<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
- -------------------------------------------------------------------------------
September 6, 1996
Date of Report (Date of earliest event reported): (August 29, 1996)
------------------------------
BOATMEN'S BANCSHARES, INC.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSOURI
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(State or other jurisdiction of incorporation)
1-3750 43-0672260
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
ONE BOATMEN'S PLAZA, 800 MARKET STREET, ST. LOUIS, MISSOURI 63101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 466-6000
Not Applicable
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(Former name or former address, if changed since last report)
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<PAGE> 2
ITEMS 1-4. Not applicable.
ITEM 5. OTHER EVENTS.
(a) On August 29, 1996, Boatmen's Bancshares, Inc., a Missouri
corporation (the "Company"), and NationsBank Corporation, a North Carolina
corporation ("NationsBank"), entered into an Agreement and Plan of Merger,
dated as of August 29, 1996 (the "Merger Agreement"). The Merger Agreement
provides for the merger ("Merger") of the Company with and into a wholly-owned
subsidiary of NationsBank, subject to, among other customary conditions, the
affirmative vote of two-thirds of the outstanding voting shares of the Company
and various regulatory approvals.
Pursuant to the Merger Agreement, (i) each outstanding share of
Boatmen's common stock, par value $1.00 per share (the "Company Common
Stock"), would be exchanged for 0.6525 share of NationsBank common stock (the
"NationsBank Common Stock;" the "Stock Consideration") or, at the election of
the holder, cash consideration with respect to all or a portion of such
holder's shares of Company Common Stock in a per share amount based upon 0.6525
times the average of the closing sales prices of NationsBank Common Stock as
reported on the New York Stock Exchange, Inc. ("NYSE") Composite Transactions
reporting system during a specified period shortly before the anticipated
effective date of the Merger (the "Cash Consideration"), and (ii) each
outstanding share of Boatmen's preferred stock of each series would be converted
into one share of new preferred stock of NationsBank of a new series with
substantially identical terms. The aggregate amount of cash available to pay
holders who elect the Cash Consideration (including cash paid to dissenting
shareholders) may not exceed 40% of the total consideration paid by NationsBank
to holders of the Company Common Stock in the Merger; to the extent elections
are made for Cash Consideration in excess of such amount, randomly selected
holders of the Company's Common Stock who make such election will receive the
Stock Consideration.
The foregoing description of the Merger Agreement is qualified in its
entirety by reference to the Merger Agreement, which is attached hereto as
Exhibit 2 and is incorporated herein by reference.
(b) In connection with the execution of the Merger Agreement, the
Company and NationsBank entered into a Stock Option Agreement, dated as of
August 29, 1996 (the "Option Agreement"), pursuant to which Boatmen's granted
NationsBank with the right to purchase up to 19.9% of the shares of Company
Common Stock at a price of $43.375 per share upon the occurrence of certain
events described therein relating generally to the acquisition of the Company
by a third party. The Option Agreement provides that in no event shall
NationsBank realize a total profit (as defined therein) in excess of $250
million from the option issued thereunder.
The foregoing description is qualified in its entirety by reference to
the Stock Option Agreement, a copy of which is attached hereto as
Exhibit 99(a) and is incorporated herein by reference.
(c) In connection with the execution of the Merger Agreement, the
Company amended its Rights Agreement, dated as of August 14, 1990, as amended as
of January 26, 1993 (as amended, the "Rights Agreement"), between the Company
and Boatmen's Trust Company, to provide that the Merger and the Option Agreement
with NationsBank would not trigger the exercisability of the rights issued under
the Rights Agreement.
The foregoing description is qualified in its entirety by reference to
Amendment No. 2 to the Rights Agreement, which is attached hereto as
Exhibit 99(b) and is incorporated herein by reference.
ITEM 6. Not applicable.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS
PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(a) - (b) Not applicable.
(c) Exhibits Required by Item 601 of Regulation S-K:
2 Agreement and Plan of Merger, by and between Boatmen's
Bancshares, Inc. and NationsBank Corporation, dated as of
August 29, 1996.
99(a) Stock Option Agreement, by and between Boatmen's Bancshares,
Inc. and NationsBank Corporation, dated as of August 29,
1996.
99(b) Amendment No. 2 to Rights Agreement, between Boatmen's
Bancshares, Inc. and Boatmen's Trust Company, dated as of
August 29, 1996.
99(c) Press release issued by NationsBank Corporation and
Boatmen's Bancshares, Inc. on August 30, 1996.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: September 6, 1996.
BOATMEN'S BANCSHARES, INC.
By: /s/ James W. Kienker
----------------------------------------
James W. Kienker
Executive Vice President and
Chief Financial Officer
<PAGE> 5
<TABLE>
EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
2 Agreement and Plan of Merger, by and between Boatmen's
Bancshares, Inc. and NationsBank Corporation, dated as
of August 29, 1996.
99(a) Stock Option Agreement, by and between Boatmen's
Bancshares, Inc. and NationsBank Corporation, dated as
of August 29, 1996.
99(b) Amendment No. 2 to Rights Agreement, between Boatmen's
Bancshares, Inc. and Boatmen's Trust Company, dated as
of August 29, 1996.
99(c) Press release issued by NationsBank Corporation and
Boatmen's Bancshares, Inc. on August 30, 1996.
</TABLE>
<PAGE> 1
EXHIBIT 2
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AGREEMENT AND PLAN OF MERGER
by and between
Boatmen's Bancshares, Inc.
and
NationsBank Corporation
Dated as of August 29, 1996
===============================================================================
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I CERTAIN DEFINITIONS 1
1.01. Certain Definitions 1
ARTICLE II THE MERGER; EFFECTS OF THE MERGER 7
2.01. The Merger 7
2.02. Effective Date And Effective Time 7
2.03. Amendment Of Parent Articles 7
2.04. Tax Consequences 8
ARTICLE III MERGER CONSIDERATION; EXCHANGE PROCEDURES 8
3.01. Merger Consideration 8
3.02. Optional Cash Election 9
3.03. Rights As Stockholders; Stock Transfers 11
3.04. Fractional Shares 11
3.05. Exchange Procedures 12
3.06. Dissenting Stockholders 13
3.07. Anti-Dilution Provisions 13
3.08. Treasury Shares 13
3.09. Options 13
ARTICLE IV ACTIONS PENDING MERGER 14
4.01. Ordinary Course 14
4.02. Capital Stock 15
4.03. Dividends, Etc 15
4.04. Compensation; Employment Agreements; Etc 15
4.05. Benefit Plans 16
4.06. Acquisitions And Dispositions 16
4.07. Amendments 16
4.08. Accounting Methods 16
4.09. Adverse Actions 16
4.10. Agreements 17
ARTICLE V REPRESENTATIONS AND WARRANTIES 17
5.01. Disclosure Schedules 17
5.02. Standard 17
5.03. Representations And Warranties 17
<PAGE> 3
ARTICLE VI COVENANTS 25
6.01. Best Efforts 25
6.02. Stockholder Approvals 25
6.03. Registration Statement 25
6.04. Press Releases 26
6.05. Access; Information 27
6.06. Acquisition Proposals 27
6.07. Affiliate Agreements 27
6.08. Takeover Laws 28
6.09. No Rights Triggered 28
6.10. Shares Listed 28
6.11. Regulatory Applications 28
6.12. Indemnification 29
6.13. Benefit Plans 30
6.14. Certain Director And Officer Positions 31
6.15. Notification Of Certain Matters 31
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER 31
7.01. Shareholder Vote 31
7.02. Regulatory Approvals 32
7.03. Third Party Consents 32
7.04. No Injunction, Etc. 32
7.05. Representations, Warranties And Covenants Of Parent 32
7.06. Representations, Warranties And Covenants Of The Company 32
7.07. Effective Registration Statement 33
7.08. Tax Opinion 33
7.09. Articles Of Amendment 33
7.10. NYSE Listing 33
7.11. Company Rights Agreement 34
ARTICLE VIII TERMINATION 34
8.01. Termination 34
8.02. Effect Of Termination And Abandonment 37
ARTICLE IX MISCELLANEOUS 37
9.01. Survival 37
ii
<PAGE> 4
9.02. Waiver; Amendment 37
9.03. Counterparts 38
9.04. Governing Law 38
9.05. Expenses 38
9.06. Confidentiality 38
9.07. Notices 38
9.08. Entire Understanding; No Third Party Beneficiaries 39
9.09. Headings 39
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER, dated as of August 29, 1996 (this
"Agreement"), by and between Boatmen's Bancshares, Inc. (the "Company") and
NationsBank Corporation ("Parent").
WITNESSETH:
WHEREAS, the Boards of Directors of the Company and Parent have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination
transaction provided for herein in which the Company will, subject to the
terms and conditions set forth herein, merge (the "Merger") with and into a
wholly-owned direct or indirect subsidiary of Parent ("Merger Sub"), so that
Merger Sub is the surviving corporation in the Merger;
WHEREAS, in connection with the execution of this Agreement, the
Company and Parent will enter into a stock option agreement (the "Stock
Option Agreement") in the form attached hereto as Exhibit A; and
---------
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to
be legally bound hereby, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01. Certain Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Affiliate" shall have the meaning set forth in Section 6.07(a).
"Agreement" shall have the meaning set forth in the recitals to
this Agreement.
"Articles of Amendment" shall have the meaning set forth in
Section 2.03.
"Average Closing Price" shall have the meaning set forth in
Section 8.01(e).
"Average Index Price" shall have the meaning set forth in Section
8.01(e).
"Cash Amount" shall have the meaning set forth in Section 3.02.
"Cash Election Shares" shall have the meaning set forth in
Section 3.02.
"Certificate of Merger" shall have the meaning set forth in
Section 2.01(b).
<PAGE> 6
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the recitals to
this Agreement.
"Company Common Stock" shall have the meaning set forth in
Section 3.01(a).
"Company Directors" shall have the meaning set forth in Section
6.14.
"Company Meeting" shall have the meaning set forth in
Section 6.02.
"Company Preferred Stock" shall mean Company Series A Preferred
Stock and Company Series B Preferred Stock.
"Company Right" shall have the meaning set forth in
Section 3.01(a).
"Company Rights Agreement" shall have the meaning set forth in
Section 3.01(a).
"Company Series A Preferred Stock" shall have the meaning set
forth in Section 3.01(b).
"Company Series B Preferred Stock" shall have the meaning set
forth in Section 3.01(b).
"Company Stock" shall mean Company Common Stock and Company
Preferred Stock.
"Company Stock Option" shall have the meaning set forth in
Section 3.09.
"Company Stock Option Plans" shall have the meaning set forth in
Section 3.09.
"Compensation and Benefit Plans" shall have the meaning set forth
in Section 5.03(l).
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated August 13, 1996, between the Company and Parent.
"Costs" shall have the meaning set forth in Section 6.12(a).
"Determination Date" shall have the meaning set forth in Section
8.01(e).
"Disclosure Schedule" shall have the meaning set forth in
Section 5.01.
"Dissenting Shares" shall have the meaning set forth in
Section 3.06.
"Effective Date" shall have the meaning set forth in
Section 2.02.
"Effective Time" shall have the meaning set forth in
Section 2.02.
2
<PAGE> 7
"Election Deadline" shall have the meaning set forth in Section
3.02.
"Election Form" shall have the meaning set forth in Section 3.02.
"Election Form Record Date" shall have the meaning set forth in
Section 3.02.
"Employee Benefit Plans" shall have the meaning set forth in
Section 6.13.
"Environmental Laws" shall have the meaning set forth in
Section 5.03(o).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in
Section 5.03(l).
"ESOP Preferred Stock" shall have the meaning set forth in
Section 4.03(1).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" shall have the meaning set forth in Section
3.02.
"Exchange Fund" shall have the meaning set forth in
Section 3.05(a).
"Exchange Ratio" shall have the meaning set forth in
Section 3.01(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
"GBCL" shall have the meaning set forth in Section 2.01(b).
"Indemnified Party" shall have the meaning set forth in
Section 6.12(a).
"Index Group" shall have the meaning set forth in
Section 8.01(e).
"Index Price" shall have the meaning set forth in
Section 8.01(e).
"Index Ratio" shall have the meaning set forth in
Section 8.01(e).
"Joint Proxy Statement" shall have the meaning set forth in
Section 6.03.
"Liens" shall mean any charge, mortgage, pledge, security
interest, restriction, claim, lien, or encumbrance.
"Mailing Date" shall have the meaning set forth in Section 3.02.
3
<PAGE> 8
"Material Adverse Effect" shall mean with respect to the Company or
Parent, respectively, any effect that (i) is material and adverse to the
financial position, results of operations or business of the Company and
its Subsidiaries taken as a whole, or Parent and its Subsidiaries taken as
a whole, respectively, or (ii) would materially impair the ability of the
Company or Parent, respectively, to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the Merger and the other transactions contemplated by this
Agreement; provided, however, that Material Adverse Effect shall not be
-------- --------
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks or savings
associations and their holding companies generally, (c) actions or
omissions of the Company, Parent or Merger Sub taken with the prior
written consent of the Company or Parent, as applicable, in contemplation
of the transactions contemplated hereby, (d) circumstances affecting banks
or savings associations and their holding companies generally, and (e) the
effects of the Merger and compliance with the provisions of this Agreement
on the operating performance of such party and its Subsidiaries.
"Meeting" shall have the meaning set forth in Section 6.02.
"Merger" shall have the meaning set forth in the recitals to this
Agreement and in Section 2.01(a).
"Merger Consideration" shall have the meaning set forth in
Section 2.01.
"Merger Sub" shall have the meaning set forth in the recitals to
this Agreement.
"Merger Sub Common Stock" shall have the meaning set forth in
Section 3.01(c).
"Multiemployer Plans" shall have the meaning set forth in
Section 5.03(l).
"NASDAQ" shall mean the Nasdaq Stock Market, Inc.'s National
Market.
"New Certificates" shall have the meaning set forth in
Section 3.05(a).
"No Election Shares" shall have the meaning set forth in Section
3.02.
"NYSE" shall mean the New York Stock Exchange.
"OCC" shall mean the Office of the Comptroller of the Currency.
"Old Certificates" shall have the meaning set forth in
Section 3.02.
"OTS" shall mean the Office of Thrift Supervision.
"Parent" shall have the meaning set forth in the recitals to this
Agreement.
4
<PAGE> 9
"Parent Common Stock" shall have the meaning set forth in
Section 3.01(a).
"Parent Meeting" shall have the meaning set forth in
Section 6.02.
"Parent Preferred Stock" shall mean Parent Series A Preferred
Stock and Parent Series B Preferred Stock.
"Parent Ratio" shall have the meaning set forth in
Section 8.01(e).
"Parent Series A Preferred Stock" shall have the meaning set
forth in Section 3.01(b).
"Parent Series B Preferred Stock" shall have the meaning set
forth in Section 3.01(b).
"Parent Stock" shall mean Parent Common Stock and Parent
Preferred Stock.
"Pension Plan" shall have the meaning set forth in
Section 5.03(l).
"Per Share Cash Consideration" shall have the meaning set forth
in Section 3.02.
"Per Share Stock Consideration" shall have the meaning set forth
in Section 3.01(a).
"Person" or "person" shall mean any individual, bank,
corporation, partnership, association, joint-stock company, business
trust or unincorporated organization.
"Plans" shall have the meaning set forth in Section 5.03(l).
"Previously Disclosed" by a party shall mean information set
forth in its Disclosure Schedule.
"Registration Statement" shall have the meaning set forth in
Section 6.03.
"Regulatory Authorities" shall have the meaning set forth in
Section 5.03(h).
"Rights" shall mean, with respect to any person, securities or
obligations convertible into or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or
commitments relating to, shares of capital stock of such person.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in
Section 5.03(g).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
5
<PAGE> 10
"Starting Date" shall have the meaning set forth in
Section 8.01(e).
"Starting Price" shall have the meaning set forth in
Section 8.01(e).
"Stock Designees" shall have the meaning set forth in Section
3.02.
"Stock Option Agreement" shall have the meaning set forth in the
recitals to this Agreement.
"Subsidiary" and "Significant Subsidiary" shall have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC; provided that
--------
for purposes of Article V, Merger Sub shall be deemed a Significant
Subsidiary of Parent.
"Surviving Corporation" shall have the meaning set forth in
Section 2.01(a).
"Takeover Laws" shall have the meaning set forth in
Section 5.03(n).
"Takeover Proposal" shall mean, with respect to any person, any
tender or exchange offer, proposal for a merger, consolidation or other
business combination involving the Company or any of its Significant
Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of,
the Company or any of its Significant Subsidiaries other than the
transactions contemplated or permitted by this Agreement.
"Tax Returns" shall have the meaning set forth in
Section 5.03(p).
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property
or other taxes, custom duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority.
"Treasury Shares" shall have the meaning set forth in
Section 3.01(a).
"Valuation Period" shall have the meaning set forth in Section
3.02.
"Valuation Period Market Value" shall have the meaning set forth
in Section 3.02.
6
<PAGE> 11
ARTICLE II
THE MERGER; EFFECTS OF THE MERGER
2.01. The Merger. (a) The Surviving Corporation. At the
-------------------------
Effective Time, the Company shall merge with and into Merger Sub (the
"Merger"), the separate corporate existence of the Company shall cease and
Merger Sub shall survive and continue to exist as a Missouri corporation
(Merger Sub, as the surviving corporation in the Merger, sometimes being
referred to herein as the "Surviving Corporation"). Parent may at any time
change the method of effecting the combination with the Company (including
without limitation the provisions of this Article II) if and to the extent it
deems such change to be desirable, including without limitation to provide
for a merger of the Company directly into Parent, in which Parent is the
surviving corporation; provided, however, that no such change shall (A) alter
-------- --------
or change the amount or kind of consideration to be issued to holders of
Company Stock as provided for in this Agreement (the "Merger Consideration"),
(B) adversely affect the tax treatment of the Company's stockholders as a
result of receiving the Merger Consideration or (C) materially impede or
delay consummation of the transactions contemplated by this Agreement.
(b) Effectiveness And Effects Of The Merger. Subject to the
---------------------------------------
satisfaction or waiver of the conditions set forth in Article VII in
accordance with this Agreement, the Merger shall become effective upon the
filing in the office of the Secretary of State of Missouri of a certificate
of merger (the "Certificate of Merger"), or such later date and time as may
be set forth in the Certificate of Merger, in accordance with Section 440 of
the General and Business Corporation Law of Missouri (the "GBCL"). The
Merger shall have the effects prescribed in Section 450 of the GBCL.
(c) Certificate Of Incorporation And By-Laws. The certificate
----------------------------------------
of incorporation and by-laws of the Surviving Corporation shall be those of
Merger Sub, as in effect immediately prior to the Effective Time.
2.02. Effective Date And Effective Time. Subject to the
satisfaction or waiver of the conditions as set forth in Article VII in
accordance with this Agreement, the parties shall cause the effective date of
the Merger (the "Effective Date") to occur on (1) the third business day to
occur after the last of the conditions set forth in Sections 7.01, 7.02, 7.03
and 7.10 shall have been satisfied or waived in accordance with the terms of
this Agreement or (2) such other date to which the parties may agree in
writing. The time on the Effective Date when the Merger shall become
effective is referred to as the "Effective Time."
2.03. Amendment Of Parent Articles. At the Effective Time, the
articles of incorporation of Parent shall be amended to fix the preferences,
limitations and relative rights of the series of Parent Preferred Stock,
shares of which are to be issued in the Merger pursuant to Section 3.01(b).
At or prior to the Effective Time, Parent shall deliver to the Secretary of
State of North Carolina for filing, pursuant to Section 6-02 of the North
Carolina Business Corporation Act, articles of amendment, in a form mutually
acceptable to Parent and the Company, giving effect to the foregoing and
containing any other provisions with respect to the aforementioned series of
Parent Preferred Stock necessary to permit consummation of the Merger in
accordance with the terms of this Agreement (the "Articles of Amendment").
7
<PAGE> 12
2.04. Tax Consequences. It is intended that the Merger shall
qualify as a reorganization under Section 368(a) of the Code.
ARTICLE III
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.01. Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any party or stockholder:
(a) Outstanding Company Common Stock. Each share (excluding (i)
--------------------------------
shares held by the Company or any of its Subsidiaries or by Parent or any of
its Subsidiaries, in each case other than in a fiduciary capacity or as a
result of debts previously contracted ("Treasury Shares") and (ii) Dissenting
Shares) of the common stock, par value $1.00 per share, of the Company,
including each attached right (a "Company Right") issued pursuant to the
Rights Agreement, dated August 14, 1990, as amended (the "Company Rights
Agreement"), between the Company and the Rights Agent named therein (the
"Company Common Stock"), issued and outstanding immediately prior to the
Effective Time shall become and be converted into the right to receive 0.6525
share (subject to adjustment as set forth herein, the "Exchange Ratio") of
common stock (the "Parent Common Stock") of Parent (the "Per Share Stock
Consideration"), subject to the election rights set forth in Section 3.02.
(b) Outstanding Company Preferred Stock. (i) Each share of the
-----------------------------------
Company's Cumulative Convertible Preferred Stock, Series A, stated value $100
per share, liquidation preference $400 per share ("Company Series A Preferred
Stock"), excluding any Treasury Shares, issued and outstanding immediately
prior to the Effective Time, shall become and be converted into the right to
receive one share of newly created preferred stock of Parent ("Parent Series
A Preferred Stock") having terms (to be set forth in the Articles of
Amendment) substantially identical to those of the Company Series A Preferred
Stock.
(ii) Each share of the Company's 7% Cumulative Redeemable
Preferred Stock, Series B, stated value $100 per share, liquidation
preference $100 per share ("Company Series B Preferred Stock"), excluding any
Treasury Shares, issued and outstanding immediately prior to the Effective
Time, shall become and be converted into the right to receive one share of
newly created preferred stock of Parent ("Parent Series B Preferred Stock")
having terms (to be set forth in the Articles of Amendment) substantially
identical to those of the Company Series B Preferred Stock.
(iii) At the Effective Time, any deposit agreements pursuant to
which shares of Company Preferred Stock are held subject to depositary
receipts shall automatically, and without further action on the part of
Parent or the Surviving Corporation, be assumed by Parent.
(c) Outstanding Merger Sub Common Stock. Each share of the
-----------------------------------
common stock of Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the
8
<PAGE> 13
Effective Time shall be unchanged and shall remain issued and outstanding as
common stock of the Surviving Corporation.
Section 3.02. Optional Cash Election. Holders of the Company
Common Stock shall be provided with an opportunity to elect to receive cash
consideration in lieu of receiving Parent Common Stock in the Merger, in
accordance with the election procedures set forth below in this Section 3.02.
Holders who are to receive cash in lieu of exchanging their shares of Company
Common Stock for Parent Common Stock as specified below shall receive an
amount in cash (the "Per Share Cash Consideration") in respect of each share
of Company Common Stock that is so converted equal to the Exchange Ratio
times the Valuation Period Market Value. The aggregate amount of cash that
shall be issued in the Merger to satisfy such elections shall not exceed 40%
of the aggregate consideration paid in exchange for shares of Company Common
Stock in the Merger (the "Cash Amount"). For purposes of this Section 3.02:
(i) "Valuation Period Market Value" shall mean the average of
the closing sales prices for Parent Common Stock as reported on the NYSE
Composite Transactions reporting system (as reported in The Wall Street
---------------
Journal or, in the absence thereof, by another authoritative source)
-------
during the Valuation Period; and
(ii) "Valuation Period" shall mean the ten (10) consecutive trading
day period during which the shares of Parent Common Stock are traded on
the NYSE ending on the tenth calendar day immediately prior to the
anticipated Effective Time.
An election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing Company Common
Stock ("Old Certificates") shall pass, only upon proper delivery of such Old
Certificates to an exchange agent designated by Parent (the "Exchange
Agent")) in such form as Parent and the Company shall mutually agree
("Election Form") shall be mailed 25 days prior to the anticipated Effective
Time or on such other date as the Company and Parent shall mutually agree
("Mailing Date") to each holder of record of Company Common Stock as of five
business days prior to the Mailing Date ("Election Form Record Date").
Each Election Form shall permit a holder (or the beneficial owner
through appropriate and customary documentation and instructions) of Company
Common Stock to elect to receive cash with respect to all or a portion of
such holder's Company Common Stock (shares as to which the election is made
being "Cash Election Shares").
Any shares of Company Common Stock with respect to which the
holder (or the beneficial owner, as the case may be) shall not have submitted
to the Exchange Agent an effective, properly completed Election Form on or
before 5:00 p.m. on the 20th day following the Mailing Date (or such other
time and date as Parent and the Company may mutually agree) (the "Election
Deadline") shall be converted into Parent Common Stock at the Exchange Ratio
(such shares being "No Election Shares").
9
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Parent shall make available one or more Election Forms as may be
reasonably requested by all persons who become holders (or beneficial owners)
of Company Common Stock between the Election Form Record Date and the close
of business on the business day prior to the Election Deadline, and the
Company shall provide to the Exchange Agent all information reasonably
necessary for it to perform as specified herein.
Any such election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election
Form by the Election Deadline. An Election Form shall be deemed properly
completed only if accompanied by one or more certificates (or customary
affidavits and indemnification regarding the loss or destruction of such
certificates or the guaranteed delivery of such certificates) representing
all shares of the Company Common Stock covered by such Election Form,
together with duly executed transmittal materials included in the Election
Form. Any Election Form may be revoked or changed by the person submitting
such Election Form at or prior to the Election Deadline. In the event an
Election Form is revoked prior to the Election Deadline, the shares of
Company Common Stock represented by such Election Form shall become No
Election Shares and Parent shall cause the certificates representing Company
Common Stock to be promptly returned without charge to the person submitting
the Election Form upon written request to that effect from the person who
submitted the Election Form. Subject to the terms of this Agreement and of
the Election Form, the Exchange Agent shall have reasonable discretion to
determine whether any election, revocation or change has been properly or
timely made and to disregard immaterial defects in the Election Forms, and
any good faith decisions of the Exchange Agent regarding such matters shall
be binding and conclusive. Neither Parent nor the Exchange Agent shall be
under any obligation to notify any person of any defect in an Election Form.
Any Dissenting Shares (as defined below) shall be treated as Cash Election
Shares for the purposes of the determinations set forth below (but shall not
be converted into the right to receive the Per Share Cash Consideration and
shall instead be treated as set forth in Section 3.06).
Within five business days after the Election Deadline, unless the
Effective Time has not yet occurred, in which case as soon thereafter as
practicable, Parent shall cause the Exchange Agent to effect the allocation
among the holders of Company Common Stock in accordance with the Election
Forms as follows:
(i) Cash Elections Less Than or Equal To the Cash Amount. If
----------------------------------------------------
the amount of cash that would be issued upon conversion in the Merger
of the Cash Election Shares is less than or equal to the Cash Amount,
then:
(1) all Cash Election Shares shall be converted into the right to
receive the Per Share Cash Consideration, and
(2) the No Election Shares shall be converted into the right to
receive the Per Share Stock Consideration.
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(ii) Cash Elections More Than the Cash Amount. If the amount of
----------------------------------------
cash that would be issued upon the conversion of the Cash Election Shares
is greater than the Cash Amount, then:
(1) all No Election Shares shall be converted into the right to
receive the Per Share Stock Consideration,
(2) the Exchange Agent shall select from among the holders of Cash
Election Shares (other than Dissenting Shares), by random selection
(as described below), a sufficient number of such holders ("Stock
Designees") such that the amount of cash that will be issued in the
Merger equals as closely as practicable the Cash Amount, and all
shares held by the Stock Designees shall be converted into the right
to receive the Per Share Stock Consideration, and
(3) the Cash Election Shares not held by Stock Designees shall
be converted into the right to receive the Per Share Cash
Consideration.
The random selection process to be used by the Exchange Agent
shall consist of such processes as shall be mutually determined by Parent and
the Company.
3.03. Rights As Stockholders; Stock Transfers. At the Effective
Time, holders of Company Stock shall cease to be, and shall have no rights
as, stockholders of the Company, other than to receive any dividend or other
distribution with respect to such Company Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock
transfer books of the Company or the Surviving Corporation of shares of
Company Stock.
3.04. Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of Parent Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, Parent shall pay to each holder of Company Common Stock who
would otherwise be entitled to a fractional share of Parent Common Stock
(after taking into account all Old Certificates delivered by such holder) an
amount in cash (without interest) determined by multiplying such fraction by
the average of the last sale prices of Parent Common Stock, as reported by
the NYSE Composite Transactions reporting system (as reported in The Wall
--------
Street Journal or, if not reported therein, in another authoritative source),
- --------------
for the five NYSE trading days immediately preceding the Effective Date.
3.05. Exchange Procedures. (a) At or prior to the Effective
Time, Parent shall deposit, or shall cause to be deposited, with the Exchange
Agent, for the benefit of the holders of Old Certificates (which for purposes
of this Section 3.05 shall include certificates formerly representing shares
of Company Preferred Stock), for exchange in accordance with this
Article III, certificates representing the shares of Parent Stock ("New
Certificates") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with respect
thereto (without any interest thereon), being hereinafter referred to as the
"Exchange Fund") to be paid pursuant to this Article III in exchange for
outstanding shares of Company Stock.
11
<PAGE> 16
(b) As promptly as practicable after the Effective Date, Parent
shall send or cause to be sent to each former holder of record of shares
(other than Cash Election Shares, Treasury Shares or Dissenting Shares) of
Company Stock immediately prior to the Effective Time transmittal materials
for use in exchanging such stockholder's Old Certificates for the
consideration set forth in this Article III. Parent shall cause the New
Certificates into which shares of a stockholder's Company Stock are converted
on the Effective Date and/or any check in respect of the Per Share Cash
Consideration and any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered
to such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Company Stock (or indemnity reasonably
satisfactory to Parent and the Exchange Agent, if any of such certificates
are lost, stolen or destroyed) owned by such stockholder. No interest will
be paid on any such cash to be paid pursuant to this Article III upon such
delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to any former holder of Company Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to Parent
Stock with a record date occurring after the Effective Time shall be paid to
the holder of any unsurrendered Old Certificate representing shares of
Company Stock converted in the Merger into shares of such Parent Stock until
the holder thereof shall surrender such Old Certificate in accordance with
this Article III. After the surrender of an Old Certificate in accordance
with this Article III, the record holder thereof shall be entitled to receive
any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of Parent Stock
represented by such Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of the Company for twelve months after the Effective Time
shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article III shall thereafter look only to
Parent for payment of the shares of Parent Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on the Parent Stock
deliverable in respect of each share of Company Stock such stockholder holds
as determined pursuant to this Agreement, in each case, without any interest
thereon.
3.06. Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, shares of Company Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who did not vote in favor of the adoption of this Agreement, who
are entitled to demand the fair value of such shares of Company Stock under
Section 455 of the GBCL, and who comply with all of the relevant provisions
of such Section (the "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive Parent Common Stock or Parent Preferred
Stock, as applicable (unless and until such holders shall have failed to
perfect or shall have effectively withdrawn or lost their dissenters' rights
under the GBCL), but shall instead be entitled to all applicable dissenters'
rights as are prescribed by the GBCL. If any such holder shall have failed
to perfect or shall have effectively withdrawn or lost such dissenters'
rights, such
12
<PAGE> 17
holder's shares of Company Stock shall thereupon be converted into
and become exchangeable for the right to receive, as of the Effective
Time, Parent Common Stock or Parent Preferred Stock, as applicable, without
any interest thereon. The Company shall give Parent (i) prompt notice of any
written demands for payment for any Company Stock under Section 455 of the
GBCL, attempted withdrawals of such demands, and any other instruments served
pursuant to the GBCL and received by the Company relating to dissenters'
rights, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to the exercise of dissenters' rights under the
GBCL. The Company shall not, except with the prior written consent of the
Parent, voluntarily make any payment with respect to any demands for payment
for Company Stock under Section 455 of the GBCL, offer to settle or settle
any such demands or approve any withdrawal of any such demands.
3.07. Anti-Dilution Provisions. In the event Parent changes (or
establishes a record date for changing) the number of shares of Parent Common
Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding Parent Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
3.08. Treasury Shares. Each of the shares of Company Stock held
as Treasury Shares immediately prior to the Effective Time shall be canceled
and retired at the Effective Time and no consideration shall be issued in
exchange therefor.
3.09. Options. At the Effective Time, all employee and director
stock options to purchase shares of Company Common Stock (each, a "Company
Stock Option"), which are then outstanding and unexercised, shall cease to
represent a right to acquire shares of Company Stock and shall be converted
automatically into options to purchase shares of Parent Common Stock, and
Parent shall assume each such Company Stock Option subject to the terms of
any of the stock option plans listed under "Stock Option Plans" in Exhibit
5.03(l)(i) of the Company's Disclosure Schedule (collectively, the "Company
Stock Option Plans"), and the agreements evidencing grants thereunder,
including but not limited to the accelerated vesting of such options which
shall occur in connection with and by virtue of the Merger as and to the
extent required by such plans and agreements; provided, however, that from
-------- --------
and after the Effective Time, (i) the number of shares of Parent Common Stock
purchasable upon exercise of such Company Stock Option shall be equal to the
number of shares of Company Common Stock that were purchasable under such
Company Stock Option immediately prior to the Effective Time multiplied by
the Exchange Ratio, and rounding to the nearest whole share, and (ii) the per
share exercise price under each such Company Stock Option shall be adjusted
by dividing the per share exercise price of each such Company Stock Option by
the Exchange Ratio, and rounding down to the nearest cent. The terms of each
Company Stock Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction with respect to Parent Common
Stock on or subsequent to the Effective Date. Notwithstanding the foregoing,
each Company Stock Option which is intended to be an "incentive stock option"
(as defined in Section 422 of the Code) shall be adjusted in accordance with
the requirements of Section 424 of the Code. Accordingly, with respect to
any incentive stock options, fractional shares shall
13
<PAGE> 18
be rounded down to the nearest whole number of shares and where necessary the
per share exercise price shall be rounded down to the nearest cent.
ARTICLE IV
ACTIONS PENDING MERGER
From the date hereof until the Effective Time, except as
expressly contemplated by this Agreement, (i) without the prior written
consent of Parent (which consent shall not be unreasonably withheld or
delayed) the Company will not, and will cause each of its Subsidiaries not
to, and (ii) without the prior written consent of the Company (which consent
shall not be unreasonably withheld or delayed) Parent will not, and will
cause each of its Subsidiaries not to:
4.01. Ordinary Course. Conduct the business of it and its
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact their
business organizations and assets and maintain their rights, franchises and
existing relations with customers, suppliers, employees and business
associates, or take any action that would (i) adversely affect the ability of
any party to obtain any necessary approvals of any Regulatory Authorities
required for the transactions contemplated hereby without the imposition of a
condition or restriction of the type referred to in the second sentence of
Section 7.02 or (ii) adversely affect its ability to perform any of its
material obligations under this Agreement.
4.02. Capital Stock. In the case of the Company, other than (i)
pursuant to Rights or other stock options Previously Disclosed in its
Disclosure Schedule and currently outstanding as of the date hereof, or (ii)
upon conversion of shares of Company Preferred Stock pursuant to the terms
thereof, (x) issue, sell or otherwise permit to become outstanding, or
authorize the creation of, any additional shares of capital stock, any stock
appreciation rights or any Rights, (y) enter into any agreement with respect
to the foregoing, or (z) permit any additional shares of capital stock to
become subject to new grants of employee stock options, stock appreciation
rights, or similar stock-based employee rights.
4.03. Dividends, Etc. (1) Make, declare or pay any dividend
(other than (i) in the case of the Company, (A) quarterly cash dividends on
Company Common Stock in an amount not to exceed the greater of (I) $0.42 per
share and (II) the product of the Exchange Ratio multiplied by Parent's
then-effective quarterly dividend, dividends payable on Company Preferred
Stock at a rate not exceeding the rate provided for in the terms thereof, and
(B) dividends from greater than 95%-owned Subsidiaries to the Company or another
greater than 95%-owned Subsidiary of the Company, as applicable, and (ii) in
the case of Parent, quarterly cash dividends on Parent Common Stock not in
excess of $0.66 per share, semi-annual cash dividends on the ESOP Convertible
Preferred Stock, Series C (the "ESOP Preferred Stock"), not in excess of
$3.30 per share and cash dividends on any other outstanding issues of
preferred stock in accordance with the terms thereof and dividends from
Subsidiaries to Parent or another Subsidiary of Parent, as applicable) on or
in respect of, or declare or make any distribution on any shares of its
capital stock, or (2) other than (A) as Previously Disclosed in its
Disclosure Schedule, (B) in the case of the Company, pursuant to the terms of
the Company Preferred
14
<PAGE> 19
Stock, (C) in the ordinary course pursuant to employee benefit plans, directly
or indirectly combine, redeem, reclassify, purchase or otherwise acquire, any
shares of its capital stock, or (D) in the case of Parent, repurchases of Parent
Stock in the ordinary course. After the date of this Agreement, each of Parent
and the Company shall coordinate with the other the declaration of any dividends
in respect of Parent Common Stock and Company Common Stock and the record dates
and payment dates relating thereto, it being the intention of the parties hereto
that holders of Parent Common Stock or Company Common Stock shall not receive
two dividends, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Parent Common Stock and/or Company Common Stock
and any shares of Parent Common Stock any such holder receives in exchange
therefor in the Merger.
4.04. Compensation; Employment Agreements; Etc. In the case of
the Company and its Subsidiaries, enter into or amend any written employment,
severance or similar agreements or arrangements with any of its directors,
officers or employees, or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments), except for (i)
normal individual increases in compensation to employees in the ordinary
course of business consistent with past practice or (ii) other changes as are
provided for herein or as may be required by law or to satisfy contractual
obligations existing as of the date hereof or additional grants of awards to
newly hired employees consistent with past practice or such changes that,
either individually or in the aggregate, would not reasonably be expected to
result in a material liability to the Company or its Subsidiaries or such
changes that, either individually or in the aggregate, would not reasonably
be expected to result in a material liability to the Company or its
Subsidiaries.
4.05. Benefit Plans. In the case of the Company and its
Subsidiaries, enter into or amend (except as may be required by applicable
law, to satisfy contractual obligations existing as of the date hereof or
amendments which, either individually or in the aggregate, would not
reasonably be expected to result in a material liability to the Company or
its Subsidiaries) any pension, retirement, stock option, stock purchase,
savings, profit sharing, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any of its
directors, officers or other employees, including without limitation taking
any action that accelerates the vesting or exercise of any benefits payable
thereunder.
4.06. Acquisitions And Dispositions. In the case of the
Company, except as Previously Disclosed in its Disclosure Schedule, dispose
of or discontinue any portion of its assets, business or properties, which is
material to it and its Subsidiaries taken as a whole, or acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith, in
each case in the ordinary and usual course of business consistent with past
practice) all or any portion of, the business or property of any other entity
which is material to it and its Subsidiaries taken as a whole. Parent will
not, and will cause its Subsidiaries not to, make any acquisition or take any
other action which would materially adversely affect its ability to
consummate the transactions contemplated by this Agreement.
15
<PAGE> 20
4.07. Amendments. In the case of the Company, amend its
Articles of Incorporation or By-laws or amend or waive any rights under the
Company Rights Agreement.
4.08. Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
generally accepted accounting principles.
4.09. Adverse Actions. (1) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code; or (2) knowingly take any action that is intended or is reasonably
likely to result in (x) any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect at any
time prior to the Effective Time, (y) any of the conditions to the Merger set
forth in Article VII not being satisfied or (z) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law.
4.10. Agreements. Agree or commit to do anything prohibited by
Sections 4.01 through 4.09.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof,
Parent has delivered to the Company and the Company has delivered to Parent a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate in relation
to any or all of its representations and warranties; provided, that (i) no
--------
such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence is not reasonably
likely to result in the related representation or warranty being deemed
untrue or incorrect under the standard established by Section 5.02, and (ii)
the mere inclusion of an item in a Disclosure Schedule shall not be deemed an
admission by a party that such item represents a material exception or fact,
event or circumstance or that such item is reasonably likely to result in a
Material Adverse Effect.
5.02. Standard. No representation or warranty of Parent or the
Company contained in Section 5.03 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty,
as a consequence of the existence of any fact, circumstance or event unless
such fact, circumstance or event, individually or taken together with all
other facts, circumstances or events inconsistent with any paragraph of
Section 5.03 has had or is expected to have a Material Adverse Effect.
16
<PAGE> 21
5.03. Representations And Warranties. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in its Disclosure Schedule, the
Company hereby represents and warrants to Parent, and Parent hereby
represents and warrants to the Company, to the extent applicable, in each
case with respect to itself and its Subsidiaries, as follows:
(a) Organization, Standing and Authority. Such party is a
------------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Such party is duly qualified
to do business and is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified. It has in effect all
federal, state, local, and foreign governmental authorizations necessary for
it to own or lease its properties and assets and to carry on its business as
it is now conducted.
(b) Shares. (i) As of the date hereof, the authorized capital
------
stock of the Company consists solely of 250,000,000 shares of Company Common
Stock, of which, as of July 31, 1996, 156,741,130 shares were outstanding,
10,300,000 shares of Company Preferred Stock, of which 250,000 shares have
been designated as Company Series A Preferred Stock, of which, as of July 31,
1996, 247,729 shares were outstanding, and 35,045 shares have been designated
as Company Series B Preferred Stock, of which, as of July 31, 1996, 9,487
shares were outstanding. As of the date hereof, the authorized capital stock
of Parent consists solely of 800,000,000 shares of Parent Common Stock, of
which, as of July 31, 1996, 291,169,674 shares were outstanding, and
45,000,000 shares of Parent Preferred Stock, of which, as of July 31, 1996,
2,445,143 shares of ESOP Preferred Stock were outstanding. As of July 31,
1996, 1,659,226 shares of Company Common Stock and no shares of Parent Common
Stock were held in treasury. The outstanding shares of such party's capital
stock are validly issued and outstanding, fully paid and nonassessable, and
subject to no preemptive rights (and were not issued in violation of any
preemptive rights). As of the date hereof, there are no shares of such
party's capital stock authorized and reserved for issuance, such party does
not have any Rights issued or outstanding with respect to its capital stock,
and such party does not have any commitment to authorize, issue or sell any
such shares or Rights, except pursuant to this Agreement and the Company
Rights Agreement, as the case may be. Since July 31, 1996, the Company has
issued no shares of its capital stock or rights in respect thereof or
reserved any shares for such purposes except pursuant to plans or commitments
Previously Disclosed in its Disclosure Schedule.
(ii) The number of shares of Company Common Stock which are
issuable and reserved for issuance upon exercise of Company Stock Options as
of the date hereof are Previously Disclosed in the Company's Disclosure
Schedule, and the number of shares of Parent Common Stock which are issuable
and reserved for issuance upon exercise of any employee or director stock
options to purchase shares of Parent Common Stock as of the date hereof are
Previously Disclosed in Parent's Disclosure Schedule.
(iii) In the case of the representations and warranties of
Parent: (i) the outstanding shares of Merger Sub Common Stock are validly
issued and outstanding, fully paid and nonassessable, and subject to no
preemptive rights; and (ii) the shares of Parent Stock to be issued in
exchange for shares of Company Stock in the Merger, when issued in
accordance with
17
<PAGE> 22
the terms of this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable.
(c) Subsidiaries. (i) (A) Such party has Previously Disclosed
------------
in its Disclosure Schedule a list of all of its Subsidiaries together with
the jurisdiction of organization of each such Subsidiary, (B) it owns,
directly or indirectly at least 99% of the issued and outstanding shares of
each of its Significant Subsidiaries, (C) no equity securities of any of its
Significant Subsidiaries are or may become required to be issued (other than
to it or a Subsidiary of it) by reason of any Rights, (D) there are no
contracts, commitments, understandings or arrangements by which any of such
Significant Subsidiaries is or may be bound to sell or otherwise transfer any
shares of the capital stock of any such Significant Subsidiaries (other than
to it or a Subsidiary of it), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to dispose
of such shares (other than to it or a Subsidiary of it), and (F) all of the
shares of capital stock of each such Significant Subsidiary held by it or its
Subsidiaries are fully paid and (except pursuant to 12 U.S.C. Sec. 55 or
equivalent state statutes in the case of bank Subsidiaries) nonassessable and
are owned by it or its Subsidiaries free and clear of any Liens.
(ii) In the case of the representations and warranties of the
Company, the Company does not own (other than in a bona fide fiduciary
capacity or in satisfaction of a debt previously contracted) beneficially,
directly or indirectly, any shares of any equity securities or similar
interests of any person, or any interest in a partnership or joint venture of
any kind.
(iii) Each of such party's Significant Subsidiaries has been
duly organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and in
good standing in the jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so qualified. Each of such
Significant Subsidiaries has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties
and assets and to carry on its business as it is now conducted.
(d) Corporate Power. Such party and each of its Significant
---------------
Subsidiaries has the corporate power and authority to carry on its business
as it is now being conducted and to own all its properties and assets; and it
has (and, in the case of the representations and warranties of Parent, Merger
Sub will have as of the Effective Time) the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(e) Corporate Authority. Subject to receipt of the requisite
-------------------
approval by the holders of two-thirds of the outstanding Company Common Stock
(in the case of the Company) and by the holders of a majority of a quorum of
Parent Common Stock (in the case of Parent), this Agreement and the
transactions contemplated hereby have been authorized by all necessary
corporate action of it, and this Agreement is a legal, valid and binding
agreement of it, enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar
18
<PAGE> 23
laws of general applicability relating to or affecting creditors' rights or by
general equity principles).
(f) No Defaults. Subject to receipt of the regulatory
-----------
approvals, and expiration of the waiting periods, referred to in Section 7.02
and the required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by it do not and will not (i) constitute
a breach or violation of, or a default under, any law, rule or regulation or
any judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of it or of any of its Significant Subsidiaries or to
which it or any of its Significant Subsidiaries or properties is subject or
bound, (ii) constitute a breach or violation of, or a default under, its
articles or certificate of incorporation or by-laws, or (iii) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license agreement, indenture or instrument.
(g) Financial Reports And SEC Documents. Its Annual Report on
-----------------------------------
Form 10-K for the fiscal year ended December 31, 1995, and all other reports,
registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its Subsidiaries subsequent
to December 31, 1995 under the Securities Act, or under Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, in the form filed, or to be filed
(collectively, its "SEC Documents"), with the SEC (i) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (ii) did not
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 to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents and will fairly present the
financial position of the entity or entities to which it relates as of its
date, and each of the statements of income and changes in stockholders'
equity and cash flows or equivalent statements in such SEC Documents
(including any related notes and schedules thereto) fairly presents and will
fairly present the results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of the entity or entities to which
it relates for the periods to which they relate, in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except in each case as may be noted therein, subject to
normal year-end audit adjustments in the case of unaudited statements.
(h) Litigation; Regulatory Action. (i) No litigation, claim or
-----------------------------
other proceeding before any court or governmental agency is pending against
it or any of its Subsidiaries and, to the best of its knowledge, no such
litigation, claim or other proceeding has been threatened.
(ii) Neither it nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any federal or state governmental agency or authority charged
with the supervision or regulation of financial institutions or issuers of
securities or engaged in the insurance of deposits (including, without
limitation, the OCC, the
19
<PAGE> 24
Federal Reserve Board, the FDIC and the OTS) or the supervision or regulation of
it or any of its Subsidiaries (collectively, the "Regulatory Authorities").
(iii) Neither it nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter or similar submission.
(i) Compliance With Laws. It and each of its Subsidiaries:
--------------------
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including, without limitation, the
Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable
fair lending laws and other laws relating to discriminatory business
practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations with,
all Regulatory Authorities that are required in order to permit them to
conduct their businesses substantially as presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in
full force and effect and, to the best of its knowledge, no suspension or
cancellation of any of them is threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Regulatory Authority (A) asserting that it or any of
its Subsidiaries is not in compliance with any of the statutes, regulations,
or ordinances which such Regulatory Authority enforces, (B) threatening to
revoke any license, franchise, permit, or governmental authorization, (C)
threatening or contemplating revocation or limitation of, or which would have
the effect of revoking or limiting, federal deposit insurance (nor, to its
knowledge, do any grounds for any of the foregoing exist) or (D) failing to
approve any proposed acquisition, or stating its intention not to approve
acquisitions proposed to be effected by it within a certain time period or
indefinitely.
(j) Defaults. Neither it nor any of its Subsidiaries is in
--------
default under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives benefits,
and there has not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default.
(k) No Brokers. No action has been taken by it that would give
----------
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding, in the case of the Company, a fee
to be paid to Goldman, Sachs & Co., and, in the case of Parent, a fee to be
paid to Stephens, Inc., which, in each case, has been heretofore disclosed to
the other party.
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(l) Employee Benefit Plans. (i) Such Party's Disclosure
----------------------
Schedule contains a complete list of all written bonus, vacation, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock and stock
option plans, all employment or severance contracts, all medical, dental,
disability, health and life insurance plans, all other employee benefit and
fringe benefit plans, contracts or arrangements and any applicable "change of
control" or similar provisions in any plan, contract or arrangement
maintained or contributed to by it or any of its Subsidiaries for the benefit
of officers, former officers, employees, former employees, directors, former
directors, or the beneficiaries of any of the foregoing (collectively,
"Compensation and Benefit Plans").
(ii) True and complete copies of its Compensation and Benefit
Plans, including, but not limited to, any trust instruments and/or insurance
contracts, if any, forming a part thereof, and all amendments thereto have
been supplied to the other party.
(iii) Each of its Compensation and Benefit Plans has been
administered in all material respects in accordance with the terms thereof.
All "employee benefit plans" within the meaning of Section 3(3) of ERISA,
other than "multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"), covering employees or former employees of it and its
Subsidiaries (its "Plans"), to the extent subject to ERISA, are in material
compliance with ERISA, the Code, the Age Discrimination in Employment Act and
other applicable laws. Each Compensation and Benefit Plan of it or its
Subsidiaries which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("Pension Plan") and which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and it is not aware
of any circumstances reasonably likely to result in the revocation or denial
of any such favorable determination letter. There is no pending or, to its
knowledge, threatened litigation or governmental audit, examination or
investigation relating to the Plans.
(iv) No material liability under Title IV of ERISA has been or
is expected to be incurred by it or any of its Subsidiaries with respect to
any ongoing, frozen or terminated "single-employer plan", within the meaning
of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or the single-employer plan of any entity which is considered one
employer with it under Section 4001(a)(15) of ERISA or Section 414 of the
Code (an "ERISA Affiliate"). Neither it nor any of its Subsidiaries
presently contributes to a Multiemployer Plan, nor have they contributed to
such a plan within the past five calendar years. 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 Pension Plan of it or any of its Subsidiaries or by any ERISA Affiliate
within the past 12 months.
(v) All contributions, premiums and payments required to be made
under the terms of any Compensation and Benefit Plan of it or any of its
Subsidiaries have been made. Neither any Pension Plan of it or any of its
Subsidiaries nor any single-employer plan of an ERISA Affiliate of it or any
of its Subsidiaries has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA. Neither it nor any of its Subsidiaries has provided, or is required
to provide, security
21
<PAGE> 26
to any Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(vi) Under each Pension Plan of it or any of its Subsidiaries
which is a single-employer plan, as of the last day of the most recent plan
year ended prior to the date hereof, the actuarially determined present value
of all "benefit liabilities", within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions contained in
the Plan's most recent actuarial valuation) did not exceed the then current
value of the assets of such Plan, and there has been no adverse change in the
financial condition of such Plan (with respect to either assets or benefits)
since the last day of the most recent Plan year.
(vii) Neither it nor any of its Subsidiaries has any obligations
under any Compensation and Benefit Plans to provide benefits, including death
or medical benefits, with respect to employees of it or its Subsidiaries
beyond their retirement or other termination of service other than (i)
coverage mandated by Part 6 of Title I of ERISA or Section 4980B of the Code,
(ii) retirement or death benefits under any employee pension benefit plan (as
defined under Section 3(2) of ERISA), (iii) disability benefits under any
employee welfare plan that have been fully provided for by insurance or
otherwise, or (iv) benefits in the nature of severance pay.
(viii) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in
any payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of it or any of its Subsidiaries under any Compensation and
Benefit Plan or otherwise from it or any of its Subsidiaries, (ii) increase
any benefits otherwise payable under any Compensation and Benefit Plan or
(iii) result in any acceleration of the time of payment or vesting of any
such benefit.
(m) Labor Matters. Neither it nor any of its Subsidiaries is a
-------------
party to, or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is it or any of its Subsidiaries the subject of a proceeding asserting
that it or any such Subsidiaries has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel
it or such Subsidiaries to bargain with any labor organization as to wages
and conditions of employment.
(n) Takeover Laws; Rights Plans. (i) It has taken all action
---------------------------
required to be taken by it in order to exempt this Agreement and the
transactions contemplated hereby from, and this Agreement and the
transactions contemplated hereby are exempt from, the requirements of any
"moratorium", "control share", "fair price" or other antitakeover laws and
regulations (collectively, "Takeover Laws") of the State of Missouri in the
case of the representations and warranties of the Company, including Section
459 of the GBCL. In the case of the representations and warranties of the
Company, the transactions contemplated by this Agreement have been approved
for purposes of Article XI of the Company's Restated Articles of
Incorporation.
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(ii) In the case of the representations and warranties of the
Company, it has (A) duly entered into an amendment to the Company Rights
Agreement in substantially the form of Exhibit B hereto and (B) taken all
---------
other action necessary or appropriate so that, the entering into of this
Agreement, and the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) do not and will not result in the
ability of any person to exercise any Rights under the Company Rights
Agreement or enable or require the Company Rights to separate from the shares
of Company Common Stock to which they are attached or to be triggered or
become exercisable.
(iii) In the case of the representations and warranties of the
Company, no "Distribution Date" or "Shares Acquisition Date" (as such terms
are defined in the Company Rights Plan) has occurred.
(o) Environmental Matters. (i) As used in this Plan,
---------------------
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conversation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each
as amended, regulations promulgated thereunder, and state counterparts.
(ii) Neither the conduct nor operation of such party or its
Subsidiaries nor any condition of any property presently or previously owned,
leased or operated by any of them violates or violated Environmental Laws and
no condition has existed or event has occurred with respect to any of them or
any such property that, with notice or the passage of time, or both, is
reasonably likely to result in liability under Environmental Laws. Neither
such party nor any of its Subsidiaries has received any notice from any
person or entity that it or its Subsidiaries or the operation or condition of
any property ever owned, leased, operated, held as collateral or held as a
fiduciary by any of them are or were in violation of or otherwise are alleged
to have liability under any Environmental Law, including but not limited to
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(p) Tax Matters. (i)(A) All returns, declarations, reports,
-----------
estimates, information returns and statements required to be filed under
federal, state, local or any foreign tax laws ("Tax Returns") with respect to
it or any of its Subsidiaries, have been timely filed, or requests for
extensions have been timely filed and have not expired; (B) all material Tax
Returns filed by it are complete and accurate; (C) all Taxes shown to be due
on such Tax Returns have been paid or adequate reserves have been established
for the payment of such Taxes; and (D) no material (1) audit or examination
or (2) refund litigation with respect to any Tax Return is pending.
(ii) It has no reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code.
23
<PAGE> 28
(q) Tax Treatment. As of the date hereof, it is aware of no
-------------
reason why the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
(r) Regulatory Approvals. The approval of the following
--------------------
regulatory authorities is necessary to consummate the Merger: the Federal
Reserve Board and the regulatory authorities of the States in which the
Company and its Subsidiaries operate. As of the date hereof, neither of the
Company nor Parent is aware of any reason why the approvals of such
regulatory authorities will not be received without the imposition of a
condition or requirement described in the second sentence of Section 7.02.
(s) No Material Adverse Effect. Since December 31, 1995, except
--------------------------
as disclosed in its SEC Documents filed with the SEC on or before the date
hereof, (i) it and its Subsidiaries have conducted their respective
businesses in the ordinary and usual course (excluding the incurrence of
expenses related to this Agreement and the transactions contemplated hereby)
and (ii) no event has occurred or circumstance arisen that, individually or
taken together with all other facts, circumstances and events (described in
any paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to it.
ARTICLE VI
COVENANTS
The Company hereby covenants to and agrees with Parent, and
Parent hereby covenants to and agrees with the Company, that:
6.01. Best Efforts. Subject to the terms and conditions of this
Agreement, it shall use its best efforts in good faith to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to permit
consummation of the Merger as promptly as practicable and otherwise to enable
consummation of the transactions contemplated hereby and shall cooperate
fully with the other parties hereto to that end.
6.02. Stockholder Approvals. Each of them shall take, in
accordance with applicable law, applicable stock exchange or NASDAQ rules and
its respective articles or certificate of incorporation and by-laws, all
action necessary to convene, respectively, an appropriate meeting of
stockholders of Parent to consider and vote upon the issuance of the shares
of Parent Stock to be issued in the Merger pursuant to this Agreement and any
other matters required to be approved by Parent stockholders for consummation
of the Merger (including any adjournment or postponement, the "Parent
Meeting"), and an appropriate meeting of stockholders of the Company to
consider and vote upon the approval of this Agreement and any other matters
required to be approved by the Company's stockholders for consummation of the
Merger (including any adjournment or postponement, the "Company Meeting"; and
each of the Parent Meeting and the Company Meeting, a "Meeting"),
respectively, as promptly as practicable after the Registration Statement is
declared effective. The Board of Directors of each of Parent and the Company
shall (subject in the case of the Company to compliance with its fiduciary
duties as advised by counsel) recommend such
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<PAGE> 29
approval, and each of Parent and the Company shall take all reasonable lawful
action to solicit such approval by its respective stockholders.
6.03. Registration Statement. (a) Each of Parent and the
Company agrees to cooperate in the preparation of a registration statement on
Form S-4 (the "Registration Statement") to be filed by Parent with the SEC in
connection with the issuance of Parent Stock in the Merger (including the
joint proxy statement and prospectus and other proxy solicitation materials
of Parent and the Company constituting a part thereof (the "Joint Proxy
Statement") and all related documents). Provided the Company has cooperated
as required above, Parent agrees to file the Registration Statement with the
SEC as promptly as practicable, but in no event later than 45 days after the
date of this Agreement. Each of the Company and Parent agrees to use all
reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable
after filing thereof. Parent also agrees to use all reasonable efforts to
obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement. The
Company agrees to furnish to Parent all information concerning the Company,
its Subsidiaries, officers, directors and stockholders as may be reasonably
requested in connection with the foregoing.
(b) Each of the Company and Parent agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it
for inclusion or incorporation by reference in (i) the Registration Statement
will, at the time the Registration Statement and each amendment or supplement
thereto, if any, becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Joint Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the
times of the Parent Meeting and the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading
or any statement which, in the light of the circumstances under which such
statement is made, will be false or misleading with respect to any material
fact, or which will omit to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to correct
any statement in any earlier statement in the Joint Proxy Statement or any
amendment or supplement thereto. Each of the Company and Parent further
agrees that if it shall become aware prior to the Effective Date of any
information that would cause any of the statements in the Joint Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to take
the necessary steps to correct the Joint Proxy Statement.
(c) In the case of Parent, Parent will advise the Company,
promptly after Parent receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment
has been filed, of the issuance of any stop order or the suspension of the
qualification of the Parent Stock for offering or sale in any jurisdiction,
of the initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration
Statement or for additional information.
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<PAGE> 30
6.04. Press Releases. It will not, without the prior approval
of the other parties, issue any press release or written statement for
general circulation relating to the transactions contemplated hereby, except
as otherwise required by applicable law or regulation.
6.05. Access; Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information, it shall
afford the other parties and their officers, employees, counsel, accountants
and other authorized representatives, access, during normal business hours
throughout the period prior to the Effective Date, to all of its properties,
books, contracts, commitments and records and, during such period, it shall
furnish promptly to such other parties and representatives (i) a copy of each
material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (ii) all
other information concerning the business, properties and personnel of it as
the other may reasonably request.
(b) It will not use any information obtained pursuant to this
Section 6.05 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement and, if this Agreement is
terminated, will hold all information and documents obtained pursuant to this
paragraph in confidence (as provided in, and subject to the provisions of,
the Confidentiality Agreement). No investigation by either party of the
business and affairs of another shall affect or be deemed to modify or waive
any representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
6.06. Acquisition Proposals. Without the prior written consent
of Parent, the Company shall not, and shall cause its Subsidiaries and its
and its Subsidiaries' officers, directors, agents, advisors and affiliates
not to, solicit or encourage inquiries or proposals with respect to, or
engage in any negotiations concerning, or provide any confidential
information to, or have any discussions with, any such person relating to,
any tender offer or exchange offer for, or any proposal for the acquisition
of a substantial equity interest in, or a substantial portion of the assets
of, or any merger or consolidation with, the Company or any of its
Significant Subsidiaries; provided, however, that the Board of Directors of
-------- --------
the Company, on behalf of the Company, may furnish or cause to be furnished
information and may participate in such discussions and negotiations directly
or through its representatives if such Board of Directors, after having
consulted with and considered the advice of outside counsel reasonably
acceptable to Parent, has determined that the failure to provide such
information or participate in such negotiations and discussions would cause
the members of such Board of Directors to breach their fiduciary duties under
applicable laws. The Company shall promptly (within 24 hours) advise Parent
of its receipt of any such proposal or inquiry, of the substance thereof, and
of the identity of the person making such proposal or inquiry.
6.07. Affiliate Agreements. (a) Not later than the 15th day
prior to the mailing of the Joint Proxy Statement, the Company shall deliver
to Parent, a schedule of each person that, to the best of its knowledge, is
or is reasonably likely to be, as of the date of the relevant Meeting, deemed
to be an "affiliate" of it (each, an "Affiliate") as that term is used in
Rule 145 under the Securities Act.
26
<PAGE> 31
(b) The Company shall use its best efforts to cause each person
who may be deemed to be an Affiliate of the Company to execute and deliver to
the Company and Parent on or before the date of mailing of the Joint Proxy
Statement an agreement in the form attached hereto as Exhibit C.
---------
6.08. Takeover Laws. No party shall take any action that would
cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect, including, without limitation, Section
459 of the GBCL and Takeover Laws of any other State that purport to apply to
this Agreement or the transactions contemplated hereby or thereby.
6.09. No Rights Triggered. Each of Company and Parent shall
take all steps necessary to ensure that the entering into of this Agreement
and the consummation of the transactions contemplated hereby and any other
action or combination of actions, or any other transactions contemplated
hereby, do not and will not result in the grant of any rights to any person
(i) under its articles or certificate of incorporation or by-laws, (ii) under
any material agreement to which it or any of its Subsidiaries is a party
(including without limitation, in the case of the Company, the Company Rights
Agreement) or (iii) in the case of the Company, to exercise or receive
certificates for Rights, or acquire any property in respect of Rights, under
the Company Rights Agreement.
6.10. Shares Listed. In the case of Parent, Parent shall use
its best efforts to list, prior to the Effective Date, on the NYSE (or, in
the case of Company Preferred Stock, NASDAQ), upon official notice of
issuance, the shares of Parent Stock to be issued to the holders of Company
Stock in the Merger (but only to the extent that the corresponding class or
series of Company Stock were listed on NASDAQ immediately prior to the
Effective Time).
6.11. Regulatory Applications. Parent and the Company and their
respective Subsidiaries shall cooperate and use their respective best efforts
(i) to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Regulatory Authorities necessary to consummate the transactions contemplated
by this Agreement, including, without limitation, any such approvals or
authorizations required by the Federal Reserve Board and the regulatory
authorities of the States in which the Company and its Subsidiaries operate,
and (ii) to cause the Merger to be consummated as expeditiously as
practicable. Provided the Company has cooperated as required above, Parent
agrees to file the requisite applications to be filed by it with the Federal
Reserve Board and the regulatory authorities of the States in which the
Company and its Subsidiaries operate as promptly as practicable, but in no
event later than 45 days after the date of this Agreement. Each of Parent
and the Company shall have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to
applicable laws relating to the exchange of information, with respect to, all
material written information submitted to any third party or any Regulatory
Authorities in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto
27
<PAGE> 32
agrees to act reasonably and as promptly as practicable. Each party hereto
agrees that it will consult with the other parties hereto with respect to the
obtaining of all material permits, consents, approvals and authorizations of
all third parties and Regulatory Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party
will keep the other parties apprised of the status of material matters
relating to completion of the transactions contemplated hereby.
(2) Each party agrees, upon request, to furnish the other
parties with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any filing, notice or application
made by or on behalf of such other party or any of its Subsidiaries to any
Regulatory Authority.
6.12. Indemnification. (a) Following the Effective Date and
without limitation as to time, Parent shall indemnify, defend and hold
harmless the present and former directors, officers and employees of the
Company and its Subsidiaries (each, an "Indemnified Party") against all costs
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the fullest
extent that the Company is permitted to indemnify such persons under the laws
of the State of Missouri and the Company's Restated Articles of Incorporation
and By-laws as in effect on the date hereof (and Parent shall also advance
expenses (including expenses constituting Costs described in Section 6.12(e))
as incurred to the fullest extent permitted under applicable law; provided
--------
that any determination required to be made with respect to whether an
officer's or director's conduct complies with the standards set forth under
Missouri law and such articles of incorporation and by-laws shall be made by
independent counsel (which shall not be counsel that provides material
services to Parent) selected by Parent and reasonably acceptable to such
officer or director; and provided, further, that in the absence of applicable
-------- -------
Missouri judicial precedent to the contrary, such counsel, in making such
determination, shall presume such officer's or director's conduct complied
with such standard and Parent shall have the burden to demonstrate that such
officer's or director's conduct failed to comply with such standard.
(b) Parent shall maintain the Company's existing directors' and
officers' liability insurance policy (or a policy providing comparable
coverage amount on terms no less favorable to the covered persons, including
Parent's existing policy if it meets the foregoing standard) covering persons
who are currently covered by such insurance for a period of six years after
the Effective Date.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Parent thereof; provided
--------
that the failure so to notify shall not affect the obligations of Parent
under Section 6.12(a) unless and to the extent such failure materially
increases Parent's liability under such subsection (a).
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(d) If Parent or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or shall
transfer all or substantially all of its assets to any entity, then and in
each case, proper provision shall be made so that the successors and assigns
of Parent shall assume the obligations set forth in this Section 6.12.
(e) Parent shall pay all reasonable Costs, including attorneys'
fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 6.12. The
rights of each Indemnified Party hereunder shall be in addition to any other
rights such Indemnified Party may have under applicable law.
6.13. Benefit Plans. (i) Until the transition to Parent's
benefit plans as set forth below, Parent shall cause the Surviving
Corporation and its Subsidiaries to provide employees of the Company and its
Subsidiaries who become employees of the Surviving Corporation and its
Subsidiaries with compensation and employee benefit plans, programs,
arrangements and other perquisites (including, but not limited to, "employee
benefit plans" within the meaning of section 3(3) of ERISA) ("Employee
Benefit Plans") that are, in the aggregate, substantially the same as the
compensation and Employee Benefit Plans provided to such individuals by the
Company immediately prior to the Effective Date; provided, however, that for
-------- -------
at least a one-year period, Parent shall cause the Surviving Corporation and
its Subsidiaries to continue the Company's severance benefits, as disclosed
in the Company's Disclosure Schedule, with respect to all employees of the
Company and its Subsidiaries who become employees of the Surviving
Corporation or its Subsidiaries. Promptly following the Effective Time,
Parent shall cause the Surviving Corporation and its Subsidiaries to provide
Company employees who are employees thereof with compensation and Employee
Benefit Plans that are substantially the same as the compensation and
Employee Benefit Plans provided to similarly situated employees of the
Surviving Corporation or its Subsidiaries who were not employees of the
Company; provided, however, that employees of the Company shall not be
-------- -------
required to satisfy any additional copayment or other eligibility
requirements in connection with such transition of Employee Benefit Plans.
For the purpose of determining eligibility to participate in Employee Benefit
Plans, eligibility for benefit forms and subsidies and the vesting of
benefits under such Employee Benefit Plans (including, but not limited to,
any pension, severance, 401(k), vacation and sick pay), and for purposes of
accrual of benefits under any severance, sick leave, vacation and other
similar Employee Benefit Plans, Parent shall give effect to years of service
(and for purposes of qualified and nonqualified pension plans, prior
earnings) with the Company or its Subsidiaries, as the case may be, as if
they were with Parent or its Subsidiaries. For a period of one year after
the Effective Date, Parent shall cause the Surviving Corporation and its
Subsidiaries to continue substantially the same retiree benefits to all
retirees of the Company and its Subsidiaries as well as all employees of the
Company and its Subsidiaries who become retirees during the one-year period.
Parent also shall cause the Surviving Corporation and its Subsidiaries to
assume and agree to perform the Company's obligations under all employment,
severance, consulting and other compensation contracts as disclosed in the
Company Disclosure Schedule, including without limitation the Company Change
in Control Severance Plan, between the Company or any of its Subsidiaries and
any current or former director, officer or employee thereof. Parent shall
give fair consideration to the promotion, retention, firing, and other terms
and conditions of employment of all employees of the Company and its
Subsidiaries
29
<PAGE> 34
who become employees thereof. Furthermore, Parent will offer to
enter into executive compensation arrangements with certain Company
executives on terms to be set forth in separate letter agreements.
6.14. Certain Director And Officer Positions. (a) Parent
agrees to cause five (5) persons designated by the Company willing so to
serve and reasonably satisfactory to Parent ("Company Directors"), which
shall include Mr. Andrew B. Craig, III, to be elected or appointed as
directors of Parent at, or as promptly as practicable after, the Effective
Time. At the first annual meeting of stockholders of Parent subsequent to
the Effective Time, Parent shall take all corporate action necessary to, and
shall, renominate each such person, including Mr. Andrew B. Craig, III, for
election as directors of Parent and shall recommend that the Parent
stockholders vote for the election of such individuals as directors.
(b) Parent agrees to cause Mr. Andrew B. Craig, III to be
elected or appointed as a member of the Executive Committee of the Board of
Directors of Parent at, or as promptly as practicable after, the Effective
Time.
(c) At the Effective Time, Mr. Andrew B. Craig, III shall be
Chairman of the Board of Directors of Parent for a term extending through one
year from the Effective Date.
6.15. Notification Of Certain Matters. Each of the Company and
Parent shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to
result in any Material Adverse Effect with respect to it or (ii) would cause
or constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the parties to consummate the Merger
is conditioned upon the satisfaction at or prior to the Effective Time of
each of the following:
7.01. Shareholder Vote. Approval of the Plan of Merger
contained in this Agreement by the requisite vote of the stockholders of the
Company and of Parent, respectively.
7.02. Regulatory Approvals. All regulatory approvals required
to consummate the transactions contemplated hereby, including, without
limitation, those specified in Section 5.03(r), shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired. No such approvals shall contain any
conditions or restrictions which the Board of Directors of either Parent or
the Company reasonably determines in good faith will have a Material Adverse
Effect on Parent and its Subsidiaries (including the Surviving Corporation
and its Subsidiaries) taken as a whole. For purposes of this paragraph, a
divestiture required as a condition to any regulatory approval shall not be
deemed to have a Material Adverse Effect if such divestiture is consistent with
30
<PAGE> 35
Department of Justice and Federal Reserve Board guidelines, policies and
practices regarding mergers of bank holding companies that have been utilized
in transactions that have recently been reviewed prior to the date of this
Agreement.
7.03. Third Party Consents. All consents or approvals of all
persons (other than Regulatory Authorities) required for the consummation of
the Merger shall have been obtained and shall be in full force and effect,
unless the failure to obtain any such consent or approval is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on the Company or Parent.
7.04. No Injunction, Etc. No order, decree or injunction of any
court or agency of competent jurisdiction shall be in effect, and no law,
statute or regulation shall have been enacted or adopted, that enjoins,
prohibits or makes illegal consummation of any of the transactions
contemplated hereby.
7.05. Representations, Warranties And Covenants Of Parent. In
the case of the Company's obligations: (i) each of the representations and
warranties contained herein of Parent shall be true and correct as of the
date of this Agreement and upon the Effective Date with the same effect as
though all such representations and warranties had been made on the Effective
Date, except for any such representations and warranties made as of a
specified date, which shall be true and correct as of such date, in any case
subject to the standard set forth in Section 5.02, (ii) each and all of the
agreements and covenants of Parent to be performed and complied with pursuant
to this Agreement on or prior to the Effective Date shall have been duly
performed and complied with in all material respects, and (iii) the Company
shall have received a certificate signed by the Chief Financial Officer of
Parent, dated the Effective Date, to the effect set forth in clauses (i) and
(ii) of this Section 7.05.
7.06. Representations, Warranties And Covenants Of The Company.
In the case of Parent's obligations: (i) each of the representations and
warranties contained herein of the Company shall be true and correct as of
the date of this Agreement and upon the Effective Date with the same effect
as though all such representations and warranties had been made on the
Effective Date, except for any such representations and warranties made as of
a specified date, which shall be true and correct as of such date, in any
case subject to the standard set forth in Section 5.02, (ii) each and all of
the agreements and covenants of the Company to be performed and complied with
pursuant to this Agreement on or prior to the Effective Date shall have been
duly performed and complied with in all material respects, and (iii) Parent
shall have received a certificate signed by the Chief Financial Officer of
the Company, dated the Effective Date, to the effect set forth in clauses (i)
and (ii) of this Section 7.06.
7.07. Effective Registration Statement. The Registration
Statement shall have become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC or any other Regulatory Authority.
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<PAGE> 36
7.08. Tax Opinion. Parent and the Company shall have received
an opinion from Wachtell, Lipton, Rosen & Katz, Cleary, Gottlieb, Steen &
Hamilton or such other tax counsel as is reasonably acceptable to the Company
and Parent, dated as of the Effective Time, substantially to the effect that,
on the basis of the facts, representations and assumptions set forth in such
opinions which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated for Federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code and that
accordingly:
(i) No gain or loss will be recognized by Parent, the Company or
Merger Sub as a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of the
Company who exchange their Company Stock solely for Parent Stock pursuant
to the Merger (except with respect to cash received in lieu of a
fractional share interest in Parent Stock); and
(iii) The tax basis of the Parent Stock received by stockholders
who exchange all of their Company Stock solely for Parent Stock in the
Merger will be the same as the tax basis of the Company Stock surrendered
in exchange therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
In rendering such opinion, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Parent, the Company and Merger Sub and others.
7.09. Articles Of Amendment. The Articles of Amendment shall
have become effective in accordance with the North Carolina Business
Corporation Act.
7.10. NYSE Listing. The shares of Parent Stock issuable
pursuant to this Agreement shall have been approved for listing on the NYSE
(or, in the case of Company Preferred Stock, NASDAQ) (but only to the extent
that the corresponding class or series of Company Stock were listed on NASDAQ
immediately prior to the Effective Time), subject to official notice of
issuance.
7.11. Company Rights Agreement. There shall exist no "Shares
Acquisition Date" or "Distribution Date" (as each of such terms is defined in
the Company Rights Agreement).
It is specifically provided, however, that a failure to satisfy any of the
conditions set forth in Section 7.06 or 7.11 shall only constitute conditions
if asserted by Parent, and a failure to satisfy the condition set forth in
Section 7.05 shall only constitute a condition if asserted by the Company.
32
<PAGE> 37
ARTICLE VIII
TERMINATION
8.01. Termination. This Agreement may be terminated, and the
Merger may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by
--------------
the mutual consent of Parent and the Company, if the Board of Directors of
each so determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Parent
------
or the Company, if its Board of Directors so determines by vote of a majority
of the members of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained herein (subject
to the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the breaching
party of such breach; or (ii) a material breach by the other party of any of
the covenants or agreements contained herein, which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach.
(c) Delay. At any time prior to the Effective Time, by Parent
-----
or the Company, if its Board of Directors so determines by vote of a majority
of the members of its entire Board, in the event that the Merger is not
consummated by September 1, 1997, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this Section
8.01(c).
(d) No Approval. By the Company or Parent, if its Board of
-----------
Directors so determines by a vote of a majority of the members of its entire
Board, in the event (i) the approval of the Federal Reserve Board required
for consummation of the Merger and the other transactions contemplated by the
Merger shall have been denied by final nonappealable action of such
Regulatory Authority or (ii) any stockholder approval required by Section
7.01 herein is not obtained at the Company Meeting or the Parent Meeting.
(e) Possible Adjustment. By the Company, if its Board of
-------------------
Directors so determines by a vote of a majority of the members of its entire
Board, at any time during the ten-day period commencing two days after the
Determination Date, if either (x) both of the following conditions are
satisfied:
(i) the Average Closing Price shall be less than $79.26; and
(ii) (A) the number obtained by dividing the Average Closing
Price by the Starting Price (such number being referred to herein as the
"Parent Ratio") shall be less than (B) the number obtained by dividing the
Average Index Price by the Index Price on the Starting Date and subtracting
.15 from the quotient in this clause (x)(ii)(B) (such number being referred
to herein as the "Index Ratio");
or (y) the Average Closing Price shall be less than $74.60;
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<PAGE> 38
subject, however, to the following four sentences. If the Company elects
- ------- -------
to
exercise its termination right pursuant to the immediately preceding
sentence, it shall give prompt written notice to Parent which notice shall
specify which of clause (x) or (y) is applicable (or if both would be
applicable, which clause is being invoked); provided that such notice of
--------
election to terminate may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt of
such notice, Parent shall have the option in the case of a failure to satisfy
the condition in clause (x), of adjusting the Exchange Ratio to equal the
lesser of (i) a number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the product of $79.26 and the
Exchange Ratio (as then in effect) and the denominator of which is the Average
Closing Price, and (ii) a number equal to a quotient (rounded to the nearest
one-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 Parent
Ratio. During such five-day period, Parent shall have the option, in the
case of a failure to satisfy the condition in clause (y), to elect to
increase the Exchange Ratio to equal a number equal to a quotient (rounded to
the nearest one-thousandth), the numerator of which is the product of $74.60
and the Exchange Ratio (as then in effect) and the denominator of which is
the Average Closing Price. If Parent makes an election contemplated by
either of the two preceding sentences within such five-day period, it shall
give prompt written notice to the Company of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
Section 8.01(e) 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 8.01(e).
For purposes of this Section 8.01(e), the following terms shall
have the meanings indicated:
"Average Closing Price" means the average of the daily last sale
prices of Parent Common Stock as reported on the NYSE Composite Transactions
reporting system (as reported in The Wall Street Journal or, if not reported
-----------------------
therein, in another mutually agreed upon authoritative source) for the ten
consecutive full trading days in which such shares are traded on the NYSE
ending at the close of trading on the Determination Date.
"Average Index Price" means the average of the Index Prices for
the ten consecutive full NYSE trading days 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.
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<PAGE> 39
"Index Group" means the group of each of the 15 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, any public announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that the common stock of any such company
ceases to be publicly traded or such an announcement is made, 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 purposes of determining the Index Price.
The 15 bank holding companies and the weights attributed to them are as
follows:
<TABLE>
<CAPTION>
Bank Holding Company Weighting
- -------------------- ---------
<S> <C>
Citicorp 15.8%
Chase Manhattan Corp. 13.2
BankAmerica Corporation 11.3
Wells Fargo & Company 9.4
First Union Corporation 7.2
Banc One Corporation 6.5
Norwest Corporation 5.5
First Chicago NBD Corporation 5.4
Fleet Financial Group, Inc. 4.4
PNC Bank Corp. 4.2
Bank of New York Company, Inc. 4.2
KeyCorp 3.6
SunTrust Banks, Inc. 3.4
Wachovia Corporation 3.0
Mellon Bank Corporation 2.9
Total 100.0%
</TABLE>
"Index Price" on a given date means the weighted average
(weighted in accordance with the factors listed above) of the closing prices
on such date of the companies composing the Index Group.
"Starting Date" means the last full day on which the NYSE was
open for trading prior to the execution of this Agreement.
"Starting Price" shall mean the last sale price per share of
Parent Common Stock on the Starting Date, as reported by the NYSE Composite
Transactions reporting system (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 Parent declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or
35
<PAGE> 40
similar transaction between the Starting Date and the Determination Date, the
prices for the common stock of such company or Parent shall be appropriately
adjusted for the purposes of applying this Section 8.01(e).
8.02. Effect Of Termination And Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
this Article VIII, no party to this Agreement shall have any liability or
further obligation to any other party hereunder except (i) as set forth in
Section 9.01 and (ii) that termination will not relieve a breaching party
from liability for any willful breach of this Agreement giving rise to such
termination.
ARTICLE IX
MISCELLANEOUS
9.01. Survival. All representations, warranties, agreements and
covenants contained in this Agreement shall not survive the Effective Time or
termination of this Agreement if this Agreement is terminated prior to the
Effective Time; provided, however, if the Effective Time occurs, the
-------- -------
agreements of the parties in Sections 6.12, 6.13, 6.14, 9.01, 9.04 and 9.08
shall survive the Effective Time, and if this Agreement is terminated prior
to the Effective Time, the agreements of the parties in Sections 6.05(b),
8.02, 9.01, 9.02, 9.04, 9.05, 9.06, 9.07 and 9.08, shall survive such
termination.
9.02. Waiver; Amendment. Prior to the Effective Time, any
provision of this Agreement may be (i) waived by the party benefited by the
provision, or (ii) amended or modified at any time, by an agreement in
writing among the parties hereto approved by their respective Boards of
Directors and executed in the same manner as this Agreement, except that,
after the Company Meeting the consideration to be received by the
stockholders of the Company for each share of Company Stock shall not thereby
be decreased. Prior to submission of this Agreement for approval by the
stockholders of the Company, Parent shall supplement this Agreement by
specifying the name of Merger Sub and may make such amendments as are
permitted by Section 2.01 and the Company's Board of Directors shall approve
the supplements and amendments specified in this sentence.
9.03. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original.
9.04. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Missouri, without
regard to the conflict of law principles thereof (except to the extent that
mandatory provisions of Federal law govern).
9.05. Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing expenses and SEC registration fees
shall be shared equally between the Company and Parent.
9.06. Confidentiality. Each of the parties hereto and their
respective agents, attorneys and accountants will maintain the
confidentiality of all information provided in
36
<PAGE> 41
connection herewith in accordance, and subject to the limitations of, the
Confidentiality Agreement.
9.07. Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if
personally delivered, telecopied (with confirmation) or mailed by registered
or certified mail (return receipt requested) to such party at its address set
forth below or such other address as such party may specify by notice to the
parties hereto.
If to Parent, to:
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Center
Charlotte, North Carolina 28255
Attention: Hugh L. McColl, Jr.
Chairman and Chief Executive Officer
With copies to:
Paul J. Polking, Esq.
Executive Vice President and General Counsel
NationsBank Corporation
NationsBank Corporate Center
Legal Department
100 North Tryon Center
Charlotte, North Carolina 28255
and:
Edward D. Herlihy, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
If to the Company, to:
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, Missouri 63166-0236
Attention: Andrew B. Craig, III
Chairman and Chief Executive Officer
37
<PAGE> 42
With copies to:
John C. Murphy, Jr., Esq.
Cleary, Gottlieb, Steen & Hamilton
1752 N Street, N.W.
Washington, D.C. 20036
and:
Thomas C. Erb, Esq.
Lewis, Rice & Fingersh
500 N. Broadway, Suite 2000
St. Louis, Missouri 63102-2147
9.08. Entire Understanding; No Third Party Beneficiaries.
Except for the Confidentiality Agreement, which shall remain in effect, this
Agreement represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and thereby and supersede
any and all other oral or written agreements heretofore made. Except for
Sections 6.12 and 6.14, nothing in this Agreement expressed or implied, is
intended to confer upon any person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
9.09. Headings. The headings contained in this Agreement are
for reference purposes only and are not part of this Agreement.
38
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly authorized officers,
all as of the day and year first above written.
BOATMEN'S BANCSHARES, INC.
By: /s/ Andrew B. Craig, III
--------------------------------------
Andrew B. Craig, III
Chairman and Chief Executive Officer
NATIONSBANK CORPORATION
By: /s/ Hugh L. McColl, Jr.
--------------------------------------
Hugh L. McColl, Jr.
Chairman and Chief Executive Officer
39
<PAGE> 44
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 29, 1996 (the
"Agreement"), by and between BOATMEN'S BANCSHARES, INC., a Missouri
corporation ("Issuer"), and NATIONSBANK CORPORATION, a North Carolina
corporation ("Grantee").
RECITALS
(A) MERGER AGREEMENT. Grantee and Issuer have, on the date
hereof, entered into an Agreement and Plan of Merger (the "Merger
Agreement"), providing for, among other things, the merger of Issuer with and
into a wholly owned subsidiary of Grantee, with such subsidiary being the
surviving corporation.
(B) CONDITION TO MERGER AGREEMENT. As a condition and
inducement to Grantee's pursuit of the transactions contemplated by the
Merger Agreement, and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the 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 a number of shares of common stock, par value $1.00 per
share ("Issuer Common"), of Issuer up to 31,218,660 of such 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, but in no
event shall the number of Option Shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Issuer Common) at a
purchase price per Option Share (as adjusted as set forth herein, the
"Purchase Price") equal to $43.375.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the 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, the 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 (as hereinafter defined); provided that the Option shall
terminate and be of no further force or effect upon the
1
<PAGE> 45
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 (as hereinafter defined) other
than a termination thereof by Grantee pursuant to Section 8.01(b) of the Merger
Agreement (but only if the breach of Issuer giving rise to such termination was
willful) (a termination of the Merger Agreement by Grantee pursuant to Section
8.01(b) thereof as a result of a willful breach by Issuer being referred to
herein as a "Default Termination"), (C) fifteen (15) months after a Default
Termination, or (D) fifteen (15) months after termination of the Merger
Agreement (other than by reason of a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event; provided,
however, 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
Grantee. The rights set forth in Section 8 hereof 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:
(i) Without Grantee's prior written consent, Issuer shall
have 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 (A) a
merger, consolidation or similar transaction involving Issuer or any of
its significant subsidiaries (other than transactions solely between
Issuer's subsidiaries that are not violative of the Merger Agreement),
(B) the disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Issuer or any of its significant subsidiaries representing in
either case 25% or more of the consolidated assets or deposits of Issuer
and its subsidiaries, or (C) the issuance, sale or other disposition by
Issuer of (including by way of merger, consolidation, share exchange or
any similar transaction) securities representing 25% or more of the
voting power of Issuer or any of its significant subsidiaries, other
than, in each case of (A), (B), or (C), any merger, consolidation or
similar transaction involving Issuer or any of its significant
subsidiaries in which the voting securities of Issuer outstanding
immediately prior thereto continue to represent (by either remaining
outstanding or being converted into the voting securities of the
surviving entity of any such transaction) at least 65% of the combined
voting power of the voting securities of the Issuer or the surviving
entity outstanding immediately after the consummation of such merger,
consolidation, or similar transaction (provided any such transaction is
not violative of the Merger Agreement)(each of (A), (B), or (C), 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 in Section 13(d)(3) of the Exchange Act), other than a group of
which Grantee or any subsidiary of Grantee is a member, shall have been
formed which beneficially owns, or has the right to acquire beneficial
ownership of, 25% or more of the voting power of Issuer or any of its
significant subsidiaries.
2
<PAGE> 46
(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 such that, upon
consummation of such offer, such person would own or control 15% or more
of the then outstanding shares of Issuer Common (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the shareholders shall not have approved the Merger
Agreement by the requisite vote at the Company Meeting, the Company
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 bona fide 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 the Home Owners' Loan Act, as
amended, the Bank Holding Company Act of 1956, as amended, the Bank
Merger Act, as amended, or the Change in Bank Control Act of 1978, as
amended, for approval to engage in an Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its
shareholders by public announcement, or written communication that is or
becomes the subject of public disclosure, to engage in an Acquisition
Transaction; or
(iv) after a proposal is made by a third party to Issuer
or its shareholders to engage in an Acquisition Transaction, or such
third party states its intention to the Issuer to make such a proposal if
the Merger Agreement terminates, Issuer shall have breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach would entitle Grantee to terminate the Merger
Agreement under Article VIII thereof (without regard to the cure period
provided for therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the terms of the
Merger Agreement); or
(v) any person (other than Grantee or any subsidiary of
Grantee), other than in connection with a transaction to which Grantee
has given its prior written consent, shall have filed an application or
notice with any Regulatory Authority for approval to engage in an
Acquisition Transaction.
3
<PAGE> 47
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) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition
to the right of Holder to exercise the Option.
(e) 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 (3) business days nor later than fifteen (15) business
days from the Notice Date for the closing (the "Closing") of such purchase
(the "Closing Date"); provided that the first notice of exercise shall be
sent to Issuer within one hundred eighty (180) days after the first Purchase
Event of which Grantee has been notified. If prior notification to or
approval of any Regulatory Authority is required in connection with such
purchase, Issuer shall cooperate with the Holder in the filing of the
required notice or application for approval and the obtaining of such
approval and the Closing shall occur immediately following such regulatory
approvals (and any mandatory waiting periods). Any exercise of the Option
shall be deemed to occur on the Notice Date relating thereto.
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).
(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 and subject to no
preemptive rights, and (B), if the Option 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 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
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<PAGE> 48
OPTION AGREEMENT DATED AS OF AUGUST 29, 1996. 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 the portion of the above legend relating to
the Securities Act 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.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately available funds and the tender of
this Agreement to Issuer, Holder shall be deemed to be the holder of record
of the shares of Issuer Common issuable upon such exercise, notwithstanding
that the stock transfer books of issuer shall then be closed or that
certificates representing such shares of Issuer Common shall not then be
actually delivered to Holder. Issuer shall pay all expenses, and any and all
United States federal, state, and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares
of Issuer Common so that the Option may be exercised without additional
authorization of Issuer Common after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common,
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any of
the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer, (iii) promptly to take all action as may from time to
time be required (including (A) complying with all premerger notification,
reporting and waiting period requirements, and (B) in the event prior
approval of or notice to any Regulatory Authority is necessary before the
Option may be exercised, cooperating fully with Holder in preparing such
applications or notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to exercise the Option
and Issuer duly and effectively to issue shares of the Issuer Common pursuant
hereto, and (iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Issuer,
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<PAGE> 49
and no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so contemplated;
this Agreement has been duly and validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer, as
of the date of this Agreement, no person or group has beneficial ownership of
more than 10% of the issued and outstanding shares of Issuer Common.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and permit it
to issue, and at all times from the date hereof through the termination of
this Agreement in accordance with its terms, will have reserved for issuance
upon the exercise of the Option, that number of shares of Issuer Common equal
to the maximum number of shares of Issuer Common at any time and from time to
time purchasable upon exercise of the Option, and all such shares, upon
issuance pursuant to the Option, will be duly authorized, validly issued,
fully paid and nonassessable, and will be delivered free and clear of all
claims, liens, encumbrances, and security interests (other than those created
by this Agreement) and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of
this Agreement does not or will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, its certificate of incorporation
or by-laws, or the comparable governing instruments of any of its
subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its subsidiaries is
subject, that would, in any case give any other person the ability to prevent
or enjoin Issuer's performance under this Agreement in any material respect.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the
approvals referred to in this Agreement, to consummate the transactions
contemplated by this Agreement; 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; and this
Agreement has been duly executed and delivered by Grantee.
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common 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
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<PAGE> 50
Option, the number and class of shares or other securities or property that
Holder would have received in respect of Issuer Common 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 are issued after the
date of this Agreement (other than pursuant to an event described in the
first sentence of this Section 7(a), upon exercise of any option to purchase
Issuer Common outstanding on the date hereof or upon conversion into Issuer
Common of any convertible security of Issuer outstanding on the date hereof),
the number of shares of Issuer Common subject to the Option shall be adjusted
so that, after such issuance, it, together with any shares of Issuer Common
previously issued pursuant hereto, equals 19.9% of the number of shares of
Issuer Common then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option. No provision of this
Section 7 shall be deemed to affect or change, or constitute authorization
for any violation of, any of the covenants or representations in the Merger
Agreement.
(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 shall be changed into or
exchanged for stock or other securities of Issuer or any other person or cash
or any other property or the outstanding shares of Issuer Common 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 or deposits
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 the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election
of Holder, of either (x) the Acquiring Corporation (as hereinafter defined),
(y) any person that controls the Acquiring Corporation, or (z) in the case of
a merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided, that, if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Holder. Substitute Option
Issuer shall also enter into an agreement with Holder in substantially the
same form as this Agreement, which shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of Substitute
Option per share of Substitute Common (the "Substitute Option Price") shall
then be equal to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common for which the Option was
theretofore exercisable and the
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<PAGE> 51
denominator is the number of shares of the Substitute Common for which the
Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii) the transferee of all or
substantially all of Issuer's assets (or a substantial part of the assets
of its subsidiaries taken as a whole).
(2) "Substitute Common" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
(3) "Assigned Value" shall mean the highest of (w) the
price per share of Issuer Common at which a Tender Offer or an Exchange
Offer therefor has been made, (x) the price per share of Issuer Common to
be paid by any third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common within the six (6)
month period immediately preceding the consolidation, merger, or sale in
question and (z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (i) the sum of the price
paid in such sale for such assets (and/or deposits) and the current
market value of the remaining assets of Issuer, as determined by a
nationally recognized investment banking firm selected by Holder divided
by (ii) the number of shares of Issuer Common outstanding at such time.
In the event that a Tender Offer or an Exchange Offer is made for Issuer
Common or an agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for Issuer Common
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(4) "Average Price" shall mean the average closing price
of a share of Substitute Common for the one year immediately preceding
the consolidation, merger, or sale in question, but in no event higher
than the closing price of the shares of Substitute Common on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate of the shares of Substitute Common outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common but for the limitation in the first sentence of this Section 7(f),
Substitute
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Option Issuer shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
the first sentence of this Section 7(f) over (ii) the value of the Substitute
Option after giving effect to the limitation in the first sentence of this
Section 7(f). This difference in value shall be determined by a nationally-
recognized investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the holders of
the other shares of common stock issued by Substitute Option Issuer are not
entitled to exercise any rights by reason of the issuance or exercise of the
Substitute Option and the shares of Substitute Common are otherwise in no way
distinguishable from or have lesser economic value (other than any diminution
in value resulting from the fact that the Substitute Common are restricted
securities, as defined in Rule 144 under the Securities Act or any successor
provision) than other shares of common stock issued by Substitute Option
Issuer).
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 twelve (12) months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option,
and (ii) all shares of Issuer Common 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 acquired 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 over (y) the Purchase
Price (subject to adjustment pursuant to Section 7), multiplied by the
number of shares of Issuer Common 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 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 ten (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 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.
Notwithstanding the foregoing, to the extent that prior notification to or
approval of any Regulatory 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 approval 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 approval). If any Regulatory
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 Regulatory 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 Regulatory 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 (5) 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 paid
for any such share by the person or groups described in Section 8(d)(i),
(ii) the price per share of Issuer Common received by holders of Issuer
Common in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest closing sales price per share of Issuer Common on Nasdaq (or if
Issuer Common is not traded on Nasdaq, the highest bid price per share as
quoted on the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by Holder) during
the forty (40) 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 a nationally recognized investment banking firm selected by
Holder, divided by the number of shares of the Issuer Common 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
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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 of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer Common, or
(ii) any of the transactions described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii) shall be consummated.
9. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible prepare and file a registration statement under the
Securities Act if such registration is necessary in order to permit the sale
or other disposition of any or all shares of Issuer Common or other
securities that have been acquired by or are issuable to the Selling
Shareholder upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by the Selling Shareholder in such
request, including without limitation a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other securities for
sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common under the Securities Act in connection with an underwritten public
offering of such Issuer Common, Issuer will promptly give written notice to
the Selling Shareholders of its intention to do so and, upon the written
request of any Selling Shareholder given within thirty (30) days after
receipt of any such notice (which request shall specify the number of shares
of Issuer Common intended to be included in such underwritten public offering
by the Selling Shareholder), Issuer will cause all such shares for which a
Selling Shareholder requests participation in such registration, to be so
registered and included in such underwritten public offering; provided,
however, 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 an
employee benefit plan or a registration filed on Form S-4 of the Securities
Act or any successor Form; provided, further, however, that such election
pursuant to (i) may only be made two times. If some but not all the shares
of Issuer Common, with respect to which Issuer shall have received requests
for registration pursuant to this Section 9(b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders desiring to register their shares
pro rata in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total number of
shares requested to be registered by all such Selling Shareholders then
desiring to have Issuer Common registered for sale.
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(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in
Section 9(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, however, that Issuer may delay any
registration of Option Shares required pursuant to Section 9(a) above for a
period not exceeding ninety (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 Act pursuant to
Section 9(a) above:
(i) prior to the earliest of (a) termination of the
Merger Agreement pursuant to Article VIII thereof, (b) failure to
obtain the requisite shareholder approval pursuant to Section 7.01 of the
Merger Agreement, and (c) a Purchase Event or a Preliminary Purchase
Event;
(ii) on more than one occasion during any calendar year;
(iii) within ninety (90) days after the effective date of a
registration referred to in Section 9(b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded the
opportunity to register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common issuable upon
exercise of the Option) 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 (9) 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, however, 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.
(d) Expenses. 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), legal expenses, including the reasonable
fees and expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold
comfort" letters, 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
Section 9(a) or 9(b) above (including the related offerings and sales by
holders of Option Shares) and all other qualifications, notifications or
exemptions pursuant to Section 9(a) or 9(b) above.
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(e) Indemnification. In connection with any registration under
Section 9(a) or 9(b) above, Issuer hereby indemnifies the Selling
Shareholders, 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, or alleged 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, or alleged 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 Shareholders, 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 Section
9(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 Section 9(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
Section 9(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 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
fails 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 Section 9(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or
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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, the Selling
Shareholders and the underwriters from the offering of the securities and also
the relative fault of Issuer, the Selling Shareholders 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, however, that in no case shall any Selling Shareholder 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 Section 9(a) or
9(b) above, Issuer and each Selling Shareholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. 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 the
Selling Shareholders thereof in accordance with and to the extent permitted
by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rule 144A. Issuer shall at its expense
provide the Selling Shareholders 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 Act or the Exchange Act, or required pursuant to
any state securities laws or the rules of any stock exchange.
(g) Issue Taxes. 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 the Selling Shareholders harmless,
without limitation as to time, against any and all liabilities, with respect
to all such taxes.
10. QUOTATION; LISTING. If Issuer Common or any other securities
to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on any securities exchange,
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 or other securities to be acquired upon exercise of the Option
on such securities exchange and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
14
<PAGE> 58
11. 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 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.
12. LIMITATION ON TOTAL PROFIT AND NOTIONAL TOTAL PROFIT.
(a) Notwithstanding anything to the contrary contained herein, in no
event shall Grantee's Total Profit (as defined below in Section 12(c) hereof)
exceed $250 million and, if it otherwise would exceed such amount, Grantee,
at its sole election, shall either (i) reduce the number of shares of Issuer
Common subject to the Option, (ii) deliver to Issuer for cancellation Option
Shares previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any
combination thereof, so that Grantee's actually realized Total Profit shall
not exceed $250 million after taking into account the foregoing actions.
(b) Notwithstanding anything to the contrary contained herein, the
Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as defined below in Section
14(d) hereof) of more than $250 million; provided, that nothing in this
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8 hereof, (ii)(x) the amount received by Grantee pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8 hereof, less
(y) Grantee's purchase price for such Option Shares, (iii)(x) the net cash
amounts received by Grantee pursuant to the sale of Option Shares (or any
other securities into which such Option Shares shall be converted or
exchanged) to any unaffiliated party, less (y) Grantee's purchase price of
such Option Shares, (iv) any amounts received by Grantee on the transfer of
the Option (or any portion thereof) to any unaffiliated party, and (v) any
equivalent amount with respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise the Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that the Option were exercised on
15
<PAGE> 59
such date for such number of shares and assuming that such shares, together
with all other Option Shares held by Grantee and its affiliates as of such
date, were sold for cash at the closing market price for the Issuer Common as
of the close of business on the preceding trading day (less customary brokerage
commissions).
(e) Grantee agrees, promptly following any exercise of all or any
portion of the Option, and subject to its rights under Section 8 hereof, to
use commercially reasonable efforts promptly to maximize the value of Option
Shares purchased taking into account market conditions, the number of Option
Shares, the potential negative impact of substantial sales on the market
price for Issuer Common, and the availability of an effective registration
statement to permit public sale of Option Shares.
13. MISCELLANEOUS.
(a) Expenses. 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 Beneficiaries;
Severability. This Agreement, together with the Merger Agreement and the
other documents and instruments referred to herein and therein, between
Grantee and Issuer (i) 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 (ii) is not intended
to confer upon any person other than the parties hereto (other than the
indemnified parties under Section 9(e) and 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, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
Regulatory 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 Authority 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 as provided in
Section 3 (as may be adjusted herein), 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 Missouri without regard
to any applicable conflicts of law rules.
16
<PAGE> 60
(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) or mailed by registered or certified mail
(return receipt requested) 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 and delivered, 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 Holder may assign
this Agreement to a wholly-owned subsidiary of Holder and Holder 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 the Holder, Issuer and the 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 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.
17
<PAGE> 61
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.
BOATMEN'S BANCSHARES, INC.
By
--------------------------------------
Andrew B. Craig, III
Chairman and Chief Executive Officer
NATIONSBANK CORPORATION
By
--------------------------------------
Hugh L. McColl, Jr.
Chairman and Chief Executive Officer
18
<PAGE> 62
EXHIBIT B
AMENDMENT NO. 2
TO
RIGHTS AGREEMENT
----------------
Amendment No. 2, dated as of August 29, 1996, to Rights
Agreement, dated as of August 14, 1990, as amended by Amendment No. 1
thereto, dated as of January 26, 1993, (the "Rights Agreement"), between
Boatmen's Bancshares, Inc., a Missouri corporation (the "Corporation"), and
Boatmen's Trust Company, a Missouri trust corporation (the "Rights Agent")
(all terms not otherwise defined herein shall have the meanings ascribed to
them in the Rights Agreement).
WITNESSETH:
WHEREAS, the Corporation and the Rights Agent have previously
entered into the Rights Agreement specifying the terms of the Rights;
WHEREAS, Section 27 of the Rights Agreement provides that the
Corporation may from time to time supplement or amend the Rights Agreement to
make any provisions with respect to the Rights which the Corporation may deem
necessary or desirable, any such amendment to be evidenced by a writing
signed by the Corporation and the Rights Agent;
WHEREAS, the Corporation and NationsBank Corporation, a North
Carolina corporation ("Counterparty"), have entered into an Agreement and
Plan of Merger, dated as of August 29, 1996 (the "Merger Agreement"),
pursuant to which the Corporation would merge with and into Merger Sub, a
wholly-owned subsidiary of Counterparty ("Merger Sub"), with Merger Sub as
the surviving corporation in the merger (the "Merger");
WHEREAS, in connection with the Merger Agreement, the Corporation
and Counterparty have entered into a Stock Option Agreement, dated as of
August 29, 1996 (the "Counterparty Stock Option Agreement"), pursuant to
which the Corporation has granted to Counterparty an option (the
"Counterparty Stock Option") to purchase certain of the Company's Common
Shares under certain circumstances and upon certain terms and conditions;
WHEREAS, the consummation of the transactions contemplated by the
Merger Agreement would result in Counterparty owning all of the outstanding
Common Shares of the Corporation and therefore becoming an Acquiring Person
within the meaning of the Rights Agreement;
WHEREAS, the consummation of the transactions contemplated by the
Counterparty Stock Option Agreement might cause the Counterparty to become an
Acquiring Person within the meaning of the Rights Agreement;
WHEREAS, the Corporation wishes to amend the Rights Agreement to
provide that the acquisition of Common Shares of the Corporation by
Counterparty in accordance with
1
<PAGE> 63
the Merger Agreement or the Counterparty Stock Option Agreement will not result
in Counterparty being deemed an Acquiring Person under the Rights Agreement;
and
WHEREAS, all acts and things necessary to make this Amendment No.
2 a valid agreement according to its terms have been done and performed, and
the execution and delivery of this Amendment No. 2 by the Corporation and the
Rights Agent have been in all respects duly authorized by the Corporation and
the Rights Agent;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereby agree as follows:
1. Amendment to Section 1(a). Section 1(a) of the Rights
-------------------------
Agreement is hereby amended and restated in its entirety to read as follows:
"(a) Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 20% or more of
the Common Shares of the Corporation then outstanding, but shall not include
any of the following:
(i) the Corporation, any Subsidiary (as such term is
hereinafter defined) of the Corporation, any employee benefit plan of
the Corporation or any Subsidiary of the Corporation, or any entity
holding Common Shares for or pursuant to the terms of any such plan; or
(ii) until the termination of the Merger Agreement and the
Counterparty Stock Option Agreement in accordance with their respective
terms, any Counterparty Party, but only if and for so long as (A)
Counterparty is in compliance with all material terms, conditions and
obligations imposed upon it by the Merger Agreement and the Counterparty
Stock Option Agreement and (B) no Counterparty Party is the Beneficial
Owner of any Common Shares of the Corporation then outstanding other
than: (u) Common Shares of the Corporation of which any Counterparty
Party is or becomes the Beneficial Owner by reason of the approval,
execution or delivery of the Merger Agreement or the Counterparty Stock
Option Agreement or by reason of the consummation of any transaction
contemplated in the Merger Agreement or the Counterparty Stock Option
Agreement or both; (v) Common Shares of the Corporation of which any
Counterparty Party is the Beneficial Owner on the date hereof; (w) Common
Shares of the Corporation of which any Counterparty Party becomes the
Beneficial Owner after the date hereof; provided, that the aggregate
--------
number of Common Shares of the Corporation which may be Beneficially
Owned by the Counterparty Parties pursuant to this clause (w) shall not
exceed 5% of the Common Shares of the Corporation outstanding; (x) Common
Shares of the Corporation acquired in satisfaction of debts contracted
prior to the date hereof by any Counterparty Party in good faith in the
ordinary course of such Counterparty Party's banking business; (y) Common
Shares of the Corporation held by any Counterparty Party in a bona fide
---- ----
fiduciary or depository capacity; and (z) Common Shares of the
Corporation owned in the ordinary course of business by either (A) an
investment company registered under the Investment Company Act of 1940,
as amended, or (B) an investment account, for either of which any
Counterparty Party acts as investment advisor.
<PAGE> 64
Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
as the result of an acquisition of Common Shares by the Corporation which, by
reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 20% or more of the Common
Shares of the Corporation then outstanding; provided, however, that if a
-------- -------
Person shall become the Beneficial Owner of 20% or more of the Common Shares
of the Corporation then outstanding by reason of share purchases by the
Corporation and shall, after such share purchases by the Corporation, become
the Beneficial Owner of any additional Common Shares of the Corporation, then
such Person shall be deemed to be an "Acquiring Person"."
2. Amendment to Section 1(o). Section 1(o) of the Rights
-------------------------
Agreement is hereby modified and amended to add the following sentence at the
end thereof:
"Notwithstanding anything in this paragraph to the contrary, neither the
execution and delivery of the Merger Agreement or the Counterparty Stock
Option Agreement nor consummation of the transactions contemplated by the
Merger Agreement or the Counterparty Stock Option Agreement shall be deemed
to be a Trigger Event."
3. Additions to Section 1. The following terms are hereby
----------------------
added to Section 1 of the Rights Agreement as additional defined terms under
the Rights Agreement;
"(q) "Counterparty" shall mean NationsBank Corporation, a North
Carolina corporation.
(r) "Counterparty Parties" shall mean, collectively,
Counterparty and its Affiliates and Associates (including Merger Sub).
"Counterparty Party" shall have a correlative meaning.
(s) "Counterparty Stock Option Agreement" shall mean the Stock
Option Agreement, dated as of August 29, 1996, between the Corporation
and Counterparty.
(t) "Merger Agreement" shall mean the Agreement and Plan of
Merger, dated as of August 29, 1996, by and between the Corporation and
Counterparty, as the same may be amended from time to time.
(u) "Termination Time" shall be immediately prior to the
Effective Time, as defined in the Merger Agreement."
4. Amendment to Section 15. Section 15 of the Rights
-----------------------
Agreement is hereby modified and amended to add the following sentence at the
end thereof:
"Nothing in this Agreement shall be construed to give any holder of Rights or
any other Person any legal or equitable rights, remedies or claims under this
Agreement in connection with any transactions contemplated by the Merger
Agreement or the Counterparty Stock Option Agreement."
3
<PAGE> 65
5. Addition of Section 34. A new Section 34 is added to the
----------------------
Rights Agreement, to read as follows:
"Section 34. Termination. This Agreement shall terminate
-----------
at the Termination Time and all rights, benefits, obligations, duties and
agencies created by this Agreement shall be terminated at the Termination
Time. All Rights issued and outstanding shall, at the Termination Time,
cease to exist and shall be terminated without any payment to any holder
thereof."
6. Effectiveness. This Amendment shall be deemed to be in
-------------
force and effective immediately prior to the execution and delivery of the
Merger Agreement. Except as amended hereby, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected hereby,
until the Termination Time.
7. Counterparts. This Amendment No. 2 may be executed in any
------------
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
8. Miscellaneous. In all respects not inconsistent with the
-------------
terms and provisions of this Amendment No. 2, the Rights Agreement is hereby
ratified, adopted, approved and confirmed. In executing and delivering this
Amendment No. 2, the Rights Agent shall be entitled to all the privileges and
immunities afforded to the Rights Agent under the terms and conditions of the
Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 to be duly executed and attested on the day and year first set forth
above.
Boatmen's Bancshares, Inc.
By:
-------------------------------------
Name:_______________________________
Title:______________________________
Attest:
By:
----------------------------------
Name:____________________________
Title:___________________________
4
<PAGE> 66
Boatmen's Trust Company
By:
-------------------------------------
Name:_______________________________
Title:______________________________
Attest:
By:
----------------------------------
Name:____________________________
Title:___________________________
5
<PAGE> 67
EXHIBIT C
---------
_______________, 199__
- ---------------------------------
- ---------------------------------
- ---------------------------------
- ---------------------------------
Attention:
-----------------------
-----------------------
Re: Agreement and Plan of Merger, dated as of August 29,
1996 (the "Merger Agreement"), by and between Boatmen's
Bancshares, Inc. (the "Company") and NationsBank
Corporation ("Parent")
Gentlemen:
I have been advised that I may be deemed to be an affiliate of
the Company, as that term is defined for purposes of paragraphs (c) and (d)
of Rule 145 ("Rule 145") of the Rules and Regulations of the Securities and
Exchange Commission (the "Commission") promulgated under the Securities Act
of 1933, as amended (the "Securities Act").
Pursuant to the terms and conditions of the Merger Agreement,
each share of common stock of the Company owned by me as of the effective
time of the merger contemplated by the Merger Agreement (the "Merger") will
be converted into the right to receive shares of common stock of Parent or,
if I so elect, cash consideration in lieu of receiving shares of common stock
of Parent, and each share of preferred stock of the Company owned by me as of
the effective time of the Merger will be converted into the right to receive
preferred stock of Parent. As used in this letter, the shares of common
stock and preferred stock of the Company which may be received by me in the
Merger in exchange for the shares of common stock and preferred stock of the
Company owned by me immediately prior to the effective time of the Merger are
referred to as the "Post-Merger Shares." This letter is delivered to Parent
pursuant to Section 6.07 of the Merger Agreement.
<PAGE> 68
- ------------------------------
, 19
- --------------------------- --
Page 2
A. I represent and warrant to Parent and agree that:
1. I shall not make any sale, transfer or other disposition
of the Post-Merger Shares I receive pursuant to the Merger in
violation of the Securities Act or the Rules and Regulations of the
Commission promulgated thereunder.
2. I understand that the issuance of the Post-Merger Shares
to me pursuant to the Merger will be registered with the Commission
under the Securities Act. I also understand that, because I may be
deemed an "affiliate" of the Company and because any distributions
by me of the Post-Merger Shares will not be registered under the
Securities Act, such Post-Merger Shares must be held by me unless
(i) the sale, transfer or other distribution has been registered
under the Securities Act, (ii) the sale, transfer or other
distribution of such Post-Merger Shares is made in accordance with
the provisions of Rule 145, or (iii) in the opinion of counsel
acceptable to Parent, another exemption from registration under the
Securities Act is available with respect to any such proposed
distribution, sale, transfer or other disposition of such
Post-Merger Shares.
B. I understand and agree that:
1. There will be placed on the certificates representing
such Post-Merger Shares, or any certificate delivered in
substitution therefor, a legend stating in substance:
"The shares represented by this Certificate were issued in a
transaction to which Rule 145 under the Securities Act of
1993, as amended, applied. The shares represented by this
certificate may be transferred only in accordance with the
terms of a letter agreement dated __________, 1996, by the
registered holder in favor of NationsBank Corporation, a copy
of which agreement is on file at the principal offices of
NationsBank Corporation."
2. Unless the transfer by me of Post-Merger Shares is a
sale made in compliance with the provisions of Rule 145(d) or made
pursuant to an effective registration statement under the Securities
Act, Parent reserves the right to place the following legend on the
certificates issued to my transferee:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, and
were acquired from a person who received such shares in a
transaction to which Rule 145 under the Securities Act of
1933, as amended, applied. The shares have not been acquired
by the holder with a view to, or for resale in connection
with, any distribution thereof within the meaning of the
Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless the shares have been registered
under the Securities Act of 1933, as amended, or an exemption
from registration is available."
I understand and agree that the legends set forth in paragraphs 1
and 2 above shall be removed by delivery of substitute certificates without
any legend if I deliver to Parent a copy of
C-2
<PAGE> 69
- ------------------------------
, 19
- --------------------------- --
Page 3
a letter from the staff of the Commission, or an opinion of counsel in form and
substance satisfactory to Parent, to the effect that no such legend is required
for the purpose of the Securities Act.
I have carefully read this letter and the Merger Agreement and
understand the requirements of each and the limitation imposed upon the
distribution, sale, transfer or other disposition of Post-Merger Shares by
me.
Very truly yours,
[#66481]
C-3
<PAGE> 1
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 29, 1996 (the
"Agreement"), by and between BOATMEN'S BANCSHARES, INC., a Missouri
corporation ("Issuer"), and NATIONSBANK CORPORATION, a North Carolina
corporation ("Grantee").
RECITALS
(A) MERGER AGREEMENT. Grantee and Issuer have, on the date
hereof, entered into an Agreement and Plan of Merger (the "Merger
Agreement"), providing for, among other things, the merger of Issuer with and
into a wholly owned subsidiary of Grantee, with such subsidiary being the
surviving corporation.
(B) CONDITION TO MERGER AGREEMENT. As a condition and
inducement to Grantee's pursuit of the transactions contemplated by the
Merger Agreement, and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the 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 a number of shares of common stock, par value $1.00 per
share ("Issuer Common"), of Issuer up to 31,218,660 of such 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, but in no
event shall the number of Option Shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Issuer Common) at a
purchase price per Option Share (as adjusted as set forth herein, the
"Purchase Price") equal to $43.375.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the 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, the 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 (as hereinafter defined); provided that the Option shall
terminate and be of no further force or effect upon the
1
<PAGE> 2
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 (as hereinafter defined) other
than a termination thereof by Grantee pursuant to Section 8.01(b) of the Merger
Agreement (but only if the breach of Issuer giving rise to such termination was
willful) (a termination of the Merger Agreement by Grantee pursuant to Section
8.01(b) thereof as a result of a willful breach by Issuer being referred to
herein as a "Default Termination"), (C) fifteen (15) months after a Default
Termination, or (D) fifteen (15) months after termination of the Merger
Agreement (other than by reason of a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event; provided,
however, 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
Grantee. The rights set forth in Section 8 hereof 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:
(i) Without Grantee's prior written consent, Issuer shall
have 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 (A) a
merger, consolidation or similar transaction involving Issuer or any of
its significant subsidiaries (other than transactions solely between
Issuer's subsidiaries that are not violative of the Merger Agreement),
(B) the disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Issuer or any of its significant subsidiaries representing in
either case 25% or more of the consolidated assets or deposits of Issuer
and its subsidiaries, or (C) the issuance, sale or other disposition by
Issuer of (including by way of merger, consolidation, share exchange or
any similar transaction) securities representing 25% or more of the
voting power of Issuer or any of its significant subsidiaries, other
than, in each case of (A), (B), or (C), any merger, consolidation or
similar transaction involving Issuer or any of its significant
subsidiaries in which the voting securities of Issuer outstanding
immediately prior thereto continue to represent (by either remaining
outstanding or being converted into the voting securities of the
surviving entity of any such transaction) at least 65% of the combined
voting power of the voting securities of the Issuer or the surviving
entity outstanding immediately after the consummation of such merger,
consolidation, or similar transaction (provided any such transaction is
not violative of the Merger Agreement)(each of (A), (B), or (C), 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 in Section 13(d)(3) of the Exchange Act), other than a group of
which Grantee or any subsidiary of Grantee is a member, shall have been
formed which beneficially owns, or has the right to acquire beneficial
ownership of, 25% or more of the voting power of Issuer or any of its
significant subsidiaries.
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<PAGE> 3
(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 such that, upon
consummation of such offer, such person would own or control 15% or more
of the then outstanding shares of Issuer Common (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the shareholders shall not have approved the Merger
Agreement by the requisite vote at the Company Meeting, the Company
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 bona fide 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 the Home Owners' Loan Act, as
amended, the Bank Holding Company Act of 1956, as amended, the Bank
Merger Act, as amended, or the Change in Bank Control Act of 1978, as
amended, for approval to engage in an Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its
shareholders by public announcement, or written communication that is or
becomes the subject of public disclosure, to engage in an Acquisition
Transaction; or
(iv) after a proposal is made by a third party to Issuer
or its shareholders to engage in an Acquisition Transaction, or such
third party states its intention to the Issuer to make such a proposal if
the Merger Agreement terminates, Issuer shall have breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach would entitle Grantee to terminate the Merger
Agreement under Article VIII thereof (without regard to the cure period
provided for therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the terms of the
Merger Agreement); or
(v) any person (other than Grantee or any subsidiary of
Grantee), other than in connection with a transaction to which Grantee
has given its prior written consent, shall have filed an application or
notice with any Regulatory Authority for approval to engage in an
Acquisition Transaction.
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<PAGE> 4
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) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition
to the right of Holder to exercise the Option.
(e) 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 (3) business days nor later than fifteen (15) business
days from the Notice Date for the closing (the "Closing") of such purchase
(the "Closing Date"); provided that the first notice of exercise shall be
sent to Issuer within one hundred eighty (180) days after the first Purchase
Event of which Grantee has been notified. If prior notification to or
approval of any Regulatory Authority is required in connection with such
purchase, Issuer shall cooperate with the Holder in the filing of the
required notice or application for approval and the obtaining of such
approval and the Closing shall occur immediately following such regulatory
approvals (and any mandatory waiting periods). Any exercise of the Option
shall be deemed to occur on the Notice Date relating thereto.
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).
(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 and subject to no
preemptive rights, and (B), if the Option 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 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
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<PAGE> 5
OPTION AGREEMENT DATED AS OF AUGUST 29, 1996. 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 the portion of the above legend relating to
the Securities Act 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.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately available funds and the tender of
this Agreement to Issuer, Holder shall be deemed to be the holder of record
of the shares of Issuer Common issuable upon such exercise, notwithstanding
that the stock transfer books of issuer shall then be closed or that
certificates representing such shares of Issuer Common shall not then be
actually delivered to Holder. Issuer shall pay all expenses, and any and all
United States federal, state, and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares
of Issuer Common so that the Option may be exercised without additional
authorization of Issuer Common after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common,
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any of
the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer, (iii) promptly to take all action as may from time to
time be required (including (A) complying with all premerger notification,
reporting and waiting period requirements, and (B) in the event prior
approval of or notice to any Regulatory Authority is necessary before the
Option may be exercised, cooperating fully with Holder in preparing such
applications or notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to exercise the Option
and Issuer duly and effectively to issue shares of the Issuer Common pursuant
hereto, and (iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Issuer,
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<PAGE> 6
and no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so contemplated;
this Agreement has been duly and validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer, as
of the date of this Agreement, no person or group has beneficial ownership of
more than 10% of the issued and outstanding shares of Issuer Common.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and permit it
to issue, and at all times from the date hereof through the termination of
this Agreement in accordance with its terms, will have reserved for issuance
upon the exercise of the Option, that number of shares of Issuer Common equal
to the maximum number of shares of Issuer Common at any time and from time to
time purchasable upon exercise of the Option, and all such shares, upon
issuance pursuant to the Option, will be duly authorized, validly issued,
fully paid and nonassessable, and will be delivered free and clear of all
claims, liens, encumbrances, and security interests (other than those created
by this Agreement) and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of
this Agreement does not or will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, its certificate of incorporation
or by-laws, or the comparable governing instruments of any of its
subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its subsidiaries is
subject, that would, in any case give any other person the ability to prevent
or enjoin Issuer's performance under this Agreement in any material respect.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the
approvals referred to in this Agreement, to consummate the transactions
contemplated by this Agreement; 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; and this
Agreement has been duly executed and delivered by Grantee.
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common 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
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<PAGE> 7
Option, the number and class of shares or other securities or property that
Holder would have received in respect of Issuer Common 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 are issued after the
date of this Agreement (other than pursuant to an event described in the
first sentence of this Section 7(a), upon exercise of any option to purchase
Issuer Common outstanding on the date hereof or upon conversion into Issuer
Common of any convertible security of Issuer outstanding on the date hereof),
the number of shares of Issuer Common subject to the Option shall be adjusted
so that, after such issuance, it, together with any shares of Issuer Common
previously issued pursuant hereto, equals 19.9% of the number of shares of
Issuer Common then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option. No provision of this
Section 7 shall be deemed to affect or change, or constitute authorization
for any violation of, any of the covenants or representations in the Merger
Agreement.
(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 shall be changed into or
exchanged for stock or other securities of Issuer or any other person or cash
or any other property or the outstanding shares of Issuer Common 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 or deposits
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 the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election
of Holder, of either (x) the Acquiring Corporation (as hereinafter defined),
(y) any person that controls the Acquiring Corporation, or (z) in the case of
a merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided, that, if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Holder. Substitute Option
Issuer shall also enter into an agreement with Holder in substantially the
same form as this Agreement, which shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of Substitute
Option per share of Substitute Common (the "Substitute Option Price") shall
then be equal to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common for which the Option was
theretofore exercisable and the
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<PAGE> 8
denominator is the number of shares of the Substitute Common for which the
Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii) the transferee of all or
substantially all of Issuer's assets (or a substantial part of the assets
of its subsidiaries taken as a whole).
(2) "Substitute Common" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
(3) "Assigned Value" shall mean the highest of (w) the
price per share of Issuer Common at which a Tender Offer or an Exchange
Offer therefor has been made, (x) the price per share of Issuer Common to
be paid by any third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common within the six (6)
month period immediately preceding the consolidation, merger, or sale in
question and (z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (i) the sum of the price
paid in such sale for such assets (and/or deposits) and the current
market value of the remaining assets of Issuer, as determined by a
nationally recognized investment banking firm selected by Holder divided
by (ii) the number of shares of Issuer Common outstanding at such time.
In the event that a Tender Offer or an Exchange Offer is made for Issuer
Common or an agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for Issuer Common
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(4) "Average Price" shall mean the average closing price
of a share of Substitute Common for the one year immediately preceding
the consolidation, merger, or sale in question, but in no event higher
than the closing price of the shares of Substitute Common on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate of the shares of Substitute Common outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common but for the limitation in the first sentence of this Section 7(f),
Substitute
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Option Issuer shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
the first sentence of this Section 7(f) over (ii) the value of the Substitute
Option after giving effect to the limitation in the first sentence of this
Section 7(f). This difference in value shall be determined by a nationally-
recognized investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the holders of
the other shares of common stock issued by Substitute Option Issuer are not
entitled to exercise any rights by reason of the issuance or exercise of the
Substitute Option and the shares of Substitute Common are otherwise in no way
distinguishable from or have lesser economic value (other than any diminution
in value resulting from the fact that the Substitute Common are restricted
securities, as defined in Rule 144 under the Securities Act or any successor
provision) than other shares of common stock issued by Substitute Option
Issuer).
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 twelve (12) months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option,
and (ii) all shares of Issuer Common 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 acquired 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 over (y) the Purchase
Price (subject to adjustment pursuant to Section 7), multiplied by the
number of shares of Issuer Common 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 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 ten (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 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.
Notwithstanding the foregoing, to the extent that prior notification to or
approval of any Regulatory 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 approval 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 approval). If any Regulatory
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 Regulatory 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 Regulatory 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 (5) 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 paid
for any such share by the person or groups described in Section 8(d)(i),
(ii) the price per share of Issuer Common received by holders of Issuer
Common in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest closing sales price per share of Issuer Common on Nasdaq (or if
Issuer Common is not traded on Nasdaq, the highest bid price per share as
quoted on the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by Holder) during
the forty (40) 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 a nationally recognized investment banking firm selected by
Holder, divided by the number of shares of the Issuer Common 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
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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 of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer Common, or
(ii) any of the transactions described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii) shall be consummated.
9. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible prepare and file a registration statement under the
Securities Act if such registration is necessary in order to permit the sale
or other disposition of any or all shares of Issuer Common or other
securities that have been acquired by or are issuable to the Selling
Shareholder upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by the Selling Shareholder in such
request, including without limitation a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other securities for
sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common under the Securities Act in connection with an underwritten public
offering of such Issuer Common, Issuer will promptly give written notice to
the Selling Shareholders of its intention to do so and, upon the written
request of any Selling Shareholder given within thirty (30) days after
receipt of any such notice (which request shall specify the number of shares
of Issuer Common intended to be included in such underwritten public offering
by the Selling Shareholder), Issuer will cause all such shares for which a
Selling Shareholder requests participation in such registration, to be so
registered and included in such underwritten public offering; provided,
however, 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 an
employee benefit plan or a registration filed on Form S-4 of the Securities
Act or any successor Form; provided, further, however, that such election
pursuant to (i) may only be made two times. If some but not all the shares
of Issuer Common, with respect to which Issuer shall have received requests
for registration pursuant to this Section 9(b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders desiring to register their shares
pro rata in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total number of
shares requested to be registered by all such Selling Shareholders then
desiring to have Issuer Common registered for sale.
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(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in
Section 9(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, however, that Issuer may delay any
registration of Option Shares required pursuant to Section 9(a) above for a
period not exceeding ninety (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 Act pursuant to
Section 9(a) above:
(i) prior to the earliest of (a) termination of the
Merger Agreement pursuant to Article VIII thereof, (b) failure to
obtain the requisite shareholder approval pursuant to Section 7.01 of the
Merger Agreement, and (c) a Purchase Event or a Preliminary Purchase
Event;
(ii) on more than one occasion during any calendar year;
(iii) within ninety (90) days after the effective date of a
registration referred to in Section 9(b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded the
opportunity to register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common issuable upon
exercise of the Option) 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 (9) 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, however, 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.
(d) Expenses. 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), legal expenses, including the reasonable
fees and expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold
comfort" letters, 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
Section 9(a) or 9(b) above (including the related offerings and sales by
holders of Option Shares) and all other qualifications, notifications or
exemptions pursuant to Section 9(a) or 9(b) above.
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<PAGE> 13
(e) Indemnification. In connection with any registration under
Section 9(a) or 9(b) above, Issuer hereby indemnifies the Selling
Shareholders, 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, or alleged 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, or alleged 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 Shareholders, 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 Section
9(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 Section 9(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
Section 9(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 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
fails 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 Section 9(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or
13
<PAGE> 14
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, the Selling
Shareholders and the underwriters from the offering of the securities and also
the relative fault of Issuer, the Selling Shareholders 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, however, that in no case shall any Selling Shareholder 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 Section 9(a) or
9(b) above, Issuer and each Selling Shareholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. 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 the
Selling Shareholders thereof in accordance with and to the extent permitted
by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rule 144A. Issuer shall at its expense
provide the Selling Shareholders 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 Act or the Exchange Act, or required pursuant to
any state securities laws or the rules of any stock exchange.
(g) Issue Taxes. 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 the Selling Shareholders harmless,
without limitation as to time, against any and all liabilities, with respect
to all such taxes.
10. QUOTATION; LISTING. If Issuer Common or any other securities
to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on any securities exchange,
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 or other securities to be acquired upon exercise of the Option
on such securities exchange and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
14
<PAGE> 15
11. 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 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.
12. LIMITATION ON TOTAL PROFIT AND NOTIONAL TOTAL PROFIT.
(a) Notwithstanding anything to the contrary contained herein, in no
event shall Grantee's Total Profit (as defined below in Section 12(c) hereof)
exceed $250 million and, if it otherwise would exceed such amount, Grantee,
at its sole election, shall either (i) reduce the number of shares of Issuer
Common subject to the Option, (ii) deliver to Issuer for cancellation Option
Shares previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any
combination thereof, so that Grantee's actually realized Total Profit shall
not exceed $250 million after taking into account the foregoing actions.
(b) Notwithstanding anything to the contrary contained herein, the
Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as defined below in Section
14(d) hereof) of more than $250 million; provided, that nothing in this
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8 hereof, (ii)(x) the amount received by Grantee pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8 hereof, less
(y) Grantee's purchase price for such Option Shares, (iii)(x) the net cash
amounts received by Grantee pursuant to the sale of Option Shares (or any
other securities into which such Option Shares shall be converted or
exchanged) to any unaffiliated party, less (y) Grantee's purchase price of
such Option Shares, (iv) any amounts received by Grantee on the transfer of
the Option (or any portion thereof) to any unaffiliated party, and (v) any
equivalent amount with respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise the Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that the Option were exercised on
15
<PAGE> 16
such date for such number of shares and assuming that such shares, together
with all other Option Shares held by Grantee and its affiliates as of such
date, were sold for cash at the closing market price for the Issuer Common as
of the close of business on the preceding trading day (less customary brokerage
commissions).
(e) Grantee agrees, promptly following any exercise of all or any
portion of the Option, and subject to its rights under Section 8 hereof, to
use commercially reasonable efforts promptly to maximize the value of Option
Shares purchased taking into account market conditions, the number of Option
Shares, the potential negative impact of substantial sales on the market
price for Issuer Common, and the availability of an effective registration
statement to permit public sale of Option Shares.
13. MISCELLANEOUS.
(a) Expenses. 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 Beneficiaries;
Severability. This Agreement, together with the Merger Agreement and the
other documents and instruments referred to herein and therein, between
Grantee and Issuer (i) 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 (ii) is not intended
to confer upon any person other than the parties hereto (other than the
indemnified parties under Section 9(e) and 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, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
Regulatory 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 Authority 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 as provided in
Section 3 (as may be adjusted herein), 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 Missouri without regard
to any applicable conflicts of law rules.
16
<PAGE> 17
(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) or mailed by registered or certified mail
(return receipt requested) 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 and delivered, 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 Holder may assign
this Agreement to a wholly-owned subsidiary of Holder and Holder 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 the Holder, Issuer and the 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 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.
17
<PAGE> 18
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.
BOATMEN'S BANCSHARES, INC.
By /s/ Andrew B. Craig, III
--------------------------------------
Andrew B. Craig, III
Chairman and Chief Executive Officer
NATIONSBANK CORPORATION
By /s/ Hugh L. McColl, Jr.
--------------------------------------
Hugh L. McColl, Jr.
Chairman and Chief Executive Officer
18
<PAGE> 1
EXHIBIT B
AMENDMENT NO. 2
TO
RIGHTS AGREEMENT
----------------
Amendment No. 2, dated as of August 29, 1996, to Rights
Agreement, dated as of August 14, 1990, as amended by Amendment No. 1
thereto, dated as of January 26, 1993, (the "Rights Agreement"), between
Boatmen's Bancshares, Inc., a Missouri corporation (the "Corporation"), and
Boatmen's Trust Company, a Missouri trust corporation (the "Rights Agent")
(all terms not otherwise defined herein shall have the meanings ascribed to
them in the Rights Agreement).
WITNESSETH:
WHEREAS, the Corporation and the Rights Agent have previously
entered into the Rights Agreement specifying the terms of the Rights;
WHEREAS, Section 27 of the Rights Agreement provides that the
Corporation may from time to time supplement or amend the Rights Agreement to
make any provisions with respect to the Rights which the Corporation may deem
necessary or desirable, any such amendment to be evidenced by a writing
signed by the Corporation and the Rights Agent;
WHEREAS, the Corporation and NationsBank Corporation, a North
Carolina corporation ("Counterparty"), have entered into an Agreement and
Plan of Merger, dated as of August 29, 1996 (the "Merger Agreement"),
pursuant to which the Corporation would merge with and into Merger Sub, a
wholly-owned subsidiary of Counterparty ("Merger Sub"), with Merger Sub as
the surviving corporation in the merger (the "Merger");
WHEREAS, in connection with the Merger Agreement, the Corporation
and Counterparty have entered into a Stock Option Agreement, dated as of
August 29, 1996 (the "Counterparty Stock Option Agreement"), pursuant to
which the Corporation has granted to Counterparty an option (the
"Counterparty Stock Option") to purchase certain of the Company's Common
Shares under certain circumstances and upon certain terms and conditions;
WHEREAS, the consummation of the transactions contemplated by the
Merger Agreement would result in Counterparty owning all of the outstanding
Common Shares of the Corporation and therefore becoming an Acquiring Person
within the meaning of the Rights Agreement;
WHEREAS, the consummation of the transactions contemplated by the
Counterparty Stock Option Agreement might cause the Counterparty to become an
Acquiring Person within the meaning of the Rights Agreement;
WHEREAS, the Corporation wishes to amend the Rights Agreement to
provide that the acquisition of Common Shares of the Corporation by
Counterparty in accordance with
1
<PAGE> 2
the Merger Agreement or the Counterparty Stock Option Agreement will not result
in Counterparty being deemed an Acquiring Person under the Rights Agreement;
and
WHEREAS, all acts and things necessary to make this Amendment No.
2 a valid agreement according to its terms have been done and performed, and
the execution and delivery of this Amendment No. 2 by the Corporation and the
Rights Agent have been in all respects duly authorized by the Corporation and
the Rights Agent;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereby agree as follows:
1. Amendment to Section 1(a). Section 1(a) of the Rights
-------------------------
Agreement is hereby amended and restated in its entirety to read as follows:
"(a) Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 20% or more of
the Common Shares of the Corporation then outstanding, but shall not include
any of the following:
(i) the Corporation, any Subsidiary (as such term is
hereinafter defined) of the Corporation, any employee benefit plan of
the Corporation or any Subsidiary of the Corporation, or any entity
holding Common Shares for or pursuant to the terms of any such plan; or
(ii) until the termination of the Merger Agreement and the
Counterparty Stock Option Agreement in accordance with their respective
terms, any Counterparty Party, but only if and for so long as (A)
Counterparty is in compliance with all material terms, conditions and
obligations imposed upon it by the Merger Agreement and the Counterparty
Stock Option Agreement and (B) no Counterparty Party is the Beneficial
Owner of any Common Shares of the Corporation then outstanding other
than: (u) Common Shares of the Corporation of which any Counterparty
Party is or becomes the Beneficial Owner by reason of the approval,
execution or delivery of the Merger Agreement or the Counterparty Stock
Option Agreement or by reason of the consummation of any transaction
contemplated in the Merger Agreement or the Counterparty Stock Option
Agreement or both; (v) Common Shares of the Corporation of which any
Counterparty Party is the Beneficial Owner on the date hereof; (w) Common
Shares of the Corporation of which any Counterparty Party becomes the
Beneficial Owner after the date hereof; provided, that the aggregate
--------
number of Common Shares of the Corporation which may be Beneficially
Owned by the Counterparty Parties pursuant to this clause (w) shall not
exceed 5% of the Common Shares of the Corporation outstanding; (x) Common
Shares of the Corporation acquired in satisfaction of debts contracted
prior to the date hereof by any Counterparty Party in good faith in the
ordinary course of such Counterparty Party's banking business; (y) Common
Shares of the Corporation held by any Counterparty Party in a bona fide
---- ----
fiduciary or depository capacity; and (z) Common Shares of the
Corporation owned in the ordinary course of business by either (A) an
investment company registered under the Investment Company Act of 1940,
as amended, or (B) an investment account, for either of which any
Counterparty Party acts as investment advisor.
<PAGE> 3
Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
as the result of an acquisition of Common Shares by the Corporation which, by
reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 20% or more of the Common
Shares of the Corporation then outstanding; provided, however, that if a
-------- -------
Person shall become the Beneficial Owner of 20% or more of the Common Shares
of the Corporation then outstanding by reason of share purchases by the
Corporation and shall, after such share purchases by the Corporation, become
the Beneficial Owner of any additional Common Shares of the Corporation, then
such Person shall be deemed to be an "Acquiring Person"."
2. Amendment to Section 1(o). Section 1(o) of the Rights
-------------------------
Agreement is hereby modified and amended to add the following sentence at the
end thereof:
"Notwithstanding anything in this paragraph to the contrary, neither the
execution and delivery of the Merger Agreement or the Counterparty Stock
Option Agreement nor consummation of the transactions contemplated by the
Merger Agreement or the Counterparty Stock Option Agreement shall be deemed
to be a Trigger Event."
3. Additions to Section 1. The following terms are hereby
----------------------
added to Section 1 of the Rights Agreement as additional defined terms under
the Rights Agreement;
"(q) "Counterparty" shall mean NationsBank Corporation, a North
Carolina corporation.
(r) "Counterparty Parties" shall mean, collectively,
Counterparty and its Affiliates and Associates (including Merger Sub).
"Counterparty Party" shall have a correlative meaning.
(s) "Counterparty Stock Option Agreement" shall mean the Stock
Option Agreement, dated as of August 29, 1996, between the Corporation
and Counterparty.
(t) "Merger Agreement" shall mean the Agreement and Plan of
Merger, dated as of August 29, 1996, by and between the Corporation and
Counterparty, as the same may be amended from time to time.
(u) "Termination Time" shall be immediately prior to the
Effective Time, as defined in the Merger Agreement."
4. Amendment to Section 15. Section 15 of the Rights
-----------------------
Agreement is hereby modified and amended to add the following sentence at the
end thereof:
"Nothing in this Agreement shall be construed to give any holder of Rights or
any other Person any legal or equitable rights, remedies or claims under this
Agreement in connection with any transactions contemplated by the Merger
Agreement or the Counterparty Stock Option Agreement."
3
<PAGE> 4
5. Addition of Section 34. A new Section 34 is added to the
----------------------
Rights Agreement, to read as follows:
"Section 34. Termination. This Agreement shall terminate
-----------
at the Termination Time and all rights, benefits, obligations, duties and
agencies created by this Agreement shall be terminated at the Termination
Time. All Rights issued and outstanding shall, at the Termination Time,
cease to exist and shall be terminated without any payment to any holder
thereof."
6. Effectiveness. This Amendment shall be deemed to be in
-------------
force and effective immediately prior to the execution and delivery of the
Merger Agreement. Except as amended hereby, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected hereby,
until the Termination Time.
7. Counterparts. This Amendment No. 2 may be executed in any
------------
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
8. Miscellaneous. In all respects not inconsistent with the
-------------
terms and provisions of this Amendment No. 2, the Rights Agreement is hereby
ratified, adopted, approved and confirmed. In executing and delivering this
Amendment No. 2, the Rights Agent shall be entitled to all the privileges and
immunities afforded to the Rights Agent under the terms and conditions of the
Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 to be duly executed and attested on the day and year first set forth
above.
Boatmen's Bancshares, Inc.
By: /s/ Gregory L. Curl
-------------------------------------
Name:_______________________________
Title:______________________________
Attest:
By: /s/ James W. Kienker
----------------------------------
Name:____________________________
Title:___________________________
4
<PAGE> 5
Boatmen's Trust Company
By: /s/
-------------------------------------
Name:_______________________________
Title:______________________________
Attest:
By: /s/
----------------------------------
Name:____________________________
Title:___________________________
5
<PAGE> 1
NATIONSBANK NEWS RELEASE
FOR IMMEDIATE RELEASE
August 30, 1996 -- NationsBank Corporation and Boatmen's Bancshares, Inc.
today announced a definitive agreement to merge the two companies. The
combined company will create an unmatched banking franchise serving more than
13 million customers in 16 states in the Midwest, Southwest, Southeast and
Mid-Atlantic.
Following the merger, NationsBank will have combined assets of approximately
$230 billion, $20 billion in shareholder's equity and a market capitalization
of $33 billion. The company will have the earnings power to produce nearly
$3 billion in net income during 1997, based on current analyst consensus
estimates. The transaction is expected to close in January 1997.
Andrew B. Craig III, chairman and chief executive officer of Boatmen's, will
be chairman of the board of NationsBank Corp. Hugh L. McColl, Jr., current
chairman and chief executive officer of NationsBank Corp., will be chief
executive officer of the merged company.
"The combination of these two great companies creates a new power in banking
in North America. The access to products and services in our newly expanded
16-state franchise is evidence of our continued commitment to convenience,
choice and value for our new and existing customers. We are creating
tomorrow's banking company today," McColl said.
<PAGE> 2
"In addition, the short-term and long-term earnings potential of our company
has been strengthened dramatically, providing increasing financial opportunity
for NationsBank shareholders," McColl added. "We welcome our new teammates
and eagerly anticipate joining them in this partnership. Such a dynamic
expansion of our company means greater opportunity for all."
Banking customers in the expanded NationsBank territory will have access to
the premier retail banking organization in the United States. NationsBank
will reach a population of 100 million people through more than 5,000 ATMs and
approximately 2,600 banking centers. NationsBank will have a combined
15 percent deposit share across its franchise.
"We believe NationsBank is the best partner for Boatmen's to bring an
innovative mindset, technology expertise and a similar commitment to helping
our customers succeed," Craig said. "We feel confident that our customers,
our communities, our associates and our shareholders will benefit from this
combination."
In addition to creating a unique retail banking franchise, the newly combined
company will enjoy:
-- A trust and asset management division with $111 billion in assets
under discretionary management, making it the sixth-largest bank-owned asset
management business in North America, and generating $650 million in annual
fees
-- $26 billion in combined proprietary mutual funds
-- A $110 billion mortgage servicing portfolio
<PAGE> 3
-- A greatly expanded business customer base in small- to
middle-market companies
NationsBank will use purchase accounting for the transaction. The purchase
price is based on a fixed exchange rate of .6525 shares of NationsBank common
stock for each share of Boatmen's common stock outstanding.
For Boatmen's shareholders, the merger will be structured as a "cash election"
merger, in which holders of Boatmen's common stock will have the right to
choose to receive either form of consideration. At least 60 percent of the
aggregate purchase price paid to all holders will be in shares of NationsBank
common stock, and the balance of approximately 40 percent will be paid in
either cash or NationsBank common stock, or a mix of the two. The transaction
will be a tax-free exchange for Boatmen's shareholders to the extent they
receive shares of NationsBank stock.
NationsBank projects $335 million in annual cost savings from the merger,
fully realized by 1999. This represents a reduction in the combined expenses
of 5 percent. These cost savings will come in the areas of operational
consolidation, delivery system optimization, business line consolidation and
vendor leverage.
The merger is subject to the approval of Boatmen's and NationsBank
shareholders and the appropriate regulatory authorities.
<PAGE> 4
At June 30, 1996, NationsBank had $192 billion in total assets, ranking the
Charlotte, N.C.-based company as the fifth-largest U.S. commercial bank. The
assets of St. Louis,Mo.-based Boatmen's totaled $41 billion. The combined
company is expected to rank fourth in assets.
