EXHIBIT 2.1
AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF REORGANIZATION
This AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF REORGANIZATION, dated as
of February 27, 2002 (the "Amendment"), by and among R&G FINANCIAL CORPORATION,
a Puerto Rico corporation ("R&G"), R&G ACQUISITION HOLDINGS CORPORATION, a
Florida corporation and wholly-owned subsidiary of R&G ("Holdings"), THE CROWN
GROUP, INC. a Florida corporation (the "Group"), and CROWN BANK, A Federal
Savings Bank (the "Bank" and together with R&G, Holdings and Group, the
"Parties").
WHEREAS, the Parties entered into an Agreement and Plan of
Reorganization, dated as of December 19, 2001 and as amended by the Amendment to
the Agreement and Plan of Reorganization dated as of January 31, 2002
(collectively, the "Agreement");
WHEREAS, the Parties hereto wish to modify and amend the Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises, covenants and
agreements hereinafter set forth, the Parties hereto agree as follows:
SECTION 1. Amendment of Article I of the Agreement.
(a) The definition of "Merger Consideration" in Article I of the
Agreement is hereby amended and restated in its entirety to read as follows:
"Merger Consideration" shall mean an aggregate of One Hundred
Million Dollars ($100,000,000) in cash, into which shares of
Group Common Stock shall be converted in the Merger pursuant
to Section 2.6(c) hereof, which shall be reduced to provide
for the right of holders of any Group Options to receive the
amount described in Section 2.6(d) hereof.
(b) The definition of "R&G Debenture" is removed.
SECTION 2. Amendment to Section 2.6(c) of the Agreement.
The reference in Section 2.6(c) of the Agreement was in error and is
hereby corrected to reference Section 2.7 of the Agreement.
SECTION 3. Amendment to Section 2.7 of the Agreement.
Section 2.7 of the Agreement is hereby amended and restated in its
entirety to read as follows:
1
2.7 Shareholder Rights; Stock Transfers
(a)(1) To the extent that, as of the Effective Time, holders
of Group Common Stock and holders of Group Options shall have (i)
executed the Power of Attorney, the form of which is set forth as
Exhibit K hereto; and (ii) delivered to the Attorney-in-Fact all
outstanding shares of Group Common Stock held by such holders duly
endorsed in blank and, to the extent applicable, certificates for Group
Options; then R&G and Holdings shall cause the portion of the Merger
Consideration to which such holder shall be entitled to be delivered at
the Closing to the order of the Attorney-in-Fact. Group has Previously
Disclosed each person's pro rata holdings of Group Common Stock.
(2) To the extent that as of the Effective Time, any
holder has not satisfied the requirements of Section 2.7(a)(1), R&G and
Holdings shall distribute the Merger Consideration to which those
holders not satisfying such requirements are entitled in accordance
with the requirements of Section 2.7(b) hereof.
(b) Subject to Sections 2.7(a) and 2.8 hereof, R&G and
Holdings shall use their best efforts to cause to be mailed, within
three (3) business days of the Effective Time, to each such holder who
has not satisfied the requirements of Section 2.7(a)(1) and who was, at
the Effective Time, a holder of record of issued and outstanding Group
Common Stock, a letter of transmittal and instructions for use in
affecting the surrender of the Group Common Stock certificate(s)
("Certificates") which, immediately prior to the Effective Time,
represented such shares. Upon surrender to R&G of such certificates (or
such documentation as is acceptable to and required by R&G with respect
to lost certificates), together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, R&G
shall promptly cause to be issued to such persons entitled thereto a
check in the amount to which such persons are entitled (which shall be
determined based upon each person's pro rata holdings of Group Common
Stock which has been Previously Disclosed by Group and the Bank), after
giving effect to any required tax withholdings. If payment of the
Merger Consideration is to be made to a person other than the
registered holder of the Group Certificate(s) surrendered, it shall be
a condition of such payment that the Group Certificate(s) 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 to a person
other than the registered holder of the Group Certificate(s)
surrendered or established to the satisfaction of R&G or Holdings that
such tax has been paid or is not applicable.
2
SECTION 4. Amendment to Section 4.1 of the Agreement.
The last sentence of Section 4.1 is hereby deleted in its entirety.
SECTION 5. Amendment to Section 5.3(a) of the Agreement.
The last sentence of Section 5.3(a) is hereby deleted in its entirety.
SECTION 6. Amendment of Section 5.13 of the Agreement.
(a) Section 5.13(a) of the Agreement is amended through the
amendment and restatement of Schedule 5.13(a) thereunder, a copy of which is
attached as Exhibit A hereto.
(b) Section 5.13(b) of the Agreement is amended and restated in
its entirety to read as follows:
(b) Prior to the Effective Time, Group shall cause to be
sold for cash the assets identified in Schedule 5.13(b)
hereto. To the extent that, as of the Effective Time, the
condition set forth in Section 6.3 (k) is satisfied, R&G or
Group shall distribute to the LLC on behalf of the holders of
Group common stock any cash held by Group in excess of Five
Million and Two Hundred Thousand Dollars ($5,200,000). The LLC
agrees to indemnify R&G and Group for any Tax imposed in
connection with the sales contemplated by this Section
5.13(b), which may be satisfied by any amounts due to the LLC
pursuant to Section 5.13(c) hereof.
(c) In addition, Schedule 5.13(b) thereunder is amended and
restated, a copy of which is attached as Exhibit B hereto.
SECTION 7. Amendment of Section 6 of the Agreement.
(a) Section 6.3(h) of the Agreement is amended and restated in its
entirety to read as follows:
(h) Group shall have taken a write-down of One Million
and Eight Hundred Thousand Dollars ($1,800,000) in connection
with its transfer of the F MACT security identified in
Schedule 5.13(a) hereto and shall have taken all appropriate
steps to cause the Bank to take, and the Bank shall have taken
and as of the Effective Time there shall be, aggregate
reserves (in addition to that which existed as of November 30,
2001), equal to Eleven Million and Six Hundred Thousand
Dollars ($11,600,000) with respect to the Bank's mortgage
servicing portfolio, loan loss reserves, sale of real estate
owned properties identified in Schedule 6.3(h) hereto and
residual interest in its collateralized mortgage obligation,
Nine Million and Six Hundred Thousand Dollars ($9,600,000) of
which shall be allocated as specified by R&G and Holdings to
the Bank prior to the Effective Time and Two Million Dollars
($2,000,000) of which shall be allocated by Group.
3
(b) The language of Section 6.3(j) of the Agreement is amended and
restated in its entirety to read as follows:
(j) Group (on an unconsolidated basis) shall have cash of
not less than Five Million and Two Hundred Thousand Dollars
($5,200,000) (which takes into consideration the prior
transfer by Group to the Bank of Six Million and Eight Hundred
Thousand Dollars ($6,800,000);
(c) The language of Section 6.3(k) of the Agreement is amended and
restated in its entirety to read as follows:
(k) Following the sale of assets required by Section
5.13(b) and after taking into consideration the actions
required to be taken pursuant to Section 6.3(h) and (j)
hereof, but without giving effect to any increase in
stockholders' equity arising out of tax benefits associated
with the write-down in value of the FFI investment referenced
in Section 5.13(c) hereof and without giving effect to any
adjustments required by Financial Accounting Standards Board
Statement No. 115, Group shall have total stockholders' equity
of Fifty Four Million Dollars ($54,000,000), determined in
accordance with generally accepted accounting principles. To
the extent that, as of the Effective Time, Group has total
stockholders' equity that is less than Fifty Four Million
Dollars ($54,000,000), R&G shall have the right but not the
obligation to terminate the Agreement.
(d) Section 6.3(l) of the Agreement is hereby deleted in its
entirety and the subsection is reserved.
(e) There is hereby established a new Section 6.3(r) of the
Agreement to read in its entirety as follows:
(r) R&G shall have received a letter dated the Effective
Time from its investment banker, UBS Warburg LLC, that the
investment securities retained in Crown Bank's investment
portfolio are, as of such date, all of investment grade
quality.
SECTION 8. Amendment to Exhibits to the Agreement.
(a) Exhibits B and H to the Agreement are hereby deleted in their
entirety and each of the Exhibit references are reserved.
(b) Exhibit J to the Agreement is hereby amended and restated in
its entirety to read in the form attached hereto as Exhibit C.
4
SECTION 9. Miscellaneous.
(a) The Agreement is incorporated herein by reference.
(b) Except as otherwise set forth herein, the Agreement, as
amended hereby, shall remain in full force and effect and the Parties shall have
all the rights and remedies provided thereunder with the same force and effect
as if the Agreement were restated herein in its entirety.
(c) The provisions hereof shall be binding upon and inure to the
benefit of the Parties and their respective executors, heirs, personal
representatives, successors and assigns.
(d) This Amendment may be executed and delivered in several
counterparts with the intention that all such counterparts, when taken together,
constitute one and the same instrument.
* * *
5
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
R&G FINANCIAL CORPORATION R&G ACQUISITION HOLDINGS
CORPORATION
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------------- --------------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer Title: Chairman and Chief Executive Officer
THE CROWN GROUP, INC. CROWN BANK, A FEDERAL SAVINGS BANK
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
-------------------------------------------------- --------------------------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer Title: President and Chief Executive Officer
6
EXHIBIT A
A-1
SCHEDULE 5.13(A)
ASSETS OF GROUP TO BE TRANSFERRED TO LLC PRIOR TO EFFECTIVE TIME
Stock in Metro Savings Bank
Investment in Fortune Financial, Inc.
Note Receivables - $240,000 from Carrisbrook Properties
Security Deposit - Stoneleigh Financial Corporation
F MACT 1997cb (CMO B tranche -- CUSIP # 302471bj5)
REO of Group (only) - as included in Schedule 3.20(b)
A-2
EXHIBIT B
B-1
SCHEDULE 5.13(B)
ASSETS TO BE SOLD FOR CASH PRIOR TO EFFECTIVE TIME
Investment in Cresleigh Financial Services LLC
AIM Fund
Accrued Interest Receivable of AIM Fund
Warehouse Line - Cresleigh Financial Services LLC
Working Capital Credit Line - Cresleigh Financial Services LLC
Environmental Processing, Inc. (Corporate Bonds - CUSIP # 293902AAO)
B-2
EXHIBIT C
C-1
EXHIBIT J
_____________ , 2002
R&G Financial Corporation
R&G Plaza
000 Xxxxx X. Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 000000
Gentlemen:
The undersigned, the _______________ of ________________ LLC
("____________") understands that R&G Financial Corporation ("R&G") and R&G
Acquisition Holdings Corporation ("Holdings") have entered into an Agreement and
Plan of Reorganization (the "Agreement") with The Crown Group, Inc. ("Group")
and Crown Bank, a Federal Savings Bank ("Bank"). The Agreement provides for the
merger of Holdings with and into Group and the related conversion of all the
outstanding common stock of Group into the Merger Consideration set forth in the
Agreement.
1. In order to induce R&G and Holdings to enter into the
Agreement, and intending to be legally bound thereby, the undersigned, on
behalf of ___________, agrees for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, to indemnify and defend R&G,
Holdings, their subsidiaries and each of their officers, directors, employees
and stockholders (each, an "Indemnitee") against, and hold each Indemnitee
harmless from, any loss, liability, Tax (as defined in the Agreement)
obligation, damage or expense, including without limitation, attorneys' fees and
disbursements (collectively, "Damages"), that any Indemnitee may suffer or incur
(whether or not in connection with or incidental to any claim or any Proceeding
(as defined below) by a third party against such Indemnitee) based on or arising
from, any transactions involving the transfer of the assets identified in
Schedule 5.13(a) to the Agreement by Group to _________. For purposes of this
letter agreement, "Proceedings" shall mean any lawsuits or other legal,
administrative, arbitration or other proceedings or claims, actions, disputes,
audits, subpoenas or investigations.
2. Promptly after notice to an Indemnitee of any claim
or the commencement of any Proceeding, including any Proceeding by a third
party, involving any Damage referred to herein, the Indemnitee shall give
written notice to ____________ of the commencement of such claim or Proceeding,
setting forth in reasonable detail the nature thereof and the basis upon which
such party seeks indemnification hereunder; provided, however, that the failure
of the Indemnitee to give such notice shall not relieve ______________ of its
obligations, except to the extent that is actually prejudiced by the failure to
give such notice.
J-1
3. In the case of any such Proceedings by a third party
against the Indemnitee, _____________ shall, upon notice as provided above,
assume the defense thereof, with counsel reasonably satisfactory to the
Indemnitee, and, after notice from _______________ to the Indemnitee of its
assumption of the defense thereof, shall not be liable to the Indemnitee for any
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof (but the Indemnitee shall have the right, but not the
obligation, to participate at its own cost and expense in such defense by
counsel of its own choice) or for any amounts paid or foregone by the latter as
a result of the settlement or compromise thereof without the written consent of
_______________.
4. Notwithstanding Section 3 hereto, if both
_______________ and the Indemnitee are named as parties or subject to such
Proceedings and either such party determines with advice of counsel that there
may be one or more legal defenses available to it that are different from or
additional to those available to the other party or that a material conflict of
interest between such parties may exist in respect of such Proceedings, then
_______________ may decline to assume the defense on behalf of the Indemnitee or
the Indemnitee may retain the defense on its own behalf, and, in either such
case, after notice to such effect is duly given hereunder to the other party,
_______________ shall be relieved of its obligation to assume the defense on
behalf of the Indemnitee, but shall be required to pay any legal or other
expenses, including without limitation reasonable attorneys' fees and
disbursements, incurred by the Indemnitee in such defense; provided, however,
that _______________ shall not be liable for such expenses on account of more
than one separate firm of attorneys (and, if necessary, local counsel) at any
time representing the Indemnitee in connection with any Proceedings or separate
Proceedings in the same jurisdiction arising out of or based upon substantially
the same jurisdiction arising out of or based upon substantially the same
allegations or circumstances.
5. If _______________ assumes the defense of any such
Proceedings, the Indemnitee shall cooperate fully in all reasonable respects
with _______________ and shall appear and give testimony, produce documents and
other tangible evidence, allow _______________ access to the books and records
of the Indemnitee and otherwise assist _______________ in conducting such
defense. _______________ shall not, without the consent of the Indemnitee (which
consent shall not be unreasonably withheld), consent to entry of any judgement
or enter into any settlement or compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnitee of a release from all liability in respect to such claim or
Proceeding. Provided that proper notice is duly given, if _______________ shall
fail promptly and diligently to assume the defense thereof, then the Indemnitee
may respond to, consent and defend against such Proceedings (but _______________
shall have the right to participate at its own cost and expense in such defense
by counsel of its own choice) and may make in good faith any compromise or
settlement with respect thereto, and recover from _______________ the entire
cost and expense thereof, including without limitation reasonable attorneys'
fees and disbursements and all amounts paid or foregone as a result of such
Proceeding, or the settlement or compromise thereof; provided that in no event
shall _______________ be liable or otherwise have any obligation with respect to
any settlement, compromise or determination of any claim agreed to by the
Indemnitee without the prior written consent of _______________ (which shall not
be unreasonably withheld). The indemnification required hereunder shall be made
by periodic payments of the amount thereof during the course of
J-2
the investigation or defense, as and when bills or invoices are received or
loss, liability, obligation, damage or expense is actually suffered or incurred.
6. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this letter agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that R&G and Holdings shall be entitled to
seek an injunction or injunctions to prevent breaches of this letter agreement
by _______________ and to enforce specifically the terms and provisions hereof
in any court of the United States or any state having competent jurisdiction,
this being in addition to any other remedy to which it is entitled at law or in
equity.
7. This Agreement is to be governed by and construed in
accordance with the laws of the Commonwealth of Puerto Rico. If any provision
hereof deemed unenforceable, the enforceability of the other provisions shall
not be affected.
Yours truly,
--------------------------------------
By:
-----------------------------------
Name:
Title:
Accepted and Agreed to:
R&G FINANCIAL CORPORATION
By:
----------------------------------
Name:
Title:
J-3
