<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12, 1997
UNION PLANTERS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 1-10160 62-0859007
--------------- ------------ --------------
(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
7130 Goodlett Farms Parkway, Memphis, Tennessee 38018
-----------------------------------------------------------
(Address, including zip code, of principal executive office)
(901) 580-6000
---------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On August 12, 1997, Union Planters Corporation ("UPC") and Capital
Bancorp ("Bancorp") entered into an Agreement and Plan of Merger (the
"Agreement"), pursuant to which Bancorp will be acquired by UPC. In accordance
with the terms of the Agreement, UPC will acquire Bancorp pursuant to the merger
(the "Merger") of Bancorp with a newly-formed, wholly-owned subsidiary of UPC,
to be organized under the laws of the State of Florida. Bancorp will be the
surviving entity resulting from the Merger.
Upon consummation of the Merger, each share of the $1.00 par value
common stock of Bancorp ("Bancorp Common Stock") (excluding shares held by
Bancorp, UPC, or any of their respective subsidiaries, in each case other than
in a fiduciary capacity or as a result of debts previously contracted) issued
and outstanding at the effective time of the Merger (as defined in the
Agreement, the "Effective Time") shall cease to be outstanding and shall be
converted into and exchanged for the right to receive .8525 shares of the $5.00
par value common stock of UPC, together with associated preferred stock
purchase rights (collectively, "UPC Common Stock") (subject to possible
adjustment as described below, the "Exchange Ratio").
In addition, at the Effective Time, all rights with respect to
Bancorp Common Stock, pursuant to stock options, stock appreciation rights, or
other rights granted by Bancorp under the existing stock plans of Bancorp, which
are outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to UPC Common Stock on a basis
that reflects the Exchange Ratio. In addition, subject to certain conditions
set forth in the Agreement, each holder of outstanding stock options which are
not "incentive stock options" of Bancorp may elect to convert all or a portion
of such options which have not expired prior to the Effective Time into the
right to receive such number of shares of UPC Common Stock as are equal in
value to the excess of (i) the product of the number of shares of Bancorp
Common Stock subject to such option times the Exchange Ratio times the Average
Closing Price (as defined in the Agreement) of UPC Common Stock, over (ii) the
product of (a) the exercise price per share of Bancorp Common Stock subject to
such option and (b) the number of shares of Bancorp Common Stock subject to
such option.
The Merger is intended to constitute a tax-free transaction under the
Internal Revenue Code of 1986, as amended, and be accounted for as a pooling of
interests.
Consummation of the Merger is subject to various conditions,
including: (i) receipt of the approval by the shareholders of Bancorp of
appropriate matters relating to the Agreement and the Merger required to be
approved under applicable law and pursuant to the Agreement; (ii) receipt of
certain regulatory approvals from the Board of Governors of the Federal Reserve
System (the "Federal Reserve") and other applicable regulatory authorities;
(iii) receipt of an opinion of counsel as to the tax-free nature of certain
aspects of the Merger; (iv) receipt of a letter from Price Waterhouse LLP,
UPC's independent public acccountants, to the effect that the Merger will
qualify for pooling-of-interests accounting treatment; and (v) satisfaction of
certain other conditions.
- 2 -
<PAGE> 3
In addition, UPC can terminate the Agreement at any time before
September 12, 1997 pursuant to standards included in the Agreement based upon a
due diligence investigation of Bancorp.
Under the Agreement, Bancorp has the right to terminate the Agreement
if the Average Closing Price (as defined in the Agreement) of UPC Common Stock
(i) is less than 80% of the Starting Price (as defined in the Agreement) and
(ii) reflects a decline, on the Determination Date (as defined in the
Agreement), of more than 15% below a weighted index of the stock prices of a
group of bank holding companies designated in the Agreement. In the event that
Bancorp gives notice of its intention to terminate the Agreement based on such
provision, UPC has the right, within five (5) days of UPC's receipt of such
notice, to elect to adjust the Exchange Ratio in accordance with the terms of
the Agreement, and thereby remove Bancorp's right to terminate.
In connection with executing the Agreement, UPC and Bancorp entered
into a stock option agreement (the "Stock Option Agreement") pursuant to which
Bancorp granted to UPC an option to purchase, subject to certain limitations, up
to 1,510,500 shares of Bancorp Common Stock (representing 19.9% of the
outstanding shares of Bancorp Common Stock without giving effect to the exercise
of the option), at a purchase price of $40.50 per share, upon certain terms and
in accordance with certain conditions. Under the terms of the Stock Option
Agreement, the Total Profit (as defined in the Stock Option Agreement) and the
Notional Total Profit (as defined in the Stock Option Agreement) that a holder
may realize, including UPC, as a result of exercising the Stock Option Agreement
may not exceed $18.0 million.
- 3 -
<PAGE> 4
In addition, each of the directors of Bancorp has entered into an
agreement with UPC wherein such directors agree, among other matters, as
individual shareholders, to vote his or her shares of Bancorp Common Stock in
favor of the Merger.
The Agreement and the Merger will be submitted for approval at a
meeting of the shareholders of Bancorp. Prior to the shareholders' meeting, UPC
will file a registration statement with the Securities and Exchange Commission
registering under the Securities Act of 1933, as amended, the shares of UPC
Common Stock to be issued in exchange for the outstanding shares of Bancorp
Common Stock. Such shares of stock of UPC will be offered to the Bancorp
shareholders pursuant to a prospectus that will also serve as a proxy statement
for the meeting of the shareholders of Bancorp to consider and vote upon
appropriate matters relating to the Agreement and the Merger.
For additional information regarding the Agreement and the Stock
Option Agreement, please refer to the copies of those documents which are
incorporated herein by reference and included as Exhibits to this Current Report
on Form 8-K. The foregoing discussion is qualified in its entirety by reference
to such documents.
- 4 -
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNION PLANTERS CORPORATION
(Registrant)
By: /s/ M. KIRK WALTERS
--------------------------------
M. Kirk Walters
Senior Vice President, Treasurer
and Chief Accounting Officer
Date: August 14, 1997
- 5 -
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential
Exhibit Page No.
------- --------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of August 12,
1997, by and between Union Planters Corporation and
Capital Bancorp ..................................................
2.2 Stock Option Agreement, dated as of August 12, 1997,
issued by Capital Bancorp to Union Planters
Corporation ......................................................
99.1 Text of press release, dated August 13, 1997, issued
by Union Planters Corporation ....................................
</TABLE>
- 6 -
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
UNION PLANTERS CORPORATION
AND
CAPITAL BANCORP
DATED AS OF AUGUST 12, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Execution of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Restructure of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Shares Held by Subject Company or Parent . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Conversion of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4 EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Rights of Former Subject Company Shareholders . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY . . . . . . . . . . . . . . . . . . . 9
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Authority; No Breach by Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Subject Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9 Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.10 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12 Compliance With Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C>
5.14 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.15 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.16 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.17 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.18 Statements True and Correct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.19 Accounting, Tax, and Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . 24
5.20 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.21 Article Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Organization, Standing and Power. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Authority; No Breach by Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 Parent Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.7 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.9 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.10 Compliance With Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.11 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.13 Statements True and Correct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.14 Accounting, Tax, and Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Affirmative Covenants of Subject Company. . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Negative Covenants of Subject Company. . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 8 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Registration Statement; Proxy Statement; Shareholder
Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4 Filings With State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C>
8.9 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.10 Agreement of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.11 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.13 Merger Subsidiary Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.14 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS
TO CONSUMMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Conditions to Obligations of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.3 Conditions to Obligations of Subject Company . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 10 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.12 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.13 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of August 12, 1997, by and between Capital Bancorp, a Florida
corporation having its principal office located in Miami, Florida ("Subject
Company"), and Union Planters Corporation, a Tennessee corporation having its
principal office located in Memphis, Tennessee ("Parent").
PREAMBLE
The Boards of Directors of Subject Company and Parent are of the
opinion that the transactions described herein are in the best interests of the
parties and their respective shareholders. This Agreement provides for the
acquisition of Subject Company by Parent pursuant to the merger of a wholly
owned subsidiary of Parent to be organized under the Laws of the State of
Florida ("Merger Subsidiary") with and into Subject Company. At the effective
time of such merger, the outstanding shares of the common stock of Subject
Company shall be converted into the right to receive shares of the common stock
of Parent (except as provided in Sections 3.3 and 3.4 of this Agreement). As a
result, shareholders of Subject Company shall become shareholders of Parent and
Subject Company shall continue to conduct its business and operations as a
wholly owned subsidiary of Parent. The transactions described in this
Agreement are subject to the approvals of the shareholders of Subject Company,
the Board of Governors of the Federal Reserve System, the Department of Banking
and Finance of the State of Florida, and other applicable federal and state
regulatory authorities, and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that (i) for federal income tax purposes this Agreement shall
constitute a plan of merger and the Merger shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code and (ii) for
accounting purposes the Merger shall qualify for treatment as a pooling of
interests.
Immediately after the execution and delivery of this Agreement,
as a condition and inducement to Parent's willingness to enter into this
Agreement, (i) Subject Company and Parent are entering into a stock option
agreement pursuant to which Subject Company is granting to Parent an option to
purchase shares of Subject Company Common Stock and (ii) each of the directors
of Subject Company are entering into a support agreement with Parent.
<PAGE> 6
Certain terms used in this Agreement are defined in Section 11.1
of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Merger Subsidiary shall be merged with and
into Subject Company in accordance with the provisions of Section 607.1101 of
the FBCA and with the effect provided in Section 607.1106 of the FBCA (the
"Merger"). Subject Company shall be the Surviving Corporation resulting from
the Merger and shall continue to be governed by the Laws of the State of
Florida. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of Subject Company and Parent and will be approved and adopted by the
Board of Directors of Merger Subsidiary upon its organization.
1.2 Time and Place of Closing. The Closing will take place at
9:00 A.M. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M.), or at such
other time as the Parties, acting through their chief executive officers or
chief financial officers, may mutually agree. The Closing shall be held at
such place as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Articles of Merger reflecting the Merger shall become effective with
the Secretary of State of the State of Florida (the "Effective Time"). Subject
to the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officers or chief financial officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur on such date as may be designated by Parent within 30 days
following the last to occur of (i) the effective date of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger (without regard to any requisite waiting period in respect
thereof), (ii) the date on which the shareholders of Subject Company approve
this
2
<PAGE> 7
Agreement, and (iii) the date on which all other conditions precedent (other
than those conditions which relate to actions to be taken at the Closing) to
each Party's obligations hereunder shall have been satisfied or waived (to the
extent waivable by such Party).
1.4 Execution of Agreements. Immediately after the execution
of this Agreement by the Parties and as a condition thereto, (i) Subject
Company is executing and delivering to Parent a stock option agreement (the
"Stock Option Agreement"), in substantially the form of Exhibit 1, pursuant to
which Subject Company is granting to Parent an option to purchase shares of
Subject Company Common Stock and (ii) each of the directors of Subject Company
is executing and delivering to Parent a support agreement (the "Support
Agreement") in substantially the form of Exhibit 2.
1.5 Restructure of Transaction. Parent shall, in its
reasonable discretion, have the unilateral right to revise the structure of the
Merger contemplated by this Agreement in order to achieve tax benefits or for
any other reason which Parent may deem advisable; provided, however, that
Parent shall not have the right, without the approval of the Board of Directors
of Subject Company and, if required by Section 607.1103 of the FBCA, the
holders of the Subject Company Common Stock, to make any revision to the
structure of the Merger which: (i) changes the amount of the consideration
which the holders of shares of Subject Company Common Stock are entitled to
receive (determined in the manner provided in Section 3.1 of this Agreement);
(ii) changes the intended tax-free effects of the Merger to Parent, Subject
Company or the holders of shares of Subject Company Common Stock or changes the
intended pooling of interests accounting treatment; (iii) would permit Parent
to pay the consideration other than by delivery of Parent Common Stock
registered with the SEC (in the manner described in Section 4.1 of this
Agreement); (iv) would be materially adverse to the interests of Subject
Company or adverse to the holders of shares of Subject Company Common Stock;
(v) would materially impede or delay consummation of the Merger; or (vi) would
require a vote of Parent's shareholders under relevant state Law. Parent may
exercise this right of revision by giving written notice to Subject Company in
the manner provided in Section 11.8 of this Agreement which notice shall be in
the form of an amendment to this Agreement or in the form of an Amended and
Restated Agreement and Plan of Merger.
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ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Articles of Incorporation (the "Articles")
of Subject Company in effect immediately prior to the Effective Time shall be
the Articles of the Surviving Corporation until otherwise amended or repealed.
2.2 By-Laws. The Amended and Restated By-laws of Subject
Company (the "By-Laws") in effect immediately prior to the Effective Time shall
be the By-laws of the Surviving Corporation until otherwise amended or
repealed.
2.3 Directors and Officers. The directors of Merger
Subsidiary in office immediately prior to the Effective Time, together with
such additional persons as may thereafter be elected, shall serve as the
directors of the Surviving Corporation from and after the Effective Time in
accordance with the By-laws of the Surviving Corporation. The officers of
Merger Subsidiary in office immediately prior to the Effective Time, together
with such additional persons as may thereafter be elected, shall serve as the
officers of the Surviving Corporation from the Effective Time in accordance
with the By-laws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Merger Subsidiary, Subject Company, or the
shareholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of Parent Capital Stock, including any
associated Parent Rights, issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the Effective
Time.
(b) Each share of Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for one share of Subject
Company Common Stock.
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(c) Each share of Subject Company Common Stock (excluding
shares held by Subject Company, any Subject Company Subsidiary, Parent or any
Parent Subsidiary, in each case other than in a fiduciary capacity or as a
result of debts previously contracted) issued and outstanding at the Effective
Time shall cease to be outstanding and shall be converted into and exchanged
for the right to receive .8525 shares of Parent Common Stock (as subject to
possible adjustment as set forth in Section 10.1(g) of this Agreement, the
"Exchange Ratio"). Pursuant to the Parent Rights Agreement, each share of
Parent Common Stock issued in connection with the Merger upon conversion of
Subject Company Common Stock shall be accompanied by a Parent Right.
3.2 Anti-Dilution Provisions. In the event Parent changes the
number of shares of Parent Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
3.3 Shares Held by Subject Company or Parent. Each of the
shares of Subject Company Common Stock held by Subject Company, any Subject
Company Subsidiary, Parent or any Parent Subsidiary, in each case other than in
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
3.4 Fractional Shares. Notwithstanding any other provision of
this Agreement, each holder of shares of Subject Company Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fractional share of Parent Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional share of Parent Common
Stock multiplied by the closing price of such common stock on the
NYSE-Composite Transactions List (as reported by The Wall Street Journal or, if
not reported thereby, any other authoritative source selected by Parent) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.
3.5 Conversion of Stock Options. (a) At the Effective Time,
each option to purchase or other right with respect to shares of Subject
Company Common Stock pursuant to stock options, stock appreciation rights or
other rights, including
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stock awards ("Subject Company Options") granted by Subject Company under the
Subject Company Stock Plans, which are outstanding at the Effective Time,
whether or not exercisable, shall be converted into and become options with
respect to Parent Common Stock, and Parent shall assume each Subject Company
Option, in accordance with the terms of the applicable Subject Company Stock
Plan and stock option or other agreement by which it is evidenced, except that
from and after the Effective Time, (i) Parent and its Salary and Benefits
Committee shall be substituted for Subject Company and the committee of Subject
Company's Board of Directors (including, if applicable, the entire Board of
Directors of Subject Company) administering such Subject Company Stock Plan,
(ii) each Subject Company Option assumed by Parent may be exercised solely for
shares of Parent Common Stock (or cash in the case of stock appreciation
rights), (iii) the number of shares of Parent Common Stock subject to such
Subject Company Option shall be equal to the number of shares of Subject
Company Common Stock subject to such Subject Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio and rounding down to the
nearest whole share, and (iv) the per share exercise price under each such
Subject Company Option shall be adjusted by dividing the per share exercise
price under each such Subject Company Option by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding clauses (iii) and (iv) of the first
sentence of this Section 3.5, each Subject Company Option that is an "incentive
stock option" shall be adjusted as required by Section 424 of the Internal
Revenue Code, and the regulations promulgated thereunder, so as not to
constitute a modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code. Parent and Subject
Company agree to take all necessary steps to effectuate the foregoing
provisions of this Section 3.5.
(b) As soon as practicable after the Effective Time, Parent
shall deliver to the participants in each Subject Company Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants subject to such Subject Company Stock Plan shall continue in effect
on the same terms and conditions (subject to the adjustments required by
Section 3.5(a) after giving effect to the Merger), and Parent shall comply with
the terms of each Subject Company Stock Plan to ensure, to the extent required
by, and subject to the provisions of, such Subject Company Stock Plan, that
Subject Company Options that qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options after the
Effective Time. Within 30 days after the Effective Time, Parent shall file a
registration statement on Form S-8 with respect to the shares of Parent Common
Stock subject to such options and shall use its reasonable efforts to maintain
the effectiveness of such registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
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(c) Without limiting the foregoing, and provided that the
right contained in this paragraph (c) is not inconsistent with any of the
conditions contained in Article 9 hereof, each holder of a Subject Company
Option that is not an "incentive stock option", whether or not then vested,
shall have the right to elect to convert, at the Effective Time, all or a
portion of his or her Subject Company Options which are not "incentive stock
options" and which have not expired prior to the Effective Time into the right
to receive such number of shares (rounded to the nearest whole share) of Parent
Common Stock as are equal in value (determined by valuing each share of Parent
Common Stock at the Average Closing Price (as defined in Section 10.1)) to the
excess of (i) the product of the number of shares of Subject Company Common
Stock subject to such option times the Exchange Ratio times the Average Closing
Price of the Parent Common Stock over (ii) the product of (A) the exercise
price per share of Subject Company Common Stock subject to such option and (B)
the number of shares of Subject Company Common Stock subject to such option.
The foregoing right shall be exercised by delivery to Parent of written notice
of election (specifying the number of Subject Company Options covered by such
election) by the holder of such Subject Company Option not later than two
business days prior to the Effective Time.
(d) All contractual restrictions or limitations on transfer
with respect to Subject Company Common Stock awarded under the Subject Company
Stock Plans or any other plan, program, or Contract of Subject Company or any
of the Subject Company Subsidiaries, to the extent that such restrictions or
limitations shall not have already lapsed (whether as a result of the Merger or
otherwise), and except as otherwise expressly provided in such plan, program,
or Contract, shall remain in full force and effect with respect to shares of
Parent Common Stock into which such restricted stock is converted pursuant to
Section 3.1 of this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time,
Parent and Subject Company shall cause the exchange agent selected by Parent
(the "Exchange Agent") to mail to the former shareholders of Subject Company
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of Subject Company Common Stock shall pass, only upon
proper delivery of such certificates to the Exchange Agent). Subject Company
shall have the right to review the transmittal
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materials. The Exchange Agent may establish reasonable and customary rules and
procedures in connection with its duties. After the Effective Time, each
holder of shares of Subject Company Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) issued and outstanding at
the Effective Time shall surrender the certificate or certificates representing
such shares to the Exchange Agent and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in Section 3.1 of this
Agreement, together with all undelivered dividends or distributions in respect
of such shares (without interest thereon) pursuant to Section 4.2 of this
Agreement. To the extent required by Section 3.4 of this Agreement, each
holder of shares of Subject Company Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional share of
Parent Common Stock to which such holder may be otherwise entitled (without
interest). Parent shall not be obligated to deliver the consideration to which
any former holder of Subject Company Common Stock is entitled as a result of
the merger until such holder surrenders such holder's certificate or
certificates representing the shares of Subject Company Common Stock for
exchange as provided in this Section 4.1. The certificate or certificates of
Subject Company Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither Parent nor the Exchange Agent shall be liable to a
holder of Subject Company Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 Rights of Former Subject Company Shareholders. At the
Effective Time, the stock transfer books of Subject Company shall be closed as
to holders of Subject Company Common Stock immediately prior to the Effective
Time and no transfer of Subject Company Common Stock by any such holder shall
thereafter be made or recognized. Until surrendered for exchange in accordance
with the provisions of Section 4.1 of this Agreement, each certificate
theretofore representing shares of Subject Company Common Stock (other than
shares to be canceled pursuant to Section 3.3 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.4 of this Agreement in
exchange therefor, subject, however, to the Surviving Corporations' obligation
to pay any dividends or make any other distributions with a record date prior
to the Effective Time which have been declared or made by Subject Company in
respect of such shares of Subject Company Common Stock in accordance with the
terms of this Agreement and which remain unpaid at the Effective Time.
Whenever a dividend or other distribution is declared by Parent on the Parent
Common Stock, the record date for which is at or after the Effective Time, the
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declaration shall include dividends or other distributions on all shares of
Parent Common Stock issuable pursuant to this Agreement, but beginning 30 days
after the Effective Time no dividend or other distribution payable to the
holders of record of Parent Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate representing
shares of Subject Company Common Stock issued and outstanding at the Effective
Time until such holder surrenders such certificate for exchange as provided in
Section 4.1 of this Agreement. However, upon surrender of such Subject Company
Common Stock certificate, both a Parent Common Stock certificate (together with
all such undelivered dividends or other distributions without interest) and any
undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to each share represented by such
certificate. In the event any Subject Company Common Stock certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such person of a bond in such amount
as Parent may reasonably direct as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificate the shares of Parent
Common Stock and cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent as
follows:
5.1 Organization, Standing, and Power. Subject Company is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Florida, and has the corporate power and authority to
carry on its business as now conducted and to own, lease, and operate its
Assets. Subject Company is duly qualified or licensed to transact business as
a foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company.
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5.2 Authority; No Breach by Agreement. (a) Subject Company
has the corporate power and authority necessary to execute, deliver, and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement, and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action (including valid authorization and adoption of this Agreement
by Subject Company's duly constituted Board of Directors) in respect thereof on
the part of Subject Company, subject to the approval of this Agreement by the
holders of the outstanding shares of Subject Company Common Stock, which is the
only shareholder vote required for approval of this Agreement and consummation
of the Merger by Subject Company. Subject to such requisite shareholder
approval and assuming due authorization, execution and delivery of this
Agreement by each of Parent and Merger Subsidiary, this Agreement (which, for
purposes of this sentence, shall not include the Stock Option Agreement)
represents a legal, valid, and binding obligation of Subject Company,
enforceable against Subject Company in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
(which, for purposes of clause (iii) of this sentence, shall not include the
Stock Option Agreement) by Subject Company, nor the consummation by Subject
Company of the transactions contemplated hereby, nor compliance by Subject
Company with any of the provisions hereof, will (i) conflict with or result in
a breach of any provision of the Articles or the By-laws, or (ii) except as
disclosed in Section 5.2 of the Subject Company Disclosure Memorandum,
constitute or result in a Default under, or require any Consent (excluding
Consents required by Law or Order) pursuant to, or result in the creation of
any Lien on any material Asset of Subject Company or any Subject Company
Subsidiary under, any Contract or Permit of Subject Company or any Subject
Company Subsidiary, except for such Defaults, Liens and Consents, which, if not
obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company, or (iii) subject to
receipt of the requisite Consents referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to Subject Company, its
Subsidiaries or any of their respective material Assets.
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(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Subject
Company, no notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by Subject Company of the Merger and the
other transactions contemplated in this Agreement.
5.3 Capital Stock. (a) The authorized capital stock of
Subject Company consists of 20,000,000 shares of Subject Company Common Stock,
of which 7,590,925 shares are issued and outstanding as of July 31, 1997
(exclusive of treasury shares) and not more than 8,887,237 shares will be
issued and outstanding at the Effective Time (exclusive of shares issued or
issuable pursuant to the Stock Option Agreement). All of the issued and
outstanding shares of capital stock of Subject Company are duly and validly
issued and outstanding and are fully paid and nonassessable under the FBCA.
None of the outstanding shares of capital stock of Subject Company has been
issued in violation of any preemptive rights of the current or past
shareholders of Subject Company. As of the date of this Agreement, Subject
Company has 739,192 shares of Subject Company Common Stock available for grant
under the Subject Company Stock Plans, and there are options to purchase not
more than 1,296,312 shares of Subject Company Common Stock outstanding.
(b) Except as set forth in Section 5.3(a) of this Agreement,
or as provided in the Stock Option Agreement, there are no shares of capital
stock or other equity securities of Subject Company outstanding and no
outstanding Rights relating to the capital stock of Subject Company.
5.4 Subject Company Subsidiaries. Subject Company has
disclosed in Section 5.4 of the Subject Company Disclosure Memorandum all of
the Subject Company Subsidiaries that are corporations (identifying its
jurisdiction of incorporation) and all of the Subject Company Subsidiaries that
are general or limited partnerships or other non-corporate entities
(identifying the Law under which such entity is organized, and the amount and
nature of the ownership interest therein of Subject Company Subsidiaries).
Except as set forth in Section 5.4 of the Subject Company Disclosure
Memorandum, Subject Company or one of its wholly owned Subsidiaries owns all of
the issued and outstanding shares of capital stock (or other equity interests)
of each of the Subject Company Subsidiaries. Except as set forth in Section
5.4
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of the Subject Company Disclosure Memorandum and except for the Stock Option
Agreement and options outstanding under the Subject Company Stock Plans, no
capital stock (or other equity interest) of any Subject Company Subsidiary is
or may become required to be issued (other than to another Subject Company
Subsidiary) by reason of any rights, and there are no Contracts by which
Subject Company or any of the Subject Company Subsidiaries is bound to issue
(other than to Subject Company or another of the Subject Company Subsidiaries)
additional shares of its capital stock (or other equity interests) or Rights or
by which Subject Company or any of the Subject Company Subsidiaries is or may
be bound to transfer any shares of the capital stock (or other equity
interests) of any of Subject Company or any of the Subject Company Subsidiaries
(other than to Subject Company or any of the Subject Company Subsidiaries).
Except as set forth in Section 5.4 of the Subject Company Disclosure
Memorandum, there are no Contracts relating to the rights of Subject Company or
any Subject Company Subsidiary to vote or to dispose of any shares of the
capital stock (or other equity interests) of Subject Company or any Subject
Company Subsidiary. All of the shares of capital stock (or other equity
interests) of each Subject Company Subsidiary held by Subject Company or any
Subject Company Subsidiary are fully paid and nonassessable (except pursuant to
applicable state law, in the case of the Bank) under the applicable corporation
or similar Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by Subject Company or a Subject Company Subsidiary free
and clear of any Liens. Each Subject Company Subsidiary is either a bank,
partnership, limited liability corporation, or a corporation, and each such
Subsidiary is duly organized, validly existing, and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each Subject Company Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Subject Company. The only Subject Company
Subsidiary that is a depository institution is the Bank. The Bank is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund. The minute book and other organizational documents (and
all amendments thereto) for Subject Company and each Subject Company Subsidiary
that is a "Significant Subsidiary" (as such term is defined in Regulation S-X
promulgated under the 1934 Act) have been or will be made available to Parent
for its review, and are true and complete as in effect as of the date of this
Agreement.
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5.5 Financial Statements. (a) Each of the Subject Company
Financial Statements (including, in each case, any related notes) contained in
the Subject Company SEC Reports, including any Subject Company SEC Reports
filed after the date of this Agreement until the Effective Time, complied, or
will comply, as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was prepared, or will be
prepared, in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented, or will fairly present, in all
material respects the consolidated financial position of Subject Company and
the Subject Company Subsidiaries as of the respective dates and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
(b) Each of the Holding Financial Statements (including, in each
case, any related notes) complied, or will comply, as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared, or will be prepared, in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented, or will fairly present, in all material respects the consolidated
financial position of Holding and its Subsidiaries as of the respective dates
and the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
5.6 Absence of Undisclosed Liabilities. Neither Subject
Company nor any of the Subject Company Subsidiaries has any Liabilities that
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Subject Company, except Liabilities which are accrued or
reserved against in the consolidated balance sheets of Subject Company as of
March 31, 1997, included in the Subject Company Financial Statements made
available prior to the date of this Agreement or reflected in the notes
thereto. Neither Subject Company nor any of the Subject Company Subsidiaries
has incurred or paid any Liability since March 31, 1997, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice or which are not reasonably likely to have,
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individually or in the aggregate, a Material Adverse Effect on Subject Company
or (ii) in connection with the transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since December 31,
1996, except as disclosed in the Subject Company SEC Reports made available
prior to the date of this Agreement or in Section 5.7 of the Subject Company
Disclosure Memorandum, 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 Subject Company.
5.8 Tax Matters. Except as set forth in Section 5.8 of the
Subject Company Disclosure Memorandum:
(a) All material Tax Returns required to be filed by or on
behalf of Subject Company or any of the Subject Company Subsidiaries have been
timely filed or requests for extensions have been timely filed, granted, and
have not expired for periods ended on or before December 31, 1996, and on or
before the date of the most recent fiscal year end immediately preceding the
Effective Time, and all such Tax Returns filed are complete and accurate in all
material respects. All Taxes shown on filed Tax Returns have been paid. There
is no audit examination or refund Litigation with respect to any material
Taxes, except as reserved against in the Subject Company Financial Statements
made available prior to the date of this Agreement. All material Taxes and
other material Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid. There are no material
Liens with respect to Taxes upon any of the Assets of Subject Company or any of
the Subject Company Subsidiaries.
(b) Neither Subject Company nor any of the Subject Company
Subsidiaries has executed an extension or waiver of any statute of limitations
on the assessment or collection of any Tax due (excluding such statutes that
relate to years currently under examination by the Internal Revenue Service or
other applicable taxing authorities) that is currently in effect.
(c) Adequate provision for any material Taxes due or to become
due for Subject Company or the Subject Company Subsidiaries for the period or
periods through and including the date of the respective Subject Company
Financial Statements has been made and is reflected on such Subject Company
Financial Statements.
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(d) Material deferred Taxes of Subject Company and the Subject
Company Subsidiaries have been provided for in accordance with GAAP.
(e) Subject Company and the Subject Company Subsidiaries are
in material compliance with, and its records contain all information and
documents (including properly completed IRS Forms W-9) necessary to comply in
all material respects with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.
(f) Neither Subject Company nor any of the Subject Company
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any Contract that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of Subject Company or any of the Subject
Company Subsidiaries that occurred during or after any Taxable Period in which
Subject Company or any of the Subject Company Subsidiaries incurred a net
operating loss that carries over to any Taxable Period ending after December
31, 1996, except in connection with the transactions contemplated pursuant to
this Agreement.
(h) Neither Subject Company nor any of the Subject Company
Subsidiaries is a party to any tax allocation or sharing agreement and neither
Subject Company nor any of the Subject Company Subsidiaries has been a member
of an affiliated group filing a consolidated federal income tax return (other
than a group the common parent of which was Subject Company) or has any
material Liability for taxes of any Person (other than Subject Company and the
Subject Company Subsidiaries) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign law) as a transferee or
successor or by Contract or otherwise.
5.9 Assets. Except as disclosed or reserved against in the
Subject Company Financial Statements made available prior to the date of this
Agreement, Subject Company and the Subject Company Subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. All tangible properties used in the businesses of Subject Company and
its Subsidiaries are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business of Subject Company and its
Subsidiaries. All Assets which are material to Subject Company's business on a
consolidated basis, held under leases or subleases by
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the Subject Company or any of the Subject Company Subsidiaries, are held under
valid Contracts enforceable in accordance with their respective terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought), and each
such Contract is in full force and effect. Subject Company and the Subject
Company Subsidiaries currently maintain insurance in amounts, scope, and
coverage which, in the reasonable opinion of management of Subject Company, are
adequate for the operations of Subject Company and the Subject Company
Subsidiaries. Neither Subject Company nor any of the Subject Company
Subsidiaries has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. Except as set forth in Section 5.9 of the
Subject Company Disclosure Memorandum, there are presently no claims pending
under any such policies of insurance and no notices have been given by Subject
Company or any of the Subject Company Subsidiaries under such policies.
5.10 Intellectual Property. All of the Intellectual Property
rights of Subject Company and the Subject Company Subsidiaries are in full
force and effect and, if applicable, constitute legal, valid, and binding
obligations of the respective parties thereto, and there have not been, and, to
the Knowledge of Subject Company, there currently are not, any Defaults
thereunder by Subject Company or a Subject Company Subsidiary. Subject Company
or a Subject Company Subsidiary owns or is the valid licensee of all such
Intellectual Property rights free and clear of all Liens or claims of
infringement. Neither Subject Company nor any of the Subject Company
Subsidiaries nor, to the Knowledge of Subject Company, their respective
predecessors has infringed the Intellectual Property rights of others and, to
the Knowledge of Subject Company, none of the Intellectual Property rights as
used in the business conducted by Subject Company or the Subject Company
Subsidiaries infringes upon or otherwise violates the rights of any Person, nor
has any Person asserted a claim of such infringement. Except as disclosed in
Section 5.10 of the Subject Company Disclosure Memorandum, neither Subject
Company nor the Subject Company Subsidiaries is obligated to pay any royalties
to any Person with respect to any such Intellectual Property. Subject Company
or a Subject Company Subsidiary owns or has the valid right to use all of the
Intellectual Property rights which it is presently using, or in connection with
performance of any material Contract to which it is a party. No officer,
director, or employee of Subject Company or the Subject Company Subsidiaries is
party to any Contract which requires such officer, director, or
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employee to assign any interest in any Intellectual Property or keep
confidential any trade secrets, proprietary data, customer information, or
other business information or, except as disclosed in Section 5.10 of the
Subject Company Disclosure Memorandum, which restricts or prohibits such
officer, director, or employee from engaging in activities competitive with any
Person, including Subject Company or any of the Subject Company Subsidiaries.
5.11 Environmental Matters. Except as set forth in Section
5.11 of the Subject Company Disclosure Memorandum:
(a) To the Knowledge of Subject Company, each of Subject
Company and the Subject Company Subsidiaries, its Participation Facilities, and
its Operating Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Subject
Company.
(b) To the Knowledge of Subject Company, there is no
Litigation pending or threatened before any court, governmental agency, or
authority or other forum in which Subject Company, any of the Subject Company
Subsidiaries or any of their respective Operating Properties or Participation
Facilities (or Subject Company in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material, whether or not occurring at, on,
under, adjacent to, or affecting (or potentially affecting) a site owned,
leased, or operated by Subject Company or any of the Subject Company
Subsidiaries or any of their respective Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company, nor, to the knowledge of Subject Company, is there
any reasonable basis for any Litigation of a type described in this sentence.
(c) During the period of (i) Subject Company's or any of the
Subject Company Subsidiaries' ownership or operation of any of their respective
current properties, (ii) Subject Company's or any of the Subject Company
Subsidiaries' participation in the management of any Participation Facility, or
(iii) Subject Company's or any of the Subject Company Subsidiaries' holding of
a security interest in an Operating Property, to the Knowledge of Subject
Company, there have been no releases of Hazardous Material in, on, under,
adjacent to, or affecting (or potentially affecting) such properties, except
such as are not reasonably likely to have,
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individually or in the aggregate, a Material Adverse Effect on Subject Company.
Prior to the period of (i) Subject Company's or any of the Subject Company
Subsidiaries' ownership or operation of any of their respective current
properties, (ii) Subject Company's or any of the Subject Company Subsidiaries'
participation in the management of any Participation Facility, or (iii) Subject
Company's or any of the Subject Company Subsidiaries' holding of a security
interest in an Operating Property, to the Knowledge of Subject Company, there
were no releases of Hazardous Material in, on, under, or affecting any such
property, Participation Facility or Operating Property, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company.
5.12 Compliance With Laws. Subject Company is duly registered
as a bank holding company under the BHC Act. Each of Subject Company and the
Subject Company Subsidiaries has in effect all Permits necessary for it to own,
lease, or operate its material Assets and to carry on its business as now
conducted, except where the failure to hold such Permits would not be
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company. Except as set forth in Section 5.12 of the Subject
Company Disclosure Memorandum, neither Subject Company nor any of the Subject
Company Subsidiaries:
(a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for such
violations which would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company; or
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that Subject Company or any of the
Subject Company Subsidiaries is not in compliance with any of the Laws or
Orders which such governmental authority or Regulatory Authority enforces, (ii)
threatening to revoke any Permits, or (iii) requiring Subject Company or any of
the Subject Company Subsidiaries to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment, or memorandum
of understanding, or to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
5.13 Labor Relations. Neither Subject Company nor any of the
Subject Company Subsidiaries is the subject of any Litigation asserting that
Subject Company or any of the Subject Company Subsidiaries has committed an
unfair labor
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practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel Subject Company or any of the Subject Company
Subsidiaries to bargain with any labor organization as to wages or conditions
of employment, nor is there any strike or other labor dispute involving Subject
Company or any of the Subject Company Subsidiaries, pending or threatened, or
to the Knowledge of Subject Company, is there any activity involving Subject
Company's or any of the Subject Company Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
5.14 Employee Benefit Plans. (a) Subject Company has disclosed
in Section 5.14 of the Subject Company Disclosure Memorandum, and has delivered
or made available to Parent prior to the execution of this Agreement copies in
each case of, all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus, or
other incentive plan, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including "employee benefit plans" as that term is defined in Section 3(3) of
ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by Subject Company or the Subject Company Subsidiaries or ERISA
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries of Subject Company
or any Subject Company Subsidiary and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
of Subject Company or any Subject Company Subsidiary are eligible to
participate (collectively, the "Subject Company Benefit Plans"). Any of the
Subject Company Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to herein as a
"Subject Company ERISA Plan." Each Subject Company ERISA Plan which is also a
"defined benefit plan" (as defined in Section 414(j) of the Internal Revenue
Code) is referred to herein as a "Subject Company Pension Plan." No Subject
Company Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(b) All Subject Company Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Subject Company.
Each Subject Company ERISA Plan that is intended to be qualified under Section
401(a) of the Internal Revenue Code has either received a favorable
determination letter from the Internal Revenue Service (and Subject Company is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter) or timely application
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has been made therefor. To the knowledge of Subject Company, neither Subject
Company nor any of the Subject Company Subsidiaries has engaged in a
transaction with respect to any Subject Company Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
any Subject Company to a material Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA.
(c) Except as disclosed in Section 5.14 of the Subject Company
Disclosure Memorandum, no Subject Company Pension Plan has any "underfunded
current liability" as that term is defined in Section 302(d)(8)(A) of ERISA and
the fair market value of the assets of any such plan exceeds the plan's
"benefit liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements. Since the date of the
most recent actuarial valuation, there has been (i) no material change in the
financial position of any Subject Company Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Subject Company Pension Plan, and
(iii) no increase in benefits under any Subject Company Pension Plan as a
result of plan amendments or changes in applicable Law which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Subject Company or materially adversely affect the funding status of any such
plan. Neither any Subject Company Pension Plan nor any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by Subject Company or any of the Subject Company Subsidiaries, or
the single-employer plan of any entity which is considered one employer with
Subject Company under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA. Neither
Subject Company nor any of the Subject Company Subsidiaries has provided, or,
to Subject Company's knowledge, is required to provide, security to a Subject
Company Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time,
no material Liability under Subtitle C or D of Title IV of ERISA has been
incurred by Subject Company or any of the Subject Company Subsidiaries with
respect to any current, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate. Neither Subject Company nor any
of the Subject Company Subsidiaries has incurred any material withdrawal
Liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contri-
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butions of an ERISA Affiliate). No notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Subject Company Pension
Plan or by any ERISA Affiliate within the 12-month period ending on the date
hereof.
(e) Except as disclosed in Section 5.14 of the Subject Company
Disclosure Memorandum, neither Subject Company nor any of the Subject Company
Subsidiaries has any material Liability for retiree health and life benefits
under any of the Subject Company Benefit Plans.
(f) Except as disclosed in Section 5.14 of the Subject Company
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation or golden parachute)
becoming due to any director or any employee of Subject Company or any of the
Subject Company Subsidiaries from Subject Company or any of the Subject Company
Subsidiaries under any Subject Company Benefit Plan, (ii) materially increase
any benefits otherwise payable under any Subject Company Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any Subject Company Subsidiary and their respective
beneficiaries, other than entitlements accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, have been fully reflected on the Subject Company
Financial Statements to the extent required by and in accordance with GAAP.
5.15 Material Contracts. Except as disclosed in the Subject
Company SEC Reports, in the SEC Documents filed by Holding or as disclosed in
Section 5.15 of the Subject Company Disclosure Memorandum, neither Subject
Company, the Subject Company Subsidiaries, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $100,000, (ii) any Contract relating
to the borrowing of money by Subject Company or any of the Subject Company
Subsidiaries or the guarantee by Subject Company or any of the Subject Company
Subsidiaries of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
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trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business), (iii) any Contracts which prohibit or restrict
Subject Company or any of the Subject Company Subsidiaries from engaging in any
business activities in any geographic area, line of business, or otherwise in
competition with any other Person, (iv) any Contracts between or among Subject
Company and the Subject Company Subsidiaries, (v) any exchange-traded or
over-the-counter swap, forward, future, option, cap, floor, or collar financial
Contract, or any other interest rate or foreign currency protection Contract
(not disclosed in the Subject Company Financial Statements delivered prior to
the date of this Agreement) which is a financial derivative Contract (including
various combinations thereof), and (vi) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Subject Company SEC
Report filed by Subject Company with the SEC prior to the date of this
Agreement that has not been filed as an exhibit to a Subject Company SEC Report
(together with all Contracts referred to in Sections 5.9 and 5.14(a) of this
Agreement, the "Subject Company Contracts"). With respect to each Subject
Company Contract: (i) the Contract is in full force and effect; (ii) neither
Subject Company nor any Subject Company Subsidiary is in Default thereunder;
(iii) neither Subject Company nor its Subsidiaries has repudiated or waived any
material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of Subject Company, in Default in any respect or
has repudiated or waived any material provision thereunder.
5.16 Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of Subject Company, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Subject Company or
any of the Subject Company Subsidiaries, or against any Asset, employee benefit
plan, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Subject Company,
nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against Subject Company or any of the
Subject Company Subsidiaries. Section 5.16 of the Subject Company Disclosure
Memorandum includes a summary report of all material Litigation as of the date
of this Agreement to which Subject Company or any Subject Company Subsidiary is
a party and which names Subject Company or a Subject Company Subsidiary as a
defendant or cross-defendant.
5.17 Reports. Except as disclosed in Section 5.17 of the
Subject Company Disclosure Memorandum, since January 1, 1994, or the applicable
date of organization if later, Subject Company and each Subject Company
Subsidiary has timely filed all reports and statements, together with any
amendments required to be
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made with respect thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements (the "Subject Company SEC Reports"), (ii) other Regulatory
Authorities, and (iii) any applicable state securities or banking authorities,
except failures to file which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Subject Company. As of its
respective date (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its
respective date (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), each Subject Company SEC
Report did not contain any untrue statement of a material fact or omit 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. Except for Holding or as disclosed in Section 5.17 of
the Subject Company Disclosure Schedule, none of the Subject Company
Subsidiaries is required to file any SEC Documents.
5.18 Statements True and Correct. None of the information
supplied or to be supplied by Subject Company for inclusion in the Registration
Statement to be filed by Parent 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 Subject Company for inclusion in the Proxy Statement to be mailed
to Subject Company's shareholders in connection with the Shareholders' Meeting,
and any other documents to be filed by Subject Company with the SEC or any
other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statement, when first mailed to the shareholders of Subject
Company, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or, in the case
of the Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Shareholders' 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 any
proxy for the Shareholders' Meeting. All documents that Subject Company or the
Subject Company Subsidiaries are responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable Law.
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5.19 Accounting, Tax, and Regulatory Matters. Neither Subject
Company nor any of the Subject Company Subsidiaries has taken any action or has
any Knowledge of any fact or circumstance relating to Subject Company that is
reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying for pooling-of-interests accounting
treatment or as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement.
5.20 State Takeover Laws. Except as disclosed in Section 5.20
of the Subject Company Disclosure Memorandum, Subject Company has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any applicable "moratorium," "fair price," "business combination," "control
share," or other anti-takeover laws (collectively, "Takeover Laws"), including
Sections 607.0901 and 607.0902 of the FBCA.
5.21 Article Provisions. Except as disclosed in Section 5.21
of the Subject Company Disclosure Memorandum, Subject Company has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under the Articles,
By-laws or other governing instruments of Subject Company or any Subject
Company Subsidiary or restrict or impair the ability of Parent or any of the
Parent Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of Subject Company or any Subject Company
Subsidiary.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Subject Company as
follows:
6.1 Organization, Standing and Power. Parent is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Tennessee, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
Parent is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for
24
<PAGE> 29
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
6.2 Authority; No Breach by Agreement. (a) Parent has the
corporate power and authority necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein, including the
Merger, have been duly and validly authorized by all necessary corporate action
(including valid authorization and adoption of this Agreement by Parent's duly
constituted Board of Directors) in respect thereof on the part of Parent.
Assuming due authorization, execution and delivery of this Agreement by Subject
Company, this Agreement (which, for purposes of this sentence, shall not
include the Stock Option Agreement) represents a legal, valid, and binding
obligation of Parent, enforceable against Parent in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
(which, for purposes of clause (iii) of this sentence, shall not include the
Stock Option Agreement) by Parent, nor the compliance by Parent with any of the
provisions hereof, will (i) conflict with or result in a breach of any
provision of Parent's Restated Charter of Incorporation or By-laws, or (ii)
constitute or result in a Default under, or require any Consent (excluding
Consents required by Law or Order) pursuant to, or result in the creation of
any Lien on any material Asset of Parent or any Parent Subsidiary under, any
Contract or Permit of Parent or any Parent Subsidiary, except for such
Defaults, Liens and Consents, which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to Parent or any Parent Subsidiary or any of their respective
material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NYSE, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not
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reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Parent of the Merger and the
other transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of Parent
consists of (i) 100,000,000 shares of Parent Common Stock, of which 66,790,144
shares are issued and outstanding as of June 30, 1997, and (ii) 10,000,000
shares of Parent Preferred Stock, of which 2,533,236 shares of Parent Series E
Preferred Stock are issued and outstanding. All of the issued and outstanding
shares of Parent Capital Stock are, and all of the shares of Parent Common
Stock to be issued in exchange for shares of Subject Company Common Stock upon
consummation of the Merger, when issued in exchange for shares of Subject
Company Common Stock upon consummation of the Merger, when issued in accordance
with the terms of this Agreement, will be, duly and validly issued and
outstanding and fully paid and nonassessable under the TBCA. None of the
outstanding shares of Parent Capital Stock has been, and none of the shares of
Parent Common Stock to be issued in exchange for shares of Subject Company
Common Stock upon consummation of the Merger will be, issued in violation of
any preemptive rights of the current or past shareholders of Parent. Parent
has reserved for issuance a sufficient number of shares of Parent Common Stock
for the purpose of issuing shares of Parent Common Stock in accordance with the
provisions of Sections 3.1 and 3.5 of this Agreement.
6.4 Parent Subsidiaries. Except as set forth in Section 6.4
of the Parent Disclosure Memorandum, Parent or one of its wholly owned
Subsidiaries owns all of the issued and outstanding shares of capital stock (or
other equity interests) of each of the Parent Subsidiaries. No capital stock
(or other equity interest) of any Parent Subsidiary is or may become required
to be issued (other than to another Parent Subsidiary) by reason of any rights,
and there are no Contracts by which the Parent or any of the Parent
Subsidiaries are bound to issue (other than to Parent or any of the Parent
Subsidiaries) additional shares of its capital stock (or other equity
interests) or Rights or by which Parent or any of the Parent Subsidiaries are
or may be bound to transfer any shares of the capital stock (or other equity
interests) of any of Parent or any of the Parent Subsidiaries (other than to
Parent or any of the Parent Subsidiaries). There are no Contracts relating to
the rights of Parent or any Parent Subsidiary to vote or to dispose of any
shares of the capital stock (or other equity interests) of Parent or any of the
Parent Subsidiaries. All of the shares of capital stock (or other equity
interests) of each Parent Subsidiary held by Parent or any Parent Subsidiary
are fully paid and nonassessable (except pursuant to 12 U.S.C. Section 55 in
the case of national banks and comparable, applicable state Law, if any,
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in the case of state depository institutions) under the applicable corporation
or similar Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by Parent or a Parent Subsidiary free and clear of any
Liens. Each Parent Subsidiary is either a bank, a savings association,
partnership, limited liability corporation, or a corporation, and each such
Subsidiary is duly organized, validly existing, and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each Parent Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent. The minute book and other organizational documents (and all
amendments thereto) for each of Parent and each Parent Subsidiary that is a
Significant Subsidiary have been made available to Subject Company for its
review, and are true and complete as in effect as of the date of this
Agreement.
6.5 Financial Statements. Each of the Parent Financial
Statements (including, in each case, any related notes) contained in the Parent
SEC Reports, including any Parent SEC Reports filed after the date of this
Agreement until the Effective Time, complied, or will comply, as to form in all
material respects with the applicable published rules and regulations of the
SEC with respect thereto, was prepared, or will be prepared, in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented, or will fairly present, in all material respects the consolidated
financial position of Parent and the Parent Subsidiaries as at the respective
dates and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount or effect.
6.6 Absence of Undisclosed Liabilities. Neither Parent nor
any of the Parent Subsidiaries has any Liabilities that are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Parent,
except Liabilities which are accrued or reserved against in the consolidated
balance sheets of Parent as of March 31, 1997, included in the Parent Financial
Statements made available prior to the date of this Agreement or reflected in
the notes thereto. Neither Parent nor any of
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the Parent Subsidiaries has incurred or paid any Liability since March 31,
1997, except for such Liabilities incurred or paid (i) in the ordinary course
of business consistent with past business practice or which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Parent or (ii) in connection with the transaction contemplated by this
Agreement.
6.7 Absence of Certain Changes or Events. Since December 31,
1996, except as disclosed in the Parent SEC Reports made available prior to the
date of this Agreement or in Section 6.7 of the Parent Disclosure Memorandum,
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 Parent.
6.8 Tax Matters. (a) All material Tax Returns required to be
filed by or on behalf of Parent or any of the Parent Subsidiaries have been
timely filed or requests for extensions have been timely filed, granted, and
have not expired for periods ended on or before December 31, 1996, and on or
before the date of the most recent fiscal year end immediately preceding the
Effective Time, and all such Tax Returns filed are complete and accurate in all
material respects. All Taxes shown on filed Tax Returns have been paid. There
is no audit examination, or refund Litigation with respect to any material
Taxes, except as reserved against the Parent Financial Statements delivered
prior to the date of this Agreement. All material Taxes and other material
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid. There are no material Liens with respect to Taxes
upon any of the Assets of Parent or any of the Parent Subsidiaries.
(b) Adequate provision for any material Taxes due or to become
due for Parent or any of the Parent Subsidiaries for the period or periods
through and including the date of the respective Parent Financial Statements
has been made and is reflected on such Parent Financial Statements.
(c) Material deferred Taxes of Parent and the Parent
Subsidiaries have been provided for in accordance with GAAP.
6.9 Environmental Matters. (a) To the Knowledge of Parent,
each of Parent and the Parent Subsidiaries, its Participation Facilities, and
its Operating Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
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(b) To the Knowledge of Parent, there is no Litigation pending
or threatened before any court, governmental agency, or authority or other
forum in which Parent or any of the Parent Subsidiaries or any of their
respective Operating Properties or Participation Facilities (or Parent in
respect of such Operating Property or Participation Facility) has been or, with
respect to threatened Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, adjacent to, or affecting (or potentially
affecting) a site owned, leased, or operated by Parent or any of the Parent
Subsidiaries or any of their respective Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent, nor, to the knowledge of Parent, is there any reasonable
basis for any Litigation of a type described in this sentence.
(c) During the period of (i) Parent's or any of the Parent
Subsidiaries' ownership or operation of any of their respective current
properties, (ii) any Parent's or any of the Parent Subsidiaries' participation
in the management of any Participation Facility, or (iii) Parent's or any of
the Parent Subsidiaries' holding of a security interest in an Operating
Property, to the Knowledge of Parent, there have been no releases of Hazardous
Material in, on, under, adjacent to, or affecting (or potentially affecting)
such properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Parent. Prior to the period
of (i) Parent's or any of Parent Subsidiaries' ownership or operation of any of
their respective current properties, (ii) Parent's or any of Parent
Subsidiaries' participation in the management of any Participation Facility,
or (iii) Parent or any of Parent Subsidiaries' holding of a security interest
in an Operating Property, to the Knowledge of Parent, there were no releases of
Hazardous Material in, on, under, or affecting any such property, Participation
Facility or Operating Property, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
6.10 Compliance With Laws. Parent is duly registered as a bank
holding company under the BHC Act. Each of Parent and the Parent Subsidiaries
has in effect all Permits necessary for it to own, lease, or operate its
material Assets and to carry on its business as now conducted, except where the
failure to hold such permits would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent. Neither
Parent nor any of the Parent Subsidiaries:
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(a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for such
violations which would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent; or
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that Parent or any Parent
Subsidiary is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, (ii) threatening to
revoke any Permits, or (iii) requiring Parent or any Parent Subsidiary to enter
into or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
6.11 Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of Parent, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Parent or any Parent
Subsidiary, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against Parent or any
Parent Subsidiary.
6.12 Reports. Since January 1, 1994, or the applicable date of
organization if later, Parent and each Parent Subsidiary has filed all reports
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements (the
"Parent SEC Reports"), (ii) other Regulatory Authorities, and (iii) any
applicable state securities or banking authorities, except failures to file
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Parent. As of its respective date (or, if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such filing), each of such reports and documents, including, the financial
statements, exhibits, and schedules thereto complied in all material respects
with all applicable Laws. As of its respective date, each Parent SEC Report
did not contain any untrue statement of a material fact or omit 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. Except for Parent
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Subsidiaries that are registered as a broker, dealer, or investment advisor,
no Parent Subsidiary is required to file any SEC Documents.
6.13 Statements True and Correct. None of the information
supplied or to be supplied by Parent for inclusion in the Registration
Statement to be filed by Parent 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 Parent for inclusion in the Proxy Statement to be mailed to Subject
Company's shareholders in connection with the Shareholders' Meeting, and any
other documents to be filed by Parent or any Parent Subsidiary with the SEC or
any other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statement, when first mailed to the shareholders of Subject
Company, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or, in the case
of the Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Shareholders' 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 any
proxy for the Shareholders' Meeting. All documents that Parent or any Parent
Subsidiary is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.14 Accounting, Tax, and Regulatory Matters. Neither Parent
nor any Parent Subsidiary has taken any action or has any Knowledge of any fact
or circumstance relating to Parent that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Subject Company. Unless the
prior written consent of Parent shall have been obtained, and except as
otherwise expressly contemplated herein, Subject Company shall and shall cause
each of the Subject Company Subsidiaries to (i) operate its business only in
the usual, regular, and ordinary course, (ii) use reasonable efforts to
preserve intact its business organization and Assets and maintain its rights
and franchises, and (iii) take no action which would (a) materially adversely
affect the ability of any Party to obtain any Consents required for the
transactions contemplated hereby or prevent the transactions contemplated
hereby, including the Merger, from qualifying for pooling-of-interests
accounting treatment or as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (b) materially adversely affect the
ability of any Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of Subject Company. Except as
specifically permitted by this Agreement, from the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Subject
Company covenants and agrees that it will not do or agree or commit to do, or
permit any of the Subject Company Subsidiaries to do or agree or commit to do,
any of the following without the prior written consent of the chief executive
officer, president, or chief financial officer of Parent, which consent shall
not be unreasonably withheld:
(a) amend the Articles, By-laws, or other governing
instruments of Subject Company or any Subject Company Subsidiary; or
(b) incur any additional debt obligation for borrowed money
(other than indebtedness of Subject Company or the Subject Company Subsidiaries
to each other) in excess of an aggregate of $500,000 (for Subject Company and
the Subject Company Subsidiaries on a consolidated basis) except in the
ordinary course of the business of the Subject Company Subsidiaries consistent
with past practices (which shall include, for the Subject Company Subsidiaries
that are depository institutions, creation of deposit liabilities, purchases of
federal funds, advances from the Federal Reserve Bank or Federal Home Loan
Bank, and entry into repurchase agreements fully secured by U.S. government or
agency securities), or impose, or suffer the imposition, on any material Asset
of Subject Company or any of the Subject Company Subsidiaries of any Lien or
permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan"
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accounts established in the ordinary course of business, the satisfaction of
legal requirements in the exercise of trust-powers, and Liens in effect as of
the date hereof that are disclosed in the Subject Company Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of Subject Company or any of the Subject Company
Subsidiaries, or declare or pay any dividend or make any other distribution in
respect of Subject Company's capital stock, provided that Subject Company may
(to the extent legally and contractually permitted to do so), but shall not be
obligated to, declare and pay regular quarterly cash dividends on the shares of
Subject Company Common Stock at a rate not in excess of $.08 1/3 per share with
usual and regular record and payment dates in accordance with past practice,
provided, that, notwithstanding the provisions of Section 1.3, the Parties
shall cooperate in selecting the Effective Time to ensure that, with respect to
the quarterly period in which the Effective Time occurs, the holders of Subject
Company Common Stock do not become entitled to receive both a dividend in
respect of their Subject Company Common Stock and a dividend in respect of
Parent Common Stock or fail to be entitled to receive any dividend; or
(d) except (I) for this Agreement, (II) pursuant to the
exercise of stock options outstanding as of the date hereof and pursuant to the
terms thereof in existence on the date hereof under the Subject Company Stock
Plans or (III) pursuant to the exercise of stock options granted by Holding, or
(IV) pursuant to the Stock Option Agreement, issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of its common stock or any other capital
stock, or any stock appreciation rights, or any option, warrant, conversion, or
other right to acquire any such stock, or any security convertible into any
such stock; or
(e) adjust, split, combine or reclassify any capital stock of
Subject Company or any of the Subject Company Subsidiaries or issue or
authorize the issuance of any other securities in respect of or in substitution
for shares of Subject Company Common Stock, or sell, lease, mortgage or
otherwise dispose of or otherwise encumber any shares of capital stock of any
Subject Company Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another Subject Company Subsidiary) or any Asset
having a book value in excess of $250,000 other than in the ordinary course of
business for reasonable and adequate consideration; or
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(f) except for purchases of investment securities acquired in
the ordinary course of business consistent with past practice, purchase any
securities or make any material investment, either by purchase of stock or
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Subsidiary of Subject Company,
or otherwise acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, (ii)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity, or (iii) the creation of new wholly-owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of Subject Company or the Subject Company Subsidiaries,
except in the ordinary course of business consistent with past practice and
disclosed in Section 7.2(g) of the Subject Company Disclosure Memorandum or as
required by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 7.2(g) of the Subject Company Disclosure
Memorandum; enter into or amend any severance agreements with officers of
Subject Company or the Subject Company Subsidiaries; grant any material
increase in fees or other increases in compensation or other benefits to
directors of Subject Company or the Subject Company Subsidiaries; or
voluntarily accelerate the vesting of any stock options or other stock-based
compensation or employee benefits (other than the acceleration of vesting which
occurs under a benefit plan upon a change of control of Subject Company); or
(h) enter into or amend any employment Contract between
Subject Company or the Subject Company Subsidiaries and any Person (unless such
amendment is required by Law) that Subject Company does not have the
unconditional right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of Subject Company or
the Subject Company Subsidiaries or terminate or withdraw from, or make any
material change in or to, any existing employee benefit plans of Subject
Company or the Subject Company Subsidiaries other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or advisable
to maintain the tax qualified status of any such plan, or make any
distributions from such employee benefit plans, except as required by Law, the
terms of such plans or consistent with past practices; or
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(j) make any material change in any Tax or accounting methods
or systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of Subject Company or
the Subject Company Subsidiaries for material money damages or restrictions
upon the operations of Subject Company or the Subject Company Subsidiaries; or
(l) except in the ordinary course consistent with past
practice, enter into, modify, amend, or terminate any material Contract
(excluding any loan Contract) or waive, release, compromise, or assign any
material rights or claims.
7.3 Covenants of Parent. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Parent covenants and agrees that it shall (i) continue to conduct its business
and the business of the Parent Subsidiaries in a manner designed in its
reasonable judgment to enhance the long-term value of the Parent Common Stock
and the business prospects of Parent and the Parent Subsidiaries, and (ii) take
no action which would (a) materially adversely affect the ability of any Party
to obtain any Consents required for the transactions contemplated hereby or
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, (b)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement, or (c) result in Parent entering into an
agreement with respect to an Acquisition Proposal with a third party which
could be reasonably expected to result in the Merger not being consummated;
provided, that the foregoing shall not prevent Parent or any Parent Subsidiary
from acquiring any other Assets or businesses or from discontinuing or
disposing of any of its Assets or business if such action is, in the reasonable
judgment of Parent, desirable in the conduct of the business of Parent and the
Parent Subsidiaries and would not, in the reasonable judgment of Parent, likely
delay the Effective Time to a date subsequent to the date set forth in Section
10.1(e) of this Agreement.
7.4 Adverse Changes in Condition. 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
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any of its representations, warranties, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and, to the extent permitted by Law,
shall deliver to the other Party copies of all such reports promptly after the
same are filed. If financial statements are contained in any such reports
filed with the SEC, such financial statements will fairly present the
consolidated financial position of the entity filing such statements as of the
dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of their respective
dates, such reports filed with the SEC will comply in all material respects
with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder
Approval. Each of Parent and Subject Company shall prepare and file the
Registration Statement, of which the Proxy Statement shall form a part, with
the SEC, and shall use its reasonable efforts to cause the Registration
Statement to become effective under the 1933 Act and Parent shall take any
action required to be taken under the applicable state Blue Sky or securities
Laws in connection with the issuance of the shares of Parent Common Stock upon
consummation of the Merger. Each of Parent and Subject Company shall furnish
all information concerning it and the holders of its capital stock as the other
Party may reasonably request in connection with such action. Subject Company
shall call a Shareholders' Meeting, to be held as soon as practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meeting, (i) the Board
of Directors of Subject Company shall recommend (subject to compliance with its
fiduciary duties as advised by counsel) to its shareholders the approval of the
Merger,
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and (ii) the Board of Directors (subject to compliance with its fiduciary
duties as advised by counsel) and officers of Subject Company shall use their
reasonable efforts to obtain shareholder approval.
8.2 Exchange Listing. Parent shall use its reasonable efforts
to list, prior to the Effective Time, on the NYSE, subject to official notice
of issuance, the shares of Parent Common Stock to be issued to the holders of
Subject Company Common Stock or Subject Company Options pursuant to the Merger,
and Parent shall give all notices and make all filings with the NYSE required
in connection with the transactions contemplated herein.
8.3 Applications. Parent shall prepare and file, and Subject
Company shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement;
provided, however, that no party shall be required to seek any Consents for the
exercise of any rights or performance of any obligations under the Stock Option
Agreement except as set forth in such agreement. At least five business days
prior to each filing, Parent shall provide Subject Company and its counsel with
copies of such applications. The Parties shall deliver to each other copies of
all filings, correspondence and orders to and from all Regulatory Authorities
in connection with the transactions contemplated hereby as soon as practicable
upon their becoming available.
8.4 Filings With State Offices. Upon the terms and subject to
the conditions of this Agreement, Parent and Subject Company shall execute and
file the Articles of Merger with the Secretary of State of the State of Florida
in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the
terms and conditions of this Agreement, each Party agrees to use, and to cause
its Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, however, that no party shall be required
to seek any Consents or take any other actions for the exercise of any rights
or performance of any obligations under the Stock Option Agreement
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except as set forth in such agreement. Each Party shall use, and shall cause
each of its Subsidiaries to use, its reasonable efforts to obtain all Consents
necessary or desirable for the consummation of the transactions contemplated by
this Agreement; provided, however, that no party shall be required to seek any
Consents or take any other actions for the exercise of any rights or
performance of any obligations under the Stock Option Agreement except as set
forth in such agreement.
8.6 Investigation and Confidentiality. (a) Prior to the
Effective Time, 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
the business and properties of it and 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. Neither Party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of such Party's customers, jeopardize any attorney-client privilege
or contravene any Law, rule, regulation, order, judgment, decree, fiduciary
duty or binding agreement entered into prior to the date of this Agreement.
The Parties will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply. No
investigation by a Party shall affect the representations and warranties of the
other Party.
(b) Each Party will hold all information gathered pursuant to
this Agreement in confidence to the extent required by, and in accordance with,
the provisions of the Confidentiality Agreement, dated April 23, 1997, between
Parent and Subject Company.
8.7 Press Releases. Prior to the Effective Time, Subject
Company and Parent shall consult with each other as to the form and substance
of any press release or other public disclosure materially related to this
Agreement or any other transaction contemplated hereby; provided, that nothing
in this Section 8.7 shall be deemed to prohibit any Party from making any
disclosure which its counsel deems necessary or advisable in order to satisfy
such Party's disclosure obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement
and the transactions contemplated hereby, after the date of this Agreement,
neither Subject Company, the Subject Company Subsidiaries nor any
Representatives thereof retained by Subject Company or the Subject Company
Subsidiaries shall directly or indirectly
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solicit any Acquisition Proposal by any Person. Except to the extent necessary
to comply with the fiduciary duties of Subject Company's Board of Directors as
advised by counsel, Subject Company, the Subject Company Subsidiaries, or
Representatives thereof shall not furnish any non-public information that it is
not legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but Subject Company may
communicate information about such an Acquisition Proposal to its shareholders
if and to the extent that it is required to do so in order to comply with its
legal obligations as advised by counsel. Subject Company shall promptly notify
Parent orally and in writing in the event that it receives any Acquisition
Proposal or inquiry related thereto. Subject Company shall (i) immediately
cease and cause to be terminated any existing activities, discussions, or
negotiations with any Persons conducted heretofore with respect to any of the
foregoing, and (ii) direct and use its reasonable efforts to cause all of its
Representatives not to engage in any of the foregoing.
8.9 Accounting and Tax Treatment. Each of the Parties
undertakes and agrees to use its reasonable efforts to cause the Merger, and to
take no action which would cause the Merger not, to qualify for
pooling-of-interests accounting treatment and treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code for federal
income tax purposes.
8.10 Agreement of Affiliates. Subject Company has disclosed in
Section 8.10 of the Subject Company Disclosure Memorandum each Person whom it
reasonably believes is an "affiliate" of Subject Company as of the date of this
Agreement for purposes of Rule 145 under the 1933 Act. Subject Company shall
use its reasonable efforts to cause each such Person to deliver to Parent not
later than 40 days prior to the Effective Time, a written agreement,
substantially in the form of Exhibit 3, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of Subject Company
Common Stock held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of Parent Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder and until such time as financial
results covering at least 30 days of combined operations of Parent and Subject
Company have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. If the Merger will qualify for
pooling-of-interests accounting treatment, shares of Parent Common Stock issued
to such affiliates of Subject Company in exchange for shares of Subject Company
Common Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of Parent and Subject Company
have been
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published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such affiliate has
provided the written agreement referred to in this Section 8.10 (and Parent
shall be entitled to place restrictive legends upon certificates for shares of
Parent Common Stock issued to affiliates of Subject Company pursuant to this
Agreement to enforce the provisions of this Section 8.10). Parent shall not be
required to maintain the effectiveness of the Registration Statement under the
1933 Act for the purposes of resale of Parent Common Stock by such affiliates.
8.11 Employee Benefits and Contracts. (a) Following the
Effective Time, Parent shall provide to officers and employees of the Subject
Company and any Subject Company Subsidiary, employee benefits under employee
benefit and welfare plans of Parent or the Parent Subsidiaries on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by Parent or a Parent Subsidiary to their similarly situated
officers and employees. For purposes of participation, vesting, and (except in
the case of retirement plans) benefit accrual under such employee benefit
plans, the service of the employees of the Subject Company and any Subject
Company Subsidiary prior to the Effective Time shall be treated as service with
Parent or a Parent Subsidiary participating in such employee benefit plans.
(b) Except as set forth in the Supplemental Letter, Parent
shall, and shall cause the Parent Subsidiaries to, honor in accordance with
their terms the Subject Company Benefit Plans, each as amended to the date
hereof, and other contracts, arrangements, commitments or understandings
disclosed in Section 8.11 of the Subject Company Disclosure Memorandum. Parent
and Subject Company hereby acknowledge that consummation of the Merger will
constitute a "Change in Control" for purposes of all employee benefit plans,
contracts, arrangements and commitments that contain change in control
provisions and, except as set forth in the Supplemental Letter, agree to abide
by the provisions of any employee benefit plan, contract, arrangement or
commitment which relates to a Change in Control.
8.12 Indemnification. (a) After the Effective Time, Parent
shall indemnify, defend and hold harmless the present and former directors,
officers, employees, and agents of the Subject Company and any Subject Company
Subsidiary (each, an "Indemnified Party") (including any person who becomes a
director, officer, employee, or agent prior to the Effective Time) against all
Liabilities (including reasonable attorneys' fees, and expenses, judgments,
fines and amounts paid in settlement) arising out of actions or omissions
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement and the Stock
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Option Agreement and the proceedings entitled Nathan J. Esformes, Stanley I.
Worton, M.D., and Leonard Wein, as individual shareholders and on behalf of all
other shareholders of Subject Company v. Abel Holtz, Fana Holtz, Daniel M.
Holtz and Javier J. Holtz, the Bank and Subject Company and Stanley I. Worton,
M.D., Nathan Esformes v. Abel Holtz, Fana Holtz, Daniel Holtz, Alex Halberstein
and Subject Company) to the full extent permitted under any of Florida Law,
Subject Company's Articles and By-laws as in effect on the date hereof and any
indemnity agreements entered into prior to the date of this Agreement by
Subject Company or any Subject Company Subsidiary and any director, officer,
employee or agent of Subject Company or any Subject Company Subsidiary,
including provisions relating to advances of expenses incurred in the defense
of any Litigation. Without limiting the foregoing, in any case in which
approval by Parent is required to effectuate any indemnification, Parent shall
direct, at the election of the Indemnified Party, that the determination of any
such approval shall be made by independent counsel mutually agreed upon between
Parent and the Indemnified Party.
(b) Parent shall use its reasonable efforts (and
Subject Company shall cooperate prior to the Effective Time in these efforts)
to maintain in effect for a period of three years after the Effective Time
Subject Company's existing directors' and officers' liability insurance policy
(provided that Parent may substitute therefor (i) policies of at least the same
coverage and amounts containing terms and conditions which are substantially no
less advantageous or (ii) with the consent of Subject Company given prior to
the Effective Time, any other policy) with respect to claims arising from facts
or events which occurred prior to the Effective Time and covering persons who
are currently covered by such insurance; provided, that the Surviving
Corporation shall not be obligated to make aggregate annual premium payments
for such three-year period in respect of such policy (or coverage replacing
such policy) which exceed, for the portion related to Subject Company's
directors and officers, 150% of the annual premium payments on Subject
Company's current policy in effect as of the date of this Agreement (the
"Maximum Amount"). If the amount of the premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Parent shall use
its reasonable efforts to maintain the most advantageous policies of directors'
and officers' liability insurance obtainable for a premium equal to the Maximum
Amount.
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.12, upon learning of any
such Liability or Litigation, shall promptly notify Parent thereof, provided
that the failure so to notify shall not affect the obligations of Parent under
this Section 8.12 unless and to the extent such failure materially increases
Parent's Liability under this Section 8.12. In
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<PAGE> 46
the event of any such Litigation (whether arising before or after the Effective
Time), (i) Parent or the Surviving Corporation shall have the right to assume
the defense thereof and Parent 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 Parent or the Surviving Corporation elects not to assume such
defense or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between Parent or the
Surviving Corporation and the Indemnified Parties or between the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Parent or the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; provided, that Parent shall be obligated pursuant to this paragraph
(c) to pay for only two firms of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any
such Litigation, and (iii) neither Parent nor the Surviving Corporation shall
be liable for any settlement effected without its prior written consent or 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.
(d) If either Parent or the Surviving Corporation or
any of their respective successors or assigns shall consolidate with or merge
into any other Person and shall not be the continuing or surviving Person of
such consolidation or merger or shall transfer all or substantially all of its
assets to any Person, then and in each case, proper provision shall be made so
that the successors and assigns of Parent or the Surviving Corporation, as the
case may be, shall assume the obligations set forth in this Section 8.12
(e) Parent shall pay all reasonable costs, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 8.12.
(f) The provisions of this Section 8.12 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and representatives.
8.13 Merger Subsidiary Organization. Parent shall organize
Merger Subsidiary under the Laws of the State of Florida. Prior to the
Effective Time, the outstanding capital stock of Merger Subsidiary shall
consist of 1,000 shares of Parent Merger Subsidiary Common Stock, all of which
shares shall be owned by Parent.
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Prior to the Effective Time, Merger Subsidiary shall not (i) conduct any
business operations whatsoever or (ii) enter into any Contract or agreement of
any kind, acquire any assets or incur any Liability, except as may be
specifically contemplated by this Agreement or as the Parties may otherwise
agree. Parent, as the sole stockholder of Merger Subsidiary, shall vote prior
to the Effective Time the shares of Merger Subsidiary Common Stock in favor of
this Agreement.
8.14 State Takeover Laws. Subject Company shall use, and shall
cause Holdings to use, its reasonable efforts to take all necessary steps to
exempt the transactions contemplated by this Agreement from the Takeover Laws.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(a) Shareholder Approval. The shareholders of Subject Company
shall have approved this Agreement and the consummation of the transactions
contemplated hereby and thereby, including the Merger, as and to the extent
required by Law, or by the provisions of any governing instruments (without
regard to any shares which are voted pursuant to irrevocable proxies, the
validity of which has been contested by the underlying owner, unless the
underlying owner has given written instructions with respect to the voting of
such shares in connection with this Agreement).
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary
to consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (other than matters relating to the raising of
additional capital or the disposition of Assets or deposit Liabilities and
associated branches) which in the reasonable judgment of the Board of Directors
of Parent would so materially adversely impact the financial or economic
benefits of the
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<PAGE> 48
transactions contemplated by this Agreement that, had such condition or
requirement been known, Parent would not, in its reasonable judgment, have
entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained
any and all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or 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.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced, or entered by 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.
(e) Registration Statement. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit, proceeding,
or investigation by the SEC to suspend the effectiveness thereof shall have
been initiated and be continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to the issuance or trading
of the shares of Parent Common Stock issuable pursuant to the Merger shall have
been received.
(f) Exchange Listing. The shares of Parent Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(g) Tax Matters. Parent shall have received a written opinion
of counsel from Alston & Bird LLP, and Subject Company shall have received a
written opinion of counsel from Skadden, Arps, Slate, Meagher & Flom LLP, in
form and substance reasonably satisfactory to Parent and Subject Company,
respectively, dated as of the Effective Time, in each case substantially to the
effect that (i) the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, (ii) no gain or loss will be
recognized by the shareholders of Subject Company who exchange all of their
Subject Company Common Stock solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest in Parent Common Stock), (iii) the tax basis of the Parent Common
Stock received by shareholders of Subject Company who exchange Subject Company
Common Stock solely for Parent Common Stock in the Merger will
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<PAGE> 49
be the same as the tax basis of the Subject Company Common Stock surrendered in
exchange therefor, (iv) the holding period of the Parent Common Stock received
by shareholders of Subject Company in the Merger will include the period during
which the shares of Subject Company Common Stock surrendered in exchange
therefor were held, provided such Subject Company Common Stock was held as a
capital asset by the holder of such Subject Company Common Stock at the
Effective Time, and (v) neither Subject Company nor Parent will recognize gain
or loss as a consequence of the Merger. In rendering such Tax Opinion, such
counsel shall require and be entitled to rely upon representations and
covenants of officers of Parent, Subject Company, shareholders of Subject
Company and others reasonably satisfactory in form and substance to such
counsel.
9.2 Conditions to Obligations of Parent. The obligations of
Parent to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Parent pursuant to Section 11.6(a) of
this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of Subject
Company set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specific
date shall speak only as of such date). The representations and warranties of
Subject Company set forth in Sections 5.1, 5.2, 5.3, 5.19, 5.20, and 5.21 of
this Agreement shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of Subject Company
set forth in this Agreement (including the representations and warranties set
forth in Sections 5.1, 5.2, 5.3, 5.19, 5.20, and 5.21) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on Subject Company, provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or "Knowledge" shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Subject Company to be performed and complied
with pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied with in
all material respects.
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(c) Certificates. Subject Company shall have delivered to
Parent (i) a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Sections 9.2(a) and
9.2(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Subject Company's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as Parent shall request.
(d) Parent Pooling Letter. Parent shall have received a copy
of a letter, dated as of the date of filing of the Registration Statement with
the SEC and as of the Effective Time, addressed to it and in a form reasonably
acceptable to it, from Price Waterhouse LLP to the effect that the Merger will
qualify for pooling of interests accounting treatment.
9.3 Conditions to Obligations of Subject Company. The
obligations of Subject Company to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Subject Company
pursuant to Section 11.6(b) of this Agreement.
(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of Parent
set forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties of
Parent set forth in Sections 6.1, 6.2, 6.3 and 6.14 of this Agreement shall be
true and correct in all material respects. There shall not exist inaccuracies
in the representations and warranties of Parent set forth in this Agreement
(including the representations and warranties set forth in Sections 6.1, 6.2,
6.3 and 6.14) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Parent; provided that,
for purposes of this sentence only, those representations and warranties which
are qualified by references to "material" or "Material Adverse Effect" or
"Knowledge" shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Parent to be performed and complied with
pursuant to
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<PAGE> 51
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. Parent shall have delivered to Subject
Company (i) a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Sections 9.3(a) and
9.3(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Parent's or Merger Subsidiary's Boards of Directors
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, all in such reasonable detail as Subject
Company shall request.
(d) Subject Company Pooling Letter. Subject Company shall
have received a copy of the letters contemplated by Section 9.2(d).
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Subject Company, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Parent and
the Board of Directors of Subject Company; or
(b) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Subject Company and Section 9.3(a) in
the case of Parent or in material breach of any covenant or other agreement
contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such inaccuracy and which inaccuracy would
provide the terminating Party the ability to refuse to consummate the Merger
under the applicable standard set forth in Section 9.2(a) of this Agreement
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in the case of Subject Company and Section 9.3(a) of this Agreement in the case
of Parent; or
(c) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Subject Company and Section 9.3(a) in
the case of Parent or in material breach of any 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 30 days after the giving of written notice to the
breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i)
any Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the shareholders of
Subject Company fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the FBCA and this Agreement at
the Shareholders' Meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by April 30, 1998, if the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any willful breach of this Agreement by the Party
electing to terminate pursuant to this Section 10.1(e); or
(f) By Parent, upon written notice to Subject Company at any
time prior to the close of business on September 12, 1997, if, as a result of
Parent's due diligence investigation of the Assets, the Liabilities, the
business, and the operating performance of Subject Company and the Subject
Company Subsidiaries, Parent's Board of Directors reasonably determines in good
faith that (i) the financial condition, core operating performance or business
of Subject Company and the Subject Company Subsidiaries taken as a whole as of
the date of this Agreement is materially and adversely different from Parent's
reasonable expectations with respect thereto based on the Subject Company's
Annual Report on Form 10-K for the year ended December 31, 1996, the Subject
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
and the June 30, 1997 financial information of the Subject Company and the
Subject Company Subsidiaries set forth in Section 5.7 of the Subject Company
Disclosure Memorandum; or (ii) facts or circumstances exist that lead it
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<PAGE> 53
reasonably to conclude that it is unlikely that the Subject Company's budget as
reflected in Section 10.1(f) of the Subject Company Disclosure Memorandum are
realizable in all material respects (without giving effect to any loan loss
provisions that Parent may choose to make or request Subject Company to make to
the extent set forth in set forth in Section 10.1(f) of the Parent Disclosure
Memorandum and without regard to any of the transactions contemplated hereby);
or (iii) Subject Company's allowance for loan losses and doubtful accounts
established by Subject Company for contingencies as reflected on the balance
sheet included in the Subject Company's earnings release for the quarter ended
June 30, 1997 included in Section 5.7 of the Subject Company Disclosure
Memorandum (assuming for this purpose that such allowance is increased to the
extent set forth in Section 10.1(f) of the Parent Disclosure Memorandum) is
materially insufficient to absorb the losses inherent in Subject Company's
Assets; provided, that in connection with any termination pursuant to this
clause (f), Parent's notice shall specify in reasonable detail the basis for
its determination; or
(g) By the Board of Directors of Subject Company upon
written notice to Parent at any time during the ten-day period commencing two
days after the Determination Date, if both of the following conditions are
satisfied:
(1) the Average Closing Price shall be less than
the product of (i) 0.80 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the
Average Closing Price by the Starting Price (such number being
referred to herein as the "Parent Ratio") shall be less than (ii) the
quotient obtained by dividing the Index Price on the Determination
Date by the Index Price on the Starting Date and subtracting 0.15 from
the quotient in this clause (2)(ii) (such number being referred to
herein as the "Index Ratio");
subject, however, to the following three sentences. If Subject Company
refuses to consummate the Merger pursuant to this Section 10.1(g), it
shall give prompt written notice thereof to Parent; provided, that such
notice of election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, Parent shall have the option to elect to
increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of 0.80, the Starting Price, and the
Exchange Ratio (as then in effect) by (2) the Average Closing Price, and
(ii) the quotient obtained by dividing (1) the product of the Index Ratio
and the Exchange Ratio (as then in effect) by (2) the Parent Ratio.
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If Parent makes an election contemplated by the preceding sentence,
within such five-day period, it shall give prompt written notice to
Subject Company of such election and the revised Exchange Ratio,
whereupon no termination shall have occurred pursuant to this Section
10.1(g) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 10.1(g).
For purposes of this Section 10.1(g), the following terms
shall have the meanings indicated:
"Average Closing Price" shall mean the average of the
daily last sales prices of Parent Common Stock as reported on the
NYSE (as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source as chosen by Parent) for the
20 consecutive full trading days in which such shares are traded
on the NYSE ending at the close of trading on the Determination
Date.
"Determination Date" shall mean the later of the date
(i) of the Shareholders' Meeting and (ii) on which the Consent of
the Board of Governors of the Federal Reserve System shall be
received (without regard to any requisite waiting period thereof).
"Index Group" shall mean the 15 bank holding
companies listed below, the common stocks of all of which shall be
publicly traded and as to which there shall not have been, since
the Starting Date and before the Determination Date, any public
announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market
capitalization as of the Starting Date. In the event that any
such company or companies are removed from the Index Group as a
result of any of the events described in the preceding sentence,
the weights (which shall be determined based upon the number of
outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The
15 bank holding companies and the weights attributed to them are
as follows:
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<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
------------------------------------------------ -------------
<S> <C>
AmSouth Bancorporation 5.75%
BB&T Corporation 7.55
Crestar Financial Corporation 7.75
First American Corporation 4.12
First of America Bank Corporation 6.18
First Security Corporation 8.12
First Tennessee National Corporation 4.49
Firstar Corporation 10.12
Huntington Bancshares, Inc. 11.16
Marshall & Ilsley Corporation 6.22
Mercantile Bancorporation, Inc. 5.19
National Commerce Bancorp 3.44
Old Kent Financial Corporation 3.34
Regions Financial Corporation 9.58
SouthTrust Corporation 6.99
-------
Total 100.00%
=======
</TABLE>
"Index Price" on a given date shall mean the weighted
average (weighted in accordance with the factors listed above) of
the closing prices of the companies composing the Index Group.
"Starting Date" shall mean the fourth full trading
day after the announcement by press release of the Merger.
"Starting Price" shall mean the closing price per
share of Parent Common Stock as reported on the NYSE (as reported
by The Wall Street Journal or, if not reported thereby, another
authoritative source as chosen by Parent) on the Starting Date.
If Parent or any company belonging to the Index Group 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
common stock of such company
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<PAGE> 56
or Parent shall be appropriately adjusted for the purposes of applying
this Section 10.1(g).
10.2 Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 10.1 of this
Agreement, this Agreement shall become void and have no effect, except that (i)
the provisions of this Section 10.2, Section 8.6(b), Section 11.2 and Section
11.3 of this Agreement shall survive any such termination and abandonment, and
(ii) a termination pursuant to the terms of this Agreement shall not relieve
the breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement. The Stock Option Agreement
and the Confidentiality Agreement shall be governed by their respective terms
as to its termination.
10.3 Non-Survival of Representations and Covenants. The
respective representations, warranties, obligations, covenants, and agreements
of the Parties shall not survive the Effective Time except for those covenants
and agreements which by their terms apply in whole or in part after the
Effective Time.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. (a) Except as otherwise provided
herein, the capitalized terms set forth below shall have the following
meanings:
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the assets of, such Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean any other Person, directly
or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such Person.
"Agreement" shall mean this Agreement, including the Stock
Option Agreement and the Exhibits delivered pursuant hereto and
incorporated herein by reference.
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"Articles of Merger" shall mean the Articles of Merger to be
executed by Subject Company and filed with the Secretary of State of
the State of Florida relating to the Merger as contemplated by Section
1.1 of this Agreement.
"Assets" of a 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" shall mean Capital Bank.
"BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended.
"Closing Date" shall mean the date on which the Closing
occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order, or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase or impose any Liability under,
any Contract, Order or Permit.
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"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata)
and which are administered, interpreted or enforced by the United
States Environmental Protection Agency and state and local agencies
with jurisdiction over, and including common law in respect of,
pollution or protection of the environment, including the
Comprehensive Environmental Response Compensation and Liability Act,
as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.
("RCRA"), and other Laws relating to emissions, discharges, releases,
or threatened releases of any Hazardous Material, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean any trade or business, whether or
not incorporated, that together with Subject Company would be deemed a
"single employer" within the meaning of section 4001(b) of ERISA.
"Exhibits" shall mean the Exhibits so marked, copies of which
are attached to this Agreement. Such Exhibits are hereby incorporated
by reference herein and made a part hereof, and may be referred to in
this Agreement and any other related instrument or document without
being attached hereto.
"FBCA" shall mean the Florida Business Corporation Act.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"Holding" shall mean Capital Factors Holding, Inc.
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<PAGE> 59
"Holding Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Holding as of March 31, 1997, and as of December 31, 1996 and 1995,
and the related statements of earnings, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
for the three months ended March 31, 1997 and for each of the three
years ended December 31, 1996, 1995 and 1994, as filed by Holding in
SEC Documents, and (ii) the consolidated balance sheets of Holding
(including related notes and schedules, if any) and related statements
of earnings, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to March 31,
1997.
"HSR Act" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated
thereunder.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software (including
any source or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how, inventions, and other
intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean those facts that are known by the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer, or
General Counsel of such Person.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including those
promulgated, interpreted, or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, 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
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any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention, or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current Taxes upon the assets or
properties of a Party or its Subsidiaries which are not yet due and
payable, and (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary
course of the banking business.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information relating
to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement,
but shall not include regular, periodic examinations of depository
institutions and their Affiliates by Regulatory Authorities.
"Material Adverse Effect" on a Party shall mean an event,
change, or occurrence which, individually or together with any other
event, change, or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of such Party
and its Subsidiaries, taken as a whole, or (ii) the ability of such
Party to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement in
accordance with applicable Law, provided that "Material Adverse
Effect" and "material adverse impact" shall not be deemed to include
the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting principles
generally applicable to banks and their holding companies, (c) actions
and omissions of a Party (or any of its Subsidiaries) taken with the
prior written consent of the other Party, (d) changes in economic
conditions or interest rates generally affecting financial
institutions, or (e) the direct effects of compliance with this
Agreement (including the expense associated with the vesting of
benefits under the various employee benefit plans of Subject Company
as a result of the Merger constituting a change of control) on the
operating performance of the Parties, including
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expenses incurred by the Parties in consummating the transactions
contemplated by the Agreement.
"Merger Subsidiary" shall mean the wholly owned subsidiary of
Parent to be organized to effect the Merger under the Laws of the
State of Florida.
"Merger Subsidiary Common Stock" shall mean the $1.00 par
value common stock of Merger Subsidiary.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NYSE" shall mean the New York Stock Exchange, Inc.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Operating Property" shall mean 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.
"Order" shall mean 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
Regulatory Authority.
"Parent Capital Stock" shall mean, collectively, the Parent
Common Stock, the Parent Preferred Stock and any other class or series
of capital stock of Parent.
"Parent Common Stock" shall mean the $5.00 par value common
stock of Parent.
"Parent Disclosure Memorandum" shall mean the written
information entitled "Parent Memorandum" delivered prior to the date
of this Agreement to Subject Company describing in reasonable detail
the matters contained therein
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<PAGE> 62
and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure
is being made.
"Parent Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Parent as of March 31, 1997, and as of December 31, 1996 and 1995, and
the related statements of earnings, changes in shareholders' equity,
and cash flows (including related notes and schedules, if any) for the
three months ended March 31, 1997 and for each of the three years
ended December 31, 1996, 1995 and 1994, as filed by Parent in SEC
Documents, and (ii) the consolidated balance sheets of Parent
(including related notes and schedules, if any) and related statements
of earnings, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to March 31,
1997.
"Parent Preferred Stock" shall mean the no par value preferred
stock of Parent and shall include the (i) Series A Preferred Stock and
(ii) Series E 8% Cumulative, Convertible Preferred Stock, of Parent
("Parent Series E Preferred Stock").
"Parent Rights" shall mean the preferred stock purchase rights
issued pursuant to the Parent Rights Agreement.
"Parent Rights Agreement" shall mean that certain Rights
Agreement, dated January 19, 1989, between Parent and UPNB, as Rights
Agent.
"Parent Subsidiaries" shall mean the Subsidiaries of Parent
and any corporation, bank, or other organization acquired as a
Subsidiary of Parent in the future and owned by Parent at the
Effective Time.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
in the management and, where required by the context, said term means
the owner or operator of such facility or property, but only with
respect to such facility or property.
"Party" shall mean either Subject Company or Parent, and
"Parties" shall mean both Subject Company and Parent.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice,
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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" shall mean a natural person or any legal, commercial,
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by
Subject Company to solicit the approval of its shareholders of the
transactions contemplated by this Agreement, which shall include the
prospectus of Parent relating to the issuance of the Parent Common
Stock to holders of Subject Company Common Stock.
"Registration Statement" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC
by Parent under the 1933 Act with respect to the shares of Parent
Common Stock to be issued to the shareholders of Subject Company in
connection with the transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board
of the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Department of Banking and Finance of the State of
Florida, all state regulatory agencies having jurisdiction over the
Parties and their respective Subsidiaries, the NYSE, the NASD, and the
SEC.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of
a Person.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, warrants, or other
binding obligations of any character whatsoever by which a Person is
or may be bound to issue additional shares of its capital stock or
other Rights, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person.
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"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its Subsidiaries
with any Regulatory Authority pursuant to the Securities Law.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Shareholders' Meeting" shall mean the meeting of the
shareholders of Subject Company to be held pursuant to Section 8.1 of
this Agreement, including any adjournment or adjournments thereof.
"Stock Option Agreement" shall mean the Stock Option Agreement
of even date herewith issued to Parent by Subject Company,
substantially in the form of Exhibit 1.
"Subject Company Common Stock" shall mean the $1.00 par value
common stock of Subject Company.
"Subject Company Disclosure Memorandum" shall mean the written
information entitled "Subject Company Disclosure Memorandum" delivered
prior to the date of this Agreement to Parent describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made.
"Subject Company Financial Statements" shall mean (i) the
consolidated statements of financial position (including related notes
and schedules, if any) of Subject Company as of March 31, 1997, and as
of December 31, 1996 and 1995, and the related statements of
operations, shareholders' equity, and cash flows (including related
notes and schedules, if any) for the three months ended March 31,
1997, and for each of the three fiscal years ended December 31, 1996,
1995 and 1994, as filed by Subject Company in SEC Documents, and (ii)
the consolidated statements of financial position of Subject Company
(including related notes and schedules, if any) and related statements
of operations, shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to March 31, 1997.
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<PAGE> 65
"Subject Company Stock Plans" shall mean the existing stock
option and other stock-based compensation plans of Subject Company.
"Subject Company Subsidiaries" shall mean the Subsidiaries of
Subject Company, which shall include Subject Company Subsidiaries
described in Section 5.4 of this Agreement and any corporation, bank,
or other organization acquired as a Subsidiary of Subject Company in
the future and owned by Subject Company at the Effective Time.
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns
or controls 10% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
10% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, there shall not be included any
such entity acquired through foreclosure or any such equity the equity
securities of which are owned or controlled in a fiduciary capacity.
"Supplemental Letter" shall mean the supplemental letter of
even date herewith relating to certain understandings and agreements
in addition to those included in this Agreement in substantially the
form of Exhibit 4.
"Surviving Corporation" shall mean Subject Company as the
surviving corporation resulting from the Merger.
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies
or other assessments, including, without limitation, all net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes,
customs duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or
foreign).
"TBCA" shall mean the Tennessee Business Corporation Act.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
<TABLE>
<S> <C>
Average Closing Price . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Determination Date . . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
</TABLE>
61
<PAGE> 66
<TABLE>
<S> <C>
Effective Time . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . Section 5.14(c)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . Section 4.1
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(c)
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . Section 8.12(a)
Index Group . . . . . . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
Index Price . . . . . . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
Index Ratio . . . . . . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Parent Ratio . . . . . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
Parent SEC Reports . . . . . . . . . . . . . . . . . . . . . Section 6.12
Starting Date . . . . . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
Starting Price . . . . . . . . . . . . . . . . . . . . . . . Section 10.1(g)
Subject Company Benefit Plans . . . . . . . . . . . . . . . . Section 5.14(a)
Subject Company Contracts . . . . . . . . . . . . . . . . . . Section 5.15
Subject Company ERISA Plan . . . . . . . . . . . . . . . . . Section 5.14(a)
Subject Company Options . . . . . . . . . . . . . . . . . . . Section 3.5(a)
Subject Company Pension Plan . . . . . . . . . . . . . . . . Section 5.14(a)
Subject Company SEC Reports . . . . . . . . . . . . . . . . . Section 5.17
Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . Section 5.20
Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . Section 9.1(g)
</TABLE>
(c) Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 Expenses. (a) Except as otherwise provided in this
Section 11.2, 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 each of the Parties
shall bear and pay the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection
with the printing of the Registration Statement and the Proxy Statement based
on the relative Asset sizes of the Parties at December 31, 1996.
(b) Nothing contained in this Section 11.2 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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11.3 Brokers and Finders. Except for Sandler O'Neill &
Partners, L.P. as to Subject Company and except for Salomon Brothers Inc. as to
Parent, each of the Parties represents and warrants that neither it nor any of
its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a
claim by any broker or finder based upon his or its representing or being
retained by or allegedly representing or being retained by Subject Company or
Parent other than those disclosed in the previous sentence, each of Subject
Company and Parent, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability incurred by such party in respect of
any such claim.
11.4 Entire Agreement. Except as otherwise expressly
provided herein, this Agreement (including the other documents and instruments
referred to herein) and the Confidentiality Agreement constitute the entire
agreement between the Parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereto, written or oral. Nothing in this Agreement expressed or implied is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, other than as provided in Section 8.12 of this
Agreement.
11.5 Amendments. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by each of the Parties
upon the approval of the Boards of Directors of each of the Parties, whether
before or after shareholder approval of this Agreement has been obtained;
provided, that after any such approval by the holders of Subject Company Common
Stock, except as contemplated herein, there shall be made no amendment that has
any of the effects set forth in Section 607.1103 of the FBCA without the
further approval of such shareholders.
11.6 Waivers. (a) Prior to or at the Effective Time,
Parent, acting through its Board of Directors, chief executive officer, or
other authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by Subject Company, to waive or
extend the time for the compliance or fulfillment by Subject Company of any and
all of its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of Parent under this Agreement, except
any condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Parent.
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(b) Prior to or at the Effective Time, Subject Company,
acting through its Board of Directors, chief executive officer, or other
authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by Parent, to waive or extend the
time for the compliance or fulfillment by Parent of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to its obligations of Subject Company under this Agreement, except
any condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Subject Company.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach of a
waiver of any other condition or of the breach of any other term of this
Agreement.
11.7 Assignment. 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.
11.8 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 person 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
delivered:
<TABLE>
<S> <C>
Subject Company: Capital Bancorp
1221 Brickell Avenue
Miami, Florida
Attention: Daniel M. Holtz
Telecopy Number: (305) 371-8428
</TABLE>
64
<PAGE> 69
<TABLE>
<S> <C>
Copy to Subject Counsel: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: William S. Rubenstein, Esq.
Telecopy Number: (212) 735-2000
Parent: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attention: Jackson W. Moore
Telecopy Number: (901) 580-2939
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attention: E. James House, Jr., Esq.
Telecopy Number: (901) 580-2939
and
Alston & Bird LLP
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Attention: Frank M. Conner III, Esq.
Telecopy Number: (202) 508-3333
</TABLE>
11.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of Tennessee, without
regard to any applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement
are for reference purposes only and are not part of this Agreement.
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11.12 Interpretations. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The Parties acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all Parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
11.13 Enforcement of Agreement. The Parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.14 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be enforceable, the provision
shall be interpreted to be only so broad as is enforceable.
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<PAGE> 71
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto as of the day and year first above
written.
ATTEST: CAPITAL BANCORP
By: /s/ By: /s/
------------------------------ ------------------------------
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ By: /s/
------------------------------ ------------------------------
[CORPORATE SEAL]
67
<PAGE> 1
EXHIBIT 2.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of August 12, 1997, by and between Capital Bancorp, a Florida corporation
("Issuer"), and Union Planters Corporation, a Tennessee corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Merger, dated as of August 12, 1997 (the "Merger Agreement"), providing
for, among other things, the merger of a wholly owned Subsidiary of Grantee with
and into Issuer, with Issuer as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the Merger
Agreement, Grantee has required that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 1,510,500 shares (as adjusted as set forth herein, the "Option Shares,"
which shall include the Option Shares before and after any transfer of such
Option Shares) of common stock, $1.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to $40.50; provided, however,
that in no event shall the number of shares of Issuer Common Stock for which
this Option is exercisable exceed 19.9% of the Issuer's issued and outstanding
shares of Issuer Common Stock without giving effect to any shares subject to or
issued pursuant to the Option.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event and
prior to the termination of the Option. Notwithstanding anything to the contrary
contained herein, this Option shall be of no force and effect until the earlier
to occur of (i) expiration of the termination right set forth in Section 10.1(f)
of the Merger Agreement without prior exercise of such right by Grantee and (ii)
delivery by Grantee of written notice to Issuer to the effect that Grantee has
waived its right to
<PAGE> 2
terminate the Merger Agreement pursuant to Section 10.1(f). The Option shall
terminate and be of no further force and effect upon the earliest to occur of
(A) the Effective Time, (B) termination of the Merger Agreement in accordance
with the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (other than a termination of the Merger Agreement by
Grantee pursuant to (i) Section 10.1(b) thereof (but only if such termination
was a result of a willful breach by Issuer) or (ii) Section 10.1(c) thereof
(each a "Default Termination")), (C) 12 months after a Default Termination, and
(D) 12 months after any termination of the Merger Agreement following the
occurrence of a Purchase Event or a Preliminary Purchase Event. Any purchase of
shares upon exercise of the Option shall be subject to compliance with
applicable law, including, without limitation, the Bank Holding Company Act of
1956, as amended (the "BHC Act"). The term "Holder" shall mean the holder or
holders of the Option from time to time, and which initially is the Grantee. The
rights set forth in Section 8 shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise of the Option)
as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any Subsidiary of Grantee) to effect
an Acquisition Transaction (as defined below). As used herein, the term
Acquisition Transaction shall mean (A) a merger, consolidation or similar
transaction involving Issuer or any of its Subsidiaries (other than
transactions solely between Issuer's Subsidiaries and transactions
involving Issuer or any Subsidiary in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent (by either
remaining outstanding or being converted into securities of the surviving
entity or the parent thereof) at least 60% of the combined voting power of
the voting securities of the Issuer or the surviving entity or the parent
thereof outstanding immediately after the consummation of the transaction),
(B) except as permitted pursuant to Section 7.1 of the Merger Agreement,
the disposition, by sale, lease, exchange or otherwise, of Assets of Issuer
or any of its Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the issuance,
sale or other disposition of (including by way of merger, consolidation,
share exchange or any similar transaction) securities representing 25% or
more of the voting power of Issuer or any of its Subsidiaries (any of the
foregoing, an "Acquisition Transaction"); or
(ii) any person (other than Grantee, any Subsidiary of Grantee or
the group consisting of Abel Holtz, Fana Holtz, Daniel M. Holtz and Javier
J. Holtz (the "Family"), provided that no member of the Family increases
his or her beneficial ownership of outstanding Issuer Common Stock (other
than as a result of exercise of options outstanding as of the date hereof)
such that the aggregate beneficial ownership of the Family as of the date
hereof increases by more than 1%) shall have acquired beneficial ownership
(as such term is defined in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of or the right to
acquire beneficial ownership of, or any
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<PAGE> 3
"group" (as such term is defined under the Exchange Act), other than a
group of which Grantee or any of its Subsidiaries of Grantee is a member,
shall have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 25% or more of the then-outstanding shares of
Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") with respect to,
a tender offer or exchange offer to purchase any shares of Issuer Common
Stock such that, upon consummation of such offer, such person would own or
control 25% or more of the then-outstanding shares of Issuer Common Stock
(such an offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the purpose
of voting on the Merger Agreement, such meeting shall not have been held or
shall have been canceled prior to termination of the Merger Agreement, or
Issuer's Board of Directors shall have withdrawn or modified in a manner
adverse to Grantee the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case after it shall have been
publicly announced that any person (other than Grantee or any Subsidiary of
Grantee) shall have (A) made a proposal to engage in an Acquisition
Transaction, (B) commenced a Tender Offer or filed a registration statement
under the Securities Act with respect to an Exchange Offer, or (C) filed an
application (or given a notice), whether in draft or final form, under any
federal or state statute or regulation (including a notice filed under the
HSR Act and an application or notice filed under the BHC Act, the Bank
Merger Act, or the Change in Bank Control Act of 1978) seeking the Consent
to an Acquisition Transaction from any federal or state governmental or
regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"). If prior Consent
of any governmental or regulatory agency or authority is required in connection
with such purchase, Issuer shall cooperate with Holder in the filing of the
required notice or application for such Consent and the obtaining of such
Consent and the Closing shall occur immediately following receipt of such
Consents (and expiration of any mandatory waiting periods).
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<PAGE> 4
(e) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total Profit
(as defined below) exceed $18.0 million and, if it otherwise would exceed
such amount, Holder, at its sole election, shall either (A) reduce the
number of shares of Issuer Common Stock subject to the Option, (B) deliver
to Issuer for cancellation without consideration Option Shares previously
purchased by Holder, (C) pay cash to Issuer, or (D) any combination of the
foregoing, so that Holder's actually realized Total Profit (together with
the Total Profit realized by all other Holders) shall not exceed $18.0
million after taking into account the foregoing actions; and
(ii) the Option be exercised for a number of shares of Issuer Common
Stock as would, as of the date of exercise, result in Holder's (taking into
account all other Holders) Notional Total Profit (as defined below) of more
than $18.0 million; provided, that nothing in this clause (ii) shall
restrict any exercise of the Option permitted hereby on any subsequent
date.
As used in this Agreement, the term "Total Profit" shall mean the aggregate sum
(prior to the payment of taxes) of the following: (i) the amount received by
Holder pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8; (ii) (x) the amount received by Holder pursuant to
Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with respect to any
number of shares of Issuer Common Stock as to which Holder may propose to
exercise the Option shall be the Total Profit determined as of the date of such
proposed exercise, assuming that the Option were exercised on such date for such
number of shares and assuming that such shares, together with all other Option
Shares held by Holder and its affiliates as of such date, were sold for cash at
the closing sale price per share of Issuer Common Stock as quoted on the Nasdaq
National Market (or, if Issuer Common Stock is not then quoted on the Nasdaq
National Market, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) as of the close of business on
the preceding trading day (less customary brokerage commissions).
The provisions of this Section 3(e) shall apply to any Substitute
Option (as defined below).
(f) Grantee agrees, promptly following any exercise of all or any
portion of the Option, and subject to its rights under Section 8, to use
commercially reasonable efforts promptly to maximize the value of Option Shares
purchased, taking into account market conditions, the
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<PAGE> 5
number of Option Shares, the potential negative impact of substantial sales on
the market price for Issuer Common Stock, and availability of an effective
registration statement to permit public sale of Option Shares.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 13(f)
hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a), (i)
Issuer shall deliver to Holder (A) a certificate or certificates representing
the Option Shares to be purchased at such Closing, which Option Shares shall be
free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever and subject to no pre-emptive rights, and (B) if the Option is
exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST 12,
1997. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that: (i) the references in the above legend to
resale restrictions of the Securities Act shall be removed by delivery of
substitute certificate(s) without such reference if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act; (ii)
the references in the above legend to the provisions of this Agreement shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied.
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<PAGE> 6
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Issuer. This Agreement has been duly executed and delivered by
Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and, at all times from the date hereof
until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of
the Option, the number of shares of Issuer Common Stock necessary for
Holder to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to
Section 7 upon exercise of the Option. The shares of Issuer Common Stock to
be issued upon due exercise of the Option, including all additional shares
of Issuer Common Stock or other securities which may be issuable pursuant
to Section 7, upon issuance pursuant hereto, shall be duly and validly
issued, fully paid, and nonassessable, and shall be delivered free and
clear of all liens, claims, charges, and encumbrances of any kind or nature
whatsoever, including any preemptive rights of any shareholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents and
warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed and
delivered by Grantee.
(b) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with
a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase
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<PAGE> 7
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, if any, so that Holder shall
receive, upon exercise of the Option, the number and class of shares or other
securities or property that Holder would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such event,
or the record date therefor, as applicable. If any additional shares of Issuer
Common Stock are issued after the date of this Agreement (other than pursuant to
an event described in the first sentence of this Section 7(a) or pursuant to
this Option), the number of shares of Issuer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together with any shares of
Issuer Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (iii) to sell or otherwise transfer
all or substantially all of its Assets to any person, other than Grantee or one
of its Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below) or (y) any person that controls the Acquiring Corporation (in
each case, such person being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Grantee. The Substitute Option Issuer shall also
enter into an agreement with the then-holder or holders of the Substitute Option
in substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
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<PAGE> 8
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (y) Issuer in a merger in which Issuer is the continuing or
surviving person, and (z) the transferee of all or any substantial part of
the Issuer's assets (or the assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price per
share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee), (y) the price
per share of the Issuer Common Stock to be paid by any person (other than
the Grantee) pursuant to an agreement with Issuer, and (z) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq
National Market, the highest bid price per share on any day as quoted on
the principal trading market or securities exchange on which such shares
are traded as reported by a recognized source chosen by Grantee) within the
six-month period immediately preceding the agreement; provided, that in the
event of a sale of less than all of Issuer's assets, the Assigned Value
shall be the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Grantee (or by a
majority in interest of the Grantees if there shall be more than one
Grantee (a "Grantee Majority")) and reasonably acceptable to Issuer,
divided by the number of shares of the Issuer Common Stock outstanding at
the time of such sale. In the event that an exchange offer is made for the
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Grantee and reasonably acceptable to
Issuer (or if applicable, Acquiring Corporation). (If there shall be more
than one Grantee, any such selection shall be made by a Grantee Majority.)
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled by
such merger person, as Grantee may elect.
(f) In no event pursuant to any of the foregoing paragraphs shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute
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<PAGE> 9
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
aggregate of the shares of Substitute Common Stock but for this clause (f), the
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (f) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (f). This difference in value
shall be determined by a nationally recognized investment banking firm selected
by Grantee (or a Grantee Majority) and reasonably acceptable to the Acquiring
Corporation.
(g) Issuer shall not enter into any transaction described in subsection
(b) of this Section 7 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to Section 3(e) and to the last sentence of Section 3(a),
at the request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending 12 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares of
Issuer Common Stock purchased by Holder pursuant hereto with respect to which
Holder then has beneficial ownership. The date on which Holder exercises its
rights under this Section 8 is referred to as the "Request Date." Such
repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired by Holder pursuant to the Option with respect
to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 7) paid (or, in the case
of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by
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<PAGE> 10
Holder for each share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder then has
beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within ten business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock purchased thereunder
with respect to which Holder then has beneficial ownership, and Holder shall
warrant that it has sole record and beneficial ownership of such shares and that
the same are then free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or Consent of any governmental or regulatory agency or authority
is required in connection with the payment of all or any portion of the Section
8 Repurchase Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in part, or to require
that Issuer deliver from time to time that portion of the Section 8 Repurchase
Consideration that it is not then so prohibited from paying and promptly file
the required notice or application for Consent and expeditiously process the
same (and each party shall cooperate with the other in the filing of any such
notice or application and the obtaining of any such Consent). If any
governmental or regulatory agency or authority disapproves of any part of
Issuer's proposed repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Holder. If any governmental or regulatory agency or
authority prohibits the repurchase in part but not in whole, then Holder shall
have the right (i) to revoke the repurchase request or (ii) to the extent
permitted by such agency or authority, determine whether the repurchase should
apply to the Option and/or Option Shares and to what extent to each, and Holder
shall thereupon have the right to exercise the Option as to the number of Option
Shares for which the Option was exercisable at the Request Date less the sum of
the number of shares covered by the Option in respect of which payment has been
made pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within five business
days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i), (ii) the price
per share of Issuer Common Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination transaction described
in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest closing sales
price per share of Issuer Common Stock quoted on the Nasdaq National Market (or
if Issuer Common Stock is not quoted on the Nasdaq National Market, the highest
bid price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) during the 60 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
Assets, the Applicable Price shall be the sum of the price paid in such sale for
such assets and the current market value of
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<PAGE> 11
the remaining assets of Issuer as determined by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer (which determination shall be conclusive for all purposes of this
Agreement), divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be offered, paid
or received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in good
faith by an independent nationally recognized investment banking firm selected
by Holder and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange
Act), or the right to acquire beneficial ownership, or any "group" (as such term
is defined under the Exchange Act) shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of 50% or more of the
then-outstanding shares of Issuer Common Stock, or (ii) any of the transactions
described in Section 7(b)(i), 7(b)(ii) or 7(iii) shall be consummated.
(e) In connection with the application of the provisions of this
Section 8, Grantee acknowledges (i) that Issuer's ability to fund the Section 8
Repurchase Consideration in accordance with the provisions of this Section 8 may
be dependent upon the payment by Issuer's Subsidiaries of a capital distribution
or distributions ("Capital Distribution") to Issuer and that any such Capital
Distribution will be subject to the prior approval of the Federal Reserve Board
and the principal federal and state regulatory agencies having jurisdiction over
Issuer's Subsidiary banks, and (ii) that, unless there has been an agreement of
the type described in Section 7(b), Issuer's obligations under this Section 8 do
not impose on Issuer an obligation to otherwise finance the payment of the
Section 8 Repurchase Consideration through the incurrence of indebtedness or the
issuance of capital instruments or securities by Issuer in either case
sufficient in amount to satisfy the payment of the Section 8 Repurchase
Consideration. Accordingly, Issuer shall not be deemed to be in breach of this
Section 8 if, after making its best efforts to obtain regulatory authorization
for a Capital Distribution required to pay the Section 8 Repurchase
Consideration, it is unable to do so.
9. REGISTRATION RIGHTS.
(a) Issuer shall, subject to the conditions of subparagraph (c) below,
if requested by any Holder, including Grantee and any permitted transferee
("Selling Holder"), as expeditiously as possible prepare and file a registration
statement under the Securities Laws if necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to Selling Holder upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by Holder in such request (it being understood and agreed
that any such sale or other disposition shall be effected on a widely
distributed basis so that, upon consummation thereof, no purchaser or transferee
shall beneficially own more than 2% of the shares of Issuer Common Stock then
outstanding), including, without limitation, a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other
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<PAGE> 12
securities for sale under any applicable state securities laws. Each such Holder
shall provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder.
(b) If Issuer at any time after the exercise of the Option, but prior
to the termination of the Option, proposes to register any shares of Issuer
Common Stock under the Securities Laws in connection with an underwritten public
offering of such Issuer Common Stock, Issuer will promptly give written notice
to Holder of its intention to do so and, upon the written request of Holder
given within 30 days after receipt of any such notice (which request shall
specify the number of shares of Issuer Common Stock intended to be included in
such underwritten public offering by Selling Holder), Issuer will use all
reasonable efforts to cause all such shares, the holders of which shall have
requested participation in such registration, to be so registered and included
in such underwritten public offering; provided, that Issuer may elect to not
cause any such shares to be so registered (i) if the underwriters in good faith
determine that the inclusion of such shares would interfere with the successful
marketing of the shares of Issuer Common Stock for the account of Issuer, or
(ii) in the case of a registration solely to implement a dividend reinvestment
or similar plan, an employee benefit plan or a registration filed on Form S-4 or
any successor form, or a registration filed on a form which does not permit
registrations of resales; provided, further, that such election pursuant to
clause (i) may only be made once. If some but not all the shares of Issuer
Common Stock, with respect to which Issuer shall have received requests for
registration pursuant to this subparagraph (b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among Selling Holders and any other person (other than Issuer or any
person exercising demand registration rights in connection with such
registration) who or which is permitted to register their shares of Issuer
Common Stock in connection with such registration pro rata in the proportion
that the number of shares requested to be registered by each Selling Holder
bears to the total number of shares requested to be registered by all persons
then desiring to have Issuer Common Stock registered for sale (other than Issuer
or any person exercising demand registration rights in connection with such
registration).
(c) Issuer shall use all reasonable efforts to cause the registration
statement referred to in subparagraph (a) above to become effective and to
obtain all consents or waivers of other parties which are required therefor and
to keep such registration statement effective, provided, that Issuer may delay
any registration of Option Shares required pursuant to subparagraph (a) above
for a period not exceeding 90 days provided Issuer shall in good faith determine
that any such registration would adversely affect an offering or contemplated
offering of other securities by Issuer. Notwithstanding anything to the contrary
contained herein, Issuer shall not be required to register Option Shares under
the Securities Laws pursuant to subparagraph (a) above:
(i) prior to the occurrence of a Purchase Event and following
the termination of the Option;
(ii) more than once;
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<PAGE> 13
(iii) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by Selling Holders
holding at least 25% or more of the aggregate number of Option Shares then
outstanding or the right to acquire at least 25% of the Option Shares.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
120 days from the effective date of such registration statement. Issuer shall
use all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Except where applicable state law prohibits such payments, Issuer
will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of Issuer's counsel), accounting expenses, printing expenses, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares and any other
expenses incurred by such Selling Holders in connection with any such
registration (including expenses of Selling Holders' counsel) shall be borne by
such Selling Holders.
(e) In connection with any registration under subparagraph (a) or (b)
above Issuer hereby agrees to indemnify the Selling Holders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue statement
of a material fact contained in any registration statement or prospectus
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
expenses, losses, claims, damages or liabilities of such indemnified party are
caused by any untrue statement or alleged untrue statement or any omission or
alleged omission made in reliance upon and in conformity with, information
furnished in writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling person of Issuer
shall be indemnified by such Selling Holder, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue,
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<PAGE> 14
statement or omission made in reliance upon, and in conformity with, information
furnished in writing to Issuer by such holder or such underwriter, as the case
may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subparagraph (e), except to the extent such failure to notify materially
prejudices the indemnifying party. In case notice of commencement of any such
action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense of such action at its own expense, with counsel chosen by it and
reasonably satisfactory to such indemnified party. The indemnified party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party either agrees to pay the same, (ii) the indemnifying
party falls to assume the defense of such action with counsel satisfactory to
the indemnified party, or (iii) the indemnified party has been advised by
counsel that one or more legal defenses may be available to the indemnifying
party that may be contrary to the interest of the indemnified party, in which
case the indemnifying party shall be entitled to assume the defense of such
action notwithstanding its obligation to bear fees and expenses of such counsel;
provided, however, that the indemnifying party shall not be liable for the
expenses of more than one firm of counsel for all indemnified parties in any
jurisdiction. No indemnifying party shall be liable for any settlement entered
into without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, all Selling Holders and the underwriters from the offering of the
securities and also the relative fault of Issuer, all Selling Holders and the
underwriters in connection with the statements or omissions which resulted in
such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim; provided, that in no case shall any Selling Holder be responsible, in
the aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
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<PAGE> 15
In connection with any registration pursuant to subparagraph (a)
or (b) above, Issuer and each Selling Holder (other than Grantee) shall enter
into an agreement containing the indemnification provisions of this subparagraph
(e).
(f) Issuer shall use its best efforts to comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by Holder in accordance with
and to the extent permitted by any rule or regulation promulgated by the SEC
from time to time, including, without limitation, Rules 144 and 144A.
(g) Issuer will pay all stamp taxes in connection with the issuance and
the sale of the Option Shares and in connection with the exercise of the Option,
and will save Holder harmless, without limitation as to time, against any and
all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the Nasdaq National Market or any other securities exchange or
any automated quotations system maintained by a self-regulatory organization and
will use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided in Section 9, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
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<PAGE> 16
(B) WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h) and other than
as provided in the Merger Agreement) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state governmental or regulatory agency
or authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. If
for any reason such court or regulatory agency determines that the Option does
not permit Holder to acquire, or does not require Issuer to repurchase, the full
number of shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to allow
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(D) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Tennessee without regard to any
applicable conflicts of law rules.
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement(or
at such other address for a party as shall be specified by like notice).
(G) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may
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<PAGE> 17
assign its rights hereunder in whole or in part after the occurrence of a
Purchase Event. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(I) FURTHER ASSURANCES. In the event of any exercise of the Option by
Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(J) SPECIFIC PERFORMANCE. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: CAPITAL BANCORP
By: /s/ Timothy E. Kish By: /s/ Daniel M. Holtz
----------------------------- ---------------------------------------
Timothy E. Kish Daniel M. Holtz
Secretary Chairman of the Board, President and
Principal Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
----------------------------- ---------------------------------------
E. James House, Jr. Jackson W. Moore
Secretary President and Chief Operating Officer
[CORPORATE SEAL]
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<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
UNION PLANTERS SIGNS DEFINITIVE AGREEMENT TO ACQUIRE CAPITAL BANCORP
MEMPHIS, TENNESSEE; August 13, 1997 (NYSE:UPC) Union Planters Corporation
announced today that it has entered into a definitive agreement pursuant to
which UPC would acquire all of the outstanding stock of Capital Bancorp
(NASDAQ:CBCP), based in Miami, Florida.
Under the terms of the agreement, UPC would exchange .8525 shares of UPC common
stock for each common share of Capital. The acquisition, which is to be
accounted for as a pooling of interests, is expected to be completed by the end
of the first quarter of 1998, and is subject to due diligence review,
shareholder and regulatory approval, and the satisfaction of certain normal
contractual closing conditions. Based on the UPC closing price on August 12 of
$50 7/16, Capital shareholders would receive approximately $43 in UPC shares for
each common share of Capital in a tax-free exchange.
Capital Bancorp reported total assets of approximately $1.9 billion as of June
30, 1997, and is the largest independent bank holding company in South Florida
with 28 offices in Dade, Broward and Palm Beach Counties. Capital is one of the
largest issuers of trade letters of credit in the Southeast U.S. and operates a
strong banking franchise with a focus on small business. In addition, Capital
owns 81.3 percent of a successful commercial finance subsidiary, Capital Factors
Holding, Inc. (NASDAQ:CAPF) headquartered in Boca Raton, with offices in Los
Angeles, New York City, Charlotte, NC, and Atlanta. Capital Financial is ranked
as one of the ten largest factoring companies nationwide. At the close of
business on August 12, the market value of Capital's investment in Capital
Financial was valued at approximately $192 million. Union Planters intends to
market both the commercial financial and trade financial expertise to its
existing customer base throughout seven states.
Union Planters, headquartered in Memphis, Tennessee was founded in 1869 and is a
$15 billion bank holding company with banking offices in Tennessee, Mississippi,
Missouri, Arkansas, Alabama, Louisiana and Kentucky.
For More Information:
Media: Bill Andrews
Senior Vice President
Union Planters Corporation
(901) 580-2892
Financial: Jack Parker
Executive Vice President and CFO
Union Planters Corporation
(901) 580-6781
