<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
Pioneer Bancshares, Inc.
------------------------
(Name of Issuer)
Common Stock
------------
(Title of Class of Securities)
72356P103
---------
(CUSIP Number)
Mary Neil Price, Esq.
Executive Vice President
and
General Counsel
First American Corporation
First American Center
Nashville, Tennessee 37237-0721
(615) 748-2049
--------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 28, 1998
-----------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Exchange Act") or otherwise subject to the liabilities of that
section of the Exchange Act but shall be subject to all other provisions of the
Exchange Act.
This Document Consists of 91 Pages.
An Exhibit Index Appears on Sequentially Numbered Page 13.
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CUSIP No. 72356P103 Schedule 13D Page 2 of 91
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1. Name of Reporting Person: First American Corporation
I.R.S. Identification No. 62-079975
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds: WC, OO
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant To Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Tennessee
Number of 7. Sole Voting Power: 0(1)
Shares
Beneficially 8. Shared Voting Power: 0(1)
Owned by
Each 9. Sole Dispositive Power: 0(1)
Reporting
Person 10. Shared Dispositive Power: 0(1)
With
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 0(1)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares [X]
13. Percent of Class Represented by Amount in Row 11: 0%(1)
14. Type of Reporting Person: HC, CO
- ---------------
(1) The Reporting Person and the Issuer have entered into a Stock Option
Agreement covering 748,222 shares of Pioneer Common Stock (as defined herein) or
approximately 16.6% of the total shares that would be outstanding following
exercise (including the shares issued upon exercise). Unless and until the
option granted thereunder is exercised by the Reporting Person, the Reporting
Person disclaims beneficial ownership of the shares covered by the Stock Option
Agreement.
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CUSIP No. 72356P103 Schedule 13D Page 3 of 91
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Item 1. Security and Issuer.
The title of the class of equity securities to which this Schedule 13D
relates is the common stock, par value $0.01 per share, of Pioneer Bancshares,
Inc. ("Pioneer") (the "Pioneer Common Stock"). The address of the principal
executive offices of Pioneer is 801 Broad Street, Chattanooga, Tennessee 37402.
Item 2. Identity and Background.
This statement is filed on behalf of First American Corporation
("First American"). First American is a Tennessee corporation with its principal
executive offices at First American Center, Nashville, Tennessee 37237. First
American is registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended, and is principally engaged in the business of managing
and controlling banks and activities closely related to banking.
Filed as Schedule I to this Schedule 13D is a list of the executive
officers and directors of First American containing the following information
with respect to each such person: (a) name, (b) business address and (c) present
principal occupation or employment, and the name and, if different than such
person's business address, the address of any corporation or other organization
in which such employment is conducted. Each person listed in Schedule I is a
United States citizen.
During the past five years, neither First American nor, to the best
of First American's knowledge, any person named in Schedule I: (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
It presently is anticipated that shares of Pioneer Common Stock as
described in Item 4 would be purchased either with working capital or funds
borrowed from one or more banks in the ordinary course of business; the identity
of such bank or banks has not yet been determined.
Item 4. Purpose of Transaction.
Pursuant to an Agreement and Plan of Merger, dated as of May 28, 1998
(the "Agreement"), by and between First American and Pioneer, and in
consideration thereof, Pioneer
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CUSIP No. 72356P103 Schedule 13D Page 4 of 91
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issued an option to First American on May 28, 1998 (the "Option") to purchase,
under certain conditions, up to 748,222 shares of Pioneer Common Stock subject
to adjustment under certain circumstances at a purchase price of $67.50 per
share, subject to adjustment pursuant to anti-dilution provisions (the "Purchase
Price"). The Option was issued to First American pursuant to a Stock Option
Agreement, dated as of May 28, 1998 (the "Option Agreement"), between First
American and Pioneer. Copies of the Agreement and the Option Agreement are
attached hereto as Exhibits 1 and 2, respectively, and are incorporated herein
by reference and made a part hereof to the same extent as though set forth
herein in full. Descriptions of certain provisions of the Agreement and the
Option Agreement set forth below are qualified in their entirety by reference to
the Exhibits.
The Agreement provides, among other things, for the merger of Pioneer
with and into First American, with First American as the corporation surviving
from the merger (the "Merger). Upon consummation of the Merger, which is subject
to the approval of the Pioneer stockholders, regulatory approvals, and the
satisfaction or waiver of various other terms and conditions, each share of
Pioneer Common Stock (excluding shares held by Pioneer, or First American, or
any of their respective subsidiaries, in each case other than in a fiduciary
capacity or as a result of debts previously contracted and shares subject to
dissenters' rights) issued and outstanding shall be converted into 1.65 shares,
subject to possible adjustment under certain circumstances as set forth in the
Agreement, of the common stock of First American, $2.50 par value per share
("First American Common Stock") (the "Exchange Ratio"). The Agreement also
provides that Pioneer will operate its business in the usual, regular and
ordinary course and will not take or agree to take certain actions (described in
the Agreement) with respect to its business without the prior written consent of
First American.
Under the Agreement, Pioneer has the right to terminate the Agreement
during the five-day period commencing two days after the Determination Date (as
defined in the Agreement) if (i) the Average Closing Price (as defined in the
Agreement) of First American Common Stock is less than the product of .80 and
the Starting Price (as defined in the Agreement), and (ii) (a) the number
obtained by dividing the Average Closing Price by the Starting Price (such
number being referred to herein as the "First American Ratio") shall be less
than (b) the quotient obtained by dividing the Index Price (as defined in the
Agreement) on the Determination Date by the Index Price on the Starting Date (as
defined in the Agreement) and subtracting 0.15 from the quotient. First American
has the right to elect to adjust the Exchange Ratio in accordance with terms of
the Agreement, and thereby eliminate Pioneer's right to terminate the Agreement.
The Option Agreement was executed to facilitate the consummation of the
Merger and provides that if (i) First American is not in material breach of the
Option Agreement or the Agreement, and (ii) no injunction against delivery of
the shares covered by the Option is in effect, First American may exercise the
Option in whole or in part, at any time and from time to time following the
happening of certain events (each a "Purchase Event") and prior to the
termination of the Option, including, among others:
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CUS
IP No. 72356P103 Schedule 13D Page 5 of 91
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A. Pioneer shall have authorized, recommended, publicly proposed or
publicly announced an intention to authorize, recommend or propose, or
entered into an agreement with any person (other than First American
or any subsidiary of First American) to effect (each an "Acquisition
Transaction") (1) a merger, consolidation or similar transaction
involving Pioneer or its subsidiaries (with certain exceptions), (2)
the sale, lease, exchange or other disposition of 20% or more of the
consolidated assets of Pioneer and its subsidiaries, or (3) the
issuance, sale or other disposition of 20% or more of the voting
securities of Pioneer or any of its subsidiaries; or
B. any third party (other than First American or any subsidiary of First
American) acquires, or obtains the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Pioneer Common
Stock;
provided, the Option will terminate upon the earliest of: (i) the Effective
Time; (ii) termination of the Agreement in accordance with its terms (other than
a termination of the Agreement by First American in the event of a material
breach of a representation, warranty or covenant by Pioneer (but only if such
termination was a result of a willful breach by Pioneer) (each a "Default
Termination")) prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (as defined below); (iii) 12 months after a Default Termination
(provided, that if, within 12 months after such termination of the Agreement, a
Purchase Event or a Preliminary Purchase Event shall occur, then notwithstanding
anything to the contrary contained in the Option Agreement, the Option shall
terminate 12 months after the first occurrence of such an event); and (iv)
except as provided in the preceding clause (iii), 12 months after any
termination of the Agreement (other than a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event. For purposes of
the Option Agreement, a "Preliminary Purchase Event" means (A) the commencement
by any third party of a tender or exchange offer to purchase 20% or more of the
outstanding shares of Pioneer Common Stock, or (B) the occurrence of certain
circumstances surrounding the failure of the stockholders of Pioneer to approve
the Agreement, the failure to hold a meeting of the Pioneer stockholders to
approve the Agreement or the withdrawal or modification in a manner adverse to
First American of the recommendation of Pioneer's Board of Directors with
respect to the Agreement.
At the request of First American at any time, beginning on the first
occurrence of certain events (each a "Repurchase Event"), including, among
others, the acquisition by a third party of 50% or more of the outstanding
shares of Pioneer Common Stock, and ending upon the earlier of 12 months
immediately thereafter or termination of the Option, Pioneer will repurchase
from First American (i) the Option, and (ii) all shares of Pioneer Common Stock
purchased by First American pursuant to the Option Agreement, at a specified
price.
Upon the occurrence of certain events set forth in the Option
Agreement generally relating to the merger of Pioneer with, or sale by Pioneer
of substantially all of its assets to, a third party (other than First American
or a subsidiary of First American), the Holder (as defined in the Option
Agreement) is entitled to receive for each Option Share with respect to which
the Option has not been exercised an amount of consideration in the form of and
equal to the per-share amount of consideration that
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CUSIP No. 72356P103 Schedule 13D Page 6 of 91
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would be received by the holder of one share of Pioneer Common Stock less the
Purchase Price.
Except as otherwise set forth in Items 4, 5 and 6 hereof and the
Exhibits to this Schedule 13D (which are hereby incorporated by reference herein
and made a part hereof to the same extent as though set forth herein in full),
First American does not now have any plans or proposals which relate to or would
result in (i) the acquisition by any person of additional securities of Pioneer,
or the disposition of securities of Pioneer; (ii) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving Pioneer
or any of its subsidiaries; (iii) any change in the present Board of Directors
or management of Pioneer, including any change in the number or term of Pioneer
directors or the filling of any existing vacancies on the Board of Directors of
Pioneer; (iv) any material change in the present capitalization or dividend
policy of Pioneer; (v) any other material change in the business or corporate
structure of Pioneer; (vi) changes in Pioneer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of Pioneer by any person; (vii) causing a class of securities of Pioneer
to be delisted from a national securities exchange or to cease to be authorized
to be quoted in an inter-dealer quotation system of a registered national
securities association; or (viii) a class of equity securities of Pioneer
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act.
Item 5. Interest in Securities of the Issuer.
The 748,222 shares of Pioneer Common Stock which are purchasable by
First American upon exercise of the Option are equal to approximately 19.9% of
Pioneer Common Stock, based on the 3,759,912 shares of Pioneer Common Stock
issued and outstanding on May 28, 1998, before taking into consideration the
748,222 shares of Pioneer Common Stock that would be issued pursuant to the
Option (or approximately 16.6% after taking into consideration such shares).
The Option Agreement contains anti-dilution provisions which provide
that the number of shares of Pioneer Common Stock issuable upon exercise of the
Option and the Purchase Price will be adjusted upon the happening of certain
events, including the payment of a stock dividend or other distribution in
Pioneer Common Stock or the subdivision or reclassification of Pioneer Common
Stock, as set forth in the Option Agreement. If any additional shares of Pioneer
Common Stock are issued after the date of the Option Agreement other than those
described in the preceding sentence and shares issued upon exercise of the
Option, the number of shares subject to the Option (taking into account the
shares previously issued pursuant to the Option), shall be adjusted so that such
number of shares following such issuance shall equal 19.9% of the number of
shares of Pioneer Common Stock then issued and outstanding without giving effect
to the Option. First American expressly disclaims any beneficial ownership of
the shares of Pioneer Common Stock which are purchasable by First American upon
exercise of the
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CUSIP No. 72356P103 Schedule 13D Page 7 of 91
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Option because the Option is exercisable only in the circumstances referred to
in Item 4 above, none of which has occurred as of this date.
Other than as set forth in this Item 5, (i) neither First American nor
any subsidiary or affiliate of First American or, to the best of First
American's knowledge, any of its or their executive officers or directors
beneficially owns any shares of Pioneer Common Stock, and (ii) there have been
no transactions in the shares of Pioneer Common Stock effected during the past
60 days by First American, nor to the best of First American's knowledge, by any
subsidiary or affiliate of First American or any of its or their executive
officers or directors.
No other person is known by First American to have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the Pioneer Common Stock obtainable by First American upon exercise of
the Option.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Other than the Agreement and the Option Agreement, copies of which
(excluding certain exhibits) are incorporated by reference herein, to the best
of First American's knowledge there are at present no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 above and between such persons and any person with respect to any
securities of Pioneer.
Item 7. Material to be Filed as Exhibits.
1. Agreement and Plan of Merger dated as of May 28, 1998.
2. Stock Option Agreement dated as of May 28, 1998
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CUSIP No. 72356P103 Schedule 13D Page 8 of 91
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: June 5, 1998 First American Corporation
By: /s/ Mary Neil Price
------------------------------------
Mary Neil Price,
Executive Vice President and
General Counsel
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CUSIP No. 72356P103 Schedule 13D Page 9 of 91
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SCHEDULE I
Following is a list of the executive officers and directors of First American
Corporation as of June 1, 1998:
Executive Officers:
<TABLE>
<CAPTION>
Name Office
<S> <C>
- ----------------------------------------------------------------------------------
Dennis C. Bottorff Chairman and Chief Executive
Officer
- ----------------------------------------------------------------------------------
Melissa J. Buffington Executive Vice President, Director of Human
Resources
- ----------------------------------------------------------------------------------
R. Booth Chapman Executive Vice President, Independent Loan Review
- ----------------------------------------------------------------------------------
Brian L. Cooper Executive Vice President, Marketing
- ----------------------------------------------------------------------------------
Emery F. Hill Executive Vice President, Operations and
Technology
- ----------------------------------------------------------------------------------
Rufus B. King Executive Vice President, Chief Credit Officer
- ----------------------------------------------------------------------------------
Robert A. McCabe, Jr. Vice Chairman and President,
First American Enterprises
- ----------------------------------------------------------------------------------
Howard McMillan Chairman of Deposit Guaranty
System
- ----------------------------------------------------------------------------------
Dale W. Polley President, Principal Financial
Officer
- ----------------------------------------------------------------------------------
Joe Powell Executive Vice President, Bank Investments and
Investor Relations
- ----------------------------------------------------------------------------------
Mary Neil Price Executive Vice President, General Counsel and
Corporate Secretary
- ----------------------------------------------------------------------------------
E.B. Robinson, Jr. Vice Chairman, Chief Operating Officer and President,
First American Bank
- ----------------------------------------------------------------------------------
Terry S. Spencer Executive Vice President, Treasurer
- ----------------------------------------------------------------------------------
Claire W. Tucker President, Corporate Banking
Group
- ----------------------------------------------------------------------------------
M. Terry Turner President, Retail Banking Group
- ----------------------------------------------------------------------------------
M. Jack Vannatta Executive Vice President, Controller and Principal
Accounting Officer
- ----------------------------------------------------------------------------------
Steve Walker President, C&P Banking Group
- ----------------------------------------------------------------------------------
</TABLE>
The business address for each executive officer is First American
Corporation, First American Center, Nashville, Tennessee 37237, except for
Messrs. McMillan and Robinson, for whom the business address is One Deposit
Guaranty Plaza, 4th Floor, Jackson, Mississippi 39205
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CUSIP No. 72356P103 Schedule 13D Page 10 of 91
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Directors:
<TABLE>
<CAPTION>
Name and Occupation Business or Residence Address
<S> <C>
- ---------------------------------------------------------------------------------------
Mr. Dennis C. Bottorff First American Corporation
Chairman & Chief Executive Officer First American Center
Nashville, TN 37237
- ---------------------------------------------------------------------------------------
Mr. Earnest W. Deavenport, Jr. Eastman Chemical Company
Chairman & Chief Executive Officer Eastman Road - P.O. Box 511
Kingsport, TN 37662
- ---------------------------------------------------------------------------------------
Mr. Reginald D. Dickson 4301 Roland Boulevard
President Emeritus Pasadena Hills, MO 63121-2523
INROADS, Inc.
Chairman
Buford, Dickson, Harper
& Sparrow, Inc.
- ---------------------------------------------------------------------------------------
Mr. James A. Haslam II Pilot Corporation
Chairman of the Board P.O. Box 10146
Knoxville, TN 37919
- ---------------------------------------------------------------------------------------
Mr. Warren A. Hood, Jr. Hood Industries, Inc.
Chairman P.O. Box 682
Hattiesburg, MS 39403
- ---------------------------------------------------------------------------------------
Mrs. Martha R. Ingram Ingram Industries, Inc.
Chairman of the Board 4400 Harding Road
Nashville, TN 37205
- ---------------------------------------------------------------------------------------
Mr. Walter G. Knestrick Walter Knestrick Contractor, Inc.
Chairman of the Board 2617 Grandview Avenue
Nashville, TN 37222
- ---------------------------------------------------------------------------------------
Mr. Gene C. Koonce Atmost Energy Corporation
Vice Chairman United Cities Gas Company
5300 Maryland Way
Brentwood, TN 37027
- ---------------------------------------------------------------------------------------
Mr. James R. Martin Plasti-Line, Inc.
Chairman & Chief Executive Officer P.O. Box 59043
Knoxville, TN 37950-9043
- ---------------------------------------------------------------------------------------
Mr. Robert A. McCabe, Jr. First American Corporation
Vice Chairman - First American Corporation First American Center
President - First American Enterprises Nashville, TN 37737
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
CUSIP No. 72356P103 Schedule 13D Page 11 of 91
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<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------
Mr. Howard L. McMillan, Jr. Deposit Guaranty System
Chairman One Deposit Guaranty Plaza, 4th Floor
Jackson, MS 39205
- ---------------------------------------------------------------------------------------
Mr. John N. Palmer Mobile Telecommunications
Technologies, Corp.
200 South Lamar Street
Mtel Centre, South Building
Jackson, MS 39201
- ---------------------------------------------------------------------------------------
Mr. Dale W. Polley First American Corporation
President and Principal Financial Officer First American Center
Nashville, TN 37237-0616
- ---------------------------------------------------------------------------------------
M. E. B. Robinson, Jr. One Deposit Guaranty Plaza, 4th Floor
Vice Chairman & Chief Operating Officer Jackson, MS 39205
First American Corporation
President - First American National Bank
- ---------------------------------------------------------------------------------------
Dr. Roscoe R. Robinson 501 Jackson Blvd.
Retired Nashville, TN 37205
Former Vice Chancellor for
Health Affairs, Vanderbilt
University
- ---------------------------------------------------------------------------------------
Mr. James F. Smith, Jr. 5508 Heathrow
Retired Knoxville, TN 37919
Former Chairman and Chief
Executive Officer
First American National Bank
- ---------------------------------------------------------------------------------------
Mr. Cal Turner, Jr. Dollar General Corporation
Chairman and Chief Executive Officer 104 Woodmont Boulevard, Suite 500
Nasville, TN 37205
- ---------------------------------------------------------------------------------------
Ms. Celia A. Wallace Southern Medical Health Systems, Inc.
Chairman and Chief Executive Officer 3632 Dauphin Street
Suite 101-B
Mobile, AL 36608
- ---------------------------------------------------------------------------------------
Mr. Ted H. Welch Eagle Communications
Real Estate Developer The Tower, Suite 2920
President and Chief Executive Officer 611 Commerce Street
Nashville, TN 37203
- ---------------------------------------------------------------------------------------
Mr. J. Kelley Williams ChemFirst, Inc.
Chairman and Chief Executive Officer 700 North Street
Jackson, MS 39202
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
CUSIP No. 72356P103 Schedule 13D Page 12 of 91
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<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------
Mr. David K. Wilson Cherokee Equity Corporation
Chairman of the Board P.O. Box 121559
3022 Vanderbilt Place
Nashville, TN 37212
- ---------------------------------------------------------------------------------------
Mr. Toby S. Wilt TSW Investment Company
President P.O. Box 50879
Nashville, TN 37205
- ---------------------------------------------------------------------------------------
Mr. William S. Wire, II 6119 Stonehaven Drive
Retired Nashville, TN 37215
Former Chairman of the Board
Genesco, Inc.
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
CUSIP No. 72356P103 Schedule 13D Page 13 of 91
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Location in
Sequentially
Numbered Copy
-------------
<S> <C> <C>
Exhibit 1 Agreement and Plan of Merger
dated as of May 28, 1998 14
Exhibit 2 Stock Option Agreement dated as of
May 28, 1998 77
</TABLE>
<PAGE> 1
Page 14 of 91
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST AMERICAN CORPORATION,
AND
PIONEER BANCSHARES, INC.
DATED AS OF MAY 28, 1998
<PAGE> 2
Page 15 of 91
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES....................................................................................................... 1
PREAMBLE...................................................................................................... 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER.................................................................. 1
1.1 Merger............................................................................................ 1
1.2 Time and Place of Closing......................................................................... 2
1.3 Effective Time.................................................................................... 2
1.4 Execution of Stock Option Agreement............................................................... 2
1.5 Bank Merger....................................................................................... 2
ARTICLE 2 - TERMS OF MERGER................................................................................... 2
2.1 Charter........................................................................................... 2
2.2 Bylaws............................................................................................ 3
2.3 Directors and Officers............................................................................ 3
ARTICLE 3 - MANNER OF CONVERTING SHARES....................................................................... 3
3.1 Conversion of Shares.............................................................................. 3
3.2 Anti-Dilution Provisions.......................................................................... 3
3.3 Shares Held by Pioneer or Buyer................................................................... 4
3.4 Dissenting Shareholders........................................................................... 4
3.5 Fractional Shares................................................................................. 4
3.6 Conversion of Stock Options; Restricted Stock..................................................... 5
ARTICLE 4 - EXCHANGE OF SHARES................................................................................ 6
4.1 Exchange Procedures............................................................................... 6
4.2 Rights of Former Pioneer Shareholders............................................................. 7
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PIONEER......................................................... 8
5.1 Organization, Standing, and Power................................................................. 8
5.2 Authority of Pioneer; No Breach By Agreement...................................................... 8
5.3 Capital Stock..................................................................................... 9
5.4 Pioneer Subsidiaries.............................................................................. 10
5.5 SEC Filings; Financial Statements................................................................. 10
5.6 Absence of Undisclosed Liabilities................................................................ 11
5.7 Absence of Certain Changes or Events.............................................................. 11
5.8 Tax Matters....................................................................................... 11
5.9 Allowance for Possible Loan Losses................................................................ 13
5.10 Assets............................................................................................ 13
5.11 Intellectual Property............................................................................. 14
5.12 Environmental Matters............................................................................. 14
5.13 Compliance with Laws.............................................................................. 15
5.14 Labor Relations................................................................................... 16
5.15 Employee Benefit Plans............................................................................ 16
5.16 Material Contracts................................................................................ 18
5.17 Legal Proceedings................................................................................. 19
</TABLE>
-i-
<PAGE> 3
Page 16 of 91
<TABLE>
<S> <C>
5.18 Reports........................................................................................... 19
5.19 Statements True and Correct....................................................................... 19
5.20 Accounting, Tax and Regulatory Matters............................................................ 20
5.21 Opinion of Financial Advisor...................................................................... 20
5.22 Board Recommendation.............................................................................. 20
5.23 Derivatives....................................................................................... 20
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF BUYER........................................................... 21
6.1 Organization, Standing, and Power................................................................. 21
6.2 Authority; No Breach By Agreement................................................................. 21
6.3 Capital Stock..................................................................................... 22
6.4 Reserved.......................................................................................... 22
6.5 SEC Filings; Financial Statements................................................................. 22
6.6 Absence of Undisclosed Liabilities................................................................ 23
6.7 Absence of Certain Changes or Events.............................................................. 23
6.8 Tax Matters....................................................................................... 23
6.9 Allowance for Possible Loan Losses................................................................ 24
6.10 Assets............................................................................................ 24
6.11 Intellectual Property............................................................................. 25
6.12 Environmental Matters............................................................................. 25
6.13 Compliance With Laws.............................................................................. 26
6.14 Labor Relations................................................................................... 27
6.15 Employee Benefit Plans............................................................................ 27
6.16 Reserved.......................................................................................... 28
6.17 Legal Proceedings................................................................................. 28
6.18 Reports........................................................................................... 28
6.19 Statements True and Correct....................................................................... 29
6.20 Accounting, Tax and Regulatory Matters............................................................ 29
6.21 Rights Agreement.................................................................................. 29
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION.......................................................... 30
7.1 Affirmative Covenants of Pioneer.................................................................. 30
7.2 Negative Covenants of Pioneer..................................................................... 30
7.3 Covenants of Buyer................................................................................ 32
7.4 Reserved.......................................................................................... 33
7.5 Adverse Changes in Condition...................................................................... 33
7.6 Reports........................................................................................... 33
ARTICLE 8 - ADDITIONAL AGREEMENTS............................................................................. 34
8.1 Registration Statement; Proxy Statement; Shareholder Approval..................................... 34
8.2 Exchange Listing.................................................................................. 34
8.3 Applications...................................................................................... 34
8.4 Filings with State Offices........................................................................ 35
8.5 Agreement as to Efforts to Consummate............................................................. 35
8.6 Investigation and Confidentiality................................................................. 35
8.7 Press Releases.................................................................................... 36
8.8 Certain Actions................................................................................... 36
</TABLE>
-ii-
<PAGE> 4
Page 17 of 91
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of May 28, 1998, by and between FIRST AMERICAN
CORPORATION("Buyer"), a Tennessee corporation; and PIONEER BANCSHARES, INC.
("Pioneer"), a Delaware corporation.
PREAMBLE
The respective Boards of Directors of Pioneer and Buyer have
determined that the transactions described herein are in the best interests of
the parties to this Agreement and their respective shareholders. This Agreement
provides for the acquisition of Pioneer by Buyer pursuant to the merger of
Pioneer with and into Buyer. At the effective time of such merger, the
outstanding shares of the capital stock of Pioneer shall be converted into the
right to receive shares of the common stock of Buyer (except as provided
herein). As a result, shareholders of Pioneer shall become shareholders of Buyer
and Buyer shall continue to conduct the business and operations of Pioneer. The
transactions described in this Agreement are subject to the approvals of the
shareholders of Pioneer, the Board of Governors of the Federal Reserve System,
the Comptroller of the Currency, the Office of Thrift Supervision, and/or the
Tennessee Department of Financial Institutions and the satisfaction of certain
other conditions described in this Agreement. The parties to this Agreement
intend that the Merger qualify for federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and qualify for accounting purposes as a pooling of interests.
Immediately after the execution and delivery of this Agreement, as
a condition and inducement to Buyer's willingness to enter into this Agreement,
Pioneer and Buyer are entering into a stock option agreement the form of which
is attached hereto as Exhibit 1, pursuant to which Pioneer will grant to Buyer
an option to purchase shares of Pioneer Common Stock.
Certain terms used in this Agreement are defined in Section 11.1
of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
warranties, representations, covenants, and agreements set forth herein, and
other good and valuable consideration, the sufficiency and receipt of which are
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time, Pioneer shall be merged with and into Buyer in accordance
with the provisions of Section 252 of the DGCL and Section 48-21-102 of the TBCA
and with the effect provided in Section
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259 of the DGCL and Section 48-21-108 of the TBCA (the "Merger"). Buyer shall be
the Surviving Corporation resulting from the Merger and shall continue to be
governed by the Laws of the State of Tennessee. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the respective Boards of Directors of Pioneer and Buyer.
1.2 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at 10:00 A.M. on the day
before the Effective Time occurs, or at such other time as the Parties, acting
through their authorized officers, may mutually agree. The Closing shall be held
at Buyer's offices at First American Center, Nashville, Tennessee, or such
location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated
by this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Delaware and the Secretary of State of
Tennessee (the "Effective Time"). Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon in writing by the authorized officers of
each Party, the Parties shall use their reasonable efforts to cause the
Effective Time to occur on the first business day following the last to occur of
(i) the effective date (including expiration of any applicable waiting period)
of the last required Consent of any Regulatory Authority having authority over
and approving or exempting the Merger, and (ii) the date on which the
shareholders of Pioneer approve this Agreement to the extent such approval is
required by applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Immediately following the
execution of this Agreement by the Parties and as a condition thereto, Pioneer
will execute and deliver to Buyer a stock option agreement (the "Stock Option
Agreement"), in substantially the form of Exhibit 1 hereto, pursuant to which
Pioneer is granting to Buyer an option to purchase 19.9% of the outstanding
shares of Pioneer Common Stock.
1.5 BANK MERGER. Buyer may, in its discretion, effective at or
after the Effective Time, merge one or more of Pioneer Bank, Valley Bank or
Pioneer Bank, f.s.b. (collectively the "Pioneer Banks") with and into FANB (the
"Bank Merger"), pursuant to the terms and conditions of a Bank Plan of Merger
("Bank Plan") providing therefor. The Bank Plan shall be executed and the
transactions contemplated therein shall be consummated at such time as Buyer
directs. If the Bank Plan is executed prior to the Effective Time, Pioneer shall
vote the shares of capital stock of Pioneer Bank in favor of the Bank Plan and
the Bank Merger provided therein.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Charter of Buyer in effect immediately prior to
the Effective Time shall be the Charter of the Surviving Corporation until duly
amended or repealed.
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2.2 BYLAWS. The Bylaws of Buyer in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Buyer in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Buyer in office immediately prior to
the Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of Buyer, Pioneer, or the shareholders of either of the foregoing,
the shares of the constituent corporations shall be converted as follows:
(a) Each share of capital stock of Buyer issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding from and after the Effective Time.
(b) Each share of Pioneer Common Stock , but excluding shares
held by any Pioneer Entity or any Buyer Entity, in each case other than
in a fiduciary capacity or as a result of debts previously contracted,
and excluding shares held by shareholders who perfect their statutory
dissenters' rights, if any, as provided in Section 3.4) issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to
receive 1.65 shares of Buyer Common Stock (the "Exchange Ratio").Pursuant
to the Buyer Rights Agreement, each share of Buyer Common Stock issued in
connection with the Merger upon conversion of Pioneer Common Stock shall
be accompanied by a Buyer Right.
3.2 ANTI-DILUTION PROVISIONS. In the event Buyer changes the
number of shares of Buyer Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted. In the event Buyer changes the number of shares of
Buyer Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be after the
Exchange Ratio has been determined in accordance with Section 3.1(c) and prior
to the Effective
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Time, the Exchange Ratio shall be proportionately adjusted. In the event Buyer
changes the number of shares of Buyer Common Stock issued and outstanding prior
to the Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the date on which the Exchange Ratio is determined in
accordance with Section 3.1(c), (i) the Average Closing Price Limitations, the
Base Exchange Ratio, the Minimum Exchange Ratio, the Maximum Exchange Ratio and
the Threshold Prices shall be adjusted to appropriately adjust the ratio under
which shares of Pioneer Common Stock will be converted into shares of Buyer
Common Stock pursuant to Section 3.1(c), and (ii) if necessary, the anticipated
Effective Time shall be postponed for an appropriate period of time agreed upon
by the parties in order for the Average Closing Price to reflect the market
effect of such stock split, stock dividend, or similar recapitalization.
3.3 SHARES HELD BY PIONEER OR BUYER. Each of the shares of Pioneer
Common Stock held by any Pioneer Entity or by any Buyer Entity, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. In the event that dissenters' rights
are available under Section 262 of the DGCL, any holder of shares of Pioneer
Common Stock who perfects his dissenters' rights in accordance with and as
contemplated by Section 262 of the DGCL shall be entitled to receive the value
of such shares in cash as determined pursuant to such provision of Law;
provided, however, no such payment shall be made to any dissenting shareholder
unless and until such dissenting shareholder has complied with the applicable
provisions of the DGCL and surrendered to Pioneer the certificate or
certificates representing the shares for which payment is being made. In the
event that after the Effective Time a dissenting shareholder of Pioneer fails to
perfect, or effectively withdraws or loses, his right to appraisal and of
payment for his shares, Buyer shall issue and deliver the consideration to which
such holder of shares of Pioneer Common Stock is entitled under this Article 3
(without interest) upon surrender by such holder of the certificate or
certificates representing shares of Pioneer Common Stock held by him. If and to
the extent required by applicable Law, Pioneer will establish (or cause to be
established) an escrow account with an amount sufficient to satisfy the maximum
aggregate payment that may be required to be paid to dissenting shareholders.
Upon satisfaction of all claims of dissenting shareholders, the remaining
escrowed amount, reduced by payment of the fees and expenses of the escrow
agent, will be returned to the Surviving Corporation.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Pioneer Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Buyer Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Buyer Common
Stock multiplied by the market value of one share of Buyer Common Stock at the
Effective Time. The market value of one share of Buyer Common Stock at the
Effective Time shall be the closing price of such common stock on the
NYSE-Composite Transactions List or the last sale price of such
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common stock on the Nasdaq National Market, as applicable (as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative source
selected by Buyer), on the second trading day immediately preceding but not
including the Effective Time. No holder will be entitled to dividends, voting
rights, or any other rights as a shareholder in respect of any fractional
shares.
3.6 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK.
(a) At the Effective Time, each option or other Equity Right
to purchase shares of Pioneer Common Stock pursuant to stock options or stock
appreciation rights ("Pioneer Options") granted by Pioneer under the Pioneer
Stock Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to Buyer
Common Stock, and Buyer shall assume each Pioneer Option, in accordance with the
terms of the Pioneer Stock Plans and stock option agreement by which it is
evidenced, except that from and after the Effective Time, (i) Buyer and its
Compensation Committee shall be substituted for Pioneer and the Committee of
Pioneer's Board of Directors (including, if applicable, the entire Board of
Directors of Pioneer) administering such Pioneer Stock Plan, (ii) each Pioneer
Option assumed by Buyer may be exercised solely for shares of Buyer Common Stock
(or cash, if so provided under the terms of such Pioneer Option), (iii) the
number of shares of Buyer Common Stock subject to such Pioneer Option shall be
equal to the number of shares of Pioneer Common Stock subject to such Pioneer
Option immediately prior to the Effective Time multiplied by the Exchange Ratio
and rounding down to the nearest whole share, and (iv) the per share exercise
price under each such Pioneer Option shall be adjusted by dividing the per share
exercise price under each such Pioneer Option by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the provisions of clause (iii) of the
preceding sentence, Buyer shall not be obligated to issue any fraction of a
share of Buyer Common Stock upon exercise of Pioneer Options and any fraction of
a share of Buyer Common Stock that otherwise would be subject to a converted
Pioneer Option shall represent the right to receive a cash payment upon exercise
of such converted Pioneer Option equal to the product of such fraction and the
difference between the market value of one share of Buyer Common Stock at the
time of exercise of such Option and the per share exercise price of such Option.
The market value of one share of Buyer Common Stock at the time of exercise of
an Option shall be the closing price of such common stock on the NYSE-Composite
Transactions List last sale price of such common stock on the Nasdaq National
Market (as reported by The Wall Street Journal or, if not reported thereby, any
other authoritative source selected by Buyer) on the last trading day preceding
the date of exercise. In addition, notwithstanding the provisions of clauses
(iii) and (iv) of the first sentence of this Section 3.6, each Pioneer Option
which is an "incentive stock option" shall be adjusted as required by Section
424 of the Internal Revenue Code, and the regulations promulgated thereunder, so
as not to constitute a modification, extension or renewal of the option, within
the meaning of Section 424(h) of the Internal Revenue Code. Each of Pioneer and
Buyer agrees to take all necessary steps to effectuate the foregoing provisions
of this Section 3.6, including using its reasonable efforts to obtain from each
holder of a Pioneer Option any Consent or Contract that may be deemed necessary
or advisable in order to effect the transactions contemplated by this Section
3.6. Anything in this Agreement to the contrary notwithstanding, Buyer shall
have the
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right, in its sole discretion, not to deliver the consideration provided in this
Section 3.6 to a former holder of a Pioneer Option who has not delivered such
Consent or Contract.
(b) As soon as practicable after the Effective Time, Buyer
shall deliver to the participants in each Pioneer Stock Plan an appropriate
notice setting forth such participant's rights pursuant thereto and the grants
subject to such Pioneer Stock Plan shall continue in effect on the same terms
and conditions (subject to the adjustments required by Section 3.6(a) after
giving effect to the Merger), and Buyer shall comply with the terms of each
Pioneer Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such Pioneer Stock Plan, that Pioneer Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. At or prior to the Effective
Time, Buyer shall take all corporate action necessary to reserve for issuance
sufficient shares of Buyer Common Stock for delivery upon exercise of Pioneer
Options assumed by it in accordance with this Section 3.6. As soon as
practicable after the Effective Time, Buyer shall file a registration statement
on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate SEC forms), with respect to the shares of Buyer Common Stock subject
to such options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such options
remain outstanding. With respect to those individuals who subsequent to the
Merger will be subject to the reporting requirements under Section 16(a) of the
Exchange Act, where applicable, Buyer shall administer the Pioneer Stock Plan
assumed pursuant to this Section 3.6 in a manner that complies with Rule 16b-3
promulgated under the Exchange Act to the extent the Pioneer Stock Plan complied
with such rule prior to the Effective Time.
(c) All contractual restrictions or limitations on transfer
with respect to Pioneer Common Stock awarded under the Pioneer Stock Plans or
any other plan, program, Contract or arrangement of any Pioneer Entity, to the
extent that such restrictions or limitations shall not have already lapsed
(whether as a result of the Merger or otherwise), and except as otherwise
expressly provided in such plan, program, Contract or arrangement, shall remain
in full force and effect with respect to shares of Buyer Common Stock into which
any such restricted stock is converted pursuant to Section 3.1.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Buyer
and Pioneer shall cause the exchange agent selected by Buyer (the "Exchange
Agent") to mail to each holder of record of a certificate or certificates which
represented shares of Pioneer Common Stock immediately prior to the Effective
Time (the "Certificates") appropriate transmittal materials and instructions
(which shall specify that delivery shall be effected, and risk of loss and title
to such Certificates shall pass, only upon proper delivery of such Certificates
to the Exchange Agent). The Certificate or Certificates of Pioneer Common Stock
so delivered shall be duly endorsed as the Exchange Agent may require. In the
event of a transfer of ownership of shares of Pioneer Common Stock represented
by Certificates that are not registered in the transfer records of
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Pioneer, the consideration provided in Section 3.1 may be issued to a transferee
if the Certificates representing such shares are delivered to the Exchange
Agent, accompanied by all documents required to evidence such transfer and by
evidence satisfactory to the Exchange Agent that any applicable stock transfer
taxes have been paid. If any Certificate shall have been lost, stolen, mislaid
or destroyed, upon receipt of (i) an affidavit of that fact from the holder
claiming such Certificate to be lost, mislaid, stolen or destroyed, (ii) such
bond, security or indemnity as Buyer and the Exchange Agent may reasonably
require and (iii) any other documents necessary to evidence and effect the bona
fide exchange thereof, the Exchange Agent shall issue to such holder the
consideration into which the shares represented by such lost, stolen, mislaid or
destroyed Certificate shall have been converted. The Exchange Agent may
establish such other reasonable and customary rules and procedures in connection
with its duties as it may deem appropriate. After the Effective Time, each
holder of shares of Pioneer Common Stock (other than shares to be canceled
pursuant to Section 3.3 or as to which statutory dissenters' rights, if any have
been perfected as provided in Section 3.4) issued and outstanding at the
Effective Time shall surrender the Certificate or Certificates representing such
shares to the Exchange Agent and shall promptly upon surrender thereof receive
in exchange therefor the consideration provided in Section 3.1, together with
all undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2. To the extent required by Section
3.5, each holder of shares of Pioneer Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the Certificate or
Certificates, cash in lieu of any fractional share of Buyer Common Stock to
which such holder may be otherwise entitled (without interest). Buyer shall not
be obligated to deliver the consideration to which any former holder of Pioneer
Common Stock is entitled as a result of the Merger until such holder surrenders
such holder's Certificate or Certificates for exchange as provided in this
Section 4.1. Any other provision of this Agreement notwithstanding, neither
Buyer nor the Exchange Agent shall be liable to a holder of Pioneer Common Stock
for any amounts paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
4.2 RIGHTS OF FORMER PIONEER SHAREHOLDERS. At the Effective Time,
the stock transfer books of Pioneer shall be closed as to holders of Pioneer
Common Stock immediately prior to the Effective Time and no transfer of Pioneer
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1, each
Certificate theretofore representing shares of Pioneer Common Stock (other than
shares to be canceled pursuant to Sections 3.3 and 3.4) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.5 in exchange therefor, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which
have been declared or made by Pioneer in respect of such shares of Pioneer
Common Stock in accordance with the terms of this Agreement and which remain
unpaid at the Effective Time. To the extent permitted by Law, former
shareholders of record of Pioneer shall be entitled to vote after the Effective
Time at any meeting of Buyer shareholders the number of whole shares of Buyer
Common Stock into which their respective shares of Pioneer Common Stock are
converted, regardless of whether such holders have exchanged their Certificates
for certificates representing Buyer Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by Buyer on the Buyer
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Common Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares of
Buyer Common Stock issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of Buyer Common Stock as of any
time subsequent to the Effective Time shall be delivered to the holder of any
Certificate until such holder surrenders such Certificate for exchange as
provided in Section 4.1. However, upon surrender of such Certificate, both the
Buyer Common Stock certificate (together with all such undelivered dividends or
other distributions without interest) and any undelivered dividends and cash
payments payable hereunder (without interest) shall be delivered and paid with
respect to each share represented by such Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PIONEER
Pioneer hereby represents and warrants to Buyer as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Pioneer is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
Pioneer is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Pioneer Material
Adverse Effect. The minute books and other organizational documents for Pioneer
have been made available to Buyer for its review and, except as disclosed in
Section 5.1 of the Pioneer Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors and shareholders thereof. True and complete copies of the
Certificate of Incorporation and By-laws of Pioneer, and all amendments thereto,
have been delivered to Buyer.
5.2 AUTHORITY OF PIONEER; NO BREACH BY AGREEMENT.
(a) Pioneer has the corporate power and authority necessary
to execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Pioneer,
subject to the approval of this Agreement by the holders of a majority of the
outstanding shares of Pioneer Common Stock, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by
Pioneer. Subject to such requisite shareholder approval, this Agreement
represents a legal, valid, and binding obligation of Pioneer, enforceable
against Pioneer in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except
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that the availability of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Pioneer, nor the consummation by Pioneer of the transactions contemplated
hereby, nor compliance by Pioneer with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Pioneer's Certificate of
Incorporation or Bylaws or the certificate or articles of incorporation or
bylaws of any Pioneer Subsidiary or any resolution adopted by the board of
directors or the shareholders of any Pioneer Entity, or (ii) except as disclosed
in Section 5.2 of the Pioneer Disclosure Memorandum, constitute or result in a
Default under, or require any Consent pursuant to, or result in the creation of
any Lien on any Asset of any Pioneer Entity under, any Contract or Permit of any
Pioneer Entity, where such Default or Lien, or any failure to obtain such
Consent, is reasonably likely to have, individually or in the aggregate, a
Pioneer Material Adverse Effect, or, (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b), constitute or result in a Default under,
or require any Consent pursuant to, any Law or Order applicable to any Pioneer
Entity or any of their respective material Assets (including any Buyer Entity or
any Pioneer Entity becoming subject to or liable for the payment of any Tax or
any of the Assets owned by any Buyer Entity or any Pioneer Entity being
reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of The Nasdaq National Market, or the national securities
exchange on which Buyer Common Stock is hereafter listed, and other than
Consents required from Regulatory Authorities, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings, or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Pioneer Material Adverse Effect, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by Pioneer of the
Merger and the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Pioneer consists of (i)
7,500,000 shares of $.01 par value Pioneer Common Stock, of which 3,759,912
shares were issued and outstanding as of the date of this Agreement, and (ii)
1,000,000 shares of preferred stock, par value $0.01 per share, no series of
which has been designated and no shares of which are issued and outstanding. All
of the issued and outstanding shares of capital stock of Pioneer are duly and
validly issued and outstanding and are fully paid and nonassessable under the
DGCL. None of the outstanding shares of capital stock of Pioneer has been issued
in violation of any preemptive rights of the current or past shareholders of
Pioneer.
(b) Except as set forth in Section 5.3(a), or as provided in
the Stock Option Agreement, or as disclosed in Section 5.3(b) of the Pioneer
Disclosure Memorandum, there are no shares of capital stock or other equity
securities of Pioneer outstanding and no outstanding Equity Rights relating to
the capital stock of Pioneer.
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5.4 PIONEER SUBSIDIARIES. Pioneer has disclosed in Section 5.4 of
the Pioneer Disclosure Memorandum all of the Pioneer Subsidiaries(identifying
its jurisdiction of organization, and Pioneer's percentage ownership interest
therein . Except as disclosed in Section 5.4 of the Pioneer Disclosure
Memorandum, Pioneer or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock (or other equity interests) of each Pioneer
Subsidiary. No capital stock (or other equity interest) of any Pioneer
Subsidiary is or may become required to be issued (other than to another Pioneer
Entity) by reason of any Equity Rights, and there are no Contracts by which any
Pioneer Subsidiary is bound to issue (other than to another Pioneer Entity)
additional shares of its capital stock (or other equity interests) or Equity
Rights or by which any Pioneer Entity is or may be bound to transfer any shares
of the capital stock (or other equity interests) of any Pioneer Subsidiary
(other than to another Pioneer Entity). Except as disclosed in Section 5.4 of
the Pioneer Disclosure Memorandum, Pioneer does not own, directly or indirectly
5% or more of the outstanding capital stock or other voting securities of any
corporation, bank, savings bank or other organization except for the Pioneer
Subsidiaries. There are no Contracts relating to the rights of any Pioneer
Entity to vote or to dispose of any shares of the capital stock (or other equity
interests) of any Pioneer Subsidiary. All of the shares of capital stock (or
other equity interests) of each Pioneer Subsidiary held by a Pioneer Entity are
fully paid and (except pursuant to 12 USC Section 55 in the case of national
banks and comparable, applicable state Law, if any, in the case of state
depository institutions) nonassessable under the applicable corporation Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by the Pioneer Entity free and clear of any Lien. Except as disclosed in
Section 5.4 of the Pioneer Disclosure Memorandum, each Pioneer Subsidiary is
either a bank, a savings bank, or a corporation, and each such Subsidiary is
duly organized, validly existing, and (as to corporations) in good standing
under the Laws of the jurisdiction in which it is incorporated or organized, and
has the corporate power and authority necessary for it to own, lease, and
operate its Assets and to carry on its business as now conducted. Each Pioneer
Subsidiary is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Pioneer Material
Adverse Effect. Each Pioneer Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund. The minute book
and other organizational documents for each Pioneer Subsidiary have been made
available to Buyer for its review, and, except as disclosed in Section 5.4 of
the Pioneer Disclosure Memorandum, are true and complete in all material
respects as in effect as of the date of this Agreement and accurately reflect in
all material respects all amendments thereto and all proceedings of the Board of
Directors and shareholders thereof.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Pioneer has timely filed and made available to Buyer all
SEC Documents required to be filed by Pioneer since December 31, 1993 (the
"Pioneer SEC Reports"). The
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Pioneer SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Laws and other applicable
Laws and (ii) did not, at the time they were filed (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Pioneer SEC Reports in order to make
the statements in such Pioneer SEC Reports, in light of the circumstances under
which they were made, not misleading. Except for Pioneer Subsidiaries that are
registered as a broker, dealer, or investment advisor, no Pioneer Subsidiary is
required to file any SEC Documents.
(b) Each of the Pioneer Financial Statements (including, in
each case, any related notes) contained in the Pioneer SEC Reports, including
any Pioneer SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited interim statements, as permitted by Form 10-Q of
the SEC), and fairly presented in all material respects the consolidated
financial position of Pioneer and its Subsidiaries as at the respective dates
and the consolidated results of operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Pioneer Entity has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Pioneer Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Pioneer as of
December 31, 1997, included in the Pioneer Financial Statements delivered prior
to the date of this Agreement or reflected in the notes thereto. No Pioneer
Entity has incurred or paid any Liability since December 31, 1997, except for
such Liabilities incurred or paid (i) in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Pioneer Material Adverse Effect or
(ii) in connection with the transactions contemplated by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
except as disclosed in the Pioneer Financial Statements delivered prior to the
date of this Agreement or as disclosed in Section 5.7 of the Pioneer Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Pioneer Material Adverse Effect, and (ii) the Pioneer Entities have not taken
any action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement, would
represent or result in a material breach or violation of any of the covenants
and agreements of Pioneer provided in Article 7.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
any of the Pioneer Entities have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1997, and on or before the date of the
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most recent fiscal year end immediately preceding the Effective Time, except to
the extent that all such failures to file, taken together, are not reasonably
likely to have a Pioneer Material Adverse Effect, and all Tax Returns filed are
complete and accurate in all material respects to the Knowledge of Pioneer. All
Taxes shown on filed Tax Returns have been paid. As of the date of this
Agreement, there is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Pioneer Material Adverse Effect,
except as reserved against in the Pioneer Financial Statements delivered prior
to the date of this Agreement or as disclosed in Section 5.8 of the Pioneer
Disclosure Memorandum. Pioneer's federal income Tax Returns have been audited by
the IRS and accepted through December 31, 1980. All Taxes and other Liabilities
due with respect to completed and settled examinations or concluded Litigation
have been paid. There are no Liens with respect to Taxes upon any of the Assets
of the Pioneer Entities, except for any such Liens which are not reasonably
likely to have a Pioneer Material Adverse Effect.
(b) None of the Pioneer Entities has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for any
of the Pioneer Entities for the period or periods through and including the date
of the respective Pioneer Financial Statements that has been made and is
reflected on such Pioneer Financial Statements is sufficient to cover all such
Taxes.
(d) Deferred Taxes of the Pioneer Entities have been
provided for in accordance with GAAP.
(e) None of the Pioneer Entities is a party to any Tax
allocation or sharing agreement except for the consolidated group of Pioneer and
none of the Pioneer Entities has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Pioneer) has any Liability for Taxes of any Person (other than Pioneer
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law) as a transferee or successor or by
Contract or otherwise. Pioneer has delivered to Buyer a correct and complete
copy of any tax allocation or sharing agreement to which it is a party.
(f) Each of the Pioneer Entities is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Pioneer Material Adverse Effect.
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(g) Except as disclosed in Section 5.8 of the Pioneer
Disclosure Memorandum, none of the Pioneer Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Pioneer Entities that occurred
during or after any Taxable Period in which the Pioneer Entities incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1998.
(i) No Pioneer Entity has or has had in any foreign country
a permanent establishment, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. In the opinion of
management of Pioneer, the allowance for possible loan or credit losses (the
"Allowance") shown on the consolidated balance sheets of Pioneer included in the
most recent Pioneer Financial Statements dated prior to the date of this
Agreement was, and the Allowance shown on the consolidated balance sheets of
Pioneer included in the Pioneer Financial Statements as of dates subsequent to
the execution of this Agreement will be, as of the dates thereof, adequate
(within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known or reasonably anticipated losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables) of the Pioneer Entities and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by the Pioneer
Entities as of the dates thereof, except where the failure of such Allowance to
be so adequate is not reasonably likely to have a Pioneer Material Adverse
Effect.
5.10 ASSETS.
(a) Except as disclosed in Section 5.10 of the Pioneer
Disclosure Memorandum or as disclosed or reserved against in the Pioneer
Financial Statements delivered prior to the date of this Agreement, the Pioneer
Entities have good and marketable title, free and clear of all Liens, to all of
their respective Assets, except for any such Liens or other defects of title
which are not reasonably likely to have a Pioneer Material Adverse Effect. All
tangible properties used in the businesses of the Pioneer Entities are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Pioneer's past practices.
(b) All Assets which are material to Pioneer's business on a
consolidated basis, held under leases or subleases by any of the Pioneer
Entities, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or other Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of
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the court before which any proceedings may be brought), and each such Contract
is in full force and effect.
(c) The Pioneer Entities currently maintain insurance
similar in amounts, scope, and coverage to that maintained by other peer banking
organizations. None of the Pioneer Entities has received notice from any
insurance carrier that (i) any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There are
presently no claims for amounts exceeding in any individual case $100,000
pending under such policies of insurance and no notices of claims in excess of
such amounts have been given by any Pioneer Entity under such policies.
(d) The Assets of the Pioneer Entities include all Assets
required to operate the business of the Pioneer Entities as presently conducted.
5.11 INTELLECTUAL PROPERTY. Each Pioneer Entity owns or has a
license to use all of the Intellectual Property used by such Pioneer Entity in
the course of its business. Each Pioneer Entity is the owner of or has a license
to any Intellectual Property sold or licensed to a third party by such Pioneer
Entity in connection with such Pioneer Entity's business operations, and such
Pioneer Entity has the right to convey by sale or license any Intellectual
Property so conveyed. No Pioneer Entity is in Default under any of its
Intellectual Property licenses. No proceedings have been instituted, or are
pending or to the Knowledge of Pioneer are threatened, which challenge the
rights of any Pioneer Entity with respect to Intellectual Property used, sold or
licensed by such Pioneer Entity in the course of its business, nor has any
person claimed or alleged any rights to such Intellectual Property. The conduct
of the business of the Pioneer Entities does not infringe any Intellectual
Property of any other person. Except as disclosed in Section 5.11 of the Pioneer
Disclosure Memorandum, no Pioneer Entity is obligated to pay any recurring
royalties to any Person with respect to any such Intellectual Property. Except
as disclosed in Section 5.11 of the Pioneer Disclosure Memorandum, no officer,
director or employee of any Pioneer Entity is party to any Contract which
restricts or prohibits such officer, director or employee from engaging in
activities competitive with any Person, including any Pioneer Entity.
5.12 ENVIRONMENTAL MATTERS.
(a) Each Pioneer Entity, and, to the Knowledge of Pioneer,
its Participation Facilities and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Pioneer Material
Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of
Pioneer, threatened before any court, governmental agency, or authority or other
forum in which any Pioneer Entity or any of its Operating Properties or
Participation Facilities (or Pioneer in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the
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environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by any Pioneer Entity or any of its Operating Properties or
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Pioneer
Material Adverse Effect, nor is there any reasonable basis for any Litigation of
a type described in this sentence, except such as is not reasonably likely to
have, individually or in the aggregate, a Pioneer Material Adverse Effect.
(c) During the period of (i) any Pioneer Entity's ownership
or operation of any of their respective current properties, (ii) any Pioneer
Entity's participation in the management of any Participation Facility, or (iii)
any Pioneer Entity's holding of a security interest in an Operating Property,
there have been no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, adjacent to, or affecting (or potentially affecting)
such properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Pioneer Material Adverse Effect. Prior to the period of
(i) any Pioneer Entity's ownership or operation of any of their respective
current properties, (ii) any Pioneer Entity's participation in the management of
any Participation Facility, or (iii) any Pioneer Entity's holding of a security
interest in an Operating Property, to the Knowledge of Pioneer, there were no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Pioneer Material Adverse Effect.
5.13 COMPLIANCE WITH LAWS. Pioneer is duly registered as a bank
holding company under the BHC Act. Each Pioneer Entity has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Pioneer
Material Adverse Effect, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Pioneer Material Adverse Effect. Except as
disclosed in Section 5.13 of the Pioneer Disclosure Memorandum, none of the
Pioneer Entities:
(a) is in Default under any of the provisions of its
Certificate of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except
for Defaults which are not reasonably likely to have, individually or in
the aggregate, a Pioneer Material Adverse Effect; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that any Pioneer Entity is not in compliance with any of the Laws or
Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Pioneer Material Adverse Effect, (ii)
threatening to revoke any Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a Pioneer
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Material Adverse Effect, or (iii) requiring any Pioneer Entity to enter
into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business or in any manner relates to its
capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to Buyer.
5.14 LABOR RELATIONS. No Pioneer Entity is the subject of any
Litigation asserting that it or any other Pioneer Entity has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Pioneer Entity to
bargain with any labor organization as to wages or conditions of employment, nor
is any Pioneer Entity party to any collective bargaining agreement, nor is there
any strike or other labor dispute involving any Pioneer Entity, pending or
threatened, or to the Knowledge of Pioneer, is there any activity involving any
Pioneer Entity's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.15 EMPLOYEE BENEFIT PLANS.
(a) Pioneer has disclosed in Section 5.15 of the Pioneer
Disclosure Memorandum, and has delivered or made available to Buyer prior to the
execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any Pioneer Entity or ERISA
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Pioneer
Benefit Plans"). Any of the Pioneer Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Pioneer ERISA Plan." Neither Pioneer nor any ERISA Affiliate
currently maintains any plan which is a "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code). No Pioneer Pension Plan is or has
been a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) Pioneer has delivered or made available to Buyer prior
to the execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such
Pioneer Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Pioneer Benefits Plans or amendments, all
determination letters, material rulings, material opinion letters, material
information letters, or materials advisory opinions issued by the Internal
Revenue Service, the United States Department
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of Labor, or the Pension Benefit Guaranty Corporation after December 31, 1993,
(iii) annual reports or returns, audited or unaudited financial statements,
actuarial valuation and reports, and summary annual reports prepared for any
Pioneer Benefit Plan with respect to the most recent plan year, and (iv) the
most recent summary plan descriptions and any material modifications thereto.
(c) All Pioneer Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Pioneer Material Adverse Effect. Each
Pioneer ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service and Pioneer is not aware of any circumstance that
presents a material risk of the revocation of such favorable determination
letter. No Pioneer Entity has engaged in a transaction with respect to any
Pioneer Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject any Pioneer Entity to a Tax imposed
by either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA
in amounts which are reasonably likely to have, individually or in the
aggregate, a Pioneer Material Adverse Effect.
(d) No Pioneer Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any Pioneer Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Pioneer Pension Plan, and (iii) no increase in
benefits under any Pioneer Pension Plan as a result of plan amendments or
changes in applicable Law which is reasonably likely to have, individually or in
the aggregate, a Pioneer Material Adverse Effect or materially adversely affect
the funding status of any such plan. Neither any Pioneer Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Pioneer Entity, or the single-employer
plan of any entity which is considered one employer with Pioneer under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, which is reasonably likely to have a Pioneer Material
Adverse Effect. No Pioneer Entity has provided, or is required to provide,
security to a Pioneer Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(e) Within the six-year period preceding the Effective Time,
no Liability under Subtitle C or D of Title IV of ERISA has been or is expected
to be incurred by any Pioneer Entity with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Pioneer Material
Adverse Effect. No Pioneer Entity has incurred any withdrawal Liability with
respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Pioneer
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Material Adverse Effect. No notice of a "reportable event," within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pioneer Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(f) Except as disclosed in Section 5.15 of the Pioneer
Disclosure Memorandum, no Pioneer Entity has any Liability for retiree health
and life benefits under any of the Pioneer Benefit Plans and there are no
restrictions on the rights of such Pioneer Entity to amend or terminate any such
retiree health or benefit Plan without incurring any Liability thereunder, which
Liability is reasonably likely to have a Pioneer Material Adverse Effect.
(g) Except as disclosed in Section 5.15 of the Pioneer
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Pioneer Entity
from any Pioneer Entity under any Pioneer Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Pioneer Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a Pioneer Material Adverse Effect.
(h) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Pioneer Entity and their respective beneficiaries, have
been fully reflected on the Pioneer Financial Statements to the extent required
by and in accordance with GAAP.
5.16 MATERIAL CONTRACTS. Except as disclosed in Section 5.16 of
the Pioneer Disclosure Memorandum or otherwise reflected in the Pioneer
Financial Statements, none of the Pioneer Entities, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $100,000, (ii) any Contract relating to the borrowing
of money by any Pioneer Entity or the guarantee by any Pioneer Entity of any
such obligation (other than Contracts evidencing deposit liabilities, purchases
of federal funds, fully-secured repurchase agreements, and Federal Home Loan
Bank advances of depository institution Subsidiaries, trade payables and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), (iii) any Contract which prohibits or restricts any Pioneer Entity
from engaging in any business activities in any geographic area, line of
business or otherwise in competition with any other Person, (iv) any Contract
involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses), (v) any
Contract relating to the provision of data processing, network communication, or
other technical services to or by any Pioneer Entity, (vi) any exchange-traded
or over-the-counter swap, forward, future, option, cap, floor, or collar
financial Contract, or any other interest rate or foreign currency protection
Contract not included on its balance sheet or any note thereto which is a
financial derivative Contract, (vii) any contract
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that obligates a Pioneer Entity to pay more than $100,000 over the life of such
contract that is not terminable with 30 days or less notice without payment of a
penalty, and (vii) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by Pioneer with the SEC
as of the date of this Agreement (together with all Contracts referred to in
Sections 5.10 and 5.15(a), the "Pioneer Contracts"). With respect to each
Pioneer Contract and except as disclosed in Section 5.16 of the Pioneer
Disclosure Memorandum: (i) the Contract is in full force and effect; (ii) no
Pioneer Entity is in Default thereunder, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Pioneer Material
Adverse Effect; (iii) no Pioneer Entity has repudiated or waived any material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of Pioneer, in Default in any respect, other than Defaults
which are not reasonably likely to have, individually or in the aggregate, a
Pioneer Material Adverse Effect, or has repudiated or waived any material
provision thereunder. All of the indebtedness of any Pioneer Entity for money
borrowed is prepayable at any time by such Pioneer Entity without penalty or
premium.
5.17 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Pioneer, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Pioneer Entity, or
against any director, employee or employee benefit plan of any Pioneer Entity,
or against any Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Pioneer Material Adverse
Effect, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Pioneer Entity,
that are reasonably likely to have, individually or in the aggregate, a Pioneer
Material Adverse Effect. Section 5.17 of the Pioneer Disclosure Memorandum
contains a summary of all Litigation as of the date of this Agreement to which
any Pioneer Entity is a party and which names a Pioneer Entity as a defendant or
cross-defendant or for which any Pioneer Entity has any potential Liability.
5.18 REPORTS. Since January 1, 1993, or the date of organization
if later, each Pioneer Entity has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with Regulatory Authorities (except, in the case of state
securities authorities, failures to file which are not reasonably likely to
have, individually or in the aggregate, a Pioneer Material Adverse Effect) and
have paid all fees and assessments due and payable in connection therewith. As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.19 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Pioneer Entity
or any Affiliate thereof to Buyer pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Pioneer Entity for inclusion in the Registration Statement to be
filed by Buyer with the SEC will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any Pioneer Entity for
inclusion in the Proxy Statement to be mailed to Pioneer's shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by a Pioneer Entity with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy Statement, when first mailed
to the shareholders of Pioneer, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any Pioneer Entity is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.20 ACCOUNTING, TAX AND REGULATORY MATTERS. No Pioneer Entity has
taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the Merger from qualifying
for pooling of interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) or result in the imposition of a condition or restriction of the
type referred to in the last sentence of such Section.
5.21 OPINION OF FINANCIAL ADVISOR. Pioneer has received the
opinions of The Carson Medlin Company ("Carson Medlin") and Keefe, Bruyette &
Woods, Inc. ("KBW"), dated the date of this Agreement, to the effect that the
Exchange Ratio is fair, from a financial point of view, to such holders, signed
copies of which have been delivered to Buyer.
5.22 BOARD RECOMMENDATION. The Board of Directors of Pioneer, at a
meeting duly called and held, has by vote of the directors present (who
constituted all of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, taken
together, are fair to and in the best interests of the shareholders and (ii)
resolved to recommend that the holders of the shares of Pioneer Common Stock
approve this Agreement.
5.23 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for Pioneer's own account, or for the account
of one or more of the Pioneer Subsidiaries or their customers, were entered into
(i) in accordance with prudent business practices and all applicable Laws, and
(ii) with counter parties believed to be financially responsible.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Pioneer as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Buyer is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Tennessee, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. Buyer is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Buyer Material Adverse Effect.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Buyer has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Buyer. This
Agreement represents a legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Buyer, nor the consummation by Buyer of the transactions contemplated hereby,
nor compliance by Buyer with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Buyer's Charter or Bylaws, or
(ii) constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of any Buyer Entity
under, any Contract or Permit of any Buyer Entity, where such Default or Lien,
or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, or, (iii)
subject to receipt of the requisite Consents referred to in Section 9.1(b),
constitute or result in a Default under, or require any Consent pursuant to, any
Law or Order applicable to any Buyer Entity or any of their respective material
Assets (including any Buyer Entity or any Pioneer Entity becoming subject to or
liable for the payment of any Tax or any of the Assets owned by any Buyer Entity
or any Pioneer Entity being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the
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Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, and other than
Consents, filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Buyer of the Merger and the other
transactions contemplated in this Agreement.
6.3 CAPITAL STOCK.
(a) The authorized capital stock of Buyer consists of (i)
200,000,000 shares of $2.50 par value Buyer Common Stock, of which 106,587,874
shares are issued and outstanding as of May 1, 1998, and (ii) 2,500,000 shares
of no par value Buyer Preferred Stock, of which no shares are issued and
outstanding. All of the issued and outstanding shares of Buyer Capital Stock
are, and all of the shares of Buyer Common Stock to be issued in exchange for
shares of Pioneer Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding and fully paid and nonassessable under the TBCA. None of the
outstanding shares of Buyer Capital Stock has been, and none of the shares of
Buyer Common Stock to be issued in exchange for shares of Pioneer Common Stock
upon consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of Buyer.
(b) Except as set forth in Section 6.3(a), or as provided
pursuant to the Buyer Dividend Reinvestment and Stock Purchase Plan or the Buyer
Rights Agreement, or as disclosed in Section 6.3 of the Buyer Disclosure
Memorandum, there are no shares of capital stock or other equity securities of
Buyer outstanding and no outstanding Equity Rights relating to the capital stock
of Buyer.
6.4 RESERVED.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Buyer has timely filed and made available to Pioneer all
SEC Documents required to be filed by Buyer since December 31, 1993 (the "Buyer
SEC Reports"). The Buyer SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Buyer SEC Reports or
necessary in order to make the statements in such Buyer SEC Reports, in light of
the circumstances under which they were made, not misleading. Except for Buyer
Subsidiaries that are registered as a broker, dealer, or investment advisor, no
Buyer Subsidiary is required to file any SEC Documents.
(b) Each of the Buyer Financial Statements (including, in
each case, any related notes) contained in the Buyer SEC Reports, including any
Buyer SEC Reports filed after the date of this Agreement until the Effective
Time, complied as to form in all material respects
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with the applicable published rules and regulations of the SEC with respect
thereto, was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited interim statements, as
permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of Buyer and its Subsidiaries as at
the respective dates and the consolidated results of operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount or effect.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Buyer Entity has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect, except Liabilities which are accrued
or reserved against in the consolidated balance sheets of Buyer as of December
31, 1997, included in the Buyer Financial Statements delivered prior to the date
of this Agreement or reflected in the notes thereto. No Buyer Entity has
incurred or paid any Liability since December 31, 1997, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
except as disclosed in the Buyer Financial Statements delivered prior to the
date of this Agreement or as disclosed in Section 6.7 of the Buyer Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect, and (ii) the Buyer Entities have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and agreements of
Buyer provided in Article 7.
6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
any of the Buyer Entities have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1997, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Buyer
Material Adverse Effect, and all Tax Returns filed are complete and accurate in
all material respects to the Knowledge of Buyer. All Taxes shown on filed Tax
Returns have been paid. As of the date of this Agreement, there is no audit
examination, deficiency, or refund Litigation with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a Buyer Material Adverse Effect, except as reserved against in
the Buyer Financial Statements delivered prior to the date of this Agreement or
as disclosed in Section 6.8 of the Buyer Disclosure Memorandum. Buyer's federal
income Tax Returns have been audited and accepted through December 31, 1993.
All Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
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(b) None of the Buyer Entities has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any Taxes due or to become due for any
of the Buyer Entities for the period or periods through and including the date
of the respective Buyer Financial Statements that has been made and is reflected
on such Buyer Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the Buyer Entities have been provided
for in accordance with GAAP.
(e) None of the Buyer Entities is a party to any Tax
allocation or sharing agreement except for the consolidated group of Buyer and
none of the Buyer Entities has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Buyer) has any Liability for Taxes of any Person (other than Buyer and
its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law) as a transferee or successor or by
Contract or otherwise.
6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. In the opinion of
management of Buyer, the Allowance shown on the consolidated balance sheets of
Buyer included in the most recent Buyer Financial Statements dated prior to the
date of this Agreement was, and the Allowance shown on the consolidated balance
sheets of Buyer included in the Buyer Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known or reasonably anticipated losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables) of the Buyer Entities and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by the Buyer
Entities as of the dates thereof, except where the failure of such Allowance to
be so adequate is not reasonably likely to have a Buyer Material Adverse Effect.
6.10 ASSETS.
(a) The Assets of the Buyer and Buyer Entities that are
"significant subsidiaries" under SEC Rules include all assets required to
operate the business of the Buyer and Buyer Entities that are such significant
subsidiaries as presently conducted. Except as disclosed in Section 6.10 of the
Buyer Disclosure Memorandum or as disclosed or reserved against in the Buyer
Financial Statements delivered prior to the date of this Agreement, the Buyer
and Buyer Entities that are such significant subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for any such Liens or other defects of title which are not
reasonably likely to have a Buyer Material Adverse Effect. All tangible
properties used in the businesses of the Buyer and the Buyer Entities that are
such significant subsidiaries are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
Buyer's past practices.
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(b) All Assets which are material to Buyer's business on a
consolidated basis, held under leases or subleases by any of the Buyer and Buyer
Entities that are significant subsidiaries, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
(c) The Buyer and Buyer Entities that are significant
subsidiaries currently maintain insurance similar in amounts, scope and coverage
to that maintained by other peer banking organizations, including directors' and
officers' insurance providing for coverage of $50 million as part of an
integrated risk program. Neither Buyer nor the Buyer Entities that are
significant subsidiaries has received notice from any insurance carrier that (i)
such insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no claims pending under
such policies of insurance and no notices have been given by Buyer or Buyer
Entity that are significant subsidiaries under such policies regarding any claim
which, if determined adversely to Buyer or any Buyer Entity that is a
significant subsidiary, would have a Buyer Material Adverse Effect.
6.11 INTELLECTUAL PROPERTY. Each of Buyer and each Buyer Entity
that is a significant subsidiary owns or has a license to use all of the
Intellectual Property used by such Buyer Entity in the course of its business.
Each of Buyer and each Buyer Entity that is a significant subsidiary is the
owner of or has a license to any Intellectual Property sold or licensed to a
third party by such Buyer or such Buyer Entity that is a significant subsidiary
in connection with such Buyer's or such Buyer's Entity's business operations,
and neither Buyer nor such Buyer Entity has the right to convey by sale or
license any Intellectual Property so conveyed. Neither Buyer nor any Buyer
Entity that is a significant subsidiary is in Default under any of its
Intellectual Property licenses. No proceedings have been instituted, or are
pending or to the Knowledge of Buyer threatened, which challenge the rights of
any Buyer or Buyer Entity that is a significant subsidiary with respect to
Intellectual Property used, sold or licensed by such Buyer or Buyer Entity that
is a significant subsidiary in the course of its business, nor has any person
claimed or alleged any rights to such Intellectual Property. The conduct of the
business of Buyer and Buyer Entities does not infringe any Intellectual Property
of any other person.
6.12 ENVIRONMENTAL MATTERS.
(a) Each Buyer Entity, and, to the knowledge of Buyer, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect.
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(b) There is no Litigation pending or, to the knowledge of
Buyer, threatened before any court, governmental agency, or authority or other
forum in which any Buyer Entity or any of its Operating Properties or
Participation Facilities (or Buyer in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any Buyer Entity or
any of its Operating Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, nor is there
any reasonable basis for any Litigation of a type described in this sentence,
except such as is not reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect.
(c) During the period of (i) any Buyer Entity's ownership or
operation of any of their respective current properties, (ii) any Buyer Entity's
participation in the management of any Participation Facility, or (iii) any
Buyer Entity's holding of a security interest in a Operating Property, there
have been no releases, discharges, spillages, or disposals of Hazardous Material
in, on, under, adjacent to, or affecting (or potentially affecting) such
properties, except such as are not reasonably likely to have, individually or in
the aggregate, a Buyer Material Adverse Effect. Prior to the period of (i) any
Buyer Entity's ownership or operation of any of their respective current
properties, (ii) any Buyer Entity's participation in the management of any
Participation Facility, or (iii) any Buyer Entity's holding of a security
interest in a Operating Property, to the Knowledge of Buyer, there were no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Pioneer Material Adverse Effect.
6.13 COMPLIANCE WITH LAWS. Buyer is duly registered as a bank
holding company under the BHC Act. Each Buyer Entity has in effect all Permits
necessary for it to own, lease or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect. Except as
disclosed in Section 6.13 of the Buyer Disclosure Memorandum, none of the Buyer
Entities:
(a) is in Default under its Charter or Bylaws (or other
governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for Defaults
which are not reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect; or
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(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that any Buyer Entity is not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces, where
such noncompliance is reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect, (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, or
(iii) requiring any Buyer Entity to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve
policies, its management, or the payment of dividends.
6.14 LABOR RELATIONS. No Buyer Entity is the subject of any
Litigation asserting that it or any other Buyer Entity has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Buyer Entity to
bargain with any labor organization as to wages or conditions of employment, nor
is any Buyer Entity party to any collective bargaining agreement, nor is there
any strike or other labor dispute involving any Buyer Entity, pending or
threatened, or to the Knowledge of Buyer, is there any activity involving any
Buyer Entity's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.15 EMPLOYEE BENEFIT PLANS.
(a) Buyer has delivered or made available to Pioneer prior
to the execution of this Agreement copies in each case of all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any Buyer Entity or ERISA
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Buyer
Benefit Plans"). Any of the Buyer Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Buyer ERISA Plan." Each Buyer ERISA Plan which is also a "defined
benefit plan" (as defined in Section 414(j) of the Internal Revenue Code) is
referred to herein as a "Buyer Pension Plan." No Buyer Pension Plan is or has
been a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All Buyer Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect. Each Buyer
ERISA Plan which is intended to be qualified under Section 401(a) of the
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Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and Buyer is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No Buyer Entity
has engaged in a transaction with respect to any Buyer Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any Buyer Entity to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are reasonably
likely to have, individually or in the aggregate, a Buyer Material Adverse
Effect.
(c) No Buyer Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there has been (i) no
material adverse change in the financial position of a Buyer Pension Plan, (ii)
no change in the actuarial assumptions with respect to any Buyer Pension Plan,
and (iii) no increase in benefits under any Buyer Pension Plan as a result of
plan amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect or materially
adversely affect the funding status of any such plan. Neither any Buyer Pension
Plan nor any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any Buyer Entity, or the
single-employer plan of any ERISA Affiliate has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, which is reasonably likely to have a Buyer Material
Adverse Effect. No Buyer Entity has provided, or is required to provide,
security to a Buyer Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
6.16 RESERVED.
6.17 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Buyer, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Buyer Entity, or against any
director, employee or employee benefit plan of any Buyer Entity, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, nor are there
any Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any Buyer Entity, that are reasonably likely to
have, individually or in the aggregate, a Buyer Material Adverse Effect.
6.18 REPORTS. Since January 1, 1993, or the date of organization
if later, each of Buyer and each Buyer Entity that is a significant subsidiary
has filed all reports and statements, together with any amendments required to
be made with respect thereto, that it was required to file with Regulatory
Authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Buyer Material Adverse Effect). As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did not, in all
material respects, contain any untrue statement of a material fact or omit to
state a material fact required to be
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stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
6.19 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any Buyer Entity to
Pioneer pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any Buyer
Entity for inclusion in the Registration Statement to be filed by Buyer with the
SEC, will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading. None of the information
supplied or to be supplied by any Buyer Entity for inclusion in the Proxy
Statement to be mailed to Pioneer's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by any Buyer Entity
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of Pioneer, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any Buyer Entity is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.20 ACCOUNTING, TAX AND REGULATORY MATTERS. No Buyer Entity has
taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the Merger from qualifying
for pooling of interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) or result in the imposition of a condition or restriction of the
type referred to in the last sentence of such Section.
6.21 RIGHTS AGREEMENT. Execution of this Agreement and
consummation of the Merger and the other transactions contemplated by this
Agreement will not result in the grant of any rights to any Person under the
Buyer Rights Agreement (other than as contemplated by Section 3.1) or enable or
require the Buyer Rights to be exercised, distributed or triggered. No "Stock
Acquisition Date" or "Flip-in Date" (as such terms are defined in the Buyer
Rights Agreement) has occurred.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF PIONEER. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of Buyer shall have been obtained,
and except as otherwise expressly contemplated herein, Pioneer shall and shall
cause each of its Subsidiaries to (a) operate its business only in the usual,
regular, and ordinary course, (b) use all reasonable efforts to preserve intact
its business organization and Assets and maintain its rights and franchises, and
(c) take no action which would (i) materially adversely affect the ability of
any Party to obtain any Consents required for the transactions contemplated
hereby without imposition of a condition or restriction of the type referred to
in the last sentences of Section 9.1(b) or 9.1(c), or (ii) materially adversely
affect the ability of any Party to perform its covenants and agreements under
this Agreement.
7.2 NEGATIVE COVENANTS OF PIONEER. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of Buyer shall have been obtained, and except
as otherwise expressly contemplated herein, Pioneer covenants and agrees that it
will not do or agree or commit to do, or permit any of its Subsidiaries to do or
agree or commit to do, any of the following:
(a) amend the Certificate of Incorporation, Bylaws or other
governing instruments of any Pioneer Entity, or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a Pioneer Entity to
another Pioneer Entity) in excess of an aggregate of $500,000 (for the
Pioneer Entities on a consolidated basis) except in the ordinary course
of the business of Pioneer Subsidiaries consistent with past practices
(which shall include, for Pioneer Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal
funds, advances from the Federal Reserve Bank or Federal Home Loan Bank,
and entry into repurchase agreements secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any Asset of any
Pioneer Entity of any Lien or permit any such Lien to exist (other than
in connection with deposits, repurchase agreements, bankers' acceptances,
"treasury tax and loan" accounts established in the ordinary course of
business, the satisfaction of legal requirements in the exercise of trust
powers, and Liens in effect as of the date hereof that are disclosed in
the Pioneer Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges or repurchases under any "put" obligations under
Pioneer's 401(k) and Employee Stock Ownership Plan in the ordinary course
under employee benefit plans), directly or indirectly, any shares, or any
securities convertible into any shares, of the capital stock of any
Pioneer Entity, or declare or pay any dividend or make any other
distribution in respect of Pioneer's capital stock, provided that Pioneer
may (to the extent legally and contractually permitted to do so), but
shall not be obligated to, declare and pay regular quarterly cash
dividends on the shares of Pioneer Common Stock on the usual and regular
record and
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payment dates in accordance with past practice disclosed in Section
7.2(c) of the Pioneer Disclosure Memorandum and such dates may not be
changed without the prior written consent of Buyer; and further provided
that any dividend declared or payable on the shares of Pioneer Common
Stock for the quarterly period during which the Effective Time occurs
shall, unless otherwise agreed upon in writing by Buyer and Pioneer, be
declared with a record date prior to the Effective Time only if the
normal record date for payment of the corresponding quarterly dividend to
holders of Buyer Common Stock is before the Effective Time or if the
Buyer agrees that Pioneer's shareholders shall be entitled to receive
such dividend or Buyer's Common Stock as if Pioneer shareholders had been
a holder of record of Buyer Common Stock on the record date for such
dividend; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the terms
thereof in existence on the date hereof, or pursuant to the Stock Option
Agreement, or as disclosed in Section 7.2(d) of the Pioneer Disclosure
Memorandum, issue, sell, pledge, encumber, authorize the issuance of,
enter into any Contract to issue, sell, pledge, encumber, or authorize
the issuance of, or otherwise permit to become outstanding, any
additional shares of Pioneer Common Stock or any other capital stock of
any Pioneer Entity, or any stock appreciation rights, or any option,
warrant or other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of
any Pioneer Entity or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Pioneer Common
Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber (x) any shares of capital stock of any Pioneer Subsidiary
(unless any such shares of stock are sold or otherwise transferred to
another Pioneer Entity) or (y) any Asset other than (1) other real estate
owned, (2) other property taken in full or partial satisfaction of debts
previously contracted, including foreclosures, (3) any Asset having a
book value less than $1,000,000 in the ordinary course of business for
reasonable and adequate consideration, or (4) dispositions of any
property held in a trust or fiduciary capacity other than in the ordinary
course of business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of
three years or less, purchase any securities or make any material
investment, either by purchase of stock of securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other
than a wholly owned Pioneer Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of
control by a depository institution Subsidiary in its fiduciary capacity,
or (iii) the creation of new wholly owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Pioneer Entity, except in accordance with
past practice disclosed in Section 7.2(g) of the Pioneer Disclosure
Memorandum or as required by Law; pay any severance or
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termination pay or any bonus other than pursuant to written policies or
written Contracts in effect on the date of this Agreement and disclosed
in Section 7.2(g) of the Pioneer Disclosure Memorandum; and enter into or
amend any severance agreements with officers of any Pioneer Entity; grant
any material increase in fees or other increases in compensation or other
benefits to directors of any Pioneer Entity except in accordance with
past practice or disclosed in Section 7.2(g) of the Pioneer Disclosure
Memorandum; or voluntarily accelerate the vesting of any stock options or
other stock-based compensation or employee benefits or other Equity
Rights; or
(h) enter into or amend any employment Contract between any
Pioneer Entity and any Person having a salary thereunder in excess of
$100,000 per year (unless such amendment is required by Law) that the
Pioneer Entity does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any
time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Pioneer Entity
or terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any Pioneer Entity other than any such
change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan, or make any distributions from such employee benefit plans, except
as required by Law, the terms of such plans or consistent with past
practice; or
(j) make any change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Pioneer
Entity for material money damages or restrictions upon the operations of
any Pioneer Entity; or
(l) except in the ordinary course of business, enter into,
modify, amend or terminate any material Contract (including any loan
Contract with an unpaid balance exceeding $5,000,000) or waive, release,
compromise or assign any material rights or claims.
7.3 COVENANTS OF BUYER. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, unless the
prior written consent of Pioneer shall have been obtained, and except as
otherwise expressly contemplated herein, Buyer covenants and agrees that it
shall (a) continue to conduct its business and the business of its Subsidiaries
in a manner designed in its reasonable judgment, to enhance the long-term value
of the Buyer Common Stock and the business prospects of the Buyer Entities and
to the extent consistent therewith use all reasonable efforts to preserve intact
the Buyer Entities' core businesses and goodwill with their respective employees
and the communities they serve, and (b) take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the
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type referred to in the last sentences of Section 9.1(b) or 9.1(c), or (ii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided that the foregoing shall not
prevent any Buyer Entity from acquiring any Assets or other businesses or from
discontinuing or disposing of any of its Assets or business if such action is,
in the reasonable judgment of Buyer, desirable in the conduct of the business of
Buyer and its Subsidiaries, provided that such actions shall not materially
delay the Effective Time or materially hinder consummation of the Merger, and
provided further, that the provisions of this Section 7.3 (other than the
provisions of clause (b) above) shall not be deemed to preclude Buyer from
acquiring unaffiliated depository and nondepository institutions. Buyer further
covenants and agrees that it will not, without the prior written consent of
Pioneer, which consent shall not be unreasonably withheld, amend the Charter of
Buyer or, except as expressly contemplated by this Agreement, the Buyer Rights
Agreement, in each case, in any manner adverse to the holders of Pioneer Common
Stock as compared to rights of holders of Buyer Common Stock generally as of the
date of this Agreement.
7.4 RESERVED.
7.5 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Pioneer Material Adverse Effect or a Buyer Material Adverse Effect,
as applicable, or (ii) would cause or constitute a material breach of any of its
representations, warranties, or covenants contained herein, and to use its
reasonable efforts to prevent or promptly to remedy the same.
7.6 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and Pioneer and the Banks shall deliver
to Buyer and Buyer and its significant subsidiaries shall deliver to Pioneer
copies of all such reports filed by them promptly after the same are filed. If
financial statements are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with the SEC will
comply in all material respects with the Securities Laws and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with the Laws applicable to
such reports.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
As soon as reasonably practicable after execution of this Agreement, Buyer shall
prepare and file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become effective under
the 1933 Act and take any action required to be taken under the applicable state
Blue Sky or securities Laws in connection with the issuance of the shares of
Buyer Common Stock upon consummation of the Merger. Pioneer shall cooperate in
the preparation and filing of the Registration Statement and shall furnish all
information concerning it and the holders of its capital stock as Buyer may
reasonably request in connection with such action. Pioneer shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon adoption of this Agreement and such other related matters as it,
with the mutual agreement of Buyer, deems appropriate. In connection with the
Shareholders' Meeting, (i) Pioneer shall prepare and file with the SEC a Proxy
Statement and mail such Proxy Statement to its shareholders, (ii) the Parties
shall furnish to each other all information concerning them that they may
reasonably request in connection with such Proxy Statement, (iii) the Board of
Directors of Pioneer shall call a special meeting of Pioneer shareholders to
consider and act upon this Agreement and the Merger, shall establish a record
for such meeting, and shall recommend to its shareholders the approval of the
matters submitted for approval (subject to the Board of Directors of Pioneer,
after having consulted with and considered the advice of outside counsel,
reasonably determining in good faith that the making of such recommendation, or
the failure to withdraw or modify its recommendation, would constitute a breach
of fiduciary duties of the members of such Board of Directors to Pioneer's
shareholder under applicable law), and (iv) the Board of Directors and officers
of Pioneer shall use their reasonable efforts to obtain such shareholders'
approval (subject to the Board of Directors of Pioneer, after having consulted
with and considered the advice of outside counsel, reasonably determining in
good faith that the taking of such actions would constitute a breach of
fiduciary duties of the members of such Board of Directors to Pioneer's
shareholder under applicable law). Buyer and Pioneer shall make all necessary
filings with respect to the Merger under the Securities Laws.
8.2 EXCHANGE LISTING. Buyer shall use all reasonable efforts to
list, prior to the Effective Time, on the Nasdaq National Market any national
securities exchange on which Buyer Common Stock is hereafter listed, subject to
official notice of issuance, the shares of Buyer Common Stock to be issued to
the holders of Pioneer Common Stock pursuant to the Merger, and Buyer shall give
all notices and make all filings required in connection with the transactions
contemplated herein.
8.3 APPLICATIONS. Buyer shall promptly prepare and file, and
Pioneer shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. The
Parties shall deliver to each other copies of all filings, correspondence and
orders to and from all Regulatory Authorities in connection with the
transactions contemplated hereby.
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8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Buyer shall execute and file the Articles of
Merger with the Secretary of State of the State of Tennessee and the Certificate
of Merger with the Secretary of State of the State of Delaware in connection
with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided that nothing herein shall preclude either
Party from exercising its rights under this Agreement or the Stock Option
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under
their Confidentiality Agreements, which are hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Pioneer shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with Persons which were
considering an Acquisition Proposal with respect to Pioneer to preserve the
confidentiality of the information relating to the Pioneer Entities provided to
such Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon
as practicable after any determination by it of any fact or occurrence relating
to the other Party which it has
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discovered through the course of its investigation and which represents, or is
reasonably likely to represent, either a material breach of any representation,
warranty, covenant or agreement of the other Party or which has had or is
reasonably likely to have a Pioneer Material Adverse Effect or a Buyer Material
Adverse Effect, as applicable.
8.7 PRESS RELEASES. Prior to the Effective Time, Pioneer and Buyer
shall consult with each other as to the form and substance of all press releases
or other public disclosure, including communications to officers and employees
materially related to this Agreement or any other transaction contemplated
hereby; provided that nothing in this Section 8.7 shall be deemed to prohibit
any Party from making any disclosure which its counsel deems necessary or
advisable in order to satisfy such Party's disclosure obligations imposed by
Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Pioneer Entity nor any Affiliate thereof
nor any Representatives thereof retained by any Pioneer Entity shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
the Board of Directors of Pioneer, after having consulted with and considered
the advice of outside counsel, reasonably determines in good faith that the
failure to take such actions would constitute a breach of fiduciary duties of
the members of such Board of Directors to Pioneer's shareholder under applicable
law, no Pioneer Entity or any Affiliate or Representative thereof shall furnish
any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but Pioneer may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
outside counsel. Pioneer shall promptly advise Buyer following the receipt of
any Acquisition Proposal and the details thereof, and advise Buyer of any
developments with respect to such Acquisition Proposal promptly upon the
occurrence thereof. Pioneer shall (i) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and (ii) direct and
use its reasonable efforts to cause all of its Affiliates and Representatives
not to engage in any of the foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for treatment as a pooling
of interests for accounting purposes or as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 AGREEMENT OF AFFILIATES. Pioneer has disclosed in Section
8.10 of the Pioneer Disclosure Memorandum all Persons whom it reasonably
believes is an "affiliate" of Pioneer for purposes of Rule 145 under the 1933
Act. Pioneer shall cause each such Person to deliver to Buyer not later than 30
days prior to the Effective Time, a written agreement, substantially in the form
of Exhibit 3, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of Pioneer Common Stock held by such Person,
except as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of Buyer Common Stock to be
received by such Person upon consummation of the Merger
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except in compliance with applicable provisions of the 1933 Act and the rules
and regulations thereunder and until such time as financial results covering at
least 30 days of combined operations of Buyer and Pioneer have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies. Shares of Buyer Common Stock issued to such affiliates of
Pioneer in exchange for shares of Pioneer Common Stock shall not be transferable
until such time as financial results covering at least 30 days of combined
operations of Buyer and Pioneer have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies,
regardless of whether each such affiliate has provided the written agreement
referred to in this Section 8.10 (and Buyer shall be entitled to place
restrictive legends upon certificates for shares of Buyer Common Stock issued to
affiliates of Pioneer pursuant to this Agreement to enforce the provisions of
this Section 8.10). Buyer shall not be required to maintain the effectiveness of
the Registration Statement under the 1933 Act for the purposes of resale of
Buyer Common Stock by such affiliates.
8.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, Buyer shall provide generally to officers and employees of the Pioneer
Entities employee benefits under employee benefit and welfare plans (other than
stock option or other plans involving the potential issuance of Buyer Common
Stock), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the Buyer Entities to their similarly
situated officers and employees; provided, that, for a period of 12 months after
the Effective Time, Buyer shall provide generally to officers and employees of
Pioneer Entities severance benefits in accordance with the policies of either
(i) Pioneer as disclosed in Section 8.11 of the Pioneer Disclosure Memorandum,
or (ii) Buyer, whichever of (i) or (ii) will provide the greater benefit to the
officer or employee. For purposes of participation, vesting and (except in the
case of Buyer retirement plans) benefit accrual under Buyer's employee benefit
plans, the service of the employees of the Pioneer Entities prior to the
Effective Time shall be treated as service with a Buyer Entity participating in
such employee benefit plans. Buyer also shall cause the Surviving Corporation
and its Subsidiaries to honor in accordance with their terms all employment,
severance, consulting and other compensation Contracts disclosed in Section 8.11
of the Pioneer Disclosure Memorandum to Buyer between any Pioneer Entity and any
current or former director, officer, or employee thereof, and all provisions for
vested benefits or other vested amounts earned or accrued through the Effective
Time under the Pioneer Benefit Plans.
8.12 INDEMNIFICATION.
(a) For a period of six years after the Effective Time,
Buyer shall indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the Pioneer Entities (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
arising out of the Indemnified Party's service or services as directors,
officers, employees or agents of Pioneer or, at Pioneer's request, of another
corporation, partnership, joint venture, trust or other enterprise occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under Delaware Law and by Pioneer's
Certificate of Incorporation and Bylaws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any Litigation and whether or not any Buyer Entity is insured against any such
matter. Without limiting the foregoing, in any
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case in which approval by the Surviving Corporation is required to effectuate
any indemnification, the Surviving Corporation shall direct, at the election of
the Indemnified Party, that the determination of any such approval shall be made
by independent counsel mutually agreed upon between Buyer and the Indemnified
Party.
(b) Buyer shall use its reasonable efforts (and Pioneer
shall cooperate prior to the Effective Time in these efforts) to maintain in
effect for a period of three years after the Effective Time Pioneer's existing
directors' and officers' liability insurance policy (provided that Buyer may
substitute therefor (i) policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less advantageous or
(ii) with the consent of Pioneer given prior to the Effective Time, any other
policy) with respect to claims arising from facts or events which occurred prior
to the Effective Time and covering persons who are currently covered by such
insurance; provided that the Surviving Corporation shall not be obligated to
make aggregate premium payments for such three-year period in respect of such
policy (or coverage replacing such policy) which exceed, for the portion related
to Pioneer's directors and officers, 150% of the annual premium payments on
Pioneer's current policy in effect as of the date of this Agreement (the
"Maximum Amount"). If the amount of the premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Buyer shall use its
reasonable efforts to maintain the most advantageous policies of directors' and
officers' liability insurance obtainable for a premium equal to the Maximum
Amount.
(c) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 8.12, upon learning of any such Liability or
Litigation, shall promptly notify Buyer thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) the
Surviving Corporation shall have the right to assume the defense thereof and the
Surviving Corporation shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
the Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Surviving Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided that the Surviving Corporation shall be obligated pursuant to
this paragraph (c) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such Litigation, and (iii) the Surviving Corporation shall not be
liable for any settlement effected without its prior written consent; and
provided further the Surviving Corporation shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.
(d) If the Surviving Corporation or any successors or
assigns shall consolidate with or merge into any other Person and shall not be
the continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and
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in each case, proper provision shall be made so that the successors and assigns
of the Surviving Corporation shall assume the obligations set forth in this
Section 8.12.
(e) The provisions of this Section 8.12 are intended to be
for the benefit of and shall be enforceable by, each Indemnified Party and
their respective heirs and representatives.
8.13 CERTAIN POLICIES OF PIONEER. Buyer and Pioneer shall consult
with respect to their respective loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
and Pioneer shall make such modification or changes to its policies and
practices, if any, prior to the Effective Time on a basis mutually satisfactory
to Pioneer and Buyer, so that such policies and procedures shall be applied on a
basis consistent with that of Buyer. Buyer and Pioneer also shall consult with
respect to the character, amount and timing of restructuring and Merger-related
expense charges to be taken by each of the Parties in connection with the
transactions contemplated by this Agreement and shall take such charges in
accordance with GAAP, prior to the Effective Time, as may be mutually agreed
upon by the Parties. None of either Party's representations, warranties,
covenants or agreements contained in this Agreement shall be deemed to be
inaccurate or breached in any respect as a consequence of any modifications or
charges undertaken solely on account of this Section 8.13.
8.14 COORDINATION OF DIVIDENDS. After the date of this Agreement
each of Buyer and Pioneer shall coordinate with the other the declaration of any
dividends in respect of the Buyer Common Stock and Pioneer Common Stock and the
record dates and payments dates relating thereto, it being the intention of the
parties that the holders of Pioneer Common Stock shall not receive more than one
dividend, or fail to receive one dividend, for any single calendar quarter with
respect to their shares of Pioneer Common Stock and any shares of Parent Common
Stock any holder of Pioneer Common Stock receives in exchange therefor in the
Merger.
8.15 DIRECTOR. Buyer's Board of Directors, prior to Closing, shall
take all requisite action to elect as a director of Buyer effective as of the
Effective Time, an individual, chosen in the sole discretion of the Buyer's
Committee on Directors, who is (a) either a member of Pioneer's Board of
Directors prior to the Effective Time or (b) George M. Clark, Jr. or a member of
the immediate family of George M. Clark, Jr.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6:
(a) SHAREHOLDER APPROVAL. The shareholders of Pioneer shall
have adopted this Agreement, and the consummation of the transactions
contemplated hereby, including
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the Merger, as and to the extent required by Law, by the provisions of
any governing instruments, or by the rules of the NASD.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or made
and shall be in full force and effect and all waiting periods required by
Law shall have expired.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than
those referred to in Section 9.1(b)) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or
made, is reasonably likely to have, individually or in the aggregate, a
Pioneer Material Adverse Effect or a Buyer Material Adverse Effect, as
applicable.
(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of Buyer
Common Stock issuable pursuant to the Merger shall have been received.
(f) EXCHANGE LISTING. The shares of Buyer Common Stock
issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq National Market, or any national securities exchange on which
Buyer Common Stock is hereafter listed subject to official notice of
listing by such exchange.
(g) POOLING LETTERS. Each of the Parties shall have received
letters, dated as of the date of filing of the Registration Statement
with the SEC and as of the Effective Time, addressed to Buyer, in form
and substance reasonably acceptable to Buyer, from KPMG Peat Marwick LLP
to the effect that the Merger will qualify for pooling of interests
accounting treatment. Each of the Parties also shall have received
letters, dated as of the date of filing of the Registration Statement
with the SEC and as of the Effective Time, addressed to Buyer, in form
and substance reasonably acceptable to Buyer, from Joseph Decosimo and
Company, LLP to the effect that such firm is not aware of any matters
relating to Pioneer and its Subsidiaries which would preclude the Merger
from qualifying for pooling of interests accounting treatment.
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(h) TAX MATTERS. Each Party shall have received a written
opinion of counsel from Arnold & Porter, in form reasonably satisfactory
to such Parties (the "Tax Opinion"), to the effect that (i) the Merger
will constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, (ii) the exchange in the Merger of Pioneer
Common Stock for Buyer Common Stock will not give rise to gain or loss to
the shareholders of Pioneer with respect to such exchange (except to the
extent of any cash received in lieu of fractional share interests), and
(iii) none of Pioneer or Buyer will recognize gain or loss as a
consequence of the Merger (except for amounts resulting from any required
change in accounting methods and any income and deferred gain recognized
pursuant to Treasury regulations issued under Section 1502 of the
Internal Revenue Code). In rendering such Tax Opinion, such counsel shall
be entitled to rely upon representations of officers of Pioneer and Buyer
reasonably satisfactory in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Buyer pursuant to Section 11.6(a):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
Pioneer set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which
are confined to a specified date shall speak only as of such date). The
representations and warranties set forth in Section 5.3 shall be true and
correct (except for inaccuracies which are de minimis in amount). The
representations and warranties set forth in Sections 5.20, 5.21, and 5.22
shall be true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Pioneer set forth
in this Agreement (including the representations and warranties set forth
in Sections 5.3 and 5.20) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Pioneer Material
Adverse Effect; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any
Person shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Pioneer to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) CERTIFICATES. Pioneer shall have delivered to Buyer (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to Pioneer
and in Section 9.2(a) and 9.2(b) have been satisfied, and (ii) certified
copies of resolutions duly adopted by Pioneer's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this
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Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Buyer and its counsel shall request.
(d) OPINION OF COUNSEL. Buyer shall have received an opinion
of Alston & Bird LLP, counsel to Pioneer, dated as of the Closing, in
form reasonably satisfactory to Buyer, as to the matters set forth in
Exhibit 4.
(e) ACCOUNTANT'S LETTERS. Buyer shall have received from
Joseph Decosimo and Company, LLP letters dated not more than five days
prior to (i) the date of the Proxy Statement and (ii) the Effective Time,
with respect to certain financial information regarding Pioneer, in form
and substance reasonably satisfactory to Buyer, which letters shall be
based upon customary specified procedures undertaken by such firm in
accordance with Statement of Auditing Standard Nos. 72 and 75.
(f) AFFILIATES' AGREEMENTS. Buyer shall have received from
each affiliate of Pioneer the affiliates' letter referred to in Section
8.13, to the extent necessary to assure in the reasonable judgment of
Buyer that the transactions contemplated hereby will qualify for pooling
of interests accounting treatment.
9.3 CONDITIONS TO OBLIGATIONS OF PIONEER. The obligations of
Pioneer to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Pioneer pursuant to Section 11.6(b):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
Buyer set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which
are confined to a specified date shall speak only as of such date). There
shall not exist inaccuracies in the representations and warranties of
Buyer set forth in this Agreement such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Buyer Material
Adverse Effect; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any
Person shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Buyer to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with.
(c) CERTIFICATES. Buyer shall have delivered to Pioneer (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to Buyer
and in Section 9.3(a) and 9.3(b) have been satisfied, and (ii) certified
copies of resolutions
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duly adopted by Buyer's Board of Directors evidencing the taking of all
corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Pioneer and its
counsel shall request.
(d) OPINION OF COUNSEL. Pioneer shall have received an opinion
of Mary Neil Price, Esq., Executive Vice President and General Counsel,
counsel to Buyer, dated as of the Effective Time, in form reasonably
acceptable to Pioneer, as to the matters set forth in Exhibit 5.
(e) ACCOUNTANT'S LETTERS. Pioneer shall have received from
KPMG Peat Marwick LLP letters dated not more than five days prior to (i)
the date of the Proxy Statement and (ii) the Effective Time, with respect
to certain financial information regarding Buyer, in form and substance
reasonably satisfactory to Pioneer, which letters shall be based upon
customary specified procedures undertaken by such firm in accordance with
Statement of Auditing Standard Nos. 72 and 75.
(f) FAIRNESS OPINION. Pioneer shall have received from KBW and
Carson Medlin letters, dated as of the date hereof to the effect that, in
the opinions of such firms, the consideration or Exchange Ratio to be
received by Pioneer shareholders in connection with the Merger is fair,
from a financial point of view, to such shareholders.
(g) EXCHANGE AGENT CERTIFICATION. The Exchange Agent shall
have delivered to Pioneer a certificate, dated as of the Effective Time,
to the effect that the Exchange Agent has received from Buyer appropriate
instructions and authorization for the Exchange Agent to issue a
sufficient number of shares of Buyer Common Stock in exchange for
outstanding shares of Pioneer Common Stock and that Buyer has deposited
with the Exchange Agent sufficient funds to pay a reasonable estimate of
the cash payments necessary to make all fractional share payments as
required by Section 3.5.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Pioneer, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of Buyer and Pioneer; or
(b) By either Party, (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or
other agreement contained in this Agreement) in the event of a material
breach by the other Party of any representation or warranty contained in
this Agreement which cannot be or has not been cured within 30 days after
the giving of written notice to the breaching Party of such breach and
which breach is
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reasonably likely, in the judgment of the non-breaching Party, to have,
individually or in the aggregate, a Pioneer Material Adverse Effect or a
Buyer Material Adverse Effect, as applicable, on the breaching Party; or
(c) By either Party, (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or
other agreement contained in this Agreement) in the event of a material
breach by the other Party of any covenant or agreement contained in this
Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach; or
(d) By either Party, (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or
other agreement contained in this Agreement) in the event (i) any Consent
of any Regulatory Authority required for consummation of the Merger and
the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by
such authority is not appealed within the time limit for appeal, or (ii)
the shareholders of Pioneer fail to vote their approval of the matters
relating to this Agreement and the transactions contemplated hereby at
the Shareholders' Meeting where such matters were presented to such
shareholders for approval and voted upon; or
(e) By either Party, in the event that the Merger shall not
have been consummated by December 31, 1998; or
(f) By either Party(provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or
other agreement contained in this Agreement) in the event that any of the
conditions precedent to the obligations of such Party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section
10.1(e); or
(g) By Buyer, in the event that the Board of Directors of
Pioneer shall have failed to reaffirm its approval of the Merger and the
transactions contemplated by this Agreement (to the exclusion of any
other Acquisition Proposal), or shall have resolved not to reaffirm the
Merger, or shall have affirmed, recommended or authorized entering into
any other Acquisition Proposal or other transaction involving a merger,
share exchange, consolidation or transfer of substantially all of the
Assets of Pioneer; or
(h) By Pioneer if:
(1) the Average Closing Price (as defined below)
shall be less than the product of 0.80 and the
Starting Price; and
(2) (i) the number obtained by dividing the Average
Closing Price by the Starting Price (such number
being referred to herein as the "FAC Ratio") shall be
less than (ii) the number obtained by dividing the
Index Price on the Determination Date by the Index
Price on the Starting Date and
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subtracting 0.15 from such quotient (such number
being referred to herein as the "Index Ratio").
If Pioneer elects to exercise its termination right pursuant to
the immediately preceding sentence, it shall give to Buyer written notice on or
before the second trading day after the Determination Date. During the five-day
period commencing on the date of such notice, Buyer shall have the option of
adjusting the Exchange Ratio to equal the lesser of (i) a number equal to a
quotient (rounded to the nearest one-ten thousandth), the numerator of which is
the product of 0.80, the Starting Price and the Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price, or (ii) a
number equal to a quotient (rounded to the nearest one-ten thousandth), the
numerator of which is the Index Ratio multiplied by the Exchange Ratio (as then
in effect) and the denominator of which is the FAC Ratio. If Buyer makes an
election contemplated by the preceding sentence, within such five-day period, it
shall give prompt written notice to Pioneer of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
Section, and this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section.
For purposes of this Section only, the following terms shall have the
meanings indicated:
"Average Closing Price" means the average of the last reported sale
prices per share of Buyer Common Stock as reported on The Nasdaq Stock
Market or such successor exchange on which Buyer Common Stock may then be
traded (as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source) for the 20
consecutive trading days on The Nasdaq Stock Market or such successor
exchange on which Buyer Common Stock may then be traded ending at the
close of trading on the Determination Date.
"Determination Date" means the date on which the approval of the
Federal Reserve Board required for consummation of the Merger shall be
received by Buyer, without regard to any requisite waiting periods in
respect thereof.
"Index Group" means the group of the 17 bank holding companies listed
below, the common stock of all of which shall be publicly traded and as
to which there shall not have been, since the Starting Date and before
the Determination Date, an announcement of a transaction whereby such
company would be acquired or whereby such company would acquire another
company or companies in transactions with a value exceeding 25% of the
acquiror's market capitalization as of the Starting Date. In the event
that the common stock of any such company ceases to be publicly traded or
any such announcement is made with respect to any such company, such
company will be removed from the Index Group, and the weights (which have
been determined based on the number of outstanding shares of common
stock) redistributed proportionately for purpose of determining the Index
Price. The bank holding companies and the weights attributed to them are
as follows:
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<TABLE>
<S> <C>
BB&T Corp. 9.9%
Regions Financial Corp. 9.3%
Mercantile Bancorporation 8.3%
Union Planters Corp. 8.1%
Southtrust Corp. 7.2%
Star Banc Corp. 7.1%
Crestar Financial Corp. 6.8%
Huntington Bancshares Inc. 6.8%
Marshall & Ilsley Corp. 6.6%
Firstar Corp. 5.6%
First Tennessee National Corp. 4.7%
Old Kent Financial Corp. 4.3%
Zions Bancorp 3.9%
Hibernia Corp. 3.4%
Amsouth Bancorporation 3.4%
National Commerce Bancorporation 2.5%
Commerce Bancshares Inc. 2.0%
</TABLE>
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the
companies comprising the Index Group.
"Starting Date" means May 28, 1998.
"Starting Price" shall mean the last reported sale price per share of
Buyer Common Stock on the Starting Date, as reported by The Nasdaq Stock
Market or such successor exchange on which Buyer Common Stock may then be
traded (as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source).
If any company belonging to the Index Group or Buyer declares or effects
a stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or Buyer
shall be appropriately adjusted for the purposes of applying this Section.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.6(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c) or
10.1(f) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive
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the Effective Time, except this Section 10.3 and Articles 1, 2, 3, 4 and 11 and
Sections 8.10, 8.11 and 8.12.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination involving
the acquisition of such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial portion
of the assets of, such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of
any 10% or greater equity or voting interest of such Person; or (iii) any
other Person for which a Person described in clause (ii) acts in any such
capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated herein
by reference.
"ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by Buyer and filed with the Secretary of State of the State of
Tennessee relating to the Merger as contemplated by Section 1.1.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether
or not carried on the books and records of such Person, and whether or
not owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BHC ACT" shall mean the Federal Bank Holding Company Act of
1956, as amended.
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"BUYER CAPITAL STOCK" shall mean, collectively, the Buyer
Common Stock, the Buyer Preferred Stock and any other class or series of
capital stock of Buyer.
"BUYER COMMON STOCK" shall mean the $2.50 par value common
stock of Buyer.
"BUYER DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Acquiring Company Disclosure Memorandum" delivered
prior to the date of this Agreement to Pioneer describing in reasonable
detail the matters contained therein and, with respect to each disclosure
made therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes
of any other Section not specifically referenced with respect thereto.
"BUYER ENTITIES" shall mean, collectively, Buyer and all Buyer
Subsidiaries.
"BUYER FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Buyer
as of March 31, 1998 and as of December 31, 1997 and 1996, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) for the three
months ended March 31, 1998 and for each of the three fiscal years ended
December 31, 1997, 1996 and 1995, as filed by Buyer in SEC Documents, and
(ii) the consolidated balance sheets of Buyer (including related notes
and schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to March 31,1998.
"BUYER MATERIAL ADVERSE EFFECT" shall mean an event, change or
occurrence which, individually or together with any other event, change
or occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of Buyer and its
Subsidiaries, taken as a whole, or (ii) the ability of Buyer to perform
its obligations under this Agreement or to consummate the Merger or the
other transactions contemplated by this Agreement, provided 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 generally accepted accounting principles or regulatory
accounting principles generally applicable to banks and thrifts and their
holding companies and applicable to Buyer, (c) actions and omissions of
Buyer (or any of its Subsidiaries) taken with the prior informed written
Consent of Pioneer in contemplation of the transactions contemplated
hereby, and (d) the direct effects of compliance with this Agreement on
the operating performance of Buyer and its subsidiaries, including
expenses incurred by Buyer in consummating the transactions contemplated
by this Agreement.
"BUYER PREFERRED STOCK" shall mean the no par value preferred
stock of Buyer.
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"BUYER RIGHTS AGREEMENT" shall mean that certain Rights
Agreement, dated December, 1998 between Buyer and First American Trust
company, as Rights Agent, previously delivered to Pioneer.
"BUYER RIGHTS" shall mean the preferred stock purchase rights
issued pursuant to the Buyer Rights Agreement.
"BUYER STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of Buyer designated as follows: the
First American Corporation 1991 Employee Stock Incentive Plan, the First
American Corporation 1993 Non-Employee Director Stock Option Plan, the
First American Corporation STAR Award Plan, the First American
Corporation First Incentive Reward Savings Thrift Plan, the First
American Corporation Dividend Reinvestment and Stock Purchase Plan, the
Heritage Federal Bancshares, Inc. 1994 Stock Option Plan for Non-Employee
Directors and the 1992 Stock Option Incentive Compensation Plan for
Non-Employee Directors, the Deposit Guaranty Corp. Stock-Based, Long-Term
Incentive Plan dated April 15, 1986 and the Stock-Based Long-Term
Incentive Plan II dated April 20, 1993.
"BUYER SUBSIDIARIES" shall mean the Subsidiaries of Buyer,
which shall include the Buyer Subsidiaries described in Section 6.4 and
any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Buyer in the future and held as a Subsidiary
by Buyer at the Effective Time.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger
to be executed by Buyer and filed with the Secretary of State of the
State of Delaware relating to the Merger as contemplated by Section 1.1.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONFIDENTIALITY AGREEMENTS" shall mean that certain
Confidentiality Agreement, dated April 24, 1998, between Pioneer and
Buyer.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument,
lease, obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital stock,
Assets or business.
"DEFAULT" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or
Permit, (ii) any occurrence of any event that with the passage of time or
the giving of notice or both would constitute a breach or violation of,
default under, contravention of, or conflict with, any Contract, Law,
Order, or
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Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right of any
Person to exercise any remedy or obtain any relief under, terminate or
revoke, suspend, cancel, or modify or change the current terms of, or
renegotiate, or to accelerate the maturity or performance of, or to
increase or impose any Liability under, any Contract, Law, Order, or
Permit, where, in any such event, such Default is reasonably likely to
have, individually or in the aggregate, a Pioneer Material Adverse Effect
or a Buyer Material Adverse Effect, as applicable.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and
which are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et
seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"EQUITY RIGHTS" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip,
understandings, warrants, or other binding obligations of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of a Person or by which a
Person is or may be bound to issue additional shares of its capital stock
or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXHIBITS" 1 through 5, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may
be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"FANB" shall mean First American National Bank, a national
banking association and a Buyer Subsidiary.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
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requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software (including
any source or object codes therefor or documentation relating thereto),
trade secrets, franchises, know-how, inventions, and other intellectual
property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean
the personal knowledge after due inquiry of the chairman, president,
chief financial officer, chief accounting officer, chief operating
officer, chief credit officer, general counsel, any assistant or deputy
general counsel, or any senior, executive or other vice president of such
Person.
"LAW" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or
statute applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection
or deposit in the ordinary course of business) of any type, whether
accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest,
title retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, (ii) for depository
institution Subsidiaries of a Party, pledges to secure deposits and other
Liens incurred in the ordinary course of the banking business, and (iii)
Liens which do not materially impair the use of or title to the Assets
subject to such Lien.
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"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other proceeding
relating to or affecting a Party, its business, its Assets (including
Contracts related to it), or the transactions contemplated by this
Agreement, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market Inc.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OPERATING PROPERTY" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security interest or other
interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such property,
but only with respect to such property.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in
the management and, where required by the context, said term means the
owner or operator of such facility or property, but only with respect to
such facility or property.
"PARTY" shall mean either Pioneer or Buyer, and "PARTIES"
shall mean both Pioneer and Buyer.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in concert,
or any person acting in a representative capacity.
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"PIONEER BANK" shall mean Pioneer Bank, a Tennessee bank and a
Pioneer Subsidiary.
"PIONEER COMMON STOCK" shall mean the $0.01 par value common
stock of Pioneer.
"PIONEER DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Pioneer Bancshares, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to Buyer describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be disclosed
for purposes of any other Section not specifically referenced with
respect thereto.
"PIONEER ENTITIES" shall mean, collectively, Pioneer and all
Pioneer Subsidiaries.
"BUYER FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Buyer
as of March 31, 1998 and as of December 31, 1997 and 1996, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) for the three
months ended March 31, 1998 and for each of the three fiscal years ended
December 31, 1997, 1996 and 1995, as filed by Buyer in SEC Documents, and
(ii) the consolidated balance sheets of Buyer (including related notes
and schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to March 31,1998
"PIONEER FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Pioneer
as of March 31, 1998 and as of December 31, 1997 and 1996, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) for the three
months ended March 31, 1998 and as of each of the three fiscal years
ended December 31, 1997, 1996 and 1995, as filed by Pioneer in SEC
Documents, and (ii) the consolidated balance sheets of Pioneer (including
related notes and schedules, if any) and related statements of income,
changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1997.
"PIONEER MATERIAL ADVERSE EFFECT" shall mean an event, change
or occurrence which, individually or together with any other event,
change or occurrence, has a material adverse effect on (i) the financial
position, business, or results of operations of Pioneer and its
Subsidiaries, taken as a whole, or (ii) the ability of Pioneer to perform
its obligations under this Agreement or to consummate the Merger or the
other transactions contemplated by this Agreement, provided that
"Material Adverse Effect" shall not be deemed to include the impact of
(a) changes in banking and similar Laws of general applicability or
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interpretations thereof by courts or governmental authorities, (b)
changes in generally accepted accounting principles or regulatory
accounting principles generally applicable to banks and thrifts and their
holding companies, (c) actions and omissions of Pioneer (or any of its
Subsidiaries) taken with the prior informed written Consent of Buyer in
contemplation of the transactions contemplated hereby, and (d) the direct
effects of compliance with this Agreement on the operating performance or
financial condition of Pioneer and its Subsidiaries, including expenses
incurred by Pioneer in consummating the transactions contemplated by this
Agreement.
"PIONEER STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of Pioneer designated as follows:
"The Pioneer Bancshares, Inc. 1994 Long-Term Incentive Plan" and the
"Pioneer 401(k) and Employee Stock Ownership Plan".
"PIONEER SUBSIDIARIES" shall mean the Subsidiaries of Pioneer,
which shall include the Pioneer Subsidiaries described in Section 5.4 and
any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Pioneer in the future and held as a
Subsidiary by Pioneer at the Effective Time.
"PROXY STATEMENT" shall mean the proxy statement used by
Pioneer to solicit the approval of its shareholders of the transactions
contemplated by this Agreement, which shall include the prospectus of
Buyer relating to the issuance of the Buyer Common Stock to holders of
Pioneer Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement
on SEC Form S-4, or other appropriate form, including any pre-effective
or post-effective amendments or supplements thereto, filed with the SEC
by Buyer under the 1933 Act with respect to the shares of Buyer Common
Stock and related Buyer Rights to be issued to the shareholders of
Pioneer in connection with the transactions contemplated by this
Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC,
the NYSE, the NASD, the Federal Trade Commission, the United States
Department of Justice, the Board of the Governors of the Federal Reserve
System, the Office of Thrift Supervision (including its predecessor, the
Federal Home Loan Bank Board), the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, and all other
federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over
the Parties and their respective Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative
engaged by a Person.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
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"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of Pioneer to be held pursuant to Section 8.1, including any
adjournment or adjournments thereof.
"SIGNIFICANT SUBSIDIARY" shall mean any present or future
consolidated Subsidiary of the Party in question, the assets of which
constitute ten percent (10%) or more of the consolidated assets of such
Party as reflected on such Party's consolidated statement of condition
prepared in accordance with GAAP.
"STOCK OPTION AGREEMENT" shall mean the stock option agreement
of even date herewith issued to Buyer by Pioneer, substantially in the
form of Exhibit 1.
"SUBSIDIARIES" shall mean all those corporations,
associations, or other business entities of which the entity in question
either (i) owns or controls 50% or more of the outstanding equity
securities either directly or through an unbroken chain of entities as to
each of which 50% or more of the outstanding equity securities is owned
directly or indirectly by its parent (provided there shall not be
included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity), (ii) in the case of partnerships,
serves as a general partner, (iii) in the case of a limited liability
company, serves as a managing member, or (iv) otherwise has the ability
to elect a majority of the directors, trustees or managing members
thereof.
"SURVIVING CORPORATION" shall mean Buyer as the surviving
corporation resulting from the Merger.
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an affiliated
or combined or unitary group that includes a Party or its Subsidiaries.
"TAX" or "TAXES" shall mean any federal, state, county, local,
or foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment, sales,
use, transfer, license, payroll, franchise, severance, stamp, occupation,
windfall profits, environmental, federal highway use, commercial rent,
customs duties, capital stock, paid-up capital, profits, withholding,
Social Security, single business and unemployment, disability, real
property, personal property, registration, ad valorem, value added,
alternative or add-on minimum, estimated, or other tax or governmental
fee of any kind whatsoever, imposed or required to be withheld by the
United States or any state, county, local or foreign government or
subdivision or agency thereof, including any interest, penalties, and
additions imposed thereon or with respect thereto.
"TBCA" shall mean the Tennessee Business Corporation Act.
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(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
<TABLE>
<S> <C>
Allowance Section 5.9
Average Closing Price Section 10.1(h)
Bank Merger Section 1.5
Bank Plan Section 1.5
Buyer Benefit Plans Section 6.15(a)
Buyer ERISA Plan Section 6.15(a)
Buyer Pension Plan Section 6.15(a)
Buyer SEC Reports Section 6.5(a)
Carson Medlin Section 5.21
Certificates Section 4.1
Closing Section 1.2
Determination Date Section 10.1(h)
Effective Time Section 1.3
ERISA Affiliate Section 5.15(d)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(b)
FAC Ratio Section 10.1(h)
Indemnified Party Section 8.12(a)
Index Group Section 10.1(h)
Index Price Section 10.1(h)
Index Ratio Section 10.1(h)
KBW Section 5.21
Maximum Amount Section 8.12(b)
Merger Section 1.1
Pioneer Banks Section 1.5
Pioneer Benefit Plans Section 5.15(a)
Pioneer Contracts Section 5.16
Pioneer ERISA Plan Section 5.15(a)
Pioneer Options Section 3.6(a)
Pioneer SEC Reports Section 5.5(a)
Starting Date Section 10.1(h)
Starting Price Section 10.1(h)
Stock Option Agreement Section 1.2
Tax Opinion Section 9.1(h)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
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11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection with
the printing of the Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute
or shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Carson Medlin and KBW as to
Pioneer and except for Salomon Smith Barney as to Buyer, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by Pioneer or by Buyer, each of Pioneer and
Buyer, as the case may be, agrees to indemnify and hold the other Party harmless
of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b), for the Confidentiality Agreement). Nothing in this Agreement expressed
or implied, is intended to confer upon any Person (whether as third party
beneficiaries or otherwise), other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, other than as provided in Section 8.12.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of each of the Parties, whether before or after shareholder approval of
this Agreement has been obtained; provided that after any such approval by the
holders of Pioneer Common Stock, there shall be made no amendment that reduces
or modifies in any material respect the consideration to be received by holders
of Pioneer Common Stock pursuant to Section 251(d) and 252(e) of the DGCL
requires further approval by such shareholder.
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11.6 WAIVERS.
(a) Prior to or at the Effective Time, Buyer, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by Pioneer, to waive or extend the time for the compliance or
fulfillment by Pioneer of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of Buyer
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Buyer.
(b) Prior to or at the Effective Time, Pioneer, acting
through its Board of Directors, Executive Committee of the Board of Directors,
chief executive officer or other authorized officer, shall have the right to
waive any Default in the performance of any term of this Agreement by Buyer, to
waive or extend the time for the compliance or fulfillment by Buyer of any and
all of its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of Pioneer under this Agreement, except
any condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly authorized
officer of Pioneer.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
Pioneer: Pioneer Bancshares, Inc.
801 Broad Street
Chattanooga, Tennessee 37402
Telecopy Number: (423) 755-
Attention: Rodger B. Holley,
Chairman, President and CEO
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Copy to Counsel: Alston & Bird LLP
One Atlantic Center
1201 W. Peachtree Street
Atlanta, Georgia 30309-3423
Telecopy Number: (404) 881-4777
Attention: Ralph F. MacDonald, III
Buyer: First American Corporation
First American Center
Nashville, Tennessee 37237-0700
Telecopy Number: (615) 748-2412
Attention: Dale W. Polley, President
Copy to Counsel: Mary Neil Price, Esq.
Executive Vice President and General Counsel
721 First American Center
Nashville, Tennessee 37237-0700
Telecopy Number: (615) 748-2538
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Tennessee, without regard
to any applicable conflicts of Laws.
11.10 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
together shall constitute one and the same instrument.
11.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in
this Agreement are for reference purposes only and are not part of this
Agreement. Unless otherwise indicated, all references to particular Articles or
Sections shall mean and refer to the referenced Articles and Sections of this
Agreement.
11.12 INTERPRETAIONS. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise, on account of any party being
considered the draftsman hereof. The parties acknowledge and agree that this
Agreement has been reviewed, negotiated, and accepted by all parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and intentions
of all parties hereto.
11.13 ENFORECEMNTS OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in
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accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the Parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf by its undersigned duly authorized officer as of
the day and year first above written.
FIRST AMERICAN CORPORATION
By: /s/ Dale W. Polley
-------------------------------------
Dale W. Polley
President
PIONEER BANCSHARES, INC.
By: /s/ Rodger B. Holley
-------------------------------------
Rodger B. Holley
President
<PAGE> 1
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of May 28, 1998, by and between Pioneer Bancshares, Inc., a Delaware
corporation ("Issuer"), and First American Corporation, a Tennessee corporation
("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Merger, dated as of May 28, 1998 (the "Merger Agreement"), providing
for, among other things, the merger of Issuer with and into Grantee, with
Grantee as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 748,222 shares (as adjusted as set forth herein, the "Option Shares,"
which shall include the Option Shares before and after any transfer of such
Option Shares) of common stock, $0.01 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to $67.50; provided, however,
that in no event shall the number of shares of Issuer Common Stock for which
this Option is exercisable exceed 19.9% of the issued and outstanding Issuer
Common Stock without giving effect to the shares subject to or issued pursuant
to the Option.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter defined),
as applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event;
provided that the Option shall terminate and be of no further force and effect
upon the earliest to occur of (A) the Effective Time, (B) termination of the
Merger Agreement in accordance with the terms thereof prior to the occurrence of
a Purchase Event or a Preliminary Purchase Event (other than a termination of
the Merger Agreement by Grantee pursuant to Section 10.1(b) or Section 10.1(c)
thereof (but only if such termination was a result of a willful breach by
Issuer) (each a "Default Termination")),
<PAGE> 2
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(C) 12 months after a Default Termination (provided, that if, within 12 months
after such termination of the Merger Agreement, a Purchase Event or a
Preliminary Purchase Event shall occur, then notwithstanding anything to the
contrary contained herein (including clause (D) of this sentence), this Option
shall terminate 12 months after the first occurrence of such an event), and (D)
12 months after any termination of the Merger Agreement (other than a Default
Termination) following the occurrence of a Purchase Event or a Preliminary
Purchase Event; provided further, that any purchase of shares upon exercise of
the Option shall be subject to compliance with applicable law. The term "Holder"
shall mean the holder or holders of the Option from time to time, and which
initially is the Grantee. The rights set forth in Section 8 shall terminate when
the right to exercise the Option terminates (other than as a result of a
complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any Subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below). As used
herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.1 of the
Merger Agreement, the disposition, by sale, lease, exchange or otherwise,
of Assets of Issuer or any of its Subsidiaries representing in either
case 20% or more of the consolidated assets of Issuer and its
Subsidiaries, or (C) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 20% or more of the voting power of
Issuer or any of its Subsidiaries (any of the foregoing, an "Acquisition
Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act), other than a group of which Grantee or
any of its Subsidiaries of Grantee is a member, shall have been formed
which beneficially owns or has the right to acquire beneficial ownership
of, 20% or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 20% or more
of the then-
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outstanding shares of Issuer Common Stock (such an offer being referred
to herein as a "Tender Offer" or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such stockholders held
for the purpose of voting on the Merger Agreement, such meeting shall not
have been held or shall have been canceled prior to termination of the
Merger Agreement, or Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Grantee the recommendation of Issuer's
Board of Directors with respect to the Merger Agreement, in each case
after it shall have been publicly announced that any person (other than
Grantee or any Subsidiary of Grantee) shall have (A) made, or disclosed
an intention to make, a proposal to engage in an Acquisition Transaction,
(B) commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or (C) filed an
application (or given a notice), whether in draft or final form, under
any federal or state statute or regulation (including a notice filed
under the HSR Act) seeking the Consent to an Acquisition Transaction from
any federal or state governmental or regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 30 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"), subject to
possible extension in accordance with the next sentence. If prior Consent of any
governmental or regulatory agency or authority is required in connection with
such purchase, Issuer shall cooperate with Holder in the filing of the required
notice or application for such Consent and the obtaining of such Consent and the
Closing shall occur immediately following receipt of such Consents (and the
expiration of any mandatory waiting periods).
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 13(f)
hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option
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is exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF MAY 27,
1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the above legend shall be removed by
delivery of substitute certificate(s) without such legend if 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 and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act; (ii) the references in the above legend to the provisions of
this Agreement shall be removed by delivery of substitute certificate(s) without
such references if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that do not require the
retention of such reference, and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals 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 Issuer. This Agreement has been duly executed and
delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from
the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance,
upon exercise of the Option, the number of shares of Issuer Common Stock
necessary for Holder to exercise the Option, and Issuer will take all
necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may be
issued pursuant to Section 7 upon exercise of the Option.
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The shares of Issuer Common Stock to be issued upon due exercise of the
Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens,
claims, charges, and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
6. REPRESENTATIONS AND WARRANTS 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) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not
be, acquired with a view to the public distribution thereof and will
not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of
a stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 7(a)), the number of shares of Issuer Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with any
shares of Issuer Common Stock previously issued pursuant hereto, equals 19.9% of
the number of shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then-outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities
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of Issuer or any other person or cash or any other property or the outstanding
shares of Issuer Common Stock immediately prior to such merger shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company; or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that upon the consummation of any
such transaction and upon the terms and conditions set forth herein, Holder
shall receive for each Option Share with respect to which the Option has not
been exercised an amount of consideration in the form of and equal to the per
share amount of consideration that would be received by the holder of one share
of Issuer Common Stock less the Purchase Price (and, in the event of an election
or similar arrangement with respect to the type of consideration to be received
by the holders of Issuer Common Stock, subject to the foregoing, proper
provision shall be made so that Holder would have the same election or similar
rights as would the holder of the number of shares of Issuer Common Stock for
which the Option is then exercisable).
(c) Issuer shall not enter into any agreement of the type
described in Section 7(b) unless the other party thereto consents to provide the
funding required for Issuer to pay the Section 8 Repurchase Consideration.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the request
of Holder at any time commencing upon the first occurrence of a Repurchase Event
(as defined in Section 8(d)) and ending 12 months immediately thereafter, Issuer
shall repurchase from Holder the Option and all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired by Holder pursuant to the Option with
respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
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(b) If Holder exercises its rights under this Section 8, Issuer
shall, within 10 business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for Consent and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
Consent). If any governmental or regulatory agency or authority disapproves of
any part of Issuer's proposed repurchase pursuant to this Section 8, Issuer
shall promptly give notice of such fact to Holder. If any governmental or
regulatory agency or authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been repurchased. Holder
shall notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of termination
of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 8(d)(i), (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in subsections 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded (including the OTC
Bulletin Board) as reported by a recognized source chosen by Holder) during the
60 business days preceding the Request Date; provided, however, that in the
event of a sale of less than all of Issuer's Assets, the Applicable Price shall
be 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 an independent
nationally recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer (which determination shall be conclusive for all purposes
of this
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Agreement), divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be offered, paid
or received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in good
faith by an independent nationally recognized investment banking firm selected
by Holder and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any Subsidiary of Grantee) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act) or control or the right to acquire beneficial ownership or
control, or any "group" (as such term is defined under the Exchange Act) shall
have been formed which shall have acquired beneficial ownership or control or
has the right to acquire beneficial ownership or control, of 50% or more of the
then-outstanding shares of Issuer Common Stock, or (ii) any of the transactions
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) shall be consummated.
10. REGISTRATION RIGHTS.
(a) For a period of 24 months, following termination of the Merger
Agreement, Issuer shall, subject to the conditions of subparagraph (c) below, if
requested by any Holder, including Grantee and any permitted transferee
("Selling Holder"), as expeditiously as possible prepare and file a registration
statement under the Securities Laws if necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to Selling Holder upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by Holder in such request (it being understood and agreed
that any such sale or other disposition shall be effected on a widely
distributed basis so that, upon consummation thereof, no purchaser or transferee
shall beneficially own more than 5% of the shares of Issuer Common Stock then
outstanding), including, without limitation, a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its reasonable best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock under the Securities Laws
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registrations of resales;
provided, further, that such election pursuant to clause (i) may only be made
two times. If some but not all
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the shares of Issuer Common Stock, with respect to which Issuer shall have
received requests for registration pursuant to this subparagraph (b), shall be
excluded from such registration, Issuer shall make appropriate allocation of
shares to be registered among Selling Holders and any other person (other than
Issuer or any person exercising demand registration rights in connection with
such registration) who or which is permitted to register their shares of Issuer
Common Stock in connection with such registration pro rata in the proportion
that the number of shares requested to be registered by each Selling Holder
bears to the total number of shares requested to be registered by all persons
then desiring to have Issuer Common Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subparagraph (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer shall
in good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subparagraph (a) above:
(i) prior to the earliest of (a) termination of the Merger
Agreement pursuant to Section 10.1 thereof, (b) failure to obtain the
requisite stockholder approval pursuant to Section 9.1(a) of the Merger
Agreement, and (c) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the Selling
Holders concerned were afforded the opportunity to register such shares
under the Securities Laws and such shares were registered as requested;
and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 15% or more of the aggregate number of Option
Shares then outstanding.
In addition to the foregoing, Issuer shall not be required
to maintain the effectiveness of any registration statement after the expiration
of nine months from the effective date of such registration statement. Issuer
shall use all reasonable efforts to make any filings, and take all steps, under
all applicable state securities laws to the extent necessary to permit the sale
or other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
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(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), accounting expenses, legal expenses including the reasonable fees
and expenses of one counsel to the Selling Holders, printing expenses, expenses
of underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares, fees and
disbursements of counsel to the Selling Holders and any other expenses incurred
by such Selling Holders in connection with any such registration shall be borne
by such Selling Holders.
(e) In connection with any registration under subparagraph (a) or
(b) above, Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in any registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such expenses, losses,
claims, damages or liabilities of such indemnified party are caused by any
untrue statement or alleged untrue statement that was included by Issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon and in
conformity with, information furnished in writing to Issuer by such indemnified
party expressly for use therein, and Issuer and each officer, director and
controlling person of Issuer shall be indemnified by such Selling Holder, or by
such underwriter, as the case may be, for all such expenses, losses, claims,
damages and liabilities caused by any untrue, or alleged untrue, statement, that
was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to Issuer by such holder or such underwriter, as the case may be,
expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subparagraph (e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party shall
be entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such
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counsel (other than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees to pay the
same, (ii) the indemnifying party falls to assume the defense of such action
with counsel satisfactory to the indemnified party, or (iii) the indemnified
party has been advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to the interest of the
indemnified party, in which case the indemnifying party shall be entitled to
assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subparagraph (e)
is unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, all selling stockholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, all selling stockholders
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, that in no case shall any Selling Holder be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to subparagraph
(a) or (b) above, Issuer and each Selling Holder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (e).
(f) Issuer shall comply with all reporting requirements and will
do all such other things as may be necessary to permit the expeditious sale at
any time of any Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rules 144 and 144A. Issuer shall at its expense
provide Holder with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Laws, or required pursuant to any state securities laws or the rules
of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
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11. QUOTATION; LISTING. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any securities exchange or
any automated quotations system maintained by a self-regulatory organization,
Issuer, upon the request of Holder, will promptly file an application, if
required, to authorize for quotation or trading or listing the shares of Issuer
Common Stock or other securities to be acquired upon exercise of the Option on
the [Nasdaq National Market or any securities exchange or any automated
quotations system maintained by a self-regulatory organization and will use its
reasonable efforts to obtain approval, if required, of such quotation or listing
as soon as practicable.
12. DIVISION OF OPTION. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of 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 in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
13. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided in Section 11, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(B) WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 13(h)) any rights or
remedies hereunder. If any term, provision,
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covenant or restriction of this Agreement is held by a court of competent
jurisdiction or a federal or state governmental or regulatory agency or
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of 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 Option does
not permit Holder to acquire, or does not require Issuer to repurchase, the full
number of shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to allow
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(D) GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by reliable overnight delivery service to the parties at
the addresses set forth in the Merger Agreement(or at such other address for a
party as shall be specified by like notice).
(G) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(I) FURTHER ASSURANCES. In the event of any exercise of the Option
by Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(J) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in
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connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
(K) CONFIDENTIALITY AGREEMENT. The parties hereto agree that this
Agreement supersedes any provision of the Confidentiality Agreement that could
be interpreted to preclude the exercise of any rights or the fulfillment of any
obligations under this Agreement, and that none of the provisions included in
the Confidentiality Agreement will act to preclude Holder from exercising the
Option or exercising any other rights under this Agreement or act to preclude
Issuer from fulfilling any of its obligations under this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: PIONEER BANCSHARES, INC.
By: /s/ Ralph M. West By: /s/ Rodger B. Holley
----------------------- -------------------------------
Secretary President
[CORPORATE SEAL]
ATTEST: FIRST AMERICAN CORPORATION
By: /s/ Mary Neil Price By: /s/ Dale W. Polley
----------------------- -------------------------------
Secretary President
[CORPORATE SEAL]
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