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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 16, 1999
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Fifth Third Bancorp
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(Exact Name of Registrant as specified in its charter)
Ohio 000-08076 31-0854434
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(State or other jurisdiction (Commission (IRS employer
of incorporation) File Number) Identification No.)
Fifth Third Center, Cincinnati, Ohio 45263
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 579-5300
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N/A
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(former name or former address, if changed since last report)
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Item 5. Other Events.
On June 16, 1999, CNB Bancshares, Inc. and Fifth Third entered
into an Affiliation Agreement, pursuant to which CNB will be merged with and
into Fifth Third. In connection with the merger, Civitas Bank, a Michigan
banking corporation formerly known as Citizens Bank of the MidAmerica and a
wholly-owned subsidiary of CNB, will be merged with and into Fifth Third Bank,
Indiana, a wholly-owned subsidiary of Fifth Third. Fifth Third may, at any time,
change the legal method of effecting these mergers if and to the extent Fifth
Third reasonably deems such change to be desirable, including, without
limitation, to provide for the merger of CNB with a wholly-owned subsidiary of
Fifth Third or the merger of Civitas Bank with another wholly-owned subsidiary
of Fifth Third; provided, however, that no such change shall: (1) alter or
change the amount or kind of consideration to be received by the shareholders of
CNB in the merger, (2) adversely affect the tax treatment to shareholders of
CNB, or (3) materially impede or delay receipt of any approvals referred to in
the Affiliation Agreement or the consummation of the transactions contemplated
thereby.
As a result of the merger, each outstanding share of CNB
common stock (excluding treasury and certain other shares) will be converted
into .8825 shares of Fifth Third common stock, and a cash payment for any
fraction of a share of Fifth Third common stock to which any holder of CNB
common stock would be entitled pursuant to the merger in lieu of such fraction
of a share. This exchange ratio is subject to change: (1) so as to give CNB's
shareholders the economic benefit of any stock dividends, reclassifications,
recapitalizations, split-ups, exchanges of shares or combinations or
subdivisions of Fifth Third common stock effected before the effective time of
the merger and (2) so as to maintain as closely as practicable the proportional
interest in Fifth Third common stock which the shareholders of CNB would
otherwise have received if CNB should pay or declare a stock dividend prior to
the effective time of the merger. Additionally, if Fifth Third consolidates with
or is merged with or into any other corporation prior to the effective time of
the merger and the terms of this other action provide that Fifth Third common
stock is to be converted into or exchanged for the shares of any other
corporation or entity, then provision shall be made as part of the terms of such
other action so that each shareholder of CNB who would be entitled to receive
shares of Fifth Third common stock pursuant to the Affiliation Agreement shall
be entitled to receive the same kind and amount of securities or assets as such
CNB shareholder would have received with respect to such shares if the merger
between Fifth Third and CNB had been consummated and such shareholder had
received shares of Fifth Third common stock immediately prior to the
consummation of the other action.
Consummation of the merger will result in the CNB common stock
ceasing to be listed on the New York Stock Exchange and the termination of the
registration of such securities pursuant to the Securities Exchange Act of 1934.
The merger is expected to be a tax-free reorganization and to
be accounted for as a pooling-of-interests. The merger is subject to approval by
the shareholders of CNB, certain regulatory approvals and a number of
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conditions set forth in the Affiliation Agreement. The Affiliation Agreement is
included as Exhibit 2.1 hereto and is hereby incorporated herein by reference.
As a condition and inducement to Fifth Third's entering into
the Affiliation Agreement, CNB entered into the Stock Option Agreement with
Fifth Third. Pursuant to the Stock Option Agreement, CNB has granted to Fifth
Third an option to purchase up to 19.9% of CNB's outstanding common stock, which
currently would be 6,921,479 shares, at a price of $42.96 per share, exercisable
only upon the occurrence of certain events. Both the number of shares subject to
the option and the exercise price therefor are subject to adjustment as provided
in the Stock Option Agreement. The Stock Option Agreement is included as Exhibit
4.1 hereto and is hereby incorporated herein by reference.
Pursuant to the Affiliation Agreement, upon consummation of
the merger, the articles of incorporation of Fifth Third of record with the
Secretary of State of Ohio as of the effective time of the merger shall be the
articles of incorporation of Fifth Third, as the surviving corporation, and the
code of regulations of Fifth Third at the effective time of the merger shall be
the code of regulations of the surviving corporation, until each is amended as
provided therein and in accordance with law. Also pursuant to the Affiliation
Agreement, upon consummation of the merger, the directors and officers of Fifth
Third in office at the effective time of the merger shall continue to be the
directors and officers of the surviving corporation. Additionally, in the
Affiliation Agreement, Fifth Third has agreed: (1) to take all steps necessary
at the first Fifth Third Board of Directors meeting held after the effective
time of the merger to elect or appoint as Directors of Fifth Third three
persons mutually selected by Fifth Third and CNB prior to the effective time of
the merger who were directors of CNB on the date of the Affiliation Agreement,
with each of such persons to serve in a different class of the Fifth Third
Board of Directors and (2) to enter into an employment agreement to employ
James J. Giancola as the Chief Executive Officer of Fifth Third Bank, Indiana.
The Affiliation Agreement may be terminated by either Fifth
Third or CNB if the merger has not been consummated by April 1, 2000, provided
the terminating party is not in material breach or default of any
representations, warranty or covenant contained in the Affiliation Agreement on
the date of such termination.
The preceding summary of certain provisions of the Affiliation
Agreement and the Stock Option Agreement, copies of which are filed as exhibits
hereto, is not intended to be complete and is qualified in its entirety by
reference to the full text of such agreements.
FORWARD-LOOKING STATEMENT DISCLOSURE
This report contains certain forward-looking statements within
the meaning of the Private Litigation Reform Act of 1995. Forward-looking
statements are statements other than historical information or statements of
current condition. Words such as expects, anticipates, intends, plans, believes,
seeks or estimates, or variations of such words, and similar
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expressions are also intended to identify forward-looking statements. In light
of the risks and uncertainties inherent in future projections, many of which are
beyond Fifth Third's control, actual results could differ materially from those
in the forwarded-looking statements. These statements should not be regarded as
a representation that the objectives will be achieved. Risks and uncertainties
include, but are not limited to, the following: general economic conditions
including changes in interest rates and the performance of financial markets;
changes in domestic and foreign laws, regulations and taxes, the success of
processing and other strategies, judicial decisions and rulings; and various
other matters. Fifth Third has no obligation to release publicly the results of
any future revisions it may make to forward-looking statements to reflect events
or circumstances after the date hereof, or to reflect the occurrence of
unanticipated events. For more information about Fifth Third and risks arising
when investing in Fifth Third, you are directed to Fifth Third's most recent
reports on Form 10-K and 10-Q as filed with the SEC.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
2.1 Affiliation Agreement dated as of June 16, 1999 by and between
Fifth Third Bancorp and CNB Bancshares, Inc. (omitting
schedules and exhibits not deemed material).
4.1 Stock Option Agreement dated as of June 16, 1999 by and
between CNB Bancshares, Inc., as Issuer, and Fifth Third
Bancorp, as Grantee (omitting schedules and exhibits not
deemed material).
99.1 Press Release dated June 16, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: June 16, 1999
FIFTH THIRD BANCORP
By: /s/ Paul L. Reynolds
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Paul L. Reynolds, Senior Vice President
and Assistant Secretary
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Exhibit 2.1
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AFFILIATION AGREEMENT
BETWEEN
FIFTH THIRD BANCORP
AND
CNB BANCSHARES, INC.
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TABLE OF CONTENTS
ARTICLE I.
MODE OF EFFECTUATING CONVERSION OF SHARES; EFFECTS OF THE MERGER.............2
A. THE MERGER..............................................................2
B. TREATMENT OF FIFTH THIRD STOCK..........................................2
C. TREATMENT OF CNB BANCSHARES STOCK.......................................2
D. TREATMENT OF CNB BANCSHARES OPTIONS.....................................2
E. EXCHANGE PROCEDURES.....................................................4
F. ADJUSTMENTS TO EXCHANGE RATIO...........................................5
G. CONVERTIBLE DEBENTURES..................................................6
H. EFFECTIVENESS OF MERGER; SURVIVING CORPORATION..........................6
I. ARTICLES OF THE SURVIVING CORPORATION...................................6
J. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.....................6
K. REGULATIONS OF THE SURVIVING CORPORATION................................6
L. EFFECTS OF THE MERGER...................................................7
M. FURTHER ACTIONS.........................................................7
N. FILING OF DOCUMENTS.....................................................7
O. TAX AND ACCOUNTING TREATMENT............................................7
P. NO DISSENTERS' RIGHTS...................................................7
Q. CONSOLIDATION OF ENTITIES; CHANGES TO FORM OF MERGER....................7
R. PLAN OR ARTICLES OF MERGER..............................................8
S. DISCLOSURE SCHEDULE; STANDARD...........................................8
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF CNB BANCSHARES.............................9
A. ORGANIZATION; CAPITALIZATION; SUBSIDIARIES..............................9
B. BANK SUBSIDIARY........................................................10
C. FINANCIAL STATEMENTS; REGULATORY REPORTS...............................10
D. TITLE TO PROPERTIES....................................................12
E. NO MATERIAL ADVERSE EFFECT.............................................12
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F. LITIGATION; REGULATORY ACTION..........................................12
G. ORDINARY COURSE OF BUSINESS............................................13
H. TAXES; ACCOUNTING......................................................13
I. CONTRACTS..............................................................13
J. LOAN LOSSES............................................................14
K. BROKER.................................................................14
L. BOARD APPROVAL; CORPORATE AUTHORITY; NO BREACH.........................14
M. ARTICLES AND BY-LAWS...................................................15
N. COMPLIANCE WITH LAW....................................................16
O. INTENTIONALLY OMITTED..................................................16
P. ENVIRONMENTAL MATTERS..................................................16
Q. EMPLOYMENT MATTERS.....................................................17
R. INVESTMENT PORTFOLIO...................................................20
S. ANTI-TAKEOVER PROVISIONS; NO IMPEDIMENTS...............................21
T. DERIVATIVE INSTRUMENTS.................................................21
U. YEAR 2000..............................................................21
V. FAIRNESS OPINION.......................................................22
W. TRANSACTIONS WITH AFFILIATES...........................................22
X. EXPIRATION OF REPRESENTATIONS AND WARRANTIES...........................22
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF FIFTH THIRD...............................22
A. ORGANIZATION...........................................................22
B. CAPITALIZATION.........................................................22
C. INTENTIONALLY OMITTED..................................................23
D. DUE ISSUANCE...........................................................23
E. FINANCIAL STATEMENTS...................................................23
F. NO MATERIAL ADVERSE EFFECT.............................................23
G. BOARD APPROVAL; CORPORATE AUTHORITY; NO BREACH.........................23
H. ARTICLES AND REGULATIONS...............................................24
I. COMPLIANCE WITH LAW....................................................24
J. SEC FILINGS; REGULATORY REPORTS........................................25
K. LITIGATION; REGULATORY ACTION..........................................25
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L. LOAN LOSSES............................................................26
M. TAX RETURNS............................................................26
N. BROKER.................................................................26
O. INVESTMENT PORTFOLIO...................................................26
P. TAXES; ACCOUNTING......................................................27
Q. YEAR 2000..............................................................27
R. EXPIRATION OF REPRESENTATIONS AND WARRANTIES...........................27
ARTICLE IV.
OBLIGATIONS OF CNB BANCSHARES BETWEEN THE DATE OF THIS AGREEMENT AND
THE EFFECTIVE TIME.....................................................27
A. SHAREHOLDERS' MEETING..................................................27
B. NO SOLICITATION........................................................28
C. VALUATION ADJUSTMENT...................................................29
D. OPERATIONS IN THE ORDINARY COURSE; FORBEARANCES........................29
ARTICLE V.
COOPERATION AND OTHER OBLIGATIONS AND OTHER COVENANTS.......................30
A. REGISTRATION STATEMENT AND PROXY STATEMENT.............................30
B. REGULATORY APPROVALS...................................................31
C. REASONABLE BEST EFFORTS................................................32
D. ACCESS TO INFORMATION..................................................32
E. EMPLOYEE BENEFIT MATTERS...............................................33
F. STATE TAKEOVER STATUTES................................................35
G. AFFILIATES.............................................................35
H. EXEMPTION FROM LIABILITY UNDER SECTION 16(B)...........................36
I. EMPLOYMENT AGREEMENT...................................................36
J. FORBEARANCES OF FIFTH THIRD............................................36
K. COORDINATION OF DIVIDENDS..............................................36
ARTICLE VI.
CONDITIONS PRECEDENT TO CLOSING.............................................37
A. CONDITIONS TO THE OBLIGATIONS OF EACH OF THE PARTIES...................37
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B. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF FIFTH THIRD................38
C. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF CNB BANCSHARES.............38
ARTICLE VII.
ADDITIONAL COVENANTS........................................................39
A. BANK MERGER............................................................39
B. EMPLOYMENT ARRANGEMENTS................................................39
C. DIRECTOR, OFFICER AND EMPLOYEE INDEMNIFICATION.........................41
D. NOTICES................................................................42
E. ENTIRE AGREEMENT.......................................................43
F. ELECTRONIC FUNDS TRANSFERS.............................................43
G. PRESS RELEASES.........................................................43
H. EXPENSES...............................................................43
I. ADVICE OF CHANGES......................................................43
J. TAX AND ACCOUNTING TREATMENT...........................................44
K. ENFORCEMENT OF THIS AGREEMENT..........................................44
ARTICLE VIII.
TERMINATION ................................................................44
A. BASES FOR TERMINATION..................................................44
B. EFFECT OF TERMINATION..................................................45
ARTICLE IX.
CLOSING AND EFFECTIVE TIME .................................................45
ARTICLE X.
AMENDMENT...................................................................45
ARTICLE XI.
GENERAL ....................................................................46
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ARTICLE XII.
COUNTERPARTS.................................................................46
APPENDIX A........ OPTION AGREEMENT
APPENDIX B........ FORM OF CNB BANCSHARES AFFILIATE LETTER
APPENDIX C........ FORM OF FIFTH THIRD AFFILIATE LETTER
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AFFILIATION AGREEMENT
This Affiliation Agreement (this "Agreement") dated as of June 16, 1999 is
entered into by and between FIFTH THIRD BANCORP, a corporation organized and
existing under the corporation laws of the State of Ohio with its principal
office located in Cincinnati, Hamilton County, Ohio ("Fifth Third"), and CNB
BANCSHARES, INC., a corporation organized and existing under the corporation
laws of the State of Indiana, with its principal office located in Evansville,
Vanderburgh County, Indiana ("CNB Bancshares").
W I T N E S S E T H :
WHEREAS, Fifth Third is a registered multi-bank holding company under the Bank
Holding Company Act of 1956, as amended, and CNB Bancshares is a registered bank
holding company registered under the Bank Holding Company Act of 1956, as
amended, and Fifth Third and CNB Bancshares desire to effect a merger under the
authority and provisions of the corporation laws of the State of Ohio and the
State of Indiana pursuant to which at the Effective Time (as herein defined in
Article IX) CNB Bancshares will be merged with and into Fifth Third, with Fifth
Third as the surviving corporation (the "Merger");
WHEREAS, the Board of Directors of CNB Bancshares has determined that it is in
the best interests of CNB Bancshares and its stockholders to consummate the
Merger, subject to the terms and conditions set forth herein;
WHEREAS, the Board of Directors of Fifth Third has determined that it is in the
best interests of Fifth Third and its stockholders to consummate the Merger,
subject to the terms and conditions set forth herein;
WHEREAS, under the terms of this Agreement each share of Common Stock, no par
value per share, of CNB Bancshares (the "CNB Bancshares Common Stock"), which is
issued and outstanding (excluding any treasury shares) immediately prior to the
Effective Time will at the Effective Time be canceled and extinguished and
converted into shares of Common Stock, without par value, of Fifth Third ("Fifth
Third Common Stock"), all as more fully provided in this Agreement;
WHEREAS, the parties to this Agreement intend that the Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code") and for pooling-of-interests accounting
treatment;
WHEREAS, as an inducement and condition to, and concurrently with, the execution
of, this Agreement, Fifth Third and CNB Bancshares are entering into a stock
option agreement (the "Option Agreement") in the form attached hereto as
Appendix A;
WHEREAS, prior to the date hereof, the Board of Directors of CNB Bancshares has
approved, adopted and recommended this Agreement and the Merger, upon the terms
and subject to the conditions set forth herein, and has approved (including for
purposes of Chapter 42 and Chapter 43 of the Indiana Business Corporation Law
(the "IBCL")) the Option Agreement, upon the terms and subject to the conditions
set forth herein and therein.
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NOW, THEREFORE, in consideration of the mutual covenants herein contained, Fifth
Third and CNB Bancshares, agree together as follows:
ARTICLE I. MODE OF EFFECTUATING CONVERSION OF SHARES; EFFECTS OF THE MERGER
A. THE MERGER. Upon the terms and conditions set forth in this Agreement, CNB
Bancshares shall be merged with and into Fifth Third.
B. TREATMENT OF FIFTH THIRD STOCK. At the Effective Time (as defined in Article
IX) all of the shares of Fifth Third Common Stock that are issued and
outstanding or held by Fifth Third as treasury shares immediately prior to the
Effective Time will remain unchanged and will remain outstanding or as treasury
shares, as the case may be, of the Surviving Corporation. Any stock options,
subscription rights, warrants or other securities outstanding immediately prior
to the Effective Time, entitling the holders to subscribe for purchase of any
shares of the capital stock of any class of Fifth Third, and any securities
outstanding at such time that are convertible into shares of the capital stock
of any class of Fifth Third will remain unchanged and will remain outstanding,
with the holders thereof entitled to subscribe for, purchase or convert their
securities into the number of shares of the class of capital stock of Fifth
Third to which they are entitled under the terms of the governing documents.
C. TREATMENT OF CNB BANCSHARES STOCK. 1. At the Effective Time, each share of
CNB Bancshares Common Stock (excluding treasury shares) that is issued and
outstanding immediately prior to the Effective Time will be converted by virtue
of the Merger and without further action, into .8825 shares of Fifth Third
Common Stock (the "Exchange Ratio"), or cash in lieu thereof for fractional
shares, if any, as described in Section I.E. below, subject to adjustment as
provided in Section I.F. below. At the Effective Time, all shares of CNB
Bancshares Common Stock held as treasury shares and all shares of CNB Bancshares
Common Stock owned by Fifth Third or any of its wholly-owned subsidiaries (other
than in a fiduciary, custodial or similar capacity or owned as a result of a
debt previously contracted) will be canceled and terminated and no shares of
Fifth Third or other consideration will be issued in exchange therefor.
2. At the Effective Time, all of the shares of CNB Bancshares Common
Stock, whether issued or unissued (including treasury shares), will be converted
as provided in this Article I, canceled and extinguished and the holders of
certificated or uncertificated shares thereof shall cease to have any rights as
shareholders of CNB Bancshares, other than the right to receive any dividend or
other distribution with respect to such CNB Bancshares Common Stock with a
record date occurring prior to the Effective Time and the right to receive the
consideration provided in this Article I. After the Effective Time, there shall
be no transfers on the stock transfer books of CNB Bancshares of shares of CNB
Bancshares Common Stock.
D. TREATMENT OF CNB BANCSHARES OPTIONS. 1. At the Effective Time, each award,
option, or other right to purchase or acquire shares of CNB Bancshares Common
Stock pursuant to stock options ("CNB Bancshares Rights") granted by CNB
Bancshares under the stock option plans identified in the Disclosure Schedule
(as defined below) ("Stock Plan"), which are outstanding at the Effective Time,
whether or not vested or exercisable, shall automatically be converted into
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and become options with respect to Fifth Third Common Stock, and Fifth Third
shall assume each CNB Bancshares Right, in accordance with the same terms and
conditions of the Stock Plan and stock option agreement by which the CNB
Bancshares Right is evidenced (including the immediate vesting of such CNB
Bancshares Rights if provided by the terms thereof), except from and after the
Effective Time, (i) Fifth Third and its Compensation Committee shall be
substituted for the Committee of CNB Bancshares' Board of Directors (including,
if applicable, the entire Board of Directors of CNB Bancshares) administering
such Stock Plan, (ii) each CNB Bancshares Right assumed by Fifth Third may be
exercised solely for shares of Fifth Third Common Stock, (iii) the number of
shares of Fifth Third Common Stock subject to such CNB Bancshares Right shall
be equal to the number of shares of CNB Bancshares Common Stock subject to such
CNB Bancshares Right immediately prior to the Effective Time multiplied by the
Exchange Ratio, and (iv) the per share exercise price under each such CNB
Bancshares Right shall be adjusted by dividing the per share exercise price
under each such CNB Bancshares Right by the Exchange Ratio and rounding to the
nearest four decimal places. Notwithstanding, the provisions of clause (iii) of
the preceding sentence, Fifth Third shall not be obligated to issue any
fraction of a share of Fifth Third Common Stock upon exercise of CNB Bancshares
Rights and any fraction of a share of Fifth Third Common Stock that otherwise
would be subject to a converted CNB Bancshares Right shall represent the right
to receive a cash payment equal to the product of such fraction and the excess,
if any, of the Applicable Market Value Per Share of Fifth Third Common Stock as
defined in Section I.E. hereof over the per share exercise price of such CNB
Bancshares Right (as adjusted in accordance with subparagraph (iv) of this
Section I.C.2.). In addition, notwithstanding the foregoing, each CNB
Bancshares Right which is an "incentive stock option" shall be adjusted as
required by Section 424 of the Code so as not to constitute a modification,
extension, or renewal of the option, within the meaning of Section 424(h) of
the Code. Fifth Third agrees to take all reasonable steps which are necessary
to effectuate the foregoing provisions of this Section.
2. At or prior to the Effective Time, Fifth Third shall take all
corporate action necessary to reserve for issuance sufficient shares of Fifth
Third Common Stock for delivery upon exercise of CNB Bancshares Rights assumed
by Fifth Third in accordance with this Section.
3. As soon as practicable after the Effective Time, Fifth Third shall
deliver to each holder of CNB Bancshares Rights appropriate notices setting
forth such holders' rights pursuant to the Stock Plan, and the agreements
evidencing the grants of such CNB Bancshares Rights shall continue in effect on
the same terms and conditions (subject to the conversion required by this
Section I.C. after giving effect to the Merger and the assumption by Fifth Third
as set forth above). To the extent necessary to effectuate the provisions of
this Section I.C., Fifth Third shall deliver new or amended agreements
reflecting the terms of each CNB Bancshares Rights assumed by Fifth Third and
amend the Stock Plan to reflect the terms hereof.
4. As soon as practicable after the Effective Time, Fifth Third shall
file with the SEC a registration statement on the appropriate form with respect
to the shares of Fifth Third Common Stock subject to such options and shall use
its best efforts to maintain the effectiveness of such registration statement or
registration statements (and to maintain the current status of the prospectus or
prospectuses with respect thereto) for so long as such options remain
outstanding.
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E. EXCHANGE PROCEDURES. 1. After the Effective Time, each holder of a
certificate or certificates for shares of CNB Bancshares Common Stock as of the
Effective Time, upon surrender of the same duly transmitted to Fifth Third Trust
Department, as exchange agent (the "Exchange Agent") (or in lieu of surrendering
such certificates, in the case of uncertificated shares or lost, stolen,
destroyed or mislaid certificates, upon execution of such documentation as may
be reasonably required by Fifth Third), shall be entitled to receive in exchange
therefor a certificate or certificates representing the number of whole shares
of Fifth Third Common Stock into which such holder's shares of CNB Bancshares
Common Stock shall have been converted by the Merger pursuant to the Exchange
Ratio, plus a cash payment for any fraction of a share to which the holder is
entitled, in lieu of such fraction of a share, without any interest thereon,
equal in amount to the product resulting from multiplying such fraction by the
per share price of Fifth Third Common Stock as reported for the NASDAQ National
Market System as of the close of business on the date of the Effective Time (the
"Applicable Market Value Per Share of Fifth Third Common Stock") (such
certificates and cash being hereinafter collectively referred to as the
"Exchange Fund"); provided, however, that if CNB Bancshares' Dividend
Reinvestment Plan is merged with Fifth Third's Dividend Reinvestment Plan, the
shares of CNB Bancshares Common Stock held through CNB Bancshares' Dividend
Reinvestment Plan shall be converted in the Merger into whole shares and
fractional shares of Fifth Third Common Stock at the Exchange Ratio and such
shares shall be held through Fifth Third's Dividend Reinvestment Plan. Within
seven (7) business days after the Effective Time, the Exchange Agent will send a
notice and transmittal form to each CNB Bancshares shareholder of record at the
Effective Time advising such shareholder of the effectiveness of the Merger and
the procedures for surrendering to the Exchange Agent outstanding certificates
formerly evidencing CNB Bancshares Common Stock in exchange for new certificates
of Fifth Third Common Stock and cash in lieu of fractional shares, or for
receiving certificates of Fifth Third Common Stock and cash in lieu of
fractional shares with respect to uncertificated shares of CNB Bancshares Common
Stock. Until so surrendered, as applicable, each uncertificated share and
outstanding certificate that prior to the Effective Time represented shares of
CNB Bancshares Common Stock shall be deemed for all corporate purposes to
represent the right to receive the number of full shares of Fifth Third Common
Stock and cash in lieu of fractional share interests into which the same shall
have been converted; provided, however, that dividends or distributions
otherwise payable with respect to shares of Fifth Third Common Stock into which
CNB Bancshares Common Stock shall have been so converted shall be paid with
respect to such shares only when the transmittal form shall have been validly
executed and delivered (and, in the case of certificated shares, the certificate
or certificates evidencing shares of CNB Bancshares Common Stock shall have been
so surrendered, or in lieu of surrendering such certificates in the case of
lost, stolen, destroyed or mislaid certificates, upon execution of such
documentation as may be reasonably required by Fifth Third) and thereupon any
such dividends and distributions shall be paid, without interest, to the holder
entitled thereto subject however to the operation of any applicable escheat or
similar laws relating to unclaimed funds.
2. Any portion of the Exchange Fund that remains unclaimed by the
stockholders of CNB Bancshares for twelve months after the Effective Time shall
be paid to Fifth Third. Any stockholders of CNB Bancshares who have not
theretofore complied with this Section I.E. shall thereafter only look to Fifth
Third for payment of the shares of CNB Bancshares Common Stock
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and cash in lieu of any fractional shares deliverable in respect of each share
of CNB Bancshares Common Stock such stockholder holds as determined pursuant to
this Agreement, without any interest thereon. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to any former
holder of CNB Bancshares Common Stock for any amount or security delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
F. ADJUSTMENTS TO EXCHANGE RATIO. 1. The Exchange Ratio referred to in Section
I.C. shall be adjusted so as to give the CNB Bancshares shareholders the
economic benefit of any stock dividends, reclassifications, recapitalizations,
split-ups, exchanges of shares, or combinations or subdivisions of Fifth Third
Common Stock (each, a "Share Adjustment") effected between the date of this
Agreement and the Effective Time. In particular, without limiting the foregoing,
if, prior to the Effective Time, Fifth Third should effect a split,
reclassification or combination of the Fifth Third Common Stock, or pay or
declare a stock dividend or other stock distribution in Fifth Third Common
Stock, as of a record date prior to the Effective Time, appropriate and
proportionate adjustments (rounded to the nearest one-ten-thousandth of a share
of Fifth Third Common Stock) will be made to the Exchange Ratio and the total
number of shares of Fifth Third Common Stock to be issued in the transaction so
that each shareholder of CNB Bancshares shall be entitled to receive such number
of shares of Fifth Third Common Stock as such shareholder would have received
pursuant to such Share Adjustment had the record date and the payment date
therefor been immediately following the Effective Time of the Merger. In the
event of a Share Adjustment with a record date between the date of this
Agreement and the Effective Time but a payment date subsequent to the Effective
Time, Fifth Third shall take all actions necessary such that on such payment
date, any holder of CNB Bancshares Common Stock as of the Effective Time shall
be entitled to receive such number of shares of Fifth Third Common Stock as such
shareholder would have received as a result of such Share Adjustment if the
record date for such Share Adjustment had been immediately after the Effective
Time.
2. If, between the date hereof and the Effective Time, Fifth Third
shall consolidate with or be merged with or into any other corporation (a
"Business Combination") and the terms thereof shall provide that Fifth Third
Common Stock shall be converted into or exchanged for the shares of any other
corporation or entity, then provision shall be made as part of the terms of such
Business Combination so that each shareholder of CNB Bancshares who would be
entitled to receive shares of Fifth Third Common Stock pursuant to this
Agreement shall be entitled to receive, in lieu of each share of Fifth Third
Common Stock issuable to such shareholder as provided herein, the same kind and
amount of securities or assets as such shareholder would have received with
respect to such shares if the Merger had been consummated, and such shareholder
had received shares of Fifth Third Common Stock, immediately prior to the
consummation of such Business Combination.
3. If, prior to the Effective Time, CNB Bancshares should pay or
declare a stock dividend, an appropriate adjustment (rounded to the nearest
one-ten-thousandth of a share of Fifth Third Common Stock) will be made to the
Exchange Ratio so as to maintain (as closely as practicable) the proportional
interest in Fifth Third Common Stock which the shareholders of CNB Bancshares
would otherwise have received (it being understood that in the event that CNB
Bancshares shall pay or declare a 5% (1-for-20) stock dividend, in keeping with
CNB
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Bancshares' past practice, prior to the Effective Time and CNB Bancshares does
not pay or declare any other stock dividend, the Exchange Ratio would be
adjusted to equal .8405).
G. CONVERTIBLE DEBENTURES. CNB Bancshares' outstanding 6% Convertible
Subordinated Debentures due June 30, 2028 (the "Convertible Debentures"), issued
to CNB Capital Trust I (of which CNB Bancshares is the beneficial owner of all
of the beneficial ownership interests represented by common securities) shall
remain outstanding, unchanged by reason of the Merger, except that, in
accordance with the applicable provisions of the indenture under which the
Convertible Debentures were issued, without any action on the part of the holder
thereof, the Convertible Debentures shall no longer be convertible into CNB
Bancshares Common Stock but shall thereafter be convertible only into the right
to receive the number of shares of Fifth Third Common Stock the holder thereof
would have been entitled to receive had such holder converted such Convertible
Debentures into CNB Bancshares Common Stock immediately prior to the Effective
Time. At the Effective Time, Fifth Third shall expressly assume CNB Bancshares'
obligations under the Convertible Debentures as required by such indenture.
H. EFFECTIVENESS OF MERGER; SURVIVING CORPORATION. At the Effective Time, the
Merger shall become effective, the separate existence of CNB Bancshares shall
cease and CNB Bancshares shall be merged into Fifth Third (which will be the
"Surviving Corporation"), and which shall continue its corporate existence under
the laws of the State of Ohio under the name "Fifth Third Bancorp".
I. ARTICLES OF THE SURVIVING CORPORATION. The Second Amended Articles of
Incorporation, as amended, of Fifth Third of record with the Secretary of State
of Ohio as of the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation, until further amended as provided by law.
J. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. 1. The Directors of
Fifth Third who are in office at the Effective Time shall be the directors of
the Surviving Corporation, each of whom shall continue to serve as a Director
for the term for which he was elected, subject to the Regulations of the
Surviving Corporation and in accordance with applicable law. At the first Board
of Directors meeting held after the Effective Time, Fifth Third shall take all
steps necessary to elect or appoint as Directors of Fifth Third three persons
who are directors of CNB Bancshares on the date hereof (mutually selected by
Fifth Third and CNB Bancshares prior to the Effective Time), with each of such
persons to serve in a different class of the Fifth Third Board of Directors.
2. The officers of Fifth Third who are in office at the time the Merger
becomes effective shall continue as officers of the Surviving Corporation,
subject to the Regulations of the Surviving Corporation and in accordance with
law.
K. REGULATIONS OF THE SURVIVING CORPORATION. The Regulations of Fifth Third at
the Effective Time shall be the Regulations of the Surviving Corporation, until
amended as provided therein and in accordance with law.
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<PAGE> 13
L. EFFECTS OF THE MERGER. At the Effective Time, the effects of the Merger
shall be as provided by the applicable provisions of the laws of Ohio and, to
the extent applicable, Indiana. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time: the separate existence
of CNB Bancshares shall cease; Fifth Third as the Surviving Corporation shall
possess and have title to all assets and property (including all real estate)
of every description, and every interest therein, wherever located, without
reversion or impairment; and the rights, privileges, immunities, powers,
franchises and authority, of a public as well as a private nature, of each of
Fifth Third and CNB Bancshares, and all obligations owing by or due each of
Fifth Third and CNB Bancshares shall be vested in, and become the obligations
of, Fifth Third, without further act or deed; and all rights of creditors of
each of Fifth Third and CNB Bancshares shall be preserved unimpaired, and all
liens upon the property of each of Fifth Third and CNB Bancshares shall be
preserved unimpaired, on only the property affected by such liens immediately
prior to the Effective Time; and any proceeding pending against CNB Bancshares
may be continued as if the Merger did not occur or the Surviving Corporation
may be substituted in the proceeding for CNB Bancshares.
M. FURTHER ACTIONS. From time to time as and when requested by the Surviving
Corporation, or by its successors or assigns, the officers and Directors of CNB
Bancshares in office immediately prior to the Effective Time shall execute and
deliver such instruments and shall take or cause to be taken such further or
other action as shall be necessary in order to vest or perfect in the Surviving
Corporation or to confirm of record or otherwise, title to, and possession of,
all the assets, property, interests, rights, privileges, immunities, powers,
franchises and authority of CNB Bancshares and otherwise to carry out the
purposes of this Agreement.
N. FILING OF DOCUMENTS. A certificate or articles of merger (and, if required,
this Agreement) shall be filed and/or recorded in accordance with the
requirements of the laws of the States of Ohio and Indiana, respectively, as
provided in Article IX. Such filing shall not be made until, but shall be filed
promptly after, all of the conditions precedent to consummating the Merger as
contained in Article VI of this Agreement shall have been fully satisfied or
effectively waived at the Closing contemplated by Article IX hereof.
O. TAX AND ACCOUNTING TREATMENT. 1. The parties intend that the Merger qualify
as a "reorganization" within the meaning of Section 368(a) of the Code. The
Agreement is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under the Code and for purposes of Section 354 and 361
of the Code.
2. The Merger is intended to qualify for pooling-of-interests
accounting treatment.
P. NO DISSENTERS' RIGHTS. No holder of Fifth Third Common Stock or CNB
Bancshares Common Stock shall be entitled to relief as a dissenting shareholder
pursuant to the IBCL, the Ohio General Corporation Law (the "OGCL") or
otherwise.
Q. CONSOLIDATION OF ENTITIES; CHANGES TO FORM OF MERGER. The parties agree to
cooperate and take all reasonable requisite action prior to or following the
Effective Time to merge or otherwise consolidate legal entities (effective at or
after the Effective Time) to the extent desirable in Fifth Third's good faith
judgment for commercial, regulatory or other reasons, and
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further agree that Fifth Third may, at any time, change the legal method of
effecting the Merger (including without limitation the provisions of Article I
hereof) or the contemplated merger of the Bank Subsidiary (as defined below)
with and into Fifth Third Bank, Indiana on a date at or after the Effective
Time to be determined by Fifth Third, with Fifth Third Bank, Indiana as the
surviving corporation (the "Subsidiary Merger"), if and to the extent Fifth
Third reasonably deems such change to be desirable, including, without
limitation, to provide for the merger of CNB Bancshares with a wholly-owned
subsidiary of Fifth Third or the merger of Civitas Bank, a Michigan banking
corporation, formerly known as Citizens Bank of the MidAmerica (the "Bank
Subsidiary"), with another wholly-owned subsidiary of Fifth Third; provided,
however, that no such change shall (A) alter or change the amount or kind of
the consideration for the Merger to be received by the shareholders of CNB
Bancshares in the Merger, (B) adversely affect the tax treatment to
shareholders of CNB Bancshares, or (C) materially impede or delay receipt of
any approvals referred to herein or the consummation of the transactions
contemplated hereby.
R. PLAN OR ARTICLES OF MERGER. At the request of Fifth Third, CNB Bancshares
shall enter into a separate plan of merger or articles of merger reflecting the
terms hereof (including Section I.Q. hereof) for purposes of any filing required
by the IBCL or the OGCL.
S. DISCLOSURE SCHEDULE; STANDARD. 1. CNB Bancshares has delivered to Fifth
Third a confidential schedule (the "Disclosure Schedule"), executed by both CNB
Bancshares and Fifth Third concurrently with the delivery and execution hereof,
setting forth, among other things, in each case with respect to specified
sections of this Agreement, items the disclosure of which shall be necessary or
appropriate either in response to an express disclosure requirement contained
in a provision hereof or as an exception to one or more representations or
warranties contained in Article II hereof, provided, however, that
notwithstanding anything in this Agreement to the contrary (i) no such item
shall be required to be set forth in the Disclosure Schedule as an exception to
a representation or warranty if its absence would not be reasonably likely to
result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section I.S.2., and (ii) the mere
inclusion of an item in the Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by CNB Bancshares
that such item represents a material exception or fact, event or circumstance
or that such item is reasonably likely to result in a Material Adverse Effect
(as defined in Section I.S.2.).
2. No representation or warranty of CNB Bancshares contained in Article
II hereof (other than Section II.A.1., the first sentence of Section II.A.2.,
Section II.E. and Section II.L.3(i)(x).) or Fifth Third contained in Article III
hereof (other than Section III.F.) shall be deemed untrue or incorrect, and CNB
Bancshares and Fifth Third, as the case may be, shall not be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, event or circumstance unless such fact, circumstance or event,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warrant contained in Article II hereof,
in the case of CNB Bancshares, or Article III hereof, in the case of Fifth
Third, has had or is reasonably likely to have a Material Adverse Effect on the
party making such representation or warranty. The representation and warranty
contained in Section II.A.1. shall not be deemed untrue or incorrect, and CNB
Bancshares shall not be deemed to have breached such representation or warranty,
if such representation and warranty is
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<PAGE> 15
untrue or incorrect only in a DE MINIMIS respect. As used herein, the term
"Material Adverse Effect" means, with respect to CNB Bancshares or Fifth Third,
any effect that (i) is, or is reasonably expected to be, material and adverse
to the financial position, results of operations or business of CNB Bancshares
and its subsidiaries taken as a whole, or Fifth Third and its subsidiaries
taken as a whole, respectively, or (ii) would materially impair the ability of
either CNB Bancshares or Fifth Third to perform its obligations under this
Agreement or would otherwise materially threaten or materially impede the
consummation of the Merger and other transactions contemplated by this
Agreement; provided, however, that Material Adverse Effect shall not be deemed
to include the impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in GAAP or regulatory accounting requirements applicable to banks
and their holding companies generally, and (c) any modifications or changes to
valuation or reserve policies and practices in connection with or in
anticipation of the Merger. Except with respect to the representations and
warranties of CNB Bancshares set forth in Section II.A.1., the first sentence
of Section II.A.2. and Section II.L.3(i)(x), for all purposes of determining
whether any facts or events contravening a representation or warranty contained
herein constitute, individually or in the aggregate, a Material Adverse Effect,
representations and warranties contained in Article II (other than Section
II.E.) or Article III (other than Section III.F.) shall be read without regard
to any reference to materiality or Material Adverse Effect set forth therein.
3. CNB Bancshares shall be permitted to update and supplement the
Disclosure Schedule so as to disclose exceptions to one or more representations
or warranties contained in Article II hereof which shall have arisen between the
date hereof and the Closing Date; provided, however, that, anything herein to
the contrary notwithstanding, the exceptions and other information set forth on
any such updated or supplemented Disclosure Schedule shall not be taken into
consideration in determining, for purposes of this Agreement, whether the
condition set forth in Section VI.B.1. hereof shall have been satisfied.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF CNB BANCSHARES
CNB Bancshares represents and warrants to Fifth Third that as of the date hereof
or as of the indicated date, as appropriate, and subject to the standard set
forth in Section I.S. except as otherwise disclosed in the Disclosure Schedule:
A. ORGANIZATION; CAPITALIZATION; SUBSIDIARIES. 1. CNB Bancshares (i) is duly
incorporated, validly existing and in good standing as a corporation under the
corporation laws of the State of Indiana and is a registered bank holding
company under the Bank Holding Company Act; (ii) is duly authorized, in all
material respects, to conduct the business in which it is engaged in all
material respects; (iii) has an authorized capital stock consisting entirely of
100,000,000 shares of CNB Bancshares Common Stock and 2,000,000 shares of
preferred stock, no par value per share ("CNB Bancshares Preferred Stock"); (iv)
has no outstanding securities of any kind, nor any outstanding options, warrants
or other rights, contracts, understandings or commitments entitling another
person to acquire (or to receive consideration based on the value of) any
securities of CNB Bancshares of any kind, other than (a) 34,781,304 shares of
CNB Bancshares Common Stock, which are authorized, duly issued and outstanding
as of June 11, 1999 (which amount includes shares held through CNB Bancshares'
Dividend Reinvestment Plan (the
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<PAGE> 16
"Dividend Reinvestment Plan")), all of which shares are fully paid and
non-assessable, (b) options to purchase a total of not more than 1,500,000
shares of CNB Bancshares Common Stock as of June 11, 1999, which were granted
to and are currently held by the present and former employees, officers,
Directors and advisory directors of CNB Bancshares and/or the Bank Subsidiary
or other subsidiaries of CNB Bancshares, (c) 3,336,150 shares of CNB Bancshares
Common Stock issuable upon conversion of the Convertible Debentures and (d)
937,005 shares issuable pursuant to certain Benefits Plans (as defined below)
as set forth in the Disclosure Schedule. Since the date referred to in clause
(iv) of the preceding sentence to the date hereof, CNB Bancshares has not
issued any shares, except in connection with the exercise of the options
referred to in clause (iv)(b), conversion of the Convertible Debentures
referred to in clause (iv)(c), or under the Benefit Plans as set forth in the
Disclosure Schedule, or any additional options. CNB Bancshares has made
available to Fifth Third a correct and complete list of all options referred to
in clause (iv)(b), together with the name of the holder, the exercise price,
and vesting information.
2. CNB Bancshares owns of record and beneficially free and clear of all
liens and encumbrances, all of the outstanding shares of the common stock of the
Bank Subsidiary, no par value per share. The Disclosure Schedule sets forth a
complete and correct list of all of the CNB Bancshares' subsidiaries (the "CNB
Subsidiaries"). Except for the capital stock and securities referred to in the
immediately following sentence, there are no outstanding shares of capital stock
or other equity securities of any such CNB Subsidiary, options, warrants, stock
appreciation rights, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
shares of any capital stock or other equity securities of any such CNB
Subsidiary, or contracts, commitments, understandings or arrangements by which
any such CNB Subsidiary may become bound to issue additional shares of its
capital stock or other equity securities, or options, warrants, scrip or rights
to purchase, acquire, subscribe to, calls on or commitments for any shares of
its capital stock or other equity securities. All of the outstanding shares of
capital stock or other securities evidencing ownership of the CNB Subsidiaries
are validly issued, fully paid and (except as otherwise required by law)
non-assessable and such shares or other securities are owned by CNB Bancshares
or its wholly-owned CNB Subsidiaries free and clear of any lien, claim, charge,
option, encumbrance, mortgage, pledge or security interest with respect thereto.
Other than as set forth on the Disclosure Schedule, CNB Bancshares does not own
(other than in a bona fide fiduciary capacity or in satisfaction of a debt
previously contracted) beneficially, directly or indirectly, shares or equity
securities or similar interests of any person or any interest in a partnership
or joint venture of any kind, other than shares, securities and interests as are
not material.
B. BANK SUBSIDIARY. The Bank Subsidiary is duly incorporated, validly existing
and in good standing as a Michigan banking corporation under the laws of the
State of Michigan, and has all the requisite power and authority to conduct the
banking business as now conducted by it.
C. FINANCIAL STATEMENTS; REGULATORY REPORTS. 1. CNB Bancshares has previously
furnished to Fifth Third its audited, consolidated balance sheets, statements of
income, changes in shareholders' equity and cash flows as of and at December 31,
1998, and for the year then ended, together with the opinion of its independent
certified public accountants associated therewith. CNB Bancshares has made
available to Fifth Third the Call Reports as filed with the applicable
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federal banking agency of the Bank Subsidiary as of and at December 31, 1996,
1997 and 1998. CNB Bancshares also has furnished to Fifth Third (i) its
unaudited, consolidated condensed financial statements as at March 31, 1999,
and for the three (3) months then ended, and (ii) the Bank Call Report as filed
with the Federal Reserve Bank of the Bank Subsidiary for the quarter ended
March 31, 1999. Such audited and unaudited consolidated financial statements of
CNB Bancshares fairly present or will fairly present, as applicable, the
consolidated financial condition, results of operations and cash flows of CNB
Bancshares as of the date thereof, and for the years or periods covered
thereby, in conformity with generally accepted accounting principles ("GAAP"),
consistently applied (except as stated therein and except for the omission of
notes to unaudited statements and except for year-end adjustments (consisting
of normal recurring accruals)). There are no material liabilities, obligations
or indebtedness of CNB Bancshares or any of the CNB Subsidiaries required to be
disclosed in the financial statements (or in the footnotes to the financial
statements) so furnished other than the liabilities, obligations or
indebtedness disclosed in such financial statements (including footnotes).
Since March 31, 1999, CNB Bancshares and the CNB Subsidiaries have not incurred
any liabilities outside the ordinary course of business consistent with past
practice.
2. CNB Bancshares has made available to Fifth Third an accurate and
complete copy (including all exhibits and all documents incorporated by
reference) of each of the following documents as filed by CNB Bancshares with
the SEC: (a) each final registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1997 by CNB Bancshares or the
Bank Subsidiary with the Securities and Exchange Commission (the "SEC"),
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act ("CNB Bancshares Reports"), and (b) each communication mailed
by CNB Bancshares to its stockholders since January 1, 1997. Since January 1,
1997, CNB Bancshares has timely filed (and will timely file after the date of
this Agreement) all reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates, all
such reports complied (and, in the case of all reports and other documents filed
after the date of this Agreement, will comply) in all material respects with the
published rules and regulations of the SEC with respect thereto. As of the date
of filing or mailing, as the case may be, no such registration statement,
prospectus, report or proxy statement contained (and no registration statement,
prospectus, report or proxy statement filed or mailed after the date of this
Agreement will contain) any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date (but filed
before the date hereof) shall be deemed to modify information as of an earlier
date. No event has occurred subsequent to December 31, 1998 which CNB Bancshares
is required to describe in a Current Report on Form 8-K other than the Current
Reports heretofore furnished by CNB Bancshares to Fifth Third. Other than CNB
Capital Trust I, none of the CNB Subsidiaries has any class of securities
registered, or is obligated to register any class of securities, under Section
12 of the Exchange Act.
3. CNB Bancshares and the CNB Subsidiaries have filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 1997 with
any applicable industry self-regulatory organization or stock exchange ("SRO")
and any other federal, state, local or foreign
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<PAGE> 18
governmental or regulatory agency or authority (collectively with the SEC and
the SROs, "Regulatory Agencies"), and all other reports, registrations and
statements required to be filed by them since January 1, 1997, including,
without limitation, any report or statement required to be filed pursuant to
the laws, rules or regulations of the United States, any state, or any
Regulatory Agency, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of CNB Bancshares and the CNB
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the best
knowledge of CNB Bancshares, investigation into the business or operations of
CNB Bancshares or the CNB Subsidiaries since January 1, 1997. To the best
knowledge of CNB Bancshares, there is no unresolved violation, or material
criticism or exception, by any bank Regulatory Agency with respect to any
report, registration or statement relating to any examinations of CNB
Bancshares or the CNB Subsidiaries.
D. TITLE TO PROPERTIES. CNB Bancshares and the CNB Subsidiaries have good and
marketable title to all of the material properties and assets reflected in CNB
Bancshares statement of financial condition as at December 31, 1998, other than
properties and assets sold in the ordinary course of business since that date,
and each has good and marketable title to all material properties and assets
acquired by it after such date (other than properties and assets subsequently
sold in the ordinary course of business), subject to (i) any liens and
encumbrances that do not materially adversely impair the use of the property,
(ii) statutory liens for taxes not yet due and payable, and (iii) minor defects
and irregularities in title that do not materially adversely impair the use of
the property.
E. NO MATERIAL ADVERSE EFFECT. Since December 31, 1998, no event has occurred
and no fact or circumstance shall have come to exist or come to be known which,
directly or indirectly, individually or taken together with all other facts,
circumstances and events (described in any paragraph of this Article II or
otherwise), has had, or is reasonably likely to have, a Material Adverse Effect
with respect to CNB Bancshares.
F. LITIGATION; REGULATORY ACTION. 1. There are no actions, suits, proceedings,
investigations or assessments of any kind pending, or to the best knowledge of
CNB Bancshares, threatened against CNB Bancshares or the Bank Subsidiary which
reasonably can be expected to result in any material liability or any material
adverse change in the financial condition, operations or business of CNB
Bancshares and the Bank Subsidiary on a consolidated or separate basis, or
reasonably likely to prevent or delay the consummation of the transactions
contemplated by this Agreement. The Disclosure Schedule lists all pending or, to
the knowledge of CNB Bancshares, threatened claims and proceedings which, in
each case, seek, or could result in, damages or other amounts payable by CNB
Bancshares or the CNB Subsidiaries, in excess of $1,000,000.
2. There are no actions, suits, claims, proceedings, investigations or
assessments of any kind pending, or to the best knowledge of CNB Bancshares,
threatened against any of the Directors or officers of CNB Bancshares or the
Bank Subsidiary in their capacities as such, and no Director or officer of CNB
Bancshares or the Bank Subsidiary currently is being indemnified or seeking to
be indemnified by either CNB Bancshares or any of the CNB Subsidiaries pursuant
to applicable law or applicable articles of incorporation, bylaws or other
constituent documents or any indemnity agreements.
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3. Neither CNB Bancshares nor any of the CNB Subsidiaries is subject to
any cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any supervisory letter from or has adopted
any board resolutions at the request of, any Regulatory Agency or other
governmental entity, that restricts the conduct of its business or has resulted,
or could reasonably be expected to result, in a liability or that in any manner
relates to its capital adequacy, its credit policies, its management or its
business (each a "CNB Regulatory Agreement"), nor has CNB Bancshares or the Bank
Subsidiary (a) been advised since January 1, 1996 by any Regulatory Agency or
other governmental entity that it is considering issuing or requesting any such
CNB Regulatory Agreement or (b) any actual knowledge of any pending or
threatened regulatory investigation.
G. ORDINARY COURSE OF BUSINESS. Except as disclosed in the CNB Bancshares
Reports filed prior to the date hereof, since December 31, 1998, CNB Bancshares
and the CNB Subsidiaries have each been operated in the ordinary course of
business, have not made any changes in their respective capital or corporate
structures, nor any material changes in their methods of business operations and
have not provided any increases in employee salaries or benefits other than
increases in the ordinary course of business, and have not instituted or made
any announcements to institute or amend any existing employee benefit plan,
policy or arrangement or any employment contract or policy. Except as disclosed
in the CNB Bancshares Reports filed prior to the date hereof, since December 31,
1998 to the date hereof, CNB Bancshares has not declared or paid any dividends
nor made any distributions of any other kind to its shareholders except for
regular quarterly dividends not in excess of $0.24 per share.
H. TAXES; ACCOUNTING. 1. CNB Bancshares and the Bank Subsidiary have timely
filed all federal, state and local tax returns required to be filed (after
giving effect to all extensions) by them, respectively, and have paid or
provided for all tax liabilities shown to be due thereon or which have been
assessed against them, respectively. All tax returns filed by CNB Bancshares or
the Bank Subsidiary through the date hereof are complete and accurate in all
material respects.
2. CNB Bancshares has no reason to believe that any conditions exist
that might prevent or impede the Merger from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code or for pooling-of-interests
accounting treatment.
3. Since December 31, 1998, except insofar as required by a change in
GAAP, there has been no material change in any material accounting methods,
principles or practices of CNB Bancshares or the Bank Subsidiary.
I. CONTRACTS. Neither CNB Bancshares nor any of the CNB Subsidiaries is a party
to or bound by any contract, arrangement, commitment or understanding (a) as of
the date hereof, with respect to the employment, termination or compensation of
any directors, executive officers, employees or material consultants (other than
oral contracts of employment at will or engagement of consultants which may be
terminated without material penalty), (b) which is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) that has
not been filed with or incorporated by reference in the CNB Bancshares Reports,
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(c) which contains any material non-compete or exclusivity provisions with
respect to any business or geographic area in which business is conducted by CNB
Bancshares or any of its Significant Subsidiaries (as defined in Regulation S-X
of the SEC) or which restricts the conduct of any business by CNB Bancshares or
any of its Significant Subsidiaries or any geographic area in which CNB
Bancshares or any of its Significant Subsidiaries may conduct business or
requires exclusive referrals of any business, (d) except as contemplated by
Article I hereof or as set forth in the Disclosure Schedule (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the funding,
vesting or payment of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement (either
alone or together with any other event), or the value of any of the benefits of
which will be calculated on the basis of any of the transactions contemplated by
this Agreement or (e) which would prohibit or materially delay the consummation
of the Merger. CNB Bancshares has previously made available to Fifth Third true
and correct copies of all employment, termination, compensation, change of
control, and similar agreements (including deferred compensation) with executive
officers, key employees or material consultants which are in writing and to
which CNB Bancshares or any of the CNB Subsidiaries are a party. Each contract,
arrangement, commitment or understanding of the type described in this Section
II.I., and every agreement relating to the Convertible Debentures, whether or
not set forth in the Disclosure Schedule, is referred to herein as a "CNB
Contract", and neither CNB Bancshares nor any of the CNB Subsidiaries has
knowledge of, or has received notice of, any violation of any CNB Contract by it
or any of the other parties thereto.
J. LOAN LOSSES. Since December 31, 1998, to the date hereof, except as
disclosed in CNB Bancshares Reports filed prior to the date hereof, the Bank
Subsidiary has not incurred any unusual or extraordinary loan losses which are
material to CNB Bancshares and the CNB Subsidiaries on a consolidated basis; to
the best knowledge of CNB Bancshares and in light of the Bank Subsidiary's
historical loan loss experience and its management's analysis of the quality
and performance of its loan portfolio, as of December 31, 1998, its reserve for
loan losses was, in the opinion of CNB Bancshares, adequate to absorb potential
loan losses determined on the basis of management's continuing review and
evaluation of the loan portfolio and its judgment as to the impact of economic
conditions on the portfolio.
K. BROKER. Except for Donaldson, Lufkin & Jenrette Incorporated ("DLJ"), whose
fee in connection with the transactions contemplated by this Agreement is
disclosed in the Disclosure Schedule, neither CNB Bancshares nor any of the CNB
Subsidiaries has a direct or indirect commitment to any investment banker,
broker, or finder in connection with this transaction and neither has incurred
or will incur any obligation for any investment banker's, broker's or finder's
fee or commission in connection with the transactions provided for in this
Agreement.
L. BOARD APPROVAL; CORPORATE AUTHORITY; NO BREACH. 1. The Directors of CNB
Bancshares, by resolution adopted by the unanimous vote of all Directors present
at a meeting duly called and held in accordance with applicable law, have duly
approved this Agreement and the Option Agreement and have adopted this Agreement
as a "plan of merger" within the meaning of Section 23-1-40-1 of the IBCL. The
Directors of CNB Bancshares have directed that the plan of merger contained in
this Agreement be submitted to a vote of CNB Bancshares' shareholders at the
annual or a special meeting of the shareholders to be called for that purpose.
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2. CNB Bancshares has the corporate power and authority to enter into
this Agreement and the Option Agreement and to carry out its obligations
hereunder and thereunder subject to required regulatory approvals and, in the
case of consummation of the Merger, subject to approval by the holders of a
majority of the outstanding shares of CNB Bancshares Common Stock, which is the
only approval of shareholders required. This Agreement and the Option Agreement
have each been duly authorized. This Agreement constitutes the valid and binding
obligation of CNB Bancshares, enforceable in accordance with its terms, except
to the extent that (i) enforceability thereof may be limited by insolvency,
reorganization, liquidation, bankruptcy, readjustment of debt or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally and (ii) the availability of certain remedies may be precluded
by general principles of equity.
3. Neither the execution of the Agreement or the Option Agreement, nor
the consummation of the transactions contemplated hereby and thereby (either
alone or together with any other event), (i) conflicts with, results in a breach
of, violates or constitutes a default under, (x) CNB Bancshares' Restated
Articles of Incorporation or Amended By-laws or, to the best knowledge of CNB
Bancshares, any federal, state or local law, statute, ordinance, rule,
regulation or court or administrative order, or (y) any agreement, arrangement,
or commitment, to which CNB Bancshares or the Bank Subsidiary is subject or
bound; (ii) to the knowledge of CNB Bancshares, results in the creation of or
gives any person the right to create any material lien, charge, encumbrance, or
security agreement or any other material rights of others or other material
adverse interest upon any material right, property or asset belonging to CNB
Bancshares or the Bank Subsidiary; (iii) terminates or gives any person the
right to terminate, amend, abandon, or refuse to perform any material agreement,
arrangement or commitment to which CNB Bancshares or the Bank Subsidiary is a
party or by which CNB Bancshares' or the Bank Subsidiary's rights, properties or
assets are subject or bound; or (iv) to the knowledge of CNB Bancshares,
accelerates or modifies, or gives any party thereto the right to accelerate or
modify, the time within which, or the terms according to which, CNB Bancshares
or the Bank Subsidiary is to perform any duties or obligations or receive any
rights or benefits under any material agreements, arrangements or commitments.
For purposes of clauses (iii) and (iv) immediately preceding, material
agreements, arrangements or commitments exclude (without limitation) agreements,
arrangements or commitments having a term expiring less than twelve (12) months
from the date of this Agreement or which do not require the expenditure of more
than $500,000 over the term of the agreement, arrangement or commitment (but
shall include all agreements, arrangements or commitments pursuant to which
credit has been extended by the Bank Subsidiary).
4. As of the date hereof, CNB Bancshares is not aware of the existence
of any factor that would materially delay or materially hinder issuance of any
of the required regulatory approvals necessary to consummate the Merger or the
other transactions contemplated hereby.
M. ARTICLES AND BY-LAWS. Complete and accurate copies of the (i) Restated
Articles of Incorporation and Amended By-laws of CNB Bancshares and (ii) the
Articles of Incorporation and Bylaws of the Bank Subsidiary in force as of the
date hereof have been delivered to Fifth Third.
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N. COMPLIANCE WITH LAW. To the knowledge of CNB Bancshares, neither CNB
Bancshares nor any of the CNB Subsidiaries nor any employee, officer or Director
of any of them acting in such capacity has engaged in any activity or omitted to
take any action which, in any material way, has resulted or could result in the
violation of, or material failure to comply with the regulatory requirements of
(i) any local, state or federal law (including without limitation the Bank
Secrecy Act, the Community Reinvestment Act, applicable consumer protection and
disclosure laws and regulations, including without limitation, Truth in Lending,
Truth in Savings and similar disclosure laws and regulations, and equal
employment and employment discrimination laws and regulations) or (ii) any
regulation, order, injunction or decree of any court or governmental body, the
violation of either of which could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate, on the financial condition or
operations of CNB Bancshares and the CNB Subsidiaries, and neither CNB
Bancshares nor any of the CNB Subsidiaries has received notice of any violations
of any of the above. To the best knowledge of CNB Bancshares, CNB Bancshares and
the CNB Subsidiaries possess all licenses, franchises, permits and other
authorizations necessary to continue to conduct such businesses as they are
presently conducted following the Effective Time without material interference
or interruption.
O. INTENTIONALLY OMITTED.
P. ENVIRONMENTAL MATTERS. 1. CNB Bancshares has no knowledge of any actions,
proceedings or investigations pending before any environmental regulatory body,
with respect to, or, to the knowledge of CNB Bancshares, threatened against or
affecting CNB Bancshares or the Bank Subsidiary in respect to any "facility"
owned, leased or operated by any of them (but EXCLUDING any "facility" as to
which the sole interest of CNB Bancshares or the Bank Subsidiary is that of a
lienholder or mortgagee, but INCLUDING any "facility" to which title has been
taken pursuant to mortgage foreclosure or similar proceedings and INCLUDING any
"facility" in which CNB Bancshares or the Bank Subsidiary ever participated in
the financial management of such facility to a degree sufficient to influence,
or have the ability to influence, the facility's treatment of hazardous waste)
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or under any Federal, state, local or municipal
statute, ordinance or regulation in respect thereof, in connection with any
release of any toxic or "hazardous substance", pollutant or contaminant into the
"environment", nor, to the best knowledge of CNB Bancshares after reasonable
inquiry, is there any reasonable basis for the institution of any such actions
or proceedings or investigations which is probable of assertion, nor are there
any such actions or proceedings or investigations in which CNB Bancshares or the
Bank Subsidiary is a plaintiff or complainant. To the knowledge of CNB
Bancshares, neither CNB Bancshares nor the Bank Subsidiary is liable in any
material respect under any applicable law for any release by either of them or
for any release by any other "person" of a hazardous substance caused by the
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of hazardous wastes or other chemical
substances, pollutants or contaminants into the environment, nor, to the
knowledge of CNB Bancshares, is CNB Bancshares or the Bank Subsidiary liable for
any material costs (as a result of the acts or omissions of CNB Bancshares or
the Bank Subsidiary or, to the best knowledge of CNB Bancshares, as a result of
the acts or omissions of any other "person") of any remedial action including,
without limitation, costs arising out of security fencing, alternative water
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supplies, temporary evacuation and housing and other emergency assistance
undertaken by any environmental regulatory body having jurisdiction over CNB
Bancshares or the Bank Subsidiary to prevent or minimize any actual or
threatened release by CNB Bancshares or the Bank Subsidiary of any hazardous
wastes or other chemical substances, pollutants and contaminants into the
environment which would endanger the public health or the environment. All
terms contained in quotation marks in this paragraph and the paragraph
immediately following shall have the meaning ascribed to such terms, and
defined in, CERCLA.
2. To the best knowledge of CNB Bancshares each "facility" owned,
leased or operated by CNB Bancshares or the Bank Subsidiary (but EXCLUDING any
"facility" as to which the sole interest of CNB Bancshares or the Bank
Subsidiary is that of a lienholder or mortgagee, but INCLUDING any "facility" to
which title has been taken pursuant to mortgage foreclosure or similar
proceedings and INCLUDING any "facility" in which CNB Bancshares or the Bank
Subsidiary ever participated in the financial management of such facility to a
degree sufficient to influence, or have the ability to influence, the facility's
treatment of hazardous waste) is, in all material respects, in compliance with
all applicable Federal, state, local or municipal statutes, ordinances, laws and
regulations and all orders, rulings or other decisions of any court,
administrative agency or other governmental authority relating to the protection
of the environment, except to the extent a failure to comply would not have a
Material Adverse Effect on CNB Bancshares and the Bank Subsidiary taken as a
whole.
Q. EMPLOYMENT MATTERS. 1. Benefit Plans. The Disclosure Schedule lists the name
of each Benefit Plan (as herein defined), together with an indication of the
type of plan (I.E., defined benefit, defined contribution, health and welfare,
etc.) and funding status (E.G., funded trust, unfunded obligation or insurance
policy). For purposes hereof, the term "Benefit Plan" shall mean any plan,
program, policy, practice, arrangement or system for the benefit of employees,
former employees, directors or former directors which is contributed to or
maintained by CNB Bancshares or any of the CNB Subsidiaries or for which CNB
Bancshares or any of the CNB Subsidiaries have any liability (contingent or
otherwise) and shall include, without limitation, (a) any retirement plan such
as a pension, profit sharing, stock bonus plan or employee stock ownership plan
("ESOP"), (b) any plan, program or arrangement providing deferred compensation,
bonus deferral change in control payments or benefits or incentive benefits,
whether funded or unfunded, and (c) any welfare plan, program or policy
providing vacation, severance, salary continuation, supplemental unemployment,
disability, life, health coverage, retiree health, Voluntary Employees'
Beneficiary Association, medical expense reimbursement or dependent care
assistance benefits, in any such foregoing case without regard to whether the
Benefit Plan constitutes an employee benefit plan under Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
number of employees covered under such Benefit Plan. Through the date of this
Agreement, neither CNB Bancshares nor any of the CNB Subsidiaries have made or
have committed to make any contributions to any Benefit Plan outside the
ordinary course of business and inconsistent with past practice with regard to
amounts. None of the Benefit Plans is a "multiemployer plan" within the meaning
of Section 3(37) of ERISA.
2. Predecessor Plan. The term "Benefit Plan" for all purposes of this
Agreement shall include each Predecessor Plan (as herein defined). For purposes
hereof, "Predecessor Plan"
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shall mean any plan, program, policy, practice, arrangement or system as
otherwise described in Section II.Q.1. which was maintained, contributed to or
resulted in liability to any predecessor employer of CNB Bancshares or any of
the CNB Subsidiaries since January 1, 1996. For purposes hereof, "predecessor
employer" shall mean any employer, entity or business operation acquired by CNB
Bancshares or any of the CNB Subsidiaries in any type of acquisition
(including, without limitation, mergers, stock acquisitions and asset
acquisitions).
3. Plan Documents, Reports and Filings. CNB Bancshares or the Bank
Subsidiary has provided true, complete and correct copies of all plan documents,
or, if no plan document exists, a description of such Benefit Plan, comprising
each Benefit Plan, together with, when applicable, (a) the most recent summary
plan description and any material modifications thereto, (b) the most recent
actuarial and financial reports and the most recent annual reports filed with
any governmental agency and (c) all Internal Revenue Service ("IRS") or other
governmental agency rulings and determination letters or any open requests for
IRS rulings or letters with respect to Benefit Plans issued within five years of
the date of this Agreement.
4. Qualified Retirement Plan Compliance. With respect to each Benefit
Plan which is an employee pension benefit plan (as defined in Section 3(2) of
ERISA) which is intended to be qualified under Section 401 of the Code (a
"Qualified Benefit Plan"): (a) the IRS has issued a determination letter which
determined that such Qualified Benefit Plan (as amended by any and all
amendments) satisfies the requirements of Section 401(a) of the Code, as amended
by all of the laws referred to in Section 1 of Revenue Procedure 93-39, such
determination letter has not been revoked or threatened to be revoked by the
IRS, and the scope of such determination letter is complete and does not
exclude, to the best knowledge of CNB Bancshares, consideration of any of the
requirements or matters referred to in Sections 4.02 through 4.04 of Revenue
Procedure 93-39; (b) except as listed in the Disclosure Schedule, such Qualified
Benefit Plan has been maintained in accordance with and continues to be in
material compliance with all qualification requirements of Section 401(a) of the
Code; (c) such Qualified Benefit Plan has been maintained in accordance with and
continues to be in substantial compliance with all notice, reporting and
disclosure requirements of ERISA and the Code; (d) any Qualified Benefit Plan
which is an ESOP as defined in Section 4975(e)(7) of the Code (an "ESOP
Qualified Benefit Plan") is in material compliance with the applicable
qualification requirements of Section 409 of the Code; (e) to the best knowledge
of CNB Bancshares, any Qualified Benefit Plan terminated within the last five
years was terminated in material compliance with the requirements of ERISA and
the Code, has received a favorable determination letter therefor, and the
liabilities of such Qualified Benefit Plan and the requirements of the Pension
Benefit Guaranty Corporation ("PBGC") were fully satisfied; and (f) to the best
knowledge of CNB Bancshares, any and all amendments to the Qualified Benefit
Plans not covered by an IRS determination letter should not adversely affect the
qualified and tax exempt status of such plans.
5. General Plan Compliance. With respect to each Benefit Plan, except
as noted on the Disclosure Schedule: (a) such Benefit Plan, if it is intended to
provide favorable tax benefits to plan participants, has been in material
compliance with applicable Code provisions; and (b) such Benefit Plan has been,
to the best knowledge of CNB Bancshares, operated in substantial compliance with
its terms and all applicable laws, including, without limitation, ERISA and the
Code, and to the extent such Benefit Plan is a group health plan subject to the
requirements of
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Section 4980B of the Code ("COBRA"), has been, to the best knowledge of CNB
Bancshares, operated in substantial compliance with such COBRA requirements.
6. Prohibited Transactions. No prohibited transaction under Section
406 of ERISA and not exempt under Section 408 of ERISA has occurred with
respect to any Benefit Plan which would result, with respect to any person, in
(a) the imposition, directly or indirectly, of a material excise tax under
Section 4975 of the Code or (b) material fiduciary liability under Section 409
of ERISA.
7. Lawsuits or Claims. No material actions, suits or claims (other
than routine claims of benefits) are pending or, to the best knowledge of CNB
Bancshares, threatened against any Benefit Plan or against CNB Bancshares or
any of the CNB Subsidiaries with respect to any Benefit Plan.
8. Disclosure of Unfunded Liabilities. All material Unfunded
Liabilities (as defined below) with respect to each Benefit Plan have been
recorded and disclosed on the most recent financial statement of CNB Bancshares
and the Bank Subsidiary or, if not, in the Disclosure Schedule. For purposes
hereof, the term "Unfunded Liabilities" shall mean any amounts properly accrued
to date under GAAP in effect as of the date of this Agreement, or amounts not
yet accrued for GAAP purposes but for which an obligation (which has legally
accrued and cannot legally be eliminated and which is subject to reasonable
estimate) exists for payment in the future which is attributable to any Benefit
Plan, including but not limited to (a) severance pay benefits, (b) deferred
compensation or unpaid bonuses, (c) any liabilities on account of the change in
control which will result from this Agreement, including any potential
liabilities relating to excess parachute payments under Section 280G of the
Code, (d) any unpaid pension contributions for the current plan year or any
accumulated funding deficiency under Section 412 of the Code and related
penalties under Section 4971 of the Code, including unpaid pension
contributions or funding deficiencies owed by members of a controlled group of
corporations which includes CNB Bancshares or any of the CNB Subsidiaries and
for which CNB Bancshares or any of the CNB Subsidiaries is liable under
applicable law, (e) any authorized but unpaid profit sharing contributions or
contributions under Section 401(k) and Section 401(m) of the Code, (f) retiree
health benefit coverage and (g) unpaid premiums for contributions required
under any group health plan to maintain such plan's coverage through the
Effective Time.
9. Defined Benefit Pension Plan Liabilities. CNB Bancshares, the CNB
Subsidiaries and any entity treated as a single employer with CNB Bancshares
and any of the CNB Subsidiaries in accordance with Section 414(b), (c), (m) and
(o) of the Code (hereinafter a "Controlled Group Member") (or any pension plan
maintained by any of them) have not incurred any material liability to the PBGC
or the IRS with respect to any employee pension plan which is a defined benefit
pension plan, except for the payment of PBGC premiums pursuant to Section 4007
of ERISA, all of which if due prior to the date of this Agreement have been
fully paid, and no PBGC reportable event under Section 4043 of ERISA has
occurred with respect to any such pension plan. Except as otherwise disclosed
in the Disclosure Schedule, the benefit liabilities, as defined in Section
4001(a)(16) of ERISA, of each such employee pension plan subject to Title IV of
ERISA, using the actuarial assumptions that would be used by the PBGC in the
event of termination of such plan, do not exceed the fair market value of the
assets of such plan. Neither
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CNB Bancshares, any of the CNB Subsidiaries nor any Controlled Group Member
participates in, or has incurred any liability under Sections 4201, 4063 or
4064 of ERISA for a complete or partial withdrawal from a multiple employer
plan or a multi-employer plan (as defined in Section 3(37) of ERISA). Except as
may be otherwise contemplated hereby, no employee, former employee, plan
participant or any other party (other than CNB Bancshares or the CNB
Subsidiaries) has any entitlement (under the terms of any plan document or
otherwise) to any surplus assets in any Qualified Benefit Plan which is a
defined benefit plan as defined in Section 414(j) of the Code.
10. Third Party Plans. CNB Bancshares and the CNB Subsidiaries (a)
have not incurred any asserted or, to the best knowledge of CNB Bancshares,
unasserted material liability for breach of duties assumed in connection with
acting as an independent trustee, custodian, agent, investment manager or
otherwise with respect to any employee benefit plan (as defined in Section 3(3)
of ERISA) which is maintained by an employer unrelated in ownership to CNB
Bancshares or any of the CNB Subsidiaries, (b) have not authorized nor
knowingly participated in a material prohibited transaction under Section 406
of ERISA or Section 4975 of the Code not exempt under Section 408 of ERISA and
(c) have not received notice of any material actions, suits or claims (other
than routine claims for benefits) pending or threatened against the unrelated
employer or against them.
11. Retiree Benefits. Except as listed on the Disclosure Schedule and
identified as "Retiree Liability", CNB Bancshares and the CNB Subsidiaries have
no obligation to provide health benefits, or life insurance benefits to or with
respect to retirees, former employees or any of their relatives, except for any
continuation coverage provided in accordance with COBRA.
12. Right to Amend and Terminate. CNB Bancshares or the Bank
Subsidiary has all power and authority necessary to amend or terminate each
Benefit Plan without incurring any penalty or liability provided that benefits
accrued as of the date of amendment or termination are not reduced.
13. Consummation of Transactions. Except as set forth in the
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement (alone or together with any other event which, standing alone, would
not by itself trigger such entitlement or acceleration) will not (i) entitle
any person to any benefit under any Benefit Plan, (ii) accelerate the time of
payment or vesting, or increase the amount, of any compensation due to any
person under any Plan or (iii) result in the payment of any "excess parachute
payment" under Section 280G of the Code or any other payment that is not
deductible for any reason by the CNB Bancshares or any of the CNB Subsidiaries
or their successors.
R. INVESTMENT PORTFOLIO. The investment portfolios of CNB Bancshares and the
Bank Subsidiary consist in all material respects of securities in marketable
form. Since December 31, 1998 to the date hereof neither CNB Bancshares nor the
Bank Subsidiary has incurred any material and unusual or extraordinary losses in
its investment portfolio, and, except for matters of general application to the
banking industry (including, but not limited to, changes in laws or regulations
or GAAP) or for events relating to the business environment in general,
including market fluctuations and changes in interest rates, CNB Bancshares is
not aware of any events
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which are reasonably certain to occur in the future and which reasonably can be
expected to result in any material adverse change in the quality or performance
of CNB Bancshares' and the Bank Subsidiary's investment portfolio on a
consolidated basis.
S. ANTI-TAKEOVER PROVISIONS; NO IMPEDIMENTS. The Directors of CNB Bancshares
have taken all requisite action (including, in the case of the provisions of
Chapter 42 of the IBCL, through the amendment of CNB Bancshares' Amended
By-laws) such that the freezeout, special shareholder voting and other
requirements imposed by Article X of CNB Bancshares' Restated Articles of
Incorporation, Article XI of CNB Bancshares' Amended By-laws, Chapter 42 and
Chapter 43 of the IBCL, and the provisions of any other applicable "freezeout",
"fair price", "moratorium", "control share acquisition" or other similar
anti-takeover statute or regulation enacted under the laws of Indiana, are not
applicable to the Merger, this Agreement, or the Option Agreement or the
transactions contemplated by this Agreement and the Option Agreement. There is
no agreement to which CNB Bancshares is a party which (i) prohibits or restricts
CNB Bancshares' ability to perform its obligations under this Agreement or the
Option Agreement, or its ability to consummate the transactions contemplated
hereby or thereby, or (ii) would have the effect of invalidating or voiding this
Agreement or the Option Agreement, or any provisions hereof or thereof.
T. DERIVATIVE INSTRUMENTS. All swaps, caps, floors, futures, forward contracts,
option agreements, and any other derivative financial instruments, contracts or
arrangements, whether entered into for CNB Bancshares' own account, or by CNB
Bancshares for the account of one or more of the CNB Subsidiaries for their
respective customers, were entered into (i) in the ordinary course of business,
(ii) to the knowledge of CNB Bancshares, in accordance with prudent banking
practices and all applicable laws, rules, regulations and regulatory policies
and (iii) with counter-parties reasonably believed by CNB Bancshares to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of CNB Bancshares or one of the CNB Subsidiaries,
enforceable in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and are in full
force and effect (except to the extent that they have been fully performed or
terminated) in all respects material to CNB Bancshares. CNB Bancshares and each
of the CNB Subsidiaries have duly performed in all material respects all of
their obligations thereunder to the extent that such obligations to perform have
accrued, and, to CNB Bancshares' knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
U. YEAR 2000. Neither CNB Bancshares nor any of the CNB Subsidiaries has
received, nor to the knowledge of CNB Bancshares are there facts that would
reasonably be expected to form the basis for the issuance of, a "Year 2000
Deficiency Notification Letter" (as such term is employed in the Federal
Reserve's Supervision and Regulatory Letter No. SR 98-3 (SUP), dated March 4,
1998). CNB Bancshares has made available to Fifth Third a complete and accurate
copy of its plan, including its good faith estimate of the anticipated
associated costs, for addressing the issues set forth in the Year 2000 guidance
papers issued by the Federal Financial Institutions Examination Council,
including the statements dated May 5, 1997, entitled "Year 2000 Project
Management Awareness", December 17, 1997, entitled "Safety and Soundness
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Guidelines Concerning the Year 2000 Business Risk", and October 15, 1998,
entitled "Interagency Guidelines Establishing Year 2000 Standards for Safety
and Soundness", as such issues affect any of CNB Bancshares or the CNB
Subsidiaries. Between the date of this Agreement and the Effective Time, CNB
Bancshares shall use its reasonable best efforts to implement such plan.
V. FAIRNESS OPINION. On or before the date hereof, DLJ has delivered its
opinion to CNB Bancshares' Board of Directors that the consideration to be
received by the shareholders of CNB Bancshares pursuant to this Agreement is
fair, from a financial point of view, to the holders of the CNB Bancshares
Common Stock, a true and correct form of which has been delivered to Fifth
Third.
W. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the CNB Bancshares
Reports filed prior to the date hereof, from January 1, 1999 through the date
hereof there have been no transactions, agreements, arrangements or
understandings between CNB Bancshares or any of the CNB Subsidiaries, on the one
hand, and the CNB Bancshares' affiliates (other than wholly-owned subsidiaries
of CNB Bancshares) or other persons, on the other hand, that would be required
to be disclosed under Item 404 of Regulation S-K under the Securities Act.
X. EXPIRATION OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Article II shall expire at the Effective Time,
and, thereafter, CNB Bancshares and the Bank Subsidiary shall have no further
liability or obligations with respect thereto.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF FIFTH THIRD
Fifth Third represents and warrants to CNB Bancshares that as of the date hereof
or as of the indicated date, as appropriate, subject to the standard set forth
in Section I.S.:
A. ORGANIZATION. Fifth Third is duly incorporated, validly existing and in good
standing as a corporation under the corporation laws of the State of Ohio, is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended, and is duly authorized to conduct the business in which it is engaged,
and Fifth Third's wholly-owned subsidiary Fifth Third Bank, Indiana, an Indiana
banking corporation ("Fifth Third Bank, Indiana"), is duly incorporated,
validly existing and in good standing as a corporation under the laws of the
State of Indiana and is duly authorized to conduct the business in which it is
engaged.
B. CAPITALIZATION. Pursuant to Fifth Third's Second Amended Articles of
Incorporation, as amended, the total number of shares of capital stock Fifth
Third is authorized to have outstanding is 500,500,000 of which 500,000,000
shares are classified as Common Stock without par value and 500,000 shares are
classified as Preferred Stock without par value. As of the close of business on
May 31, 1999, 268,746,761 shares of Fifth Third Common Stock were issued and
outstanding and 318,761 shares were held in its treasury. As of the date of this
Agreement, no shares of Preferred Stock have been issued by Fifth Third. Fifth
Third does not have outstanding any stock options, subscription rights, warrants
or other securities entitling the holders to subscribe for or purchase any
shares of its capital stock other than options granted and to be granted to
employees and Directors under its stock option plans. At May 31, 1999, (a)
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16,614,000 shares of Fifth Third Common Stock were reserved for issuance in
connection with outstanding options granted under its stock option plans and
7,417,291 shares were reserved for issuance under options to be granted in the
future, (b) 39,609,874 shares of Fifth Third Common Stock were reserved for
issuance to the shareholders of CNB Bancshares pursuant to the terms of this
Agreement.
C. INTENTIONALLY OMITTED.
D. DUE ISSUANCE. All shares of Fifth Third Common Stock to be received by the
shareholders of CNB Bancshares as a result of the Merger pursuant to the terms
of this Agreement shall be, upon transfer or issuance, duly and validly issued,
fully paid and non-assessable, and will not, upon such transfer or issuance, be
subject to the preemptive rights of any shareholder of Fifth Third.
E. FINANCIAL STATEMENTS. Fifth Third has previously furnished to CNB Bancshares
its audited, consolidated balance sheets, statements of operations, statements
of shareholders' equity and cash flows as of and at December 31, 1998, and for
the year then ended, together with the opinion of its independent certified
public accountants associated therewith. Fifth Third has made available to CNB
Bancshares the Call Reports as filed with the applicable federal banking agency
of the Fifth Third Bank, Indiana as of and at December 31, 1996, 1997 and 1998.
Fifth Third also has furnished to CNB Bancshares (i) its unaudited, consolidated
financial statements as at March 31, 1999, and for the three (3) months then
ended, and (ii) the Call Reports as filed with the Federal Reserve Bank of the
Fifth Third Bank, Indiana for the quarter ended March 31, 1999. As soon as they
are available, Fifth Third will provide to CNB Bancshares Fifth Third's
unaudited, consolidated balance sheets, statements of operations, statements of
stockholders' equity and cash flows as of and at June 30, 1999, and for the six
months then ended. Such audited and unaudited consolidated financial statements
of Fifth Third fairly present or will fairly present, as applicable, the
consolidated financial condition, results of operations and cash flows of Fifth
Third as of the date thereof, and for the years or periods covered thereby, in
conformity with GAAP, consistently applied (except as stated therein and except
for the omission of notes to unaudited statements and except for normal (in
nature and amount) year-end adjustments to interim results). There are no
material liabilities, obligations or indebtedness of Fifth Third or any of its
subsidiaries required to be disclosed in the financial statements (or in the
footnotes to the financial statements) so furnished other than the liabilities,
obligations or indebtedness disclosed in such financial statements (including
footnotes). Since March 31, 1999, Fifth Third and its subsidiaries have not
incurred any liabilities outside the ordinary course of business consistent with
past practice.
F. NO MATERIAL ADVERSE EFFECT. Since December 31, 1998, no event has occurred
and no fact or circumstance shall have come to exist or come to be known which,
directly or indirectly, individually or taken together with all other facts,
circumstances and events (described in any paragraph of this Article III or
otherwise), has had, or is reasonably likely to have, a Material Adverse Effect
with respect to Fifth Third.
G. BOARD APPROVAL; CORPORATE AUTHORITY; NO BREACH. 1. The Board of Directors of
Fifth Third, by resolution adopted by the members present at a meeting duly
called and held, at which
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meeting a quorum was at all times present and acting, has approved this
Agreement, including reserving for issuance to CNB Bancshares shareholders in
accordance with this Agreement, a sufficient number of shares of Fifth Third
Common Stock. Approval and adoption of this Agreement by the shareholders of
Fifth Third is not required under Ohio law or under the Second Amended Articles
of Incorporation, as amended, or Code of Regulations of Fifth Third.
2. Fifth Third has corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder subject to certain required
regulatory approvals. This Agreement, has been duly executed and delivered and
constitutes the valid and binding obligation of Fifth Third, enforceable in
accordance with its terms, except to the extent that (i) enforceability hereof
may be limited by insolvency, reorganization, liquidation, bankruptcy,
readjustment of debt or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the
availability of certain remedies may be precluded by general principles of
equity.
3. Neither the execution of this Agreement nor the Option Agreement,
nor the consummation of the transactions contemplated hereby and thereby, does
or will (i) conflict with, result in a breach of, violate or constitute a
default, under Fifth Third's Second Amended Articles of Incorporation, as
amended, or Code of Regulations or, to the best knowledge of Fifth Third, any
federal, foreign, state or local law, statute, ordinance, rule, regulation or
court or administrative order, or any agreement, arrangement, or commitment to
which Fifth Third is subject or bound; (ii) to the best knowledge of Fifth
Third, result in the creation of or give any person the right to create any
material lien, charge, encumbrance, security agreement or any other material
rights of others or other material adverse interest upon any material right,
property or asset belonging to Fifth Third or any of its subsidiaries; (iii)
terminate or give any person the right to terminate, amend, abandon, or refuse
to perform any material agreement, arrangement or commitment to which Fifth
Third is a party or by which Fifth Third's rights, properties or assets are
subject or bound; or (iv) accelerate or modify, or give any party thereto the
right to accelerate or modify, the time within which, or the terms according to
which, Fifth Third is to perform any duties or obligations or receive any rights
or benefits under any material agreement, arrangements or commitments.
4. As of the date hereof, Fifth Third is not aware of the existence of
any factor that would materially delay or materially hinder issuance of any of
the required regulatory approvals necessary to consummate the Merger or the
other transactions contemplated hereby.
H. ARTICLES AND REGULATIONS. Complete and accurate copies of (i) the Second
Amended Articles of Incorporation, as amended, and (ii) the Code of Regulations
of Fifth Third in force as of the date hereof have been delivered to CNB
Bancshares.
I. COMPLIANCE WITH LAW. To the knowledge of Fifth Third, neither Fifth Third
nor any of its subsidiaries has knowingly engaged in any activity or omitted to
take any action which, in any material way, has resulted or could result in the
violation of (i) any local, state or federal law (including without limitation
the Bank Secrecy Act, the Community Reinvestment Act, applicable consumer
protection and disclosure laws and regulations, including without limitation,
Truth in Lending, Truth in Savings and similar disclosure laws and regulations,
and equal
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employment and employment discrimination laws and regulations) or (ii) any
regulation, order, injunction or decree of any court or governmental body, the
violation of either of which could reasonably be expected to have a Material
Adverse Effect on Fifth Third and its subsidiaries taken as a whole. To the
best knowledge of Fifth Third, Fifth Third and its subsidiaries possess all
licenses, franchise, permits and other governmental authorizations necessary
for the continued conduct of their businesses without material interference or
interruption.
J. SEC FILINGS; REGULATORY REPORTS. 1. Fifth Third has made available to CNB
Bancshares an accurate and complete copy (including all exhibits and all
documents incorporated by reference) of each of the following documents as filed
by Fifth Third with the SEC: (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
Fifth Third with the SEC, pursuant to the Securities Act or the Exchange Act,
and (b) each communication mailed by Fifth Third to its stockholders since
January 1, 1997. Since January 1, 1997, Fifth Third has timely filed (and will
timely file after the date of this Agreement) all reports and other documents
required to be filed by it under the Securities Act and the Exchange Act, and,
as of their respective dates, all such reports complied (and, in the case of all
reports and other documents filed after the date of this Agreement, will comply)
in all material respects with the published rules and regulations of the SEC. As
of the date of filing or mailing, as the case may be, no such registration
statement, prospectus, report, schedule, proxy statement or communication
contained (and no registration statement, prospectus, report, schedule, proxy
statement or communication filed or mailed after the date of this Agreement will
contain) any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date (but filed before the
date hereof) shall be deemed to modify information as of an earlier date, or
omitted any material exhibit required to be filed therewith. No event has
occurred subsequent to December 31, 1998 which Fifth Third is required to
describe in a Current Report on Form 8-K other than the Current Reports
heretofore furnished by Fifth Third to CNB Bancshares.
2. Fifth Third and its subsidiaries have filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 1997 with
any SRO and any other Regulatory Agencies, and all other reports, registrations
and statements required to be filed by them since January 1, 1997, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, or any Regulatory
Agency, and have paid all fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of Fifth Third and its subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the best knowledge of
Fifth Third, investigation into the business or operations of Fifth Third or its
subsidiaries since January 1, 1997. To the best knowledge of Fifth Third, there
is no unresolved violation, or material criticism or exception, by any bank
Regulatory Agency with respect to any report, registration or statement relating
to any examinations of Fifth Third or its subsidiaries.
K. LITIGATION; REGULATORY ACTION. 1. There are no actions, suits, proceedings,
investigations or assessments of any kind pending or, to the best knowledge of
Fifth Third, threatened against
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Fifth Third or any Fifth Third subsidiary, which reasonably can be expected to
result in any material adverse change in the consolidated financial condition,
operations or business of Fifth Third, or reasonably likely to prevent or delay
the consummation of the transactions contemplated by this Agreement.
2. Neither Fifth Third nor any of its subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any supervisory letter from or has adopted
any board resolutions at the request of, any Regulatory Agency or other
governmental entity, that restricts the conduct of its business or has resulted,
or could reasonably be expected to result, in a liability or that in any manner
relates to its capital adequacy, its credit policies, its management or its
business (each a "Fifth Third Regulatory Agreement"), nor has Fifth Third or
Fifth Third Bank, Indiana (a) been advised since January 1, 1996 by any
Regulatory Agency or other governmental entity that it is considering issuing or
requesting any such Fifth Third Regulatory Agreement or (b) any actual knowledge
of any pending or threatened regulatory investigation.
L. LOAN LOSSES. Since December 31, 1998 to the date hereof, none of Fifth
Third's banking subsidiaries and Bank subsidiaries has incurred any unusual or
extraordinary loan losses which would be material to Fifth Third on a
consolidated basis; and to the best knowledge and belief of Fifth Third, and in
the light of any banking or Bank subsidiary's historical loan loss experience
and their managements' analysis of the quality and performance of their
respective loan portfolios, as of December 31, 1998, their consolidated reserves
for loan losses are adequate to absorb potential loan losses determined on the
basis of management's continuing review and evaluation of the loan portfolio and
its judgment as to the impact of economic conditions on the portfolio.
M. TAX RETURNS. Fifth Third and its subsidiaries have timely filed all federal,
state and local tax returns required to be filed (after giving effect to all
extensions) by them, respectively, and have paid or provided for all tax
liabilities shown to be due thereon or which have been assessed against them,
respectively. All tax returns filed by Fifth Third and its subsidiaries are
complete and accurate in all material respects.
N. BROKER. Except for Salomon Smith Barney Inc., Fifth Third has no direct or
indirect commitment to any investment banker, broker or finder in connection
with this transaction and has not incurred and will not incur any obligation for
any investment banker's, broker's or finder's fee or commission in connection
with the transactions provided for in this Agreement.
O. INVESTMENT PORTFOLIO. The investment portfolios of Fifth Third and its
subsidiaries and affiliates consist in all material respects of securities in
marketable form. Since December 31, 1998, to the date hereof Fifth Third and its
affiliates, on a consolidated basis, have not incurred any material and unusual
or extraordinary losses in their respective investment portfolios, and, except
for matters of general application to the banking industry (including, but not
limited to, changes in laws or regulations or GAAP) or for events relating to
the business environment in general, including market fluctuations and changes
in interest rates, the management of Fifth Third is not aware of any events
which are reasonably certain to occur in the future and which
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reasonably can be expected to result in any material adverse change in the
quality or performance of the investment portfolios of Fifth Third and its
affiliates on a consolidated basis.
P. TAXES; ACCOUNTING. Fifth Third has no reason to believe that any conditions
exist that might prevent or impede the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code or for
pooling-of-interests accounting treatment.
Q. YEAR 2000. Neither Fifth Third nor any of its subsidiaries has received, nor
to the knowledge of Fifth Third are there facts that would reasonably be
expected to form the basis for the issuance of, a "Year 2000 Deficiency
Notification Letter" (as such term is employed in the Federal Reserve's
Supervision and Regulatory Letter No. SR 98-3 (SUP), dated March 4, 1998). Fifth
Third has made available to CNB Bancshares a complete and accurate copy of its
plan, including its good faith estimate of the anticipated associated costs, for
addressing the issues set forth in the Year 2000 guidance papers issued by the
Federal Financial Institutions Examination Council, including the statements
dated May 5, 1997, entitled "Year 2000 Project Management Awareness", December
17, 1997, entitled "Safety and Soundness Guidelines Concerning the Year 2000
Business Risk", and October 15, 1998, entitled "Interagency Guidelines
Establishing Year 2000 Standards for Safety and Soundness", as such issues
affect any of Fifth Third or its subsidiaries. Between the date of this
Agreement and the Effective Time, Fifth Third shall use its reasonable best
efforts to implement such plan.
R. EXPIRATION OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Article III shall expire at the Effective Time, and
thereafter, Fifth Third shall have no further liability or obligation with
respect thereto.
ARTICLE IV. OBLIGATIONS OF CNB BANCSHARES BETWEEN THE DATE
OF THIS AGREEMENT AND THE EFFECTIVE TIME.
A. SHAREHOLDERS' MEETING. CNB Bancshares, in consultation with Fifth Third,
will take all actions necessary to call and hold an annual or a special meeting
of CNB Bancshares' shareholders as soon as practicable after the Fifth Third
registration statement relating to the shares of Fifth Third Common Stock to be
issued in the Merger has been declared effective by the SEC and under all
applicable state securities laws for the purpose of approving the Merger and
the plan of merger (within the meaning of Section 23-1-40-1 of the IBCL)
contained in this Agreement (and any other documents or actions necessary to
the consummation of the Merger) pursuant to law. The Board of Directors of CNB
Bancshares shall be permitted to withdraw or modify in a manner adverse to
Fifth Third (or not to continue to make) its recommendation to its shareholders
(including recommending that shareholders vote against the Merger) if, but only
if, (a) in the reasonable opinion of the Board of Directors of CNB Bancshares
upon the advice of its outside counsel, such action is required in order for
the Board of Directors of CNB Bancshares to comply with duties applicable to
directors under applicable law, and (b) CNB Bancshares has given Fifth Third
five business days' prior notice of its intention to withdraw or modify such
recommendation and CNB Bancshares' Board of Directors has considered any
proposed changes to this Agreement (if any) proposed by Fifth Third prior to
such five day period. Without limiting the generality of the foregoing, CNB
Bancshares agrees that its obligations pursuant to the first sentence of this
Section IV.A. shall not be altered by the commencement, public
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proposal, public disclosure or communication to CNB Bancshares of any
Acquisition Proposal (as defined below), including without limitation a
Superior Proposal (as defined below), or a decision by the Board of Directors
of CNB Bancshares to withdraw or modify in a manner adverse to Fifth Third (or
not to continue to make) its recommendation to its stockholders to approve the
Merger and the plan of merger contained in this Agreement. For the purposes of
this Agreement, "Superior Proposal" shall mean any bona fide Acquisition
Proposal for all of the outstanding shares of the CNB Bancshares Common Stock
on terms the Board of Directors of CNB Bancshares determines in its good faith
judgment (taking into account the advice of a financial advisor of nationally
recognized reputation, taking into account all the terms and conditions of the
Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation) are more favorable and provide
greater value to all of CNB Bancshares' shareholders than this Agreement and
the Merger taken as a whole.
B. NO SOLICITATION. CNB Bancshares and its subsidiaries, and the officers,
directors, financial or legal advisors of CNB Bancshares and its subsidiaries,
will not, directly or indirectly, (a) take any action to solicit, initiate or
encourage any Acquisition Proposal or (b) engage in negotiations with, or
disclose any nonpublic information relating to CNB Bancshares or any of its
subsidiaries or afford access to the properties, books or records of CNB
Bancshares or any of its subsidiaries to, any person that may be considering
making, or has made, an Acquisition Proposal; provided that CNB Bancshares may,
in response to an unsolicited written proposal from a third party regarding an
Acquisition Proposal engage in the activities specified in clause (b) of this
Section IV.B., if (i) in the reasonable opinion of the Board of Directors of CNB
Bancshares upon the advice of its outside counsel, such action is required for
the Board of Directors of CNB Bancshares to comply with the duties applicable to
directors under applicable law and (ii) CNB Bancshares has received from such
third party an executed confidentiality agreement with terms not materially less
favorable to CNB Bancshares than those contained in the confidentiality
agreement entered into between CNB Bancshares and Fifth Third dated June 14,
1999. CNB Bancshares will immediately notify Fifth Third orally and will
promptly (and in no event later than 24 hours after the relevant event) notify
Fifth Third in writing (which oral and written notices shall identify the person
making the Acquisition Proposal or request for information and set forth the
material terms thereof) after having received any Acquisition Proposal, or
request for nonpublic information relating to CNB Bancshares or any of its
subsidiaries or for access to the properties, books or records of CNB Bancshares
or any of its subsidiaries by any person who is considering making or has made
an Acquisition Proposal. CNB Bancshares will keep Fifth Third fully and
currently informed of the status and details of any such Acquisition Proposal or
request and any related discussions or negotiations. CNB Bancshares shall, and
shall cause the CNB Subsidiaries and its directors, officers and financial and
legal advisors to, cease immediately and cause to be terminated all activities,
discussions or negotiations, if any, with any persons conducted heretofore with
respect to any Acquisition Proposal. Nothing in this Section IV.B. shall
prohibit CNB Bancshares or its Board of Directors from taking and disclosing to
the stockholders of CNB Bancshares a position with respect to an Acquisition
Proposal by a third party to the extent required under the Exchange Act or from
making such disclosure to the stockholders of CNB Bancshares which, in the
reasonable opinion of the Board of Directors of CNB Bancshares upon the advice
of its outside counsel, is required under applicable law; provided that nothing
in this sentence shall affect the obligations of CNB Bancshares and its Board of
Directors under any other provision of this Agreement. For
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purposes of this Agreement, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in (a) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
beneficial ownership (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the Exchange
Act, and the rules and regulations thereunder) of securities representing 10%
or more of the voting power of CNB Bancshares or more than 25% of any
Significant Subsidiary of CNB Bancshares, (b) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of CNB Bancshares or all or a substantial portion of the assets or
deposits of any Significant Subsidiary of CNB Bancshares, (c) a merger or
consolidation, or any similar transaction, involving CNB Bancshares or any
Significant Subsidiary of CNB Bancshares, or (d) any substantially similar
transaction.
C. VALUATION ADJUSTMENT. Consistent with GAAP, CNB Bancshares agrees that on or
before the Effective Time based on a review of the Bank Subsidiary's loan
losses, current classified assets and commercial, multi-family and residential
mortgage loans and investment portfolio, CNB Bancshares will work with Fifth
Third with the goal of establishing collection procedures, internal valuation
reviews, credit policies and practices and general valuation allowances which
are consistent with the guidelines used within the Fifth Third holding company
system, provided that no adjustment to general valuation allowances or reserves
shall be made until immediately prior to the Effective Time and all conditions
precedent to the obligations of the parties hereto have either been satisfied or
waived as confirmed by such parties in writing. Fifth Third shall provide such
assistance and direction to CNB Bancshares as is necessary in conforming to such
policies, practices, procedures and asset dispositions which are mutually
agreeable between the date of this Agreement until the Effective Time.
D. OPERATIONS IN THE ORDINARY COURSE; FORBEARANCES. From the date of this
Agreement until the Effective Time, CNB Bancshares and the CNB Subsidiaries will
be operated in the ordinary course of business, and none of them will, without
the prior written consent of Fifth Third, which consent shall not be
unreasonably withheld or unreasonably delayed: make any changes in its Restated
Articles of Incorporation, Amended By-laws, or corporate structures; issue any
additional shares of CNB Bancshares Common Stock or other equity securities
other than pursuant to the exercise of options granted prior to the date hereof,
in the form of permissible stock dividends (as described below), upon conversion
of Convertible Debentures, pursuant to the Dividend Reinvestment Plan or as set
forth in the Disclosure Schedule pursuant to Section II.A.1. with respect to
Benefit Plans; or, issue as borrower any long term debt or convertible or other
securities of any kind, or right to acquire any of its securities; repurchase
any equity securities, other than (subject to Section VII.J.) the repurchase of
shares of CNB Bancshares Common Stock in accordance with past practice (as to
timing and amount) and in compliance with applicable law and the safe harbor
requirements of Rule 10b-18 of the Exchange Act; make any material changes in
its method of business operations; make, enter into any agreement to make, or
become obligated to make, any capital expenditures in excess of $500,000 (except
as set forth in the Disclosure Schedule); make, enter into or renew any
agreement for services to be provided to CNB Bancshares or the CNB Subsidiaries
or permit the automatic renewal of any such agreement, other than the agreements
identified in the Disclosure Schedule which are specifically identified on such
Schedule as agreements which CNB Bancshares intends to renew, except any
agreement for services having a term of not more than six (6) months and
requiring
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the expenditure of not more than $500,000 (for this purpose the phrase "permit
the automatic renewal" includes the failure to send a notice of termination of
such contract if such failure would constitute a renewal); acquire, become
obligated to acquire, or enter into any agreement to acquire, any banking or
non-banking company or any branch offices of any such companies or any material
assets or liabilities outside the ordinary course of business, other than such
agreements existing on the date hereof and previously publicly announced or
disclosed in the Disclosure Schedule; make, declare, pay or set aside for
payment any cash dividends on its own stock other than normal and customary
cash dividends per quarter paid in such amounts and at such times as CNB
Bancshares historically has done on its Common Stock and which shall not exceed
$0.24 per share in the case of the dividend to be paid in July 1999 and
(subject to Section VII.J.) $0.26 per share in the case of subsequent quarters,
or be paid more frequently than once per calendar quarter, provided this
covenant shall only apply to CNB Bancshares; make any distributions on its
stock, other than (i) stock dividends to be declared in accordance with past
practice (subject to Section VII.J. and provided that Fifth Third has been
given a reasonable opportunity prior to such declaration to review and comment
on any announcement with respect thereto) and (ii) cash dividends, as described
in the immediately preceding clause; change or otherwise amend any Benefit
Plans other than as required by law or as contemplated herein; provide any
increases in employee salaries or benefits other than in the ordinary course of
business; or take any intentional action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VI not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as required by applicable law,
regulation or safe and sound banking practices. CNB Bancshares agrees that it
will not sell, transfer, mortgage or otherwise dispose of or encumber any of
the shares of the capital stock of the CNB Subsidiaries which are now owned by
it, and neither CNB Bancshares nor any of the CNB Subsidiaries shall sell,
transfer, mortgage or otherwise dispose of or encumber any other assets, except
in the ordinary course of business consistent with past practice. CNB
Bancshares agrees that neither it nor the CNB Subsidiaries will agree to, or
make any commitment to, take any of the actions prohibited by this Section
IV.D.
ARTICLE V. COOPERATION AND OTHER OBLIGATIONS AND OTHER COVENANTS
A. REGISTRATION STATEMENT AND PROXY STATEMENT. 1. Each of Fifth Third and CNB
Bancshares agree to cooperate in the preparation of a registration statement on
Form S-4 (the "Registration Statement") to be filed by Fifth Third with the SEC
in connection with the issuance of Fifth Third Common Stock in the Merger
(including the proxy statement and prospectus and other proxy solicitation
materials of CNB Bancshares constituting a part thereof (the "Proxy Statement")
and all related documents). The Registration Statement and the Proxy Statement
shall comply as to form in all material respects with the applicable provisions
of the Securities Act and the Exchange Act and the rules and regulations
thereunder. Fifth Third and CNB Bancshares agree to each use their best efforts
to enable CNB Bancshares to file the Proxy Statement in preliminary form with
the SEC within sixty (60) days of the date hereof and CNB Bancshares agrees to
furnish the preliminary Proxy Statement in draft form for comments to Fifth
Third at least 5 days prior to the anticipated filing. Unless Fifth Third elects
to file the Registration Statement sooner, Fifth Third agrees to file the
Registration Statement with the SEC
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as soon as reasonably practicable after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of Fifth Third and CNB
Bancshares shall, as promptly as practicable after receipt thereof, provide
copies of any written comments received from the SEC with respect to the
Registration Statement and the Proxy Statement, as the case may be, to the
other party, and advise the other party of any oral comments with respect to
the Registration Statement or the Proxy Statement received from the SEC. Each
of Fifth Third and CNB Bancshares agrees to use reasonable best efforts to
cause the Registration Statement to be declared effective under the Securities
Act as promptly as reasonably practicable after filing thereof. As promptly as
possible after the Registration Statement is declared effective, CNB Bancshares
agrees to mail the Proxy Statement to its shareholders. Fifth Third also agrees
to use reasonable best efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by the Agreement. CNB Bancshares agrees to furnish to Fifth Third
all information concerning CNB Bancshares, its Subsidiaries, officers,
directors and stockholders as may be reasonably requested in connection with
the foregoing.
2. Each of Fifth Third and CNB Bancshares agrees, as to itself and its
subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to shareholders and at the time of the CNB Bancshares shareholder
meeting to approve the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.
3. Fifth Third agrees to advise CNB Bancshares, promptly after Fifth
Third receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of the Fifth Third
Common Stock for offering or sale in any jurisdiction, of the initiation or
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information. CNB Bancshares agrees to advise Fifth Third of any request by the
SEC for the amendment or supplement of the Proxy Statement or for additional
information.
B. REGULATORY APPROVALS. 1. Fifth Third will prepare and cause to be filed, at
the expense of Fifth Third, such notices, applications and other documents with
the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Ohio Division of Financial Institutions, the Michigan
Financial Institutions Bureau, and any other Regulatory Agencies or stock
exchanges as are required to secure the requisite approvals for the consummation
of the transactions provided for in this Agreement. Fifth Third shall use its
reasonable best efforts to file all such applications within forty-five (45)
days of the date of this Agreement and to use all reasonable efforts to secure
all such approvals. CNB Bancshares agrees that it will cooperate with Fifth
Third and, as promptly as practicable after request and at
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its own expense, provide Fifth Third with all information and documents
concerning CNB Bancshares and the Bank Subsidiary, as shall be required in
connection with preparing such notices, applications and other documents and in
connection with securing such approvals.
2. Fifth Third and CNB Bancshares shall promptly advise each other
upon receiving any communication from any governmental entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement.
C. REASONABLE BEST EFFORTS. Each of the parties hereto agrees to use its
reasonable best efforts and to cooperate with the other party in all reasonable
respects in order to carry out and consummate the transactions contemplated by
this Agreement at the earliest practicable time including, without limitation,
the filing of applications, notices and other documents with, and obtaining
approval from, appropriate governmental regulatory agencies; provided that
nothing in this Agreement shall obligate Fifth Third to agree to any conditions,
restraints or requirements that would materially adversely reduce the
anticipated economic or business benefits of the Merger to Fifth Third or could
reasonably be expected to have a Material Adverse Effect on CNB Bancshares and
the CNB Subsidiaries taken as a whole (a "Burdensome Condition") (it being
understood that a condition preventing the integration of the computer systems
of CNB Bancshares or any of the CNB Subsidiaries with those of Fifth Third or
its subsidiaries until after January 1, 2000 shall not be deemed a Burdensome
Condition).
D. ACCESS TO INFORMATION. 1. CNB Bancshares agrees to permit Fifth Third, its
officers, employees, accountants, agents and attorneys, and Fifth Third agrees
to permit CNB Bancshares, its officers, employees, accountants, agents and
attorneys, to have reasonable access during business hours to their respective
books, records and properties, and those of its respective subsidiaries as well,
for the purpose of making a detailed examination, or updating and amplifying
prior examinations, of the financial condition, assets, liabilities, legal
compliance, affairs and the conduct of the business of CNB Bancshares and the
CNB Subsidiaries or Fifth Third and its subsidiaries, as the case may be, prior
to the Effective Time, and also to permit the monitoring of the foregoing on an
ongoing basis (such rights of examination and monitoring to be subject to the
confidentiality obligations set forth in Section V.D.2. hereof); provided,
however, no investigation by any of the parties or their respective
representatives shall affect the representations and warranties of the other
party set forth herein.
2. Fifth Third will not disclose to others, shall not use in respect
of its (or any of its subsidiaries) business operations, and will hold in
confidence any non-public, confidential information disclosed to it by CNB
Bancshares concerning CNB Bancshares or the Bank Subsidiary. CNB Bancshares
will not disclose to others, shall not use in respect of its (or any of its
subsidiaries) business operations, and will hold in confidence any non-public,
confidential information disclosed to it concerning Fifth Third or any of its
affiliates. In the event the Merger is not completed, all non-public financial
statements, documents and materials, and all copies thereof, shall be returned
to CNB Bancshares or Fifth Third, as the case may be, and shall not be used by
Fifth Third or CNB Bancshares, as the case may be, in any way detrimental to
CNB Bancshares or Fifth Third.
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3. As soon as they are available, CNB Bancshares will provide to Fifth
Third CNB Bancshares' unaudited, consolidated balance sheets, statements of
income, changes in stockholders' equity and cash flows as of and at June 30,
1999, and for the six months then ended, and shall continue to furnish such
financial information for subsequent monthly and quarterly periods to Fifth
Third, and audited, consolidated financial statements as at December 31, 1999
and for the year then ended, as soon as practicable, in each case, until the
Closing Date. Such audited and unaudited consolidated financial statements of
CNB Bancshares will fairly present, as applicable, the consolidated financial
condition, results of operations and cash flows of CNB Bancshares as of the date
thereof, and for the years or periods covered thereby, in conformity with GAAP,
consistently applied (except as stated therein and except for the omission of
notes to unaudited statements and except for year-end adjustments (consisting of
normal recurring accruals)). CNB Bancshares timely shall furnish Fifth Third
with copies of all reports filed by CNB Bancshares with the SEC subsequent to
the date of this Agreement and until the Closing Date.
4. As soon as they are available, Fifth Third will provide to CNB
Bancshares Fifth Third's unaudited, consolidated balance sheets, statements of
operations, statements of stockholders' equity and cash flows as of and at June
30, 1999, and for the six months then ended, and shall continue to furnish such
financial information for subsequent monthly and quarterly periods to Fifth
Third, and audited, consolidated financial statements as at December 31, 1999
and for the year then ended, as soon as practicable, in each case, until the
Closing Date. Such audited and unaudited consolidated financial statements of
Fifth Third will fairly present, as applicable, the consolidated financial
condition, results of operations and cash flows of Fifth Third as of the date
thereof, and for the years or periods covered thereby, in conformity with GAAP,
consistently applied (except as stated therein and except for the omission of
notes to unaudited statements and except for normal (in nature and amount)
year-end adjustments to interim results). Fifth Third timely shall furnish CNB
Bancshares with copies of all reports filed by Fifth Third with the SEC
subsequent to the date of this Agreement and until the Closing Date.
E. EMPLOYEE BENEFIT MATTERS. 1. If Fifth Third so requests, CNB Bancshares or
the CNB Subsidiaries shall develop a plan and timetable for terminating any or
all of the Qualified Benefit Plans, and, with the advance written approval of
Fifth Third, shall proceed with the implementation of said termination plan and
timetable; provided that such terminations will not adversely affect
qualification of such Qualified Benefit Plans under the Code. In the event of
the termination of defined benefit plans maintained by CNB Bancshares, such
plans may be amended with the advance written consent of Fifth Third (which
shall not be unreasonably withheld) to allow participants to elect lump sum
distributions using actuarial assumptions in the CNB Bancshares defined benefit
plan as of the date of this Agreement.
2. CNB Bancshares or the CNB Subsidiaries shall provide to Fifth Third
at least sixty (60) days prior to the Effective Time, documentation reasonably
satisfactory to Fifth Third demonstrating that the requirements of Sections 404,
412, 415, 416, 401(k) and (m) of the Code have been satisfied by all of its
Qualified Benefit Plans for the 1996, 1997 and 1998 plan years.
3. All participants in the defined benefits plans maintained by CNB
Bancshares shall become 100% vested as of the Effective Time. With respect to
any other Benefit Plan that
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provides for vesting of benefits, there shall be no discretionary acceleration
of vesting without Fifth Third's consent whether or not such discretionary
acceleration of vesting is provided under the terms of the Benefit Plan;
provided that a Benefit Plan which pursuant to its terms provides for an
acceleration of vesting upon a change of control of CNB Bancshares shall not be
deemed to involve a discretionary acceleration of vesting and vesting
thereunder shall accelerate as of the Effective Time or any other date as
provided therein.
4. If Fifth Third so requests, CNB Bancshares or any of the CNB
Subsidiaries shall take all actions necessary to freeze the Qualified Benefit
Plans as of a date at least one day prior to the Effective Time such that no
further contributions (including employee 401(k) contributions) shall be made
under the Qualified Benefit Plans after the Effective Time.
5. Except as provided otherwise pursuant hereto, CNB Bancshares and
any of the CNB Subsidiaries, without the advance written consent of Fifth
Third, which shall not be unreasonably withheld or delayed, shall not (a) adopt
any amendments to the Qualified Benefit Plans after the date of this Agreement;
or (b) make any distributions from the Qualified Benefit Plans after the date
of this Agreement other than in the ordinary course of operations of such
Qualified Benefit Plans; or (c) make any contributions to the defined benefit
plans maintained by CNB Bancshares or discretionary contributions to any of the
Qualified Benefit Plans after the date of this Agreement; or (d) take any
action which would reduce or restrict the availability of surplus (excess of
plan assets over plan liabilities) under any defined benefit plan as defined in
Section 414(j) of the Code.
6. Nonqualified Deferred Compensation Plans. For all nonqualified
deferred compensation plans maintained by CNB Bancshares, Fifth Third will (a)
not terminate the plan without the written consent of a majority of the
participants, (b) maintain investment alternatives in the same categories as
those now available to participants, (c) not require participants to alter their
distribution elections, (d) provide participants or beneficiaries at least
quarterly statements on their accounts, and (e) take no action which would
otherwise jeopardize the tax deferral of benefits under the nonqualified
deferred compensation plan.
7. Retiree Health Plans. Fifth Third will continue to maintain (i) the
retiree health plan maintained by CNB Bancshares for the individuals who are
listed in the Disclosure Schedule, and (ii) the health plan for disabled
employees who are listed in the Disclosure Schedule and/or merge such plans with
the retiree medical plans provided by Fifth Third.
8. Short Term Incentive Plan and Bonus. Bonuses will be paid by CNB
Bancshares in its cash bonus plan at a rate of 8% of compensation for the
calendar year 1999. Short Term Incentive Plan ("STIP") distributions for the
calendar year 1999 will be made at the maximum level permitted under the STIP.
Employees of CNB Bancshares and the subsidiaries of CNB Bancshares who are
terminated on or after the date of this Agreement and before January 1, 2000,
will receive a pro rata portion of the bonus and/or STIP distribution they
otherwise would have received for the calendar year 1999. Bonuses and
distributions under the STIP will be paid on or before December 31, 1999.
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9. With the advance written consent of Fifth Third (which shall not be
unreasonably withheld), CNB Bancshares may amend the CNB Bancshares, Inc.
Employees' Pension Plan to provide that (i) compensation through December 31,
1999 shall be taken into account notwithstanding an earlier freeze or
termination of said plan and (ii) if a participant is involuntarily terminated
on or after the date of this Agreement, his compensation for purposes of the
plan will be calculated as if such participant worked through December 31, 1999
based on his rate of pay as of his termination of employment.
10. Defined Benefit Plan Surplus. The amount of the surplus in the CNB
Bancshares defined benefit plan will be calculated on a plan termination basis,
as of the Effective Time, as mutually agreed by CNB Bancshares and Fifth Third's
actuaries. An amount equal to 50% of the surplus in excess of $6,000,000 will be
used to provide enhanced benefits for (i) employees of CNB Bancshares and the
subsidiaries of CNB Bancshares who are employed by Fifth Third on December 31,
2000 and (ii) employees of CNB Bancshares and the subsidiaries of CNB Bancshares
who are involuntarily terminated on or after the date of this Agreement and
prior to December 31, 2000. Said 50% share of the surplus in excess of
$6,000,000 shall be reduced by (i) the potential liability determined in good
faith by Fifth Third arising from the breach of any representations and
warranties in Section II.Q., to be determined by Fifth Third as soon as
practicable after the date hereof, but in no event later than fifteen (15) days
prior to the Effective Time, and (ii) the actuarial cost (if any) determined in
good faith by Fifth Third's actuaries of the amendments referred to in Section
V.E. providing for immediate vesting, lump sum distributions and the inclusion
of compensation through December 31, 1999. The enhanced benefits will be payable
within the defined benefit plan and the nature of those benefits will be
determined by the management of CNB Bancshares subject to the approval of Fifth
Third (which approval shall not be unreasonably withheld.)
11. Employees employed by Fifth Third after the Effective Time will be
entitled to a flex dollar allocation of not less than 6% of such employees'
qualifying compensation (or an allocation comparable thereto) under the Fifth
Third Section 125 Plan allocable over the pay periods in the year 2000 (falling
after the Effective Time) in accordance with the terms of said plan.
F. STATE TAKEOVER STATUTES. CNB Bancshares will take all steps within its
reasonable control necessary to exempt (or continue the exemption of) the
Merger, this Agreement and the Option Agreement and the transactions
contemplated hereby and thereby (including, without limitation, exercise of the
Option (as defined therein)) from any applicable state takeover law, as now or
hereafter in effect.
G. AFFILIATES. 1. Not later than the 15th day prior to the mailing of CNB
Bancshares' Proxy Statement with respect to the Merger, CNB Bancshares shall
deliver to Fifth Third a list of each person that, to the best of CNB
Bancshares' knowledge, is or is reasonably likely to be, as of the date of the
annual or special meeting called to approve the Merger, deemed an "affiliate" of
it as that term is used in Rule 145 under the Securities Act, or SEC Accounting
Series Releases 130 and 135 (the "CNB Bancshares Affiliates"). CNB Bancshares
shall use its best efforts to cause each CNB Bancshares Affiliate to execute and
deliver to Fifth Third on or before the mailing of such Proxy Statement an
agreement in the form of Appendix B hereto.
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2. Fifth Third shall use its best efforts to cause each person who may
be deemed to be an "affiliate" of it as that term is used in Rule 145 under the
Securities Act, or SEC Accounting Series Releases 130 and 135, as the case may
be, to execute and deliver to Fifth Third on or before the date of mailing of
the Proxy Statement an agreement in the form of Appendix C hereto.
H. EXEMPTION FROM LIABILITY UNDER SECTION 16(B). Assuming that CNB Bancshares
delivers to Fifth Third the Section 16 Information in a timely fashion prior to
the Effective Time, the Board of Directors of Fifth Third, or a committee of
Non-Employee Directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), shall reasonably promptly thereafter and in
any event prior to the Effective Time adopt a resolution, expressly relying on
CNB Bancshares' representation that any such options or other grants were upon
their issuance exempt from liability pursuant to Section 16(b) under the
Exchange Act, providing that the receipt by the CNB Insiders of Fifth Third
Common Stock in exchange for shares of CNB Bancshares Common Stock, and of
options to purchase shares of Fifth Third Common Stock upon conversion of
options to purchase shares of CNB Bancshares Common Stock, in each case pursuant
to the transactions contemplated hereby and to the extent such securities are
listed in the Section 16 Information, are intended to be exempt from liability
pursuant to Section 16(b) under the Exchange Act; provided, however, that the
Board of Directors of Fifth Third will be under no obligation to adopt such a
resolution unless it may expressly rely on a written representation by CNB
Bancshares that any such options or other grants were, upon their issuance,
exempt from liability pursuant to Section 16(b) under the Exchange Act. "Section
16 Information" shall mean information accurate in all respects regarding the
CNB Insiders, the number of shares of CNB Bancshares Common Stock held by each
such CNB Insider and expected to be exchanged for Fifth Third Common Stock in
the Merger, and the number and description of the options to purchase shares of
CNB Bancshares Common Stock held by each such CNB Insider and expected to be
converted into options to purchase shares of Fifth Third Common Stock in
connection with the Merger. "CNB Insiders" shall mean those officers and
directors of CNB Bancshares who are subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are listed in the Section 16
Information.
I. EMPLOYMENT AGREEMENT. Concurrently with the execution of this Agreement,
Fifth Third is entering into an employment agreement with Mr. James J.
Giancola, effective as of the Effective Time.
J. FORBEARANCES OF FIFTH THIRD. From the date of this Agreement until the
Effective Time, Fifth Third will not, without the prior written consent of CNB
Bancshares, which consent shall not be unreasonably withheld or unreasonably
delayed: make any changes in its Second Amended Articles of Incorporation or
Code of Regulations in a manner adverse to the shareholders of CNB Bancshares;
make, declare, pay or set aside for payment any extraordinary cash dividends on
its own stock; or agree to, or make any commitment to, take any of the actions
prohibited by this Section V.J.
K. COORDINATION OF DIVIDENDS. Fifth Third and CNB Bancshares shall coordinate
(on a mutually agreeable basis that will not materially impair Deloitte & Touche
LLP's ability to deliver the letters referred to in Section VI.B.6.) the timing
of the declaration and payment of
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dividends payable after the date hereof so that Fifth Third and CNB Bancshares
shareholders will receive during each quarter fair dividends and in no event
shall Fifth Third or CNB Bancshares shareholders fail to receive a fair
dividend, or receive more than one fair dividend, during any quarter up to and
including the quarter immediately following the quarter during which the
Effective Time occurs.
ARTICLE VI. CONDITIONS PRECEDENT TO CLOSING
A. CONDITIONS TO THE OBLIGATIONS OF EACH OF THE PARTIES.
The obligation of each of the parties hereto to consummate the transactions
provided for herein is subject to the fulfillment on or prior to the Effective
Time of each of the following conditions:
1. The shareholders of CNB Bancshares shall have duly approved the
Merger and the plan of merger contained within this Agreement in accordance with
and as required by law and in accordance with CNB Bancshares' Restated Articles
of Incorporation and Amended Bylaws.
2. All necessary governmental and regulatory orders, consents,
clearances and approvals and requirements shall have been secured and satisfied
for the consummation of such transactions, including without limitation, those
of the Federal Reserve System, the Ohio Division of Financial Institutions, the
Michigan Financial Institutions Bureau, and the Federal Deposit Insurance
Corporation to the extent required and, in the case of Fifth Third's obligation,
none of such orders, consents, clearances and approvals and requirements shall
be subject to a Burdensome Condition.
3. Any waiting period mandated by law in respect of the final
requisite approval by any applicable Regulatory Agency of the transaction
contemplated herein shall have expired.
4. No order or injunction of any federal or state agency or court
shall be in effect preventing, prohibiting or enjoining the transactions
contemplated by this Agreement.
5. Fifth Third shall have registered its shares of Fifth Third Common
Stock to be issued to the CNB Bancshares shareholders hereunder with the SEC
pursuant to the Securities Act, and with all applicable state securities
authorities. The registration statement with respect thereto shall have been
declared effective by the SEC and all applicable state securities authorities
and no stop order shall have been issued. The shares of Fifth Third Common Stock
to be issued to the CNB Bancshares shareholders hereunder shall have been
authorized for trading on the National Market System of the National Association
of Securities Dealers upon official notice of issuance.
6. Fifth Third and CNB Bancshares shall have received from Deloitte &
Touche LLP, independent auditors for Fifth Third, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
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B. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF FIFTH THIRD.
The obligation of Fifth Third to consummate the transactions provided for herein
is subject to the fulfillment at or prior to the Effective Time of each of the
following additional conditions unless waived by Fifth Third in a writing
delivered to CNB Bancshares which specifically refers to the condition or
conditions being waived:
1. All of the representations and warranties of CNB Bancshares set
forth in Article II of this Agreement shall be true and correct (subject to the
standard set forth in Section I.S.) both as of the date of this Agreement and at
and as of the Closing Date (as hereinafter defined) as if each such
representation and warranty was given on and as of the Closing Date, except for
any such representations and warranties made as of a specified date, which shall
be true and correct (subject to the standard set forth in Section I.S.) as of
such date.
2. CNB Bancshares shall have performed all of the obligations required
of it under the terms of this Agreement in all material respects.
3. Fifth Third shall have received a certificate from CNB Bancshares,
executed by its chief executive officer and chief financial officer, dated the
Closing Date, certifying to the best knowledge and belief of such chief
executive officer and chief financial officer of each that the conditions set
forth in Section VI.B.1. and VI.B.2. have been satisfied.
4. Fifth Third shall have received an opinion of Cleary, Gottlieb,
Steen & Hamilton, special counsel to Fifth Third, dated the Closing Date, to the
effect that, on the basis of facts, representations and assumptions set forth in
such opinion (a) the Merger constitutes a "reorganization" within the meaning of
Section 368 (a) of the Code and (b) that, accordingly, no gain or loss will be
recognized by Fifth Third as a result of the Merger. In rendering such opinion,
such counsel may require and rely upon representations contained in letters from
Fifth Third and CNB Bancshares.
5. No investigation or action by any state or federal agency shall
have been threatened in writing or instituted seeking to enjoin or prohibit or
unwind the transactions contemplated hereby and no governmental action or
proceeding shall have been threatened or instituted before any court or
governmental body or authority, seeking to enjoin or prohibit or unwind, the
transactions contemplated hereby or seeking to impose material sanctions or
penalties as a result thereof (other than investigations, actions and
proceedings which have been withdrawn prior to the Closing without Material
Adverse Effect on Fifth Third or CNB Bancshares, individually or on a combined
basis, and other than regularly scheduled regulatory examinations).
C. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF CNB BANCSHARES.
The obligation of CNB Bancshares to consummate the transactions provided for
herein is subject to the fulfillment at or prior to the Effective Time of each
of the following additional conditions unless waived by CNB Bancshares in a
writing delivered to Fifth Third which specifically refers to the condition or
conditions being waived:
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1. All of the representations and warranties of Fifth Third set forth
in Article II of this Agreement shall be true and correct (subject to the
standard set forth in Section I.S.) both as of the date of this Agreement and at
and as of the Closing Date (as hereinafter defined) as if each such
representation and warranty was given on and as of the Closing Date, except for
any such representations and warranties made as of a specified date, which shall
be true and correct (subject to the standard set forth in Section I.S.) as of
such date.
2. Fifth Third shall have performed all of the obligations required of
it under the terms of this Agreement in all material respects.
3. CNB Bancshares shall have received a certificate from Fifth Third,
executed by its chief executive officer and chief financial officer, dated the
Closing Date, certifying to each of such officers' best knowledge and belief
that the conditions set forth in Section VI.C.1. and VI.C.2. have been
satisfied.
4. CNB Bancshares shall have received an opinion of Lewis, Rice &
Fingersh, L.C., counsel to CNB Bancshares, dated the Closing Date, to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion (a) the Merger constitutes a "reorganization" within the meaning of
Section 368 (a) of the Code and (b) that, (i) no gain or loss will be recognized
by CNB Bancshares as a result of the Merger and (ii) no gain or loss will be
recognized by stockholders of CNB Bancshares who receive Fifth Third Common
Stock in exchange for shares of CNB Bancshares Common Stock, except for cash
received in lieu of fractional share interests. In rendering such opinion, such
counsel may require and rely upon reasonable assumptions and require and rely
upon representations contained in letters from Fifth Third and CNB Bancshares.
ARTICLE VII. ADDITIONAL COVENANTS
A. BANK MERGER. The Bank Subsidiary shall be merged with Fifth Third Bank,
Indiana, to be effective at the Effective Time. The parties hereto agree to
cooperate with one another to effect such merger. Upon consummation of any
merger of the Bank Subsidiary, the separate corporate existence of the Bank
Subsidiary shall cease by operation of law.
B. EMPLOYMENT ARRANGEMENTS. 1. Fifth Third shall use its best efforts to employ
at Fifth Third or other Fifth Third subsidiaries or affiliates as many of the
employees of CNB Bancshares and all of the subsidiaries of CNB Bancshares who
desire employment within the Fifth Third holding company system as possible, to
the extent of available positions and consistent with Fifth Third's standard
staffing levels and personnel policies. Immediately following the Effective
Time, Fifth Third shall provide the employees of CNB Bancshares and all
subsidiaries of CNB Bancshares ("Transferred Employees") who become employees of
Fifth Third or any of its subsidiaries or affiliates at or immediately
subsequent to the Merger as a group with employee benefit plans in the aggregate
that are comparable in all material respects with the employee benefit plans
provided to similarly situated employees of Fifth Third. Under each employee
benefit plan sponsored or maintained by Fifth Third or its subsidiaries or
affiliates in which Transferred Employees participate, prior service with CNB
Bancshares and any of the subsidiaries of CNB Bancshares (including service
prior to acquisition by CNB Bancshares to
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the extent CNB Bancshares takes such service into account) shall be taken into
account for purposes of eligibility, vesting and, with the exception of any
defined benefit plan, the accrual of benefits. In addition, with respect to any
payroll practice (such as accrued vacation) where service is utilized to
determine the amount of benefit under such practice, prior service with CNB
Bancshares and any subsidiaries of CNB Bancshares (including service prior to
acquisition by CNB Bancshares to the extent CNB Bancshares takes such service
into account) shall be taken into account. With respect to any employee of CNB
Bancshares subsidiaries of CNB Bancshares who is not employed by Fifth Third or
one of its subsidiaries or affiliates as of the Effective Time, Fifth Third
shall be responsible for providing continuation coverage to such employee (and
his or her dependents), as required by COBRA. With respect to any former
employee of CNB Bancshares or the CNB Subsidiaries (or their dependents) who is
receiving continuation coverage under COBRA as of the Effective Time, Fifth
Third shall be responsible to maintain such continuation coverage in compliance
with COBRA. Notwithstanding the above, there will be no duplication of benefits
for employees of CNB Bancshares and the subsidiaries of CNB Bancshares.
Transferred Employees shall be entitled to a flex dollar allocation (or an
allocation comparable thereto) under the Fifth Third Section 125 Plan allocable
over the pay periods in the year 2000 (falling after the Effective Time) in
accordance with the terms of said plan.
2. Those employees of CNB Bancshares and the subsidiaries of CNB
Bancshares who do not have an employment, change in control or severance
agreement and who are not employed by Fifth Third or who are terminated or
voluntarily resign after being notified that, as a condition of employment, such
employee must work at a location more than thirty (30) miles from such
employee's former location of employment or that such employee's salary will be
materially decreased, in any case and in both cases, within ninety (90) days
after the Effective Time, and who sign and deliver a termination and release
agreement in a form acceptable to Fifth Third, shall be entitled to severance
pay equal to, in the case of CNB Bancshares or subsidiaries of CNB Bancshares,
two (2) weeks of pay for each completed year of service (with a minimum of four
(4) weeks) up to a maximum of twenty-six (26) weeks of pay, plus any earned but
not paid vacation pay. Fifth Third shall provide sufficient notification to CNB
Bancshares of those employees it will not be hiring in order that such employees
terminated by CNB Bancshares can be given appropriate notice of termination in
advance of the effectiveness thereof. CNB Bancshares shall cooperate with Fifth
Third to effectuate the foregoing and to comply with, and provide notices
regarding, the Workers Adjustment and Retraining Act or any similar state or
local law, including without limitation, providing notices to employees and
government representatives. Nothing contained in this Section VII.B.2. shall be
construed or interpreted to limit or modify in any way Fifth Third's at will
employment policy.
3. Notwithstanding anything herein to the contrary, in lieu of any
severance benefits provided in Section VII.B.2. above, Fifth Third shall
acknowledge and assume, upon consummation of the Merger, the obligations of CNB
Bancshares under all existing change in control and employment agreements
specifically identified by CNB Bancshares in Section VII.B.3. of the Disclosure
Schedule.
4. Effective at the Effective Time, Fifth Third shall establish a
retention program (the "Retention Program") for key employees of CNB Bancshares
or the CNB Subsidiaries under which certain key employees will be granted
options on the Effective Date to purchase shares of
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Fifth Third Common Stock. The number of shares of Fifth Third Common Stock
which will be reserved for issuance under the Retention Program shall be
250,000 shares, subject to the adjustment provided in Section I.E. hereof. Such
options will vest on the same schedule as those options regularly granted to
Fifth Third's employees. CNB Bancshares' management team shall recommend key
employees that may be eligible for grant of an award under the Retention
Program and shall cooperate with Fifth Third's management team in identifying
and determining the key employees who will participate in the Retention
Program, provided that the final determination of which employees will
participate and the amount, terms and conditions of such awards will be
determined by Fifth Third in its sole discretion.
C. DIRECTOR, OFFICER AND EMPLOYEE INDEMNIFICATION. 1. From and after the
Effective Time, Fifth Third shall assume the obligations of CNB Bancshares and
the Bank Subsidiary or any of their subsidiaries arising under applicable Ohio,
Michigan, Indiana and Federal law in existence as of the date hereof or as
amended prior to the Effective Time and under the CNB Bancshares' Restated
Articles of Incorporation and Amended By-laws or the Bank Subsidiary's Articles
of Incorporation and Bylaws as in effect on the date hereof, to indemnify,
defend and hold harmless each person who is now, or has been at any time prior
to the date hereof or who become, prior to the Effective Time, an officer or
director of CNB Bancshares, the Bank Subsidiary, or any of their subsidiaries or
predecessors (the "Indemnified Parties") against losses, claims, damages, costs,
expenses (including reasonable attorneys' fees), liabilities or judgments or
amounts that are paid in settlement (which settlement shall require the prior
written consent of Fifth Third) of or in connection with any claim, action,
suit, proceeding or investigation (a "Claim") in which an Indemnified Party is,
or is threatened to be made, a party or a witness based in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director or officer of CNB Bancshares, the Bank Subsidiary or any of their
subsidiaries if such Claim pertains to any matter or fact arising, existing or
occurring prior to the Effective Time (including, without limitation, the Merger
and the transactions contemplated by this Agreement), regardless of whether such
Claim is asserted or claimed prior to, at or after the Effective Time. Fifth
Third shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the full extent permitted by law and
under CNB Bancshares' Restated Articles of Incorporation or Amended By-laws or
the Bank Subsidiary's Articles of Incorporation or Bylaws. Fifth Third's
assumption of the indemnification obligations of CNB Bancshares, the Bank
Subsidiary or any of their subsidiaries as provided herein shall continue for
the period of the applicable statute of limitations after the Effective Time or,
in the case of claims asserted prior to the fifth anniversary of the Effective
Time until such matters are finally resolved. Any Indemnified Party wishing to
claim indemnification under this provision, upon learning of any Claim shall
notify Fifth Third (but the failure to so notify Fifth Third shall not relieve
Fifth Third from any liability which Fifth Third may have under this Section
VII.C. except to the extent Fifth Third is materially prejudiced thereby).
Notwithstanding the foregoing, the Indemnified Parties as a group may retain
only one law firm to represent them with respect to each matter under this
Section VII.C. unless there is, under applicable standards of professional
conduct, a conflict on any one significant issue between the positions of any
two or more Indemnified Parties.
2. From and after the Effective Time, the directors, officers and
employees of CNB Bancshares and its subsidiaries who become directors, officers
or employees of Fifth Third or
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any of its subsidiaries, except for the indemnification rights set forth in
Section VII.C.1., shall have indemnification rights with prospective
application only. The prospective indemnification rights shall consist of such
rights to which directors, officers or employees of Fifth Third or the
subsidiary by which such person is employed are entitled under the provisions
of the Articles of Incorporation of Fifth Third or similar governing documents
of Fifth Third or its applicable subsidiaries, as in effect from time to time
after the Effective Time, as applicable, and provisions of applicable law as in
effect from time to time after the Effective Time.
3. The obligations of Fifth Third provided under this Section VII.C.
are intended to benefit, and be enforceable against Fifth Third directly by, the
Indemnified Parties, and shall be binding on all respective successors of Fifth
Third.
4. Fifth Third shall also purchase and keep in force for a six (6)
year period, a policy of directors' and officers' liability insurance to
provide coverage for acts or omissions of the type currently covered by CNB
Bancshares' existing directors' and officers' liability insurance for acts or
omissions occurring on or prior to the Effective Time, but only to the extent
such insurance may be purchased or kept in full force on commercially
reasonable terms taking into account the cost thereof and the benefits provided
thereby. It is agreed that such costs shall be commercially reasonable so long
as they do not exceed 100% per annum of the costs currently paid per annum for
such coverage by CNB Bancshares.
5. The rights set forth in this Section VII.C. are in addition to and
not in substitution of other indemnification and related rights that such
Indemnified Parties may otherwise be entitled to receive under CNB Bancshares'
Restated Articles of Incorporation, Amended By-laws or applicable law.
D. NOTICES. All notices, requests, consents, and demands under this Agreement
shall be in writing and shall be sufficient in all respects if delivered in
person or mailed by certified mail, return receipt requested, with postage
prepaid, or by confirmed air courier, and addressed, if to CNB Bancshares to Mr.
James J. Giancola, President and CEO, CNB Bancshares, Inc., 20 NW Third Street,
Evansville, Indiana 47739, with a copy to Thomas C. Erb, Esq., Lewis, Rice &
Fingersh, 500 North Broadway, St. Louis, Missouri 63102; and, if to Fifth Third,
to Mr. George A. Schaefer, Jr., President and Chief Executive Officer, Fifth
Third Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, with a copy to
Paul L. Reynolds, Esq., Senior Vice President and General Counsel, Fifth Third
Bank, Legal Division, 38 Fountain Square Plaza, M.D. 10AT76, Cincinnati, Ohio
45263, with a copy to Victor I. Lewkow, Esq., Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York 10006. Such notices shall be
deemed to be received when delivered in person or when deposited in the mail by
certified mail, return receipt requested with postage prepaid. If sent by
confirmed air courier, such notice shall be deemed to be given upon the earlier
to occur of the date upon which it is actually received by the addressee or the
business day upon which delivery is made at such address as confirmed by the air
courier (or if the date of such confirmed delivery is not a business day, the
next succeeding business day). If mailed, such notice shall be sent by certified
mail, postage pre-paid, return receipt requested.
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E. ENTIRE AGREEMENT. This Agreement, together with the written instruments
specifically referred to herein and such other written agreements delivered by
Fifth Third or CNB Bancshares to each other pursuant hereto, constitute the
entire agreement between the parties with regard to the transactions
contemplated herein and supersede any prior agreements, whether oral or in
writing. This Agreement may be hereafter amended only by a written instrument
executed by each of the parties pursuant to Article X hereof.
F. ELECTRONIC FUNDS TRANSFERS. CNB Bancshares and the Bank Subsidiary shall
cooperate with Fifth Third in providing for the conversion of all of CNB
Bancshares' electronic funds transfer related services to MPS and the Jeanie(R)
system at, or as soon as practicable after, the Effective Time.
G. PRESS RELEASES. Fifth Third and CNB Bancshares shall agree with each other
as to the form and substance of any press release related to this Agreement or
the transactions contemplated hereby and thereby, and shall consult with each
other as to the form and substance of other public disclosures related thereto,
provided, however, that nothing contained herein shall prohibit either party
from making any disclosure which its outside counsel deems required by law.
H. EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses for the Proxy Statement and Registration Statement and
SEC filing and registration fees shall be shared equally between Fifth Third and
CNB Bancshares.
I. ADVICE OF CHANGES. 1. Between the date hereof and the Closing Date, CNB
Bancshares shall promptly advise Fifth Third in writing of any fact that, if
existing or known at the date hereof, would have been required to be set forth
or disclosed in or pursuant to this Agreement or of any fact that, if existing
or known at the date hereof, would have made any of the representations
contained herein untrue to any material extent; provided, that no such
disclosure shall affect or modify any representation or warranty of CNB
Bancshares contained herein or made pursuant hereto.
2. Between the date hereof and the Closing Date, Fifth Third shall
promptly advise CNB Bancshares in writing of any fact that, if existing or
known at the date hereof, would have been required to be set forth or disclosed
in or pursuant to this Agreement or of any fact that, if existing or known at
the date hereof, would have made any of the representations contained herein
untrue to any material extent; provided, that no such disclosure shall affect
or modify any representation or warranty of Fifth Third contained herein or
made pursuant hereto.
3. Each party hereto will promptly notify the other party in writing
of the occurrence of any event which will or may result in the failure to
satisfy any material condition precedent set forth in this Agreement. Between
the date of this Agreement and the Closing Date, each party hereto will notify
the other of the satisfaction of such material conditions precedent as they
occur.
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J. TAX AND ACCOUNTING TREATMENT. Neither Fifth Third nor CNB Bancshares will
take any action while knowing that such action would, or is reasonably likely
to, prevent or impede the Merger from qualifying as a "reorganization" within
the meaning of Section 368(a) of the Code or as a "pooling of interests" for
accounting purposes.
K. ENFORCEMENT OF THIS AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, such remedy being in addition to any other
remedy to which any party is entitled at law or in equity.
ARTICLE VIII. TERMINATION
A. BASES FOR TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time by written notice delivered by Fifth Third to CNB Bancshares
or by CNB Bancshares to Fifth Third in the following instances:
1. By Fifth Third or CNB Bancshares, if there has been to the extent
contemplated in Section VI.B.1. or VI.B.2. or Section VI.C.1. or VI.C.2. herein,
as the case may be, a breach of a representation or warranty (subject to the
standard in Section I.S.) or a material breach of any covenant on the part of
the other party with respect to the representations, warranties, and covenants
set forth herein and such breach has not been cured within thirty (30) days
after receipt of written notice or is not capable of being cured, provided, the
party in breach or default shall have no right to terminate for its own breach
or default. For purposes hereof, a breach of Sections IV.A. or IV.B. will be
deemed not capable of being cured.
2. By Fifth Third or CNB Bancshares, if the merger transaction
contemplated herein has not been consummated by April 1, 2000, provided the
terminating party is not in material breach or default of any representations,
warranty or covenant contained herein on the date of such termination.
3. By the mutual written consent of Fifth Third and CNB Bancshares.
4. By Fifth Third if any event occurs which renders impossible of
satisfaction one or more of the conditions to the obligations of Fifth Third to
effect the Merger set forth in Sections VI.A. and VI.B. herein and
non-compliance is not waived by Fifth Third.
5. By CNB Bancshares if any event occurs which renders impossible of
satisfaction one or more of the conditions of the obligations of CNB Bancshares
to effect the Merger as set forth in Sections VI.A. and VI.C. herein and
non-compliance is not waived by CNB Bancshares.
6. By Fifth Third if the Board of Directors of CNB Bancshares shall
have publicly announced its withdrawal or modification in a manner adverse to
Fifth Third of its favorable recommendation of the Merger.
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7. By Fifth Third or CNB Bancshares if CNB Bancshares shareholders,
acting at a meeting held for the purpose of voting upon the Merger, vote not to
approve the Merger in the manner required by law.
B. EFFECT OF TERMINATION. Upon termination as provided in this Article VIII,
this Agreement, except for the provisions of Sections V.D.2. and VII.H. hereof,
shall be void and of no further force or effect, and neither party hereto (nor
any of their respective officers, directors or subsidiaries) shall have any
liability of any kind to the other party including but not limited to liability
for expenses incurred by the other party in connection with this transaction;
provided that no such termination shall relieve a breaching party from liability
for any uncured willful breach of a covenant, undertaking, representation or
warranty giving rise to such termination, but in no event shall any party be
liable for punitive or exemplary damages. Termination of this Agreement shall
not affect the Option Agreement except as set forth therein.
ARTICLE IX. CLOSING AND EFFECTIVE TIME
The consummation of the transactions contemplated by this Agreement shall take
place at a closing (the "Closing") to be held at the offices of Fifth Third in
Cincinnati, Ohio on a Friday selected by Fifth Third which is not more than 15
days after the satisfaction or waiver of all of the conditions precedent to
consummation of the Merger set forth in Article VI hereof (other than those
conditions which by their nature cannot be satisfied until the Closing),
including the expiration of all regulatory waiting periods, have been fully met
or effectively waived (the "Closing Date"). Pursuant to the filing of a
certificate or articles of merger (which shall be prepared by Fifth Third and
reasonably satisfactory to CNB Bancshares) with the Secretary of State of the
State of Ohio and the State of Indiana, respectively, in accordance with law and
this Agreement, the Merger provided for herein shall become effective at the
close of business on said day (the "Effective Time"). By mutual agreement of the
parties, the closing may be held at any other time or place or on any other date
and the effectiveness of the Merger (and the Effective Time) may be changed by
such mutual agreement. None of the representations, warranties and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for agreements of the parties which by their
terms are intended to be performed after the Effective Time.
ARTICLE X. AMENDMENT
This Agreement may be amended, modified or supplemented by the written agreement
of CNB Bancshares and Fifth Third upon the authorization of each company's
respective Board of Directors at any time before or after approval of the Merger
and this Agreement by the shareholders of CNB Bancshares, but after any such
approval by the shareholders of CNB Bancshares no amendment shall be made
(without further shareholder approval) which changes in any manner adverse to
such shareholders the consideration to be provided to such shareholders pursuant
to this Agreement.
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ARTICLE XI. GENERAL
Except to the extent that provisions of the IBCL are applicable to the Merger,
this Agreement was made in the State of Ohio and shall be interpreted under the
laws of the United States and the State of Ohio. Each of the parties hereto
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns but, with the exception of Section I.C., Section I.D. and
Section VII.C., none of the provisions hereof shall be binding upon and inure to
the benefit of any other person, firm or corporation whomsoever. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or transferred by operation of law or otherwise by any party hereto
without the prior written consent of the other party hereto; provided, however,
that the merger or consolidation of Fifth Third shall not be deemed an
assignment hereunder if Fifth Third is the Surviving Corporation in such merger
or consolidation and its Common Stock shall thereafter continue to be publicly
traded and issuable to CNB Bancshares shareholders pursuant to the terms of this
Agreement. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
ARTICLE XII. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original for all purposes but such counterparts taken
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date hereinabove set forth.
FIFTH THIRD BANCORP
(SEAL) By: /s/ Neal E. Arnold
---------------------------
Attest: /s/ Paul L. Reynolds
---------------------------
CNB BANCSHARES, INC.
(SEAL) By: /s/ James J. Giancola
---------------------------
Attest: /s/ H. Lee Cooper
---------------------------
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EXHIBIT 4.1
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated June 16, 1999 between CNB
Bancshares, Inc., an Indiana corporation ("ISSUER"), and Fifth Third Bancorp,
an Ohio corporation ("GRANTEE").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Affiliation
Agreement of even date herewith (the "AFFILIATION AGREEMENT"), which agreement
has been executed by the parties hereto concurrently with this Stock Option
Agreement (the "AGREEMENT"); and
WHEREAS, as a condition to Grantee's entering into the
Affiliation Agreement and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Affiliation
Agreement, the parties hereto agree as follows:
1. THE OPTION. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "OPTION") to purchase, subject to the
terms hereof, up to 6,921,479 fully paid and nonassessable shares of Issuer's
common stock, without par value (the "COMMON STOCK"), at a price of $42.96 per
share (the "OPTION Price"); PROVIDED, however, that in the event Issuer issues
or agrees to issue any shares of Common Stock (other than as permitted under
the Affiliation Agreement) at a price less than the Option Price (as adjusted
pursuant to Section 5), the Option Price shall be equal to such lesser price;
PROVIDED, further, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock at the time of exercise without giving
effect to any shares subject or issued pursuant to the Option. The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price is subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement and other than an event described in
Section 5 hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number (including the
number of shares theretofor issued pursuant to this Option) equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer to breach any provision of the Affiliation Agreement.
2. EXERCISE; CLOSING. (a) The Holder (as defined below) may
exercise the Option, in whole or part, and from time to time, if, but only if,
both an Initial Triggering Event (as defined below) and a Subsequent Triggering
Event (as defined below) shall have occurred
<PAGE> 2
prior to the occurrence of an Exercise Termination Event (as defined below),
PROVIDED that the Holder shall have sent written notice of such exercise (as
provided in subsection (f) of this Section 2) within 180 days following such
Subsequent Triggering Event (or such later period as provided in Section 10).
(b) Each of the following shall be an "EXERCISE TERMINATION
EVENT":
(i) the Effective Time (as defined in the
Affiliation Agreement) of the Merger;
(ii) termination of the Affiliation Agreement in
accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event, except a
termination by Grantee pursuant to Section VIII.A.1. of the
Affiliation Agreement (provided that the breach by Issuer giving rise
to the termination by Grantee under Section VIII.A.1. of the
Affiliation Agreement was willful (a "Listed Termination")); or
(iii) the passage of 18 months after termination of
the Affiliation Agreement (or such later period as provided in Section
10) if such termination (A) follows or is concurrent with the
occurrence of an Initial Triggering Event or (B) is a Listed
Termination.
The term "HOLDER" shall mean Grantee and any other person
that shall become a holder of the Option in accordance with the terms of this
Agreement. Notwithstanding anything to the contrary contained herein, this
Agreement shall automatically terminate upon the proper termination of the
Affiliation Agreement by Issuer pursuant to Section VIII.A.1. thereof.
(c) The term "INITIAL TRIGGERING EVENT" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission (the "SEC")) (each an "ISSUER SUBSIDIARY"),
without having received Grantee's prior written consent, shall have
entered into an agreement to engage in an Acquisition Transaction (as
defined below) with any person (the term "PERSON" for purposes of this
Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the rules and regulations thereunder) other than
Grantee or any of its Subsidiaries (each a "GRANTEE SUBSIDIARY") or
the Board of Directors of Issuer shall have recommended that the
stockholders of Issuer approve or accept any Acquisition Transaction
(other than the Merger referred to in the Affiliation Agreement). For
purposes of this Agreement, "ACQUISITION TRANSACTION" shall mean (x) a
merger or consolidation, or any similar transaction, involving Issuer
or any Significant Subsidiary of Issuer, (y) a purchase, lease or
other acquisition or assumption of all or a substantial portion of the
assets or deposits of Issuer or all or substantially all of the assets
or deposits of any Significant Subsidiary of Issuer, (z) a purchase or
other acquisition
2
<PAGE> 3
(including by way of merger, consolidation, share exchange or
otherwise) of beneficial ownership (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the Exchange Act, and the rules and regulations
thereunder) of securities representing 10% or more of the voting power
of Issuer or more than 10% of any Significant Subsidiary of Issuer;
PROVIDED, however, that in no event shall any merger, consolidation,
purchase or similar transaction involving only the Issuer and one or
more of its wholly-owned Subsidiaries or involving only any two or more
of such wholly-owned Subsidiaries, be deemed to be an Acquisition
Transaction, if such transaction is not entered into in violation of
the terms of the Affiliation Agreement;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have authorized,
recommended, proposed or publicly announced its intention to
authorize, recommend or propose, to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary
or shall have authorized or engaged in, or announced its intention to
authorize or engage in, any negotiations regarding an Acquisition
Transaction with any person other than the Grantee or a Grantee
Subsidiary, or the Board of Directors of Issuer shall have failed to
recommend or shall have publicly withdrawn or modified, or publicly
disclosed that, in the absence of the Option it would withdraw or
modify, or publicly announced its intention to withdraw or modify, in
any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the Merger;
(iii) The shareholders of Issuer shall have voted
and failed to approve the Merger and the plan of merger contained in
the Affiliation Agreement at a meeting which has been held for that
purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Affiliation Agreement or
shall have been canceled prior to termination of the Affiliation
Agreement if, prior to such meeting (or if such meeting shall not have
been held or shall have been canceled, prior to such termination), any
person (other than the Grantee or a Grantee Subsidiary) shall have
made a proposal to Issuer or its stockholders by public announcement
or written communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(iv) (a) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in
the ordinary course of its business, shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 10% or more
of the then outstanding shares of Common Stock or (b) any group (the
term "GROUP" having the meaning assigned in Section 13(d)(3) of the
Exchange Act), other than a group of which the Grantee or any Grantee
Subsidiary is a member, shall have been formed that beneficially owns
10% or more of the shares of Common Stock then outstanding;
3
<PAGE> 4
(v) Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to Issuer or its
stockholders to engage in an Acquisition Transaction and such proposal
shall have been publicly announced;
(vi) After a proposal is made by a third party to
Issuer or its stockholders to engage in an Acquisition Transaction or
such third party states its intention to make such a proposal if the
Affiliation Agreement terminates, Issuer shall have willfully breached
any covenant or obligation contained in the Affiliation Agreement and
such breach would entitle Grantee to terminate the Affiliation
Agreement (without regard to the cure period provided for therein); or
(vii) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed with any
federal or state regulatory or governmental authority an application
for approval or notice of intention to engage in an Acquisition
Transaction.
(d) The term "SUBSEQUENT TRIGGERING EVENT" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person or by a group
other than Grantee, any Grantee Subsidiary or any Issuer Subsidiary
acting in a fiduciary capacity in the ordinary course of its business,
of beneficial ownership of 25% or more of the then outstanding Common
Stock; or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (c) of this Section 2, except
that references to 10% in clause (z) shall be 25%.
(e) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "TRIGGERING EVENT"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(f) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), it shall send to Issuer a written
notice (the date of which being herein referred to as the "NOTICE Date")
specifying (i) the total number of shares it will purchase pursuant to such
exercise and the aggregate purchase price as provided herein and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "CLOSING DATE");
PROVIDED that if prior notification to or approval of the Federal Reserve Board
or any other regulatory agency is required in connection with such purchase,
the Holder shall promptly file the required notice or application for approval
and shall expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which
any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or
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<PAGE> 5
periods shall have passed. Any exercise of the Option shall be deemed to occur
on the Notice Date relating thereto.
(g) At the closing referred to in subsection (f) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer and present and surrender this Agreement to Issuer at its principal
executive offices; PROVIDED that failure or refusal of Issuer to designate such
a bank account shall not preclude the Holder from exercising the Option.
(h) At such closing subject to any regulatory notification
and/or approval having been made or given and being in full force and effect,
simultaneously with the delivery of immediately available funds as provided in
subsection (g) of this Section 2, Issuer shall deliver to the Holder a
certificate or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part only, a
new Option evidencing the rights of the Holder thereof to purchase the balance
of the shares of Common Stock purchasable hereunder, and the Holder shall
deliver to Issuer this Agreement and a letter agreeing that the Holder will not
offer to sell or otherwise dispose of such shares in violation of applicable
law or the provisions of this Agreement.
(i) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate
is subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Holder shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance reasonably satisfactory to Issuer, to the effect that
such legend is not required for purposes of the Securities Act; (ii) the
reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares of Common Stock delivered pursuant hereto have been sold or transferred
in compliance with the provisions of this Agreement under circumstances that do
not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
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(j) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (f) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed, subject to the receipt of any
necessary regulatory approvals, to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates representing
such shares of Common Stock shall not then be actually delivered to the Holder.
Issuer shall pay all expenses, and any and all United States federal, state and
local taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its permitted assignee, transferee or designee.
3. COVENANTS OF ISSUER. In addition to its other agreements
and covenants herein, Issuer agrees: (i) that it shall at all times maintain,
free from subscriptive or preemptive rights, sufficient authorized but unissued
or treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA") or the Change in Bank Control Act of 1978, as
amended, or any state or other federal banking law, prior approval of or notice
to the Federal Reserve Board or to any state or other federal regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state or other federal
regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer to duly and effectively issue shares of Common
Stock pursuant hereto; (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution; and (v) not to enter or
agree to enter into any Acquisition Transaction unless the other party or
parties thereto agree to assume in writing all of Issuer's obligations
hereunder; PROVIDED that nothing in this Section 3 or elsewhere in this
Agreement shall be deemed to authorize Issuer to breach any provision of the
Affiliation Agreement. Notwithstanding any notice of revocation delivered
pursuant to the proviso to Section 7(c), a Holder may require such other party
or parties to perform Issuer's obligations under Section 7(a) unless such other
party or parties are prohibited by law or regulation from such performance.
4. EXCHANGE; REPLACEMENT. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of the Holder,
upon presentation and surrender of this Agreement at the principal office of
Issuer, for other Agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms "AGREEMENT" and
"OPTION" as used herein include any Agreements and related Options for which
this Agreement (and the Option granted
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hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. ADJUSTMENTS. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and proper
provision shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise become outstanding as a result of
any such change (other than pursuant to an exercise of the Option), the number
of shares of Common Stock that remain subject to the Option shall be increased
so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on
account of any of the foregoing changes in the Common Stock), it equals 19.9%
of the number of shares of Common Stock then issued and outstanding. Whenever
the number of shares of Common Stock purchasable upon exercise hereof is
adjusted as provided in this Section 5, the Option Price shall be adjusted by
multiplying the Option Price by a fraction, the numerator of which shall be
equal to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Common Stock purchasable after the adjustment.
6. REGISTRATION. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within twelve (12) months (or such
later period as provided in Section 10) of such Subsequent Triggering Event
(whether on its own behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration statement under
the 1933 Act covering any shares issued and issuable pursuant to this Option
and shall use its reasonable best efforts to cause such registration statement
to become effective and remain current in order to permit the sale or other
disposition of any shares of Common Stock issued upon total or partial exercise
of this Option ("OPTION SHARES") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement promptly to become effective and then to remain
effective for a period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary, in the judgment of the Grantee or the Holder, to effect such sales
or other dispositions. Grantee shall have the right to demand two such
registrations. The Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers' fees).
The foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing
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<PAGE> 8
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would interfere
with the successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; PROVIDED, however, that after any
such required reduction of the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be sold by the Holder and Issuer in the aggregate; and
PROVIDED further, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance of such shares of Common Stock
issuable pursuant to this Option as promptly as practical following such
reduction and no reduction in the number of shares of Common Stock to be sold by
the Holder shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this Section 6 from
any Holder, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 6, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall the number of registrations that
Issuer is obligated to effect pursuant to this Section 6 be increased by reason
of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. REPURCHASE OF OPTION AND/OR OPTION SHARES. (a) At any time
after the occurrence of a Repurchase Event (as defined below), (i) at the
request of the Holder, delivered prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer (or any successor thereto)
shall repurchase the Option from the Holder at a price (the "OPTION REPURCHASE
PRICE") equal to the amount by which (A) the Market/Offer Price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which this Option may then be exercised and (ii) at the request of the owner of
Option Shares from time to time (the "OWNER"), delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "OPTION SHARE REPURCHASE PRICE") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "MARKET/OFFER PRICE" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof, (ii) the price per share of Common Stock to be paid by
any third party pursuant to an agreement with Issuer, (iii) the highest closing
price per share of Common Stock as reported in the Wall Street Journal within
the six-month period immediately preceding the date on which the Holder gives
notice of the required repurchase of this Option or the Owner gives notice of
the required repurchase of Option Shares, as the case may be, or (iv) in the
event of a sale of all or a substantial portion of Issuer's assets, the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by a nationally recognized investment
banking
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<PAGE> 9
firm selected by the Holder or the Owner, as the case may be, and reasonably
acceptable to the Issuer, divided by the number of shares of Common Stock of
Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm mutually selected by the Holder or
Owner, as the case may be, and reasonably acceptable to the Issuer. The costs of
any such investment banking firm shall be paid equally by Issuer and such
Holders or Owners.
(b) The Holder or the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer to repurchase
this Option and/or the Option Shares, as the case may be, in accordance with
the provisions of this Section 7. As promptly as practicable and in any event
within five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price or the
portion thereof that Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter shall deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from
delivering, in each case within five business days after the date on which
Issuer is no longer so prohibited; PROVIDED, however, that if Issuer at any
time after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, from delivering to the Holder and/or the Owner, as
the case may be, the Option Repurchase Price or the Option Share Repurchase
Price, respectively, in full (and Issuer hereby undertakes to use its best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option and/or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver
to the Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price and/or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares
of Common Stock for which the surrendered Agreement was exercisable at the time
of delivery of the notice of repurchase by a fraction, the numerator of which
is the Option Repurchase Price less the portion thereof theretofore delivered
to the Holder and the denominator of which is the Option Repurchase Price, or
(B) to the Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior
to the date of the notice by Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after
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<PAGE> 10
such date, the Holder shall nonetheless have the right to exercise the Option
until the expiration of such 30-day period.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred upon the occurrence of any of the following events
or transactions after the date hereof:
(i) the acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of 50% or
more of the then outstanding Common Stock; or
(ii) the consummation of any Acquisition
Transaction described in Section 2(c)(i) hereof, except that the
percentages referred to in clause (z) shall be 50%.
8. SUBSTITUTE OPTION. (a) In the event that prior to an
Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of
Grantee's Subsidiaries, or engage in a plan of exchange with any person other
than Grantee or one of Grantee's Subsidiaries, and Issuer shall not be the
continuing or surviving corporation of such consolidation or merger or the
acquiror in such plan of exchange, (ii) to permit any person, other than
Grantee or one of its Subsidiaries, to merge into Issuer or be acquired by
Issuer in a plan of exchange and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding voting shares and voting
share equivalents of the merged or acquiring company, or (iii) to sell or
otherwise transfer all or substantially all of its or any Significant
Subsidiary's assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "SUBSTITUTE
OPTION"), at the election of the Holder, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "ACQUIRING CORPORATION" shall mean (i) the
continuing or surviving person of a consolidation or merger with
Issuer (if other than Issuer), (ii) the acquiring person in a plan of
exchange in which Issuer is acquired, (iii) Issuer in a merger or plan
of exchange in which Issuer is the continuing, surviving or acquiring
person, and (iv) the transferee of all or substantially all of
Issuer's assets or deposits.
(2) "SUBSTITUTE COMMON STOCK" shall mean the common
stock (or similar equity interest) issued by the issuer of the
Substitute Option upon exercise of the Substitute Option.
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(3) "ASSIGNED VALUE" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "AVERAGE PRICE" shall mean the average closing
price of a share of the Substitute Common Stock for the year
immediately preceding the consolidation, merger or sale in question
but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation,
merger or sale; PROVIDED that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to
a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option; PROVIDED, that if the terms of the Substitute Option may not, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
to the terms of the Option and in no event less advantageous to the Holder. The
issuer of the Substitute Option shall also enter into an agreement with the
then Holder or Holders of the Substitute Option in substantially the same form
as this Agreement (after giving effect for such purpose to the provisions of
Section 9), which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
and the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "SUBSTITUTE
OPTION ISSUER") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be and reasonably acceptable to the
Substitute Issuer, and all fees and expenses of such investment banking firm
shall be shared equally.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
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9. REPURCHASE OF SUBSTITUTE OPTION AND/OR OPTION SHARES. (a)
At the request of the holder of the Substitute Option (the "SUBSTITUTE OPTION
HOLDER"), the Substitute Option Issuer shall repurchase the Substitute Option
from the Substitute Option Holder at a price (the "SUBSTITUTE OPTION REPURCHASE
PRICE") equal to the amount by which (i) the Highest Closing Price (as defined
below) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "SUBSTITUTE SHARE
OWNER") of shares of Substitute Common Stock (the "SUBSTITUTE SHARES"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"SUBSTITUTE SHARE REPURCHASE PRICE") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "HIGHEST
CLOSING PRICE" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise their respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal executive office, the agreement for
such Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares, as the case may be, in
accordance with the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of the
Substitute Option and/or certificates representing Substitute Shares and the
receipt of such notice or notices relating thereto, the Substitute Option
Issuer shall deliver or cause to be delivered to the Substitute Option Holder
the Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price or, in either case, the portion thereof which
the Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer, following a
request for repurchase pursuant to this Section 9, shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and shall
thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price and/or the Substitute
Share Repurchase Price, respectively, which it is no longer prohibited from
delivering, in each case, within five business days after the date on which the
Substitute Option Issuer is no longer so prohibited; PROVIDED, however, that if
the Substitute Option Issuer at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
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Substitute Option Issuer shall use its best efforts to receive all required
regulatory and legal approvals as promptly as practicable in order to accomplish
such repurchase), the Substitute Option Holder and/or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. EXTENSION. The period for exercise of certain rights
under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (provided and
for so long as the Grantee or the Holder is using commercially reasonable
efforts to obtain such regulatory approvals), and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant
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hereto, will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(c) The execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of or a default under, its articles or certificate of incorporation or by-laws,
or the comparable governing instruments of any of its subsidiaries, or (ii) a
breach or violation of or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or to the best of Issuer's knowledge under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its subsidiaries is
subject.
(d) To the best of Issuer's knowledge neither Section 23-1-42
or 23-1-43 of the Indiana Business Corporation Law nor any other "fair price",
"moratorium", "control share acquisition" or other similar anti-takeover
statute or regulation enacted under state or federal laws in the United States
applicable to the Issuer or any of its Subsidiaries is applicable to this
Agreement or any of the transactions contemplated hereby.
12. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority
to enter into this Agreement and, subject to any approvals or consents referred
to herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Grantee. This Agreement has been duly executed and delivered by
Grantee.
(b) The Option is not being, and any shares of Common Stock
or other securities acquired by Grantee upon exercise of the Option will not
be, acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
13. ASSIGNMENT. Neither of the parties hereto may assign any
of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder; PROVIDED, however, that until the date 15 days following
the date on which the Federal Reserve Board approves an application by Grantee
under the BHCA to acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (E.G.,
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a broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee's behalf, or (iv) any other manner approved by
the Federal Reserve Board.
14. VOTING. Except to the extent Grantee exercises the Option,
Grantee shall have no rights to vote or receive dividends or have any other
rights as a shareholder with respect to shares of Common Stock covered hereby.
15. BEST EFFORTS. Each of Grantee and Issuer will use its
reasonable best efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary for the consummation
of the transactions contemplated by this Agreement, including without
limitation making application to list the shares of Common Stock issuable
hereunder on the New York Stock Exchange upon official notice of issuance and,
in the case of the Grantee, applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
16. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other equitable
relief. In connection therewith both parties waive the posting of any bond or
similar requirement.
17. SEVERABILITY. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason
such court or regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the
full number of shares of Common Stock provided in Section 1(a) hereof (as
adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention of
Issuer to allow the Holder to acquire or to require Issuer to repurchase such
lesser number of shares as may be permissible, without any amendment or
modification hereof.
18. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Affiliation Agreement or such other address as
shall be provided in writing.
19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the conflict of law principles thereof.
15
<PAGE> 16
20. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
21. EXPENSES. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
22. ENTIRE AGREEMENT. Except as otherwise expressly provided
herein or in the Affiliation Agreement, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
23. CAPTIONS; CAPITALIZED TERMS. The section and paragraph
captions herein are for convenience of reference only, do not constitute part
of this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Affiliation Agreement.
16
<PAGE> 17
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
Fifth Third Bancorp
By /s/ Neal E. Arnold
-------------------------------------
Name: Neal E. Arnold
Title: Chief Financial Officer,
Executive Vice President and
Treasurer
By /s/ Paul L. Reynolds
-------------------------------------
Name: Paul L. Reynolds
Title: Senior Vice President and
Assistant Secretary
CNB Bancshares, Inc.
By: /s/ James J. Giancola
-------------------------------------
Name: James J. Giancola
Title: President and Chief Executive
Officer
17
<PAGE> 1
EXHIBIT 99.1
[FIFTH THIRD BANCORP LOGO]
CONTACT: FIFTH THIRD FOR IMMEDIATE RELEASE
NEAL E. ARNOLD (ANALYSTS) JUNE 16, 1999
(513) 579-4356
ROBERTA R. JENNINGS (MEDIA)
(513) 579-4153
CNB BANCSHARES
JOHN R. SPRUILL (ANALYSTS)
(812) 456-3043
JOAN F. DAVID (MEDIA)
(812) 456-3564
FIFTH THIRD AND CNB BANCSHARES ANNOUNCE MERGER TO CREATE 3RD LARGEST INDIANA
BANK
- - EXPANDS FIFTH THIRD'S INDIANA PRESENCE - WILL RANK 3RD IN STATE
- - IMMEDIATELY ACCRETIVE TO EPS BEFORE COST SAVINGS, REVENUE ENHANCEMENT
OPPORTUNITIES
- - PROVIDES SUBSTANTIAL REVENUE EXPANSION POTENTIAL
- - MAINTAINS HISTORICALLY SUPERIOR FIFTH THIRD OPERATING RATIOS, BALANCE
SHEET STRENGTH
- - LOW RISK INTEGRATION, REPRESENTS ONLY 11% OF FIFTH THIRD'S PRO FORMA MARKET
CAPITALIZATION
FIFTH THIRD BANCORP (NASDAQ: FITB) and CNB BANCSHARES, INC. (NYSE: BNK)
announced today the signing of a definitive agreement in which Fifth Third will
acquire CNB and its subsidiary, CIVITAS BANK, headquartered in Evansville,
Indiana. CNB has $7.2 billion in assets and is the largest independent bank
holding company based in Indiana. Civitas Bank has 145 banking offices and
operates 200 ATMs predominantly in Indiana with a presence in Michigan, Kentucky
and Illinois as well.
As a result of the acquisition, Fifth Third Bank will become the third
largest bank in Indiana with combined total assets of $6.8 billion, deposits of
$4.4 billion and a 6.4% statewide market share.
The transaction is a tax-free, stock-for-stock fixed exchange of 0.8825
shares of Fifth Third common stock for each outstanding share of CNB and will be
accounted for as a pooling-of-interests.
The transaction is expected to be accretive to Fifth Third's 2000
earnings, and the company expects to take an estimated one-time, merger-related,
after-tax charge of $55 million in 1999. As with any earnings estimate, there
are factors that could cause the actual results to differ materially from such
estimates, such as changes in economic conditions and other factors that would
be indicated on a Form 8-K filed with the Securities and Exchange Commission. In
connection with the transaction CNB has granted Fifth Third an option
(exercisable under certain circumstances on 6.9 million CNB shares.)
- M O R E -
<PAGE> 2
Theacquisition is expected to be completed, pending regulatory approval
and approval of CNB shareholders, during the fourth quarter of 1999 with systems
conversion completed in the first quarter of 2000.
CNB delivered a record 24% increase in first quarter 1999 diluted net
income per share of $.68 over first quarter 1998. Its net income was $24.6
million; return on assets was 1.39%; return on equity was 19.32% and its revenue
growth was 15% over the same period. CNB Bancshares has a 54% efficiency ratio
and its systems are Y2K ready.
Fifth Third posted its 25th consecutive year of record increased
earnings in 1998. Its first quarter 1999 net income was $150.4 million, a 21%
increase over first quarter 1998. Diluted earnings per share were $.55, a 20%
increase over last year's $.46. Return on assets was 2.08%; return on equity was
19.3% and net interest margin was 4.23%. Fifth Third's average loans and leases,
excluding residential mortgages, grew $1.5 billion, or 12% from first quarter,
1998, and Fifth Third leads the banking industry with the lowest efficiency
ratio, 42%.
Fifth Third President & CEO George A. Schaefer, Jr. states, "In 1998,
Fifth Third substantially expanded its Ohio presence through acquisitions in
Dayton and Columbus. These acquisitions have now been fully integrated, and our
financial results have exceeded even our expectations." Schaefer continues,
"Civitas has a demonstrated track record as a high-performing, growth-oriented
bank. Their franchise both complements our geographic territory and gives us a
presence in several new markets."
Schaefer adds, "Fifth Third entered Indiana in 1987; given the
increased merger activity in Indiana with out-of-region banks, we are very
excited about the opportunities in the Indiana banking market. Our size and
financial strength allows us to offer banking and investment products and
services at highly competitive rates with easy access through our extensive
Banking Center, Bank Mart and electronic delivery systems. We intend to improve
Civitas' already strong revenue momentum by overlaying our Fifth Third retail
delivery franchise and complimentary business lines to improve returns quickly."
"Fifth Third and Civitas have very similar cultures that espouse the
value of aggressive sales, hard work and teamwork," adds CNB President and CEO
Jim Giancola. "Fifth Third Bank has an excellent track record of delivering
shareholder value, integrating acquisitions successfully and is renowned for its
operating discipline."
Giancola continues, "Civitas wants to be a part of this success story,
and our partnership is an excellent fit for many reasons. Fifth Third's size and
overall market presence will enhance the types of products and level of
convenience we can now offer our customers. Together, we look forward to our
continued expansion in Indiana with Fifth Third's aggressive operating and
growth philosophy.
- M O R E -
<PAGE> 3
Our customers and employees alike will be better served by the combination of
these two superb financial institutions."
Giancola will lead Fifth Third Bank, Indiana, and Civitas' banking
locations will expand Fifth Third's market presence throughout Indiana and
Kentucky.
Salomon Smith Barney acted as financial advisor to Fifth Third Bancorp.
Donaldson, Lufkin & Jenrette acted as financial advisor to CNB Bancshares.
For the past 25 years, Fifth Third Bank has consistently increased its
earnings at an average rate of 18.7% and risen to #8 among all public companies
for their combined earnings and dividend growth consistency. During this time,
Fifth Third has outperformed the S&P 500 Index by 13-fold and posted nine stock
splits, while maintaining a high capital ratio and strong credit quality.
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. The Company, which is Y2K ready, has $29.7
billion in assets, operates 12 affiliate banks with 484 full-service Banking
Centers, including 108 Bank Mart(R) locations open seven days a week inside
select grocery stores and 1,216 Jeanie(R) ATMs in Ohio, Kentucky, Indiana,
Florida, Arizona and Michigan. Fifth Third's financial strength continues to be
recognized by rating agencies with deposit ratings of AA- and Aa2 and commercial
paper ratings of A1+ and P1 from Standard & Poor's and Moody's, respectively.
Fifth Third operates four main businesses: Retail, Commercial, Investment
Advisors, and Midwest Payment Systems, the Bank's data processing subsidiary.
Investor information and press releases can be viewed at WWW.53.COM; press
releases are also available by fax at no charge by calling 800-758-5804,
identification number 281775. The company's common stock is traded in the
over-the-counter market through the NASDAQ National Market System under the
symbol "FITB."
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