SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amended SCHEDULE 13D
Under the Securities Exchange Act of 1934
NATIONAL COMMERCE BANCORPORATION
(Name of Issuer)
$2.00 Par Value Common Stock
(Title of Class of Securities)
635 449 101
(CUSIP NUMBER)
W. Harold Parker, Jr.
Senior Vice President and Controller
CCB Financial Corporation
111 Corcoran Street
Durham, North Carolina 27701
(919) 683-7631
(Name, Address and Telephone Number of Person Authorized to
Receipt Notice and Communications)
March 17, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this Schedule because of Rule
13d-1(b)93) or (4), check the following box ?.
The information required on the remainder of this cover
page shall not be deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934, as amended
(the "Act"), or otherwise subject to the liabilities of that
section of that Act but shall be subject to all other
provisions of the Act.
CUSIP NO.: 124 875 105
_________________________________________________________________
1) Names of Reporting Persons S.S. or I.R.S. Identification
Nos. of Above Persons:
CCB Financial Corporation, I.R.S. Identification No.:
56-1347849
- ----------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group
(a)
(b)
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds WC:00
_________________________________________________________________
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): Not Applicable
_________________________________________________________________
6) Citizenship or Place of Organization: North Carolina.
_________________________________________________________________
Number of Shares Beneficially Owned By Each Reporting Person
With
7) Sole Voting Power: 21,527,748 shares (16.6% upon
exercise of option).*
_____________________________________________________________
8) Shares Voting Power: -0-
______________________________________________________________
9) Sole Dispositive Power: 21,527,748 shares (16.6%
upon exercise of option).*
_____________________________________________________________
10) Shared Dispositive Power: -0-
_________________________________________________________________
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 21,527,748
_________________________________________________________________
12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares: Not Applicable.
_________________________________________________________________
13) Percent of Class Represented by Amount in Row (11):
19.9% (16.6% upon exercise of option)
_________________________________________________________________
14) Type of Reporting Person: CO (bank holding company).
_________________________________________________________________
* The shares indicated are purchasable by CCB Financial
Corporation ("CCB") upon exercise of an option granted by
National Commerce Bancorporation ("NCB") to CCB on March 17,
2000, and described in Item 4 of this report ("Option"). Prior
to the exercise of the Option, CCB is not entitled to any rights
as a shareholder of NCB as to the shares covered by the Option.
The Option may only be exercised upon the happening of certain
events referred to in Item 4, none of which has occurred as of
the date hereof. CCB expressly disclaims beneficial ownership of
any of the shares of Common Stock of NCB which are purchasable by
CCB upon exercise of the Option.
The percentage indicated represents the percentage of the
total outstanding shares of Common Stock of NCB as of March 13,
2000, taking into consideration the 21,527,748 shares of NCB
Common Stock that would be issued pursuant to the Option. For
the reasons discussed above, CCB expressly disclaims beneficial
ownership of any of the shares of Common Stock of NCB which are
purchasable by CCB upon exercise of the Option.
Item 1. Security and Issuer
In connection with the proposed merger of CCB Financial
Corporation, a bank holding company headquartered in Durham,
North Carolina ("CCB"), with and into National Commerce
Bancorporation, a bank holding company headquartered in Memphis,
Tennessee ("NCB"), and pursuant to an Agreement and Plan of
Merger, dated March 17, 2000, between CCB and NCB (the
"Agreement"), CCB and NCB entered into a Stock Option Agreement
("Option Agreement") pursuant to which NCB granted CCB an option
(the "Option") to acquire 21,527,748 shares (the "Option Shares")
of NCB's $2.00 par value common stock ("NCB Common Stock") at a
price of $20.3125 per share, subject to adjustment pursuant to
the anti-dilution provisions of the Option Agreement (the
"Purchase Price").
Item 2. Identity and Background
CCB is a bank holding company with its principal offices
located at 111 Corcoran Street, Durham, North Carolina 27701.
Its principal business is the ownership of Central Carolina Bank
and Trust Company, a North Carolina commercial bank whose
principal executive offices are the same as that of CCB ("CCB
Bank"), and American Federal Bank, FSB, a federal savings bank
whose principal offices are located in Greenville, South Carolina
("AFB"). CCB Bank and AFB engaged in the general business of
banking, and activities related thereto, primarily in the States
of North Carolina and South Carolina, with associated activities
conducted through direct or indirect subsidiaries of CCB
incorporated and doing business in Delaware, Virginia and
Florida.
To the best of CCB's knowledge, during the last five years,
neither CCB nor any of its directors or executive officers (each
of whom is set forth on Exhibit A hereto) has been convicted in
any criminal proceedings (excluding traffic violations or similar
misdemeanors) nor has CCB or any of its directors or executive
officers been a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction resulting in a
judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration
It is presently anticipated that shares of NCB Common Stock
as described in Item 4 would be purchased with working capital
funds of CCB.
Item 4. Purpose of Transaction
Pursuant to the Agreement, and in consideration thereof, NCB
issued the Option to CCB to purchase, under certain conditions,
the Option Shares, or any portion thereof, at the Purchase Price.
The Agreement provides, among other things, for the merger
of CCB with and into NCB (the "Merger"). The Merger will be
conducted pursuant to the terms of the Agreement. Upon
consummation of the Merger, which is subject to the approvals of
the shareholders of CCB and NCB, the approval of NCB's
shareholders of the issuance of NCB Common Stock in connection
with the Merger, receipt of required regulatory approvals, and
the satisfaction or waiver of various other terms and conditions,
each share outstanding of CCB Common Stock (excluding shares of
CCB Common Stock held by CCB, NCB, or any of their subsidiaries
(other than shares of CCB Common Stock held in a fiduciary
capacity), shall be converted into and exchanged for 2.45 shares
of NCB Common Stock (subject to possible adjustment in accordance
with the terms of the Agreement, the "Exchange Ratio").
If (i) CCB is not in material breach of the Option Agreement
or the Agreement, and (ii) no injunction against delivery of the
Option Shares is in effect, CCB may exercise the Option in whole
or in part, at any time and from time to time following the
happening of certain events:
(A) (i) NCB or any of its subsidiaries (each an "NCB
Subsidiary"), without having received CCB's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person
(the term "person" having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than CCB or any CCB Subsidiary or the Board of
Directors of NCB shall have recommended that the shareholders of
NCB approve or accept any Acquisition Transaction. "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving NCB or any NCB Subsidiary that is
a "Significant Subsidiary" (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")), (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the
assets or deposits of NCB or any Significant Subsidiary of NCB,
(y) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of NCB, or (z) any
substantially similar transaction; provided, however, that in any
event neither the consummation of the merger of Piedmont Bancorp,
Inc. into NCB (the "Piedmont Merger") nor any merger,
consolidation, purchase or similar transaction involving (A) only
NCB and one or more of the NCB Subsidiaries or involving only any
two or more NCB Subsidiaries, provided that any such transaction
is not entered into in violation of the terms of the Agreement,
or (B) any pending acquisition by NCB disclosed by NCB in its
disclosure schedule delivered to CCB in connection with entering
into the Agreement and consummated pursuant to such disclosed
terms, shall be deemed to be an Acquisition Transaction;
(ii) NCB or any NCB Subsidiary, without having received
CCB's prior written consent, shall have authorized,
recommended, proposed or publicly announced its
intention to authorize, recommend or propose, to engage
in an Acquisition Transaction with any person other
than CCB or a CCB Subsidiary, or the Board of Directors
of NCB shall have publicly withdrawn or modified, or
publicly announced its interest to withdraw or modify,
in any manner adverse to CCB, its recommendation that
the shareholders of NCB approve the transactions
contemplated by the Agreement in anticipation of
engaging in an Acquisition Transaction;
(iii) Any person other than CCB, a CCB Subsidiary
or any NCB Subsidiary acting in a fiduciary capacity in
the ordinary course of its business shall have acquired
beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of
NCB Common Stock (the term "beneficial ownership"
having the meaning assigned thereto in Section 13(d) of
the 1934 Act, and the rules and regulations
thereunder);
(iv) Any person other than CCB or any CCB Subsidiary
shall have made a bona fide proposal to NCB or its
shareholders by public announcement or written
communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to NCB
or its shareholders to engage in an Acquisition
Transaction, NCB shall have breached any covenant or
obligation contained in the Agreement and such breach
(x) would entitle CCB to terminate the Agreement and
(y) shall not have been cured prior to the date on
which CCB shall give notice to NCB of its intent to
purchase shares of NCB Common Stock under the Option;
(vi) Any person other than CCB or any CCB Subsidiary,
other than in connection with a transaction to which
CCB has given its prior written consent, shall have
filed an application or notice with the Federal Reserve
Board, or other federal or state bank regulatory
authority, which application or notice has been
accepted for processing, for approval to engage in an
Acquisition Transaction (each the foregoing items being
an "Initial Triggering Event"); and
(B) (i) The acquisition by any person of beneficial
ownership of 20% or more of the then outstanding NCB
Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in item (A)(i) above, except that the
percentage referred to in clause (y) of such item
(A)(i) shall be 20% (each of the foregoing items being
a "Subsequent Triggering Event").
In addition to the foregoing: (a) Immediately prior to the
occurrence of a Repurchase Event (as defined below), (i)
following a request of the holders or holders of the Option
("Holder"), delivered prior to an Exercise Termination Event, NCB
(or any successor thereto) shall repurchase the Option from the
Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares
for which the Option may then be exercised and (ii) at the
request of the owner of Option Shares from time to time (the
"Owner"), delivered within 90 days of such occurrence (or such
later period as is provided in the Option Agreement), NCB shall
repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase
Price") equal to the Market/Offer Price multiplied by the number
of Option Shares so designated. The term "Market/Offer Price"
means the highest of (i) the price per share of NCB Common Stock
at which a tender offer or exchange offer therefor has been made,
(ii) the price per share of NCB Common Stock to be paid by any
third party pursuant to an agreement with NCB, (iii) the highest
closing price for shares of NCB Common Stock within the six-month
period immediately preceding the date the Holder gives notice of
the required repurchase of the Option or the Owner gives notice
of the required repurchase of Option Shares, as the case may be,
or (iv) in the event of a sale or all of a substantial portion of
NCB's assets, the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of
NCB as determined by a nationally recognized investment banking
firm selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to NCB, divided by the number of shares of
Common Stock of NCB outstanding at the time of such sale. In
determining the Market/Offer Price, the value of consideration
other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the
case may be, and reasonably acceptable to NCB.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require NCB to repurchase the Option and
any Option Shares by surrendering for such purpose to NCB, at its
principal office, a copy of the Option Agreement or certificates
for Option Shares, as applicable, accompanied by a written notice
or notices stating that the Holder or the Owner, as the case may
be, elects to require NCB to repurchase this Option and/or the
Option Shares in accordance with the provisions of the Option
Agreement. Within the latter to occur of (x) five business days
after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately
prior to the occurrence of a Repurchase Event, NCB shall deliver
or cause to be delivered to the Holder the Option Repurchase
Price and/or to the Owner the Option Share Repurchase Price
thereof, if any, that NCB is not then prohibited under applicable
law and regulation from so delivering.
(c) To the extent that NCB is prohibited under applicable
law or regulation from repurchasing the Option and/or the Option
Shares in full, NCB shall immediately so notify the Holder and/or
the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the
portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is not so prohibited from
delivering, within five business days after the date on which
Issuer is not so prohibited; provided, however, that if NCB at
any time after delivery of a notice of repurchase as described in
paragraph (b) above is prohibited under applicable law or
regulation from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and NCB has undertaken
in the Option Agreement to use its best efforts to obtain all
required regulatory and legal approvals and to file any required
notices, in each case as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option or the Option Shares either in
whole or to the extent of the prohibition, whereupon, in the
latter case, NCB shall promptly (i) deliver to the Holder and/or
the Owner, as appropriate, that portion of the Option Repurchase
Price or the Option Share Repurchase Price that NCB is not
prohibited from delivering; and (ii) deliver, as appropriate,
either (i) to the Holder, a new Option Agreement evidencing the
right of the Holder to purchase that number of shares of NCB
Common Stock obtained by multiplying the number of shares of NCB
Common Stock for which the surrendered Stock Option Agreement was
exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Option Repurchase
Price less the portion thereof theretofore delivered to the
Holder and the denominator of which is the Option Repurchase
Price, or (ii) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing.
(d) A Repurchase Event shall be deemed to have occurred (i)
upon the consummation of any merger, consolidation or similar
transaction involving NCB or any purchase, lease or other
acquisition of all or a substantial portion of the assets of NCB,
other than any such transaction which would not constitute an
Acquisition Transaction or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then
outstanding shares of NCB Common Stock, provided that no such
event shall constitute a Repurchase Event unless a Subsequent
Triggering Event shall have occurred prior to an Exercise
Termination Event. NCB's obligations to repurchase the Option or
Option Shares under the Option Agreement will not terminate upon
the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
A copy of the Agreement, but excluding certain other
exhibits, and the Option Agreement are incorporated by reference
herein, and the foregoing summary is qualified in its entirety by
reference thereto.
Item 5. Interests in Securities of the Issuer
Based upon representations and warranties in the Agreement,
NCB currently has outstanding 108,179,637 shares of NCB Common
Stock, option to acquire 5,529,423 shares of NCB Common Stock,
and an obligation to issue up to a maximum of 1,514,108 shares of
NCB Common Stock and to grant an option to acquire up to a
maximum of 152,569 shares of NCB Common Stock upon the
consummation of the Piedmont Merger. The Option is for
21,527,748 Option Shares (19.9% of currently outstanding NCB
Common Stock and 16.6% of outstanding NCB Common Stock assuming
exercise of the Option).
The Option Agreement contains anti-dilution provisions which
provide that both the number of shares of NCB Common Stock
issuable upon exercise of the Option and Purchase Price will be
adjusted upon the happening of certain events, including the
payment of a stock dividend or other distribution in NCB Common
Stock or the subdivision or reclassification of NCB Common Stock,
as set forth in the Option Agreement. If any additional shares
of NCB Common Stock are issued after the date of the Option
Agreement other than as permitted in the Option Agreement, the
number of Option Shares shall be adjusted so that such number of
shares following such issuance shall continue to equal 19.9% of
the number of shares of NCB Common Stock then issued and
outstanding.
CCB expressly disclaims any beneficial ownership of the
shares of NCB Common Stock which are purchasable by CCB upon
exercise of the Option because the Option is exercisable only in
the circumstances referred to in Item 4 above, none of which has
occurred as of this date.
To the best of CCB's knowledge (i) neither CCB nor any
subsidiary or affiliate of CCB or any of its or their executive
officers or directors beneficially owns any shares of NCB Common
Stock, and (ii) there have been no transactions in the shares of
NCB Common Stock effected during the past 60 days by CCB, nor to
the best of CCB's knowledge, by any subsidiary or affiliate of
CCB or any of its or their executive officers or directors.
No other person is known by CCB to have the right to receive
or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the NCB Common Stock obtainable by CCB
upon exercise of the Option.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer
Other than the Agreement, the Option Agreement or any
document referenced in the Agreement or the Option Agreement,
copies of which are incorporated by reference herein, to the best
of CCB's knowledge there are at present no contracts,
arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 above and between
such persons and any person with respect to any securities of
NCB.
Item 7. Material Filed as Exhibits
(a) Description of Directors and Executive Officers of CCB.
(b) Agreement and Plan of Merger, dated March 17, 2000.
(c) Stock Option Agreement, dated March 17, 2000.
Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
March 23, 2000
Date
CCB Financial Corporation
By: /s/ ERNEST C. ROESSLER
Ernest C. Roessler
Chairman, President and
Chief Executive Officer
EXHIBIT INDEX
1 Description of Directors and Executive Officers of CCB
2 Agreement and Plan of Merger between CCB Financial Corporation and
National Commerce Bancorporation, dated March 17, 2000
3 Stock Option Agreement between CCB Financial Corporation and National
Commerce Bancorporation, dated March 17, 2000
Exhibit 1
The following individuals are executive officers or
directors of CCB. Each individual is a citizen of the
United States.
Title of
Reporting Person Reporting Person Business Address
Ernest C. Roessler Chairman and CCB Financial
President(Chief Corporation
Executive Officer) 111 Corcoran Street
Durham, NC 27701
William L. Abercrombie, Vice Chairman CCB Financial
Jr. Corporation
111 Corcoran Street
Durham, NC 27701
J. Harper Beall, III Director President and Chief
Executive Officer
Fairfield Chair
Company
1331 Harper Avenue
Lenoir, NC 28645
James B. Brame, Jr. Director President
Brame Specialty Co.,
Inc.
2021 S. Briggs Avenue
Durham, NC 27703
Timothy B. Burnett Director President
Bessemer Improvement
Company
822 N. Elm Street
Greensboro, NC 27401
Blake P. Garrett, Jr. Director Partner
Garrett & Garrett
P.O. Box 36
Fountain Inn, SC 29644
Edward S. Holmes Director Partner
Holmes & McLaurin
Attorneys
at Law
27 Hillsboro Street
Pittsboro, NC 27312
David B. Jordan Vice Chairman CCB Financial
Corporation
111 Corcoran Street
Durham, NC 27701
C. Dan Joyner Director President and Chief
Executive Officer
The Prudential/C. Dan
Joyner
P.O. Box 16059
Greenville, SC 29606
Owen G. Kenan Director President and Chief
Executive Officer
Kenan Enterprises, Inc.
129 Timberhill Place
Chapel Hill, NC 27514
Eugene J. McDonald Executive Vice President
Chairman Duke Management
Company
2200 West Main Street,
Suite 1000
Durham, NC 27707
Hamilton W. McKay, Director Retired Physician
Jr., M.D. Carolina Asthma &
Allergy
Center, P.A.
2711 Randolph Road
Charlotte, NC 28207
George J. Morrow Director President and Chief
Executive Officer
Glaxo Wellcome Inc.
Five Moore Drive
Research Triangle
Park, NC 27709
Eric B. Munson Director President and Chief
Executive Officer
University of North
Carolina Hospitals
101 Manning Drive
Chapel Hill, NC 27514
Dr. David E. Shi Director President
Furman University
3300 Poinsett Highway
Greenville, SC 29613
Jimmy K. Stegall Director President
Stegall Petroleum, Inc.
527 East Franklin
Street
Monroe, NC 28111
H. Allen Tate, Jr. Director President
Allen Tate Company, Inc.
6620 Fairview Road
Charlotte, NC 28210
James L. Williamson Director Retired Partner
KPMG LLP
1937 Clematis Drive
Charlotte, NC 28211
Dr. Phail Wynn, Jr. Director President
Durham Technical
Community College
1637 Lawson Street
Durham, NC 27703
Richard L. Furr Senior Executive CCB Financial Corporation
Vice President 111 Corcoran Street
Durham, NC 27701
J. Scott Edwards Senior Executive CCB Financial Corporation
Vice President 111 Corcoran Street
Durham, NC 27701
Sheldon M. Fox Executive Vice CCB Financial
President Corporation
and Chief 111 Corcoran Street
Financial Durham, NC 27701
Officer
W. Harold Parker, Jr. Senior Vice CCB Financial President
Corporation
and Controller 111 Corcoran Street
(chief accounting Durham, NC 27701
Officer)
Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and between
CCB FINANCIAL CORPORATION
and
NATIONAL COMMERCE BANCORPORATION
Dated as of March 17, 2000
TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE MERGER
1.1 The Merger 1
1.2 Effective Time 2
1.3 Effects of the Merger 2
1.4 Conversion of CCB Common Stock 2
1.5 NCBC Capital Stock 3
1.6 Options 3
1.7 Charter 4
1.8 By-Laws 4
1.9 Tax and Accounting Consequences 4
1.10 Management 4
1.11 Board of Directors 4
1.12 Headquarters of Surviving Corporation 5
ARTICLE II
EXCHANGE OF SHARES
2.1 NCBC to Make Shares Available 5
2.2 Exchange of Shares 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NCBC
3.1 Corporate Organization 7
3.2 Capitalization 8
3.3 Authority; No Violation 9
3.4 Consents and Approvals 9
3.5 Reports 10
3.6 Financial Statements 11
3.7 Broker's Fees 11
3.8 Absence of Certain Changes or Events 11
3.9 Legal Proceedings 12
3.10 Taxes and Tax Returns 12
3.11 Employees 13
3.12 SEC Reports 14
3.13 Compliance with Applicable Law 15
3.14 Certain Contracts 15
3.15 Agreements with Regulatory Agencies 16
3.16 Interest Rate Risk Management Instruments 16
3.17 Undisclosed Liabilities 16
3.18 Insurance 17
3.19 Environmental Liability 17
3.20 State Takeover Laws 17
3.21 Reorganization; Pooling of Interests 17
3.22 Financial Holding Company Status 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CCB
4.1 Corporate Organization 18
4.2 Capitalization 18
4.4 Authority; No Violation 19
4.4 Consents and Approvals 20
4.5 Reports 20
4.6 Financial Statements 21
4.7 Broker's Fees 21
4.8 Absence of Certain Changes or Events 21
4.9 Legal Proceedings 22
4.10 Taxes and Tax Returns 22
4.11 Employees 23
4.12 SEC Reports 24
4.13 Compliance with Applicable Law 25
4.14 Certain Contracts 25
4.15 Agreements with Regulatory Agencies 26
4.16 Interest Rate Risk Management Instruments 26
4.17 Undisclosed Liabilities 26
4.18 Insurance 26
4.19 Environmental Liability 27
4.20 State Takeover Laws; CCB Rights Agreement 27
4.21 Reorganization; Pooling of Interests 27
4.22 Financial Holding Company Status 27
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time 27
5.2 Forbearances 28
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters 30
6.2 Access to Information 31
6.3 Shareholders' Approvals 32
6.4 Legal Conditions to Merger 32
6.5 Affiliates; Publication of Combined Financial Results 32
6.6 Stock Quotation 33
6.7 Employee Benefit Plans 33
6.8 Indemnification; Directors' and Officers' Insurance 34
6.9 Additional Agreements 34
6.10 Advice of Changes 35
6.11 Dividends 35
6.12 Exemption from Liability Under Section 16(b) 35
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger
35
7.2 Conditions to Obligations of CCB 37
7.3 Conditions to Obligations of NCBC 37
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination 38
8.2 Effect of Termination 38
8.3 Amendment 38
8.4 Extension; Waiver 39
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing 39
9.2 Nonsurvival of Representations, Warranties and Agreements39
9.3 Expenses 39
9.4 Notices 40
9.5 Interpretation 40
9.6 Counterparts 40
9.7 Entire Agreement 40
9.8 Governing Law 40
9.9 Publicity 41
9.10 Assignment; Third Party Beneficiaries 41
Exhibit A - CCB Option Agreement
Exhibit B - NCBC Option Agreement
Exhibit 6.5(a)(1) - Form of Affiliate Letter Addressed to NCBC
Exhibit 6.5(a)(2) - Form of Affiliate Letter Addressed to CCB
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 17, 2000
(this "Agreement"), by and between CCB Financial Corporation, a
North Carolina corporation ("CCB"), and National Commerce
Bancorporation, a Tennessee corporation ("NCBC").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of NCBC and CCB have
determined that it is in the best interests of their respective
corporations and shareholders to consummate the strategic
business combination transaction provided for herein in which CCB
will, subject to the terms and conditions set forth herein, merge
with and into NCBC (the "Merger"), so that NCBC is the surviving
corporation (hereinafter sometimes referred to in such capacity
as the "Surviving Corporation") in the Merger; and
WHEREAS, as a condition to, and immediately after, the
execution of this Agreement, and as a condition to the execution
of the NCBC Option Agreement, CCB and NCBC are entering into a
stock option agreement (the "CCB Option Agreement") in the form
attached hereto as Exhibit A; and
WHEREAS, as a condition to, and immediately after, the
execution of this Agreement, and as a condition to the execution
of the CCB Option Agreement, CCB and NCBC are entering into a
stock option agreement (the "NCBC Option Agreement", and together
with the CCB Option Agreement, the "Option Agreements") in the
form attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. (a) Subject to the terms and conditions
of this Agreement, in accordance with Business Corporation Act of
the State of North Carolina (the "NCBCA") and the Business
Corporation Act of the State of Tennessee (the "TBCA"), at the
Effective Time (as defined below), CCB shall merge with and into
NCBC. NCBC shall be the Surviving Corporation in the Merger, and
shall continue its corporate existence under the laws of the
State of Tennessee. Upon consummation of the Merger, the
separate corporate existence of CCB shall terminate.
(b) NCBC and CCB may at any time change the method of
effecting the combination of CCB and NCBC including without
limitation the provisions of this Article I, if and to the extent
they deem such change to be desirable, including without
limitation to provide for a merger of either party with and into
a wholly-owned subsidiary of the other; provided, however, that
no such change shall (i) alter or change the amount of
consideration to be provided to holders of CCB Common Stock (as
defined below) as provided for in this Agreement (the "Merger
Consideration"), (ii) adversely affect the tax treatment of
shareholders as a result of receiving the Merger Consideration or
(iii) materially impede or delay consummation of the transactions
contemplated by this Agreement.
1.2 Effective Time. The Merger shall become effective as
set forth in the "North Carolina Articles of Merger" and the
"Tennessee Articles of Merger" (each an "Article of Merger" and,
together, the "Articles of Merger") which shall, respectively, be
filed with the Secretary of State of the State of North Carolina
(the "North Carolina Secretary") and the Secretary of State of
the State of Tennessee (the "Tennessee Secretary") on the Closing
Date. The term "Effective Time" shall be the date and time when
the Merger becomes effective, as set forth in the Articles of
Merger.
1.3 Effects of the Merger. At and after the Effective
Time, the Merger shall have the effects set forth in Section 55-
11-06 of the NCBCA and Section 48-21-108 of the TBCA.
1.4 Conversion of CCB Common Stock . At the Effective
Time, by virtue of the Merger and without any action on the part
of CCB, NCBC or the holder of any of the following securities:
(a) Subject to Section 2.2(e), each share of the common
stock, par value $5.00 per share, of CCB (the "CCB Common Stock")
issued and outstanding immediately prior to the Effective Time
(together with the preferred share purchase rights (the "CCB
Shareholder Rights") issued to the holders thereof pursuant to
that certain Amended and Restated Rights Agreement, dated as of
October 1, 1998 (as such may be amended, supplemented, restated
or replaced from time to time), between CCB and Central Carolina
Bank and Trust Company (the "CCB Rights Agreement") except for
shares of CCB Common Stock owned, directly or indirectly, by CCB
or NCBC or any of their respective wholly-owned Subsidiaries
(other than shares of CCB Common Stock held, directly or
indirectly, in trust accounts, managed accounts and the like, or
otherwise held in a fiduciary capacity, that are beneficially
owned by third parties (any such shares, whether held directly or
indirectly by CCB or NCBC, as the case may be, being referred to
herein as "Trust Account Shares")) or shares of CCB Common Stock
held on account of a debt previously contracted ("DPC Shares")
shall be converted into the right to receive 2.45 shares (the
"Exchange Ratio") of the common stock, par value $2.00 per share,
of NCBC (the "NCBC Common Stock").
(b) All of the shares of CCB Common Stock (together with
the associated CCB Shareholder Rights converted into the right to
receive NCBC Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and
shall cease to exist as of the Effective Time, and each
certificate (each a "Certificate") previously representing any
such shares of CCB Common Stock (and the associated CCB
Shareholder Rights) shall thereafter represent only the right to
receive (i) a certificate representing the number of whole shares
of NCBC Common Stock and (ii) cash in lieu of fractional shares
into which the shares of CCB Common Stock represented by such
Certificate have been converted pursuant to this Section 1.4 and
Section 2.2(e). Certificates previously representing shares of
CCB Common Stock (together with the associated CCB Shareholder
Rights) shall be exchanged for certificates representing whole
shares of NCBC Common Stock and cash in lieu of fractional shares
issued in consideration therefor upon the surrender of such
Certificates in accordance with Section 2.2, without any interest
thereon. If, prior to the Effective Time, the outstanding shares
of NCBC Common Stock or CCB Common Stock shall have been
increased, decreased, changed into or exchanged for a different
number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar
change in capitalization, an appropriate and proportionate
adjustment shall be made to the Exchange Ratio.
(c) At the Effective Time, all shares of CCB Capital Stock
(as defined below) that are owned, directly or indirectly, by CCB
or NCBC or any of their respective wholly-owned Subsidiaries
(other than Trust Account Shares and DPC Shares) shall be
cancelled and shall cease to exist and no stock of NCBC or other
consideration shall be delivered in exchange therefor. All
shares of NCBC Common Stock that are owned by CCB or any of its
wholly-owned Subsidiaries (other than Trust Account Shares and
DPC Shares) shall as of the Effective Time be cancelled and
become authorized but unissued shares of NCBC Common Stock.
1.5 NCBC Capital Stock. Except as otherwise provided in
Section 1.4(c), at and after the Effective Time, each share of
NCBC Capital Stock (as defined below) issued and outstanding
immediately prior to the Closing Date shall remain an issued and
outstanding share of capital stock of the Surviving Corporation
and shall not be affected by the Merger.
1.6 Options. (a) At the Effective Time, each option
granted by CCB to purchase shares of CCB Common Stock which is
outstanding and unexercised immediately prior thereto shall cease
to represent a right to acquire shares of CCB Common Stock and
shall be converted automatically into an option to purchase
shares of NCBC Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms
of the CCB Stock Plans (as defined below) and the agreements
evidencing grants thereunder):
(i) The number of shares of NCBC Common Stock to be subject
to the new option shall be equal to the product of the number of
shares of CCB Common Stock subject to the original option and the
Exchange Ratio, provided that any fractional shares of NCBC
Common Stock resulting from such multiplication shall be rounded
to the nearest whole share; and
(ii) The exercise price per share of NCBC Common Stock under
the new option shall be equal to the exercise price per share of
CCB Common Stock under the original option divided by the
Exchange Ratio, provided that such exercise price shall be
rounded to the nearest whole cent.
(c) The adjustment provided herein with respect to any
options which are "incentive stock options" (as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")), shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code. The
duration and other terms of the new option shall be the same as
the original option except that all references to CCB shall be
deemed to be references to NCBC.
1.7 Charter. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Restated Charter of NCBC,
with such amendments as to which the parties may hereafter agree
to submit to NCBC's shareholders, including, without limitation,
an amendment to increase the authorized number of shares of NCBC
Common Stock and NCBC Preferred Stock to levels reasonable in
light of the Surviving Corporation's overall capitalization,
taking into account the issuance of shares of NCBC Common Stock
pursuant to the terms hereof and all options, warrants and rights
to purchase shares of NCBC Capital Stock which will be
outstanding following the consummation of the Merger, and which
may be properly approved by NCBC's Board of Directors and by such
shareholders (the "NCBC Charter"), shall be the Charter of the
Surviving Corporation until thereafter amended in accordance with
applicable law.
1.8 By-Laws. Subject to the terms and conditions of this
Agreement, at the Effective Time, the By-Laws of NCBC shall be
the By-Laws of the Surviving Corporation until thereafter amended
in accordance with applicable law.
1.9 Tax and Accounting Consequences. It is intended that
the Merger shall constitute a "reorganization" within the meaning
of Section 368(a) of the Code, that this Agreement shall
constitute a "plan of reorganization" for the purposes of
Sections 354 and 361 of the Code and that the Merger shall be
accounted for as a "pooling of interests" under generally
accepted accounting principles ("GAAP").
1.10 Management. At the Effective Time, Thomas M. Garrott
shall be Chairman of the Board of Directors and Chairman of the
Executive Committee of the Board of Directors of the Surviving
Corporation and Ernest C. Roessler shall be President and Chief
Executive Officer of the Surviving Corporation.
1.11 Board of Directors. (a) From and after the Effective
Time, until duly changed in compliance with applicable law and
the Charter and By-Laws of the Surviving Corporation, the Board
of Directors of the Surviving Corporation shall consist of twenty
(20) directors, and shall initially include Mr. Garrott and Mr.
Roessler and an equal number of NCBC Directors and CCB Directors
(each as defined below). The initial NCBC Directors shall be
selected by NCBC's Board of Directors and the initial CCB
Directors shall be selected by CCB's Board of Directors. The
NCBC Directors and CCB Directors shall be allocated among each
class in as nearly equal a number as possible. From and after
the Effective Time and until the second anniversary thereof, all
vacancies on the Board of Directors of the Surviving Corporation
created by (i) the cessation of service of a CCB Director shall
be filled by a nominee selected by the continuing CCB Directors
and (ii) the cessation of service of a NCBC Director shall be
filled by a nominee selected by the continuing NCBC Directors.
(b) From and after the Effective Time until the second
anniversary thereof, each of the committees of the Board of
Directors of the Surviving Corporation shall be comprised of an
equal number of CCB Directors and NCBC Directors, and the
respective chairmen of such committees shall be drawn equally
from the CCB Directors and the NCBC Directors, the identity of
the members of such committees to be otherwise mutually defined
by Mr. Garrott and Mr. Roessler.
(c) The term "CCB Director" means (i) any person serving as
a Director of CCB on the date of this Agreement who continues as
a Director of the Surviving Corporation at the Effective Time and
(ii) any person who becomes a Director of the Surviving
Corporation and who is designated as such by the continuing CCB
Directors prior to his or her election; and the term "NCBC
Director" means (i) any person serving as a Director of NCBC on
the date of this Agreement who becomes a Director of the
Surviving Corporation at the Effective Time and (ii) any person
who becomes a Director of the Surviving Corporation and who is
designated as such by the continuing NCBC Directors prior to his
or her election.
1.12 Headquarters of Surviving Corporation. From and after
the Effective Time, the location of the headquarters and
principal executive offices of the Surviving Corporation shall be
that of the headquarters and principal executive offices of NCBC
as of the date of this Agreement.
ARTICLE II
EXCHANGE OF SHARES
2.1 NCBC to Make Shares Available. At or prior to the
Effective Time, NCBC shall deposit, or shall cause to be
deposited, with The Bank of New York, or another bank or trust
company reasonably acceptable to each of CCB and NCBC (the
"Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article II,
certificates representing the shares of NCBC Common Stock, and
cash in lieu of any fractional shares (such cash and certificates
for shares of NCBC Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund"), to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) in exchange for outstanding
shares of CCB Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after
the Effective Time, and in no event later than five business days
thereafter, the Exchange Agent shall mail to each holder of
record of one or more Certificates a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use
in effecting the surrender of the Certificates in exchange for
certificates representing the shares of NCBC Common Stock and any
cash in lieu of fractional shares into which the shares of CCB
Common Stock represented by such Certificate or Certificates
shall have been converted pursuant to this Agreement. Upon
proper surrender of a Certificate or Certificates for exchange
and cancellation to the Exchange Agent, together with such
properly completed letter of transmittal, duly executed, the
holder of such Certificate or Certificates shall be entitled to
receive in exchange therefor, as applicable, (i) a certificate
representing that number of whole shares of NCBC Common Stock to
which such holder of CCB Common Stock shall have become entitled
pursuant to the provisions of Article I and (ii) a check
representing the amount of any cash in lieu of fractional shares
which such holder has the right to receive in respect of the
Certificate or Certificates surrendered pursuant to the
provisions of this Article II, and the Certificate or
Certificates so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any cash in lieu of
fractional shares or on any unpaid dividends and distributions
payable to holders of Certificates.
(b) No dividends or other distributions declared with
respect to NCBC Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall
surrender such Certificate in accordance with this Article II.
After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with
respect to shares of NCBC Common Stock represented by such
Certificate.
(c) If any certificate representing shares of NCBC Common
Stock is to be issued in a name other than that in which the
Certificate or Certificates surrendered in exchange therefor is
or are registered, it shall be a condition of the issuance
thereof that the Certificate or Certificates so surrendered shall
be properly endorsed (or accompanied by an appropriate instrument
of transfer) and otherwise in proper form for transfer, and that
the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of NCBC
Common Stock in any name other than that of the registered holder
of the Certificate or Certificates surrendered, or required for
any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers
on the stock transfer books of CCB of the shares of CCB Common
Stock that were issued and outstanding immediately prior to the
Effective Time. If, after the Effective Time, certificates
representing such shares are presented for transfer to the
Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of NCBC Common Stock as provided
in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares
of NCBC Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution with
respect to NCBC Common Stock shall be payable on or with respect
to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other
rights of a shareholder of NCBC. In lieu of the issuance of any
such fractional share, NCBC shall pay to each former shareholder
of CCB who otherwise would be entitled to receive such fractional
share an amount in cash determined by multiplying (i) the average
of the closing-sale prices of NCBC Common Stock on the National
Market System of The Nasdaq Stock Market, Inc. (the "Nasdaq") as
reported by The Wall Street Journal for the five trading days
immediately preceding the date of the Effective Time by (ii) the
fraction of a share (rounded to the nearest thousandth when
expressed in decimal form) of NCBC Common Stock to which such
holder would otherwise be entitled to receive pursuant to
Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed
by the shareholders of CCB for 12 months after the Effective Time
shall be paid to NCBC. Any former shareholders of CCB who have
not theretofore complied with this Article II shall thereafter
look only to NCBC for payment of the shares of NCBC Common Stock,
cash in lieu of any fractional shares and any unpaid dividends
and distributions on the NCBC Common Stock deliverable in respect
of each share of CCB Common Stock, as the case may be, such
shareholder holds as determined pursuant to this Agreement, in
each case, without any interest thereon. Notwithstanding the
foregoing, none of CCB, NCBC, the Exchange Agent or any other
person shall be liable to any former holder of shares of CCB
Common Stock for any amount delivered in good faith to a public
official pursuant to applicable abandoned property, escheat or
similar laws.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or
destroyed and, if reasonably required by NCBC, the posting by
such person of a bond in such amount as NCBC may determine is
reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of NCBC Common Stock and any cash in lieu
of fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NCBC
Except as disclosed in the NCBC disclosure schedule
delivered to CCB concurrently herewith (the "NCBC Disclosure
Schedule") NCBC hereby represents and warrants to CCB as follows:
3.1 Corporate Organization. (a) NCBC is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Tennessee. NCBC has the corporate power and
authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character
or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not, either
individually or in the aggregate, have a Material Adverse Effect
on NCBC. As used in this Agreement, the term "Material Adverse
Effect" means, with respect to CCB, NCBC or the Surviving
Corporation, as the case may be, a material adverse effect on (i)
the business, operations, results of operations or financial
condition of such party and its Subsidiaries taken as a whole or
(ii) the ability of such party to timely consummate the
transactions contemplated hereby. As used in this Agreement, the
word "Subsidiary" when used with respect to any party means any
bank, savings bank, corporation, partnership, limited liability
company, or other organization, whether incorporated or
unincorporated, which is consolidated with such party for
financial reporting purposes. NCBC is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"). True and complete copies of the NCBC
Charter and By-Laws of NCBC, as in effect as of the date of this
Agreement, have previously been made available by NCBC to CCB.
(b) Each NCBC Subsidiary (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii)
is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure
to be so qualified would have a Material Adverse Effect on NCBC
and (iii) has all requisite corporate power and authority to own
or lease its properties and assets and to carry on its business
as now conducted.
3.2 Capitalization. (a) The authorized capital stock of
NCBC consists of (i) 175,000,000 shares of NCBC Common Stock, of
which, as of March 13, 2000, 108,179,637 shares were issued and
outstanding and (ii) 5,000,000 shares of preferred stock, no par
value per share (the "NCBC Preferred Stock" and, together with
the NCBC Common Stock, the "NCBC Capital Stock"), of which, as of
the date hereof, no shares are issued and outstanding. All of
the issued and outstanding shares of NCBC Common Stock have been
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of
this Agreement, except pursuant to the terms of (i) the NCBC
Option Agreement, (ii) options to acquire 5,529,423 shares of
NCBC Common Stock issued pursuant to employee and director stock
plans of NCBC in effect as of the date hereof (the "NCBC Stock
Plans"), (iii) options to acquire up to a maximum of 152,569
shares of NCBC Common Stock that may be issued to holders of
options to acquire shares of common stock of Piedmont Bancorp,
Inc. ("Piedmont") in the event of consummation of a merger (the
"Piedmont Merger") of Piedmont into NCBC pursuant to an Agreement
and Plan of Reorganization dated as of December 27, 1999 between
NCBC and Piedmont (the "Piedmont Merger Agreement") and (iv) the
obligation to issue a maximum of 1,514,108 shares of NCBC Common
Stock to shareholders of Piedmont pursuant to the Piedmont Merger
Agreement (subject to the satisfaction or waiver of conditions
stated in the Piedmont Merger Agreement) in the event of
consummation of the Piedmont Merger, NCBC does not have and is
not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of NCBC Capital Stock or any
other equity securities of NCBC or any securities representing
the right to purchase or otherwise receive any shares of NCBC
Capital Stock (collectively, including the items contemplated by
clauses (i) through (iii) of this sentence, the "NCBC Rights").
As of the date hereof, no shares of NCBC Capital Stock were
reserved for issuance, except for 21,527,748 shares of NCBC
Common Stock reserved for issuance upon exercise of the NCBC
Option Agreement, shares of NCBC Common Stock reserved for
issuance in connection with the NCBC Dividend Reinvestment Plan
(the "NCBC DRIP"), and 5,712,771 shares of NCBC Common Stock
reserved for issuance upon the exercise of stock options pursuant
to the NCBC Stock Plans. Since December 31, 1999, NCBC has not
issued any shares of NCBC Capital Stock or any securities
convertible into or exercisable for any shares of NCBC Capital
Stock, other than as would be permitted by Section 5.2(b) hereof
and pursuant to the NCBC Option Agreement. NCBC has previously
provided CCB with a list of the option holders, the date of each
option to purchase NCBC Common Stock granted, the number of
shares subject to each such option, the expiration date of each
such option and the price at which each such option may be
exercised under an applicable NCBC Stock Plan. In no event will
the aggregate number of shares of NCBC Common Stock outstanding
at the Effective Time (including all shares of NCBC Common Stock
subject to then-outstanding NCBC Rights other than the NCBC
Option Agreement) exceed the number specified in Section 3.2(a)
of the NCBC Disclosure Schedule.
(b) NCBC owns, directly or indirectly, all of the issued
and outstanding shares of capital stock or other equity ownership
interests of each of the NCBC Subsidiaries, free and clear of any
liens, pledges, charges, encumbrances and security interests
whatsoever ("Liens"), and all of such shares or equity ownership
interests are duly authorized and validly issued and are fully
paid, nonassessable (subject to 12 U.S.C. 55) and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. No NCBC Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary. Section
3.2(b) of the NCBC Disclosure Schedule sets forth a list of the
material investments of NCBC in Non-Subsidiary Affiliates. As
used in this Agreement, the term "Non-Subsidiary Affiliate" when
used with respect to any party means any corporation,
partnership, limited liability company, joint venture or other
entity other than such party's Subsidiaries.
3.3 Authority; No Violation. (a) NCBC has full corporate
power and authority to execute and deliver this Agreement and the
NCBC Option Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of
this Agreement and the NCBC Option Agreement and the consummation
of the transactions contemplated hereby and thereby have been
duly and validly approved by the Board of Directors of NCBC. The
Board of Directors of NCBC has directed that this Agreement and
the transactions contemplated hereby be submitted to NCBC's
shareholders for adoption at a meeting of such shareholders and,
except for (i) the adoption of this Agreement by the affirmative
vote of the holders of a majority of the outstanding shares of
NCBC Common Stock and (ii) the amendment of the NCBC Charter
contemplated by Section 1.7, no other corporate proceedings on
the part of NCBC are necessary to approve this Agreement and the
NCBC Option Agreement and to consummate the transactions
contemplated hereby and thereby. This Agreement and the NCBC
Option Agreement have been duly and validly executed and
delivered by NCBC and (assuming due authorization, execution and
delivery by CCB) constitute valid and binding obligations of
NCBC, enforceable against NCBC in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies).
(b) Neither the execution and delivery by NCBC of this
Agreement and the NCBC Option Agreement nor the consummation by
NCBC of the transactions contemplated hereby or thereby, nor
compliance by NCBC with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the NCBC Charter or By-
Laws or (ii) assuming that the consents and approvals referred to
in Section 3.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to NCBC, any of its Subsidiaries or Non-
Subsidiary Affiliates or any of their respective properties or
assets or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation
of any Lien upon any of the respective properties or assets of
NCBC, any of its Subsidiaries or Non-Subsidiary Affiliates under,
any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which NCBC, any of its
Subsidiaries or its Non-Subsidiary Affiliates is a party, or by
which they or any of their respective properties or assets may be
bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, will not have a Material
Adverse Effect on NCBC.
3.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board") under the BHC Act and the Federal Reserve Act, as
amended, and approval of such applications and notices, (ii) the
filing of any required applications or notices with any state or
foreign agencies and approval of such applications and notices
(the "State Approvals"), (iii) the filing with the Securities and
Exchange Commission (the "SEC") of a joint proxy statement in
definitive form relating to the meetings of CCB's and NCBC's
shareholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Joint Proxy Statement"),
and of the registration statement on Form S-4 (the "S-4") in
which the Joint Proxy Statement will be included as a prospectus,
(iv) the filing of the Articles of Merger with the North Carolina
Secretary and the Tennessee Secretary pursuant to the NCBCA and
TBCA, respectively, (v) any consents, authorizations, approvals,
filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws
relating to the regulation of broker-dealers, investment advisers
or transfer agents, and federal commodities laws relating to the
regulation of futures commission merchants and the rules and
regulations thereunder and of any applicable industry self-
regulatory organization ("SRO"), and the rules of The New York
Stock Exchange, Inc. ("NYSE"), or which are required under
consumer finance, mortgage banking and other similar laws, (vi)
such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of NCBC Capital Stock
pursuant to this Agreement and (vii) the approval of this
Agreement by the requisite vote of the shareholders of CCB and
NCBC (including the approval of the amendment of the NCBC Charter
contemplated by Section 1.7), no consents or approvals of or
filings or registrations with any court, administrative agency or
commission or other governmental authority or instrumentality
(each a "Governmental Entity") are necessary in connection with
(A) the execution and delivery by NCBC of this Agreement and (B)
the consummation by NCBC of the Merger and the other transactions
contemplated hereby.
3.5 Reports. NCBC and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that
they were required to file since January 1, 1997 with (i) the
Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority (each a "State
Regulator"), (iv) the Office of the Comptroller of the Currency
(the "OCC"), (v) the SEC, (vi) any SRO and (vii) the Office of
Thrift Supervision (the "OTS") (collectively "Regulatory
Agencies"), and all other reports and statements required to be
filed by them since January 1, 1997, including, without
limitation, any report or statement required to be filed pursuant
to the laws, rules or regulations of the United States, any
state, or any Regulatory Agency, and have paid all fees and
assessments due and payable in connection therewith, except where
the failure to file such report, registration or statement or to
pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on NCBC.
Except for normal examinations conducted by a Regulatory Agency
in the ordinary course of the business of NCBC and its
Subsidiaries, no Regulatory Agency has initiated any proceeding
or, to the best knowledge of NCBC, investigation into the
business or operations of NCBC or any of its Subsidiaries since
January 1, 1997, except where such proceedings or investigation
will not, either individually or in the aggregate, have a
Material Adverse Effect on NCBC. There is no unresolved
violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations
of NCBC or any of its Subsidiaries which, in the reasonable
judgment of NCBC, will, either individually or in the aggregate,
have a Material Adverse Effect on NCBC.
3.6 Financial Statements. NCBC has previously made
available to CCB true and correct copies of the consolidated
balance sheets of NCBC and its Subsidiaries as of December 31,
for the fiscal years 1997, 1998 and 1999 and the related
consolidated statements of income and changes in stockholders'
equity and cash flows for the fiscal years 1997 through 1999,
inclusive (the "NCBC Financial Statements"), in each case
accompanied by the audit report of Ernst & Young LLP, independent
public accountants with respect to NCBC. The December 31, 1999
consolidated balance sheet of NCBC (including the related notes,
where applicable) fairly presents in all material respects the
consolidated financial position of NCBC and its Subsidiaries as
of the date thereof, and the other financial statements referred
to in this Section 3.6 (including the related notes, where
applicable) fairly present in all material respects the results
of the consolidated operations, changes in stockholders' equity,
cash flows and consolidated financial position of NCBC and its
Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth, subject to normal adjustments
in the case of unaudited statements; each of such statements
(including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect
thereto; and each of such statements (including the related
notes, where applicable) has been prepared in all material
respects in accordance with GAAP consistently applied during the
periods involved, except, in each case, as indicated in such
statements or in the notes thereto. The books and records of
NCBC and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only
actual transactions.
3.7 Broker's Fees. Except for Credit Suisse First Boston
Corporation, neither NCBC nor any NCBC Subsidiary nor any of
their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the Merger or
related transactions contemplated by this Agreement or the Option
Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in NCBC Reports filed prior to the date
hereof, since December 31, 1999, no event or events have occurred
that have had, either individually or in the aggregate, a
Material Adverse Effect on NCBC.
(b) Except as publicly disclosed in NCBC Reports filed
prior to the date hereof, since December 31, 1999, NCBC and its
Subsidiaries have carried on their respective businesses in all
material respects in the ordinary course.
(c) Since December 31, 1999, neither NCBC nor any of its
Subsidiaries has (i) except for such actions as are in the
ordinary course of business or except as required by applicable
law, (A) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect
as of December 31, 1999, or (B) granted any severance or
termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonuses, which in the
aggregate exceed 5% of NCBC's 1999 salary and employee benefits
expenses (other than customary year-end bonuses for fiscal 1999)
or (ii) suffered any strike, work stoppage, slowdown, or other
labor disturbance which will, either individually or in the
aggregate, have a Material Adverse Effect on NCBC.
3.9 Legal Proceedings. (a) Neither NCBC nor any of its
Subsidiaries is a party to any, and there are no pending or, to
the best of NCBC's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or
regulatory investigations of any nature against NCBC or any of
its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the NCBC Option
Agreement as to which, in any such case, there is a reasonable
probability of an adverse determination and which, if adversely
determined, will, either individually or in the aggregate, have a
Material Adverse Effect on NCBC.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon NCBC, any
of its Subsidiaries or the assets of NCBC or any of its
Subsidiaries that has had, or will have, either individually or
in the aggregate, a Material Adverse Effect on NCBC or the
Surviving Corporation.
3.10 Taxes and Tax Returns. (a) Each of NCBC and its
Subsidiaries has duly filed all federal, state, foreign and local
information returns and tax returns required to be filed by it on
or prior to the date hereof (all such returns being accurate and
complete in all material respects) and has duly paid or made
provisions for the payment of all Taxes and other governmental
charges which have been incurred or are due or claimed to be due
from it by federal, state, foreign or local taxing authorities on
or prior to the date of this Agreement (including, without
limitation, if and to the extent applicable, those due in respect
of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or
other charges which are not yet delinquent or are being contested
in good faith and have not been finally determined, or (ii)
information returns, tax returns, Taxes or other governmental
charges as to which the failure to file, pay or make provision
for will not, either individually or in the aggregate, have a
Material Adverse Effect on NCBC. The federal income tax returns
of NCBC and its Subsidiaries have been examined by the Internal
Revenue Service (the "IRS") for all years to and including the
taxable year ended December 31, 1996 and any liability with
respect thereto has been satisfied or any liability with respect
to deficiencies asserted as a result of such examination is
covered by adequate reserves. To the best of NCBC's knowledge,
there are no material disputes pending, or claims asserted for,
Taxes or assessments upon NCBC or any of its Subsidiaries for
which NCBC does not have adequate reserves. In addition, (A)
proper and accurate amounts have been withheld by NCBC and its
Subsidiaries from their employees for all prior periods in
compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except
where failure to do so will not, either individually or in the
aggregate, have a Material Adverse Effect on NCBC, (B) federal,
state, and local returns which are accurate and complete in all
material respects have been filed by NCBC and its Subsidiaries
for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes, except
where failure to do so will not, either individually or in the
aggregate, have a Material Adverse Effect on NCBC, (C) the
amounts shown on such federal, state or local returns to be due
and payable have been paid in full or adequate provision therefor
has been included by NCBC in its consolidated financial
statements, except where failure to do so will not, either
individually or in the aggregate, have a Material Adverse Effect
on NCBC and (D) there are no Tax liens upon any property or
assets of NCBC or its Subsidiaries except liens for current taxes
not yet due or liens that will not, either individually or in the
aggregate, have a Material Adverse Effect on NCBC. Neither NCBC
nor any of its Subsidiaries has been required to include in
income any adjustment pursuant to Section 481 of the Code by
reason of a voluntary change in accounting method initiated by
NCBC or any of its Subsidiaries, and the IRS has not initiated or
proposed any such adjustment or change in accounting method, in
either case which has had or will have, either individually or in
the aggregate, a Material Adverse Effect on NCBC. Except as set
forth in the financial statements described in Section 3.6,
neither NCBC nor any of its Subsidiaries has entered into a
transaction which is being accounted for as an installment
obligation under Section 453 of the Code, which will have, either
individually or in the aggregate, a Material Adverse Effect on
NCBC.
(b) As used in this Agreement, the term "Tax" or "Taxes"
means all federal, state, local, and foreign income, excise,
gross receipts, gross income, ad valorem, profits, gains,
property, capital, sales, transfer, use, payroll, employment,
severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments
together with all penalties and additions to tax and interest
thereon.
(c) Neither NCBC nor any of its Subsidiaries is a party to
or is bound by an Tax sharing, allocation or indemnification
agreement or arrangement (other than such an agreement or
arrangement solely among NCBC and its Subsidiaries). Neither
NCBC nor any of its Subsidiaries has any liability for the Taxes
of any person (other than NCBC and its Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law). Within the past five years,
neither NCBC nor any of its Subsidiaries has been a "distributing
corporation" or a "controlled corporation" in a distribution
intended to qualify under Section 355 (a) of the Code.
(d) No disallowance of a deduction under Section 162(m) of
the Code for employee remuneration of any amount paid or payable
by NCBC or any Subsidiary of NCBC under any contract, plan,
program, arrangement or understanding will have, either
individually or in the aggregate, a Material Adverse Effect on
NCBC.
3.11 Employees. (a) The NCBC Disclosure Schedule sets
forth a true and complete list of each material employee or
director benefit plan, arrangement or agreement that is
maintained, or contributed to, as of the date of this Agreement
(the "NCBC Benefit Plans") by NCBC, any of its Subsidiaries or by
any trade or business, whether or not incorporated (a "NCBC ERISA
Affiliate"), all of which together with NCBC would be deemed a
"single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) NCBC has heretofore made available to CCB true and
complete copies of each of the NCBC Benefit Plans and certain
related documents, including, but not limited to, (i) the
actuarial report for such NCBC Benefit Plan (if applicable) for
each of the last two years and (ii) the most recent determination
letter from the IRS (if applicable) for such NCBC Benefit Plan.
(c) (i) Each of the NCBC Benefit Plans has been operated
and administered in all material respects in compliance with
applicable laws, including, but not limited to, ERISA and the
Code, (ii) each of the NCBC Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is
so qualified, and there are no existing circumstances or any
events that have occurred that will adversely affect the
qualified status of any such NCBC Benefit Plan, (iii) with
respect to each NCBC Benefit Plan that is subject to Title IV of
ERISA, the present value of accrued benefits under such NCBC
Benefit Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by
such NCBC Benefit Plan's actuary with respect to such NCBC
Benefit Plan, did not, as of its latest valuation date, exceed
the then current value of the assets of such NCBC Benefit Plan
allocable to such accrued benefits, (iv) no NCBC Benefit Plan
provides benefits, including, without limitation, death or
medical benefits (whether or not insured), with respect to
current or former employees or directors of NCBC or its
Subsidiaries beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable law, (B)
death benefits or retirement benefits under any "employee pension
plan" (as such term is defined in Section 3(2) of ERISA), (C)
deferred compensation benefits accrued as liabilities on the
books of NCBC or its Subsidiaries or (D) benefits the full cost
of which is borne by the current or former employee or director
(or his beneficiary), (v) no material liability under Title IV of
ERISA has been incurred by NCBC, its Subsidiaries or any NCBC
ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to NCBC, its
Subsidiaries or any NCBC ERISA Affiliate of incurring a material
liability thereunder, (vi) no NCBC Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section
3(37) of ERISA), (vii) all contributions or other amounts payable
by NCBC or its Subsidiaries as of the Effective Time with respect
to each NCBC Benefit Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) none of NCBC, its Subsidiaries or
any other person, including any fiduciary, has engaged in a
transaction in connection with which NCBC, its Subsidiaries or
any NCBC Benefit Plan will be subject to either a material civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the
Code, and (ix) to the best knowledge of NCBC there are no
pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against, any of the NCBC
Benefit Plans or any trusts related thereto that will have,
either individually or in the aggregate, a Material Adverse
Effect on NCBC.
(d) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event) (i) result
(either alone or upon the occurrence of any additional acts or
events) in any payment (including, without limitation, severance,
unemployment compensation, "excess parachute payment" (within the
meaning of Section 280G of the Code), forgiveness of indebtedness
or otherwise) becoming due to any director or any employee of
NCBC or any of its affiliates from NCBC or any of its affiliates
under any NCBC Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any NCBC Benefit Plan or
(iii) other than the NCBC Corporation Directors' Stock Deferral
Plan and the NCBC Corporation Employees' Stock Deferral Plan,
result in any acceleration of the time of payment or vesting of
any such benefits which will, either individually or in the
aggregate, have a Material Adverse Effect on NCBC.
3.12 SEC Reports. NCBC has previously made available to CCB
an accurate and complete copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1997 by NCBC (the "NCBC
Reports") with the SEC pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of
1934, as amended (the "Exchange Act") and prior to the date
hereof and (b) communication mailed by NCBC to its shareholders
since January 1, 1997 and prior to the date hereof, and no such
NCBC Report or communication, as of the date thereof, contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in
which they were made, not misleading, except that information as
of a later date (but before the date hereof) shall be deemed to
modify information as of an earlier date. Since January 1, 1997,
as of their respective dates, all NCBC Reports filed under the
Securities Act and the Exchange Act complied in all material
respects with the published rules and regulations of the SEC with
respect thereto.
3.13 Compliance with Applicable Law. (a) NCBC and each of
its Subsidiaries hold all material licenses, franchises, permits
and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to each, and have
complied in all material respects with and are not in default in
any material respect under any, applicable law, statute, order,
rule, regulation, policy and/or guideline of any Governmental
Entity relating to NCBC or any of its Subsidiaries, except where
the failure to hold such license, franchise, permit or
authorization or such noncompliance or default will not, either
individually or in the aggregate, have a Material Adverse Effect
on NCBC.
(b) Except as will not have, either individually or in the
aggregate, a Material Adverse Effect on NCBC, NCBC and each NCBC
Subsidiary have properly administered all accounts for which it
acts as a fiduciary, including accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms
of the governing documents, applicable state and federal law and
regulation and common law. None of NCBC, any NCBC Subsidiary, or
any director, officer or employee of NCBC or of any NCBC
Subsidiary, has committed any breach of trust with respect to any
such fiduciary account that will have a Material Adverse Effect
on NCBC, and the accountings for each such fiduciary account are
true and correct in all material respects and accurately reflect
the assets of such fiduciary account.
3.14 Certain Contracts. (a) Neither NCBC nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors, officers or
employees, other than in the ordinary course of business
consistent with past practice, (ii) which, upon the consummation
or shareholder approval of the transactions contemplated by this
Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from CCB, NCBC, the
Surviving Corporation, or any of their respective Subsidiaries to
any officer or employee thereof, (iii) which is a "material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in
the NCBC Reports, (iv) which materially restricts the conduct of
any line of business by NCBC or upon consummation of the Merger
will materially restrict the ability of the Surviving Corporation
to engage in any line of business in which a bank holding company
may lawfully engage, (v) with or to a labor union or guild
(including any collective bargaining agreement) or
(vi) (including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan) any of the
benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any
shareholder approval or the consummation of any of the
transactions contemplated by this Agreement, or the value of any
of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. NCBC has
previously made available to CCB true and correct copies of all
employment and deferred compensation agreements which are in
writing and to which NCBC is a party. Each contract,
arrangement, commitment or understanding of the type described in
this Section 3.14(a), whether or not set forth in the NCBC
Disclosure Schedule, is referred to herein as a "NCBC Contract",
and neither NCBC nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the
other parties thereto which, either individually or in the
aggregate, will have a Material Adverse Effect on NCBC.
(b) (i) Each NCBC Contract is valid and binding on NCBC or
any of its Subsidiaries, as applicable, and in full force and
effect, (ii) NCBC and each of its Subsidiaries has in all
material respects performed all obligations required to be
performed by it to date under each NCBC Contract, except where
such noncompliance, either individually or in the aggregate, will
not have a Material Adverse Effect on NCBC, and (iii) no event or
condition exists which constitutes or, after notice or lapse of
time or both, will constitute, a material default on the part of
NCBC or any of its Subsidiaries under any such NCBC Contract,
except where such default, either individually or in the
aggregate, will not have a Material Adverse Effect on NCBC.
3.15 Agreements with Regulatory Agencies. Neither NCBC nor
any of its Subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has been since January
1, 1997, a recipient of any supervisory letter from, or since
January 1, 1997, has adopted any board resolutions at the request
of any Regulatory Agency or other Governmental Entity that
currently restricts in any material respect the conduct of its
business or that in any material manner relates to its capital
adequacy, its credit policies, its management or its business
(each, whether or not set forth in the NCBC Disclosure Schedule,
an "NCBC Regulatory Agreement"), nor has NCBC or any of its
Subsidiaries been advised since January 1, 1997, by any
Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such Regulatory Agreement.
3.16 Interest Rate Risk Management Instruments. All
interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements, whether entered into
for the account of NCBC or for the account of a customer of NCBC
or one of its Subsidiaries, were entered into in the ordinary
course of business and, to NCBC's knowledge, in accordance with
prudent banking practice and applicable rules, regulations and
policies of any Regulatory Authority and with counterparties
believed to be financially responsible at the time and are legal,
valid and binding obligations of NCBC or one of its Subsidiaries
enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the
availability of equitable remedies), and are in full force and
effect. NCBC and each of its Subsidiaries have duly performed in
all material respects all of their material obligations
thereunder to the extent that such obligations to perform have
accrued; and, to NCBC's knowledge, there are no material
breaches, violations or defaults or allegations or assertions of
such by any party thereunder.
3.17 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the consolidated
balance sheet of NCBC included in the NCBC Financial Statements
and for liabilities incurred in the ordinary course of business
consistent with past practice, since December 31, 1999, neither
NCBC nor any of its Subsidiaries has incurred any liability of
any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either
individually or in the aggregate, has had or will have a Material
Adverse Effect on NCBC.
3.18 Insurance. NCBC and its Subsidiaries have in effect
insurance coverage with reputable insurers or are self-insured,
which in respect of amounts, premiums, types and risks insured,
constitutes reasonably adequate coverage against all risks
customarily insured against by bank holding companies and their
subsidiaries comparable in size and operations to NCBC and its
Subsidiaries.
3.19 Environmental Liability. There are no legal,
administrative, arbitral or other proceedings, claims, actions,
causes of action, private environmental investigations or
remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the
imposition, on NCBC of any liability or obligation arising under
common law or under any local, state or federal environmental
statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), pending or
threatened against NCBC, which liability or obligation will,
either individually or in the aggregate, have a Material Adverse
Effect on NCBC. To the knowledge of NCBC, there is no reasonable
basis for any such proceeding, claim, action or governmental
investigation that would impose any liability or obligation that
will, individually or in the aggregate, have a Material Adverse
Effect on NCBC. NCBC is not subject to any agreement, order,
judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing
any liability or obligation with respect to the foregoing that
will have, either individually or in the aggregate, a Material
Adverse Effect on NCBC.
3.20 State Takeover Laws. (a) The Board of Directors of
NCBC has approved the transactions contemplated by this Agreement
and the Option Agreements for purposes of Sections 48-103-301
through 312 of the TBCA such that the provisions of such Sections
of the TCBA will not apply to this Agreement or the Option
Agreements or any of the transactions contemplated hereby or
thereby.
3.21 Reorganization; Pooling of Interests. As of the date
of this Agreement, NCBC has no reason to believe that the Merger
will not qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and as a "pooling of interests" for
accounting purposes.
3.22 Financial Holding Company Status As of the date of
this Agreement, and following the consummation of the
transactions contemplated hereby, NCBC meets and (assuming the
accuracy of Section 4.22) reasonably expects to meet, all
applicable criteria to become and remain a "financial holding
company", as such term is defined in Section 2(p) of the BHC Act,
set forth in such act as well as in any regulations, rules or
interpretations issued by the Federal Reserve Board.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF CCB
Except as disclosed in the CCB disclosure schedule delivered
to NCBC concurrently herewith (the "CCB Disclosure Schedule") CCB
hereby represents and warrants to NCBC as follows:
4.1 Corporate Organization. (a) CCB is a corporation duly
organized, validly existing and in good standing under the laws
of the State of North Carolina. CCB has the corporate power and
authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character
or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not, either
individually or in the aggregate, have a Material Adverse Effect
on CCB. CCB is duly registered as a bank holding company under
the BHC Act. True and complete copies of the Amended and
Restated Articles of Incorporation, as amended, (the "CCB
Articles") and By-Laws of CCB, as in effect as of the date of
this Agreement, have previously been made available by CCB to
NCBC.
(b) Each CCB Subsidiary (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii)
is duly qualified to do business and in good standing in all
jurisdictions (whether Federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure
to be so qualified would have a Material Adverse Effect on CCB,
and (iii) has all requisite corporate power and authority to own
or lease its properties and assets and to carry on its business
as now conducted.
4.2 Capitalization. (a) The authorized capital stock of
CCB consists of (i) 100,000,000 shares of CCB Common Stock, of
which, as of February 29, 2000, 39,450,660 shares were issued and
outstanding, and (ii) 10,000,000 shares of serial preferred stock
(the "CCB Preferred Stock" and together with the CCB Common
Stock, the "CCB Capital Stock") of which (i) 800,000 shares were
designated, issued and outstanding as CCB Series A Preferred
Stock, par value $5.00. As of the date hereof, no shares of CCB
Common Stock or CCB Preferred Stock were reserved for issuance,
except for (i) 7,846,175 shares of CCB Common Stock issuable
pursuant to the CCB Option Agreement and (ii) 2,383,065 shares
reserved for issuance pursuant to the CCB Amended and Restated
Long-Term and Equity Incentive Plans and other employee and
director stock plans of CCB in effect as of the date hereof (the
"CCB Stock Plans"). All of the issued and outstanding shares of
CCB Common Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof. As of
the date of this Agreement, except for the CCB Option Agreement,
the CCB Stock Plans and the CCB Rights Agreement (as defined
below), CCB does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance
of any shares of CCB Capital Stock or any other equity securities
of CCB or any securities representing the right to purchase or
otherwise receive any shares of CCB Capital Stock (collectively,
"CCB Rights"). Since December 31, 1999, CCB has not issued any
shares of CCB Capital Stock or any securities convertible into or
exercisable for any shares of CCB Capital Stock, other than as
permitted by Section 5.2(b) and pursuant to (A) the exercise of
employee stock options granted prior to such date, and (B)
pursuant to the CCB Option Agreement. CCB has previously
provided NCBC with a list of the option holders, the date of each
option to purchase CCB Common Stock granted, the number of shares
subject to each such option, the expiration date of each such
option and the price at which each such option may be exercised
under an applicable CCB Stock Plan. In no event will the
aggregate number of shares of CCB Common Stock outstanding at the
Effective Time (including all shares of CCB Common Stock subject
to then-outstanding CCB Rights other than the CCB Option
Agreement) exceed the number specified in Section 4.2(a) of the
CCB Disclosure Schedule.
(b) CCB owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership
interests of each of the CCB Subsidiaries, free and clear of any
Liens, and all of such shares or equity ownership interests are
duly authorized and validly issued and are fully paid,
nonassessable (subject to N.C. Gen. Stat. 54-42) and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. No CCB Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary. Section
4.2(b) of the CCB Disclosure Schedule sets forth a list of the
material investments of CCB in Non-Subsidiary Affiliates.
4.3 Authority; No Violation. (a) CCB has full corporate
power and authority to execute and deliver this Agreement and the
CCB Option Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of
this Agreement and the CCB Option Agreement and the consummation
of the transactions contemplated hereby and thereby have been
duly and validly approved by the Board of Directors of CCB. The
Board of Directors of CCB has directed that this Agreement and
the transactions contemplated hereby be submitted to CCB's
shareholders for adoption at a meeting of such shareholders and,
except for the adoption of this Agreement by the affirmative vote
of the holders of a majority of the outstanding shares of CCB
Common Stock, no other corporate proceedings on the part of CCB
are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the CCB
Option Agreement have been duly and validly executed and
delivered by CCB and (assuming due authorization, execution and
delivery by NCBC) constitute valid and binding obligations of
CCB, enforceable against CCB in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement of
the CCB Option Agreement by CCB, nor the consummation by CCB of
the transactions contemplated hereby or thereby, nor compliance
by CCB with any of the terms or provisions hereof or thereof,
will (i) violate any provision of the CCB Articles or By-Laws, or
(ii) assuming that the consents and approvals referred to in
Section 4.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to CCB, any of its Subsidiaries or Non-
Subsidiary Affiliates or any of their respective properties or
assets or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation
of any Lien upon any of the respective properties or assets of
CCB, any of its Subsidiaries or its Non-Subsidiary Affiliates
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which CCB, any of
its Subsidiaries or Non-Subsidiary Affiliates is a party, or by
which they or any of their respective properties or assets may be
bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which either
individually or in the aggregate will not have a Material Adverse
Effect on CCB.
4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal Reserve
Board under the BHC Act and the Federal Reserve Act, as amended,
and approval of such applications and notices, (ii) the State
Approvals, (iii) the filing with the SEC of the Joint Proxy
Statement and the S-4, (iv) the filing of the Articles of Merger
with the North Carolina Secretary and the Tennessee Secretary
pursuant to the NCBCA and the TBCA, respectively, (v) any
consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of
federal and state securities laws relating to the regulation of
broker-dealers, investment advisers or transfer agents, and
federal commodities laws relating to the regulation of futures
commission merchants and the rules and regulations thereunder and
of any applicable SRO, and the rules of the NYSE, or which are
required under consumer finance, mortgage banking and other
similar laws, (vi) such filings and approvals as are required to
be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of
NCBC Capital Stock pursuant to this Agreement and (vii) the
approval of this Agreement by the requisite vote of the
shareholders of CCB and NCBC, no consents or approvals of or
filings or registrations with any Governmental Entity are
necessary in connection with (A) the execution and delivery by
CCB of this Agreement and (B) the consummation by CCB of the
Merger and the other transactions contemplated hereby.
4.5 Reports. CCB and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that
they were required to file since January 1, 1997 with the
Regulatory Agencies, and all other reports and statements
required to be filed by them since January 1, 1997, including,
without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States,
any state, or any Regulatory Agency, and have paid all fees and
assessments due and payable in connection therewith, except where
the failure to file such report, registration or statement or to
pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on CCB.
Except for normal examinations conducted by a Regulatory Agency
in the ordinary course of the business of CCB and its
Subsidiaries, no Regulatory Agency has initiated any proceeding
or, to the best knowledge of CCB, investigation into the business
or operations of CCB or any of its Subsidiaries since January 1,
1997, except where such proceedings or investigation will not
have, either individually or in the aggregate, a Material Adverse
Effect on CCB. There is no unresolved violation, criticism, or
exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of CCB or any of its
Subsidiaries which, in the reasonable judgment of CCB, will have,
either individually or in the aggregate, a Material Adverse
Effect on CCB.
4.6 Financial Statements. CCB has previously made
available to NCBC true and correct copies of the consolidated
balance sheets of CCB and its Subsidiaries as of December 31, for
the fiscal years 1997, 1998, and 1999 and the related
consolidated statements of income and changes in shareholders'
equity and cash flows for the fiscal years 1997 through 1999,
inclusive, as reported in CCB's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999 (the "CCB 10-K"), filed
with the SEC under the Exchange Act in each case accompanied by
the audit report of KPMG LLP, independent public accountants with
respect to CCB. The December 31, 1999 consolidated balance sheet
of CCB (including the related notes, where applicable) fairly
presents in all material respects the consolidated financial
position of CCB and its Subsidiaries as of the date thereof, and
the other financial statements referred to in this Section 4.6
(including the related notes, where applicable) fairly present in
all material respects the results of the consolidated operations
and changes in shareholders' equity, cash flows and consolidated
financial position of CCB and its Subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth,
subject to normal year-end audit adjustments in the case of
unaudited statements; each of such statements (including the
related notes, where applicable) complies in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in
accordance with GAAP consistently applied during the periods
involved, except in each case as indicated in such statements or
in the notes thereto. The books and records of CCB and its
Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual transactions.
4.7 Broker's Fees. Except for J.P. Morgan & Co.
Incorporated, neither CCB nor any CCB Subsidiary nor any of their
respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the Merger or
related transactions contemplated by this Agreement or the Option
Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in CCB Reports filed prior to the date hereof,
since December 31, 1999, no event or events have occurred which
have had, individually or in the aggregate, a Material Adverse
Effect on CCB.
(b) Except as publicly disclosed in CCB Reports filed prior
to the date hereof, since December 31, 1999, CCB and its
Subsidiaries have carried on their respective businesses in all
material respects in the ordinary course.
(c) Since December 31, 1999, neither CCB nor any of its
Subsidiaries has (i) except for such actions as are in the
ordinary course of business or except as required by applicable
law, (A) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect
as of December 31, 1999, or (B) granted any severance or
termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonuses, which in the
aggregate exceed 5% of CCB's 1999 salary and employee benefit
expenses (other than customary year-end bonuses for fiscal 1999)
or (ii) suffered any strike, work stoppage, slowdown, or other
labor disturbance which will have, either individually or in the
aggregate, a Material Adverse Effect on CCB.
4.9 Legal Proceedings. (a) Neither CCB nor any of its
Subsidiaries is a party to any, and there are no pending or, to
the best of CCB's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or
regulatory investigations of any nature against CCB or any of its
Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the CCB Option
Agreement as to which, in any such case, there is a reasonable
probability of an adverse determination and which, if adversely
determined, will have, either individually or in the aggregate, a
Material Adverse Effect on CCB.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon CCB, any
of its Subsidiaries or the assets of CCB or any of its
Subsidiaries that has had or will have, either individually or in
the aggregate, a Material Adverse Effect on CCB or the Surviving
Corporation.
4.10 Taxes and Tax Returns. (a) Each of CCB and its
Subsidiaries has duly filed all federal, state, foreign and local
information returns and tax returns required to be filed by it on
or prior to the date hereof (all such returns being accurate and
complete in all material respects) and has duly paid or made
provisions for the payment of all Taxes and other governmental
charges which have been incurred or are due or claimed to be due
from it by federal, state, foreign or local taxing authorities on
or prior to the date of this Agreement (including, without
limitation, if and to the extent applicable, those due in respect
of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or
other charges which are not yet delinquent or are being contested
in good faith and have not been finally determined, or (ii)
information returns, tax returns, Taxes or other governmental
charges as to which the failure to file, pay or make provision
for will not have, either individually or in the aggregate, a
Material Adverse Effect on CCB. The federal income tax returns
of CCB and its Subsidiaries have been examined by the IRS through
the taxable year ended December 31, 1993 and for the taxable year
ended December 31, 1996 and any liability with respect thereto
has been satisfied or any liability with respect to deficiencies
asserted as a result of such examination is covered by adequate
reserves. To the best of CCB's knowledge, there are no material
disputes pending, or claims asserted for, Taxes or assessments
upon CCB or any of its Subsidiaries for which CCB does not have
adequate reserves. In addition, (A) proper and accurate amounts
have been withheld by CCB and its Subsidiaries from their
employees for all prior periods in compliance in all material
respects with the tax withholding provisions of applicable
federal, state and local laws, except where failure to do so will
not, either individually or in the aggregate, have a Material
Adverse Effect on CCB, (B) federal, state and local returns which
are accurate and complete in all material respects have been
filed by CCB and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social
Security and unemployment taxes, except where failure to do so
will not, either individually or in the aggregate, have a
Material Adverse Effect on CCB, (C) the amounts shown on such
federal, state or local returns to be due and payable have been
paid in full or adequate provision therefor has been included by
CCB in its consolidated financial statements, except where
failure to do so will not, individually or in the aggregate, have
a Material Adverse Effect on CCB and (D) there are no Tax liens
upon any property or assets of CCB or its Subsidiaries except
liens for current taxes not yet due or liens that will not have,
either individually or in the aggregate, a Material Adverse
Effect on CCB. Neither CCB nor any of its Subsidiaries has been
required to include in income any adjustment pursuant to Section
481 of the Code by reason of a voluntary change in accounting
method initiated by CCB or any of its Subsidiaries, and the IRS
has not initiated or proposed any such adjustment or change in
accounting method, in either case, which has had or will have,
either individually or in the aggregate, a Material Adverse
Effect on CCB. Except as set forth in the financial statements
described in Section 4.6, neither CCB nor any of its Subsidiaries
has entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, which will
have, either individually or in the aggregate, a Material Adverse
Effect on CCB.
(b) No disallowance of a deduction under Section 162(m) of
the Code for employee remuneration of any amount paid or payable
by CCB or any Subsidiary of CCB under any contract, plan,
program, arrangement or understanding will have, either
individually or in the aggregate, a Material Adverse Effect on
CCB.
(c) Neither CCB nor any of its Subsidiaries is a party to
or is bound by any Tax sharing, allocation or indemnification
agreement or arrangement (other than such an agreement or
arrangement solely among CCB and its Subsidiaries). Neither CCB
nor any of its Subsidiaries has any liability for the Taxes of
any person (other than CCB and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law). Within the past five years, neither CCB
nor any of its Subsidiaries has been a "distributing corporation"
or a "controlled corporation" in a distribution intended to
qualify under Section 355(a) of the Code.
4.11 Employees. (a) The CCB Disclosure Schedule sets forth
a true and complete list of each material employee benefit plan,
arrangement or agreement that is maintained, or contributed to,
as of the date of this Agreement (the "CCB Benefit Plans") by
CCB, any of its Subsidiaries or by any trade or business, whether
or not incorporated (a "CCB ERISA Affiliate"), all of which
together with CCB would be deemed a "single employer" within the
meaning of Section 4001 of ERISA.
(b) CCB has heretofore made available to NCBC true and
complete copies of each of the CCB Benefit Plans and certain
related documents, including, but not limited to, (i) the
actuarial report for such CCB Benefit Plan (if applicable) for
each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such CCB
Benefit Plan.
(c) (i) Each of the CCB Benefit Plans has been operated
and administered in all material respects in compliance with
applicable laws, including, but not limited to, ERISA and the
Code, (ii) each of the CCB Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is
so qualified, and there are no existing circumstances or any
events that have occurred that will adversely affect the
qualified status of any such CCB Benefit Plan, (iii) with respect
to each CCB Benefit Plan which is subject to Title IV of ERISA,
the present value of accrued benefits under such CCB Benefit
Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such CCB
Benefit Plan's actuary with respect to such CCB Benefit Plan, did
not, as of its latest valuation date, exceed the then current
value of the assets of such CCB Benefit Plan allocable to such
accrued benefits, (iv) no CCB Benefit Plan provides benefits,
including, without limitation, death or medical benefits (whether
or not insured), with respect to current or former employees or
directors of CCB or its Subsidiaries beyond their retirement or
other termination of service, other than (A) coverage mandated by
applicable law, (B) death benefits or retirement benefits under
any "employee pension plan" (as such term is defined in Section
3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of CCB or its Subsidiaries or (D)
benefits the full cost of which is borne by the current or former
employee or director (or his beneficiary), (v) no material
liability under Title IV of ERISA has been incurred by CCB, its
Subsidiaries or any CCB ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a
material risk to CCB, its Subsidiaries or any CCB ERISA Affiliate
of incurring a material liability thereunder, (vi) no CCB Benefit
Plan is a "multiemployer pension plan" (as such term is defined
in Section 3(37) of ERISA), (vii) all contributions or other
amounts payable by CCB or its Subsidiaries as of the Effective
Time with respect to each CCB Benefit Plan in respect of current
or prior plan years have been paid or accrued in accordance with
GAAP and Section 412 of the Code, (viii) none of CCB, its
Subsidiaries or any other person, including any fiduciary, has
engaged in a transaction in connection with which CCB, its
Subsidiaries or any CCB Benefit Plan will be subject to either a
material civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code, and (ix) to the best knowledge of CCB there are
no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the CCB
Benefit Plans or any trusts related thereto which will have,
either individually or in the aggregate, a Material Adverse
Effect on CCB.
(d) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event) (i) result
(either alone or upon the occurrence of any additional acts or
events) in any payment (including, without limitation, severance,
unemployment compensation, "excess parachute payment" (within the
meaning of Section 280G of the Code), forgiveness of indebtedness
or otherwise) becoming due to any director or any employee of CCB
or any of its affiliates from CCB or any of its affiliates under
any CCB Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any CCB Benefit Plan or (iii) result in
any acceleration of the time of payment or vesting of any such
benefits that will have, either individually or in the aggregate,
a Material Adverse Effect on CCB.
4.12 SEC Reports. CCB has previously made available to NCBC
an accurate and complete copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1997 by CCB with the SEC
pursuant to the Securities Act or the Exchange Act (the "CCB
Reports") and prior to the date hereof and (b) communication
mailed by CCB to its shareholders since January 1, 1997 and prior
to the date hereof, and no such CCB Report or communication, as
of the date thereof, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not
misleading, except that information as of a later date (but
before the date hereof) shall be deemed to modify information as
of an earlier date. Since January 1, 1997, as of their
respective dates, all CCB Reports filed under the Securities Act
and the Exchange Act complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. (a) CCB and each of
its Subsidiaries hold all material licenses, franchises, permits
and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to each, and have
complied in all material respects with, and are not in default in
any material respect under, any applicable law, statute, order,
rule, regulation, policy and/or guideline of any Governmental
Entity relating to CCB or any of its Subsidiaries, except where
the failure to hold such license, franchise, permit or
authorization or such noncompliance or default will not, either
individually or in the aggregate, have a Material Adverse Effect
on CCB.
(b) Except as will not have, either individually or in the
aggregate, a Material Adverse Effect on CCB, CCB and each CCB
Subsidiary have properly administered all accounts for which it
acts as a fiduciary, including accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms
of the governing documents, applicable state and federal law and
regulation and common law. None of CCB, any CCB Subsidiary, or
any director, officer or employee of CCB or of any CCB
Subsidiary, has committed any breach of trust with respect to any
such fiduciary account that will have a Material Adverse Effect
on CCB, and the accountings for each such fiduciary account are
true and correct in all material respects and accurately reflect
the assets of such fiduciary account.
4.14 Certain Contracts. (a) Neither CCB nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors, officers or employees
other than in the ordinary course of business consistent with
past practice, (ii) which, upon the consummation or shareholder
approval of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or
events) result in any payment (whether of severance pay or
otherwise) becoming due from CCB, NCBC, the Surviving
Corporation, or any of their respective Subsidiaries to any
officer or employee thereof, (iii) which is a "material contract"
(as such term is defined in Item 601(b)(10) of Regulation S-K of
the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the CCB
Reports, (iv) which materially restricts the conduct of any line
of business by CCB or upon consummation of the Merger will
materially restrict the ability of the Surviving Corporation to
engage in any line of business in which a bank holding company
may lawfully engage, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi)
(including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits
of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any shareholder
approval or the consummation of any of the transactions
contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement. CCB has previously
made available to NCBC true and correct copies of all employment
and deferred compensation agreements which are in writing and to
which CCB is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.14(a),
whether or not set forth in the CCB Disclosure Schedule, is
referred to herein as a "CCB Contract", and neither CCB nor any
of its Subsidiaries knows of, or has received notice of, any
violation of the above by any of the other parties thereto which
will have, individually or in the aggregate, a Material Adverse
Effect on CCB.
(b) (i) Each CCB Contract is valid and binding on CCB or
any of its Subsidiaries, as applicable, and in full force and
effect, (ii) CCB and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it
to date under each CCB Contract, except where such noncompliance,
either individually or in the aggregate, will not have a Material
Adverse Effect on CCB, and (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, will
constitute, a material default on the part of CCB or any of its
Subsidiaries under any such CCB Contract, except where such
default, either individually or in the aggregate, will not have a
Material Adverse Effect on CCB.
4.15 Agreements with Regulatory Agencies. Neither CCB nor
any of its Subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has been since January
1, 1997, a recipient of any supervisory letter from, or since
January 1, 1997, has adopted any board resolutions at the request
of any Regulatory Agency or other Governmental Entity that
currently restricts in any material respect the conduct of its
business or that in any material manner relates to its capital
adequacy, its credit policies, its management or its business
(each, whether or not set forth in the CCB Disclosure Schedule, a
"CCB Regulatory Agreement"), nor has CCB or any of its
Subsidiaries been advised since January 1, 1997, by any
Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such Regulatory Agreement.
4.16 Interest Rate Risk Management Instruments. All
interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements, whether entered into
for the account of CCB or for the account of a customer of CCB or
one of its Subsidiaries, were entered into in the ordinary course
of business and, to CCB's knowledge, in accordance with prudent
banking practice and applicable rules, regulations and policies
of any Regulatory Authority and with counterparties believed to
be financially responsible at the time and are legal, valid and
binding obligations of CCB or one of its Subsidiaries enforceable
in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the
availability of equitable remedies), and are in full force and
effect. CCB and each of its Subsidiaries have duly performed in
all material respects all of their material obligations
thereunder to the extent that such obligations to perform have
accrued; and to CCB's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by
any party thereunder.
4.17 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the consolidated
balance sheet of CCB included in the CCB Form 10-K and for
liabilities incurred in the ordinary course of business
consistent with past practice, since December 31, 1999, neither
CCB nor any of its Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either
individually or in the aggregate, has had or will have, a
Material Adverse Effect on CCB.
4.18 Insurance. CCB and its Subsidiaries have in effect
insurance coverage with reputable insurers or are self-insured,
which in respect of amounts, premiums, types and risks insured,
constitutes reasonably adequate coverage against all risks
customarily insured against by bank holding companies and their
subsidiaries comparable in size and operations to CCB and its
Subsidiaries.
4.19 Environmental Liability. There are no legal,
administrative, arbitral or other proceedings, claims, actions,
causes of action, private environmental investigations or
remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could result in the
imposition, on CCB of any liability or obligation arising under
common law or under any local, state or federal environmental
statute, regulation or ordinance including, without limitation,
CERCLA, pending or threatened against CCB, which liability or
obligation will have, either individually or in the aggregate, a
Material Adverse Effect on CCB. To the knowledge of CCB, there
is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or
obligation that will have, either individually or in the
aggregate, a Material Adverse Effect on CCB. CCB is not subject
to any agreement, order, judgment, decree, letter or memorandum
by or with any court, governmental authority, regulatory agency
or third party imposing any liability or obligation with respect
to the foregoing that will have, either individually or in the
aggregate, a Material Adverse Effect on CCB.
4.20 State Takeover Laws CCB Rights Agreement. (a) The
Board of Directors of CCB has approved the transactions
contemplated by this Agreement and the Option Agreements for
purposes of Sections 55-9A-01 through 09 of the NCBCA, and for
purposes of Section 13 of the CCB Certificate, such that the
provisions of such Sections will not apply to this Agreement or
the Option Agreements or any of the transactions contemplated
hereby or thereby.
(b) CCB has taken all action, if any, necessary or
appropriate so that the entering into of this Agreement and the
Option Agreements, and the consummation of the transactions
contemplated hereby and thereby do not and will not result in the
ability of any person to exercise any CCB Shareholder Rights
under the CCB Rights Agreement or enable or require the CCB
Shareholder Rights to separate from the shared of CCB Common
Stock to which they are attached or to become triggered or
exercisable. No "Distribution Date" or "Shares Acquisition Date"
(as such terms are defined in the CCB Rights Agreement) has
occurred.
4.21 Reorganization; Pooling of Interests. As of the date
of this Agreement, CCB has no reason to believe that the Merger
will not qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and as a "pooling of interests" for
accounting purposes.
4.22 Financial Holding Company Status. As of the date of
this Agreement, CCB meets all applicable criteria to become and
remain a "financial holding company", as such term is defined in
Section 2(p) of the BHC Act, set forth in such act as well as in
any regulations, rules or interpretations issued by the Federal
Reserve Board.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the
Effective Time, except as expressly contemplated or permitted by
this Agreement (including the NCBC Disclosure Schedule and the
CCB Disclosure Schedule) or the Option Agreements, each of CCB
and NCBC shall, and shall cause each of their respective
Subsidiaries to, (a) conduct its business in the ordinary course,
(b) use reasonable best efforts to maintain and preserve intact
its business organization, employees and advantageous business
relationships and retain the services of its key officers and key
employees and (c) take no action which would adversely affect or
delay the ability of either CCB or NCBC to obtain any necessary
approvals of any Regulatory Agency or other governmental
authority required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement or the
Option Agreements or to consummate the transactions contemplated
hereby or thereby.
5.2 Forbearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in the CCB
Disclosure Schedule or the NCBC Disclosure Schedule, as the case
may be, and, except as expressly contemplated or permitted by
this Agreement or the Option Agreements, neither CCB nor NCBC
shall, and neither CCB nor NCBC shall permit any of their
respective Subsidiaries to, without the prior written consent of
the other party to this Agreement:
(a) other than in the ordinary course of business, incur
any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and
indebtedness of NCBC or any of its wholly-owned Subsidiaries to
NCBC or any of its Subsidiaries, on the one hand, or of CCB or
any of its Subsidiaries to CCB or any of its wholly-owned
Subsidiaries, on the other hand), assume, guarantee, endorse or
otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity,
or make any loan or advance (it being understood and agreed that
incurrence of indebtedness in the ordinary course of business
shall include, without limitation, the creation of deposit
liabilities, purchases of Federal funds, sales of certificates of
deposit and entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital
stock;
(ii) make, declare or pay any dividend, or make any
other distribution on, or directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible (whether currently
convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares
of its capital stock (except (A) in the case of NCBC, for regular
quarterly cash dividends at a rate not in excess of $.105 per
share of NCBC Common Stock, (B) in the case of CCB, for regular
quarterly cash dividends on CCB Common Stock at a rate not in
excess of $.31 per share of CCB Common Stock, and (C) dividends
paid by any of the Subsidiaries of each of CCB and NCBC to CCB or
NCBC or any of their Subsidiaries, respectively, and dividends
paid in the ordinary course of business consistent with past
practice by any subsidiaries (whether or not wholly-owned) of
each of CCB and NCBC);
(iii) grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire any
shares of its capital stock, other than (A) pursuant to the NCBC
Stock Plans, the CCB Stock Plans or the CCB Rights Agreement, as
the case may be, in the ordinary course of business consistent
with past practice, or (B) the conversion of employee or director
stock options pursuant to the consummation of the transactions
contemplated by the Piedmont Merger Agreement; or
(iv) issue any additional shares of capital stock except
pursuant to (A) the exercise of stock options, outstanding as of
the date hereof or issued in compliance with Section 5.2(b)(iii),
(B) the Option Agreements, and (C) in connection with the
Piedmont Merger Agreement;
(c) sell, transfer, mortgage, encumber or otherwise dispose
of any of its material properties or assets to any individual,
corporation or other entity other than a Subsidiary, or cancel,
release or assign any indebtedness to any such person or any
claims held by any such person, except in the ordinary course of
business or pursuant to contracts or agreements in force at the
date of this Agreement;
(d) except for transactions in the ordinary course of
business or pursuant to contracts or agreements in force at the
date of or permitted by this Agreement, make any material
investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other
entity other than a Subsidiary thereof;
(e) except for transactions in the ordinary course of
business, terminate, or waive any material provision of, any NCBC
Contract or CCB Contract, as the case may be, or make any change
in any instrument or agreement governing the terms of any of its
securities, or material lease or contract, other than normal
renewals of contracts and leases without material adverse changes
of terms;
(f) increase in any manner the compensation or fringe
benefits of any of its employees or pay any pension or retirement
allowance not required by any existing plan or agreement to any
such employees or become a party to, amend or commit itself to
any pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit of
any employee other than in the ordinary course of business, or
accelerate the vesting of, or the lapsing of restrictions with
respect to, any stock options or other stock-based compensation;
(g) solicit or encourage from any third party or enter into
any negotiations, discussions or agreement in respect of, or
authorize any individual, corporation or other entity to solicit
or encourage from any third party or enter into any negotiations,
discussions or agreement in respect of, or provide or cause to be
provided any confidential information in connection with any
inquiries or proposals relating to, the disposition of all or
substantially all of its business or assets, or the acquisition
of its voting securities, or the merger of it or any of its
Subsidiaries with any corporation or other entity, other than as
provided by this Agreement (and each party shall promptly notify
the other of all of the relevant details relating to all
inquiries and proposals which it may receive relating to any of
such matters);
(h) settle any material claim, action or proceeding
involving money damages, except in the ordinary course of
business;
(i) knowingly take any action that would prevent or impede
the Merger from qualifying (i) for "pooling of interests"
accounting treatment or (ii) as a reorganization within the
meaning of Section 368 of the Code; provided, however, that
nothing contained herein shall limit the ability of CCB or NCBC
to exercise its rights under the NCBC Option Agreement or the CCB
Option Agreement, as the case may be;
(j) amend its charter or articles of incorporation or its
bylaws;
(k) other than in prior consultation with the other party
to this Agreement, restructure or materially change its
investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(l) take any action that is intended or expected to result
in any of its representations, warranties, covenants or
agreements set forth in this Agreement being or becoming untrue
in any material respect at any time prior to the Effective Time,
or in any of the conditions to the Merger set forth in Article
VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by
applicable law;
(m) implement or adopt any change in its accounting
principles, practices or methods, other than as may be required
by GAAP or regulatory guidelines; or
(n) agree to take, make any commitment to take, or adopt
any resolutions of its board of directors in support of, any of
the actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) CCB and NCBC shall promptly
prepare and file with the SEC the Joint Proxy Statement and NCBC
shall promptly prepare and file with the SEC the S-4, in which
the Joint Proxy Statement will be included as a prospectus. Each
of CCB and NCBC shall use their reasonable best efforts to have
the S-4 declared effective under the Securities Act as promptly
as practicable after such filing, and CCB and NCBC shall
thereafter mail or deliver the Joint Proxy Statement to their
respective shareholders. NCBC shall also use its reasonable best
efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement, and CCB shall furnish all
information concerning CCB and the holders of CCB Capital Stock
as may be reasonably requested in connection with any such
action.
(b) The parties hereto shall cooperate with each other and
use their reasonable best efforts to promptly prepare and file
all necessary documentation to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or
advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger) and the
Option Agreements, and to comply with the terms and conditions of
all such permits, consents, approvals and authorizations of all
such Governmental Entities. CCB and NCBC shall have the right to
review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws
relating to the exchange of information, all the information
relating to NCBC or CCB, as the case may be, and any of their
respective Subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any
Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will
consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and
the Option Agreements and each party will keep the other apprised
of the status of matters relating to completion of the
transactions contemplated herein.
(c) CCB and NCBC shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries,
directors, officers and shareholders and such other matters as
may be reasonably necessary or advisable in connection with the
Joint Proxy Statement, the S-4 or any other statement, filing,
notice or application made by or on behalf of CCB, NCBC or any of
their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions
contemplated by this Agreement.
(d) CCB and NCBC shall promptly advise each other upon
receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the
transactions contemplated by this Agreement or the Option
Agreements that causes such party to believe that there is a
reasonable likelihood that any Requisite Regulatory Approval (as
defined below) will not be obtained or that the receipt of any
such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of
information, each of CCB and NCBC, for the purposes of verifying
the representations and warranties of the other and preparing for
the Merger and the other matters contemplated by this Agreement,
shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal
business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records
and, during such period, each of CCB and NCBC shall, and shall
cause their respective Subsidiaries to, make available to the
other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws or
federal or state banking laws (other than reports or documents
which CCB or NCBC, as the case may be, is not permitted to
disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as such party
may reasonably request. Neither CCB nor NCBC nor any of their
respective Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would
violate or prejudice the rights of CCB's or NCBC's, as the case
may be, customers, jeopardize the attorney-client privilege of
the institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply.
(b) Each of NCBC and CCB agrees that it will not, and will
cause its representatives not to, use any information obtained
pursuant to this Section 6.2 (as well as any other information
obtained prior to the date hereof in connection with entering
into this Agreement) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
Subject to the requirements of law, each party will keep
confidential, and will cause its representatives to keep
confidential, all information and documents obtained pursuant to
this Section 6.2 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this
Agreement) unless such information (i) was already known to such
party, (ii) becomes available to such party from other sources
not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of
the providing party or (iv) is or becomes readily ascertainable
from publicly available sources. If this Agreement is terminated
or the transactions contemplated by this Agreement shall
otherwise fail to be consummated, each party shall promptly cause
all copies of documents or extracts thereof containing
information and data as to the other party to be returned to the
other party.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein.
6.3 Shareholders' Approvals. Each of CCB and NCBC shall
call a meeting of its shareholders to be held as soon as
reasonably practicable for the purpose of voting upon the
requisite shareholder approvals required in connection with this
Agreement and the Merger, and each shall use its reasonable best
efforts, except as may otherwise be required by applicable law,
to cause such meetings to occur as soon as reasonably practicable
and on the same date. The Board of Directors of each of NCBC and
CCB shall use its reasonable best efforts to obtain from the
shareholders of NCBC and CCB, as the case may be, the vote in
favor of the adoption of this Agreement required by the NCBCA and
TBCA, respectively to consummate the transactions contemplated
hereby.
6.4 Legal Conditions to Merger. Each of CCB and NCBC
shall, and shall cause its Subsidiaries to, use their reasonable
best efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal
requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VII hereof, to consummate the
transactions contemplated by this Agreement, and (b) to obtain
(and to cooperate with the other party to obtain) any material
consent, authorization, order or approval of, or any exemption
by, any Governmental Entity and any other third party that is
required to be obtained by NCBC or CCB or any of their respective
Subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement.
6.5 Affiliates; Publication of Combined Financial Results.
(a) Each of CCB and NCBC shall use its reasonable best efforts
to cause each director, executive officer and other person who is
an "affiliate" (for purposes of Rule 145 under the Securities Act
and for purposes of qualifying the Merger for "pooling of
interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this
Agreement, and prior to the date of the shareholders' meetings
called by CCB and NCBC to approve this Agreement, a written
agreement, in the form of Exhibit 5.5(a)(1) or (2), as
applicable, hereto, providing that such person will not sell,
pledge, transfer or otherwise dispose of any shares of CCB
Capital Stock, or NCBC Capital Stock held by such "affiliate"
and, in the case of the "affiliates" of CCB, the shares of NCBC
Capital Stock to be received by such "affiliate" in the Merger.
(b) The Surviving Corporation shall use its best efforts to
publish as promptly as reasonably practical, but in no event
later than 90 days after the end of the first month after the
Effective Time in which there are at least 30 days of post-Merger
combined operations (which month may be the month in which the
Effective Time occurs), combined sales and net income data as
contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 135.
6.6 Stock Quotation. NCBC shall cause the shares of NCBC
Common Stock to be issued in the Merger to be qualified for
quotation on the Nasdaq, subject to official notice of issuance,
prior to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the
Effective Time, unless otherwise mutually determined, the NCBC
Benefit Plans and CCB Benefit Plans in effect as of the date of
this Agreement shall remain in effect with respect to employees
of NCBC or CCB (or their Subsidiaries), respectively, covered by
such plans at the Effective Time until such time as the Surviving
Corporation shall, subject to applicable law, the terms of this
Agreement and the terms of such plans, adopt new benefit plans
with respect to employees of the Surviving Corporation and its
Subsidiaries (the "New Benefit Plans"), or otherwise merge or
combine existing CCB Benefit Plans into NCBC Benefit Plans, or
vice versa. Prior to the Closing Date, NCBC and CCB shall
cooperate in reviewing, evaluating and analyzing the CCB Benefit
Plans and NCBC Benefit Plans with a view towards developing
appropriate New Benefit Plans or combining or merging existing
benefit plans for the employees covered thereby.
(b) The foregoing notwithstanding, the Surviving
Corporation agrees to honor in accordance with their terms all
benefits vested as of the date hereof under the CCB Benefit Plans
or the NCBC Benefit Plans or under other contracts, arrangements,
commitments, or understandings described in the CCB Disclosure
Schedule and the NCBC Disclosure Schedule.
(c) Nothing in this Section 6.7 shall be interpreted as
preventing the Surviving Corporation from amending, modifying or
terminating any CCB Benefit Plans, NCBC Benefit Plans, or other
contracts, arrangements, commitments or understandings, in
accordance with their terms and applicable law.
(d) It is the intention of NCBC and CCB, during the period
shortly following the execution of the Merger Agreement, to
coordinate efforts towards establishing a retention and severance
program, consistent with the strategy for the Merger, in an
effort to retain and provide incentives to key personnel for the
benefit of the Surviving Corporation in a manner that provides
for equitable treatment of similarly situated employees of NCBC
and CCB.
6.8 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any individual
who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director
or officer or employee of CCB or any of its Subsidiaries,
including any entity specified in the CCB Disclosure Schedule
(the "Indemnified Parties"), is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in
part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of CCB or any of its Subsidiaries
or any entity specified in the CCB Disclosure Schedule or any of
their respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or
thereby, whether in any case asserted or arising before or after
the Effective Time, the parties hereto agree to cooperate and use
their best efforts to defend against and respond thereto. It is
understood and agreed that after the Effective Time, NCBC shall
indemnify and hold harmless, as and to the fullest extent
permitted by law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit,
proceeding or investigation.
(b) NCBC shall use its reasonable best efforts to cause the
individuals serving as officers and directors of CCB, its
Subsidiaries or any entity specified in the CCB Disclosure
Schedule immediately prior to the Effective Time to be covered
for a period of six (6) years from the Effective Time (or the
period of the applicable statute of limitations, if longer) by
the directors' and officers' liability insurance policy
maintained by CCB (provided that NCBC may substitute therefor
policies of at least the same coverage and amounts containing
terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and
directors in their capacity as such.
(c) In the event NCBC or any of its successors or assigns
(i) consolidates with or merges into any other person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of
NCBC assume the obligations set forth in this Section 6.8.
(d) The provisions of this Section 6.8 shall survive the
Effective Time and are intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement (including, without
limitation, any merger between a Subsidiary of NCBC, on the one
hand, and a Subsidiary of CCB, on the other) or to vest the
Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each
party to this Agreement and their respective Subsidiaries shall
take all such necessary action as may be reasonably requested by,
and at the sole expense of, NCBC.
6.10 Advice of Changes. CCB and NCBC shall each promptly
advise the other party of any change or event (i) having a
Material Adverse Effect on it or (ii) which it believes would or
would be reasonably likely to cause or constitute a material
breach of any of its representations, warranties, covenants or
agreements contained herein.
6.11 Dividends. After the date of this Agreement, each of
CCB and NCBC shall coordinate with the other the declaration of
any dividends in respect of CCB Common Stock and NCBC Common
Stock and the record dates and payment dates relating thereto, it
being the intention of the parties hereto that holders of CCB
Common Stock shall not receive two dividends, or fail to receive
one dividend, for any quarter with respect to their shares of CCB
Common Stock and any shares of NCBC Common Stock any such holder
receives in exchange therefor in the Merger.
6.12 Exemption from Liability Under Section 16(b). If CCB
delivers to NCBC in a timely fashion prior to the Effective Time
accurate information regarding those officers and directors of
CCB subject to the reporting requirements of Section 16(a) of the
Exchange Act (the "CCB Insiders"), the number of shares of CCB
Common Stock held or to be held by each such CCB Insider expected
to be exchanged for NCBC Common Stock in the Merger, and the
number and description of the options to purchase shares of CCB
Common Stock held by each such CCB Insider and expected to be
converted into options to purchase NCBC Common Stock in the
Merger, the Board of Directors of NCBC, or a committee of non-
employee directors thereof (as such term is defined for purposes
of Rule 16b-3(d) under the Exchange Act), shall reasonably
promptly thereafter, and in any event prior to the Effective
Time, adopt a resolution providing that the receipt by the CCB
Insiders of NCBC Common Stock in exchange for shares of CCB
Common Stock, and of option to purchase shares of NCBC Common
Stock upon conversion of options to purchase CCB Common Stock, in
each case pursuant to the transactions contemplated hereby and to
the extent such securities are listed in the information provided
by CCB, are approved by such Board of Directors or by such
committee thereof, and are intended to be exempt from liability
pursuant to Section 16(b) of the Exchange Act, such that any such
receipt shall be so exempt.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of the parties to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement (including the
amendment of the NCBC Certificate contemplated by Section 1.7)
shall have been adopted by the respective requisite affirmative
votes of the holders of NCBC Common Stock and CCB Common Stock
entitled to vote thereon.
(b) Nasdaq Listing. The shares of NCBC Common Stock which
shall be issued to the shareholders of CCB upon consummation of
the Merger shall have been qualified for quotation on the Nasdaq,
subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of
the S-4 shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of
the other transactions contemplated by this Agreement shall be in
effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits, materially restricts
or makes illegal consummation of the Merger.
(f) Federal Tax Opinion. The parties hereto shall have
received the opinion of Wachtell, Lipton, Rosen & Katz, in form
and substance reasonably satisfactory to CCB and NCBC, dated the
Closing Date, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in each such
opinion which are consistent with the state of facts existing at
the Effective Time:
(i) The Merger will constitute a reorganization under
Section 368(a) of the Code and CCB and NCBC will each be a party
to the reorganization;
(ii) No gain or loss will be recognized by CCB or NCBC as a
result of the Merger; and
(iii) No gain or loss will be recognized by shareholders
of CCB who exchange their CCB Common Stock solely 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).
In rendering such opinions, counsel may require and rely
upon representations contained in certificates of officers of
CCB, NCBC and others.
(g) Pooling of Interests. CCB and NCBC shall each have
received a letter from their respective independent accountants
addressed to NCBC or CCB, as the case may be, to the effect that
the Merger will qualify for "pooling of interests" accounting
treatment.
7.2 Conditions to Obligations of CCB. The obligation of
CCB to effect the Merger is also subject to the satisfaction, or
waiver by CCB, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties. The representations
and warranties of NCBC set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date; provided, however,
that for purposes of this paragraph, such representations and
warranties (other than the representation set forth in the last
sentence of Section 3.2(a)) shall be deemed to be true and
correct unless the failure or failures of such representations
and warranties to be so true and correct, either individually or
in the aggregate, and without giving effect to any qualification
as to materiality set forth in such representations or
warranties, will have a Material Adverse Effect on NCBC or the
Surviving Corporation. CCB shall have received a certificate
signed on behalf of NCBC by the Chief Executive Officer and the
Chief Financial Officer of NCBC to the foregoing effect.
(b) Performance of Obligations of NCBC. NCBC shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and CCB shall have received a certificate signed on behalf
of NCBC by the Chief Executive Officer and the Chief Financial
Officer of NCBC to such effect.
7.3 Conditions to Obligations of NCBC. The obligation of
NCBC to effect the Merger is also subject to the satisfaction or
waiver by NCBC at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of CCB set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, provided, however,
that for purposes of this paragraph, such representations and
warranties (other than the representation set forth in the last
sentence of Section 4.2(a)) shall be deemed to be true and
correct unless the failure or failures of such representations
and warranties to be so true and correct, either individually or
in the aggregate, and without giving effect to any qualification
as to materiality set forth in such representations or
warranties, will have a Material Adverse Effect on CCB. NCBC
shall have received a certificate signed on behalf of CCB by the
Chief Executive Officer and the Chief Financial Officer of CCB to
the foregoing effect.
(b) Performance of Obligations of CCB. CCB shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and NCBC shall have received a certificate signed on behalf
of CCB by the Chief Executive Officer and the Chief Financial
Officer of CCB to such effect.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger
by the shareholders of CCB or NCBC:
(a) by mutual consent of CCB and NCBC in a written
instrument, if the Board of Directors of each so determines by a
vote of a majority of the members of its entire Board;
(b) by either the Board of Directors of CCB or the Board of
Directors of NCBC if any Governmental Entity that must grant a
Requisite Regulatory Approval has denied approval of the Merger
and such denial has become final and nonappealable or any
Governmental Entity of competent jurisdiction shall have issued a
final nonappealable order permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by
this Agreement;
(c) by either the Board of Directors of CCB or the Board of
Directors of NCBC if the Merger shall not have been consummated
on or before the first anniversary of the date of this Agreement,
unless the failure of the Closing to occur by such date shall be
due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of
such party set forth herein; or
(d) by either the Board of Directors of CCB or the Board of
Directors of NCBC (provided that the terminating party is not
then in breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a breach of
any of the covenants or agreements or any of the representations
or warranties set forth in this Agreement on the part of NCBC, in
the case of a termination by CCB, or CCB, in the case of a
termination by NCBC, which breach, either individually or in the
aggregate, would constitute, if occurring or continuing on the
Closing Date, the failure of the conditions set forth in Section
7.2 or 7.3, as the case may be, and which is not cured within 45
days following written notice to the party committing such breach
or by its nature or timing cannot be cured prior to the Closing
Date.
8.2 Effect of Termination. In the event of termination of
this Agreement by either CCB or NCBC as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect,
and none of CCB, NCBC, any of their respective Subsidiaries or
any of the officers or directors of any of them shall have any
liability of any nature whatsoever hereunder, or in connection
with the transactions contemplated hereby, except that (i)
Sections 6.2(b), 8.2, 9.2 and 9.3 shall survive any termination
of this Agreement, and (ii) notwithstanding anything to the
contrary contained in this Agreement, neither CCB nor NCBC shall
be relieved or released from any liabilities or damages arising
out of its willful breach of any provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law
and Section 1.1(b), this Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards
of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of
CCB and NCBC; provided, however, that after any approval of the
transactions contemplated by this Agreement by the respective
shareholders of CCB or NCBC, there may not be, without further
approval of such shareholders, any amendment of this Agreement
that changes the amount or the form of the consideration to be
delivered hereunder to the holders of CCB Common Stock, other
than as contemplated by this Agreement. This Agreement may not
be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained
herein; provided, however, that after any approval of the
transactions contemplated by this Agreement by the respective
shareholders of CCB or NCBC, there may not be, without further
approval of such shareholders, any extension or waiver of this
Agreement or any portion thereof which reduces the amount or
changes the form of the consideration to be delivered to the
holders of CCB Common Stock hereunder, other than as contemplated
by this Agreement. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance
with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date and at a place to be specified by
the parties, which shall be no later than five business days
after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII
hereof, unless extended by mutual agreement of the parties (the
"Closing Date").
9.2 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants
and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement (other than the Option Agreements and
the Confidentiality Agreement, which shall terminate in
accordance with terms) shall survive the Effective Time, except
for Section 6.8 and for those other covenants and agreements
contained herein and therein which by their terms apply in whole
or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense;
provided, however, that the costs and expenses of printing and
mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne
equally by CCB and NCBC.
9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation), mailed by
registered or certified mail (return receipt requested) or
delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to CCB, to:
CCB Financial Corporation
111 Corcoran Street
P.O. Box 931
Durham, North Carolina 27702
Attention: Ernest C. Roessler
Chairman, President and Chief Executive
Officer
Telecopier: (919) 683-7254
and
(b) if to NCBC, to:
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Attention: Charles A. Neale
Vice President and General Counsel
Telecopier: (901) 523-3303
9.5 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference
shall be to a Section of or Exhibit or Schedule to this
Agreement, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
9.6 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties,
it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof other than the Option
Agreements.
9.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York,
without regard to any applicable conflicts of law principles,
except to the extent mandatory provisions of federal, North
Carolina or Tennessee law apply.
9.9 Publicity. Except as otherwise required by applicable
law or the rules of the NYSE or the Nasdaq, neither CCB or NCBC
shall, or shall permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement
with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement
without the consent of NCBC, in the case of a proposed
announcement or statement by CCB, or CCB, in the case of a
proposed announcement or statement by NCBC, which consent shall
not be unreasonably withheld.
9.10 Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations shall
be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except
as otherwise specifically provided in Section 6.8, this Agreement
(including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, CCB and NCBC have caused this
Agreement to be executed by their respective officers
thereunto duly authorized as of the date first above
written.
NATIONAL COMMERCE
BANCORPORATION
By: /s/ Thomas M. Garrott
Name: Thomas M. Garrott
Title: Chairman, President and
Chief Executive Officer
CCB FINANCIAL CORPORATION
By: /s/ Ernest C. Roessler
Name: Ernest C. Roessler
Title: Chairman, President and
Chief Executive Officer
-20-
Exhibit 3
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated March 17, 2000, between
CCB Financial Corporation, a North Carolina corporation
("Issuer"), and National Commerce Bancorporation, a Tennessee
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an
Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), which agreement has been executed by the parties
hereto immediately prior to this Stock Option Agreement (the
"Agreement"); and
WHEREAS, as a condition to Grantee's entering into the
Merger Agreement and in consideration therefor and for Grantee's
entering into the NCB Option Agreement, Issuer has agreed to
grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 7,846,175 fully paid and nonassessable shares
of Issuer's Common Stock, par value $5.00 per Share ("Common
Stock"), at a price of $39.75 per share (the "Option Price");
provided, however, that in no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 19.9% of
the Issuer's issued and outstanding shares of Common Stock
without giving effect to any shares subject to or issued pursuant
to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the
date of this Agreement (other than pursuant to this Agreement) or
(ii) redeemed, repurchased, retired or otherwise cease to be
outstanding after the date of the Agreement, the number of shares
of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such
number equals 19.9% of the number of shares of Common Stock then
issued and outstanding without giving effect to any shares
subject or issued pursuant to the Option. Nothing contained in
this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise
the Option, in whole or part, and from time to time, if, but only
if, both an Initial Triggering Event (as hereinafter defined) and
a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within 90 days following such
Subsequent Triggering Event. Each of the following shall be an
"Exercise Termination Event": (i) the Effective Time (as defined
in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial
Triggering Event, except a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by
Issuer giving rise to such right of termination is non-
volitional); or (iii) the passage of 12 months after termination
of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by
Grantee pursuant to Section 8.1(d) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of
termination is non-volitional) (provided that if an Initial
Triggering Event continues or occurs beyond such termination and
prior to the passage of such 12-month period, the Exercise
Termination Event shall be 12 months from the expiration of the
Last Triggering Event but in no event more than 18 months after
such termination). The "Last Triggering Event" shall mean the
last Initial Triggering Event to expire. The term "Holder" shall
mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of
the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person
(the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the rules and regulations thereunder) other than Grantee or any
of its Subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the Shareholders
of Issuer approve or accept any Acquisition Transaction. For
purposes of this Agreement, "Acquisition Transaction" shall mean
(w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC")) of Issuer, (x) a purchase, lease
or other acquisition or assumption of all or a substantial
portion of the assets or deposits of Issuer or any Significant
Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting
power of Issuer, or (z) any substantially similar transaction;
provided, however, that in no event shall any merger,
consolidation, purchase or similar transaction involving only the
Issuer and one or more of its Subsidiaries or involving only any
two or more of such Subsidiaries, provided that any such
transaction is not entered into in violation of the terms of the
Merger Agreement, be deemed to be an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have authorized,
recommended, proposed or publicly announced its intention to
authorize, recommend or propose, to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee
Subsidiary, or the Board of Directors of Issuer shall have
publicly withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the Shareholders of Issuer approve the
transactions contemplated by the Merger Agreement in anticipation
of engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary
capacity in the ordinary course of its business shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of
the 1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its
Shareholders by public announcement or written communication
that is or becomes the subject of public disclosure to engage in
an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or
its Shareholders to engage in an Acquisition Transaction, Issuer
shall have breached any covenant or obligation contained in the
Merger Agreement and such breach (x) would entitle Grantee to
terminate the Merger Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after
the date hereof:
(i) The acquisition by any person of beneficial ownership
of 20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (b) of this Section 2,
except that the percentage referred to in clause (y) shall be
20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event and/or Subsequent
Triggering Event of which it has notice (together, a "Triggering
Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice
(the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing
Date"); provided that if prior notification to or approval of the
Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall promptly file
the required notice or application for approval and shall
expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained
and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase
price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this
Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of
Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended
(the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form
and substance reasonably satisfactory to Issuer, to the effect
that such legend is not required for purposes of the 1933 Act;
(ii) the reference to the provisions to this Agreement in the
above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection
(e) of this Section 2 and the tender of the applicable purchase
price in immediately available funds, the Holder shall be deemed,
subject to the receipt of applicable regulatory approvals, to be
the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing
such shares of Common Stock shall not then be actually delivered
to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name
of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued
shares of Common Stock so that the Option may be exercised
without additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities and
other rights to purchase Common Stock; (ii) that it will not, by
charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or
performed hereunder by Issuer; (iii) promptly to take all action
as may from time to time be required (including (x) complying
with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. 18a and regulations
promulgated thereunder and (y) in the event, under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), or the
Change in Bank Control Act of 1978, as amended, or any state
banking law, prior approval of or notice to the Federal Reserve
Board or to any state regulatory authority is necessary before
the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such
information to the Federal Reserve Board or such state regulatory
authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (iv) promptly to take
all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of
Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated,
Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed
or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares of
Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on
or in respect of the Common Stock, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof
and the Option Price shall be appropriately adjusted in such
manner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations
hereunder.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall,
at the request of Grantee delivered within 90 days of such
Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration
statement under the 1933 Act covering this Option and any shares
issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to
become effective and remain current in order to permit the sale
or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best
efforts to cause such registration statement first to become
effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first
becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee
shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as
provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters,
of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option
Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that
after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold
by the Holder and Issuer in the aggregate; and provided further,
however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as
practical and no reduction shall thereafter occur. Each such
Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with
such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof
to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two
registrations pursuant to this Section 6 by reason of the fact
that there shall be more than one Grantee as a result of any
assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as defined below), (i) following a request of the Holder,
delivered prior to an Exercise Termination Event, Issuer (or any
successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by
which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which
this Option may then be exercised and (ii) at the request of the
owner of Option Shares from time to time (the "Owner"), delivered
within 90 days of such occurrence (or such later period as
provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so
designated. The term "Market/Offer Price" shall mean the highest
of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price
per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (iii) the highest closing price for
shares of Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the
required repurchase of Option Shares, as the case may be, or
(iv) in the event of a sale of all or a substantial portion of
Issuer's assets, the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may
be, and reasonably acceptable to the Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the Market/Offer Price, the
value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to
the Issuer.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and
any Option Shares pursuant to this Section 7 by surrendering for
such purpose to Issuer, at its principal office, a copy of this
Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer
to repurchase this Option and/or the Option Shares in accordance
with the provisions of this Section 7. Within the latter to
occur of (x) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is not so
prohibited from delivering, within five business days after the
date on which Issuer is not so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 7 is
prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal
approvals and to file any required notices, in each case as
promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price or the
Option Share Repurchase Price that Issuer is not prohibited from
delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the
Holder to purchase that number of shares of Common Stock obtained
by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator
of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation or similar transaction involving Issuer or
any purchase, lease or other acquisition of all or a substantial
portion of the assets of Issuer, other than any such transaction
which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or more
of the then outstanding shares of Common Stock, provided that no
such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares
under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge
into Issuer and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of
Common Stock shall after such merger represent less than 50% of
the outstanding voting shares and voting share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee
or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision
so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein,
be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person
that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in
merger in which Issuer is the continuing or surviving
person, and (iii) the transferee of all or substantially
all of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of
the Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(iv) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock
for the one year immediately preceding the
consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer
is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of
common stock issued by the person merging into Issuer
or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common Stock
for which the Option is then exercisable, divided by the Average
Price. The exercise price of the Substitute Option per share of
Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of
shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the shares of Substitute Common Stock outstanding
prior to exercise of the Substitute Option. In the event that
the Substitute Option would be exercisable for more than 19.9% of
the shares of Substitute Common Stock outstanding prior to
exercise but for this clause (e), the issuer of the Substitute
Option (the "Substitute Option Issuer") shall make a cash payment
to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in
value shall be determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may
be, and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described
in subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute
Option Holder at a price (the "Substitute Option Repurchase
Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of
the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then
be exercised, and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute
Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The
term "Highest Closing Price" shall mean the highest closing price
for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives
notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of
the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to
require the Substitute Option Issuer to repurchase the Substitute
Option and the Substitute Shares pursuant to this Section 9 by
surrendering for such purpose to the Substitute Option Issuer, at
its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by
a written notice or notices stating that the Substitute Option
Holder or the Substitute Share Owner, as the case may be, elects
to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with
the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of
the Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating
thereto, the Substitute Option Issuer shall deliver or cause to
be delivered to the Substitute Option Holder the Substitute
Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or, in either case,
the portion thereof which the Substitute Option Issuer is not
then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing
the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner
and thereafter deliver or cause to be delivered, from time to
time, to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is not prohibited from
delivering, within five business days after the date on which the
Substitute Option Issuer is not so prohibited; provided, however,
that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation from
delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts
to obtain all required regulatory and legal approvals, in each
case as promptly as practicable, in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share
Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option
Holder or Substitute Share Owner, as appropriate, that portion of
the Substitute Option Repurchase Price or the Substitute Share
Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock
obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered
to the Substitute Option Holder and the denominator of which is
the Substitute Option Repurchase Price, or (B) to the Substitute
Share Owner, a certificate for the Substitute Common Shares it is
then so prohibited from repurchasing.
10. The 90-day or 6-month periods for exercise of certain
rights under Sections 2, 6, 7, 13 and 15 shall be extended: (i)
to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and for the expiration of all
statutory waiting periods; (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such
exercise and (iii) during any period in which Grantee is
precluded from exercising such rights due to an injunction or
other legal restriction, plus in each case such additional period
as is reasonably necessary for the exercise of such rights
promptly following the obtaining of such approvals or the
expiration of such periods.
11. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon
the exercise of the Option, that number of shares of Common Stock
equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and
clear of all claims, liens, encumbrance and security interests
and not subject to any preemptive rights.
(c) Issuer has taken all action so that the entering into
of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any person
under the Amended and Restated Rights Agreement, dated as of
October 1, 1998, between Issuer and Central Carolina Bank and
Trust Company, or enable or require the shareholder rights
thereunder to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly
executed and delivered by Grantee.
b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option
will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of
except in a transaction registered or exempt from registration
under the Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express
written consent of the other party, except that in the event a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as provided in Section
10); provided, however, that until the date 15 days following the
date on which the Federal Reserve Board approves an application
by Grantee under the BHCA to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under
the Option except in (i) a widely dispersed public distribution,
(ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii)
an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf, or (iv) any other manner
approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement,
including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock
Exchange upon official notice of issuance and applying to the
Federal Reserve Board under the BHCA for approval to acquire the
shares issuable hereunder, but Grantee shall not be obligated to
apply to state banking authorities for approval to acquire the
shares of Common Stock issuable hereunder until such time, if
ever, as it deems appropriate to do so.
15. (a) Grantee may in its sole discretion, at any time
during which Issuer would be required to repurchase the Option or
any Option Shares pursuant to Section 7, surrender the Option
(together with any Option Shares issued to and then owned by the
Holder) to Issuer in exchange for a cash payment equal to the
Surrender Price (as defined herein); provided, however, the
Grantee may not exercise its rights pursuant to this Section 15
if Issuer has previously repurchased the Option (or any portion
thereof) or any Option Shares pursuant to Section 7. The
"Surrender Price" shall be equal to (i) $45,000,000, plus (ii) if
applicable, the aggregate purchase price previously paid pursuant
hereto by Grantee with respect to any Option Shares, minus (iii)
if applicable, the excess of (A) the net cash, if any, received
by Grantee pursuant to the arm's-length sale of Option Shares (or
any other securities into which such Option Shares were converted
or exchanged) to any party not affiliated with Grantee, over (B)
the purchase price paid by Grantee with respect to such Option
Shares.
(b) Grantee may exercise its right to surrender the Option
and any Option Shares pursuant to this Section 15 by surrendering
for such purpose to Issuer, at its principal office, a copy of
this Agreement, together with certificates for Option Shares, if
any, accompanied by a written notice stating (i) that Grantee
elects to surrender the Option and Option Shares, if any, in
accordance with the provisions of this Section 15 and (ii) the
Surrender Price. Within two business days after the surrender of
the Option and the Option Shares, if applicable, Issuer shall
deliver or cause to be delivered to Grantee the Surrender Price.
(c) To the extent that the Issuer is prohibited under applicable
law or regulation from paying the Surrender Price to Grantee in
full, Issuer shall immediately so notify Grantee and thereafter
deliver, or cause to be delivered, from time to time, to Grantee,
that portion of the Surrender Price that Issuer is not or no
longer prohibited from paying, within two business days after the
date on which Issuer is no longer so prohibited; provided,
however, that if Issuer at any time after delivery of a notice of
surrender pursuant to Section 15(b) is prohibited under
applicable law or regulation from paying to Grantee the Surrender
Price in full, (i) Issuer shall (A) use its best efforts to
obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to make
such payments, (B) within two business days of the submission or
receipt of any documents relating to any such regulatory and
legal approvals, provide Grantee with copies of the same, and (c)
keep Grantee advised of both the status of any such request for
regulatory and legal approvals and any discussions with any
relevant regulatory or other third party reasonably related to
the same, and (ii) Grantee may revoke such notice or surrender by
delivery of a notice of revocation to Issuer and, upon delivery
of such notice of revocation, the Exercise Termination Event
shall be extended to a date six months from the date on which the
Exercise Termination Event would have occurred if not for the
provisions of this Section 15(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all
rights pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to
those set forth in paragraphs (a), (b) and (c) of this Section 15
with respect to the Substitute Option and the Substitute Option
Issuer during any period in which the Substitute Option Issuer
would be required to repurchase the Substitute Option pursuant to
Section 9.
16. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
17. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that the Holder is not permitted to
acquire, or Issuer or Substitute Option Issuer, as the case may
be, is not permitted to repurchase pursuant to Section 7 or
Section 9, as the case may be, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), or Issuer or Substitute
Option Issuer is not permitted to pay the full amount of the
Surrender Price pursuant to Section 15, it is the express
intention of Issuer (which shall be binding on the Substitute
Option Issuer) to allow the Holder to acquire or to require
Issuer or Substitute Option Issuer to repurchase such lesser
number of shares, or to require Issuer or Substitute Option
Issuer to pay such portion of the Surrender Price, as may be
permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given
when delivered in person, by cable, telegram, telecopy or telex,
or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set
forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles
of conflicts of laws thereof (except to the extent that mandatory
provisions of federal or North Carolina law apply).
20. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
21. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses
of its own financial consultants, investment bankers, accountants
and counsel.
22. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided
herein.
23. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the
Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
CCB FINANCIAL CORPORATION
By:
NATIONAL COMMERCE BANCORPORATION
By:
