 from BancGroup relating to medical insurance and
other matters, a copy of which is included as part of Schedule 6.1(f)(i).
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10.8 Shareholders' Equity The consolidated Shareholders' Equity of
First Family shall be no less than $9,000,000 as of the Effective Date.
ARTICLE 11
TERMINATION OF REPRESENTATIONS AND WARRANTIES
All representations and warranties provided in Articles 4 and 5 of this
Agreement or in any closing certificate pursuant to Articles 9 and 10 shall
terminate and be extinguished at and shall not survive the Effective Date. All
covenants, agreements and undertakings required by this Agreement to be
performed by any Party hereto following the Effective Date shall survive such
Effective Date and be binding upon such Party. If the Merger is not consummated,
all representations, warranties, obligations, covenants, or agreements hereunder
or in any certificate delivered hereunder relating to the transaction which is
not consummated shall be deemed to be terminated or extinguished except that
Section 7.2, Article 11, Article 15 and any applicable definitions of Article
14, shall survive. Items disclosed in the Exhibits and Schedules attached hereto
are incorporated into this Agreement and form a part of the representations,
warranties, covenants or agreements to which they relate. Information provided
in such Exhibits and Schedules is provided only in response to the specific
section of this Agreement which calls for such information.
ARTICLE 12
NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time given or mailed, first class postage prepaid:
(a) If to First Family, to David M. Shepherd, Chairman of the
Board, President and CEO, First Family Financial Corporation, 2801 South Bay
Street, Eustis, Florida 32726, facsimile (352) 357-8007, with copies to George
Igler, Esq., Igler & Dougherty, P.A., 1501 Park Avenue East, Tallahassee,
Florida 32301, facsimile 904-878- 1230, or as may otherwise be specified by
First Family in writing to BancGroup.
(b) If to BancGroup, to W. Flake Oakley, IV, One Commerce
Street, Suite 800, Montgomery, Alabama, 36104, facsimile (334) 240-6040, with a
copy to Michael D. Waters, Miller, Hamilton, Snider & Odom, One Commerce Street,
Suite 802, Montgomery, Alabama 36104, facsimile (334) 265-4533, or as may
otherwise be specified in writing by BancGroup to First Family.
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ARTICLE 13
AMENDMENT OR TERMINATION
13.1 Amendment. This Agreement may be amended by the mutual consent of
BancGroup and First Family before or after approval of the transactions
contemplated herein by the shareholders of First Family, except that if amended
after shareholder approval no amendment shall:
(a) Change the amount or kind of shares, securities cash,
property, or rights to be received; or
(b) Change any other terms and conditions of the Merger if
such change would materially and adversely affect First Family or the holders of
First Family Stock; or
(c) Change any term of First Family articles of incorporation.
13.2 Termination. This Agreement may be terminated at any time prior to
or on the Effective Date whether before or after action thereon by the
shareholders of First Family, as follows:
(a) by the mutual consent of the respective boards of
directors of First Family and BancGroup;
(b) by the board of directors of either Party (provided that
the terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a breach by the other Party of any representation or warranty contained in
this Agreement which cannot be or has not been cured within thirty (30) days
after the giving of written notice to the breaching Party of such breach and
which breach would provide the non-breaching Party the ability to refuse to
consummate the Merger under the standard set forth in section 10.1 of this
Agreement in the case of BancGroup and section 9.1 of this Agreement in the case
of First Family;
(c) by the board of directors of either Party (provided that
the terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within thirty (30) days
after the giving of written notice to the breaching Party of such breach, or if
any of the conditions to the obligations of such Party contained in this
Agreement shall not have been satisfied in full; or
(d) by the board of directors of either BancGroup or First
Family if all transactions contemplated by this Agreement shall not have been
consummated on or prior to March 31, 1997, if the failure to consummate the
transactions provided for in this
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Agreement on or before such date is not caused by any breach of this Agreement
by the Party electing to terminate pursuant to this section 13.2(d).
13.3 Damages. In the event of termination pursuant to section 13.2,
First Family and BancGroup shall not be liable for damages for any breach of
warranty or representation contained in this Agreement made in good faith, and,
in that case, the expenses incurred shall be borne as set forth in section 15.1
hereof.
ARTICLE 14
DEFINITIONS
The following terms, which are capitalized in this Agreement, shall
have the meanings set forth below for the purpose of this Agreement:
Agencies Shall mean, collectively, the Federal Trade Commission, the
United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision, all state
regulatory agencies having jurisdiction over the Parties and
their respective Subsidiaries, HUD, the VA, the FHA, the GNMA,
the FNMA, the FHLMC, the NYSE, and the SEC.
Agreement Shall mean this Agreement and Plan of Merger and the Exhibits and
Schedules delivered pursuant hereto and incorporated herein by
reference.
Assets Of a Party shall mean all of the assets, properties, businesses
and rights of such Party of every kind, nature, character and
description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or
utilized in such Party's business, directly or indirectly, in
whole or in part, whether or not carried on the books and records
of such Party, and whether or not owned in the name of such Party
or any Affiliate of such Party and wherever located.
BancGroup The Colonial BancGroup, Inc., a Delaware corporation with its
principal offices in Montgomery, Alabama.
Bank First Family Bank, FSB, a federal savings bank.
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Closing The closing of the transactions contemplated hereby as
described in section 2.7 of this Agreement.
Code The Internal Revenue Code of 1986, as amended.
Common Stock BancGroup's Common Stock authorized and defined
in the restated certificate of incorporation of
BancGroup, as amended.
Consent Any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
Contract Any written or oral agreement, arrangement,
authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice,
restriction, understanding or undertaking of any kind
or character, or other document to which any Person is
a party or that is binding on any Person or its capital
stock, Assets or business.
Default Shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any
occurrence of any event that with the passage of time
or the giving of notice or both would constitute a
breach or violation of or default under any Contract,
Order or Permit, or (iii) any occurrence of any event
that with or without the passage of time or the giving
of notice would give rise to a right to terminate or
revoke, change the current terms of, or renegotiate, or
to accelerate, increase, or impose any Liability under,
any Contract, Order or Permit.
DGCL The Delaware General Corporation Law.
Effective Date Means the date and time at which the Merger
becomes effective as defined in section 2.7 hereof.
Environmental Laws Means the laws, regulations and governmental
requirements referred to in section 5.23 hereof.
ERISA The Employee Retirement Income Security Act of 1974, as
amended.
Executive Means those persons covered by section 6.2(g) hereof.
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Exchange Ratio The ratio of the number of shares of BancGroup
Common Stock to be issued for First Family Options, as
defined in section 3.1(b).
Exhibits A through C, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement.
Such Exhibits are hereby incorporated by reference
herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or
document without being attached hereto.
FBCA The Florida Business Corporation Act
First Family First Family Financial Corporation, a Florida
corporation.
First Family Company Shall mean First Family, the Bank, any Subsidiary of
First Family or the Bank, or any person or entity
acquired as a Subsidiary of First Family or the Bank in
the future and owned by First Family or the Bank at the
Effective Date.
First Family Options Options respecting the issuance of First Family common
stock pursuant to the First Family Bank, FSB, 1992
Stock Option and Stock Appreciation Rights Plan.
First Family Stock Shares of Common stock, par value $.01 per share, of
First Family.
GAAP Generally Accepted Accounting Principles
Knowledge Means the actual knowledge of the Chairman, President,
Chief Financial Officer, Chief Accounting Officer,
Chief Credit Officer, General Counsel or any Senior or
Executive Vice President of BancGroup, in the case of
knowledge of BancGroup, or of First Family and the
Bank, in the case of knowledge of First Family.
Law Any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business,
including those promulgated, interpreted or enforced by
any Agency.
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Liability Any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection
and defense), deficiency, guaranty or endorsement of or
by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit
in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
Lien Any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or
other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of,
on, or with respect to any property or property
interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) for depository
institution Subsidiaries of a Party, pledges to secure
deposits and other Liens incurred in the ordinary
course of the banking business, and (iii) Liens in the
form of easements and restrictive covenants on real
property which do not materially adversely affect the
use of such property by the current owner thereof.
Litigation Any action, arbitration, complaint, criminal
prosecution, governmental or other examination or
investigation, hearing, inquiry, administrative or
other proceeding relating to or affecting a Party, its
business, its Assets (including Contracts related to
it), or the transactions contemplated by this
Agreement.
Loan Property Any property owned by the Party in question or
by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where
required by the context, includes the owner or operator
of such property, but only with respect to such
property.
Loss Any and all direct or indirect payments, obligations,
recoveries, deficiencies, fines, penalties, interest,
assessments, losses, diminution in the value of Assets,
damages, punitive, exemplary or consequential damages
(including, but not limited to, lost income and profits
36
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and interruptions of business), Liabilities, costs,
expenses (including without limitation, reasonable
attorneys' fees and expenses, and consultant's fees and
other costs of defense or investigation), and interest
on any amount payable to a third party as a result of
the foregoing.
material For purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in
question; provided that any specific monetary amount
stated in this Agreement shall determine materiality in
that instance.
Material Adverse Effect On a Party shall mean an event, change or occurrence
which has a material adverse impact on (i) the
financial position, business, or results of operations
of such Party and its Subsidiaries, taken as a whole,
or (ii) the ability of such Party to perform its
obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this
Agreement provided that "material adverse impact" shall
not be deemed to include the impact of (x) changes in
banking and similar laws of general applicability or
interpretations thereof by courts or governmental
authorities, (y) changes in generally accepted
accounting principles or regulatory accounting
principles generally applicable to banks and thrifts
and their holding companies, and (z) the Merger and
compliance with the provisions of this Agreement on the
operating performance of the Parties.
Merger The merger of First Family with BancGroup as
contemplated in this Agreement.
Merger Consideration The distribution of BancGroup Common Stock and cash for
each share of First Family Stock as provided in section
3.1(a) hereof.
NYSE The New York Stock Exchange.
Order Any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or
award, ruling, or writ of any federal, state, local or
foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Agency.
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Party Shall mean First Family or BancGroup, and "Parties"
shall mean both First Family and BancGroup.
Permit Any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which
any Person is a party or that is or may be binding upon
or inure to the benefit of any Person or its
securities, Assets or business.
Person A natural person or any legal, commercial or
governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture,
limited partnership, limited liability company, trust,
business association, group acting in concert, or any
person acting in a representative capacity.
Proxy Statement The proxy statement used by First Family to solicit the
approval of its stockholders of the transactions
contemplated by this Agreement, which shall include the
prospectus of BancGroup relating to the issuance of the
BancGroup Common Stock to the shareholders of First
Family.
Registration Statement The registration statement on Form S-4, or such other
appropriate form, to be filed with the SEC by
BancGroup, and which has been agreed to by First
Family, to register the shares of BancGroup Common
Stock offered to stockholders of First Family pursuant
to this Agreement, including the Proxy Statement.
Resulting Corporation BancGroup, as the surviving corporation resulting from
the Merger.
SEC United States Securities and Exchange Commission.
Shareholders' Equity Shall mean the consolidated stockholder's equity of
First Family at the close of business on the month-end
immediately preceding the Closing Date computed in
accordance with GAAP, plus the after-tax impact of (a)
the booked or accrued amount of any one-time special
assessment by the Federal Deposit Insurance Fund after
the date of this Agreement; (b) reasonable fees paid to
Igler & Dougherty, P.A. relating to this Agreement; (c)
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compensation and other expenses paid to or on behalf of
persons hired by First Family pursuant to Section
6.2(h) of the Agreement; (d) any amounts transferred by
First Family to reserve accounts at the request of
BancGroup that would be in excess of the amounts
required by GAAP or in excess of amounts necessary to
maintain reserves at current levels; (e) fees paid to
Mercer Capital Management, Inc. pursuant to Section 9.5
of this Agreement; and (f) any other fees or payments
required to be paid or accrued by First Family in
connection with this Agreement or the proposed
transaction.
Stockholders Meeting The special meeting of stockholders of First
Family called to approve the transactions contemplated
by this Agreement.
Subsidiaries Shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns
or controls 5% or more of the outstanding equity
securities either directly or through an unbroken chain
of entities as to each of which 5% or more of the
outstanding equity securities is owned directly or
indirectly by its parent; provided, however, there
shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity.
Tax or Taxes Means any federal, state, county, local, foreign, and
other taxes, assessments, charges, fares, and
impositions, including interest and penalties thereon
or with respect thereto.
1933 Act The Securities Act of 1933, as amended.
1934 Act The Securities Exchange Act of 1934, as amended.
ARTICLE 15
MISCELLANEOUS
15.1 Expenses. Each Party hereto shall bear its own legal, auditing,
trustee, investment banking, regulatory and other expenses in connection with
this Agreement and the transactions contemplated hereby.
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15.2 Benefit. This Agreement shall inure to the benefit of and be
binding upon First Family and BancGroup, and their respective successors. This
Agreement shall not be assignable by any Party without the prior written consent
of the other Party.
15.3 Governing Law. This Agreement shall be governed by, and construed
in accordance with the Laws of the State of Alabama without regard to any
conflict of Laws.
15.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to constitute an original. Each such counterpart shall
become effective when one counterpart has been signed by each Party thereto.
15.5 Headings. The headings of the various articles and sections of
this Agreement are for convenience of reference only and shall not be deemed a
part of this Agreement or considered in construing the provisions thereof.
15.6 Severability. Any term or provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining terms and provisions thereof or affecting the
validity or enforceability of such provision in any other jurisdiction, and if
any term or provision of this Agreement is held by any court of competent
jurisdiction to be void, voidable, invalid or unenforceable in any given
circumstance or situation, then all other terms and provisions, being severable,
shall remain in full force and effect in such circumstance or situation and the
said term or provision shall remain valid and in effect in any other
circumstances or situation.
15.7 Construction. Use of the masculine pronoun herein shall be deemed
to refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No
inference in favor of or against any Party shall be drawn from the fact that
such Party or such Party's counsel has drafted any portion of this Agreement.
15.8 Return of Information. In the event of termination of this
Agreement prior to the Effective Date, each Party shall return to the other,
without retaining copies thereof, all confidential or non-public documents, work
papers and other materials obtained from the other Party in connection with the
transactions contemplated in this Agreement and shall keep such information
confidential, not disclose such information to any other person or entity, and
not use such information in connection with its business.
15.9 Equitable Remedies. The parties hereto agree that, in the event of
a breach of this Agreement by either Party, the other Party may be without an
adequate remedy at law owing to the unique nature of the contemplated
transactions. In recognition thereof, in addition to (and not in lieu of) any
remedies at law that may be available to the non- breaching Party, the
non-breaching Party shall be entitled to obtain equitable relief, including the
remedies of specific performance and injunction, in the event of a breach of
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this Agreement by the other Party, and no attempt on the part of the
non-breaching Party to obtain such equitable relief shall be deemed to
constitute an election of remedies by the non-breaching Party that would
preclude the non-breaching Party from obtaining any remedies at law to which it
would otherwise be entitled.
15.10 Arbitration. Any controversy or claim arising out of or related
to this Agreement, or the interpretation thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration Association
then in effect, before a panel of three arbitrators, and judgment upon the award
rendered may be entered without notice and enforced in any court having
jurisdiction thereof. It is agreed and understood that the transactions
contemplated by this Agreement are conducted in and affect interstate commerce
and that this section concerning arbitration shall be enforced notwithstanding
any provision of state or federal law to the contrary.
15.11 Attorneys' Fees. If any Party hereto shall bring an action at law
or in equity to enforce its rights under this Agreement (including an action
based upon a misrepresentation or the breach of any warranty, covenant,
agreement or obligation contained herein), the prevailing Party in such action
shall be entitled to recover from the other Party its costs and expenses
incurred in connection with such action (including fees, disbursements and
expenses of attorneys and costs of investigation).
15.12 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or Default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or Default, nor shall it be construed to be a wavier of any such right,
power or remedy, or an acquiescence in any similar breach or Default; nor shall
any waiver of any single breach or Default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Agreement must be in writing and be executed by the Parties
to this Agreement and shall be effective only to the extent specifically set
forth in such writing.
15.13 Remedies Cumulative. All remedies provided in this Agreement, by
law or otherwise, shall be cumulative and not alternative.
15.14 Entire Contract. This Agreement and the documents and instruments
referred to herein constitute the entire contract between the parties to this
Agreement and supersede all other understandings with respect to the subject
matter of this Agreement.
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IN WITNESS WHEREOF, First Family and BancGroup have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
ATTEST: FIRST FAMILY FINANCIAL CORPORATION
BY: /s/ Bradley R. Meredith BY: /s/ David M. Shepherd
----------------------- ---------------------
ITS: Corporate Secretary ITS: President & CEO
------------------- ---------------
(CORPORATE SEAL)
ATTEST: THE COLONIAL BANCGROUP, INC.
BY: /s/ W. Flake Oakley, IV BY: /s/ Robert E. Lowder
----------------------- --------------------
ITS: Assistant Secretary ITS: President & CEO
------------------- ---------------
(CORPORATE SEAL)
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EXHIBIT A
First Family Bank
July 17, 1996
Mr. Robert E. Lowder
Chairman of the Board and
Chief Executive Officer
The Colonial BancGroup, Inc.
Post Office Box 1108
Montgomery, Alabama 36101
RE: Merger
Dear Mr. Lowder:
I am writing to confirm the following agreement between The Colonial
BancGroup, Inc. ("BancGroup") and the undersigned regarding the proposed merger
between First Family Financial Corporation ("First Family") and BancGroup
pursuant to the Agreement and Plan of Merger dated as of July 19, 1996 (the
"Agreement"). In consideration of the merger and until the merger is consummated
in accordance with the Agreement or the Agreement is terminated in accordance
with its terms, whichever is the first to occur, I agree to vote all of the
shares of First Family that I own directly, or otherwise have the power to vote,
in favor of the merger of First Family and BancGroup. Furthermore, for the same
period of time I will vote any shares I own in First Family against any business
combination or other reorganization of any kind involving First Family or its
subsidiaries with any entity other than BancGroup.
Sincerely yours,
David M. Shepherd 7/16/96 William M. Furnas 7/17/96
- ----------------- ------- ----------------- -------
David M. Shepherd Date William M. Furnas Date
Director Director
William Wintersdorf 7/17/96 Catherine C. Hanson 7/17/96
- ------------------- ------- ------------------- -------
William Wintersdorf Date Catherine C. Hanson Date
Director Director
John B. Kirkpatrick, Jr. 7/17/96 Bradley R. Meredith 7/17/96
- -------------------------------- ------------------- -------
John B. Kirkpatrick, Jr. Date Bradley R. Meredith Date
Director Director
Thomas J. Windram 7/17/96 Braxton W. Price, M.D. 7/17/96
- ----------------- ------- ---------------------- -------
Thomas J. Windram Date Braxton W. Price, M.D. Date
Director Director
Idris D. Voldness 7/17/96 George A. Bavelis 7/17/96
- ----------------- ------- ----------------- -------
Idris D. Voldness Date George A. Bavelis Date
Director Director
Corporate Office: 2801 South Bay Street
Eustis, Florida 32726-6503
(352) 357-4171 -- Fax (352) 483-1300
<PAGE>
Colonial
BancGroup
July 18, 1996
Mr. David M. Shepherd Chairman, CEO and President
First Family Financial Corporation
2801 South Bay Street
Eustis, Florida 32726-6503
Dear David:
This agreement is being entered into in connection with the proposed merger
of Colonial BancGroup, Inc. ("BancGroup") and First Family Financial Corporation
("First Family"). BancGroup agrees to provide health care coverage, equal to
that currently provided by First Family under its Florida Bankers Association
("FBA") plan (hereinafter referred to as "Coverage" or "FBA Plan"), for Shepherd
and his wife Gretchen S. Shepherd ("Wife") for 24 months following the
completion of the merger.
It is anticipated that the above described Coverage will be provided, as
follows:
1. It is anticipated that Colonial will continue the FBA Plan for First
Family employees.
2. It is further anticipated that Shepherd's employment with First Family,
or its successor, will continue for a period of at least 6 months
following the effective date of the merger; provided, however, that the
terms and conditions of employment shall be mutually agreed to by
Shepherd and BancGroup.
3. During Shepherd's continued employment, it is anticipated that Coverage
will be provided to Shepherd and Wife under the FBA Plan; provided,
BancGroup may, in its sole discretion, elect to provide such Coverage
pursuant to BancGroup's current group health plan or any other plan
that BancGroup may provide. To the extent BancGroup's current group
health plan or any other plan that BancGroup may provide does not
provide Coverage equal to that currently provided by the FBA Plan,
BancGroup will reimburse Shepherd for any unreimbursed medical expenses
that otherwise would have been covered under the FBA Plan.
4. Upon Shepherd's termination of employment, Coverage will be provided to
Shepherd, as follows:
a. Shepherd should be entitled to coverage under Medicare.
b. In addition, BancGroup will purchase, on behalf of
Shepherd, a Supplemental Medicare Insurance policy (for which
BancGroup will pay the premiums and pay Part B premium of
Medicare coverage through the date which is 24 months after
the effective date of the merger); and
c. To the extent that Medicare and Supplemental Medicare
Insurance policies do not provide Coverage equal to that
currently provided by the FBA Plan, BancGroup will reimburse
Shepherd for any unreimbursed medical expenses that otherwise
would have been covered under the FBA Plan.
5. Upon Shepherd's termination of employment, Coverage will be provided to
Wife pursuant to COBRA (for which BancGroup will pay the premiums
through the date which is 24 months after the effective date of the
merger).
Shepherd agrees that BancGroup and its subsidiaries' obligation to provide
Coverage to him and Wife shall terminate 24 months after the merger without
regard to any provision of the current Employment Agreement, Senior Executive
Severance Plan, Executive Supplemental Retirement Income Agreement (Type A), and
any other agreements.
Shepherd will continue to be an employee of First Family for a period of at
least 6 months from the date of the merger. During this 6 month period, Shepherd
shall render such reasonable services as the Bank may request and shall be
entitled to receive the same rate of salary as is set forth in Section 3.1 of
his Employment Agreement, as amended on October 25, 1995 ("Salary"). During this
6 month period, the Bank shall reimburse Shepherd for FICA taxes payable on
Shepherd's Salary in an amount equal to 4.75% up to the Social Security taxable
wage base.
Shepherd agrees that in addition to the Coverage and continued Salary
referenced in this letter he is entitled to the following:
1. $225,000 pursuant to his existing Employment Agreement dated November
1, 1992, as amended on November 1, 1994 and October 30, 1995, to be
paid in one lump sum by First Family Bank at the closing of the merger;
2. $200,000 pursuant to the Senior Executive Severance Plan dated October
30, 1995, to be paid by First Family Bank in one lump sum at the
closing of the merger;
3. $500,000 pursuant to the Executive Supplemental Retirement Income
Agreement (Type A) dated May 1, 1994, to be paid in 10 annual
installments of $50,000 per year, beginning on November 1, 1997;
provided, Bank and Shepherd may mutually agree that Bank will provide
Shepherd with an annuity (equal to the actuarial equivalent of these 10
installments) in lieu of these 10 installments.
4. The Executive Supplemental Retirement Income Agreement Type A dated May
1, 1994, provides benefits to a designated Beneficiary (either a
primary beneficiary or a secondary beneficiary), in the event of
Shepherd's death. These payments will be paid to the designated
Beneficiary, and will be made in the manner provided for in the
Agreement;
5. Continuation of Group Life Insurance coverage in the amount of
$292,500, pursuant to his existing Employment Agreement and the Senior
Executive Severance Plan, for a period of 24 months following the
merger; and
6. Subject to the terms of the definitive merger agreement between First
Family and BancGroup, 12,000 stock options granted pursuant to First
Family's 1992 Stock Option and Stock Appreciation Rights Plan ("1992
Stock Plan"), will be substituted for BancGroup stock options.
As a condition to BancGroup's obligations as stated herein, Shepherd agrees
to comply with any reasonable request by BancGroup to make appropriate elections
and authorizations to provide the coverage selected by BancGroup and to
cooperate in BancGroup's efforts to provide such coverage. In addition, as a
condition to BancGroup's obligations stated herein, Shepherd agrees that; (i) he
will not terminate his employment with BancGroup before the expiration of the
six month period beginning on the effective date of the merger; and (ii) Wife
will sign a separate letter agreement agreeing to comply with any reasonable
request by BancGroup to make appropriate elections and to cooperate in
BancGroup's efforts to provide COBRA coverage, as long as the COBRA coverage is
equivalent to that currently being provided under the FBA Plan.
As a condition to BancGroup's obligations herein, Shepherd agrees to comply
with the non-competition clause, as set forth in Section 2.7 of the Executive
Supplemental Retirement Income Agreement, for a 24 month period beginning on the
date of the merger.
Except for amounts which may be due Shepherd through First Family's annual
bonus program or accrued vacation, which will be paid at the time of closing,
Shepherd acknowledges that the foregoing represents the sum total of all amounts
to which Shepherd and Wife are entitled to receive from First Family and
BancGroup, and that they will not be entitled to any additional amounts,
pursuant to his Employment Agreement, the Senior Executive Severance Plan, the
Executive Supplemental Retirement Income Agreement (Type A), or any other
agreements.
Sincerely,
Robert E. Lowder
- ----------------
Robert E. Lowder
Chairman of the Board
Chief Executive Officer and President
I accept the above terms.
Date: July 19, 1996
David M. Shepherd
- -----------------
David M. Shepherd
The above letter of agreement is accepted by First Family.
Date: July 19, 1996
By: Bradley R. Meredith
-------------------
Bradley R. Meredith
Chief Financial Officer
P.O. Box 1108 -- Montgomery, Alabama 36101-1108 -- Telephone 334/240-5000
<PAGE>
Colonial
BancGroup
July 18, 1996
Mrs. Gretchen S. Shepherd
c/o Mr. David M. Shepherd
Chairman, CEO and President
First Family Financial Corporation
2801 South Bay Street
Eustis, FL 32726-6503
Dear Mrs. Shepherd:
In connection with the proposed merger of Colonial BancGroup ("BancGroup")
and First Family Financial Corporation ("First Family"), BancGroup and First
Family agree that, as a result of the merger, you will be entitled to the
provision of health care coverage for a 24 month period beginning on the
effective date of the merger.
Set forth in a letter agreement with your husband, David M. Shepherd,
BancGroup has proposed the method in which your health care coverage will be
provided. We respectfully request that you agree with BancGroup (1) to comply
with any reasonable request by BancGroup to make appropriate elections for your
health care coverage, and (2) to cooperate in BancGroup's efforts to provide you
with COBRA coverage. Specifically, by signing this letter agreement, you agree
that, to the extent the Florida Bankers Association group health plan (the "FBA
Plan") is still maintained for employees of First Family at the time you are
entitled to make an election to continue your health care coverage pursuant to
COBRA, you will make an election to continue your health care coverage under the
FBA Plan. The health care coverage under COBRA shall be equal to that currently
provided First Family under the FBA Plan.
Sincerely,
Robert E. Lowder
- ----------------
Robert E. Lowder
Chairman of the Board,
Chief Executive Officer and President
I accept the above terms.
Date: July 18, 1996
Gretchen S. Shepherd
- --------------------
Gretchen S. Shepherd
P.O. Box 1108 -- Montgomery, Alabama 36101-1108 -- Telephone 334/240-5000
43
<PAGE>
First Family Financial Corporation
___________________, 1996
Page_____________
EXHIBIT B
___________________, 1996
(Opinion of Counsel for BancGroup)
First Family Financial Corporation
==============================
- ------------------------------
Gentlemen:
We have acted as counsel to The Colonial BancGroup, Inc.
("BancGroup"), a Delaware corporation, in connection with the merger of First
Family Financial Corporation ("First Family"), with and into BancGroup, pursuant
to the Agreement and Plan of Merger ("Agreement") dated as of
____________________, 1996 by and between BancGroup and First Family. We have
also acted as counsel to BancGroup in connection with the preparation and filing
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "1933 Act"), of a Registration Statement
on Form S-4, Registration No. ____________ (the "Registration Statement"), and
other related matters. The terms used in this opinion that are defined in the
Agreement shall have the same definitions when used herein, unless otherwise
defined herein.
In connection with our representation of BancGroup and in order to
render this opinion pursuant to section 9.4 of the Agreement, we have examined
such records, agreements, instruments, documents, and certificates of officers
and employees of BancGroup and of other persons, and such questions of law, as
we deemed necessary or appropriate. In all such examinations, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity to the original documents of documents
submitted to us as certified or photostatic copies. We have relied on
certificates issued to us by the secretaries of state and other appropriate
government officials of the various states in which BancGroup is incorporated or
qualified and, except as expressly set forth in any such documents or
hereinafter, we have assumed the authority of the person or persons who have
executed any such documents on behalf of any person or persons, state or any
other entity.
Upon the basis of the foregoing, we are of the opinion that:
44
<PAGE>
First Family Financial Corporation
___________________, 1996
Page_____________
(i) BancGroup is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to carry on its business as now conducted. Each of
BancGroup's subsidiary banks is a wholly-owned subsidiary of BancGroup and is a
banking corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation with full corporate power and
authority to carry on its business as now conducted;
(ii) The Agreement has been duly authorized, approved and adopted by
all requisite corporate action of the board of directors of BancGroup, this
being the only corporate authorization required under BancGroup's certificate of
incorporation, bylaws and applicable law, has been duly executed and delivered
by BancGroup, and constitutes a valid and legally binding agreement of BancGroup
enforceable in accordance with its terms;
(iii) The execution, delivery and performance by BancGroup of the
Agreement will not violate the restated certificate of incorporation or bylaws
of BancGroup and, to the best of our knowledge but without independent
verification, will not violate, result in a breach of, or constitute a default
under any material lease, loan agreement, indenture, mortgage, deed of trust or
other material agreement or instrument known to us to which BancGroup is a
party;
(iv) All consents, approvals, authorizations or orders required to be
obtained by BancGroup for the consummation of the transactions contemplated by
the Agreement have been obtained;
(v) The shares of BancGroup Common Stock to be issued pursuant to the
Agreement are duly authorized and will be when so issued, validly issued and
outstanding, fully paid and nonassessable;
(vi) The authorized, issued and outstanding shares of capital stock of
BancGroup are as stated in the Agreement, all of which are validly issued, fully
paid and nonassessable and not issued in violation of the preemptive rights of
any stockholder;
(vii) To our knowledge, there is no action, suit, proceeding or
investigation pending or currently threatened against BancGroup which questions
the validity of the Agreement or the right of BancGroup to enter into the
Agreement, or to consummate the transactions contemplated thereby, or which
might result, either individually or in the aggregate, in any changes in the
assets, condition, affairs or prospects of BancGroup which are materially
adverse to BancGroup, financially or otherwise, or any change in the current
equity ownership of BancGroup. To our knowledge, BancGroup is not a party to nor
is
45
<PAGE>
First Family Financial Corporation
___________________, 1996
Page_____________
BancGroup subject to the provisions of any currently effective order, writ,
injunction or decree of any court or government agency or instrumentality.
(viii) To our knowledge, BancGroup is in compliance with all applicable
Federal, state, municipal and other political subdivision or governmental agency
statutes, ordinances and regulations in every applicable jurisdiction, in
respect of the ownership of its properties and the conduct of its business,
including, without limitation, antitrust and fair trade practice laws. To our
knowledge, there are no investigations, audits or other proceedings by any
Federal, state or municipal governmental agency pending or threatened against
BancGroup.
(ix) To our knowledge, BancGroup is not in default under any term or
condition of any instrument evidencing, creating or securing any material
indebtedness of BancGroup and there has been no default in any material
obligation to be performed by BancGroup under any other material contract,
lease, agreement, commitment or undertaking to which it is a party or by which
it or its assets or properties are bound; nor has BancGroup waived any material
right under any such contract, lease, agreement, commitment or undertaking.
(x) The Registration Statement has become effective and, to our
knowledge, no stop order suspending its effectiveness has been issued nor have
any proceedings for that purpose been instituted; and
(xi) The Registration Statement complies as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder. We do not know of any contracts or other
documents of a character required to be filed as an exhibit to the Registration
Statement, or required to be incorporated by reference into the Prospectus or
required to be described in the Registration Statement or Prospectus which has
not been filed or incorporated by reference or described as required. While we
have made no independent investigation or verification of factual information
relating to BancGroup set forth in the Registration Statement, during the course
of our representation of BancGroup, nothing has come to our attention to
indicate that the Proxy Statement delivered to First Family's stockholders, or
any amendments or revisions thereto so delivered, as of the date thereof,
contained or incorporated by reference any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
under which they were made (it being understood that we do not hereby express an
opinion as to the financial statements, the notes thereto or other financial or
statistical data contained or incorporated by reference in such Registration
Statement or as to any information concerning or provided by First Family for
inclusion in the Registration Statement).
46
<PAGE>
We give no opinion as to the laws of any jurisdiction other than the
general corporation law of the State of Delaware and the laws of the United
States and the State of Alabama. We are licensed to practice law only in the
State of Alabama.
The opinions rendered herein are as of the date hereof. We assume no
obligation, and specifically disclaim any responsibility, to update or
supplement these opinions to reflect any facts which hereafter may come to our
attention or any changes in facts or law subsequent to the date hereof.
These opinions have been furnished to you at your request, and we
consider them to be a confidential communication which may not be furnished,
reproduced, distributed, or disclosed to anyone without our prior written
consent. These opinions are rendered solely for your information and assistance
in connection with the transactions contemplated in the Agreement. They may not
be relied upon by any other person or for any other purpose without our prior
written consent.
Sincerely,
Miller, Hamilton, Snider & Odom, L.L.C.
cc: Mr. W. Flake Oakley, IV
47
<PAGE>
The Colonial BancGroup, Inc.
____________________, 1996
Page __________
EXHIBIT C
(Opinion of Counsel for First Family)
_______________, 1996
The Colonial BancGroup, Inc.
One Commerce Street, Suite 800
Montgomery, AL 36104
Gentlemen:
We have acted as counsel to First Family Financial Corporation ("First
Family"), a Florida corporation, in connection with the transactions
contemplated by that certain Agreement and Plan of Merger (the "Agreement")
dated as of __________, 1996, by and among First Family and The Colonial
BancGroup, Inc. ("BancGroup"). We render this opinion pursuant to section 10.4
of the Agreement. Capitalized terms not otherwise defined in this letter have
the definitions set forth in the Agreement.
This letter has been prepared and is to be construed in accordance with
the Report on Standards for Florida Opinions dated April 8, 1991, issued by the
Business Law Section of the Florida Bar (the "Report"). The Report is
incorporated by reference into this letter.
In rendering the opinions set forth in this letter, we have relied, as
to factual matters that affect our opinions, on our examination of the following
documents, and we have made no independent verification of the facts asserted to
be true and correct in those documents:
[Add list]
Based upon the foregoing and subject to the limitations, qualifications
and assumptions set forth herein, and in the Report, we are of the opinion that:
1. First Family is a corporation duly organized, validly existing and
in good standing under the laws of Florida. First Family Bank, FSB (the "Bank")
is a federal savings bank duly chartered, organized, validly existing and in
good standing under the laws of the United States, and is a wholly owned
subsidiary of First Family. First Family has the full corporate power and
authority to own its properties and to conduct its business as now conducted and
to own, lease and operate all of its properties. The Bank is an "insured
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and its deposits are insured by the Savings Association
Insurance Fund, to the extent provided by applicable law.
48
<PAGE>
The Colonial BancGroup, Inc.
____________________, 1996
Page __________
2. First Family has the requisite corporate power and authority to
execute, deliver and perform its undertakings and obligations under the
Agreement and to consummate the transactions provided for therein. The
execution, delivery and performance of the Agreement and the consummation of the
transactions provided for therein have been duly and validly authorized by all
necessary corporate action with respect thereto on the part of First Family and
its shareholders. The Agreement constitutes a legal, valid and binding
obligation of First Family, enforceable against First Family in accordance with
the respective terms thereof.
3. The execution, delivery, performance and compliance with the terms
of the Agreement by First Family do not violate any provision of any applicable
Federal or Florida law, rule or regulation or any provision of First Family's
Articles of Incorporation or Bylaws or, to our knowledge will not violate,
result in a breach of, or constitute a default under any material lease, loan
agreement, indenture, mortgage, deed or trust or other material agreement or
instrument known to us to which First Family is a party.
4. The authorized capital stock of First Family consists of __________
shares of common stock, par value $_______ per share (the "Shares"), of which
____________ Shares are issued and outstanding. All such issued and outstanding
Shares have been duly authorized and validly issued, are fully paid and
nonassessable and are free of preemptive rights.
5. To our knowledge, there is no action, suit, proceeding or
investigation pending or currently threatened against First Family which
questions the validity of the Agreement or the right of First Family to enter
into the Agreement, or to consummate the transactions contemplated thereby, or
which might result, either individually or in the aggregate, in any changes in
the assets, condition, affairs or prospects of First Family which are materially
adverse to First Family, financially or otherwise, or any change in the current
equity ownership of First Family. To our knowledge, First Family is not a party
to nor is First Family subject to the provisions of any currently effective
order, writ, injunction or decree of any court or government agency or
instrumentality.
6. To our knowledge, First Family is in compliance with all applicable
Federal, state, municipal and other political subdivision or governmental agency
statutes, ordinances and regulations in every applicable jurisdiction, in
respect of the ownership of its properties and the conduct of its business,
including, without limitation, antitrust and fair trade practice laws. To our
knowledge, there are no investigations, audits or other proceedings by any
Federal, state or municipal governmental agency pending or threatened against
First Family.
49
<PAGE>
The Colonial BancGroup, Inc.
____________________, 1996
Page __________
7. To our knowledge, First Family is not in default under any term or
condition of any instrument evidencing, creating or securing any material
indebtedness of First Family, and there has been no default in any material
obligation to be performed by First Family under any other material contract,
lease, agreement, commitment or undertaking to which it is a party or by which
it or its assets or properties are bound; nor has First Family waived any
material right under any such contract, lease, agreement, commitment or
undertaking.
Our opinion concerning the validity, binding effect and enforceability
of the Agreement means that: (a) the Agreement constitutes an effective contract
under applicable law; (b) the Agreement is not invalid in its entirety because
of a specific statutory prohibition or public policy, and is not subject in its
entirety to a contractual defense; and (c) subject to the last sentence of this
paragraph, some remedies are available if First Family is in material default
under the Agreement. This opinion does not mean that (a) any particular remedy
is available upon a material default, or (b) every provision of the Agreement
will be upheld or enforced in any circumstance by a court. Furthermore, the
validity, binding effect, and the enforceability of the Agreement may be limited
or otherwise affected by (a) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar statutes, rules and regulations, or other
laws affecting the enforcement of creditors rights and remedies generally, and
(b) the unavailability of, or limitation on the availability of, a particular
right or remedy (whether in a proceeding in equity or at law) because of an
equitable principle or a requirement as to commercial reasonableness,
conscionability or good faith.
We are licensed to practice only in the State of Florida, and our
opinions expressed herein are limited to the application of laws in the State of
Florida and the Federal laws of the United States of America, and do not extend
to any laws of any other state or nation.
This opinion is intended solely for your use in connection with the
above-described transaction and may not be relied upon, used, quoted, made
available to, or circulated to or by any third person or entity, in whole or in
part, without prior consent.
Very truly yours,
By: ______________________________
z:\cbg.fff\agree-pl.mer
50
<PAGE>
EXHIBIT 2
PRESS RELEASE
Colonial Bank member FDIC
PRESS RELEASE
Colonial BancGroup
P.O. Box 1108
Montgomery, AL 36101
FAX (205) 240-5345
For more information contact:
Colonial BancGroup (Montgomery)
Flake Oakley (334) 240-6035
Walter Hargrove (334) 240-5590
Colonial Bank (Orlando)
Charlie Brinkley (407) 481-8833
First Family (Eustis)
David M. Shepherd (352) 357-4171
For immediate release
July 25, 1996
Colonial Bank to Acquire First Family Bank
MONTGOMERY, AL -- Colonial BancGroup Chairman, CEO and President Robert E.
Lowder, along with First Family Financial Corporation Chairman, CEO and
President David M. Shepherd jointly announced today that the companies have
entered into a definitive agreement to merge First Family Financial Corporation
into Colonial BancGroup. First Family Financial Corporation's subsidiary First
Family Bank, FSB, based in Eustis, Florida will become a wholly-owned subsidiary
of Colonial BancGroup. Colonial will pay $23.50 per share, half in cash and half
in stock, for First Family's outstanding shares, a total value of $12.8 million.
At June 30, 1996, First Family had $155.8 million in assets and had produced net
income of $1.4 million for the year ended June 30, 1996.
First Family is located in Lake County, Florida, and is part of the Orlando
Metropolitan area, which is considered to be one of the fastest-growing markets
in the Southeast. First Family's five offices are located in Eustis, Leesburg,
Mount Dora, Tavares and Umatilla. A sixth office is scheduled to open on August
8, 1996 in Lady Lake.
"This acquisition represents another step in Colonial's long-term strategy
to realize the benefits inherent in Florida's high-growth markets. We completed
the acquisition of the largest independent bank in Orlando several weeks ago,
and announced another acquisition in nearby Volusia County yesterday. This
latest move to the adjacent markets in Lake County will benefit our Florida
customers through expanded banking offices and our shareholders through
in-market cost savings. Colonial intends to continue to pursue our community
banking approach in other attractive Florida markets," said Mr. Lowder.
"I am enthusiastic about the prospects for our merged companies. We are
proud of the services First Family has provided to our community over the years
and are excited about joining Colonial BancGroup which has a strong reputation
for community banking. This association with Colonial will be good for our
shareholders, customers and employees," said Mr. Shepherd.
Charlie Brinkley, Jr., President and CEO of Colonial Bank in Florida,
stated, "We are excited about our pending acquisition of First Family. First
Family has been a good corporate citizen in the Central Florida community for
more than 60 years. We're looking forward to becoming involved in the dynamic
market which First Family operates. We believe that this affiliation combined
with Colonial's Orlando operations will provide an excellent base from which to
expand our operations in Florida."
Completion of the transaction is subject to approval by various regulatory
bodies and First Family's shareholders.
Colonial BancGroup is a multi-bank holding company headquartered in
Montgomery, Alabama with assets of $4.5 billion and 127 full service offices in
Alabama, Florida, Georgia and Tennessee. Colonial is traded on the New York
Stock Exchange under the symbol CNB. In most newspapers the stock is listed as
ColBgp.
First Family Financial Corporation
Corporate Office
2801 South Bay Street
Eustis, Florida 32726-6503
July 25, 1996
Dear Valued Shareholder:
On Wednesday, July 17, 1996 your Board of Directors voted to enter into a
definitive agreement to merge First Family Financial Corporation, Inc. into
Colonial BancGroup, Inc. Under this agreement, First Family Bank, a subsidiary
of First Family Financial Corporation will become a wholly-owned subsidiary of
Colonial BancGroup. Colonial will pay $23.50 per share, half in cash and half in
stock, for First Family Financial Corporation's outstanding stock, a total value
of $12.8 million. The merger is subject to approvals by Regulators and First
Family Financial shareholders, and should be completed by year end.
The management of your bank feels that a partnership with Colonial
BancGroup is both strategically and financially compelling.
Though First Family had a very successful year with net income of
$1,417,000, strategically, many industry experts believe that it will become
increasingly difficult for a small bank with limited capital to co-exist and
prosper in the future financial arena with mega-banks and large non-bank
financial intermediaries. Furthermore, regulatory changes brought about in the
course of rebuilding the FDIC's Savings Association Insurance Fund have put
Savings Banks like First Family at a competitive disadvantage. Currently, First
Family pays 23 cents per each $100 of deposits for FDIC deposit insurance
coverage, whereas, most commercial banks pay no deposit insurance premiums since
the Bank Insurance Fund is fully capitalized. In addition, Congress is now
considering legislation that would impose a one-time assessment to resolve the
shortfall in the Savings Association Insurance Fund. Based on current
projections, that assessment could result in a $1.258 million charge to First
Family's Capital account. In anticipation of this regulatory assessment, First
Family took strong positive steps throughout the 1995 - 1996 fiscal year to
bolster the capital account. During the latter part of 1995, our industry was
allowed a one time opportunity to reclassify investment securities. Our action
resulted in $335,000 of gains realized on the sale of mortgage backed
securities. In addition, in early 1996 we sold approximately $19 million of
mortgage loan servicing which netted First Family over $208,000.
Colonial BancGroup is a multi-bank holding company headquartered in
Montgomery, Alabama with assets of $4.5 billion and 127 full service offices in
Alabama, Florida, Georgia and Tennessee. Recently, Colonial completed the
acquisition of Southern Bank of Central Florida, a large independent bank, in
Orlando, Florida.
In addition to an extensive Bank branch network, which also includes
branches in Wal-Mart Supercenters, and 67 automated teller machines in Alabama
Wal-Mart stores, Colonial BancGroup is the parent company of Colonial Mortgage,
one of the 10 largest mortgage banking companies in the United States. C olonial
Mortgage has 21 offices in 11 states from Seattle to Orlando. It services a loan
portfolio approximating $10 billion. Combining a mortgage firm with an extensive
bank branching network produces a financial group with a strong focus on home
mortgages and other real estate lending. This represents a good fit with First
Family Bank's home lending mission.
A partnership with Colonial BancGroup will be good for First Family's
shareholders, customers and employees. In addition to a cash payout, First
Family shareholders will receive Colonial BancGroup stock. First Family
shareholders then have the option to retain the stock which is listed and traded
on the New York Stock Exchange under the symbol CNB. We are proud of the
services First Family has provided to our community over the past 60 years, and
we are pleased that Colonial has a strong reputation for community banking. For
our employees, a partnership with Colonial presents expanded career
opportunities.
Finally, since our conversion to a stock company, our major focus has been
the enhancement of shareholder value. The Directors and Management of First
Family believe that a merger with Colonial BancGroup supports this goal.
As always, thank you for your support.
Very truly yours,
David M. Shepherd
- -----------------
David M. Shepherd
President and Chief Executive Officer
DMS/ss
A copy of the press release announcing the merger is attached for your
information.
