<PAGE>
As filed with the Securities and Exchange Commission on June 3, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
National Commerce Bancorporation
(Exact name of registrant as specified in its charter)
--------------
Tennessee 6711 62-0784645
(Primary Standard Industrial
(I.R.S. Employer
(State or other Classification Code Number)
jurisdiction of Identification
Number)
incorporation or
organization)
One Commerce Square
Memphis, Tennessee 38150
(901) 523-3434
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------
Charles A. Neale, Esq.
Vice President and General Counsel
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
(901) 523-3371
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
<TABLE>
<S> <C>
Philip A. Theodore, Esq. Daniel W. Small, Esq.
King & Spalding Attorney at Law
191 Peachtree Street Suite 300, 323 Union Street
Atlanta, Georgia 30303 Nashville, Tennessee 37219
(404) 572-4676 (615) 252-6000
</TABLE>
--------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable following the effectiveness of this Registration
Statement.
--------------
If any securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
<CAPTION>
Proposed
Maximum Proposed Amount of
Title of Each Class of Amount to be Offering Price Maximum Aggregate Registration
Securities to be Registered Registered(1) per Share(2) Offering Price(2) Fee(2)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $2.00 par
value................. 3,062,000 $6.36 $19,487,000 $5,417.39
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
(1) This amount is based upon the maximum number of shares anticipated to be
issued pursuant to an Agreement and Plan of Merger dated as of May 1, 1999
between the Registrant and First Financial Corporation.
(2) Computed in accordance with Rule 457(f) under the Securities Act of 1933,
as amended, based on the book value as of March 31, 1999 of the securities
to be received by the Registrant in exchange for the securities registered
hereby.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
First Financial Corporation
1691 North Mt. Juliet Road
Mt. Juliet, Tennessee 37122
Dear Shareholder:
The Boards of Directors of First Financial Corporation ("FFC") and National
Commerce Bancorporation ("NCBC") have agreed on a merger transaction that will
result in the acquisition of FFC by NCBC (the "Merger"). The combined company
will have expanded operations in the Middle Tennessee area and expects to be
better positioned to compete in the financial services industry in Middle
Tennessee.
If you approve the Merger, FFC will be merged with and into NCBC and we
anticipate that FFC shareholders will receive 2.8502 shares of NCBC common
stock for each share of FFC common stock they own based on the exchange ratio
calculation described more fully in the enclosed Proxy Statement/Prospectus.
The final exchange ratio will depend on the number of shares of FFC common
stock outstanding and the number of shares of FFC common stock issuable
pursuant to options to purchase FFC common stock outstanding as of the
effective date of the Merger. The exchange ratio is also subject to adjustment
if FFC effects any stock splits, reverse stock splits, stock dividends or
similar changes in its capital accounts. NCBC has the right to terminate the
Merger if, as of the closing date of the Merger, the consolidated shareholders'
equity of FFC is less than a certain amount. The exchange ratio calculation was
based on the assumption that the market value of a share of NCBC common stock
is $24.25. The market value of a share of NCBC common stock will fluctuate.
Accordingly, the market price may be less than $24.25 on the date the Merger is
consummated. The exchange ratio will not be recalculated to adjust for
decreases or increases in the market value of NCBC common stock.
AFTER CAREFUL CONSIDERATION, FFC'S BOARD OF DIRECTORS HAS DETERMINED THAT
THE MERGER IS IN THE BEST INTERESTS OF ITS SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS VOTING FOR APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS
PROVIDED FOR IN THE MERGER AGREEMENT.
YOUR VOTE IS IMPORTANT. FFC cannot complete the Merger unless the holders of
a majority of the outstanding shares of FFC common stock approve the Merger
Agreement.
FFC has scheduled a Special Meeting of the Shareholders of FFC (the "Special
Meeting") to vote on the Merger Agreement. It is important that your shares be
represented at the Special Meeting either in person or by proxy. Whether or not
you plan to attend the Special Meeting, please take the time to vote by
completing and mailing the enclosed proxy card to us in the enclosed postage
prepaid envelope. If you sign, date and mail your proxy card without indicating
how you want to vote, your proxy will be counted as a vote in favor of the
transaction. If you do not sign and send in your proxy or you abstain, the
effect will be a vote against the Merger. If your shares are held in "street
name," you must instruct your broker in order to vote.
The Special Meeting will be held on , 1999, at p.m., local time, at
the main office of First Bank & Trust, 1691 North Mt. Juliet Road, Mt. Juliet,
Tennessee. If you attend the Special Meeting, you may vote in person if you
wish, even if you have previously returned your proxy card.
Enclosed with this letter are a Notice of Special Meeting and a Proxy
Statement/Prospectus, which contains a detailed description of the entire
transaction. Please read the enclosed material carefully. You can also obtain
more information about NCBC and FFC in documents they each file with the
Securities and Exchange Commission.
FFC strongly supports the Merger and appreciates your prompt attention to
this important matter.
Sincerely,
/s/ David Major
____________________________________
David Major
Chairman, President and
Chief Executive Officer
Mt. Juliet, Tennessee
, 1999
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on , 1999
----------------
To the Shareholders of First Financial Corporation:
Notice is hereby given that a Special Meeting of the Shareholders of First
Financial Corporation ("FFC") will be held on , 1999, at p.m., local
time, at the main office of First Bank & Trust, 1691 North Mt. Juliet Road, Mt.
Juliet, Tennessee, for the following purposes:
1. To consider and act upon a proposal to approve an agreement and plan of
merger providing for the merger (the "Merger") of FFC with and into
National Commerce Bancorporation ("NCBC"), as a result of which we
anticipate that each outstanding share of FFC common stock will be
converted into the right to receive 2.8502 shares of NCBC common stock
based on an exchange ratio calculation described more fully in the
enclosed Proxy Statement/Prospectus. The final exchange ratio will
depend on the number of shares of FFC common stock outstanding and the
number of shares of FFC common stock issuable pursuant to options to
purchase FFC common stock outstanding as of the effective date of the
Merger. The exchange ratio is also subject to adjustment if FFC effects
any stock splits, reverse stock splits, stock dividends or similar
changes in its capital accounts. NCBC has the right to terminate the
Merger if, as of the closing date of the Merger, consolidated
shareholders' equity of FFC is less than a certain amount. Such
approval, if voted, will be deemed to constitute the ratification,
confirmation and approval of the execution and delivery by FFC of the
Agreement and Plan of Merger dated as of May 1, 1999, between NCBC and
FFC, a copy of which is an appendix to the accompanying Proxy
Statement/Prospectus.
2. To transact such other business as may properly be brought before the
Special Meeting or at any postponement or adjournment thereof.
Information regarding the matters to be acted upon at the Special Meeting is
contained in the accompanying Proxy Statement/Prospectus.
Consummation of the Merger is conditioned upon approval by the holders of a
majority of the outstanding shares of FFC common stock. The Board of Directors
has fixed the close of business on June 25, 1999, as the record date for the
determination of the shareholders entitled to receive notice of and to vote at
the Special Meeting and at any postponement or adjournment thereof. A list of
shareholders who are entitled to vote at the Special Meeting will be available
for inspection by any shareholder, his or her agent or attorney at the time and
place of the Special Meeting.
Dissenting shareholders who comply with the procedural requirements of
Chapter 23 of the Tennessee Business Corporation Act will be entitled to
receive payment of the cash value of their shares if the Merger is approved.
Your vote is important regardless of the number of shares you own. Please
plan to attend the meeting.
By Order of the Board of Directors
/s/ Robert L. Callis
____________________________________
Robert L. Callis,
Secretary
Mt. Juliet, Tennessee
, 1999
A FORM OF PROXY IS ENCLOSED. PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE WHETHER OR NOT
YOU PLAN TO ATTEND THE SPECIAL MEETING. IF YOU ATTEND THE SPECIAL MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY
CARD, BY REVOKING YOUR PROXY AS DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED JUNE 3, 1999
Prospectus
PROXY STATEMENT
OF
FIRST FINANCIAL CORPORATION
1691 North Mt. Juliet Road
Mt. Juliet, Tennessee 37122
FOR THE SPECIAL MEETING OF SHAREHOLDERS
OF FIRST FINANCIAL CORPORATION
TO BE HELD ON , 1999
This Proxy Statement/Prospectus is being furnished to the holders ("FFC
Shareholders") of shares of Common Stock, $2.50 par value ("FFC Common Stock"),
of First Financial Corporation, a Tennessee corporation ("FFC"), in connection
with the Special Meeting of Shareholders (the "Special Meeting") to be held on
, 1999, at p.m., local time, at the main office of First Bank & Trust,
1691 North Mt. Juliet Road, Mt. Juliet, Tennessee 37122, and any adjournments
or postponements of the Special Meeting. This Proxy Statement/Prospectus also
constitutes a prospectus of National Commerce Bancorporation, a Tennessee
corporation ("NCBC"), relating to the shares of NCBC Common Stock, par value
$2.00 per share ("NCBC Common Stock"), to be issued to FFC Shareholders
pursuant to the terms of the Agreement and Plan of Merger, dated as of May 1,
1999 (the "Merger Agreement"), described in this Proxy Statement/Prospectus.
Under the terms of the Merger Agreement, FFC will be merged with and into NCBC
(the "Merger"), and we expect that each outstanding share of FFC Common Stock
(excluding treasury shares and shares held by FFC Shareholders who perfect
their dissenters' rights) will be converted into the right to receive 2.8502
shares of NCBC Common Stock based on an exchange ratio calculation described
more fully in the enclosed Proxy Statement/Prospectus (the "Expected Exchange
Ratio"). The final exchange ratio will depend on the number of shares of FFC
Common Stock outstanding and the number of shares of FFC Common Stock issuable
pursuant to options to purchase FFC Common Stock outstanding as of the
effective date of the Merger (the "Exchange Ratio"). The Exchange Ratio is
subject to adjustment if FFC effects any stock splits, reverse stock splits,
stock dividends or similar changes in its capital accounts. NCBC has the right
to terminate the Merger if, as of the closing date of the Merger, consolidated
shareholders' equity of FFC is less than $18,885,000 (exclusive of any
unrealized securities gains or losses). Cash will be paid in lieu of any
fractional shares otherwise issuable in the Merger. FFC Shareholders who
perfect their dissenters rights under Tennessee law will receive cash equal to
the statutory fair value of their FFC Common Stock in lieu of NCBC Common Stock
otherwise issuable. After the Merger, NCBC will be the surviving corporation,
and First Bank & Trust, the wholly owned bank subsidiary of FFC, and its
subsidiaries, American Title and Escrow Company and First Southern Finance,
Inc., and will become subsidiaries of NCBC.
This Proxy Statement/Prospectus is first being mailed to FFC Shareholders on
or about June 28, 1999.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this document. Any representation to the contrary is a
criminal offense. The securities offered hereby are not savings accounts,
deposits or other obligations of a bank or savings association and are not
insured by the Federal Deposit Insurance Corporation or any other government
agency.
-----------
No person is authorized to give any information or to make any
representations other than those contained in this Proxy Statement/Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized. This Proxy Statement/Prospectus does not
constitute an offer or solicitation by anyone in any state in which such offer
or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Proxy
Statement/Prospectus nor any distribution of such NCBC Common Stock shall,
under any circumstances, create any implication that the information contained
herein is correct as of any time subsequent to the date hereof. All information
concerning FFC contained in this Proxy Statement/Prospectus has been furnished
by FFC, and all information concerning NCBC has been furnished by NCBC.
-----------
The date of this Proxy Statement/Prospectus is , 1999
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY IS FFC BEING ACQUIRED BY NCBC?
A: Both the FFC Board and the NCBC Board believe that the Merger is in the best
interests of their respective companies and will benefit their respective
shareholders, customers and employees. The Boards believe the Merger will
create a company with expanded operations in the Middle Tennessee area and will
be better positioned to compete in the financial services industry in Middle
Tennessee. For the first time, FFC Shareholders will have substantial liquidity
in their investment because, unlike FFC Common Stock, NCBC Common Stock is
listed and actively traded. In addition, the market value of the NCBC Common
Stock to be issued in the Merger represents a substantial premium over the book
value of FFC Common Stock. To review the background and reasons for the Merger
in greater detail, see pages 15 through 16.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: FFC Shareholders are expected to receive 2.8502 shares of NCBC Common Stock
in exchange for each share of FFC Common Stock they hold based on an exchange
ratio calculation described more fully on pages 14 through 15. The final
exchange ratio will depend on the number of shares of FFC Common Stock
outstanding and the number of shares of FFC Common Stock issuable pursuant to
options to purchase FFC Common Stock outstanding as of the effective date of
the Merger. This is the "Exchange Ratio." The Exchange Ratio is subject to
adjustment if FFC effects any stock splits, reverse stock splits, stock
dividends or similar changes in its capital accounts. NCBC has the right to
terminate the Merger if, as of the closing date of the Merger, consolidated
shareholders' equity of FFC is less than $18,885,000 (exclusive of any
unrealized securities gains or losses). As of March 31, 1999, FFC's
consolidated shareholders' equity (unaudited) was approximately $19,285,000
(exclusive of any unrealized securities gains or losses).
NCBC will not issue fractional shares in the Merger. Instead, FFC
Shareholders will receive a cash payment, without interest, for the value of
any fraction of a share of NCBC Common Stock that they would otherwise be
entitled to receive based upon $24.25, the market value (as determined in the
Merger Agreement) of a share of NCBC Common Stock on April 12, 1999 as reported
on the Nasdaq National Market.
The NCBC Common Stock and cash in lieu of fractional shares that FFC
Shareholders are entitled to receive in the Merger are referred to as the
"Merger Consideration."
FOR EXAMPLE, USING THE EXPECTED EXCHANGE RATIO OF 2.8502:
. IF YOU OWN 50,000 SHARES OF FFC COMMON STOCK, THEN AFTER THE MERGER YOU
WILL RECEIVE 142,510 SHARES OF NCBC COMMON STOCK.
. IF YOU OWN 1,000 SHARES OF FFC COMMON STOCK, THEN AFTER THE MERGER YOU
WILL RECEIVE 2,850 SHARES OF NCBC COMMON STOCK AND A CHECK FOR $4.85. THE
CHECK REPRESENTS THE PRODUCT OF THE FRACTIONAL SHARE (0.2) TIMES $24.25
(THE ASSUMED MARKET VALUE OF ONE SHARE OF NCBC COMMON STOCK).
Q: WHAT WILL MY DIVIDENDS BE AFTER THE MERGER?
A: After the Merger, FFC Shareholders will receive any dividends that are
declared by the NCBC Board with respect to the NCBC Common Stock. For the first
and second quarters of 1999, NCBC paid quarterly dividends of $0.09 per share,
respectively, and in 1998, paid quarterly dividends totaling $0.32 per share.
NCBC has paid regular dividends on the NCBC Common Stock without interruption
since its incorporation.
Q: MAY I SELL THE SHARES OF NCBC COMMON STOCK THAT I WILL RECEIVE IN THE
MERGER?
A: The shares of NCBC Common Stock that will be issued in the Merger have been
registered under the Securities Act of 1933 and may be sold without restriction
following the Merger by FFC Shareholders who are
i
<PAGE>
not affiliates of FFC. Affiliates of FFC are subject to certain restrictions on
their ability to sell the shares of NCBC Common Stock that will be issued to
them in the Merger. For more detail regarding this subject, see pages 27
through 28.
Q: WHAT HAPPENS AS THE MARKET PRICE OF NCBC COMMON STOCK FLUCTUATES?
A: The Expected Exchange Ratio is 2.8502. The Exchange Ratio was calculated
based on the assumption that the market value of a share of NCBC Common Stock
is $24.25. The market value of a share of NCBC Common Stock may decrease or
increase. Accordingly, the market price may be less than $24.25 on the date the
Merger is consummated. The Exchange Ratio will not be recalculated to adjust
for decreases or increases in the market value of NCBC Common Stock. You should
obtain current market prices for shares of NCBC Common Stock.
Q: WHEN IS THE MERGER EXPECTED TO BE COMPLETED?
A: We are working to complete the Merger during the third quarter of 1999.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
A: We expect that the exchange of shares by FFC Shareholders generally will be
tax-free to FFC Shareholders for U.S. federal income tax purposes. FFC
Shareholders will, however, have to pay taxes on cash received for fractional
shares. FFC Shareholders who perfect their dissenters' rights under Tennessee
law and who receive payment in cash for the "fair value" of their shares of FFC
Common Stock generally will recognize capital gain or loss equal to the
difference between the cash received less the tax basis of such shares. To
review the federal tax consequences to FFC Shareholders in greater detail, see
pages 29 through 30.
YOUR TAX CONSEQUENCES WILL DEPEND ON YOUR PERSONAL SITUATION. YOU SHOULD
CONSULT YOUR TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF
THE MERGER TO YOU. WE CANNOT GIVE YOU TAX, ACCOUNTING, LEGAL OR INVESTMENT
ADVICE.
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: FFC Shareholders are being asked to approve the Merger Agreement, which
provides for the acquisition of FFC through the merger of FFC with and into
NCBC, as a result of which we anticipate that each outstanding share of FFC
Common Stock will be converted into the right to receive 2.8502 shares of NCBC
Common Stock based on the Exchange Ratio calculation described above. The final
Exchange Ratio will depend on the number of shares of FFC Common Stock
outstanding and the number of shares of FFC Common Stock issuable pursuant to
options to purchase FFC Common Stock outstanding as of the effective date of
the Merger. Approval of the proposal requires the affirmative vote of a
majority of the outstanding shares of FFC Common Stock.
THE FFC BOARD HAS UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT AND
RECOMMENDS VOTING FOR THE APPROVAL OF THE MERGER AGREEMENT.
Q: WHAT SHOULD I DO NOW?
A: Indicate on your proxy card how you want to vote, and sign and mail the
proxy card in the enclosed postage prepaid envelope as soon as possible, so
that your shares will be represented at the Special Meeting.
If you sign and send in your proxy and do not indicate how you want to vote,
your proxy will be voted in favor of the proposal to approve and adopt the
Merger Agreement. If you do not sign and send in your proxy or if you abstain,
it will have the effect of a vote against the Merger.
ii
<PAGE>
The Special Meeting will take place on , 1999, at p.m., local time, at
the main office of First Bank & Trust, 1691 North Mt. Juliet Road, Mt. Juliet,
Tennessee, subject to any adjournments or postponements thereof. You may attend
the Special Meeting and vote your shares in person, rather than voting by
proxy. In addition, you may withdraw your proxy up to and including the day of
the Special Meeting by following the directions on page 13 and either change
your vote or attend the Special Meeting and vote in person.
Q: HOW DO I EXERCISE MY DISSENTERS' RIGHTS UNDER TENNESSEE LAW?
A: To exercise dissenters' rights under Tennessee law, a FFC Shareholder must:
(1) deliver to NCBC before the Special Meeting written notice of his or her
intent to demand payment for his or her shares if the Merger is
effectuated, and
(2) not vote his or her shares in favor of the approval and adoption of the
Merger Agreement at the Special Meeting.
A FFC Shareholder who does not satisfy these two requirements is not
entitled to payment for his or her shares of FFC Common Stock under Tennessee
law. In addition, any FFC Shareholder who returns a signed proxy but fails to
provide instructions as to the manner in which his or her shares of FFC Common
Stock are to be voted will be deemed to have voted in favor of the approval and
adoption of the Merger Agreement and will not be entitled to assert dissenters'
rights of appraisal. For more information regarding your dissenters' rights,
see pages 31 through 33.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares of FFC Common Stock only if you provide
instructions on how to vote. You should instruct your broker how to vote your
shares, following the directions your broker provides. If you do not provide
instructions to your broker, your shares will not be voted and this will have
the effect of voting against the Merger. Please contact your broker about this
transaction.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the Merger is completed we will send you written instructions for
exchanging your FFC Common Stock certificates for NCBC Common Stock
certificates.
Q: WHO CAN HELP ANSWER YOUR QUESTIONS?
If you want additional copies of this document, or if you want to ask any
questions about the Merger, you should contact:
David Major, Chairman, President
and Chief Executive Officer
First Financial Corporation
1691 North Mt. Juliet Road
Mt. Juliet, Tennessee 37122
Telephone: (615) 754-2265
or
Sally P. Kimble, Senior Vice President of Operations,
Treasurer and Chief Financial Officer
First Financial Corporation
1691 North Mt. Juliet Road
Mt. Juliet, Tennessee 37122
Telephone: (615) 754-2265
iii
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Both NCBC and FFC are subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, file reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Their SEC filings are available
to the public over the Internet at the SEC's web site at http://www.sec.gov.
You may also read and copy any document that NCBC or FFC files with the SEC at
the SEC's following public reference facilities:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further
information on the operations of the public reference facilities. NCBC's SEC
filings are also available at the offices of the Nasdaq Stock Market at 1735 K
Street, N.W., Washington, D.C. 20006. This Proxy Statement/Prospectus does not
contain all the information set forth in the Registration Statement on Form S-4
and exhibits thereto, of which this Proxy Statement/Prospectus is a part (the
"Registration Statement"), that NCBC has filed with the SEC under the
Securities Act of 1933 (the "Securities Act").
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
safe harbor for forward-looking statements made by or on behalf of NCBC or FFC.
All statements in this Proxy Statement/Prospectus and the documents
incorporated by reference that are not historical facts or that express
expectations and projections with respect to future matters are "forward-
looking statements" for the purpose of the safe harbor provided by the Act. We
caution readers that such "forward-looking statements," including, without
limitation, those relating to future business initiatives and prospects,
revenues, working capital, liquidity, capital needs, interest costs and income,
and "Year 2000" remediation efforts, wherever they occur in this document or in
other statements attributable to NCBC, FFC or both NCBC and FFC, are
necessarily estimates reflecting the best judgment of NCBC or FFC. Such
statements involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the "forward-looking
statements." "Forward-looking statements" should, therefore, be considered in
light of various important factors, including those set forth in this Proxy
Statement/Prospectus. Important factors currently known to management of NCBC
or FFC that could cause actual results to differ materially from those in
"forward-looking statements" include significant fluctuations in interest
rates, inflation, economic recession, economic conditions in the markets served
by NCBC and FFC, significant changes in the federal and state legal and
regulatory environment, significant under-performance in NCBC's or FFC's
portfolio of outstanding loans, and competition in NCBC's and FFC's markets.
Other factors set forth from time to time in NCBC's filings with the SEC should
also be considered. NCBC undertakes no obligation to update or revise "forward-
looking statements" to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over time.
iv
<PAGE>
INCORPORATION OF DOCUMENTS FILED WITH THE SEC
The SEC allows NCBC and FFC to "incorporate by reference" the information
each company files with them, which means:
. incorporated documents are considered part of this Proxy
Statement/Prospectus;
. NCBC and FFC can disclose important information to you by referring you
to those documents; and
. information that NCBC and FFC file with the SEC will automatically update
and supersede this incorporated information.
NCBC incorporates by reference the documents listed below which were filed
with the SEC under the Exchange Act:
(1) NCBC's Annual Report on Form 10-K for the year ended December 31,
1998, filed on March 26, 1999;
(2) NCBC's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999, filed on May 7, 1999; and
(3) The description of NCBC Common Stock contained in the Registration
Statement on Form S-8 (Registration No. 33-38552), filed on January
11, 1991.
FFC incorporates by reference the documents listed below which were filed
with the SEC under the Exchange Act:
(1) FFC's Annual Report on Form 10-KSB for the year ended December 31,
1998, filed on March 24, 1999;
(2) FFC's Quarterly Report on Form 10-QSB for the quarter ended March
31, 1999, filed on May 17, 1999;
(3) FFC's Current Report on Form 8-K, filed on May 17, 1999; and
(4) The description of FFC Common Stock contained in the Registration
Statement on Form 8-A (File No. 0-23933).
NCBC and FFC also incorporate by reference each of the following documents
that we will file between the date of this document and the date of the Special
Meeting:
. Reports filed under Section 13(a) and (c) of the Exchange Act;
. Definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent shareholders meeting; and
. Any reports filed under Section 15(d) of the Exchange Act.
This Proxy Statement/Prospectus incorporates certain NCBC and FFC documents
by reference which are not presented herein or delivered herewith. Copies of
the documents (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents) are available
without charge to any person, including any beneficial owner, to whom this
Proxy Statement/Prospectus is delivered, upon written or oral request, with
respect to documents that relate to NCBC, from Lewis E. Holland, Vice Chairman,
Treasurer and Chief Financial Officer, National Commerce Bancorporation, One
Commerce Square, Memphis, Tennessee 38150; Telephone No. (901) 523-3242, and,
with respect to documents that relate to FFC, from Sally P. Kimble, Senior Vice
President of Operations, Treasurer and Chief Financial Officer, First Financial
Corporation, 1691 North Mt. Juliet Road, Mt. Juliet, Tennessee 37122; Telephone
No. (612) 754-2265. In order to ensure timely delivery of such documents, any
request should be made by , 1999.
v
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................... i
WHERE YOU CAN FIND MORE INFORMATION........................................ iv
FORWARD-LOOKING STATEMENTS................................................. iv
INCORPORATION OF DOCUMENTS FILED WITH THE SEC.............................. v
SUMMARY.................................................................... 1
The Parties.............................................................. 1
The Special Meeting...................................................... 1
The Merger............................................................... 2
Market Prices and Dividend Policy of NCBC and FFC........................ 5
NCBC and FFC Selected Historical Financial Data.......................... 6
NCBC and FFC Equivalent Pro Forma Per Common Share Data.................. 10
RISK FACTORS............................................................... 12
Transfer of Control to NCBC.............................................. 12
Less Attractive Acquisition Target....................................... 12
INFORMATION CONCERNING THE SPECIAL MEETING................................. 13
The Special Meeting...................................................... 13
Vote Required............................................................ 13
Voting of Proxies........................................................ 13
Revocability of Proxies.................................................. 13
Solicitation of Proxies.................................................. 13
Other Matters to be Considered........................................... 14
THE MERGER................................................................. 14
General.................................................................. 14
Background of the Merger................................................. 15
Reasons for the Merger; Board of Director's Recommendation............... 15
Stock Option Agreement................................................... 16
Interests of Certain Persons in the Merger............................... 18
Opinion of Financial Advisor to FFC...................................... 18
Exchange of Certificates Representing FFC Common Stock................... 23
Covenants; Conditions; Representations and Warranties; Amendment and
Termination............................................................. 23
Beneficial Ownership of FFC Common Stock................................. 26
Resale of NCBC Common Stock by FFC Shareholders and Affiliates........... 22
Regulatory and Other Legal Considerations................................ 27
Accounting Treatment..................................................... 28
Federal Income Tax Considerations........................................ 29
Expenses................................................................. 30
Stock Exchange Listing................................................... 30
Dissenters' Rights....................................................... 31
COMPARISON OF RIGHTS OF FFC AND NCBC SHAREHOLDERS.......................... 33
DESCRIPTION OF NCBC COMMON STOCK........................................... 36
VALIDITY OF COMMON STOCK................................................... 38
EXPERTS.................................................................... 38
APPENDIX A--MERGER AGREEMENT............................................... A-1
APPENDIX B--OPINION OF MORGAN KEEGAN & COMPANY, INC. ...................... B-1
APPENDIX C--TENNESSEE BUSINESS CORPORATION ACT, (S)(S) 48-23-101 et seq. .. C-1
</TABLE>
<PAGE>
SUMMARY
Certain significant matters discussed in this Proxy Statement/Prospectus are
summarized below. These summaries are not intended to be complete and are
qualified in all respects by reference to the detailed information appearing
elsewhere in this Proxy Statement/Prospectus. FFC Shareholders are urged to
review carefully the entire Proxy Statement/Prospectus (including the
Appendices and other documents to which this Proxy Statement/Prospectus
refers).
The Parties
NCBC. National Commerce Bancorporation is a registered bank holding company.
NCBC provides select financial services and consulting through a regional
network of banking affiliates and a national network of non-banking affiliates.
NCBC operates 144 bank locations in Tennessee, North Carolina, Georgia,
Virginia, Mississippi and Arkansas and has three major lines of business:
retail banking, commercial banking and financial services. Financial services
include transaction processing, in-store licensing and consulting, capital
markets, trust and asset management and treasury.
NCBC was formed in February 1966 as a Tennessee financial corporation. The
corporate name was changed in 1970, and the present name was adopted in May
1978. NCBC Common Stock, par value $2.00 per share, is quoted on the Nasdaq
National Market under the symbol "NCBC." Unless the context otherwise requires,
references to NCBC include National Commerce Bancorporation and its
subsidiaries. NCBC's principal executive offices are located at One Commerce
Square, Memphis, Tennessee 38150, and its telephone number is (901) 523-3242.
FFC. First Financial Corporation is a financial services corporation
incorporated under the laws of the State of Tennessee in 1991 for the purpose
of becoming a bank holding company by acquiring all of the issued and
outstanding common stock of First Bank & Trust ("First Bank").
FFC's principal business is the ownership of First Bank and all material
operations of FFC are conducted through First Bank, its wholly owned
subsidiary. FFC and First Bank concentrate on developing the financial service
business of First Bank in Wilson, Davidson and Rutherford Counties near
Nashville, Tennessee and in other trade areas (generally, in those counties
reasonably close to Wilson County). First Bank is a Tennessee banking
corporation originally established in 1989. First Bank conducts a full-service
commercial banking business centered principally in Wilson County, Tennessee,
with full-service banking offices located also in Rutherford and Davidson
Counties in Tennessee. First Bank also owns all of the issued and outstanding
stock of American Title and Escrow Company, its title insurance subsidiary, and
First Southern Finance, Inc., its inactive finance subsidiary. Unless the
context otherwise requires, references to FFC include First Financial
Corporation and its subsidiaries. FFC's principal executive offices are located
at 1691 North Mt. Juliet Road, Mt. Juliet, Tennessee 37122, telephone (615)
754-2265.
The Special Meeting (pages 13 through 14)
The Special Meeting of the Shareholders of FFC will be held at the main
office of First Bank at 1691 North Mt. Juliet Road, Mt. Juliet, Tennessee
37122, on , 1999 at p.m., local time. The purpose of the Special
Meeting is to consider and vote upon the approval and adoption of the Merger
Agreement. Only holders of shares of FFC Common Stock of record at the close of
business on June 25, 1999 (the "Record Date"), will be entitled to vote at the
Special Meeting. As of the Record Date, there were [998,827] shares of FFC
Common Stock outstanding and entitled to vote, with each share entitled to one
vote. As of the Record Date, approximately [30.61]% of the outstanding shares
of FFC Common Stock were beneficially owned by officers and directors of FFC
and their affiliates. The presence in person or by proxy of the holders of a
majority of the shares of FFC Common Stock outstanding as of the Record Date is
necessary to constitute a quorum at the Special Meeting. The affirmative vote
of the holders of a majority of the shares of FFC Common Stock entitled to vote
is necessary to approve and adopt the Merger Agreement. See "Information
Concerning the Special Meeting--Vote Required."
1
<PAGE>
A form of proxy for the FFC Common Stock is enclosed with this Proxy
Statement/Prospectus. Holders of FFC Common Stock are requested to sign, date
and return the proxy. All shares of FFC Common Stock represented by properly
executed proxies, unless such proxies have been previously revoked, will be
voted in accordance with the instructions indicated on such proxies. If no
instructions are indicated, such shares will be voted for approval of the
Merger Agreement and, in the discretion of the proxy holder, as to any other
matter which may properly come before the Special Meeting. See "The Information
Concerning the Special Meeting--Revocability of Proxies" and "--Solicitation of
Proxies."
The Merger (pages 13 through 32)
General. The Merger Agreement, a copy of which is attached as Appendix A and
incorporated by reference in this Proxy Statement/Prospectus, provides for the
Merger of FFC with and into NCBC in accordance with the applicable provisions
of the Tennessee Business Corporation Act (the "TBCA"). NCBC will be the
surviving corporation of the Merger. The separate existence of FFC will cease
following the Merger and First Bank will become a wholly owned bank subsidiary
of NCBC. Subject to the terms, conditions and procedures set forth in the
Merger Agreement, upon consummation of the Merger at the time and date
specified in the articles of merger to be filed to effect the Merger (the
"Effective Time"), we anticipate that each of the issued and outstanding shares
of FFC Common Stock (excluding treasury shares and shares held by FFC
Shareholders who perfect their dissenters' rights) will be converted, without
any further action on the part of FFC Shareholders, into the right to receive
2.8502 shares of NCBC Common Stock based on an exchange ratio calculation
described more fully below (the "Expected Exchange Ratio"). The final exchange
ratio will depend on the number of shares of FFC Common Stock outstanding and
the number of shares of FFC Common Stock issuable pursuant to options to
purchase FFC Common Stock outstanding as of the consummation of the merger (the
"Exchange Ratio"). The Exchange Ratio is subject to adjustment if FFC effects
any stock splits, reverse stock splits, stock dividends or similar changes in
its capital accounts. NCBC has the right to terminate the Merger if, as of the
closing date of the Merger, consolidated shareholders' equity of FFC is less
than $18,885,000 (exclusive of any unrealized securities gains or losses). As
of March 31, 1999, FFC's consolidated shareholders' equity (unaudited) was
approximately $19,285,000 (exclusive of any unrealized securities gains or
losses). The Exchange Ratio was calculated based on the assumption that the
market value of a share of NCBC Common Stock is $24.25. The market value of a
share of NCBC Common Stock may decrease or increase. Accordingly, the market
price may be less than $24.25 on the date the Merger is consummated. The
Exchange Ratio will not be recalculated to adjust for decreases or increases in
the market value of NCBC Common Stock.
FFC Shareholders who properly exercise and perfect their dissenters' rights
under the TBCA will be paid the statutory fair value of their shares in cash.
In addition, cash will be paid to FFC Shareholders in lieu of fractional shares
otherwise issuable in the Merger based on a price of $24.25 per share of NCBC
Common Stock. Shareholders are encouraged to read the Merger Agreement in its
entirety.
Background of the Merger. The managements of NCBC and FFC began considering
a potential combination in April of 1999. A letter of intent was finalized and
executed on April 17, 1999. The Merger Agreement was approved by the FFC Board
of Directors on May 1, 1999, and by the NCBC Board of Directors on April 28,
1999. The Merger Agreement was executed as of May 1, 1999. See "The Merger--
Background of the Merger."
Board of Directors' Recommendation. The Board of Directors of FFC voted to
approve the Merger Agreement as being in the best interests of FFC and FFC
Shareholders and recommends that FFC Shareholders vote to approve the Merger
and approve and adopt the Merger Agreement. See "The Merger--Reasons for the
Merger; Board of Director's Recommendation."
Stock Option Agreement. In connection with the Merger Agreement, NCBC and
FFC entered into a Stock Option Agreement, dated as of May 1, 1999 (the "Option
Agreement"). The Option Agreement was requested by NCBC to enhance the
likelihood that the Merger will be successfully consummated in accordance
2
<PAGE>
with the terms contemplated by the Merger Agreement. Pursuant to the Option
Agreement, FFC granted NCBC an option to purchase, subject to adjustments in
certain circumstances, the number of authorized but unissued shares of FFC
Common Stock such that immediately following such purchase NCBC would own 19.5%
of the then issued and outstanding shares of FFC Common Stock (approximately
241,952 shares, assuming 998,827 shares of FFC Common Stock are issued and
outstanding on the date the option is exercised), giving effect to the exercise
by NCBC of the option, at a price per share in cash equal to two times the book
value of a share of FFC Common Stock as of March 31, 1999.
NCBC may exercise such option only in whole and only under certain limited
and specifically defined circumstances (none of which, to the best knowledge of
NCBC and FFC, has occurred as of the date of this document). Certain regulatory
approvals may be required before an acquisition of FFC Common Stock pursuant to
an exercise of such option could be completed.
Certain aspects of the Option Agreement may have the effect of discouraging
parties who might be interested in acquiring all of or a significant interest
in FFC from considering or proposing such an acquisition, even if such persons
were prepared to offer to pay consideration to the FFC Shareholders that has a
higher value than the shares of NCBC Common Stock to be received for each share
of FFC Common Stock in the Merger.
Interests of Certain persons in the Merger. First Bank and NCBC, as the
corporate successor to FFC, will, as a condition to the consummation of the
Merger, enter into employment agreements with David Major and James S. Short,
who serve as President and Executive Vice President, respectively, of First
Bank. Each employment agreement will have a term of five years. Such term will
be automatically renewed for one additional year at the end of each calendar
year, unless terminated as provided in the respective employment agreement.
Opinion of Financial Advisor to FFC. Morgan Keegan & Company, Inc.,
financial advisor to FFC, rendered an opinion dated as of June 1, 1999 to the
FFC Board that as of such date the Exchange Ratio was fair to FFC from a
financial point of view. A copy of the fairness opinion, setting forth the
information reviewed, assumptions made and matters considered, is attached to
this document as Appendix B. FFC Shareholders should read the fairness opinion
of Morgan Keegan in its entirety.
Exchange of Certificates Representing FFC Common Stock. Promptly after the
Effective Time, NCBC shall cause The Bank of New York, the exchange agent for
NCBC Common Stock (the "Exchange Agent"), to mail to each holder of record of
any of the issued and outstanding shares of FFC Common Stock immediately prior
to the Effective Time materials that will contain instructions with respect to
the surrender of certificates representing shares of FFC Common Stock and the
distribution of certificates representing shares of NCBC Common Stock. Shares
of FFC Common Stock will be surrendered to the Exchange Agent.
Covenants; Conditions; Representations and Warranties; Amendment and
Termination. The respective obligations of the parties to consummate the Merger
are subject to, among other things, the requisite vote of FFC Shareholders
approving the Merger and compliance with certain regulatory requirements.
Additional conditions to the obligations of NCBC and FFC to consummate the
Merger are discussed in "The Merger--Covenants; Conditions; Representations and
Warranties; Amendment and Termination."
The Merger Agreement may be amended by agreement between FFC and NCBC, but
no amendment reducing the consideration to be received by FFC Shareholders is
valid unless approved by the FFC Shareholders. The Merger Agreement may be
terminated by either NCBC or FFC if by November 30, 1999, specified conditions
in the Merger Agreement have not been satisfied or waived.
In addition to the conditions described in the preceding sentence, the
obligation of NCBC to consummate the Merger is subject the following
conditions:
(1) exclusive of gains or losses on transactions in securities, total
shareholders equity of FFC as of the closing date is not less than
$18,885,000;
3
<PAGE>
(2) FFC owning, free and clear of any liens, not less than 100% of the
outstanding capital stock of First Bank;
(3) from and after December 31, 1998, neither FFC nor First Bank has
consummated any extraordinary sale of assets nor any material investment
portfolio restructuring; and
(4) each of David Major, James S. Short and six of the eight other
members of the FFC Board have entered into certain employment and/or non-
competition agreements with NCBC and First Bank.
Beneficial Ownership of FFC Common Stock. On the Record Date, the executive
officers and directors of FFC, including their affiliates, beneficially owned
an aggregate of [305,787] shares of FFC Common Stock, or approximately [30.61]%
of the [998,827] shares of FFC Common Stock then outstanding.
Resale of FFC Common Stock by Affiliates. Shares of NCBC Common Stock
received by FFC Shareholders in the Merger will be freely transferable by the
holders, except for those shares held by FFC Shareholders who may be deemed to
be "affiliates" (generally including directors, certain executive officers and
holders of 10% or more of FFC Common Stock) of FFC under applicable federal
securities laws. Generally, all shares of NCBC Common Stock received by such
affiliates may not be sold by them until NCBC publishes at least one full
calendar month of the combined results of operations of NCBC and FFC, except in
compliance with the Securities Act and applicable accounting rules governing
pooling of interests. Shares of NCBC Common Stock received by non-affiliates in
connection with the Merger will be freely transferable under the Securities
Act.
Regulatory or Other Legal Considerations. The Merger is subject to approval
by the Board of Governors of the Federal Reserve System (the "FRB") under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), and the
expiration of the 30-day Department of Justice waiting period. NCBC filed an
application for such approval on or about May 19, 1999. NCBC believes the
approval will be granted on or about June 28, 1999. The Merger is also subject
to approval by the State of Tennessee Department of Financial Institutions.
NCBC filed an application for such approval on May 19, 1999. NCBC believes the
Tennessee approval will be granted on or about June 28, 1999. See "The Merger--
Regulatory and Other Legal Considerations."
Accounting Treatment. We expect the Merger to be accounted for as a pooling
of interests, which means that we will treat our companies as if they had
always been combined for accounting and financial reporting purposes.
Federal Income Tax Considerations. NCBC and FFC will receive an opinion of
NCBC's counsel that the Merger will constitute a "reorganization," within the
meaning of Section 368(a) of the Internal Revenue Code of 1986 (the "Code"),
and that no gain or loss will be recognized by the FFC Shareholders for federal
income tax purposes upon the conversion of FFC Common Stock into NCBC Common
Stock pursuant to the Merger Agreement (except with respect to any cash paid in
lieu of fractional shares of NCBC Common Stock) or by holders of FFC Options
(as defined below, see "The Merger--General") upon conversion of such options
into rights with respect to NCBC Common Stock. See "The Merger--Federal Income
Tax Considerations."
Dissenters' Rights. FFC Shareholders who do not vote in favor of the Merger
and who comply with the applicable provisions of the TBCA will be entitled, if
the Merger is consummated, to have a Tennessee court determine the statutory
fair value of his or her shares of FFC Common Stock and to receive payment of
that amount in cash in lieu of receiving shares of NCBC Common Stock in the
Merger. To assert dissenters' rights in connection with the Merger, an FFC
Shareholder must, among other things, file a written notice with FFC of his or
her intention to demand payment for his or her shares before the vote with
respect to the Merger Agreement is taken prior to or at the Special Meeting.
See "The Merger--Dissenters' Rights" and Appendix C.
4
<PAGE>
Comparison of Rights of FFC and NCBC Shareholders. Both FFC and NCBC are
incorporated under the laws of the State of Tennessee. FFC Shareholders, whose
rights as shareholders are currently governed by Tennessee law and the FFC
Charter, as amended (the "FFC Charter"), and Bylaws, upon consummation of the
Merger will become shareholders of NCBC and their rights as NCBC shareholders
will be governed by Tennessee law and the NCBC Restated Charter (the "NCBC
Charter") and Bylaws. The NCBC Charter and Bylaws contain certain provisions
intended to deter certain takeover attempts that are not contained in the FFC
Charter and Bylaws. See "Comparison of Rights of FFC and NCBC Shareholders."
Market Prices and Dividend Policy of NCBC and FFC
NCBC. The NCBC Common Stock is traded over-the-counter on the Nasdaq
National Market and is quoted under the trading symbol "NCBC." At December 31,
1998, there were approximately 3,600 shareholders of record of NCBC.
The following table sets forth for the periods indicated the high and low
closing sales prices for the NCBC Common Stock as reported on the Nasdaq
National Market, as restated to give retroactive recognition to all stock
dividends and stock splits:
Market Price of NCBC Common Stock and Dividend Policy
<TABLE>
<CAPTION>
NCBC Common Stock
-----------------------
High Low Dividends
------ ------ ---------
<S> <C> <C> <C>
1997
First Quarter..................................... $11.50 $ 8.94 $0.05
Second Quarter.................................... 11.81 9.63 0.06
Third Quarter..................................... 13.82 11.44 0.05
Fourth Quarter.................................... 17.88 13.59 0.07
1998
First Quarter..................................... $21.57 $15.13 $0.07
Second Quarter.................................... 23.38 19.69 0.08
Third Quarter..................................... 25.75 16.50 0.08
Fourth Quarter.................................... 19.06 13.94 0.09
1999
First Quarter..................................... $24.38 $17.56 $0.09
Second Quarter (through June 2, 1999)............. 25.67 22.44 0.09(a)
</TABLE>
- --------
(a) Payable on July 1, 1999 to shareholders of record as of June 4, 1999.
NCBC has paid regular dividends on its common stock without interruption
since its incorporation. NCBC's Board has the discretion to decide whether or
not to pay dividends in the future and the amount of any such dividends. NCBC's
ability to pay dividends to its shareholders may be limited by certain factors
including regulatory capital requirements and broad enforcement powers of the
FRB.
FFC. There is no established public trading market for FFC Common Stock.
FFC's management, however, believes that Middle Tennessee is the principal
market area for FFC Common Stock. The following table sets forth the high and
low sales prices per share of FFC Common Stock, as restated to give retroactive
recognition to all stock dividends and stock splits. Although FFC's management
believes that the information supplied by purchasers and sellers concerning
their respective transactions is generally reliable, it has not been verified.
Such information may not include all transactions in FFC Common Stock for the
respective periods shown, and it is possible that transactions occurred during
the periods reflected or discussed at prices higher or lower than the prices
set forth below. Some of the transactions may have involved FFC or its
principals.
5
<PAGE>
Known Trading Prices of FFC Common Stock and Dividend Policy
<TABLE>
<CAPTION>
FFC Common Stock
-----------------------
High Low Dividends
------ ------ ---------
<S> <C> <C> <C>
1997
First Quarter...................................... $21.00 $20.00 --
Second Quarter..................................... * * --
Third Quarter...................................... 22.50 22.50 0.25
Fourth Quarter..................................... 25.00 25.00 --
1998
First Quarter...................................... $26.00 $26.00 --
Second Quarter..................................... 26.00 26.00 --
Third Quarter...................................... 32.00 32.00 0.25
Fourth Quarter..................................... 33.00 33.00 --
1999
First Quarter...................................... $35.00 $35.00 --
Second Quarter (through June 2, 1999).............. 35.00 35.00 --
</TABLE>
- --------
* No reported trades.
FFC commenced business for all practical purposes on January 1, 1992. FFC
declared and paid cash dividends on its common stock of $0.25 per share in
1998, $0.25 per share in 1997, and $0.20 per share in 1996. Future dividends
may be paid as determined by FFC's Board from time to time in accordance with
federal and state law.
On April 30, 1999, the last trading day before the public announcement of
the Merger, the high and low sales prices per share reported on the Nasdaq
National Market for the NCBC Common Stock were $25.00 and $24.75, respectively
(approximately $71.2550 and $70.5425, respectively, on an equivalent share
basis for each share of FFC Common Stock based on the Expected Exchange Ratio).
On the trading day immediately prior to the date of this Proxy
Statement/Prospectus, the high and low sales prices per share reported on the
Nasdaq National Market for the NCBC Common Stock were $23.125 and $23.4375,
respectively (approximately $65.9109 and $66.8016, respectively, on an
equivalent share basis for each share of FFC Common Stock based on the Expected
Exchange Ratio). FFC Shareholders are urged to obtain current quotations for
the market prices of NCBC Common Stock. However, the Exchange Ratio will not
change as a result of fluctuations in the price of the NCBC Common Stock.
NCBC and FFC Selected Historical Financial Data
NCBC. The selected consolidated financial data of NCBC for, and as of the
end of, each of the periods indicated in the five-year period ended December
31, 1998, have been derived from the audited consolidated financial statements
of NCBC. The selected consolidated financial data for each of the three-month
periods ended March 31, 1998 and 1999, and as of March 31, 1998 and 1999, have
been derived from the unaudited consolidated financial statements of NCBC,
which reflect, in the opinion of management of NCBC, all adjustments (which
include only normal recurring adjustments) necessary for the fair presentation
of the financial data for such periods. The results for such interim periods
are not necessarily indicative of the results for the full year. The selected
financial data should be read in conjunction with the consolidated financial
statements of NCBC and the notes thereto which have been incorporated by
reference herein. All common share data have been restated to reflect a two-
for-one stock split, effective as of May 16, 1997, and a subsequent two-for-one
stock split effective on July 1, 1998. Pro forma data reflecting the Merger are
not presented because the Merger would not have a significant effect on the
data as presented.
6
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended
For the Year Ended December 31, March 31,
------------------------------------------------ -----------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- ------- --------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income.. $195,120 $246,465 $286,567 $336,993 $383,587 $88,227 $104,118
Total interest
expense............... 85,099 126,440 151,101 174,172 190,969 43,956 51,524
-------- -------- -------- -------- -------- ------- --------
Net interest income.... 110,021 120,025 135,466 162,821 192,618 44,271 52,594
Provision for loan
losses................ 7,077 9,750 14,134 17,013 9,599 867 2,379
-------- -------- -------- -------- -------- ------- --------
Net interest income
after provision for
loan losses........... 102,944 110,275 121,332 145,808 183,019 43,404 50,215
Total other income..... 49,940 53,868 69,635 82,405 84,871 21,006 20,494
Total other expenses... 87,574 91,830 103,875 123,460 140,304 34,141 35,078
-------- -------- -------- -------- -------- ------- --------
Income before income
taxes................. 65,310 72,313 87,092 104,753 127,586 30,269 35,631
Income taxes........... 20,968 23,278 29,579 34,973 42,445 10,254 11,563
-------- -------- -------- -------- -------- ------- --------
Net income............. $ 44,342 $ 49,035 $ 57,513 $ 69,780 $ 85,141 $20,015 $ 24,068
======== ======== ======== ======== ======== ======= ========
Per Common Share Data:
Earnings per share-
basic................. $ 0.46 $ 0.50 $ 0.59 $ 0.71 $ 0.85 $ 0.20 $ 0.24
Earnings per share-
diluted............... $ 0.44 $ 0.49 $ 0.57 $ 0.69 $ 0.83 $ 0.19 $ 0.23
Cash dividends
declared.............. $ 0.16 $ 0.18 $ 0.20 $ 0.23 $ 0.32 $ 0.07 $ 0.09
Performance Ratios:
Return on assets....... 1.56% 1.53% 1.51% 1.58% 1.66% 1.70% 1.64%
Return on equity....... 18.48% 18.00% 19.44% 20.92% 22.15% 21.76% 23.00%
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
December 31, March 31,
------------------------------------------------------ ---------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total cash and cash
equivalents........... $ 166,433 $ 387,755 $ 195,902 $ 247,493 $ 311,850 $ 288,677 $ 289,776
Available-for-sale
securities............ 872,379 516,623 700,775 408,083 721,268 541,840 881,544
Held-to-maturity
securities............ 283,906 762,023 817,124 1,210,071 1,377,102 1,254,194 1,417,413
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total securities...... 1,156,285 1,278,646 1,517,899 1,618,154 2,410,220 2,084,711 2,298,957
Trading account
securities............ 13,507 20,159 31,812 98,332 62,737 52,049 40,576
Loans, net of unearned
discounts............. 1,592,806 1,931,213 2,347,973 2,608,967 3,197,673 2,719,212 3,205,888
Less allowance for loan
losses................ 24,310 29,010 35,514 43,297 49,122 44,643 49,484
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net loans............. 1,568,496 1,902,203 2,312,459 2,565,670 3,148,551 2,674,569 3,156,404
Premises and equipment
net................... 17,729 18,382 21,799 27,404 37,382 29,984 40,331
Broker/dealer customer
receivables........... 1,130 13,444 11,699 7,695 2,505 11,554 42,166
Other assets........... 82,229 74,453 108,839 127,263 149,659 139,611 160,527
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets.......... $3,005,809 $3,695,042 $4,200,409 $4,692,011 $5,811,054 $4,992,478 $6,028,737
========== ========== ========== ========== ========== ========== ==========
Total deposits......... $2,154,390 $2,574,770 $2,976,430 $3,251,242 $3,947,275 $3,509,202 $3,943,347
Short-term borrowings
and other
liabilities........... 299,076 444,413 358,476 492,601 667,352 556,905 830,745
Federal Home Loan Bank
advances.............. 321,541 372,799 396,109 389,884 731,610 340,866 777,673
Long term debt......... 6,383 6,381 156,065 156,252 6,372 156,298 6,372
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities..... 2,781,390 3,398,363 3,887,080 4,289,979 5,352,609 4,563,271 5,558,137
Capital trust pass-
through securities... 49,884 49,896 49,887 49,899
Total shareholders'
equity................. 224,419 296,679 313,329 352,148 408,549 379,320 420,701
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
shareholders'
equity............... $3,005,809 $3,695,042 $4,200,409 $4,692,011 $5,811,054 $4,992,478 $6,028,737
========== ========== ========== ========== ========== ========== ==========
</TABLE>
FFC. The selected consolidated financial data of FFC for each of the periods
indicated in the five-year period ended December 31, 1998 have been derived
from the audited consolidated financial statements of FFC. The selected
consolidated financial data for each of the three-month periods ended March 31,
1998 and 1999 have been derived from the unaudited consolidated financial
statements of FFC, which reflect, in the opinion of management of FFC, all
adjustments (which include only normal recurring adjustments) necessary for the
fair presentation of the financial data for such periods. The results of such
interim periods are not necessarily indicative of the results for the full
year. The selected financial data should be read in conjunction with FFC's
consolidated financial statements, including the notes thereto, and
"Management's Discussion and Analysis of FFC's Financial Condition and Results
of Operations" incorporated by reference into this Proxy Statement/Prospectus.
8
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended
For the Year Ended December 31, March 31,
------------------------------------------------ ------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operating
Results Data:
Net Interest Income.... $ 5,056 $ 6,588 $ 7,973 $ 8,915 $ 10,039 $ 2,331 $ 2,746
Provision for Possible
Loan and Lease
Losses................ 325 356 310 350 480 120 160
Net Earnings........... 1,330 1,741 2,350 2,604 2,848 570 737
Period End Balance Sheet
Data:
Total Assets........... $125,589 $157,755 $183,973 $212,492 $269,234 $224,014 $260,965
Total Deposits......... 113,038 142,922 167,445 193,260 247,711 204,576 238,927
Shareholders' Equity... 8,885 11,047 13,173 15,962 18,885 16,556 19,487
Per Common Share Data:
Basic Earnings Per
Common Share*......... $ 1.43 $ 1.89 $ 2.53 $ 2.78 $ 3.01 $ 0.60 $ 0.77
Diluted Earnings Per
Common Share*......... $ 1.43 $ 1.88 $ 2.50 $ 2.71 $ 2.91 $ 0.59 $ 0.75
Cash Dividends......... $ 0.175 $ 0.175 $ 0.20 $ 0.25 $ 0.25 $ -- $ --
Book Value*............ $ 9.63 $ 11.97 $ 14.15 $ 16.95 $ 19.83 $ 17.56 $ 20.44
Performance Ratios:
Return on Assets....... 1.14% 1.22% 1.38% 1.31% 1.22% 1.04% 1.12%**
Return on Equity....... 15.27% 18.01% 20.02% 19.48% 17.37% 14.04% 15.36%**
</TABLE>
- --------
* On April 18, 1996, the FFC Shareholders approved a two-for-one stock split.
All data with respect to earnings per share has been adjusted to reflect
this transaction. In addition, the earnings per share calculations have been
retroactively adjusted to present basic and diluted earnings per share in
accordance with Statement of Financial Accounting Standards 128, "Earnings
Per Share," which became effective in 1997.
** Return on assets and return on equity are presented on an annualized basis
based on actual results for the three months ended March 31, 1998 and 1999.
9
<PAGE>
NCBC and FFC Equivalent Pro Forma Per Common Share Data(1)
The following unaudited table presents selected historical per common share
data for NCBC and FFC, NCBC pro forma per common share data and FFC equivalent
pro forma per common share data on the basis described in Note (1). All common
share data have restated to reflect stock splits and stock dividends during the
periods presented. This data should be read in conjunction with the historical
financial statements of NCBC (incorporated by reference into this Proxy
Statement/Prospectus) and of FFC (incorporated by reference in this Proxy
Statement/Prospectus).
<TABLE>
<CAPTION>
Per Share of Common Stock
-------------------------------------------------------
Net Income Net Income Cash Book Value
(Basic)(2) (Diluted)(2) Dividends(3)(4) (End of Period)
---------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
NCBC--Historical
Year ended December
31, 1996............. $0.59 $0.57 $0.20 $ 3.22
Year ended December
31, 1997............. $0.71 $0.69 $0.23 $ 3.60
Year ended December
31, 1998............. $0.85 $0.83 $0.32 $ 4.03
Three Months ended
March 31, 1999....... $0.24 $0.23 $0.09 $ 4.14
FFC--Historical(5)
Year ended December
31, 1996............. $2.53 $2.50 $0.20 $14.15
Year ended December
31, 1997............. $2.78 $2.71 $0.25 $16.95
Year ended December
31, 1998............. $3.01 $2.91 $0.25 $19.83
Three Months ended
March 31, 1999....... $0.77 $0.75 $0.00 $20.44
NCBC--Pro forma(6)
Year ended December
31, 1996............. $0.59 $0.58 $0.20 $ 3.25
Year ended December
31, 1997............. $0.72 $0.69 $0.23 $ 3.65
Year ended December
31, 1998............. $0.85 $0.83 $0.32 $ 4.09
Three Months ended
March 31, 1999....... $0.24 $0.23 $0.09 $ 4.21
FFC--Equivalent pro
forma
Year ended December
31, 1996............. $1.68 $1.65 $0.57 N/A
Year ended December
31, 1997............. $2.05 $1.97 $0.66 N/A
Year ended December
31, 1998............. $2.42 $2.37 $0.91 $11.66
Three Months ended
March 31, 1999....... $0.68 $0.66 $0.26 $12.00
</TABLE>
- --------
(1) Represents NCBC data equivalent to one share of FFC Common Stock computed
by multiplying NCBC pro forma data by the Exchange Ratio of 2.8502.
(2) Net income per common share (basic) is based on the average number of
common shares outstanding during the periods presented. Diluted net income
per common share includes an adjustment for the assumed conversion of all
potentially dilutive securities.
(3) NCBC declared quarterly dividends per common share of $0.07 beginning the
fourth quarter of 1997. In the second quarter of 1998, the dividend was
increased to $0.08 per common share and was increased to $0.09 in the
fourth quarter of 1998.
10
<PAGE>
(4) FFC's management has for the past seven years declared dividends. In 1998,
a $0.25 per share cash dividend was declared. The Merger Agreement
restricts the right of FFC to declare dividends. In addition, FFC is
prohibited from declaring or paying stock dividends or making any other
distribution in respect of FFC Common Stock if a cash dividend would affect
the ability of the parties to obtain pooling of interest treatment for the
Merger. FFC expects to pay a cash dividend consistent with its past
practices in June or July of 1999. However, the proceeds of such dividends
may not be used to purchase shares of FFC Common Stock pursuant to FFC's
Dividend Reinvestment Plan.
(5) On April 18, 1996, the FFC Shareholders approved a two-for-one stock split.
All data with respect to earnings per share have been adjusted to reflect
this transaction. In addition, the earnings per share calculations have
been retroactively adjusted to present basic and diluted earnings per share
in accordance with Statement of Financial Accounting Standards 128,
"Earnings Per Share," which became effective in 1997.
(6) NCBC pro forma gives effect to the assumed business combination between
NCBC and FFC, accounted for as a pooling of interests for the periods
indicated.
11
<PAGE>
RISK FACTORS
Transfer of Control to NCBC
FFC Shareholders currently control FFC through their ability to elect the
Board of Directors of FFC and to vote on various matters affecting FFC. The
Merger will transfer control of FFC from the FFC Shareholders to NCBC. As of
the Effective Time, FFC Shareholders will become shareholders of NCBC, a multi-
bank holding company. As a result of the Merger, former FFC Shareholders will
no longer have the ability to control or influence the management policies of
FFC's operations, and as shareholders of NCBC, their ability to influence the
management policies of NCBC will be limited due to the fact that they will hold
a relatively small percentage of the voting stock of NCBC.
Less Attractive Acquisition Target
The NCBC Charter and Bylaws contain several provisions which may make NCBC a
less attractive target for acquisition by anyone who does not have the support
of NCBC's Board of Directors. Such provisions include, among other things, the
requirement of a supermajority vote of shareholders or directors to approve
certain business combinations and other corporate actions, a minimum price
provision, several special procedural rules and a staggered Board of Directors.
FFC's Charter and Bylaws do not contain similar restrictions. See "Comparison
of Rights of FFC and NCBC Shareholders--Changes in Control."
12
<PAGE>
INFORMATION CONCERNING THE SPECIAL MEETING
The Special Meeting
The Special Meeting will be held at the main office of First Bank at 1691
North Mt. Juliet Road, Mt. Juliet, Tennessee 37122, on , 1999 at p.m.,
local time. The purpose of the Special Meeting is to consider and vote upon the
approval and adoption of the Merger Agreement. Only holders of FFC Common Stock
of record at the close of business on June 25, 1999, the Record Date, will be
entitled to receive notice of and to vote at the Special Meeting. As of the
Record Date, there were [998,827] shares of FFC Common Stock outstanding and
entitled to vote, with each such share entitled to one vote.
Vote Required
Under the TBCA, the affirmative vote of the holders of a majority of the
outstanding shares of FFC Common Stock entitled to vote is required to approve
and adopt the Merger Agreement. On the Record Date, there were approximately
[531] holders of record of FFC Common Stock. On such date, the directors and
officers of FFC and their affiliates beneficially owned, and expressed their
intent to vote in favor of the Merger, a total of approximately [30.61]% of the
outstanding shares of FFC Common Stock. At the date of this Proxy
Statement/Prospectus, neither NCBC nor any of its affiliates owned any of the
outstanding shares of FFC Common Stock.
Voting of Proxies
Shares of FFC Common Stock represented by properly executed proxies received
at or prior to the Special Meeting will be voted at the Special Meeting in the
manner specified by the holders of such shares. Properly executed proxies which
do not contain voting instructions will be voted FOR approval and adoption of
the Merger Agreement. Any stockholder present in person or by proxy (including
broker non-votes) at the Special Meeting who abstains from voting will be
counted for purposes of determining whether a quorum exists. With respect to
all matters considered at the Special Meeting, an abstention (or broker non-
vote) has the same effect as a vote AGAINST the proposal.
Each holder of FFC Common Stock is requested to complete, date and sign the
accompanying proxy and return it promptly to FFC in the enclosed postage
prepaid envelope.
If any other matters are properly presented at the Special Meeting, the
person or persons named in the form of proxy enclosed with this Proxy
Statement/Prospectus and acting thereunder will have discretion to vote on such
matters in accordance with their best judgment, unless the proxy indicates
otherwise. FFC has no knowledge of any matters to be presented at the Special
Meeting, other than the matters described in this Proxy Statement/Prospectus.
Revocability of Proxies
The grant of a proxy on the enclosed form of proxy does not preclude an FFC
Shareholder from voting in person or otherwise revoking a proxy. Attendance at
the Special Meeting will not in and of itself constitute revocation of a proxy.
An FFC Shareholder may revoke a proxy at any time prior to its exercise by
delivering to Robert L. Callis, Secretary of FFC, a duly executed revocation or
proxy bearing a later date or by voting in person at the Special Meeting.
Solicitation of Proxies
FFC will bear the cost of the solicitation of proxies in connection with the
Special Meeting and both NCBC and FFC will bear the cost of printing and
mailing this Proxy Statement/Prospectus based on the relative asset sizes of
the parties at December 31, 1998. In addition to solicitation by mail, the
directors, officers and
13
<PAGE>
employees of FFC may solicit proxies by telephone or telegram or in person.
Such persons will not be additionally compensated, but will be reimbursed for
reasonable out-of-pocket expenses incurred in connection with such
solicitation. Arrangements may also be made with brokerage firms, nominees,
fiduciaries and other custodians, for the forwarding of solicitation materials
to the beneficial owners of shares held of record by such persons, and FFC will
reimburse such persons for their reasonable out-of-pocket expenses in
connection therewith.
Other Matters to be Considered
It is not anticipated that any matter other than matters described above
will be brought before the Special Meeting.
THE MERGER
The descriptions of the terms and conditions of the Merger, the Merger
Agreement, and any related documents in this Proxy Statement/Prospectus are
qualified in their entirety by reference to the copy of the Merger Agreement
attached as Appendix A to this Proxy Statement/Prospectus, to the Tennessee
statute governing dissenters' rights, a copy of which is attached as Appendix C
to this Proxy Statement/Prospectus, to the Registration Statement of which this
Proxy Statement/Prospectus is a part and to the exhibits to the Registration
Statement.
General
Subject to the terms of the Merger Agreement, FFC will be merged with and
into NCBC in accordance with Tennessee law. NCBC will be the surviving
corporation of the Merger and the separate existence of FFC will cease
following the Merger. First Bank will become a wholly owned subsidiary of NCBC
as a result of the Merger. If all conditions to consummation of the Merger are
satisfied or waived, unless the Merger Agreement is terminated in accordance
with its terms, Articles of Merger reflecting the Merger will be filed with the
Secretary of State of the State of Tennessee, and the Merger will then become
effective at the Effective Time. It is presently contemplated that the
Effective Time will occur as soon as practicable after the Special Meeting and
the receipt of the approval of the FRB and the expiration of a statutory
Department of Justice 30-day waiting period following FRB approval, subject to
the conditions described under "The Merger--Covenants; Conditions;
Representations and Warranties; Amendment and Termination."
At the Effective Time, each of the issued and outstanding shares of FFC
Common Stock (other than treasury shares and shares held by FFC Shareholders
who perfect their dissenters' rights) will be converted, without any action on
the part of the holders of those shares, into the right to receive that number
of shares of NCBC Common Stock equal to:
(1) The quotient of (a) the Net Purchase Price (as defined below) divided
by (b) the NCBC Market Price Per Share (as defined below),
divided by
(2) The sum of the number of shares of FFC Common Stock outstanding at and
as of the Effective Time and the number of shares of FFC Common Stock
issuable pursuant to options to purchase FFC Common Stock to the extent
that such options are outstanding at and as of the Effective Time.
"Net Purchase Price" means $74,250,000, which is the gross purchase price of
$75,000,000 less FFC's investment banker's fee of $750,000. "Market Price Per
Share" means $24.25, which was the closing price per share of NCBC Common Stock
on the Nasdaq National Market (as reported in the Wall Street Journal) on April
12, 1999. Based on the above exchange ratio calculation, NCBC and FFC
anticipate an Exchange Ratio of 2.8502 shares of NCBC Common Stock for each
share of FFC Common Stock.
The Exchange Ratio was calculated based on the assumption that the market
value of a share of NCBC Common Stock is $24.25. The market value of a share of
NCBC Common Stock may decrease or increase. Accordingly, the market price may
be less than $24.25 on the date the Merger is consummated. The Exchange Ratio
will not be recalculated to adjust for decreases or increases in the market
value of NCBC Common Stock.
14
<PAGE>
Under the terms of the Merger Agreement, if as of the closing date of the
Merger the consolidated shareholders' equity of FFC, exclusive of any
securities gains or losses, is less than $18,885,000, which was the
consolidated shareholders' equity as of December 31, 1998, NCBC may terminate
the Merger Agreement. In addition, if FFC effects any stock splits, reverse
stock splits, stock dividends or similar changes in its capital accounts prior
to the Effective Time, the Exchange Ratio will be adjusted in such a manner as
the NCBC Board deems in good faith to be fair and reasonable in order to give
effect to such changes. Each of the shares of FFC Common Stock held by FFC or
any of its subsidiaries or by NCBC or any of its subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, will be canceled and retired at the Effective Time and no exchange
or payment will be made with respect to such shares.
FFC Shareholders who properly exercise and perfect their dissenters' rights
under the TBCA will be paid the statutory fair value of their shares in cash.
In the event NCBC changes the number of shares of NCBC Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend or similar recapitalization, and the record date therefor is prior to
the Effective Time, the ratio under which shares of FFC Common Stock will be
converted into shares of NCBC Common Stock will be proportionally adjusted.
On the trading day prior to the date of this Proxy Statement/Prospectus, the
closing sale price of a share of NCBC Common Stock on the Nasdaq National
Market was $23.125. Based on such price, the equivalent value of a share of FFC
Common Stock would be approximately $65.9109 based on the Expected Exchange
Ratio. The market price of NCBC Common Stock is subject to decreases and
increases and could be more or less than its market price on the date of this
Proxy Statement/Prospectus. Any such change will cause a corresponding change
in the equivalent value of a share of FFC Common Stock. FFC Shareholders are
urged to obtain updated market information concerning NCBC Common Stock.
No fractional shares of NCBC Common Stock will be issued as a result of the
Merger. In lieu of the issuance of fractional shares, each FFC Shareholder who
otherwise would be entitled to a fractional share of NCBC Common Stock will
receive a cash payment (without interest) equal to the product of the Market
Price Per Share ($24.25) multiplied by the fractional share of NCBC Common
Stock otherwise issuable.
Background of the Merger
The managements of NCBC and FFC began considering a potential combination in
April of 1999. A letter of intent was finalized and executed as of April 17,
1999. The Merger Agreement was approved by the FFC Board of Directors on May 1,
1999, and by the NCBC Board of Directors on April 28, 1999. The Merger
Agreement was executed as of May 1, 1999.
Reasons for the Merger; Board of Director's Recommendation
Reasons for the Merger. The Board of Directors of FFC believes that the
Merger is in the best interests of FFC and the FFC Shareholders. The market
value of the NCBC Common Stock to be issued in the Merger (based on the market
value of a share of NCBC Common Stock on the date of this Proxy
Statement/Prospectus) represents a substantial premium over the book value of
FFC Common Stock. The dividends currently paid on the 2.8502 shares of NCBC
Common Stock into which each share of FFC Common Stock would be converted
(based on the Expected Exchange Ratio) are greater than those currently paid on
FFC Common Stock. Furthermore, for the first time, FFC Shareholders will have
substantial liquidity in their investment because, unlike FFC Common Stock,
NCBC Common Stock is listed and actively traded. The Merger also will allow the
FFC Shareholders to own shares in NCBC, which has significantly greater
financial resources and many more banking locations in more diversified markets
than FFC has at the present time and can expect to have in the foreseeable
future. Additionally, after the Merger, the resources of NCBC should enable
First Bank to enhance its services to its customers and the Middle Tennessee
market in which it operates.
The Board of Directors of NCBC also believes that the Merger is in the best
interests of NCBC and the NCBC Shareholders. The Merger will allow NCBC to
establish additional "hubs" for NCBC's network of
15
<PAGE>
in-store supermarket branches in the Nashville metropolitan market, and should
facilitate further expansion in that fast-growing market. In addition, FFC has
a strong commercial loan base which should enable NCBC to augment its small
business and commercial lending services in the region.
FFC entered into the Merger Agreement after consideration of various factors
affecting the determination of the value for FFC Common Stock in the context of
a merger transaction, including among other factors the histories, financial
conditions, results of operations, and dividend records of FFC and NCBC, and
the business prospects of FFC, both separately and as a combined entity with
NCBC. In addition, the Board of Directors of FFC considered the effect of the
Merger on the employees, customers and suppliers of FFC, First Bank and the
community where First Bank currently operates. The Board of Directors of FFC
also considered, in approving the Merger Agreement, the advice of Morgan Keegan
& Company, Inc. ("Morgan Keegan"), financial advisor to FFC, that the Exchange
Ratio is fair, from a financial point of view, to the FFC Shareholders. See "--
Opinion of Financial Advisor to FFC." The terms of the Merger Agreement are the
result of arms-length negotiations between FFC and NCBC.
Board of Director's Recommendation. The Board of Directors of FFC believes
that the proposed Merger is in the best interests of FFC and the FFC
Shareholders and recommends that FFC Shareholders vote for approval and
adoption of the Merger Agreement. The Board of Directors of FFC approved the
Merger Agreement at its Special Meeting on May 1, 1999, which was attended by
all FFC directors.
Stock Option Agreement
Concurrently with the execution of the Merger Agreement, NCBC and FFC
entered into a Stock Option Agreement, dated as of May 1, 1999. The Option
Agreement was requested by NCBC to enhance the likelihood that the Merger will
be successfully consummated in accordance with the terms contemplated by the
Merger Agreement. Pursuant to the Option Agreement, FFC granted NCBC an option
to purchase, subject to adjustments in certain circumstances, the number of
authorized but unissued shares of FFC Common Stock, such that immediately
following such purchase NCBC would own 19.5% of the then issued and outstanding
shares of FFC Common Stock (approximately [241,952] shares, assuming [998,827]
shares of FFC Common Stock are issued and outstanding on the date the option is
exercised), giving effect to the exercise by NCBC of the option, at a price per
share in cash equal to two times the book value of a share of FFC Common Stock
as of March 31, 1999 (the "Option").
The Option Agreement is intended to increase the likelihood that the Merger
will be consummated in accordance with the terms of the Merger Agreement.
Consequently, certain aspects of the Option Agreement may have the effect of
discouraging parties who might be interested in acquiring all of or a
significant interest in FFC from considering or proposing such an acquisition,
even if such persons were prepared to offer to pay consideration to the FFC
Shareholders that has a higher value than the shares of NCBC Common Stock to be
received for each share of FFC Common Stock in the Merger. The acquisition of
FFC by an entity other than NCBC could cause the Option to become exercisable.
The existence of the Option could significantly increase the cost to a
potential acquiror of acquiring FFC compared to its cost had the Option
Agreement not been entered into. Such increased cost might discourage a
potential acquiror from considering or proposing an acquisition or might result
in a potential acquiror proposing to pay a lower per share price to acquire FFC
than it might otherwise have proposed to pay.
Subject to applicable law, and NCBC's material compliance with the covenants
of the Merger Agreement, NCBC may exercise the Option, in whole only, at any
time, in any of the following circumstances:
(1) FFC or its board of directors enters into an agreement or recommends to
FFC shareholders an agreement (other than the Merger Agreement) under
which any entity, person or group (collectively, "Person"), within the
meaning of Section 13(d)(3) of the Exchange Act, would: (a) merge or
consolidate with, acquire 9.9% or more of the assets or liabilities of,
or enter into any similar transaction with FFC, or (b) purchase or
otherwise acquire (including by merger, reorganization,
16
<PAGE>
consolidation, share exchange or similar transaction) securities
representing 9.9% or more of FFC's voting shares;
(2) any Person (other than NCBC or any of its subsidiaries) acquires the
beneficial ownership or the right to acquire beneficial ownership of
securities which, when aggregated with other such securities owned by
such Person, represent 25% or more of the voting shares of FFC (the
term "beneficial ownership" for the purposes of the Merger Agreement
has the meaning set forth in Section 13(d) of the Exchange Act, and the
regulations promulgated under the Exchange Act);
(3) after having received a fairness opinion from its financial advisor
that the transaction is fair to FFC shareholders from a financial point
of view, failure of the board of directors of FFC to recommend the
Merger to the shareholders at the time of the calling of the special
meeting of the shareholders pursuant to the Merger Agreement; or
(4) failure of the shareholders to approve by the earliest of (a) the
termination of the Merger Agreement or (b) November 30, 1999, the
Merger by the required affirmative vote at a meeting of the
shareholders, because a third Person (other than NCBC or a subsidiary
of NCBC) announces publicly or communicates, in writing, to FFC a
proposal to (i) acquire FFC (by merger, reorganization, consolidation,
the purchase of 9.9% or more of its assets or liabilities, or any other
similar transaction), (ii) purchase or otherwise acquire securities
representing 9.9% or more of the voting shares of FFC or (iii) change
the composition of the board or directors of FFC.
As provided in the Option Agreement, if NCBC is entitled to and wishes to
exercise the Option, it is obligated to give written notice of its intention
to exercise the Option and the place and date for the closing of the exercise
(which date may not be later than ten business days from the date such notice
is mailed). If any law, regulation or other restriction will not permit such
exercise to be consummated during this ten-day period, the date for the
closing of such exercise will be within five days following the cessation of
the restriction on consummation.
The purchase of shares of FFC Common Stock pursuant to the Option is
subject to compliance with applicable law, including receipt of any approvals
required under the BHC Act, and the rules and regulations promulgated
thereunder.
Neither of the parties to the Option Agreement may assign any of its rights
or obligations under the Option Agreement or the Option created thereunder to
any other person prior to the time the Option becomes exercisable.
The number of shares of FFC Common Stock subject to the Option will be
increased to the extent that additional shares of FFC Common Stock are issued
or otherwise become outstanding (other than pursuant to the Option Agreement)
such that, after such issuance, the number of Option Shares will continue to
equal 19.5% of the FFC Common Stock then issued and outstanding. In the event
of any change in the FFC Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, exchanges of shares or the like, the
number and kind of shares or securities subject to the Option and the purchase
price per share of FFC Common Stock will be appropriately adjusted. If, before
the Option terminates or is exercised, FFC is acquired by another party,
consolidates with or merges into another corporation or liquidates, NCBC will
thereafter receive, upon exercise of the Option, the securities or properties
to which a holder of the number of shares of FFC Common Stock then deliverable
upon the exercise thereof would have been entitled upon such acquisition,
consolidation, merger, reorganization or liquidation, and FFC must take all
steps in connection with such acquisition, merger, reorganization or
liquidation as may be necessary to assure that the provisions of the Option
Agreement will thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any securities or property thereafter deliverable
upon exercise of the Option.
The Option will terminate upon the earliest of:
. the mutual agreement of NCBC and FFC;
17
<PAGE>
. the thirtieth day following the termination of the Merger Agreement for
any reason other than a material noncompliance or default by NCBC with
respect to its obligations thereunder; or
. the date of termination of the Merger Agreement if the termination is
due to a material noncompliance or default by NCBC with respect to its
obligations thereunder, but only if the Option has been exercised before
the termination of the Option Agreement.
Interests of Certain Persons in the Merger
First Bank and NCBC, as the corporate successor to FFC and as a condition to
closing, will enter into employment agreements with David Major, who serves as
President of First Bank, and James S. Short, who serves as Executive Vice
President of First Bank (collectively, these agreements are referred to as the
"Employment Agreements"). The Employment Agreements will each have a term of
five years. Such term will be automatically renewed for one additional year at
the end of each calendar year unless terminated as provided in the Employment
Agreements. The Employment Agreements provide for termination with cause (as
defined therein) and for termination by the respective employee upon 90 days
written notice. Pursuant to their respective Employment Agreement, Mr. Major
and Mr. Short will receive an annual base salary and are entitled to receive a
bonus of up to 30% of base salary upon the attainment of prearranged plan
performance goals, which bonus is guaranteed through December 31, 1999.
Additional benefits to Mr. Major and Mr. Short include participation in
medical, dental and group term life insurance plans; participation in a
qualified retirement plan; participation in NCBC's 1994 Incentive Stock Option
Plan; and an automobile allowance.
In connection with the Merger Agreement, and as a condition to closing, Mr.
Major, Mr. Short and six of the other eight members of the FFC Board agreed to
enter into certain employment agreements and/or non-competition agreements with
NCBC and First Bank.
Opinion of Financial Advisor to FFC
FFC retained Morgan Keegan as its financial advisor to render an opinion to
the FFC Board of Directors concerning the fairness, from a financial point of
view, to FFC Shareholders of the Exchange Ratio pursuant to the Merger
Agreement. Morgan Keegan was retained by FFC on the basis of, among other
things, its experience and expertise in the bank and thrift industries. As part
of its investment banking business, Morgan Keegan is regularly engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for other various
purposes.
On June 1, 1999, Morgan Keegan delivered its written opinion to the Board of
Directors of FFC to the effect that, as of June 1, 1999 and based upon and
subject to certain matters stated in such opinion, the Exchange Ratio is fair,
from a financial point of view, to FFC Shareholders.
The full text of the written opinion of Morgan Keegan, which sets forth the
assumptions made, matters considered and limitations on the review undertaken,
is attached hereto as Appendix B and is incorporated herein by reference. FFC
Shareholders are urged to read this opinion carefully in its entirety. Morgan
Keegan's opinion is directed only to the fairness to the FFC Shareholders, from
a financial point of view, of the Exchange Ratio and does not address any other
aspect of the Merger or related transactions and does not constitute a
recommendation to any FFC Shareholder as to how such FFC Shareholder should
vote at the Meeting. The summary of the opinion of Morgan Keegan set forth in
this Proxy Statement/Prospectus is qualified in its entirety by reference to
the full text of such opinion.
In arriving at its opinion, Morgan Keegan reviewed the Merger Agreement and
held discussions with certain senior officers, directors and other
representatives and advisors of FFC and certain senior officers and other
representatives and advisors of NCBC concerning the businesses, operations and
prospects of FFC and
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<PAGE>
NCBC. Morgan Keegan examined certain publicly available business and financial
information relating to FFC and NCBC as well as certain financial forecasts, to
the extent publicly available, and other data for FFC and NCBC which were
provided to Morgan Keegan by or otherwise discussed with the respective
management teams of FFC and NCBC, including information relating to certain
strategic implications and operational benefits anticipated from the Merger.
Morgan Keegan reviewed the financial terms of the Merger as set forth in the
Merger Agreement in relation to, among other things: current and historical
market prices and trading volumes of FFC and NCBC Common Stock; the historical
and publicly available projected earnings and operating data of FFC and NCBC;
and the capitalization and financial condition of FFC and NCBC. Morgan Keegan
considered, to the extent publicly available, the financial terms of certain
other similar transactions recently effected which Morgan Keegan considered
relevant in evaluating the Merger and analyzed certain financial, stock market
and other publicly available information relating to the businesses of other
companies whose businesses Morgan Keegan considered relevant in evaluating
those of FFC and NCBC. Morgan Keegan also considered the relative contributions
of FFC and NCBC to the combined company. In addition to the foregoing, Morgan
Keegan conducted such other analyses and examinations and considered such other
financial, economic and market criteria as Morgan Keegan deemed appropriate to
arrive at its opinion. Morgan Keegan noted that its opinion was necessarily
based upon information available, and financial, stock market and other
conditions and circumstances existing and disclosed, to Morgan Keegan as of the
date of its opinion.
In conducting its review and rendering its opinion, Morgan Keegan assumed
and relied, without independent verification, upon the accuracy and
completeness of all financial and other information publicly available or
furnished to or otherwise reviewed by or discussed with Morgan Keegan. With
respect to financial forecasts and other information provided to or otherwise
reviewed by or discussed with Morgan Keegan, the management teams of FFC and
NCBC advised Morgan Keegan that such forecasts and other information were
reasonably prepared on a basis reflecting the best currently available
estimates and judgements of the respective management teams of FFC and NCBC as
to the future financial performance of FFC and NCBC and the strategic
implications and operational benefits anticipated from the Merger. Morgan
Keegan assumed, with the consent of the Board of Directors of FFC, that the
Merger will be accounted for as a pooling of interests in accordance with
generally accepted accounting principles and as a tax-free reorganization for
federal income tax purposes. Morgan Keegan did not express any opinion as to
what the value of NCBC Stock actually will be when issued pursuant to the
Merger or the price at which NCBC Common Stock will trade subsequent to the
Merger. In addition, Morgan Keegan did not make or obtain an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of FFC or NCBC nor did Morgan Keegan make any physical inspection of the
properties or assets of FFC or NCBC. Morgan Keegan was not asked to consider,
and its opinion does not address, the relative merits of the Merger as compared
to any alternative business strategies that might exist for FFC or the effect
of any other transaction in which FFC might engage. In addition, Morgan Keegan
was asked to and did assist in recommending the specific consideration payable
in the Merger, along with FFC and NCBC through arms-length negotiations. No
other limitations were imposed by FFC on Morgan Keegan with respect to the
investigations made or procedures followed by Morgan Keegan in rendering its
opinion.
The following is a summary of the principal analyses performed by Morgan
Keegan in connection with its opinion.
Summary Transaction Analysis. Morgan Keegan reviewed the terms of the
proposed transaction, including the consideration to be received and the
aggregate transaction value. Morgan Keegan reviewed the implied value of the
consideration offered based upon a market price per share of $23.16, which is
the average of the closing price per share of NCBC Common Stock on the Nasdaq
National Market (as reported by Bloomberg) during the five trading day period
from May 25, 1999 through June 1, 1999. This indicates an implied value of
$66.01 per share of FFC Common Stock (assuming 953,328 shares outstanding and
120,935 options outstanding at March 31, 1999 and an exchange ratio of 2.8502
shares of NCBC Common Stock for one share of FFC Common Stock, which includes
any Stock Equivalents). The implied aggregate transaction value is
$71.7 million. Morgan Keegan calculated that as of June 1, 1999, the aggregate
transaction value
19
<PAGE>
represented 26.61% of the total assets of FFC at December 31, 1999, 3.79x FFC's
stated book value at December 31, 1998 and 25.16x FFC's earnings for the year
ended December 31, 1998.
Contribution Analysis. Morgan Keegan reviewed certain historical financial
and operating information for FFC, NCBC and the pro forma combined entity
resulting from the Merger based on financial data reported by FFC and NCBC.
Morgan Keegan analyzed the relative balance sheet contribution of FFC and NCBC
for certain data to the combined company on a pro forma basis as of December
31, 1998. This analysis indicated that FFC would have contributed 4.43% to
combined total assets, 5.35% to combined loans (net of allowances for loan
losses), 5.90% to deposits and 4.42% to tangible equity. Morgan Keegan also
analyzed the relative income statement contribution of FFC and NCBC for certain
data to the combined company on a pro forma basis. This analysis indicated that
FFC would have contributed 4.95% to combined net interest income for the latest
twelve months ("LTM") ended December 31, 1998, 3.31% to combined pretax income
and 3.32% to combined net income. Based on the Exchange Ratio, the holders of
outstanding FFC Common Stock would own approximately 2.64% of NCBC outstanding
shares and 2.88% of NCBC outstanding shares plus outstanding options.
Comparable Company Analysis for FFC. Morgan Keegan reviewed and compared
certain financial information relating to FFC to corresponding financial
information, public market multiples and ratios for eight publicly traded banks
headquartered in the Southeast that it deemed to be comparable to FFC. The
companies Morgan Keegan used for the purposes of this analysis were Auburn
National Bancorporation, Inc., Bank of South Carolina Corporation, Community
Financial Group, Inc., Lamar Capital Corporation, South Alabama Bancorporation,
Inc., Southwest Georgia Financial Corporation, Summit Bank Corporation and
Summit Financial Corporation (collectively, the "Comparable Companies"). Morgan
Keegan calculated a range of market multiples for the Comparable Companies by
dividing market value per share as of May 24, 1999 by each such company's LTM
earnings per share ended March 31, 1999 and by dividing market value by
tangible book value reported as of March 31, 1999. The last trade of FFC Common
Stock prior to the announcement of the Merger and known to FFC occurred on
April 7, 1999. For the LTM results ended March 31, 1999, Morgan Keegan also
compared certain ratios, (including, among other things, return on latest
assets, return on latest equity, loan loss reserve to total loans, total equity
capital to total assets, and total loans to total deposits) of the Comparable
Companies to FFC.
FFC Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/ Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Total Loans Total Assets Total Deposits
------ ---------- ------------- ------------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 25.03x 3.18x 1.54% 12.71% 2.23% 20.64% 94.06%
Low..................... 10.35x 1.15x 0.78% 5.33% 1.10% 8.73% 61.49%
Mean.................... 18.84x 1.93x 1.15% 10.32% 1.63% 11.81% 75.05%
Median.................. 18.61x 1.95x 1.14% 10.47% 1.71% 10.85% 72.21%
------ ----- ----- ------ ----- ------ ------
FFC..................... 11.94x 1.86x 1.16% 15.57% 1.04% 7.43% 78.68%
</TABLE>
Comparable Company Analysis for NCBC. Morgan Keegan reviewed and compared
certain financial information relating to NCBC to corresponding financial
information, public market multiples and ratios for eight publicly traded banks
that it deemed to be comparable to NCBC based on asset size and market areas.
The companies Morgan Keegan used for the purposes of this analysis were
BancorpSouth, Inc., CCB Financial Corporation, Centura Banks, Inc.,
Cullen/Frost Bankers, Inc., International Bancshares Corporation, One Valley
Bancorp, Inc., Trustmark Corporation and Whitney Holding Corporation
(collectively, the "NCBC Comparable Companies"). Morgan Keegan calculated a
range of market multiples for the Comparable Companies by dividing market value
per share as of May 24, 1999 by each such company's LTM earnings per share
ended March 31, 1999 and by dividing market value by tangible book value
reported as of March 31, 1999. For the LTM results ended March 31, 1999, Morgan
Keegan also compared certain ratios (including, among other things, return on
latest assets, return on latest equity, loan loss reserve to total loans, total
equity capital to total assets, and total loans to total deposits) of the NCBC
Comparable Companies to NCBC.
20
<PAGE>
NCBC Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/ Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Total Loans Total Assets Total Deposits
------ ---------- ------------- ------------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 18.98x 3.29x 1.61% 18.93% 1.77% 10.91% 96.17%
Low..................... 12.75x 1.67x 0.98% 9.01% 1.28% 6.88% 47.79%
Mean.................... 17.21x 2.46x 1.23% 14.40% 1.43% 8.70% 78.76%
Median.................. 17.43x 2.41x 1.22% 14.43% 1.38% 8.60% 80.14%
------ ----- ----- ------ ----- ------ ------
NCBC.................... 27.47x 5.82x 1.48% 21.20% 1.54% 6.98% 81.30%
</TABLE>
High-Value Comparable Company Analysis for NCBC. Morgan Keegan reviewed and
compared certain financial information relating to NCBC to corresponding
financial information, public market multiples and ratios for nine highly-
valued publicly traded banks that it deemed to be comparable to NCBC based on
their high trading multiples and performance characteristics. The companies
Morgan Keegan used for the purposes of this analysis were AmSouth
Bancorporation, BB&T Corporation, Fifth Third Bancorp, Firstar Corporation,
Northern Trust Corporation, State Street Corporation, SunTrust Banks, Inc.,
Wachovia Corporation and Zions Bancorporation (collectively, the "High-Value
Comparable Companies"). Morgan Keegan calculated a range of market multiples
for the High-Value Comparable Companies by dividing market value per share as
of May 24, 1999 by each such company's LTM earnings per share ended March 31,
1999 and by dividing market value by tangible book value reported as of March
31, 1999. For the LTM results ending March 31, 1999, Morgan Keegan also
compared certain ratios (including, among other things, return on latest
assets, return on latest equity, loan loss reserve to total loans, total equity
capital to total assets, and total loans to total deposits) of the High-Value
Comparable Companies to NCBC.
NCBC High-Value Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/ Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Total Loans Total Assets Total Deposits
------ ---------- ------------- ------------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 33.88x 6.24x 1.89% 23.28% 1.85% 11.06% 111.52%
Low..................... 19.11x 2.93x 0.91% 14.68% 1.05% 4.65% 22.25%
Mean.................... 25.17x 4.63x 1.36% 18.41% 1.41% 7.54% 89.10%
Median.................. 26.79x 5.06x 1.35% 17.93% 1.40% 7.37% 95.65%
------ ----- ----- ------ ----- ------ -------
NCBC.................... 27.47x 5.82x 1.48% 21.20% 1.54% 6.98% 81.30%
</TABLE>
Stock Return Analysis. Morgan Keegan reviewed and analyzed the price
performance and the historical trading volume for NCBC's Common Stock as well
as the indices of the NCBC Comparable Companies, the High-Value Comparable
Companies, the Nasdaq Bank index, the S&P Bank index and the S&P 500.
Compound Annual Growth Rate--excluding dividends
<TABLE>
<CAPTION>
(ending 5/24/99)
---------------------------------------
1 Year 3 Year 5 Year 10 Year Volume(1)
------ ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C>
NCBC.................................... 7.74 46.51 34.08 23.83 0.31%
NCBC comp index......................... (8.14) 22.31 21.66 16.09 0.14%
High-value comp index................... 27.93 41.00 32.22 23.98 0.29%
Nasdaq Bank index....................... (17.53) 20.31 21.00 14.82 NM
S&P Bank index(2)....................... (4.62) 23.04 23.19 20.84 NM
S&P 500................................. 20.56 25.43 24.10 15.33 NM
</TABLE>
- --------
(1) Average daily volume for YTD 1999 divided by fully diluted shares
outstanding.
(2) Began on May 21, 1993.
21
<PAGE>
Morgan Keegan considers NCBC Common Stock to be liquid and marketable. FFC
Common Stock is privately held and relatively thinly traded. Morgan Keegan
placed little weight on the market price of FFC Common Stock in its analyses.
Analysis of Selected Comparable Mergers and Acquisitions. In order to assess
market pricing for comparable mergers, Morgan Keegan reviewed overall merger
transactions in the banking industry using five different sets of parameters.
Morgan Keegan selected 17 transactions occurring between January 1, 1998 and
May 18, 1999, involving selling banks located within the Southeast with total
assets between $200 million and $500 million, 18 transactions occurring between
January 1, 1998 and May 18, 1999, involving selling banks located in the
Southeast with deal values between $50 million and $100 million, 66
transactions occurring between January 1, 1998 and May 18, 1999, involving
selling banks within the United States with total assets between $200 million
and $500 million, 43 transactions occurring between January 1, 1998 and May 18,
1999 within the United States with deal values between $50 million and $100
million and 15 transactions occurring between January 1, 1998 and May 18, 1999,
involving selling banks in Tennessee. Because no transaction was considered
identical to the Merger, the medians of the overall transaction multiples were
considered more relevant than the multiples for any specific transaction.
Medians of Comparable Mergers
<TABLE>
<CAPTION>
Total Assets
$200MM-$500MM Deal Value $50MM-$100MM
----------------------- -----------------------
United States Southeast United States Southeast Tennessee FFC
------------- --------- ------------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Price/EPS (x)........... 22.27 21.61 22.33 21.99 21.43 25.16
Price/Book (x).......... 2.93 2.80 3.15 3.05 2.78 3.79
Price/Assets (%)........ 26.08 30.79 28.43 32.50 27.78 26.61
Price/Deposits (%)...... 30.97 35.92 33.97 38.03 32.08 28.93
</TABLE>
No company or transaction used in the comparable companies and comparable
transactions analyses for comparative purposes is identical to FFC or the
Merger. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations concerning differences in financial and
operating characteristics of the companies and other factors. Mathematical
analysis (such as determining the average or median) is not, in itself, a
meaningful method of using comparable company or transaction data.
Discounted Cash Flow Analysis. Morgan Keegan performed a discounted cash
flow analysis of the projected cash flow available for dividends of FFC for
fiscal years 1999 through 2003, based on projections provided by FFC
management. Using this information, Morgan Keegan calculated a range of equity
values for FFC based on the sum of (a) the present value of the cash flow
available for dividends to FFC and (b) the present value of the estimated
terminal value for FFC assuming that it was sold at the end of fiscal year
2003. In performing its discounted cash flow analysis, Morgan Keegan assumed,
among other things, discount rates of 11.0% to 15.0% and terminal multiples of
net income of 12.0x to 16.0x. Those discount rates and terminal multiples
reflect Morgan Keegan's qualitative judgments concerning the specific risk
associated with such an investment and the historical and projected operating
performance of FFC. This analysis resulted in a range of equity values for FFC
of $61.2 million to $91.2 million, with a median of $75.1 million, or $56.95 to
$84.92 per share (shares outstanding plus options outstanding), with a median
of $69.91 per share.
The summary of the Morgan Keegan opinion set forth above does not purport to
be a complete description of the analyses performed by Morgan Keegan. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. Morgan Keegan believes that its analyses and
the summary set forth above must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the above
summary, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses set forth in the
opinion. In addition, Morgan Keegan may have deemed various assumptions more or
less probable than other assumptions, so that the ranges of
22
<PAGE>
valuations resulting from any particular analysis described above should not be
taken to represent the actual value of FFC or the combined company.
In performing its analyses, Morgan Keegan made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of FFC or NCBC. The
analyses performed by Morgan Keegan are not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely
as part of Morgan Keegan's analysis of the fairness, from a financial point of
view, of the consideration to be paid by NCBC. The analyses do not purport to
be appraisals or to reflect the prices at which a company might actually be
sold or the prices at which any securities may trade at the present time or at
any time in the future.
FFC has agreed to pay Morgan Keegan a retainer fee of $15,000, payable in
advance upon the signing of its engagement letter, an opinion fee of $70,000,
payable in cash promptly upon delivery by Morgan Keegan of an Opinion, and a
transaction fee equal to $750,000, which includes the retainer fee and the
opinion fee, payable in cash at the closing of the Merger. FFC has also agreed
to reimburse Morgan Keegan for its reasonable out-of-pocket expenses and to
indemnify Morgan Keegan against certain liabilities, including liabilities
under the federal securities laws.
Exchange of Certificates Representing FFC Common Stock
Promptly after the Effective Time, NCBC shall cause The Bank of New York,
the Exchange Agent, to mail to each holder of record of any of the issued and
outstanding shares of FFC Common Stock materials that will contain instructions
with respect to the surrender of certificates representing shares of FFC Common
Stock and the distribution of certificates representing shares of NCBC Common
Stock. Shares of FFC Common Stock will be surrendered to the Exchange Agent.
Upon surrender to the Exchange Agent of one or more certificates for shares
of FFC Common Stock for cancellation, together with properly completed
transmittal materials, the Exchange Agent will distribute to each FFC
Shareholder a certificate representing the shares of NCBC Common Stock into
which the holder's shares of FFC Common Stock have been converted, together
with all undelivered dividends or distributions in respect of such shares
(without interest thereon). Cash will be paid in lieu of the issuance of
fractional shares of NCBC Common Stock. FFC Shareholders will not be entitled
to receive interest on any such cash to be received in the Merger. See "--
General."
Until they have surrendered their FFC Common Stock certificates for
exchange, FFC Shareholders will not be entitled to receive any dividends or
other distributions that may be declared and payable to holders of record of
NCBC Common Stock. Upon the surrender of FFC Common Stock certificates,
however, NCBC Common Stock certificates (together with all such withheld
dividends or other distributions with respect to the certificates, without
interest) and any withheld cash payment for a fractional share interest will be
delivered and paid (without interest). Neither NCBC nor the Exchange Agent will
be liable to a FFC Shareholder for any NCBC Common Stock or dividends thereon
delivered in good faith to a public official in accordance with any state's
abandoned property, escheat, or other similar law. After the Effective Time,
certificates representing shares of FFC Common Stock converted in the Merger
into NCBC Common Stock will be deemed for all other corporate purposes to
evidence ownership of the shares of NCBC Common Stock into which they were
converted.
Covenants; Conditions; Representations and Warranties;
Amendment and Termination
FFC Covenants. Pursuant to the Merger Agreement, during the period from the
date of the Merger Agreement and continuing until the Effective Time, FFC has
agreed to operate its business only in the usual,
23
<PAGE>
regular and ordinary course and has agreed not to take certain actions (unless
expressly contemplated in the Merger Agreement) without the prior written
consent of NCBC, including, among other things:
. amending its Charter, Bylaws or other governing instruments;
. incurring any additional debt obligation or other obligation for
borrowed money in excess of an aggregate of $100,000, except in the
ordinary course of business consistent with past practices, or imposing,
or suffering the imposition, on any asset of any lien or permitting any
such lien to exist on any of its assets;
. directly or indirectly redeeming, repurchasing, or otherwise acquiring
any of its capital stock or securities convertible into capital stock;
. declaring or paying any dividend, or making any other distribution in
respect of FFC's capital stock that would result in a total consolidated
stockholder's equity of FFC of less than $18,885,000 (exclusive of any
unrealized securities gains or losses);
. issuing, selling, pledging, encumbering, authorizing the issuance of,
entering into any contract to issue, sell, pledge, encumber or authorize
the issuance of or otherwise permitting to become outstanding any
additional shares of FFC Common Stock or any other capital stock of FFC
except pursuant to the Merger Agreement and its employee stock option
plans;
. adjusting, splitting, combining or reclassifying any capital stock or
issuing or authorizing the issuance of any other securities in respect
of or in substitution for shares of FFC Common Stock or selling,
leasing, mortgaging or otherwise disposing of or otherwise encumbering
any shares of capital stock of any subsidiary or any asset having a book
value in excess of $25,000, other than under employee stock option plans
or sales of repossessed property;
. except for purchases of certain marketable securities, purchasing any
securities or making any material investment in any person other than a
wholly owned subsidiary or otherwise acquiring direct or indirect
control over any other persons, except in connection with foreclosures
in the ordinary course of business, acquisitions of control by a
depository institution subsidiary in its fiduciary capacity or the
creation of new wholly owned subsidiaries organized to conduct
activities permitted by the Merger Agreement;
. making any significant 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
generally accepted accounting principles;
. entering into, modifying, amending or terminating any material contract
or waiving, releasing, compromising or assigning any material rights or
claims, except in accordance with past practice;
. taking any action that would prevent the Merger from qualifying for
pooling of interests accounting treatment; or
. commencing any litigation other than in accordance with past practice.
FFC also has agreed not to take certain enumerated actions relating to the
conduct of its business or pertaining to its employees and employee benefit
arrangements.
In the Merger Agreement, FFC has agreed to cooperate in the preparation and
filing of the Registration Statement and the distribution of this Proxy
Statement/Prospectus. The Board of Directors of FFC is required to recommend
(subject to compliance with their fiduciary duties as advised by counsel) to
the FFC Shareholders approval of the matters submitted for approval in
connection with the Merger. The Board of Directors and the officers of FFC are
obligated (subject to compliance with their fiduciary duties as advised by
counsel) to use their reasonable efforts to obtain the approval of the FFC
Shareholders of the Merger Agreement, and to take all appropriate actions to
cause the Merger to be consummated.
24
<PAGE>
Conditions to Consummation of the Merger. The obligations of FFC and NCBC to
consummate the Merger are conditioned upon the following:
. approval of the Merger Agreement by FFC Shareholders owning a majority
of the outstanding shares of FFC Common Stock under applicable law;
. approval of the Merger by the FRB, and the absence of any objection by
the United States Justice Department;
. each party obtaining all consents required for the consummation of the
Merger or for preventing any default under any contract or permit, which
if such consent is not obtained or made would be reasonably likely to
have a material adverse effect;
. no court or governmental or regulatory authority enacting, issuing,
promulgating, enforcing or entering any law or order that prohibits,
restricts or makes illegal consummation of the Merger;
. the absence of any stop order suspending the effectiveness of the
Registration Statement of which this Proxy Statement/Prospectus; the
absence of any action, suit, proceeding or investigation by the SEC to
suspend the effectiveness the Registration Statement; and receipt of all
necessary approvals under state securities laws or the Securities Act or
the Exchange Act relating to the issuance of trading of the shares of
NCBC Common Stock pursuant to the Merger;
. the Nasdaq National Market approving for listing the shares of NCBC
Common Stock to be issued pursuant to the Merger, subject to official
notice of issuance; and
. agreement among NCBC and FFC on certain retention contracts and
employment agreements for key employees.
Consummation of the Merger by the parties is subject to the further
conditions, including among others, that:
. the representations and warranties of FFC and NCBC contained in the
Merger Agreement are true and correct in all material respects as of the
closing date, and the various covenants of FFC and NCBC have been duly
performed and complied with pursuant to the Merger Agreement and
. NCBC and FFC have received certain legal opinions and also a negative
assurance letter from FFC's independent auditors (as to FFC only) that
there are no known factors related to FFC that would cause the Merger
not to be eligible for pooling of interests accounting treatment.
In addition to the conditions described in the preceding sentence, the
obligation of NCBC to consummate the Merger is subject to the following
conditions:
. exclusive of gains or losses on transactions in securities, total
consolidated stockholders equity of FFC as of the closing date is not
less than $18,885,000;
. FFC owning, free and clear of any liens, not less than 100.0% of the
outstanding capital stock of First Bank;
. from and after December 31, 1998, neither FFC nor First Bank has
consummated any extraordinary sale of assets nor any material investment
portfolio restructuring; and
. each of David Major, James S. Short and six of the other eight members
of the FFC Board have entered into certain employment and/or non-compete
agreements with NCBC and First Bank.
It is anticipated that the foregoing conditions will be complied with but
FFC and NCBC may waive any condition to their obligations to consummate the
transaction, except requisite approvals of FFC Shareholders and regulatory
authorities. The Merger Agreement may be terminated by either of the parties if
all of the conditions to closing have not been satisfied or waived on or before
November 30, 1999.
Representations and Warranties. The Merger Agreement contains a number of
representations and warranties by NCBC and FFC. The material accuracy of all
those representations and warranties as of the closing date is a condition to
the obligation of each company to consummate the Merger. The representations
and warranties relate to matters such as the organization of each company, the
authority of each company to
25
<PAGE>
transact its business, to enter into the Merger Agreement and to consummate the
transactions contemplated by the Merger Agreement, the capitalization of each
company, the filing of certain reports by each company with regulatory
authorities and the presentation of information contained in those reports, the
absence of certain changes in FFC's financial condition or business since
December 31, 1998, the payment of taxes and filing of tax returns, FFC's
allowance for possible loan losses, the absence of material litigation, the
compliance with laws by each company, the information provided by each company
for use in the Registration Statement, FFC's employee benefit plans and the
employment contracts of FFC.
Amendment and Termination. The Merger Agreement may be amended by agreement
between FFC and NCBC, except that no amendment reducing the consideration
received by FFC Shareholders may be made unless approved by the FFC
Shareholders. The Merger Agreement may be terminated by either FFC or NCBC upon
the failure of conditions to be met on or before November 30, 1999. In such
event, the Merger Agreement will be of no further force or effect, and neither
party will have any further liability to the other.
Beneficial Ownership of FFC Common Stock
FFC is authorized to issue 5,000,000 shares of FFC Common Stock. As of May
27, 1999 there were 998,827 shares of FFC's Common Stock issued and outstanding
and 75,436 shares reserved for options.
The following table sets forth certain information regarding the beneficial
ownership of the FFC Common Stock by (i) persons owning five percent or more of
FFC's Common Stock, (ii) directors of FFC, and (iii) the directors and
executive officers of FFC as a group. This information is based on information
provided to FFC by the FFC named persons as of May 27, 1999. This table
includes, in the ownership and percentage calculations, shares subject to
options which may be exercised within the next 60 days by all directors and
executive officers who are option holders in accordance with Rule 13d-3(d)(1)
under the Exchange Act. Each director's percentage of ownership is based on
such director's pro forma ownership (including shares subject to being obtained
by the exercise of options within the next 60 days) and the actual number of
shares outstanding (998,827) at said date, plus that number of shares
obtainable by the named person on the exercise of such options. All outstanding
options held by the FFC named persons will be exercisable upon the consummation
of the Merger.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership(l) Percent of Class
------------------- ----------------------- ----------------
<S> <C> <C>
5% Holders:
M. Dale McCulloch................. 57,027(2) 5.31%
818 Moreland Hills Drive
Mt. Juliet, TN 37122
Directors:
Harold G. Bone.................... 37,502(3) 3.45%
Robert L. Callis, Esq............. 33,452(4) 3.11%
Morris D. Ferguson, M.D........... 17,300 1.61%
Arthur P. Gardner................. 9,607(5) *
M. Dale McCulloch................. 57,027(2) 5.31%
David Major....................... 43,050 4.01%
Dan E. Midgett.................... 23,700(6) 2.21%
Monty Mires....................... 23,053 2.15%
James S. Short.................... 39,892(7) 3.71%
Harold W. Sutton.................. 15,092(8) 1.40%
Directors and Officers As a Group
(14 Persons):.................... 369,663(9) 34.41%
</TABLE>
- --------
* Less than 1%.
(1) The percentages shown are based on 1,074,263 shares (total shares
outstanding of 998,827 plus total options outstanding of 75,436 as of May
27, 1999). The shares shown in each Director's column, and in the group
total, include shares beneficially owned at May 27, 1999 by the named
individual and those
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<PAGE>
obtainable by the exercise of all options granted (assuming the Merger is
consummated). The percentages include, as to each individual and group
listed, the number of shares of Common Stock deemed to be owned by such
holder pursuant to Rule 13d-3(d)(1) of the Exchange Act. Under that Rule, a
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares voting power or investment power with respect to
the security. Voting power includes the power to vote or to direct the
voting of the security. Investment power includes the power to dispose or
to direct the disposition of the security. Unless otherwise indicated, a
shareholder possesses sole voting and investment power with respect to all
of the shares shown opposite her or his name, including shares held in her
or his individual retirement account. The following Directors and Executive
Officers hold the specified number of options exercisable upon consummation
of the Merger: Mr. Bone (3,804), Mr. Callis (2,536), Dr. Ferguson (2,536),
Mr. Gardner (2,536), Mr. Major (11,488), Mr. McCulloch (2,536), Mr. Midgett
(2,536), Mr. Mires (5,300), Mr. Short (9,392), Mr. Sutton (5,300),
Mr. Davenport (2,848), Mr. Henson (2,048), Mrs. Kimble (6,120), and
Mr. Penuel (4,896). Shares held in self-directed Individual Retirement
Accounts have been shown in each Director's total, which shares are shown
as the individual possessing sole voting and dispositive authority.
(2) This Director disclaims voting and investment authority as to 25,148
shares controlled by his spouse. Included in this Director's total are
1,848 shares which belong to such Director's minor children.
(3) This Director has voting and investment authority with respect to 15,742
of the shares indicated as custodian for his children.
(4) This Director disclaims voting and investment authority as to 4,971 shares
controlled by his spouse. This Director also shares voting and dispositive
authority as to 400 of the shares reflected in the total that are part of
a trust.
(5) This Director shares voting and investment authority as to 1,653 shares
held jointly with his spouse and disclaims voting and investment authority
as to 713 shares controlled by his spouse.
(6) A plan of this Director's company (within the meaning of the Employee
Retirement Income Security Act of 1974), owns 4,800 of the shares
indicated. This Director disclaims voting and investment authority as to
1,400 shares controlled by his spouse. Included in this Director's total
are 1,000 shares which belong to such Director's minor child.
(7) Included in this Director's total are 201 shares which belong to such
Director's minor step-children.
(8) This Director shares voting and investment authority as to 8,519 shares
held jointly with his spouse and disclaims voting and investment authority
as to 302 shares controlled by his spouse.
(9) This total includes all options attributable to such Executive Officers
and Directors as well as shares as to which such persons might disclaim
voting or investment authority.
Resale of NCBC Common Stock by FFC Shareholders and Affiliates
The shares of NCBC Common Stock received by FFC Shareholders in the Merger
have been registered under the Securities Act and, upon consummation of the
Merger, will be freely transferable under the Securities Act, except for
shares issued to any FFC shareholder who may be deemed an "Affiliate" (as
defined below) of FFC, within the meaning of Rule 145 under the Securities
Act. "Affiliates" are generally defined as persons who control, are controlled
by, or are under common control with FFC at the time of the Special Meeting
(generally, directors and certain executive officers of FFC and major
shareholders of FFC). Generally, all shares of NCBC Common Stock received by
such Affiliates may not be sold by them until NCBC publishes at least 30 days
of the combined results of operations of NCBC and FFC. Shares of NCBC Common
Stock received by non-Affiliates in connection with the Merger will be freely
transferable under the Securities Act.
In addition, Affiliates of FFC may not sell their shares of NCBC Common
Stock acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act covering such shares or in
compliance with Rule 145 or another applicable exemption from the registration
requirements of the Securities Act. In general, under Rule 145, for one year
following the Effective Time (the "Restricted Period"), an Affiliate (together
with certain related persons) is entitled to sell shares of NCBC Common Stock
acquired in connection with the Merger only through unsolicited "broker
transactions" or in transactions directly with a "market maker," as such terms
are defined in Rule 144 under the Securities Act. Additionally, the number of
shares that may be sold by an Affiliate (together with certain related persons
and certain persons
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<PAGE>
acting in concert) within any three-month period during the Restricted Period
for purposes of Rule 145 may not exceed the greater of (1) one percent of the
outstanding shares of NCBC Common Stock or (2) the average weekly trading
volume of such stock during the four calendar weeks preceding such sale. Rule
145 is available to Affiliates only if NCBC remains current with its
information filings with the SEC under the Exchange Act. Following the
Restricted Period, an Affiliate may sell such NCBC Common Stock free of such
manner of sale or volume limitations, provided that NCBC was current with its
Exchange Act information filings and such Affiliate was not then an Affiliate
of NCBC. Two years after the Effective Time, an Affiliate may sell shares of
NCBC Common Stock without any restrictions so long as such Affiliate was not
and had not been for at least three months prior thereto, an Affiliate of NCBC.
Regulatory and Other Legal Considerations
The Merger is subject to approval by the FRB under the BHC Act. The BHC Act
provides that the FRB will not approve a transaction (1) which would result in
a monopoly, or which would be in furtherance of any combination or conspiracy
to monopolize or to attempt to monopolize the business of banking in any part
of the United States or (2) the effect of which in any section of the country
may be substantially to lessen competition, or to tend to create a monopoly, or
which in any other manner would be in restraint of trade, unless the FRB finds
that the anticompetitive effects of the proposed transaction are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the community to be served. In conducting
its review of any application for approval, the FRB is required to consider the
financial and managerial resources and future prospects of the company or
companies and the banks concerned, and the convenience and needs of the
community to be served. The BHC Act also requires the FRB to notify the
Attorney General of the United States of the approval of any transaction. Any
action brought under the antitrust laws by the Attorney General (acting through
the Department of Justice) arising out of any transaction must be commenced by
the Department of Justice prior to the earliest date the transaction could be
consummated, which, with certain limited exceptions, is 30 days after the FRB
approval. The BHC Act further requires that consummation of approved
acquisitions or mergers be delayed for a period of not less than 30 days
following the date of FRB approval during which time complaining parties may
obtain a review of the FRB's order by filing a petition requesting that the
order be set aside in the United States Court of Appeals for the District of
Columbia Circuit, or in the United States Court of Appeals for the circuit in
which the complaining party has its principal place of business. If no action
based on the antitrust laws is commenced before the termination of the 30-day
period, the acquisition or merger may not be attacked thereafter in any
judicial proceeding on the ground that it alone and of itself constituted a
violation of any antitrust laws other than Section 2 of the Sherman Antitrust
Act.
The Merger is also subject to approval by the State of Tennessee Department
of Financial Institutions (the "Department"). Under Tennessee law, an
application must be filed with the Department immediately after the
acquisition. The application will be officially filed when, in the sole
determination of the commissioner, the application is deemed complete. An
application consists of:
. a copy of the application filed with the FRB;
. certified copies of the authorizing resolutions of each board of
directors showing approval by a majority of each respective board;
. evidence of proper action by the board of directors of any merging
national bank; and
. proof of publication of a notice of the merger.
The Department will approve the Merger if it determines that: (1) the
resulting state bank meets the requirements of state law as to the formation of
a new state bank; (2) the Merger Agreement provides an adequate capital
structure, including surplus, in relation to the deposit liabilities of the
resulting bank and its other activities which are to continue or are to be
undertaken; (3) the Merger Agreement is fair; and (4) the Merger is not
contrary to public policy.
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<PAGE>
The BHC Act discussed above provides for the publication of notices and the
administrative hearings relating to the federal or state filings noted above
and permits interested parties to intervene in the proceedings. If interested
parties intervene, administrative and judicial proceedings relating to both
federal and state filings could substantially delay the regulatory approvals
required for consummation of the Merger.
The management of NCBC does not believe that the consummation of the Merger
will violate any antitrust or applicable state laws, but there can be no
assurance that the FRB, the Department of Justice or other regulatory
authorities will concur in this assessment.
Accounting Treatment
NCBC will account for the Merger as a pooling of interests. Under the
pooling of interests method of accounting, the historical basis of the assets
and liabilities of NCBC and FFC will be combined at the Effective Time and
carried forward at their previously recorded amounts, the stockholders' equity
accounts of NCBC and FFC will be combined on the consolidated balance sheet of
NCBC and no goodwill or other intangible assets will be created. Consolidated
financial statements of NCBC issued after the Merger will be restated
retroactively to reflect the consolidated operations of NCBC and FFC as if the
Merger had taken place prior to the periods covered by such consolidated
financial statements.
Federal Income Tax Considerations
The following is a summary of certain federal income tax consequences of the
Merger and the exchange by the holders of FFC Common Stock of such shares for
shares of NCBC Common Stock. This discussion does not address all aspects of
taxation that may be relevant to particular FFC Shareholders in light of their
personal investment or tax circumstances, or to certain types of FFC
Shareholders (including insurance companies, financial institutions, broker-
dealers, foreign corporations, persons who receive stock through the exercise
of stock options or otherwise as compensation for services rendered and persons
who are not citizens or residents of the United States) subject to special
treatment under the federal income tax laws, nor does it discuss any state,
local or foreign tax considerations. Accordingly, each FFC Shareholder is urged
to consult his or her own tax advisor as to the specific tax consequences of
the Merger, including the applicable federal, state, local and foreign tax
consequences of the Merger.
Neither NCBC nor FFC has requested or will receive an advance ruling from
the Internal Revenue Service (the "Service") as to the federal income tax
consequences of the Merger. Instead, King & Spalding, counsel to NCBC, will
deliver an opinion to FFC and NCBC relating to certain federal income tax
consequences of the Merger. Such opinion will be based upon certain
representations of fact provided by NCBC and FFC. Such representations of fact
have not been independently verified by King & Spalding. Such opinion will be
also based upon the Code, regulations thereunder, administrative rulings and
practice by the Service, and judicial authority, in each case existing at the
time such opinion is delivered. Any change in applicable law or pertinent facts
could affect the continuing validity of such opinion and this discussion. In
addition, a tax opinion is not binding upon the Service, and there can be no
complete assurance, and none is hereby given, that the Service will not take a
position which is contrary to one or more positions reflected in the tax
opinion, or that such opinion will be upheld by the courts if challenged by the
Service. However, NCBC and FFC have agreed in the Merger Agreement not to take
any action which would disqualify the Merger as a reorganization which is tax-
free to the FFC Shareholders pursuant to Section 368(a) of the Code. Based on
the foregoing, it is anticipated that the tax opinion will state, among other
matters, that:
. the Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code;
. no gain or loss will be recognized by NCBC or FFC as a result of the
Merger;
. no gain or loss will be recognized by the Shareholders of FFC upon the
exchange of FFC Common Stock for NCBC Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional
share interest in NCBC Common Stock), or by the holders of FFC options
upon the conversion of such options into options with respect to NCBC
Common Stock (assuming that the
29
<PAGE>
FFC options were granted by FFC as compensation in connection with the
provision of services by the holders thereof to FFC and First Bank);
. the receipt of cash in lieu of fractional shares of NCBC Common Stock
will be treated as if fractional shares were distributed as part of the
exchange and then were redeemed by NCBC, and the FFC Shareholder
generally will recognize capital gain or loss in such exchange equal to
the difference between the cash received and the tax basis of such
fractional share;
. the aggregate tax basis of the shares of NCBC Common Stock received by a
FFC Shareholder pursuant to the Merger will be the same as the aggregate
tax basis of the shares of FFC Common Stock surrendered in exchange
therefor (excluding any basis allocable to a fractional share of NCBC
Common Stock for which cash is received);
. a FFC Shareholder who perfects his or her dissenter's rights under
Tennessee law and who receives payment in cash for the "fair value" of
his or her shares of FFC Common Stock will be treated as having
exchanged such stock for cash in a redemption subject to Section 302 of
the Code, and the FFC Shareholder generally will recognize capital gain
or loss in such exchange equal to the difference between the cash
received and the tax basis of such stock; and
. the holding period of the shares of NCBC Common Stock received by a FFC
Shareholder will include the holding period or periods of the shares of
FFC Common Stock exchanged therefor, provided that the shares of FFC
Common Stock are held as a capital asset within the meaning of Section
1221 of the Code at the Effective Time.
EACH HOLDER OF SHARES OF FFC COMMON STOCK IS URGED TO CONSULT SUCH HOLDER'S
PERSONAL TAX AND FINANCIAL ADVISORS AS TO THE SPECIFIC FEDERAL INCOME TAX
CONSEQUENCES TO SUCH HOLDER, BASED ON SUCH HOLDER'S OWN PARTICULAR STATUS AND
CIRCUMSTANCES, AND ALSO AS TO ANY STATE, LOCAL, FOREIGN OR OTHER TAX
CONSEQUENCES ARISING OUT OF THE MERGER.
THE DISCUSSION SET FORTH ABOVE DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN
TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY EXISTING
PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING
ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY
OF THIS DISCUSSION. EACH FFC SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR
HER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
Expenses
All expenses incurred by or on behalf of the parties in connection with the
Merger Agreement and the transactions contemplated by the Merger Agreement are
to be borne by the party incurring the expense, except that FFC will bear the
cost of the solicitation of proxies in connection with the Special Meeting and
both NCBC and FFC will bear all costs of printing and distributing this Proxy
Statement/Prospectus based on the relative asset sizes of the parties at
December 31, 1998.
Stock Exchange Listing
NCBC Common Stock is listed on the Nasdaq National Market. NCBC will use
its best efforts to cause the shares of NCBC Common Stock to be issued under
the Merger Agreement to be approved for listing on the Nasdaq National Market,
subject to official notice of issuance, prior to the Effective Time.
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<PAGE>
Dissenters' Rights
The following is a summary of Chapter 23 of the TBCA ("Chapter 23") and the
procedures that an FFC Shareholder must follow to dissent from the Merger and
perfect his or her dissenters' rights. This summary is qualified in its
entirety by reference to Chapter 23, which is reprinted in full as Appendix C
to this Proxy Statement/Prospectus. Appendix C should be reviewed carefully by
any FFC Shareholder who wishes to perfect such dissenters' rights. Failure to
strictly comply with the procedures set forth in Chapter 23 will result in the
loss of dissenters' rights.
If the Merger Agreement and the transactions contemplated thereby are
consummated, any FFC Shareholder who properly perfects his or her statutory
dissenters' rights in accordance with Chapter 23 has the right to obtain, in
cash, payment of the fair value of such FFC Shareholder's shares of FFC Common
Stock. Fair value is determined immediately prior to the consummation of the
Merger and excludes any appreciation or depreciation in anticipation of the
Merger.
To exercise dissenters' rights under Chapter 23, a FFC Shareholder must:
(1) deliver to NCBC, before the Special Meeting, written notice of his or
her intent to demand payment for his or her shares of FFC Common Stock
if the Merger is consummated, and
(2) not vote his or her shares in favor of approving and adopting the
Merger Agreement.
A FFC Shareholder who does not satisfy these two requirements is not
entitled to payment for his or her shares of FFC Common Stock under Chapter
23. In addition, any FFC Shareholder who returns a signed proxy but fails to
provide instructions as to the manner in which such shares are to be voted
will be deemed to have voted in favor of approving and adopting the Merger
Agreement and will not be entitled to assert dissenters' rights.
A FFC Shareholder may assert dissenters' rights as to fewer than all the
shares registered in his or her name only if he or she dissents with respect
to all shares beneficially owned by any one beneficial FFC Shareholder and
notifies NCBC in writing of the name and address of each person on whose
behalf he or she is asserting dissenters' rights. The rights of such a partial
dissenter are determined as if the shares as to which he or she dissents and
his or her other shares are registered in the names of different FFC
Shareholders.
If the Merger Agreement is approved and adopted at the Special Meeting,
NCBC must deliver a written dissenters' notice (the "Dissenters' Notice") to
all FFC Shareholders who satisfied the two requirements of Chapter 23
described above. The Dissenters' Notice must be sent no later than 10 days
after the Effective Time and must:
. state where the demand for payment must be sent and where and when
certificates for certificated shares must be deposited;
. inform holders of uncertificated shares to what extent transfer of those
shares will be restricted after the demand for payment is received;
. supply a form for demanding payment that includes the date of the
announcement of the Merger to the public (May 3, 1999) and requires that
the FFC Shareholder asserting dissenters' rights certify whether or not
he or she acquired beneficial ownership of such shares prior to May 3,
1999;
. set a date by which NCBC must receive the demand for payment (which date
may not be fewer than one nor more than two months after the Dissenters'
Notice is delivered); and
. be accompanied by a copy of Chapter 23.
A record FFC Shareholder who receives the Dissenters' Notice must demand
payment, certify that he or she acquired beneficial ownership of such shares
prior to the date set forth in the Dissenters' Notice and deposit his or her
certificates in accordance with the Dissenters' Notice. NCBC may elect to
withhold payment required by Chapter 23 from the dissenting FFC Shareholder
unless such FFC Shareholder was the beneficial owner of
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<PAGE>
the shares prior to the public announcement of the Merger on May 3, 1999. A
dissenting FFC Shareholder will retain all other rights of a FFC Shareholder
until those rights are canceled or modified by the consummation of the Merger.
A record FFC Shareholder who does not demand payment or deposit his or her
share certificates where required, each by the date set in the Dissenters'
Notice, is not entitled to payment for his or her shares under Chapter 23. A
demand for payment may not be withdrawn unless consented to by FFC or NCBC.
NCBC may restrict the transfer of uncertificated shares from the date the
demand for their payment is received until the Merger is consummated. An FFC
Shareholder for whom dissenters' rights are asserted as to uncertificated
shares of FFC Common Stock retains all other rights of a FFC Shareholder until
these rights are canceled or modified by the consummation of the Merger.
At the Effective Time or upon receipt of a demand for payment, whichever is
later, NCBC must offer to pay each dissenting FFC Shareholder who complied with
Chapter 23 the amount NCBC estimates to be the fair value of his or her shares,
plus accrued interest from the Effective Time. The offer of payment must be
accompanied by:
. certain recent NCBC financial statements;
. NCBC's estimate of the fair value of the shares and interest due;
. an explanation of how the interest was calculated;
. a statement of the dissenter's right to demand payment under Chapter 23;
and
. a copy of Chapter 23, if not previously provided to such FFC
Shareholder.
If the Merger is not consummated within two months after the date set for
demanding payment and depositing share certificates, NCBC must return the
deposited certificates and release the transfer restrictions imposed on the
uncertificated shares. If, after such return or release, the Merger is
consummated, NCBC must send a new Dissenters' Notice and repeat the payment
procedure described above.
If the FFC Shareholder is dissatisfied with or rejects NCBC's calculation of
fair value, such dissenting FFC Shareholder must notify NCBC in writing of his
or her own estimate of the fair value of his or her shares and the interest
due, and may demand payment of his or her estimate, if:
. he or she believes that the amount offered by NCBC is less than the fair
value of his or her shares or that the interest due has been calculated
incorrectly;
. NCBC fails to make payment within two months after the date set forth
for demanding payment; or
. NCBC, having failed to consummate the Merger, does not return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within two months after the date set for demanding
payment.
A dissenting FFC Shareholder waives his or her right to dispute NCBC's
calculation of fair value unless he or she notifies NCBC of his or her demand
in writing within one month after NCBC makes or offers payment for his or her
shares.
If a demand for payment by a FFC Shareholder remains unsettled, NCBC must
commence a proceeding in the appropriate court, as specified in Chapter 23,
within two months after receiving the demand for payment, and petition the
court to determine the fair value of the shares and accrued interest. If NCBC
does not commence the proceeding within two months, NCBC is required to pay
each dissenting FFC Shareholder whose demand remains unsettled, the amount
demanded. NCBC is required to make all dissenting FFC Shareholders whose
demands remain unsettled parties to the proceeding and to serve a copy of the
petition upon each dissenting FFC Shareholder. The court may appoint one or
more appraisers to receive evidence and to recommend a decision on fair value.
Each dissenting FFC Shareholder made a party to the proceeding is entitled to
judgment for the fair value of his or her shares plus interest to the date of
judgment.
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In an appraisal proceeding commenced under Chapter 23, the court must
determine the costs of the proceeding, including the reasonable compensation
and expenses of appraisers appointed by the court. The court will assess these
costs against NCBC, except that the court may assess the costs against all or
some of the dissenting FFC Shareholders to the extent the court finds they
acted arbitrarily, vexatiously, or not in good faith in demanding payment under
Chapter 23. The court also may assess the fees and expenses of attorneys and
experts for the respective parties against NCBC if the court finds NCBC did not
substantially comply with the requirements of Chapter 23, or against either
NCBC or a dissenting FFC Shareholder if the court finds that such party acted
arbitrarily, vexatiously, or not in good faith with respect to the rights
provided by Chapter 23.
If the court finds that the services of the attorneys for any dissenting FFC
Shareholder were of substantial benefit to other dissenting FFC Shareholders
similarly situated, and that the fees for those services should not be assessed
against NCBC, the court may award those attorneys reasonable fees out of the
amounts awarded the dissenting FFC Shareholders who were benefited.
COMPARISON OF RIGHTS OF FFC AND NCBC SHAREHOLDERS
Both FFC and NCBC are incorporated under the laws of the State of Tennessee.
FFC Shareholders, whose rights as shareholders are currently governed by
Tennessee law and the FFC Charter and Bylaws, will become, upon consummation of
the Merger, shareholders of NCBC. Their rights as shareholders of NCBC will be
governed by Tennessee law and the NCBC Charter and Bylaws. Certain differences
between the rights of FFC Shareholders and NCBC Shareholders are summarized
below. The summary does not purport to be a complete statement of the rights of
FFC Shareholders as compared with the rights of NCBC Shareholders. The
identification of specific differences is not meant to indicate that other
equally or more significant differences do not exist. The summary is qualified
in its entirety by reference to the TBCA, and the respective Charter and Bylaws
of the two corporations.
Changes in Control. Certain provisions of the NCBC Charter and Bylaws may
have the effect of preventing, discouraging or delaying any change of control
of NCBC. Article Seventh of the NCBC Charter provides for a Board of Directors
consisting of at least three and no more than twenty-five directors and divided
into three classes of directors serving staggered three-year terms. The
classification of directors has the effect of making it more difficult for NCBC
Shareholders to change the composition of the NCBC Board in a short period of
time. At least two annual meetings of NCBC Shareholders, instead of one, will
generally be required to effect a change in a majority of the NCBC Board.
In addition, the NCBC Board can at any time, under the NCBC Charter and
without shareholder approval, issue one or more series of preferred stock. In
some cases, the issuance of preferred stock without shareholder approval could
discourage or make more difficult attempts to take control of NCBC through a
merger, tender offer, proxy contest or otherwise. Preferred stock with special
voting rights or other features issued to persons favoring NCBC's management
could stop a takeover by preventing the person trying to take control of NCBC
from acquiring enough voting shares necessary to take control.
Finally, Article Ninth of the NCBC Charter includes specific provisions with
respect to mergers and other business combinations (as defined in the NCBC
Charter, a "Business Combination"). In general, a Business Combination requires
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of each class of NCBC's capital voting stock to approve the Business
Combination, unless the Business Combination is not with or does not involve:
(1) any Interested Shareholders (as defined in the NCBC Charter) or an
Affiliate (as defined in the NCBC Charter) of an Interested Shareholder
if the following conditions set forth in (2)(a) below are met, in which
event such Business Combination will require only such affirmative vote
as is required by law and the NCBC Charter, or
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<PAGE>
(2) an Interested Shareholder or an Affiliate of an Interested Shareholder
if the following conditions set forth in (a), (b) and (c) are met, in
which event such Business Combination will require only such
affirmative vote as is required by law and the NCBC Charter:
(a) if the Business Combination has been approved by at least two-
thirds of the entire NCBC Board at any time prior to the
consummation of the Business Combination;
(b) the aggregate amount of the cash and the fair market value as of
the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders
of NCBC's outstanding capital voting stock in such Business
Combination will be at least equal to the Minimum Price Per Share
(as defined in the NCBC Charter); and
(c) the consideration to be received by holders of a particular class
of outstanding voting stock will be in cash or in the same form as
the Interested Shareholder has previously paid for shares of such
class of voting stock. If the Interested Shareholder has paid for
shares of any class of voting stock with varying forms of
consideration, the form of consideration for such class of voting
stock will be either cash or the form used to acquire the largest
number of shares of such class of voting stock previously acquired
by it (collectively, the "Fair Price Provisions").
The Fair Price Provisions are designed to discourage attempts to take over
NCBC by utilizing two-tier pricing tactics or by acquiring less than all of
NCBC's outstanding shares. In recent years there have been increasing numbers
of non-negotiated attempts to take over publicly owned corporations. These
attempts typically involve the accumulation of a substantial block of the
target corporation, followed by a merger or other reorganization of the
acquired company on terms determined entirely by the purchaser. The terms of
these attempts may include two-tier pricing, which is the practice of paying
cash to acquire a controlling interest in a company and acquiring the remaining
equity interest by paying the remaining shareholders a price that is lower than
the price paid to acquire the controlling interest or by utilizing a different
form of consideration for payment to the remaining shareholders than was used
to purchase the controlling interest.
While the terms of such a non-negotiated takeover could be fair to NCBC
Shareholders, negotiated transactions may result in more favorable terms to
NCBC Shareholders because of factors such as the timing of the transaction, the
tax effects on the shareholders and the fact that the nature and amount of the
consideration paid to all shareholders will be negotiated by the parties at
arms-length rather than dictated by the purchaser.
In addition, due to the difficulties of complying with the requirements of
the Fair Price Provisions, the Fair Price Provisions generally may discourage
attempts to acquire control of NCBC. As a result, holders of NCBC Common Stock
may be deprived of an opportunity to sell their shares at a premium above the
market price. In addition, the Fair Price Provisions would give veto power to
the holders of a minority of NCBC Common Stock with respect to certain business
combinations that are opposed by more than one-third of the NCBC Board of
Directors and which do not meet the Fair Price Provisions, but which a majority
of shareholders may believe to be desirable and beneficial. Moreover, in any
such business combination not receiving the requisite approval of NCBC
Shareholders or of directors, the minimum price provisions of the Fair Price
Provisions, while providing objective pricing criteria, could be arbitrary and
not indicative of value.
The FFC Charter and Bylaws also contain certain provisions which may have
the effect of preventing, discouraging or delaying a change in control of FFC.
Like NCBC, the FFC Board has the authority to issue shares of preferred stock.
However, unlike NCBC, the FFC Charter does not contain provisions for the
classification of the FFC Board or Fair Price Provisions. The FFC Charter
relies on Tennessee law requiring the affirmative vote of a majority of all the
votes entitled to be cast on the proposed transaction thereon to approve any
merger or consolidation of the corporation with or into any other corporation
and any sale, lease, exchange or disposition of all or substantially all of the
assets of the corporation.
Amendment of Charter. The NCBC Charter requires an affirmative vote by at
least two-thirds of the shares entitled to vote (other than shares held by an
Interested Shareholder) to alter or amend any provisions of
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the Charter unless the Board of Directors, by a two-thirds majority, submits
the proposed amendment to a vote of shareholders in which circumstance a
majority vote of shareholders is needed. The FFC Charter defers to Tennessee
law, which requires a majority vote of the shares entitled to vote to amend its
charter.
Certain Voting Rights. As described more fully above, the NCBC Charter
requires a special shareholder vote to approve certain business combinations,
including mergers, consolidations and sales of assets, involving certain
shareholders. The FFC Charter defers to Tennessee law. Tennessee law requires
approval of any merger, consolidation or sale of substantially all the assets
of a corporation (except for a surviving corporation in certain exempted
mergers) by a vote of a majority of the outstanding shares of the corporation
entitled to vote, unless the corporation's charter requires approval by a
greater percentage.
Dividends. A Tennessee corporation may pay dividends, if authorized by the
Board of Directors, unless, after giving effect to the dividend, (1) the
corporation would not be able to pay its debts as they become due in the usual
course of business or (2) the corporation's total assets would be less than the
sum of its total liabilities plus (unless the corporation's charter permits
otherwise) the amount necessary to satisfy, upon dissolution, the rights of
shareholders whose preferential rights are superior to those receiving the
distribution if the corporation were dissolved at the time of the distribution.
The NCBC Charter authorizes distributions in accordance with this Section 48-
16-401 of the TBCA. The FFC Charter defers to Tennessee law.
Boards of Directors. As permitted by Tennessee law, the NCBC Bylaws divide
the NCBC Board into three classes serving staggered three-year terms, with the
terms of one class of directors to expire each year. The classification of the
NCBC Board means that approximately one-third of the NCBC Board is elected each
year, with the result that it would take two annual meetings of NCBC
Shareholders to change the majority of the members constituting the NCBC Board.
The classification of directors has the effect of making it more difficult to
change the composition of the board of directors. A classified board of
directors can help promote the continuity and stability of management and
policies because a majority of the directors at any given time will have prior
experience as directors.
In addition, the NCBC Bylaws provide that any or all of the NCBC directors
may be removed from office at any time with or without cause, but only by the
affirmative vote of at least two-thirds of the shares entitled to vote.
The FFC Charter and Bylaws defer to the provisions of the TBCA providing for
the directors term to expire annually at its shareholders' meeting. The FFC
Charter and Bylaws provide that any director may be removed from office, with
or without cause, upon the affirmative vote of the holders of a majority of the
issued and outstanding shares entitled to vote.
Special Meetings of Shareholders. Tennessee law provides that the Board of
Directors, any person authorized by the charter or bylaws, or unless the
charter provides otherwise, the holder of at least 10% of the votes entitled to
be cast may call a special meeting of shareholders. The NCBC Bylaws provide
that a special meeting of NCBC Shareholders may be called by the Chairman of
the Board, the Board of Directors, or upon the written request of the holders
of not less than 10% of the votes entitled to be cast of NCBC Common Stock. The
FFC Bylaws provide that a special meeting of FFC Shareholders may be called by
one-third or more of the members of the Board of Directors, or by any one or
more shareholders owning, in aggregate, not less than 20% of the issued and
outstanding shares of FFC Common Stock.
Dissenters' Rights. Both NCBC and FFC must provide to their respective
shareholders dissenters' rights under Tennessee law. Under Tennessee law, the
shareholders of a corporation that is being merged into another corporation or
of a corporation that is selling all or substantially all its assets to another
corporation have the right to dissent from the action and have a Tennessee
court determine the statutory fair value of their shares. See "The Merger--
Dissenters' Rights."
Preemptive Rights. Unless the charter of a Tennessee corporation provides
otherwise, Tennessee law states that shareholders of a Tennessee corporation do
not have preemptive rights to acquire proportional
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amounts of the corporation's unissued shares upon decision of the board of
directors to issue them. The NCBC Charter provides that no holder of any class
of NCBC common stock will have preemptive rights. The FFC Charter does not
provide for preemptive rights and, therefore, FFC Shareholders do not have
preemptive rights.
Indemnification/Limitation on Liability. Under Tennessee law, a corporation
may indemnify an individual who is a party to a proceeding because he or she is
or was a director or officer against liability incurred in the proceeding if
such individual conducted himself or herself in good faith and such individual
reasonably believed:
. in the case of conduct in his or her official capacity, that such
conduct was in the best interests of the corporation;
. in all other cases, that such conduct was at least not opposed to the
best interests of the corporation; and
. in the case of any criminal proceeding, that the individual had no
reasonable cause to believe such conduct was unlawful.
A corporation may not indemnify a director or officer (1) in connection with
a proceeding by or in the right of the corporation, except for reasonable
expenses incurred in connection with the proceeding if it is determined that
the director or officer has met the relevant standard of conduct under
Tennessee or (2) in connection with any proceeding with respect to conduct for
which he or she was adjudged liable on the basis that personal benefit was
improperly received by him or her, whether or not involving action in his or
her official capacity. A corporation must indemnify a director or officer who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he or she was a party because he or she was a director or
officer of the corporation against reasonable expenses incurred by the director
or officer in connection with the proceeding.
Both the NCBC and FFC Bylaws provide for indemnification in accordance with
Tennessee law for officers and directors of NCBC and their testators and in
testators.
Both the NCBC and FFC Charters, pursuant to Tennessee law, provide that
their respective directors will not be liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as director
except for (1) any breach of the director's duty of loyalty to the corporation
or its shareholders, (2) acts or omissions not in good faith which involve
intentional misconduct or a knowing violation of the law, or (3) liability with
regard to unlawful distributions.
DESCRIPTION OF NCBC COMMON STOCK
This section describes the general terms and provisions of the NCBC Common
Stock. The summary is not complete and is qualified in its entirety by
reference to the description of the NCBC Common Stock incorporated by reference
in this Proxy Statement/Prospectus. See "Incorporation of Information Filed
with the SEC." NCBC has also filed its Charter and Bylaws as exhibits to the
Registration Statement.
General. As of June 1, 1999, the number of authorized shares of NCBC Common
Stock was 175,000,000, of which 101,404,232 were issued and outstanding.
Dividends. Holders of NCBC Common Stock are entitled to receive pro rata
dividends when, as and if declared by the NCBC Board out of any funds that NCBC
can legally use to pay dividends. NCBC may pay dividends in cash, stock or
other property. In certain cases, holders of NCBC Common Stock may not receive
dividends until NCBC has satisfied its obligations to any holders of
outstanding preferred stock. In the event NCBC liquidates, dissolves or winds
up its business, the holders of NCBC preferred stock will receive an amount per
share equal to the amount fixed and determined by the Board, plus any amount
equal to all the
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dividends accrued on the NCBC preferred stock, before any distribution will be
made on the NCBC Common Stock.
Voting Rights. Each share of NCBC Common Stock is entitled to one vote on
each matter submitted to a vote of shareholders unless Tennessee law or the
certificate of amendment for an outstanding series of NCBC preferred stock
gives the holders of that series of preferred stock the right to vote on
certain matters. The holders of the NCBC Common Stock have noncumulative voting
rights, which means that the holders of more than 50% of the shares of NCBC
Common Stock voting for the election of directors can elect 100% of the
directors standing for election at any meeting if they choose to do so and, in
such event, the holders of the remaining shares voting for the election of
directors will not be able to elect any person or persons to the NCBC Board.
Other Rights. The NCBC Common Stock has no conversion rights and is not
redeemable. The holders of the NCBC Common Stock do not have any preemptive
rights to subscribe for additional shares of common stock or other NCBC
securities except as may be granted by the NCBC Board. There is no restriction
on the purchase of shares of NCBC Common Stock by NCBC except for certain
regulatory limits.
Fully Paid. The issued and outstanding shares of NCBC Common Stock are fully
paid and nonassessable (i.e., the full purchase price for the outstanding
shares of NCBC Common Stock has been paid and the holders of such shares will
not be assessed any additional monies for such shares).
Listing. The NCBC Common Stock is listed on the Nasdaq National Market under
the symbol "NCBC." The Bank of New York, or an affiliate thereof, is the
transfer agent, registrar and dividend disbursing agent for the Common Stock.
NCBC is a legal entity separate and distinct from its subsidiaries,
including its subsidiary banks. There are various legal and regulatory
limitations under federal and state law on the extent to which its
subsidiaries, including its bank and bank holding company subsidiaries, can
finance or otherwise supply funds to NCBC.
The principal source of NCBC's cash revenues is dividends from its
subsidiaries. There are certain limitations under federal and Tennessee law on
the payment of dividends by such subsidiaries. The prior approval of the
appropriate federal regulatory body is required if the total of all dividends
declared by any state member bank of the Federal Reserve System or any national
banking association in any calendar year exceeds the bank's net profits (as
defined) for that year combined with its retained net profits for the preceding
two calendar years, less any required transfers to surplus or a fund for the
retirement of any preferred stock. Such regulatory bodies also have authority
to prohibit a state member bank or bank holding company, such as NCBC, or a
national banking association from engaging in what, in the opinion of such
regulatory body, constitutes an unsafe or unsound practice in conducting its
business. The payment of dividends could, depending upon the financial
condition of the subsidiary, be deemed to constitute such an unsafe or unsound
practice.
Retained earnings of NCBC's banking subsidiaries available for payment of
cash dividends under all applicable regulations would have been approximately
$24.3 million as of December 31, 1998. See Note N to the Financial Statements
of NCBC, incorporated by reference in this Proxy Statement/Prospectus, with
respect to certain contractual limits on dividend payments by NCBC.
NCBC's subsidiaries, subsidiary banks and their respective subsidiaries are
subject to limitations under Section 23A of the Federal Reserve Act with
respect to extensions of credit to, investments in, and certain other
transactions with, NCBC and its other subsidiaries. Furthermore, loans and
extensions of credit are also subject to various collateral requirements.
Certain provisions of the NCBC Charter and Bylaws may restrict changes of
control of NCBC. These provisions include the authority to issue preferred
stock with such rights and privileges as the Board of
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Directors may deem appropriate from time to time, provisions for the
classification of the NCBC Board of Directors and provisions relating to
certain business combinations with certain shareholders. See "Comparison of
Rights of FFC and NCBC Shareholders--Changes in Control" and "--Boards of
Directors."
VALIDITY OF COMMON STOCK
The validity of the shares of NCBC Common Stock to be issued upon
consummation of the Merger has been passed upon for NCBC by King & Spalding,
Atlanta, Georgia. Attorneys at King & Spalding working on the Merger and the
Registration Statement of which this Proxy Statement/Prospectus is a part owned
approximately 13,500 shares of NCBC Common Stock as of the date of this Proxy
Statement/Prospectus.
EXPERTS
Ernst & Young, independent auditors, have audited NCBC's consolidated
financial statements incorporated by reference herein from NCBC's Annual Report
on Form 10-K for the year ended December 31, 1998, as set forth in their
report, which is incorporated herein by reference in this Form S-4. Such
consolidated financial statements are incorporated herein by reference in
reliance on Ernst & Young LLP's report, given upon authority of such firm as
experts in accounting and auditing.
Maggart & Associates, P.C., independent public accountants, have audited
FFC's consolidated financial statements at December 31, 1997 and 1998 and for
the years then ended incorporated by reference herein from FFC's Annual Report
on Form 10-KSB for the year ended December 31, 1998, as set forth in their
report, which is incorporated herein by reference in this Form S-4. Such
consolidated financial statements are incorporated herein by reference in
reliance on Maggart & Associates, P.C.'s report, given upon authority of such
firm as experts in accounting and auditing.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 1, 1999
BY AND BETWEEN
NATIONAL COMMERCE BANCORPORATION
AND FIRST FINANCIAL CORPORATION
MT. JULIET, TENNESSEE
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
R E C I T A L S.................................................................. A-1
<S> <C>
ARTICLE 1.TERMS OF THE MERGER.................................................... A-2
1.1Merger.................................................................. A-2
1.2Time and Place of Closing............................................... A-2
1.3Effective Time.......................................................... A-2
1.4Charter................................................................. A-2
1.5Bylaws.................................................................. A-2
1.6Name.................................................................... A-2
1.7Directors and Officers.................................................. A-2
ARTICLE 2.MANNER OF CONVERTING SHARES AND OPTIONS;
EXCHANGE RATIO................................................................... A-2
2.1Conversion; Cancellation and Exchange of Shares; Exchange Ratio......... A-2
2.2Conversion of Stock Options............................................. A-4
2.3Anti-Dilution Provisions................................................ A-5
ARTICLE 3.EXCHANGE OF SHARES..................................................... A-5
3.1Exchange Procedures..................................................... A-5
3.2Rights of Former FFC Record Holders..................................... A-5
ARTICLE 4.REPRESENTATIONS AND WARRANTIES OF FFC.................................. A-6
4.1Organization, Standing and Power........................................ A-6
4.2Authority; No Breach of Agreement....................................... A-6
4.3Capital Stock........................................................... A-7
4.4FFC Subsidiaries........................................................ A-7
4.5SEC Filings; FFC Financial Statements................................... A-8
4.6Absence of Undisclosed Liabilities...................................... A-8
4.7Absence of Certain Changes or Events.................................... A-9
4.8Tax Matters............................................................. A-9
4.9Allowance for Possible Loan Losses...................................... A-10
4.10Assets................................................................. A-10
4.11Intellectual Property.................................................. A-11
4.12Environmental Matters.................................................. A-11
4.13Compliance with Laws................................................... A-12
4.14Labor Relations........................................................ A-12
4.15Employee Benefit Plans................................................. A-12
4.16Material Contracts..................................................... A-13
4.17Legal Proceedings...................................................... A-14
4.18Reports................................................................ A-14
4.19Statements True and Correct............................................ A-14
4.20Accounting, Tax and Regulatory Matters................................. A-15
4.21State Takeover Laws.................................................... A-15
4.22Articles of Incorporation Provisions................................... A-15
4.23Charter Documents...................................................... A-15
4.24Year 2000 Matters...................................................... A-15
4.25Board Action........................................................... A-15
4.26Vote Required.......................................................... A-15
ARTICLE 5.REPRESENTATIONS AND WARRANTIES OF NCBC................................. A-16
5.1Organization, Standing and Power........................................ A-16
5.2Authority; No Breach by Agreement....................................... A-16
5.3Capital Stock........................................................... A-17
5.4SEC Filings; Financial Statements....................................... A-17
5.5Absence of Undisclosed Liabilities...................................... A-17
</TABLE>
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<TABLE>
<S> <C>
5.6Absence of Certain Changes or Events.............................. A-18
5.7Compliance with Laws.............................................. A-18
5.8Legal Proceedings................................................. A-18
5.9Reports........................................................... A-18
5.10Statements True and Correct...................................... A-18
5.11Accounting, Tax and Regulatory Matters........................... A-19
5.12Year 2000 Matters................................................ A-19
5.13Board Action..................................................... A-19
5.14Vote Required.................................................... A-19
ARTICLE 6.CONDUCT OF BUSINESS PENDING CONSUMMATION......................... A-20
6.1Affirmative Covenants of FFC...................................... A-20
6.2Negative Covenants of FFC......................................... A-20
6.3Covenants of NCBC................................................. A-21
6.4Adverse Changes in Condition...................................... A-22
6.5Reports........................................................... A-22
ARTICLE 7.ADDITIONAL AGREEMENTS............................................ A-22
7.1Registration Statement; Proxy Statement; Shareholder Approvals.... A-22
7.2Exchange Listing.................................................. A-23
7.3Applications...................................................... A-23
7.4NCBC Filings with State Offices................................... A-23
7.5Agreement as to Efforts to Consummate............................. A-23
7.6Investigation and Confidentiality................................. A-24
7.7Press Release..................................................... A-24
7.8Certain Actions................................................... A-24
7.9Accounting and Tax Treatment...................................... A-25
7.10State Takeover Laws.............................................. A-25
7.11Articles of Incorporation Provisions............................. A-25
7.12Agreement of Affiliates.......................................... A-25
7.13Employee Benefits and Contracts.................................. A-26
7.14D&O Coverage..................................................... A-26
7.15.Indemnification................................................. A-26
ARTICLE 8.CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE................ A-27
8.1Conditions to Obligations of Each Party........................... A-27
8.2Conditions to Obligations of NCBC................................. A-28
8.3Conditions to Obligations of FFC.................................. A-30
ARTICLE 9.TERMINATION...................................................... A-31
9.1Termination....................................................... A-31
9.2Effect of Termination............................................. A-32
9.3Non-Survival of Representations and Covenants..................... A-33
ARTICLE 10.GENERAL PROVISIONS.............................................. A-33
10.1Definitions...................................................... A-39
10.2Expenses......................................................... A-40
10.3Brokers and Finders.............................................. A-40
10.4Entire Agreement................................................. A-40
10.5Amendments....................................................... A-40
10.6Waivers.......................................................... A-40
10.7Assignment....................................................... A-40
10.8Notices.......................................................... A-41
10.9Governing Law.................................................... A-41
10.10Counterparts.................................................... A-41
</TABLE>
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<TABLE>
<S> <C>
10.11Captions........................................................ A-41
10.12Interpretation.................................................. A-41
10.13Enforcement of Agreement........................................ A-42
10.14Attorneys' Fees................................................. A-42
10.15Severability.................................................... A-42
10.16Remedies Cumulative............................................. A-42
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of this day of
May 1, 1999, by and between NATIONAL COMMERCE BANCORPORATION ("NCBC" or
"Surviving Corporation," as the context may require), a corporation chartered
and existing under the laws of the State of Tennessee which is registered both
as a bank holding company and as a savings and loan holding company and whose
principal offices are located at One Commerce Square, Memphis, Shelby County,
Tennessee 38150; and FIRST FINANCIAL CORPORATION ("FFC"), a corporation
chartered and existing under the laws of the State of Tennessee which is
registered as a bank holding company and whose principal offices are located at
1691 North Mt. Juliet Road, Mt. Juliet, Tennessee 37122.
Certain other capitalized terms used in this Agreement and in the Plan of
Merger are defined below in Section 10.1.
R E C I T A L S
A. FFC is the beneficial owner and holder of record of one hundred percent
(100%) of the issued and outstanding shares of capital stock of First Bank and
Trust, a state-chartered, non-member bank with its principal or mail office in
Mt. Juliet, Tennessee. FFC also owns indirectly 100% of the outstanding common
stock of First Bank and Trust's wholly owned title insurance agency subsidiary,
American Title and Escrow Company, and its wholly owned inactive finance
subsidiary, First Southern Finance, Inc. For the purpose of this Agreement,
First Bank and Trust, American Title and Escrow Company and First Southern
Finance, Inc., will hereinafter be referred to as the "FFC Bank Subsidiary."
FFC desires to be acquired by NCBC on the terms and subject to the conditions
set forth in this Agreement and the Plan of Merger annexed hereto as Exhibit
1.1.
B. NCBC desires to acquire FFC on the terms and subject to the conditions
set forth in this Agreement and the Plan of Merger.
C. The Board of Directors of FFC deems it desirable and in the best
interests of FFC and the shareholders of FFC that FFC be merged with and into
NCBC (which would survive the merger as the Surviving Corporation, as defined
herein) on the terms and subject to the conditions set forth in this Agreement
and in the manner provided in this Agreement and the Plan of Merger (the
"Merger") and has directed that this Agreement and the Plan of Merger be
submitted to the shareholders of FFC with the recommendation that they be
approved by them.
D. The Board of Directors of NCBC deems it desirable and in the best
interests of NCBC and the shareholders of NCBC that FFC be merged with and into
NCBC on the terms and subject to the conditions set forth in this Agreement and
in the manner provided in this Agreement and the Plan of Merger.
E. The respective Boards of Directors of NCBC and FFC have each adopted
resolutions setting forth and adopting this Agreement and the Plan of Merger,
and have directed that this Agreement and the annexed Plan of Merger and all
resolutions adopted by said Boards of Directors and by the FFC Shareholders
related to this Agreement, be submitted with appropriate applications to, and
filed with all applicable Regulatory Authorities as may be necessary in order
to obtain all Consents required to consummate the proposed Merger and the
transactions contemplated in this Agreement in accordance with this Agreement,
the Plan of Merger and applicable law.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
A-1
<PAGE>
ARTICLE 1
TERMS OF THE MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time FFC shall be merged with and into NCBC in accordance with the
provisions of Section 48-21-101, et seq. of the Tennessee Code, and with the
effect provided in Section 48-21-108 of the Tennessee Code (the "Merger").
NCBC 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, which has been approved
and adopted by the respective Boards of Directors of FFC and NCBC, and the Plan
of Merger, in substantially the form of Exhibit 1.1 which has been approved and
adopted by the Boards of Directors of FFC and NCBC.
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 the NCBC Board Room,
NCBC Executive Offices (Fourth Floor), One Commerce Square, Memphis, Shelby
County, Tennessee 38150, or at such other place as the Parties, acting through
their chief executive officers or chief financial officers, may mutually agree.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Articles of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Tennessee (the "Effective Time").
1.4 Charter. The Charter of NCBC in effect immediately prior to the
Effective Time shall be the Charter of the Surviving Corporation until
otherwise amended or repealed.
1.5 Bylaws. The Bylaws of NCBC in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation until otherwise amended
or repealed.
1.6 Name. The name of NCBC shall remain unchanged after the Effective Time,
unless and until otherwise renamed.
1.7 Directors and Officers. The directors and officers of NCBC in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected or appointed, shall serve as the directors and
officers of the Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation, unless and until their
successors shall have been elected or appointed and shall have qualified or
until they shall have been removed in the manner provided herein.
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 Conversion; Cancellation and Exchange of Shares; Exchange Ratio. At the
Effective Time, by virtue of the Merger becoming effective and without any
action on the part of NCBC, FFC, or the shareholders of either of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) NCBC Capital Stock. Each share of NCBC Capital Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) FFC Common Stock. Each share of FFC Common Stock issued and
outstanding at the Effective Time shall cease to represent any interest
(equity, shareholder or otherwise) in FFC and shall, except for those
shares (the "Dissenting Shares") held by any FFC Record Holders who shall
have
A-2
<PAGE>
properly perfected such Record Holders' dissenters' rights and shall have
maintained the perfected status of such dissenters' rights through the
Effective Time ("FFC Dissenting Shareholders"), whose rights shall be
governed by the provisions of Sections 48-23-101 through 48-23-302 of the
Tennessee Code, automatically be converted exclusively into, and constitute
only the right of each FFC Record Holder to receive in exchange for such
Record Holder's shares of FFC Common Stock, the Consideration to which the
FFC Record Holder is entitled as provided in this Section 2.1(b).
(i) The Exchange Ratio Calculation. Subject to any adjustments
which may be required by an event described in Subsection 2.1(b)(iii)
below, at and as of the Effective Time:
(A) Each one (1) share of FFC Common Stock (other than
Dissenting Shares) outstanding at and as of the Effective Time shall
be converted into the right to receive that number of shares of NCBC
Common Stock equal to:
(I) The quotient of (x) the Net Purchase Price (defined
below) and (y) divided by the NCBC "Market Price Per Share"
(defined below),
divided by
(II) The sum of number of shares of FFC Common Stock
outstanding at and as of the Effective Time and the number of
shares of FFC Common Stock issuable pursuant to options to
purchase FFC Common Stock to the extent that such options are
outstanding at and as of the Effective Time.
(B) Each share of FFC Common Stock held of record by a FFC
Dissenting Shareholder shall be converted into the right to receive
payment from the Surviving Corporation with respect thereto in
accordance with the provisions of the Tennessee Code, and in
particular, T.C.A. (S) 48-23-102.
(C) "Net Purchase Price" shall be $74,250,000 which is the Gross
Purchase Price of $75,000,000 less FFC's investment banker's fee of
$750,000.
(D) If as of the Closing Date the consolidated stockholders'
equity of FFC, exclusive of any securities gains or losses in
accordance with FAS 115, is less than $18,885,000, which was the
consolidated stockholders' equity as of December 31, 1998, NCBC
reserves the right to terminate this Agreement.
(E) No share of FFC Common Stock shall be deemed to be
outstanding or have any rights other than those set forth in this
Section 2.1(b) after the Effective Time. No fractional shares of
NCBC Common Stock shall be issued in the Merger and, if after
aggregating all of the whole and fractional shares of NCBC Common
Stock to which a FFC Record Holder shall be entitled based upon this
Exchange Ratio Calculation, there should be a fractional share of
NCBC Common Stock remaining, such fractional share shall be settled
by a cash payment therefor pursuant to Article 3 of this Agreement,
which cash settlement shall be based upon the Market Price Per Share
(as defined below) of one (1) full share of NCBC Common Stock.
(ii) Definition of "Market Price Per Share". The "Market Price Per
Share" is $24.25 which was the closing price per share of NCBC Common
Stock on the NASDAQ (as reported by The Wall Street Journal) on April
12, 1999:
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<PAGE>
Therefore, by way of example, if as of the day immediately prior to the
Closing Date FFC(1) owns 100% of the authorized and outstanding common
stock of FFC Bank Subsidiary and (2) has consolidated stockholders' equity
not less than as described in (D) hereinabove, then:
<TABLE>
<CAPTION>
Net Purchase Price of........................................ $74,250,000
<S> <C>
divided by
NCBC Market Price Per Share of............................... $ 24.25
equals
Number of NCBC Shares........................................ 3,061,856
divided by
FFC Shares Outstanding....................................... 953,328
+ FFC Options................................................ 120,935
----------
1,074,263
equals
NCBC Shares for Each 1 Share of FFC.......................... 2.8502
==========
</TABLE>
(iii) Effect of Stock Splits, Reverse Stock Splits, Stock
Dividends and Similar Changes in the Capital of FFC. Should FFC effect
any stock splits, reverse stock splits, stock dividends or similar
changes in its respective capital accounts subsequent to the date of
this Agreement but prior to the Effective Time, the Exchange Ratio
shall be adjusted in such a manner as the Board of Directors of NCBC
shall deem in good faith to be fair and reasonable in order to give
effect to such changes. Notwithstanding the foregoing, nothing in this
subparagraph (iii) shall be deemed to be a waiver of the inaccuracy of
any representation or warranty or breach of any covenant by FFC set
forth herein.
(c) Shares Held by FFC or NCBC. Each of the shares of FFC Common Stock
held by any FFC Company or by any NCBC Company, in each case other than (x)
in a fiduciary capacity, or (y) 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) Dissenters' Rights of FFC Shareholders. Any FFC Dissenting
Shareholder who shall comply strictly with the provisions of Sections 48-
23-101, et seq. of the Tennessee Code shall be entitled to dissent from the
Merger and to seek those appraisal remedies afforded by the Tennessee Code.
FFC Shareholders who fail to strictly comply with such provisions shall be
deemed not to have dissented and shall not be treated as Dissenters.
(e) Payment to FFC Investment Banker. At the Effective Time, NCBC shall
pay Seven Hundred Fifty Thousand Dollars ($750,000.00) to FFC's investment
banker, which amount has been netted out of the Gross Purchase Price
pursuant to Section 2.1(b) (i) (C).
2.2 Conversion of Stock Options. At the Effective Time, all options with
respect to FFC Common Stock pursuant to stock options ("FFC Options") granted
by FFC under the FFC Option Plans, which are outstanding at the Effective Time,
whether or not exercisable, shall be assumed by NCBC and converted into options
to purchase shares of NCBC Common Stock in accordance with the following
sentence and otherwise having the same duration and terms as the FFC Option
Plans. From and after the Effective Time, (i) each FFC Option assumed by NCBC
may be exercised solely for shares of NCBC Common Stock, (ii) the number of
shares of NCBC Common Stock subject to such FFC Option shall be equal to the
number of shares of FFC Common Stock subject to such FFC Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (iii) the per
share exercise price under each such FFC Option shall be adjusted by dividing
the per share exercise price under each such FFC Option by the Exchange Ratio
and rounding down to the nearest cent. FFC shall take all necessary steps to
effectuate the foregoing provisions of this Section 2.2.
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<PAGE>
2.3 Anti-Dilution Provisions. In the event NCBC changes the number of shares
of NCBC Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, reorganization, stock dividend, or 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.
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures. Promptly after the Effective Time, NCBC and FFC
shall cause the Exchange Agent to mail to the FFC Record Holders appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
FFC Common Stock shall pass, only upon proper delivery of such certificates to
the Exchange Agent). The Exchange Agent may establish reasonable and customary
rules and procedures in connection with its duties including its obligation to
deliver the Consideration to which any FFC Record Holder may receive for lost,
misplaced or destroyed FFC certificates. After the Effective Time, each FFC
Record Holder of FFC Common Stock (other than shares to be canceled pursuant to
Section 2.1(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 2.1(b) of this Agreement,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 3.2 of this Agreement. To
the extent required by Section 2.1(b) of this Agreement, each FFC Record Holder
also shall receive, upon surrender of the certificate or certificates
representing his or her shares of FFC Common Stock outstanding immediately
prior to the Effective Time, cash in lieu of any fractional share of NCBC
Common Stock to which such holder may be otherwise entitled (without interest).
NCBC shall not be obligated to deliver the Consideration to which any FFC
Record Holder is entitled as a result of the Merger until such FFC Record
Holder surrenders such holder's certificate or certificates representing the
shares of FFC Common Stock for exchange as provided in this Section 3.1. The
certificate or certificates of FFC Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may reasonably require. Any other provision of
this Agreement notwithstanding, neither NCBC nor the Exchange Agent shall be
liable to a FFC Record Holder for any amounts paid or properly delivered in
good faith to a public official pursuant to any applicable abandoned property
Law. Adoption of this Agreement by the shareholders of FFC shall constitute
ratification of the appointment of the Exchange Agent.
3.2 Rights of Former FFC Record Holders. At the Effective Time, the stock
transfer books of FFC shall be closed as to holders of FFC Common Stock
outstanding immediately prior to the Effective Time, and no transfer of FFC
Common Stock by any FFC Record Holder shall thereafter be made or recognized.
Until surrendered for exchange in accordance with the provisions of Section 3.1
of this Agreement, each certificate theretofore representing shares of FFC
Common Stock (other than shares to be cancelled pursuant to Section 2.1(c) of
this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the Consideration provided in Section 2.1(b)
of this Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by FFC in respect of such shares of FFC Common Stock in accordance with the
terms of this Agreement and which remain unpaid at the Effective Time. Whenever
a dividend or other distribution is declared by NCBC on the NCBC 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 NCBC Common
Stock issuable pursuant to this Agreement, but beginning thirty (30) days after
the Effective Time no dividend or other distribution payable to the holders of
record of NCBC Common Stock as of any time subsequent to the Effective Time
shall be delivered to a FFC Record Holder until such FFC Record Holder
surrenders his or her certificate or certificates evidencing FFC Common Stock
for exchange as provided in Section 3.1 of this Agreement. However, upon
surrender of such FFC Common Stock certificate, both the NCBC Common Stock
certificate and any undelivered dividends and cash payments
A-5
<PAGE>
payable hereunder (without interest) shall be delivered and paid with respect
to each share represented by such certificate.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FFC
Except as disclosed on the FFC Disclosure Memorandum, and in SEC Documents
and in the regulatory filings made by FFC and FFC Bank Subsidiary, FFC hereby
represents and warrants to NCBC that the following matters are or will be true
and correct at the Effective Time, in all material respects:
4.1 Organization, Standing and Power Organization, Standing and Power. FFC
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
Assets. FFC 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 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 FFC.
4.2 Authority; No Breach of Agreement Authority; No Breach of Agreement.
(a) Subject to requisite FFC Shareholder approval and Consents of
Regulatory Authorities, FFC 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, as appropriate, and the consummation of the
transactions contemplated herein and therein, including the Merger, have
been duly and validly authorized by all necessary corporate action in
respect thereof on the part of FFC, subject to the approval of this
Agreement and the Plan of Merger by the holders of a majority (or such
greater percentage as may be required by the Articles of Incorporation of
FFC or other applicable law) of the outstanding shares of FFC Common Stock,
which is the only shareholder vote required for approval of this Agreement
and the Plan of Merger and consummation of the Merger by FFC. Subject to
the receipt of such requisite shareholder approval, this Agreement and the
Plan of Merger represent legal, valid and binding obligations of FFC,
enforceable against FFC in accordance with their respective terms (except
in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of
the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement or the Plan of
Merger, as appropriate, by FFC, nor the consummation by FFC of the
transactions contemplated hereby or thereby, nor compliance by FFC with any
of the provisions hereof or thereof will (i) conflict with or result in a
breach of any provision of FFC's Articles of Incorporation or Bylaws, or
(ii) except as disclosed in Section 4.2(b) of the FFC Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
(other than shareholder approval) pursuant to, or result in the creation of
any Lien on any material Asset of any FFC Company under, any Contract or
Permit of any FFC Company, or (iii) subject to receipt of the requisite
Consents referred to in Section 7.3 of this Agreement, violate any Law or
Order applicable to either FFC Company or any of their respective Material
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate Laws, 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 FFC Employee Plans or, 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 FFC, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by FFC of the Merger
and the other transactions contemplated in this Agreement and the Plan of
Merger.
A-6
<PAGE>
(d) Neither FFC Company is a party to, or subject to, or bound by, any
agreement or judgment, order, letter of understanding, writ, prohibition,
injunction or decree of any court or other governmental body of competent
jurisdiction, or any law which would prevent the execution and delivery of
this Agreement and the Plan of Merger by FFC, or the consummation of the
transactions contemplated hereby and thereby, and no action or proceeding
is pending against either FFC Company in which the validity of this
Agreement, the transactions contemplated hereby or any action which has
been taken by any of such Parties in connection herewith or in connection
with the transaction contemplated hereby is at issue.
4.3 Capital Stock.
(a) The authorized capital stock of FFC consists of (i) 5,000,000
shares of FFC Common Stock, $2.50 par value per share, of which 953,328
shares are issued and outstanding as of April 16, 1999, and (ii) 5,000,000
shares of FFC Preferred Stock of which no shares are issued, outstanding or
committed. All of the issued and outstanding shares of capital stock of FFC
are duly and validly issued and outstanding and are fully paid and
nonassessable under the Tennessee Code and FFC's Articles of Incorporation.
None of the outstanding shares of capital stock of FFC has been issued in
violation of any preemptive rights of the current or past shareholders of
FFC. The number of outstanding shares of FFC Common Stock is subject to
increase as options under the FFC Option Plans are exercised prior to the
Effective Date.
(b) As of April 16, 1999, there were outstanding under the FFC Option
Plans options to purchase 120,935 shares of FFC Common Stock, which FFC
Options had a weighted average price of approximately $13.05 per share and
for which adequate shares of FFC Common Stock have been reserved for
issuance under the FFC Option Plans. The number of outstanding options for
shares of FFC Common Stock is subject to change as options under the FFC
Option Plans lapse, are exercised, or are forfeited prior to the Effective
Date.
(c) Except as set forth in Section 4.3(a) and (b) of this Agreement,
there are no shares of capital stock or other equity securities of FFC
outstanding and no outstanding Rights relating to the capital stock of FFC.
However, FFC presently has shares of the FFC Common Stock reserved to its
dividend reinvestment plan
4.4 FFC Subsidiaries.
(a) FFC has no Subsidiaries, direct or indirect, other than FFC Bank
Subsidiary. As set forth hereinabove at "Recitals," paragraph A, FFC Bank
Subsidiary shall include (i) First Bank and Trust; (ii) American Title and
Escrow Company, and (iii) First Southern Finance, Inc. FFC owns, directly
or indirectly, all of the issued and outstanding shares of capital stock
(or other equity interests) of FFC Bank Subsidiary. No capital stock (or
other equity interest) of FFC Bank Subsidiary is or may become required to
be issued (other than to FFC) by reason of any Rights, and there are no
Contracts by which FFC Bank Subsidiary is bound to issue (other than to
FFC) additional shares of its capital stock (or other equity interests) or
Rights or by which FFC is or may be bound to transfer any shares of the
capital stock (or other equity interest) of FFC Bank Subsidiary (other than
to another FFC Company). There are no Contracts relating to the rights of
FFC to vote or to dispose of any shares of the capital stock (or other
equity interests) of FFC Bank Subsidiary. All of the shares of capital
stock (or other equity interests) of FFC Bank Subsidiary held by FFC are
fully paid and nonassessable under the applicable corporation or similar
Law of the jurisdiction in which FFC Bank Subsidiary is incorporated or
organized and are owned by FFC free and clear of any Lien, except as
expressly set forth in the FFC Disclosure Memorandum and noted in Section
4.4(b) of this Agreement. FFC Bank Subsidiary is duly organized, validly
existing, and 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, except as set forth in Section 4.4(b) of the FFC
Disclosure Memorandum. FFC Bank 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
A-7
<PAGE>
aggregate, a Material Adverse Effect on FFC. FFC Bank Subsidiary 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, to the extent provided by law. The minute book and
other organizational documents and Records for FFC Bank Subsidiary have
been made available to NCBC for its review, and are true and complete as in
effect as of the date of this Agreement and accurately reflect all
amendments thereto and all proceedings of the Board of Directors and
shareholders thereof.
(b) All shares of First Bank and Trust are currently pledged to secure
a line of credit, the balance of which is zero. FFC agrees that it is a
condition of this Agreement that all such shares of First Bank and Trust be
released and otherwise free of any Lien prior to the Effective Time.
4.5 SEC Filings; FFC Financial Statements.
(a) FFC has filed and made available to NCBC all SEC Documents required
to be filed by FFC since December 31, 1996. The FFC SEC Documents (i) at
the time filed, complied in all material respects with the applicable
requirements of the Securities Laws and (ii) did not, at the time they were
filed (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing), contain any untrue statement
of a material fact or omit to state a material fact required to be stated
in such FFC SEC Documents or necessary in order to make the statements in
such FFC SEC Documents, in light of the circumstances under which they were
made, not materially misleading. FFC Bank Subsidiary is not required to
file any SEC Documents with the SEC as a separate entity.
(b) Each of the FFC Financial Statements (including, in each case, any
related notes) contained in the FFC SEC Documents, including any FFC SEC
Documents filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was 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 to
be reported on Form 10-QSB of the SEC), and fairly presented in all
material respects the consolidated financial position of FFC and its
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 statements were or are subject to normal year-end
adjustments which were not or are not expected to be material in amount or
effect.
(c) FFC has delivered to NCBC (or will deliver when available, with
respect to periods ended after the date of this Agreement to the Effective
Time) true, correct and complete copies of all Call Reports, FRY-6 Reports
and FRY-9C Reports, including any amendments thereto, filed with any
Regulatory Authorities by FFC and FFC Bank Subsidiary, respectively, for
the years ended December 31, 1997, and 1998, and thereafter, together with
any correspondence deemed material by FFC's management with any Regulatory
Authorities concerning any of the aforesaid financial statements and
Reports (the "FFC Regulatory Financial Statements"). Such FFC Regulatory
Financial Statements (i) were (or will be) prepared from the Records of FFC
and/or each FFC Bank Subsidiary; (ii) were (or will be) prepared in
accordance with regulatory accounting principles consistently applied;
(iii) present (or, when prepared, will present) FFC and FFC Bank
Subsidiary's financial condition and the results of its operations, changes
in stockholders' equity and cash flows at the relevant dates thereof and
for the periods covered thereby; and (iv) contain or reflect (or, when
prepared, will contain and reflect) all necessary adjustments and accruals
for an accurate presentation of FFC's and FFC Bank Subsidiary's financial
condition and the results of FFC's and FFC Bank Subsidiary's operations and
cash flows for the periods covered by such financial statements (subject to
any exceptions as to consistency specified therein or as may be indicated
in the notes thereto or, in the case of interim financial statements, to
normal recurring year-end adjustments that are not material.)
4.6 Absence of Undisclosed Liabilities. No FFC Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FFC, except Liabilities which are accrued or
reserved against in the FFC Financial Statements as of December 31, 1998, and
the FFC Regulatory Financial Statements for the quarter ended March 31, 1999,
or reflected in the notes or schedules, if any,
A-8
<PAGE>
thereto, and delivered with the FFC Disclosure Memorandum prior to the date of
this Agreement. Neither FFC Company has incurred or paid any Liability since
the Balance Sheet Date, except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business practice and which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FFC or on the transactions contemplated by this Agreement.
4.7 Absence of Certain Changes or Events. Except as described in Section 4.7
of the FFC Disclosure Memorandum, since the Balance Sheet Date there has not
been:
(a) Any material transaction by either FFC Company which was not
undertaken in the ordinary course of business and in conformity with past
practice.
(b) Any loss of a key employee or any damage, destruction or loss,
whether or not covered by insurance, which has had or which may be
reasonably expected to have a Material Adverse Effect on either FFC
Company.
(c) Any acquisition or disposition by either FFC Company of any Asset
having a fair market value, singularly or in the aggregate for each FFC
Company, in an amount greater than Fifty Thousand Dollars ($50,000.00),
except in the ordinary course of business and in conformity with past
practice.
(d) Any mortgage, pledge or subjection to Lien, of any kind on any of
the Assets of either FFC Company, except to secure extensions of credit in
the ordinary course of business and in conformity with past practice.
(e) Any amendment, modification or termination of any Contract relating
to either FFC Company or to which either FFC Company is a party which would
or may be reasonably expected to have a Material Adverse Effect on FFC.
(f) Any increase in, or commitment to increase, the compensation
payable or to become payable to any officer, director, employee or agent of
either FFC Company, or any bonus payment or similar arrangement made to or
with any of such officers, directors, employees or agents, other than
routine increases made in the ordinary course of business not exceeding the
greater of ten percent (10%) per annum or Five Thousand Dollars ($5,000.00)
for any of them individually.
(g) Any incurring of, assumption of, or taking of, by either FFC
Company, any Asset subject to any Liability, except for Liabilities
incurred or assumed or Assets taken subsequent to the Balance Sheet Date in
the ordinary course of business and in conformity with past practice.
(h) Any material alteration in the manner of keeping the books,
accounts or Records of either FFC Company, or in the accounting policies or
practices therein reflected.
(i) Any release or discharge (or partial release or discharge) of any
obligation or Liability of any Person related to or arising out of any loan
made by either FFC Company, except in the ordinary course of business and
in conformity with past practice.
4.8 Tax Matters.
(a) Except as set forth in Section 4.8(a) of the FFC Disclosure
Memorandum, all Tax Returns required to be filed by or on behalf of any of
the FFC Companies 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, 1998, and on or before the date of the most recent
fiscal year end immediately preceding the Effective Time, and all Tax
returns filed are complete and accurate. All Taxes shown on filed Tax
returns have been paid. There is no audit examination, deficiency, or
refund litigation with respect to any Taxes, except as fully reserved
against in the FFC Financial Statements made available prior to the date of
this Agreement. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
There are no Liens with respect to Taxes upon any of the Assets of the FFC
Companies, except for taxes which constitute a Lien on Assets but which are
not delinquent.
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<PAGE>
(b) Neither of the FFC Companies 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) To the Knowledge of FFC, adequate provision for any Taxes due or to
become due for any of the FFC Companies for the period or periods through
and including the date of the respective FFC Financial Statements has been
made and is reflected on such FFC Financial Statements.
(d) To the Knowledge of FFC, each of the FFC Companies is in compliance
with, and its Records contain all information and documents (including
properly completed IRS Forms W-9) necessary to comply 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 IRC, except for
such instances of non-compliance and such omissions as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on FFC.
(e) Except as set forth in Section 4.8(e) of the FFC Disclosure
Memorandum, neither of the FFC Companies 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 IRC.
(f) There has not been an ownership change, as defined in the IRC
Section 382(g), of either of the FFC Companies that occurred during or
after any Taxable Period in which the Companies incurred a net operating
loss that carries over to any Taxable Period ending after December 31,
1998.
(g) Except as set forth in Section 4.8(g) of the FFC Disclosure
Memorandum, neither of the FFC Companies is a party to any tax allocation
or sharing agreement and neither of the FFC Companies 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 FFC) or has any Liability for
taxes of any Person (other than FFC and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of Tennessee Law) as
a transferee or successor or by contract or otherwise.
4.9 Allowance for Possible Loan Losses. The allowance for possible loan or
credit losses, including any allowances or reserves for losses on ORE and other
collateral taken in satisfaction, or partial satisfaction of a debt previously
contracted shown on the consolidated balance sheets of FFC included in the most
recent FFC Regulatory Financial Statements dated prior to the date of this
Agreement was, and the Allowance shown on the consolidated balance sheets of
FFC included in the FFC Regulatory Financial Statements as of dates subsequent
to the execution of this Agreement and as of the Closing Date will be, as of
the dates thereof, in the reasonable opinion of management of FFC adequate
(within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known and reasonably anticipated losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables and ORE reserves) of the FFC Companies and other extensions of
credit (including letters of credit and commitments to make loans or extend
credit) by the FFC Companies as of the dates thereof. Except as described in
Section 4.9 of the FFC Disclosure Memorandum (by loan type, loan number,
classification and outstanding balance), neither FFC Company has any Loan or
other extension of credit which has been (or should have been in management's
reasonable opinion) classified as "Other Assets Especially Mentioned,"
"Substandard," "Doubtful" or "Loss," or similar classifications, that were not
classified in either FFC Company's most recent report of examination. Section
4.9 of the FFC Disclosure Memorandum also lists all Loans or extensions of
credit which are included on any FFC Company's "watch list." The net book value
of either FFC Company's ORE is carried on the balance sheet of the FFC
Financial Statements at fair value at the time of acquisition less estimated
selling costs which approximate the net realizable value of the ORE in
accordance with the American Institute of Certified Public Accountants'
Statement of Position 92-3.
4.10 Assets. Except as disclosed or reserved against in the FFC Regulatory
Financial Statements made available prior to the date of this Agreement, the
FFC Companies have good and marketable title, free and clear of all Liens, to
all of their respective Assets. All tangible Assets used in the businesses of
the FFC
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Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with FFC's past
practices. All Assets which are material to FFC's business on a consolidated
basis, held under leases or subleases by either of the FFC Companies, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought), and each
such Contract is in full force and effect. To the best of management's
Knowledge, the FFC Companies currently maintain insurance similar in amounts,
scope, and coverage to that maintained by other peer banking organizations.
Neither of the FFC Companies has received notice from any insurance carrier
that (i) such insurance would be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. Except as set forth in Section 4.10
of the FFC Disclosure Memorandum, there are no variations in the foregoing and
presently no claims pending under any such policies of insurance and no
notices have been given by either FFC Company under such policies.
4.11 Intellectual Property. All of the Intellectual Property rights of the
FFC Companies are in full force and effect and constitute legal, valid and
binding obligations of the respective parties thereto, and there have not
been, and, to the Knowledge of FFC, there currently are not, any defaults
thereunder by either FFC Company. An FFC Company owns or is the valid licensee
of all such Intellectual Property rights free and clear of all liens or claims
of infringement. Neither of the FFC Companies or, to the Knowledge of FFC,
their respective predecessors, has misused the Intellectual Property rights of
others and none of the Intellectual Property rights as used in the business
conducted by either such FFC Company infringes upon or otherwise violates the
rights of any Person, nor has any Person asserted a claim of such
infringement. Except as disclosed in Section 4.11 of the FFC Disclosure
Memorandum, neither FFC Company is obligated to pay any royalties to any
Person with respect to any such Intellectual Property. Each FFC Company owns
or has the valid right to use all of the Intellectual Property rights which it
is presently using, or in connection with performance of any material Contract
to which it is a party. No officer, director, or employee of either FFC
Company 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 except as disclosed in Section 4.11 of the FFC
Disclosure Memorandum, which restricts or prohibits such officer, director or
employee from engaging in activities competitive with any person, including
either FFC Company.
4.12 Environmental Matters. Except as set forth in Section 4.12 of the FFC
Disclosure Memorandum:
(a)To the Knowledge of FFC, each FFC Company, 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 FFC.
(b)There is no litigation pending and served on FFC or, to the
Knowledge of FFC, threatened before any court, governmental agency or
authority or other forum in which any FFC Company or any of its Operating
Properties or Participation Facilities (or FFC 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, a site owned, leased, or operated by either FFC Company
or any of its 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 FFC,
nor, to the knowledge of FFC, is there any reasonable basis for any
litigation of a type described in this sentence. Any variation from the
foregoing shall be set forth in Section 4.12(b) of the FFC Disclosure
Memorandum.
(c)To the Knowledge of FFC, during the period of (i) either FFC
Company's ownership or operation of any of their respective current
properties, (ii) either FFC Company's participation in the management of
any Participation Facility, or (iii) either FFC Company's holding of a
security interest in
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an Operating Property, there have been no releases of hazardous material,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FFC. To the Knowledge of FFC, prior
to the period of (i) either FFC Company's ownership or operation of any of
their respective current properties, (ii) either FFC Company's
participation in the management of any Participation Facility, or (iii)
either FFC Company's holding of a security interest in an Operating
Property, to the Knowledge of FFC, there were no releases of Hazardous
Material in or affecting 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 FFC. Any variation from the
foregoing shall be set forth in Section 4.12(c) of the FFC Disclosure
Memorandum.
4.13 Compliance with Laws. FFC is duly registered as a bank holding company
under the BHC Act. Each FFC Company has in effect all (i) Permits required by
any applicable state or federal bank regulatory authority ("Regulatory
Permits") and (ii) all other Permits necessary for it to own, lease or operate
its material Assets and to carry on its business as now conducted, except for
those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FFC, and there
has occurred (i) no default under any such Regulatory Permit and (ii) no
Default under any such other Permit other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FFC. Except as set forth in Section 4.13 of the FFC Disclosure
Memorandum, neither of the FFC Companies:
(a)Is in violation of any (i) Laws, Orders or Permits applicable to
banks or bank holding companies; or (ii) any other Laws, Orders or Permits
applicable to its business or employees conducting its business except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FFC; and
(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 either FFC Company is not
in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, (ii) threatening to revoke any
Permits, or (iii) requiring either FFC Company to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive, 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.
4.14 Labor Relations. Neither FFC Company is the subject of any Litigation
asserting that it or the other FFC Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it or any other FFC Company to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving either FFC Company, pending or
threatened, or to the Knowledge of FFC, is there any activity involving FFC
Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity.
4.15 Employee Benefit Plans.
(a)FFC has disclosed in Section 4.15(a) of the FFC Disclosure
Memorandum, and has delivered or made available to NCBC prior to the date
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 plans, all other written
employee programs, arrangement 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 any
FFC Company or ERISA Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively the "FFC Benefit Plans"). Any of the FFC Benefit
Plans which is an "employee pension benefit plan," as that term
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is defined in Section 3(2) of ERISA, is referred to herein as a "FFC ERISA
Plan." Each FFC ERISA Plan which is also a "defined benefit plan" (as
defined in IRC Section 414(j)) is referred to herein as a "FFC Pension
Plan." No FFC Pension Plan is or has been a multi-employer plan within the
meaning of Section 3(37) of ERISA.
(b)All FFC Benefit Plans are in compliance with the applicable terms of
ERISA, the IRC 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 FFC. Each FFC ERISA Plan which is intended to be
qualified under IRC Section 401(a) has received a favorable determination
letter from the Internal Revenue Service, and FFC is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. No FFC Company has engaged in a transaction with
respect to any FFC Benefit Plan that, assuming the taxable period of such
plan expired as of the date hereof, would subject any FFC Company to a tax
imposed by either IRC Section 4975 or Section 502(i) of ERISA.
(c)Neither FFC nor any entity which is considered one employer with FFC
under Section 4001 of ERISA or IRC Section 414 or Section 302 of ERISA (an
"ERISA Affiliate") maintains, or has, or under any circumstances might
have, any obligation to make contributions to any plan which is a defined
benefit plan as defined in Section 3(35) of ERISA or IRC Section 414(j) or
which is subject to Title IV of ERISA.
(d)Except as disclosed in Section 4.15(d) of the FFC Disclosure
Memorandum, neither FFC Company has any liability for retiree health and
life benefits under any of the FFC Benefit Plans to former employees and
there are no restrictions on the rights of such FFC Company to amend or
terminate any such retiree health or benefit plan without incurring
liability thereunder.
(e)Except as disclosed in Section 4.15(e) of the FFC Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any director or any employee of any FFC
Company from either FFC Company under any FFC Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any FFC Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any
such benefit.
(f)The assets of each FFC ERISA Plan which is intended to be qualified
under IRC Section 401(a) are held in trust, and the fair market value of
each such plan's assets are equal to the liabilities of each such plan. The
liabilities of each other FFC ERISA Plan are fully and properly reflected
on the FFC Financial Statements to the extent required by, and in
accordance with, GAAP. All contributions required under or premium payments
due under each of the other FFC Benefit Plans which calls for contributions
or premium payments have been made in full on a timely basis or are fully
and properly accrued on the FFC Financial Statements, and the liabilities
of each of the other FFC Benefit Plans which do not call for contributions
or premium payments are fully and properly accrued on the FFC Financial
Statements.
(g)Prior to consummation of the Merger, FFC will take all actions
necessary to terminate FFC's 401(k) effective as of the Effective Time.
4.16 Material Contracts. Except as disclosed in Section 4.16 of the FFC
Disclosure Memorandum and in Section 10.3 of this Agreement, none of the FFC
Companies, nor any of their respective Assets, businesses or operations, is a
party to or, or is bound or affected by, or receives benefits under (i) any
employment, severance, termination, consulting or retirement contract or
contracts providing for aggregate payments (x) to any person in any calendar
year in excess of $10,000, or (y) to any one or more Persons in the aggregate
in excess of $50,000, (ii) any contract relating to the borrowing of money by
either FFC Company or the guarantee by either FFC Company of any such
obligation (other than contracts evidencing deposit liabilities, purchases of
federal funds, fully secured repurchase agreements and Federal Home Loan Bank
advances to depository institution subsidiaries, trade payables, and contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any contracts which prohibit or restrict either FFC Company 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 FFC
Companies, (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
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currency protection contract (not disclosed in the FFC Financial Statements
delivered prior to the date of this Agreement) which is a financial derivative
contract (including various combinations thereof), and (vi) any other material
contract or amendment thereto that would be required to be filed as an exhibit
to a FFC SEC Document filed by FFC with the SEC prior to the date of this
Agreement (together with all contracts referred to in Sections 4.10 and 4.15(a)
of this Agreement (the "FFC Contracts")). With respect to each FFC Contract:
(i) to the Knowledge of FFC, the Contract is in full force and effect; (ii) no
FFC Company is in Default thereunder, (iii) neither FFC Company 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 FFC, in Default in any respect or
has repudiated or waived any material provision thereunder. Except as set forth
in Section 4.16 of the FFC Disclosure Memorandum, all of the indebtedness of
either FFC Company for money borrowed is prepayable at any time by such FFC
Company without penalty or premium.
4.17 Legal Proceedings. Except as set forth in Section 4.17 of the FFC
Disclosure Memorandum, there is no Litigation pending (and as to which process
has been served or with respect to which FCC has otherwise received notice) or,
to the Knowledge of FFC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against either FFC Company, 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 FFC, nor are
there any orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against either FFC Company. Section 4.17 of the FFC
Disclosure Memorandum includes a report of all material Litigation as of the
date of this Agreement to which either FFC Company is a party and which names
any FFC Company as a defendant, cross-defendant or counter-defendant.
4.18 Reports. Since January 1, 1996, FFC 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, if applicable,
including Forms 10-KSB, Forms 10-QSB, Forms 8-K and proxy statements, and since
January 1, 1996, each FFC Company 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, (ii) all other Regulatory Authorities, and (iii) any
applicable state securities or banking authorities (except failures to file
which applies only to (ii) and (iii) which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FFC). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in any material
respects with all applicable laws. As of its respective date, each such report
and document did not, in any material respect, 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 materially misleading.
4.19 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by any FFC Company to NCBC pursuant
to this Agreement contains, or will contain, any untrue statement of material
fact or will omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading. None of the information supplied or to be supplied by
any FFC Company or (to FFC's Knowledge) any Affiliate thereof for inclusion in
the Registration Statement to be filed by NCBC with the SEC or for inclusion in
the Proxy Statement to be mailed to FFC's shareholders in connection with the
shareholders' meeting, and any other documents to be filed by a FFC Company or
any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated thereby, will, at the respective
time such documents are filed or become effective, and with respect to the
Proxy Statement, when first mailed to the shareholders of FFC, 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 materially 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 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 any FFC Company or any Affiliate
thereof is responsible for
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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. FFC is relying on its Affiliates (other than
direct or indirect subsidiaries) as to the truth of their respective
representations to FFC.
4.20 Accounting, Tax and Regulatory Matters. No FFC Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or circumstance
relating to FFC 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 IRC, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 8.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such section.
4.21 State Takeover Laws. No FFC Company has taken any action designed or
intended to require the transactions contemplated by this Agreement and the
Plan of Merger to comply with any applicable "moratorium," "fair price,"
"business combination," "control share," or other anti-takeover laws
(collectively "Takeover Laws"), including Sections 48-103-201 through 312 of
the Tennessee Code.
4.22 Articles of Incorporation Provisions. FFC has taken all action so that
the entering into of this Agreement and the Plan of Merger and the consummation
of the Merger and the other transactions contemplated by this Agreement and the
Plan of Merger do not and will not result in the grant of any rights to any
Person under the Articles of Incorporation, Bylaws or other governing
instruments of FFC (other than voting, dissenters' appraisal or other similar
rights) or otherwise restrict or impair the ability of NCBC or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, shares of FFC or any FFC Company that may be directly or indirectly
acquired or controlled by it.
4.23 Charter Documents. FFC has previously provided NCBC true and correct
copies of the Articles of Incorporation and Bylaws of FFC and the Articles of
Incorporation and Bylaws of FFC Bank Subsidiary, as amended to date, and each
are in full force and effect.
4.24 Year 2000 Matters. The computer software operated by FFC which is
material to the conduct of its business is capable of providing or is being
adapted to provide uninterrupted millennium functionality to record, store,
process and present calendar dates falling on or after January 1, 2000, in
substantially the same manner and with the same functionality as such software
records, stores, processes and presents such calendar dates falling on or
before December 31, 1999, except as would not have a Material Adverse Effect.
FFC has not received and does not expect to receive a "Year 2000 Deficiency
Notification Letter" (as such term is employed in the Federal Reserve's
Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). FFC
has disclosed to NCBC a complete and accurate copy of FFC's plan for addressing
the issues set forth in the statements of the Federal Financial Institutions
Examination Council, dated May 5, 1997, entitled "Year 2000 Project Management
Awareness," and December 1997, entitled "Safety and Soundness Guidelines
Concerning the Year 2000 Business Risk," as such issues affect FFC. The costs
of the adaptions and compliance referred to in this Section 4.24 will not have
a Material Adverse Effect.
4.25 Board Action. The Board of Directors of FFC (at a meeting duly called
and held) has by requisite vote of all directors present (a) determined that
the Merger is advisable and in the best interests of FFC and it shareholders,
(b) approved this Agreement and the transactions contemplated hereby, including
the Merger, and (c) directed that the Merger be submitted for consideration by
FFC shareholders at a special meeting. FFC has taken or will take commercially
reasonable steps necessary to exempt (i) the execution of this Agreement and
the Option, (ii) the Merger and (iii) the transactions contemplated hereby and
thereby from any statute of the State of Tennessee that purports to limit or
restrict business combinations or the ability to acquire or to vote shares,
including, without limitation Tennessee Code Annotated Sections 48-103-201
through 48-103-312, and any applicable provision of FFC's Charter containing
change of control or anti-takeover provisions. Nothing in this Section in the
Agreement shall require any Director or officer of FFC to breach his or her
legal or fiduciary duties.
4.26 Vote Required. The affirmative vote of holders of a majority of the
outstanding shares of FFC Common Stock entitled to vote thereon is the only
vote of the holders of any class or series of FFC capital stock necessary to
approve this Agreement and the transactions contemplated by this Agreement.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF NCBC
Except as disclosed in SEC Documents and in the regulatory filings made by
NCBC, NCBC hereby represents and warrants to FFC that the following matters are
or will be true and correct at the Effective Time, in all material respects:
5.1 Organization, Standing and Power.
(a) NCBC 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. NCBC 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 NCBC.
(b) The securities to be issued by NCBC pursuant to the Plan of Merger
will be registered under the 1933 Act and will be part of a class of
securities registered under the 1934 Act under Section 12. NCBC meets all
of the requirements of Rule 144(c) and Rule 145 of the 1933 Act.
5.2 Authority; No Breach by Agreement.
(a) NCBC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the 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 in respect
thereof on the part of NCBC. This Agreement represents a legal, valid and
binding obligation of NCBC, enforceable against NCBC in accordance with its
terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by NCBC, nor
the consummation by NCBC of the transactions contemplated hereby, nor
compliance by NCBC with any of the provisions hereof will (i) conflict with
or result in a breach of any provision of any NCBC Company's Charter (or
similar governing instrument) or Bylaws, or (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any assets of any NCBC Company under any Contract
or Permit of any NCBC Company, or (iii) subject to receipt of the requisite
approvals referred to in Section 8.1(b) of this Agreement, violate any Law
or Order applicable to any NCBC Company or any of their respective material
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate law and the rules of the
NASDAQ, 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 NCBC,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by NCBC of the Merger and the other
transactions contemplated in this Agreement and the Plan of Merger.
(d) NCBC is not a party to, or subject to, or bound by, any agreement
or judgment, order, letter of understanding, writ, prohibition, injunction
or decree of any court or other governmental body of competent
jurisdiction, or any law which would prevent the execution and delivery of
this Agreement and the Plan of Merger by NCBC, or the consummation of the
transactions contemplated hereby and thereby,
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and no action or proceeding is pending against NCBC in which the validity
of this Agreement, the transactions contemplated hereby or any action which
has been taken by any of such Parties in connection herewith or in
connection with the transaction contemplated hereby is at issue. Neither
the execution or the delivery of this Agreement, nor the consummation of
the transactions described herein, will have a Materially Adverse Effect on
NCBC on a consolidated basis.
5.3 Capital Stock. The currently authorized capital stock of NCBC consists
of (i) 175,000,000 shares of NCBC Common Stock, of which 101,272,004 shares
were issued and outstanding as of March 5, 1999, and (ii) 5,000,000 shares of
NCBC Preferred Stock, of which no shares are issued and outstanding. All of the
issued and outstanding shares of NCBC Capital Stock are, and all of the shares
of NCBC Common Stock to be issued in exchange for shares of FFC 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 Tennessee Code and the NCBC Charter. None of the
outstanding shares of NCBC Capital Stock has been, and none of the shares of
NCBC Common Stock to be issued in exchange for shares of FFC Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of NCBC. NCBC has reserved for
issuance a sufficient number of shares of NCBC Common Stock for the purpose of
issuing shares of NCBC Common Stock in accordance with the provisions of
Section 2.1(b) and 2.2 of this Agreement.
5.4 SEC Filings; Financial Statements.
(a) NCBC has filed and made available to FFC all SEC Documents required
to be filed by NCBC since December 31, 1995. The NCBC SEC Documents (i) at
the time filed, complied in all material respects with the applicable
requirements of the Securities Laws and (ii) did not, at the time they were
filed (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated in
such NCBC SEC Documents or necessary in order to make the statements in
such NCBC SEC Documents, in light of the circumstances under which they
were made, not materially misleading. Except for NCBC Subsidiaries that are
registered as a broker, dealer or investment advisor, no NCBC Subsidiary is
required to file any SEC Documents.
(b) Each of the NCBC Financial Statements (including, in each case, any
related notes) contained in the NCBC SEC Reports, including any NCBC SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was 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 in all material respects the
consolidated financial position of NCBC and its 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
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.
(c) Nothing has come to the attention of NCBC that would require a
material change in its most recently filed SEC Documents since the date of
such filing.
5.5 Absence of Undisclosed Liabilities. No NCBC Company has any liabilities
that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on NCBC, except liabilities which are accrued or
reserved against in the consolidated balance sheets of NCBC as of December 31,
1998, included in the NCBC Financial Statements made available prior to the
date of this Agreement or reflected in the notes thereto. No NCBC Company has
incurred or paid any liability since December 31, 1998, except for such
liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on NCBC or (ii) on
the transactions contemplated by this Agreement. To NCBC's Knowledge, neither
NCBC, any of its Operating Property, nor any of its Participation Facilities
are in material violation of any Environmental Laws.
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5.6 Absence of Certain Changes or Events. Since December 31, 1998, except as
disclosed in the NCBC Financial Statements delivered prior to the date of this
Agreement or contemplated by pending federal legislation applicable to
financial institutions generally, (i) 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 NCBC, and (ii) the NCBC
Companies have not taken any action, or failed to take any action, prior to the
date of this Agreement, which action or failure, if taken after the date of
this Agreement, would represent or result in a material breach or violation of
any of the covenants and agreements of NCBC provided in Article 6 of this
Agreement.
5.7 Compliance with Laws. NCBC is duly registered as a bank holding company
under the BHC Act and as a savings and loan holding company under the HOLA.
Each NCBC Company 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, and
there has occurred no default under any such permit. No NCBC Company:
(a) Is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on NCBC; and
(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 any NCBC Company is not
in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, (ii) threatening to revoke any
Permits, or (iii) requiring any NCBC Company to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum or understanding, or to adopt any board resolution
or similar undertaking, which, in the case of clauses (i), (ii) or (iii),
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.
5.8 Legal Proceedings. There is no Litigation pending and as to which
process has been served or with respect to which NCBC has otherwise received
notice, or, to the Knowledge of NCBC, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any NCBC Company, or against any
Asset, interest or right of any of them, and there are no orders of any
regulatory authorities, other than governmental authorities, or arbitrators
against any NCBC Company, in each case that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on NCBC.
5.9 Reports. Since January 1, 1996, NCBC 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, (ii) other
Regulatory Authorities, and (iii) any applicable state securities or banking
authorities and since January 1, 1996, each NCBC Company 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 all other Regulatory
Authorities and any applicable state securities or banking authorities (except,
in the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on NCBC). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits and schedules thereto,
complied in any material respects with all applicable Laws. As of its
respective date, each such report and document did not, in any material
respect, 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
materially misleading.
5.10 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by any NCBC Company or any Affiliate
thereof to FFC pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances
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under which they were made, not materially misleading. None of the information
supplied or to be supplied by any NCBC Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by NCBC 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 any NCBC Company or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to FFC Shareholders in connection with the
shareholders' meetings, and any other documents to be filed by any NCBC Company
or any Affiliate thereof 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 FFC, 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 materially misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the shareholders'
meetings, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
shareholders' meetings. All documents that any NCBC Company or any Affiliate
thereof 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.
5.11 Accounting, Tax and Regulatory Matters. No NCBC Company or any
Affiliate thereof has taken any action or has any knowledge of any fact or
circumstance relating to NCBC 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 IRC Section 368(a), or (ii) materially delay receipt of any Consents
of Regulatory Authorities referred to in Section 8.1(b) of this Agreement or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such Section.
5.12 Year 2000 Matters. The computer software operated by NCBC which is
material to the conduct of its business is capable of providing or is being
adapted to provide uninterrupted millennium functionality to record, store,
process and present calendar dates falling on or after January 1, 2000, in
substantially the same manner and with the same functionality as such software
records, stores, processes and presents such calendar dates falling on or
before December 31, 1999, except as would not have a Material Adverse Effect.
NCBC has not received and does not expect to receive a "Year 2000 Deficiency
Notification Letter" (as such term is employed in the Federal Reserve's
Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). NCBC
has disclosed to FFC a complete and accurate copy of NCBC's plan for addressing
the issues set forth in the statements of the Federal Financial Institutions
Examination Council, dated May 5, 1997, entitled "Year 2000 Project Management
Awareness," and December 1997, entitled "Safety and Soundness Guidelines
Concerning the Year 2000 Business Risk," as such issues affect NCBC. The costs
of the adaptions and compliance referred to in this Section 5.12 will not have
a Material Adverse Effect.
5.13 Board Action. The Board of Directors of NCBC (at a meeting duly called
and held) has by requisite vote of all directors present (a) determined that
the Merger is advisable and in the best interests of NCBC and it shareholders,
and (b) approved this Agreement and the transactions contemplated hereby,
including the Merger. NCBC has taken all steps necessary to exempt (i) the
execution of this Agreement and the Option, (ii) the Merger and (iii) the
transactions contemplated hereby and thereby from any statute of the State of
Tennessee that purports to limit or restrict business combinations or the
ability to acquire or to vote shares, including, without limitation Tennessee
Code Annotated Sections 48-103-201 through 48-103-312, and any applicable
provision of NCBC's Charter containing change of control or anti-takeover
provisions.
5.14 Vote Required. The affirmative vote of holders of a majority of the
outstanding shares of NCBC Common Stock entitled to vote thereon is the only
vote of the holders of any class or series of NCBC capital stock necessary to
approve this Agreement and the transactions contemplated by this Agreement.
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ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 Affirmative Covenants of FFC. (a) From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of NCBC shall have been obtained, and except as
otherwise expressly contemplated herein, FFC shall, and shall cause each of its
Subsidiaries to: (i) operate its business only in the usual, regular and
ordinary course, (ii) preserve intact its business organization and assets and
maintain its rights and franchises, (iii) take no action which would (x)
materially adversely affect the ability of any party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of
Section 8.1(b) of this Agreement 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 IRC or (y) adversely affect in any material respect the
ability of any Party to perform its covenants and agreements under this
Agreement, and (iv) provide NCBC with First Bank & Trust financial statements
as of the end of each month by the tenth (10th) day following the close of said
month.
(b) FFC shall deliver to NCBC within ten (10) days from the execution of
this Agreement the FFC Disclosure Memorandum described in Article 4 of this
Agreement.
6.2 Negative Covenants of FFC. Except as specifically permitted by this
Agreement, from the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, FFC covenants and agrees that it
will not do or agree to commit to do, or permit any of its 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
NCBC, which consent shall not be unreasonably withheld:
(a) Amend the Articles of Incorporation, Bylaws or other governing
instruments of any FFC Company; or
(b) Incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a FFC Company to another FFC
Company) (i) pursuant to the line of credit agreement between FFC and an
unaffiliated commercial bank or (ii) in excess of an aggregate of $100,000
(for the FFC Companies on a consolidated basis) except in the ordinary
course of the business of FFC Bank Subsidiary consistent with past
practices (which shall include 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 Asset of either FFC Company 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 FFC Disclosure Memorandum); or
(c) Repurchase, redeem or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans or under the
FFC Option Plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any FFC Company, or
declare or pay any dividend or make any other distribution in respect of
FFC capital stock or take any other actions which would result in a total
consolidated stockholder's equity of FFC which would be less than
$18,885,000.00; or
(d) Except pursuant to this Agreement or under the FFC Options Plans,
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 FFC Common
Stock or any other capital stock of either FFC Company, 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
any stock equivalent type rights; or
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(e) Except under the FFC Option Plans or sales of repossessed property,
adjust, split, combine or reclassify any capital stock of either FFC
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of FFC Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any shares of
capital stock of FFC Bank Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another FFC Company) or any Asset having a
book value in excess of $25,000, other than in the ordinary course of
business for reasonable and adequate consideration; or
(f) Except for purchases of U.S. Treasury securities or U.S. government
agency securities, which in either case have maturities of three (3) years
or less, 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 FFC Bank Subsidiary, 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 any FFC Company, except in accordance with past practice
disclosed in Section 6.2(g) of the FFC Disclosure Memorandum or as required
by law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written contracts in effect on the date of
this Agreement and disclosed in Section 6.2(g) of the FFC Disclosure
Memorandum; enter into or amend any severance agreements with officers of
any FFC Company; grant any material increase in fees or other increases in
compensation or other benefits to directors of either FFC Company, except
in accordance with past practice disclosed in Section 6.2(g) of the FFC
Disclosure Memorandum; 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 FFC); or
(h) Enter into or amend any employment contract between either FFC
Company and any Person (unless such amendment is required by law) that the
FFC 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 either FFC Company or,
except as provided in section 4.15(g), terminate or withdraw from, or make
any material change in or to, any existing employee benefit plans of either
FFC Company 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 practice; or
(j) Make any significant 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 either FFC
Company for material money damages or restrictions upon the operations of
either FFC Company; or
(l) Except in the ordinary course of business, enter into, modify,
amend or terminate any material Contract (excluding any loan contract) or
waive, release, compromise or assign any material rights or claims.
6.3 Covenants of NCBC.
(a) From the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, NCBC covenants and agrees that
it shall (i) continue to conduct its business and the business
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of its Subsidiaries in a manner designed in its reasonable judgment to
enhance the long-term value of the NCBC Common Stock and the business
prospects of the NCBC Companies, and (ii) take no action which would
(x) materially adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the
last sentence of Section 8.1(b) of this Agreement or (y) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this agreement, provided, that the foregoing shall not
prevent any NCBC Company from acquiring any other assets or businesses or
from discontinuing or disposing of any of its Assets or business if such
action is, in the judgment of NCBC, desirable in the conduct of the
business of NCBC and its Subsidiaries and would not, in the judgment of
NCBC, likely delay the Effective Time to a date subsequent to the date set
forth in Section 9.1(e) of this Agreement.
(b) From and after the date of this Agreement, NCBC (i) shall continue
to comply with the requirements of Rules 144 and 145 under the 1933 Act to
the extent that such Rules can provide a means of sale of NCBC's Shares
issued or committed pursuant to the Merger, including options for a period
ending not later than the date that any person receiving NCBC shares or
options pursuant to the Merger becomes eligible to sell all of such shares,
and (ii) shall take no action which would prevent the transactions
contemplated hereby, including the Merger, from qualifying for pooling-of-
interests accounting treatment or as a reorganization within the meaning of
IRC Section 368(a).
(c) NCBC shall permit the participants of the FFC 401(k) Plan to roll
their plan assets into the NCBC 401(k) plan if, in the judgment of the
trustees of the FFC 401(k) Plan, the same would be appropriate unless, in
the judgment of the trustees of the NCBC 401(k) Plan, such a rollover would
have negative tax implications.
6.4 Adverse Changes in Condition. Except to the extent prohibited by Law,
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.
6.5 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 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 any Regulatory Authority pursuant to
the Securities Laws, 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 or regulatory accounting (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 any Regulatory Authorities
pursuant to the Securities Laws 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 materially misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with laws applicable to such reports.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 Registration Statement; Proxy Statement; Shareholder Approvals. NCBC
shall file the Registration Statement with the SEC, and shall use its
reasonable effort to cause the Registration Statement to become effective under
the 1933 Act and 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 NCBC Common Stock upon consummation of
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the Merger. FFC shall furnish all information concerning it and the holders of
its capital stock as NCBC may reasonably request in connection with such
action. FFC shall call a shareholders' meeting, to be held as soon as
reasonably practicable 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 its deems appropriate. In
connection with the shareholders' meeting, (i) NCBC and FFC shall prepare a
Proxy Statement (which shall be included in the Registration Statement with the
SEC) and mail such Proxy Statement to the shareholders of FFC, (ii) the Parties
shall furnish to each other all information concerning them that they may
reasonably request in connection with such Proxy Statement, (iii) the Board of
Directors of FFC shall recommend (subject to compliance with their fiduciary
duties as advised by counsel) to their shareholders the approval of the matters
submitted for approval, and (iv) the Board of Directors and officers of FFC
shall (subject to compliance with their fiduciary duties as advised by counsel)
use all reasonable effort to solicit and obtain such approval and adoption and
shall not recommend or present for shareholder consideration in any manner any
other Acquisition Proposal. FFC shall have no duty to disclose its Shareholder
list to NCBC. FFC shall have the right to mail the Proxy Statement to its
Shareholders, except that FFC agrees that the use of a commercial mailing
service to mail the Proxy Statement is acceptable to FFC unless the use thereof
appears reasonably likely to disclose the list of FFC's Shareholders to NCBC.
7.2 Exchange Listing. NCBC shall use its reasonable efforts to qualify,
prior to the Effective Time, for inclusion in the NASDAQ National Market
System, the shares of NCBC Common Stock to be issued to the holders of FFC
Common Stock or FFC Stock Options pursuant to the Merger, and NCBC shall give
all notices and make all filings with the NASDAQ required in connection with
the transactions contemplated herein. Notwithstanding this provision, NCBC's
obligation to list the shares of NCBC Common Stock remains a condition to FFC's
obligation to close the transactions described in this Agreement.
7.3 Applications. NCBC shall prepare and file, and FFC shall cooperate in
the preparation and, where applicable, 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. At least two business days prior
to filing, NCBC shall provide FFC and its counsel with copies of such
applications to review and approve with respect to information relating to FFC.
The Parties shall deliver to each other copies of all filings, correspondence
and orders to and from, all Regulatory Authorities in connection with the
transactions contemplated hereby as soon as practicable upon their becoming
available. In addition, each party shall advise the other promptly of any
substantive verbal communications with an such Regulatory Authorities
concerning the transactions described in this Agreement.
7.4 NCBC Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, NCBC and FFC shall execute and file the Articles
of Merger with the Tennessee Secretary of State in connection with the Closing.
7.5 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 8 of this Agreement; provided, however, that nothing herein shall
preclude either Party from exercising its rights under this 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 nothing in this Section 7.5 shall be construed to obligate NCBC
to take any action to meet any condition required for it to obtain any Consent
if NCBC shall, in its sole discretion, deem such condition to be unreasonable
or to constitute a significant impediment upon NCBC's ability to carry on its
business or acquisition programs or to require NCBC to
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increase its capital ratios to amounts in excess of the Federal Reserve's
minimum capital ratio guidelines which may from time to time be in effect.
7.6 Investigation and Confidentiality.
(a) To the extent not prohibited by law, 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. No investigation by a Party shall affect the
representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to
it by the other Party concerning its and its Subsidiaries' businesses,
operations and financial positions and shall not use such information for
any purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Effective Time,
each Party shall promptly return or certify the destruction of all
documents and copies thereof, and all work papers containing confidential
information received from the other Party. The Parties' Confidentiality
Agreement dated April 22, 1999, remains in full force and effect in
accordance with its terms and shall not be deemed to have merged into this
Agreement.
(c) Each Party shall give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the
other Party which it has discovered through the course of its investigation
and which represents either a material breach of any representation,
warranty, covenant or agreement of the other Party or which has had or is
reasonably likely to have a Material Adverse Effect on the other Party.
Each Party shall be afforded a reasonable time after such notice to cure
any breach that is not or was not done with the intent to breach this
Agreement.
7.7 Press Release. The initial press release announcing this Agreement shall
be reviewed and approved prior to release and shall be released at a time and
date agreed to in advance by appropriate representatives of both NCBC and FFC
and with respect to any subsequent press releases, FFC and NCBC shall consult
with each other as to the form and substance of such press release or other
public disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 7.7 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. FFC has advised NCBC that it is likely that FFC will file a
current report on Form 8-K with the SEC in respect to this transaction,
particularly in light of the Option granted to NCBC in Section 7.8(b) of this
Agreement.
7.8 Certain Actions.
(a) Except with respect to this Agreement and the Plan of Merger and
the transactions contemplated hereby and thereby, after the date of this
Agreement, neither FFC Company nor any Affiliate thereof nor any
representatives thereof retained by either FFC Company shall directly or
indirectly solicit or knowingly encourage any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary duties
of FFC Board of Directors as advised by counsel, neither FFC Company and no
Affiliate or representative of FFC or either FFC Company shall furnish any
non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into, or agree to enter into any
contract with respect to any Acquisition Proposal, but FFC 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. FFC shall promptly notify NCBC in
writing in the event that it receives any inquiry or proposal relating to
any such transaction. FFC shall (i) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
persons conducted
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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.
(b) As a condition of and as an inducement to NCBC's entering this
Agreement and the Letter of Intent between the parties dated April 14,
1999, FFC is simultaneously with the execution of the Agreement issuing to
NCBC an option in the form attached hereto as Exhibit 7.8, the terms and
conditions of which are incorporated herein by reference.
(c) The requirements, conditions and obligations imposed by this
Section 7.8 shall continue in full force and effect from the date of this
Agreement until October 31, 1999, unless this Agreement shall have been
extended to November 30, 1999 pursuant to Section 9.1(e) or shall have been
earlier terminated (i) mutually by the Parties pursuant to Section 9.1(a)
of this Agreement; (ii) by FFC pursuant to Section 9.1(b) of this
Agreement; (iii) by either Party pursuant to Section 9.1(d)(i) of this
Agreement; (iv) by FFC pursuant to Section 9.1(f) of this Agreement, other
than due to the failure to satisfy Section 8.1(a); or (v) by FFC pursuant
to Section 9.1(c) of this Agreement, but in such event only on the basis of
(a) material inaccuracy (without waiver thereof) of representations and
warranties of NCBC as contemplated by the provisions of Section 8.3(a) of
this Agreement; (b) noncompliance by NCBC with its obligations as required
by the provisions of Section 8.3(b) of this Agreement; or (c) the failure
of NCBC to deliver all certificates as required by the provisions of
Section 8.3(d) of this Agreement, or (d) the failure of NCBC to satisfy the
conditions set forth in Sections 8.3(b) and 8.3(e) of this Agreement.
7.9 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 IRC Section
368(a) for federal income tax purposes.
7.10 State Takeover Laws. Each FFC Company shall take all reasonable steps
to exempt the transactions contemplated by this Agreement from any applicable
Takeover Law.
7.11 Articles of Incorporation Provisions. Each FFC Company shall take
reasonable steps to ensure that the entering into of this Agreement and the
Plan of Merger and the consummation of the Merger and the other transactions
contemplated hereby and thereby do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws, or other
governing instruments of any FFC Company (other than voting, dissenters'
appraisal and other similar rights) or restrict or impair the ability of NCBC
or any of its Subsidiaries to vote, or to exercise the rights of a shareholder
with respect to, shares of any FFC Company that may be directly or indirectly
acquired or controlled by it.
7.12 Agreement of Affiliates. FFC has disclosed in Section 7.12 of the FFC
Disclosure Memorandum all persons whom it reasonably believes is an "affiliate"
of FFC for purposes of Rule 145 under the 1933 Act. FFC shall use its
reasonable efforts to cause each such Person to deliver to NCBC not later than
thirty (30) days prior to the Effective Time, a written agreement,
substantially in the form of Exhibit 7.12, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of FFC 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 NCBC 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 thirty (30) days of combined operations of NCBC and FFC 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 NCBC Common Stock issued
to such affiliates of FFC in exchange for shares of FFC Common Stock shall not
be transferable until such time as financial results covering at least thirty
(30) days of combined operations of NCBC and FFC 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 7.12 (and NCBC shall be entitled to place
customary restrictive legends upon certificates for shares of NCBC Common Stock
issued to affiliates of FFC pursuant to this Agreement and to
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enforce the provisions of this Section 7.12). NCBC shall not be required to
maintain the effectiveness of the Registration Statement under the 1933 Act for
the purposes of resale of NCBC Common Stock by such affiliates. NCBC will not
unreasonably withhold its consent for the removal of such restrictive legends
under appropriate circumstances.
7.13 Employee Benefits and Contracts. Following the Effective Time, NCBC
shall provide to officers and employees of the FFC Companies employee benefits
under employee benefit and welfare plans, on terms and conditions which when
taken as a whole are substantially similar to those currently provided by the
NCBC Companies to their similarly situated officers and employees. For purposes
of participation, vesting and other benefit accrual, under any such NCBC
employee benefit plans, the service of the employees of the FFC Companies prior
to the Effective Time shall be treated as service with an NCBC Company
participating in such employee benefit plan. Nothing herein shall be deemed to
have reduced, contracted, enlarged, undertaken, authorized, approved or
otherwise to have affected whatever contractual rights the officers and
employees of FFC may have under existing documentation other than as expressly
stated herein, and nothing herein shall be deemed to be an employment contract,
agreement or understanding, or offer of employment by NCBC or any of its direct
or indirect Subsidiaries after the Effective Time. FFC hereby represents and
covenants that it has accrued and will continue to accrue pursuant to GAAP
amounts sufficient to enable it to make the foregoing payments. Following
Closing, NCBC agrees to allow the current directors of FFC to participate in
its health insurance plans generally available to employees of NCBC, subject to
eligibility and any other requirements of such plans.
7.14 D&O Coverage. At the Effective Time, NCBC will provide, errors and
omissions insurance coverage for FFC's directors and officers, at its election,
either (i) by purchasing continuation coverage under FFC's current policy for a
period not less than six (6) years after the Effective Time, or (ii) obtain
coverage under NCBC's current policy to provide coverage for FFC's directors
and officers on a prior acts basis for a period not less than six (6) years
prior to the Effective Time.
7.15 Indemnification.
(a) With respect to all claims brought during the period of six (6)
years and an additional one (1) year if a savings statute is properly
invoked after the Effective Time, NCBC shall indemnify, defend and hold
harmless present and former directors, officers, employees and agents of
FFC and FFC Companies (the "FFC Entities") (each an "Indemnification
Party") against all Liabilities or litigation arising out of actions or
omissions arising out of the Indemnified Party's service or services as
directors, officers, employees or agents of an FFC entity, or at the
request of an FFC Entity, of another corporation, partnership, joint
venture, trust or other enterprise occurring at or prior to the Effective
Time (including transactions contemplated by this Agreement) to the fullest
extent permitted under Tennessee Law and the Articles of Incorporation and
Bylaws of FFC as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any Litigation
and whether or not any FFC Company or NCBC is insured against any such
matter. Without limiting the foregoing, in any case in which approval by
the Surviving Corporation is required to effectuate any indemnification,
the Surviving Corporation 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 NCBC and the Indemnified
Party.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 7.15, upon learning of any such Liability or
Litigation, shall promptly notify NCBC thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) the
Surviving Corporation shall have the right to assume the defense thereof
and the Surviving Corporation 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 the Surviving Corporation elects not to
assume such defense or counsel for the Indemnified Parties advised that
there are substantive issues which raise conflicts of interest between the
Surviving Corporation and
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the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and the Surviving Corporation shall be obligated
pursuant to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction (except that if there are conflicts
of interest among such Indemnified Parties, this limitation shall not
apply), (ii) the Indemnified Parties will cooperate in the defense of any
such Litigation, and (iii) the Surviving Corporation shall not be liable
for any settlement effected without its prior written consent; and provided
further that the Surviving Corporation shall not have any obligation
thereunder 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.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 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 10.6 of
this Agreement:
(a) Shareholder Approval. The shareholders of FFC shall have approved
this Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby, including the Merger, as and
to the extent required by law and by the provisions of any governing
instruments.
(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, which in the reasonable judgment of
the Board of Directors of either party 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, either party
would not, in its reasonable judgment, have entered into this Agreement.
(c) Consents. Each Party shall have obtained any and all Consents
required for consummation of the Merger (other than those referred to in
Sections 8.1(b) and 8.1(c) 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 government or regulatory authority
of competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any law or order (whether temporary, preliminary or permanent)
or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement and the
Plan of Merger.
(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 approval
under state Securities Laws or the 1933 Act, or 1934 Act relating to the
issuance or trading of the shares of NCBC Common Stock pursuant to the
Merger shall have been received.
(f) Exchange Listing. The shares of NCBC Common Stock issuable pursuant
to the Merger shall have been approved for inclusion on the NASDAQ National
Market System subject to official notice of issuance.
(g) Tax Matters. Each of the Parties shall have received an opinion
from King & Spalding in form and substance reasonably satisfactory to such
Party, dated the Effective Time, substantially to the effect
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that, on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Effective Time, for federal income tax purposes:
(i) The Merger will be treated as a reorganization within the
meaning of Section 368(a) of the IRC;
(ii) No gain or loss will be recognized by NCBC or FFC as a result
of the Merger;
(iii) No gain or loss will be recognized by the shareholders of
FFC upon the exchange of FFC Common Stock for NCBC Common Stock
pursuant to the Merger (except with respect to cash received in lieu of
a fractional share interest in NCBC Common Stock) or by the holders of
FFC Options upon the conversion of such options into rights with
respect to NCBC Common Stock;
(iv) The aggregate tax basis of NCBC Common Stock received by a
FFC shareholder pursuant to the Merger will be the same as the
aggregate tax basis of the FFC Common Stock surrendered in exchange
therefor (excluding any basis allocable to a fractional share of NCBC
Common Stock for which cash is received); and
(v) A FFC shareholder who perfects his dissenters' rights under
Tennessee law and who receives payment in cash for the "fair value" of
his FFC Common Stock will be treated as having exchanged such stock for
cash in a redemption subject to Section 302 of the IRC, and the FFC
shareholder generally will recognize capital gain or loss in such
exchange equal to the difference between the cash received and the tax
basis of such stock.
In rendering such opinion, King & Spalding may require and rely upon
representations and covenants, including those contained in certificates of
officers of NCBC, FFC, and others, reasonably satisfactory in form and
substance to such counsel.
(h) Retention Agreements. NCBC and FFC have agreed upon mutually
satisfactory retention contracts and bonuses for key employees of the FFC
Companies.
(i) Employment Agreements. NCBC and each of David Major and James S.
Short shall have entered into an Employment Agreement having terms and
conditions reasonably satisfactory to each of the respective parties.
(j) Accounting Treatment. FFC's external audit firm shall provide FFC
with a negative assurance letter (the "FFC Pooling Letter") that the
proposed transaction will qualify for pooling of interest accounting
treatment based on the attributes of FFC only.
8.2 Conditions to Obligations of NCBC. The obligations of NCBC to perform
this Agreement and the Plan of Merger and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by NCBC pursuant to Section 10.6(a) of this
Agreement:
(a) Representations and Warranties. For purposes of this Section
8.2(a), the accuracy of the representations and warranties of FFC 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 FFC set forth in Section 4.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimis in amount). The
representations and warranties of FFC set forth in Sections 4.20, 4.21 and
4.22 of this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
FFC set forth in this Agreement (including the representations and
warranties set forth in Sections 4.3, 4.20, 4.21 and 4.22), such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have,
a Material Adverse Effect on FFC.
(b) No Material Adverse Effect. There shall have been no Material
Adverse Effect on FFC's or FFC Bank Subsidiary's financial condition since
March 31, 1999.
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(c) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of FFC 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.
(d) Certificates. FFC shall have delivered to NCBC (i) a certificate,
dated as of the Effective Time and signed on its behalf by its President
and the Chief Financial Officer of the FFC Bank Subsidiary, to the effect
that the conditions to its obligations set forth in Sections 8.2(a) and
8.2(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by FFC'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 Plan of
Merger, and the consummation of the transactions contemplated hereby and
thereby, all in such reasonable detail as NCBC and its counsel shall
reasonably request.
(e) Affiliates Agreements. NCBC shall have received from each affiliate
of FFC the affiliates letter referred to in Section 7.12 of this Agreement,
to the extent necessary to assure in the reasonable judgment of NCBC that
the transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
(f) Legal Opinion. FFC shall have delivered to NCBC an opinion of
Daniel W. Small, counsel to FFC, dated as of the Closing Date, addressed to
and in form and substance satisfactory to NCBC, to the effect that:
(i) FFC is a bank holding company duly organized, validly existing
and in good standing under the laws of the State of Tennessee with
corporate power and authority to conduct its business and to own and
use its Assets.
(ii) FFC Bank Subsidiary is a financial institution duly
organized, validly existing, and in good standing under the laws of the
State of Tennessee with corporate power and authority to conduct its
business and own and use its Assets.
(iii) The execution, delivery and performance of this Agreement and
the Plan of Merger, as appropriate, and the consummation of the
transactions contemplated herein and therein, including the Merger and
the Option Agreement attached hereto as Exhibit 7.8 have been duly and
validly authorized by all necessary corporate and shareholder action in
respect thereof on the part of FFC.
(iv) The execution and delivery by FFC of this Agreement and
Option do not, and if FFC were now to perform its obligations under
this Agreement such performance would not, violate or contravene any
provision of the Articles of Incorporation or Bylaws of FFC or, to my
knowledge but without any independent investigation, result in any
breach of, or default or acceleration under any mortgage, agreement,
lease, indenture, or other instrument, order, judgment or decree to
which FFC is a party or by which it is bound.
(v) This Agreement, the Plan of Merger and the Option have been
duly and validly authorized, executed and delivered on behalf of FFC by
duly authorized officers, and (assuming valid authorization, execution
and delivery by NCBC) constitutes a valid and binding agreement of FFC
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and subject to the
application of equitable principles and judicial discretion; provided,
however, that no opinion is expressed as to the availability of the
equitable remedy of specific performance.
Such opinion shall be rendered by counsel reasonably acceptable to NCBC.
NCBC agrees that Daniel W. Small is acceptable counsel. In rendering such
opinion, counsel for FFC shall be entitled to require and shall be permitted to
rely upon certificates of officers of FFC and upon certificates of public
officials as to factual matters relevant to such opinion, which certificates
shall be in form and substance reasonably satisfactory to such counsel.
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(g) Maintenance of Certain Covenants, Etc. At the time of Closing,
(i) Exclusive of any securities gains or losses pursuant to FAS
115, total consolidated stockholders' equity shall not be less than
$18,885,000.00.
(ii) FFC shall own, free and clear of any liens, not less than
100% of the outstanding capital stock of FFC Bank Subsidiary; and
(iii) From and after the Balance Sheet Date, there shall have
been no extraordinary sale of assets, nor any material investment
portfolio restructuring by either FFC Company.
The financial criteria and calculations set forth above shall be determined
in accordance with GAAP consistently applied.
(h) Non-Compete Agreements. Each of David Major, James S. Short and six
of the other eight members of the FFC Board shall have entered into a non-
compete agreement with NCBC and FFC Bank Subsidiary substantially in the
form of the non-compete agreement which is annexed hereto as Exhibit 8.2.
8.3 Conditions to Obligations of FFC. The obligations of FFC to perform this
Agreement and the Plan of Merger and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by FFC pursuant to Section 10.6(b) of this
Agreement:
(a) Representations and Warranties. For purposes of this Section
8.3(a), the accuracy of the representations and warranties of NCBC 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 NCBC set forth in Section 5.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimis in amount). The
representations and warranties of NCBC set forth in Section 5.11 of this
Agreement shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of NCBC set
forth in this Agreement (including the representations and warranties set
forth in Sections 5.3 and 5.11) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on NCBC.
(b) No Material Adverse Effect. There shall have been no Material
Adverse Effect on NCBC's financial condition since March 31, 1999.
(c) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of NCBC 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.
(d) Certificates. NCBC shall have delivered to FFC (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 8.3(a) and 8.3(b) of
this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by NCBC's Board of Directors evidencing the taking
of all corporate action necessary to authorize the execution, delivery and
performance of this Agreement and the Plan of Merger, and the consummation
of the transactions contemplated hereby and thereby, all in such reasonable
detail as FFC and its counsel shall reasonably request.
(e) Legal Opinion. NCBC shall have delivered to FFC an opinion of
counsel, which may be in-house counsel of NCBC, dated as of the Closing
Date, addressed to and in form and substance satisfactory to FFC, to the
effect that:
(i) NCBC is a bank holding company duly organized, validly existing
and in good standing under the laws of the State of Tennessee with
corporate power and authority to conduct its business and to own and
use its Assets;
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(ii) This Agreement and the Plan of Merger have been duly and
validly authorized, executed and delivered on behalf of NCBC by duly
authorized officers or representatives thereof, and (assuming this
Agreement is a binding obligation of FFC) constitutes a valid and
binding obligation of NCBC enforceable in accordance with its terms,
subject as to enforceability to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and subject to the application of equitable
principles and judicial discretion;
(iii) The execution, delivery and performance of this Agreement and
the Plan of Merger, as appropriate, and the consummation of the
transactions contemplated herein and therein, including the Merger, have
been duly and validly authorized by all necessary corporate and
shareholder action in respect thereof on the part of NCBC; and
(iv) The execution and delivery by NCBC of this Agreement do not,
and if NCBC were now to perform its obligations under this Agreement
such performance would not, violate or contravene any provision of its
Charter or Bylaws or, to such counsel's knowledge but without any
independent investigation, result in any breach of, or default or
acceleration under any mortgage, agreement, lease, indenture, or other
instrument, order, judgment or decree to which NCBC is a party or by
which it is bound.
(f) Fairness Opinion. FFC shall have received a "fairness opinion" from
its independent financial adviser dated as of the date of the Proxy
Statement and as of the Closing Date to the effect that, in the opinion of
such adviser, the consideration to be received by the FFC Record Holders
pursuant to the terms and conditions of this Agreement is fair to the
shareholders of FFC from a financial point of view, and such fairness
opinion shall not have been withdrawn on or prior to the Closing Date.
ARTICLE 9
TERMINATION
9.1 Termination. Notwithstanding any other provision of this Agreement, and
notwithstanding the approval of this Agreement by the shareholders of NCBC or
FFC, this Agreement and the Plan of Merger 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 NCBC and the Board
of Directors of FFC; 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 8.2 of this Agreement in the case of FFC and Section 8.3 in the
case of NCBC 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 thirty (30) days after the
giving of written notice to breaching Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to terminate the
Merger under the applicable standard set forth in Section 8.2 of this
Agreement in the case of FFC and Section 8.3 of this Agreement in the case
of NCBC; 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 8.2of this Agreement in the case of FFC and Section 8.3 in the case
of NCBC 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 thirty (30) days after the giving of written
notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i) any
consent of any Regulatory Authority required for consummation of the Merger
shall have been denied by final nonappealable action
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of such Regulatory Authority or if any action taken by such Regulatory
Authority is not appealed within the time limit for appeal or (ii) the
shareholders of FFC fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the Tennessee Code and
FFC's Charter and Bylaws; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by October 31, 1999, 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 9.1(e) and further, if NCBC shall
have filed all applications necessary to obtain the necessary Consents of
banking Regulatory Authorities within sixty (60) days of the date hereof,
and if the Closing shall not have occurred because of a delay caused by a
bank Regulatory Authority in its review of the application before it, or by
the SEC in its review of the Registration Statement to be filed by NCBC,
then FFC shall, upon NCBC's written request, extend the October 31, 1999,
date for a reasonable time, in no event less than thirty (30) days, in
order for NCBC to obtain all Consents of bank Regulatory Authorities
required and/or all Consents of the SEC and any other securities Regulatory
Authorities, and for the expiration of any stipulated waiting periods.
Nothing shall require FFC to extend the Closing Date beyond November 30,
1999; or
(f) 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 8.2(a) of this Agreement in the case of FFC and Section 8.3(a) in
the case of NCBC or in material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Merger cannot
be satisfied or fulfilled by the date specified in Section 9.1(e) of this
Agreement as the same may be extended pursuant to Section 9.1(e).
If the FFC Disclosure Memorandum, as described in Article 4 of this
Agreement, (i) is not delivered within ten (10) days after the execution of
this Agreement as provided for in Section 6.1(b) of this Agreement; or (ii) if
the FFC Disclosure Memorandum is delivered within the time restrictions set
forth herein, but NCBC finds the FFC Disclosure Memorandum to be deficient in
content; or (iii) if the FFC Disclosure Memorandum is delivered in a timely
manner, but NCBC finds the FFC Disclosure Memorandum to contain disclosures
that NCBC deems unsatisfactory, NCBC has the following remedies. In the case of
either subsection (i) or (ii) of this Section 9.1(f), NCBC has the right to
immediately terminate this Agreement. In the case of subsection (iii) of this
Section 9.1(f), NCBC has the right to terminate this Agreement if the
disclosure deemed unsatisfactory by NCBC cannot be or has not been cured by FFC
to NCBC's satisfaction within thirty (30) days from the date NCBC gives FFC
written notice thereof. Within ten (10) days of receipt of the FFC Disclosure
Memorandum, NCBC shall give FFC written notice of any deficiencies or
unsatisfactory matters disclosed in the FFC Disclosure Memorandum. Such notice
shall state with particularity the issues in question and if such issue is
subject to cure, shall set forth NCBC's description of what action or result is
necessary to cure the items. In addition, in the case of subsection (iii) of
this Section 9.1(f), FFC has the right to terminate this Agreement if NCBC
demands that FFC remedy any problems perceived by NCBC with the substance of
the disclosures and if FFC is unwilling or unable to remedy the such perceived
problems. In the event of termination by either Party pursuant to this second
paragraph of Section 9.1(f), the Option shall terminate and this Agreement, the
Parties' Letter of Intent dated April 16, 1999 shall terminate and, other than
Section 7.6(b) and Article 10, this Agreement shall terminate. In the event of
termination under this second paragraph of Section 9.1(f), each Party shall be
responsible for its own fees and expenses and shall have no liability to the
other except for wilful violations of Section 7.6(b).
9.2 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 9.1 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 9.2 and Article 10 and Sections 7.6(b) and 7.8 of
this Agreement shall survive any such termination and abandonment; (ii) a
termination pursuant to Sections 9.1(b), 9.1(c) or 9.1(f) of this Agreement
shall not relieve the breaching Party from liability for (x) an uncured willful
breach of
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a covenant or agreement or (y) a fraudulent act of such Party, in either case
to the extent giving rise to such termination; and (iii) Section 7.8 of this
Agreement shall be governed by its own terms.
9.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants and agreements of the
Parties shall not survive the Effective Time except this Section 9.3 and
Articles 1, 2, 3 and 10 and Sections 6.3(b), 7.6, 7.8, 7.12, 7.13, 7.14 and
7.15 of this Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"Acquisition Proposal" shall mean any exchange offer or any proposal
for a merger, consolidation, or acquisition of 9.9% or more of the
outstanding common stock of FFC.
"Affiliate" of a Party means any Person that, directly or
indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person.
"Agreement" shall mean this Agreement, the Plan of Merger and the
Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Allowances" shall mean the allowances for loan, lease and other
credit losses, including losses in connection with ORE, of any Person.
"Articles of Merger" shall mean the Articles of Merger to be
executed by NCBC and FFC and filed with the Secretary of State of the
State of Tennessee pursuant to Section 48-21-107 of the Tennessee Code
relating to the merger of FFC with and into NCBC as contemplated by
this Agreement and the Plan of Merger.
"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.
"Balance Sheet Date" shall mean December 31, 1998.
"BHC Act" shall mean the Bank Holding Company Act of 1956, as
amended.
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday
or Friday that (i) is not a federal or state holiday generally
recognized or observed by banks in the State of Tennessee and (ii) is
not a day on which the principal executive office of either NCBC or FFC
is closed for business.
"Closing" shall mean the consummation of the Merger.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or affirmation by any Person pursuant to
any Contract, Law, Order or Permit.
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"Consideration" shall mean the shares of NCBC Common Stock and the
cash settlement of any remaining fractional share of NCBC Common Stock
deliverable to the FFC Record Holders pursuant to Section 2.1(b) of
this Agreement.
"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 that is binding on any
Person or its capital stock, Assets, or business.
"Control" shall have the meaning assigned to such term in Section
2(a)(2) of the Bank Holding Company Act of 1956, as amended.
"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 or 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.
"Effective Date" shall mean that date on which the Effective Time of
the Merger shall have occurred.
"Effective Time" shall mean the date and time that the Articles of
Merger shall become effective with the Secretary of State of Tennessee.
"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 any 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
USC (S)9601, et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 USC (S)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.
"Exchange Agent" shall mean The Bank of New York.
"Exchange Ratio" shall mean the number of shares of NCBC Common
Stock, and fractions thereof, to be exchanged for each share of FFC
Common Stock pursuant to Section 2.1(b) of this Agreement, subject to
such adjustments as may be expressly provided in this Agreement and the
Plan of Merger.
"Exhibits" 1.1, 7.8, 7.12 and 8.2, inclusive, 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 or
thereto.
"FFC" shall mean First Financial Corporation, a Tennessee
corporation.
"FFC Bank Subsidiary" shall mean, collectively, First Bank and
Trust, a state non-member bank and its wholly owned subsidiaries,
American Title and Escrow Company and First Southern Finance, Inc.
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"FFC Common Stock" shall mean the common stock of First Financial
Corporation, $2.50 par value per share.
"FFC Company(ies)" shall mean FFC and all of its Subsidiaries,
whether direct or indirect.
"FFC Disclosure Memorandum" shall mean the written information
entitled "First Financial Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to NCBC describing in reasonable
detail the matters contained therein. Disclosure of a specific state of
facts on one schedule shall be deemed to be disclosed with respect to
other relevant schedules so long as such disclosure is made with such
detail and such specificity that it is clear that the information
disclosed relates to the subject matter of the schedule.
"FFC Employee Plans" shall mean any pension plans, profit sharing
plans, deferred compensation plans, stock option plans, cafeteria
plans, and any other such or related benefit plans or arrangements
offered or funded by FFC or any FFC Bank Subsidiary, to or for the
benefit of the officers, directors, employees, independent contractors
or consultants of FFC or any FFC Bank Subsidiary.
"FFC Financial Statements" shall mean (i) the unaudited consolidated
balance sheets (including related notes and schedules, if any) of FFC
as of March 31, 1999, and 1998, and the related unaudited consolidated
statements of earnings, changes in shareholders' equity and cash flows
(including related notes and schedules, if any) for the three months
ended March 31, 1999; (ii) the audited consolidated balance sheets
(including related notes and schedules) of FFC as of December 31, 1998,
1997 and 1996, and the related audited consolidated statements of
earnings, changes in shareholders' equity and cash flows (including
related notes and schedules) for the years then ended; and (iii) the
consolidated financial statements of FFC (including related notes and
schedules, if any) with respect to periods subsequent to March 31,
1999, in each case as filed by FFC in SEC Documents.
"FFC Option Plans" means those options to acquire FFC Common Stock
under (i) FFC's non-qualified stock option plans; (ii) FFC's employment
agreement with its president; and (iii) FFC's incentive stock option
plan.
"FFC Preferred Stock" means the no par value preferred stock of FFC,
no shares of which are currently outstanding.
"FFC Record Holders" means those Persons who shall be the holders of
record of any of the issued and outstanding shares of FFC Common Stock
immediately prior to the Effective Time.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System and shall include the Federal Reserve Bank of St. Louis
when acting under delegated authority.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time, consistently applied.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HOLA" shall mean the Home Owners' Loan Act, 12 USC Section 1461 et
seq.
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"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.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person (including references
to such Person being aware of a particular matter) shall mean those
facts that are known by the Chairman, Chief Executive Officer,
President, Chief Administrative Officer, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer or General Counsel of such
Person, or such other officer of such Person, regardless of title,
charged with or responsible for the oversight of a particular area,
department or function to which the subject matter relates. As used in
this Agreement, the term "Knowledge" does not mean or include
constructive knowledge.
"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 property Taxes 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 written notice by any Person alleging potential
Liability or requesting information relating to or affecting a Party,
its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include
regular, periodic routine 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. With
respect to NCBC, a decline in the price of a share of NCBC Common Stock
shall not, in and of itself, be deemed to be or to be evidence of the
occurrence of a Material Adverse Effect with respect to NCBC.
"Merger" shall mean the merger of FFC with and into NCBC, as
described in Section 1.1 of this Agreement.
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"NASDAQ" shall mean the NASDAQ Stock Market or NASDAQ National
Market, or its successor, upon which shares of NCBC Common Stock are
listed for trading.
"NCBC" shall mean National Commerce Bancorporation, a corporation
chartered and existing under the laws of the State of Tennessee which
is registered both as a bank holding company and as a savings and loan
holding company and whose principal offices are located at One Commerce
Square, Memphis, Shelby County, Tennessee 38150.
"NCBC Capital Stock" shall mean, collectively, the NCBC Common
Stock, the NCBC Preferred Stock and any other class or series of
capital stock of NCBC.
"NCBC Common Stock" shall mean the $2.00 par value common stock of
NCBC.
"NCBC Companies" shall mean, collectively, NCBC and all NCBC
Subsidiaries.
"NCBC Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of NCBC as of
March 31, 1999, and as of March 31, 1998, and March 31, 1997, the
related statements of earnings, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) for the
three months ended March 31, 1999, and for each of the three years
ended December 31, 1998, 1997, and 1996, as filed by NCBC in SEC
Documents and (ii) the consolidated balance sheet of NCBC (including
related notes and schedules, if any) and related statements of
earnings, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to March 31, 1999.
"NCBC Preferred Stock" shall mean the no par value preferred stock
of NCBC authorized but none of which is currently outstanding.
"NCBC Subsidiaries" shall mean the Subsidiaries of NCBC.
"1933 Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"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.
"ORE" shall mean real estate and other property acquired through
foreclosure, deed in lieu of foreclosure, or similar procedures.
"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. A Party shall not be deemed to
participate in the management of a facility or property by reason of
the existence of covenants in loan agreements or similar instruments
between such Party and the owner of such facility or property.
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"Party" shall mean either NCBC, on the one hand, or FFC on the other
hand, and "Parties" shall mean NCBC and FFC.
"Pension Plan" shall mean any employee pension benefit plan as such
term is defined in Section 3(2) of ERISA which is maintained by the
referenced Party.
"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 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 providing for the
Merger, in substantially the form of Exhibit 1.1.
"Proxy Statement" shall mean the proxy statement to be used by FFC
to solicit proxies with a view to securing the approval of the FFC
shareholders of this Agreement and the Plan of Merger.
"Records" means all available records, minutes of meetings of the
Board of Directors, committees and shareholders of a Party; original
instruments and other documentation (or true and correct copies
thereof), pertaining to a Party or any of its Subsidiaries or assets
(including plans and specifications relating to any realty),
Liabilities, Deposits, Contracts, capital stock, and loans; and all
other business and financial records which are necessary or customary
for use in the conduct of such Person or any of such Person's
Subsidiary businesses on or after the Effective Time as it was
conducted prior to the Effective Time.
"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
NCBC under the 1933 Act with respect to the issuance of the shares of
NCBC Common Stock to the shareholders of FFC in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the United States
Department of Justice, the Federal Reserve, the Office of Thrift
Supervision (including its predecessor, the Federal Home Loan Bank
Board), the Office of the Comptroller of the Currency, the FDIC, all
state regulatory agencies having jurisdiction over the Parties and
their respective Subsidiaries, the NASDAQ, the National Association of
Securities Dealers and the SEC, or any respective successor thereto.
"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, understandings, warrants, or
other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for shares of the
capital stock of a Person, or which derive their value in whole or in
part from shares of the capital stock of a Person, including stock
appreciation rights and phantom stock, or by which a Person is or may
be bound to issue additional shares of its capital stock or other
Rights.
"SEC" shall mean the United States Securities and Exchange
Commission, or any successor thereto.
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"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required
to be filed, by a Party or any of its Subsidiaries pursuant to the
Securities Laws.
"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 the SEC promulgated thereunder, as well as
any similar state securities laws and any similar rules and regulations
promulgated by the applicable federal or state bank Regulatory
Authorities.
"Shareholders' Meeting" shall mean the Special Meeting of the
shareholders of FFC to be held pursuant to Section 7.1 of this
Agreement, including any adjournment or adjournments or postponement or
postponements thereof.
"Subsidiaries" shall mean all of those Persons of which the entity
in question owns or controls 5% or more of the outstanding voting
equity securities or equity interest, either directly or through an
unbroken chain of entities as to each of which 5% or more of the
outstanding equity securities or equity interest is owned directly or
indirectly by its parent; provided, however, that there shall not be
included any Person acquired through foreclosure or in satisfaction of
a debt previously contracted in good faith, any such entity that owns
or operates an automatic teller machine interchange network, or any
such Person the equity securities or equity interest of which are owned
or controlled in a fiduciary capacity or through a small business
development corporation.
"Surviving Corporation" shall mean NCBC, as the corporation
resulting from and surviving the consummation of the Merger as set
forth in Section 1.1 of this Agreement.
"Tax" or "Taxes" shall mean any federal, state, county, local or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy and other
taxes, assessments, charges, fares or impositions, including interest,
penalties, and additions imposed thereon or with respect thereto.
"Tennessee Code" shall mean the Tennessee Code Annotated, as
amended.
(b) 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."
10.2 Expenses.
(a) Except as otherwise provided in Section 7.8 and this Section 10.2,
each of the Parties shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the costs 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,
1998. No such amounts shall affect or serve to reduce the Gross Purchase
Price or the Net Purchase Price.
(b) Nothing contained in this Section 10.2 shall constitute or shall be
deemed to constitute liquidated damages with respect to any liability of a
Party pursuant to this Agreement or otherwise limit the rights of the non-
breaching Party. This paragraph shall not be deemed to limit or to enlarge
the agreed remedies for breach of this Agreement set forth in Section 9.2.
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10.3 Brokers and Finders. Other than the engagement of Morgan Keegan &
Company, Inc. by FFC, the fees of which solely shall be the responsibility of
FFC, 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, investments bankers
fees, brokerage fees, commissions, or finders fees in connection with this
Agreement or the ones 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 FFC or NCBC, each of FFC and NCBC,
as the case may be agrees to indemnify and hold the other Party harmless of and
from any Liability in respect of any such claim.
10.4 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. Nothing in this
Agreement, expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
Notwithstanding the foregoing, this Agreement does not supersede that certain
Confidentiality Agreement, dated as of April 22, 1999, between the Parties. The
Parties acknowledge and agree that such Confidentiality Agreement shall remain
in full force and effect, notwithstanding the execution of this Agreement,
until the earlier of the Effective Time or the expiration of such
Confidentiality Agreement in accordance with its terms.
10.5 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 and the Plan of Merger has been
obtained; provided, that after any such approval by the holders of FFC Common
Stock, there shall be made no amendment that modifies in any material respect
the Consideration to be received by the FFC Record Holders.
10.6 Waivers.
(a) Prior to or at the Effective Time, NCBC, 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 FFC, to waive or extend the time for the compliance or
fulfillment by FFC of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
NCBC 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 NCBC.
(b) Prior to or at the Effective Time, FFC, 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 NCBC, to waive or extend the time for the compliance or
fulfillment by NCBC of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
FFC 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 FFC.
(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
or a waiver of any other condition or of the breach of any other term of
this Agreement.
10.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party; provided, however, NCBC may
assign all of its
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rights hereunder to any other wholly owned Subsidiary whether now existing or
hereafter acquired or organized (but NCBC may not delegate any of its duties,
including the duty to issue and list the shares of NCBC Common Stock to be
issued pursuant to the Merger to the FFC Record Holders. Notwithstanding 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.
10.8 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 prepaid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
<TABLE>
<S> <C>
If to NCBC: National Commerce Bancorporation
One Commerce Square
Memphis, TN 38150
Fax: (901) 523-3170
Telephone: (901) 523-3320
Attention: Lewis E. Holland
Vice Chairman and CFO
and Charles A. Neale
Vice President and General Counsel
Fax: (901) 523-3303
Telephone: (901) 523-3371
If to FFC: First Financial Corporation
1691 North Mt. Juliet Road
Mt. Juliet, TN 37122
Fax: (615) 758-8645
Telephone: (615) 754-2265
Attention: David Major, President and
Chief Executive Officer
With a copy
to: Daniel W. Small
Attorney at Law
323 Union Street, Suite 300
P.O. Box 190608
Nashville, TN 37219-0608
Fax: (615) 252-6001
Telephone: (615) 252-6000
</TABLE>
10.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Tennessee, without regard to any
applicable conflicts of Laws.
10.10 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 document.
10.11 Captions. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
10.12 Interpretation. 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.
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10.13 Enforcement of Agreement.
(a) The Parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were 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.
(b) The beneficiaries of the provisions set forth in Sections 7.13,
7.14 and 7.15 may enforce their respective rights, under said sections of
this Agreement and any other applicable sections of this Agreement
including Section 10.14.
10.14 Attorneys' Fees. If any Party hereto shall bring any action at law or
in equity to enforce its rights under this Agreement (including an action based
upon a misrepresentation or the breach of any warranty, covenant, agreement or
obligation contained herein), the prevailing Party in such action shall be
entitled to recover from the other Party its reasonable costs and expenses
necessarily incurred in connection with such action (including fees,
disbursements and expenses of attorneys and costs of investigation).
10.15 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 unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
10.16 Remedies Cumulative. All remedies provided in this Agreement, by Law
or otherwise, shall be cumulative and not alternative.
IN WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Agreement or has caused this Agreement to be executed and
delivered in its name and on behalf by its representatives thereunto duly
authorized, all as of the date first written above.
FIRST FINANCIAL CORPORATION
/s/ David Major
By: ___________________________________
David Major
President and Chief Executive
Officer
ATTEST:
/s/ Sam Short
- -------------------------------------
Sam Short, Executive Vice President
(This corporation has no seal)
NATIONAL COMMERCE BANCORPORATION
/s/ William R. Reed, Jr.
By: ___________________________________
William R. Reed, Jr.
Vice Chairman
ATTEST:
/s/ Charles A. Neale
- -------------------------------------
Charles A. Neale, Vice President and General Counsel
(This corporation has no seal)
A-42
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APPENDIX B
Form of Fairness Opinion
[Letterhead of Morgan Keegan & Company, Inc.]
June 1, 1999
Board of Directors
First Financial Corporation
1691 North Mt. Juliet Road
Mt. Juliet, TN 37122
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of First Financial Corporation (the "Company") of the
Exchange Ratio in connection with its proposed merger with National Commerce
Bancorporation ("NCBC") (the "Transaction") pursuant to and in accordance with
the terms of the Agreement and Plan of Merger (the "Agreement") entered into by
and between NCBC and the Company. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Agreement.
You have advised us that, pursuant to the Agreement, the Company will merge
with and into NCBC (the "Merger") and that the Company's banking subsidiary
will become a wholly owned bank subsidiary of NCBC. Each share of the Company's
Common Stock (excluding shares held by Company shareholders who have perfected
their dissenters' rights of appraisal) issued and outstanding at the Effective
Time shall be converted into 2.8502 shares of NCBC Common Stock. In addition,
each stock option outstanding shall be converted at the above Exchange Ratio
into and become rights with respect to NCBC Common Stock.
Morgan Keegan & Company, Inc. ("Morgan Keegan"), as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for various purposes. We have been retained by the Board of
Directors of the Company to serve as its financial advisor. Morgan Keegan will
receive a fee for serving as financial advisor and for rendering this opinion.
We have not advised any party in connection with the Transaction other than the
Company and we make no recommendation to the shareholders of the Company.
In connection with our opinion, we have (1) reviewed the Agreement; (2) held
discussions with various members of management and representatives of the
Company and NCBC concerning each company's historical and current operations,
financial condition and prospects; (3) reviewed historical consolidated
financial and operating data that was publicly available or furnished to us by
the Company and NCBC; (4) reviewed internal financial analyses, financial and
operating forecasts, to the extent publicly available, reports and other
information prepared by officers and representatives of the Company; (5)
reviewed certain publicly available information with respect to certain other
companies that we believe to be comparable to the Company and NCBC and the
trading markets for such other companies' securities; (6) reviewed certain
publicly available information concerning the terms of certain other
transactions that we deemed relevant to our inquiry; (7) considered the
relative contributions of the Company and NCBC to the combined company; and
(8) conducted such other financial studies, analyses and investigations as we
deemed appropriate for the purpose of this opinion.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have assumed and relied upon
the representations and warranties of the Company and NCBC contained in the
Agreement. We have not been engaged to, and have not independently attempted
to, verify any of such information. We have also relied upon the managements of
the Company and NCBC as to the reasonableness and achievabiity of the financial
and operating projections and the assumptions and bases therefor provided to us
and, with your consent, we have assumed that such projections reflect the best
currently available estimates and judgments of such respective managements of
the Company and NCBC and that such projections and
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forecasts will be realized in the amounts and time periods currently estimated
by the managements of the Company and NCBC. We have not been engaged to assess
the achievability of such projections or the assumptions on which they were
based and express no view as to such projections or assumptions. In addition,
we have not conducted a physical inspection or appraisal of any of the assets,
properties or facilities of either the Company or NCBC nor have we been
furnished with any such evaluation or appraisal. We have also assumed that the
conditions to the Transaction would be consummated on a timely basis in the
manner contemplated in the Agreement. Our opinion is based upon analyses of the
foregoing factors in light of our assessment of general economic, financial and
market conditions as they exist and can be evaluated by us as of the date
hereof. We express no opinion as to the price or trading range at which shares
of NCBC Common Stock will trade following the date hereof, or the price or
trading range at which NCBC Common Stock will trade upon completion of the
Transaction.
Morgan Keegan has not previously provided investment banking services, but
has provided fixed income services, to the Company. In the ordinary course of
our business, we serve as a market maker for NCBC Common Stock and trade shares
for our own account and the accounts of our customers. Accordingly, we may at
any time hold long or short positions in NCBC Common Stock. In connection with
a recent secondary offering of 5 million shares of NCBC Common Stock, Morgan
Keegan was an underwriter and member of the selling group.
It is understood that this opinion is not to be quoted or referred to, in
whole or in part (including excerpts or summaries), in any filing, report,
document, release or other communication used in connection with the
Transaction (unless required to be quoted or referred to by applicable
regulatory requirements), nor shall this opinion be used for any other
purposes, without our prior written consent, which consent shall not be
unreasonably withheld. Furthermore, our opinion is directed to the Board of
Directors of the Company and does not constitute a recommendation to any
shareholder of the Company as to how such shareholder should vote at the
shareholders' meeting to be held in connection with the Transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that, as of the date hereof, the
Exchange Ratio is fair, from a financial point of view, to the Company's
shareholders.
Yours very truly,
/s/ Morgan Keegan & Company, Inc.
MORGAN KEEGAN & COMPANY, INC.
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APPENDIX C
DISSENTERS' RIGHTS
PART I--RIGHT TO DISSENT AND
OBTAIN PAYMENT FOR SHARES
TENNESSEE BUSINESS CORPORATION ACT (S)(S) 48-23-101 ET SEQ.
48-23-101. Definitions.--As used in this chapter, unless the context
otherwise requires:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder;
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under (S) 48-23-102 and who exercises that right when and in
the manner required by part 2 of this chapter;
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action;
(5) "Interest" means interest from the effective date of the corporate
action that gave rise to the shareholder's right to dissent until the date of
payment, at the average auction rate paid on United States treasury bills with
a maturity of six (6) months (or the closest maturity thereto) as of the
auction date for such treasury bills closest to such effective date;
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation; and
(7) "Shareholder" means the record shareholder or the beneficial
shareholder. [Acts 1986, ch. 887, (S) 13.01.]
48-23-102. Right to dissent.--(a) A shareholder is entitled to dissent from,
and obtain payment of the fair value of the shareholder's shares in the event
of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party:
(A) If shareholder approval is required for the merger by (S) 48-21-104
or the charter and the shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its parent
under (S) 48-21-105;
(2) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one (1) year after the date of sale;
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(4) An amendment of the charter that materially and adversely affects rights
in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter, or
to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a fraction
of a share, if the fractional share is to be acquired for cash under (S)
48-16-104; or
(5) Any corporate action taken pursuant to a shareholder vote to the extent
the charter, bylaws, or a resolution of the board of directors provides that
voting or nonvoting shareholders are entitled to dissent and obtain payment for
their shares.
(b) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(c) Notwithstanding the provisions of subsection (a), no shareholder may
dissent as to any shares of a security which, as of the date of the
effectuation of the transaction which would otherwise give rise to dissenters'
rights, is listed on an exchange registered under (S) 6 of the Securities
Exchange Act of 1934, as amended, or is a "national market system security," as
defined in rules promulgated pursuant to the Securities Exchange Act of 1934,
as amended. [Acts 1986, ch. 887, (S) 13.02.]
48-23-103. Dissent by nominees and beneficial owners.--(a) A record
shareholder may asset dissenters' rights as to fewer than all the shares
registered in the record shareholder's name only if the record shareholder
dissents with respect to all shares beneficially owned by any one (1) person
and notifies the corporation in writing of the name and address of each person
on whose behalf the record shareholder asserts dissenters' rights. The rights
of a partial dissenter under this subsection are determined as if the shares as
to which the partial dissenter dissents and the partial dissenter's other
shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares of
any one (1) or more classes held on the beneficial shareholder's behalf only if
the beneficial shareholder:
(1) Submits to the corporation the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(2) Does so with respect to all shares of the same class of which the person
is the beneficial shareholder or over which the person has power to direct the
vote. [Acts 1986, ch. 887, (S) 13.03.]
PART 2 -- PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
48-23-201. Notice of dissenters' rights.--(a) If proposed corporate action
creating dissenters' rights under (S) 48-23-102 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under this chapter and be
accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under (S) 48-23-102 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was
taken and send them the dissenters' notice described in (S) 48-23-203.
(c) A corporation's failure to give notice pursuant to this section will not
invalidate the corporate action. [Acts 1986, ch. 887, (S) 13.20.]
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48-23-202. Notice of intent to demand payment.--(a) If proposed corporate
action creating dissenters' rights under (S) 48-23-102 is submitted to a vote
at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights must:
(1) Deliver to the corporation, before the vote is taken, written notice of
the shareholder's intent to demand payment for the shareholder's shares if the
proposed action is effectuated; and
(2) Not vote the shareholder's shares in favor of the proposed action. No
such written notice of intent to demand payment is required of any shareholder
to whom the corporation failed to provide the notice required by (S) 48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment for the shareholder's shares under this chapter. [Acts
1986, ch. 887, (S) 13.21.]
48-23-203. Dissenters' notice.--(a) If proposed corporate action creating
dissenters' rights under (S) 48-23-102 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of (S) 48-23-202.
(b) The dissenters' notice must be sent no later than ten (10) days after
the corporate action was authorized by the shareholders or effectuated,
whichever is the first to occur, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the principal terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not the person asserting dissenters' rights acquired
beneficial ownership of the shares before that date;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than one (1) nor more than two (2) months after the
date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has not
previously sent a copy of this chapter to the shareholder pursuant to (S) 48-
23-201. [Acts 1986, ch. 887, (S) 13.22.]
48-23-204. Duty to demand payment.--(a) A shareholder sent a dissenters'
notice described in (S) 48-23-203 must demand payment, certify whether the
shareholder acquired beneficial ownership of the shares before the date
required to be set forth in the dissenters' notice pursuant to (S) 48-23-
203(b)(3), and deposit the shareholder's certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits the shareholder's share
certificates under subsection (a) retains all other rights of a shareholder
until these rights are cancelled or modified by the effectuation of the
proposed corporate action.
(c) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn unless
the corporation with which it was filed, or the surviving corporation, consents
thereto. [Acts 1986, ch. 887, (S) 13.23.]
48-23-205. Share restrictions.--(a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is effectuated or the restrictions
released under (S) 48-23-207.
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(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the effectuation of the proposed corporate action.
[Acts 1986, ch. 887, (S) 13.24.]
48-23-206. Payment.--(a) Except as provided in (S) 48-23-208, as soon as the
proposed corporate action is effectuated, or upon receipt of a payment demand,
whichever is later, the corporation shall pay each dissenter who complied with
(S) 48-23-204 the amount the corporation estimates to be the fair value of each
dissenter's shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under (S) 48-23-
209; and
(5) A copy of this chapter if the corporation has not previously sent a copy
of this chapter to the shareholder pursuant to (S) 48-23-201 or (S) 48-23-203.
[Acts 1986, ch. 887, (S) 13.25.]
48-23-207. Failure to take action.--(a) If the corporation does not
effectuate the proposed action that gave rise to the dissenters' rights within
two (2) months after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under (S) 48-23-203 and repeat the payment demand
procedure. [Acts 1986, ch. 887, (S) 13.26.]
48-23-208. After-acquired shares.--(a) A corporation may elect to withhold
payment required by (S) 48-23-206 from a dissenter unless the dissenter was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders
of the principal terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after effectuating the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and shall pay
this amount to each dissenter who agrees to accept it in full satisfaction of
the dissenter's demand. The corporation shall send with its offer a statement
of its estimate of the fair value of the shares, an explanation of how the
interest was calculated, and a statement of the dissenter's right to demand
payment under (S) 48-23-209. [Acts 1986, ch. 887, (S) 13.27.]
48-23-209. Procedure if shareholder dissatisfied with payment or offer.--(a)
A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate (less any payment under (S)
48-23-206), or reject the corporation's offer under (S) 48-23-208 and demand
payment of the fair value of the dissenter's shares and interest due, if:
(1) The dissenter believes that the amount paid under (S) 48-23-206 or
offered under (S) 48-23-208 is less than the fair value of the dissenter's
shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under (S) 48-23-206 within two (2)
months after the date set for demanding payment; or
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(3) The corporation, having failed to effectuate the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within two (2) months after the date set for
demanding payment.
(b) A dissenter waives the dissenter's right to demand payment under this
section unless the dissenter notifies the corporation of the dissenter's
demand in writing under subsection (a) within one (1) month after the
corporation made or offered payment for the dissenter's shares. [Acts 1986,
ch. 887, (S) 13.28.]
48-23-301. Court action.--(a) If a demand for payment under (S) 48-23-209
remains unsettled, the corporation shall commence a proceeding within two (2)
months after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does not
commence the proceeding within the two-month period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in a court of record
having equity jurisdiction in the county where the corporation's principal
office (or, if none in this state, its registered office) is located. If the
corporation is a foreign corporation without a registered office in this
state, it shall commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one (1)
or more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled
to the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus accrued interest, exceeds the amount paid by the
corporation; or
(2) For the fair value, plus accrued interest, of the dissenter's after-
acquired shares for which the corporation elected to withhold payment under
(S) 48-23-208. [Acts 1986, ch. 887, (S) 13.30.]
48-23-302. Court costs and counsel fees.--(a) The court in an appraisal
proceeding commenced under (S) 48-23-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under (S) 48-23-209.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable against:
(1) The corporation and in favor of any or all dissenters if the court
finds the corporation did not substantially comply with the requirements of
part 2 of this chapter; or
(2) Either the corporation or a dissenter, in favor of any other party, if
the court finds that the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously, or not in good faith with respect to the
rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited. [Acts 1986, ch. 887, (S) 13.31.]
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20: Indemnification of Directors and Officers
The Registrant is a Tennessee corporation. Sections 48-18-501 through 48-18-
509 of the Tennessee Business Corporation Act contain detailed provisions on
indemnification of directors and officers of a Tennessee corporation against
reasonable expenses.
The Registrant's Restated Charter (the "Charter"), provides that no director
of the Registrant shall be personally liable to the Registrant or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except: (i) for any breach of the director's duty of loyalty to the Registrant
or its shareholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; or (iii) for
unlawful distributions under Section 48-18-304 of the Tennessee Business
Corporation Act.
The Registrant's Bylaws (the "Bylaws"), provide that the Registrant, shall
indemnify any person who is made a party to a suit by or in the right of the
Registrant to procure a judgment in its favor by reason of the fact that he,
his testator or intestate is or was a director or officer of the Registrant,
against amounts paid in settlement and reasonable expenses including attorneys'
fees actually and necessarily incurred as a result of such suit or proceeding
or any appeal therein to the extent permitted by and in the manner provided by
the laws of Tennessee. The Registrant shall indemnify any person made or
threatened to be made a party to a suit or proceeding other than by or in the
right of any company of any type or kind, domestic or foreign, which any
director or officer of the Registrant, by reason of the fact that he, his
testator or intestate, was a director or officer of the Registrant or served
such other company in any capacity, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees actually and
necessarily incurred as a result of such suit or proceeding, or any appeal
therein, if such director or officer acted in good faith for a purpose which he
reasonably believed to be in the best interest of the Registrant and, in
criminal actions or proceedings, in addition, had no reasonable cause to
believe that this conduct was unlawful, and to the extent permitted by, and in
the manner provided by, the laws of Tennessee.
The directors and officers of the Registrant are covered by an insurance
policy indemnifying them against certain civil liabilities, including
liabilities under the federal securities laws, which might be incurred by them
in such capacity.
Item 21: Exhibits and Financial Statement Schedules
An index to Exhibits appears at pages II-5 through II-6 hereof.
Item 22: Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual
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report pursuant to section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy
Statement/Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Memphis, State of
Tennessee, on May 28, 1999.
National Commerce Bancorporation
/s/ Thomas M. Garrott
By: _________________________________
Thomas M. Garrott
Chairman of the Board, President
and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Lewis E. Holland and Charles A. Neale and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas M. Garrott Chairman of the Board, May 28, 1999
______________________________________ President and Chief
Thomas M. Garrott Executive Officer
(Principal Executive
Officer) and Director
/s/ Lewis E. Holland Vice Chairman, Treasurer May 28, 1999
______________________________________ and Chief Financial
Lewis E. Holland Officer (Principal
Financial Officer and
Director)
/s/ Mark A. Wendel Accounting Officer May 28, 1999
______________________________________ (Principal Accounting
Mark A. Wendel Officer)
Director May , 1999
______________________________________
Frank G. Barton, Jr.
/s/ R. Grattan Brown, Jr. Director May 28, 1999
______________________________________
R. Grattan Brown, Jr.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Bruce E. Campbell, Jr. Director May 28, 1999
______________________________________
Bruce E. Campbell, Jr.
/s/ John D. Canale, III Director May 28, 1999
______________________________________
John D. Canale, III
/s/ James H. Daughdrill, Jr. Director May 28, 1999
______________________________________
James H. Daughdrill, Jr.
/s/ Thomas C. Farnsworth, Jr. Director May 28, 1999
______________________________________
Thomas C. Farnsworth, Jr.
/s/ R. Lee Jenkins Director May 28, 1999
______________________________________
R. Lee Jenkins
/s/ W. Neely Mallory, Jr. Director May 28, 1999
______________________________________
W. Neely Mallory, Jr.
/s/ James E. McGehee, Jr. Director May 28, 1999
______________________________________
James E. McGehee, Jr.
/s/ Phillip H. McNeil, Sr. Director May 28, 1999
______________________________________
Phillip H. McNeil, Sr.
/s/ Harry J. Phillips, Sr. Director May 28, 1999
______________________________________
Harry J. Phillips, Sr.
/s/ J. Bradbury Reed Director May 28, 1999
______________________________________
J. Bradbury Reed
/s/ William R. Reed, Jr. Director May 28, 1999
______________________________________
William R. Reed, Jr.
/s/ G. Mark Thompson Director May 28, 1999
______________________________________
G. Mark Thompson
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger among National Commerce Bancorporation
and First Financial Corporation dated as of May 1, 1999 (included as
Appendix A to the Proxy Statement/Prospectus in Part I of this
Registration Statement).
2.2 Stock Option Agreement, dated as of May 1, 1999, between National
Commerce Bancorporation and First Financial Corporation.
3.1 Charter of National Commerce Bancorporation as amended and restated
(filed as Exhibit 3.1 to the Registrant's Form 10-K for the year ended
December 31, 1996 (File No. 0-6094) and incorporated herein by
reference).
3.2 Bylaws of National Commerce Bancorporation as amended (filed as
Exhibit 3.2 to the Registrant's Form 10-K for the year ended December
31, 1995 (File No. 0-6094) and incorporated herein by reference).
4.1 Specimen Stock Certificate.
5.1 Opinion of King & Spalding, counsel to the Registrant, as to the
legality of the shares of the Registrant's Common Stock being
registered.
8.1 Opinion of King & Spalding, counsel to the Registrant, as to certain
federal income tax consequences of the Merger.
10.1 Form of Promissory Notes of NBC payable to The Mallory Partners (filed
as Exhibit 10.1 to the Registrant's Form 10-K for the year ended
December 31, 1987 (File No. 0-6094) and incorporated herein by
reference).
10.2 Employment Agreement dated as of October 1, 1991, by and between
National Bank of Commerce and Bruce E. Campbell, Jr. (filed as Exhibit
10.5 to the Registrant's Form 10-K for the year ended December 31,
1987 (File No. 0-6094) and incorporated herein by reference).
10.3 Employment Agreement dated as of January 1, 1992, by and between
National Bank of Commerce and John S. Evans (filed as Exhibit 10.6 to
the Registrant's Form 10-K for the year ended December 31, 1992 (File
No. 0-6094) and incorporated herein by reference).
10.4 Employment Agreement dated as of January 1, 1992, by and between
National Bank of Commerce and William R. Reed, Jr. (filed as Exhibit
10.8 to the Registrant's Form 10-K for the year ended December 31,
1992 (File No. 0-6094) and incorporated herein by reference).
10.5 Employment Agreement dated as of September 1, 1993, by and between
National Bank of Commerce and Thomas M. Garrott (filed as Exhibit 10.9
to the Registrant's Form 10-K for the year ended December 31, 1994
(File No. 0-6094) and incorporated herein by reference).
10.6 Employment Agreement dated as of September 1, 1993, by and between
National Bank of Commerce and Gary L. Lazarini (filed as Exhibit 10.10
to the Registrant's Form 10-K for the year ended December 31, 1994
(File No. 0-6094) and incorporated herein by reference).
10.7 Employment Agreement dated as of September 1, 1993, by and between
National Bank of Commerce and Mackie H. Gober (filed as Exhibit 10.11
to the Registrant's Form 10-K for the year ended December 31, 1994
(File No. 0-6094) and incorporated herein by reference).
10.8 Deferred Compensation Agreement for Thomas M. Garrott (filed as
Exhibit 10c(2) to the Registrant's Form 10-K for the year ended
December 31, 1984 (File No. 0-6094) and incorporated herein by
reference).
10.9 Employment Agreement dated as of July 1, 1994, by and between National
Bank of Commerce and Lewis E. Holland (filed as Exhibit 10.14 to the
Registrant's Form 10-K for the year ended December 31, 1994 (File No.
0-6094) and incorporated herein by reference).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
10.10 Split Dollar Insurance Plan (filed as Exhibit 10c(3) to the
Registrant's Form 10-K for the year ended December 31, 1984 (File No.
0-6094) and incorporated herein by reference).
10.11 Bonus Incentive Plan (filed as Exhibit 10c(1) to the Registrant's Form
10-K for the year ended December 31, 1980 (File No. 0-6094) and
incorporated herein by reference).
10.12 1982 Incentive Stock Option Plan, as amended (filed as Exhibit 10.8 to
the Registrant's Form 10-K for the year ended December 31, 1988 (File
No. 0-6094)) and incorporated herein by reference).
10.13 1986 Stock Option Plan (filed as Exhibit A to the Registrant's Proxy
Statement for the 1987 Annual Special Meeting of Shareholders and
incorporated herein by reference).
10.14 1990 Stock Plan (filed as Exhibit A to the Registrant's Proxy
Statement for the 1990 Annual Special Meeting of Shareholders and
incorporated herein by reference).
10.15 Form of Amendment to 1986 Stock Option Plan (filed as Exhibit 10.10 to
the Registrant's Form 10-K for the year ended December 31, 1988 (File
No. 0-6094) and incorporated herein by reference).
10.16 1994 Stock Plan (filed as Exhibit A to the Registrant's Proxy
Statement for the 1994 Annual Special Meeting of Shareholders and
incorporated herein by reference).
10.17 Resolution authorizing Pension Restoration Plan (filed as Exhibit
10(c)(7) to the Registrant's Form 10-K for the year ended December 31,
1986 (File No. 0-6094) and incorporated herein by reference).
10.18 Employment Agreement dated as of August 19, 1996, by and between
National Commerce Bancorporation and Jacques Driscoll (filed as
Exhibit 10.18 to the Registrant's Form 10-K for the year ended
December 31, 1997 (File No. 0-6094) and incorporated herein by
reference).
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Maggart & Associates, P.C.
23.3 Consent of King & Spalding (included in the opinions filed as Exhibits
5.1 and 8.1).
23.4 Consent of Morgan Keegan & Company, Inc.
24.1 Powers of Attorney (see signature pages).
99.1 Form of FFC Proxy.
</TABLE>
II-6
<PAGE>
EXHIBIT 2.2
STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT 2.2
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement"), dated as of May 1, 1999, is
between National Commerce Bancorporation ("NCBC") and First Financial
Corporation ("FFC").
RECITALS
FFC and NCBC have executed an Agreement and Plan of Merger ("Merger
Agreement"), of even date with this Agreement, under which FFC will be merged
into NCBC upon completion of the merger ("Merger") contemplated in the Merger
Agreement.
By negotiating and executing the Merger Agreement and by taking actions
necessary or appropriate to effect the transactions contemplated by the Merger
Agreement, NCBC has incurred and will incur substantial direct and indirect
costs (including, without limitation, the costs and management and employee
time) and will forgo the pursuit of certain alternative investments and
transactions.
AGREEMENT
THEREFORE, in consideration of the promises set forth in this Agreement and
in the Merger Agreement, the parties agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth in this
Agreement, FFC irrevocably grants an option ("Option") to NCBC to purchase that
number of authorized but unissued shares of FFC's common stock, $2.50 par value
per share ("FFC Common Stock"), such that immediately following such purchase
NCBC would own 19.5% of the then issued and outstanding shares (as adjusted as
set forth herein) of FFC Common Stock after giving effect to the exercise of
the Option at a per share price in cash (or immediately available funds) equal
to two times the book value of a share of FFC Common Stock as of March 31, 1999
("Option Price").
2. Exercise of Option. Subject to the provisions of this Section 2 and of
Section 13(a) of this Agreement, this Option may be exercised by NCBC as set
forth in Section 5 of this Agreement, in whole only, at any time, in any of the
following circumstances:
(a) FFC or its board of directors enters into an agreement or
recommends to FFC shareholders an agreement (other than the Merger
Agreement) under which any entity, person or group (collectively "Person"),
within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended ("Exchange Act"), would: (1) merge or consolidate with,
acquire 9.9% or more of the assets or liabilities of, or enter into any
similar transaction with FFC, or (2) purchase or otherwise acquire
(including by merger, reorganization, consolidation, share exchange or any
similar transaction) securities representing 9.9% or more of FFC's voting
shares;
(b) any Person (other than NCBC or any of its subsidiaries) acquires
the beneficial ownership or the right to acquire beneficial ownership of
securities which, when aggregated with other such securities owned by such
Person, represents 25% or more of the voting shares of FFC (the term
"beneficial ownership" for purposes of this Agreement has the meaning set
forth in Section 13(d) of the Exchange Act, and the regulations promulgated
under the Exchange Act);
(c) after having received a fairness opinion from its financial advisor
that the transaction is fair to FFC shareholders from a financial point of
view, failure of the board of directors of FFC to recommend the Merger to
the shareholders at the time of the calling of the special meeting of the
shareholders pursuant to the Merger Agreement; or
<PAGE>
(d) failure of the shareholders to approve by the earliest of (1) the
termination of the Merger Agreement or (2) November 30, 1999, the Merger by
the required affirmative vote at a meeting of the shareholders, because a
third Person (other than NCBC or a subsidiary of NCBC) announces publicly
or communicates, in writing, to FFC a proposal to (1) acquire FFC(by
merger, reorganization, consolidation, the purchase of 9.9% or more of its
assets or liabilities, or any other similar transaction), (2) purchase or
otherwise acquire securities representing 9.9% or more of the voting shares
of FFC or (3) change the composition of the board of directors of FFC.
It is understood and agreed that the Option will become exercisable on the
occurrence of any of the above-described circumstances even though the
circumstance occurred as a result, in part or in whole, of the board of FFC
complying with its fiduciary duties.
Notwithstanding the foregoing, the Option may not be exercised if either (1)
any applicable and required governmental approvals have not been obtained with
respect to such exercise or if such exercise would violate any applicable
regulatory restrictions, or (2) at the time of exercise, NCBC is failing in any
material respect to perform or observe its material covenants or conditions
under the Merger Agreement, unless the reason for such failure is that FFC is
failing to perform or observe its covenants or conditions under the Merger
Agreement.
3. Notice, Time and Place of Exercise. When NCBC wishes to exercise the
Option, NCBC will give written notice of its intention to exercise the Option
and the place and date for the closing of the exercise (which date may not be
later than ten business days from the date such notice is mailed). If any law,
regulation or other restriction will not permit such exercise to be consummated
during this ten-day period, the date for the closing of such exercise will be
within five days following the cessation of the restriction on consummation.
4. Payment and Delivery of Certificate(s). At the closing for the exercise of
the Option or any portion thereof, (a) NCBC and FFC will each deliver to the
other certificates as to the accuracy, as of the closing date, of their
respective representations and warranties under this Agreement, (b) NCBC will
pay the aggregate purchase price for the shares of FFC Common Stock to be
purchased by delivery of a certified or bank cashier's check in immediately
available funds payable to the order of FFC, and (c) FFC will deliver to NCBC a
certificate or certificates representing the shares so purchased.
5. Transferability of the Option and Option Shares. Before the Option, or a
portion of the Option, becomes exercisable in accordance with the provisions of
Section 2 of this Agreement, neither the Option nor any portion of the Option
will be transferable.
6. Representations, Warranties and Covenants of FFC. FFC represents and
warrants to NCBC as follows:
(a) Due Authorization. This Agreement has been duly authorized by all
necessary corporate action on the part of FFC, has been duly executed by a
duly authorized officer of FFC and constitutes a valid and binding
obligation of FFC. No shareholder approval by FFC shareholders is required
by applicable law or otherwise before the exercise of the Option in whole
or in part.
(b) Option Shares. FFC has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue and, at all times
from the date of this Agreement to such time as the obligation to deliver
shares under this Agreement terminates, will have reserved for issuance, at
the closing(s) upon exercise of the Option, the Option Shares (subject to
adjustment, as provided in Section 8 below), all of which, upon issuance
under this Agreement, will be duly and validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests, including any preemptive right of any
of the shareholders of FFC.
(c) No Conflicts. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated by it will violate or
result in any violation of or be in conflict with or constitute a default
under any term of the charter or bylaws of FFC or any agreement,
instrument, judgment, decree, law, rule or order applicable to FFC or any
subsidiary of FFC or to which FFC or any such subsidiary is a party.
<PAGE>
(d) Notification of Record Date. At any time from and after the date of
this Agreement until the Option is no longer exercisable, FFC will give
NCBC 30 days prior written notice before setting the record date for
determining the holders of record of the FFC Common Stock entitled to vote
on any matter, to receive any dividend or distribution or to participate in
any rights offering or other matters, or to receive any other benefit or
right, with respect to the FFC Common Stock.
7. Representations, Warranties and Covenants of NCBC. NCBC represents and
warrants to FFC as follows:
(a) Due Authorization. This Agreement has been duly authorized by all
necessary corporate action on the part of NCBC, has been duly executed by a
duly authorized officer of NCBC and constitutes a valid and binding
obligation of NCBC.
(b) Transfers of Common Stock. No shares of FFC Common Stock acquired
upon exercise of the Option will be transferred except in a transaction
registered or exempt from registration under any applicable securities
laws.
(c) No Conflicts. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated by it will violate or
result in any violation of or be in conflict with or constitute a default
under any term of the charter or bylaws of NCBC or any agreement,
instrument, judgment, decree, law, rule or order applicable to NCBC or any
subsidiary of NCBC or to which NCBC or any such subsidiary is a party.
8. Adjustment Upon Changes in Capitalization. In the event of any change in
the FFC Common Stock by reason of stock dividends, split-ups, mergers,
reorganizations, recapitalizations, combinations, exchanges of shares or the
like, the number and kind of shares or securities subject to the Option and the
purchase price per share of Common Stock will be appropriately adjusted. If,
before the Option terminates or is exercised, FFC is acquired by another party,
consolidates with or merges into another corporation or liquidates, NCBC will
thereafter receive, upon exercise of the Option, the securities or properties
to which a holder of the number of shares of Common Stock then deliverable upon
the exercise thereof would have been entitled upon such acquisition,
consolidation, merger, reorganization or liquidation, and FFC will take all
steps in connection with such acquisition, consolidation, merger,
reorganization or liquidation as may be necessary to assure that the provisions
of this Agreement will thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any securities or property thereafter deliverable
upon exercise of the Option.
9. Nonassignability. This Agreement binds and inures to the benefit of the
parties and their successors. This Agreement is not assignable by either party.
10. Regulatory Restrictions. FFC will use its best efforts to obtain or to
cooperate with NCBC in obtaining all necessary regulatory consents, approvals,
waivers or other action (whether regulatory, corporate or other) to permit the
acquisition of any or all Option Shares by NCBC.
11. Remedies. For the purposes of this Agreement, NCBC's sole remedy
hereunder shall be limited to the exercise of the option herein granted.
12. No Rights as Shareholder. This Option, before it is exercised, will not
entitle its holder to any rights as a shareholder of FFC at law or in equity.
Specifically, this Option, before it is exercised, will not entitle the holder
to vote on any matter presented to the shareholders of FFC or, except as
provided in this Agreement, to any notice of any meetings of shareholders or
any other proceedings of FFC.
13. Miscellaneous.
(a) Termination. This Agreement and the Option will terminate upon the
earliest of (1) the mutual agreement of the parties to this Agreement; (2)
the 30th day following the termination of the Merger Agreement for any
reason other than a material noncompliance or default by NCBC with respect
to its obligations under it; or (3) the date of termination of the Merger
Agreement if the termination is due to a
<PAGE>
material noncompliance or default by NCBC with respect to its obligations
under it; but if the Option has been exercised before the termination of
this Agreement, then the exercise will close under Section 4 of this
Agreement, even though that closing date is after the termination of this
Agreement. The option granted under this Agreement shall only be
exercisable one (1) time.
(b) Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties.
(c) Severability of Terms. Any provision of this Agreement that is
invalid, illegal or unenforceable is ineffective only to the extent of the
invalidity, illegality or unenforceability without affecting in any way the
remaining provisions or rendering any other provisions of this Agreement
invalid, illegal or unenforceable. Without limiting the generality of the
foregoing, if the right of NCBC to exercise the Option in full for the
total number of shares of FFC Common Stock or other securities or property
issuable upon the exercise of the Option is limited by applicable law, or
otherwise, NCBC may, nevertheless, exercise the Option to the fullest
extent permissible.
(d) Notices. All notices, requests, claims, demands and other
communications under this Agreement must be in writing and must be given
(and will be deemed to have been duly received if so given) by delivery, by
cable, telecopies or telex, or by registered or certified mail, postage
prepaid, return receipt requested, to the respective parties at the
addresses below, or to such other address as either party may furnish to
the other in writing. Change of address notices will be effective upon
receipt.
<TABLE>
<S> <C>
If to FFC to: First Financial Corporation
1691 Mt. Juliet Road
Mt. Juliet, TN 37122
Attn: David Major, President and
Chief Executive Officer
Fax: (615) 758-8645
Phone: (615) 754-2265
with a copy to: Daniel W. Small
Attorney at Law
323 Union Street, Suite 300
Nashville, TN 37219-0608
Fax: (615) 252-6001
Phone: (615) 252-6000
If to NCBC to: National Commerce Bancorporation
One Commerce Square
Memphis, TN 38150
Attn: Lewis E. Holland
Fax: (901) 523-3170
Phone: (901) 523-3320
and
Charles A. Neale
Vice President and General Counsel
Fax: (901) 523-3303
Phone: (901) 523-3371
</TABLE>
(a) Governing Law and Venue. The parties intend this Agreement and the
Option, in all respects, including all matters of construction, validity
and performance, to be governed by the laws of the State of Tennessee,
without giving effect to conflicts of law principles. Any actions brought
by either party against the other arising under this Agreement must be
filed in Wilson County, Tennessee, and each party consents to personal
jurisdiction in Wilson County.
<PAGE>
(b) Counterparts. This Agreement may be executed in several
counterparts, including facsimile counterparts, each of which is an
original, and all of which together constitute one and the same agreement.
(c) Effects of Headings. The section headings in this Agreement are for
convenience only and do not affect the meaning of its provisions.
NATIONAL COMMERCE BANCORPORATION
/s/ William R. Reed, Jr.
By: ___________________________________
William R. Reed, Jr
Vice Chairman
FIRST FINANCIAL CORPORATION.
/s/ David Major
By: ___________________________________
David Major
President and Chief Executive
Officer
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
COMMON COMMON
- ------------ ------------
NATIONAL COMMERCE
-----------------
BANCORPORATION
SEE REVERSE FOR
CERTAIN DEFINITIONS
INCORPORATED UNDER THE LAWS OF THE STATE OF TENNESSEE
CUSIP 635449 10 1
This Certifies that
is the owner of
FULL-PAID AND NON-ASSESSABLE SHARES EACH OF $2.00 PAR VALUE OF THE COMMON STOCK
OF
NATIONAL COMMERCE BANCORPORATION
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. The Shares
represented hereby are issued and shall be held subject to all of the provisions
of the Certificate of Incorporation and amendments thereto, to all of which the
holder by acceptance hereof assents. This Certificate is not valid until
countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile signatures of the Corporation's duly authorized
officers.
Dated
/s/ Gus B. Denton /s/ Thomas M. Garrott
--------------------- ---------------------
Secretary Chairman of the Board
<PAGE>
NATIONAL COMMERCE BANCORPORATION
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT - .......Custodian.....
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act....................
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer unto
-----------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------- shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
--------------------
--------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED
--------------------------------------------
THE SIGNATURES SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
The Corporation is authorized to issue different classes of shares and
different series within a class. The Corporation will furnish to the holder of
this certificate a full statement of the designations, relative rights,
preferences and limitations applicable to each class and the variations in
rights, preferences and limitations determined for any series (and the authority
of the Board of Directors to determine variations for future series) on request
in writing and without charge.
<PAGE>
Exhibit 5.1
June 2, 1999
National Commerce Bancorporation
One Commerce Square
Memphis, TN 38150
Re: Form S-4 Registration Statement Relating to 3,062,000 Shares of Common
Stock, Par Value $2.00 per Share, of National Commerce Bancorporation
----------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for National Commerce Bancorporation, a Tennessee
corporation ("NCBC"), in connection with the preparation and filing of the
Registration Statement on Form S-4 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, relating to 3,062,000 shares of NCBC common stock, par
value $2.00 per share, to be issued in connection with the Agreement and Plan of
Merger, dated as of May 1, 1999 (the "Merger Agreement"), by and between NCBC
and First Financial Corporation.
In our capacity as such counsel, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such corporate records
of NCBC, such agreements and instruments, such certificates of public officials,
officers of NCBC and other persons, and such other documents as we have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed. In
such examinations, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity and completeness of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed, photostatic or facsimile
copies, and the authenticity of the originals of such copies, as we have assumed
all certificates of public officials to have been properly given and to be
accurate.
<PAGE>
National Commerce Bancorporation
June 2, 1999
Page 2
As to factual matters relevant to this opinion letter, we have relied upon
the representations and warranties as to factual matters contained in
certificates and statements of officers of NCBC and certain public officials.
Except to the extent expressly set forth herein, we have made no independent
investigations with regard thereto, and, accordingly, we do not express any
opinion as to matters that might have been disclosed by independent
verification.
On the basis of the foregoing, and subject to the limitations set forth
herein, we are of the opinion that the shares of common stock of NCBC, par value
$2.00 per share, issuable in connection with the Merger Agreement have been duly
authorized and, when issued in accordance with the terms of the Merger Agreement
as described in the Registration Statement, will be validly issued, fully paid
and nonassessable.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to any related registration statement subsequently
filed by NCBC pursuant to Rule 462(b) of the Act and to the use of our name
under the heading "Validity of Common Stock" in the Proxy Statement/Prospectus
constituting a part thereof. In giving such consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission thereunder.
This opinion letter is being furnished by us to NCBC and the Commission
solely for the benefit of NCBC and the Commission in connection with the
Registration Statement and is not to be used, circulated, quoted or otherwise
relied upon by any other person, or by NCBC or the Commission for any other
purposes, without our express written consent. The only opinion rendered by us
consists of those matters set forth in the fourth paragraph hereof, and no
opinion may be implied or inferred beyond those expressly stated. This opinion
letter is rendered as of the date hereof, and we have no obligation to update
this opinion letter.
Sincerely,
/s/ King & Spalding
KING & SPALDING
<PAGE>
EXHIBIT 8.1
June 2, 1999
National Commerce Bancorporation
One Commerce Square
Memphis, TN 38150
First Financial Corporation
1691 North Mt. Juliet Road
Mt. Juliet, TN 37122
Re: Federal Income Tax Consequences of Merger of First Financial
Corporation with and into National Commerce Bancorporation
Ladies and Gentlemen:
We have acted as counsel to National Commerce Bancorporation ("NCBC") in
connection with the Merger (the "Merger") of First Financial Corporation ("FFC")
with and into NCBC, pursuant to the Agreement and Plan of Merger dated as of May
1, 1999 (the "Agreement") by and between NCBC and FFC. You have requested our
opinion, in our capacity as counsel to NCBC, regarding certain federal income
tax consequences of the Merger.
We understand that our opinion will be referred to in the Proxy
Statement/Prospectus that forms a part of the Registration Statement on Form S-4
filed with the Securities and Exchange Commission in connection with the Merger.
We hereby consent to such use of our opinion.
All capitalized terms used herein without definition have the respective
meanings specified in the Agreement. All references herein to the Code are to
the United States Internal Revenue Code of 1986, as amended.
INFORMATION RELIED ON
In rendering the opinion expressed herein, we have examined such documents
as we have deemed appropriate, including the Agreement. In our examination of
such documents, we have assumed, with your consent, that all documents submitted
to us as photocopies or telecopies
<PAGE>
National Commerce Bancorporation
First Financial Corporation
June 2, 1999
Page 2
faithfully reproduce the originals thereof, that such originals are authentic,
that all such documents have been or will be duly executed to the extent
required, and that all statements set forth in such documents are accurate. We
also have obtained such additional information and representations as we have
deemed relevant and necessary. However, we have not yet obtained written
certificates from NCBC and FFC to verify certain facts that we have assumed in
rendering this opinion. Before rendering our opinion in connection with the
closing, we intend to obtain appropriate written certificates to confirm certain
material facts that we have assumed herein.
In view of the foregoing, we have assumed that the following statements are
true on the date hereof and will be true at the time of the Merger:
(1) The Merger will be consummated in compliance with the material terms of
the Agreement, and none of the material terms and conditions therein have been
waived or modified, and neither NCBC nor FFC has a plan or intention to waive or
modify any such material term or condition.
(2) The fair market value of the NCBC Common Stock and other consideration
received by each FFC shareholder will be approximately equal to the fair market
value of the FFC Common Stock surrendered by such shareholder in the Merger.
(3) Neither FFC nor any person related to FFC has acquired or will acquire,
in connection with the Merger, any FFC Common Stock from the FFC shareholders
prior to the Effective Time. For purposes of this assumption, a person is
related to FFC if it is a corporation as to which FFC owns, actually or
constructively, fifty percent or more of the total voting power or total value
of the shares of all classes of stock outstanding. A person will be deemed
related to FFC for this purpose if such relationship exists either immediately
before or immediately after such acquisition, and a person that is a partner in
a partnership will be deemed to own or have acquired any stock that such
partnership acquired in accordance with the partner's interest in the
partnership.
(4) Neither NCBC nor any person related to NCBC has acquired or will
acquire, in connection with the Merger, any FFC Common Stock from the FFC
shareholders prior to the Effective Time. For purposes of this assumption, a
person is related to NCBC if it is (i) a member of its affiliated group within
the meaning of Section 1504 of the Code, or (ii) a corporation as to which NCBC
owns, actually or constructively, fifty percent or more of the total voting
power or total value of the shares of all classes of stock outstanding. A
person will be deemed related to NCBC for this purpose if such relationship
exists either immediately before or immediately after such acquisition or arises
in connection with the Merger, and a person that is a
<PAGE>
National Commerce Bancorporation
First Financial Corporation
June 2, 1999
Page 3
partner in a partnership will be deemed to own or have acquired any stock that
such partnership acquired in accordance with the partner's interest in the
partnership.
(5) Neither NCBC nor any person related to NCBC has any plan or intention
to reacquire any of the shares of NCBC Common Stock issued in the Merger. For
purposes of this assumption, a person is related to NCBC if it is (i) a member
of its affiliated group within the meaning of Section 1504 of the Code, or (ii)
a corporation as to which NCBC owns, actually or constructively, fifty percent
or more of the total voting power or total value of the shares of all classes of
stock outstanding. A person will be deemed related to NCBC for this purpose if
such relationship exists either immediately before or immediately after such
acquisition or arises in connection with the Merger, and a person that is a
partner in a partnership will be deemed to own or have acquired any stock that
such partnership acquired in accordance with the partner's interest in the
partnership.
(6) The liabilities of FFC to be assumed by NCBC and the liabilities to
which the transferred assets of FFC are subject were incurred by FFC in the
ordinary course of its business.
(7) NCBC, FFC and the shareholders of FFC will pay their respective
expenses, if any, incurred in connection with the Merger.
(8) There is no intercorporate indebtedness existing between FFC and NCBC
that was or will be issued, acquired, or settled at a discount.
(9) Neither FFC nor NCBC is a regulated investment company, a real estate
investment trust, or a corporation 50 percent or more of the value of whose
total assets (excluding cash, cash items, receivables and U.S. government
securities) are stock or securities and 80 percent or more of the value of whose
total assets are assets held for investment. For purposes of the 50 percent and
80 percent determinations under the preceding sentence, stock and securities in
any subsidiary shall be disregarded, and the parent corporation shall be deemed
to own its ratable share of the subsidiary's assets. A corporation shall be
considered a subsidiary for purposes of this paragraph if the parent owns 50
percent or more of the combined voting power of all classes of such
corporation's stock entitled to vote, or 50 percent or more of the total value
of shares of all classes of such corporation's stock outstanding.
(10) FFC is not under the jurisdiction of a court in a case under Title 11
of the United States Code or a receivership, foreclosure, or similar proceeding
in a federal or state court.
(11) The fair market value of the assets of FFC transferred to NCBC will
equal or exceed the sum of the liabilities assumed by NCBC plus the amount of
liabilities, if any, to which the transferred assets are subject.
<PAGE>
National Commerce Bancorporation
First Financial Corporation
June 2, 1999
Page 4
(12) NCBC has no plan or intention to sell or otherwise dispose of any of
the assets acquired from FFC, except for dispositions made in the ordinary
course of business.
(13) Following the Merger, NCBC will continue the historic business of FFC
or use a significant portion of FFC's historic business assets in a business.
(14) None of the compensation received by any shareholder-employees of FFC
in contemplation of or as a result of the Merger will be separate consideration
for, or allocable to, any of their shares of FFC Common Stock; none of the
shares of NCBC Common Stock received by any shareholder-employees of FFC in
exchange for FFC Common Stock in the Merger will be separate consideration for,
or allocable to, any employment agreement; and the compensation paid to any
shareholder-employees pursuant to the Merger will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
(15) The outstanding FFC Options have been granted by FFC as compensation
in connection with the provision of services to FFC and First Bank & Trust by
the FFC Option holders.
(16) The payment of cash in lieu of fractional shares of NCBC Common Stock
is solely for the purpose of avoiding the expense and inconvenience to NCBC of
issuing fractional shares and does not represent separately bargained-for
consideration. The total cash consideration that will be paid in the Merger to
the FFC shareholders instead of issuing fractional shares of NCBC Common Stock
will not exceed one percent of the total consideration that will be issued in
the Merger to the FFC shareholders in exchange for their shares of FFC Common
Stock. The fractional share interest of each FFC shareholder will be aggregated
and no FFC shareholder will receive cash in an amount equal to or greater than
the value of one full share of NCBC Common Stock.
(17) At the Effective Time, the aggregate fair market value of the NCBC
Common Stock issued to the FFC shareholders in the Merger will represent at
least fifty percent (50%) of the total value of the aggregate consideration
payable in the Merger to the FFC shareholders (including cash paid to FFC
shareholders who perfect their dissenters' rights and cash paid in lieu of
fractional shares of NCBC Common Stock).
(18) FFC will not, prior to the Effective Time, make any distributions with
respect to its stock which are of an extraordinary nature.
<PAGE>
National Commerce Bancorporation
First Financial Corporation
June 2, 1999
Page 5
OPINION
Based upon the foregoing, it is our opinion that:
(1) The Merger will be treated as a "reorganization" within the meaning of
Section 368(a) of the Code;
(2) No gain or loss will be recognized by NCBC or FFC as a result of the
Merger;
(3) No gain or loss will be recognized by the shareholders of FFC upon the
exchange of FFC Common Stock for NCBC Common Stock pursuant to the Merger
(except with respect to cash received in lieu of a fractional share interest in
NCBC Common Stock) or by the holders of FFC Options upon the conversion of such
options into options with respect to NCBC Common Stock;
(4) The receipt of cash in lieu of fractional shares of NCBC Common Stock
will be treated as if fractional shares were distributed as part of the exchange
and then were redeemed by NCBC, and the FFC shareholder generally will recognize
capital gain or loss in such exchange equal to the difference between the cash
received and the tax basis of such fractional share;
(5) The aggregate tax basis of the NCBC Common Stock received by a FFC
shareholder pursuant to the Merger will be the same as the aggregate tax basis
of the FFC Common Stock surrendered in exchange therefor (excluding any basis
allocable to a fractional share of NCBC Common Stock for which cash is
received);
(6) A FFC shareholder who perfects his dissenters' rights under Tennessee
law and who receives payment in cash for the "fair value" of his FFC Common
Stock will be treated as having exchanged such stock for cash in a redemption
subject to Section 302 of the Code, and the FFC shareholder generally will
recognize capital gain or loss in such exchange equal to the difference between
the cash received and the tax basis of such stock; and
(7) The holding period of the shares of NCBC Common Stock received by a FFC
shareholder will include the holding period or periods of the shares of FFC
Common Stock exchanged therefor, provided that the shares of FFC Common Stock
are held as a capital asset within the meaning of Section 1221 of the Code at
the Effective Time.
<PAGE>
National Commerce Bancorporation
First Financial Corporation
June 2, 1999
Page 6
The opinion expressed herein is based upon existing statutory, regulatory,
and judicial authority, any of which may be changed at any time with retroactive
effect. In addition, our opinion is based solely on the documents that we have
examined, the additional information that we have obtained, and the statements
set out herein that we have assumed to be true on the day hereof and at the time
of the Merger. Our opinion cannot be relied upon if any of the material facts
contained in such documents or any such additional information is, or later
becomes, inaccurate or if any of the material statements set out herein is, or
later becomes, inaccurate. Finally, our opinion is limited to the tax matters
specifically covered thereby, and we have not been asked to address herein, nor
have we addressed herein, any other tax consequences of the Merger.
Very truly yours,
KING & SPALDING
<PAGE>
EXHIBIT 21.1
Parent and Subsidiaries
National Commerce Bancorporation and
------------------------------------
Subsidiaries
- ------------
The following table shows the subsidiaries of NCBC, their jurisdiction of
organization, and the percentage of voting securities owned by each subsidiary's
parent.
<TABLE>
<CAPTION>
% of Voting
Jurisdiction Securities
of Owned by
Name of Subsidiary Organization Parent Parent
- ------------------ ------------ ---------- -----------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
National Bank of Commerce (NBC) United States NCBC 100.00%
Commerce General Corporation Tennessee NBC 100.00
NBC Capital Markets Group, Inc. Tennessee NBC 80.00
NBC Bank, FSB (Knoxville) United States NCBC 100.00
Commerce Capital Management, Inc. Tennessee NCBC 100.00
Monroe Properties, Inc. Tennessee NCBC 100.00
Commerce Corporate Advisors, Inc. Tennessee Nashville 100.00
National Commerce Bank Services, Inc. Tennessee NBC 100.00
Commerce Finance Company Tennessee NBC 100.00
NBC Bank, FSB (Roanoke) United States NCBC 100.00
TransPlatinum Service Corp. Tennessee NCBC 100.00
Kenesaw Leasing, Inc. Tennessee Knoxville 100.00
First Market Bank United States NCBC 49.00
USI Alliance Corp. Tennessee NCBC 100.00
National Commerce Real Estate Holding
Company (NCREHC) Tennessee NBC 100.00
J&S Leasing, Inc. Tennessee Knoxville 100.00
NBC Insurance Services, Inc. Tennessee NBC 100.00
Commerce Real Estate Holding Company
(CREHC) Delaware NCREHC 100.00
Commerce Real Estate Company Delaware CREHC 100.00
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 No. 333-0000) and related Prospectus of
National Commerce Bancorporation for the registration of 3,062,000 shares of
its common stock and to the incorporation by reference therein of our report
dated February 19, 1999, with respect to the consolidated financial statements
of National Commerce Bancorporation incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Memphis, Tennessee
June 1, 1999
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF MAGGART & ASSOCIATES, P.C. APPEARS HERE]
ACCOUNTANT'S CONSENT
The Board of Directors
National Commerce Bancorporation:
We consent to the reference to our firm under the heading "Experts" in the
Prospectus/Proxy Statement.
/s/ Maggart & Associates, P.C.
Maggart & Associates, P.C.
Nashville, Tennessee
June 1, 1999
<PAGE>
EXHIBIT 23.4
June 2, 1999
Pursuant to the penultimate paragraph of our letter to the Board of
Directors of First Financial Corporation dated June 1, 1999, we hereby consent
to the use of our opinion attached as Appendix B to the Registration Statement
on Form S-4 of National Commerce Bancorporation, and confirmed as of this date,
and to the references to such opinion and to our firm contained in the section
titled "--Opinion of Financial Advisor to FFC" of the Proxy
Statement/Prospectus that is a part of said Registration Statement.
Very truly yours,
/s/ Morgan Keegan & Company, Inc.
Morgan Keegan & Company, Inc.
<PAGE>
EXHIBIT 99.1
FIRST FINANCIAL CORPORATION, INC.
Proxy Solicited on Behalf of The Board of Directors For The
Special Meeting of Stockholders to be Held on .
The undersigned hereby revokes all previous proxies, acknowledges receipt of
the notice of special stockholders meeting to be held on and appoints
and as proxies, each with the power to appoint his
substitute, and hereby authorizes either of them to act and vote at the
special meeting of stockholders of First Financial Corporation ("FFC") to be
held on , and at any adjournments or postponements thereof, as
indicated upon all matters referred to on this proxy card and described in the
Joint Proxy Statement/Prospectus for the meeting, and, in their discretion,
upon any other matters which may properly come before the meeting.
Approval and adoption of the Agreement and Plan of Merger dated as of May 1,
1999 (the "Agreement and Plan of Merger") between National Commerce
Bancorporation, a Tennessee corporation "NCBC"), and FFC, providing for the
merger (the "Merger") of FFC with and into NCBC, with NCBC continuing as the
surviving corporation, and the transactions contemplated thereby.
FOR [_] AGAINST [_]
ABSTAIN [_]
(Continued on reverse side)
<PAGE>
The Board of Directors recommends a vote FOR the proposal. This proxy, when
properly executed, will be voted as specified above, and in the discretion of
the proxy holders as to any other matter that may properly come before the
meeting. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED FOR THE
PROPOSAL.
Dated: 1999
-------------- (SEAL)
(SIGNATURE)
-------------- (SEAL)
(SIGNATURE)
NOTE: Please sign above exactly as name appears on Stock Certificate. If stock
is held in the name of two or more persons, all must sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE RETURN YOUR EXECUTED PROXY TO THE COMPANY IN THE ENCLOSED ENVELOPE
