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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 20, 2000
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NATIONAL COMMERCE BANCORPORATION
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(Exact name of registrant as specified in its charter)
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Tennessee 0-6094 62-0784645
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
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One Commerce Square, Memphis, Tennessee 38150
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (901) 523-3371
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Not Applicable
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(Former name, former address and former fiscal year, if changed since
last report)
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
The Registrant announced on March 20, 2000 that it has executed a
definitive Agreement and Plan of Merger with CCB Financial Corporation providing
for the merger of CCB Financial Corporation into the Registrant. A copy of the
Agreement and Plan of Merger is attached to this Current Report on Form 8-K/A as
an Exhibit and is incorporated herein by reference.
Also attached as an exhibit to this Current Report on Form 8-K/A and
incorporated herein by reference is a copy of the Stock Option Agreement by and
between CCB Financial Corporation and National Commerce Bancorporation dated as
of March 17, 2000.
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(c) Exhibits.
The following exhibits are filed pursuant to Item 601 of Regulation S-K:
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Exhibit
Number Description
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2.1 Agreement and Plan of Merger by and between CCB Financial Corporation
and National Commerce Bancorporation dated as of March 17, 2000.
2.2 Stock Option Agreement by and between CCB Financial Corporation and
National Commerce Bancorporation dated as of March 17, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL COMMERCE BANCORPORATION
Date: March 24, 2000 By: /s/ Lewis E. Holland
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Lewis E. Holland
Chief Financial Officer
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and between
CCB FINANCIAL CORPORATION
and
NATIONAL COMMERCE BANCORPORATION
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Dated as of March 17, 2000
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TABLE OF CONTENTS
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Page
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AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE MERGER
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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......................................... 10
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
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3.15 Agreements with Regulatory Agencies............................ 16
3.16 Interest Rate Risk Management Instruments...................... 16
3.17 Undisclosed Liabilities........................................ 17
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
4.3 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
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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 Exchange Listing......................................... 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 Agreements...... 39
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
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Exhibit A - CCB Option Agreement
Exhibit B - NCBC Option Agreement
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Exhibit 6.5(a)(1) - Form of Affiliate Letter Addressed to NCBC
Exhibit 6.5(a)(2) - Form of Affiliate Letter Addressed to CCB
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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 :
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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
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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
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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.
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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.
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(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.
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(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
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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
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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.
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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. (S) 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
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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
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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.
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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.
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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
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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,
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(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
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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.
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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
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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.
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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
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(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. (S)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 or 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)
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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
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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
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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
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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,
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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.
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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.
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(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
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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
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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);
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(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
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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
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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,
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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
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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.
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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
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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.
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(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.
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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.
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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
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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.
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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.
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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.
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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
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EXHIBIT 2.2
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 National
Commerce Bancorporation, a Tennessee corporation ("Issuer"), and CCB Financial
Corporation, a North Carolina 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 CCB
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 21,527,748 fully paid and nonassessable shares of Issuer's Common Stock, par
value $2.00 per share ("Common Stock"), at a price of $20.3125 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
<PAGE>
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 any event
neither the Piedmont Merger nor any merger, consolidation, purchase or
similar transaction involving (A) 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, or (B) any pending acquisition by Issuer
disclosed by Issuer in its disclosure schedule delivered to Grantee in
connection with entering into the Merger Agreement and consummated pursuant
to such disclosed terms, 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
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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 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)
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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.
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(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 or treasury 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. (S) 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
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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
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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 Sec-
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<PAGE>
tion 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:
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(A) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets.
(B) "Substitute Common Stock" shall mean the common stock issued
by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(4) "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
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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.
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(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
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<PAGE>
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, 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.
12. Grantee hereby represents and warrants to Issuer that:
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(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 authorize for
quotation the shares of Common Stock issuable hereunder on the National Market
System of the Nasdaq Stock Market, Inc. 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 in its sole discretion may, 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, that 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
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<PAGE>
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 purchase 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 of
surrender by delivery of a 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
Surrender
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Price, 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
the Substitute Option Issuer, as the case may be, to repurchase such lesser
number of shares, or 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 Tennessee 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.
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<PAGE>
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.
NATIONAL COMMERCE BANCORPORATION
By:_____________________________
CCB FINANCIAL CORPORATION
By:_____________________________
[NCB OPTION AGREEMENT]
