EXHIBIT 10
AGREEMENT AND PLAN OF MERGER
by and between
PEOPLE’S COMMUNITY BANCSHARES, INC.
and
SUPERIOR BANCORP
dated as of
January 18, 2007

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TABLE OF CONTENTS

          Caption   Page
ARTICLE 1
    1  
 
       
NAME
    1  
 
       
1.1 Name
    1  
 
       
ARTICLE 2
    1  
 
       
MERGER — TERMS AND CONDITIONS
    1  
 
       
2.1 Applicable Law
    1  
 
       
2.2 Corporate Existence
    1  
 
       
2.3 Certificate of Incorporation and Bylaws
    2  
 
       
2.4 Resulting Corporation’s Officers and Board
    2  
 
       
2.5 Stockholder Approvals
    2  
 
       
2.6 Further Acts
    2  
 
       
2.7 Effective Date and Closing
    2  
 
       
2.8 Subsidiary Bank
    3  
 
       
ARTICLE 3
    3  
 
       
CONVERSION OF ACQUIRED CORPORATION STOCK
    3  
 
       
3.1 Conversion of Acquired Corporation Stock
    3  
 
       
3.2 Surrender of Acquired Corporation Stock
    4  
 
       
3.3 Fractional Shares
    4  
 
       
3.4 Adjustments
    4  
 
       
3.5 Buyer Stock
    5  
 
       
3.6 Dissenting Stockholder Rights
    5  
 
       
ARTICLE 4
    5  
 
       
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
    5  
 
       
4.1 Organization
    5  
 
       
4.2 Capital Stock
    5  
 
       
4.3 Taxes
    6  
 
       
4.4 No Conflict with Other Instrument
    6  
 
       
4.5 Absence of Material Adverse Change
    6  

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          Caption   Page
4.6 Approval of Agreement
    6  
 
       
4.7 Tax Treatment
    7  
 
       
4.8 Title and Related Matters
    7  
 
       
4.9 Subsidiaries
    7  
 
       
4.10 Contracts
    7  
 
       
4.11 Litigation
    7  
 
       
4.12 Compliance
    8  
 
       
4.13 Registration Statement
    8  
 
       
4.14 SEC Filings and Financial Statements; NASDAQ
    8  
 
       
4.15 Form S-4
    9  
 
       
4.16 Brokers
    9  
 
       
4.17 Government Authorization
    9  
 
       
4.18 Absence of Regulatory Communications
    9  
 
       
4.19 Disclosure
    9  
 
       
4.20 Absence of Certain Changes or Events
    10  
 
       
4.21 Commitments
    11  
 
       
4.22 Charter and Bylaws
    11  
 
       
4.23 Material Contract Defaults
    11  
 
       
4.24 Insurance
    11  
 
       
4.25 Pension and Employee Benefit Plans
    12  
 
       
4.27 Regulatory Approvals
    15  
 
       
4.28 Loans; Adequacy of Allowance for Loan Losses
    15  
 
       
4.29 Environmental Matters
    15  
 
       
4.30 Collective Bargaining; Labor Disputes
    15  
 
       
4.31 Derivative Contracts
    16  
 
       
4.32 Accounting, Tax and Regulatory Matters
    16  
 
       
4.33 Opinion of Counsel
    16  
 
       
4.34 Transactions with Management
    16  
 
       
4.35 Accounting Controls
    16  
 
       
4.36 Deposit Insurance
    17  

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          Caption   Page
4.37 Intellectual Property.
    17  
 
       
ARTICLE 5
    17  
 
       
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED
    17  
 
       
CORPORATION
    17  
 
       
5.1 Organization
    17  
 
       
5.2 Capital Stock
    17  
 
       
5.3 Subsidiaries
    17  
 
       
5.4 Financial Statements
    18  
 
       
5.5 Absence of Certain Changes or Events
    18  
 
       
5.6 Title and Related Matters
    20  
 
       
5.7 Commitments
    21  
 
       
5.8 Charter and Bylaws
    21  
 
       
5.9 Litigation; Compliance with Laws
    21  
 
       
5.10 Material Contract Defaults
    22  
 
       
5.11 No Conflict with Other Instrument
    22  
 
       
5.12 Governmental Authorization
    22  
 
       
5.13 Absence of Regulatory Communications
    22  
 
       
5.14 Absence of Material Adverse Change
    22  
 
       
5.15 Insurance
    23  
 
       
5.16 Pension and Employee Benefit Plans; Employees
    23  
 
       
5.17 Buy-Sell Agreement
    27  
 
       
5.18 Brokers
    27  
 
       
5.19 Approval of Agreements
    27  
 
       
5.20 Disclosure
    27  
 
       
5.21 Registration Statement
    27  
 
       
5.22 Loans; Allowance for Possible Loan Losses
    28  
 
       
5.23 Environmental Matters
    28  

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          Caption   Page
5.24 Taxes
    29  
 
       
5.25 Collective Bargaining
    29  
 
       
5.26 Labor Disputes
    30  
 
       
5.27 Derivative Contracts
    30  
 
       
5.28 Accounting, Tax and Regulatory Matters
    30  
 
       
5.29 Offices
    30  
 
       
5.30 Data Processing Systems
    31  
 
       
5.31 Intellectual Property
    31  
 
       
5.32. No Trust Powers
    31  
 
       
5.33 Regulatory Approvals
    31  
 
       
5.34 Opinion of Counsel
    31  
 
       
5.35 Anti-takeover Provisions
    31  
 
       
5.36 Transactions with Management
    31  
 
       
5.37 Deposits
    32  
 
       
5.38 Accounting Controls
    32  
 
       
5.39 Deposit Insurance
    32  
 
       
5.40 Registration Obligations
    32  
 
       
ARTICLE 6
    32  
 
       
ADDITIONAL COVENANTS
    32  
 
       
6.1 Additional Covenants of Buyer
    32  
 
       
6.2 Additional Covenants of Acquired Corporation
    35  
 
       
6.3 Additional Covenants Relating to Trust Preferred Securities
    39  
 
       
ARTICLE 7
    39  
 
       
MUTUAL COVENANTS AND AGREEMENTS
    39  
 
       
7.1 Best Efforts, Cooperation
    39  
 
       
7.2 Press Release
    39  
 
       
7.3 Mutual Disclosure
    40  
 
       
7.4 Access to Properties and Records; Investigation
    40  
 
       
7.5 Notice of Adverse Changes
    40  
 
       
ARTICLE 8
    40  
 
       
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
    40  

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          Caption   Page
8.1 Approval by Stockholders
    41  
 
       
8.2 Regulatory Authority Approval; Other Consents
    41  
 
       
8.3 Legal Proceedings
    41  
 
       
8.4 Registration Statement
    41  
 
       
8.5 Tax Opinion
    42  
 
       
ARTICLE 9
    42  
 
       
CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
    42  
 
       
9.1 Representations, Warranties and Covenants
    42  
 
       
9.3 Closing Certificate
    43  
 
       
9.4 Opinion of Counsel
    44  
 
       
9.5 Fairness Opinion
    44  
 
       
9.6 NASDAQ Listing
    44  
 
       
9.7 Support for Legal Opinion
    44  
 
       
9.8 Material Events
    44  
 
       
ARTICLE 10
    44  
 
       
CONDITIONS TO OBLIGATIONS OF BUYER
    44  
 
       
10.1 Representations, Warranties and Covenants
    44  
 
       
10.2 Acquired Corporation Net Worth
    44  
 
       
10.3 Closing Certificate
    44  
 
       
10.4 Opinion of Counsel
    45  
 
       
10.5 Controlling Stockholders
    45  
 
       
10.6 Support for Legal Opinions
    46  
 
       
10.7 Dissenters
    46  
 
       
10.8 Material Events
    46  
 
       
10.9 Fairness Opinion
    46  
 
       
10.10 Other Matters
    46  
 
       
ARTICLE 11
    47  
 
       
TERMINATION OF REPRESENTATIONS AND WARRANTIES
    47  
 
       
ARTICLE 12
    48  
 
       
NOTICES
    48  
 
       
ARTICLE 13
    48  
 
       
AMENDMENT OR TERMINATION
    48  

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          Caption   Page
13.1 Amendment
    48  
 
       
13.2 Termination
    48  
 
       
ARTICLE 14
    51  
 
       
DEFINITIONS
    51  
 
       
ARTICLE 15
    59  
 
       
MISCELLANEOUS
    59  
 
       
15.1 Expenses
    59  
 
       
15.2 Benefit and Assignment
    59  
 
       
15.3 Governing Law
    60  
 
       
15.4 Counterparts
    60  
 
       
15.5 Headings
    60  
 
       
15.6 Severability
    60  
 
       
15.7 Construction
    60  
 
       
15.8 Confidentiality; Return of Information
    60  
 
       
15.9 Equitable Remedies
    61  
 
       
15.10 Attorneys’ Fees
    61  
 
       
15.11 No Waiver
    61  
 
       
15.12 Remedies Cumulative
    61  
 
       
15.13 Entire Contract
    61  

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AGREEMENT AND PLAN OF MERGER
     THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this the
18th day of January, 2007, by and between PEOPLE’S COMMUNITY BANCSHARES, INC.
(“Acquired Corporation”), a Florida corporation, and SUPERIOR BANCORP (“Buyer”),
a Delaware corporation.
WITNESSETH
     WHEREAS, Acquired Corporation operates as a bank holding company for its
wholly owned Subsidiary, People’s Community Bank of the West Coast, a Florida
state bank (the “Bank”), with its principal office in Sarasota, Florida;
     WHEREAS, Buyer is a thrift holding company with a Subsidiary federal
savings bank in Alabama and Florida;
     WHEREAS, Acquired Corporation wishes to merge with Buyer; and
     WHEREAS, it is the intention of Buyer and Acquired Corporation 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
     1.1 Name. The name of the corporation resulting from the Merger shall be
“Superior Bancorp”, or such other name as Buyer shall have adopted as of the
Effective Date.
ARTICLE 2
MERGER — TERMS AND CONDITIONS

 

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     2.1 Applicable Law. On the Effective Date, Acquired Corporation shall be
merged (the “Merger”) with and into Buyer (herein referred to as the “Resulting
Corporation” whenever reference is made to it as of the Effective Date or
thereafter). The Merger shall be undertaken pursuant to the provisions of and
with the effect provided in the DGCL and, to the extent applicable, the FBCA.
The offices and facilities of Acquired Corporation and of Buyer shall become the
offices and facilities of the Resulting Corporation.
     2.2 Corporate Existence. On the Effective Date, the corporate existence of
Acquired Corporation and of Buyer shall, as provided in the DGCL and FBCA, be
merged into and continued in the Resulting Corporation, and the Resulting
Corporation shall be deemed to be the same corporation as Acquired Corporation
and Buyer. All property, rights, privileges, powers, franchises and interests of
Acquired Corporation and Buyer, 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, and all debts and other obligations shall
be assumed by 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 Acquired
Corporation and Buyer, respectively, on the Effective Date, and shall be subject
to all the restrictions, disabilities and duties of Acquired Corporation and
Buyer, respectively, on the Effective Date.
     2.3 Certificate 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 Buyer 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 Buyer as of the Effective Date.
Buyer agrees that at its first regularly scheduled meeting of Resulting
Corporation’s board of directors following the Effective Date Resulting
Corporation will elect to its board of directors one individual who as of the
business day prior to the Effective Date is an independent member of Acquired
Corporation’s board of directors (as determined by SEC and NASDAQ rules and
regulations and other applicable Laws).
     2.5 Stockholder Approvals. This Agreement shall be submitted to the
stockholders of Acquired Corporation at the Stockholders Meeting to be held as
promptly as practicable consistent with the terms and conditions set forth in
this Agreement. Upon approval by the requisite vote of the stockholders of
Acquired Corporation as required by applicable Law, the Merger shall become
effective as soon as practicable thereafter in the manner provided in
Section 2.7 hereof, subject to the provisions of Articles 8, 9 and 10 below.

 

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     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 to vest, perfect,
confirm or record, in the Resulting Corporation, title to and possession of any
property or right of Acquired Corporation or Buyer, acquired as a result of the
Merger, Buyer 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.
     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 Delaware (such time being herein called the “Effective
Date”). Assuming all other conditions stated in this Agreement have been or will
be satisfied as of the Closing, the Closing shall take place at the offices of
Buyer, in Birmingham, Alabama, at 5:00 p.m. on a date specified by Buyer that
shall be as soon as reasonably practicable, but not later than 30 calendar days,
after the later to occur of the Stockholders Meetings or the receipt of all
required regulatory approvals under Section 8.2, or at such other place and time
that the Parties may mutually agree.
     2.8 Subsidiary Bank. Buyer and Acquired Corporation anticipate that, on or
after the Effective Date, Buyer’s federal savings bank Subsidiary, Superior
Bank, will acquire the Bank by merger, acquisition of assets or otherwise. The
exact timing and structure of such acquisition have not been finalized at this
time, and Buyer in its discretion will finalize such timing and structure at a
later date. Acquired Corporation will cooperate with Buyer, including the call
of any special meetings of the board of directors of the Bank and the filing of
any regulatory applications, in the execution of appropriate documentation
relating to such merger or other transaction. In the event that following the
Effective Date the Bank remains a separate legal entity owned by Buyer, Buyer
and Acquired Corporation will mutually agree prior to the Effective Date upon
which existing members of the board of directors of the Bank, if any, shall
remain as directors thereof following the Effective Date.
ARTICLE 3
CONVERSION OF ACQUIRED CORPORATION STOCK
     3.1 Conversion of Acquired Corporation Stock.
     (a) Subject to the potential adjustment provided for in Section 3.1(c) and
3.4 below, on the Effective Date, each share of common stock of Acquired
Corporation outstanding and held of record by Acquired Corporation’s
stockholders, but excluding shares held by Acquired Corporation or any of its
Subsidiaries, other than in a fiduciary capacity or as a result of debts
previously contracted, and excluding shares held by stockholders who perfect
their dissenters’ rights of appraisal as provided in Section 3.6 of this
Agreement (the “Acquired Corporation Stock”), shall be converted by operation of
law and without any action by any holder thereof into and exchanged for the
right to receive 2.9036 shares of Buyer’s Common Stock (the “Exchange Ratio”).

 

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     (b) On the Effective Date, all outstanding Acquired Corporation Options
shall be cancelled and each holder of such options shall be entitled to receive
in exchange therefor the right to receive cash equal to the amount resulting
when the number of Acquired Corporation Options held by a holder thereof is
multiplied by the Per Unit Value. As used herein, the term “Per Unit Value”
shall mean (i) the average of the closing prices of Buyer’s Common Stock for the
10 business days preceding the Effective Date multiplied by the Exchange Ratio
less (ii) the exercise price for each share of Acquired Corporation Stock
subject to such option. Schedule 3.1 to the Acquired Corporation’s Disclosure
Supplement sets forth the names of all persons holding Acquired Corporation
Options, the number of shares of Acquired Corporation common stock subject to
such options, the exercise price and the expiration date of such options.
     (c) Notwithstanding anything to the contrary in this Section 3.1 or
otherwise in this Agreement, in the event that there is a shortfall (the “Net
Worth Shortfall Amount”) between the Acquired Corporation Net Worth specified in
Section 10.2 hereof (the “Required Net Worth Amount”), and the actual amount of
such Net Worth, then the Exchange Ratio shall be adjusted downward by the
Reduction Factor. As used herein, the “Reduction Factor” shall mean the
percentage obtained by dividing (i) the Net Worth Shortfall Amount by (ii) the
Required Net Worth Amount.

 

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     3.2 Surrender of Acquired Corporation Stock. As promptly as practicable,
but in no case later than fifteen (15) business days after the Effective Date,
an independent exchange agent (the “Exchange Agent”) appointed by Buyer shall
send to each holder of record of shares of Acquired Company Stock outstanding on
the Effective Date transmittal materials for use in exchanging the certificates
for such shares for certificates for shares of Buyer’s Common Stock into which
such shares of Acquired Company Stock have been converted pursuant hereto. Each
holder of an outstanding certificate or certificates which prior thereto
represented shares of Acquired Corporation Stock who is entitled to receive
Buyer’s Common Stock shall be entitled, upon surrender to the Exchange Agent of
their certificate or certificates representing shares of Acquired Corporation
Stock (or an affidavit or affirmation by such holder of the loss, theft, or
destruction of such certificate or certificates in such form as the Exchange
Agent may reasonably require and, if Buyer reasonably requires, a bond of
indemnity in form and amount, and issued by such sureties, as Buyer may
reasonably require), to receive in exchange therefor a certificate or
certificates representing the number of whole shares of Buyer’s Common Stock
into and for which the shares of Acquired Corporation 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 Acquired Corporation Stock and which is to
be converted into Buyer’s Common Stock shall for all purposes evidence ownership
of the Buyer’s Common Stock into and for which such shares shall have been so
converted and holders thereof shall have all rights as holders of Buyer’s Common
Stock, except that dividends or other distributions with respect to such Buyer’s
Common Stock, if any, shall be held by Buyer until the certificates previously
representing shares of Acquired Corporation Stock shall have been properly
tendered. After the Effective Date, there shall be no transfers on the stock
transfer books of Acquired Corporation of shares of Acquired Corporation Stock
which were issued and outstanding on the Effective Date and converted pursuant
to the provisions hereof. If after the Effective Date certificates are presented
for transfer to Acquired Corporation, they shall be canceled and exchanged for
the shares of Buyer’s Common Stock deliverable in respect thereof as determined
in accordance with the provisions of this paragraph.
     3.3 Fractional Shares. No fractional shares of Buyer’s Common Stock shall
be issued, and each holder of shares of Acquired Corporation Stock having a
fractional interest arising upon the conversion of such shares into shares of
Buyer’s Common Stock shall, at the time of surrender of the certificates
previously representing Acquired Corporation Stock, be paid by Buyer an amount
in cash, without interest, in an amount equal to such fractional part of a share
of Buyer’s Common Stock multiplied by the closing price per share of Buyer’s
Common Stock on NASDAQ on the Effective Date.
     3.4 Adjustments. In the event that prior to the Effective Date Buyer’s
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 Buyer’s Common
Stock, an appropriate and proportionate adjustment shall be made in the number
of shares of Buyer’s Common Stock into which the Acquired Corporation Stock
shall be converted. In the event that Buyer is acquired by another entity prior
to the Effective Date, the compensation paid to stockholders of Acquired
Corporation shall be adjusted as necessary to reflect the consideration paid to
the stockholders of Buyer.

 

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     3.5 Buyer Stock. The shares of Common Stock of Buyer issued and outstanding
immediately before the Effective Date shall continue to be issued and
outstanding shares of the Resulting Corporation.
     3.6 Dissenting Stockholder Rights Any stockholder of Acquired Corporation
who perfects such stockholder’s dissenters’ rights in accordance with the FBCA
shall be entitled to receive from the Resulting Corporation the value of such
shares in cash as determined pursuant to the provisions of the FBCA; provided,
that no such payment shall be made to any dissenting stockholder unless and
until such dissenting stockholder has complied with the applicable provisions of
the FBCA and surrendered to the Resulting Corporation the certificate or
certificates representing the shares for which payment is being made. If after
the Effective Date a dissenting stockholder of Acquired Corporation fails to
perfect, or effectively withdraws or loses, his or her right to appraisal and
payment for shares of Acquired Corporation Stock, Buyer shall issue and deliver
the consideration to which such holder of shares of Acquired Corporation Stock
is entitled under Section 3.1(a) (without interest) upon surrender by such
holder of the certificate or certificates representing shares of Acquired
Corporation Stock held by him or her.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
     Buyer represents, warrants and covenants to and with Acquired Corporation
as follows:
     4.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware. Buyer 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 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.
     4.2 Capital Stock.
     (a) The authorized capital stock of Buyer consists of (A) 50,000,000 shares
of Common Stock, $0.001 par value per share, of which as of December 31, 2006,
34,641,666 shares were validly issued and 34,722,342 shares were outstanding,
fully paid and nonassessable under the DGCL and are not subject to preemptive
rights (not counting additional shares reserved for issuance pursuant to stock
option and other plans and outstanding options issued under such plans or
otherwise), and (B) 5,000,000 shares of Convertible Preferred Stock, $0.001 par
value per share, none of which is issued and outstanding. The shares of Buyer’s
Common Stock to be issued in the Merger are duly authorized and, when so issued,
will be validly issued and outstanding, fully paid and nonassessable under the
DGCL, 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
Acquired Corporation and will be listed and eligible for trading on NASDAQ.
     (b) The authorized capital stock of each Subsidiary of Buyer is validly
issued and outstanding, fully paid and nonassessable under the Laws of the
jurisdiction in which such Subsidiary is organized, and each Subsidiary is
wholly owned, directly or indirectly, by Buyer.

 

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     4.3 Taxes. All Tax returns required to be filed by or on behalf of Buyer
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 due and all additional assessments
received have been paid, if due and payable. The amounts recorded for Taxes on
the balance sheets contained in the reports described in Section 4.14 are, to
the Knowledge of Buyer, sufficient in all material respects for the payment of
all unpaid federal, state, county, local, foreign or other Taxes (including any
interest or penalties) of Buyer accrued for or applicable to the period ended on
the dates thereof, and all years and periods prior thereto and for which Buyer
may at such 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. Except as
disclosed on Schedule 4.3 to Buyer’s Disclosure Supplement, no audit,
examination or investigation is presently being conducted or, to the Knowledge
of Buyer, 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 Buyer. To the Knowledge
of Buyer, Buyer 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 the breach of any term or
provision of or constitute a Default (without regard to the giving of notice or
the passage of time) under any material Contract, indenture, mortgage, deed of
trust or other material agreement or instrument to which Buyer 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 certificate of incorporation or bylaws of
Buyer or the certificate or 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 September 30, 2006, 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
Buyer, except as disclosed in Schedule 4.5 to Buyer’s Disclosure Supplement.
     4.6 Approval of Agreement. The board of directors of Buyer has approved
this Agreement and the transactions contemplated by it, and has authorized the
execution and delivery by Buyer of this Agreement. This Agreement constitutes
the legal, valid and binding obligation of Buyer, enforceable against it in
accordance with its terms. Subject to the matters referred to in Section 8.2,
Buyer has full power, authority and legal right to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. Buyer 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. Buyer has no present plan to sell or otherwise dispose
of any material portion of the Assets of Acquired Corporation, subsequent to the
Merger, and Buyer intends to continue the historic business of Acquired
Corporation.
     4.8 Title and Related Matters. Buyer has good and marketable title to all
the properties, interests in properties and Assets, real and personal, that are
material to the business of Buyer, reflected in the balance sheet dated as of
September 30, 2006 in the Buyer SEC Reports, 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, or, if other
than in the ordinary course of business, of a nature and amount not material to
the business of Buyer), free and clear of all mortgages, Liens, pledges, charges
or encumbrances except (a) mortgages and other encumbrances referred to in the
notes of such balance sheet, (b) liens for current Taxes not yet due and payable
and (c) 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 Buyer, the material structures and
equipment of Buyer comply in all material respects with the requirements of all
applicable Laws.
     4.9 Subsidiaries. Each Subsidiary of Buyer 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 Buyer and
its Subsidiaries considered as one enterprise; the federal savings bank
Subsidiary of Buyer 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 Buyer are permitted to
subsidiaries of registered thrift holding companies.
     4.10 Contracts. Neither Buyer nor any of its Subsidiaries is in violation
of its respective certificate or articles of incorporation or bylaws 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, except for such Defaults, if any, as would not,
individually or in the aggregate, have a Material Adverse Effect upon Buyer.
     4.11 Litigation. Except as disclosed in Schedule 4.11 to Buyer’s Disclosure
Supplement, there is no Litigation before or by any court or Agency, domestic or
foreign, now pending, or, to the Knowledge of Buyer, threatened against or
affecting Buyer or any of its Subsidiaries (nor does Buyer have knowledge of any
facts which could give rise to any such Litigation) which is reasonably likely
to have any Material Adverse Effect or prospective Material Adverse Effect, or
which is reasonably likely to materially affect or delay the consummation of the
transactions contemplated by this Agreement; and all pending legal or
governmental proceedings to which Buyer or any Subsidiary is a party or of which
any of their properties is the subject, including ordinary routine litigation
incidental to the business, are, considered in the aggregate not material.

 

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     4.12 Compliance. Except as disclosed in Schedule 4.12 to Buyer’s Disclosure
Supplement, to the Knowledge of Buyer, Buyer and its Subsidiaries have complied
in all material respects with all material applicable Laws and Regulations
including without limitation those imposing Taxes and those related to consumer
finance, commercial banking, and the sale of non-deposit investment and
insurance products, of any applicable jurisdiction and of all states,
municipalities, other political subdivisions and Agencies, in respect of the
ownership of its Assets and the conduct of its business, except where such
noncompliance would not have a Material Adverse Effect on the Buyer and its
Subsidiaries as a whole.
     4.13 Registration Statement. None of the information supplied or to be
supplied by Buyer for inclusion in the Registration Statement to be filed by
Buyer with the SEC will, when the Registration Statement becomes effective, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by Buyer to Acquired Corporation’s
stockholders in the proxy statement/prospectus used in connection with the
Stockholders Meeting, and any other documents to be filed by Buyer with the SEC,
or any other Agency in connection with the transactions contemplated hereby
will, at the respective time such documents are filed and with respect to the
Acquired Corporation Proxy Statement, when first mailed to the stockholders of
Acquired Corporation, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to make the statements therein, not
misleading, or in the case of the Acquired Corporation Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Acquired Corporation
Stockholders Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting.

 

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     4.14 SEC Filings and Financial Statements; NASDAQ. (a) Since December 31,
2003, Buyer has filed all forms, reports and documents with the SEC required to
be filed by it pursuant to the federal securities Laws and SEC rules and
regulations thereunder (the “Buyer SEC Reports”), each of which complied as to
form, at the time such form, report or document was filed (and subject to any
subsequent amendments thereto), in all material respects with the applicable
requirements of the 1933 Act, the 1934 Act and the applicable rules and
regulations thereunder. To the Knowledge of Buyer, each member of Buyer’s board
of directors has filed all forms, reports and documents with the SEC required to
be filed by him pursuant to the federal securities Laws and SEC rules and
regulations thereunder. As of their respective dates, none of the Buyer SEC
Reports contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. Each of the balance sheets in the Buyer SEC Reports (including the
related notes and schedules, and subject to any subsequent amendments to such
Buyer SEC Reports) fairly presents the financial condition of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Buyer has no material obligations or liabilities
(contingent or otherwise) except as disclosed in the Buyer SEC Reports. For
purposes of this paragraph, “material” shall have the meaning of such term as
defined under the 1933 Act, the 1934 Act and the rules promulgated thereunder.
     (b) Since December 31, 2003, Buyer has filed all forms, reports and
documents with NASDAQ required to be filed by it pursuant to the requirements of
NASDAQ (the “NASDAQ Reports”), each of which complied as to form, at the time
such form, report or document was filed (and subject to any subsequent
amendments thereto), in all material respects with the applicable requirements
of NASDAQ. As of their respective dates, none of the NASDAQ Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. Buyer
is in material compliance with all rules and requirements of NASDAQ applicable
to it.

 

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     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 will be satisfied
with respect to Buyer and the Registration Statement.
     4.16 Brokers. Except for services provided by Sandler O’Neill & Partners,
L.P., which have been retained by Buyer and the arrangements with which,
including fees, have been disclosed to Acquired Corporation prior to the date
hereof, all negotiations relative to this Agreement and the transactions
contemplated by this Agreement have been carried on by Buyer directly with
Acquired Corporation and without the intervention of any other person, either as
a result of any act of Buyer or otherwise in such manner as to give rights to
any valid claim against Buyer for finder’s fees, brokerage commissions or other
like payments.
     4.17 Government Authorization. Buyer and its Subsidiaries have all Permits
that are or will be legally required to enable Buyer 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. Except as disclosed in
Schedule 4.18 to Buyer’s Disclosure Supplement, neither Buyer nor any of its
Subsidiaries is subject to, or has received during the past three years, any
written communication directed specifically to it from any Agency to which it is
or has been subject or pursuant to which such Agency has imposed or has
indicated it is reasonably likely to impose any material restrictions on the
operations of it or the business conducted by it or taken any other action with
respect to Buyer or any of its Subsidiaries which has had or is reasonably
likely to have a Material Adverse Effect upon Buyer and its Subsidiaries taken
as a whole.
     4.19 Disclosure. No representation or warranty, or any statement or
certificate furnished or to be furnished to Acquired Corporation by Buyer,
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.
     4.20 Absence of Certain Changes or Events. Except as disclosed in
Schedule 4.20 to Buyer’s Disclosure Supplement, since September 30, 2006,
neither Buyer nor any of its Subsidiaries 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 existing
options to purchase shares of Buyer’s common stock under its Third Amended and
Restated 1998 Stock Option Plan;
     (b) borrowed or agreed to borrow any funds or incurred, or become subject
to, any Liability (absolute or contingent) except borrowings, obligations
(including purchase of federal funds) 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 shown on the September 30, 2006 balance sheet in
the Buyer SEC Reports and current Liabilities incurred since that date in the
ordinary course of business and consistent with past practice;

 

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     (d) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any Assets of any kind whatsoever to stockholders,
or purchased or redeemed, or agreed to purchase or redeem, directly or
indirectly, or otherwise acquire, any of its outstanding securities;
     (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 Buyer’s business as a whole, except as
are disclosed in Schedule 4.20 of Buyer’s Disclosure Supplement;
     (h) except in the ordinary course of business or as disclosed in
Schedule 4.20(h) to Buyer’s Disclosure Supplement, 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 Buyer’s business
as a whole;
     (i) except in accordance with Buyer’s normal and usual practice, or as
required by Law or by Contract, or as noted in Schedule 4.20(i) to Buyer’s
Disclosure Supplement, 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 that any of its substantial customers has terminated or
intends to terminate its relationship, which termination would have a Material
Adverse Effect;
     (l) failed to operate its business in the ordinary course (other than this
Agreement and the transactions contemplated hereby) 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 other than in the ordinary course of
business; 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, Buyer will not do any of
the things listed in clauses (a) through (n) of this Section 4.20 if such action
would have a Material Adverse Effect on Buyer and its Subsidiaries taken as a
whole.

 

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     4.21 Commitments. Buyer has disclosed in the Exhibits to its annual report
on Form 10-K for the year ended December 31, 2005, or in the Exhibits to any
subsequently filed quarterly report on Form 10-Q or current report on Form 8-K,
all “material contracts” required to be disclosed pursuant to Item 601(b)(10) of
Regulation S-K under the 1933 Act.
     4.22 Charter and Bylaws. Schedule 4.22 to Buyer’s Disclosure Supplement
contains true and correct copies of the certificate of incorporation or articles
of incorporation and bylaws of Buyer and Superior Bank including all amendments
thereto, as currently in effect. There will be no changes in such certificates
or articles of incorporation or bylaws prior to the Effective Date without the
prior written consent of Acquired Corporation.
     4.23 Material Contract Defaults. Except as disclosed on Schedule 4.23 to
Buyer’s Disclosure Supplement, neither Buyer nor any of its Subsidiaries is in
Default in any material respect under the terms of any material Contract which
has or is reasonably likely to have a Material Adverse Effect on Buyer and its
Subsidiaries taken as a whole, and, to the Knowledge of Buyer, 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 that is reasonably likely to have such
a Material Adverse Effect in respect of which adequate steps have not been taken
to prevent such a Default from occurring.
     4.24 Insurance. Each of the Buyer and its Subsidiaries has in effect
insurance coverage and bonds with reputable insurers which, in respect to
amounts, types and risks insured, management of Buyer reasonably believes to be
adequate for the type of business conducted by such company, and all of which
are identified on Schedule 4.24 to Buyer’s Disclosure Supplement. Neither Buyer
nor any of its Subsidiaries is liable for any material retroactive premium
adjustment. All insurance policies and bonds are valid, enforceable and in full
force and effect, and neither Buyer nor any of its Subsidiaries 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, neither Buyer nor
any of its Subsidiaries 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, to the extent available generally in the market without
material increase in cost or change in coverage, will be outstanding and in full
force with respect to each of Buyer and its Subsidiaries at all times from the
date hereof to the Effective Date.
     4.25 Pension and Employee Benefit Plans.
     (a) The following representations pertain to “employee benefit plans” as
defined by Section 3(3) of ERISA (whether or not such plans are subject to
ERISA), and all bonus, incentive compensation, deferred compensation, profit
sharing, stock option, restricted stock, stock appreciation right, stock bonus,
stock purchase, supplemental retirement, life insurance, or any other employee
benefit plans, programs or arrangements (whether written or oral, qualified or
nonqualified), and all employment, consulting, retention, termination, severance
or other contracts or arrangements, whether legally enforceable or not, and any
trust, escrow or other

 

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agreement related thereto, to which Buyer or any ERISA Affiliate thereof is a
party which (i) is now or was for the last six (6) years maintained or
contributed to by Buyer or an ERISA Affiliate thereof (as hereinafter defined),
or (ii) with respect to which Buyer or any ERISA Affiliate thereof has any
obligations to any current or former officer, employee, consultant or
independent contractor, leased employee or the dependents of any thereof,
regardless of whether funded, or (iii) which could result in the imposition of
any liability or obligation of any kind or nature, and whether or not now due or
to become due to Buyer or any ERISA Affiliate thereof (all of the above shall be
collectively referred to as the “ Buyer Employee Plans”).
     (b) [Reserved]
     (c) Except as set forth in Schedule 4.25(c) to Buyer’s Disclosure
Supplement, neither Buyer nor any ERISA Affiliate has been liable at any time
for contributions to (i) a plan or program that is, or has been at any time,
subject to Section 412 of the Code, Section 302 of ERISA and/or Title IV of
ERISA or (ii) a “multiemployer plan” (as defined in Section 3(39) of ERISA).
Schedule 4.25(c) to Buyer’s Disclosure Supplement also indicates whether (i) any
Buyer Employee Plan has an “accumulated funding deficiency” (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of ERISA,
(ii) Buyer or any ERISA Affiliate has an outstanding funding waiver, (iii) Buyer
or any ERISA Affiliate is required to provide security for any Employee Plan
pursuant to Section 401(a)(29) of the Code or (iv) if, and to the extent, any
unfunded liabilities (past, present or future) exist with respect to any Buyer
Employee Plan.
     (d) Except as set forth in Schedule 4.25(d) to Buyer’s Disclosure
Supplement, the form and operation of all Buyer Employee Plans are in all
material respects in compliance with the applicable provisions of ERISA, the
Code, and any other applicable laws, including the Americans with Disabilities
Act of 1990, the Family Medical Leave Act of 1993 and the Health Insurance
Portability and Accountability Act of 1996, and such Buyer Employee Plans have
been operated in all material respects in compliance with such laws and the
written Buyer Employee Plan documents. To the Knowledge of Buyer, neither Buyer
nor any fiduciary of a Buyer Employee Plan has violated the requirements of
Section 404 of ERISA with respect to any Buyer Employee Plan. All required
reports (including IRS Form 5500 annual reports and summary annual reports) have
been (when required) timely filed with the IRS and the United States Department
of Labor (the “DOL”). To the Knowledge of Buyer, all summary plan descriptions
and summaries of material modifications and other notices required by ERISA or
the Code with respect to the Buyer Employee Plans have been timely distributed
as required to all participants, alternate payees and beneficiaries, and all
such summary plan descriptions, summaries of material modifications and other
notices have complied and currently comply with applicable Law and are
consistent with the terms and provisions of the corresponding written Buyer
Employee Plan documents. To the Knowledge of Buyer, there have been no
prohibited transactions with respect to the Buyer Employee Plans that will or
could reasonably likely result in a Material Adverse Effect on Buyer and its
Subsidiaries taken as a whole. Any contributions, including salary deferrals,
required to be made under the terms of any of the Buyer Employee Plans by Buyer
as of the Effective Date of the Merger have been timely made.

 

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     (e) Each Buyer Employee Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS,
and Buyer is not aware of any circumstances that will or could reasonably result
in revocation of any such favorable determination letter. Each trust created
under any Buyer Employee Plan has been determined to be exempt from taxation
under Section 501(a) of the Code, and to the Knowledge of Buyer there are no
circumstances that will or could reasonably result in a revocation of such
exemption. Each Buyer Employee Plan that is an employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that utilizes a funding vehicle described in
Section 501(c)(9) of the Code or is subject to the provisions of Section 505 of
the Code has been the subject of a notification by the IRS that such funding
vehicle qualifies for tax-exempt status under Section 501(c)(9) of the Code or
that the Buyer Employee Plan complies with Section 505 of the Code, unless the
IRS does not, as a matter of policy, issue such notification with respect to the
particular type of funding vehicle. With respect to each Buyer Employee Plan, to
the Knowledge of Buyer no event has occurred or condition exists that will or
could give rise to a loss of any intended tax consequence or to any tax under
Section 511 of the Code.
     (f) Except as disclosed on Schedule 4.25(f) of Buyer’s Disclosure
Supplement, there are no pending claims, lawsuits or actions relating to any
Buyer Employee Plan (other than ordinary course claims for benefits) and, to the
best knowledge of Buyer, none are threatened.
     (g) No written or oral representations have been made, and no Buyer
Employee Plans provide, for the continuation of medical, dental, life or
disability insurance coverage for any period of time beyond the earlier of
(i) the end of the current plan year, or (ii) the termination of employment
(except to the extent of coverage required under COBRA), except as provided in
any Contracts disclosed in Buyer’s Disclosure Supplement.
     (h) Except as disclosed on Schedule 4.25(h) of Buyer’s Disclosure
Supplement and except for the possibility of full vesting of plan account
balances which may be necessitated by Section 411(d)(3) of the Code in order for
tax-qualified status to be retained, the consummation of the transactions
contemplated by this Agreement will not accelerate the time of vesting, of
payment, or increase the amount, of compensation to any employee, officer,
former employee or former officer of Buyer or any ERISA Affiliate.
     (i) Buyer and any ERISA Affiliate thereof have at all times complied and
currently comply in all material respects with the applicable continuation
requirements for their group health plans, including (1) Section 4980B of the
Code and Sections 601 through 608, inclusive, of ERISA, which provisions are
referred to collectively as “COBRA” and (2) any applicable state statutes
mandating health insurance continuation coverage for employees.
     (j) Except as disclosed in Schedule 4.25(j) to Buyer’s Disclosure
Supplement, neither Buyer nor any ERISA Affiliate has incurred any liability to
the DOL, the Pension Benefit Guaranty Corporation (the “PBGC”) or the IRS in
connection with any of the Buyer Employee Plans, and, to the Knowledge of Buyer,
except as disclosed in Schedule 4.25(j) to Buyer’s Disclosure Supplement, no
condition exists that presents a risk to Acquired Buyer or any ERISA Affiliate
of incurring any liability to the DOL, the PBGC or the IRS.

 

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     (k) For the purpose of this Section 4.25, the term “ERISA Affiliate” shall
mean (i) any related company or trade or business that is required to be
aggregated with Buyer under Code Sections 414(b), (c), (m) or (o); (ii) any
other company, entity or trade or business that has adopted or has ever
participated in any Buyer Employee Plan; and (iii) any predecessor or successor
company or trade or business of Buyer or any entity described in this
Section 4.25(k).
     (l) Buyer and any ERISA Affiliate have properly classified individuals
providing services to such entities as independent contractors or employees, as
the case may be for purposes of eligibility to participate in the Buyer Employee
Plans and such classifications have not been challenged by the IRS.
     (m) Except as disclosed in Schedule 4.25(m) to the Buyer’s Disclosure
Supplement, no lien, security interests or other encumbrances exist with respect
to any of the assets of Buyer or any ERISA Affiliate that were imposed pursuant
to the terms of the Code or ERISA and, to the Knowledge of Buyer, no condition
exists or could occur that would result in the imposition of such liens,
security interests or encumbrances arising from or relating to the Buyer
Employee Plans.
     (n) [Reserved]
     (o) To the Knowledge of Buyer, Buyer is not delinquent in payments to any
of its employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it or any other amounts required to
be reimbursed to such employees (including accrued paid time off, accrued
vacation, accrued sick leave and other benefits) or in the payment to the
appropriate governmental authority of all required taxes, insurance, social
security and withholding thereon; and as of the Effective Date of the Merger,
Buyer will not have an obligation or liability to any of its employees or to any
governmental authority for any such matters.
     4.26 [Reserved]
     4.27 Regulatory Approvals. Buyer has no Knowledge of any reason why all
requisite regulatory approvals regarding the Merger should not or cannot be
obtained.
     4.28 Loans; Adequacy of Allowance for Loan Losses. All reserves for loan
losses shown on the September 30, 2006 financial statements of Buyer in the
Buyer SEC Reports are adequate (within the meaning of GAAP and applicable
regulatory guidelines) in all material respects. Buyer has no Knowledge of any
fact which is likely to require a future material increase in the provision for
loan losses or a material decrease in the loan loss reserve reflected in the
most recent financial statements contained in Buyer’s SEC Reports. Each loan
reflected as an Asset on the financial statements of Buyer 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 and complies with all Laws to which it is subject.
Buyer does not have in its portfolio any loan exceeding its legal lending limit,
and except as disclosed to Acquired Corporation, to the Knowledge of Acquired
Corporation, it has no material loans that are delinquent in payment for more
than 30 days, substandard, doubtful, loss, or nonperforming.

 

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     4.29 Environmental Matters. Buyer and each of its Subsidiaries are in
material compliance with all Environmental Laws, and Buyer has no Knowledge that
Buyer or any of its Subsidiaries has not complied with all regulations and
requirements promulgated by the Occupational Safety and Health Administration
that are applicable to Buyer or any of its Subsidiaries, except, in each case,
where such noncompliance has not had or is not reasonably likely to have a
Material Adverse Effect on Buyer and its Subsidiaries taken as a whole. To the
Knowledge of Buyer, there is no Litigation pending or threatened with respect to
any violation or alleged violation of the Environmental Laws. To the Knowledge
of Buyer, with respect to Assets of Buyer or any of its Subsidiaries, including
any Loan Property of any material loan, (a) there has been no spillage, leakage,
contamination or release of any substances for which the appropriate remedial
action has not been completed; (b) no owned or leased property is contaminated
with or contains any hazardous substance or waste; and (c) there are no
underground storage tanks on any premises owned or leased by Buyer or any of its
Subsidiaries, where in the case of each of clause (a) and (b) any such condition
or occurrence has had or is reasonably likely to have a Material Adverse Effect
on Buyer and its Subsidiaries taken as a whole.
     4.30 Collective Bargaining; Labor Disputes. To the Knowledge of Buyer,
Buyer and each of its Subsidiaries is in material compliance with all federal
and state laws respecting employment and employment practices, terms and
conditions of employment, wages and hours. Neither Buyer nor any of its
Subsidiaries is or has been engaged in any unfair labor practice, and, to the
Knowledge of Buyer, no unfair labor practice complaint against Buyer or any of
its Subsidiaries is pending before the National Labor Relations Board. Relations
between management of Buyer and its Subsidiaries and the employees are amicable
and there have not been, nor to the Knowledge of Buyer, are there presently, any
attempts to organize employees, nor to the Knowledge of Buyer, are there plans
for any such attempts. There are no labor contracts, collective bargaining
agreements, letters of undertakings or other arrangements, formal or informal,
between Buyer and any union or labor organization covering any employees of
Buyer and its Subsidiaries and none of said employees are represented by any
union or labor organization.
     4.31 Derivative Contracts. Except as disclosed in Section 4.31 to Buyer’s
Disclosure Supplement or as entered into in the ordinary course of business
subsequent to the date hereof, neither Buyer nor any of its Subsidiaries 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 (“Derivative Contract”) not included
in Buyer’s September 30, 2006 financial statements in the Buyer SEC Reports
(including various combinations thereof). With respect to all agreements
currently outstanding pursuant to which Buyer or any of its Subsidiaries has
purchased securities subject to an agreement to resell, Buyer or such Subsidiary
has a security interest in the securities or other collateral securing such
agreement, and the value of such collateral at the date such agreement was
entered into equals or exceeds the amount of the debt secured thereby. Neither
Buyer nor any of its Subsidiaries has pledged collateral in excess of the amount
required under any interest rate swap, repurchase agreement, Derivative Contract
or other similar agreement currently outstanding.

 

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     4.32 Accounting, Tax and Regulatory Matters. Neither Buyer nor any of its
Subsidiaries has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions provided
for herein, including the Merger, from qualifying as a reorganization within the
meaning of Section 368(a) of the Code, or (ii) materially impede or delay
receipt of any Consents of Agencies referred to in subsection 8.2 of this
Agreement.
     4.33 Opinion of Counsel. Buyer has no Knowledge of any facts that would
preclude issuance of the opinion of counsel referred to in Section 9.4.
     4.34 Transactions with Management. Buyer has disclosed in Buyer’s proxy
statement dated April 17, 2006 with respect to its regular 2006 annual meeting
of stockholders all matters required to be disclosed pursuant to Item 404 of
Regulation S-K under the 1933 Act, “Certain Relationships and Related
Transactions”.
     4.35 Accounting Controls. Buyer and its Subsidiaries have devised and
maintained systems of internal accounting control sufficient to provide
reasonable assurances that: (i) all material transactions are executed in
accordance with general or specific authorization of the Board of Directors of
Buyer and the duly authorized executive officers of Buyer or the applicable
Subsidiary of Buyer; (ii) all material transactions are recorded as necessary to
permit the preparation of financial statements in conformity with GAAP with
respect to Buyer or the applicable Subsidiary of Buyer or any other criteria
applicable to such financial statements, and to maintain proper accountability
for items therein; (iii) access to the material Assets of Buyer and its
Subsidiaries is permitted only in accordance with general or specific
authorization of the Board of Directors of Buyer and the duly authorized
executive officers; and (iv) the recorded accountability for items is compared
with the actual levels at reasonable intervals and appropriate actions taken
with respect to any differences.
     4.36 Deposit Insurance. The deposit accounts of Superior Bank are insured
by the FDIC in accordance with the provisions of the FDIC Act. Superior Bank has
paid all regular premiums and special assessments and filed all reports required
under the FDIC Act.
     4.37 Intellectual Property. Each of Buyer and its Subsidiaries owns or
possesses licenses or other rights to use all material patents, copyrights,
trade secrets, trade names, service marks, trademarks, computer software and
other intellectual property used in its business; and none of Buyer or its
Subsidiaries has received any notice of any Litigation that is pending or
threatened, which challenge the right of Buyer and its Subsidiaries to the
ownership or use of such. Each of Buyer and its Subsidiaries has taken
reasonable precautions to safeguard its trade secrets from disclosure to
third-parties.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED
CORPORATION
     Acquired Corporation represents, warrants and covenants to and with Buyer,
as follows:

 

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     5.1 Organization. Acquired Corporation is a Florida corporation, and the
Bank is a Florida state-chartered bank. Each 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 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.
     5.2 Capital Stock. As of December 31, 2006, the authorized capital stock of
Acquired Corporation consisted of (A) 9,000,000 shares of common stock, $0.01
par value per share, 2,290,696 shares of which were issued and outstanding at
such date, and (B) 1,000,000 shares of Preferred Stock, no par value per share,
none of which was issued and outstanding at such date. All of such shares which
are outstanding are validly issued, fully paid and nonassessable under the FBCA
and not subject to preemptive rights. As of December 31, 2006, Acquired
Corporation had 107,201 shares of its common stock subject to exercise at any
time pursuant to outstanding stock options under its stock option plans or
pursuant to outstanding warrants. Except for the foregoing, Acquired Corporation
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, including the grant or issuance
of Acquired Corporation Options.
     5.3 Subsidiaries. Acquired Corporation has no direct Subsidiaries other
than the Bank and the Subsidiaries shown on Schedule 5.3 to Acquired
Corporation’s Disclosure Supplement. Acquired Corporation owns all of the issued
and outstanding capital stock of the Bank and its other Subsidiaries, including
without limitation the Trust, 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 December 31, 2006, there were 3,000,000 shares of the
common stock, par value $5.00 per share, authorized of the Bank, 762,156 of
which were issued and outstanding and wholly owned by Acquired Corporation, and
no shares of preferred stock. The Bank has no 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. There are no
arrangements or commitments relating to the rights of any Acquired Corporation
Company to vote or dispose of any shares of the capital stock of any Acquired
Corporation Company.
     5.4 Financial Statements. Acquired Corporation has delivered to Buyer
copies of the following financial statements of Acquired Corporation:
     (i) Consolidated statements of financial condition as of December 31, 2004
and 2005 and September 30, 2006;
     (ii) Consolidated statements of income for each of the two years ended
December 31, 2004 and 2005 and the quarter ended September 30, 2006;
     (iii) Consolidated statements of stockholders’ equity for each of the two
years ended December 31, 2004 and 2005 and the quarter ended September 30, 2006;
and

 

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     (iv) Consolidated statements of cash flows for the two years ended
December 31, 2004 and 2005 and the quarter ended September 30, 2006.
     All of the foregoing financial statements are in all material respects in
accordance with the books and records of Acquired Corporation and have been
prepared in accordance with GAAP 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 financial statements
presents fairly as of its date the financial condition and results of operations
of Acquired Corporation for the year then ended. Except as and to the extent
reflected or reserved against in such financial statements (including the notes
thereto), Acquired Corporation did not have, as of the date of such financial
statements, any material Liabilities or obligations (absolute or contingent) of
a nature customarily reflected in financial statements or the notes thereto. For
purposes of this paragraph, “material” shall have the meaning of such term as
defined under the 1933 Act, the 1934 Act and the rules promulgated thereunder.
     5.5 Absence of Certain Changes or Events. Except as set forth on
Schedule 5.5 to Acquired Corporation’s Disclosure Supplement, since
September 30, 2006, no Acquired Corporation 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 existing
Acquired Corporation Options;
     (b) borrowed or agreed to borrow any funds or incurred, or become subject
to, any Liability (absolute or contingent) except borrowings, obligations
(including purchase of federal funds) 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 and current Liabilities incurred since that
date in the ordinary course of business and consistent with past practice;
     (d) except as necessary in order to enable Acquired Corporation to pay the
dividend contemplated by Section 6.2(k) hereof or for any Acquired Corporation
Company to pay dividends to enable Acquired Corporation to meet its obligations
as they come due, declared or made, or agreed to declare or make, any payment of
dividends or distributions of any Assets of any kind whatsoever to stockholders,
or purchased or redeemed, or agreed to purchase or redeem, directly or
indirectly, or otherwise acquire, any of its outstanding securities;
     (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;

 

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     (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;
     (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 or as required by
Law or Contract, 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) as of December 31, 2006, received notice that any of its substantial
customers has terminated or intends to terminate its relationship, which
termination would have a Material Adverse Effect;
     (l) failed to operate its business in the ordinary course (other than this
Agreement and the transactions contemplated hereby) 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 other than in the ordinary course of
business; 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 Acquired Corporation
Company, without the express written approval of Buyer, 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, or disclosed in the Acquired
Corporation Disclosure Supplement and no Acquired Corporation Company will enter
into or amend any material Contract wherein either the Acquired Corporation
Company has an obligation to pay or the other party thereto has an obligation to
provide goods or services, in either case in excess of $50,000 during the term
thereof, other than Loans or renewals thereof entered into in the ordinary
course of business, without the express written consent of Buyer.
     5.6 Title and Related Matters.
     (a) Title. Each Acquired Corporation Company has good and marketable title
to all Assets that are material to the business of the Acquired Corporation
Companies taken as a whole, reflected in the most recent financial statements
referred to in Section 5.4, or acquired after the date of such financial
statement (except Assets sold or otherwise disposed of since such date, in the
ordinary course of business or as disclosed in the Acquired Corporation
Disclosure Supplement),

 

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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 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 Acquired Corporation, the material structures and equipment of each
Acquired Corporation Company comply in all material respects with the
requirements of all applicable Laws.
     (b) Leases. Schedule 5.6(b) to Acquired Corporation’s Disclosure Supplement
sets forth a list and description of all real and personal property owned or
leased by any Acquired Corporation Company, either as lessor or lessee, all of
which are in full force and effect and under which no breach or Default on the
part of such Acquired Corporation Company or, to the Knowledge of Acquired
Corporation, any other party has occurred or is continuing.
     (c) Depreciation Schedule. Schedule 5.6(c) to Acquired Corporation’s
Disclosure Supplement sets forth a depreciation schedule for financial reporting
purposes of each Acquired Corporation Company’s fixed Assets as of September 30,
2006.
     (d) Computer Hardware and Software. Schedule 5.6(d) to Acquired
Corporation’s Disclosure Supplement contains a description of all material
agreements relating to data processing computer software and hardware now being
used in the business operations of any Acquired Corporation Company. Acquired
Corporation has no Knowledge of any defects, irregularities or problems with any
of its computer hardware or software which renders such hardware or software
unable to reasonably perform the tasks and functions to be performed by them in
the business of any Acquired Corporation Company. Except as set forth in
Schedule 5.6(d) to Acquired Corporation’s Disclosure Supplement, each applicable
Acquired Corporation Company owns or has the uncontested right, and after the
Effective Date will continue to own or have the uncontested right, to use all
such computer software and hardware.
     (e) Bank Owned Life Insurance. Schedule 5.6(e) sets forth the insurance
policies owned by Acquired Corporation or an Acquired Corporation Company
insuring the lives of certain of its officers. The premiums for each such policy
have been paid in full and Acquired Corporation or an Acquired Corporation
Company is both the legal owner and beneficiary of each such policy. Neither
Acquired Corporation nor any Acquired Corporation Company has Knowledge of any
misrepresentation in the application for such policies or any other reason why
such policies would not be valid and binding on the insurers who issued the
policies.

 

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     5.7 Commitments. Except as set forth in Schedule 5.7 to Acquired
Corporation’s Disclosure Supplement or in the most recent financial statements
referred to in Section 5.4, no Acquired Corporation 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, except for
such agreements for borrowing made in the ordinary course of business ,
(iv) guaranty of any obligation for the borrowing of money or otherwise,
excluding guaranties made in the ordinary course of business, (v) consulting
Contracts, (vi) collective bargaining agreement, (vii) agreement with any
present or former officer, director or shareholder of such party, or (viii) any
Contract (A) which limits the freedom of the Acquired Corporation Companies to
compete in any line of business or with any Person or (B) which limits the
freedom of any other Person to compete in any line of business with any Acquired
Corporation Company, or (ix) other Contract, agreement or commitment which
involves the payment by any Acquired Corporation Company of amounts aggregating
$50,000 or more in any twelve-month period or is otherwise material to the
business, operations, prospects or Assets or to the condition, financial or
otherwise, of any Acquired Corporation Company. Complete and accurate copies of
all Contracts, plans and other items so listed will be made available to Buyer
for inspection and copying.
     5.8 Charter and Bylaws. Schedule 5.8 to Acquired Corporation’s Disclosure
Supplement contains true and correct copies of the certificate of incorporation
or articles of incorporation and bylaws of each Acquired Corporation 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 Buyer which will not be unreasonably
withheld.

 

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     5.9 Litigation; Compliance with Laws. Except as described in Schedule 5.9
of the Acquired Corporation’s Disclosure Supplement, there is no Litigation
(whether or not purportedly on behalf of Acquired Corporation) pending or, to
the Knowledge of Acquired Corporation, threatened against or affecting any
Acquired Corporation Company (nor does Acquired Corporation have Knowledge of
any facts which are reasonably 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 is reasonably likely to result in 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 Acquired Corporation
Companies as a whole, and no Acquired Corporation 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 Acquired Corporation Companies as a whole. Except as
disclosed in Schedule 5.9 to Acquired Corporation’s Disclosure Supplement, to
the Knowledge of Acquired Corporation, each Acquired Corporation Company has
complied in all material respects with all material applicable Laws and
Regulations including without limitation those imposing Taxes and those related
to consumer finance, commercial banking, and the sale of non-deposit investment
and insurance products, of any applicable jurisdiction and of all states,
municipalities, other political subdivisions and Agencies, in respect of the
ownership of its Assets and the conduct of its business, except where such
noncompliance would not have a Material Adverse Effect on the Acquired
Corporation Companies as a whole.
     5.10 Material Contract Defaults. Except as disclosed on Schedule 5.10 to
Acquired Corporation’s Disclosure Supplement, no Acquired Corporation Company is
in Default in any material respect under the terms of any material Contract
which default has or is reasonably likely to have a Material Adverse Effect on
the Acquired Corporation Companies as a whole and, to the Knowledge of Acquired
Corporation, there is no event which, with notice or lapse of time, or both,
which is reasonably likely to or will become an event of Default under any such
material Contract that is reasonably likely to have such a Material Adverse
Effect in respect of which adequate steps have not been taken to prevent such a
Default from occurring.
     5.11 No Conflict with Other Instrument. Upon the receipt of all required
Consents, 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 material Contract indenture, mortgage, deed of trust, lease
identified on Schedule 5.6(b) to Acquired Corporation’s Disclosure Supplement or
other material agreement or instrument to which any Acquired Corporation Company
is a party and will not conflict with any provision of the charter or bylaws of
any Acquired Corporation Company.
     5.12 Governmental Authorization. Each Acquired Corporation Company has all
Permits that are required to enable any Acquired Corporation Company to conduct
its business in all material respects as now conducted by each Acquired
Corporation Company.

 

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     5.13 Absence of Regulatory Communications. Except as provided in
Schedule 5.13 to Acquired Corporation’s Disclosure Supplement, no Acquired
Corporation Company is subject to, nor has any Acquired Corporation Company
received during the past three years, any written communication directed
specifically to it from any Agency to which it is or has been subject or
pursuant to which such Agency has imposed or has indicated it is reasonably
likely to impose any material restrictions on the operations of it or the
business conducted by it or taken any other action with respect to any Acquired
Corporation Company which has had or is reasonably likely to have a Material
Adverse Effect upon the Acquired Corporation Companies taken as a whole.
     5.14 Absence of Material Adverse Change. Except as disclosed in
Schedule 5.14 to Acquired Corporation’s Disclosure Supplement, since
September 30, 2006, 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 the Acquired Corporation Companies taken as a whole.
For purposes of this Section 5.14, Material Adverse Effect shall exclude any
changes in results of operations, cash flows, stockholders’ equity or financial
condition resulting from items excluded from the definition of Net Worth.
     5.15 Insurance. Each Acquired Corporation Company has in effect insurance
coverage and bonds with reputable insurers, which, in respect to amounts, types
and risks insured, management of Acquired Corporation reasonably believes to be
adequate for the type of business conducted by such company, and all of which
are identified on Schedule 5.15 to Acquired Corporation’s Disclosure Supplement.
No Acquired Corporation 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 Acquired Corporation 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 Acquired
Corporation Company has been refused any insurance coverage which it has sought
or applied for. All policies of insurance presently held or policies containing
substantially equivalent coverage, to the extent available generally in the
market without material increase in cost or change in coverage, will be
outstanding and in full force with respect to each Acquired Corporation Company
at all times from the date hereof to the Effective Date.
     5.16 Pension and Employee Benefit Plans; Employees.
     (a) Schedule 5.16(a) to Acquired Corporation’s Disclosure Supplement sets
forth a true, complete and correct list of all “employee benefit plans” as
defined by Section 3(3) of ERISA (whether or not such plans are subject to
ERISA), and all bonus, incentive compensation, deferred compensation, profit
sharing, stock option, restricted stock, stock appreciation right, stock bonus,
stock purchase, supplemental retirement, life insurance, or any other employee
benefit plans, programs or arrangements (whether written or oral, qualified or
nonqualified), and all employment, consulting, retention, termination, severance
or other contracts or arrangements, whether legally enforceable or not, and any
trust, escrow or other agreement related thereto, to which any Acquired
Corporation Company or any ERISA Affiliate thereof is a party which (i) is now
or was for the last six (6) years maintained or contributed to by any Acquired
Corporation Company or an ERISA Affiliate thereof (as hereinafter defined), or
(ii) with respect to which any

 

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Acquired Corporation Company or any ERISA Affiliate thereof has any obligations
to any current or former officer, employee, consultant or independent
contractor, leased employee or the dependents of any thereof, regardless of
whether funded, or (iii) which could result in the imposition of any liability
or obligation of any kind or nature, and whether or not now due or to become due
to any Acquired Corporation Company or any ERISA Affiliate thereof (all of the
above shall be collectively referred to as the “Employee Plans”).
     (b) For each Employee Plan, Acquired Corporation has heretofore provided or
made available to Buyer true and correct copies of each of the following
documents, as applicable: (i) the Employee Plan document and where such Employee
Plan is unwritten, a written description of the material terms thereof, (ii) the
actuarial report or financial statements, if any, for such Employee Plan for
each of the last three (3) years, (iii) the most recent determination letter
from the Internal Revenue Service (the “IRS”) for such Employee Plan, (iv) the
IRS Form 5500 annual reports for such Employee Plan for the 2004 and 2005 plan
years and Acquired Corporation will provide Buyer with any 2006 plan year IRS
Form 5500 annual reports filed with respect to such Employee Plan as soon as
administratively practicable following the filing of such annual report with the
appropriate Agency, (v) all personnel, payroll and employment manuals, handbooks
and policies, and (iv) the most recent summary plan description and related
summaries of material modifications.
     (c) Except as set forth in Schedule 5.16(c) to the Acquired Corporation’s
Disclosure Supplement, neither the Acquired Corporation, any Acquired
Corporation Company nor any ERISA Affiliate has been liable at any time for
contributions to (i) a plan or program that is, or has been at any time, subject
to Section 412 of the Code, Section 302 of ERISA and/or Title IV of ERISA or
(ii) a “multiemployer plan” (as defined in Section 3(39) of ERISA).
Schedule 5.16(c) to Acquired Corporation’s Disclosure Supplement also indicates
whether (i) any Employee Plan has an “accumulated funding deficiency” (whether
or not waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA, (ii) Acquired Corporation, any Acquired Corporation Company or any ERISA
Affiliate has an outstanding funding waiver, (iii) Acquired Corporation, any
Acquired Corporation Company or any ERISA Affiliate is required to provide
security for any Employee Plan pursuant to Section 401(a)(29) of the Code or
(iv) if, and to the extent, any unfunded liabilities (past, present or future)
exist with respect to any Employee Plan.
     (d) Except as set forth in Schedule 5.16(d) to the Acquired Corporation’s
Disclosure Supplement, the form and operation of all Employee Plans are in all
material respects in compliance with the applicable provisions of ERISA, the
Code, and any other applicable laws, including the Americans with Disabilities
Act of 1990, the Family Medical Leave Act of 1993 and the Health Insurance
Portability and Accountability Act of 1996, and such Employee Plans have been
operated in all material respects in compliance with such laws and the written
Employee Plan documents. To the Knowledge of Acquired Corporation, no Acquired
Corporation Company or any fiduciary of an Employee Plan has violated the
requirements of Section 404 of ERISA with respect to any Employee Plan. All
required reports (including IRS Form 5500 annual reports and summary annual
reports) have been (when required) timely filed with the IRS and the United
States Department of Labor (the “DOL”). To the Knowledge of Acquired
Corporation, all summary plan descriptions and summaries of material
modifications and other notices required by ERISA or the Code with respect to
the Employee Plans have been

 

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timely distributed as required to all participants, alternate payees and
beneficiaries, and all such summary plan descriptions, summaries of material
modifications and other notices have complied and currently comply with
applicable Law and are consistent with the terms and provisions of the
corresponding written Employee Plan documents. To the Knowledge of Acquired
Corporation, there have been no prohibited transactions with respect to the
Employee Plans that will or could reasonably likely result in a Material Adverse
Effect on any Acquired Corporation Company. Any contributions, including salary
deferrals, required to be made under the terms of any of the Employee Plans by
Acquired Corporation as of the Effective Date of the Merger have been timely
made.
     (e) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS,
and Acquired Corporation is not aware of any circumstances that will or could
reasonably result in revocation of any such favorable determination letter. Each
trust created under any Employee Plan has been determined to be exempt from
taxation under Section 501(a) of the Code, and to the Knowledge of Acquired
Corporation there are no circumstances that will or could reasonably result in a
revocation of such exemption. Each Employee Plan that is an employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that utilizes a funding
vehicle described in Section 501(c)(9) of the Code or is subject to the
provisions of Section 505 of the Code has been the subject of a notification by
the IRS that such funding vehicle qualifies for tax-exempt status under
Section 501(c)(9) of the Code or that the Employee Plan complies with
Section 505 of the Code, unless the IRS does not, as a matter of policy, issue
such notification with respect to the particular type of funding vehicle. With
respect to each Employee Plan, to the Knowledge of Acquired Corporation no event
has occurred or condition exists that will or could give rise to a loss of any
intended tax consequence or to any tax under Section 511 of the Code.
     (f) Except as disclosed on Schedule 5.16(f) of Acquired Corporation’s
Disclosure Supplement, there are no pending claims, lawsuits or actions relating
to any Employee Plan (other than ordinary course claims for benefits) and, to
the best knowledge of Acquired Corporation, none are threatened.
     (g) No written or oral representations have been made, and no Employee
Plans provide, for the continuation of medical, dental, life or disability
insurance coverage for any period of time beyond the earlier of (i) the end of
the current plan year, or (ii) the termination of employment (except to the
extent of coverage required under COBRA), except as provided in any Contracts
disclosed in the Acquired Corporation Disclosure Supplement.
     (h) Except as disclosed on Schedule 5.16(h) of Acquired Corporation’s
Disclosure Supplement and except for the possibility of full vesting of plan
account balances which may be necessitated by Section 411(d)(3) of the Code in
order for tax- qualified status to be retained, the consummation of the
transactions contemplated by this Agreement will not accelerate the time of
vesting, of payment, or increase the amount, of compensation to any employee,
officer, former employee or former officer of any Acquired Corporation Company
or any ERISA Affiliate. Except as disclosed in Schedule 5.16(h) to Acquired
Corporation’s Disclosure Supplement, no wages, salaries, compensation, bonus,
pension or other payments to any employee, affiliate, officer, director or
broker of any Acquired Corporation Company or any ERISA Affiliate will be

 

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triggered by or result from the consummation of the transactions contemplated by
this Agreement. Except as disclosed in the Acquired Corporation Disclosure
Supplement, no Employee Plan or other Contracts, including those contemplated in
this Agreement, provide for payments or other benefits that would be triggered
by the consummation of the transactions contemplated by this Agreement that
would subject any person to excise tax under Section 4999 of the Code (i.e.,
“golden parachute” taxes), and no action otherwise has been taken to accelerate
payments or vesting and no agreement entered into by Acquired Corporation, any
Acquired Corporation Company or ERISA Affiliate within the prior 12 months that
would be treated as a parachute payment as defined in Section 280G of the Code.
All compensation amounts that have been paid or are payable are or will become
deductible by Acquired Corporation or Buyer pursuant to Section 162(m) of the
Code.
     (i) Acquired Corporation, any Acquired Corporation Company and any ERISA
Affiliate thereof have at all times complied and currently comply in all
material respects with the applicable continuation requirements for their group
health plans, including (1) Section 4980B of the Code and Sections 601 through
608, inclusive, of ERISA, which provisions are referred to collectively as
“COBRA” and (2) any applicable state statutes mandating health insurance
continuation coverage for employees. Schedule 5.16(i) to Acquired Corporation’s
Disclosure Supplement lists all of the former employees of Acquired Corporation,
any Acquired Corporation Company or any ERISA Affiliate thereof and their
beneficiaries who have elected or are eligible to elect COBRA continuation of
health insurance coverage under any Employee Plan offering group health
insurance benefits.
     (j) Except as disclosed in Schedule 5.16(j) to Acquired Corporation’s
Disclosure Supplement, neither Acquired Corporation, any Acquired Corporation
Company nor any ERISA Affiliate has incurred any liability to the DOL, the
Pension Benefit Guaranty Corporation (the “PBGC”) or the IRS in connection with
any of the Employee Plans, and, to the Knowledge of Acquired Corporation, except
as disclosed in Schedule 5.16(j) to Acquired Corporation’s Disclosure
Supplement, no condition exists that presents a risk to Acquired Corporation,
any Acquired Corporation Company or any ERISA Affiliate of incurring any
liability to the DOL, the PBGC or the IRS.
     (k) For the purpose of this Section 5.16, the term “ERISA Affiliate” shall
mean (i) any related company or trade or business that is required to be
aggregated with Acquired Corporation or any Acquired Corporation Company under
Code Sections 414(b), (c), (m) or (o); (ii) any other company, entity or trade
or business that has adopted or has ever participated in any Employee Plan; and
(iii) any predecessor or successor company or trade or business of Acquired
Corporation or any entity described in this Section 5.16(k).
     (l) Acquired Corporation, each Acquired Corporation Company and any ERISA
Affiliate have properly classified individuals providing services to such
entities as independent contractors or employees, as the case may be for
purposes of eligibility to participate in the Employee Plans and such
classifications have not been challenged by the IRS.
     (m) Except as disclosed in Schedule 5.16(m) to the Acquired Corporation
Disclosure Supplement, no lien, security interests or other encumbrances exist
with respect to any of the assets of Acquired Corporation, any Acquired
Corporation Company or any ERISA Affiliate that

 

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were imposed pursuant to the terms of the Code or ERISA and, to the Knowledge of
Acquired Corporation, no condition exists or could occur that would result in
the imposition of such liens, security interests or encumbrances arising from or
relating to the Employee Plans.
     (n) Schedule 5.16(n) to Acquired Corporation’s Disclosure Supplement
contains a list of all of the employees of Acquired Corporation, any Acquired
Corporation Company and any ERISA Affiliate, their current salary or wage rates,
bonus and other compensation, including stock options and stock grants, benefit
arrangements, accrued sick days, vacation days and holidays, period of service,
department and a job title or other summary of the responsibilities of such
employees. Schedule 5.16(n) also indicates whether such employees are part-time,
full-time or on a leave of absence and the type of leave. All employees are
employees at-will, unless otherwise specified in Schedule 5.16(n). Except as
disclosed on Schedule 5.16(n) to the Acquired Corporation Disclosure Supplement,
Acquired Corporation, any Acquired Corporation Company and any ERISA Affiliate,
is not a party to any oral (express or implied) or written (i) employment
agreement, (ii) consulting agreement, or (iii) independent contractor agreement
with any individual or entity.
     (o) To the Knowledge of Acquired Corporation, no Acquired Corporation
Company is delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed for it or any other amounts required to be reimbursed to such
employees (including accrued paid time off, accrued vacation, accrued sick leave
and other benefits) or in the payment to the appropriate governmental authority
of all required taxes, insurance, social security and withholding thereon; and
as of the Effective Date of the Merger, no Acquired Corporation Company will
have an obligation or liability to any of its employees or to any governmental
authority for any such matters.

 

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     5.17 Buy-Sell Agreement. To the Knowledge of Acquired Corporation, there
are no agreements among any of its stockholders 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 stockholder of Acquired
Corporation, any similar agreement or any voting agreement or voting trust in
respect of any such shares.
     5.18 Brokers. Except for services provided by Hovde Financial, which has
been retained by Acquired Corporation and the arrangements with which, including
fees, have been disclosed to Buyer prior to the date hereof, all negotiations
relative to this Agreement and the transactions contemplated by this Agreement
have been carried on by Acquired Corporation directly with Buyer and without the
intervention of any other person, either as a result of any act of Acquired
Corporation, or otherwise, in such manner as to give rise to any valid claim
against Acquired Corporation for a finder’s fee, brokerage commission or other
like payment.
     5.19 Approval of Agreements. The board of directors of Acquired Corporation
has approved this Agreement and the transactions contemplated by this Agreement,
and has authorized the execution and delivery by Acquired Corporation of this
Agreement. As of the date of this Agreement, Acquired Corporation’s Board of
Directors has by the majority vote of the members of Acquired Corporation’s
Board of Directors determined (a) that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable to and in the best
interests of Acquired Corporation and its stockholders, (b) to submit this
Agreement for approval and adoption by the stockholders of Acquired Corporation
and to declare the advisability of this Agreement, and (c) to recommend that the
stockholders of Acquired Corporation adopt and approve this Agreement and the
transactions contemplated hereby, including the Merger (collectively, the
“Acquired Corporation’s Board of Directors Recommendation”).
     5.20 Disclosure. No representation or warranty, nor any written statement
or certificate furnished or to be furnished to Buyer by Acquired Corporation,
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. (a) Acquired Corporation shall furnish all
information to Buyer with respect to any Acquired Corporation Company including
financial statements of Acquired Corporation as Buyer may reasonably request for
inclusion in the Registration Statement, and the Buyer’s application for listing
on NASDAQ of Buyer’s Common Stock to be registered by the Registration
Statement, and such information and financial statements shall satisfy the
requirements of SEC Form S-4 and SEC Regulation S-X under the 1933 Act, as
applicable.
     (b) None of the information supplied or to be supplied by Acquired
Corporation for inclusion in the Registration Statement to be filed by Buyer
with the SEC will, when the Registration Statement becomes effective, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading. None of the
information supplied by Acquired Corporation or to be supplied to Buyer’s or
Acquired Corporation’s stockholders in the proxy statement/prospectus used in
connection with the

 

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Stockholders Meeting, and any other documents to be filed by Acquired
Corporation with the SEC, or any other Agency in connection with the
transactions contemplated hereby will, at the respective time such documents are
filed and with respect to the Acquired Corporation Proxy Statement, when first
mailed to the stockholders of Acquired Corporation be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein, not misleading, or in the case of the Acquired
Corporation Proxy Statement or any amendment thereof or supplement thereto, at
the time of the Acquired Corporation Stockholders Meetings, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting.
     5.22 Loans; Allowance for Possible Loan Losses. Except as disclosed in
Schedule 5.22 to Acquired Corporation’s Disclosure Supplement, the allowance for
possible loan, securities or credit losses (the “Allowance”) shown on the
consolidated balance sheets of Acquired Corporation in financial statements
referred to in Section 5.4 was as of the dates thereof, adequate (within the
meaning of GAAP and applicable regulatory requirements or guidelines) in all
material respects. Acquired Corporation has no Knowledge of any fact which is
likely to require a future material increase in the provision for loan losses or
a material decrease in the loan loss reserve reflected in the most recent
financial statements referred to in Section 5.4.
     Each loan reflected as an Asset on the financial statements of Acquired
Corporation 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 and
the absence of indemnity and contribution and complies with all Laws to which it
is subject. Acquired Corporation does not have in its portfolio any loan
exceeding its legal lending limit, and except as disclosed on Schedule 5.22 to
Acquired Corporation’s Disclosure Supplement, to the Knowledge of Acquired
Corporation, it has no material loans that are delinquent in payment for more
than 30 days, substandard, doubtful, loss, or nonperforming.

 

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     5.23 Environmental Matters. Except as provided in Schedule 5.23 to Acquired
Corporation’s Disclosure Supplement, to the Knowledge of Acquired Corporation,
each Acquired Corporation Company is in material compliance with all 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 or hazardous substance
(the “Environmental Laws”), and Acquired Corporation has no Knowledge that any
Acquired Corporation Company has not complied in all material respects with all
regulations and requirements promulgated by the Occupational Safety and Health
Administration that are applicable to any Acquired Corporation Company, except,
in each case, where such noncompliance has not had or is not reasonably likely
to have a Material Adverse Effect on the Acquired Corporation Companies taken as
a whole. To the Knowledge of Acquired Corporation, there is no Litigation
pending or threatened with respect to any violation or alleged violation of the
Environmental Laws. To the Knowledge of Acquired Corporation, with respect to
Assets of any Acquired Corporation Company, including any Loan Property of any
material loan, (a) there has been no spillage, leakage, contamination or release
of any substances for which the appropriate remedial action has not been
completed; (b) no owned or leased property is contaminated with or contains any
hazardous substance or waste; and (c) there are no underground storage tanks on
any premises owned or leased by any Acquired Corporation Company, where, in the
case of each of clause (a) and (b) any such condition or occurrence has had or
is reasonably likely to have a Material Adverse Effect on the Acquired
Corporation Companies taken as a whole.
     5.24 Taxes. All Tax returns required to be filed by or on behalf of
Acquired Corporation 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, or appropriate reserves
established, except as may be disclosed in the Acquired Corporation Disclosure
Supplement. All Taxes shown on these returns to be due and all additional
assessments received have been paid or will be paid before the date on which
they would be delinquent. Except as disclosed in the Acquired Corporation
Disclosure Supplement, the amounts recorded for Taxes on the Acquired
Corporation’s most recent financial statements referred to in Section 5.4 are,
to the Knowledge of Acquired Corporation, 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 Acquired Corporation accrued for
or applicable to the period ended on the dates thereof, and all years and
periods prior thereto and for which Acquired Corporation may at such 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 Acquired
Corporation, 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 Acquired Corporation. Acquired
Corporation 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. To the Knowledge of Acquired Corporation, each Acquired Corporation
Company has withheld from its employees (and timely paid to the appropriate
governmental entity) proper and accurate amounts for all periods in material

 

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compliance with all Tax withholding provisions of applicable federal, state,
foreign and local Laws (including without limitation, income, Social Security
and employment Tax withholdings).
     5.25 Collective Bargaining. There are no labor contracts, collective
bargaining agreements, letters of undertakings or other arrangements, formal or
informal, between any Acquired Corporation Company and any union or labor
organization covering any Acquired Corporation Company’s employees and none of
said employees are represented by any union or labor organization.
     5.26 Labor Disputes. To the Knowledge of Acquired Corporation, each
Acquired Corporation 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 Acquired Corporation Company is or has been
engaged in any unfair labor practice, and, to the Knowledge of Acquired
Corporation, no unfair labor practice complaint against any Acquired Corporation
Company is pending before the National Labor Relations Board. Relations between
management of each Acquired Corporation Company and the employees are amicable
and there have not been, nor to the Knowledge of Acquired Corporation, are there
presently, any attempts to organize employees, nor to the Knowledge of Acquired
Corporation, are there plans for any such attempts.
     5.27 Derivative Contracts. Except as disclosed in Section 5.27 of the
Acquired Corporation Disclosure Supplement or as entered into in the ordinary
course of business after the date hereof, no Acquired Corporation 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 (“Derivative Contract”) not included
in Acquired Corporation’s most recent financial statements referred to in
Section 5.4 (including various combinations thereof). With respect to all
agreements currently outstanding pursuant to which any Acquired Corporation
Company has purchased securities subject to an agreement to resell, such
Acquired Corporation Company has a security interest in the securities or other
collateral securing such agreement, and the value of such collateral at the date
such agreement was entered into equals or exceeds the amount of the debt secured
thereby. No Acquired Corporation Company has pledged collateral in excess of the
amount required under any interest rate swap, repurchase agreement, Derivative
Contract or other similar agreement currently outstanding.
     5.28 Accounting, Tax and Regulatory Matters. No Acquired Corporation
Company has taken any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the transactions provided for herein,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Code, or (ii) materially impede or delay receipt of any
Consents of Agencies referred to in subsection 8.2 of this Agreement. Acquired
Corporation has no knowledge of any plan or intention on the part of Acquired
Corporation shareholders to sell or otherwise dispose of any of the Buyer’s
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
Acquired Corporation common stock outstanding immediately before the Merger.

 

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     5.29 Offices. The headquarters of Acquired Corporation and each other
office, branch or facility maintained and operated by each Acquired Corporation
Company (including without limitation representative and loan production offices
and operations centers) and the locations thereof are listed on Schedule 5.29 to
Acquired Corporation’s Disclosure Supplement. None of the Acquired Corporation
Companies maintains any other office or branch or conducts business at any other
location, or has applied for or received permission to open any additional
office or branch or to operate at any other location.
     5.30 Data Processing Systems. Except to the extent indicated on
Schedule 5.30 of Acquired Corporation’s Disclosure Supplement, no action will be
necessary as a result of the transactions contemplated by this Agreement to
enable use by Buyer and its Subsidiaries of the electronic data processing,
information, record keeping, communications, telecommunications, hardware, third
party software, networks, peripherals, and computer systems, including any
outsourced systems and processes, that are used by the Acquired Corporation
Companies to the same extent and in the same manner that it has been used by the
Acquired Corporation Companies.
     5.31 Intellectual Property. Each of the Acquired Corporation Companies owns
or possesses licenses or other rights to use all material patents, copyrights,
trade secrets, trade names, service marks, trademarks, computer software and
other intellectual property used in its business; and none of the Acquired
Corporation Companies has received any notice of any Litigation that is pending
or threatened, which challenge the right of any Acquired Corporation Company to
the ownership or use of such. Schedule 5.31 to Acquired Corporation’s Disclosure
Supplement lists all of the trademarks, trade names, licenses and other
intellectual property used to conduct the businesses of the Acquired Corporation
Companies. Each of the Acquired Corporation Companies has taken reasonable
precautions to safeguard its trade secrets from disclosure to third-parties.
     5.32. No Trust Powers. The Bank does not possess and does not exercise
trust powers.
     5.33 Regulatory Approvals. Acquired Corporation has no Knowledge of any
reason with respect to the Acquired Corporation Companies why all requisite
regulatory approvals regarding the Merger should not or cannot be obtained.
     5.34 Opinion of Counsel. Acquired Corporation has no Knowledge of any facts
that would preclude issuance of the opinion of counsel referred to in
Section 10.4.
     5.35 Anti-takeover Provisions. Except for state and/or federal bank Laws,
no provisions of an anti-takeover nature contained in their respective
organizational documents or the provisions of any federal or state
“anti-takeover,” “fair price,” “control share acquisition” or similar Laws apply
to Acquired Corporation, this Agreement or the Merger. The provisions of
Section 607.0901 and Section 607.0902 of the FBCA do not apply to Acquired
Corporation.
     5.36 Transactions with Management. Except for (a) deposits, all of which
are on terms and conditions comparable in all material respects to those made
available to other nonaffiliated similarly situated customers of the Bank at the
time such deposits were entered into, (b) the loans listed on Schedule 5.36 to
Acquired Corporation’s Disclosure Supplement, (c) the

 

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agreements designated on Schedule 5.36 to Acquired Corporation’s Disclosure
Supplement, (d) obligations under employee benefit plans of the Acquired
Corporation Companies set forth in Schedule 5.16 to Acquired Corporation’s
Disclosure Supplement, and (e) any other items described on Schedule 5.36 to
Acquired Corporation’s Disclosure Supplement, there are no contracts with or
commitments to present or former stockholders who own or owned more than 5% of
the Acquired Corporation Stock, directors, officers or employees (or their
Related Interests) involving the expenditure of more than $1,000 as to any one
individual (including any business directly or indirectly controlled by any such
person), or more than $5,000 for all such contracts or commitments in the
aggregate for all such individuals.
     5.37 Deposits. Except as set forth on Schedule 5.37 to Acquired
Corporation’s Disclosure Supplement, none of the deposits of the Bank are
subject to any encumbrance, legal restraint or other legal process (other than
garnishments, pledges, set off rights, limitations applicable to public
deposits, escrow limitation, arrangements for “sweeps” of business deposit
accounts and similar actions taken in the ordinary course of business), and
other than deposits of Acquired Corporation, no portion of deposits of the Bank
represents a deposit of any other Acquired Corporation Company.
     5.38 Accounting Controls. Each of the Acquired Corporation Companies has
devised and maintained systems of internal accounting control sufficient to
provide reasonable assurances that: (i) all material transactions are executed
in accordance with general or specific authorization of the Board of Directors
and the duly authorized executive officers of the applicable Acquired
Corporation Company; (ii) all material transactions are recorded as necessary to
permit the preparation of financial statements in conformity with GAAP with
respect to the applicable Acquired Corporation Company or any other criteria
applicable to such financial statements, and to maintain proper accountability
for items therein; (iii) access to the material Assets of each of the Acquired
Corporation Companies is permitted only in accordance with general or specific
authorization of the Board of Directors and the duly authorized executive
officers; and (iv) the recorded accountability for items is compared with the
actual levels at reasonable intervals and appropriate actions taken with respect
to any differences.
     5.39 Deposit Insurance. The deposit accounts of the Bank are insured by the
FDIC in accordance with the provisions of the FDIC Act. The Bank has paid all
regular premiums and special assessments and filed all reports required under
the FDIC Act.
     5.40 Registration Obligations. Neither of Acquired Corporation or the Bank
is under any obligation, contingent or otherwise, which will survive the Merger
to register its securities under the 1933 Act or any state securities laws.
ARTICLE 6
ADDITIONAL COVENANTS
     6.1 Additional Covenants of Buyer. Buyer covenants to and with Acquired
Corporation as follows:
     (a) Operations. Buyer will conduct its business and the business of each of
its Subsidiaries in the ordinary course of business and will use commercially
reasonable efforts

 

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subject to the terms of this Agreement to maintain its relationships with its
depositors, customers and employees. Buyer will not make any material change in
its accounting or tax policies or methods of operation, except as required by
GAAP or by Law. Buyer will take no action which would (i) materially adversely
affect the ability of any Party to obtain any Consents required for the
transactions contemplated hereby without imposition of a condition or
restriction, or (ii) materially adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement; provided, that the
foregoing shall not prevent Buyer from acquiring any Assets or other businesses
or from discontinuing or disposing of any of its Assets or business if such
action is, in the reasonable judgment of Buyer, desirable in the conduct of the
business of Buyer and its Subsidiaries, provided further that such actions shall
not materially delay the receipt of any regulatory or governmental or third
party approvals or Consents or the Effective Date or materially hinder or delay
consummation of the Merger. Buyer will use its reasonable efforts to cause the
Merger to be effected at the earliest practicable date, and to take no action or
omit to take any action which would cause the Merger not, to qualify as a
“reorganization” within the meaning of Section 368(a) of the Code for federal
income tax purposes.
     (b) Regulatory Approvals and Stockholders Meeting. Acquired Corporation
will cooperate with Buyer in the preparation of any regulatory filings and the
Registration Statement. Buyer will file all regulatory applications seeking all
necessary regulatory approvals of the transactions contemplated hereby as soon
as possible and shall file the Registration Statement as soon as possible and
shall actively seek the necessary regulatory approvals and effectiveness of the
Registration Statement and will keep informed and copy the Acquired Corporation
and its counsel on all filings and correspondence with respect to the regulatory
applications and the Registration Statement.
     (c) Reports. Buyer shall furnish to Acquired Corporation:
          (i) As soon as practicable, copies of all such financial statements
and loan reports as it shall provide the members of its board of directors or to
its executive management and of such regular and periodic reports as Buyer may
file with the SEC or any other Agency; and
          (ii) With reasonable promptness, such additional financial or
operating data as Acquired Corporation may reasonably request.
     (d) No Control of Acquired Corporation by Buyer. Notwithstanding any other
provision hereof, until the Effective Date, the authority to establish and
implement the business policies of Acquired Corporation shall continue to reside
solely in Acquired Corporation’s officers and board of directors.
     (e) Listing. Prior to the Effective Date, Buyer shall cause the listing of
the shares of Buyer’s Common Stock to be issued in the Merger on the NASDAQ or
other quotations system on which such shares are primarily traded.
     (f) Employee Benefit Matters. (i) Upon and following the Effective Date,
Buyer shall provide generally to officers and employees of the Acquired
Corporation Companies employee benefits under employee benefit and welfare plans
(other than stock option or other plans involving the potential issuance of
Buyer Common Stock), on terms and conditions which

 

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when taken as a whole are substantially similar to those currently provided by
Buyer and its Subsidiaries to their similarly situated officers and employees.
     (ii) With respect to each Buyer employee benefit plan that is an “employee
benefit plan,” as defined in Section 3(3) of ERISA, for purposes of determining
eligibility to participate and vesting, including for severance benefits and
vacation entitlement, service with Acquired Corporation or any Acquired
Corporation Company shall be treated as service with Buyer; provided, however,
that such service shall not be recognized to the extent that such recognition
would result in a duplication or increase of any benefits. Service with Acquired
Corporation or any Acquired Corporation Company also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations with respect to any Buyer
employee benefit plan that is a group health plan. Each Buyer employee benefit
plan that is a group health plan shall waive, or cause its insurance carrier to
waive, pre-existing condition limitations to the same extent waived under the
applicable Acquired Corporation employee benefit plan. Acquired Corporation
Employees shall be given credit for amounts paid under a corresponding group
health plan during the same period for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the Buyer group health plan.
     (iii) If requested by Buyer, prior to the Effective Date, Acquired
Corporation shall freeze, amend or take other action with respect to any
Employee Plan (including terminating such plans immediately prior to the
Effective Date) that Buyer, in its sole discretion, deems advisable and not
inconsistent with this Agreement, and provide all required notices to
participants and appropriate governmental agencies.
     (g) Indemnification. (i) Subject to the conditions set forth in subsection
(ii) hereof, for a period of four years from and after the Effective Time, Buyer
shall indemnify and hold harmless each present and former director and/or
officer of any Acquired Corporation Company (the “Indemnified Parties”) against
any costs or expenses (including reasonable attorney’s fees), judgments, fines
losses, claims, damages, settlements or liabilities incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal
administrative or investigative (each, a “Claim”), arising out of or pertaining
to matters existing or occurring at or prior to the Effective Date, whether
asserted or claimed prior to, at or after the Effective Date, to the fullest
extent that any Acquired Corporation Company would have been permitted to
indemnify such person under applicable law, the articles of incorporation,
certificate of incorporation or bylaws of any such Acquired Corporation Company
in effect on the date hereof.
     (ii) Any Indemnified Party wishing to claim indemnification under this
Section 6.1(g) shall notify Buyer within 45 days after the Indemnified Party’s
receipt of a notice of any Claim, but the failure to so notify shall not relieve
Buyer of any Liability it may have to such Indemnified Party, unless such
failure materially prejudices Buyer in the defense of the Claim or otherwise. In
the event of any claim (whether arising before or after the Effective Date),
(A) Buyer shall have the right to assume the defense thereof, and Buyer shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Buyer

 

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elects not to assume such defense, or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between Buyer
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Buyer shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties promptly after statements therefor are
received; provided, however, that Buyer shall be obligated pursuant to this
Section 6.1(g)(ii)(A) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, unless the interests of any Indemnified Party
conflict with the interests of another Indemnified Party, then, in such event,
Buyer shall pay for the counsel for each Indemnified Party having a conflicting
interest, (B) the Indemnified Parties will cooperate in the defense of any such
matter and (C) Buyer shall not be liable for any settlement effected without its
prior written consent which shall not be unreasonably withheld; and provided
further that Buyer shall not have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
     6.2 Additional Covenants of Acquired Corporation. Acquired Corporation
covenants to and with Buyer as follows:
     (a) Operations. Acquired Corporation will conduct its business and the
business of each Acquired Corporation Company in the ordinary course of business
and will use commercially reasonable efforts subject to the terms of this
Agreement to maintain its relationships with its depositors, customers and
employees. Acquired Corporation will not make any material change in its
accounting or tax policies or methods of operation, except as disclosed in the
Acquired Corporation Disclosure Supplement. Acquired Corporation will take no
action that would prevent or impede the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368 of the Code.
     (b) Stockholders Meeting; Consents. Acquired Corporation will cooperate
with Buyer in the preparation of the Registration Statement and any regulatory
filings and 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. Acquired Corporation will take no action which would
(i) materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction, or (ii) materially adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement, provided,
that the foregoing shall not prevent Acquired Corporation from acquiring any
Assets or other businesses or from discontinuing or disposing of any of its
Assets or business if such action is, in the reasonable judgment of Acquired
Corporation, desirable in the conduct of the business of the Acquired
Corporation Companies, provided further that such actions shall not materially
delay the receipt of any regulatory or governmental or third party approvals or
Consents or the Effective Date or materially hinder or delay consummation of the
Merger. Acquired Corporation will use its reasonable efforts to cause the Merger
to be effected at the earliest practicable date, and to take no action or omit
to take any action which would cause the Merger not, to qualify as a
“reorganization” within the meaning of Section 368(a) of the Code for federal
income tax purposes
     (c) Withdrawal of Board Recommendation; Other Offers.

 

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          (i) Except as provided below, (A) Acquired Corporation’s Board of
Directors shall recommend that Acquired Corporation’s stockholders vote in favor
of and adopt and approve this Agreement and the Merger at Acquired Corporation’s
Stockholders Meeting; (B) the Acquired Corporation Proxy Statement shall include
a statement of the Acquired Corporation’s Board of Directors Recommendation (as
defined in Section 5.19 hereof); and (C) neither the Board of Directors of
Acquired Corporation nor any committee thereof shall (x) except as expressly
permitted by this Section 6.2(c)(i), withdraw, qualify or modify, or propose
publicly to withdraw, qualify or modify, in a manner adverse to Buyer, the
approval or recommendation of such Board of Directors or such committee of the
Merger or this Agreement, (y) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal, or (z) cause Acquired
Corporation to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Proposal. Notwithstanding the foregoing, in the event that, prior to the
adoption of this Agreement by the holders of Acquired Corporation Stock, the
Board of Directors of Acquired Corporation determines in good faith, after it
has received a Superior Proposal and after receipt of advice from outside
counsel, that the failure to do so would result in a reasonable possibility that
the Board of Directors of Acquired Corporation would breach its fiduciary duties
to Acquired Corporation stockholders under applicable Law, the Board of
Directors of Acquired Corporation may (subject to this and the following
sentences) inform Acquired Corporation stockholders that it no longer believes
that the Merger is advisable and no longer recommends approval and may (subject
to this Section 6.2(c)(i)) approve or recommend a Superior Proposal (and in
connection therewith withdraw or modify its approval or recommendation of this
Agreement and the Merger (a “Subsequent Determination”), but only at a time that
is after the fifth business day following Buyer’s receipt of written notice
advising Buyer that the Board of Directors of Acquired Corporation has received
a Superior Proposal specifying the material terms and conditions of such
Superior Proposal (and including a copy thereof with all accompanying
documentation, if in writing), identifying the person making such Superior
Proposal and stating that it intends to make a Subsequent Determination. After
providing such notice, Acquired Corporation shall provide a reasonable
opportunity to Buyer to make such adjustments in the terms and conditions of
this Agreement as would enable Acquired Corporation to proceed with its
recommendation to its stockholders without a Subsequent Determination; provided,
however, that any such adjustment shall be at the discretion of the Parties at
the time. Notwithstanding any other provision of this Agreement, Acquired
Corporation shall submit this Agreement to its stockholders at its Stockholders
Meeting even if the Board of Directors of Acquired Corporation determines at any
time after the date hereof that it is no longer advisable or recommends that
Acquired Corporation stockholders reject it, provided, however, that Acquired
Corporation shall not be required to submit this Agreement to its stockholders
at its Stockholders Meeting if this Agreement has been terminated and Buyer has
been paid the fee specified in Section 13.4 hereof.
     (ii) Other Offers. No Acquired Corporation Company shall, nor shall it
authorize or permit any of its Representatives to, directly or indirectly
(A) solicit, initiate, encourage or induce the making, submission or
announcement of any Acquisition Proposal, (B) participate in any discussions or
negotiations regarding, or furnish to any Person or “Group” (as such term is
defined in Section 13(d) under the 1934 Act) any nonpublic information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (C) subject to Section 6.2(c)(i),

 

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approve, endorse or recommend any Acquisition Proposal, or (D) enter into any
Contract contemplating or otherwise relating to any Acquisition Transaction;
provided however, that this Section 6.2(c)(ii) shall not prohibit an Acquired
Corporation Company from furnishing nonpublic information regarding any Acquired
Corporation Company to, or entering into a confidentiality agreement or
discussions or negotiations with, any Person or Group in response to a bona fide
unsolicited written Acquisition Proposal submitted by such Person or Group (and
not withdrawn) if (I) no Acquired Corporation Company or Representative thereof
shall have violated any of the restrictions set forth in this
Section 6.2(c)(ii), (II) the Board of Directors of Acquired Corporation
determines in its good faith judgment (based on, among other things, the advice
of Acquired Corporation’s financial advisors that such Acquisition Proposal
constitutes a Superior Proposal, (III) the Board of Directors of Acquired
Corporation concludes in good faith, after consultation with its outside legal
counsel, that the failure to take such action would be inconsistent with its
fiduciary duties, as such duties would exist in the absence of this
Section 6.2(c)(ii), to the stockholders of Acquired Corporation under applicable
Law, (IV) (x) at least five business days prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with, such Person
or Group, Acquired Corporation gives Buyer written notice of the identity of
such Person or Group and of Acquired Corporation’s intention to furnish
nonpublic information to, or enter into discussions or negotiations with, such
Person or Group, and (y) Acquired Corporation receives from such Person or Group
an executed confidentiality agreement containing terms no less favorable to the
disclosing Party than the terms of the confidentiality agreement between
Acquired Corporation and Buyer and (V) contemporaneously with furnishing any
such nonpublic information to such Person or Group, Acquired Corporation
furnishes such nonpublic information to Buyer (to the extent such nonpublic
information has not been previously furnished by Acquired Corporation to Buyer).
In addition to the foregoing, Acquired Corporation shall provide Buyer with at
least five business days’ prior written notice of a meeting of the Board of
Directors of Acquired Corporation at which meeting the Board of Directors of
Acquired Corporation is reasonably expected to resolve to recommend a Superior
Proposal to its stockholders and together with such notice a copy of the most
recently proposed documentation relating to such Superior Proposal; provided
further that Acquired Corporation hereby agrees promptly to provide to Buyer any
revised documentation and any Contract entered into in connection with such
Superior Proposal.
          (iii) Requests for Nonpublic Information on Acquired Corporation. In
addition to the obligations of Acquired Corporation set forth in
Section 6.2(c)(ii), as promptly as practicable, after any of the executive
officers of Acquired Corporation become aware thereof, Acquired Corporation
shall advise Buyer of any request received by Acquired Corporation for nonpublic
information which Acquired Corporation reasonably believes could lead to an
Acquisition Proposal or of any Acquisition Proposal, the material terms and
conditions of such request or Acquisition Proposal, and the identity of the
Person or Group making any such request or Acquisition Proposal. Acquired
Corporation shall keep Buyer informed promptly of material amendments or
modifications to any such request or Acquisition Proposal.
          (iv) Cessation of Activities Regarding Prior Acquisition Proposals.
Each Acquired Corporation Company shall immediately cease any and all existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any Acquisition Proposal and

 

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will use their respective reasonable best efforts to enforce any confidentiality
or similar or related agreement relating to any Acquisition Proposal.
          (v) Compliance with 1934 Act Rules. Nothing contained in this
Agreement shall prevent a Party or its board of directors from complying with
Rule 14d-9 and Rule 14e-2 under the 1934 Act with respect to an Acquisition
Proposal, provided that such Rules will in no way eliminate or modify the effect
that any action pursuant to such Rules would otherwise have under this
Agreement.
     (d) Loan Loss Reserve. Acquired Corporation shall maintain an allowance for
possible loan, securities or credit losses, including for loans made or
securities purchased after the date hereof, that is adequate within the meaning
of GAAP and applicable regulatory requirements or guidelines, and its current
credit policies and loan loss methodologies.
     (e) Stockholder Voting. Acquired Corporation shall as soon as practicable
after the date hereof use its reasonable efforts to cause each director and
executive officer of Acquired Corporation to execute a Support Agreement in
substantially the form of Exhibit A hereto.
     (f) Reports. Acquired Corporation shall furnish to Buyer:
               (i) As soon as practicable, and in any event within 30 days after
the end of each quarterly period, consolidated statements of operations of
Acquired Corporation 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 Acquired Corporation 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 Acquired Corporation by independent auditors in connection with
each annual or special audit of the books of Acquired Corporation made by such
accountants, including any management letters;
               (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 Acquired Corporation may file with the SEC or any other
Agency; and
               (iv) With reasonable promptness, such additional financial data
and information as Buyer may reasonably request.
     (h) Certain Practices. Acquired Corporation shall (i) provide Buyer with
all information provided to its board of directors for each new, renewed or
modified loan with an outstanding principal amount in excess of $250,000,
(ii) consult with Buyer prior to making any loan which will result in an
exception to its loan policy, (iii) consult with Buyer in advance on any
agreement to make or to permit any amendment or termination of any Contract by
or with any Acquired Corporation Company requiring capital expenditures of more
than $50,000; and (iv) consult with Buyer to coordinate various business issues
on a basis mutually satisfactory to Acquired Corporation and

 

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Buyer. Acquired Corporation 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.
     (i) Bank Owned Life Insurance. Acquired Corporation shall, and shall cause
each Acquired Corporation Company to, maintain the insurance policies currently
in effect insuring the lives of certain of its officers, and will not cause or
allow the owner or beneficiary of such policies to be changed.
     (j) Insurance. Prior to the Effective Date, Acquired Corporation shall
purchase for, and on behalf of, its current and former officers and directors,
extended coverage under the current directors’ and officers’ liability insurance
policy maintained by Acquired Corporation to provide for continued coverage of
such insurance for a period of four years following the Effective Date with
respect to matters occurring prior to the Effective Date.
     (k) Dividend. Notwithstanding anything in this Agreement to the contrary,
Acquired Corporation may establish and declare its normal dividend of $0.10 per
share of Acquired Corporation Stock at the earlier of ten business days prior to
the anticipated Closing Date, or during May 2007.
     6.3 Additional Obligations of Buyer and Acquired Corporation Relating to
Trust Preferred Securities. Buyer acknowledges that the Trust holds $4,000,000
principal amount of Fixed/Floating Rate Junior Subordinated Deferrable Interest
Debentures (the “Debentures”) issued by Acquired Corporation pursuant to an
Indenture (the “Indenture”) between Wilmington Trust Company, as trustee (the
“Trustee”), dated as of December 15, 2005 and has issued $4,000,000 in
Fixed/Floating Rate Capital Securities (the “Trust Preferred Securities”).
Subject to the provisions of this Agreement, and without limiting the effects of
the Merger, Buyer shall, at the Effective Date, expressly assume all of Acquired
Corporation’s obligations under the Indenture (including, without limitation,
being substituted for Acquired Corporation) and execute any and all documents,
instruments and agreements, including any supplemental indentures, required by
the Indenture, the Debentures or the Trust Preferred Securities and thereafter
shall perform all of Acquired Corporation’s obligations with respect to the
Debentures and the Trust Preferred Securities. Acquired Corporation shall use
commercially reasonable best efforts to obtain the consent of the Trustee to any
supplemental indenture or other document, instrument or agreement required to
evidence such assumption by Buyer, and Buyer shall cooperate in good faith with
such efforts.

 

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ARTICLE 7
MUTUAL COVENANTS AND AGREEMENTS
     7.1 Best Efforts, Cooperation. Subject to the terms and conditions herein
provided, Buyer and Acquired Corporation 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, including the holding
of any regular or special board meetings, 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. Buyer and Acquired Corporation will agree on “stay
bonuses” for various key employees of the Acquired Corporation Companies in such
amounts and payable on such date or dates as they may agree.
     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, Form 8-K, Form 10-Q
and Form 10-K filings, Y-3 applications, reports on Form Y-6, quarterly or
special reports to stockholders, Tax returns, Form S-8 registration statements
and similar documents.

 

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     7.4 Access to Properties and Records; Investigation. Each Party hereto
shall afford the officers and authorized representatives of the other Party full
access to the Assets, books and records of such Party during normal business
hours in order to effect the Parties’ respective covenants hereunder. All such
information that may be obtained by any such Party will be held in confidence by
such party, will not be disclosed by such Party or any of its representatives
except in accordance with this Agreement, and will not be used by such Party for
any purpose other than the accomplishment of the Merger as provided herein. Each
Party shall keep the other Party advised of all material developments relevant
to its business and to consummation of the Merger and shall permit the other
Party to make or cause to be made such investigation of its business and
properties (including that of its Subsidiaries) and of their respective
financial and legal conditions as the other Party reasonably requests, provided,
that such investigation shall be reasonably related to the transactions
contemplated hereby and shall not interfere unnecessarily with normal
operations. No investigation by a Party shall affect the ability of such Party
to rely on the representations and warranties of the other Party. Between the
date hereof and the Effective Date, Acquired Corporation shall permit Buyer’s
senior officers and independent auditors to meet with the senior officers of
Acquired Corporation, including officers responsible for Acquired Corporation’s
financial statements, the internal controls of Acquired Corporation and the
disclosure controls and procedures of Acquired Corporation, to discuss such
matters as Buyer may deem reasonably necessary or appropriate for Buyer to
satisfy its obligations under Sections 302 and 906 of the Sarbanes-Oxley Act.
     7.5 Notice of Adverse Changes. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
     The obligations of Buyer and Acquired Corporation 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 Stockholders. 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 Acquired Corporation as is required by
applicable Law and Acquired Corporation’s articles of incorporation and bylaws.
     8.2 Regulatory Authority Approval; Other Consents. (a) Orders, Consents and
approvals, in form and substance reasonably satisfactory to Buyer and Acquired
Corporation, required for consummation of the Merger and the Subsidiary
transactions contemplated by this Agreement shall have been entered by the
Office of Thrift Supervision and other appropriate bank

 

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regulatory Agencies granting the authority necessary for the consummation of the
transactions contemplated by this Agreement and satisfying all other
requirements prescribed by Law and shall be in full force and effect, and all
waiting periods required by law shall have expired. No Order, Consent or
approval so obtained which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner which in the
reasonable judgment of the Board of Directors of Buyer would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement so as to render inadvisable consummation of the
Merger.
     (b) Each Party shall have obtained any and all other Consents required for
consummation of the Merger (other than those referred to in Section 8.2(a) of
this Agreement) for the preventing of any Default under any Contract or Permit
of such Party which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on such Party. No
Consent obtained which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner which in the reasonable
judgment of the Board of Directors of Buyer would so materially adversely impact
the economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable consummation of the Merger.
     8.3 Legal Proceedings. No federal, state, local, foreign or other court,
board, body, commission, agency, authority or instrumentality, including the
Agencies, of competent jurisdiction, shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement, provided that
the Buyer and the Acquired Corporation shall, and shall cause their respective
Subsidiaries to use commercially reasonable efforts to seek the lifting or
change of any Order or action, and to obtain an interpretation of any Law, so as
to permit the completion of the transactions contemplated herein or the terms
hereof.

 

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     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, 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 Buyer’s 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.
     8.5 Tax Opinion. Buyer and Acquired Corporation shall have received an
opinion of Haskell Slaughter Young & Rediker, LLC, addressed to each of them, in
form and substance reasonably satisfactory to Acquired Corporation and Buyer 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
Buyer or Acquired Corporation; (iii) no gain or loss will be recognized by the
stockholders of Acquired Corporation who receive shares of Buyer’s Common Stock
except to the extent of any taxable “boot” received by such persons from Buyer,
and except to the extent of any dividends received from Acquired Corporation
prior to the Effective Date; (iv) the basis of the Buyer’s Common Stock received
in the Merger will be equal to the sum of the basis of the shares of Acquired
Corporation common stock exchanged in the Merger and the amount of gain, if any,
which was recognized by the exchanging Acquired Corporation stockholder,
including any portion treated as a dividend, less the value of taxable boot, if
any, received by such stockholder in the Merger; (v) the holding period of the
Buyer’s Common Stock will include the holding period of the shares of Acquired
Corporation common stock exchanged therefor if such shares of Acquired
Corporation common stock were capital assets in the hands of the exchanging
Acquired Corporation stockholder; and (vi) cash received by an Acquired
Corporation stockholder in lieu of a fractional share interest of Buyer’s Common
Stock will be treated as having been received as a distribution in full payment
in exchange for the fractional share interest of Buyer’s Common Stock which he
or she would otherwise be entitled to receive and will qualify as capital gain
or loss (assuming the Acquired Corporation Stock was a capital asset in his or
her hands as of the Effective Date).
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
     The obligations of Acquired Corporation 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 Acquired Corporation may waive such conditions in writing:

 

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     9.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of Acquired Corporation, all representations
and warranties of Buyer 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 without regard to any
qualifications in such representations and warranties relating to materiality),
provided that any representations and warranties that are as of a specified date
shall speak and be effective only as to such date, and Buyer 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 [Reserved]
     9.3 Closing Certificate. In addition to any other deliveries required to be
delivered hereunder, Acquired Corporation shall have received a certificate from
the President or a Vice President and from the Secretary or Assistant Secretary
of Buyer dated as of the Closing certifying that:
     (a) the Board of Directors of Buyer 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 Buyer is an officer
of Buyer 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 Buyer 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 or otherwise against, by or
affecting Buyer or the business, prospects, condition (financial or otherwise),
or Assets of Buyer which would prevent the performance of this Agreement or the
transactions contemplated by this Agreement or declare the same unlawful or
cause the rescission thereof; and
     (e) the conditions set forth in Article 8 and this Article 9 have been
satisfied insofar as they relate to Buyer.

 

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     9.4 Opinion of Counsel. Acquired Corporation shall have received an opinion
of Buyer’s General Counsel, dated as of the Closing, to the effect that, on the
basis of the facts, representations and assumptions set forth in the opinion,
(i) Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power and authority
to carry on the business in which it is engaged, (ii) the execution and
compliance with the terms of this Agreement do not and will not violate or
conflict with any provision of the Certificate of Incorporation or Bylaws, or
other binding contracts, agreements, orders, instruments, etc. of the Buyer,
(iii) the Agreement has been duly adopted and approved by the board of directors
and stockholders of Buyer in accordance with its Certificate of Incorporation
and Bylaws, (iv) the Agreement has been duly and validly executed by Buyer and
is enforceable in accordance with its terms against Buyer, and (v) the amount of
authorized stock of Buyer along with the number of shares of stock issued and
outstanding as of December 31, 2006, that the capital stock of Buyer issued and
outstanding were duly issued and fully paid and nonassessable, and that shares
of capital stock issued as contemplated by this Agreement will be, upon issuance
and delivery under the Agreement, duly authorized, validly issued, registered
under the Securities Act of 1933, and fully paid and nonassessable and listed
for quotation on NASDAQ. Such counsel may rely on representations and
certificates of officers and directors of Buyer and certificates of public
officials. The opinion of counsel for Buyer shall also be subject to reasonable
and customary qualifications.
     9.5 Fairness Opinion. Acquired Corporation shall have received prior to the
date of this Agreement from Hovde Financial a letter (acceptable in form to
Acquired Corporation) confirming its opinion that the terms of this Agreement
and the Merger are fair to the stockholders of Acquired Corporation from a
financial point of view.
     9.6 NASDAQ Listing. The shares of Buyer’s Common Stock to be issued under
this Agreement shall have been approved for listing on the NASDAQ.
     9.7 Support for Legal Opinion. There shall have been furnished to counsel
for Acquired Corporation delivering the opinion under Section 10.4 certified
copies of such corporate records of Buyer and copies of such other documents as
such counsel may reasonably have requested for such purpose and any officers’
certificates relied upon by such counsel in rendering its opinion.
     9.8 Material Events. There shall have been no determination by the board of
directors of Acquired Corporation 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 NASDAQ or any other exchange on which Buyer’s Common Stock may be traded.
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BUYER
     The obligations of Buyer 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 Buyer may waive
such conditions in writing:

 

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     10.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of Buyer, all representations and warranties
of Acquired Corporation 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 without regard to any
qualifications in such representations and warranties relating to materiality),
provided that any representations and warranties that are as of a specified date
shall speak and be effective only as to such date, and Acquired Corporation
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 Acquired Corporation Net Worth. Acquired Corporation shall have a Net
Worth of not less than $25,959,000.
     10.3 Closing Certificate. In addition to any other deliveries required to
be delivered hereunder, Buyer shall have received a certificate from Acquired
Corporation executed by the President or Vice President and from the Secretary
or Assistant Secretary of Acquired Corporation dated as of the Closing
certifying that:
     (a) the Board of Directors of Acquired Corporation 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 stockholders of Acquired Corporation have duly adopted resolutions
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;
     (c) each person executing this Agreement on behalf of Acquired Corporation
is an officer of Acquired Corporation 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 articles of incorporation and bylaws of Acquired Corporation and
the Bank referenced in Section 5.8 hereof remain in full force and effect and
have not been amended or modified since the date hereof; and
     (e) the conditions set forth in Article 8 and this Article 10 have been
satisfied insofar as they relate to Acquired Corporation.

 

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     10.4 Opinion of Counsel. Buyer shall have received an opinion of Igler &
Dougherty, P.A., counsel to Acquired Corporation, dated as of the Closing, to
the effect that, on the basis of the facts, representations and assumptions set
forth in the opinion, (i) Acquired Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to carry on the business in which it is
engaged and that each of the Acquired Corporation Companies is a corporation
duly organized, validly existing and in good standing under the laws of its
state of organization, with full corporate power and authority to carry on the
business in which it is engaged (ii) the execution and compliance with the terms
of this Agreement do not violate or conflict with any provision of the
Certificate of Incorporation or Bylaws of Acquired Corporation, (iii) the
Agreement has been duly adopted and approved by the board of directors and
stockholders of Acquired Corporation in accordance with its Certificate of
Incorporation and Bylaws, (iv) the Agreement has been duly and validly executed
by the Acquired Corporation and is enforceable in accordance with its terms
against Buyer, and (v) the amount of authorized stock of Acquired Corporation
along with the number of shares of stock issued and outstanding as of
December 31, 2006 that the capital stock of Acquired Corporation issued and
outstanding were duly issued and fully paid and nonassessable, and that, except
for the Acquired Corporation Options described in the Agreement, there are no
options, subscriptions, warrants calls, or other commitments obligating the
Acquired Corporation to issue or acquire any of its equity securities. Such
counsel may rely on representations and certificates of officers and directors
of Acquired Corporation and certificates of public officials. The opinion of
counsel to Acquired Corporation shall also be subject to reasonable and
customary qualifications.
     10.5 Controlling Stockholders. Acquired Corporation shall use its
reasonable best efforts to cause each director, executive officer and other
person who is an “affiliate” of Acquired Corporation (for purposes of Rule 145
under the 1933 Act) to deliver to Buyer as soon as practicable after the date
hereof, but in no event after the date of the Acquired Corporation’s
Stockholders Meeting, a written agreement, providing that such person will not
sell, pledge, transfer or otherwise dispose of the shares of the shares of
Buyer’s Common Stock to be received by such “affiliate” upon the Effective Date,
except in compliance with the applicable provisions of the 1933 Act, SEC Rule
145(d) and other rules and regulations of the SEC as may be applicable. Acquired
Corporation acknowledges that the certificates of Buyer’s Common Stock issued to
all “affiliates” of Acquired Corporation will bear an appropriate legend
reflecting the restrictions on resale described above, regardless of whether
such affiliate has delivered such written agreement.
     10.6 Support for Legal Opinions. There shall have been furnished to counsel
for Buyer delivering the opinions under Section 8.5 and Section 9.4 certified
copies of such corporate records of Acquired Corporation and copies of such
other documents as such counsel may reasonably have requested for such purpose.
     10.7 Dissenters. The number of shares as to which shareholders of Acquired
Corporation have exercised dissenters rights of appraisal under Section 3.6 does
not exceed 10% of the outstanding shares of common stock of Acquired
Corporation.

 

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     10.8 Material Events. There shall have been no determination by the board
of directors of Buyer 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 NASDAQ
or any exchange on which Buyer’s Common Stock may be traded.
     10.9 Fairness Opinion. Buyer shall have received prior to the date of this
Agreement from Sandler O’Neill & Partners, L.P. a letter (acceptable in form to
Buyer) confirming its opinion that the terms of this Agreement and the Merger
are fair to the stockholders of Buyer from a financial point of view.
     10.10 Other Matters. (a) On the Effective Date, Acquired Corporation shall
have used its reasonable efforts to cause each of the executive officers and
directors of the Acquired Corporation and the Bank to deliver a letter to Buyer
to the effect that such person is not aware of any claims he or she might have
against Buyer other than routine compensation, benefits and the like as an
employee, or ordinary rights as a customer, or pursuant to Contracts with any
Acquired Corporation Company.
     (b) Buyer shall not be required to make any payment to any Person in
connection with the Merger which in the reasonable opinion of Buyer will be
subject to the excise tax imposed on excess parachute payments by Code section
4999 and/or for which Buyer will receive no deduction by virtue of Code section
280G.
     (c) On the Effective Date Acquired Corporation shall have paid off in full
and terminated, without penalty or other cost or expense to Buyer, Acquired
Corporation or any Acquired Corporation Company the Line of Credit, and all
Liens and other collateral for such Line of Credit, including without limitation
all shares of capital stock of the Bank, shall have been released in full.
     (d) All holders of Acquired Corporation Options shall have entered into
binding agreements to surrender their respective Acquired Corporation Options in
return for the payment for which provision is made in Section 3.1(b) above.
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
the last sentence of Section 7.4, and Sections 13.3, 13.4, Article 11,
Article 12, Article 15 and any applicable definitions of Article 14, shall
survive. Items disclosed in the Schedules to a Disclosure Supplement attached
hereto (including any exhibits to

 

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such Schedules) are incorporated into this Agreement and form a part of the
representations, warranties, covenants or agreements to which they relate.
ARTICLE 12
NOTICES
     All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so received:
     (a) If to Acquired Corporation to: Neil D. McCurry, Chief Executive
Officer, People’s Community Bancshares, Inc., 25 South Links Avenue, Sarasota,
Florida 34236, facsimile (941-365-8413, with copies to A. George Igler at Igler
& Dougherty, P.A., 2457 Care Drive, Second Floor, Tallahassee, Florida 32308,
facsimile, (850) 878-1230, or as may otherwise be specified by Acquired
Corporation in writing to Buyer.
     (b) If to Buyer, to Marvin Scott, President, 17 North 20th Street,
Birmingham, AL 35203, facsimile 205-327-3611, with copies to William H.
Caughran, General Counsel, 17 North 20th Street, Birmingham, AL 35203, facsimile
205-327-3611, or as may otherwise be specified in writing by Buyer to Acquired
Corporation.
ARTICLE 13
AMENDMENT OR TERMINATION
     13.1 Amendment. This Agreement may be amended by the mutual consent of
Buyer and Acquired Corporation before or after approval of the transactions
contemplated herein by the stockholders of Acquired Corporation in any manner
permitted by applicable law.
     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 stockholders
of Acquired Corporation, as follows:
     (a) by the mutual consent of the respective boards of directors of Acquired
Corporation and Buyer;
     (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 material breach by the other Party of any representation or warranty
contained in this Agreement (determined without regard to any qualifications
regarding materiality which may be contained in such representation or warranty)
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
Buyer and Section 9.1 of this Agreement in the case of Acquired Corporation;

 

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     (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;
     (d) by the board of directors of either Party if all transactions
contemplated by this Agreement shall not have been consummated on or prior to
December 31, 2007, if the failure to consummate the transactions provided for in
this 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);
     (e) by Acquired Corporation, if its board of directors so determines by a
majority vote of the members of its entire board, at any time during the five
business day period commencing on the Determination Date, such termination to be
effective on the 30th day following such Determination Date, if both of the
following conditions are satisfied:
     (i) the Buyer Stock Price on the Determination Date is less than $9.56; and
     (ii) the number obtained by dividing the Buyer Stock Price on the
Determination Date by the Initial Buyer Stock Price shall be less than the
quotient obtained by dividing the Final NASDAQ Bank Index Value by the Initial
NASDAQ Bank Index Value minus 0.15;
     subject, however, to the next three sentences. If Acquired Corporation
elects to exercise its termination right pursuant to this Section 13.2(e), it
shall give prompt written notice thereof to Buyer. During the five business day
period commencing with its receipt of such notice, Buyer shall have the option
of paying additional consideration for the Merger in the form of Buyer’s Common
Stock, cash or a combination of Buyer’s Common Stock and cash, so that the
aggregate consideration paid by Buyer per share of Acquired Corporation Stock
for the Merger shall be valued at the lesser of (i) the product of 0.85 and the
Initial Buyer Stock Price multiplied by the Exchange Ratio or (ii) the product
obtained by multiplying the Index Ratio by the Initial Buyer Stock Price
multiplied by the Exchange Ratio. If within such five business day period, Buyer
delivers written notice to Acquired Corporation that it intends to proceed with
the Merger by paying such additional consideration, as contemplated by the
previous sentence, then no termination shall have occurred pursuant to this
Section 13.2(e) and this Agreement shall remain in full force and effect in
accordance with its terms (except that the consideration for the Merger shall
have been so modified).
     For purposes of Section 13.2(e), the following terms shall have the
meanings assigned below:
     “Buyer Stock Price” shall mean the average of the daily closing sales
prices of a share of Buyer’s Common Stock as reported on the NASDAQ for the ten
consecutive trading days immediately preceding the Determination Date.
     “Determination Date” shall mean the first date on which all Orders,
Consents and approvals (and waivers, if applicable) necessary for consummation
of the Merger and the transactions contemplated by this Agreement have been
received as provided in Section 8.2(a) hereof.

 

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     “Final NASDAQ Bank Index Value” shall mean the average of the NASDAQ Bank
Index (Symbol: ^IXBK, or US:BANK) values as reported on the NASDAQ for the ten
consecutive trading days immediately preceding the Determination Date.
     “Initial Buyer Stock Price” shall mean $11.25, adjusted as provided in the
last sentence of this Section 13.2(e).
     “Initial NASDAQ Bank Index Value” shall mean 3386.64, adjusted as provided
in the last sentence of this Section 13.2(e).
     “Index Ratio” shall mean the Final NASDAQ Bank Index Value divided by the
Initial NASDAQ Bank Index Value.
If Buyer or any company the stock of which is used in the NASDAQ Bank Index
declares or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares or similar transaction between the
date of this Agreement and the Determination Date, the prices for the stock of
such company shall be appropriately adjusted for purposes of applying this
Section 13.2(e).
     This Section 13.2(e) shall not apply to the consideration received by
holders of Acquired Corporation Options provided in Section 3.1(b) hereof.
     (f) By Buyer in the event that (i) the Board of Directors of Acquired
Corporation, shall have failed to reaffirm its approval upon Buyer’s request for
such reaffirmation of the Merger and the transactions contemplated by this
Agreement (to the exclusion of any other Acquisition Proposal), or shall have
resolved not to reaffirm the Merger, or (ii) the Board of Directors of Acquired
Corporation shall have failed to include in the Acquired Corporation Proxy
Statement its recommendation, without modification or qualification, that
Acquired Corporation stockholders approve the Merger or shall have withdrawn,
qualified or modified, or proposed publicly to withdraw, qualify or modify, in a
manner adverse to Buyer, the recommendation of such Board of Directors to
Acquired Corporation stockholders that they approve the Merger, or (iii) the
Board of Directors of Acquired Corporation shall have affirmed, recommended or
authorized entering into any Acquisition Transaction other than the Merger or,
within 10 business days after commencement of any tender or exchange offer for
any shares of Acquired Corporation Stock, the Board of Directors of Acquired
Corporation shall have failed to recommend against acceptance of such tender or
exchange offer by its stockholders or takes no position with respect to the
acceptance of such tender or exchange offer by its stockholders, or (iv) the
Board of Directors of Acquired Corporation negotiates or authorizes the conduct
of negotiations (and five business days have elapsed without such negotiations
being discontinued) with a third party (it being understood and agreed that
“negotiate” shall not be deemed to include the provision of information to, or
the request and receipt of information from, any Person that submits an
Acquisition Proposal or discussions regarding such information for the sole
purpose of ascertaining the terms of such Acquisition Proposal and determining
whether the board of

 

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directors will in fact engage in, or authorize, negotiations) regarding an
Acquisition Proposal other than the Merger;
     (g) By Acquired Corporation (provided that Acquired Corporation is not then
in material breach of any representation, warranty, covenant, or other agreement
contained in this Agreement), if prior to the adoption of this Agreement by the
affirmative vote of the holders of the requisite number of the outstanding
shares of Acquired Corporation Stock entitled to vote thereon at the Acquired
Corporation Stockholders Meeting, the Board of Directors of Acquired Corporation
has (i) withdrawn or modified or changed its recommendation or approval of this
Agreement and the shares of Buyer Common Stock issueable hereunder in a manner
adverse to Buyer in order to approve and permit Acquired Corporation to accept a
Superior Proposal and (ii) determined, after consideration of the written advice
of outside legal counsel to Acquired Corporation, that the failure to take such
action as set forth in the preceding clause (i) would be reasonably likely to
result in a breach of the Board of Directors’ fiduciary duties under applicable
Law, provided, however, that (ii) at least 2 business days prior to any such
termination, Acquired Corporation shall, and shall cause its advisors to,
negotiate with Buyer to make such adjustments in the terms and conditions of
this Agreement as would enable Acquired Corporation to proceed with the
transactions contemplated herein on such adjusted terms; or
     (h) by Buyer, if the number of shares as to which stockholders of Acquired
Corporation have exercised dissenters rights of appraisal under Section 3.6
hereof exceeds 10% of the outstanding shares of Acquired Corporation.
     13.3 Damages. In the event of termination pursuant to Section 13.2, this
Agreement shall become void and have no effect, except as provided in
Article 11, and except that Acquired Corporation and Buyer shall be liable for
damages for any willful breach of warranty, representation, covenant or other
agreement contained in this Agreement.
     13.4 Termination Fee. If Buyer terminates this Agreement pursuant to
Section 13.2(f) hereof or if Acquired Corporation terminates this Agreement
pursuant to Section 13.2(g) of this Agreement, and the transactions contemplated
by a definitive Contract with respect to an Acquisition Proposal or Acquisition
Transaction other than the Merger have been consummated with respect to Acquired
Corporation, then Acquired Corporation shall pay to Buyer an amount equal to $
3,250,000 (the “Termination Fee”) upon the consummation of the transactions
contemplated by such Contract. Acquired Corporation hereby waives any right to
set-off or counterclaim against such amount. The Termination Fee shall be paid
in same-day funds at or prior to the date of closing of the transactions
contemplated by of such Contract.
ARTICLE 14
DEFINITIONS
     (a) The following terms, which are capitalized in this Agreement, shall
have the meanings set forth below for the purpose of this Agreement:

 

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Acquired Corporation
  People’s Community Bancshares, Inc., a Florida corporation.
 
   
Acquired Corporation Company
  Acquired Corporation, the Bank, any Subsidiary of Acquired Corporation or the
Bank, or any person or entity acquired as a Subsidiary of Acquired Corporation
or the Bank in the future and owned by Acquired Corporation or the Bank at the
Effective Date.
 
   
Acquired Corporation Options
  Options respecting the issuance of a maximum of 107,201 shares of Acquired
Corporation Stock pursuant to Acquired Corporation’s stock option plans or
agreements.
 
   
Acquired Corporation Stock
  Shares of common stock, par value $.01 per share, of Acquired Corporation.
 
   
Acquired Corporation Proxy
   
Statement
  The proxy statement used by Acquired Corporation to solicit the approval of
its stockholders of the transactions contemplated by this Agreement, which shall
include the prospectus of Buyer relating to the issuance of the Buyer’s Common
Stock to the stockholders of Acquired Corporation.
 
   
Acquisition Proposal
  Any tender offer or exchange offer or any proposal for a merger, acquisition
of all or substantially all of the stock or assets of, or other business
combination involving Acquired Corporation or any other Acquired Corporation
Company or the acquisition of a substantial equity interest in, or a substantial
portion of the assets of, Acquired Corporation or any other Acquired Corporation
Company.
 
   
Acquisition Transaction
  Any transaction or series of related transactions (other than the transactions
contemplated by this Agreement) involving:
 
  (i) any acquisition or purchase from Acquired Corporation by any Person or
Group (other than Buyer or any of its Affiliates) of 25% or more in interest of
the total outstanding voting securities of Acquired Corporation or any of its
Subsidiaries, or any tender offer or exchange offer that if consummated would
result in any Person or Group (other than Buyer or any of its affiliates)
beneficially owning 25% or more in interest of the total outstanding voting
securities of Acquired Corporation or any of its Subsidiaries, or any merger,
consolidation, business combination or similar transaction involving Acquired
Corporation pursuant to which the stockholders of Acquired Corporation
immediately preceding such transaction hold less than 90% of the equity
interests in the surviving or resulting entity (which includes the parent
corporation of any constituent corporation to any such transaction) of such

 

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  transaction; (ii) any sale or lease (other than in the ordinary course of
business), or exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of 5% or more of the assets of Acquired
Corporation; or (iii) any liquidation or dissolution of Acquired Corporation.
 
   
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 NASDAQ, and the SEC.
 
   
Agreement
  This Agreement and Plan of Merger (including the exhibits hereto, which are
hereby incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement an any other related instrument or document
without being attached hereto) and the Schedules (including the exhibits
thereto) to a Disclosure Supplement delivered pursuant hereto and incorporated
herein by reference.
 
   
Assets
  With respect to any Person shall mean all of the assets, properties,
businesses and rights of such Person 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 Person’s business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
 
   
Bank
  People’s Community Bank, a Florida state bank.
 
   
Buyer
  Superior Bancorp, a Delaware corporation with its principal offices in
Birmingham, Alabama.
 
   
Buyer’s Common Stock
  Buyer’s Common Stock authorized and defined in the certificate of
incorporation of Buyer, as amended.
 
   
Buyer SEC Reports
  The forms, reports and documents filed by Buyer as described in Section 4.14.

 

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Closing
  The submission of the certificates of officers, legal opinions and other
actions required to be taken in order to consummate the Merger in accordance
with this Agreement.
 
   
Code
  The Internal Revenue Code of 1986, as amended, and the regulations thereunder.
 
   
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
  (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, as amended.
 
   
Disclosure Supplement
  The disclosure supplement delivered by Acquired Corporation to Buyer or by
Buyer to Acquired Corporation, as the case may be, concurrently with the
execution and delivery of this Agreement. Each such Disclosure Supplement is
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.
 
   
Effective Date
  The date and time at which the Merger becomes effective as defined in
Section 2.7 hereof.
 
   
Environmental Laws
  The laws, regulations and governmental requirements referred to in
Section 5.23 hereof.

 

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ERISA
  The Employee Retirement Income Security Act of 1974, as amended.
 
   
Exchange Ratio
  2.9036, as provided in Section 3.1(a), and subject to adjustment as provided
in Section 3.1(c).
 
   
FBCA
  The Florida Business Corporation Act, as amended.
 
   
FDIC Act
  The Federal Deposit Insurance Act, as amended.
 
   
GAAP
  Generally accepted accounting principles applicable to banks and bank holding
companies consistently applied during the periods involved.
 
   
Knowledge
  The actual knowledge of the Chief Executive Officer, Chief Financial Officer,
Chief Accounting Officer, Chief Credit Officer or any Senior or Executive Vice
President of Buyer, in the case of Knowledge of Buyer, or of such executive
officers with comparable responsibility of Acquired Corporation and the Bank, in
the case of knowledge of Acquired Corporation.
 
   
Law
  Any code, law, ordinance, regulation, reporting or licensing requirement,
rule, or statute applicable to a Person or its Assets, Liabilities or business,
including, without limitation, those promulgated, interpreted or enforced by any
Agency.
 
   
Liability
  Any direct or indirect, primary or secondary, liability, indebtedness,
obligation, penalty, cost or expense (including, without limitation, 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, defect 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

 

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  business, (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, and (iv) Liens which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on a Party.
 
   
Line of Credit
  The line of credit created by the Loan and Stock Pledge Agreement dated as of
November 10, 2006 between Acquired Corporation and The Bankers Bank in the
amount of $7,500,000.
 
   
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
relating to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement; provided
that such term shall not include regular, periodic examinations of depository
institutions and their affiliates by any Agency).
 
   
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 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,

 

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  Assets, 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 effect” shall
not be deemed to include the impact of (w) changes in banking and similar laws
of general applicability or interpretations thereof by courts or governmental
authorities, (x) changes in generally accepted accounting principles or
regulatory accounting principles generally applicable to banks and their holding
companies, (y) actions and omissions of a Party (or any of its Subsidiaries)
taken with the prior written consent of the other Party in contemplation of the
transactions contemplated hereby, and (z) the Merger and compliance with the
provisions of this Agreement on the operating performance of the Parties.
 
   
Merger
  The merger of Acquired Corporation with Buyer as contemplated in this
Agreement.
 
   
NASDAQ
  The National Market of the National Association of Securities Dealers
Automated Quotation System.
 
   
Net Worth
  For purposes of this Agreement, including Sections 3.1(c), and 10.2 hereof,
the term “Net Worth” which shall be calculated and used for determining whether
a “Material Adverse Effect” has occurred with respect to the results of
operations, cash flows, financial condition or stockholders’ equity of the
Acquired Corporation, based upon the Acquired Corporation’s stockholders’
equity. Net Worth shall not be reduced as a result of any expense incurred or
losses realized as a result of this Agreement, changes in Laws or GAAP, the
transactions contemplated hereby or any actions taken at the request or with the
consent of Buyer. Notwithstanding the generality of the foregoing, Net Worth
shall not be reduced by any of the items in the following non-exclusive list:
(i) the $0.10 per share cash dividend contemplated by Section 6.2(k) of this
Agreement; (ii) fees paid or costs reimbursed to Hovde Financial or the Acquired
Corporation’s attorneys or accountants in connection with the transactions
contemplated by this Agreement; (iii) costs of printing the Acquired
Corporation’s Proxt Statement; (iv) costs of soliciting proxies for the
Stockholders Meeting ; (v) the “marking to

 

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  market” of any securities; or (vi) costs associated with terminating employee
benefit plans.
 
   
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.
 
   
Party
  Acquired Corporation or Buyer, and “Parties” shall mean both Acquired
Corporation and Buyer.
 
   
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.
 
   
Registration Statement
  The registration statement on Form S-4, or such other appropriate form, to be
filed with the SEC by the Buyer, and which has been agreed to by Acquired
Corporation, to register the shares of Buyer’s Common Stock offered to
stockholders of the Acquired Corporation pursuant to this Agreement, including
the Acquired Corporation Proxy Statement.
 
   
Related Interests
  As applied to any Person: (i) the Person’s spouse, parent, grandparent, child,
grandchild, sibling, aunt, uncle, niece or nephew (including in-laws and
adoptive relationships) (“Family Member”), (ii) a partnership of which the
Person or a Family Member is a general or limited partner; (iii) a corporation
of which the Person or a Family Member owns one (1%) percent or more of the
outstanding stock or otherwise has the power to control the corporation, or
(iv) a trust of which the Person or a Family Member is a settlor, trustee or
beneficiary.
 
   
Resulting Corporation
  Buyer, as the surviving corporation resulting from the Merger.

 

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SEC
  United States Securities and Exchange Commission.
 
   
Stockholders Meeting
  The special meeting of stockholders of Acquired Corporation called to approve
the transactions contemplated by this Agreement.
 
   
Subsidiaries
  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.
 
   
Superior Proposal
  Any Acquisition Proposal (on its most recently amended or modified terms, if
amended or modified) (i) involving the acquisition of the entire equity interest
in, or all or substantially all of the assets and liabilities of, the Acquired
Corporation Companies and (ii) with respect to which the Board of Directors of
Acquired Corporation (A) determines in good faith that such Acquisition
Proposal, if accepted, is reasonably likely to be consummated on a timely basis,
taking into account all legal, financial, regulatory and other aspects of the
Acquisition Proposal and the Person or Group making the Acquisition Proposal,
and (B) determines in its good faith judgment (based on, among other things, the
advice of its financial advisors to be more favorable to Acquired Corporation’s
stockholders than the Merger taking into account all relevant factors (including
whether, in the good faith judgment of the Board of Directors of Acquired
Corporation, after obtaining the advice of Acquired Corporation’s financial
advisors the Person or Group making such Acquisition Proposal is reasonably able
to finance the transaction and close it timely, and any proposed changes to this
Agreement that may be proposed by Buyer in response to such Acquisition
Proposal.)
 
   
Tax or Taxes
  Any federal, state, county, local, foreign, and other taxes, assessments,
charges, fares, and impositions, including interest and penalties thereon or
with respect thereto.
 
   
Trust
  Peoples Community Statutory Trust I
 
   
1933 Act
  The Securities Act of 1933, as amended, and the regulations thereunder.

 

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1934 Act
  The Securities Exchange Act of 1934, as amended, and the regulations
thereunder.

ARTICLE 15
MISCELLANEOUS
     15.1 Expenses. (a) Except as otherwise provided in this Section 15.1, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that Buyer shall bear and pay the filing fees
payable in connection with the Registration Statement and the Buyer Proxy
Statement and printing costs incurred in connection with the printing of the
Registration Statement and the Buyer Proxy Statement.
     (b) Nothing contained in this Section 15.1 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.

 

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     15.2 Benefit and Assignment. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the Parties and their respective successors and
assigns.
     15.3 Governing Law; Venue. Except to the extent the Laws of the State of
Delaware apply to the Merger, this Agreement shall be governed by, and construed
in accordance with the Laws of the State of Florida without regard to any
conflict of Laws. The parties agree that the exclusive venue for disputes
arising out of this Agreement shall be the courts of the State of Florida
located in Hillsborough County, Florida and the United States District Court for
the Middle District of Florida.
     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
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. The terms
“include”, “including” and derivatives thereof shall mean “including without
limitation” by reason of enumeration or otherwise. 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.

 

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     15.8 Confidentiality; Return of Information. Between the date of this
Agreement and the Effective Date, Buyer and Acquired Company will maintain in
confidence, and will cause the directors, officers, employees, agents and
advisors of Buyer and Acquired Corporation Companies to maintain in confidence
any written, oral or other information obtained in confidence from another
Person or from an Acquired Company in connection with this Agreement or the
Merger, including any such information obtained prior to the date of this
Agreement, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such Party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the Merger to be consummated, or (c) the
furnishing or use of such information is required by legal proceedings.
     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.

 

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     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 nonbreaching 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
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 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).
     15.11 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.
     15.12 Remedies Cumulative. All remedies provided in this Agreement, by law
or otherwise, shall be cumulative and not alternative.
     15.13 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.
     IN WITNESS WHEREOF, Acquired Corporation and Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.

            PEOPLE’S COMMUNITY BANCSHARES, INC.
      BY:   /s/ Neil D. McCurry       ITS: President and         Chief Executive
Officer        SUPERIOR BANCORP
      BY:   /s/ C. Stanley Bailey       ITS: Chairman and Chief Executive
Officer           

 

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Exhibit A
Form of Support Agreement
     THIS SUPPORT AGREEMENT is made and entered into as of this the 18th day of
January, 2007, by and between SUPERIOR BANCORP (“Buyer”), a Delaware
corporation, and the undersigned officer or director (the “People’s Community
Official”) of People’s Community Bancshares, Inc., a Florida corporation
(“Acquired Corporation”), or of People’s Community Bank of the West Coast, a
Florida bank (the “Bank”).
WITNESSETH
     WHEREAS, Buyer and Acquired Corporation have entered into an Agreement and
Plan of Merger (the “Plan of Merger”), pursuant to which the parties thereto
agree that Acquired Corporation will merge (the “Merger”) with and into Buyer,
and Buyer shall be the surviving entity of the Merger;
     NOW, THEREFORE, in consideration of the expenses that Buyer will incur in
connection with the transactions contemplated by the Plan of Merger, and in
order to preserve the value of the franchise to be purchased by Buyer and induce
Buyer to proceed to incur such expenses, the People’s Community Official makes
the following agreements in favor of Buyer:
1. Undertakings of People’s Community Official
     1.1 The People’s Community Official agrees and undertakes, subject to the
exercise of his fiduciary duties, to vote or cause to be voted in favor of the
approval of the Plan of Merger all shares of Acquired Corporation Stock (as
defined in the Plan of Merger), as to which he has voting power (other than
shares held in a fiduciary capacity), which amount of shares is shown on the
schedule attached hereto and made a part hereof, at any meeting or meetings
(including any and all adjournments thereof) held on or before December 31,
2007. The parties hereto acknowledge and agree that nothing in this Section or
this Agreement is intended to dictate or require that the People’s Community
Official vote as a director in any manner.
     1.2 The People’s Community Official further agrees that he will not
transfer any of the shares of Acquired Corporation Stock over which he has
dispositive power, which number of shares is shown on the schedule attached
hereto and made a part hereof, until the vote upon the Plan of Merger by
Acquired Corporation’s stockholders has been taken or until the Plan of Merger
has been terminated pursuant to the provisions thereof, except (i) for transfers
by operation of law, and (ii) for transfers in connection with which Buyer has
consented to the transfer and the transferee shall agree in writing with Buyer
to be bound by this Agreement as fully as the undersigned.
     1.3 The People’s Community Official further agrees not to exercise any
Acquired Corporation Options owned by such individual.

 

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     1.4 This Section 1 shall terminate at such time as the Plan of Merger
terminates or on the Effective Date.
2. Agreement Not to Compete.
     The People’s Community Official agrees that for a period of two years
following the Effective Date (as defined in the Plan of Merger), the People’s
Community Official will not serve as an officer or director, or acquire (other
than by gift or inheritance) 5% or more of the outstanding voting securities, of
any bank or savings and loan association or bank holding company, or federal or
state chartered bank, savings bank, thrift, homestead association, savings
association, savings and loan association or cooperative bank, that has a
business location within any county in Florida in which the Bank has a branch or
its main office as of the date hereof.
     In the event of a Change in Control of Buyer the People’s Community
Official shall in no event be subject to the restrictions contained in this
Section 2 longer than one year following the Change in Control. For purposes of
this Agreement, a "Change in Control" is hereby defined to be:
     (a)   a merger, consolidation or other corporate reorganization of the
Buyer in which the Buyer does not survive or, if it survives, the shareholders
of the Buyer before such transaction do not own more than 50% of, respectively:
(i) the Common Stock of the surviving entity, and (ii) the combined voting power
of any other outstanding securities entitled to vote on the election of
directors of the surviving entity;
     (b)   the acquisition, other than from the Buyer, by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended from time to time (the "Exchange Act") or any
successor provision) of beneficial ownership of 25% or more of either: (i) the
then outstanding shares of Common Stock of the Buyer, or (ii) the combined
voting power of the then outstanding voting securities of the Buyer entitled to
vote generally in the election of directors; provided, however, that neither of
the following shall constitute a Change in Control:

              (A)   any acquisition by the Buyer, any of its subsidiaries, or
any employee benefit plan (or related trust) of the Buyer or its subsidiaries,
or                 (B)   any acquisition by any corporation, entity, or group,
if, following such acquisition, more than 50% of the then outstanding voting
rights of such corporation, entity or group are owned, directly or indirectly,
by all or substantially all of the persons who were the owners of the Common
Stock of the Buyer immediately prior to such acquisition:

     (c)   individuals who, as of the effective date of this Agreement,
constitute the Board of Directors of the Buyer (the "Incumbent Buyer Board")
cease for any reason to constitute at least a majority of such Board of
Directors (the "Buyer Board"), provided that any individual becoming a director
subsequent to such date, whose election, or nomination for election by the
Buyer’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Buyer Board, shall be considered as
though such individual were a member of the Incumbent Buyer Board, but
excluding, for this purpose, any individual whose initial assumption of office
is in connection with an actual or threatened election contest relating to the
election of the directors of the Buyer (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act or any successor provision);
or
     (d)   approval by the shareholders of the Buyer of:

              (i)   a complete liquidation or dissolution of the Buyer, or      
          (ii)   the sale or other disposition of all or substantially all the
assets of the Buyer, other than to a corporation, with respect to which
immediately following such sale or other disposition more than 50%,
respectively, of the then outstanding shares of common stock of such
corporation, and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Common Stock of the Buyer, and the
outstanding voting securities of the Buyer immediately prior to such sale or
other disposition, in substantially the same proportions as their ownership,
immediately prior to such sale or disposition, of the outstanding Common Stock
of the Buyer and outstanding securities of the Buyer, as the case may be.

3. Miscellaneous
     3.1 The provisions of this Agreement shall be enforceable through an action
for damages at law or a suit for specific performance or other appropriate
extraordinary relief, the Community Official acknowledging that remedies at law
for breach or default might be or become inadequate.
     3.2 The People’s Community Official acknowledges and agrees that this
Agreement is executed in connection with the sale of all of the business of
Acquired Corporation.
     3.3 To the extent permitted under applicable law, any provision of this
Agreement may be amended or modified at any time, either before or after its
approval by an agreement in writing among the parties hereto.
     3.4 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 hereto.
     3.5 This Agreement shall be governed by, and interpreted in accordance
with, the laws of the State of Florida applicable to agreements made and
entirely to be performed within such State, except as federal law may be
applicable.
     3.6 The People’s Community Official may not assign any of his rights or
obligations under this Agreement to any other person.
     3.7 This Agreement supersedes any and all oral or written agreements and
understandings heretofore made between the parties hereto relating to the
subject matter hereof and contains the entire agreement of the parties relating
to the subject matter hereof; provided, however, that notwithstanding the
foregoing, this Agreement does not modify or amend any stock option agreement,
employment agreement, option or similar employee benefit agreement between any
Acquired Corporation Company and the People’s Community Official. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors, heirs and legatees.

 

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     IN WITNESS WHEREOF, the parties have signed this Agreement effective as of
the date first set forth above.

                      SUPERIOR BANCORP    
 
               
 
  By:                               Title:        
 
               
 
                    PEOPLE’S COMMUNITY OFFICIAL    
 
                         

SCHEDULE TO SUPPORT AGREEMENT
Number of shares of common stock, $___par value, of People’s Community
Bancshares, Inc. owned by the People’s Community Official: shares.