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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): November 17, 1997
UNION PLANTERS CORPORATION
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(Exact name of registrant as specified in its charter)
Tennessee 1-10160 62-0859007
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(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
7130 Goodlett Farms Parkway, Memphis, Tennessee 38018
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(Address, including zip code, of principal executive office)
(901) 580-6000
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On November 17, 1997, Union Planters Corporation ("UPC") and Peoples
First Corporation ("Peoples") entered into an Agreement and Plan of Merger (the
"Agreement"), pursuant to which Peoples will be acquired by UPC. In accordance
with the terms of the Agreement, UPC will acquire Peoples pursuant to the merger
(the "Merger") of Peoples with and into Union Planters Holding Corporation, a
wholly-owned subsidiary of UPC organized under the laws of Tennessee. Union
Planters Holding Corporation will be the surviving entity resulting from the
Merger.
Upon consummation of the Merger, each share of common stock of
Peoples ("Peoples Common Stock") together with associated junior participating
preferred stock purchase rights, (excluding shares as to which dissenter's
rights are exercised or shares held by Peoples, 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
0.6 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
Peoples Common Stock pursuant to stock options, stock appreciation rights, or
other rights (other than junior participating preferred stock purchase rights)
granted by Peoples under the existing stock plans of Peoples, 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.
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 Peoples 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 the
approval by the shareholders of UPC of an amendment to the Restated Charter of
UPC to increase the number of authorized shares of UPC Common Stock to at least
150,000,000 and in any event to a sufficient number of shares for the Merger;
(iii) receipt of certain regulatory approvals from the Board of Governors of the
Federal Reserve System and other applicable regulatory authorities; (iv) receipt
of an opinion of counsel as to the tax-free nature of certain aspects of the
Merger; (v) receipt of a letter from Price Waterhouse LLP,
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UPC's independent public accountants, to the effect that the Merger will qualify
for pooling-of-interests accounting treatment; (vi) receipt by Peoples of
certain fairness opinions, dated the date of the proxy statement to be mailed to
Peoples' shareholders, concerning the fairness of the Merger to Peoples'
shareholders, from a financial point of view; and (vii) satisfaction of certain
other conditions.
Under the Agreement, Peoples has the right to terminate the Agreement
if either (A) the Average Closing Price (as defined in the Agreement) of UPC
Common Stock (i) is less than 85% 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 10% below a weighted index of the stock prices of a
group of bank holding companies designated in the Agreement; or (B) the Average
Closing Price is less than 80% of the Starting Price. In the event that Peoples
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 eliminate Peoples's right to terminate.
In connection with executing the Agreement, UPC and Peoples entered
into a stock option agreement (the "Stock Option Agreement") pursuant to which
Peoples granted to UPC an option to purchase, subject to certain limitations, up
to 1,991,406 shares of Peoples Common Stock (representing 19.9% of the
outstanding shares of Peoples Common Stock without giving effect to the exercise
of the option), at a purchase price of $33.00 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 $15.0 million.
The Agreement and the Merger will be submitted for approval at a
meeting of the shareholders of Peoples. 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 Peoples
Common Stock. Such shares of stock of UPC will be offered to the Peoples
shareholders pursuant to a prospectus that will also serve as a proxy statement
for the meeting of the shareholders of Peoples 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
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discussion is qualified in its entirety by reference to such documents.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND EXHIBITS
C. Exhibits
2.1 Agreement and Plan of Merger, dated as of
November 17, 1997, by and between Union
Planters Holding Corporation and Peoples
First Corporation and joined in by Union
Planters Corporation.
2.2 Stock Option Agreement, dated as of November
17, 1997, issued by Peopled First
Corporation to Union Planters Corporation.
99.1 Text of press release, dated November 18,
1997, issued by Union Planters Corporation.
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: November 21, 1997
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INDEX TO EXHIBITS
Exhibit
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2.1 Agreement and Plan of Merger, dated as of
November 17, 1997, by and between Union
Planters Holding Corporation and Peoples
First Corporation and joined in by Union
Planters Corporation.
2.2 Stock Option Agreement, dated as of November
17, 1997, issued by Peopled First
Corporation to Union Planters Corporation.
99.1 Text of press release, dated November 18,
1997, issued by Union Planters Corporation.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
UNION PLANTERS CORPORATION,
UNION PLANTERS HOLDING CORPORATION
AND
PEOPLES FIRST CORPORATION
DATED AS OF NOVEMBER 17, 1997
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TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER............................. 1
1.1 Merger....................................................... 1
1.2 Time and Place of Closing.................................... 2
1.3 Effective Time............................................... 2
1.4 Execution of Option Agreement................................ 2
1.5 Restructure of Transaction................................... 2
ARTICLE 2 - TERMS OF MERGER.............................................. 3
2.1 Charter...................................................... 3
2.2 By-Laws...................................................... 3
2.3 Directors and Officers....................................... 3
ARTICLE 3 - MANNER OF CONVERTING SHARES.................................. 3
3.1 Conversion of Shares......................................... 3
3.2 Anti-Dilution Provisions..................................... 4
3.3 Shares Held by Subject Company or Parent..................... 4
3.4 Fractional Shares............................................ 4
3.5 Conversion of Stock Options.................................. 4
ARTICLE 4 - EXCHANGE OF SHARES........................................... 6
4.1 Exchange Procedures.......................................... 6
4.2 Rights of Former Subject Company Shareholders................ 6
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY............ 7
5.1 Organization, Standing, and Power............................ 7
5.2 Authority; No Breach by Agreement............................ 7
5.3 Capital Stock................................................ 8
5.4 Subject Company Subsidiaries................................. 9
5.5 Financial Statements......................................... 10
5.6 Absence of Undisclosed Liabilities........................... 10
5.7 Absence of Certain Changes or Events......................... 10
5.8 Tax Matters.................................................. 11
5.9 Assets....................................................... 12
5.10 Intellectual Property........................................ 12
5.11 Environmental Matters........................................ 13
5.12 Compliance With Laws......................................... 14
5.13 Labor Relations.............................................. 14
5.14 Employee Benefit Plans....................................... 14
5.15 Material Contracts........................................... 16
5.16 Legal Proceedings............................................ 17
5.17 Reports...................................................... 17
5.18 Statements True and Correct.................................. 17
5.19 Accounting, Tax, and Regulatory Matters...................... 18
5.20 Subject Company Rights....................................... 18
5.21 Article Provisions; Takeover Laws............................ 18
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<TABLE>
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ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PARENT..................... 19
6.1 Organization, Standing and Power............................. 19
6.2 Authority; No Breach by Agreement............................ 19
6.3 Capital Stock................................................ 20
6.4 Parent Subsidiaries.......................................... 20
6.5 Financial Statements......................................... 21
6.6 Absence of Undisclosed Liabilities........................... 21
6.7 Absence of Certain Changes or Events......................... 22
6.8 Tax Matters.................................................. 22
6.9 Environmental Matters........................................ 22
6.10 Compliance With Laws......................................... 23
6.11 Legal Proceedings............................................ 23
6.12 Reports...................................................... 24
6.13 Statements True and Correct.................................. 24
6.14 Accounting, Tax, and Regulatory Matters...................... 24
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION..................... 25
7.1 Affirmative Covenants of Subject Company..................... 25
7.2 Negative Covenants of Subject Company........................ 25
7.3 Covenants of Parent.......................................... 27
7.4 Adverse Changes in Condition................................. 28
7.5 Reports...................................................... 28
7.6 No Rights Triggered.......................................... 28
ARTICLE 8 - ADDITIONAL AGREEMENTS........................................ 29
8.1 Registration Statement; Proxy Statement;
Shareholder Approval....................................... 29
8.2 Authorization of Shares; Exchange Listing.................... 29
8.3 Applications................................................. 29
8.4 Filings With State Offices................................... 30
8.5 Agreement as to Efforts to Consummate........................ 30
8.6 Investigation and Confidentiality............................ 30
8.7 Press Releases............................................... 31
8.8 Certain Actions.............................................. 31
8.9 Accounting and Tax Treatment................................. 31
8.10 Agreement of Affiliates...................................... 31
8.11 Employee Benefits and Contracts.............................. 32
8.12 Indemnification.............................................. 33
8.13 Merger Subsidiary............................................ 34
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............ 34
9.1 Conditions to Obligations of Each Party...................... 34
9.2 Conditions to Obligations of Parent.......................... 36
9.3 Conditions to Obligations of Subject Company................. 37
ARTICLE 10 - TERMINATION.................................................. 38
10.1 Termination.................................................. 38
10.2 Effect of Termination........................................ 41
10.3 Non-Survival of Representations and Covenants................ 41
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ARTICLE 11 - MISCELLANEOUS................................................ 42
11.1 Definitions.................................................. 42
11.2 Expenses..................................................... 50
11.3 Brokers and Finders.......................................... 50
11.4 Entire Agreement............................................. 50
11.5 Amendments................................................... 51
11.6 Waivers...................................................... 51
11.7 Assignment................................................... 51
11.8 Notices...................................................... 52
11.9 Governing Law................................................ 52
11.10 Counterparts................................................. 52
11.11 Captions..................................................... 53
11.12 Interpretations.............................................. 53
11.13 Enforcement of Agreement..................................... 53
11.14 Severability................................................. 53
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of November 17, 1997, by and between Peoples First
Corporation, a Kentucky corporation having its principal office located in
Paducah, Kentucky ("Subject Company"), Union Planters Holding Corporation, a
Tennessee corporation having its principal office located in Memphis, Tennessee
("Merger Subsidiary"), and joined in by Union Planters Corporation, a Tennessee
corporation having its principal office located in Memphis, Tennessee
("Parent").
PREAMBLE
The Boards of Directors of Subject Company, Merger Subsidiary
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
and the Plan of Merger attached hereto at Exhibit 1 and incorporated herein by
reference, provide for the acquisition of Subject Company by Parent pursuant to
the merger of Subject Company with and into Merger Subsidiary. 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
Surviving Corporation 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 Financial
Institutions of the Commonwealth of Kentucky, 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, 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.
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 and the Plan of Merger, at the Effective Time, Subject Company shall
be merged with and into Merger Subsidiary in accordance with the provisions of
KRS 271B.11-070 of the KBCA and Section 48-
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21-109 of the TBCA and with the effect provided in KRS 271B.11-060 of the KBCA
and Section 48-21-108 of the TBCA (the "Merger"). Merger Subsidiary shall be the
Surviving Corporation resulting from the Merger and shall continue to be
governed by the Laws of the State of Tennessee. The Merger shall be consummated
pursuant to the terms of this Agreement and the Plan of Merger, which have been
or will be approved and adopted by the respective Boards of Directors of Subject
Company, Parent and Merger Subsidiary.
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 Closing Date and at
the time the Articles of Merger reflecting the Merger shall become effective
with the Secretary of State of the Commonwealth of Kentucky and the Secretary of
State of the State of Tennessee (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 a date
designated by Parent which date shall be within 45 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 (taking
into account any requisite waiting period in respect thereof), (ii) the date on
which the shareholders of Subject Company approve this 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 Option Agreement. Immediately after the
execution of this Agreement by the Parties and as a condition thereto, Subject
Company is executing and delivering to Parent a stock option agreement (the
"Stock Option Agreement"), in substantially the form of Exhibit 2, pursuant to
which Subject Company is granting to Parent an option to purchase shares of
Subject Company Common Stock.
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 the KBCA, 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
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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 and the Plan of Merger or in the form of an Amended and
Restated Agreement and Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Charter (the "Charter") of Merger Subsidiary
in effect immediately prior to the Effective Time shall be the Charter of the
Surviving Corporation until otherwise amended or repealed.
2.2 By-Laws. The By-laws of Merger Subsidiary (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 (and Section 7 of the Plan of Merger), 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 remain
issued and outstanding and shall represent one share of the Surviving
Corporation from and after the Effective Time.
(c) Except for Dissenting Shares, each share of Subject
Company Common Stock, including any associated or attached Subject
Company Rights, (exclud-
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ing 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 0.6
shares of Parent Common Stock (subject to possible adjustment as set
forth in Section 10.1(f) 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.
Dissenting Shares shall not be converted pursuant to Section 3.1(c) in the
Merger but, at and after the Effective Time, shall present only the right to
receive payment in accordance with Subtitle 13 of the KBCA. If a holder of
Dissenting Shares becomes ineligible for payment under Subtitle 13 of the KBCA,
then such holder's Dissenting Shares shall cease to be Dissenting Shares and
shall be converted in the manner set forth in Section 3.1(c) effective as of the
Effective Time.
3.2 Anti-Dilution Provisions. In the event Parent changes
the number of shares of Parent Common Stock issued and outstanding after the
date of this Agreement and 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 stock awards, but excluding any Subject Company Rights
("Subject Company Options") granted by Subject Company under the
Subject Company Stock Plans, which are outstanding at the Effective
Time, whether or
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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 to the nearest whole share (rounding down
with respect to any "incentive stock options"), 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 to the nearest cent
(rounding up with respect to any "incentive stock options").
Notwithstanding clauses (iii) and (iv) of the first sentence of this
Section 3.5(a), 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 under 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 including any acceleration of option vesting resulting from the
Merger), and Parent shall comply with the terms of each Subject Company
Stock Plan to ensure, 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 best 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.
(c) 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
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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 and approve the transmittal 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 Dissenting Shares or 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
Dissenting Shares or 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
Corporation's obligations 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
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distribution is declared by Parent on the Parent Common Stock, the record date
for which is at or after the Effective Time, the 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 reasonably 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,
except as set forth on the Subject Company Disclosure Memorandum, 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 Commonwealth of Kentucky, 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.
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 the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution, delivery,
and performance of this Agreement and the Plan of Merger, 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
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this Agreement and the Plan of Merger 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 and the Plan of Merger by each of Parent and Merger
Subsidiary, this Agreement (which, for purposes of this sentence, shall
not include the Stock Option Agreement) and the Plan of Merger each
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 (including provisions of
the U.S., Tennessee and Kentucky Constitutions) 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) or the Plan of Merger 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 or thereof, will (i) conflict with or
result in a breach of any provision of the Articles of Incorporation,
Charter or the 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 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.
(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: 30,000,000 shares of Subject Company Common Stock, of
which 10,007,066 shares are issued and outstanding as of the date of
this Agreement (exclusive of treasury shares) and not more than
10,007,066 shares will be issued and outstanding at the Effective Time
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(exclusive of shares issued or issuable pursuant to the Stock Option
Agreement); and 6,000,000 shares of preferred stock, of which no shares
are issued and outstanding. 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 KBCA. 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 150,671 shares of Subject Company Common Stock
available for grant under the Subject Company Stock Plans, and there
are options to purchase not more than 557,078 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 other than the Subject Company Rights.
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). 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 for the Stock Option Agreement, Subject Company Rights 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). 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, federal savings 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
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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 Subsidiaries that are a
depository institution is the Bank and the Thrift. 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 and the Savings Association Insurance Fund. The Thrift 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
Savings Association 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.
5.5 Financial Statements. 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.
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 September
30, 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 September 30, 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 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, 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.
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5.8 Tax Matters.
(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.
(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 Internal
Revenue Service 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.
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(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 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 (including provisions of the U.S., Tennessee and Kentucky
Constitutions) 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. 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. 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
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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 employee to assign any interest in any Intellectual
Property or keep confidential any trade secrets, proprietary data, customer
information, or other business information or 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.
(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, 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.
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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. 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
material 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 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, to the Knowledge of Subject Company, 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
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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." Neither Subject Company nor any Subject
Company Subsidiary maintains any "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code). No Subject Company
Pension Plan is or has been a multi-employer plan within the meaning of
Section 3(37) of ERISA.
(b) All Subject Company Benefit Plans are in material
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 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) No "defined benefit plan" (as defined in Section
414(j) of the Internal Revenue Code) or any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, 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 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 multi-employer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions 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.
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(e) 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) 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, 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, (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, 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.
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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. 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 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. 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
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Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
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 Subject Company Rights.
(a) Subject Company has taken all necessary action to
exclude Parent or any Parent Subsidiary from being deemed an "Acquiring
Person" for purposes of the Subject Company Rights Agreement, and to
exclude the transactions contemplated by this Agreement, the Plan of
Merger and/or the Stock Option Agreement from triggering, resulting in
or causing a "Stock Acquisition Date" or "Distribution Date" for
purposes of the Subject Company Rights Agreement, so long as, after the
date of this Agreement, Parent does not acquire beneficial ownership
(within the meaning of Section 13d-3 promulgated under the 1934 Act) of
more than 100,000 shares of Subject Company Common Stock in addition to
any shares acquired pursuant to this Agreement or pursuant to the Stock
Option Agreement or any shares acquired in fiduciary capacity or as a
result of debts previously contracted.
(b) Subject Company has (i) duly entered into an
amendment to the Subject Company Rights Agreement in substantially the
form of set forth in Section 5.20 of the Subject Company Disclosure
Memorandum, and (ii) taken all other action necessary or appropriate so
that, the entering into of this Agreement and the Stock Option
Agreement, and the consummation of the transactions contemplated hereby
and thereby (including, without limitation, the Merger and/or the
purchase of shares of Subject Company Common Stock pursuant to the
Stock Option Agreement) do not and will not result in the ability of
any person to exercise any Subject Company Rights under the Subject
Company Rights Agreement or enable or require the Subject Company
Rights to separate from the shares of Subject Company Common Stock to
which they are attached or to be triggered or become exercisable.
(c) No "Distribution Date" or "Shares Acquisition
Date" (as such terms are defined in the Subject Company Rights
Agreement) has occurred.
5.21 Article Provisions; Takeover Laws. 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 of Incorporation or Charter, as the case may be, 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. Subject Company has
taken all necessary action to exempt this Agreement and the
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Stock Option Agreement from, and the transactions contemplated by hereby and
thereby are exempt from, any "super-majority" voting requirements or the
requirements of any "moratorium," "fair price," "business combination," "control
share," or other anti-takeover provisions under applicable Laws, including
Subtitle 12 of the KBCA, or the Articles of Incorporation or Charter, as the
case may be, or Bylaws of the Subject Company or any Subject Company Subsidiary
(collectively, "Takeover Laws"). The transactions contemplated by this Agreement
and the Stock Option Agreement have been approved for purposes of Articles
8(b)(ii) and 9(b)(i) of the Subject Company's Articles of Incorporation.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Subject Company,
except as set forth on Parent's Disclosure Memorandum, 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 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 the Plan of Merger and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been or will be duly
and validly authorized by all necessary corporate action (including
valid authorization and adoption of this Agreement and the Plan of
Merger by Parent's duly constituted Board of Directors) in respect
thereof on the part of Parent, subject to the adoption of an amendment
to the charter of Parent to increase the number of authorized shares of
Parent Common Stock. Assuming due authorization, execution and delivery
of this Agreement and the Plan of Merger by Subject Company, this
Agreement (which, for purposes of this sentence, shall not include the
Stock Option Agreement) and the Plan of Merger each 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 (including provisions of the U.S.,
Tennessee and Kentucky Constitutions) 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).
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(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) or the Plan of Merger 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 (subject to the
amendment of the Parent's Restated Charter of Incorporation to increase
the number of authorized shares of Parent Common Stock), 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 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 68,077,181
shares were issued and outstanding as of October 31, 1997, and (ii) 10,000,000
shares of Parent Preferred Stock, of which 2,278,228 shares of Parent Series E
Preferred Stock were issued and outstanding as of October 31, 1997. All of the
issued and outstanding shares of Parent Capital Stock are, and, subject to the
amendment of Parent's Restated Charter of Incorporation to increase the number
of authorized shares of Parent Common Stock, 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.
6.4 Parent Subsidiaries. Except for Capital Factors,
Inc., a majority of the outstanding stock of which may be acquired prior to the
Closing Date, 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
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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, 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 September 30, 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 the Parent
Subsidiaries has incurred or paid any Liability since September 30, 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.
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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, 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 in 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.
(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.
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(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:
(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 material 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.
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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 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 or expressly provided for in the Subject
Company Disclosure Memorandum, 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 or as and to the extent expressly
disclosed or provided for in the Subject Company Disclosure Memorandum, 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 of Incorporation, Charter,
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" 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
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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 $0.24
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 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
(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 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; 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
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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
(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 or an
agreement with respect to an Acquisition Proposal to be consummated prior to the
Closing Date which would effect a change in the number or kind of shares of
Parent Common Stock held by Parent shareholders immediately prior to such
consummation; provided, that the foregoing shall not prevent Parent or any
Parent Subsidiary from acquiring any other
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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 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.
7.6 No Rights Triggered. Subject Company shall take all
steps necessary to ensure that the entering into of this Agreement, the Plan of
Merger and the Stock Option Agreement and the consummation of the transactions
contemplated hereby and thereby and any other action or combination of actions,
or any other transactions contemplated hereby or by the Stock Option Agreement,
do not and will not result in the grant of any Rights (including Subject Company
Rights) to any person (i) under Subject Company's Articles of Incorporation or
Bylaws, (ii) under the Subject Company Rights Agreement, or (iii) to exercise or
receive certificates for Rights (including Subject Company Rights), or acquire
any property in respect of Rights, under the Subject Company Rights Agreement.
Subject Company will cause the Subject Company Rights Agreement to be
terminated, and shall take all steps necessary to cause all Subject Company
Rights to cease to exist and be of no effect, immediately prior to the Effective
Time.
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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 after the Registration Statement is declared
effective by the SEC for the purpose of voting upon approval of this Agreement
and the Plan of Merger and such other related matters as it deems appropriate.
Assuming the Registration Statement is then effective, the Subject Company shall
call the Shareholders' Meeting to be held not later than 40 days after the
Parent's 1998 Annual Meeting of Shareholders. Otherwise, the Subject Company
shall call a Shareholders' Meeting as soon thereafter as practicable after the
Registration Statement is declared effective by the SEC. 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, 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 Authorization of Shares; Exchange Listing. Parent
shall submit to its shareholders, at the 1998 Annual Meeting of Shareholders of
Parent, a proposal to amend the Restated Charter of Incorporation of Parent to
increase the number of authorized shares of Parent Common Stock by an amount at
least equal to the number of shares of Parent Common Stock issuable in
connection with the Merger, and, subject to the approval of such amendment by
the shareholders of Parent, shall cause such amendment to become effective and
reserve 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 and the Plan of Merger.
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
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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 Tennessee and the Secretary of State of the Commonwealth of Kentucky 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 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, and will cause its
respective Affiliates and their respective officers, directors,
employees, agents, consultants, and other representatives to hold, in
strict confidence, unless compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary Consents of Regulatory Authorities) or by other
requirements of Law, all confidential documents and confidential or
proprietary information concerning the other Parties gathered from the
other Parties, or their respective officers, directors, employees,
agents, consultants or
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Representatives, pursuant to this Agreement, or pursuant to the
Confidentiality Agreement, dated September 23, 1997, between Parent and
Subject Company, except to the extent that such documents or
information can be shown to have been (a) previously lawfully known by
the Party receiving such documents or information, (b) in the public
domain through no fault of such receiving Party, or (c) later acquired
by the receiving party from other sources not themselves bound by, and
in breach of, a confidentiality agreement. Except as provided in
Sections 8.1, 8.2 and 8.3 hereof, no Party will disclose or otherwise
provide any such confidential or proprietary documents or information
to any other Person, except to the Party's auditors, Representatives
and other consultants and advisors who need such documents or
information in connection with this Agreement or the Stock Option
Agreement, and the transactions contemplated hereby and thereby, and
the Parties agree to cause each of the foregoing to be subject to and
bound by the confidentiality provisions hereof.
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 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
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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 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.
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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) to the full
extent permitted under any of Kentucky Law, Subject Company's Articles
of Incorporation 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 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
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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. Prior to the Effective Time, the
outstanding capital stock of Merger Subsidiary shall consist of 1,000 shares of
Merger Subsidiary Common Stock, all of which shares shall be owned by Parent.
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.
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
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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 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 Wyatt, Tarrant & Combs, and Subject Company
shall have received a written opinion of counsel from Brown, Todd &
Heyburn, PLLC, 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) Parent, Merger
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Subsidiary and Subject Company will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Internal
Revenue Code; (iii) 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), (iv) 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 be the same as the tax basis of the Subject Company
Common Stock surrendered in exchange therefor, (v) 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 (vi) 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.
(h) Amendment of Parent's Charter. The shareholders
of Parent shall have approved an amendment to Parent's Restated Charter
of Incorporation to increase the number of authorized shares of Parent
Common Stock to at least 150,000,000 and in any event to a sufficient
number of authorized shares of Parent Common Stock to enable Parent to
issue authorized shares of Parent Common Stock in accordance with its
obligations under Article 3 of this Agreement and the Plan of Merger.
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 each 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.
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<PAGE> 41
(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.
(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 each 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 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
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<PAGE> 42
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).
(e) Fairness Opinion. Subject Company shall have
received opinions from Keefe, Bruyette & Woods, Inc. and Stifel,
Nicolaus & Company, Inc. to the effect that the Merger is fair to
Subject Company shareholders from a financial point of view dated the
date of the Proxy Statement.
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 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
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<PAGE> 43
(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 KBCA and this
Agreement at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon, or (iii)
the shareholders of Parent, at the 1998 Annual Meeting of Shareholders
of Parent, fail to vote their approval of an amendment to the Restated
Charter of Incorporation of Parent to increase the number of authorized
shares of Parent Common Stock, to the extent Parent would not have
sufficient authorized shares of Parent Common Stock available for
issuance in the Merger; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by August 31,
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 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 either:
A. Both of the following conditions are
satisfied:
(1) the Average Closing Price shall be
less than the product of (i) 0.85 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 0.10 from the quotient in this
clause (2)(ii) (such number being referred to herein
as the "Index Ratio"); or
B. The Average Closing Price shall be less
than the product obtained by multiplying 0.80 times the
Starting Price;
subject, however, to the following four sentences. If Subject Company
refuses to consummate the Merger pursuant to this Section 10.1(f), it
shall give prompt written notice thereof to Parent which notice shall
specify which of the clauses A. or B. is applicable (or if both would
be applicable, which clause is being invoked); 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 in the
case of a failure to satisfy the condition in clause A., to elect to
increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of 0.85, 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
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<PAGE> 44
of the Index Ratio and the Exchange Ratio (as then in effect) by (2)
the Parent Ratio. During the five-day period commencing with its
receipt of such notice, Parent shall have the option, in the case of a
failure to satisfy the condition in clause B., to elect to increase the
Exchange Ratio to the quotient obtained by dividing (i) the product of
0.80, the Starting Price and the Exchange Ratio (as then in effect), by
(ii) the Average Closing Price. If Parent makes an election
contemplated by the preceding two sentences, 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(f) 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(f).
For purposes of this Section 10.1(f), 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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<PAGE> 45
<TABLE>
<CAPTION>
Bank Holding Companies Weighting
- -------------------------------------------- ------------------
<S> <C>
AmSouth Bancorporation 5.99%
BB&T Corporation 10.41
Crestar Financial Corporation 7.75
First American Corporation 3.94
First of America Bank Corporation 7.04
First Security Corporation 5.10
First Tennessee National Corporation 5.25
Firstar Corporation 7.55
Huntington Bancshares, Inc. 9.30
Marshall & Ilsley Corporation 7.40
Mercantile Bancorporation, Inc. 9.05
National Commerce Bancorp 2.11
Old Kent Financial Corporation 4.62
Regions Financial Corporation 7.30
SouthTrust Corporation 7.19
-------
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 or Parent shall be appropriately adjusted for the purposes of applying
this Section 10.1(f).
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 and the Plan of Merger 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 shall be governed by its 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.
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<PAGE> 46
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.
"Articles of Merger" shall mean the Articles of Merger to be
executed by Subject Company and filed with the Secretary of State of
the Commonwealth of Kentucky and the Secretary of State of the State of
Tennessee 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 Peoples First National Bank and Trust
Company.
"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.
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<PAGE> 47
"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.
"Dissenting Shares" shall mean any shares of Subject Company
Common Stock with respect to which the record or beneficial holder has
properly perfected the holder's rights to dissent under Subtitle 13 of
Chapter 27IB of the KBCA.
"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.
"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
43
<PAGE> 48
abatement, removal, or encapsulation pursuant to the requirements of
governmental authorities and any polychlorinated biphenyls).
"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.
"KBCA" shall mean the Kentucky Business Corporation Act.
"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 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 contemplat-
44
<PAGE> 49
ed 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 or
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 expenses incurred by the Parties in consummating the
transactions contemplated by the Agreement.
"Merger Subsidiary" shall mean Union Planters Holding
Corporation, a wholly owned subsidiary of Parent organized under the
Laws of the State of Tennessee.
"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.
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<PAGE> 50
"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 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 September 30, 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 nine months ended September 30, 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 September 30, 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 Merger Subsidiary
or Parent, and "Parties" shall mean, collectively, Subject Company,
Merger Subsidiary and Parent.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"Person" 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
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<PAGE> 51
partnership, limited liability company, trust, business association,
group acting in concert, or any person acting in a representative
capacity.
"Plan of Merger" shall mean the Plan of Merger of even date
herewith entered into by Parent, Merger Subsidiary and Subject Company,
in the form of Exhibit 1.
"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 Office of Thrift Supervision, the
Federal Deposit Insurance Corporation, the Department of Financial
Institutions of the Commonwealth of Kentucky, 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.
"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.
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<PAGE> 52
"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 2.
"Subject Company Common Stock" shall mean the 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 September 30, 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 nine months ended September 30,
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 September
30, 1997.
"Subject Company Rights" shall mean the junior participating
preferred stock purchase rights issued pursuant to the Subject Company
Rights Agreement.
"Subject Company Rights Agreement" shall mean that certain
Rights Agreement, dated January 18, 1995, between Subject Company and
Boatman's Trust Company, as Rights Agent, as amended by the First
Amendment, dated October 20, 1997, between Subject Company and
Boatman's Trust Company, as Rights Agent, and by the Second Amendment,
dated November 17, 1997, between Subject Company and Registrar and
Trust Company, as successor trustee.
"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 fore-
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<PAGE> 53
closure 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
with respect to certain employment matters following the Effective Time
in addition to those included in this Agreement.
"Surviving Corporation" shall mean Merger Subsidiary 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.
"Thrift" shall mean Peoples First, FSB.
(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(f)
Closing..................................................... Section 1.2
Determination Date.......................................... Section 10.1(f)
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(f)
Index Price ................................................ Section 10.1(f)
Index Ratio ................................................ Section 10.1(f)
Maximum Amount ............................................. Section 8.12(b)
Merger .................................................... Section 1.1
Parent Ratio................................................ Section 10.1(f)
Parent SEC Reports.......................................... Section 6.12
Starting Date............................................... Section 10.1(f)
Starting Price.............................................. Section 10.1(f)
</TABLE>
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<TABLE>
<S> <C>
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.
11.3 Brokers and Finders. Except for Keefe, Bruyette &
Woods, Inc. and Stifel Nicolaus & Company Inc. each as to Subject Company, 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) constitutes 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, including,
without limitation, the Confidentiality Agreement, dated September 23, 1997,
between Parent and Subject Company. Nothing in this Agreement expressed or
implied is intended to
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<PAGE> 55
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.
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.
(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.
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<PAGE> 56
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:
Subject Company: Peoples First Corporation
100 South Fourth Street
Paducah, Kentucky 42001
Attention: Aubrey W. Lippert
Telecopy Number: (502) 441-1526
Copy to Subject Counsel: Brown, Todd & Heyburn, PLLC
3200 Providian Center
Louisville, Kentucky 40202-3363
Attention: R. James Straus, Esq.
Telecopy Number: (502) 581-1087
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
Wyatt, Tarrant & Combs
2800 Citizens Plaza
Louisville, Kentucky 40202
Attention: Stewart E. Conner, Esq.
Telecopy Number: (502) 589-0309
11.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the Commonwealth of Kentucky,
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.
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<PAGE> 57
11.11 Captions. The captions contained in this Agreement
are for reference purposes only and are not part of this Agreement.
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 agree that time
is of the essence in the performance of their respective obligations under this
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> 58
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: PEOPLES FIRST CORPORATION
By: /S/ EILEEN M. DUOBINIS-GRAY By: /S/ AUBREY W. LIPPERT
------------------------------- --------------------------------
Title: SECRETARY Title: CHAIRMAN, PRESIDENT AND CEO
---------------------------- -----------------------------
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /S/ E. JAMES HOUSE, JR. By: /S/ JACKSON W. MOORE
------------------------------- --------------------------------
Jackson W. Moore
Title: CORPORATE SECRETARY Title: President & Chief Operating
---------------------------- -----------------------------
Officer
-------
ATTEST: UNION PLANTERS HOLDING CORPORATION
By: /S/ LYNN L. LANIGAN By: /S/ JACKSON W. MOORE
------------------------------- --------------------------------
Jackson W. Moore
Title: SECRETARY Title: President
---------------------------- -----------------------------
[CORPORATE SEAL]
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EXHIBIT 1
PLAN OF MERGER
PROVIDING FOR THE MERGER OF
PEOPLES FIRST CORPORATION, A KENTUCKY CORPORATION,
WITH AND INTO
UNION PLANTERS HOLDING CORPORATION
THIS PLAN OF MERGER is made and entered into as of November
17, 1997, by and between Peoples First Corporation, a Kentucky corporation
("Subject Company"), Union Planters Holding Corporation, a Tennessee corporation
("Merger Subsidiary"), and joined in by Union Planters Corporation, a Tennessee
corporation ("Parent").
This Plan of Merger is entered into concurrently with, and
pursuant to, the Plan and Agreement of Merger (the "Acquisition Agreement"),
dated the date hereof, between Subject Company and Merger Subsidiary, and joined
in by Parent.
Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Acquisition Agreement.
1. SUBJECT COMPANY. Subject Company is corporation duly organized
under the laws of the Commonwealth of Kentucky and has its principal office
located in Paducah, Kentucky. The authorized capital stock of Subject Company
consists of (a) shares of common stock ("Subject Company Common Stock"), and (b)
shares of preferred stock.
2. MERGER SUBSIDIARY. Merger Subsidiary is a corporation duly
organized under the laws of Tennessee and has its principal office located in
Memphis, Tennessee. The authorized capital stock of Merger Subsidiary consists
of 1,000 shares of common stock ("Merger Subsidiary Common Stock"), of which
1,000 shares are validly issued and outstanding and owned by Parent, fully paid
and nonassessable.
3. PARENT. Parent is a corporation duly organized under the laws
of Tennessee and has its principal office located in Memphis, Tennessee. The
authorized capital stock of Parent consists of shares of common stock ("Parent
Common Stock"), and (b) shares of preferred stock ("Parent Preferred Stock").
Parent will issue shares of Parent Common Stock in the Merger (as defined
below), and will own all of the outstanding shares of the Surviving Corporation.
4. MERGER. Subject to the terms and conditions of this Plan of
Merger and the Acquisition Agreement, at the Effective Time (as defined in
Section 5 below), Subject Company shall be merged with and into Merger
Subsidiary in accordance with the provisions of KRS 271B.11-070 of the KBCA and
Section 48-21-109 of the TBCA and with the effect provided in KRS 271B.11-060 of
the KBCA and Section 48-21-108 of the TBCA (the "Merger"). Merger Subsidiary
shall be the Surviving Corporation resulting from the Merger and shall continue
to be governed by the Laws of the State of Tennessee. The Merger shall be
consummated pursuant to the terms of this Plan of Merger and the Acquisition
Agreement, which have been or will be approved and adopted by the respective
Boards of Directors of Subject Company, Parent and Merger Subsidiary, as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended.
5. EFFECTIVE TIME. The Merger and other transactions contemplated
by the Acquisition Agreement and this Plan of Merger shall become effective on
the Closing Date and
<PAGE> 60
at the time the Articles of Merger reflecting the Merger shall become effective
with the Secretary of State of the Commonwealth of Kentucky and the Secretary of
State of the State of Tennessee (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 of Subject Company,
Merger Subsidiary and Parent, Subject Company, Merger Subsidiary and Parent
shall use their reasonable efforts to cause the Effective Time to occur on a
date designated by Parent which date shall be within 45 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
(taking into account any requisite waiting period in respect thereof), (ii) the
date on which the shareholders of Subject Company approve the Acquisition
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 the
obligations of each of Subject Company, Merger Subsidiary and Parent under the
Agreement shall have been satisfied or waived (to the extent waivable by such
party).
6. SURVIVING CORPORATION - CORPORATE MATTERS. From and after the
Effective Time, until changed or amended in accordance with the Charter of
Incorporation and Bylaws of the Surviving Corporation, or otherwise in
accordance with law:
(a) Charter. The Charter (the "Charter") of Merger Subsidiary
in effect immediately prior to the Effective Time shall be the Charter of the
Surviving Corporation until otherwise amended or repealed.
(b) By-Laws. The By-laws of Merger Subsidiary (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.
(c) 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.
7. MANNER OF CONVERSION OF SHARES.
(a) Conversion of Shares. Subject to the provisions of this
Section 7, 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:
(i) 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.
(ii) Each share of Merger Subsidiary Common Stock
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding
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and shall represent one share of the Surviving Corporation from and
after the Effective Time.
(iii) Except for Dissenting Shares, each share of
Subject Company Common Stock, including any associated or attached
Subject Company Rights, (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 0.6 shares of Parent Common Stock (subject to
possible adjustment as set forth in Section 7(f) 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.
Dissenting Shares shall not be converted pursuant to Section 7(a)(iii) in the
Merger but, at and after the Effective Time, shall represent only the right to
receive payment in accordance with Subtitle 13 of the KBCA. If a holder of
Dissenting Shares becomes ineligible for payment under Subtitle 13 of the KBCA,
then such holder's Dissenting Shares shall cease to be Dissenting Shares and
shall be converted in the manner set forth in Section 7(a)(iii) effective as of
the Effective Time.
(b) Anti-Dilution Provisions. In the event Parent changes the
number of shares of Parent Common Stock issued and outstanding after the date of
this Agreement and 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.
(c) 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.
(d) 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.
(e) Conversion of Stock Options.
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(i) 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 stock awards, but excluding any Subject Company
Rights ("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 to the nearest whole
share (rounding down with respect to any "incentive stock options"),
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 to
the nearest cent (rounding up with respect to any "incentive stock
options"). Notwithstanding clauses (iii) and (iv) of the first sentence
of this Section 7(e)(i), 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
7(e).
(ii) 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 under such Subject Company Stock
Plan shall continue in effect on the same terms and conditions (subject
to the adjustments required by Section 7(e)(i) after giving effect to
the Merger including any acceleration of option vesting resulting from
the Merger), and Parent shall comply with the terms of each Subject
Company Stock Plan to ensure, 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 best 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.
(iii) All contractual restrictions or limitations
on transfer with respect to Subject Company Common Stock awarded under
the Subject Company Stock Plans or
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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 7(a) of this
Agreement.
(f) Adjustment of Exchange Ratio. If the Board of
Directors of Subject Company provides written notice to Parent in accordance
with the Acquisition Agreement that Subject Company refuses to consummate the
Merger because, at any time during the ten-day period commencing two days after
the Determination Date, if either:
A. Both of the following conditions are
satisfied:
(1) the Average Closing Price shall be
less than the product of (i) 0.85 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 0.10 from the quotient in this
clause (2)(ii) (such number being referred to herein as the
"Index Ratio"); or
B. The Average Closing Price shall be less than
the product obtained by multiplying 0.80 times the Starting Price;
which notice shall specify which of the clauses A. or B. is applicable (or if
both would be applicable, which clause is being invoked); then during the
five-day period commencing with its receipt of such notice, Parent shall have
the option to elect to increase the Exchange Ratio as follows: During the
five-day period commencing with its receipt of such notice, Parent shall have
the option, in the case of a failure to satisfy the condition in clause A., to
elect to increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of 0.85, 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. During the five-day
period commencing with its receipt of such notice, Parent shall have the option,
in the case of a failure to satisfy the condition in clause B., to elect to
increase the Exchange Ratio to the quotient obtained by dividing (i) the product
of 0.80, the Starting Price and the Exchange Ratio (as then in effect), by (ii)
the Average Closing Price. If Parent makes an election contemplated by the
preceding two sentences, 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
7(f) and this Plan of Merger shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Plan of Merger to "Exchange Ratio" shall thereafter be deemed to refer
to the Exchange Ratio as adjusted pursuant to this Section 7(f).
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<PAGE> 64
For purposes of this Section 7(f), 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:
<TABLE>
<CAPTION>
Bank Holding Companies Weighting
- --------------------------------------------- -------------------------
<S> <C>
AmSouth Bancorporation 5.99%
BB&T Corporation 10.41
Crestar Financial Corporation 7.75
First American Corporation 3.94
First of America Bank Corporation 7.04
First Security Corporation 5.10
First Tennessee National Corporation 5.25
Firstar Corporation 7.55
Huntington Bancshares, Inc. 9.30
Marshall & Ilsley Corporation 7.40
Mercantile Bancorporation, Inc. 9.05
National Commerce Bancorp 2.11
Old Kent Financial Corporation 4.62
Regions Financial Corporation 7.30
SouthTrust Corporation 7.19
-----
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.
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<PAGE> 65
"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 or Parent shall be appropriately adjusted for the purposes of applying
this Section 7(f).
8. SURRENDER OF CERTIFICATES AND EXCHANGE OF SHARES.
(a) 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 and approve the transmittal 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 Dissenting Shares or shares to be canceled pursuant to
Section 7(c) 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 7(a) of this Agreement, together
with all undelivered dividends or distributions in respect of such shares
(without interest thereon) pursuant to Section 8(b) of this Agreement. To the
extent required by Section 7(d) 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 8(a). 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.
(b) 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 8(a) of this Agreement, each certificate
theretofore representing shares of Subject Company Common Stock (other than
Dissenting
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<PAGE> 66
Shares or shares to be canceled pursuant to Section 7(c) of this Agreement)
shall from and after the Effective Time represent for all purposes only the
right to receive the consideration provided in Sections 7(a) and 7(d) of this
Agreement in exchange therefor, subject, however, to the Surviving Corporation's
obligations 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 the Acquisition 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 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 8(a) 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 reasonably 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.
9. TAX REORGANIZATION. The Boards of Directors of Parent, Merger
Subsidiary and Subject Company have each approved, or will approve, the
Acquisition Agreement and this Plan of Merger as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
10. EFFECT OF MERGER. From and after the Effective Time:
(a) Subject Company shall, as provided in Chapter 271B of the
KBCA and the TBCA, be merged into and continued in Merger Subsidiary, which at
all times after the Effective Time shall be referred to as the "Surviving
Corporation" and the separate existence of Subject Company shall cease;
(b) The title to all real estate and other property owned by
each corporation party to the Merger shall be vested in the Surviving
Corporation without reversion or impairment;
(c) The Surviving Corporation shall have all liabilities of
each corporation which is a party to the Merger; and
(d) A proceeding pending against Subject Company may be
continued as if the Merger did not occur or the Surviving Corporation may be
substituted in the proceeding for Subject Company.
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<PAGE> 67
11. AMENDMENT, TERMINATION. This Plan of Merger shall terminate
automatically, and be of no further effect, if the Acquisition Agreement is
terminated in accordance with its terms prior to the Effective Time. This Plan
of Merger 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.
12. DEFINITIONS. Capitalized terms not otherwise defined in this
Plan of Merger shall have the following meanings:
"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.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order or Permit.
"Dissenting Shares" shall mean any shares of Subject Company
Common Stock with respect to which the record or beneficial holder has
properly perfected the holder's rights to dissent under Subtitle 13 of
Chapter 27IB of the KBCA.
"KBCA" shall mean the Kentucky Business Corporation Act.
"NYSE" shall mean the New York Stock Exchange, Inc.
"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 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.
"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.
"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 Office of Thrift
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<PAGE> 68
Supervision, the Federal Deposit Insurance Corporation, the Department
of Financial Institutions of the Commonwealth of Kentucky, all state
regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NYSE, the NASD, and the SEC.
"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.
"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.
"Subject Company Common Stock" shall mean the common stock of
Subject Company.
"Subject Company Rights" shall mean the junior participating
preferred stock purchase rights issued pursuant to the Subject Company
Rights Agreement.
"Subject Company Rights Agreement" shall mean that certain
Rights Agreement, dated January 18, 1995, between Subject Company and
Boatman's Trust Company, as Rights Agent, as amended by the First
Amendment, dated October 20, 1997, between Subject Company and
Boatman's Trust Company, as Rights Agent, and by the Second Amendment,
dated November 17, 1997, between Subject Company and Registrar and
Trust Company, as successor trustee.
"Subject Company Stock Plans" shall mean the existing stock
option and other stock-based compensation plans of Subject Company.
"Surviving Corporation" shall mean Merger Subsidiary as the
surviving corporation resulting from the Merger.
"TBCA" shall mean the Tennessee Business Corporation Act.
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<PAGE> 69
IN WITNESS WHEREOF, each of the parties has caused this Plan
of Merger 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: PEOPLES FIRST CORPORATION
By: By:
------------------------- -----------------------------------------
Title: Title:
---------------------- --------------------------------------
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: By:
------------------------- -----------------------------------------
Title: Title: President and Chief Operating Officer
---------------------- --------------------------------------
ATTEST: UNION PLANTERS HOLDING CORPORATION
By: By:
------------------------- -----------------------------------------
Title: Title: President
---------------------- --------------------------------------
[CORPORATE SEAL]
11
<PAGE> 70
EXHIBIT 2
OPTION AGREEMENT
This is an Option Agreement (the "Agreement") dated as of November 17,
1997, between PEOPLES FIRST CORPORATION, a Kentucky corporation ("Issuer"), and
UNION PLANTERS CORPORATION, a Tennessee corporation ("Optionee").
RECITALS
A. The authorized capital stock of Issuer consists of 30,000,000
shares of common stock, without par value ("Issuer Common Stock"), of which
10,007,066 shares are issued and outstanding, and 6,000,000 shares of preferred
stock, none of which are issued and outstanding.
B. To induce Optionee to enter into an Acquisition Agreement
dated as of the date of this Agreement (the "Acquisition Agreement") providing
for the merger of Issuer into a wholly owned subsidiary of Optionee (the
"Merger"), Issuer has agreed to grant to Optionee an option to purchase
1,991,406 authorized but unissued shares of Issuer Common Stock upon the terms
and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Acquisition Agreement, and intending to be legally bound hereby, Issuer and
Optionee 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 Acquisition
Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Optionee an irrevocable option (the "Option") to
purchase up to 1,991,406 shares of Issuer Common Stock (as adjusted as set forth
herein, the "Option Shares", which shall include the Option Shares before and
after any transfer of such Option Shares, but in no event shall the number of
Option Shares for which this Option is exercisable exceed 19.9% of the issued
and outstanding shares of Issuer Common Stock without giving effect to any
shares subject to or issued pursuant to the Option) at a purchase price per
Option Share (as adjusted as set forth herein, the "Purchase Price") equal to
$33.00.
3. EXERCISE OF OPTION.
(a) Provided that (i) Optionee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the agreements or
covenants contained in this Agreement or the Acquisition Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
Option Shares issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or
<PAGE> 71
in part, at any time and from time to time following the occurrence of a
Purchase Event (as hereinafter defined); provided that the Option shall
terminate and be of no further force or effect upon the earliest to occur of (A)
the Effective Time, (B) termination of the Acquisition Agreement in accordance
with the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (as hereinafter defined) other than a termination
thereof by Optionee pursuant to Section 10.1(b) or 10.1(c) of the Acquisition
Agreement (but only if the breach of Issuer giving rise to such termination was
willful) (a termination of the Acquisition Agreement by Optionee pursuant to
Section 10.1(b) or 10.1(c) thereof as a result of a willful breach by Issuer
being referred to herein as a "Default Termination"), (C) twelve ( 12) months
after a Default Termination, or (D) twelve (12) months after termination of the
Acquisition Agreement (other than by reason of a Default Termination) following
the occurrence of a Purchase Event or a Preliminary Purchase Event; provided,
however, that any purchase of Option Shares upon exercise of the Option shall be
subject to compliance with applicable law. The term "Holder" shall mean the
holder or holders of the Option from time to time, and which initially is
Optionee. The rights set forth in Section 8 hereof 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:
(1) without Optionee'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 Optionee or any
subsidiary of Optionee) to effect (A) a merger, consolidation or
similar transaction involving Issuer or any of its significant
subsidiaries (other than transactions solely between Issuer's
subsidiaries that are not violative of the Acquisition Agreement), (B)
the disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Issuer or any of its significant subsidiaries representing
in either case 25% or more of the consolidated assets or deposits of
Issuer and its subsidiaries, or (C) the issuance, sale or other
disposition by Issuer 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 significant
subsidiaries, other than, in each case of (A), (B), or (C), any merger,
consolidation or similar transaction involving Issuer or any of its
significant subsidiaries in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent (by either
remaining outstanding or being converted into the voting securities of
the surviving entity of any such transaction) at least 65% of the
combined voting power of the voting
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<PAGE> 72
securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or
similar transaction (provided any such transaction is not violative of
the Acquisition Agreement)(each of (A), (B), or (C), an "Acquisition
Transaction"); or
(2) any person (other than Optionee or any subsidiary
of Optionee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined in Section 13(d)(3) of the Exchange Act), other than a group
of which Optionee or any subsidiary of Optionee is a member, shall have
been formed which beneficially owns, or has the right to acquire
beneficial ownership of, 25% or more of the voting power of Issuer or
any of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means
any of the following events:
(1) any person (other than Optionee or any subsidiary
of Optionee) 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, 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 15%
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
(2) Issuer's shareholders shall not have approved the
Acquisition Agreement by the requisite vote at the Issuer Shareholder
Meeting, the Issuer Shareholder Meeting shall not have been held or
shall have been canceled prior to termination of the Acquisition
Agreement, or Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Optionee the recommendation of Issuer's
Board of Directors with respect to the Acquisition Agreement, in each
case, after it shall have been publicly announced that any person
(other than Optionee or any subsidiary of Optionee) shall have (A)
made, or disclosed an intention to make, a bona fide 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 the Home Owners' Loan Act, as amended, the Bank
Holding Company Act of 1956, as amended, the Bank Merger Act, as
amended, or the Change in Bank Control Act of 1978, as amended, for
approval or consent to engage in an Acquisition Transaction; or
3
<PAGE> 73
(3) any person (other than Optionee or any subsidiary
of Optionee) shall have made a bona fide proposal to Issuer or its
shareholders by public announcement, or written communication that is
or becomes the subject of public disclosure, to engage in an
Acquisition Transaction; or
(4) after a proposal is made by a third party to
Issuer or its shareholders to engage in an Acquisition Transaction, or
such third party states its intention to the Issuer to make such a
proposal if the Acquisition Agreement terminates, Issuer shall have
breached any representation, warranty, covenant or agreement contained
in the Acquisition Agreement and such breach would entitle Optionee to
terminate the Acquisition Agreement under Section 10 thereof (without
regard to the cure period provided for therein unless such cure is
promptly effected without jeopardizing consummation of the Merger
pursuant to the terms of the Acquisition Agreement); or
(5) any person (other than Optionee or any subsidiary
of Optionee), other than in connection with a transaction to which
Optionee has given its prior written consent, shall have filed an
application or notice with any Regulatory Authority for approval to
engage in an Acquisition Transaction.
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) Issuer shall notify Optionee promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of Holder to exercise the Option.
(e) 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 (3) business days nor later than fifteen ( 15) business days
from the Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"). If prior notification to or approval of any Regulatory
Authority is required in connection with such purchase, Issuer shall cooperate
with the Holder in the filing of the required notice or application for approval
and the obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods). Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
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<PAGE> 74
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).
(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 and subject to no
preemptive 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 purchas-able
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, or 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
_______________, 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 above legend relating to the
Securities Act shall be removed by delivery of substitute certificate(s) without
such legend 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) if the shares have been sold
or transferred in compliance with the foregoing clause (i) and otherwise in
compliance with the provisions of this Agreement and under circumstances that do
not require the retention of such legend, certificate(s) shall be issued to such
buyer or transferee that do not bear the above legend.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately
5
<PAGE> 75
available funds and the tender of this Agreement to Issuer, Holder shall be
deemed to be the holder of record of the shares of Issuer Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Issuer
Common Stock shall not then be actually delivered to Holder. Issuer shall pay
all expenses, and any and all federal, state, and local taxes and other charges
that may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued shares of Issuer
Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements, and (B) in the event prior approval of or notice to any
Regulatory Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to such Regulatory Authority as it may require) in
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto, and (iv) promptly to
take all action provided herein to protect the rights of Holder against
dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Optionee (and Holder, if different than
Optionee) as follows:
(a) Corporate Authority. Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer, and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to consummate the transactions so contemplated; this Agreement has been duly and
validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer, as
of the date of this Agreement, no person or group has beneficial ownership of
more than 10% of the issued and outstanding shares of Issuer Common Stock.
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<PAGE> 76
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and permit it to
issue, and at all times from the date hereof through the termination of this
Agreement in accordance with its terms, will have reserved for issuance upon the
exercise of the Option, that number of shares of Issuer Common Stock equal to
the maximum number of shares of Issuer Common Stock at any time and from time to
time purchasable upon exercise of the Option, and all such shares, upon issuance
pursuant to the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances, and security interests (other than those created by this
Agreement) and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of
this Agreement does not or will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, its articles of incorporation or
bylaws, or the comparable governing instruments of any of its subsidiaries, or
(B) a breach or violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation of it or
any of its subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or license to which it
or any of its subsidiaries is subject, that would, in any case give any other
person the ability to prevent or enjoin Issuer's performance under this
Agreement in any material respect.
(e) Rights Agreement. Issuer has taken or will promptly take
and will keep in effect all action (including if required redeeming all of the
Rights or amending or terminating the Rights Agreement) so that the entering
into of this Option Agreement, the acquisition of shares of Issuer Common Stock
hereunder and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any person under the Rights Agreement or
enable or require the Rights to be exercised, distributed or triggered.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Optionee hereby
represents and warrants to Issuer that Optionee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; 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 Optionee; and this Agreement
has been duly executed and delivered by Optionee.
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7. ADJUSTMENT UPON CHANGES IN ISSUER 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 Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction 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), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date hereof or upon
conversion into Issuer Common of any convertible security of Issuer outstanding
on the date hereof), 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. No
provision of this Section 7 shall be deemed to affect or change, or constitute
authorization for any violation of, any of the covenants or representations in
the Acquisition Agreement.
(b) In the event that Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than Optionee 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 Optionee 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 or deposits to any person, other than
Optionee 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 Holder, of either (x) the Acquiring
Corporation (as hereinafter defined), (y) any person that controls the Acquiring
Corporation, or (z) in the case of a merger described in clause (ii), Issuer
(such person being referred to as "Substitute Option Issuer").
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(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 Holder. Substitute Option Issuer shall also
enter into an agreement with Holder 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 Substitute Common (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of Substitute
Option per share of Substitute Common (the "Substitute Option Price") shall then
be equal to the Purchase Price multiplied by a fraction in which the numerator
is the number of shares of Issuer Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares of the
Substitute Common for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii) the transferee of all or
substantially all of Issuer's assets (or a substantial part of the
assets of its subsidiaries taken as a whole).
(2) "Substitute Common" shall mean the shares of
capital stock (or similar equity interest) with the greatest voting
power in respect of the election of directors (or persons similarly
responsible for the direction of the business and affairs) of the
Substitute Option Issuer.
(3) "Assigned Value" shall mean the highest of (w)
the price per share of Issuer Common Stock at which a Tender Offer or
an Exchange Offer therefor has been made, (x) the price per share of
Issuer Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (y) the highest closing price for shares of
Issuer Common Stock within the six (6) month period immediately
preceding the consolidation, merger, or sale in question and (z) in the
event of a sale of all or substantially all of Issuer's assets or
deposits an amount equal to (i) the sum of the price paid in such sale
for such assets (and/or deposits) and the current market value of the
remaining assets of Issuer, as determined by a nationally recognized
investment banking firm selected by Holder divided by (ii) the number
of shares of Issuer Common Stock outstanding at such time. In the event
that a Tender Offer or an
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Exchange Offer is made for 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 Issuer Common Stock shall be determined
by a nationally recognized investment banking firm selected by Holder.
(4) "Average Price" shall mean the average closing
price of a share of Substitute Common 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 Substitute Common
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
such person, as Holder 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 Substitute Common 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 but for
the limitation in the first sentence of this Section 7(f), Substitute Option
Issuer shall make a cash payment to Holder equal to the excess of (i) the value
of the Substitute Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the Substitute Option after
giving effect to the limitation in the first sentence of this Section 7(f). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) 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 holders of the other shares of common
stock issued by Substitute Option Issuer are not entitled to exercise any rights
by reason of the issuance or exercise of the Substitute Option and the shares of
Substitute Common are otherwise in no way distinguishable from or have lesser
economic value (other than any diminution in value resulting from the fact that
the Substitute Common are restricted securities, as defined in Rule 144 under
the Securities Act or any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
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8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject 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 twelve (12) months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option, and
(ii) 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:
(1) the aggregate Purchase Price paid by Holder for
any shares of Issuer Common Stock acquired pursuant to the Option with
respect to which Holder then has beneficial ownership;
(2) 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
(3) 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
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 ( 10) 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.
Notwithstanding the foregoing, to the extent that prior
notification to or approval of any Regulatory 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
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not then so prohibited from paying and promptly file the required notice or
application for approval 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 approval). If any Regulatory 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 Regulatory 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 Regulatory 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 (5)
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
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 on Nasdaq (or if Issuer
Common Stock is not traded on Nasdaq, 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 sixty
(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 the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by Holder, 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.
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(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Optionee or any subsidiary of Optionee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial ownership of, 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(b)(iii) shall be
consummated.
9. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including Optionee
and any permitted transferee ("Selling Shareholder"), as expeditiously as
possible prepare and file a registration statement under the Securities Act if
such registration is 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 the Selling Shareholder upon exercise of the
Option in accordance with the intended method of sale or other disposition
stated by the Selling Shareholder in such request, 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 securities for sale under any applicable state securities
laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common under the Securities Act in connection with an underwritten public
offering of such Issuer Common Stock, Issuer will promptly give written notice
to the Selling Shareholders of its intention to do so and, upon the written
request of any Selling Shareholder given within thirty (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 the
Selling Shareholder), Issuer will cause all such shares for which a Selling
Shareholder requests participation in such registration, to be so registered and
included in such underwritten public offering; provided, however, that Issuer
may elect to not cause any such shares to be so registered (i) if the
underwriters in good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement an employee benefit plan or a
registration filed on Form S-4 of the Securities Act or any successor Form;
provided, further, however, that such election pursuant to (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
Section 9(b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among
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the Selling Shareholders desiring to register their shares pro rata in the
proportion that the number of shares requested to be registered by each such
Selling Shareholder bears to the total number of shares requested to be
registered by all such Selling Shareholders then desiring to have Issuer Common
Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in Section
9(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, however, that Issuer may delay any registration of Option
Shares required pursuant to Section 9(a) above for a period not exceeding ninety
(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, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(1) prior to the earliest of (a) termination of the
Acquisition Agreement pursuant to Article 10 thereof, (b) failure to
obtain the requisite shareholder approval pursuant to Section 8.1 of
the Acquisition Agreement, and (c) a Purchase Event or a Preliminary
Purchase Event;
(2) on more than one occasion during any calendar year;
(3) within ninety (90) days after the effective date
of a registration referred to in Section 9(b) above pursuant to which
the Selling Shareholder or Selling Shareholders concerned were afforded
the opportunity to register such shares under the Securities Act and
such shares were registered as requested; and
(4) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common Stock
issuable upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
nine (9) months 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, however, that Issuer
shall not be required to consent to general jurisdiction or qualify to do
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business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) Expenses. 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 counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
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 Section 9(a) or 9(b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any registration under
Section 9(a) or 9(b) above, Issuer hereby agrees to indemnify the Selling
Shareholders, 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, or alleged untrue, statement of a material fact contained
in any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein 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 that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) 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 Shareholders, 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, statement, that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) 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
Section 9(e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimburse-
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ment may be sought against any indemnifying party under this Section 9(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 Section 9(e). 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
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 fails 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.
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 Section 9(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, the Selling Shareholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the Selling Shareholders
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, however, that in no case shall any Selling
Shareholder 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.
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Any obligation by any holder to indemnify shall be several and not joint with
other holders.
In connection with any registration pursuant to Section 9(a)
or 9(b) above, Issuer and each Selling Shareholder (other than Optionee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. Issuer shall 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 the Selling
Shareholders thereof in accordance with and to the extent permitted by any rule
or regulation promulgated by the SEC from time to time, including, without
limitation, Rule 144A. Issuer shall at its expense provide the Selling
Shareholders with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Act or the Exchange Act, or required pursuant to any state securities
laws or the rules of any stock exchange.
(g) Issue Taxes. 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 hold the Selling Shareholders 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 in connection with the exercise of the Option are then
authorized for quotation or trading or listing on any securities exchange,
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
such securities exchange 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
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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. LIMITATION ON TOTAL PROFIT AND NOTIONAL TOTAL PROFIT.
(a) Notwithstanding anything to the contrary contained herein,
in no event shall Optionee's Total Profit (as defined below in Section 12(c)
hereof) exceed $15,000,000 and, if it otherwise would exceed such amount,
Optionee, at its sole election, shall either (i) reduce the number of shares of
Issuer Common subject to the Option, (ii) deliver to Issuer for cancellation
Option Shares previously purchased by Optionee, (iii) pay cash to Issuer, or
(iv) any combination thereof, so that Optionee's actually realized Total Profit
shall not exceed $15,000,000 after taking into account the foregoing actions.
(b) Notwithstanding anything to the contrary contained herein,
the Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as defined below in Section
12(d) hereof) of more than $15,000,000; provided, that nothing in this sentence
shall restrict any exercise of the Option permitted hereby on any subsequent
date.
(c) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Optionee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8 hereof, (ii)(x) the amount received by Optionee pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8 hereof, less (y)
Optionee's purchase price for such Option Shares, (iii)(x) the net cash amounts
received by Optionee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares shall be converted or exchanged) to any
unaffiliated party, less (y) Optionee's purchase price of such Option Shares,
(iv) any amounts received by Optionee on the transfer of the Option (or any
portion thereof) to any unaffiliated party, and (v) any equivalent amount with
respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with
respect to any number of shares as to which Optionee 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 Optionee and its affiliates as of such date, were sold for cash at the
closing market price for the Issuer Common Stock as of the close of business on
the preceding trading day (less customary brokerage commissions).
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(e) Optionee agrees, promptly following any exercise of all or
any portion of the Option, and subject to its rights under Section 8 hereof, to
use commercially reasonable efforts promptly to maximize the value of Option
Shares purchased taking into account market conditions, the number of Option
Shares, the potential negative impact of substantial sales on the market price
for Issuer Common Stock, and the availability of an effective registration
statement to permit public sale of Option Shares.
13. MISCELLANEOUS.
(a) Expenses. 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.
(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 Beneficiaries;
Severability. This Agreement, together with the Acquisition Agreement and the
other documents and instruments referred to herein and therein, between Optionee
and Issuer (i) 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 (ii) is not intended to confer upon
any person other than the parties hereto (other than the indemnified parties
under Section 9(e) and any transferees of the Option Shares or any permitted
transferee of this Agreement pursuant to Section 13(h)) any rights or remedies
hereunder. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or Regulatory 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 Authority 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 Section 3 (as may be adjusted herein), 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 Commonwealth of Kentucky without
regard to any applicable conflicts of law rules.
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<PAGE> 89
(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 Acquisition
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 and delivered, 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 Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may 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 the Holder, Issuer and the 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.
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<PAGE> 90
IN WITNESS WHEREOF, Issuer and Optionee 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.
PEOPLES FIRST CORPORATION
By:
-------------------------------
Title:
-----------------------------
UNION PLANTERS CORPORATION
By:
-------------------------------
Title:
-----------------------------
21
<PAGE> 91
EXHIBIT 3
AFFILIATE AGREEMENT
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38108
Attention: Jackson W. Moore, President
and Chief Operating Officer
Gentlemen:
The undersigned is a shareholder of Peoples First Corporation, a
corporation organized and existing under the laws of the State of Kentucky, and
will become a shareholder of Union Planters Corporation ("UPC") pursuant to the
transactions described in the Agreement and Plan of Merger, dated as of
____________________, (the "Agreement"), by and between UPC, Union Planters
Holding Corporation ("Merger Subsidiary"), and Peoples First Corporation
("PFC"). Under the terms of the Agreement, PFC will be merged with and into
Merger Subsidiary (the "Merger"), and shares of the no par value common stock of
PFC ("PFC Common Stock") will be converted into and exchanged for shares of the
$5.00 par value common stock of UPC ("UPC Common Stock"). This Affiliate
Agreement represents an agreement between the undersigned and UPC regarding
rights and obligations of the undersigned in connection with the shares of UPC
to be received by the undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and UPC hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
PFC the undersigned is an "affiliate" under Rule 145(c) as defined in Rule 405
of the Rules and Regulations of the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that the undersigned will be such an "affiliate" at the time of the
Merger.
2. Initial Restriction on Disposition. The undersigned agrees that the
undersigned will not sell, transfer, or otherwise dispose of the undersigned's
interest in, or reduce the under-signed's risk relative to, any of the shares of
UPC Common Stock into which the undersigned's shares of PFC Common Stock are
converted upon consummation of the Merger until such time as the requirements of
SEC Accounting Series Release Nos. 130 and 135 ("ASR 130 and 135") have been
met. The undersigned understands that ASR 130 and 135 relate to publication of
financial results of post-Merger combined operations of UPC and PFC. UPC agrees
that it will publish such results within 45 days after the end of the first
fiscal quarter of UPC containing the required period of post-Merger
<PAGE> 92
combined operations and that it will notify the undersigned promptly following
such publication.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants, and agrees that:
(a) During the 30 days immediately preceding the Effective Time of the
Merger, the undersigned will not sell, transfer or otherwise dispose of the
undersigned's interest in, or reduce the undersigned's risk relative to, any of
the shares of PFC Common Stock beneficially owned by the undersigned as of the
date of the Shareholders' Meeting of PFC held to approve the Merger.
(b) The UPC Common Stock received by the undersigned as a result of the
Merger will be taken for the undersigned's own account and not for others,
directly or indirectly, in whole or in part.
(c) UPC has informed the undersigned that any distribution by the
undersigned of UPC Common Stock has not been registered under the 1933 Act and
that shares of UPC Common Stock received pursuant to the Merger can only be sold
by the undersigned (1) following registration under the 1933 Act, or (2) in
conformity with the volume and other requirements of Rule 145(d) promulgated by
the SEC as the same now exists or may hereafter be amended, or (3) to the extent
some other exemption from registration under the 1933 Act might be available.
The undersigned understands that UPC is under no obligation to file a
registration statement with the SEC covering the disposition of the
undersigned's shares of UPC Common Stock or to take any other action necessary
to make compliance with an exemption from such registration available.
(d) The undersigned will register, and will cause each of the other
parties whose shares are deemed to be beneficially owned by the undersigned
pursuant to Section 8 hereof to have all shares of PFC Common Stock beneficially
owned by the undersigned registered in the name of the undersigned or such
parties, as applicable, prior to the Effective Date of the Merger and not in the
name of any bank, broker-dealer, nominee, or clearinghouse.
(e) The undersigned is aware that UPC intends to treat the Merger as a
tax-free reorganization under Section 368 of the Internal Revenue Code ("Code")
for federal income tax purposes. The undersigned agrees to treat the transaction
in the same manner as UPC for federal income tax purposes. The undersigned
acknowledges that Section 1.368-1(b) of the Income Tax Regulations requires
"continuity of interest" in order for the Merger to be treated as tax-free under
Section 368 of the Code. This requirement is satisfied if, taking into account
those PFC shareholders who receive cash in exchange for their stock, who receive
cash in lieu of fractional shares, or who dissent from the Merger, there is no
plan, or intention on the part of the PFC shareholders to sell
2
<PAGE> 93
or otherwise dispose of the UPC Common Stock to be received in the Merger. The
undersigned has no prearrangement, plan, or intention to sell or otherwise
dispose of an amount of his UPC Common Stock to be received in the Merger which
would cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop order instructions with respect to the shares of UPC Common Stock
received by the undersigned pursuant to the Merger will be given to UPC's
Transfer Agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating in substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of interests"
and may not be sold, nor may the owner thereof reduce his risks
relative thereto in any way, until such time as Union Planters
Corporation ("UPC") has published the financial results covering at
least 30 days of combined operations after the effective date of the
merger through which the business combination was effected. In
addition, the shares represented by this certificate may not be sold,
transferred, or otherwise disposed of except or unless (1) covered by
an effective registration statement under the Securities Act of 1933,
as amended, (2) in accordance with (i) Rule 145(d) (in the case of
shares issued to an individual who is not an affiliate of UPC) or (ii)
Rule 144 (in the case of shares issued to an individual who is an
affiliate of UPC) of the Rules and Regulations of such Act, or (3) in
accordance with a legal opinion satisfactory to counsel for UPC that
such sale or offer is otherwise exempt from the registration
requirements of such Act."
Such legend will also be placed on any certificate representing UPC securities
issued subsequent to the original issuance of the UPC Common Stock pursuant to
the Merger as a result of any offer of such shares or any stock dividend, stock
split, or other recapital-ization as long as the UPC Common Stock issued to the
undersigned pursuant to the Merger has not been transferred in such manner to
justify the removal of the legend therefrom. Upon the request of the
undersigned, UPC shall cause the certificates representing the shares of UPC
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to restrictions on transfer by virtue of
ASR 130 and 135 as soon as practicable after the requirements of ASR 130 and 135
have been met. In addition, if the provisions of Rules 144 and 145 are amended
to delete restrictions applicable to the UPC Common Stock received by the
undersigned pursuant to the Merger, or at the expiration of the restrictive
period set forth in Rule 145(d), UPC, upon the request of the undersigned, will
cause the certificates representing the shares of UPC Common Stock issued to the
under-
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<PAGE> 94
signed in connection with the Merger to be reissued free of any legend relating
to the restrictions set forth in Rules 144 and 145(d) upon receipt by UPC of an
opinion of its counsel to the effect that such legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his ability to sell, transfer, or otherwise dispose
of the shares of UPC Common Stock received by the undersigned, to the extent he
believes necessary, with his counsel or counsel for PFC.
6. Filing of Reports by UPC. UPC agrees, for a period of three years
after the Effective Time of the Merger, to file on a timely basis all reports
required to be filed by it pursuant to Section 13 of the Securities Exchange Act
of 1934, as amended, so that the public information provisions of Rule 145(d)
promulgated by the SEC as the same are presently in effect will be available to
the undersigned in the event the undersigned desires to transfer any shares of
UPC Common Stock issued to the undersigned pursuant to the Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of UPC Common Stock received by him in connection
with the Merger at any time during the restrictive period set forth in Rule
145(d), the undersigned will provide the necessary representation letter to the
transfer agent for UPC Common Stock together with such additional information as
the transfer agent for UPC Common Stock may reasonably request. If UPC's counsel
concludes that such proposed sale or transfer complies with the requirements of
Rule 145(d), UPC shall cause such counsel to provide such opinions as may be
necessary to UPC's transfer agent so that the undersigned may complete the
proposed sale or transfer.
8. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to all shares of the capital stock of PFC and
UPC that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws, which the undersigned agrees may include,
without limitation, shares owned or held in the name of (i) the undersigned's
spouse, (ii) any relative of the undersigned or of the undersigned's spouse who
has the same home as the undersigned, (iii) any trust or estate in which the
undersigned, the undersigned's spouse, and any such relative collectively own at
least a 10% beneficial interest or of which any of the foregoing serves as
trustee, executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, the undersigned's spouse and any such
relative collectively own at least 10% of any class of equity securities or of
the equity interest. The undersigned further recognizes that, in the event that
the undersigned is a director or officer of UPC or becomes a director or officer
of UPC upon
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<PAGE> 95
consummation of the Merger, among other things, any sale of UPC Common Stock by
the undersigned within a period of less than six months following the Effective
Time of the Merger may subject the undersigned to liability pursuant to Section
16(b) of the Securities Exchange Act of 1934, as amended.
9. Miscellaneous. This Affiliate Agreement is the complete agreement
between UPC and the undersigned concerning the subject matter hereof. Any notice
required to be sent to any party hereunder shall be sent by registered or
certified mail, return receipt requested, using the addresses set forth herein
or such other address as shall be furnished in writing by the parties. This
Affiliate Agreement shall be governed by the laws of the State of Tennessee.
This Affiliate Agreement is executed as of the __ day of
_____________, 199_.
Very truly yours,
------------------------------
Affiliate Signature
------------------------------
Printed Name
------------------------------
------------------------------
------------------------------
Address
Add below the signatures of all registered owners of shares
deemed to be beneficially owned by the Affiliate.
------------------------------
Name:
-------------------------
------------------------------
Name:
-------------------------
------------------------------
Name:
-------------------------
<PAGE> 96
AGREED TO AND ACCEPTED as of ______________________, 1997.
UNION PLANTERS CORPORATION
By:
-----------------------------
Jackson W. Moore
President
<PAGE> 1
EXHIBIT 2.2
OPTION AGREEMENT
This is an Option Agreement (the "Agreement") dated as of November 17,
1997, between PEOPLES FIRST CORPORATION, a Kentucky corporation ("Issuer"), and
UNION PLANTERS CORPORATION, a Tennessee corporation ("Optionee").
RECITALS
A. The authorized capital stock of Issuer consists of 30,000,000
shares of common stock, without par value ("Issuer Common Stock"), of which
10,007,066 shares are issued and outstanding, and 6,000,000 shares of preferred
stock, none of which are issued and outstanding.
B. To induce Optionee to enter into an Acquisition Agreement
dated as of the date of this Agreement (the "Acquisition Agreement") providing
for the merger of Issuer into a wholly owned subsidiary of Optionee (the
"Merger"), Issuer has agreed to grant to Optionee an option to purchase
1,991,406 authorized but unissued shares of Issuer Common Stock upon the terms
and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Acquisition Agreement, and intending to be legally bound hereby, Issuer and
Optionee 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 Acquisition
Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Optionee an irrevocable option (the "Option") to
purchase up to 1,991,406 shares of Issuer Common Stock (as adjusted as set forth
herein, the "Option Shares", which shall include the Option Shares before and
after any transfer of such Option Shares, but in no event shall the number of
Option Shares for which this Option is exercisable exceed 19.9% of the issued
and outstanding shares of Issuer Common Stock without giving effect to any
shares subject to or issued pursuant to the Option) at a purchase price per
Option Share (as adjusted as set forth herein, the "Purchase Price") equal to
$33.00.
3. EXERCISE OF OPTION.
(a) Provided that (i) Optionee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the agreements or
covenants contained in this Agreement or the Acquisition Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
Option Shares issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or
<PAGE> 2
in part, at any time and from time to time following the occurrence of a
Purchase Event (as hereinafter defined); provided that the Option shall
terminate and be of no further force or effect upon the earliest to occur of (A)
the Effective Time, (B) termination of the Acquisition Agreement in accordance
with the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (as hereinafter defined) other than a termination
thereof by Optionee pursuant to Section 10.1(b) or 10.1(c) of the Acquisition
Agreement (but only if the breach of Issuer giving rise to such termination was
willful) (a termination of the Acquisition Agreement by Optionee pursuant to
Section 10.1(b) or 10.1(c) thereof as a result of a willful breach by Issuer
being referred to herein as a "Default Termination"), (C) twelve ( 12) months
after a Default Termination, or (D) twelve (12) months after termination of the
Acquisition Agreement (other than by reason of a Default Termination) following
the occurrence of a Purchase Event or a Preliminary Purchase Event; provided,
however, that any purchase of Option Shares upon exercise of the Option shall be
subject to compliance with applicable law. The term "Holder" shall mean the
holder or holders of the Option from time to time, and which initially is
Optionee. The rights set forth in Section 8 hereof 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:
(1) without Optionee'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 Optionee or any
subsidiary of Optionee) to effect (A) a merger, consolidation or
similar transaction involving Issuer or any of its significant
subsidiaries (other than transactions solely between Issuer's
subsidiaries that are not violative of the Acquisition Agreement), (B)
the disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Issuer or any of its significant subsidiaries representing
in either case 25% or more of the consolidated assets or deposits of
Issuer and its subsidiaries, or (C) the issuance, sale or other
disposition by Issuer 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 significant
subsidiaries, other than, in each case of (A), (B), or (C), any merger,
consolidation or similar transaction involving Issuer or any of its
significant subsidiaries in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent (by either
remaining outstanding or being converted into the voting securities of
the surviving entity of any such transaction) at least 65% of the
combined voting power of the voting
2
<PAGE> 3
securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or
similar transaction (provided any such transaction is not violative of
the Acquisition Agreement)(each of (A), (B), or (C), an "Acquisition
Transaction"); or
(2) any person (other than Optionee or any subsidiary
of Optionee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined in Section 13(d)(3) of the Exchange Act), other than a group
of which Optionee or any subsidiary of Optionee is a member, shall have
been formed which beneficially owns, or has the right to acquire
beneficial ownership of, 25% or more of the voting power of Issuer or
any of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means
any of the following events:
(1) any person (other than Optionee or any subsidiary
of Optionee) 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, 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 15%
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
(2) Issuer's shareholders shall not have approved the
Acquisition Agreement by the requisite vote at the Issuer Shareholder
Meeting, the Issuer Shareholder Meeting shall not have been held or
shall have been canceled prior to termination of the Acquisition
Agreement, or Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Optionee the recommendation of Issuer's
Board of Directors with respect to the Acquisition Agreement, in each
case, after it shall have been publicly announced that any person
(other than Optionee or any subsidiary of Optionee) shall have (A)
made, or disclosed an intention to make, a bona fide 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 the Home Owners' Loan Act, as amended, the Bank
Holding Company Act of 1956, as amended, the Bank Merger Act, as
amended, or the Change in Bank Control Act of 1978, as amended, for
approval or consent to engage in an Acquisition Transaction; or
3
<PAGE> 4
(3) any person (other than Optionee or any subsidiary
of Optionee) shall have made a bona fide proposal to Issuer or its
shareholders by public announcement, or written communication that is
or becomes the subject of public disclosure, to engage in an
Acquisition Transaction; or
(4) after a proposal is made by a third party to
Issuer or its shareholders to engage in an Acquisition Transaction, or
such third party states its intention to the Issuer to make such a
proposal if the Acquisition Agreement terminates, Issuer shall have
breached any representation, warranty, covenant or agreement contained
in the Acquisition Agreement and such breach would entitle Optionee to
terminate the Acquisition Agreement under Section 10 thereof (without
regard to the cure period provided for therein unless such cure is
promptly effected without jeopardizing consummation of the Merger
pursuant to the terms of the Acquisition Agreement); or
(5) any person (other than Optionee or any subsidiary
of Optionee), other than in connection with a transaction to which
Optionee has given its prior written consent, shall have filed an
application or notice with any Regulatory Authority for approval to
engage in an Acquisition Transaction.
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) Issuer shall notify Optionee promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of Holder to exercise the Option.
(e) 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 (3) business days nor later than fifteen ( 15) business days
from the Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"). If prior notification to or approval of any Regulatory
Authority is required in connection with such purchase, Issuer shall cooperate
with the Holder in the filing of the required notice or application for approval
and the obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods). Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
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<PAGE> 5
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).
(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 and subject to no
preemptive 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, or 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
_______________, 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 above legend relating to the
Securities Act shall be removed by delivery of substitute certificate(s) without
such legend 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) if the shares have been sold
or transferred in compliance with the foregoing clause (i) and otherwise in
compliance with the provisions of this Agreement and under circumstances that do
not require the retention of such legend, certificate(s) shall be issued to such
buyer or transferee that do not bear the above legend.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately
5
<PAGE> 6
available funds and the tender of this Agreement to Issuer, Holder shall be
deemed to be the holder of record of the shares of Issuer Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Issuer
Common Stock shall not then be actually delivered to Holder. Issuer shall pay
all expenses, and any and all federal, state, and local taxes and other charges
that may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued shares of Issuer
Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements, and (B) in the event prior approval of or notice to any
Regulatory Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to such Regulatory Authority as it may require) in
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto, and (iv) promptly to
take all action provided herein to protect the rights of Holder against
dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Optionee (and Holder, if different than
Optionee) as follows:
(a) Corporate Authority. Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer, and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to consummate the transactions so contemplated; this Agreement has been duly and
validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer, as
of the date of this Agreement, no person or group has beneficial ownership of
more than 10% of the issued and outstanding shares of Issuer Common Stock.
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(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and permit it to
issue, and at all times from the date hereof through the termination of this
Agreement in accordance with its terms, will have reserved for issuance upon the
exercise of the Option, that number of shares of Issuer Common Stock equal to
the maximum number of shares of Issuer Common Stock at any time and from time to
time purchasable upon exercise of the Option, and all such shares, upon issuance
pursuant to the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances, and security interests (other than those created by this
Agreement) and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of
this Agreement does not or will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, its articles of incorporation or
bylaws, or the comparable governing instruments of any of its subsidiaries, or
(B) a breach or violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation of it or
any of its subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or license to which it
or any of its subsidiaries is subject, that would, in any case give any other
person the ability to prevent or enjoin Issuer's performance under this
Agreement in any material respect.
(e) Rights Agreement. Issuer has taken or will promptly take
and will keep in effect all action (including if required redeeming all of the
Rights or amending or terminating the Rights Agreement) so that the entering
into of this Option Agreement, the acquisition of shares of Issuer Common Stock
hereunder and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any person under the Rights Agreement or
enable or require the Rights to be exercised, distributed or triggered.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Optionee hereby
represents and warrants to Issuer that Optionee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; 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 Optionee; and this Agreement
has been duly executed and delivered by Optionee.
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<PAGE> 8
7. ADJUSTMENT UPON CHANGES IN ISSUER 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 Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction 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), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date hereof or upon
conversion into Issuer Common of any convertible security of Issuer outstanding
on the date hereof), 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. No
provision of this Section 7 shall be deemed to affect or change, or constitute
authorization for any violation of, any of the covenants or representations in
the Acquisition Agreement.
(b) In the event that Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than Optionee 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 Optionee 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 or deposits to any person, other than
Optionee 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 Holder, of either (x) the Acquiring
Corporation (as hereinafter defined), (y) any person that controls the Acquiring
Corporation, or (z) in the case of a merger described in clause (ii), Issuer
(such person being referred to as "Substitute Option Issuer").
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<PAGE> 9
(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 Holder. Substitute Option Issuer shall also
enter into an agreement with Holder 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 Substitute Common (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of Substitute
Option per share of Substitute Common (the "Substitute Option Price") shall then
be equal to the Purchase Price multiplied by a fraction in which the numerator
is the number of shares of Issuer Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares of the
Substitute Common for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving person, or (iii) the transferee of all
or substantially all of Issuer's assets (or a substantial part of the
assets of its subsidiaries taken as a whole).
(2) "Substitute Common" shall mean the shares of
capital stock (or similar equity interest) with the greatest voting
power in respect of the election of directors (or persons similarly
responsible for the direction of the business and affairs) of the
Substitute Option Issuer.
(3) "Assigned Value" shall mean the highest of (w)
the price per share of Issuer Common Stock at which a Tender Offer or
an Exchange Offer therefor has been made, (x) the price per share of
Issuer Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (y) the highest closing price for shares of
Issuer Common Stock within the six (6) month period immediately
preceding the consolidation, merger, or sale in question and (z) in the
event of a sale of all or substantially all of Issuer's assets or
deposits an amount equal to (i) the sum of the price paid in such sale
for such assets (and/or deposits) and the current market value of the
remaining assets of Issuer, as determined by a nationally recognized
investment banking firm selected by Holder divided by (ii) the number
of shares of Issuer Common Stock outstanding at such time. In the event
that a Tender Offer or an
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<PAGE> 10
Exchange Offer is made for 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 Issuer Common Stock shall be determined
by a nationally recognized investment banking firm selected by Holder.
(4) "Average Price" shall mean the average closing
price of a share of Substitute Common 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 Substitute Common
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
such person, as Holder 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 Substitute Common 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 but for
the limitation in the first sentence of this Section 7(f), Substitute Option
Issuer shall make a cash payment to Holder equal to the excess of (i) the value
of the Substitute Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the Substitute Option after
giving effect to the limitation in the first sentence of this Section 7(f). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) 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 holders of the other shares of common
stock issued by Substitute Option Issuer are not entitled to exercise any rights
by reason of the issuance or exercise of the Substitute Option and the shares of
Substitute Common are otherwise in no way distinguishable from or have lesser
economic value (other than any diminution in value resulting from the fact that
the Substitute Common are restricted securities, as defined in Rule 144 under
the Securities Act or any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
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8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject 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 twelve (12) months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option, and
(ii) 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:
(1) the aggregate Purchase Price paid by Holder for
any shares of Issuer Common Stock acquired pursuant to the Option with
respect to which Holder then has beneficial ownership;
(2) 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
(3) 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
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 ( 10) 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.
Notwithstanding the foregoing, to the extent that prior
notification to or approval of any Regulatory 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
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not then so prohibited from paying and promptly file the required notice or
application for approval 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 approval). If any Regulatory 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 Regulatory 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 Regulatory 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 (5)
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
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 on Nasdaq (or if Issuer
Common Stock is not traded on Nasdaq, 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 sixty
(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 the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by Holder, 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.
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(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Optionee or any subsidiary of Optionee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial ownership of, 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(b)(iii) shall be
consummated.
9. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including Optionee
and any permitted transferee ("Selling Shareholder"), as expeditiously as
possible prepare and file a registration statement under the Securities Act if
such registration is 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 the Selling Shareholder upon exercise of the
Option in accordance with the intended method of sale or other disposition
stated by the Selling Shareholder in such request, 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 securities for sale under any applicable state securities
laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common under the Securities Act in connection with an underwritten public
offering of such Issuer Common Stock, Issuer will promptly give written notice
to the Selling Shareholders of its intention to do so and, upon the written
request of any Selling Shareholder given within thirty (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 the
Selling Shareholder), Issuer will cause all such shares for which a Selling
Shareholder requests participation in such registration, to be so registered and
included in such underwritten public offering; provided, however, that Issuer
may elect to not cause any such shares to be so registered (i) if the
underwriters in good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement an employee benefit plan or a
registration filed on Form S-4 of the Securities Act or any successor Form;
provided, further, however, that such election pursuant to (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
Section 9(b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among
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the Selling Shareholders desiring to register their shares pro rata in the
proportion that the number of shares requested to be registered by each such
Selling Shareholder bears to the total number of shares requested to be
registered by all such Selling Shareholders then desiring to have Issuer Common
Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in Section
9(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, however, that Issuer may delay any registration of Option
Shares required pursuant to Section 9(a) above for a period not exceeding ninety
(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, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(1) prior to the earliest of (a) termination of the
Acquisition Agreement pursuant to Article 10 thereof, (b) failure to
obtain the requisite shareholder approval pursuant to Section 8.1 of
the Acquisition Agreement, and (c) a Purchase Event or a Preliminary
Purchase Event;
(2) on more than one occasion during any calendar year;
(3) within ninety (90) days after the effective date
of a registration referred to in Section 9(b) above pursuant to which
the Selling Shareholder or Selling Shareholders concerned were afforded
the opportunity to register such shares under the Securities Act and
such shares were registered as requested; and
(4) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common Stock
issuable upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
nine (9) months 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, however, that Issuer
shall not be required to consent to general jurisdiction or qualify to do
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<PAGE> 15
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) Expenses. 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 counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
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 Section 9(a) or 9(b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any registration under
Section 9(a) or 9(b) above, Issuer hereby agrees to indemnify the Selling
Shareholders, 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, or alleged untrue, statement of a material fact contained
in any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein 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 that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) 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 Shareholders, 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, statement, that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) 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
Section 9(e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimburse-
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ment may be sought against any indemnifying party under this Section 9(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 Section 9(e). 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
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 fails 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.
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 Section 9(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, the Selling Shareholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the Selling Shareholders
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, however, that in no case shall any Selling
Shareholder 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.
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<PAGE> 17
Any obligation by any holder to indemnify shall be several and not joint with
other holders.
In connection with any registration pursuant to Section 9(a)
or 9(b) above, Issuer and each Selling Shareholder (other than Optionee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. Issuer shall 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 the Selling
Shareholders thereof in accordance with and to the extent permitted by any rule
or regulation promulgated by the SEC from time to time, including, without
limitation, Rule 144A. Issuer shall at its expense provide the Selling
Shareholders with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Act or the Exchange Act, or required pursuant to any state securities
laws or the rules of any stock exchange.
(g) Issue Taxes. 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 hold the Selling Shareholders 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 in connection with the exercise of the Option are then
authorized for quotation or trading or listing on any securities exchange,
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
such securities exchange 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
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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. LIMITATION ON TOTAL PROFIT AND NOTIONAL TOTAL PROFIT.
(a) Notwithstanding anything to the contrary contained herein,
in no event shall Optionee's Total Profit (as defined below in Section 12(c)
hereof) exceed $15,000,000 and, if it otherwise would exceed such amount,
Optionee, at its sole election, shall either (i) reduce the number of shares of
Issuer Common subject to the Option, (ii) deliver to Issuer for cancellation
Option Shares previously purchased by Optionee, (iii) pay cash to Issuer, or
(iv) any combination thereof, so that Optionee's actually realized Total Profit
shall not exceed $15,000,000 after taking into account the foregoing actions.
(b) Notwithstanding anything to the contrary contained herein,
the Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as defined below in Section
12(d) hereof) of more than $15,000,000; provided, that nothing in this sentence
shall restrict any exercise of the Option permitted hereby on any subsequent
date.
(c) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Optionee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8 hereof, (ii)(x) the amount received by Optionee pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8 hereof, less (y)
Optionee's purchase price for such Option Shares, (iii)(x) the net cash amounts
received by Optionee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares shall be converted or exchanged) to any
unaffiliated party, less (y) Optionee's purchase price of such Option Shares,
(iv) any amounts received by Optionee on the transfer of the Option (or any
portion thereof) to any unaffiliated party, and (v) any equivalent amount with
respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with
respect to any number of shares as to which Optionee 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 Optionee and its affiliates as of such date, were sold for cash at the
closing market price for the Issuer Common Stock as of the close of business on
the preceding trading day (less customary brokerage commissions).
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(e) Optionee agrees, promptly following any exercise of all or
any portion of the Option, and subject to its rights under Section 8 hereof, to
use commercially reasonable efforts promptly to maximize the value of Option
Shares purchased taking into account market conditions, the number of Option
Shares, the potential negative impact of substantial sales on the market price
for Issuer Common Stock, and the availability of an effective registration
statement to permit public sale of Option Shares.
13. MISCELLANEOUS.
(a) Expenses. 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.
(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 Beneficiaries;
Severability. This Agreement, together with the Acquisition Agreement and the
other documents and instruments referred to herein and therein, between Optionee
and Issuer (i) 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 (ii) is not intended to confer upon
any person other than the parties hereto (other than the indemnified parties
under Section 9(e) and any transferees of the Option Shares or any permitted
transferee of this Agreement pursuant to Section 13(h)) any rights or remedies
hereunder. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or Regulatory 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 Authority 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 Section 3 (as may be adjusted herein), 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 Commonwealth of Kentucky without
regard to any applicable conflicts of law rules.
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(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 Acquisition
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 and delivered, 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 Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may 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 the Holder, Issuer and the 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.
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IN WITNESS WHEREOF, Issuer and Optionee 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.
PEOPLES FIRST CORPORATION
By: /S/ AUBREY W. LIPPERT
----------------------------------
Title: CHAIRMAN, PRESIDENT AND CEO
---------------------------------
UNION PLANTERS CORPORATION
By: /S/ JACKSON W. MOORE
----------------------------------
Title: PRESIDENT/COO
---------------------------------
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EXHIBIT 99.1
PEOPLES FIRST CORPORATION TO AFFILIATE WITH UNION PLANTERS
Memphis, TN (NYSE:UPC) -- November 18, 1997-- Union Planters Corporation and
Peoples First Corporation (NASDAQ:PFKY), headquartered in Paducah, Kentucky,
jointly announced today that they have signed a definitive agreement for the
acquisition of Peoples First by Union Planters. The announcement was made by
Benjamin W. Rawlins Jr., Chairman and Chief Executive Officer of Union Planters
Corporation, and Aubrey W. Lippert, Chairman of the Board, President and Chief
Executive Officer of Peoples First.
Under the agreement, in a tax-free exchange, shareholders of Peoples First would
receive .6 of a UPC common share for each PFKY common share. The transaction
would be valued at approximately $380 million or $36.00 per share based on Union
Planters' November 17 closing common stock price of $60.00. The acquisition is
expected to be accounted for as a pooling of interests.
In connection with the agreement, Peoples First has granted Union Planters an
option to purchase 19.9% of its common stock in certain circumstances. The
transaction is subject to shareholder and regulatory approval and other
customary terms and conditions. The transaction is expected to be closed late in
the second quarter of 1998.
In making the announcement, Aubrey Lippert stated, "We are extremely pleased to
announce our proposed affiliation with Union Planters. We were looking for a
partner who believes, like we do, that financial service decisions are best made
locally. In addition, our customers will benefit from over 400 additional
banking locations and 600 ATMs throughout the Southeast and Midwest."
Ben Rawlins stated, " The decision by Peoples First to join the Union Planters
team is one we are truly excited about. Presently the banks of Peoples First
serve customers in an 11 county area in western Kentucky and Clarksville,
Tennessee. These new markets to Union Planters will be a perfect enhancement to
our nearby existing locations in southeast Missouri and northwest and middle
Tennessee. We are also pleased that Aubrey will continue to direct our efforts
in the 11 county area."
Peoples First Corporation is a multi-bank holding company, with approximately
$1.5 billion in total assets as of September 30, 1997. Peoples First conducts a
complete range of commercial and personal banking activities through 26 banking
offices in Western Kentucky and three banking locations in Clarksville,
Tennessee.
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<PAGE> 2
Union Planters Corporation, headquartered in Memphis, Tennessee, one of the 50
largest banking organizations in the country, reported total assets of $14.8
billion at September 30, 1997. Union Planters serves approximately 1.5 million
households with banking offices in Tennessee, Kentucky, Mississippi, Missouri,
Arkansas, Alabama and Louisiana.
- 0 -
For more information:
(Peoples First)
Aubrey W. Lippert
Chairman
Peoples First Corporation
100 South 4th Street
P.O. Box 2200
Paducah, KY 4002-2200
(P) 502.441.1200
(Financial)
Jack W. Parker
Executive Vice President & CFO
Union Planters Corporation
7130 Goodlett Farms Parkway
Cordova, TN 38018
(P) 901.580.6781
(Media)
Bill Andrews
Senior Vice President
Union Planters Corporation
7130 Goodlett Farms Parkway
Cordova, TN 38918
(P) 901.580.2892
(F) 901.580.2396
