SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12, 1997
CAPITAL BANCORP
(Exact name of Registrant as specified in its charter)
Florida 2-26080 59-2160717
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
1221 Brickell Avenue, Miami, Florida 33131
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (305) 536-1500
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On August 12, 1997, Capital Bancorp ("Bancorp") and
Union Planters Corporation ("UPC") entered into an Agreement
and Plan of Merger (the "Agreement"), pursuant to which Bancorp
will be acquired by UPC. In accordance with the terms of the
Agreement, UPC will acquire Bancorp pursuant to the merger (the
"Merger") of Bancorp with a newly-formed, wholly-owned
subsidiary of UPC, to be organized under the laws of the State
of Florida. Bancorp will be the surviving entity resulting
from the Merger.
Upon consummation of the Merger, each share of common
stock of Bancorp ("Bancorp Common Stock") (excluding shares
held by Bancorp, UPC, or any of their respective subsidiaries,
in each case other than in a fiduciary capacity or as a result
of debts previously contracted) issued and outstanding at the
effective time of the Merger (as defined in the Agreement, the
"Effective Time") shall cease to be outstanding and shall be
converted into .8525 shares (subject to possible adjustment as
described below, the "Exchange Ratio") of common stock of UPC,
together with associated preferred stock purchase rights
(collectively, "UPC Common Stock").
In addition, at the Effective Time, all rights with
respect to Bancorp Common Stock, pursuant to stock options,
stock appreciation rights, or other rights granted by Bancorp
under the existing stock plans of Bancorp, which are
outstanding at the Effective Time, whether or not exercisable,
shall be converted into and become rights with respect to UPC
Common Stock on a basis that reflects the Exchange Ratio. In
addition, subject to certain conditions set forth in the
Agreement, each holder of outstanding stock options which are
not "incentive stock options" of Bancorp may elect to convert
all or a portion of such options which have not expired prior
to the Effective Time into the right to receive such number of
shares of UPC Common Stock (valued at the Average Closing Price
(as defined in the Agreement)) as are equal in value to the
excess of (i) the product of the number of shares of Bancorp
Common Stock subject to such option times the Exchange Ratio
times the Average Closing Price (as defined in the Agreement)
of UPC Common Stock, over (ii) the product of (a) the exercise
price per share of Bancorp Common Stock subject to such option
and (b) the number of shares of Bancorp Common Stock subject to
such option.
The Merger is intended to constitute a tax-free
transaction under the Internal Revenue Code of 1986, as
amended, and be accounted for as a pooling of interests.
Consummation of the Merger is subject to various
conditions, including: (i) receipt of the approval by the
shareholders of Bancorp of the Agreement and the Merger as
required under applicable law and the Agreement; (ii) receipt
of certain regulatory approvals from the Board of Governors of
the Federal Reserve System and other applicable regulatory
authorities; (iii) receipt of an opinion of counsel as to the
tax-free nature of the Merger; (iv) receipt of a letter from
Price Waterhouse LLP, UPC's independent public accountants, to
the effect that the Merger will qualify for pooling of
interests accounting treatment; and (v) satisfaction of certain
other customary conditions.
In addition, UPC can terminate the Agreement at any
time before September 12, 1997 under certain specified
circumstances set forth in the Agreement based upon a due
diligence investigation of Bancorp.
In addition to certain other termination rights of
Bancorp and UPC set forth in the Agreement, Bancorp has the
right to terminate the Agreement if the Average Closing Price
of UPC Common Stock (i) is less than 80% of the Starting Price
(as defined in the Agreement) and (ii) reflects a decline, on
the Determination Date (as defined in the Agreement), of more
than 15% below a weighted index of the stock prices of a group
of bank holding companies designated in the Agreement. In the
event that Bancorp gives notice of its intention to terminate
the Agreement based on such provision, UPC has the right,
within five (5) days of UPC'S receipt of such notice, to elect
to adjust the Exchange Ratio in accordance with the terms of
the Agreement, and thereby eliminate Bancorp's right to
terminate the Agreement under such provision.
In connection with executing the Agreement, UPC and
Bancorp entered into a stock option agreement (the "Stock
Option Agreement") pursuant to which Bancorp granted to UPC an
option to purchase, subject to certain limitations, up to
1,510,500 shares of Bancorp Common Stock (representing 19.9% of
the issued and outstanding shares of Bancorp Common Stock
without giving effect to the exercise of the option), at a
purchase price of $40.50 per share, upon certain terms and in
accordance with certain conditions. Under the terms of the
Stock Option Agreement, the Total Profit (as defined in the
Stock Option Agreement) and the Notional Total Profit (as
defined in the Stock Option Agreement) that a holder may
realize, including UPC, under the Stock Option Agreement may
not exceed $18.0 million.
In addition, each of the directors of Bancorp has
entered into an agreement with UPC wherein such directors have
agreed, as individual shareholders, to vote his or her shares
of Bancorp Common Stock in favor of the Merger.
For additional information regarding the Agreement
and the Stock Option Agreement, please refer to the copies of
those documents which are incorporated herein by reference and
included as Exhibits to this Current Report on Form 8-K. The
foregoing discussion is qualified in its entirety by reference
to such documents.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) The following Exhibits are filed with this
Current Report on Form 8-K:
Exhibit
Number Description
------- -----------
2.1 Agreement and Plan of Merger, dated as of August 12,
1997, by and between Union Planters Corporation and
Capital Bancorp.
2.2 Stock Option Agreement, dated as of August 12, 1997,
by and between Capital Bancorp and Union Planters
Corporation
99 Press Release of Capital Bancorp, dated August 13,
1997.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunder
duly authorized.
Dated: August 22, 1997
CAPITAL BANCORP
By:/s/ Lucious T. Harris
_____________________________
Lucious T. Harris, Senior
Vice President and Treasurer
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
UNION PLANTERS CORPORATION
AND
CAPITAL BANCORP
DATED AS OF AUGUST 12, 1997
TABLE OF CONTENTS
Page
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER . . . . . 2
1.1 Merger . . . . . . . . . . . . . . . . . . 2
1.2 Time and Place of Closing . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . 2
1.4 Execution of Agreements . . . . . . . . . . 3
1.5 Restructure of Transaction . . . . . . . . 3
ARTICLE 2 TERMS OF MERGER . . . . . . . . . . . . . . 4
2.1 Charter . . . . . . . . . . . . . . . . . . 4
2.2 By-Laws . . . . . . . . . . . . . . . . . . 4
2.3 Directors and Officers . . . . . . . . . . 4
ARTICLE 3 MANNER OF CONVERTING SHARES . . . . . . . . 4
3.1 Conversion of Shares . . . . . . . . . . . 4
3.2 Anti-Dilution Provisions . . . . . . . . . 5
3.3 Shares Held by Subject Company or Parent . 5
3.4 Fractional Shares . . . . . . . . . . . . . 5
3.5 Conversion of Stock Options . . . . . . . . 5
ARTICLE 4 EXCHANGE OF SHARES . . . . . . . . . . . . 7
4.1 Exchange Procedures . . . . . . . . . . . . 7
4.2 Rights of Former Subject Company
Shareholders . . . . . . . . . . . . . . . 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SUBJECT
COMPANY . . . . . . . . . . . . . . . . . . 9
5.1 Organization, Standing, and Power . . . . . 9
5.2 Authority; No Breach by Agreement . . . . . 10
5.3 Capital Stock . . . . . . . . . . . . . . . 11
5.4 Subject Company Subsidiaries . . . . . . . 11
5.5 Financial Statements . . . . . . . . . . . 13
5.6 Absence of Undisclosed Liabilities . . . . 13
5.7 Absence of Certain Changes or Events . . . 14
5.8 Tax Matters . . . . . . . . . . . . . . . . 14
5.9 Assets. . . . . . . . . . . . . . . . . . . 15
5.10 Intellectual Property. . . . . . . . . . . 16
5.11 Environmental Matters. . . . . . . . . . . 17
5.12 Compliance With Laws. . . . . . . . . . . . 18
5.13 Labor Relations. . . . . . . . . . . . . . 18
5.14 Employee Benefit Plans. . . . . . . . . . . 19
5.15 Material Contracts. . . . . . . . . . . . . 21
5.16 Legal Proceedings . . . . . . . . . . . . . 22
5.17 Reports. . . . . . . . . . . . . . . . . . 22
5.18 Statements True and Correct. . . . . . . . 23
5.19 Accounting, Tax, and Regulatory Matters. . 24
5.20 State Takeover Laws . . . . . . . . . . . . 24
5.21 Article Provisions . . . . . . . . . . . . 24
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT . 24
6.1 Organization, Standing and Power. . . . . 24
6.2 Authority; No Breach by Agreement. . . . . 25
6.3 Capital Stock. . . . . . . . . . . . . . . 26
6.4 Parent Subsidiaries . . . . . . . . . . . . 26
6.5 Financial Statements. . . . . . . . . . . . 27
6.6 Absence of Undisclosed Liabilities. . . . . 27
6.7 Absence of Certain Changes or Events. . . . 28
6.8 Tax Matters. . . . . . . . . . . . . . . . 28
6.9 Environmental Matters. . . . . . . . . . . 28
6.10 Compliance With Laws. . . . . . . . . . . . 29
6.11 Legal Proceedings. . . . . . . . . . . . . 30
6.12 Reports. . . . . . . . . . . . . . . . . . 30
6.13 Statements True and Correct. . . . . . . . 31
6.14 Accounting, Tax, and Regulatory Matters. . 31
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION . 32
7.1 Affirmative Covenants of Subject Company. . 32
7.2 Negative Covenants of Subject Company. . . 32
7.3 Covenants of Parent . . . . . . . . . . . . 35
7.4 Adverse Changes in Condition . . . . . . . 35
7.5 Reports . . . . . . . . . . . . . . . . . . 36
ARTICLE 8 ADDITIONAL AGREEMENTS . . . . . . . . . . . 36
8.1 Registration Statement; Proxy Statement;
Shareholder
Approval . . . . . . . . . . . . . . . . . 36
8.2 Exchange Listing . . . . . . . . . . . . . 37
8.3 Applications . . . . . . . . . . . . . . . 37
8.4 Filings With State Offices . . . . . . . . 37
8.5 Agreement as to Efforts to Consummate . . . 37
8.6 Investigation and Confidentiality . . . . . 38
8.7 Press Releases . . . . . . . . . . . . . . 38
8.8 Certain Actions . . . . . . . . . . . . . . 38
8.9 Accounting and Tax Treatment . . . . . . . 39
8.10 Agreement of Affiliates . . . . . . . . . . 39
8.11 Employee Benefits and Contracts . . . . . . 40
8.12 Indemnification . . . . . . . . . . . . . . 40
8.13 Merger Subsidiary Organization . . . . . . 42
8.14 State Takeover Laws . . . . . . . . . . . . . 43
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS
TO CONSUMMATE . . . . . . . . . . . . . . . 43
9.1 Conditions to Obligations of Each Party . . 43
9.2 Conditions to Obligations of Parent . . . . 45
9.3 Conditions to Obligations of Subject
Company . . . . . . . . . . . . . . . . . . 46
ARTICLE 10 TERMINATION . . . . . . . . . . . . . . . . 47
10.1 Termination . . . . . . . . . . . . . . . . 47
10.2 Effect of Termination . . . . . . . . . . . 52
10.3 Non-Survival of Representations and
Covenants . . . . . . . . . . . . . . . . . 52
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . 52
11.1 Definitions . . . . . . . . . . . . . . . . 52
11.2 Expenses . . . . . . . . . . . . . . . . . 62
11.3 Brokers and Finders . . . . . . . . . . . . 63
11.4 Entire Agreement . . . . . . . . . . . . . 63
11.5 Amendments . . . . . . . . . . . . . . . . 63
11.6 Waivers . . . . . . . . . . . . . . . . . . 63
11.7 Assignment . . . . . . . . . . . . . . . . 64
11.8 Notices . . . . . . . . . . . . . . . . . . 64
11.9 Governing Law . . . . . . . . . . . . . . . 65
11.10 Counterparts . . . . . . . . . . . . . . . 65
11.11 Captions . . . . . . . . . . . . . . . . . 65
11.12 Interpretations . . . . . . . . . . . . . . 66
11.13 Enforcement of Agreement . . . . . . . . . 66
11.14 Severability . . . . . . . . . . . . . . . 66
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this
"Agreement") is made and entered into as of August 12, 1997,
by and between Capital Bancorp, a Florida corporation having
its principal office located in Miami, Florida ("Subject
Company"), and Union Planters Corporation, a Tennessee
corporation having its principal office located in Memphis,
Tennessee ("Parent").
PREAMBLE
The Boards of Directors of Subject Company and
Parent are of the opinion that the transactions described
herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the
acquisition of Subject Company by Parent pursuant to the
merger of a wholly owned subsidiary of Parent to be
organized under the Laws of the State of Florida ("Merger
Subsidiary") with and into Subject Company. At the
effective time of such merger, the outstanding shares of the
common stock of Subject Company shall be converted into the
right to receive shares of the common stock of Parent
(except as provided in Sections 3.3 and 3.4 of this
Agreement). As a result, shareholders of Subject Company
shall become shareholders of Parent and Subject Company
shall continue to conduct its business and operations as a
wholly owned subsidiary of Parent. The transactions
described in this Agreement are subject to the approvals of
the shareholders of Subject Company, the Board of Governors
of the Federal Reserve System, the Department of Banking and
Finance of the State of Florida, and other applicable
federal and state regulatory authorities, and the
satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this
Agreement that (i) for federal income tax purposes this
Agreement shall constitute a plan of merger and the Merger
shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code and (ii) for
accounting purposes the Merger shall qualify for treatment
as a pooling of interests.
Immediately after the execution and delivery of
this Agreement, as a condition and inducement to Parent's
willingness to enter into this Agreement, (i) Subject
Company and Parent are entering into a stock option
agreement pursuant to which Subject Company is granting to
Parent an option to purchase shares of Subject Company
Common Stock and (ii) each of the directors of Subject
Company are entering into a support agreement with Parent.
Certain terms used in this Agreement are defined
in Section 11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and
the mutual warranties, representations, covenants, and
agreements set forth herein, the parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, Merger Subsidiary
shall be merged with and into Subject Company in accordance
with the provisions of Section 607.1101 of the FBCA and with
the effect provided in Section 607.1106 of the FBCA (the
"Merger"). Subject Company shall be the Surviving
Corporation resulting from the Merger and shall continue to
be governed by the Laws of the State of Florida. The Merger
shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the
respective Boards of Directors of Subject Company and Parent
and will be approved and adopted by the Board of Directors
of Merger Subsidiary upon its organization.
1.2 Time and Place of Closing. The Closing will
take place at 9:00 A.M. on the date that the Effective Time
occurs (or the immediately preceding day if the Effective
Time is earlier than 9:00 A.M.), or at such other time as
the Parties, acting through their chief executive officers
or chief financial officers, may mutually agree. The
Closing shall be held at such place as may be mutually
agreed upon by the Parties.
1.3 Effective Time. The Merger and other
transactions contemplated by this Agreement shall become
effective on the date and at the time the Articles of Merger
reflecting the Merger shall become effective with the
Secretary of State of the State of Florida (the "Effective
Time"). Subject to the terms and conditions hereof, unless
otherwise mutually agreed upon in writing by the chief
executive officers or chief financial officers of each
Party, the Parties shall use their reasonable efforts to
cause the Effective Time to occur on such date as may be
designated by Parent within 30 days following the last to
occur of (i) the effective date of the last required Consent
of any Regulatory Authority having authority over and
approving or exempting the Merger (without regard to any
requisite waiting period in respect thereof), (ii) the date
on which the shareholders of Subject Company approve this
Agreement, and (iii) the date on which all other conditions
precedent (other than those conditions which relate to
actions to be taken at the Closing) to each Party's
obligations hereunder shall have been satisfied or waived
(to the extent waivable by such Party).
1.4 Execution of Agreements. Immediately after
the execution of this Agreement by the Parties and as a
condition thereto, (i) Subject Company is executing and
delivering to Parent a stock option agreement (the "Stock
Option Agreement"), in substantially the form of Exhibit 1,
pursuant to which Subject Company is granting to Parent an
option to purchase shares of Subject Company Common Stock
and (ii) each of the directors of Subject Company is
executing and delivering to Parent a support agreement (the
"Support Agreement") in substantially the form of Exhibit 2.
1.5 Restructure of Transaction. Parent shall, in
its reasonable discretion, have the unilateral right to
revise the structure of the Merger contemplated by this
Agreement in order to achieve tax benefits or for any other
reason which Parent may deem advisable; provided, however,
that Parent shall not have the right, without the approval
of the Board of Directors of Subject Company and, if
required by Section 607.1103 of the FBCA, the holders of the
Subject Company Common Stock, to make any revision to the
structure of the Merger which: (i) changes the amount of the
consideration which the holders of shares of Subject Company
Common Stock are entitled to receive (determined in the
manner provided in Section 3.1 of this Agreement); (ii)
changes the intended tax-free effects of the Merger to
Parent, Subject Company or the holders of shares of Subject
Company Common Stock or changes the intended pooling of
interests accounting treatment; (iii) would permit Parent to
pay the consideration other than by delivery of Parent
Common Stock registered with the SEC (in the manner
described in Section 4.1 of this Agreement); (iv) would be
materially adverse to the interests of Subject Company or
adverse to the holders of shares of Subject Company Common
Stock; (v) would materially impede or delay consummation of
the Merger; or (vi) would require a vote of Parent's
shareholders under relevant state Law. Parent may exercise
this right of revision by giving written notice to Subject
Company in the manner provided in Section 11.8 of this
Agreement which notice shall be in the form of an amendment
to this Agreement or in the form of an Amended and Restated
Agreement and Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Articles of Incorporation (the
"Articles") of Subject Company in effect immediately prior
to the Effective Time shall be the Articles of the Surviving
Corporation until otherwise amended or repealed.
2.2 By-Laws. The Amended and Restated By-laws of
Subject Company (the "By-Laws") in effect immediately prior
to the Effective Time shall be the By-laws of the Surviving
Corporation until otherwise amended or repealed.
2.3 Directors and Officers. The directors of
Merger Subsidiary in office immediately prior to the
Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the
Surviving Corporation from and after the Effective Time in
accordance with the By-laws of the Surviving Corporation.
The officers of Merger Subsidiary in office immediately
prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the
officers of the Surviving Corporation from the Effective
Time in accordance with the By-laws of the Surviving
Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the
provisions of this Article 3, at the Effective Time, by
virtue of the Merger and without any action on the part of
Parent, Merger Subsidiary, Subject Company, or the
shareholders of any of the foregoing, the shares of the
constituent corporations shall be converted as follows:
(a) Each share of Parent Capital Stock, including
any associated Parent Rights, issued and outstanding
immediately prior to the Effective Time shall remain issued
and outstanding from and after the Effective Time.
(b) Each share of Merger Subsidiary Common Stock
issued and outstanding immediately prior to the Effective
Time shall cease to be outstanding and shall be converted
into and exchanged for one share of Subject Company Common
Stock.
(c) Each share of Subject Company Common Stock
(excluding shares held by Subject Company, any Subject
Company Subsidiary, Parent or any Parent Subsidiary, in each
case other than in a fiduciary capacity or as a result of
debts previously contracted) issued and outstanding at the
Effective Time shall cease to be outstanding and shall be
converted into and exchanged for the right to receive .8525
shares of Parent Common Stock (as subject to possible
adjustment as set forth in Section 10.1(g) of this
Agreement, the "Exchange Ratio"). Pursuant to the Parent
Rights Agreement, each share of Parent Common Stock issued
in connection with the Merger upon conversion of Subject
Company Common Stock shall be accompanied by a Parent Right.
3.2 Anti-Dilution Provisions. In the event
Parent changes the number of shares of Parent Common Stock
issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or
similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the
Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by Subject Company or Parent.
Each of the shares of Subject Company Common Stock held by
Subject Company, any Subject Company Subsidiary, Parent or
any Parent Subsidiary, in each case other than in fiduciary
capacity or as a result of debts previously contracted,
shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 Fractional Shares. Notwithstanding any other
provision of this Agreement, each holder of shares of
Subject Company Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a
fractional share of Parent Common Stock (after taking into
account all certificates delivered by such holder) shall
receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional share of Parent Common Stock
multiplied by the closing price of such common stock on the
NYSE-Composite Transactions List (as reported by The Wall
Street Journal or, if not reported thereby, any other
authoritative source selected by Parent) on the last trading
day preceding the Effective Time. No such holder will be
entitled to dividends, voting rights, or any other rights as
a shareholder in respect of any fractional shares.
3.5 Conversion of Stock Options. (a) At the
Effective Time, each option to purchase or other right with
respect to shares of Subject Company Common Stock pursuant
to stock options, stock appreciation rights or other rights,
including stock awards ("Subject Company Options") granted
by Subject Company under the Subject Company Stock Plans,
which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become options with
respect to Parent Common Stock, and Parent shall assume each
Subject Company Option, in accordance with the terms of the
applicable Subject Company Stock Plan and stock option or
other agreement by which it is evidenced, except that from
and after the Effective Time, (i) Parent and its Salary and
Benefits Committee shall be substituted for Subject Company
and the committee of Subject Company's Board of Directors
(including, if applicable, the entire Board of Directors of
Subject Company) administering such Subject Company Stock
Plan, (ii) each Subject Company Option assumed by Parent may
be exercised solely for shares of Parent Common Stock (or
cash in the case of stock appreciation rights), (iii) the
number of shares of Parent Common Stock subject to such
Subject Company Option shall be equal to the number of
shares of Subject Company Common Stock subject to such
Subject Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio and rounding down to
the nearest whole share, and (iv) the per share exercise
price under each such Subject Company Option shall be
adjusted by dividing the per share exercise price under each
such Subject Company Option by the Exchange Ratio and
rounding up to the nearest cent. Notwithstanding clauses
(iii) and (iv) of the first sentence of this Section 3.5,
each Subject Company Option that is an "incentive stock
option" shall be adjusted as required by Section 424 of the
Internal Revenue Code, and the regulations promulgated
thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of
Section 424(h) of the Internal Revenue Code. Parent and
Subject Company agree to take all necessary steps to
effectuate the foregoing provisions of this Section 3.5.
(b) As soon as practicable after the Effective
Time, Parent shall deliver to the participants in each
Subject Company Stock Plan an appropriate notice setting
forth such participant's rights pursuant thereto and the
grants subject to such Subject Company Stock Plan shall
continue in effect on the same terms and conditions (subject
to the adjustments required by Section 3.5(a) after giving
effect to the Merger), and Parent shall comply with the
terms of each Subject Company Stock Plan to ensure, to the
extent required by, and subject to the provisions of, such
Subject Company Stock Plan, that Subject Company Options
that qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock
options after the Effective Time. Within 30 days after the
Effective Time, Parent shall file a registration statement
on Form S-8 with respect to the shares of Parent Common
Stock subject to such options and shall use its reasonable
efforts to maintain the effectiveness of such registration
statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as
such options remain outstanding.
(c) Without limiting the foregoing, and provided
that the right contained in this paragraph (c) is not
inconsistent with any of the conditions contained in Article
9 hereof, each holder of a Subject Company Option that is
not an "incentive stock option", whether or not then vested,
shall have the right to elect to convert, at the Effective
Time, all or a portion of his or her Subject Company Options
which are not "incentive stock options" and which have not
expired prior to the Effective Time into the right to
receive such number of shares (rounded to the nearest whole
share) of Parent Common Stock as are equal in value
(determined by valuing each share of Parent Common Stock at
the Average Closing Price (as defined in Section 10.1)) to
the excess of (i) the product of the number of shares of
Subject Company Common Stock subject to such option times
the Exchange Ratio times the Average Closing Price of the
Parent Common Stock over (ii) the product of (A) the
exercise price per share of Subject Company Common Stock
subject to such option and (B) the number of shares of
Subject Company Common Stock subject to such option. The
foregoing right shall be exercised by delivery to Parent of
written notice of election (specifying the number of Subject
Company Options covered by such election) by the holder of
such Subject Company Option not later than two business days
prior to the Effective Time.
(d) All contractual restrictions or limitations
on transfer with respect to Subject Company Common Stock
awarded under the Subject Company Stock Plans or any other
plan, program, or Contract of Subject Company or any of the
Subject Company Subsidiaries, to the extent that such
restrictions or limitations shall not have already lapsed
(whether as a result of the Merger or otherwise), and except
as otherwise expressly provided in such plan, program, or
Contract, shall remain in full force and effect with respect
to shares of Parent Common Stock into which such restricted
stock is converted pursuant to Section 3.1 of this
Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the
Effective Time, Parent and Subject Company shall cause the
exchange agent selected by Parent (the "Exchange Agent") to
mail to the former shareholders of Subject Company
appropriate transmittal materials (which shall specify that
delivery shall be effected, and risk of loss and title to
the certificates theretofore representing shares of Subject
Company Common Stock shall pass, only upon proper delivery
of such certificates to the Exchange Agent). Subject
Company shall have the right to review the transmittal
materials. The Exchange Agent may establish reasonable and
customary rules and procedures in connection with its
duties. After the Effective Time, each holder of shares of
Subject Company Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) issued
and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the
Exchange Agent and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in
Section 3.1 of this Agreement, together with all undelivered
dividends or distributions in respect of such shares
(without interest thereon) pursuant to Section 4.2 of this
Agreement. To the extent required by Section 3.4 of this
Agreement, each holder of shares of Subject Company Common
Stock issued and outstanding at the Effective Time also
shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any
fractional share of Parent Common Stock to which such holder
may be otherwise entitled (without interest). Parent shall
not be obligated to deliver the consideration to which any
former holder of Subject Company Common Stock is entitled as
a result of the merger until such holder surrenders such
holder's certificate or certificates representing the shares
of Subject Company Common Stock for exchange as provided in
this Section 4.1. The certificate or certificates of
Subject Company Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither Parent
nor the Exchange Agent shall be liable to a holder of
Subject Company Common Stock for any amounts paid or
property delivered in good faith to a public official
pursuant to any applicable abandoned property Law.
4.2 Rights of Former Subject Company
Shareholders. At the Effective Time, the stock transfer
books of Subject Company shall be closed as to holders of
Subject Company Common Stock immediately prior to the
Effective Time and no transfer of Subject Company Common
Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance
with the provisions of Section 4.1 of this Agreement, each
certificate theretofore representing shares of Subject
Company Common Stock (other than shares to be canceled
pursuant to Section 3.3 of this Agreement) shall from and
after the Effective Time represent for all purposes only the
right to receive the consideration provided in Sections 3.1
and 3.4 of this Agreement in exchange therefor, subject,
however, to the Surviving Corporations' obligation to pay
any dividends or make any other distributions with a record
date prior to the Effective Time which have been declared or
made by Subject Company in respect of such shares of Subject
Company Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time.
Whenever a dividend or other distribution is declared by
Parent on the Parent Common Stock, the record date for which
is at or after the Effective Time, the declaration shall
include dividends or other distributions on all shares of
Parent Common Stock issuable pursuant to this Agreement, but
beginning 30 days after the Effective Time no dividend or
other distribution payable to the holders of record of
Parent Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any
certificate representing shares of Subject Company Common
Stock issued and outstanding at the Effective Time until
such holder surrenders such certificate for exchange as
provided in Section 4.1 of this Agreement. However, upon
surrender of such Subject Company Common Stock certificate,
both a Parent Common Stock certificate (together with all
such undelivered dividends or other distributions without
interest) and any undelivered dividends and cash payments
payable hereunder (without interest) shall be delivered and
paid with respect to each share represented by such
certificate. In the event any Subject Company Common Stock
certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such person of a
bond in such amount as Parent may reasonably direct as
indemnity against any claim that may be made against it with
respect to such certificate, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed certificate
the shares of Parent Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to
Parent as follows:
5.1 Organization, Standing, and Power. Subject
Company is a corporation duly organized, validly existing,
and in good standing under the Laws of the State of Florida,
and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its
Assets. Subject Company is duly qualified or licensed to
transact business as a foreign corporation in good standing
in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Subject Company.
5.2 Authority; No Breach by Agreement. (a)
Subject Company has the corporate power and authority
necessary to execute, deliver, and perform its obligations
under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and
performance of this Agreement, and the consummation of the
transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate
action (including valid authorization and adoption of this
Agreement by Subject Company's duly constituted Board of
Directors) in respect thereof on the part of Subject
Company, subject to the approval of this Agreement by the
holders of the outstanding shares of Subject Company Common
Stock, which is the only shareholder vote required for
approval of this Agreement and consummation of the Merger by
Subject Company. Subject to such requisite shareholder
approval and assuming due authorization, execution and
delivery of this Agreement by each of Parent and Merger
Subsidiary, this Agreement (which, for purposes of this
sentence, shall not include the Stock Option Agreement)
represents a legal, valid, and binding obligation of Subject
Company, enforceable against Subject Company in accordance
with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium,
or similar Laws affecting the enforcement of creditors'
rights generally and except that the availability of the
equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before
which any proceeding may be brought).
(b) Neither the execution and delivery of this
Agreement (which, for purposes of clause (iii) of this
sentence, shall not include the Stock Option Agreement) by
Subject Company, nor the consummation by Subject Company of
the transactions contemplated hereby, nor compliance by
Subject Company with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of the
Articles or the By-laws, or (ii) except as disclosed in
Section 5.2 of the Subject Company Disclosure Memorandum,
constitute or result in a Default under, or require any
Consent (excluding Consents required by Law or Order)
pursuant to, or result in the creation of any Lien on any
material Asset of Subject Company or any Subject Company
Subsidiary under, any Contract or Permit of Subject Company
or any Subject Company Subsidiary, except for such Defaults,
Liens and Consents, which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Subject Company, or (iii)
subject to receipt of the requisite Consents referred to in
Section 9.1(b) of this Agreement, violate any Law or Order
applicable to Subject Company, its Subsidiaries or any of
their respective material Assets.
(c) Other than in connection or compliance with
the provisions of the Securities Laws, applicable state
corporate and securities Laws, and rules of the NASD, and
other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation
with respect to any employee benefit plans, or under the HSR
Act, and other than Consents, filings, or notifications
which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on Subject Company, no notice to, filing with, or
Consent of, any public body or authority is necessary for
the consummation by Subject Company of the Merger and the
other transactions contemplated in this Agreement.
5.3 Capital Stock. (a) The authorized capital
stock of Subject Company consists of 20,000,000 shares of
Subject Company Common Stock, of which 7,590,925 shares are
issued and outstanding as of July 31, 1997 (exclusive of
treasury shares) and not more than 8,887,237 shares will be
issued and outstanding at the Effective Time (exclusive of
shares issued or issuable pursuant to the Stock Option
Agreement). All of the issued and outstanding shares of
capital stock of Subject Company are duly and validly issued
and outstanding and are fully paid and nonassessable under
the FBCA. None of the outstanding shares of capital stock
of Subject Company has been issued in violation of any
preemptive rights of the current or past shareholders of
Subject Company. As of the date of this Agreement, Subject
Company has 739,192 shares of Subject Company Common Stock
available for grant under the Subject Company Stock Plans,
and there are options to purchase not more than 1,296,312
shares of Subject Company Common Stock outstanding.
(b) Except as set forth in Section 5.3(a) of this
Agreement, or as provided in the Stock Option Agreement,
there are no shares of capital stock or other equity
securities of Subject Company outstanding and no outstanding
Rights relating to the capital stock of Subject Company.
5.4 Subject Company Subsidiaries. Subject
Company has disclosed in Section 5.4 of the Subject Company
Disclosure Memorandum all of the Subject Company
Subsidiaries that are corporations (identifying its
jurisdiction of incorporation) and all of the Subject
Company Subsidiaries that are general or limited
partnerships or other non-corporate entities (identifying
the Law under which such entity is organized, and the amount
and nature of the ownership interest therein of Subject
Company Subsidiaries). Except as set forth in Section 5.4
of the Subject Company Disclosure Memorandum, Subject
Company or one of its wholly owned Subsidiaries owns all of
the issued and outstanding shares of capital stock (or other
equity interests) of each of the Subject Company
Subsidiaries. Except as set forth in Section 5.4 of the
Subject Company Disclosure Memorandum and except for the
Stock Option Agreement and options outstanding under the
Subject Company Stock Plans, no capital stock (or other
equity interest) of any Subject Company Subsidiary is or may
become required to be issued (other than to another Subject
Company Subsidiary) by reason of any rights, and there are
no Contracts by which Subject Company or any of the Subject
Company Subsidiaries is bound to issue (other than to
Subject Company or another of the Subject Company
Subsidiaries) additional shares of its capital stock (or
other equity interests) or Rights or by which Subject
Company or any of the Subject Company Subsidiaries is or may
be bound to transfer any shares of the capital stock (or
other equity interests) of any of Subject Company or any of
the Subject Company Subsidiaries (other than to Subject
Company or any of the Subject Company Subsidiaries). Except
as set forth in Section 5.4 of the Subject Company
Disclosure Memorandum, there are no Contracts relating to
the rights of Subject Company or any Subject Company
Subsidiary to vote or to dispose of any shares of the
capital stock (or other equity interests) of Subject Company
or any Subject Company Subsidiary. All of the shares of
capital stock (or other equity interests) of each Subject
Company Subsidiary held by Subject Company or any Subject
Company Subsidiary are fully paid and nonassessable (except
pursuant to applicable state law, in the case of the Bank)
under the applicable corporation or similar Law of the
jurisdiction in which such Subsidiary is incorporated or
organized and are owned by Subject Company or a Subject
Company Subsidiary free and clear of any Liens. Each
Subject Company Subsidiary is either a bank, partnership,
limited liability corporation, or a corporation, and each
such Subsidiary is duly organized, validly existing, and (as
to corporations) in good standing under the Laws of the
jurisdiction in which it is incorporated or organized, and
has the corporate power and authority necessary for it to
own, lease, and operate its Assets and to carry on its
business as now conducted. Each Subject Company Subsidiary
is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character
of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Subject
Company. The only Subject Company Subsidiary that is a
depository institution is the Bank. The Bank is an "insured
institution" as defined in the Federal Deposit Insurance Act
and applicable regulations thereunder, and the deposits in
which are insured by the Bank Insurance Fund. The minute
book and other organizational documents (and all amendments
thereto) for Subject Company and each Subject Company
Subsidiary that is a "Significant Subsidiary" (as such term
is defined in Regulation S-X promulgated under the 1934 Act)
have been or will be made available to Parent for its
review, and are true and complete as in effect as of the
date of this Agreement.
5.5 Financial Statements. (a) Each of the
Subject Company Financial Statements (including, in each
case, any related notes) contained in the Subject Company
SEC Reports, including any Subject Company SEC Reports filed
after the date of this Agreement until the Effective Time,
complied, or will comply, as to form in all material
respects with the applicable published rules and regulations
of the SEC with respect thereto, was prepared, or will be
prepared, in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in
the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented, or will fairly
present, in all material respects the consolidated financial
position of Subject Company and the Subject Company
Subsidiaries as of the respective dates and the consolidated
results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-
end adjustments which were not or are not expected to be
material in amount or effect.
(b) Each of the Holding Financial Statements
(including, in each case, any related notes) complied, or
will comply, as to form in all material respects with the
applicable published rules and regulations of the SEC with
respect thereto, was prepared, or will be prepared, in
accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated
in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of
the SEC), and fairly presented, or will fairly present, in
all material respects the consolidated financial position of
Holding and its Subsidiaries as of the respective dates and
the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
5.6 Absence of Undisclosed Liabilities. Neither
Subject Company nor any of the Subject Company Subsidiaries
has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Subject Company, except Liabilities which are accrued or
reserved against in the consolidated balance sheets of
Subject Company as of March 31, 1997, included in the
Subject Company Financial Statements made available prior to
the date of this Agreement or reflected in the notes
thereto. Neither Subject Company nor any of the Subject
Company Subsidiaries has incurred or paid any Liability
since March 31, 1997, except for such Liabilities incurred
or paid (i) in the ordinary course of business consistent
with past business practice or which are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on Subject Company or (ii) in connection with
the transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since
December 31, 1996, except as disclosed in the Subject
Company SEC Reports made available prior to the date of this
Agreement or in Section 5.7 of the Subject Company
Disclosure Memorandum, there have been no events, changes,
or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on Subject Company.
5.8 Tax Matters. Except as set forth in Section
5.8 of the Subject Company Disclosure Memorandum:
(a) All material Tax Returns required to be filed
by or on behalf of Subject Company or any of the Subject
Company Subsidiaries have been timely filed or requests for
extensions have been timely filed, granted, and have not
expired for periods ended on or before December 31, 1996,
and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and all such Tax
Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been
paid. There is no audit examination or refund Litigation
with respect to any material Taxes, except as reserved
against in the Subject Company Financial Statements made
available prior to the date of this Agreement. All material
Taxes and other material Liabilities due with respect to
completed and settled examinations or concluded Litigation
have been paid. There are no material Liens with respect to
Taxes upon any of the Assets of Subject Company or any of
the Subject Company Subsidiaries.
(b) Neither Subject Company nor any of the
Subject Company Subsidiaries has executed an extension or
waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that
relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that
is currently in effect.
(c) Adequate provision for any material Taxes due
or to become due for Subject Company or the Subject Company
Subsidiaries for the period or periods through and including
the date of the respective Subject Company Financial
Statements has been made and is reflected on such Subject
Company Financial Statements.
(d) Material deferred Taxes of Subject Company
and the Subject Company Subsidiaries have been provided for
in accordance with GAAP.
(e) Subject Company and the Subject Company
Subsidiaries are in material compliance with, and its
records contain all information and documents (including
properly completed IRS Forms W-9) necessary to comply in all
material respects with, all applicable information reporting
and Tax withholding requirements under federal, state, and
local Tax Laws, and such records identify with specificity
all accounts subject to backup withholding under Section
3406 of the Internal Revenue Code.
(f) Neither Subject Company nor any of the
Subject Company Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any
Contract that could obligate it to make any payments that
would be disallowed as a deduction under Section 280G or
162(m) of the Internal Revenue Code.
(g) There has not been an ownership change, as
defined in Internal Revenue Code Section 382(g), of Subject
Company or any of the Subject Company Subsidiaries that
occurred during or after any Taxable Period in which Subject
Company or any of the Subject Company Subsidiaries incurred
a net operating loss that carries over to any Taxable Period
ending after December 31, 1996, except in connection with
the transactions contemplated pursuant to this Agreement.
(h) Neither Subject Company nor any of the
Subject Company Subsidiaries is a party to any tax
allocation or sharing agreement and neither Subject Company
nor any of the Subject Company Subsidiaries has been a
member of an affiliated group filing a consolidated federal
income tax return (other than a group the common parent of
which was Subject Company) or has any material Liability for
taxes of any Person (other than Subject Company and the
Subject Company Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local,
or foreign law) as a transferee or successor or by Contract
or otherwise.
5.9 Assets. Except as disclosed or reserved
against in the Subject Company Financial Statements made
available prior to the date of this Agreement, Subject
Company and the Subject Company Subsidiaries have good and
marketable title, free and clear of all Liens, to all of
their respective Assets. All tangible properties used in
the businesses of Subject Company and its Subsidiaries are
in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business of Subject
Company and its Subsidiaries. All Assets which are material
to Subject Company's business on a consolidated basis, held
under leases or subleases by the Subject Company or any of
the Subject Company Subsidiaries, are held under valid
Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other
Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in
full force and effect. Subject Company and the Subject
Company Subsidiaries currently maintain insurance in
amounts, scope, and coverage which, in the reasonable
opinion of management of Subject Company, are adequate for
the operations of Subject Company and the Subject Company
Subsidiaries. Neither Subject Company nor any of the
Subject Company Subsidiaries has received notice from any
insurance carrier that (i) such insurance will be canceled
or that coverage thereunder will be reduced or eliminated,
or (ii) premium costs with respect to such policies of
insurance will be substantially increased. Except as set
forth in Section 5.9 of the Subject Company Disclosure
Memorandum, there are presently no claims pending under any
such policies of insurance and no notices have been given by
Subject Company or any of the Subject Company Subsidiaries
under such policies.
5.10 Intellectual Property. All of the
Intellectual Property rights of Subject Company and the
Subject Company Subsidiaries are in full force and effect
and, if applicable, constitute legal, valid, and binding
obligations of the respective parties thereto, and there
have not been, and, to the Knowledge of Subject Company,
there currently are not, any Defaults thereunder by Subject
Company or a Subject Company Subsidiary. Subject Company or
a Subject Company Subsidiary owns or is the valid licensee
of all such Intellectual Property rights free and clear of
all Liens or claims of infringement. Neither Subject
Company nor any of the Subject Company Subsidiaries nor, to
the Knowledge of Subject Company, their respective
predecessors has infringed the Intellectual Property rights
of others and, to the Knowledge of Subject Company, none of
the Intellectual Property rights as used in the business
conducted by Subject Company or the Subject Company
Subsidiaries infringes upon or otherwise violates the rights
of any Person, nor has any Person asserted a claim of such
infringement. Except as disclosed in Section 5.10 of the
Subject Company Disclosure Memorandum, neither Subject
Company nor the Subject Company Subsidiaries is obligated to
pay any royalties to any Person with respect to any such
Intellectual Property. Subject Company or a Subject Company
Subsidiary owns or has the valid right to use all of the
Intellectual Property rights which it is presently using, or
in connection with performance of any material Contract to
which it is a party. No officer, director, or employee of
Subject Company or the Subject Company Subsidiaries is party
to any Contract which requires such officer, director, or
employee to assign any interest in any Intellectual Property
or keep confidential any trade secrets, proprietary data,
customer information, or other business information or,
except as disclosed in Section 5.10 of the Subject Company
Disclosure Memorandum, which restricts or prohibits such
officer, director, or employee from engaging in activities
competitive with any Person, including Subject Company or
any of the Subject Company Subsidiaries.
5.11 Environmental Matters. Except as set forth
in Section 5.11 of the Subject Company Disclosure
Memorandum:
(a) To the Knowledge of Subject Company, each of
Subject Company and the Subject Company Subsidiaries, its
Participation Facilities, and its Operating Properties are,
and have been, in compliance with all Environmental Laws,
except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on Subject Company.
(b) To the Knowledge of Subject Company, there is
no Litigation pending or threatened before any court,
governmental agency, or authority or other forum in which
Subject Company, any of the Subject Company Subsidiaries or
any of their respective Operating Properties or
Participation Facilities (or Subject Company in respect of
such Operating Property or Participation Facility) has been
or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or
affecting (or potentially affecting) a site owned, leased,
or operated by Subject Company or any of the Subject Company
Subsidiaries or any of their respective Operating Properties
or Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Subject Company, nor, to the knowledge of Subject
Company, is there any reasonable basis for any Litigation of
a type described in this sentence.
(c) During the period of (i) Subject Company's or
any of the Subject Company Subsidiaries' ownership or
operation of any of their respective current properties,
(ii) Subject Company's or any of the Subject Company
Subsidiaries' participation in the management of any
Participation Facility, or (iii) Subject Company's or any of
the Subject Company Subsidiaries' holding of a security
interest in an Operating Property, to the Knowledge of
Subject Company, there have been no releases of Hazardous
Material in, on, under, adjacent to, or affecting (or
potentially affecting) such properties, except such as are
not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company.
Prior to the period of (i) Subject Company's or any of the
Subject Company Subsidiaries' ownership or operation of any
of their respective current properties, (ii) Subject
Company's or any of the Subject Company Subsidiaries'
participation in the management of any Participation
Facility, or (iii) Subject Company's or any of the Subject
Company Subsidiaries' holding of a security interest in an
Operating Property, to the Knowledge of Subject Company,
there were no releases of Hazardous Material in, on, under,
or affecting any such property, Participation Facility or
Operating Property, except such as are not reasonably likely
to have, individually or in the aggregate, a Material
Adverse Effect on Subject Company.
5.12 Compliance With Laws. Subject Company is
duly registered as a bank holding company under the BHC Act.
Each of Subject Company and the Subject Company Subsidiaries
has in effect all Permits necessary for it to own, lease, or
operate its material Assets and to carry on its business as
now conducted, except where the failure to hold such Permits
would not be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Subject Company.
Except as set forth in Section 5.12 of the Subject Company
Disclosure Memorandum, neither Subject Company nor any of
the Subject Company Subsidiaries:
(a) is in violation of any Laws, Orders, or
Permits applicable to its business or employees conducting
its business, except for such violations which would not be
reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Subject Company; or
(b) has received any notification or
communication from any agency or department of federal,
state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that Subject Company or any
of the Subject Company Subsidiaries is not in compliance
with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, (ii) threatening
to revoke any Permits, or (iii) requiring Subject Company or
any of the Subject Company Subsidiaries to enter into or
consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of
understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the
payment of dividends.
5.13 Labor Relations. Neither Subject Company nor
any of the Subject Company Subsidiaries is the subject of
any Litigation asserting that Subject Company or any of the
Subject Company Subsidiaries has committed an unfair labor
practice (within the meaning of the National Labor Relations
Act or comparable state law) or seeking to compel Subject
Company or any of the Subject Company Subsidiaries to
bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other
labor dispute involving Subject Company or any of the
Subject Company Subsidiaries, pending or threatened, or to
the Knowledge of Subject Company, is there any activity
involving Subject Company's or any of the Subject Company
Subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in any other organization
activity.
5.14 Employee Benefit Plans. (a) Subject Company
has disclosed in Section 5.14 of the Subject Company
Disclosure Memorandum, and has delivered or made available
to Parent prior to the execution of this Agreement copies in
each case of, all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other
employee benefit plans or fringe benefit plans, including
"employee benefit plans" as that term is defined in Section
3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by Subject Company
or the Subject Company Subsidiaries or ERISA Affiliate
thereof for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other
beneficiaries of Subject Company or any Subject Company
Subsidiary and under which employees, retirees, dependents,
spouses, directors, independent contractors, or other
beneficiaries of Subject Company or any Subject Company
Subsidiary are eligible to participate (collectively, the
"Subject Company Benefit Plans"). Any of the Subject
Company Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "Subject Company ERISA Plan." Each
Subject Company ERISA Plan which is also a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue
Code) is referred to herein as a "Subject Company Pension
Plan." No Subject Company Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All Subject Company Benefit Plans are in
compliance with the applicable terms of ERISA, the Internal
Revenue Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Subject Company. Each Subject Company ERISA Plan that is
intended to be qualified under Section 401(a) of the
Internal Revenue Code has either received a favorable
determination letter from the Internal Revenue Service (and
Subject Company is not aware of any circumstances likely to
result in revocation of any such favorable determination
letter) or timely application has been made therefor. To
the knowledge of Subject Company, neither Subject Company
nor any of the Subject Company Subsidiaries has engaged in a
transaction with respect to any Subject Company Benefit Plan
that, assuming the taxable period of such transaction
expired as of the date hereof, would subject any Subject
Company to a material Tax imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA.
(c) Except as disclosed in Section 5.14 of the
Subject Company Disclosure Memorandum, no Subject Company
Pension Plan has any "underfunded current liability" as that
term is defined in Section 302(d)(8)(A) of ERISA and the
fair market value of the assets of any such plan exceeds the
plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since
the date of the most recent actuarial valuation, there has
been (i) no material change in the financial position of any
Subject Company Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Subject Company
Pension Plan, and (iii) no increase in benefits under any
Subject Company Pension Plan as a result of plan amendments
or changes in applicable Law which is reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on Subject Company or materially adversely affect the
funding status of any such plan. Neither any Subject
Company Pension Plan nor any "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by Subject Company or any of the Subject
Company Subsidiaries, or the single-employer plan of any
entity which is considered one employer with Subject Company
under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code or Section 302 of ERISA (whether or not waived)
(an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. Neither
Subject Company nor any of the Subject Company Subsidiaries
has provided, or, to Subject Company's knowledge, is
required to provide, security to a Subject Company Pension
Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the
Effective Time, no material Liability under Subtitle C or D
of Title IV of ERISA has been incurred by Subject Company or
any of the Subject Company Subsidiaries with respect to any
current, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate. Neither
Subject Company nor any of the Subject Company Subsidiaries
has incurred any material withdrawal Liability with respect
to a multiemployer plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contributions of an
ERISA Affiliate). 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 Subject Company Pension Plan or
by any ERISA Affiliate within the 12-month period ending on
the date hereof.
(e) Except as disclosed in Section 5.14 of the
Subject Company Disclosure Memorandum, neither Subject
Company nor any of the Subject Company Subsidiaries has any
material Liability for retiree health and life benefits
under any of the Subject Company Benefit Plans.
(f) Except as disclosed in Section 5.14 of the
Subject Company Disclosure Memorandum, neither the execution
and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation or
golden parachute) becoming due to any director or any
employee of Subject Company or any of the Subject Company
Subsidiaries from Subject Company or any of the Subject
Company Subsidiaries under any Subject Company Benefit Plan,
(ii) materially increase any benefits otherwise payable
under any Subject Company Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any
such benefit.
(g) The actuarial present values of all accrued
deferred compensation entitlements (including entitlements
under any executive compensation, supplemental retirement,
or employment agreement) of employees and former employees
of any Subject Company Subsidiary and their respective
beneficiaries, other than entitlements accrued pursuant to
funded retirement plans subject to the provisions of Section
412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Subject Company Financial
Statements to the extent required by and in accordance with
GAAP.
5.15 Material Contracts. Except as disclosed in
the Subject Company SEC Reports, in the SEC Documents filed
by Holding or as disclosed in Section 5.15 of the Subject
Company Disclosure Memorandum, neither Subject Company, the
Subject Company Subsidiaries, nor any of their respective
Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting, or
retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $100,000, (ii) any
Contract relating to the borrowing of money by Subject
Company or any of the Subject Company Subsidiaries or the
guarantee by Subject Company or any of the Subject Company
Subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, trade payables, and
Contracts relating to borrowings or guarantees made in the
ordinary course of business), (iii) any Contracts which
prohibit or restrict Subject Company or any of the Subject
Company Subsidiaries from engaging in any business
activities in any geographic area, line of business, or
otherwise in competition with any other Person, (iv) any
Contracts between or among Subject Company and the Subject
Company Subsidiaries, (v) any exchange-traded or over-the-
counter swap, forward, future, option, cap, floor, or collar
financial Contract, or any other interest rate or foreign
currency protection Contract (not disclosed in the Subject
Company Financial Statements delivered prior to the date of
this Agreement) which is a financial derivative Contract
(including various combinations thereof), and (vi) any other
Contract or amendment thereto that would be required to be
filed as an exhibit to a Subject Company SEC Report filed by
Subject Company with the SEC prior to the date of this
Agreement that has not been filed as an exhibit to a Subject
Company SEC Report (together with all Contracts referred to
in Sections 5.9 and 5.14(a) of this Agreement, the "Subject
Company Contracts"). With respect to each Subject Company
Contract: (i) the Contract is in full force and effect; (ii)
neither Subject Company nor any Subject Company Subsidiary
is in Default thereunder; (iii) neither Subject Company nor
its Subsidiaries has repudiated or waived any material
provision of any such Contract; and (iv) no other party to
any such Contract is, to the Knowledge of Subject Company,
in Default in any respect or has repudiated or waived any
material provision thereunder.
5.16 Legal Proceedings. There is no Litigation
instituted or pending, or, to the Knowledge of Subject
Company, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against
Subject Company or any of the Subject Company Subsidiaries,
or against any Asset, employee benefit plan, interest, or
right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Subject Company, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against Subject Company or any of
the Subject Company Subsidiaries. Section 5.16 of the
Subject Company Disclosure Memorandum includes a summary
report of all material Litigation as of the date of this
Agreement to which Subject Company or any Subject Company
Subsidiary is a party and which names Subject Company or a
Subject Company Subsidiary as a defendant or cross-
defendant.
5.17 Reports. Except as disclosed in Section 5.17
of the Subject Company Disclosure Memorandum, since January
1, 1994, or the applicable date of organization if later,
Subject Company and each Subject Company Subsidiary has
timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it
was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements (the "Subject Company SEC Reports"), (ii) other
Regulatory Authorities, and (iii) any applicable state
securities or banking authorities, except failures to file
which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Subject Company.
As of its respective date (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date
of such filing), each of such reports and documents,
including the financial statements, exhibits, and schedules
thereto, complied in all material respects with all
applicable Laws. As of its respective date (or, if amended
or superseded by a filing prior to the date of this
Agreement, then on the date of such filing), each Subject
Company SEC Report did not contain any untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were
made, not misleading. Except for Holding or as disclosed in
Section 5.17 of the Subject Company Disclosure Schedule,
none of the Subject Company Subsidiaries is required to file
any SEC Documents.
5.18 Statements True and Correct. None of the
information supplied or to be supplied by Subject Company
for inclusion in the Registration Statement to be filed by
Parent with the SEC will, when the Registration Statement
becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact
necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by
Subject Company for inclusion in the Proxy Statement to be
mailed to Subject Company's shareholders in connection with
the Shareholders' Meeting, and any other documents to be
filed by Subject Company with the SEC or any other
Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of Subject
Company, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the
Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Shareholders' Meeting, be false
or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement
in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting.
All documents that Subject Company or the Subject Company
Subsidiaries are responsible for filing with any Regulatory
Authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with
the provisions of applicable Law.
5.19 Accounting, Tax, and Regulatory Matters.
Neither Subject Company nor any of the Subject Company
Subsidiaries has taken any action or has any Knowledge of
any fact or circumstance relating to Subject Company that is
reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying
for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay
receipt of any Consents of Regulatory Authorities referred
to in Section 9.1(b) of this Agreement.
5.20 State Takeover Laws. Except as disclosed in
Section 5.20 of the Subject Company Disclosure Memorandum,
Subject Company has taken all necessary action to exempt the
transactions contemplated by this Agreement from any
applicable "moratorium," "fair price," "business
combination," "control share," or other anti-takeover laws
(collectively, "Takeover Laws"), including Sections 607.0901
and 607.0902 of the FBCA.
5.21 Article Provisions. Except as disclosed in
Section 5.21 of the Subject Company Disclosure Memorandum,
Subject Company has taken all action so that the entering
into of this Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement do
not and will not result in the grant of any rights to any
Person under the Articles, By-laws or other governing
instruments of Subject Company or any Subject Company
Subsidiary or restrict or impair the ability of Parent or
any of the Parent Subsidiaries to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares
of Subject Company or any Subject Company Subsidiary.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Subject
Company as follows:
6.1 Organization, Standing and Power. Parent is
a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Tennessee, and has
the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its material
Assets. Parent is duly qualified or licensed to transact
business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where
the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Parent.
6.2 Authority; No Breach by Agreement. (a)
Parent has the corporate power and authority necessary to
execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly
and validly authorized by all necessary corporate action
(including valid authorization and adoption of this
Agreement by Parent's duly constituted Board of Directors)
in respect thereof on the part of Parent. Assuming due
authorization, execution and delivery of this Agreement by
Subject Company, this Agreement (which, for purposes of this
sentence, shall not include the Stock Option Agreement)
represents a legal, valid, and binding obligation of Parent,
enforceable against Parent in accordance with its terms
(except in all cases as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability
of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
(b) Neither the execution and delivery of this
Agreement (which, for purposes of clause (iii) of this
sentence, shall not include the Stock Option Agreement) by
Parent, nor the compliance by Parent with any of the
provisions hereof, will (i) conflict with or result in a
breach of any provision of Parent's Restated Charter of
Incorporation or By-laws, or (ii) constitute or result in a
Default under, or require any Consent (excluding Consents
required by Law or Order) pursuant to, or result in the
creation of any Lien on any material Asset of Parent or any
Parent Subsidiary under, any Contract or Permit of Parent or
any Parent Subsidiary, except for such Defaults, Liens and
Consents, which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on Parent, or (iii) subject to receipt of the
requisite approvals referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to Parent or
any Parent Subsidiary or any of their respective material
Assets.
(c) Other than in connection or compliance with
the provisions of the Securities Laws, applicable state
corporate and securities Laws, and rules of the NYSE, and
other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation
with respect to any employee benefit plans, or under the HSR
Act, and other than Consents, filings, or notifications
which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on Parent, no notice to, filing with, or Consent of,
any public body or authority is necessary for the
consummation by Parent of the Merger and the other
transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock
of Parent consists of (i) 100,000,000 shares of Parent
Common Stock, of which 66,790,144 shares are issued and
outstanding as of June 30, 1997, and (ii) 10,000,000 shares
of Parent Preferred Stock, of which 2,533,236 shares of
Parent Series E Preferred Stock are issued and outstanding.
All of the issued and outstanding shares of Parent Capital
Stock are, and all of the shares of Parent Common Stock to
be issued in exchange for shares of Subject Company Common
Stock upon consummation of the Merger, when issued in
exchange for shares of Subject Company Common Stock upon
consummation of the Merger, when issued in accordance with
the terms of this Agreement, will be, duly and validly
issued and outstanding and fully paid and nonassessable
under the TBCA. None of the outstanding shares of Parent
Capital Stock has been, and none of the shares of Parent
Common Stock to be issued in exchange for shares of Subject
Company Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the
current or past shareholders of Parent. Parent has reserved
for issuance a sufficient number of shares of Parent Common
Stock for the purpose of issuing shares of Parent Common
Stock in accordance with the provisions of Sections 3.1 and
3.5 of this Agreement.
6.4 Parent Subsidiaries. Except as set forth in
Section 6.4 of the Parent Disclosure Memorandum, Parent or
one of its wholly owned Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity
interests) of each of the Parent Subsidiaries. No capital
stock (or other equity interest) of any Parent Subsidiary is
or may become required to be issued (other than to another
Parent Subsidiary) by reason of any rights, and there are no
Contracts by which the Parent or any of the Parent
Subsidiaries are bound to issue (other than to Parent or any
of the Parent Subsidiaries) additional shares of its capital
stock (or other equity interests) or Rights or by which
Parent or any of the Parent Subsidiaries are or may be bound
to transfer any shares of the capital stock (or other equity
interests) of any of Parent or any of the Parent
Subsidiaries (other than to Parent or any of the Parent
Subsidiaries). There are no Contracts relating to the
rights of Parent or any Parent Subsidiary to vote or to
dispose of any shares of the capital stock (or other equity
interests) of Parent or any of the Parent Subsidiaries. All
of the shares of capital stock (or other equity interests)
of each Parent Subsidiary held by Parent or any Parent
Subsidiary are fully paid and nonassessable (except pursuant
to 12 U.S.C. Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of
state depository institutions) under the applicable
corporation or similar Law of the jurisdiction in which such
Subsidiary is incorporated or organized and are owned by
Parent or a Parent Subsidiary free and clear of any Liens.
Each Parent Subsidiary is either a bank, a savings
association, partnership, limited liability corporation, or
a corporation, and each such Subsidiary is duly organized,
validly existing, and (as to corporations) in good standing
under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and
authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each
Parent Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where
the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Parent. The minute book and other organizational
documents (and all amendments thereto) for each of Parent
and each Parent Subsidiary that is a Significant Subsidiary
have been made available to Subject Company for its review,
and are true and complete as in effect as of the date of
this Agreement.
6.5 Financial Statements. Each of the Parent
Financial Statements (including, in each case, any related
notes) contained in the Parent SEC Reports, including any
Parent SEC Reports filed after the date of this Agreement
until the Effective Time, complied, or will comply, as to
form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was
prepared, or will be prepared, in accordance with GAAP
applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited interim
statements, as permitted by Form 10-Q of the SEC), and
fairly presented, or will fairly present, in all material
respects the consolidated financial position of Parent and
the Parent Subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
6.6 Absence of Undisclosed Liabilities. Neither
Parent nor any of the Parent Subsidiaries has any
Liabilities that are reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Parent,
except Liabilities which are accrued or reserved against in
the consolidated balance sheets of Parent as of March 31,
1997, included in the Parent Financial Statements made
available prior to the date of this Agreement or reflected
in the notes thereto. Neither Parent nor any of the Parent
Subsidiaries has incurred or paid any Liability since March
31, 1997, except for such Liabilities incurred or paid (i)
in the ordinary course of business consistent with past
business practice or which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on Parent or (ii) in connection with the transaction
contemplated by this Agreement.
6.7 Absence of Certain Changes or Events. Since
December 31, 1996, except as disclosed in the Parent SEC
Reports made available prior to the date of this Agreement
or in Section 6.7 of the Parent Disclosure Memorandum, there
have been no events, changes, or occurrences which have had,
or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
6.8 Tax Matters. (a) All material Tax Returns
required to be filed by or on behalf of Parent or any of the
Parent Subsidiaries have been timely filed or requests for
extensions have been timely filed, granted, and have not
expired for periods ended on or before December 31, 1996,
and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and all such Tax
Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been
paid. There is no audit examination, or refund Litigation
with respect to any material Taxes, except as reserved
against the Parent Financial Statements delivered prior to
the date of this Agreement. All material Taxes and other
material Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.
There are no material Liens with respect to Taxes upon any
of the Assets of Parent or any of the Parent Subsidiaries.
(b) Adequate provision for any material Taxes due
or to become due for Parent or any of the Parent
Subsidiaries for the period or periods through and including
the date of the respective Parent Financial Statements has
been made and is reflected on such Parent Financial
Statements.
(c) Material deferred Taxes of Parent and the
Parent Subsidiaries have been provided for in accordance
with GAAP.
6.9 Environmental Matters. (a) To the Knowledge
of Parent, each of Parent and the Parent Subsidiaries, its
Participation Facilities, and its Operating Properties are,
and have been, in compliance with all Environmental Laws,
except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on Parent.
(b) To the Knowledge of Parent, there is no
Litigation pending or threatened before any court,
governmental agency, or authority or other forum in which
Parent or any of the Parent Subsidiaries or any of their
respective Operating Properties or Participation Facilities
(or Parent in respect of such Operating Property or
Participation Facility) has been or, with respect to
threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by
Parent or any of the Parent Subsidiaries or any of their
respective Operating Properties or Participation Facilities,
except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Parent, nor, to the knowledge
of Parent, is there any reasonable basis for any Litigation
of a type described in this sentence.
(c) During the period of (i) Parent's or any of
the Parent Subsidiaries' ownership or operation of any of
their respective current properties, (ii) any Parent's or
any of the Parent Subsidiaries' participation in the
management of any Participation Facility, or (iii) Parent's
or any of the Parent Subsidiaries' holding of a security
interest in an Operating Property, to the Knowledge of
Parent, there have been no releases of Hazardous Material
in, on, under, adjacent to, or affecting (or potentially
affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Parent. Prior to the period of
(i) Parent's or any of Parent Subsidiaries' ownership or
operation of any of their respective current properties,
(ii) Parent's or any of Parent Subsidiaries' participation
in the management of any Participation Facility, or (iii)
Parent or any of Parent Subsidiaries' holding of a security
interest in an Operating Property, to the Knowledge of
Parent, there were no releases of Hazardous Material in, on,
under, or affecting any such property, Participation
Facility or Operating Property, except such as are not
reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Parent.
6.10 Compliance With Laws. Parent is duly
registered as a bank holding company under the BHC Act.
Each of Parent and the Parent Subsidiaries has in effect all
Permits necessary for it to own, lease, or operate its
material Assets and to carry on its business as now
conducted, except where the failure to hold such permits
would not be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Parent. Neither
Parent nor any of the Parent Subsidiaries:
(a) is in violation of any Laws, Orders, or
Permits applicable to its business or employees conducting
its business, except for such violations which would not be
reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Parent; or
(b) has received any notification or
communication from any agency or department of federal,
state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that Parent or any Parent
Subsidiary is not in compliance with any of the Laws or
Orders which such governmental authority or Regulatory
Authority enforces, (ii) threatening to revoke any Permits,
or (iii) requiring Parent or any Parent Subsidiary to enter
into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the
payment of dividends.
6.11 Legal Proceedings. There is no Litigation
instituted or pending, or, to the Knowledge of Parent,
threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against
Parent or any Parent Subsidiary, or against any Asset,
interest, or right of any of them, that is reasonably likely
to have, individually or in the aggregate, a Material
Adverse Effect on Parent, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against Parent or any Parent
Subsidiary.
6.12 Reports. Since January 1, 1994, or the
applicable date of organization if later, Parent and each
Parent Subsidiary has filed all reports and statements,
together with any amendments required to be made with
respect thereto, that it was required to file with (i) the
SEC, including, but not limited to, Forms 10-K, Forms 10-Q,
Forms 8-K, and proxy statements (the "Parent SEC Reports"),
(ii) other Regulatory Authorities, and (iii) any applicable
state securities or banking authorities, except failures to
file which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Parent.
As of its respective date (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date
of such filing), each of such reports and documents,
including, the financial statements, exhibits, and schedules
thereto complied in all material respects with all
applicable Laws. As of its respective date, each Parent SEC
Report did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. Except for Parent Subsidiaries that are
registered as a broker, dealer, or investment advisor, no
Parent Subsidiary is required to file any SEC Documents.
6.13 Statements True and Correct. None of the
information supplied or to be supplied by Parent for
inclusion in the Registration Statement to be filed by
Parent with the SEC, will, when the Registration Statement
becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact
necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by Parent
for inclusion in the Proxy Statement to be mailed to Subject
Company's shareholders in connection with the Shareholders'
Meeting, and any other documents to be filed by Parent or
any Parent Subsidiary with the SEC or any other Regulatory
Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are
filed, and with respect to the Proxy Statement, when first
mailed to the shareholders of Subject Company, be false or
misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement
or any amendment thereof or supplement thereto, at the time
of the Shareholders' Meeting, be false or misleading with
respect to any material fact, or omit to state any material
fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy
for the Shareholders' Meeting. All documents that Parent or
any Parent Subsidiary is responsible for filing with any
Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
6.14 Accounting, Tax, and Regulatory Matters.
Neither Parent nor any Parent Subsidiary has taken any
action or has any Knowledge of any fact or circumstance
relating to Parent that is reasonably likely to (i) prevent
the transactions contemplated hereby, including the Merger,
from qualifying for pooling-of-interests accounting
treatment or as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) of this
Agreement.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Subject Company.
Unless the prior written consent of Parent shall have been
obtained, and except as otherwise expressly contemplated
herein, Subject Company shall and shall cause each of the
Subject Company Subsidiaries to (i) operate its business
only in the usual, regular, and ordinary course, (ii) use
reasonable efforts to preserve intact its business
organization and Assets and maintain its rights and
franchises, and (iii) take no action which would (a)
materially adversely affect the ability of any Party to
obtain any Consents required for the transactions
contemplated hereby or prevent the transactions contemplated
hereby, including the Merger, from qualifying for pooling-
of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially adversely affect the ability of any
Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of Subject Company.
Except as specifically permitted by this Agreement, from the
date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, Subject Company
covenants and agrees that it will not do or agree or commit
to do, or permit any of the Subject Company Subsidiaries to
do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer,
president, or chief financial officer of Parent, which
consent shall not be unreasonably withheld:
(a) amend the Articles, By-laws, or other
governing instruments of Subject Company or any Subject
Company Subsidiary; or
(b) incur any additional debt obligation for
borrowed money (other than indebtedness of Subject Company
or the Subject Company Subsidiaries to each other) in excess
of an aggregate of $500,000 (for Subject Company and the
Subject Company Subsidiaries on a consolidated basis) except
in the ordinary course of the business of the Subject
Company Subsidiaries consistent with past practices (which
shall include, for the Subject Company Subsidiaries that are
depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into
repurchase agreements fully secured by U.S. government or
agency securities), or impose, or suffer the imposition, on
any material Asset of Subject Company or any of the Subject
Company Subsidiaries of any Lien or permit any such Lien to
exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan"
accounts established in the ordinary course of business, the
satisfaction of legal requirements in the exercise of trust-
powers, and Liens in effect as of the date hereof that are
disclosed in the Subject Company Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or
exchange (other than exchanges in the ordinary course under
employee benefit plans), directly or indirectly, any shares,
or any securities convertible into any shares, of the
capital stock of Subject Company or any of the Subject
Company Subsidiaries, or declare or pay any dividend or make
any other distribution in respect of Subject Company's
capital stock, provided that Subject Company may (to the
extent legally and contractually permitted to do so), but
shall not be obligated to, declare and pay regular quarterly
cash dividends on the shares of Subject Company Common Stock
at a rate not in excess of $.08 per share with usual and
regular record and payment dates in accordance with past
practice, provided, that, notwithstanding the provisions of
Section 1.3, the Parties shall cooperate in selecting the
Effective Time to ensure that, with respect to the quarterly
period in which the Effective Time occurs, the holders of
Subject Company Common Stock do not become entitled to
receive both a dividend in respect of their Subject Company
Common Stock and a dividend in respect of Parent Common
Stock or fail to be entitled to receive any dividend; or
(d) except (I) for this Agreement, (II) pursuant
to the exercise of stock options outstanding as of the date
hereof and pursuant to the terms thereof in existence on the
date hereof under the Subject Company Stock Plans or (III)
pursuant to the exercise of stock options granted by
Holding, or (IV) pursuant to the Stock Option Agreement,
issue, sell, pledge, encumber, authorize the issuance of,
enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of its common stock or
any other capital stock, or any stock appreciation rights,
or any option, warrant, conversion, or other right to
acquire any such stock, or any security convertible into any
such stock; or
(e) adjust, split, combine or reclassify any
capital stock of Subject Company or any of the Subject
Company Subsidiaries or issue or authorize the issuance of
any other securities in respect of or in substitution for
shares of Subject Company Common Stock, or sell, lease,
mortgage or otherwise dispose of or otherwise encumber any
shares of capital stock of any Subject Company Subsidiary
(unless any such shares of stock are sold or otherwise
transferred to another Subject Company Subsidiary) or any
Asset having a book value in excess of $250,000 other than
in the ordinary course of business for reasonable and
adequate consideration; or
(f) except for purchases of investment securities
acquired in the ordinary course of business consistent with
past practice, purchase any securities or make any material
investment, either by purchase of stock or securities,
contributions to capital, Asset transfers, or purchase of
any Assets, in any Person other than a wholly owned
Subsidiary of Subject Company, or otherwise acquire direct
or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of
business, (ii) acquisitions of control by a depository
institution Subsidiary in its fiduciary capacity, or (iii)
the creation of new wholly-owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or
benefits to the employees or officers of Subject Company or
the Subject Company Subsidiaries, except in the ordinary
course of business consistent with past practice and
disclosed in Section 7.2(g) of the Subject Company
Disclosure Memorandum or as required by Law; pay any
severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect
on the date of this Agreement and disclosed in Section
7.2(g) of the Subject Company Disclosure Memorandum; enter
into or amend any severance agreements with officers of
Subject Company or the Subject Company Subsidiaries; grant
any material increase in fees or other increases in
compensation or other benefits to directors of Subject
Company or the Subject Company Subsidiaries; or voluntarily
accelerate the vesting of any stock options or other stock-
based compensation or employee benefits (other than the
acceleration of vesting which occurs under a benefit plan
upon a change of control of Subject Company); or
(h) enter into or amend any employment Contract
between Subject Company or the Subject Company Subsidiaries
and any Person (unless such amendment is required by Law)
that Subject Company does not have the unconditional right
to terminate without Liability (other than Liability for
services already rendered), at any time on or after the
Effective Time; or
(i) adopt any new employee benefit plan of
Subject Company or the Subject Company Subsidiaries or
terminate or withdraw from, or make any material change in
or to, any existing employee benefit plans of Subject
Company or the Subject Company Subsidiaries other than any
such change that is required by Law or that, in the opinion
of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan, or make any distributions
from such employee benefit plans, except as required by Law,
the terms of such plans or consistent with past practices;
or
(j) make any material change in any Tax or
accounting methods or systems of internal accounting
controls, except as may be appropriate to conform to changes
in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in
accordance with past practice, settle any Litigation
involving any Liability of Subject Company or the Subject
Company Subsidiaries for material money damages or
restrictions upon the operations of Subject Company or the
Subject Company Subsidiaries; or
(l) except in the ordinary course consistent with
past practice, enter into, modify, amend, or terminate any
material Contract (excluding any loan Contract) or waive,
release, compromise, or assign any material rights or
claims.
7.3 Covenants of Parent. From the date of this
Agreement until the earlier of the Effective Time or the
termination of this Agreement, Parent covenants and agrees
that it shall (i) continue to conduct its business and the
business of the Parent Subsidiaries in a manner designed in
its reasonable judgment to enhance the long-term value of
the Parent Common Stock and the business prospects of Parent
and the Parent Subsidiaries, and (ii) take no action which
would (a) materially adversely affect the ability of any
Party to obtain any Consents required for the transactions
contemplated hereby or prevent the transactions contemplated
hereby, including the Merger, from qualifying for pooling-
of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue
Code, (b) materially adversely affect the ability of any
Party to perform its covenants and agreements under this
Agreement, or (c) result in Parent entering into an
agreement with respect to an Acquisition Proposal with a
third party which could be reasonably expected to result in
the Merger not being consummated; provided, that the
foregoing shall not prevent Parent or any Parent Subsidiary
from acquiring any other Assets or businesses or from
discontinuing or disposing of any of its Assets or business
if such action is, in the reasonable judgment of Parent,
desirable in the conduct of the business of Parent and the
Parent Subsidiaries and would not, in the reasonable
judgment of Parent, likely delay the Effective Time to a
date subsequent to the date set forth in Section 10.1(e) of
this Agreement.
7.4 Adverse Changes in Condition. Each Party
agrees to give written notice promptly to the other Party
upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or
any of its Subsidiaries which (i) is reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on it or (ii) would cause or constitute a material
breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable
efforts to prevent or promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries
shall file all reports required to be filed by it with
Regulatory Authorities between the date of this Agreement
and the Effective Time and, to the extent permitted by Law,
shall deliver to the other Party copies of all such reports
promptly after the same are filed. If financial statements
are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated
financial position of the entity filing such statements as
of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows
for the periods then ended in accordance with GAAP (subject
in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC
will comply in all material respects with the Securities
Laws and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Any financial statements contained in
any other reports to another Regulatory Authority shall be
prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement;
Shareholder Approval. Each of Parent and Subject Company
shall prepare and file the Registration Statement, of which
the Proxy Statement shall form a part, with the SEC, and
shall use its reasonable efforts to cause the Registration
Statement to become effective under the 1933 Act and Parent
shall take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection
with the issuance of the shares of Parent Common Stock upon
consummation of the Merger. Each of Parent and Subject
Company shall furnish all information concerning it and the
holders of its capital stock as the other Party may
reasonably request in connection with such action. Subject
Company shall call a Shareholders' Meeting, to be held as
soon as practicable after the Registration Statement is
declared effective by the SEC, for the purpose of voting
upon approval of this Agreement and such other related
matters as it deems appropriate. In connection with the
Shareholders' Meeting, (i) the Board of Directors of Subject
Company shall recommend (subject to compliance with its
fiduciary duties as advised by counsel) to its shareholders
the approval of the Merger, and (ii) the Board of Directors
(subject to compliance with its fiduciary duties as advised
by counsel) and officers of Subject Company shall use their
reasonable efforts to obtain shareholder approval.
8.2 Exchange Listing. Parent shall use its
reasonable efforts to list, prior to the Effective Time, on
the NYSE, subject to official notice of issuance, the shares
of Parent Common Stock to be issued to the holders of
Subject Company Common Stock or Subject Company Options
pursuant to the Merger, and Parent shall give all notices
and make all filings with the NYSE required in connection
with the transactions contemplated herein.
8.3 Applications. Parent shall prepare and file,
and Subject Company shall cooperate in the preparation and,
where appropriate, filing of, applications with all
Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions
contemplated by this Agreement; provided, however, that no
party shall be required to seek any Consents for the
exercise of any rights or performance of any obligations
under the Stock Option Agreement except as set forth in such
agreement. At least five business days prior to each
filing, Parent shall provide Subject Company and its counsel
with copies of such applications. The Parties shall deliver
to each other copies of all filings, correspondence and
orders to and from all Regulatory Authorities in connection
with the transactions contemplated hereby as soon as
practicable upon their becoming available.
8.4 Filings With State Offices. Upon the terms
and subject to the conditions of this Agreement, Parent and
Subject Company shall execute and file the Articles of
Merger with the Secretary of State of the State of Florida
in connection with the Closing.
8.5 Agreement as to Efforts to Consummate.
Subject to the terms and conditions of this Agreement, each
Party agrees to use, and to cause its Subsidiaries to use,
its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things
necessary, proper, or advisable under applicable Laws to
consummate and make effective, as soon as practicable after
the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause
to be satisfied the conditions referred to in Article 9 of
this Agreement; provided, however, that no party shall be
required to seek any Consents or take any other actions for
the exercise of any rights or performance of any obligations
under the Stock Option Agreement except as set forth in such
agreement. Each Party shall use, and shall cause each of
its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of
the transactions contemplated by this Agreement; provided,
however, that no party shall be required to seek any
Consents or take any other actions for the exercise of any
rights or performance of any obligations under the Stock
Option Agreement except as set forth in such agreement.
8.6 Investigation and Confidentiality. (a)
Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its
business and to consummation of the Merger and shall permit
the other Party to make or cause to be made such
investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal
conditions as the other Party reasonably requests, provided
that such investigation shall be reasonably related to the
transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. Neither Party shall
be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice
the rights of such Party's customers, jeopardize any
attorney-client privilege or contravene any Law, rule,
regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this
Agreement. The Parties will make appropriate substitute
disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. No
investigation by a Party shall affect the representations
and warranties of the other Party.
(b) Each Party will hold all information gathered
pursuant to this Agreement in confidence to the extent
required by, and in accordance with, the provisions of the
Confidentiality Agreement, dated April 23, 1997, between
Parent and Subject Company.
8.7 Press Releases. Prior to the Effective Time,
Subject Company and Parent shall consult with each other as
to the form and substance of any press release or other
public disclosure materially related to this Agreement or
any other transaction contemplated hereby; provided, that
nothing in this Section 8.7 shall be deemed to prohibit any
Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 Certain Actions. Except with respect to this
Agreement and the transactions contemplated hereby, after
the date of this Agreement, neither Subject Company, the
Subject Company Subsidiaries nor any Representatives thereof
retained by Subject Company or the Subject Company
Subsidiaries shall directly or indirectly solicit any
Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of Subject
Company's Board of Directors as advised by counsel, Subject
Company, the Subject Company Subsidiaries, or
Representatives thereof shall not furnish any non-public
information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with
respect to, any Acquisition Proposal, but Subject Company
may communicate information about such an Acquisition
Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal
obligations as advised by counsel. Subject Company shall
promptly notify Parent orally and in writing in the event
that it receives any Acquisition Proposal or inquiry related
thereto. Subject Company shall (i) immediately cease and
cause to be terminated any existing activities, discussions,
or negotiations with any Persons conducted heretofore with
respect to any of the foregoing, and (ii) direct and use its
reasonable efforts to cause all of its Representatives not
to engage in any of the foregoing.
8.9 Accounting and Tax Treatment. Each of the
Parties undertakes and agrees to use its reasonable efforts
to cause the Merger, and to take no action which would cause
the Merger not, to qualify for pooling-of-interests
accounting treatment and treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue
Code for federal income tax purposes.
8.10 Agreement of Affiliates. Subject Company has
disclosed in Section 8.10 of the Subject Company Disclosure
Memorandum each Person whom it reasonably believes is an
"affiliate" of Subject Company as of the date of this
Agreement for purposes of Rule 145 under the 1933 Act.
Subject Company shall use its reasonable efforts to cause
each such Person to deliver to Parent not later than 40 days
prior to the Effective Time, a written agreement,
substantially in the form of Exhibit 3, providing that such
Person will not sell, pledge, transfer, or otherwise dispose
of the shares of Subject Company Common Stock held by such
Person except as contemplated by such agreement or by this
Agreement and will not sell, pledge, transfer, or otherwise
dispose of the shares of Parent Common Stock to be received
by such Person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and
the rules and regulations thereunder and until such time as
financial results covering at least 30 days of combined
operations of Parent and Subject Company have been published
within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. If the Merger
will qualify for pooling-of-interests accounting treatment,
shares of Parent Common Stock issued to such affiliates of
Subject Company in exchange for shares of Subject Company
Common Stock shall not be transferable until such time as
financial results covering at least 30 days of combined
operations of Parent and Subject Company have been published
within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies, regardless of
whether each such affiliate has provided the written
agreement referred to in this Section 8.10 (and Parent shall
be entitled to place restrictive legends upon certificates
for shares of Parent Common Stock issued to affiliates of
Subject Company pursuant to this Agreement to enforce the
provisions of this Section 8.10). Parent shall not be
required to maintain the effectiveness of the Registration
Statement under the 1933 Act for the purposes of resale of
Parent Common Stock by such affiliates.
8.11 Employee Benefits and Contracts. (a)
Following the Effective Time, Parent shall provide to
officers and employees of the Subject Company and any
Subject Company Subsidiary, employee benefits under employee
benefit and welfare plans of Parent or the Parent
Subsidiaries on terms and conditions which when taken as a
whole are substantially similar to those currently provided
by Parent or a Parent Subsidiary to their similarly situated
officers and employees. For purposes of participation,
vesting, and (except in the case of retirement plans)
benefit accrual under such employee benefit plans, the
service of the employees of the Subject Company and any
Subject Company Subsidiary prior to the Effective Time shall
be treated as service with Parent or a Parent Subsidiary
participating in such employee benefit plans.
(b) Except as set forth in the Supplemental
Letter, Parent shall, and shall cause the Parent
Subsidiaries to, honor in accordance with their terms the
Subject Company Benefit Plans, each as amended to the date
hereof, and other contracts, arrangements, commitments or
understandings disclosed in Section 8.11 of the Subject
Company Disclosure Memorandum. Parent and Subject Company
hereby acknowledge that consummation of the Merger will
constitute a "Change in Control" for purposes of all
employee benefit plans, contracts, arrangements and
commitments that contain change in control provisions and,
except as set forth in the Supplemental Letter, agree to
abide by the provisions of any employee benefit plan,
contract, arrangement or commitment which relates to a
Change in Control.
8.12 Indemnification. (a) After the Effective
Time, Parent shall indemnify, defend and hold harmless the
present and former directors, officers, employees, and
agents of the Subject Company and any Subject Company
Subsidiary (each, an "Indemnified Party") (including any
person who becomes a director, officer, employee, or agent
prior to the Effective Time) against all Liabilities
(including reasonable attorneys' fees, and expenses,
judgments, fines and amounts paid in settlement) arising out
of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by
this Agreement and the Stock Option Agreement and the
proceedings entitled Nathan J. Esformes, Stanley I. Worton,
M.D., and Leonard Wein, as individual shareholders and on
behalf of all other shareholders of Subject Company v. Abel
Holtz, Fana Holtz, Daniel M. Holtz and Javier J. Holtz, the
Bank and Subject Company and Stanley I. Worton, M.D., Nathan
Esformes v. Abel Holtz, Fana Holtz, Daniel Holtz, Alex
Halberstein and Subject Company) to the full extent
permitted under any of Florida Law, Subject Company's
Articles and By-laws as in effect on the date hereof and any
indemnity agreements entered into prior to the date of this
Agreement by Subject Company or any Subject Company
Subsidiary and any director, officer, employee or agent of
Subject Company or any Subject Company Subsidiary, including
provisions relating to advances of expenses incurred in the
defense of any Litigation. Without limiting the foregoing,
in any case in which approval by Parent is required to
effectuate any indemnification, Parent shall direct, at the
election of the Indemnified Party, that the determination of
any such approval shall be made by independent counsel
mutually agreed upon between Parent and the Indemnified
Party.
(b) Parent shall use its reasonable efforts
(and Subject Company shall cooperate prior to the Effective
Time in these efforts) to maintain in effect for a period of
three years after the Effective Time Subject Company's
existing directors' and officers' liability insurance policy
(provided that Parent may substitute therefor (i) policies
of at least the same coverage and amounts containing terms
and conditions which are substantially no less advantageous
or (ii) with the consent of Subject Company given prior to
the Effective Time, any other policy) with respect to claims
arising from facts or events which occurred prior to the
Effective Time and covering persons who are currently
covered by such insurance; provided, that the Surviving
Corporation shall not be obligated to make aggregate annual
premium payments for such three-year period in respect of
such policy (or coverage replacing such policy) which
exceed, for the portion related to Subject Company's
directors and officers, 150% of the annual premium payments
on Subject Company's current policy in effect as of the date
of this Agreement (the "Maximum Amount"). If the amount of
the premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Parent shall use its
reasonable efforts to maintain the most advantageous
policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.12,
upon learning of any such Liability or Litigation, shall
promptly notify Parent thereof, provided that the failure so
to notify shall not affect the obligations of Parent under
this Section 8.12 unless and to the extent such failure
materially increases Parent's Liability under this Section
8.12. In the event of any such Litigation (whether arising
before or after the Effective Time), (i) Parent or the
Surviving Corporation shall have the right to assume the
defense thereof and Parent shall not be liable to such
Indemnified Parties for any legal expenses of other counsel
or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof,
except that if Parent or the Surviving Corporation elects
not to assume such defense or counsel for the Indemnified
Parties advises that there are substantive issues which
raise conflicts of interest between Parent or the Surviving
Corporation and the Indemnified Parties or between the
Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Parent or the Surviving
Corporation shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as
statements therefor are received; provided, that Parent
shall be obligated pursuant to this paragraph (c) to pay for
only two firms of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in
the defense of any such Litigation, and (iii) neither
Parent nor the Surviving Corporation shall be liable for
any settlement effected without its prior written consent or
have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall determine,
and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
(d) If either Parent or the Surviving
Corporation or any of their respective successors or assigns
shall consolidate with or merge into any other Person and
shall not be the continuing or surviving Person of such
consolidation or merger or shall transfer all or
substantially all of its assets to any Person, then and in
each case, proper provision shall be made so that the
successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the
obligations set forth in this Section 8.12
(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 8.12.
(f) The provisions of this Section 8.12 are
intended to be for the benefit of, and shall be enforceable
by, each Indemnified Party and his or her heirs and
representatives.
8.13 Merger Subsidiary Organization. Parent shall
organize Merger Subsidiary under the Laws of the State of
Florida. Prior to the Effective Time, the outstanding
capital stock of Merger Subsidiary shall consist of 1,000
shares of Parent Merger Subsidiary Common Stock, all of
which shares shall be owned by Parent. Prior to the
Effective Time, Merger Subsidiary shall not (i) conduct any
business operations whatsoever or (ii) enter into any
Contract or agreement of any kind, acquire any assets or
incur any Liability, except as may be specifically
contemplated by this Agreement or as the Parties may
otherwise agree. Parent, as the sole stockholder of Merger
Subsidiary, shall vote prior to the Effective Time the
shares of Merger Subsidiary Common Stock in favor of this
Agreement.
8.14 State Takeover Laws. Subject Company shall
use, and shall cause Holdings to use, its reasonable efforts
to take all necessary steps to exempt the transactions
contemplated by this Agreement from the Takeover Laws.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The
respective obligations of each Party to perform this
Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by
both Parties pursuant to Section 11.6 of this Agreement:
(a) Shareholder Approval. The shareholders of
Subject Company shall have approved this Agreement and the
consummation of the transactions contemplated hereby and
thereby, including the Merger, as and to the extent required
by Law, or by the provisions of any governing instruments
(without regard to any shares which are voted pursuant to
irrevocable proxies, the validity of which has been
contested by the underlying owner, unless the underlying
owner has given written instructions with respect to the
voting of such shares in connection with this Agreement).
(b) Regulatory Approvals. All Consents of,
filings and registrations with, and notifications to, all
Regulatory Authorities required for consummation of the
Merger shall have been obtained or made and shall be in full
force and effect and all waiting periods required by Law
shall have expired. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a
manner (other than matters relating to the raising of
additional capital or the disposition of Assets or deposit
Liabilities and associated branches) which in the reasonable
judgment of the Board of Directors of Parent would so
materially adversely impact the financial or economic
benefits of the transactions contemplated by this Agreement
that, had such condition or requirement been known, Parent
would not, in its reasonable judgment, have entered into
this Agreement.
(c) Consents and Approvals. Each Party shall
have obtained any and all Consents required for consummation
of the Merger (other than those referred to in Section
9.1(b) of this Agreement) or for the preventing of any
Default under any Contract or Permit of such Party which, if
not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on such Party.
(d) Legal Proceedings. No court or governmental
or regulatory authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced, or entered by Law or
Order (whether temporary, preliminary, or permanent) or
taken any other action which prohibits, restricts, or makes
illegal consummation of the transactions contemplated by
this Agreement.
(e) Registration Statement. The Registration
Statement shall be effective under the 1933 Act, no stop
orders suspending the effectiveness of the Registration
Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to the
issuance or trading of the shares of Parent Common Stock
issuable pursuant to the Merger shall have been received.
(f) Exchange Listing. The shares of Parent
Common Stock issuable pursuant to the Merger shall have been
approved for listing on the NYSE, subject to official notice
of issuance.
(g) Tax Matters. Parent shall have received a
written opinion of counsel from Alston & Bird LLP, and
Subject Company shall have received a written opinion of
counsel from Skadden, Arps, Slate, Meagher & Flom LLP, in
form and substance reasonably satisfactory to Parent and
Subject Company, respectively, dated as of the Effective
Time, in each case substantially to the effect that (i) the
Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, (ii) no gain
or loss will be recognized by the shareholders of Subject
Company who exchange all of their Subject Company Common
Stock solely for Parent Common Stock pursuant to the Merger
(except with respect to cash received in lieu of a
fractional share interest in Parent Common Stock), (iii) the
tax basis of the Parent Common Stock received by
shareholders of Subject Company who exchange Subject Company
Common Stock solely for Parent Common Stock in the Merger
will be the same as the tax basis of the Subject Company
Common Stock surrendered in exchange therefor, (iv) the
holding period of the Parent Common Stock received by
shareholders of Subject Company in the Merger will include
the period during which the shares of Subject Company Common
Stock surrendered in exchange therefor were held, provided
such Subject Company Common Stock was held as a capital
asset by the holder of such Subject Company Common Stock at
the Effective Time, and (v) neither Subject Company nor
Parent will recognize gain or loss as a consequence of the
Merger. In rendering such Tax Opinion, such counsel shall
require and be entitled to rely upon representations and
covenants of officers of Parent, Subject Company,
shareholders of Subject Company and others reasonably
satisfactory in form and substance to such counsel.
9.2 Conditions to Obligations of Parent. The
obligations of Parent to perform this Agreement and
consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Parent pursuant to
Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes
of this Section 9.2(a), the accuracy of the representations
and warranties of Subject Company set forth in this
Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though
all such representations and warranties had been made on and
as of the Effective Time (provided that representations and
warranties which are confined to a specific date shall speak
only as of such date). The representations and warranties
of Subject Company set forth in Sections 5.1, 5.2, 5.3,
5.19, 5.20, and 5.21 of this Agreement shall be true and
correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of
Subject Company set forth in this Agreement (including the
representations and warranties set forth in Sections 5.1,
5.2, 5.3, 5.19, 5.20, and 5.21) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to
have, a Material Adverse Effect on Subject Company, provided
that, for purposes of this sentence only, those
representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or
"Knowledge" shall be deemed not to include such
qualifications.
(b) Performance of Agreements and Covenants.
Each and all of the agreements and covenants of Subject
Company to be performed and complied with pursuant to this
Agreement and the other agreements contemplated hereby prior
to the Effective Time shall have been duly performed and
complied with in all material respects.
(c) Certificates. Subject Company shall have
delivered to Parent (i) a certificate, dated as of the
Effective Time and signed on its behalf by its chief
executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in
Sections 9.2(a) and 9.2(b) of this Agreement have been
satisfied, and (ii) certified copies of resolutions duly
adopted by Subject Company's Board of Directors and
shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable
detail as Parent shall request.
(d) Parent Pooling Letter. Parent shall have
received a copy of a letter, dated as of the date of filing
of the Registration Statement with the SEC and as of the
Effective Time, addressed to it and in a form reasonably
acceptable to it, from Price Waterhouse LLP to the effect
that the Merger will qualify for pooling of interests
accounting treatment.
9.3 Conditions to Obligations of Subject Company.
The obligations of Subject Company to perform this Agreement
and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Subject Company
pursuant to Section 11.6(b) of this Agreement.
(a) Representations and Warranties. For purposes
of this Section 9.3(a), the accuracy of the representations
and warranties of Parent set forth in this Agreement shall
be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such
representations and warranties had been made on and as of
the Effective Time (provided that representations and
warranties which are confined to a specified date shall
speak only as of such date). The representations and
warranties of Parent set forth in Sections 6.1, 6.2, 6.3 and
6.14 of this Agreement shall be true and correct in all
material respects. There shall not exist inaccuracies in
the representations and warranties of Parent set forth in
this Agreement (including the representations and warranties
set forth in Sections 6.1, 6.2, 6.3 and 6.14) such that the
aggregate effect of such inaccuracies has, or is reasonably
likely to have, a Material Adverse Effect on Parent;
provided that, for purposes of this sentence only, those
representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or
"Knowledge" shall be deemed not to include such
qualifications.
(b) Performance of Agreements and Covenants.
Each and all of the agreements and covenants of Parent to be
performed and complied with pursuant to this Agreement and
the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. Parent shall have delivered to
Subject Company (i) a certificate, dated as of the Effective
Time and signed on its behalf by its chief executive officer
and its chief financial officer, to the effect that the
conditions of its obligations set forth in Sections 9.3(a)
and 9.3(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by Parent's or
Merger Subsidiary's Boards of Directors evidencing the
taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby,
all in such reasonable detail as Subject Company shall
request.
(d) Subject Company Pooling Letter. Subject
Company shall have received a copy of the letters
contemplated by Section 9.2(d).
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other
provision of this Agreement, and notwithstanding the
approval of this Agreement by the shareholders of Subject
Company, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors
of Parent and the Board of Directors of Subject Company; or
(b) By the Board of Directors of either Party
(provided that the terminating Party is not then in breach
of any representation or warranty contained in this
Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Subject Company and
Section 9.3(a) in the case of Parent or in material breach
of any covenant or other agreement contained in this
Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in
this Agreement which cannot be or has not been cured within
30 days after the giving of written notice to the breaching
Party of such inaccuracy and which inaccuracy would provide
the terminating Party the ability to refuse to consummate
the Merger under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Subject
Company and Section 9.3(a) of this Agreement in the case of
Parent; or
(c) By the Board of Directors of either Party
(provided that the terminating Party is not then in breach
of any representation or warranty contained in this
Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Subject Company and
Section 9.3(a) in the case of Parent or in material breach
of any covenant or other agreement contained in this
Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this
Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching
Party of such breach; or
(d) By the Board of Directors of either Party in
the event (i) any Consent of any Regulatory Authority
required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any
action taken by such authority is not appealed within the
time limit for appeal, or (ii) the shareholders of Subject
Company fail to vote their approval of this Agreement and
the transactions contemplated hereby as required by the FBCA
and this Agreement at the Shareholders' Meeting where the
transactions were presented to such shareholders for
approval and voted upon; or
(e) By the Board of Directors of either Party in
the event that the Merger shall not have been consummated by
April 30, 1998, if the failure to consummate the
transactions contemplated hereby on or before such date is
not caused by any willful breach of this Agreement by the
Party electing to terminate pursuant to this Section
10.1(e); or
(f) By Parent, upon written notice to Subject
Company at any time prior to the close of business on
September 12, 1997, if, as a result of Parent's due
diligence investigation of the Assets, the Liabilities, the
business, and the operating performance of Subject Company
and the Subject Company Subsidiaries, Parent's Board of
Directors reasonably determines in good faith that (i) the
financial condition, core operating performance or business
of Subject Company and the Subject Company Subsidiaries
taken as a whole as of the date of this Agreement is
materially and adversely different from Parent's reasonable
expectations with respect thereto based on the Subject
Company's Annual Report on Form 10-K for the year ended
December 31, 1996, the Subject Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 and the June
30, 1997 financial information of the Subject Company and
the Subject Company Subsidiaries set forth in Section 5.7 of
the Subject Company Disclosure Memorandum; or (ii) facts or
circumstances exist that lead it reasonably to conclude that
it is unlikely that the Subject Company's budget as
reflected in Section 10.1(f) of the Subject Company
Disclosure Memorandum are realizable in all material
respects (without giving effect to any loan loss provisions
that Parent may choose to make or request Subject Company to
make to the extent set forth in set forth in Section 10.1(f)
of the Parent Disclosure Memorandum and without regard to
any of the transactions contemplated hereby); or (iii)
Subject Company's allowance for loan losses and doubtful
accounts established by Subject Company for contingencies as
reflected on the balance sheet included in the Subject
Company's earnings release for the quarter ended June 30,
1997 included in Section 5.7 of the Subject Company
Disclosure Memorandum (assuming for this purpose that such
allowance is increased to the extent set forth in Section
10.1(f) of the Parent Disclosure Memorandum) is materially
insufficient to absorb the losses inherent in Subject
Company's Assets; provided, that in connection with any
termination pursuant to this clause (f), Parent's notice
shall specify in reasonable detail the basis for its
determination; or
(g) By the Board of Directors of Subject Company
upon written notice to Parent at any time during the ten-day
period commencing two days after the Determination Date, if
both of the following conditions are satisfied:
(1) the Average Closing Price shall be less
than the product of (i) 0.80 and (ii) the Starting
Price; and
(2) (i) the quotient 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 (ii) the quotient obtained by
dividing the Index Price on the Determination Date by
the Index Price on the Starting Date and subtracting
0.15 from the quotient in this clause (2)(ii) (such
number being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If
Subject Company refuses to consummate the Merger
pursuant to this Section 10.1(g), it shall give prompt
written notice thereof to Parent; 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 to elect to
increase the Exchange Ratio to equal the lesser of
(i) the quotient obtained by dividing (1) the product of
0.80, the Starting Price, and the Exchange Ratio (as
then in effect) by (2) the Average Closing Price, and
(ii) the quotient obtained by dividing (1) the product
of the Index Ratio and the Exchange Ratio (as then in
effect) by (2) the Parent Ratio. If Parent makes an
election contemplated by the preceding sentence, within
such five-day period, it shall give prompt written
notice to Subject Company of such election and the
revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 10.1(g) 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
10.1(g).
For purposes of this Section 10.1(g), the
following terms shall have the meanings indicated:
"Average Closing Price" shall mean the
average of the daily last sales prices of Parent
Common Stock as reported on the NYSE (as reported by
The Wall Street Journal or, if not reported thereby,
another authoritative source as chosen by Parent)
for the 20 consecutive full trading days in which
such shares are traded on the NYSE ending at the
close of trading on the Determination Date.
"Determination Date" shall mean the later of
the date (i) of the Shareholders' Meeting and (ii)
on which the Consent of the Board of Governors of
the Federal Reserve System shall be received
(without regard to any requisite waiting period
thereof).
"Index Group" shall mean the 15 bank holding
companies listed below, the common stocks 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 as of the Starting Date. In the
event that any such company or companies are removed
from the Index Group as a result of any of the
events described in the preceding sentence, the
weights (which shall be determined based upon the
number of outstanding shares of common stock) shall
be redistributed proportionately for purposes of
determining the Index Price. The 15 bank holding
companies and the weights attributed to them are as
follows:
BANK HOLDING COMPANIES WEIGHTING
---------------------- ---------
AmSouth Bancorporation 5.75%
BB&T Corporation 7.55
Crestar Financial Corporation 7.75
First American Corporation 4.12
First of America Bank Corporation 6.18
First Security Corporation 8.12
First Tennessee National 4.49
Corporation
Firstar Corporation 10.12
Huntington Bancshares, Inc. 11.16
Marshall & Ilsley Corporation 6.22
Mercantile Bancorporation, Inc. 5.19
National Commerce Bancorp 3.44
Old Kent Financial Corporation 3.34
Regions Financial Corporation 9.58
SouthTrust Corporation 6.99
------
Total 100.00%
"Index Price" on a given date shall mean the
weighted average (weighted in accordance with the
factors listed above) of the closing prices of the
companies composing the Index Group.
"Starting Date" shall mean the fourth full
trading day after the announcement by press release
of the Merger.
"Starting Price" shall mean the closing price
per share of Parent Common Stock as reported on the
NYSE (as reported by The Wall Street Journal or, if
not reported thereby, another authoritative source
as chosen by Parent) on the Starting Date.
If Parent or any company belonging to the Index
Group declares or effects a stock dividend,
reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction
between the date of this Agreement 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 10.1(g).
10.2 Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to
Section 10.1 of this Agreement, this Agreement shall become
void and have no effect, except that (i) the provisions of
this Section 10.2, Section 8.6(b), Section 11.2 and Section
11.3 of this Agreement shall survive any such termination
and abandonment, and (ii) a termination pursuant to the
terms of this Agreement shall not relieve the breaching
Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement. The Stock
Option Agreement and the Confidentiality Agreement shall be
governed by their respective terms as to its termination.
10.3 Non-Survival of Representations and
Covenants. The respective representations, warranties,
obligations, covenants, and agreements of the Parties shall
not survive the Effective Time except for those covenants
and agreements which by their terms apply in whole or in
part after the Effective Time.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. (a) Except as otherwise
provided herein, the capitalized terms set forth below shall
have the following meanings:
"Acquisition Proposal" with respect to a Party
shall mean any tender offer or exchange offer or any
proposal for a merger, acquisition of all of the stock
or assets of, or other business combination involving
such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a
substantial portion of the assets of, such Party or any
of its Subsidiaries.
"Affiliate" of a Person shall mean any other
Person, directly or indirectly through one or more
intermediaries, controlling, controlled by, or under
common control with such Person.
"Agreement" shall mean this Agreement, including
the Stock Option Agreement and the Exhibits delivered
pursuant hereto and incorporated herein by reference.
"Articles of Merger" shall mean the Articles of
Merger to be executed by Subject Company and filed with
the Secretary of State of the State of Florida relating
to the Merger as contemplated by Section 1.1 of this
Agreement.
"Assets" of a Person shall mean all of the assets,
properties, businesses, and rights of such Person of
every kind, nature, character and description, whether
real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or
utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried
on the books and records of such Person, and whether or
not owned in the name of such Person or any Affiliate
of such Person and wherever located.
"Bank" shall mean Capital Bank.
"BHC Act" shall mean the federal Bank Holding
Company Act of 1956, as amended.
"Closing Date" shall mean the date on which the
Closing occurs.
"Consent" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or similar
affirmation by any Person pursuant to any Contract,
Law, Order or Permit.
"Contract" shall mean any written or oral
agreement, arrangement, authorization, commitment,
contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document
to which any Person is a party or that is binding on
any Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation
of or default under any Contract, Order, or Permit,
(ii) any occurrence of any event that with the passage
of time or the giving of notice or both would
constitute a breach or violation of or default under
any Contract, Order, or Permit, or (iii) any occurrence
of any event that with or without the passage of time
or the giving of notice would give rise to a right to
terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase or impose any
Liability under, any Contract, Order or Permit.
"Environmental Laws" shall mean all Laws relating
to pollution or protection of human health or the
environment (including ambient air, surface water,
ground water, land surface or subsurface strata) and
which are administered, interpreted or enforced by the
United States Environmental Protection Agency and state
and local agencies with jurisdiction over, and
including common law in respect of, pollution or
protection of the environment, including the
Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other
Laws relating to emissions, discharges, releases, or
threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any trade or
business, whether or not incorporated, that together
with Subject Company would be deemed a "single
employer" within the meaning of section 4001(b) of
ERISA.
"Exhibits" shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such
Exhibits are hereby incorporated by reference herein
and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document
without being attached hereto.
"FBCA" shall mean the Florida Business Corporation
Act.
"GAAP" shall mean generally accepted accounting
principles, consistently applied during the periods
involved.
"Hazardous Material" shall mean (i) any hazardous
substance, hazardous material, hazardous waste,
regulated substance, or toxic substance (as those terms
are defined by any applicable Environmental Laws) and
(ii) any chemicals, pollutants, contaminants,
petroleum, petroleum products, or oil (and specifically
shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of
governmental authorities and any polychlorinated
biphenyls).
"Holding" shall mean Capital Factors Holding, Inc.
"Holding Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and
schedules, if any) of Holding as of March 31, 1997, and
as of December 31, 1996 and 1995, and the related
statements of earnings, changes in shareholders' equity,
and cash flows (including related notes and schedules,
if any) for the three months ended March 31, 1997 and
for each of the three years ended December 31, 1996,
1995 and 1994, as filed by Holding in SEC Documents,
and (ii) the consolidated balance sheets of Holding
(including related notes and schedules, if any) and
related statements of earnings, changes in shareholders'
equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to March 31, 1997.
"HSR Act" shall mean Section 7A of the Clayton
Act, as added by Title II of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights,
patents, trademarks, service marks, service names,
trade names, applications therefor, technology rights
and licenses, computer software (including any source
or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how,
inventions, and other intellectual property rights.
"Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Knowledge" as used with respect to a Person
(including references to such Person being aware of a
particular matter) shall mean those facts that are
known by the Chairman, President, Chief Financial
Officer, Chief Accounting Officer, Chief Credit
Officer, or General Counsel of such Person.
"Law" shall mean any code, law, ordinance,
regulation, reporting or licensing requirement, rule,
or statute applicable to a Person or its Assets,
Liabilities or business, including those promulgated,
interpreted, or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect,
primary or secondary, liability, indebtedness,
obligation, penalty, cost, or expense (including costs
of investigation, collection, and defense), claim,
deficiency, guaranty, or endorsement of or by any
Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit
in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement,
default of title, easement, encroachment, encumbrance,
hypothecation, infringement, lien, mortgage, pledge,
reservation, restriction, security interest, title
retention, or other security arrangement, or any
adverse right or interest, charge, or claim of any
nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for
current Taxes upon the assets or properties of a Party
or its Subsidiaries which are not yet due and payable,
and (ii) for depository institution Subsidiaries of a
Party, pledges to secure deposits and other Liens
incurred in the ordinary course of the banking
business.
"Litigation" shall mean any action, arbitration,
cause of action, claim, complaint, criminal
prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written
or oral) by any Person alleging potential Liability or
requesting information relating to or affecting a
Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by
this Agreement, but shall not include regular, periodic
examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"Material Adverse Effect" on a Party shall mean an
event, change, or occurrence which, individually or
together with any other event, change, or occurrence,
has a material adverse impact on (i) the financial
position, business, or results of operations of such
Party and its Subsidiaries, taken as a whole, or (ii)
the ability of such Party to perform its obligations
under this Agreement or to consummate the Merger or the
other transactions contemplated by this Agreement in
accordance with applicable Law, provided that "Material
Adverse Effect" and "material adverse impact" shall not
be deemed to include the impact of (a) changes in
banking and similar Laws of general applicability or
interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory
accounting principles generally applicable to banks and
their holding companies, (c) actions and omissions of a
Party (or any of its Subsidiaries) taken with the prior
written consent of the other Party, (d) changes in
economic conditions or interest rates generally
affecting financial institutions, or (e) the direct
effects of compliance with this Agreement (including
the expense associated with the vesting of benefits
under the various employee benefit plans of Subject
Company as a result of the Merger constituting a change
of control) on the operating performance of the
Parties, including expenses incurred by the Parties in
consummating the transactions contemplated by the
Agreement.
"Merger Subsidiary" shall mean the wholly owned
subsidiary of Parent to be organized to effect the
Merger under the Laws of the State of Florida.
"Merger Subsidiary Common Stock" shall mean the
$1.00 par value common stock of Merger Subsidiary.
"NASD" shall mean the National Association of
Securities Dealers, Inc.
"NYSE" shall mean the New York Stock Exchange,
Inc.
"1933 Act" shall mean the Securities Act of 1933,
as amended.
"1934 Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Operating Property" shall mean any property owned
by the Party in question or by any of its Subsidiaries
or in which such Party or Subsidiary holds a security
interest, and, where required by the context, includes
the owner or operator of such property, but only with
respect to such property.
"Order" shall mean any administrative decision or
award, decree, injunction, judgment, order, quasi-
judicial decision or award, ruling, or writ of any
federal, state, local, or foreign or other court,
arbitrator, mediator, tribunal, administrative agency,
or Regulatory Authority.
"Parent Capital Stock" shall mean, collectively,
the Parent Common Stock, the Parent Preferred Stock and
any other class or series of capital stock of Parent.
"Parent Common Stock" shall mean the $5.00 par
value common stock of Parent.
"Parent Disclosure Memorandum" shall mean the
written information entitled "Parent Memorandum"
delivered prior to the date of this Agreement to
Subject Company describing in reasonable detail the
matters contained therein and, with respect to each
disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure
is being made.
"Parent Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes
and schedules, if any) of Parent as of March 31, 1997,
and as of December 31, 1996 and 1995, and the related
statements of earnings, changes in shareholders'
equity, and cash flows (including related notes and
schedules, if any) for the three months ended March 31,
1997 and for each of the three years ended December 31,
1996, 1995 and 1994, as filed by Parent in SEC
Documents, and (ii) the consolidated balance sheets of
Parent (including related notes and schedules, if any)
and related statements of earnings, changes in
shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents
filed with respect to periods ended subsequent to March
31, 1997.
"Parent Preferred Stock" shall mean the no par
value preferred stock of Parent and shall include the
(i) Series A Preferred Stock and (ii) Series E 8%
Cumulative, Convertible Preferred Stock, of Parent
("Parent Series E Preferred Stock").
"Parent Rights" shall mean the preferred stock
purchase rights issued pursuant to the Parent Rights
Agreement.
"Parent Rights Agreement" shall mean that certain
Rights Agreement, dated January 19, 1989, between
Parent and UPNB, as Rights Agent.
"Parent Subsidiaries" shall mean the Subsidiaries
of Parent and any corporation, bank, or other
organization acquired as a Subsidiary of Parent in the
future and owned by Parent at the Effective Time.
"Participation Facility" shall mean any facility
or property in which the Party in question or any of
its Subsidiaries participates in the management and,
where required by the context, said term means the
owner or operator of such facility or property, but
only with respect to such facility or property.
"Party" shall mean either Subject Company or
Parent, and "Parties" shall mean both Subject Company
and Parent.
"Permit" shall mean any federal, state, local, and
foreign governmental approval, authorization,
certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the
benefit of any Person or its securities, Assets or
business.
"Person" shall mean a natural person or any legal,
commercial, or governmental entity, such as, but not
limited to, a corporation, general partnership, joint
venture, limited partnership, limited liability
company, trust, business association, group acting in
concert, or any person acting in a representative
capacity.
"Proxy Statement" shall mean the proxy statement
used by Subject Company to solicit the approval of its
shareholders of the transactions contemplated by this
Agreement, which shall include the prospectus of Parent
relating to the issuance of the Parent Common Stock to
holders of Subject Company Common Stock.
"Registration Statement" shall mean the
Registration Statement on Form S-4, or other
appropriate form, including any pre-effective or post-
effective amendments or supplements thereto, filed with
the SEC by Parent under the 1933 Act with respect to
the shares of Parent Common Stock to be issued to the
shareholders of Subject Company in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively,
the Federal Trade Commission, the United States
Department of Justice, the Board of the Governors of
the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Department of Banking and
Finance of the State of Florida, all state regulatory
agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NYSE, the NASD, and the
SEC.
"Representative" shall mean any investment banker,
financial advisor, attorney, accountant, consultant, or
other representative of a Person.
"Rights" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe
to, scrip, warrants, or other binding obligations of
any character whatsoever by which a Person is or may be
bound to issue additional shares of its capital stock
or other Rights, or securities or rights convertible
into or exchangeable for, shares of the capital stock
of a Person.
"SEC Documents" shall mean all forms, proxy
statements, registration statements, reports,
schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Law.
"Securities Laws" shall mean the 1933 Act, the
1934 Act, the Investment Company Act of 1940, as
amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory
Authority promulgated thereunder.
"Shareholders' Meeting" shall mean the meeting of
the shareholders of Subject Company to be held pursuant
to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"Stock Option Agreement" shall mean the Stock
Option Agreement of even date herewith issued to Parent
by Subject Company, substantially in the form of
Exhibit 1.
"Subject Company Common Stock" shall mean the
$1.00 par value common stock of Subject Company.
"Subject Company Disclosure Memorandum" shall mean
the written information entitled "Subject Company
Disclosure Memorandum" delivered prior to the date of
this Agreement to Parent describing in reasonable
detail the matters contained therein and, with respect
to each disclosure made therein, specifically
referencing each Section of this Agreement under which
such disclosure is being made.
"Subject Company Financial Statements" shall mean
(i) the consolidated statements of financial position
(including related notes and schedules, if any) of
Subject Company as of March 31, 1997, and as of
December 31, 1996 and 1995, and the related statements
of operations, shareholders' equity, and cash flows
(including related notes and schedules, if any) for the
three months ended March 31, 1997, and for each of the
three fiscal years ended December 31, 1996, 1995 and
1994, as filed by Subject Company in SEC Documents, and
(ii) the consolidated statements of financial position
of Subject Company (including related notes and
schedules, if any) and related statements of
operations, shareholders' equity, and cash flows
(including related notes and schedules, if any)
included in SEC Documents filed with respect to periods
ended subsequent to March 31, 1997.
"Subject Company Stock Plans" shall mean the
existing stock option and other stock-based
compensation plans of Subject Company.
"Subject Company Subsidiaries" shall mean the
Subsidiaries of Subject Company, which shall include
Subject Company Subsidiaries described in Section 5.4
of this Agreement and any corporation, bank, or other
organization acquired as a Subsidiary of Subject
Company in the future and owned by Subject Company at
the Effective Time.
"Subsidiaries" shall mean all those corporations,
banks, associations, or other entities of which the
entity in question owns or controls 10% or more of the
outstanding equity securities either directly or
through an unbroken chain of entities as to each of
which 10% or more of the outstanding equity securities
is owned directly or indirectly by its parent;
provided, there shall not be included any such entity
acquired through foreclosure or any such equity the
equity securities of which are owned or controlled in a
fiduciary capacity.
"Supplemental Letter" shall mean the supplemental
letter of even date herewith relating to certain
understandings and agreements in addition to those
included in this Agreement in substantially the form of
Exhibit 4.
"Surviving Corporation" shall mean Subject Company
as the surviving corporation resulting from the Merger.
"Tax" or "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, transfer, franchise,
profits, license, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation,
property or other taxes, customs 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
(domestic or foreign).
"TBCA" shall mean the Tennessee Business
Corporation Act.
(b) The terms set forth below shall have the
meanings ascribed thereto in the referenced sections:
Average Closing Price . . . . . . . Section 10.1(g)
Closing . . . . . . . . . . . . . . Section 1.2
Determination Date . . . . . . . . Section 10.1(g)
Effective Time . . . . . . . . . . Section 1.3
ERISA Affiliate . . . . . . . . . . Section 5.14(c)
Exchange Agent . . . . . . . . . . Section 4.1
Exchange Ratio . . . . . . . . . . Section 3.1(c)
Indemnified Party . . . . . . . . . Section 8.12(a)
Index Group . . . . . . . . . . . . Section 10.1(g)
Index Price . . . . . . . . . . . . Section 10.1(g)
Index Ratio . . . . . . . . . . . . Section 10.1(g)
Merger . . . . . . . . . . . . . . Section 1.1
Parent Ratio . . . . . . . . . . . Section 10.1(g)
Parent SEC Reports . . . . . . . . Section 6.12
Starting Date . . . . . . . . . . . Section 10.1(g)
Starting Price . . . . . . . . . . Section 10.1(g)
Subject Company Benefit Plans . . . Section 5.14(a)
Subject Company Contracts . . . . . Section 5.15
Subject Company ERISA Plan . . . . Section 5.14(a)
Subject Company Options . . . . . . Section 3.5(a)
Subject Company Pension Plan . . . Section 5.14(a)
Subject Company SEC Reports . . . . Section 5.17
Takeover Laws . . . . . . . . . . . Section 5.20
Tax Opinion . . . . . . . . . . . . Section 9.1(g)
(c) Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the
singular. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses. (a) Except as otherwise provided
in this Section 11.2, each of the Parties shall bear and pay
all direct costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated
hereunder, including filing, registration and application
fees, printing fees, and fees and expenses of its own
financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties
shall bear and pay the filing fees payable in connection
with the Registration Statement and the Proxy Statement and
printing costs incurred in connection with the printing of
the Registration Statement and the Proxy Statement based on
the relative Asset sizes of the Parties at December 31,
1996.
(b) Nothing contained in this Section 11.2 shall
constitute or shall be deemed to constitute liquidated
damages for the willful breach by a Party of the terms of
this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 Brokers and Finders. Except for Sandler
O'Neill & Partners, L.P. as to Subject Company and except
for Salomon Brothers Inc. as to Parent, each of the Parties
represents and warrants that neither it nor any of its
officers, directors, employees, or Affiliates has employed
any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the
event of a claim by any broker or finder based upon his or
its representing or being retained by or allegedly
representing or being retained by Subject Company or Parent
other than those disclosed in the previous sentence, each of
Subject Company and Parent, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any
Liability incurred by such party in respect of any such
claim.
11.4 Entire Agreement. Except as otherwise
expressly provided herein, this Agreement (including the
other documents and instruments referred to herein) and the
Confidentiality Agreement constitute the entire agreement
between the Parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral.
Nothing in this Agreement expressed or implied is intended
to confer upon any Person, other than the Parties or their
respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than
as provided in Section 8.12 of this Agreement.
11.5 Amendments. To the extent permitted by Law,
this Agreement may be amended by a subsequent writing signed
by each of the Parties upon the approval of the Boards of
Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained;
provided, that after any such approval by the holders of
Subject Company Common Stock, except as contemplated herein,
there shall be made no amendment that has any of the effects
set forth in Section 607.1103 of the FBCA without the
further approval of such shareholders.
11.6 Waivers. (a) Prior to or at the Effective
Time, Parent, acting through its Board of Directors, chief
executive officer, or other authorized officer, shall have
the right to waive any Default in the performance of any
term of this Agreement by Subject Company, to waive or
extend the time for the compliance or fulfillment by Subject
Company of any and all of its obligations under this
Agreement, and to waive any or all of the conditions
precedent to the obligations of Parent under this Agreement,
except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized
officer of Parent.
(b) Prior to or at the Effective Time, Subject
Company, acting through its Board of Directors, chief
executive officer, or other authorized officer, shall have
the right to waive any Default in the performance of any
term of this Agreement by Parent, to waive or extend the
time for the compliance or fulfillment by Parent of any and
all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to its obligations of
Subject Company under this Agreement, except any condition
which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of Subject
Company.
(c) The failure of any Party at any time or times
to require performance of any provision hereof shall in no
manner affect the right of such Party at a later time to
enforce the same or any other provision of this Agreement.
No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall
be deemed to be or construed as a further or continuing
waiver of such condition or breach of a waiver of any other
condition or of the breach of any other term of this
Agreement.
11.7 Assignment. Neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other
Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors
and assigns.
11.8 Notices. All notices or other communications
which are required or permitted hereunder shall be in
writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-
paid, or by courier or overnight carrier, to the person at
the addresses set forth below (or at such other address as
may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Subject Company: Capital Bancorp
1221 Brickell Avenue
Miami, Florida
Attention: Daniel M. Holtz
Telecopy Number: (305) 371-8428
Copy to Subject
Counsel: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: William S. Rubenstein, Esq.
Telecopy Number: (212) 735-2000
Parent: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attention: Jackson W. Moore
Telecopy Number: (901) 580-2939
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attention: E. James House, Jr., Esq.
Telecopy Number: (901) 580-2939
and
Alston & Bird LLP
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Attention: Frank M. Conner III, Esq.
Telecopy Number: (202) 508-3333
11.9 Governing Law. This Agreement shall be
governed by and construed in accordance with the Laws of the
State of Tennessee, without regard to any applicable
conflicts of Laws.
11.10 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one and the same instrument.
11.11 Captions. The captions contained in
this Agreement are for reference purposes only and are not
part of this Agreement.
11.12 Interpretations. Neither this Agreement
nor any uncertainty or ambiguity herein shall be construed
or resolved against any party, whether under any rule of
construction or otherwise. No party to this Agreement shall
be considered the draftsman. The Parties acknowledge and
agree that this Agreement has been reviewed, negotiated, and
accepted by all Parties and their attorneys and shall be
construed and interpreted according to the ordinary meaning
of the words used so as fairly to accomplish the purposes
and intentions of all parties hereto.
11.13 Enforcement of Agreement. The Parties
hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are
entitled at law or in equity.
11.14 Severability. Any term or provision of
this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be enforceable, the
provision shall be interpreted to be only so broad as is
enforceable.
IN WITNESS WHEREOF, each of the Parties has caused
this Agreement to be executed on its behalf and its
corporate seal to be hereunto affixed and attested by
officers thereunto as of the day and year first above
written.
ATTEST: CAPITAL BANCORP
By: /s/ Timothy E. Kish By: /s/ Daniel M. Holtz
Timothy E. Kish Daniel M. Holtz
Secretary Chairman of the Board,
President and Chief
Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
E. James House, Jr. Jackson W. Moore
Secretary President and Chief
Operating Officer
[CORPORATE SEAL]
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of August 12, 1997, by and between Capital Bancorp, a Florida
corporation ("Issuer"), and Union Planters Corporation, a Tennessee
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Merger, dated as of August 12, 1997 (the "Merger Agreement"),
providing for, among other things, the merger of a wholly owned
Subsidiary of Grantee with and into Issuer, with Issuer as the surviving
entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee
agree as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger
Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 1,510,500 shares (as adjusted as set forth
herein, the "Option Shares," which shall include the Option Shares before
and after any transfer of such Option Shares) of common stock, $1.00 par
value per share ("Issuer Common Stock"), of Issuer at a purchase price
per Option Share (subject to adjustment as set forth herein, the
"Purchase Price") equal to $40.50; provided, however, that in no event
shall the number of shares of Issuer Common Stock for which this Option
is exercisable exceed 19.9% of the Issuer's issued and outstanding shares
of Issuer Common Stock without giving effect to any shares subject to or
issued pursuant to the Option.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its
agreements or covenants contained in this Agreement or the Merger
Agreement, and (ii) no preliminary or permanent injunction or other order
against the delivery of shares covered by the Option issued by any court
of competent jurisdiction in the United States shall be in effect, Holder
may exercise the Option, in whole or in part, at any time and from time
to time following the occurrence of a Purchase Event and prior to the
termination of the Option. Notwithstanding anything to the contrary
contained herein, this Option shall be of no force and effect until the
earlier to occur of (i) expiration of the termination right set forth in
Section 10.1(f) of the Merger Agreement without prior exercise of such
right by Grantee and (ii) delivery by Grantee of written notice to Issuer
to the effect that Grantee has waived its right to terminate the Merger
Agreement pursuant to Section 10.1(f). The Option shall terminate and be
of no further force and effect upon the earliest to occur of (A) the
Effective Time, (B) termination of the Merger Agreement in accordance
with the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (other than a termination of the Merger
Agreement by Grantee pursuant to (i) Section 10.1(b) thereof (but only if
such termination was a result of a willful breach by Issuer) or (ii)
Section 10.1(c) thereof (each a "Default Termination")), (C) 12 months
after a Default Termination, and (D) 12 months after any termination of
the Merger Agreement following the occurrence of a Purchase Event or a
Preliminary Purchase Event. Any purchase of shares upon exercise of the
Option shall be subject to compliance with applicable law, including,
without limitation, the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). The term "Holder" shall mean the holder or holders of the
Option from time to time, and which initially is the Grantee. The rights
set forth in Section 8 shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise of the
Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall
have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or
entered into an agreement with any person (other than Grantee or any
Subsidiary of Grantee) to effect an Acquisition Transaction (as
defined below). As used herein, the term Acquisition Transaction
shall mean (A) a merger, consolidation or similar transaction
involving Issuer or any of its Subsidiaries (other than transactions
solely between Issuer's Subsidiaries and transactions involving
Issuer or any Subsidiary in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent (by
either remaining outstanding or being converted into securities of
the surviving entity or the parent thereof) at least 60% of the
combined voting power of the voting securities of the Issuer or the
surviving entity or the parent thereof outstanding immediately after
the consummation of the transaction), (B) except as permitted
pursuant to Section 7.1 of the Merger Agreement, the disposition, by
sale, lease, exchange or otherwise, of Assets of Issuer or any of
its Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the
issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 25% or more of the voting power of Issuer or any of its
Subsidiaries (any of the foregoing, an "Acquisition Transaction");
or
(ii) any person (other than Grantee, any Subsidiary of
Grantee or the group consisting of Abel Holtz, Fana Holtz, Daniel M.
Holtz and Javier J. Holtz (the "Family"), provided that no member of
the Family increases his or her beneficial ownership of outstanding
Issuer Common Stock (other than as a result of exercise of options
outstanding as of the date hereof) such that the aggregate
beneficial ownership of the Family as of the date hereof increases
by more than 1%) shall have acquired beneficial ownership (as such
term is defined in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of or the
right to acquire beneficial ownership of, or any "group" (as such
term is defined under the Exchange Act), other than a group of which
Grantee or any of its Subsidiaries of Grantee is a member, shall
have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 25% or more of the then-outstanding shares
of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act") with respect to, a tender offer or exchange offer
to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 25% or
more of the then-outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders
held for the purpose of voting on the Merger Agreement, such meeting
shall not have been held or shall have been canceled prior to
termination of the Merger Agreement, or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to Grantee the
recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after it shall have been publicly
announced that any person (other than Grantee or any Subsidiary of
Grantee) shall have (A) made a proposal to engage in an Acquisition
Transaction, (B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange
Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or
regulation (including a notice filed under the HSR Act and an
application or notice filed under the BHC Act, the Bank Merger Act,
or the Change in Bank Control Act of 1978) seeking the Consent to an
Acquisition Transaction from any federal or state governmental or
regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of Option Shares
it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 15 business days
from the Notice Date for the closing (the "Closing") of such purchase
(the "Closing Date"). If prior Consent of any governmental or regulatory
agency or authority is required in connection with such purchase, Issuer
shall cooperate with Holder in the filing of the required notice or
application for such Consent and the obtaining of such Consent and the
Closing shall occur immediately following receipt of such Consents (and
expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $18.0 million and, if it otherwise
would exceed such amount, Holder, at its sole election, shall either
(A) reduce the number of shares of Issuer Common Stock subject to
the Option, (B) deliver to Issuer for cancellation without
consideration Option Shares previously purchased by Holder, (C) pay
cash to Issuer, or (D) any combination of the foregoing, so that
Holder's actually realized Total Profit (together with the Total
Profit realized by all other Holders) shall not exceed $18.0 million
after taking into account the foregoing actions; and
(ii) the Option be exercised for a number of shares of
Issuer Common Stock as would, as of the date of exercise, result in
Holder's (taking into account all other Holders) Notional Total
Profit (as defined below) of more than $18.0 million; provided, that
nothing in this clause (ii) shall restrict any exercise of the
Option permitted hereby on any subsequent date.
As used in this Agreement, the term "Total Profit" shall mean the
aggregate sum (prior to the payment of taxes) of the following: (i) the
amount received by Holder pursuant to Issuer's repurchase of the Option
(or any portion thereof) pursuant to Section 8; (ii) (x) the amount
received by Holder pursuant to Issuer's repurchase of Option Shares
pursuant to Section 8, less (y) Holder's purchase price for such Option
Shares; (iii) (x) the net cash amounts received by Holder pursuant to the
sale of Option Shares (or any other securities into which such Option
Shares shall be converted or exchanged) to any unaffiliated person, less
(y) Holder's purchase price of such Option Shares; and (iv) any amounts
received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with respect
to any number of shares of Issuer Common Stock as to which Holder 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 such date for such number of shares and assuming that such
shares, together with all other Option Shares held by Holder and its
affiliates as of such date, were sold for cash at the closing sale price
per share of Issuer Common Stock as quoted on the Nasdaq National Market
(or, if Issuer Common Stock is not then quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) as of the close of
business on the preceding trading day (less customary brokerage
commissions).
The provisions of this Section 3(e) shall apply to any
Substitute Option (as defined below).
(f) Grantee agrees, promptly following any exercise of all or
any portion of the Option, and subject to its rights under Section 8, 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 Stock, and availability of an
effective registration statement to permit public sale of Option Shares.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated
by Issuer, an amount equal to the Purchase Price multiplied by the number
of Option Shares to be purchased on such Closing Date, and (ii) present
and surrender this Agreement to the Issuer at the address of the Issuer
specified in Section 13(f) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided
in Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever and subject to no
pre-emptive rights, and (B) if the Option is exercised in part only, an
executed new agreement with the same terms as this Agreement evidencing
the right to purchase the balance of the shares of Issuer Common Stock
purchasable hereunder, and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF AUGUST 12, 1997. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that: (i) the references in the above legend
to resale restrictions of the Securities Act shall be removed by delivery
of substitute certificate(s) without such reference if Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required
for purposes of the Securities Act; (ii) the references in the above
legend to the provisions of this Agreement shall be removed by delivery
of substitute certificate(s) without such reference if the shares have
been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of
such reference; and (iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both satisfied.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Issuer. This Agreement has
been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and, at all times from the
date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, the number of shares of
Issuer Common Stock necessary for Holder to exercise the Option, and
Issuer will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Issuer Common Stock or
other securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock to be
issued upon due exercise of the Option, including all additional
shares of Issuer Common Stock or other securities which may be
issuable pursuant to Section 7, upon issuance pursuant hereto, shall
be duly and validly issued, fully paid, and nonassessable, and shall
be delivered free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not
be, acquired with a view to the public distribution thereof and will
not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction, the type and
number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision
shall be made in the agreements governing such transaction, if any, so
that Holder shall receive, upon exercise of the Option, the number and
class of shares or other securities or property that Holder would have
received in respect of Issuer Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor,
as applicable. If any additional shares of Issuer Common Stock are issued
after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a) or pursuant to this
Option), the number of shares of Issuer Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with
any shares of Issuer Common Stock previously issued pursuant hereto,
equals 19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of
its Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger; (ii) to permit any person,
other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Issuer Common
Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the
outstanding shares of Issuer Common Stock immediately prior to such
merger shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its Assets to any person,
other than Grantee or one of its Subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper
provisions so that 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 Grantee, of either (x) the Acquiring Corporation (as
defined below) or (y) any person that controls the Acquiring Corporation
(in each case, such person being referred to as the "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 Grantee. The Substitute
Option Issuer shall also enter into an agreement with the then-holder or
holders of the Substitute Option 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 the Substitute Common Stock (as hereinafter defined) as is
equal to the Assigned Value (as hereinafter defined) multiplied by the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as hereinafter
defined). The exercise price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Purchase Price") shall then be
equal to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of the Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number
of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing
or surviving corporation of a consolidation or merger with Issuer
(if other than Issuer), (y) Issuer in a merger in which Issuer is
the continuing or surviving person, and (z) the transferee of all or
any substantial part of the Issuer's assets (or the assets of its
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the
price per share of the Issuer Common Stock at which a Tender Offer
or Exchange Offer therefor has been made by any person (other than
Grantee), (y) the price per share of the Issuer Common Stock to be
paid by any person (other than the Grantee) pursuant to an agreement
with Issuer, and (z) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if
Issuer Common Stock is not quoted on the Nasdaq National Market, the
highest bid price per share on any day as quoted on the principal
trading market or securities exchange on which such shares are
traded as reported by a recognized source chosen by Grantee) within
the six-month period immediately preceding the agreement; provided,
that in the event of a sale of less than all of Issuer's assets, the
Assigned Value 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 Grantee (or by a majority in interest of the
Grantees if there shall be more than one Grantee (a "Grantee
Majority")) and reasonably acceptable to Issuer, divided by the
number of shares of the Issuer Common Stock outstanding at the time
of such sale. In the event that an exchange offer is made for the
Issuer Common Stock 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 the Issuer Common Stock shall be determined by a nationally
recognized investment banking firm selected by Grantee and
reasonably acceptable to Issuer (or if applicable, Acquiring
Corporation). (If there shall be more than one Grantee, any such
selection shall be made by a Grantee Majority.)
(iv) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock 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 the
Substitute Common Stock on the day preceding such consolidation,
merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by Issuer, the person merging into
Issuer or by any company which controls or is controlled by such
merger person, as Grantee 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 the Substitute Common Stock outstanding prior
to exercise of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock but for this clause (f), the Substitute
Option Issuer shall make a cash payment to Grantee equal to the excess of
(i) the value of the Substitute Option without giving effect to the
limitation in this clause (f) over (ii) the value of the Substitute
Option after giving effect to the limitation in this clause (f). This
difference in value shall be determined by a nationally recognized
investment banking firm selected by Grantee (or a Grantee Majority) and
reasonably acceptable to the Acquiring Corporation.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 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 shares of Substitute Common Stock are in no way
distinguishable from or have lesser economic value than other shares of
common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in
such sections to "Issuer," "Option," "Purchase Price" and "Issuer Common
Stock" shall be deemed to be references to "Substitute Option Issuer,"
"Substitute Option," "Substitute Purchase Price" and "Substitute Common
Stock," respectively.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to Section 3(e) and to the last sentence of Section
3(a), at the request of Holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d)) and ending
12 months immediately thereafter, Issuer shall repurchase from Holder the
Option and all shares of Issuer Common Stock purchased by Holder pursuant
hereto with respect to which Holder then has beneficial ownership. The
date on which Holder exercises its rights under this Section 8 is
referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the
sum of:
(i) the aggregate Purchase Price paid by Holder for any
shares of Issuer Common Stock acquired by Holder pursuant to the
Option with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with
respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid
(or, in the case of Option Shares with respect to which the Option
has been exercised but the Closing Date has not occurred, payable)
by Holder for each share of Issuer Common Stock with respect to
which the Option has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of such
shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, and Holder shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and
clear of all liens, claims, charges and encumbrances of any kind
whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or Consent of any governmental or regulatory agency or
authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the
ongoing option to revoke its request for repurchase pursuant to Section
8, in whole or in part, or to require that Issuer deliver from time to
time that portion of the Section 8 Repurchase Consideration that it is
not then so prohibited from paying and promptly file the required notice
or application for Consent and expeditiously process the same (and each
party shall cooperate with the other in the filing of any such notice or
application and the obtaining of any such Consent). If any governmental
or regulatory agency or authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Holder. If any governmental or regulatory
agency or authority prohibits the repurchase in part but not in whole,
then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine
whether the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Holder shall thereupon have the right to
exercise the Option as to the number of Option Shares for which the
Option was exercisable at the Request Date less the sum of the number of
shares covered by the Option in respect of which payment has been made
pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall
notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of
this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock
paid for any such share by the person or groups described in Section
8(d)(i), (ii) the price per share of Issuer Common Stock received by
holders of Issuer Common Stock in connection with any merger or other
business combination transaction described in Section 7(b)(i), 7(b)(ii)
or 7(b)(iii), or (iii) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer
Common Stock is not quoted on the Nasdaq National Market, the highest bid
price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized
source chosen by Holder) during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than
all of Issuer's Assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by an independent nationally
recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer (which determination shall be conclusive for all
purposes of this Agreement), divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. If the
consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive
for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee shall have
acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), or the right to acquire beneficial
ownership, 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 Stock, or (ii) any of the transactions described
in Section 7(b)(i), 7(b)(ii) or 7(iii) shall be consummated.
(e) In connection with the application of the provisions of this
Section 8, Grantee acknowledges (i) that Issuer's ability to fund the
Section 8 Repurchase Consideration in accordance with the provisions of
this Section 8 may be dependent upon the payment by Issuer's Subsidiaries
of a capital distribution or distributions ("Capital Distribution") to
Issuer and that any such Capital Distribution will be subject to the
prior approval of the Federal Reserve Board and the principal federal and
state regulatory agencies having jurisdiction over Issuer's Subsidiary
banks, and (ii) that, unless there has been an agreement of the type
described in Section 7(b), Issuer's obligations under this Section 8 do
not impose on Issuer an obligation to otherwise finance the payment of
the Section 8 Repurchase Consideration through the incurrence of
indebtedness or the issuance of capital instruments or securities by
Issuer in either case sufficient in amount to satisfy the payment of the
Section 8 Repurchase Consideration. Accordingly, Issuer shall not be
deemed to be in breach of this Section 8 if, after making its best
efforts to obtain regulatory authorization for a Capital Distribution
required to pay the Section 8 Repurchase Consideration, it is unable to
do so.
9. REGISTRATION RIGHTS.
(a) Issuer shall, subject to the conditions of subparagraph (c)
below, if requested by any Holder, including Grantee and any permitted
transferee ("Selling Holder"), as expeditiously as possible prepare and
file a registration statement under the Securities Laws if necessary in
order to permit the sale or other disposition of any or all shares of
Issuer Common Stock or other securities that have been acquired by or are
issuable to Selling Holder upon exercise of the Option in accordance with
the intended method of sale or other disposition stated by Holder in such
request (it being understood and agreed that any such sale or other
disposition shall be effected on a widely distributed basis so that, upon
consummation thereof, no purchaser or transferee shall beneficially own
more than 2% of the shares of Issuer Common Stock then outstanding),
including, without limitation, a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other securities for
sale under any applicable state securities laws. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder.
(b) If Issuer at any time after the exercise of the Option, but
prior to the termination of the Option, proposes to register any shares
of Issuer Common Stock under the Securities Laws in connection with an
underwritten public offering of such Issuer Common Stock, Issuer will
promptly give written notice to Holder of its intention to do so and,
upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of
Issuer Common Stock intended to be included in such underwritten public
offering by Selling Holder), Issuer will use all reasonable efforts to
cause all such shares, the holders of which shall have requested
participation in such registration, to be so registered and included in
such underwritten public offering; provided, that Issuer may elect to not
cause any such shares to be so registered (i) if the underwriters in good
faith determine that the inclusion of such shares would interfere with
the successful marketing of the shares of Issuer Common Stock for the
account of Issuer, or (ii) in the case of a registration solely to
implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registrations of
resales; provided, further, that such election pursuant to clause (i) may
only be made once. If some but not all the shares of Issuer Common Stock,
with respect to which Issuer shall have received requests for
registration pursuant to this subparagraph (b), shall be excluded from
such registration, Issuer shall make appropriate allocation of shares to
be registered among Selling Holders and any other person (other than
Issuer or any person exercising demand registration rights in connection
with such registration) who or which is permitted to register their
shares of Issuer Common Stock in connection with such registration pro
rata in the proportion that the number of shares requested to be
registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer
Common Stock registered for sale (other than Issuer or any person
exercising demand registration rights in connection with such
registration).
(c) Issuer shall use all reasonable efforts to cause the
registration statement referred to in subparagraph (a) above to become
effective and to obtain all consents or waivers of other parties which
are required therefor and to keep such registration statement effective,
provided, that Issuer may delay any registration of Option Shares
required pursuant to subparagraph (a) above for a period not exceeding 90
days provided Issuer shall in good faith determine that any such
registration would adversely affect an offering or contemplated offering
of other securities by Issuer. Notwithstanding anything to the contrary
contained herein, Issuer shall not be required to register Option Shares
under the Securities Laws pursuant to subparagraph (a) above:
(i) prior to the occurrence of a Purchase Event and
following the termination of the Option;
(ii) more than once;
(iii) within 90 days after the effective date of a
registration referred to in subparagraph (b) above pursuant to which
the Selling Holders concerned were afforded the opportunity to
register such shares under the Securities Laws and such shares were
registered as requested; and
(iv) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of
Option Shares then outstanding or the right to acquire at least 25%
of the Option Shares.
In addition to the foregoing, Issuer shall not be required
to maintain the effectiveness of any registration statement after the
expiration of 120 days from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities laws to the
extent necessary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of
distribution for such shares, provided, that Issuer shall not be required
to consent to general jurisdiction or qualify to do business in any state
where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration
fees, qualification fees, blue sky fees and expenses (including the fees
and expenses of Issuer's counsel), accounting expenses, printing
expenses, expenses of underwriters, excluding discounts and commissions
but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration pursuant
to subparagraph (a) or (b) above (including the related offerings and
sales by Selling Holders) and all other qualifications, notifications or
exemptions pursuant to subparagraph (a) or (b) above. Underwriting
discounts and commissions relating to Option Shares and any other
expenses incurred by such Selling Holders in connection with any such
registration (including expenses of Selling Holders' counsel) shall be
borne by such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby agrees to indemnify the Selling Holders, and
each underwriter thereof, including each person, if any, who controls
such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue statement of a material fact contained
in any registration statement or prospectus (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, 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 or any omission or alleged omission made in reliance upon and
in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such
Selling Holder, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue,
or alleged untrue, statement or omission made in reliance upon, and in
conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be
sought against any indemnifying party under this subparagraph (e), such
indemnified party shall notify the indemnifying party in writing of the
commencement of such action, but the failure so to notify the
indemnifying party shall not relieve it of any liability which it may
otherwise have to any indemnified party under this subparagraph (e),
except to the extent such failure to notify materially prejudices the
indemnifying party. 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 reasonably 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 falls to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has
been advised by counsel that one or more legal defenses may be available
to the indemnifying party that may be contrary to the interest of the
indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to
bear fees and expenses of such counsel; provided, however, that the
indemnifying party shall not be liable for the expenses of more than one
firm of counsel for all indemnified parties in any jurisdiction. No
indemnifying party shall be liable for any settlement entered into
without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this subparagraph
(e) is unavailable to a party otherwise entitled to be indemnified in
respect of any expenses, losses, claims, damages or liabilities referred
to herein, then the indemnifying party, in lieu of indemnifying such
party otherwise entitled to be indemnified, shall contribute to the
amount paid or payable by such party to be indemnified as a result of
such expenses, losses, claims, damages or liabilities in such proportion
as is appropriate to reflect the relative benefits received by Issuer,
all Selling Holders and the underwriters from the offering of the
securities and also the relative fault of Issuer, all Selling Holders and
the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The amount paid or
payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim; provided, that in no
case shall any Selling Holder be responsible, in the aggregate, for any
amount in excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to
subparagraph (a) or (b) above, Issuer and each Selling Holder (other than
Grantee) shall enter into an agreement containing the indemnification
provisions of this subparagraph (e).
(f) Issuer shall use its best efforts to comply with all
reporting requirements and will do all such other things as may be
necessary to permit the expeditious sale at any time of any Option Shares
by Holder in accordance with and to the extent permitted by any rule or
regulation promulgated by the SEC from time to time, including, without
limitation, Rules 144 and 144A.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save Holder harmless, without limitation
as to time, against any and all liabilities, with respect to all such
taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized
for quotation or trading or listing on the Nasdaq National Market or any
other securities exchange or any automated quotations system maintained
by a self-regulatory organization, Issuer, upon the request of Holder,
will promptly file an application, if required, to authorize for
quotation or trading or listing the shares of Issuer Common Stock or
other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or any other securities exchange or any automated
quotations system maintained by a self-regulatory organization and will
use its best efforts to obtain approval, if required, of such quotation
or listing as soon as practicable.
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 Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any other
Agreements and related Options for which this Agreement (and the Option
granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided in Section 9, each of
the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(B) WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.
This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between Grantee
and Issuer (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and (b) is not intended to
confer upon any person other than the parties hereto (other than any
transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h) and other than as provided in the
Merger Agreement) any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or a federal or state governmental or
regulatory agency or authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Holder to
acquire, or does not require Issuer to repurchase, the full number of
shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser
number of shares as may be permissible without any amendment or
modification hereof.
(D) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Tennessee without
regard to any applicable conflicts of law rules.
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) 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, it being understood that both parties need not sign the
same counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned
by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party, except that Grantee
may assign this Agreement to a wholly owned Subsidiary of Grantee and
Grantee may assign its rights hereunder in whole or in part after the
occurrence of a Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(I) FURTHER ASSURANCES. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(J) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in
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.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
ATTEST: CAPITAL BANCORP
By: /s/ Timothy E. Kish By: /s/ Daniel M. Holtz
Timothy E. Kish Daniel M. Holtz
Secretary Chairman of the Board, President
and Principal Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
E. James House, Jr. Jackson W. Moore
Secretary President and Chief Operating
Officer
[CORPORATE SEAL]
IMMEDIATE RELEASE Contact: Lucious T. (Tim) Harris, Treasurer
Capital Bancorp
(305) 536-1677
Bruce Rubin
Rubin Barney & Birger
(305) 448-7450
CAPITAL BANCORP ANNOUNCES EXECUTION OF MERGER AGREEMENT
WITH UNION PLANTERS CORPORATION
MIAMI --August 13, 1997 --Capital Bancorp (Nasdaq: CBCP)
announced today that it has entered into a definitive agreement
with Union Planters Corporation, a bank holding company based in
Memphis, Tennessee (NYSE: UPC), pursuant to which UPC would
acquire all of the outstanding stock of Capital Bancorp.
Under the terms of the agreement, UPC would exchange 0.8525
shares of UPC Common Stock for each outstanding share of Common
Stock of Capital Bancorp. The acquisition, which is to be
accounted for as a pooling of interests, is expected to be
completed by the end of the first quarter of 1998, and is subject
to due diligence review, shareholder and regulatory approvals,
and the satisfaction of certain normal contractual closing
conditions. Based on the closing price of UPC Common Stock on
August 12, 1997 of $50 7/16, shareholders of Capital Bancorp
would receive approximately $43 in UPC shares for each share of
Common Stock of Capital Bancorp in a tax-free exchange.
Gerald M. Stern, the Chairman of Capital Bancorp's Strategic
Planning and Finance Committee, said "The decision of the Board
of Directors to enter into this agreement represents the
culmination of an exhaustive process, which began in earnest at
the beginning of this year, that was designed to identify a high
quality merger partner for Capital Bancorp. We are extremely
pleased with the results of that process."
Union Planters Corporation, headquartered in Memphis,
Tennessee, was founded in 1869 and is a $15 billion bank holding
company. It has banking offices in Tennessee, Mississippi,
Missouri, Arkansas, Alabama, Louisiana, and Kentucky.
Daniel M. Holtz, Chairman of the Board, Chief Executive
Officer and President of Capital Bancorp said "I am delighted at
the prospect of Capital Bancorp affiliating with Union Planters.
This strategic merger should put to rest the uncertainty that has
surrounded Capital for the past few years and will allow our
shareholders to participate in the growth potential of Union
Planters."
Capital Bancorp is the parent company of Miami-based Capital
Bank, which has 28 South Florida offices. The Bank had assets of
approximately $1.9 billion and deposits of approximately $1.2
billion as of June 30, 1997. Capital Bank owns approximately 81
percent of Capital Factors Holding, Inc., which is a specialized
financial services company headquarted in Boca Raton with offices
in Los Angeles, New York City, Charlotte and Atlanta. Capital
Bancorp's Common Stock is traded on the Nasdaq National Market
under the symbol "CBCP." Capital Factors Holding, Inc.'s Common
Stock is traded on the Nasdaq National Market under the symbol
"CAPF."
#
