[Execution Copy]
SCHEDULE 13D
Amendment No. N/A
Name of Issuer: Allegiance Banc Corporation
Security: common stock, par value $1.00 per share
Cusip #: 01747F102
Name of Contact: Alfred B. Whitt, Senior VP and Secretary
F&M National Corporation
38 Rouss Avenue
Winchester, Virginia 22604
(540) 665-4200
Date of event: April 22, 1996
Filing Fee: Yes
Cusip # 01747F102
Item 1: Reporting Person - F&M National Corporation - (Tax ID: 54-0857462)
Item 4: WC
Item 6: Commonwealth of Virginia
Item 7: 343,785 (when and if option is exercised)
Item 8: None
Item 9: 343,785 (when and if option is exercised)
Item 10: None
Item 11: 343,785 (when and if option is exercised)
Item 13: 19.9%
Item 14: CO
Item 1. Security and Interest.
This statement relates to an option to purchase
shares of common stock, $1.00 par value per share (the "Allegiance Common
Stock"), of Allegiance Banc Corporation, a Delaware corporation ("Allegiance").
The address of the principal office of Allegiance is 4719 Hampden Lane,
Bethesda, Maryland 20814.
Item 2. Identity and Background.
This statement is filed by F&M National Corporation,
a Virginia corporation ("F&M"). F&M is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. The address of F&M's principal
executive office is located at 38 Rouss Avenue, P.O. Box 2800, Winchester,
Virginia 22604.
The name, residence or business address, principal
occupation or employment and principal business address of any corporation or
other organization in which such employment is conducted as to each of the
directors and non-director executive officers of F&M is set forth on Annex A
hereto and incorporated herein by reference. All such individuals are United
States citizens.
During the last five years, neither F&M, nor, to the
best knowledge of F&M, any executive officer or director of F&M has (i) been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or (ii) been a party to a civil proceeding before a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
F&M has the option (the "Option"), exercisable only
in certain circumstances that have not yet occurred, to acquire up to 19.9% of
the aggregate shares of Allegiance Common Stock that would be outstanding
immediately after the issuance of shares in respect of the Option, at a price of
$11.50 per share, pursuant to a certain Stock Option Agreement dated as of April
22, 1996, by and between F&M and Allegiance (the "Option Agreement"), a copy of
which is attached hereto as Exhibit A and incorporated herein by reference.
The Option is exercisable in whole or in part, but
subject to any required regulatory approvals, at any time after a "Purchase
Event" shall occur. A Purchase Event, as defined in the Option Agreement, is any
of the following: (1) Allegiance or Allegiance Bank, N.A. (the "Bank"), without
having received F&M's prior written consent, shall have entered into an
agreement with any person to (a) acquire, merge or consolidate, or enter into
any similar transaction, with Allegiance or the Bank, (b) purchase, lease or
otherwise acquire all or substantially all of the assets of Allegiance or the
Bank or (c) purchase or otherwise acquire securities representing 10% or more of
the voting power of Allegiance or the Bank, (2) any person shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 20% or more
of the outstanding shares of Allegiance Common Stock after the date of the
Option Agreement (the term "beneficial ownership" for purposes of the Option
Agreement having the meaning assigned thereto in Section 13(d) of the Securities
and Exchange Act of 1934, as amended, and the regulations promulgated thereunder
(the "Exchange Act")), or (3) any person shall have made a bona fide proposal to
Allegiance by public announcement or written communication that is or becomes
the subject of public disclosure to acquire Allegiance or the Bank by merger,
share exchange, consolidation, purchase of all or substantially all of its
assets or any other similar transaction, and following such bona fide proposal
the shareholders of Allegiance vote not to approve the "Merger Agreements" (as
hereafter defined). The Option shall terminate on the earliest to occur of (A)
the "Effective Date" of the "Merger" contemplated by the Merger Agreements (as
such terms are defined in the Merger Agreements); (B) upon termination of the
Merger Agreements in accordance with the provisions thereof, other than a
termination based upon, following or in connection with either (i) a material
breach by Allegiance of a Specified Covenant (as defined in the Option
Agreement) or (ii) the failure of Allegiance to obtain shareholder approval of
the Merger Agreements by the vote required under applicable law, in the case
that either (i) or (ii) follow the occurrence of a Purchase Event; or (C) 12
months after termination of the Merger Agreements based upon a material breach
by Allegiance of a Specified Covenant or the failure of Allegiance to obtain
shareholder approval of the Merger Agreements by the vote required under
applicable law, in either case following the occurrence of a Purchase Event.
The grant of the Option by Allegiance was a condition
and inducement to F&M's willingness to enter into the Agreement and Plan of
Reorganization and a related Plan of Merger dated as of April 22, 1996, by and
between F&M and Allegiance (the "Merger Agreements"), a copy of which is
attached hereto as Exhibit B and incorporated herein by reference.
In the event that F&M acquires shares of Allegiance
Common Stock pursuant to the Option Agreement, it is currently anticipated that
F&M would pay cash for such shares.
The foregoing summary of the terms of the Option
Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the Option Agreement, which is attached hereto as
Exhibit A an incorporated herein by reference.
Item 4. Purpose of Transaction.
The grant of the Option, which is exercisable only in
certain circumstances, was a condition and inducement to F&M's entry into the
Merger Agreements. Pursuant to the terms of the Merger Agreements, Allegiance
will, subject to certain conditions being satisfied or waived, be merged with
and into F&M (the "Merger"), and F&M will survive the merger (the "Surviving
Corporation"). Upon the effectiveness of the Merger, each outstanding share of
Allegiance Common Stock will be converted into the number of shares of common
stock, $2.00 par value, of F&M that equals $15.00. Fractional shares will not be
issued, but the pro rata portion of the net proceeds of the sale of all such
shares will be paid in cash to the persons entitled thereto. Upon the
effectiveness of the Merger, the directors of F&M immediately prior to the
Merger will thereafter be the directors of the Surviving Corporation and the
officers of F&M immediately prior to the Merger will thereafter be the officers
of the Surviving Corporation.
The foregoing summary of the terms of the Merger
Agreements does not purport to be complete and is qualified in its entirety by
reference to the full text of the Merger Agreements, which is attached hereto as
Exhibit B and incorporated herein by reference
Item 5. Interest in Securities of Issuer.
F&M has the Option, exercisable only in certain
circumstances, to acquire up to 19.9% of the issued and outstanding shares of
Allegiance Common Stock. F&M currently owns no shares of Allegiance Common
Stock. Based upon the representations of Allegiance contained in the Merger
Agreements, there were 1,727,563 shares of Allegiance Common Stock issued and
outstanding as of April 22, 1996; based upon such representations, the Option is
exercisable for 343,785 shares of Allegiance Common Stock, or approximately
19.9% of the outstanding shares of Allegiance Common Stock before giving effect
to the exercise of the Option. When and if F&M acquires such shares, it will
have sole voting and investment power with respect to such shares.
To the best knowledge of F&M, none of F&M's directors
and executive officers beneficially own any shares of Allegiance Common Stock.
As of the date of the Option Agreement, F&M did not
own, either directly or beneficially, any shares of Allegiance Common Stock.
Subsequently, F&M purchased 8,000 shares of Allegiance Common Stock in one or
more open market transaction(s). Aside from such purchase, there have been no
transactions in shares of the Allegiance Common Stock by F&M, or, to the best
knowledge of F&M, by any of F&M's directors and executive officers, during the
past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
Other than (i) the Merger Agreements described in
response to Item 4 (which response is incorporated herein by reference) and the
transactions contemplated thereby, and (ii) the Option Agreement described in
response to Item 3 (which response is incorporated herein by reference) an the
transactions contemplated thereby, there are no contracts, arrangements,
understandings or relationships between F&M and any other person, or, to the
best knowledge of F&M, among any of F&M's executive officers and directors or
between any of F&M's executive officers and directors and any other person, with
respect to securities of Allegiance.
The foregoing summaries of the terms of (a) the
Merger Agreements and (b) the Option Agreement do not purport to be complete and
are qualified in their entirety by reference to the full text of the Merger
Agreements and the Option Agreement, which are attached hereto as Exhibit B and
Exhibit A, respectively, and incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
(1) Stock Option Agreement dated as of April 22, 1996
by and between F&M and Allegiance.
(2) Agreement and Plan of Reorganization dated as of
April 22, 1996 by and between F&M and Allegiance.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: May 1, 1996 F&M NATIONAL CORPORATION
By: /s/ Alfred B. Whitt
Alfred B. Whitt, Secretary
<PAGE>
ANNEX A
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<CAPTION>
Principal Occupation For the Last
Nominee And (Age) Director Since Five Years and Other Information
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Frank Armstrong, III (59) 1985 Chairman, President and Chief Executive
Officer of National Fruit Product
Company, Inc.
Bus. Address: P.O. Box 2040
Winchester, VA 22604
James L. Bowman (68) 1970 Chairman of the Board, F&M Bank-
Martinsburg since 1986; retired
President of Bowman Trucking
Company.
Bus. Address: P.O. Box 6
Stephens City, VA 22655
William H. Clement (68) 1988 Vice Chairman, Hidden Creek Industries,
Inc.Retired Chairman of the Board of
Automotive Industries, Inc. and Vice
Chairman of Automotive Industries
Holding, Inc.
Bus. Address: 117 Forrest Ridge Road
Winchester, VA 22602
W. M. Feltner (76) 1970 Chairman of the Board and Chief
Executive Officer of F&M; Chairman of
the Board of F&M Bank-Winchester.
Bus. Address: P.O. Box 2800
Winchester, VA 22604
William R. Harris (67) 1986 Chairman of the Board, F&M Bank-
Richmond; Chairman of the Board of
Harris Heating & Plumbing, Inc., since
1952.
Bus. Address: 11020 Richardson Road
Ashland, VA 23005
L. David Horner, III (61) 1986 Chairman of the Board of Horner
Properties, Inc., since 1990
Bus. Address: 18 Simara Street
Stuart, FL 34996
Jack R. Huyett (63) 1990 President and Chief Administrative
Officer of F&M since 1992; President of
F&M Bank-Blakeley from 1969 to 1992.
Bus. Address: P.O. Box 2800
Winchester, VA 22604
William A. Julias (61) 1980 Chairman of the Board of F&M Bank-
Massanutten since 1975; President
of the law firm of Julias, Blatt &
Wolfe, P. C. Practicing attorney since
1960.
Bus. Address: P.O. Box 671
Harrisonburg, VA 22801
George L. Romine (84) 1986 Consultant, Sales Management
Retired as Vice President and
Director of Abex Corporation; Executive
Director of the Winchester-Frederick
County Economic Development Commission
from 1983 to 1990.
Bus. Address: 12 Rouss Avenue
Winchester, VA 22601
John S. Scully, III (85) 1970 President of Winchester Cold Storage
Co., Inc., since 1984.
Bus. Address: P.O. Box 45
Winchester, VA 22604
J. D. Shockey, Jr. (53) 1970 President of Shockey Industries, Inc.,
a general construction contractor.
Bus. Address: P.O. Box 2530
Winchester, VA 22604
Fred G. Wayland, Jr. (67) 1994 Retired in 1992 as President and Chief
Executive Officer of PNB Financial
Corporation.
Bus. Address: P.O. Box 6
Orlean, VA 22181
<PAGE>
C. Ridgely White (84) 1970 Vice Chairman of the Board of F&M
National Corporation, Retired Chairman
of the Board of J. V. Arthur, Inc., a
general insurance brokerage firm. Vice
Chairman of the board of Directors of
F&M National Corporation.
Bus. Address: 12 Rouss Avenue
Winchester, VA 22601
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NON-DIRECTOR EXECUTIVE OFFICER
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Alfred B. Whitt (57) Senior Vice President, Senior Financial
Officer and Secretary of F&M and F&M
Bank-Winchester.
Bus. Address: P.O. Box 2800
Winchester, VA 22604
Betty H. Carroll (58) 1986 Senior Vice President of F&M since
1987; President and Chief Executive
Officer of F&M Bank-Winchester.
Bus. Address: P.O. Box 2800
Winchester, VA 22604
F. Dixon Whitworth, Jr. (51) 1985 Executive Vice President of F&M since
1985.
Bus. Address: P. O. Box 2800
Winchester, VA 22604
</TABLE>
<PAGE>
Exhibit A
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of April 22, 1996 (the
"Option Agreement"), by and between ALLEGIANCE BANC CORPORATION, a Delaware
corporation ("ABC"), and F&M NATIONAL CORPORATION, a Virginia corporation
("F&M").
WITNESSETH
WHEREAS, the Boards of Directors of the parties hereto
approved an Agreement and Plan of Reorganization (the "Reorganization
Agreement") and have adopted a related Plan of Merger, dated as of the date
hereof (together referred to herein as the "Merger Agreements"), providing for
the merger of ABC with and into F&M (the "Merger"); and
WHEREAS, as a condition to and as consideration for F&M's
entry into the Merger Agreements and to induce such entry, ABC has agreed to
grant to F&M the option set forth herein to acquire authorized but unissued
shares of ABC Common Stock;
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. Definitions
Capitalized terms used but not defined herein and defined in
the Merger Agreements shall have the same meanings as in the Merger Agreements.
2. Grant of Option
Subject to the terms and conditions set forth herein, ABC
hereby grants to F&M an option (the "Option") to acquire up to 343,785 shares of
ABC Common Stock at a price of $11.50 per share (the "Exercise Price") in
exchange for the consideration provided in Section 4 hereof; provided, however,
that in the event ABC issues or agrees to issue any shares of ABC Common Stock
(other than as permitted under the Merger Agreements) at a price less than
$11.50 per share (as adjusted pursuant to Section 6 hereof), the Exercise Price
shall be equal to such lesser price. Notwithstanding anything else in this
Option Agreement to the contrary, the number of shares of ABC Common Stock
subject to the Option shall be reduced if and to the extent necessary so that
the number of shares for which this Option is exercisable shall not exceed 19.9%
of the issued and outstanding shares of ABC Common Stock, before giving effect
to the exercise of the Option. The number of shares of ABC Common Stock that may
be received upon the exercise of the Option is subject to adjustment as set
forth herein.
<PAGE>
3. Exercise of Option
(a) Subject to compliance with applicable law and regulation,
F&M may exercise the Option, in whole or part, at any time or from time to time
if a Purchase Event (as defined below) shall have occurred and be continuing.
(b) ABC shall notify F&M promptly in writing of the occurrence
of any transaction, offer or event giving rise to a Purchase Event. If more than
one of the transactions, offers or events giving rise to a Purchase Event is
undertaken or effected by the same person or occurs at the same time, then all
such transactions, offers and events shall give rise only to one Purchase Event,
which Purchase Event shall be deemed continuing for all purposes hereof until
all such transactions are terminated or abandoned by such person and all such
events have ceased or ended.
(c) In the event that F&M wishes to exercise the Option, it
shall send ABC a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of shares it will acquire
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 transaction (the "Closing Date"); provided that if prior
notification to or approval of any federal or state regulatory agency is
required in connection with such acquisition, F&M shall promptly file the
required notice or application for approval and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification period has
expired or been terminated or such approval has been obtained and any requisite
waiting period shall have passed.
(d) The Option shall expire and terminate, to the extent not
previously exercised, upon the earlier of: (i) the Effective Date of the Merger;
(ii) upon termination of the Merger Agreements in accordance with the provisions
thereof, other than a termination based upon, following or in connection with
either (A) a material breach by ABC of a Specified Covenant (as defined below)
or (B) the failure of ABC to obtain shareholder approval of the Merger
Agreements by the vote required under applicable law, in the case that either
(A) or (B) follow the occurrence of a Purchase Event; or (iii) 12 months after
termination of the Merger Agreements based upon a material breach by ABC of a
Specified Covenant or the failure of ABC to obtain shareholder approval of the
Merger Agreements by the vote required under applicable law, in either case
following the occurrence of a Purchase Event.
(e) As used herein, a "Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(1) ABC or Allegiance Bank, N.A. (the "Bank"),
without having received F&M's prior written consent, shall have entered
into an agreement with any person to (i) acquire, merge or consolidate,
or enter into any similar transaction, with ABC or the Bank, (ii)
purchase, lease or otherwise acquire all or substantially all of the
assets of ABC or the Bank or (iii) purchase or otherwise acquire,
directly from ABC or the Bank, securities representing 10% or more of
the voting power of ABC or the Bank;
(2) any person shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 20% or more
of the outstanding shares of ABC Common Stock after the date hereof
(the term "beneficial ownership" for purposes of this Option Agreement
having the meaning assigned thereto in Section 13(d) of the Exchange
Act and the regulations promulgated thereunder); or
(3) any person shall have made a bona fide proposal
to ABC by public announcement or written communication that is or
becomes the subject of public disclosure to acquire ABC or the Bank by
merger, share exchange, consolidation, purchase of all or substantially
all of its assets or any other similar transaction, and following such
bona fide proposal the shareholders of ABC vote not to approve the
Merger Agreements; or
(f) As used herein, "Specified Covenant" means any covenant or
agreement contained in the Merger Agreements.
4. Payment and Delivery of Certificates
(a) At the Closing Date, F&M shall tender certified funds in
an amount equal to the aggregate Exercise Price for the number of shares with
respect to which F&M is exercising the Option.
(b) At such closing, ABC shall deliver to F&M a certificate or
certificates representing the number of shares of ABC Common Stock exchanged for
the Exercise Price and F&M shall deliver to ABC a letter agreeing that F&M will
not offer to sell or otherwise dispose of such shares in violation of applicable
law or the provisions of this Option Agreement.
(c) Certificates for ABC Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend which 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 Allegiance
Banc Corporation and to resale restrictions arising under the
Securities Act of 1933, as amended, a copy of which agreement
is on file at the principal office of Allegiance Banc
Corporation. A copy of such agreement will be provided to the
holder thereof without charge upon receipt by Allegiance Banc
Corporation of a written request."
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if F&M shall have
delivered to ABC a copy of a letter from the staff of the Securities and
Exchange Commission (the "Commission"), or an opinion of counsel, in form and
substance satisfactory to ABC, to the effect that such legend is not required
for purposes of the Securities Act of 1933 (the "Securities Act").
5. Representations
ABC hereby represents, warrants and covenants to F&M as
follows:
(a) ABC shall at all times maintain sufficient authorized but
unissued shares of ABC Common Stock so that the Option may be exercised without
authorization of additional shares of ABC Common Stock.
(b) The shares to be issued upon due exercise, in whole or in
part, of the Option, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization
In the event of any change in ABC Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations, exchanges
of shares or the like, the type and number of shares subject to the Option, and
the purchase price per share, as the case may be, shall be adjusted
appropriately. In the event that any additional shares of ABC Common Stock are
issued or otherwise become outstanding after the date of this Option Agreement
(other than pursuant to this Option Agreement or pursuant to the exercise of
warrants or options to acquire shares of ABC Common Stock outstanding as of the
date of the Reorganization Agreement or that may be issued after the date of the
Reorganization Agreement without constituting a breach thereof), the number of
shares of ABC Common Stock subject to the Option shall be adjusted so that,
after such issuance, it equals 19.9% of the number of shares of ABC Common Stock
then issued and outstanding without giving effect to any shares subject or
issued pursuant to the Option or any shares issued pursuant to the exercise of
warrants or options to acquire shares of ABC Common Stock outstanding as of the
date of the Reorganization Agreement or that may be issued after the date of the
Reorganization Agreement without constituting a breach thereof. Nothing
contained in this Section 6 shall be deemed to authorize ABC to breach any
provision of the Merger Agreements.
7. Registration Rights
ABC shall, if requested by F&M, as expeditiously as possible
file a registration statement on a form of general use under the Securities Act
if necessary in order to permit the sale or other disposition of the shares of
ABC Common Stock that are acquired upon exercise of the Option in accordance
with the intended method of sale or other disposition requested by F&M. F&M
shall provide all information reasonably requested by ABC for inclusion in any
registration statement to be filed hereunder. ABC will use its best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 270 days from the date on which such
registration statement first becomes effective as may be reasonably necessary to
effect such sales or other dispositions. The first registration effected under
this Section 7 shall be at ABC's expense except for underwriting commissions and
the fees and disbursements of F&M's counsel attributable to the registration of
such ABC Common Stock. A second registration statement may be requested
hereunder at F&M's expense. In no event shall ABC be required to effect more
than two registrations hereunder. The filing of any registration statement
hereunder may be delayed for such period of time as may reasonably be required
to facilitate any public distribution by ABC of ABC Common Stock. If requested
by F&M, in connection with any such registration, ABC will 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. Upon receiving any request from F&M or an assignee of F&M under this
Section 7, ABC agrees to send a copy thereof to F&M and to any assignee of F&M
known to ABC, in each case by promptly mailing the same, postage prepaid, to the
address of record of the persons entitled to receive such copies.
8. Severability
If any term, provision, covenant or restriction contained in
this Option 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 Option
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 Option Agreement will not permit the holder to
acquire the full number of shares of ABC Common Stock provided in Section 2
hereof (as adjusted pursuant to Section 6 hereof), it is the express intention
of ABC to allow the holder to acquire, or to require ABC to repurchase, such
number of shares as may be necessary to comply with such court or regulatory
agency's determination of the permissible number of shares, without any
amendment or modification hereof.
9. Miscellaneous
(a) Expenses. Except as otherwise 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.
(b) Entire Agreement. Except as otherwise expressly provided
herein, this Option Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral. The terms
and conditions of this Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Option Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto may assign any
of its rights or obligations under this Option Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that F&M may assign in whole or in part the Option and other
benefits and obligations hereunder without limitation to any of its wholly-owned
subsidiaries, and F&M may assign in whole or in part the Option and other
benefits and obligations hereunder without limitation in the event a Purchase
Event shall have occurred and F&M shall have delivered to ABC a copy of a letter
from the staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to ABC, to the effect that such assignment
will not violate the requirements of the Securities Act; provided that prior to
any such assignment, F&M shall give written notice of the proposed assignment to
ABC, and within 24 hours of such notice of a bona fide proposed assignment, ABC
may purchase the Option at a price and on other terms at least as favorable to
F&M as that set forth in the notice of assignment.
(d) Notices. All notices or other communications that are
required or permitted hereunder shall be in writing and sufficient if delivered
in the manner and to the address provided for in or pursuant to Section 7.5 of
the Reorganization Agreement.
(e) Counterparts. This Option Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would
be an inadequate remedy for a breach of the provisions of this Option Agreement
by either party hereto and that this Option Agreement may be enforced by either
party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia,
without regard to the conflict of law principles thereof (except to the extent
that Delaware law governs the validity of the Option).
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has
executed this Option Agreement as of the day and year first written above.
ALLEGIANCE BANC CORPORATION
By: _____________________________
Leonard L. Abel
Chairman of the Board
F&M NATIONAL CORPORATION
By: _____________________________
Alfred B. Whitt
Senior Vice President
<PAGE>
Exhibit B
AGREEMENT AND PLAN OF REORGANIZATION
by and between
F&M NATIONAL CORPORATION
and
ALLEGIANCE BANC CORPORATION
----------------------------
April 22, 1996
----------------------------
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE 1. THE MERGER AND RELATED MATTERS......................................................1
1.1 The Merger ...................................................................1
1.2 Conversion of ABC Stock.............................................................1
1.3 Board of Directors of F&M and Allegiance Bank;
Officers and Employees.............................................................2
1.4 The Effective Date..................................................................2
1.5 Definitions ...................................................................2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF ABC...............................................3
2.1 Organization, Standing and Power....................................................3
2.2 Organization, Standing and Power of Allegiance Bank.................................3
2.3 Authorized and Effective Agreement; Affiliated
Transaction Approval...............................................................3
2.4 Capital Structure...................................................................4
2.5 Financial Statements; Books and Records; Minute
Books ...................................................................5
2.6 Material Adverse Change.............................................................5
2.7 Absence of Undisclosed Liabilities..................................................5
2.8 Legal Proceedings; Compliance with Laws.............................................5
2.9 Tax Matters ...................................................................6
2.10 Property ...................................................................6
2.11 Employee Benefit Plans..............................................................6
2.12 Insurance ...................................................................7
2.13 Allowance for Loan Losses...........................................................7
2.14 Environmental Matters...............................................................7
2.15 Brokers and Finders.................................................................9
2.16 Statements True and Correct.........................................................9
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF F&M...............................................9
3.1 Organization, Standing and Power....................................................9
3.2 Organization, Standing and Power of F&M
Subsidiaries .................................................................... 9
3.3 Authorized and Effective Agreement.................................................10
3.4 Capital Structure..................................................................10
3.5 Financial Statements; Books and Records; Minute
Books ..................................................................11
3.6 Material Adverse Change............................................................11
3.7 Absence of Undisclosed Liabilities.................................................11
3.8 Legal Proceedings; Compliance with Laws............................................11
3.9 Tax Matters ..................................................................12
3.10 Employee Benefit Plans.............................................................12
3.11 Insurance ..................................................................12
3.12 Allowance for Loan Losses..........................................................13
3.13 Environmental Matters..............................................................13
3.14 Statements True and Correct........................................................13
ARTICLE 4. COVENANTS AND AGREEMENTS...........................................................13
4.1 Investigation and Confidentiality..................................................13
4.2 Registration Statement; Shareholder Approval.......................................14
4.3 Operation of the Business of ABC...................................................14
4.4 Operation of the Business of F&M...................................................15
4.5 Regulatory Filings.................................................................16
4.6 Public Announcements...............................................................16
4.7 Accounting Treatment...............................................................16
4.8 Affiliates ..................................................................16
4.9 Benefit Plan ......................................................................16
4.10 NYSE Listing .....................................................................17
4.11 Indemnification ..................................................................17
4.12 ABC Stock Options..................................................................17
4.13 Stock Option Agreement.............................................................18
4.14 Restrictions on Trading in F&M Common Stock........................................18
ARTICLE 5. CONDITIONS TO THE MERGER...........................................................18
5.1 General Conditions.................................................................18
5.2 Conditions to Obligations of F&M...................................................19
5.3 Conditions to Obligations of ABC...................................................19
ARTICLE 6. TERMINATION ..................................................................20
6.1 Termination ..................................................................20
6.2 Effect of Termination..............................................................21
6.3 Survival of Representations, Warranties and
Covenants ..................................................................21
6.4 Expenses ..................................................................21
ARTICLE 7. GENERAL PROVISIONS.................................................................22
7.1 Entire Agreement ..................................................................22
7.2 Binding Effect; No Third-Party Rights..............................................22
7.3 Waiver and Amendment...............................................................22
7.4 Governing Law ..................................................................22
7.5 Notices ..................................................................22
7.6 Counterparts ..................................................................23
7.7 Severability ..................................................................23
</TABLE>
EXHIBIT A -- PLAN OF MERGER
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into as of April 22, 1996, by and between F&M NATIONAL
CORPORATION, a Virginia corporation ("F&M"), and ALLEGIANCE BANC CORPORATION, a
Delaware corporation ("ABC").
WITNESSETH:
WHEREAS, the respective Boards of Directors of F&M and ABC
have approved the affiliation of their companies through the merger of ABC with
and into F&M pursuant to and subject to the terms and conditions of this
Agreement and the Plan of Merger in the form attached hereto as Exhibit A (the
"Plan of Merger"); and
WHEREAS, the parties desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the mutual warranties,
covenants and agreements set forth herein, the parties agree as follows.
ARTICLE 1
THE MERGER AND RELATED MATTERS
1.1 The Merger
Subject to the terms and conditions of this Agreement, at the
Effective Date as defined in Section 1.4 hereof, ABC shall be merged with and
into F&M pursuant to the Plan of Merger attached hereto as Exhibit A and made a
part hereof (the "Merger"). The separate corporate existence of ABC shall
thereupon cease, and F&M will be the surviving corporation in the Merger.
1.2 Conversion of ABC Stock
At the Effective Date, by virtue of the Merger and without any
action on the part of the holders thereof, each share of common stock, par value
$1.00 per share, of ABC ("ABC Common Stock") issued and outstanding immediately
prior to the Effective Date shall cease to be outstanding and shall be converted
into and exchanged for shares of common stock, par value $2.00 per share, of F&M
("F&M Common Stock") whose aggregate market value equals $15.00, plus cash for
fractional shares, pursuant to the terms and conditions set forth in the Plan of
Merger. Each share of F&M Common Stock issued and outstanding immediately prior
to the Effective Date shall continue unchanged as an outstanding share common
stock of F&M, as the successor corporation.
1.3 Board of Directors of F&M and Allegiance Bank; Officers
and Employees
(a) F&M shall take all such action as shall be necessary to
elect or appoint Leonard L. Abel (or in the event that he is unavailable to
serve, Ronald D. Paul, or in the event of his unavailablity such other person
selected by the Board of Directors of ABC and acceptable to F&M) to the Board of
Directors of F&M at, or as promptly as practicable after, the Effective Date.
(b) The officers and employees of Allegiance Bank, N.A., the
national banking subsidiary of ABC ("Allegiance Bank"), will not change as a
result of the Merger.
(c) The Board of Directors of Allegiance Bank in office at the
Effective Date, together with a person designated by F&M, shall serve as the
Board of Directors of Allegiance Bank following the Effective Date until the
1997 Annual Meeting of Allegiance Bank and until their successors shall be duly
elected and qualified.
1.4 The Effective Date
Subject to the conditions to the obligations of the parties to
effect the Merger as set forth in Article 5, the parties shall cause the
effective date of the Merger (the "Effective Date") to occur on such date as the
parties may agree within five days (or as soon as reasonably practicable
thereafter) after the receipt of the approval of shareholders of ABC and the
satisfaction or waiver of all conditions to either party's obligation to effect
the Merger; it being the intent of the parties that all regulatory approvals be
obtained and all statutory and regulatory waiting periods have expired prior to
the date on which the ABC shareholder meeting is held.
1.5 Definitions
Any term defined in this Agreement and the Plan of Merger
shall have the meaning ascribed to it for purposes of this Agreement. In
addition:
(a) the term "Knowledge" when used with respect to a party
shall mean the current and conscious knowledge, after conducting a reasonable
investigation, of any "Executive Officer" of such party, as such term is defined
in Regulation O of the Federal Reserve Board. Any reference herein to the
Knowledge of ABC shall also be deemed to include the Knowledge of any Executive
Officer of Allegiance Bank;
(b) the term "Material Adverse Effect", when applied to a
party, shall mean any condition, event, change or occurrence (including, without
limitation, (i) the making of any provisions for possible loan and lease losses,
write-downs of other real estate and taxes and (ii) any breach of a
representation or warranty by such party) that individually, or in the aggregate
with any other condition, event, change or occurrence, has or is reasonably
likely to have a material negative effect upon (i) the financial condition,
results of operations or business of the party and its subsidiaries, taken as a
whole, or (ii) the ability of a party to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement.
(c) the term "Previously Disclosed" shall mean information set
forth in a letter from one party to the other party delivered and dated not
later than 5:00 p.m. on April 19, 1996, specifically designated as information
"Previously Disclosed" pursuant to this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF ABC
ABC represents and warrants to F&M as follows:
2.1 Organization, Standing and Power
ABC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to carry on its business as now conducted. ABC is duly registered
as a bank holding company under the Bank Holding Company Act of 1956.
2.2 Organization, Standing and Power of Allegiance Bank
Allegiance Bank is the only subsidiary of ABC (collectively
with ABC, the "ABC Companies"), is a duly organized and validly existing
national banking association in good standing under the national banking laws
with full corporate power and authority to carry on its business as now
conducted and is qualified to do business in each state or other jurisdiction of
the United States where its ownership or leasing of property or the conduct of
its business requires qualification to do business and where the failure to so
qualify would have a Material Adverse Effect on ABC on a consolidated basis.
Except as Previously Disclosed, ABC does not own, directly or indirectly, any
outstanding capital stock or other voting securities or ownership interests of
any corporation, bank or savings association, partnership or other organization,
except for Allegiance Bank. The outstanding shares of capital stock of
Allegiance Bank are validly issued and outstanding and fully paid and all such
shares are directly owned by ABC free and clear of all liens, claims and
encumbrances or preemptive rights of any person.
2.3 Authorized and Effective Agreement; Affiliated Transaction
Approval
(a) ABC has all requisite corporate power and authority to
enter into and (subject to the receipt of all necessary governmental approvals
and the approval of the shareholders of ABC of this Agreement and the Plan of
Merger) to perform all of its obligations under this Agreement, the Plan of
Merger and the Stock Option Agreement of even date herewith between ABC and F&M
(the "Option Agreement"). The execution, adoption and delivery of this
Agreement, the Plan of Merger and the Option Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of ABC, except, in the
case of this Agreement and the Plan of Merger, the approval of shareholders.
This Agreement, the Plan of Merger and the Option Agreement represent the legal,
valid, and binding obligations of ABC, enforceable against ABC in accordance
with their respective terms, in each case subject as to enforceability to (i)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
conservatorship, receivership and similar laws affecting the enforcement of
rights of creditors of FDIC-insured institutions or the enforcement of
creditors' rights generally, (ii) laws relating to the safety and soundness of
depository institutions and their holding companies, (iii) general principles of
equity, and (iv) in the case of the Option Agreement, the statutory and common
law of Delaware applicable to corporations organized under Delaware law.
(b) Neither the execution and delivery of this Agreement the
Plan of Merger and the Option Agreement nor the consummation of the transactions
contemplated herein or therein, nor compliance by ABC with any of the provisions
hereof or thereof will: (i) conflict with or result in a breach of any provision
of the Articles of Incorporation or Bylaws of ABC or Allegiance Bank; (ii)
except as Previously Disclosed, constitute or result in the breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon, any property or asset of
ABC or Allegiance Bank pursuant to any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation, or (iii) subject to the receipt of
all required regulatory approvals, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to ABC or Allegiance Bank, except insofar
as the statutory and common law of Delaware applicable to corporations organized
under Delaware law may affect the validity or enforceability of the Option
Agreement.
(c) In accordance with Title 8, Chapter 1, Subchapter VI,
Section 203 et. seq. of the Delaware Corporation Law Annotated (the "Affiliated
Transactions Statute"), the Board of Directors of ABC has, by resolution adopted
by its Board of Directors, approved this Agreement and the Option Agreement, and
has given prior approval of F&M's becoming an "interested stockholder" (as
defined in Section 203(c)(5) of the Affiliated Transactions Statute), all in
accordance with Section 203(a)(1) of the Affiliated Transactions Statute.
2.4 Capital Structure
The authorized capital stock of ABC consists of (i) 10,000,000
shares of common stock, par value $1.00 per share. As of the date hereof, there
are 1,727,563 shares of ABC Common Stock issued and outstanding. All outstanding
shares of ABC Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable and have not been issued in violation of the
preemptive rights of any person. As of the date hereof, there are (a) warrants
held by directors of ABC that represent rights to purchase 102,000 shares of ABC
Common Stock at a price of $5.00 per share and 35,000 shares of ABC Common Stock
at a price of $6.50 per share, and (b) options held by officers and employees of
ABC that represent rights to purchase a total of 73,480 shares of ABC Common
Stock. Copies of the warrant and stock option agreements have been Previously
Disclosed. No shares of ABC Common Stock have been reserved for any purpose,
except for the 210,480 shares of ABC Common Stock reserved in connection with
the options and warrants described herein and the 343,785 shares of ABC Common
Stock reserved in connection with the Option Agreement.
2.5 Financial Statements; Books and Records; Minute Books
The ABC Financial Statements (as defined below) fairly present
or will fairly present, as the case may be, the consolidated financial position
of ABC as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity and statements of cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to normal
year-end audit adjustments that are not material in amount or effect) in
conformity with generally accepted accounting principles applicable to financial
institutions applied on a consistent basis. The books and records of the ABC and
Allegiance Bank fairly reflect the transactions to which each company is a party
or by which its properties are subject or bound. Such books and records have
been properly kept and maintained and are in compliance in all material respects
with all applicable legal and accounting requirements. The minute books of ABC
and Allegiance Bank contain accurate records of all corporate actions of their
respective shareholders and Boards of Directors (including committees of its
Board of Directors). The ABC Financial Statements shall mean (i) the
consolidated balance sheets of ABC as of December 31, 1995 and 1994 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years ended December 31, 1995, 1994 and 1993 (including
related notes and schedules, if any) and (ii) the consolidated balance sheets of
ABC and related consolidated statements of income, shareholders' equity and cash
flows (including related notes and schedules, if any) with respect to periods
ended subsequent to December 31, 1995.
2.6 Material Adverse Change
Since December 31, 1995 and except as Previously Disclosed,
there has not been any change in the financial condition or results of
operations of ABC or Allegiance Bank which, individually or in the aggregate,
has had or is reasonably likely to have a Material Adverse Effect (other than as
a result of changes in banking laws or regulations of general applicability or
interpretations thereof).
2.7 Absence of Undisclosed Liabilities
Neither ABC nor Allegiance Bank has any liability (contingent
or otherwise) that is material to ABC on a consolidated basis or that, when
combined with all similar liabilities, would be material to ABC on a
consolidated basis, except as Previously Disclosed or as disclosed in the ABC
Financial Statements and except for liabilities incurred in the ordinary course
of business consistent with past practice since the date of the most recent ABC
Financial Statements.
<PAGE>
2.8 Legal Proceedings; Compliance with Laws
Except as Previously Disclosed, there are no actions, suits or
proceedings instituted or pending or, to the Knowledge of ABC, threatened
against ABC or Allegiance Bank or against any property, asset, interest or right
of ABC or Allegiance Bank, or against any officer, director or employee of ABC
or Allegiance Bank that would, if determined adversely to ABC or Allegiance
Bank, have a Material Adverse Effect on ABC on a consolidated basis. To the
Knowledge of ABC, ABC and Allegiance Bank have complied in all material respects
with all laws, ordinances, requirements, regulations or orders applicable to its
business (including environmental laws, ordinances, requirements, regulations or
orders).
2.9 Tax Matters
ABC has filed all federal, state and local tax returns and
reports required to be filed, and all taxes shown by such returns to be due and
payable have been paid or are reflected as a liability in the ABC Financial
Statements or are being contested in good faith and have been Previously
Disclosed. Except to the extent that tax liabilities are specifically reflected
in the ABC Financial Statements or are being contested in good faith, there are
no federal, state or local tax liabilities of ABC other than liabilities that
have arisen since December 31, 1995, all of which have been properly accrued or
otherwise provided for on the books and records of ABC. Except as Previously
Disclosed, no tax return or report of ABC or Allegiance Bank is under
examination by any taxing authority or the subject of any administrative or
judicial proceeding, and no unpaid tax deficiency has been asserted against
either ABC or Allegiance Bank by any taxing authority.
2.10 Property
Except As Previously Disclosed or reserved against in the ABC
Financial Statements, ABC and Allegiance Bank have good and marketable title
free and clear of all material liens, encumbrances, charges, defaults or
equitable interests to all of the properties and assets, real and personal,
reflected in the balance sheet included in the ABC Financial Statements as of
December 31, 1995 or acquired after such date. To the Knowledge of ABC, all
buildings, and all fixtures, equipment, and other property and assets that are
material to its business, held under leases or subleases, are held under valid
instruments enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws. To the
Knowledge of ABC, the buildings, structures, and appurtenances owned, leased, or
occupied by ABC and Allegiance Bank are in good operating condition and in a
state of good maintenance and repair and comply in all material respects with
applicable zoning and other municipal laws and regulations.
2.11 Employee Benefit Plans
(a) ABC has Previously Disclosed true and complete copies of
all material retirement, profit-sharing, stock option, bonus, vacation or other
material incentive plans or agreements, all material medical, dental or other
health plans, all life insurance plans and all other material employee benefit
plans or fringe benefit plans, including, without limitation, all "employee
benefit plans" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by ABC or
Allegiance Bank for the benefit of employees, retirees or other beneficiaries
eligible to participate (collectively, the "ABC Benefit Plans"). Any of the ABC
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as an "ABC ERISA Plan."
No ABC Benefit Plan is or has been a multi-employer plan within the meaning of
Section 3(37) of the ERISA.
(b) Except as Previously Disclosed, all ABC Benefit Plans are
in compliance with the applicable terms of the Internal Revenue Code of 1986, as
amended (the "Code"), and any other applicable laws, rules and regulations, the
breach or violation of which could result in a material liability to ABC on a
consolidated basis.
(c) No ABC ERISA Plan that is a defined benefit pension plan
has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan was terminated in accordance with all applicable legal
requirements.
2.12 Insurance
Each of ABC and Allegiance Bank currently maintains insurance
in amounts reasonably necessary for its operations and, to the Knowledge of ABC,
similar in scope and coverage to that maintained by other entities similarly
situated. Except as Previously Disclosed, neither ABC nor Allegiance Bank has
received any notice of a premium increase or cancellation or a failure to renew
with respect to any insurance policy or bond and, within the last three years,
neither ABC nor Allegiance Bank has been refused any insurance coverage sought
or applied for, and ABC has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability of coverage that do not result from any
extraordinary loss experience on the part of ABC or Allegiance Bank.
2.13 Allowance for Loan Losses
The allowance for loan losses reflected on the balance sheets
included in the ABC Financial Statements, as of their respective dates, is
adequate in all material respects under the requirements of generally accepted
accounting principles and regulatory accounting principles to provide for
reasonably anticipated losses on outstanding loans.
2.14 Environmental Matters
(a) Except as Previously Disclosed and to the Knowledge of
ABC, the ABC Companies are in substantial compliance with all Environmental Laws
(as defined below). Neither ABC nor Allegiance Bank has received any
communication alleging that ABC or Allegiance Bank is not in such compliance
and, to the Knowledge of ABC, there are no present circumstances that would
prevent or interfere with the continuation of such compliance.
(b) ABC and Allegiance Bank have not received notice of
pending, and are not aware of any threatened, legal, administrative, arbitral or
other proceedings, asserting Environmental Claims (as defined below) or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition of, any material liability
arising under any Environmental Laws upon (i) ABC or Allegiance Bank, (ii) any
person or entity whose liability for any Environmental Claim (as defined below)
ABC or Allegiance Bank has or may have retained either contractually or by
operation of law, (iii) any real or personal property owned or leased by ABC or
Allegiance Bank, or any real or personal property which ABC or Allegiance Bank
has been, or is, judged to have managed or to have supervised or to have
participated in the management of, or (iv) any real or personal property in
which Allegiance Bank holds a security interest securing a loan recorded on the
books of Allegiance Bank. Neither ABC nor Allegiance Bank is subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
(c) With respect to all real and personal property owned or
leased by ABC or Allegiance Bank, or all real and personal property which ABC or
Allegiance Bank has been, or is, judged to have managed or to have supervised or
to have participated in the management of, ABC will promptly provide F&M with
access to copies of any environmental audits, analyses and surveys that have
been prepared relating to such properties (a list of which will be been
Previously Disclosed). To the Knowledge of ABC, the ABC Companies are in
compliance in all material respects with all recommendations contained in any
such environmental audits, analyses and surveys.
(d) To the Knowledge of ABC, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Laws against ABC or Allegiance Bank or against
any person or entity whose liability for any Environmental Claim ABC or
Allegiance Bank has or may have retained or assumed either contractually or by
operation of law.
(e) For purposes of this Agreement, the following terms shall
have the following meanings:
(1) "Environmental Claim" means any written notice
from any governmental authority or third party alleging potential
liability (including, without limitation, potential liability for
investigatory costs, clean-up, governmental response costs, natural
resources damages, property damages, personal injuries or penalties)
arising out of, based upon, or resulting from the presence, or release
into the environment, of any Materials of Environmental Concern.
(2) "Environmental Laws" means all applicable
federal, state and local laws and regulations, including the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, that relate to pollution or protection of human
health or the environment.
(3) "Materials of Environmental Concern" means
pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other materials regulated under
Environmental Laws.
2.15 Brokers and Finders
Neither ABC nor any of its officers, directors or employees
has employed any broker, finder or financial advisor or incurred any liability
for any fees or commissions in connection with transactions contemplated by this
Agreement, except for Scott & Stringfellow, Inc.
2.16 Statements True and Correct
When the Registration Statement on Form S-4 (the "Registration
Statement") to be filed by F&M with the Securities and Exchange Commission (the
"SEC") shall become effective, and at all times subsequent thereto up to and
including the ABC shareholders' meeting to vote upon the Merger, such
Registration Statement and all amendments or supplements thereto, with respect
to all information set forth therein furnished by ABC relating to ABC and
Allegiance Bank, (i) shall comply in all material respects with the applicable
provisions of the federal and state securities laws, and (ii) shall 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 contained
therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF F&M
F&M represents and warrants to ABC as follows:
3.1 Organization, Standing and Power
F&M is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia, with full
corporate power and authority to carry on its business as now conducted. F&M is
duly registered as a bank holding company under the Bank Holding Company Act of
1956.
<PAGE>
3.2 Organization, Standing and Power of F&M Subsidiaries
Each subsidiary of F&M (the "F&M Subsidiaries" and,
collectively with F&M, the "F&M Companies") is a duly organized corporation,
validly existing and in good standing in their respective states of
incorporation. Each F&M Subsidiary (i) has full corporate power and authority to
carry on its business as now conducted and (ii) is duly qualified to do business
in the states where its ownership or leasing of property or the conduct of its
business requires such qualification and where the failure to so qualify would
have a material adverse effect on F&M on a consolidated basis. The outstanding
shares of capital stock of each of the F&M Subsidiaries are validly issued and
outstanding, fully paid and nonassessable and all such shares are directly or
indirectly owned by F&M free and clear of all liens, claims and encumbrances or
preemptive rights of any person.
3.3 Authorized and Effective Agreement
(a) F&M has all requisite corporate power and authority to
enter into and to perform all of its obligations under this Agreement and the
Plan of Merger. The execution, adoption and delivery of this Agreement and the
Plan of Merger and the consummation of the Merger have been duly and validly
authorized by all necessary corporate action on the part of F&M. This Agreement
and the Plan of Merger represent the legal, valid, and binding obligations of
F&M, enforceable against F&M in accordance with their respective terms, in each
case subject as to enforceability to (i) bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, conservatorship, receivership or other
similar laws affecting the enforcement of rights of creditors of FDIC-insured
institutions or the enforcement of creditors' rights generally, (ii) laws
relating to the safety and soundness of depository institutions and their
holding companies, and (iii) general principles of equity.
(b) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated herein, nor compliance by F&M with
any of the provisions hereof will: (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or Bylaws of F&M or any F&M
Subsidiary; (ii) constitute or result in the breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon, any property or asset of F&M
or any F&M Subsidiary pursuant to any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation that would have a material adverse
effect on the business, operations or financial condition of F&M on a
consolidated basis, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to F&M or any F&M Subsidiary.
3.4 Capital Structure
The authorized capital stock of F&M consists of: (i) 5,000,000
shares of preferred stock, no par value per share, of which none are issued and
outstanding; and (ii) 30,000,000 shares of common stock, par value $2.00 per
share, of which 19,095,859 shares were issued and outstanding on March 31, 1996.
All outstanding shares of F&M Common Stock have been duly issued and are validly
outstanding, fully paid and nonassessable and have not been issued in violation
of the preemptive rights of any person. The shares of F&M Common Stock to be
issued in exchange for shares of ABC Common Stock upon consummation of the
Merger will have been duly authorized and, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable,
will not be issued in violation of the preemptive rights of any person, and will
be duly registered under the applicable federal and state securities laws.
3.5 Financial Statements; Books and Records; Minute Books
The F&M Financial Statements (as defined below) fairly present
or will fairly present, as the case may be, the consolidated financial position
of F&M as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity and statements of cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to normal
year-end audit adjustments that are not material in amount or effect) in
conformity with generally accepted accounting principles applicable to financial
institutions applied on a consistent basis. The books and records of the F&M
Companies fairly reflect the transactions to which each company is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance in all material respects with
all applicable legal and accounting requirements. The minute books of the F&M
Companies contain accurate records of all corporate actions of their respective
shareholders and Boards of Directors (including committees of its Board of
Directors). The F&M Financial Statements shall mean (i) the consolidated balance
sheets of F&M as of December 31, 1995 and 1994 and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years ended December 31, 1995, 1994 and 1993 (including related notes and
schedules, if any) and (ii) the consolidated balance sheets of F&M and related
consolidated statements of income, shareholders' equity and cash flows
(including related notes and schedules, if any) with respect to periods ended
subsequent to December 31, 1995.
3.6 Material Adverse Change
Since December 31, 1995, there has not been any change in the
financial condition or results of operations of F&M or the F&M Subsidiaries
which, individually or in the aggregate, has had, or is reasonably likely to
have, a Material Adverse Effect (other than as a result of changes in banking
laws or regulations of general applicability or interpretations thereof).
3.7 Absence of Undisclosed Liabilities
Neither F&M nor any F&M Subsidiary has any liability
(contingent or otherwise) that is material to F&M on a consolidated basis or
that, when combined with all similar liabilities, would be material to F&M on a
consolidated basis, except as disclosed in the F&M Financial Statements and
except for liabilities incurred in the ordinary course of business consistent
with past practice since the date of the most recent F&M Financial Statements.
<PAGE>
3.8 Legal Proceedings; Compliance with Laws
There are no actions, suits or proceedings instituted or
pending or, to the Knowledge of F&M, threatened against any of the F&M Companies
or against any property, asset, interest or right of any of the F&M Companies or
against any officer, director or employee of any of the F&M Companies that
would, if determined adversely to F&M or any F&M Subsidiary, have a Material
Adverse Effect on F&M on a consolidated basis. To the Knowledge of F&M, the F&M
Companies have complied in all material respects with all laws, ordinances,
requirements, regulations or orders applicable to their respective businesses
(including environmental laws, ordinances, requirements, regulations or orders).
3.9 Tax Matters
F&M has filed all federal, state and local tax returns and
reports required to be filed, and all taxes shown by such returns to be due and
payable have been paid or are reflected as a liability in the F&M Financial
Statements or are being contested in good faith and have been Previously
Disclosed. Except to the extent that tax liabilities are specifically reflected
in the F&M Financial Statements or are being contested in good faith, there are
no federal, state or local tax liabilities of F&M other than liabilities that
have arisen since December 31, 1995, all of which have been properly accrued or
otherwise provided for on the books and records of F&M. Except as Previously
Disclosed, no tax return or report of F&M or any F&M Subsidiary is under
examination by any taxing authority or the subject of any administrative or
judicial proceeding, and no unpaid tax deficiency has been asserted against any
of the F&M Companies by any taxing authority.
3.10 Employee Benefit Plans
(a) All F&M employee benefit plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws, rules and
regulations, the breach or violation of which could result in a material
liability to F&M on a consolidated basis.
(b) No F&M employee benefit plan subject to ERISA that is a
defined benefit pension plan has any "unfunded current liability," as that term
is defined in Section 302(d)(8)(A) of ERISA, and the present fair market value
of the assets of any such plan exceeds the plan's 'benefit liabilities,' as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan was terminated in accordance with all
applicable legal requirements.
3.11 Insurance
Each of the F&M Companies currently maintains insurance in
amounts reasonably necessary for its operations and, to the Knowledge of F&M,
similar in scope and coverage to that maintained by other entities similarly
situated. None of the F&M Companies has received any notice of a premium
increase or cancellation or a failure to renew with respect to any insurance
policy or bond and, within the last three years, none of the F&M Companies has
been refused any insurance coverage sought or applied for, and F&M has no reason
to believe that existing insurance coverage cannot be renewed as and when the
same shall expire upon terms and conditions as favorable as those presently in
effect, other than possible increases in premiums or unavailability of coverage
that do not result from any extraordinary loss experience on the part of the F&M
Companies.
3.12 Allowance for Loan Losses
The allowance for loan losses reflected on the balance sheets
included in the F&M Financial Statements, as of their respective dates, is
adequate in all material respects under the requirements of generally accepted
accounting principles and regulatory accounting principles to provide for
reasonably anticipated losses on outstanding loans.
3.13 Environmental Matters
To the Knowledge of F&M, the F&M Companies are in substantial
compliance with all Environmental Laws (as defined in Section 2.14). None of the
F&M Companies has received any communication alleging that F&M or any F&M
Subsidiary is not in such compliance and, to the Knowledge of F&M, there are no
present circumstances that would prevent or interfere with the continuation of
such compliance.
3.14 Statements True and Correct
When the Registration Statement to be filed by F&M with the
SEC shall become effective, and at all times subsequent thereto up to and
including the ABC shareholders' meeting to vote upon the Merger, such
Registration Statement and all amendments or supplements thereto, with respect
to all information set forth therein furnished by F&M relating to F&M (i) shall
comply in all material respects with the applicable provisions of the federal
and state securities laws, and (ii) shall 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 contained therein not misleading.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.1 Investigation and Confidentiality
ABC will keep F&M advised of all material developments
relevant to its business and to consummation of the Merger, and F&M will advise
ABC of any material adverse change in its financial condition or operations and
all material developments that may adversely affect consummation of the Merger.
F&M and ABC each may make or cause to be made such further investigation of the
financial and legal condition of the other as such party reasonably deems
necessary or advisable in connection with the Merger, provided, however, that
such investigation shall not interfere unnecessarily with normal operations. F&M
and ABC agree to furnish the other and the other's advisors with such financial
data and other information with respect to its business and properties as such
other party shall from time to time reasonably request. Each party hereto shall,
and shall cause each of its directors, officers, attorneys and advisors, to
maintain the confidentiality of all information obtained in such investigation
which is not otherwise publicly disclosed by the other party, such undertaking
with respect to confidentiality to survive any termination of this Agreement. In
the event of the termination of this Agreement, each party shall return to the
furnishing party or, at the request of the furnishing party, destroy and certify
the destruction of all confidential information previously furnished in
connection with the transactions contemplated by this Agreement.
4.2 Registration Statement; Shareholder Approval
(a) Subject to the timely effectiveness of the Registration
Statement to be prepared by F&M, ABC shall submit this Agreement and the Plan of
Merger to its shareholders for approval at an annual or special meeting to be
held on or before September 30, 1996 or as soon thereafter as practicable (the
"ABC Meeting"). Subject to the fiduciary duties of the Board of Directors of
ABC, the ABC Board of Directors shall unanimously recommend approval of the
Merger and shall use its best efforts to solicit and obtain votes of the holders
of ABC Common Stock in favor of the Merger. Each member of the ABC Board of
Directors agrees to vote all shares of ABC Common Stock under his control (and
not held in a fiduciary capacity) in favor of the Merger.
(b) F&M and ABC will prepare jointly the proxy
statement/prospectus to be used in connection with the ABC Meeting (the "Proxy
Statement/Prospectus"). F&M will prepare and file with the SEC a Registration
Statement, of which such Proxy Statement/Prospectus shall be a part, and will
use its best efforts to have the Registration Statement declared effective as
promptly as possible. When the Registration Statement or any post-effective
amendment or supplement thereto shall become effective and at all times
subsequent to such effectiveness, up to and including the date of the ABC
Meeting, such Registration Statement and all amendments or supplements thereto,
with respect to all information set forth therein furnished or to be furnished
by ABC relating to ABC or Allegiance Bank and by F&M relating to the F&M
Companies, will conform in all material respects with the provisions of the
Securities Act of 1933, as amended, and any other applicable statutory or
regulatory requirements.
4.3 Operation of the Business of ABC
Between the date of this Agreement and the Effective Date, ABC
agrees that each of ABC and Allegiance Bank will operate its business
substantially as presently operated and only in the ordinary course and will use
its best efforts to preserve its properties, business and relationships with
customers, employees and other persons having business dealings with it. Without
limiting the generality of the foregoing, ABC agrees that it will not, without
the prior written consent of F&M:
(a) Make any change in its authorized capital stock, or issue,
grant or sell any additional shares of, securities convertible into or
exchangeable for, or options, warrants or rights to purchase, its capital stock,
nor shall it purchase, redeem or otherwise acquire any of its outstanding shares
of capital stock, except that ABC shall not be restricted from acquiring any
shares of ABC Common Stock that secure an extension of credit made by ABC or
Allegiance Bank that is in default and selling, in the ordinary course, any such
re-acquired shares or from issuing shares of ABC Common Stock pursuant to the
exercise of options and warrants in accordance with the terms thereof and which
are outstanding on the date hereof;
(b) Increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers or employees,
except in a manner and amount consistent with past practice, any of which
changes shall be reported promptly to F&M;
(c) Enter into any bonus, incentive compensation, stock
option, deferred compensation, profit sharing, thrift, retirement, pension,
group insurance or other benefit plan or any employment or consulting agreement;
(d) Incur any obligation or liability (whether absolute or
contingent, excluding suits instituted against it), make any pledge, or encumber
any of its assets, nor dispose of any of its assets in any other manner, except
in the ordinary course of its business and for adequate value, or as otherwise
specifically permitted in this Agreement;
(e) Solicit or encourage inquiries or proposals with respect
to, furnish any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, ABC or Allegiance
Bank or any business combination with ABC other than as contemplated by this
Agreement; (except where the Board of Directors of ABC determines, based on the
advice of counsel, that failure to furnish such information or participate in
such negotiations or discussions would constitute a breach of the fiduciary or
legal obligations of ABC's Board of Directors to its shareholders); or authorize
or permit any officer, director, agent or affiliate of ABC or Allegiance Bank to
do any of the above; or fail to notify F&M immediately if any such inquiries or
proposals are received by ABC;
(f) Change its lending, investment, asset/liability management
or other material banking policies in any material respect, except as may be
required by applicable law;
(g) Alter, amend or repeal its Bylaws or Articles of
Incorporation; or
(h) Declare or pay any cash or stock dividend or make any
other distribution in respect of the ABC Common Stock; or
(i) Propose or take any other action which would make any
representation or warranty in Article 2 hereof untrue.
<PAGE>
4.4 Operation of the Business of F&M
Between the date of this Agreement and the Effective Date, F&M
agrees that each of the F&M Companies will operate its business substantially as
presently operated and only in the ordinary course and will use its best efforts
to preserve its properties, business and relationships with customers, employees
and other persons having business dealings with it. In addition, F&M agrees that
it will not solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial portion of the
assets of, or a substantial equity interest in, F&M or any business combination
with F&M which may, as a condition thereof, result in the termination of this
Agreement and the Plan of Merger (except where the failure to furnish such
information or participate in such negotiations or discussions would, on the
advice of counsel, constitute a breach of the fiduciary or legal obligations of
F&M's Board of Directors to its shareholders); or authorize or permit any
officer, director, agent or affiliate of F&M to do any of the above.
4.5 Regulatory Filings
F&M and ABC shall use their best efforts to prepare and file
as soon as practicable after the date hereof all required applications for
regulatory approval of the Merger. F&M shall use its best efforts to obtain
prompt approval of each required application.
4.6 Public Announcements
Each party will consult with the other before issuing any
press release or otherwise making any public statements with respect to the
Merger and shall not issue any such press release or make any such public
statement prior to such consultations, except as may be required by law.
4.7 Accounting Treatment
F&M and ABC shall each use their best efforts to ensure that
the Merger qualifies for pooling-of-interests accounting treatment.
4.8 Affiliates
ABC shall identify those persons who may deemed to be
"affiliates" of ABC with the meaning of Rule 145 promulgated under the
Securities Act. ABC shall cause each person so identified to deliver to F&M at
least 30 days prior to the Effective Date a written agreement providing that
such person will not dispose of F&M Common Stock received in the Merger, except
in a manner that (i) complies with the Securities Act of 1933 and the rules and
regulations promulgated thereunder, and (ii) is consistent with the
qualification of the transactions contemplated hereby for pooling of interests
accounting treatment.
<PAGE>
4.9 Benefit Plans
Upon consummation of the Merger, as soon as administratively
practicable, employees of ABC shall be entitled to participate in the F&M
pension, health and welfare benefit and similar plans on the same terms and
conditions as employees of the F&M Companies, giving effect to years of service
with ABC as if such service were with F&M.
4.10 NYSE Listing
F&M shall list on the New York Stock Exchange the shares of
F&M Common Stock to be issued in the Merger.
4.11 Indemnification
F&M agrees that following the Effective Date, it shall
indemnify, defend and hold harmless any person who has rights to indemnification
from ABC, to the same extent and on the same conditions as such person is
entitled to indemnification pursuant to Virginia law and ABC's Articles of
Incorporation or Bylaws, as in effect on the date of this Agreement, to the
extent legally permitted to do so with respect to matters occurring on or prior
to the Effective Date. Without limiting the foregoing, in any case in which
corporate approval may be required to effectuate any indemnification, F&M shall
direct, at the election of the party to be indemnified, that the determination
of permissibility of indemnification shall be made by independent counsel
mutually agreed upon between F&M and the indemnified party. F&M shall use its
reasonable best efforts to maintain ABC's existing directors' and officers'
liability policy, or some other policy, including F&M's existing policy,
providing at least comparable coverage, covering persons who are currently
covered by such insurance of ABC for a period of three years after the Effective
Date on terms no less favorable than those in effect on the date hereof.
4.12 ABC Stock Options
From and after the Effective Date, all employee and officer
stock options and director stock warrants to purchase shares of ABC Common Stock
(each, an "ABC Stock Option" or an "ABC Stock Warrant"), that are then
outstanding and unexercised, shall be converted into and become options to
purchase shares of F&M Common Stock, and F&M shall assume each such ABC Stock
Option and ABC Stock Warrant in accordance with the terms of the plan and
agreement by which it is evidenced; provided, however, that from and after the
Effective Date (i) each such ABC Stock Option and ABC Stock Warrant assumed by
F&M may be exercised solely to purchase shares of F&M Common Stock, (ii) the
number of shares of F&M Common Stock purchasable upon exercise of such ABC Stock
Option or ABC Stock Warrant shall be equal to the number of shares of ABC Common
Stock that were purchasable under such ABC Stock Option or ABC Stock Warrant
immediately prior to the Effective Date multiplied by the Exchange Ratio and
rounding down to the nearest whole share, with cash being paid for any
fractional share interest that otherwise would be purchasable, and (iii) the per
share exercise price under each such ABC Stock Option or ABC Stock Warrant shall
be adjusted by dividing the per share exercise price of each such ABC Stock
Option or ABC Stock Warrant by the Exchange Ratio, and rounding to the nearest
cent. The terms of each ABC Stock Option or ABC Stock Warrant shall, in
accordance with its terms, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, recapitalization or other similar
transaction with respect to F&M Common Stock on or subsequent to the Effective
Date.
4.13 Stock Option Agreement
ABC shall grant to F&M an option to acquire such number of
shares of ABC Common Stock that would equate to 19.9% of the issued and
outstanding common stock of ABC as of the date hereof, all in accordance with
the Option Agreement.
4.14 Restrictions on Trading in F&M Common Stock
Neither F&M, ABC, any subsidiary of F&M or ABC, nor any
director or executive officer of F&M or ABC or their respective subsidiaries
shall directly or indirectly purchase or sell on the NYSE, or submit a bid to
purchase or offer to sell on the NYSE, any shares of F&M Common Stock, or any
options, rights, warrants or other securities convertible into or exercisable
for shares of F&M Common Stock during the Exchange Ratio Determination Period
(as such term is defined in Section 2.1(a) of the Plan of Merger).
ARTICLE 5
CONDITIONS TO THE MERGER
5.1 General Conditions
The respective obligations of each of F&M and ABC to effect
the Merger shall be subject to the fulfillment, or waiver in the case of Section
5.1(e) below, at or prior to the Effective Date of the following conditions:
(a) Corporate Action. All corporate action necessary to
authorize the execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby shall have been duly and
validly taken, including without limitation the approval of the shareholders of
ABC.
(b) Registration Statement. The Registration Statement shall
have been declared effective and shall not be subject to a stop order or any
threatened stop order of the SEC or any state securities commissioner.
(c) Regulatory Approvals. F&M and ABC shall have received all
regulatory approvals required in connection with the transactions contemplated
by this Agreement, all notice periods and waiting periods required after the
granting of any such approvals shall have passed, and all such approvals shall
be in effect; provided, however, that no such approvals shall have imposed any
condition or requirement which, in the reasonable opinion of the Boards of
Directors of F&M or ABC, would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement as to
render consummation of the Merger inadvisable or unduly burdensome.
(d) Tax Opinion. F&M and ABC shall have received an opinion of
F&M's counsel in form and substance satisfactory to F&M and ABC to the effect
that the Merger will constitute a reorganization within the meaning of Section
368 of the Code and that no gain or loss will be recognized by the shareholders
of ABC to the extent they receive F&M Common Stock solely in exchange for their
ABC Common Stock in the Merger.
(e) Opinions of Counsel. ABC shall have delivered to F&M and
F&M shall have delivered to ABC opinions of counsel, dated as of the Effective
Date, as to such matters as they may each reasonably request with respect to the
transactions contemplated by this Agreement and in a form reasonably acceptable
to each of them.
(f) Legal Proceedings. Neither F&M nor ABC shall be subject to
any order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the Merger.
5.2 Conditions to Obligations of F&M
The obligations of F&M to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Effective Date of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of ABC set forth in Article 2 shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective Date
as though made on the Effective Date (or on the date when made in the case of
any representation and warranty which specifically relates to an earlier date),
except as otherwise expressly contemplated by this Agreement or consented to in
writing by F&M.
(b) Performance of Obligations. ABC shall have performed in
all material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date.
(c) Officers' Certificate. ABC shall have delivered to F&M a
certificate, dated the Effective Date and signed by its Chairman or President,
to the effect that the conditions set forth in Sections 5.1(a), 5.2(a) and
5.2(b) have been satisfied.
(d) Affiliate Letters. F&M shall have received the written
agreements from the affiliates as specified in Section 4.8 hereof.
(e) Accountants' Letters. F&M shall have received a letter,
dated as of the Effective Date, from Yount, Hyde & Barbour, P.C., satisfactory
in form and substance to F&M, that the Merger will qualify for
pooling-of-interests accounting treatment.
<PAGE>
5.3 Conditions to Obligations of ABC
The obligations of ABC to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Effective Date of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of F&M set forth in Article 3 shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective Date
as though made on the Effective Date (or on the date when made in the case of
any representation and warranty which specifically relates to an earlier date),
except as otherwise expressly contemplated by this Agreement or consented to in
writing by ABC.
(b) Performance of Obligations. F&M shall have performed in
all material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date.
(c) Officers' Certificate. F&M shall have delivered to ABC a
certificate, dated the Effective Date and signed by its Chairman or President,
to the effect that the conditions set forth in Sections 5.1(a), 5.1(b), 5.1(c),
5.3(a) and 5.3(b) have been satisfied.
(d) Investment Banking Letter. ABC shall have received an
updated fairness opinion from Scott & Stringfellow, Inc., financial advisor to
ABC, addressed to ABC and dated on or about the date the Proxy
Statement/Prospectus is mailed to shareholders of ABC, to the effect that the
terms of the Merger are fair to the shareholders of ABC from a financial point
of view.
ARTICLE 6
TERMINATION
6.1 Termination
This Agreement and the Plan of Merger may be terminated at any
time before the Effective Date, whether before or after approval thereof by the
shareholders of ABC, as provided below:
(a) Mutual Consent. By mutual consent of the parties,
evidenced by their written agreement.
(b) Closing Delay. At the election of either party, evidenced
by written notice, if the Closing shall not have occurred on or before January
15, 1997, or such later date as shall have been agreed to in writing by the
parties; provided, however, that the right to terminate under this Section
6.1(b) shall not be available to either party whose failure to perform an
obligation hereunder has been the cause of, or has resulted in, the failure of
the Closing to occur on or before such date.
(c) Conditions to F&M Performance Not Met. By F&M upon
delivery of written notice of termination to ABC if any event occurs which
renders impossible the satisfaction in any material respect of one or more of
the conditions to the obligations of F&M to effect the Merger set forth in
Sections 5.1 and 5.2, and such noncompliance is not waived by F&M.
(d) Conditions to ABC Performance Not Met. By ABC upon
delivery of written notice of termination to F&M if any event occurs which
renders impossible the satisfaction in any material respect of one or more of
the conditions to the obligations of ABC to effect the Merger set forth in
Sections 5.1 and 5.3, and such noncompliance is not waived by ABC.
6.2 Effect of Termination
In the event this Agreement is terminated pursuant to Section
6.1 hereof, both this Agreement and the Plan of Merger shall become void and
have no effect, except that (i) the provisions hereof relating to
confidentiality, press releases and expenses set forth in Sections 4.1, 4.7 and
6.4, respectively, shall survive any such termination and (ii) a termination
pursuant to 6.1(c) or 6.1(d) hereof shall not relieve the breaching party from
liability for an uncured intentional breach of any provision of this Agreement
giving rise to such termination.
6.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this
Agreement and the Plan of Merger shall not survive the Effective Date and shall
be terminated and extinguished at the Effective Date. From and after the
Effective Date, the parties hereto shall have no liability to the other on
account of any breach of any of those representations, warranties and covenants;
provided, however, that the foregoing clause shall not (i) apply to agreements
of the parties which by their terms are intended to be performed after the
Effective Date, and (ii) shall not relieve any person for liability for fraud,
deception or intentional misrepresentation.
6.4 Expenses
(a) Except as provided below, each of the parties shall bear
and pay all costs and expenses incurred by it in connection with the
transactions contemplated herein, including fees and expenses of its own
financial consultants, accountants and counsel, except that F&M agrees to bear
and pay the cost of printing and mailing the Proxy Statement/Prospectus.
(b) Notwithstanding the provisions of Section 6.4(a) hereof,
if for any reason the Merger is not approved by ABC's shareholders at the ABC
Meeting or any adjournment thereof, ABC shall reimburse F&M for one-half of all
reasonable out-of-pocket expenses incurred by F&M in connection with the
transactions contemplated by this Agreement, provided that the maximum amount
that ABC shall be responsible to F&M for under this Section 6.4(b) shall be
limited to $50,000.
(c) If this Agreement is terminated by F&M or ABC because of a
willful and material breach by the other of any representation, warranty,
covenant, undertaking or restriction set forth herein, and provided that the
terminating party shall not have been in breach (in any material respect) of any
representation and warranty, covenant, undertaking or restriction contained
herein, then the breaching party shall reimburse the other party of all
reasonable out-of-pocket expenses incurred by it in connection with the
transactions contemplated by this Agreement.
(d) Final settlement with respect to the reimbursement of such
fees and expenses by the parties shall be made within thirty days after the
termination of this Agreement.
ARTICLE 7
GENERAL PROVISIONS
7.1 Entire Agreement
This Agreement contains the entire agreement among F&M and ABC
with respect to the Merger and the related transactions and supersedes all prior
arrangements or understandings with respect thereto.
7.2 Binding Effect; No Third Party Rights
This Agreement shall bind F&M and ABC and their respective
successors and assigns. Other than Section 4.11, nothing in this Agreement is
intended to confer upon any person, other than the parties hereto or their
respective successors, any rights or remedies under or by reason of this
Agreement.
7.3 Waiver and Amendment
Any term or provision of this Agreement may be waived in
writing at any time by the party that is, or whose shareholders are, entitled to
the benefits thereof, and this Agreement may be amended or supplemented by a
written instrument duly executed by the parties hereto at any time, whether
before or after the ABC Meeting, except statutory requirements and requisite
approvals of shareholders and regulatory authorities.
7.4 Governing Law
This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia without regard to the
conflict of law principles thereof.
7.5 Notices
All notices or other communications that are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
<PAGE>
If to F&M:
Alfred B. Whitt
F&M National Corporation
38 Rouss Avenue
P. O. Box 2800
Winchester, Virginia 22604
Copy to:
George P. Whitley, Esq.
LeClair Ryan
707 East Main Street; 11th Floor
Richmond, Virginia 23219
If to ABC:
Ronald D. Paul
Allegiance Banc Corporation
4719 Hampden Lane
Bethesda, Maryland 20814
Copy to:
David H. Baris, Esq.
Kennedy & Baris, L.L.P.
4719 Hampden Lane, Suite 300
Bethesda, Maryland 20814
7.6 Counterparts
This Agreement may be executed in any number of counterparts,
each of which shall be an original, but such counterparts together shall
constitute one and the same agreement.
7.7 Severability
In the event that any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof. Any provision of this Agreement held invalid or unenforceable only in
part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable. Further, the parties agree that a court of competent
jurisdiction may reform any provision of this Agreement held invalid or
unenforceable so as to reflect the intended agreement of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in counterparts by their duly authorized officers and
their corporate seals to be affixed hereto, all as of the date first written
above.
F&M NATIONAL CORPORATION
Winchester, Virginia
By: __________________________
Jack R. Huyett
President and Chief
Administrative Officer
ATTEST:
By: __________________________
Alfred B. Whitt
Secretary
ALLEGIANCE BANC CORPORATION
Bethesda, Maryland
By: __________________________
Leonard L. Abel
Chairman of the Board
ATTEST:
By: __________________________
Secretary
<PAGE>
ALLEGIANCE BANC CORPORATION
BOARD OF DIRECTORS
Each of the undersigned members of the Board of Directors
of Allegiance Banc Corporation agrees to be bound by his personal obligations as
provided in Section 4.2(a) and 4.3(e) of the Agreement and Plan of
Reorganization.
Leonard L. Abel Dudley C. Dworken
William A. Koier Ronald D. Paul
Thomas L. Phillips
<PAGE>
EXHIBIT A
To the Agreement and
Plan of Reorganization
PLAN OF MERGER
BETWEEN
ALLEGIANCE BANC CORPORATION
AND
F&M NATIONAL CORPORATION
Pursuant to this Plan of Merger ("Plan of Merger"), Allegiance
Banc Corporation, a Delaware corporation ("ABC"), shall merge with and into F&M
National Corporation, a Virginia corporation ("F&M").
ARTICLE I
TERMS OF THE MERGER
1.1 The Merger
Subject to the terms and conditions of the Agreement and Plan
of Reorganization, dated as of April 22, 1996 (the "Agreement"), between F&M and
ABC, at the Effective Date ABC shall be merged with and into F&M in accordance
with the provisions of Virginia and Delaware law and with the effect specified
in Section 13.1-721 of the Virginia Stock Corporation Act (the "Merger"). F&M
shall be the surviving corporation of the Merger. The Merger shall become
effective on such date as may be determined in accordance with Section 1.4 of
the Agreement (the "Effective Date").
1.2 Articles of Incorporation and Bylaws
The Articles of Incorporation and Bylaws of F&M in effect
immediately prior to the consummation of the Merger shall remain in effect
following the Effective Date until otherwise amended or repealed.
ARTICLE II
MANNER OF CONVERTING SHARES
2.1 Conversion of Shares
Upon and by reason of the Merger becoming effective and except
as set forth in Section 2.3 below, no cash shall be allocated to the
shareholders of ABC and stock shall be issued and allocated as follows:
(a) Each share of common stock, par value $1.00 per share, of
ABC ("ABC Common Stock") issued and outstanding immediately prior to the
Effective Date shall, by operation of law, be automatically exchanged for the
number of shares of F&M Common Stock whose aggregate market value equals $15.00.
The market value of F&M Common Stock will be its average closing price as
reported on the New York Stock Exchange (the "NYSE") for each of the ten full
trading days ending on the second day prior to the Effective Date (the "Average
Closing Price") (the ten full trading day period during which the Exchange Ratio
will be determined is referred to as the "Exchange Ratio Determination Period").
The ratio of shares of F&M Common Stock that will be exchanged for each
outstanding share of ABC Common Stock shall be referred to herein as the
"Exchange Ratio," which shall be rounded to the nearest third decimal point.
Notwithstanding the foregoing, in the event: (A) F&M shall have entered into an
agreement with any person to (i) acquire, merge or consolidate, or enter into
any similar transaction, with F&M, (ii) purchase, lease or otherwise acquire all
or substantially all of the assets of F&M or (iii) purchase or otherwise acquire
securities representing 10% or more of the voting power of F&M; or (B) any
person shall have made a bona fide proposal to F&M by public announcement or
written communication that is or becomes the subject of public disclosure to
acquire F&M by merger, share exchange, consolidation, purchase of all or
substantially all of its assets or any similar transaction, the Average Closing
Price will be based on the average closing price of F&M Common Stock for each of
the ten trading days immediately preceding the public announcement of a
transaction or event described in either (A) or (B).
(b) Each holder of a certificate representing shares of ABC
Common Stock upon the surrender of his ABC stock certificates to F&M, duly
endorsed for transfer in accordance with Section 2.2 below, will be entitled to
receive in exchange therefor a certificate or certificates representing the
number of shares of F&M Common Stock that his shares shall be converted into
pursuant to the Exchange Ratio. Each such holder of ABC Common Stock shall have
the right to receive the consideration described in this Section 2.1 and Section
2.3 upon the surrender of such certificate in accordance with Section 2.2. In
the event F&M changes the number of shares of F&M Common Stock issued and
outstanding prior to the Effective Date as a result of any stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding shares of F&M Common Stock and the record date therefor shall be on
or after the first full trading day of the Exchange Ratio Determination Period
but before the Effective Date, the Exchange Ratio shall be proportionately and
equitably adjusted.
(c) Shares of F&M Common Stock issued and outstanding
immediately prior to the Effective Date shall continue unchanged as an
outstanding share of Common Stock of F&M, as the successor corporation.
(d) From and after the Effective Date, all employee and
officer stock options and director stock warrants to purchase shares of ABC
Common Stock (each, an "ABC Stock Option" or an "ABC Stock Warrant"), that are
then outstanding and unexercised, shall be converted into and become options to
purchase shares of F&M Common Stock, and F&M shall assume each such ABC Stock
Option or ABC Stock Warrant in accordance with the terms of the plan and
agreement by which it is evidenced; provided, however, that from and after the
Effective Date (i) each such ABC Stock Option or ABC Stock Warrant assumed by
F&M may be exercised solely to purchase shares of F&M Common Stock, (ii) the
number of shares of F&M Common Stock purchasable upon exercise of such ABC Stock
Option or ABC Stock Warrant shall be equal to the number of shares of ABC Common
Stock that were purchasable under such ABC Stock Option or ABC Stock Warrant
immediately prior to the Effective Date multiplied by the Exchange Ratio and
rounding down to the nearest whole share, with cash being paid for any
fractional share interest that otherwise would be purchasable, and (iii) the per
share exercise price under each such ABC Stock Option or ABC Stock Warrant shall
be adjusted by dividing the per share exercise price of each such ABC Stock
Option or ABC Stock Warrant by the Exchange Ratio, and rounding to the nearest
cent. The terms of each ABC Stock Option or ABC Stock Warrant shall, in
accordance with its terms, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, recapitalization or other similar
transaction with respect to F&M Common Stock on or subsequent to the Effective
Date. It is intended that the foregoing assumption shall be effected in a manner
that is consistent with the requirements of Section 424 of the Internal Revenue
Code of 1986, as amended (the "Code") as to any ABC Stock Option or ABC Stock
Warrant that is an "incentive stock option" (as defined in Section 422 of the
Code).
2.2 Manner of Exchange of ABC Stock Certificates
As promptly as practicable after the Effective Date, F&M shall
cause American Stock Transfer & Trust Company, acting as the exchange agent
("Exchange Agent"), to send to each former shareholder of record of ABC
immediately prior to the Effective Date transmittal materials for use in
exchanging such shareholder's certificates of ABC Common Stock for the
consideration set forth in Section 2.1 above and Section 2.3 below. Any checks
for cash in lieu of fractional shares which an ABC shareholder shall be entitled
to receive in exchange for such shareholder's shares of ABC Common Stock, and
any dividends paid on any shares of F&M Common Stock, that such shareholder
shall be entitled to receive prior to the delivery to the Exchange Agent of such
shareholder's certificates representing all of such shareholder's shares of ABC
Common Stock will be delivered to such shareholder only upon delivery to the
Exchange Agent of the certificates representing all of such shares (or indemnity
satisfactory to F&M and the Exchange Agent, in their judgment, if any of such
certificates are lost, stolen or destroyed). No interest will be paid on any
such cash in lieu of fractional shares checks or dividends to which the holder
of such shares shall be entitled to receive upon such delivery.
2.3 No Fractional Shares
No certificates or scrip for fractional shares of F&M Common
Stock will be issued. In lieu thereof, F&M will pay the value of such fractional
shares in cash on the basis of the average closing price of F&M Common Stock as
determined pursuant to Section 2.1(a) hereof.
2.4 Dividends
No dividend or other distribution payable to the holders of
record of F&M Common Stock at or as of any time after the Effective Date shall
be paid to the holder of any certificate representing shares of ABC Common Stock
issued and outstanding at the Effective Date until such holder physically
surrenders such certificate for exchange as provided in Section 2.2 of this Plan
of Merger, promptly after which time all such dividends or distributions shall
be paid (without interest).
ARTICLE III
TERMINATION
This Plan of Merger may be terminated at any time prior to the
Effective Date by the parties hereto as provided in Article 6 of the Agreement
between the parties.
