SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 31, 1999
AMSOUTH BANCORPORATION
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(Exact Name of Registrant as specified in its charter)
DELAWARE No. 1-7476 No. 63-0591257
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(State or other jurisdiction of (Commission (IRS employer
incorporation) File Number) Identification No.)
AMSOUTH - SONAT TOWER
1900 FIFTH AVENUE NORTH, BIRMINGHAM,
ALABAMA 35203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(205) 320-7151
Not applicable
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(Registrant's former address of principal executive offices)
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Item 5. Other Events.
As previously reported, on May 31, 1999, AmSouth Bancorporation, a
Delaware corporation ("AmSouth"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") among AmSouth, First American Corporation, a Tennessee
corporation ("First American"), and Alpha/Foxtrot Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of AmSouth (the "Merger Sub"), for a
tax-free merger of Merger Sub and First American, upon which each outstanding
share of common stock, par value $2.50 per share, of First American would be
converted into 1.871 shares of common stock, par value $1.00 per share, of
AmSouth (the "Proposed Merger").
In connection with the Merger Agreement, AmSouth and First American
have also entered into cross stock option agreements, each dated June 1, 1999.
Pursuant to the First American stock option agreement (the "First American Stock
Option Agreement"), AmSouth granted to First American an irrevocable offer to
purchase, under certain circumstances, up to 35,025,240 shares of AmSouth common
stock at a price, subject to certain adjustments, of $ 28.5983 per share (the
"First American Option"). Pursuant to the AmSouth stock option agreement (the
"AmSouth Stock Option Agreement"), First American granted to AmSouth an
irrevocable offer to purchase, under certain circumstances, up to 23,250,165
shares of First American common stock at a price, subject to certain
adjustments, of $ 40.1625 per share (the "AmSouth Option", and, together with
the "First American Option", the "Options" ). Each of the Options, if exercised
by the grantee thereto, is intended to provide the grantee with the option to
purchase up to 19.9% of the total number of shares of the issuer then issued and
outstanding. Under certain circumstances, the issuer under each of the Options
may be required to repurchase the applicable Option or the shares acquired
pursuant to the exercise of such Option for a cash payment of at least $225
million. The Options may be exercised by the grantee thereto only if certain
events occur. These events can generally be described as business combinations
or acquisitions relating to the issuer of the particular Option (other than the
Proposed Merger).
Attached and incorporated herein by reference in their entirety as
Exhibits 2.1, 10.1 and 10.2, respectively, are copies of (1) the Merger
Agreement, (2) the First American Stock Option Agreement and (3) the AmSouth
Stock Option Agreement.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of May 31, 1999, among
AmSouth Bancorporation, First American Corporation and
Alpha/Foxtrot Acquisition Corp.
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10.1 Stock Option Agreement dated as of June 1, 1999 between First
American Corporation and AmSouth Bancorporation.
10.2 Stock Option Agreement dated as of June 1, 1999 between AmSouth
Bancorporation and First American Corporation.
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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 hereunto duly authorized.
Dated June 8, 1999
AMSOUTH BANCORPORATION
By: /s/ Carl L. Gorday
--------------------------
Name: Carl L. Gorday
Title: Assistant Secretary
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Exhibit Index
2.1 Agreement and Plan of Merger dated as of May 31, 1999, among AmSouth
Bancorporation, First American Corporation and Alpha/Foxtrot
Acquisition Corp.
10.1 Stock Option Agreement dated as of June 1, 1999 between First American
Corporation and AmSouth Bancorporation.
10.2 Stock Option Agreement dated as of June 1, 1999 between AmSouth
Bancorporation and First American Corporation.
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AGREEMENT AND PLAN OF MERGER
dated May 31, 1999
among
AMSOUTH BANCORPORATION,
FIRST AMERICAN CORPORATION
and
ALPHA/FOXTROT ACQUISITION CORP.
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions; Interpretations
1.01 Certain Definitions.................................................2
1.02 Interpretation......................................................8
ARTICLE II
The Merger
2.01 The Merger..........................................................9
2.02 Closing.............................................................9
2.03 Effective Time......................................................9
2.04 Effects of the Merger..............................................10
2.05 Certificate of Incorporation and By-laws...........................10
2.06 Board of Directors.................................................10
ARTICLE III
Consideration; Exchange Procedures
3.01 Effect on Capital Stock............................................10
3.02 Rights as Stockholders; Stock Transfers............................11
3.03 Exchange Procedures................................................11
3.04 Anti-Dilution Provisions...........................................12
3.05 Stock Options......................................................12
ARTICLE IV
Conduct of Business Pending Merger
4.01 Forebearances......................................................13
4.02 Coordination of Dividends..........................................15
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules...............................................16
5.02 Standard...........................................................16
5.03 Representations and Warranties.....................................16
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts............................................27
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Page
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6.02 Stockholder Approvals..............................................27
6.03 Registration Statement and Joint Proxy Statement...................28
6.04 Press Releases.....................................................29
6.05 Access; Information................................................29
6.06 Acquisition Proposals..............................................30
6.07 Affiliate Agreements...............................................30
6.08 Takeover Laws and Provisions.......................................31
6.09 NYSE Listing.......................................................31
6.10 Regulatory Applications............................................31
6.11 Indemnification....................................................32
6.12 Benefit Plans......................................................33
6.13 Share Repurchase Programs..........................................34
6.14 Notification of Certain Matters....................................34
6.15 Rights Agreements..................................................34
6.16 Foundation.........................................................34
6.17 Exemption from Liability Under Section 16(b).......................34
6.18 Amendment to AmSouth Certificate...................................35
ARTICLE VII
Conditions to the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger.........35
7.02 Conditions to Obligation of First American.........................36
7.03 Conditions to Obligation of AmSouth................................37
ARTICLE VIII
Termination
8.01 Termination........................................................37
8.02 Effect of Termination and Abandonment..............................38
ARTICLE IX
Miscellaneous
9.01 Survival...........................................................38
9.02 Waiver; Amendment..................................................39
9.03 Counterparts.......................................................39
9.04 GOVERNING LAW......................................................39
9.05 Expenses...........................................................39
9.06 Notices............................................................39
9.07 Entire Understanding; No Third Party Beneficiaries.................40
9.08 Severability.......................................................40
9.09 Alternative Structure..............................................40
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9.10 Enforcement of this Agreement......................................40
EXHIBIT A Form of AmSouth Stock Option Agreement
EXHIBIT B Form of First American Stock Option Agreement
EXHIBIT C Form of AmSouth Affiliate Letter
EXHIBIT D Form of First American Affiliate Letter
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AGREEMENT AND PLAN OF MERGER, dated May 31, 1999 (this "Agreement"), among
AmSouth Bancorporation, a Delaware corporation ("AmSouth"), Alpha/Foxtrot
Acquisition Corp., a Delaware Corporation and a newly formed wholly owned
subsidiary of AmSouth ("Merger Sub"), and First American Corporation, a
Tennessee corporation ("First American").
RECITALS
A. The Proposed Transaction. This Agreement provides for a business
combination to be effected through the merger of Merger Sub with and into First
American (the "Merger"), with First American as the surviving corporation (the
"Surviving Corporation"), whereby each outstanding share of common stock, par
value $2.50 per share, of First American ("First American Common Stock"), other
than certain excluded shares, will be converted into shares of common stock, par
value $1.00 per share, of AmSouth ("AmSouth Common Stock").
B. Board Approvals. The respective boards of directors of AmSouth, Merger
Sub and First American, including a majority of the disinterested directors of
First American, have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their respective
business strategies and goals, and have approved of the merger and believe that
the Merger is in the best interests of their respective shareholders.
C. Intended Tax Treatment. The parties intend the Merger to be treated as
a reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
(the "Code").
D. Intended Accounting Treatment. The parties intend the Merger to be
accounted for under the pooling-of-interests method.
E. Stock Option Agreements. In connection with this Agreement and as an
inducement to enter into this Agreement, on the date after the date of this
Agreement, First American and AmSouth expect to enter into (1) a stock option
agreement (the "First American Stock Option Agreement"), pursuant to which First
American will grant AmSouth an option (the "First American Option") to purchase
shares of First American Common Stock, upon the terms and subject to the
conditions set forth therein and (2) a stock option agreement (the "AmSouth
Stock Option Agreement" and, together with the First American Stock Option
Agreement, the "Option Agreements"), pursuant to which AmSouth will grant First
American an option (the "AmSouth Option") to purchase shares of AmSouth Common
Stock, upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
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ARTICLE I
DEFINITIONS; INTERPRETATIONS
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal", with respect to either AmSouth or First American,
means any tender or exchange offer, proposal for a merger, consolidation or
other business combination involving AmSouth or First American, as the case
may be, or any of their respective Subsidiaries or any proposal or offer to
acquire in any manner a substantial equity interest in, or a substantial
portion of the assets or deposits of, AmSouth or First American, as the case
may be, or any of their respective Significant Subsidiaries, other than the
transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"AmSouth Affiliate" has the meaning set forth in Section 6.07(a).
"AmSouth Benefit Plans" has the meaning set forth in Section 6.12.
"AmSouth Board" means the Board of Directors of AmSouth.
"AmSouth By-Laws" means the By-laws of AmSouth, as amended.
"AmSouth Certificate" means the Restated Certificate of Incorporation of
AmSouth.
"AmSouth Common Stock" has the meaning set forth in the Recitals.
"AmSouth Meeting" has the meaning set forth in Section 6.02.
"AmSouth Option" has the meaning set forth in the Recitals.
"AmSouth Preferred Stock" means the Series A Preferred Stock of AmSouth
issuable under the AmSouth Rights Agreement.
"AmSouth Rights" means the rights to purchase shares of AmSouth Preferred
Stock issued pursuant to the AmSouth Rights Agreement.
"AmSouth Rights Agreement" means the Stockholder Protection Rights
Agreement, dated as of December 18, 1997, as amended, between AmSouth and
Bank of New York (as successor to AmSouth Bank), as Rights Agent.
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"AmSouth Stock" means the AmSouth Common Stock and the AmSouth
Preferred Stock.
"AmSouth Stock Option" has the meaning set forth in Section 3.05.
"AmSouth Stock Option Agreement" has the meaning set forth in the
Recitals.
"AmSouth Stock Plans" means the 1989 Long Term Incentive Compensation
Plan, the 1996 Long Term Incentive Compensation Plan, The Deferred
Compensation Plan, The Amended and Restated Deferred Compensation Plan for
Directors, The Director Restricted Stock Plan, The Stock Option Plan for
Outside Directors, The Dividend Reinvestment and Common Stock Purchase Plan,
The Employee Stock Purchase Plan, The FloridaBank Stock Option Plan, The
FloridaBank Stock Option Plan-1993, and the AmSouth Rights Agreement.
"AmSouth" has the meaning set forth in the preamble to this Agreement.
"Articles of Merger" has the meaning set forth in Section 2.03.
"Benefits Plans" has the meaning set forth in Section 5.03(n).
"Certificate of Merger" has the meaning set forth in Section 2.03.
"Closing" has the meaning set forth in Section 2.02.
"Closing Date" has the meaning set forth in Section 2.02.
"Code" has the meaning set forth in the Recitals.
"Constituent Documents" means the certificate or articles of incorporation
and by-laws of a corporation or banking organization, the certificate of
limited partnership and partnership agreement of a limited partnership, the
certificate of formation and limited liability company agreement of a limited
liability company, the trust agreement of a trust and the comparable
documents of other entities.
"Costs" has the meaning set forth in Section 6.11(a).
"Delaware Secretary" means the Secretary of the State of Delaware.
"DGCL" means the Delaware General Corporation Law.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" has the meaning set forth in Section 2.03.
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"Employees" has the meaning set forth in Section 5.03(n).
"Environmental Laws" means any federal, state or local law, regulation,
order, decree, permit, authorization, opinion, common law or agency
requirement relating to: (1) the protection or restoration of the
environment, health, safety, or natural resources, (2) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance
or (3) noise, odor, wetlands, indoor air, pollution, contamination or any
injury or threat of injury to persons or property in connection with any
Hazardous Substance including, without limitation, the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Clean Water Act, the Federal Clean Air Act, and the
Occupational Safety and Health Act, each as amended, regulations promulgated
thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(n).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.03(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"First American" has the meaning set forth in the preamble to this
Agreement.
"First American Affiliate" has the meaning set forth in Section 6.07(a).
"First American Benefit Plans" has the meaning set forth in Section 6.12.
"First American Board" means the Board of Directors of First American.
"First American By-Laws" means the Restated By-laws of First American, as
amended.
"First American Charter" means the Restated Charter of First American.
"First American Common Stock" has the meaning set forth in the Recitals.
"First American Insiders" means those officers and directors of First
American subject to the reporting requirements of Section 16(a) of the
Exchange Act and who are listed in the Section 16 Information.
"First American Meeting" has the meaning set forth in Section 6.02(a).
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"First American Option" has the meaning set forth in the Recitals.
"First American Preferred Stock" means the preferred stock, no par value,
of First American.
"First American Rights" has the meaning set forth in Section 5.03(b).
"First American Rights Agreement" has the meaning set forth in Section
5.03(b).
"First American Series A Preferred Stock" means the Junior Preferred
Stock, Series A, issuable pursuant to the First American Rights Agreement.
"First American Stock" means, collectively, the First American Common
Stock and the First American Preferred Stock.
"First American Stock Option" has the meaning set forth in Section 3.05.
"First American Stock Option Agreement" has the meaning set forth in the
Recitals.
"First American Stock Plans" means the First American Bancorp 1987 Long
Term Incentive Plan, the First American Corporation 1991 Employee Stock
Incentive Plan, the First American Corporation 1993 Non-employee Director
Stock Option Plan, the DG Corp. Stock-Based Long-Term Incentive Plan, the DG
Corp. Stock-Based Long-Term Incentive Plan II, the PN Bancshares, Inc. 1994
Long-Term Incentive Plan, the Heritage Federal Bancshares, Inc. Employee
Plan and the Broad-based Employee Stock Option Plan.
"GAAP" means United States generally accepted accounting principles
applied on a consistent basis.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that is:
(i) listed, classified or regulated pursuant to any Environmental Law; (ii)
any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (iii) any other substance which is or may be the
subject of regulatory action by any Governmental Authority in connection with
any Environmental Law.
"Indemnified Party" has the meaning set forth in Section 6.11(a).
"Insurance Amount" has the meaning set forth in Section 6.11(b).
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"Insurance Policies" has the meaning set forth in Section 5.03(t).
"Joint Proxy Statement" has the meaning set forth in Section 6.03(a).
"Lien" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to AmSouth or First
American, any effect that (a) is material and adverse to the financial
condition, results of operations or business of AmSouth and its Subsidiaries,
taken as a whole, or First American and its Subsidiaries, taken as a whole,
respectively, excluding (with respect to each of clause (1), (2) or (3), to
the extent that a change does not materially affect it in a way that
materially differs from other banking organizations) the impact of (1)
changes in banking and other laws of general applicability or interpretations
thereof by Governmental Authorities, (2) changes in GAAP or regulatory
accounting requirements applicable to banks and their holding companies
generally, (3) changes in general economic conditions affecting banks and
their holding companies generally, (4) actions or omissions of a party to
this Agreement taken with the prior written consent of the other party to
this Agreement, in contemplation of the transactions contemplated hereby and
(5) any modifications or changes to valuation policies and practices in
connection with the Merger or restructuring charges, in each case taken with
the prior approval of AmSouth or First American, as the case may be, in
connection with the Merger, in each case in accordance with GAAP; or (b)
would materially impair the ability of AmSouth or First American,
respectively, to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.
"Merger" has the meaning set forth in the Recitals.
"Merger Sub" has the meaning set forth in the preamble to this Agreement.
"Merger Sub Stock" has the meaning set forth in Section 3.0(b).
"New Certificate" has the meaning set forth in Section 3.03(a).
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificate" has the meaning set forth in Section 3.03(a).
"Option Agreements" has the meaning set forth in the Recitals.
"Pension Plan" has the meaning set forth in Section 5.03(n).
"Person" means any individual, savings association, bank, corporation,
limited liability company, partnership, association, joint-stock company,
business trust or unincorporated organization.
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"Plan" has the meaning set forth in Section 5.03(n).
"Previously Disclosed" by a party means information set forth in the
applicable paragraph of its Disclosure Schedule, or any other paragraph of
its Disclosure Schedule so long as it is reasonably clear from the context of
the disclosure that the disclosure in such other paragraph of its Disclosure
Schedule is also applicable to the section of this Agreement in question.
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authorities" has the meaning set forth in Section 5.03(j).
"Regulatory Filings" has the meaning set forth in Section 5.03(h).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any other
Person any right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock appreciation right or other instrument
the value of which is determined in whole or in part by reference to the
market price or value of, shares of capital stock of such first Person.
"SEC" means the Securities and Exchange Commission.
"Section 16 Information" means accurate information regarding the First
American Insiders, the number of shares of First American Common Stock held
or to be held by each such First American Insider expected to be exchanged
for AmSouth Common Stock in the Merger, and the number and description of the
options to purchase shares of First American Common Stock held by each such
First American Insider and expected to be converted into options to purchase
shares of AmSouth Common Stock in connection with the Merger.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Share Increase" means (i) the amendment to the AmSouth Certificate to
increase in the authorized number of shares of AmSouth Common Stock to
750,000,000 and (ii) the issuance of shares of AmSouth Common Stock pursuant
to this Agreement.
"Subsidiary" and "Significant Subsidiary" have the meaning ascribed to
those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.
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"Surviving Corporation" has the meaning set forth in the Recitals.
"Takeover Laws" has the meaning set forth in Section 5.03(v).
"Takeover Provisions" has the meaning set forth in Section 5.03(v).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp, occupation,
property, environmental, unemployment or other taxes, custom duties, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority whether arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"TBCA" means the Tennessee Business Corporation Act.
"Tennessee Secretary" means the Secretary of State of the State of
Tennessee.
1.02 Interpretation. (a) In this Agreement, unless the context otherwise
requires, references:
(1) to the Recitals, Sections, Exhibits or Schedules are to a Recital or
Section of, or Exhibit or Schedule to, this Agreement;
(2) to any agreement (including this Agreement), contract, statute or
regulation are to the agreement, contract, statute or regulation as amended,
modified, supplemented or replaced from time to time, and to any section of
any statute or regulation are to any successor to the section;
(3) to any Governmental Authority include any successor to that
Governmental Authority; and
(4) to this Agreement are to this Agreement, the Exhibits and Schedules to
it, taken as a whole.
(b) The table of contents and headings contained herein are for reference
purposes only and do not limit or otherwise affect any of the provisions of this
Agreement.
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(c) Whenever the words "include," "includes" or "including" are used in
this Agreement, they will be deemed to be followed by the words "without
limitation."
(d) Whenever the words "herein" or "hereunder" are used in this Agreement,
they will be deemed to refer to this Agreement as a whole and not to any
specific Section.
(e) This Agreement is the product of negotiation by the parties, having
the assistance of counsel and other advisers. It is the intention of the parties
that this Agreement not be construed more strictly with regard to one party than
with regard to the other party.
(f) No provision of this Agreement shall be construed to require AmSouth,
First American or any of their respective Subsidiaries, affiliates or directors
to take any action or omit to take any action which action or omission would
violate applicable law (whether statutory or common law), rule or regulation.
ARTICLE II
THE MERGER
2.01 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL and the TBCA, Merger Sub shall
merge with and into First American at the Effective Time. First American 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 Merger Sub shall terminate.
2.02 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m. on the third business day after satisfaction or waiver of the
conditions set forth in Article VII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions), unless another time or date is agreed to by the
parties hereto (the "Closing Date").
2.03 Effective Time. Subject to the provisions of this Agreement, as soon
as practicable following the Closing, the parties shall acknowledge and file a
certificate of merger or other appropriate documents (in any such case, the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and articles of merger or other appropriate documents (in any such
case, the "Articles of Merger") executed in accordance with the relevant
provisions of the TBCA. The parties shall make all other filings or recordings
required under the DGCL and the TBCA and the Merger shall become effective at
such time as the later to occur of (i) the Certificate of Merger is duly filed
with the Delaware Secretary and (ii) the Articles of Merger are filed in the
office of the Tennessee Secretary, or at such subsequent date or time as AmSouth
and First American shall agree and specify in the Certificate of Merger and
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the Articles of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
2.04 Effects of the Merger. The Merger shall have the effects set forth in
the DGCL and the TBCA.
2.05 Certificate of Incorporation and By-laws. (a) The First American
By-Laws, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation until thereafter amended as provided
therein or by applicable law.
(b) The First American Certificate of Incorporation shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided therein or by applicable law.
2.06 Board of Directors. At the Effective Time, the board of directors of
AmSouth shall be comprised of the directors of AmSouth in office immediately
prior to the Effective Time together with five additional members designated by
First American, until their respective successors are duly elected and
qualified.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of First
American Stock or AmSouth Stock:
(a) Conversion of First American Common Stock. Except as set forth in this
Section 3.01(a), each share of First American Common Stock outstanding
immediately prior to the Effective Time shall be converted into 1.871 (the
"Exchange Ratio") fully paid and nonassessable shares of AmSouth Common
Stock. As of the Effective Time, all shares of First American Common Stock
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and from and after the Effective Time, certificates
representing First American Common Stock immediately prior to the Effective
Time shall be deemed for all purposes to represent the number of shares of
AmSouth Common Stock into which they were converted pursuant to this Section
3.01(a).
(b) AmSouth Common Stock. Each share of AmSouth Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding.
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(c) Conversion of Merger Sub Stock. The shares of stock of any class or
series of Merger Sub Stock (the "Merger Sub Stock") issued and outstanding
immediately prior to the Effective Time shall become shares of stock of the
Surviving Corporation at the Effective Time having the same terms, rights and
preferences.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of First American Common Stock shall cease to be, and shall have no
rights as, shareholders of First American, other than to receive any dividend or
other distribution with respect to such First American Common Stock with a
record date occurring prior to the Effective Date and the conversion rights
provided under this Article III. After the Effective Time, there shall be no
transfers on the stock transfer books of AmSouth or the Surviving Corporation of
shares of First American Common Stock.
3.03 Exchange Procedures. (a) At or prior to the Effective Time, AmSouth
shall deposit, or shall cause to be deposited, with AmSouth's transfer agent or
a depository or trust institution of recognized standing selected by First
American and reasonably satisfactory to AmSouth (in such capacity, the "Exchange
Agent"), for the benefit of the holders of certificates formerly representing
shares of First American Common Stock ("Old Certificates") to be exchanged in
accordance with this Article III, certificates representing the shares of
AmSouth Common Stock ("New Certificates") to which the holders of the Old
Certificates are entitled pursuant to this Agreement.
(b) Promptly after the Effective Date, AmSouth shall send or cause to be
sent to each former holder of record of shares of First American Common Stock
immediately prior to the Effective Time transmittal materials for use in
exchanging such shareholder's Old Certificates for the New Certificates provided
for in this Article III. AmSouth shall cause the New Certificates and/or any
check in respect of dividends or distributions which such Person shall be
entitled to receive to be delivered to such shareholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of AmSouth Common
Stock (or indemnity reasonably satisfactory to AmSouth and the Exchange Agent,
if any of such certificates are lost, stolen or destroyed) owned by such
shareholder. No interest will be paid on any such cash to be paid in respect of
dividends or distributions which any such Person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Neither the Exchange Agent nor any party hereto shall be liable to any
former holder of First American Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(d) From and after the 30th day following the Effective Date, no dividends
or other distributions with respect to AmSouth Common Stock with a record date
occurring after the Effective Date shall be paid in respect of any unsurrendered
Old Certificate representing shares of AmSouth Common Stock converted in the
Merger into the right to receive shares of AmSouth Common Stock. Upon surrender
of Old Certificates (or indemnity reasonably satisfactory to AmSouth and the
Exchange Agent, if any of such certificates are lost, stolen or destroyed) in
accordance with this
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Section 3.03, 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 AmSouth Common Stock
such holder had the right to receive upon surrender of Old Certificates (or
delivery of such indemnity).
(e) Notwithstanding any other provision hereof, no fractional shares of
AmSouth Common Stock and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Merger; instead, AmSouth shall pay to
each holder of First American Common Stock who would otherwise be entitled to a
fractional share of AmSouth Common Stock (after taking into account all Old
Certificates delivered by such holder) an amount in cash (without interest)
determined by multiplying such fraction by the average of the last reported sale
prices of AmSouth Common Stock, as reported by the NYSE Composite Transactions
Reporting System (as reported in The Wall Street Journal or, if not reported
therein, in another authoritative source), for the five NYSE trading days
immediately preceding the Effective Date.
3.04 Anti-Dilution Provisions. If AmSouth changes (or establishes a record
date for changing) the number or kind of shares of AmSouth Common Stock issued
and outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding AmSouth Common Stock and the record
date therefor shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
3.05 Stock Options. At the Effective Time, all employee and director stock
options to purchase shares of First American Common Stock (each, a "First
American Stock Option"), which are then outstanding and unexercised, shall cease
to represent a right to acquire shares of First American Common Stock and shall
be converted automatically into options to purchase shares of AmSouth Common
Stock, (each, an "AmSouth Stock Option") and AmSouth shall assume each such
First American Stock Option subject to the terms thereof, including but not
limited to the accelerated vesting of such options which shall occur in
connection with and by virtue of the transactions contemplated hereby as and to
the extent required by the plans and agreements governing such First American
Stock Options; provided, however, that from and after the Effective Time, (1)
the number of shares of AmSouth Common Stock purchasable upon exercise of such
First American Stock Option shall be equal to the number of shares of First
American Common Stock that were purchasable under such First American Stock
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
and rounding to the nearest whole share, and (2) the per share exercise price
under each such First American Stock Option shall be adjusted by dividing the
per share exercise price of each such First American Stock Option by the
Exchange Ratio, and rounding down to the nearest cent. The terms of each First
American Stock Option shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transactions with respect to AmSouth Common
Stock on or subsequent to the Effective Date. Notwithstanding the foregoing,
each First American Stock Option which is intended to be an "incentive stock
option" (as defined
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in Section 422 of the Code) shall be adjusted in accordance with the
requirements of Section 424 of the Code. Accordingly, with respect to any
incentive stock options, fractional shares shall be rounded down to the nearest
whole number of shares and where necessary the per share exercise price shall be
rounded down to the nearest cent. At or prior to the Effective Time, AmSouth
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of AmSouth Common Stock for delivery upon exercise of First
American Stock Options assumed by it in accordance with this Section 3.05. As
soon as practicable after the Effective Time, AmSouth shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms) with respect to the AmSouth Common Stock subject to First
American Stock Options converted hereunder.
ARTICLE IV
CONDUCT OF BUSINESS PENDING MERGER
4.01 Forebearances. Each of AmSouth and First American agrees that from
the date hereof until the Effective Time, except as expressly contemplated by
this Agreement or as Previously Disclosed, without the prior written consent of
the other party hereto (which consent shall not be unreasonably withheld), it
will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct its business and the business of its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and assets
and maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action reasonably
likely to materially impair its ability to perform its obligations under this
Agreement or the Option Agreements or to consummate the transactions
contemplated hereby and thereby.
(b) Capital Stock. Other than pursuant to the Share Increase or to Rights
Previously Disclosed and outstanding on the date hereof, (1) issue, sell or
otherwise permit to become outstanding, or dispose of or encumber or pledge
or authorize or propose the creation of, any additional shares of its stock
or any Rights (except in connection with acquisitions permitted under Section
4.01(g)), (2) enter into any agreement with respect to the foregoing or (3)
permit any additional shares of its stock to become subject to new grants,
except in the ordinary course of business, of employee or director stock
options, other Rights or similar stock-based employee rights.
(c) Dividends, Etc. (1) Make, declare, pay or set aside for payment any
dividend (other than (A) dividends from its wholly owned Subsidiaries to it
or another of its wholly owned Subsidiaries and (B) regular quarterly
dividends on its common stock at a rate equal to the rate paid by it during
the fiscal quarter immediately preceding the date hereof (but including any
increases in such
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dividends as are consistent with past practice in the ordinary course of
business) on or in respect of, or declare or make any distribution on any
shares of its stock or (2) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or renew
any employment, consulting, severance or similar agreements or arrangements
with any of its directors, officers or employees or those of its
Subsidiaries, or release or otherwise terminate the employment of any
employee, except in the ordinary course of business, or terminate the
employment of any employee who is covered by a change in control agreement
except for cause as defined in such agreement, or hire any new employees
above the rank of vice president, or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus payments), except
(1) for normal individual increases in compensation to employees in the
ordinary course of business consistent with past practice, (2) for other
changes that are required by applicable law and (3) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof.
(e) Benefit Plans. Enter into, establish, adopt or materially amend
(except (1) as may be required by applicable law or (2) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any of its
directors, officers or employees or those of its Subsidiaries, or take any
action to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose
of or discontinue any of its assets, deposits, business or properties except
for sales, transfers, mortgages, encumbrances or other dispositions or
discontinuances in the ordinary course of business consistent with past
practice and in a transaction that, together with other such transactions, is
not material to it and its Subsidiaries, taken as a whole.
(g) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a fiduciary or similar capacity or in satisfaction
of debts previously contracted in good faith, in each case in the ordinary
and usual course of business consistent with past practice) all or any
portion of the assets, business, deposits or properties of any other entity
except in the ordinary course of business consistent with past practice and
in a transaction that, together with other such transactions, is not material
to it and its Subsidiaries, taken as a whole.
(h) Constituent Documents. Amend its Constituent Documents or the
Constituent Documents (or similar governing documents) of any of its
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Subsidiaries, except that AmSouth will amend the AmSouth Certificate to
permit the Share Increase.
(i) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by GAAP or
applicable regulatory accounting requirements.
(j) Contracts. (i) Enter into, renew or terminate, or make any payment not
then required under, any contract or agreement, other than loans and other
transactions made in the ordinary course of the banking business, that calls
for aggregate annual payments of $2,000,000 or more and which is not
terminable on 60 days or less notice without payment of a premium penalty and
(ii) enter into any contract or agreement pertaining to the use of the name
"First American" or any derivative thereof unless such contract or agreement
provides that the name "AmSouth" can be substituted therefor or that such
contract or agreement can be canceled by First American or its successor
without any appreciable penalty.
(k) Claims. Other than in the ordinary course of business, settle any
claim, action or proceeding against it, except for any claim, action or
proceeding in an amount or for such consideration, individually or in the
aggregate for all such settlements, that is not material to it and its
Subsidiaries, taken as a whole, and would not impose any material restriction
on the business of the Surviving Corporation or create precedent for claims
that are reasonably likely to be material to it and its Subsidiaries, taken
as a whole.
(l) Adverse Actions. Notwithstanding anything herein to the contrary, (1)
take, or knowingly omit to take, any action that would, or is reasonably
likely to, prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code or qualifying for
pooling-of-interests accounting treatment or (2) take any action that is
reasonably likely to result in (A) any of the conditions to the Merger set
forth in Article VII not being satisfied or (B) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(m) Capital Expenditures. Other than in the ordinary course of business,
make any capital expenditures in excess of (A) $2,000,000 per project or
related series of projects or (B) $8,000,000 in the aggregate.
(n) Indebtedness. Incur any indebtedness for borrowed money other than in
the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 Coordination of Dividends. Until the Effective Time, each of AmSouth
and First American shall coordinate with the other the declaration of any
dividends or other distributions with respect to the AmSouth Common Stock and
the First
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American Common Stock and the record dates and payment dates relating thereto,
it being the intention of the parties that holders of shares of AmSouth Common
Stock or First American Common Stock shall not receive more than one dividend,
or fail to receive one dividend, for any single calendar quarter on their shares
of AmSouth Common Stock or First American Common Stock (including any shares of
AmSouth Common Stock received in exchange therefor in the Merger), as the case
may be.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, AmSouth has
delivered to First American a schedule and First American has delivered to
AmSouth a schedule (respectively, each schedule a "Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more representations or
warranties contained in Section 5.03 or to one or more of its covenants
contained in Article IV; provided, that the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item was required to be disclosed
therein.
5.02 Standard. For all purposes of this Agreement, no representation or
warranty of First American or AmSouth contained in Section 5.03 (other than the
representations and warranties contained in Section 5.03(b) and 5.03(c)) shall
be deemed untrue and no party hereto shall be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in Section 5.03 (read for this purpose
without regard to any individual reference to "materiality" or "material adverse
effect" set forth therein) has had or is reasonably likely to have a Material
Adverse Effect with respect to First American or AmSouth, as the case may be.
5.03 Representations and Warranties. Except as Previously Disclosed, First
American hereby represents and warrants to AmSouth, and AmSouth hereby
represents and warrants to First American, to the extent applicable, in each
case with respect to itself and its Subsidiaries, as follows:
(a) Organization, Standing and Authority. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. It is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
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(b) First American Stock. In the case of First American:
The authorized capital stock of First American consists of
200,000,000 shares of First American Common Stock and 2,500,000 shares
of First American Preferred Stock. As of the date hereof, no more than
116,835,000 shares of First American Common Stock were issued and
outstanding. As of the date hereof, 1,250,000 shares of Preferred Stock
were reserved for issuance in connection with the rights (the "First
American Rights") to purchase shares of First American Series A
Preferred Stock, issued pursuant to the Rights Agreement, dated as of
July 16, 1998, by and between First American and First Chicago Trust
Company of New York, as Rights Agent (the "First American Rights
Agreement"). As of the date hereof, 5,741,852 shares of First American
Common Stock were subject to First American Stock Options under the
First American Stock Plans. As of the date hereof, there were
16,833,822 shares of First American Common Stock reserved for issuance
under the First American Stock Plans. The outstanding shares of First
American Common Stock have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable, and subject to no
preemptive rights (and were not issued in violation of any preemptive
rights). Except as set forth above, as of the date hereof, there are no
shares of First American Stock authorized and reserved for issuance,
First American does not have any Rights outstanding with respect to
First American Stock, and First American does not have any commitment
to authorize, issue or sell any First American Stock or Rights, except
pursuant to this Agreement, outstanding First American Stock Options,
the First American Option and the First American Stock Plans.
(c) AmSouth Stock. In the case of AmSouth:
The authorized capital stock of AmSouth consists of 350,000,000
shares of AmSouth Common Stock and 2,000,000 shares of AmSouth
Preferred Stock. As of the date hereof, no more than 176,006,233 shares
of AmSouth Common Stock and no shares of AmSouth Preferred Stock were
outstanding and no more than 26,381,394 shares of AmSouth Common Stock
were held by AmSouth in its treasury. As of the date hereof, 3,629,229
shares of AmSouth Common Stock were subject to AmSouth Stock Options
granted under the AmSouth Stock Plans. As of the date hereof, there
were 15,100,296 shares of AmSouth Common Stock reserved for issuance
under the AmSouth Stock Plans. The outstanding shares of AmSouth Common
Stock have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights (and
were not issued in violation of any preemptive rights). Except as set
forth above, as of the date hereof, there are no shares of AmSouth
Stock authorized and reserved for issuance, AmSouth does not have any
Rights issued or outstanding with respect to AmSouth Stock, and AmSouth
does not have any commitment to authorize, issue or sell any AmSouth
Stock or Rights,
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except pursuant to this Agreement, outstanding AmSouth Stock Options,
the AmSouth Option and the AmSouth Stock Plans.
(d) Significant Subsidiaries. (1)(A) It owns, directly or indirectly, all
the issued and outstanding equity securities of each of its Significant
Subsidiaries, (B) no equity securities of any of its Significant Subsidiaries
are or may become required to be issued (other than to it or its wholly owned
Subsidiaries) by reason of any Right or otherwise, (C) there are no
contracts, commitments, understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer any equity
securities of any such Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (D) there are no contracts, commitments, understandings, or
arrangements relating to its rights to vote or to dispose of such securities
and (E) all the equity securities of each Significant Subsidiary held by it
or its Subsidiaries have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable (except as provided in 12 U.S.C.
ss. 55 or comparable state laws) and are owned by it or its Subsidiaries free
and clear of any Liens.
(2) Each of its Significant Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified. In the case of AmSouth,
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and all of its outstanding
capital stock is owned directly or indirectly by AmSouth. Merger Sub was
formed solely for the purpose of engaging in the transactions contemplated
hereby, has conducted its operations only as contemplated hereby and has
engaged in no other business activities other than as contemplated hereby.
(e) Corporate Power. It and each of its Significant Subsidiaries (and, in
the case of AmSouth, Merger Sub) has the corporate power and authority to
carry on its business as it is now being conducted and to own all its
properties and assets; and it has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Option Agreements and to consummate the transactions contemplated hereby and
thereby.
(f) Corporate Authority. (1) Subject to receipt of the stockholder
approval described in Section 5.03(f)(2), in the case of AmSouth, and in
Section 5.03(f)(3), in the case of First American, this Agreement, the Option
Agreements and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action. This Agreement is its valid and
legally binding obligation, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
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(2) In the case of AmSouth, the affirmative vote of a majority of the
holders of the outstanding shares of AmSouth Stock to approve the Share
Increase is the only vote of the holders of any class or series of AmSouth's
capital stock necessary to approve and adopt this Agreement, the Option
Agreements and the transactions contemplated hereby and thereby.
(3) In the case of First American, the affirmative vote of the holders of
a majority of the outstanding shares of First American Common Stock to adopt
this Agreement is the only vote of the holders of any class or series of
First American's capital stock necessary to approve and adopt this Agreement,
the Option Agreements and the transactions contemplated hereby and thereby.
(g) Regulatory Approvals; No Defaults. (1) No consents or approvals of, or
filings or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by it or any of its Subsidiaries in
connection with the execution, delivery or performance by it of this
Agreement and the Option Agreements or to consummate the Merger except for
(A) filings and approvals of applications with and by federal and state
banking authorities, (B) filings with the SEC and state securities
authorities, (C) the applicable stockholder approval described in Section
5.03(f), (D) the filing of the Articles of Merger with the Tennessee
Secretary pursuant to the TBCA and the Certificate of Merger with the
Delaware Secretary pursuant to the DGCL and (E) such filings with applicable
securities exchanges to obtain the authorizations for listing contemplated by
this Agreement.
(2) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach
or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of it or of any of its Subsidiaries or to
which it or any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, its Constituent
Documents or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(h) Financial Reports and Regulatory Documents; Material Adverse Effect.
(1) Its Annual Reports on Form 10-K for the fiscal years ended December 31,
1998, 1997 and 1996, and all other reports, registration statements,
definitive proxy statements or information statements filed by it or any of
its Subsidiaries subsequent to December 31, 1996 under the Securities Act, or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or under the
securities regulations of the SEC, in the form filed (collectively, its
"Regulatory Filings") with the SEC as of the date filed, (A) complied in all
material respects as to form with the applicable
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requirements under the Securities Act or the Exchange Act, as the case may
be, and (B) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such Regulatory Filing (including the
related notes and schedules thereto) fairly presented in all material
respects its financial position and that of its Subsidiaries as of its date,
and each of the statements of income and changes in shareholders' equity and
cash flows or equivalent statements in such Regulatory Filings (including any
related notes and schedules thereto) fairly presented in all material
respects, the results of operations, changes in shareholders' equity and
changes in cash flows, as the case may be, of it and its Subsidiaries for the
periods to which they relate, in each case in accordance with GAAP
consistently applied during the periods involved, except in each case as may
be noted therein, subject to normal year-end audit adjustments in the case of
unaudited statements.
(2) Since December 31, 1998, it and its Subsidiaries have not incurred any
liability other than in the ordinary course of business consistent with past
practice.
(3) Since December 31, 1998, (A) it and its Subsidiaries have conducted
their respective businesses in the ordinary and usual course consistent with
past practice (excluding the incurrence of expenses related to this Agreement
and the transactions contemplated hereby) and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.03
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(i) Litigation. Except as Previously Disclosed or set forth in its Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, there is no
suit, action or proceeding pending or, to the knowledge of it, threatened
against or affecting it or any of its Subsidiaries (and it is not aware of
any basis for any such suit, action or proceeding) that, individually or in
the aggregate, is (1) material to it and its Subsidiaries, taken as a whole,
or (2) that is reasonably likely to prevent or delay it in any material
respect from performing its obligations under, or consummating the
transactions contemplated by, this Agreement.
(j) Regulatory Matters. (1) Neither it nor any of its Subsidiaries is a
party to or is subject to any written order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from, any Governmental
Authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of deposits
or the supervision or regulation of it or any of its Subsidiaries
(collectively, the "Regulatory Authorities").
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(2) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such written order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(k) Compliance with Laws. It and each of its Subsidiaries:
(i) conducts its business in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to its knowledge, no suspension
or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1998, no written notification from
any Governmental Authority (A) asserting that it or any of its Subsidiaries
is not in compliance with any of the statutes, regulations or ordinances
which such Governmental Authority enforces or (B) threatening to revoke any
license, franchise, permit or governmental authorization.
(l) Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to its Regulatory Filings, neither it nor any of
its Subsidiaries is a party to, bound by or subject to any agreement,
contract, arrangement, commitment or understanding (whether written or oral)
(i) that is a "material contract" within the meaning of Item 601(b)(10) of
the SEC's Regulation S-K or (ii) that restricts the conduct of business by it
or any of its Subsidiaries. Neither it nor any of its Subsidiaries is in
default under any material contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it is a party, by which
its respective assets, business, or operations may be bound or affected, or
under which it or its respective assets, business, or operations receives
benefits, and there has not occurred any event that, with the lapse of time
or the giving of notice or both, would constitute such a default.
(m) No Brokers. No action has been taken by it that would give rise to any
valid claim against any party hereto for a brokerage commission, finder's fee
or other like payment with respect to the transactions contemplated by this
Agreement, excluding a Previously Disclosed fee to be paid to Donaldson,
Lufkin & Jenrette Securities Corporation, in the case of AmSouth, and a
Previously Disclosed fee to
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be paid to Merrill Lynch, Pierce, Fenner and Smith Incorporated, in the case
of First American.
(n) Employee Benefit Plans.
(1) All material benefit and compensation plans, contracts, policies or
arrangements covering its current employees or former employees and those of
its Subsidiaries (its "Employees") and its current or former directors,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and deferred compensation, stock option, stock
purchase, stock appreciation rights, stock based, incentive and bonus plans
(its "Benefit Plans"), are Previously Disclosed. True and complete copies of
all Benefit Plans, including, but not limited to, any trust instruments and
insurance contracts forming a part of any Benefit Plans, and all amendments
thereto, have been made available to the other party hereto.
(2) All employee benefit plans, other than "multiemployer plans" within
the meaning of Section 3(37) of ERISA, covering its Employees (its "Plans"),
to the extent subject to ERISA, are in substantial compliance with ERISA.
Each of its Plans which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan"), and which is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service with respect to "TRA"
(as defined in Section 1 of Rev. Proc. 93-39), and it is not aware of any
circumstances reasonably likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
First American or AmSouth, as the case may be, threatened litigation relating
to its Plans. Neither it nor any of its Subsidiaries has engaged in a
transaction with respect to any of its Plans that, assuming the taxable
period of such transaction expired as of the date hereof, could subject it or
any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA in an amount which would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has been or is
reasonably expected to be incurred by it or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained
by any of them, or the single-employer plan of any entity which is considered
one employer with it under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). None of it, any of its Subsidiaries or any of its
ERISA Affiliates has contributed to a "multiemployer plan", within the
meaning of Section 3(37) of ERISA, at any time on or after September 26,
1980. No notice of a "reportable event", within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any of its Pension Plans or by any of its ERISA
Affiliates within the 12-month period ending on the date hereof or will be
required to be filed solely as a result of the transactions contemplated by
this Agreement.
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(4) All contributions required to be made under the terms of any of its
Plans have been timely made or have been reflected on its consolidated
financial statements included in its Regulatory Filings. None of its Pension
Plans or any single-employer plan of any of its ERISA Affiliates has an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and none of its ERISA
Affiliates has an outstanding funding waiver. Neither it nor any of its
Subsidiaries has provided, or is required to provide, security to any of its
Pension Plans or to any single-employer plan of any of its ERISA Affiliates
pursuant to Section 401(a)(29) of the Code.
(5) Under each of its Pension Plans which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in its Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Plan,
and there has been no material change in the financial condition of such Plan
since the last day of the most recent plan year.
(6) Neither it nor any of its Subsidiaries has any obligations for retiree
health and life benefits under any of its Benefit Plans. It or its
Subsidiaries may amend or terminate any of its Benefit Plans at any time
without incurring any liability thereunder.
(7) Neither its execution of this Agreement, the performance of its
obligations hereunder, the consummation of the transactions contemplated by
this Agreement, the termination of the employment of any of its employees
within a specified time of the Effective Time, nor any other action taken or
failed to be taken by it prior to the execution of this Agreement will (w)
limit its right, in its sole discretion, to administer or amend in any
respect or terminate any of its Benefit Plans or any related trust, (x)
entitle any of its employees or any employees of its Subsidiaries to
severance pay, (y) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of its Benefit Plans
or (z) result in any breach or violation of, or a default under, any of its
Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement (including,
without limitation, as a result of the termination of the employment of any
of its employees within a specified time of the Effective Time) neither it
nor any of its Subsidiaries will be obligated to make a payment to an
individual that would be a "parachute payment" to a "disqualified individual"
as those terms are defined in Section 280G of the Code, without regard to
whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
(o) Labor Matters. Neither it nor any of its Subsidiaries is a party to or
is bound by any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor is it or any
of its Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiary
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has committed an unfair labor practice (within the meaning of the National
Labor Relations Act) or seeking to compel it or any of its Subsidiaries to
bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other material labor dispute involving it or any
of its Subsidiaries pending or, to its knowledge, threatened, nor to its
knowledge is there any activity involving its or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in
other organizational activity.
(p) Environmental Matters. To its knowledge, neither its conduct nor its
operation or the conduct or operation of its Subsidiaries nor any condition
of any property presently or previously owned, leased or operated by any of
them (including, without limitation, in a fiduciary or agency capacity),
violates or violated Environmental Laws and no condition has existed or event
has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. To its knowledge, no property on which it
or any of its Subsidiaries holds a Lien, violates or violated Environmental
Laws and no condition has existed or event has occurred with respect to any
such property that, with notice or the passage of time, or both, is
reasonably likely to result in liability under Environmental Laws. Neither it
nor any of its Subsidiaries has received any written notice from any person
or entity that it or its Subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a
fiduciary capacity by any of them are or were in violation of or otherwise
are alleged to have liability under any Environmental Law, including, but not
limited to, responsibility (or potential responsibility) for the cleanup or
other remediation of any pollutants, contaminants, or hazardous or toxic
wastes, substances or materials at, on, beneath, or originating from, any
such property.
(q) Tax Matters. (1) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to it and its Subsidiaries have been duly and timely filed, and all
such Tax Returns are complete and accurate in all material respects, (B) all
Taxes shown to be due on the Tax Returns referred to in clause (A) have been
paid in full, (C) all Taxes that it or any of its Subsidiaries is obligated
to withhold from amounts owing to any employee, creditor or third party have
been paid over to the proper Governmental Authority in a timely manner, to
the extent due and payable, (D) the Tax Returns referred to in clause (A)
have been examined by the Internal Revenue Service or the appropriate Tax
authority or the period for assessment of the Taxes in respect of which such
Tax Returns were required to be filed has expired, (E) all deficiencies
asserted or assessments made as a result of such examinations have been paid
in full, (F) no issues that have been raised by the relevant taxing authority
in connection with the examination of any of the Tax Returns referred to in
clause (A) are currently pending, and (G) no extensions or waivers of
statutes of limitation have been given by or requested with respect to any of
its Taxes or those of its Subsidiaries. It has made available to the other
party hereto true and correct copies of the U.S. federal income Tax Returns
filed by it and its Subsidiaries for each of the three most recent fiscal
years ended on or before December 31, 1998.
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It has made provision in accordance with GAAP, in the financial statements
included in the Regulatory Filings filed prior to the date hereof, for all
Taxes that accrued on or before the end of the most recent period covered by
its Regulatory Filings filed prior to the date hereof. Neither it nor any of
its Subsidiaries is a party to any Tax allocation or sharing agreement, is or
has been a member of an affiliated group filing consolidated or combined Tax
returns (other than a group over which it is or was the common parent) or
otherwise has any liability for the Taxes of any person (other than its own
Taxes and those of its Subsidiaries). As of the date hereof, neither it nor
any of its Subsidiaries has any reason to believe that any conditions exist
that could reasonably be expected to prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code. No Liens for Taxes exist with respect to any of its assets or
properties or those of its Subsidiaries, except for statutory Liens for Taxes
not yet due and payable or that are being contested in good faith and
reserved for in accordance with GAAP. Neither it nor any of its Subsidiaries
has been a party to any distribution occurring during the last three years in
which the parties to such distribution treated the distribution as one to
which Section 355 of the Code applied.
(2) No Tax is required to be withheld pursuant to Section 1445 of the Code
as a result of the transfer contemplated by this Agreement.
(r) Derivative Instruments. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts and other similar risk management
arrangements, whether entered into for its own account, or for the account of
one or more of its Subsidiaries or their customers, if any, were entered into
(1) in accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory policies and (2) with counterparties
believed to be financially responsible at the time; and each of them
constitutes the valid and legally binding obligation of such party or one of
its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and are in full force and effect. Neither it nor its
Subsidiaries, nor to its knowledge, any other party thereto, is in breach of
any of its obligations under any such agreement or arrangement.
(s) Books and Records. Its books and records and those of its Subsidiaries
have been fully, properly and accurately maintained in all material respects,
and there are no material inaccuracies or discrepancies of any kind contained
or reflected therein.
(t) Insurance. It has made available to the other party hereto all of the
insurance policies, binders, or bonds maintained by it or its Subsidiaries
(its "Insurance Policies"). It and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as its management
reasonably has determined to be prudent in accordance with industry
practices. All of its
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Insurance Policies are in full force and effect; it and its Subsidiaries are
not in material default thereunder; and all claims thereunder for which a
basis is known, or reasonably should be known, by it have been filed in due
and timely fashion.
(u) Accounting Treatment. As of the date hereof, to its knowledge, there
is no reason why the Merger will fail to qualify for "pooling-of-interests"
accounting treatment.
(v) Takeover Laws and Provisions. It has taken all action required to be
taken by it in order to exempt this Agreement and the AmSouth Option or the
First American Option, as applicable, and the transactions contemplated
hereby and thereby from, and this Agreement, the AmSouth Option or the First
American Option, as applicable, and the transactions contemplated hereby and
thereby are exempt from, the requirements of any "moratorium", "control
share", "fair price", "affiliate transaction", "business combination" or
other antitakeover laws and regulations of any state (collectively, "Takeover
Laws"), including, without limitation, the State of Delaware, in the case of
AmSouth, and the State of Tennessee, in the case of First American. It has
taken all action required to be taken by it in order to make this Agreement
and the AmSouth Option or the First American Option, as applicable, and the
transactions contemplated hereby and thereby comply with, and this Agreement,
the AmSouth Option or the First American Option, as applicable, and the
transactions contemplated hereby and thereby comply with, the requirements of
any Articles, Sections or provisions of its Constituent Documents concerning
"business combinations", "fair priced", "voting requirements", "constituency
requirements" or other related provisions (collectively, "Takeover
Provisions"), including, without limitation, Articles X, XI and XII of the
First American Charter, in the case of First American, and Section VIII of
the AmSouth Certificate, in the case of AmSouth.
(w) Rights Agreements. It has taken all action necessary such that (1) the
AmSouth Rights or the First American Rights, as the case may be, will not
become separable, distributable, unredeemable or exercisable as a result of
the approval, execution or delivery of this Agreement or the Option
Agreements or the consummation of the transactions contemplated hereby or
thereby and (2) in the case of First American, the First American Rights will
no longer be exercisable, and the First American Rights Agreement will
terminate, upon consummation of the Merger.
(x) Year 2000. To its knowledge, the mission critical computer software
operated by it and/or any of its Subsidiaries is currently capable of
providing, or is being adapted to provide, uninterrupted millennium
functionality to record, store, process and present calendar dates falling on
or after January 1, 2000 in substantially the same manner and with
substantially the same functionality as such mission critical software
records, stores, processes and presents such calendar dates falling on or
before December 31, 1999. To its knowledge, the costs of adaptations referred
to in this clause will not have a Material Adverse Effect with respect to it.
Neither it nor any of its Subsidiaries has received, nor to its
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knowledge are there facts that would reasonably be expected to form the basis
for the issuance of, a "Year 2000 Deficiency Notification Letter" (as such
term is employed in the Federal Reserve's Supervision and Regulatory Letter
No. SR 98-3 (SUP), dated March 4, 1998) or similar notice from any state
banking authority. It has made available to the other party hereto a complete
and accurate copy of its and its Subsidiaries' plan, including an estimate of
anticipated associated costs, for addressing the issues set forth in the Year
2000 guidance papers issued by the Federal Financial Institutions Examination
Council, including the statements dated May 5, 1997, entitled "Year 2000
Project Management Awareness," December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," and October 14,
1998, entitled "Interagency Guidelines Establishing Year 2000 Standards for
Safety and Soundness," as such issues affect any of it or its Subsidiaries.
Between the date of this Agreement and the Effective Time, it shall use
commercially reasonable and practicable efforts to implement such plan.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of AmSouth and First American agrees to use its respective
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 Stockholder Approvals. (a) Each of AmSouth and First American agrees
to take in accordance with applicable law and its respective Constituent
Documents all action necessary to convene a meeting of its respective
stockholders (including any adjournment or postponement, the "AmSouth Meeting"
and the "First American Meeting", respectively), as promptly as practicable, to
consider and vote upon the Share Increase and the adoption and approval of this
Agreement, respectively, as well as any other matters required to be approved by
such entity's stockholders for consummation of the Merger.
(b) The board of directors of First American has adopted resolutions
recommending to the stockholders of First American adoption of this Agreement
and the other matters required to be approved or adopted in order to carry out
the intentions of this Agreement. The board of directors of AmSouth has adopted
resolutions recommending to the shareholders of AmSouth the adoption and the
approval of the Share Increase. Such boards of directors shall at all times
continue such recommendations in effect without qualification and shall use, and
cause AmSouth and First American, respectively, to use reasonable best efforts
to obtain such adoption (it being understood and agreed that the obligations
under this
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sentence shall not be altered by the commencement, proposal, disclosure or
communication of any Acquisition Proposal).
6.03 Registration Statement and Joint Proxy Statement. (a) The parties
agree jointly to prepare a registration statement on Form S-4 or other
applicable form (the "Registration Statement") to be filed by AmSouth with the
SEC in connection with the issuance of AmSouth Common Stock in the Merger
(including the joint proxy statement and prospectus and other proxy solicitation
materials of AmSouth and First American constituting a part thereof (the "Joint
Proxy Statement") and all related documents). The parties agree to cooperate,
and to cause their Subsidiaries to cooperate, with the other party, its counsel
and its accountants, in the preparation of the Registration Statement and the
Joint Proxy Statement; and provided that both parties and their respective
Subsidiaries have cooperated as required above, AmSouth and First American agree
to file the Joint Proxy Statement in preliminary form with the SEC as promptly
as reasonably practicable, and AmSouth agrees to file the Registration Statement
with the SEC as soon as reasonably practicable after any SEC comments with
respect to the preliminary Joint Proxy Statement are resolved. Each of AmSouth
and First American agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. AmSouth also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. First American agrees to furnish to AmSouth all information
concerning First American, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of AmSouth and First American agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (1) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (2) the
Joint Proxy Statement and any amendment or supplement thereto will, at the date
of mailing to stockholders and at the time of the AmSouth Meeting or the First
American Meeting, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which such statement was made, not misleading. Each of AmSouth and First
American further agrees that if it shall become aware prior to the Effective
Date of any information furnished by it that would cause any of the statements
in the Joint Proxy Statement or the Registration Statement to be false or
misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Joint Proxy Statement or the Registration Statement.
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(c) AmSouth agrees to advise First American, promptly after AmSouth
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of AmSouth Common Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
6.04 Press Releases. AmSouth and First American shall consult with each
other before issuing any press release with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party (but after prior consultation, to the extent
practicable in the circumstances) issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of the NYSE. AmSouth and First American shall cooperate to
develop all public announcement materials and make appropriate management
available at presentations related to the transactions contemplated by this
Agreement as reasonably requested by the other party.
6.05 Access; Information. (a) Each of AmSouth and First American agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, it shall afford the other party, and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as any party may reasonably request and, during such period,
it shall furnish promptly to such other party (1) a copy of each material
report, schedule and other document filed by it pursuant to the requirements of
federal or state securities or banking laws, and (2) all other information
concerning the business, properties and personnel of it as the other may
reasonably request.
(b) Each party agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of 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 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(1) was already known to such party, (2) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (3) 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
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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 party of the business and affairs of the
other party, pursuant to this Section 6.05 or otherwise, shall affect or be
deemed to modify or waive any representation, warranty, covenant or agreement in
this Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.06 Acquisition Proposals. Each of AmSouth and First American agrees that
it shall not, and shall cause its Subsidiaries and its and its Subsidiaries'
officers, directors, agents, advisors and affiliates not to, solicit or
encourage inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential information to, or have any discussions
with, any Person relating to, any Acquisition Proposal or waive any provision of
or amend the terms of the AmSouth Rights Agreement or the First American Rights
Agreement, respectively, in respect of an Acquisition Proposal. Each of AmSouth
and First American shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any Persons other than First American or AmSouth, as the case may
be, with respect to any of the foregoing and shall use its reasonable best
efforts to enforce any confidentiality or similar agreement relating to an
Acquisition Proposal. Each of AmSouth and First American shall promptly (within
24 hours) advise the other party following the receipt by AmSouth or First
American, as the case may be, of any Acquisition Proposal and the substance
thereof (including the identity of the person making such Acquisition Proposal),
and shall keep such other party apprised of any developments in respect thereof
on a current basis.
6.07 Affiliate Agreements. (a) Not later than the 15th day prior to the
mailing of the Joint Proxy Statement, (i) AmSouth shall deliver to First
American a schedule of each Person that, to the best of its knowledge, is or is
reasonably likely to be, as of the date of the AmSouth Meeting, deemed to be an
"affiliate" of AmSouth (each, a "AmSouth Affiliate"), as that term is used in
SEC Accounting Series Releases 130 and 135; and (ii) First American shall
deliver to AmSouth a schedule of each person that, to the best of its knowledge,
is or is reasonably likely to be, as of the date of the First American Meeting,
deemed to be an "affiliate" of First American (each, an "First American
Affiliate") as that term is used in Rule 145 under the Securities Act or SEC
Accounting Series Releases 130 and 135.
(b) Each of AmSouth and First American shall use its respective reasonable
best efforts to cause each Person who may be deemed to be a AmSouth Affiliate or
a First American Affiliate to execute and deliver to AmSouth and First American
on or before the date of mailing of the Joint Proxy Statement an agreement in
substantially the form attached hereto as Exhibit C or Exhibit D, respectively.
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(c) AmSouth shall use its best efforts to publish as promptly as
reasonably practicable, 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 figures as contemplated by
and in accordance with the terms of SEC Accounting Series Release No. 135.
6.08 Takeover Laws and Provisions. No party hereto shall take any action
that would cause the transactions contemplated by this Agreement or the Option
Agreements to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect. No party hereto shall take any action that
would cause the transactions contemplated by this Agreement or the Option
Agreements not to comply with any Takeover Provisions and each of them shall
take all necessary steps within its control to make the transactions
contemplated by this Agreement or the Options Agreements comply with (or
continue to comply with) the Takeover Provisions.
6.09 NYSE Listing. AmSouth shall use commercially reasonable efforts to
cause the outstanding shares of AmSouth Common Stock to be issued in the Merger
to be approved for listing on the NYSE, subject to official notice of issuance,
as promptly as practicable after the date hereof, and in any event prior to the
Effective Date.
6.10 Regulatory Applications. (a) AmSouth and First American and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare as promptly as possible all documentation, to effect all
filings and to obtain all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement and First American shall make all
necessary regulatory filings as soon as practicable. Each of AmSouth and First
American shall have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to applicable
laws relating to the exchange of information, with respect to all material
written information submitted to any third party or any Governmental Authority
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that it will
consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with
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any filing, notice or application made by or on behalf of such other party or
any of its Subsidiaries with or to any third party or Governmental Authority.
6.11 Indemnification. (a) Following the Effective Date, AmSouth shall
indemnify, defend and hold harmless the present and former directors and
officers of First American and its Subsidiaries (each, an "Indemnified Party")
against all costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") as
incurred, in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement) to the fullest
extent that First American and its Subsidiaries are permitted to indemnify (and
advance expenses to) their respective directors and officers under the laws of
their respective jurisdictions of incorporation and their respective Constituent
Documents.
(b) For a period of six years from the Effective Time, AmSouth shall use
its reasonable best efforts to provide director's and officer's liability
insurance that serves to reimburse the present and former officers and directors
of First American or any of their respective Subsidiaries (determined as of the
Effective Time) (as opposed to First American or such Subsidiary) with respect
to claims against such directors and officers arising from facts or events
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) which insurance shall contain at
least the same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by First American; provided,
however, that no event shall AmSouth be required to expend more than 200 percent
of the current amount expended by First American (the "Insurance Amount") to
maintain or procure such directors and officers insurance coverage; provided,
further, that if AmSouth is unable to maintain or obtain the insurance called
for by this Section 6.11(b), AmSouth shall use its reasonable best efforts to
obtain as much comparable insurance as is available for the Insurance Amount;
and provided, further, that officers and directors of First American or any
Subsidiary may be required to make application and provide customary
representations and warranties to AmSouth's insurance carrier for the purpose of
obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.11(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify AmSouth thereof; provided that the
failure so to notify shall not affect the obligations of AmSouth under Section
6.11(a) unless and to the extent that AmSouth is actually and materially
prejudiced as a result of such failure.
(d) If AmSouth or any of its successors or assigns shall consolidate with
or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any other entity, then and in each case, AmSouth shall
cause proper provision to be made
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<PAGE>
so that the successors and assigns of AmSouth shall assume the obligations set
forth in this Section 6.11.
(e) The provisions of this Section 6.11 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.12 Benefit Plans. (a) The Surviving Company shall, from and after the
Effective Time, (i) comply with the Benefit Plans of First American (the "First
American Benefit Plans") in accordance with their terms, (ii) provide employees
of First American who remain as employees of the Surviving Corporation with
employee benefit plans no less favorable in the aggregate than those provided to
similarly situated employees of AmSouth, (iii) provide employees of First
American who remain as employees of the Surviving Corporation credit for years
of service with First American or any of its Subsidiaries prior to the Effective
Time for the purpose of eligibility, vesting and benefit accruals (other than
benefit accruals under a defined benefit pension plan), (iv) cause any and all
pre-existing condition limitations (to the extent such limitations did not apply
to a pre-existing condition under comparable First American Benefit Plans) and
eligibility waiting periods under group health plans of AmSouth to be waived
with respect to employees of First American who remain as employees of AmSouth
or its Subsidiaries (and their eligible dependents) and (v) cause to be credited
any deductibles or out-of-pocket expenses incurred by employees of First
American and their beneficiaries and dependents during the portion of the
calendar year prior to their participation in AmSouth Benefit Plans with the
objective that there be no double counting during the year in which the
Effective Date occurs of such deductibles or out-of-pocket expenses. AmSouth,
First American and the Surviving Corporation agree to honor, or to cause to be
honored, in accordance with their terms, all vested or accrued benefit
obligations to, and contractual rights of, current and former employees of First
American and its Subsidiaries, including, without limitation, any benefits or
rights arising as a result of the transactions contemplated by this Agreement
(either alone or in combination with any other event); it being understood and
agreed to by the parties hereto that the transactions contemplated by this
Agreement shall constitute a "change in control" for purposes of all First
American Benefit Plans.
(b) AmSouth, First American and the Surviving Corporation agree to take,
or to cause to be taken, the actions necessary to effectuate the items set forth
on Section 6.12 of the First American Disclosure Schedule and further agree that
no such actions shall be considered to be a violation of any other provision of
this Agreement. Section 6.12 of the First American Disclosure Schedule shall be
deemed incorporated into this Agreement.
6.13 Share Repurchase Programs. AmSouth shall rescind and terminate its
share repurchase program currently in effect. After the date hereof, First
American shall purchase no more than 4,000,000 shares of its Common Stock under
any share repurchase program currently in effect or adopted after the date
hereof.
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<PAGE>
6.14 Notification of Certain Matters. Each of AmSouth and First American
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 Rights Agreements. Each of AmSouth and First American agrees that it
shall maintain the AmSouth Rights Agreement and the First American Rights
Agreement, respectively, as amended pursuant to Section 5.03(w), and shall not
redeem the rights issued pursuant to such agreement or modify such agreement,
except as required to consummate the Merger and fulfill its obligations pursuant
to this Agreement, the Option Agreements and the transactions contemplated
hereby and thereby; provided that if AmSouth or First American redeems the
AmSouth Rights or the First American Rights, as the case may be, in order to
consummate the Merger or fulfill its obligations under this Agreement, the
Option Agreements or the transactions contemplated hereby or thereby, AmSouth or
First American shall simultaneously approve and adopt a new rights plan with
terms substantially the same as those of the AmSouth Rights Agreement. First
American agrees that it will not take any action declaring AmSouth to be, or be
treated as, an "adverse person" for purposes of the First American Rights
Agreement.
6.16 Foundation. At and after the Effective Time, AmSouth shall maintain
First American's charitable commitment to its communities through the First
American charitable foundation. The parties agree that, at and after the
Effective Time, the by-laws of the First American charitable foundation shall be
amended to be substantially in the form that First American has Previously
Disclosed to AmSouth.
6.17 Exemption from Liability Under Section 16(b). Assuming that First
American delivers to AmSouth the Section 16 information in a timely fashion
prior to the Effective Time, the Board of Directors of AmSouth, 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 First American Insiders of AmSouth Common Stock in exchange for
shares of First American Common Stock, and of options to purchase shares of
AmSouth Common Stock upon conversion of options to purchase shares of First
American Common Stock, in each case pursuant to the transactions contemplated
hereby and to the extent such securities are listed in the Section 16
Information, 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)
under the Exchange Act, such that any such receipt shall be so exempt.
6.18 Amendment to the AmSouth Certificate. AmSouth will file an amendment
to the AmSouth Certificate in accordance with Section 242 of the DGCL effecting
the Share Increase upon the approval of the AmSouth stockholders of the Share
Increase.
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<PAGE>
ARTICLE VII
CONDITIONS TO THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of AmSouth and First American to consummate the
Merger is subject to the fulfillment or written waiver by AmSouth and First
American prior to the Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement shall have been duly approved by
the requisite vote of the stockholders of First American, and the Share
Increase shall have been adopted and approved by the shareholders of AmSouth.
(b) Regulatory Approvals. Any consents, waivers, clearances, approvals and
authorizations of Governmental Authorities that are necessary to permit
consummation of the Merger (1) shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof
shall have expired and (2) shall not have imposed a condition on such
approval that would, after the Effective Time, have a Material Adverse Effect
on AmSouth and its Subsidiaries or First American and its Subsidiaries.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Merger. No statute, rule, regulation, order, injunction
or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority which prohibits or makes illegal the consummation of
the Merger.
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and be in
effect and no proceedings for that purpose shall have been initiated by the
SEC and not withdrawn.
(e) Listing. The shares of AmSouth Common Stock to be issued in the Merger
shall have been approved for listing on the NYSE, subject to official notice
of issuance.
(f) Pooling-of-Interests. Each of AmSouth and First American shall have
received a letter from its respective independent public accountants, dated
the Closing Date, in form and substance reasonably satisfactory to AmSouth
and First American, respectively, to the effect that the Merger will qualify
for pooling-of-interests accounting treatment.
(g) AmSouth Certificate. The amendment to the AmSouth Certificate
effecting the Share Increase shall have become effective.
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<PAGE>
7.02 Conditions to Obligation of First American. The obligation of First
American to consummate the Merger is also subject to the fulfillment or written
waiver by First American prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
AmSouth and Merger Sub set forth in this Agreement shall be true and correct
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. First American shall have
received a certificate signed on behalf of AmSouth by the Chief Executive
Officer and Chief Financial Officer of AmSouth to the foregoing effect.
(b) Performance of Obligations of AmSouth. AmSouth shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and First American shall
have received a certificate, dated the Effective Date, signed on behalf of
AmSouth by the Chief Executive Officer and the Chief Financial Officer of
AmSouth to such effect.
(c) Opinion of First American's Counsel. First American shall have
received an opinion of Wachtell, Lipton, Rosen & Katz, special counsel to
First American, dated the Closing Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, (1) the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code, (2) AmSouth, First American and Merger Sub will each be a
party to that reorganization within the meaning of Section 368(b) of the Code
and (3) no gain or loss will be recognized by shareholders of First American
who receive solely shares of AmSouth Common Stock in exchange for all of
their First American Common Stock, except with respect to cash received in
lieu of a fractional share interest in AmSouth Common Stock.
7.03 Conditions to Obligation of AmSouth. The obligation of AmSouth to
consummate the Merger is also subject to the fulfillment, or written waiver by
AmSouth, prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
First American set forth in this Agreement shall be true and correct 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. AmSouth shall have received a certificate
signed on behalf of First American by the Chief Executive Officer and Chief
Financial Officer of First American to the foregoing effect.
(b) Performance of Obligations of First American. First American shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and
AmSouth shall have received a certificate, dated the Effective Date, signed
on behalf of First American
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<PAGE>
by the Chief Executive Officer and the Chief Financial Officer of First
American to such effect.
(c) Opinion of AmSouth's Counsel. AmSouth shall have received an opinion
of Sullivan & Cromwell, counsel to AmSouth, dated the Closing Date, to the
effect that, on the basis of facts, representations and assumptions set forth
in such opinion, (1) the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code and (2) AmSouth, Merger Sub and
First American will each be a party to that reorganization within the meaning
of Section 368(b) of the Code.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Merger may be
abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the mutual
consent of AmSouth and First American, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by AmSouth or First
American, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (1) a breach by the
other party of any representation or warranty contained herein, which breach
cannot be or has not been cured within 30 calendar days after the giving of
written notice to the breaching party of such breach; or (2) a breach by the
other party of any of the covenants or agreements contained herein, which
breach cannot be or has not been cured within 30 calendar days after the
giving of written notice to the breaching party of such breach, provided that
any such breach under clause (1) or (2) would entitle the non-breaching party
not to consummate the Merger under Article VII hereof.
(c) Delay. At any time prior to the Effective Time, by AmSouth or First
American, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Merger is not
consummated by February 15, 2000, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this Section
8.01(c), which action or inaction is in violation of its obligations under
this Agreement.
(d) No Approval. By First American or AmSouth, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board, in
the event the approval of any Governmental Authority required for
consummation of the
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<PAGE>
Merger and the other transactions contemplated by this Agreement shall have
been denied by final nonappealable action of such Governmental Authority.
(e) Stock Option Agreements. By AmSouth in the event that First American
has not executed and delivered the First American Stock Option Agreement on
the day after the date hereof; and by First American in the event that
AmSouth has not executed and delivered the AmSouth Stock Option Agreement on
the day after the date hereof.
8.02 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
no party to this Agreement shall have any liability or further obligation to the
other party hereto except as set forth below and except that termination will
not relieve a breaching party from liability for any breach of this Agreement
giving rise to such termination and except that Sections 6.05, 8.02 and Section
9.05 shall survive any termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than Section
6.11 and this Article IX which shall survive the Effective Time).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (a) waived by the party benefitted by the provision, or (b)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that (1) after the
First American Meeting, this Agreement may not be amended if it would violate
Tennessee law and (2) after the AmSouth Meeting, this Agreement may not be
amended if it would violate Delaware law.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
9.05 Expenses. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC fees shall be shared equally between First
American and AmSouth.
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<PAGE>
9.06 Notices. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to AmSouth, to:
AmSouth Bank Law Department
1901 Sixth Avenue North
9th Floor AmSouth-Harbert Plaza
Birmingham, Alabama 35203
Attention: Stephen A. Yoder, Esq.
Facsimile: (205) 583-4497
With a copy to:
H. Rodgin Cohen, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
If to First American, to:
First American Corporation
First American Center
Attention: Mary Neil Price, Esq.
Facsimile: (615) 736-6735
With a copy to:
Edward D. Herlihy, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Facsimile: (212) 403-2000
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements heretofore made. No representation,
warranty, inducement, promise, understanding or condition not set forth in this
Agreement has been made or relied on by any party in entering into this
Agreement or the Option Agreements. Except for Section 6.11 and as specifically
provided in Schedule 6.12 of the First American Disclosure Schedule, nothing in
this Agreement expressed or implied is intended to confer upon any Person, other
than the parties
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<PAGE>
hereto or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.08 Severability. Except to the extent that application of this Section
9.08 would have a Material Adverse Effect on any party or the Surviving
Corporation, any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.09 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, the parties may
mutually agree to revise the structure of the Merger and related transactions
provided that each of the transactions comprising such revised structure shall
(1) not change the amount or form of consideration to be received by the
shareholders of First American and the holders of First American Stock Options,
(2) be capable of consummation in as timely a manner as the structure
contemplated herein and (3) not otherwise be prejudicial to the interests of the
stockholders of either party. This Agreement and any related documents shall be
appropriately amended in order to reflect any such revised structure.
9.10 Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
AMSOUTH BANCORPORATION
By: /s/ C. Dowd Ritter
---------------------------------
Name: C. Dowd Ritter
Title: Chairman, President
and Chief Executive
Officer
ALPHA/FOXTROT ACQUISITION CORP.
By: /s/ Stephen A. Yoder
---------------------------------
Name: Stephen A. Yoder
Title: Executive Vice President
and General Counsel
FIRST AMERICAN CORPORATION
By: /s/ Dennis C. Bottorff
---------------------------------
Name: Dennis C. Bottorff
Title: Chairman, Chief Executive
Officer, and Director
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 1, 1999 (this "Agreement"), between
First American Corporation, a Tennessee corporation ("Grantee"), and AmSouth
Bancorporation, a Delaware corporation ("Issuer").
RECITALS
A. Merger Agreement. Grantee and Issuer have entered into an Agreement
and Plan of Merger, dated as of May 31, 1999 (the "Merger Agreement"), which
agreement was executed and delivered on the day preceding the date of this Stock
Option Agreement; and
B. Option. As a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, 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 an aggregate of
35,025,240 fully paid and nonassessable shares of the common stock, par value
$1.00 per share, of Issuer ("Common Stock") at a price per share equal to
$28.5983; provided, however, that in no event shall the number of shares for
which this Option is exercisable exceed 19.9% of the issued and outstanding
shares of Common Stock. 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 issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, 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 l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole
or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of
<PAGE>
this Section 2) within six (6) months following such Subsequent Triggering Event
(or such later period as provided in Section 10). Each of the following shall be
an Exercise Termination Event: (i) the Effective Time 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 8.01(b) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional) (a "Listed Termination"); or (iii) the passage of eighteen
(18) months (or such longer period as provided in Section 10) after termination
of the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination. The term "Holder" shall mean the
holder or holders of the Option. Notwithstanding anything to the contrary
contained herein, the Option may not be exercised at any time when Grantee shall
be in material breach of any of its covenants or agreements contained in the
Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.01(b) thereof.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) (the "Issuer Subsidiaries"), 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 (the "Issuer Board") shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction other than as contemplated by the Merger Agreement. For purposes
of this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary (other than mergers, consolidations or similar transactions
involving solely Issuer and/or one or more wholly-owned Subsidiaries of the
Issuer, provided, any such transaction is not entered into in violation of
the terms of the Merger Agreement), (y) a purchase, lease or other
acquisition of all or any substantial part of the assets or deposits of
Issuer or any Issuer Subsidiary, or (z) 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 any
Issuer Subsidiary and (b) "Subsidiary" shall have the meaning set forth in
Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary 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);
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<PAGE>
(iii) The stockholders of Issuer shall have voted and failed to approve the
Merger Agreement and the Merger at a meeting which has been held for that
purpose or any adjournment or postponement thereof, or such meeting shall
not have been held in violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement if, prior to such
meeting (or if such meeting shall not have been held or shall have been
canceled, prior to such termination), it shall have been publicly announced
that any person (other than Grantee or any of its Subsidiaries) shall have
made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in any
manner adverse in any respect to Grantee its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized, recommended, proposed
(or publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the SEC
with respect to a potential vote by its stockholders to approve the issuance
of shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement after an overture is made by a third party
to Issuer or its stockholders to engage in an Acquisition Transaction, and
(a) following such breach Grantee would be entitled to terminate the Merger
Agreement (whether immediately or after the giving of notice or passage of
time or both) and (b) such breach shall not have been cured prior to the
Notice Date (as defined in Section 2(e)); or
(vii) Any person other than Grantee or any Grantee Subsidiary, without
Grantee's prior written consent, shall have filed an application or notice
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other federal or state bank regulatory or antitrust
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 any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
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<PAGE>
(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage referred
to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event (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
(or any portion thereof), it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 60 business days from
the Notice Date for the closing of such purchase (the "Closing Date"); provided,
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing 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 (i) 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 and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement 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.
(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
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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 of 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 in the opinion of counsel to the Holder,
in form and substance reasonably satisfactory to the Issuer; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed 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 applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 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 or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
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 or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and
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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 Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization, stock
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Option Price therefor, shall
be adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Grantee shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Grantee would have received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Common Stock are issued after the date
of this Agreement (other than pursuant to an event described in the first
sentence of this Section 5), the number of shares of Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding, without giving
effect to any shares subject to or issued pursuant to the Option.
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 six (6) months (or such later period as provided in Section 10) 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
registration statement under the 1933 Act
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covering 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
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 promptly 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 Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers' fees and
the fees and disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer 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 offer and sale
of the 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;
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 33 1/3% 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 Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. 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 such underwriting agreements for 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 the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal
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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 prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer (or any successor thereto)
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 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 any substantial part of Issuer's assets or deposits,
the sum of the net price paid in such sale for such assets or deposits and the
current market value of the remaining net 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 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 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. The
Holder shall also represent and warrant that it has sole record and beneficial
ownership of such Option Shares and that such Option Shares are then free and
clear of all liens. As promptly as practicable, and in any event within five (5)
business days after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating thereto, 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 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, or as a consequence of administrative policy, 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 no longer prohibited from delivering, within five (5) business days
after the date on which Issuer is no longer so prohibited; provided,
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however, that if Issuer at any time after delivery of a notice of repurchase
pursuant to paragraph (b) of this Section 7 is prohibited under applicable law
or regulation, or as a consequence of administrative policy, 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 reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether 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 and/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 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 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, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of (A) beneficial ownership of 50% or more of the then
outstanding Common Stock or (B) beneficial ownership of 20% or more of the
then outstanding Common Stock if Issuer shall have violated Section 6.15 of
the Merger Agreement; or
(ii) the consummation of any Acquisition Transaction described in Section
2(b)(i) hereof, except that the percentage referred to in clause (z) shall
be 25%.
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 a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or
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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
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer), (ii)
the acquiring person in a plan of exchange in which Issuer is acquired,
(iii) the Issuer in a merger or plan of exchange in which Issuer is the
continuing or surviving or acquiring person and (iv) the transferee of all
or a substantial part of Issuer's assets or deposits (or the assets or
deposits of any Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined in
Section 7.
(iv) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for one (1) year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect to a
share of common stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the Option, provided
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement 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 was exercisable
immediately prior to the
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event described in the first sentence of Section 8(a), 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 was exercisable immediately prior to the event described in the first
sentence of Section 8(a) 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.
(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 issuer of the Substitute Option (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 rights 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/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute
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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 (5) 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 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, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer 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 Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer 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, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/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 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, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after
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such date, the Substitute Option Holder shall nevertheless have the right to
exercise the Substitute Option until the expiration of such 30-day period.
10. The periods for exercise of certain rights under Sections 2, 6, 7, 9 and
14 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder, Owner,
Substitute Option Holder or Substitute Share Owner, as the case may be, is using
commercially reasonable efforts to obtain such regulatory approvals), and for
the expiration of all statutory waiting periods; (ii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise;
and (iii) when there exists an injunction, order or judgment that prohibits or
delays exercise of such right.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has the requisite 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
Issuer Board prior to the date hereof 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.
(ii) 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 thereto, 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.
(b) Grantee hereby represents and warrants to Issuer as follows: Grantee has
the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Grantee and the performance of its obligations
hereunder by the Grantee have been duly and validly authorized by the Board of
Directors of Grantee and no other corporate proceedings on the part of the
Grantee are necessary to authorize this Agreement or for Grantee to perform its
obligations hereunder. This Agreement has been duly and validly executed and
delivered by Grantee.
(c) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed or except in a transaction registered or exempt from registration under
the 1933 Act.
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12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial 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; provided, however,
that until the date fifteen (15) days following the date on which the Federal
Reserve Board has approved an application by Grantee 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.
13. Each of Grantee and Issuer will use its reasonable 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, 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.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price. The "Surrender Price" shall be equal to $225 million (i)
plus, if applicable, Grantee's purchase price with respect to any Option Shares
and (ii) minus, if applicable, the excess of (A) the net price, if any, received
by Grantee or a Grantee Subsidiary pursuant to the sale of Option Shares (or any
other securities into which such Option Shares were converted or exchanged) to
any unaffiliated party, over (B) Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering 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
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, 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,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five (5) business days after the date on which
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<PAGE>
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of surrender pursuant to paragraph (b) of this
Section 14 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, from paying to Grantee the Surrender Price in full,
(i) Issuer shall (A) use its reasonable 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 five (5) 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, as
well as 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 to Issuer and, upon delivery of
such notice of revocation, the Exercise Termination Date shall be extended to a
date six (6) months from the date on which the Exercise Termination Date would
have occurred if not for the provisions of this Section 14(c) (during which
period Grantee may exercise any of its rights hereunder, including any and all
rights pursuant to this Section 14).
15. 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. In connection therewith, both
parties waive the posting of any bond or similar requirement.
16. 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 is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
19. 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.
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<PAGE>
20. 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.
21. 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 assignees.
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
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
AMSOUTH BANCORPORATION
By: /s/ Stephen A. Yoder
---------------------------------
Name: Stephen A. Yoder
Title: Executive Vice President
and General Counsel
FIRST AMERICAN CORPORATION
By: /s/ Dennis C. Bottorff
---------------------------------
Name: Dennis C. Bottorff
Title: Chairman, Chief Executive
Officer, and Director
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 1, 1999 (this "Agreement"), between
AmSouth Bancorporation, a Delaware corporation ("Grantee"), and First American
Corporation, a Tennessee corporation ("Issuer").
RECITALS
A. Merger Agreement. Grantee and Issuer have entered into an Agreement
and Plan of Merger, dated as of May 31, 1999 (the "Merger Agreement"), which
agreement was executed and delivered on the day preceding the date of this Stock
Option Agreement; and
B. Option. As a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, 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 an aggregate of
23,250,165 fully paid and nonassessable shares of the common stock, par value
$2.50 per share, of Issuer ("Common Stock") at a price per share equal to
$40.1625; provided, however, that in no event shall the number of shares for
which this Option is exercisable exceed 19.9% of the issued and outstanding
shares of Common Stock. 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 issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, 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 l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole
or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of
<PAGE>
this Section 2) within six (6) months following such Subsequent Triggering Event
(or such later period as provided in Section 10). Each of the following shall be
an Exercise Termination Event: (i) the Effective Time 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 8.01(b) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional) (a "Listed Termination"); or (iii) the passage of eighteen
(18) months (or such longer period as provided in Section 10) after termination
of the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination. The term "Holder" shall mean the
holder or holders of the Option. Notwithstanding anything to the contrary
contained herein, the Option may not be exercised at any time when Grantee shall
be in material breach of any of its covenants or agreements contained in the
Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.01(b) thereof.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) (the "Issuer Subsidiaries"), 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 (the "Issuer Board") shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction other than as contemplated by the Merger Agreement. For purposes
of this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary (other than mergers, consolidations or similar transactions
involving solely Issuer and/or one or more wholly-owned Subsidiaries of the
Issuer, provided, any such transaction is not entered into in violation of
the terms of the Merger Agreement), (y) a purchase, lease or other
acquisition of all or any substantial part of the assets or deposits of
Issuer or any Issuer Subsidiary, or (z) 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 any
Issuer Subsidiary and (b) "Subsidiary" shall have the meaning set forth in
Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary 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);
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<PAGE>
(iii) The stockholders of Issuer shall have voted and failed to approve
the Merger Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have
been canceled prior to termination of the Merger Agreement if, prior to such
meeting (or if such meeting shall not have been held or shall have been
canceled, prior to such termination), it shall have been publicly announced
that any person (other than Grantee or any of its Subsidiaries) shall have
made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in any
manner adverse in any respect to Grantee its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized, recommended, proposed
(or publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the SEC
with respect to a potential vote by its stockholders to approve the issuance
of shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement after an overture is made by a third party
to Issuer or its stockholders to engage in an Acquisition Transaction, and
(a) following such breach Grantee would be entitled to terminate the Merger
Agreement (whether immediately or after the giving of notice or passage of
time or both) and (b) such breach shall not have been cured prior to the
Notice Date (as defined in Section 2(e)); or
(vii) Any person other than Grantee or any Grantee Subsidiary, without
Grantee's prior written consent, shall have filed an application or notice
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other federal or state bank regulatory or antitrust
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 any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
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<PAGE>
(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage referred
to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event (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
(or any portion thereof), it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 60 business days from
the Notice Date for the closing of such purchase (the "Closing Date"); provided,
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing 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 (i) 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 and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement 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.
(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
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<PAGE>
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 of 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 in the opinion of counsel to the Holder,
in form and substance reasonably satisfactory to the Issuer; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed 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 applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 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 or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
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 or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and
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<PAGE>
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 Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization, stock
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Option Price therefor, shall
be adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Grantee shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Grantee would have received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Common Stock are issued after the date
of this Agreement (other than pursuant to an event described in the first
sentence of this Section 5), the number of shares of Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding, without giving
effect to any shares subject to or issued pursuant to the Option.
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 six (6) months (or such later period as provided in Section 10) 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
registration statement under the 1933 Act
-6-
<PAGE>
covering 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
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 promptly 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 Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers' fees and
the fees and disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer 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 offer and sale
of the 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;
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 33 1/3% 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 Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. 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 such underwriting agreements for 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 the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal
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<PAGE>
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 prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer (or any successor thereto)
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 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 any substantial part of Issuer's assets or deposits,
the sum of the net price paid in such sale for such assets or deposits and the
current market value of the remaining net 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 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 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. The
Holder shall also represent and warrant that it has sole record and beneficial
ownership of such Option Shares and that such Option Shares are then free and
clear of all liens. As promptly as practicable, and in any event within five (5)
business days after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating thereto, 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 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, or as a consequence of administrative policy, 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 no longer prohibited from delivering, within five (5) business days
after the date on which Issuer is no longer so prohibited; provided,
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<PAGE>
however, that if Issuer at any time after delivery of a notice of repurchase
pursuant to paragraph (b) of this Section 7 is prohibited under applicable law
or regulation, or as a consequence of administrative policy, 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 reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether 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 and/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 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 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, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of (A) beneficial ownership of 50% or more of the then
outstanding Common Stock or (B) beneficial ownership of 20% or more of the
then outstanding Common Stock if Issuer shall have violated Section 6.15 of
the Merger Agreement; or
(ii)the consummation of any Acquisition Transaction described in Section
2(b)(i) hereof, except that the percentage referred to in clause (z) shall
be 25%.
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 a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or
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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
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer), (ii)
the acquiring person in a plan of exchange in which Issuer is acquired,
(iii) the Issuer in a merger or plan of exchange in which Issuer is the
continuing or surviving or acquiring person and (iv) the transferee of all
or a substantial part of Issuer's assets or deposits (or the assets or
deposits of any Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined in
Section 7.
(iv) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for one (1) year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect to a
share of common stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the Option, provided
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement 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 was exercisable
immediately prior to the
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event described in the first sentence of Section 8(a), 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 was exercisable immediately prior to the event described in the first
sentence of Section 8(a) 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.
(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 issuer of the Substitute Option (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 rights 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/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute
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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 (5) 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 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, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer 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 Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer 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, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/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 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, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after
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such date, the Substitute Option Holder shall nevertheless have the right to
exercise the Substitute Option until the expiration of such 30-day period.
10. The periods for exercise of certain rights under Sections 2, 6, 7, 9 and
14 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder, Owner,
Substitute Option Holder or Substitute Share Owner, as the case may be, is using
commercially reasonable efforts to obtain such regulatory approvals), and for
the expiration of all statutory waiting periods; (ii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise;
and (iii) when there exists an injunction, order or judgment that prohibits or
delays exercise of such right.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has the requisite 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
Issuer Board prior to the date hereof 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.
(ii)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
thereto, 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.
(b) Grantee hereby represents and warrants to Issuer as follows: Grantee has
the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Grantee and the performance of its obligations
hereunder by the Grantee have been duly and validly authorized by the Board of
Directors of Grantee and no other corporate proceedings on the part of the
Grantee are necessary to authorize this Agreement or for Grantee to perform its
obligations hereunder. This Agreement has been duly and validly executed and
delivered by Grantee.
(c) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed or except in a transaction registered or exempt from registration under
the 1933 Act.
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<PAGE>
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial 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; provided, however,
that until the date fifteen (15) days following the date on which the Federal
Reserve Board has approved an application by Grantee 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.
13. Each of Grantee and Issuer will use its reasonable 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, 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.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price. The "Surrender Price" shall be equal to $225 million (i)
plus, if applicable, Grantee's purchase price with respect to any Option Shares
and (ii) minus, if applicable, the excess of (A) the net price, if any, received
by Grantee or a Grantee Subsidiary pursuant to the sale of Option Shares (or any
other securities into which such Option Shares were converted or exchanged) to
any unaffiliated party, over (B) Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering 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
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, 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,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five (5) business days after the date on which
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Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of surrender pursuant to paragraph (b) of this
Section 14 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, from paying to Grantee the Surrender Price in full,
(i) Issuer shall (A) use its reasonable 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 five (5) 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, as
well as 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 to Issuer and, upon delivery of
such notice of revocation, the Exercise Termination Date shall be extended to a
date six (6) months from the date on which the Exercise Termination Date would
have occurred if not for the provisions of this Section 14(c) (during which
period Grantee may exercise any of its rights hereunder, including any and all
rights pursuant to this Section 14).
15. 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. In connection therewith, both
parties waive the posting of any bond or similar requirement.
16. 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 is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
19. 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.
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20. 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.
21. 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 assignees.
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
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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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.
AMSOUTH BANCORPORATION
By /s/ Stephen A. Yoder
-----------------------------
Name: Stephen A. Yoder
Title: Executive Vice President
and General Counsel
FIRST AMERICAN CORPORATION
By /s/ Dennis C. Bottorff
-----------------------------
Name: Dennis C. Bottorff
Title: Chairman, Chief Executive
Officer, and Director
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