Item 1.01 Entry into a Material Definitive Agreement.
On July 27, 2016, BBX Capital Corporation (BBX Capital) entered into a definitive merger agreement (the Merger Agreement) with BFC
Financial Corporation (BFC) and BBX Merger Subsidiary LLC, a newly formed wholly owned subsidiary of BFC (Merger Sub). The Merger Agreement provides for BBX Capital to merge with and into Merger Sub (the Merger),
with Merger Sub continuing as the surviving company of the Merger and a wholly owned subsidiary of BFC. Under the terms of the Merger Agreement, which has been approved by a special committee comprised of BBX Capitals independent directors as
well as the full boards of directors of both BFC and BBX Capital, each share of BBX Capitals Class A Common Stock outstanding immediately prior to the effective time of the Merger (other than shares of BBX Capitals Class A
Common Stock held by BFC and shares of BBX Capitals Class A Common Stock as to which appraisal rights are exercised and perfected in accordance with Florida law) will be converted into the right to receive, at the election of the holder
thereof, either (i) $20.00 in cash, without interest, or (ii) 5.4 shares of BFCs Class A Common Stock. BBX Capitals shareholders will have the right to specify different elections with respect to different shares of BBX
Capitals Class A Common Stock that they own. Accordingly, BBX Capitals shareholders may receive all cash, all stock, or a combination of cash and stock in exchange for their shares. Each option to acquire shares of BBX
Capitals Class A Common Stock that is outstanding at the effective time of the Merger, whether or not then exercisable, will be converted into an option to acquire shares of BFCs Class A Common Stock and be subject to the same
terms and conditions as in effect at the effective time of the Merger, except that the number of shares which may be acquired upon exercise of the option will be multiplied by the exchange ratio of 5.4 shares of BFCs Class A Common Stock
for each share of BBX Capitals Class A Common Stock subject to the option and the exercise price of the option will be divided by 5.4. In addition, each share of BBX Capitals Class A Common Stock subject to a restricted stock
award outstanding at the effective time of the Merger will be converted into a restricted share of BFCs Class A Common Stock and be subject to the same terms and conditions as in effect at the effective time of the Merger, except that the
number of shares subject to the award will be multiplied by the exchange ratio of 5.4 shares of BFCs Class A Common Stock for each share of BBX Capitals Class A Common Stock subject to the award. It is anticipated that the
Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986 so that BBX Capitals shareholders who receive only shares of BFCs Class A Common Stock in the Merger will
generally not recognize any gain or loss upon their receipt of shares of BFCs Class A Common Stock in exchange for their shares of BBX Capitals Class A Common Stock.
BFC currently owns shares of BBX Capitals Class A Common Stock and Class B Common Stock representing, in the aggregate, approximately 81% of the
total outstanding equity of BBX Capital and 90% of the total voting power of BBX Capital. The shares of BBX Capitals Class A Common Stock and Class B Common Stock held by BFC will be canceled upon consummation of the Merger.
The Merger Agreement includes representations, warranties and covenants of the companies believed to be customary for transactions such as the Merger. In
addition, BFC has agreed in the Merger Agreement to offer to the directors of BBX Capital who are not also directors of BFC the opportunity to be appointed to BFCs board of directors at the effective time of the Merger. In accordance with the
terms of the Merger Agreement, the Boards of Directors of BFC and BBX Capital each took steps to exempt the Merger and other transactions contemplated by the Merger Agreement from the operation of each companys respective shareholder rights
plan.
Consummation of the Merger is subject to certain closing conditions, including, without limitation, the
representations and warranties of each of BFC and BBX Capital contained in the merger agreement being true and correct, subject to certain materiality qualifications, and the approval of the Merger Agreement by both (i) holders of shares of BBX
Capitals Class A Common Stock and Class B Common Stock representing a majority of the votes entitled to be cast on the Merger Agreement, and (ii) holders of a majority of the shares of BBX Capitals Class A Common Stock
voted on the Merger Agreement other than shares held by BFC and its affiliates. Pursuant to the Merger Agreement, BFC has agreed to vote all of the shares of BBX Capitals Class A Common Stock and Class B Common Stock owned by it in favor
of the Merger Agreement. Accordingly, assuming BFC votes its shares as agreed, approval of the Merger Agreement with respect to the combined vote of the holders of BBX Capitals Class A Common Stock and Class B Common Stock described under
clause (i) above is assured. The Merger is also conditioned on holders of not more than 150,000 shares of BBX Capitals Class A Common Stock exercising appraisal rights and the absence of any Material Adverse Effect (as
defined in the Merger Agreement) with respect to either BFC or BBX Capital. The Merger is not subject to a financing condition. The companies currently expect to consummate the Merger promptly after all conditions to closing are satisfied.
The Merger Agreement may be terminated at any time prior to the effective time of the Merger by the mutual written consent of BFC and BBX Capital. In
addition, the Merger Agreement may be terminated by either BFC or BBX Capital under certain circumstances, including, without limitation, if the Merger has not been consummated by June 30, 2017; provided, however, that this deadline will
automatically be extended to December 31, 2017 if the companies are proceeding in good faith to satisfy the conditions to consummating the Merger.
The foregoing description of the Merger Agreement is a summary only, does not purport to be complete and is subject to, and qualified in its entirety by
reference, to the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Merger Agreement contains representations and warranties made by the parties as of specific dates and solely for their
benefit. The representations and warranties reflect negotiations between the parties and are not intended as statements of fact to be relied upon by the companies respective shareholders and, in certain cases represent allocation decisions
among the parties and have been or will be modified or qualified by correspondence or confidential disclosures that were or will be made between the parties in connection with the negotiation of the Merger Agreement (which disclosures are not
reflected in the Merger Agreement itself, may not be true as of any date other than the date made, or may apply standards of materiality in a way that is different from what may be viewed as material by shareholders). Accordingly, the
representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and shareholders should not rely on them as statements of fact. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the Merger Agreement.
John E. Abdo is the Vice Chairman of both BFC and BBX Capital. In
addition, Mr. Abdo, collectively with Alan B. Levan, who serves both BFC and BBX Capital in a non-executive
capacity as Founder and strategic advisor and who is the former Chairman, Chief Executive Officer and President of BFC and the former Chairman and Chief Executive Officer of BBX Capital, may be
deemed to control BFC by virtue of their beneficial ownership of shares of BFCs Class A Common Stock and Class B Common Stock representing approximately 76% of BFCs total voting power. Further, (i) Jarett S. Levan, the son of
Mr. Alan Levan, is a director and the Acting Chairman, Chief Executive Officer and President of BFC and a director and the President and Acting Chairman and Chief Executive Officer of BBX Capital, (ii) Seth M. Wise is a director and
Executive Vice President of BFC and Executive Vice President of BBX Capital, and (iii) Raymond S. Lopez is Executive Vice President, Chief Financial Officer and Chief Accounting Officer of BFC and Executive Vice President and Chief Financial
Officer of BBX Capital.
Prior to the opening of trading on July 28, 2016, BFC and BBX Capital issued a joint press release announcing their entry
into the Merger Agreement. A copy of the press release is attached as Exhibit 99.1 hereto.