<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
JANUARY 16, 1998
Date of Report
(Date of earliest event reported)
MERCHANTS BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-11033 76-0045946
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
5005 WOODWAY, SUITE 300
HOUSTON, TEXAS
(Address of principal executive offices)
77056
(Zip Code)
(713) 622-0042
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On January 16, 1998, Merchants Bancshares, Inc. ("Merchants") and
Union Planters Corporation ("UPC") entered into an Agreement and Plan of Merger
(the "Agreement"), pursuant to which Merchants will be acquired by UPC. In
accordance with the terms of the Agreement, UPC will acquire Merchants pursuant
to the merger of Merchants with and into Union Planters Holding Corporation, a
wholly-owned subsidiary of UPC organized under the laws of Tennessee (the
"Merger"). Union Planters Holding Corporation will be the surviving entity
resulting from the Merger.
Upon consummation of the Merger, each share of the $1.00 par value
common stock of Merchants ("Merchants Common Stock") (excluding shares as to
which dissenter's rights are exercised or shares held by Merchants, 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 (the "Effective Time") shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
one share of the $5.00 par value common stock of UPC, together with associated
preferred stock purchase rights (collectively, "UPC Common Stock") (subject to
possible adjustment as described below, the "Exchange Ratio").
The parties anticipate that the Merger will be completed in the second
quarter of 1998.
The Merger is intended to qualify as a reorganization (within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended) and
for financial accounting purposes, 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 Merchants of the
Merger; (ii) receipt of the approval by the shareholders of UPC at a meeting of
the shareholders of UPC (the "UPC Shareholders Meeting") of an amendment to the
Restated Charter of Incorporation of UPC to increase the number of authorized
shares of UPC Common Stock to a number sufficient to permit UPC to issue the
shares of UPC Common Stock contemplated by the Merger; (iii) receipt of
regulatory approval from the Board of Governors of the Federal Reserve System
and certain other applicable Regulatory Authorities (as that term is defined in
the Agreement); (iv) receipt of an opinion of legal counsel as to the tax
treatment of certain aspects of the Merger; (v) 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; (vi) receipt
by Merchants of a fairness opinion from Price Waterhouse LLP, Merchants'
financial advisor, dated the date of the proxy statement to be mailed to
Merchants' shareholders, concerning the fairness of the Merger to Merchants'
shareholders, from a financial point of view; and (vii) satisfaction of certain
other conditions.
The Agreement may be terminated (i) by the mutual consent of Merchants
and UPC, (ii) by Merchants, if UPC breaches the Agreement and fails to cure
such breach, (iii) by UPC,
-1-
<PAGE> 3
if Merchants breaches the Agreement and fails to cure such breach, (iv) by
either Merchants or UPC, if any consent by a Regulatory Authority required for
the consummation of the Merger is denied and is non-appealable, (v) by either
Merchants or UPC, if the shareholders of Merchants do not approve the Merger,
(vi) by UPC, if the shareholders of UPC do not approve the amendment to the
Restated Charter of Incorporation of UPC to increase the number of authorized
shares of UPC Common Stock, (vii) by Merchants, if the shareholders of UPC do
not approve the amendment to the Restated Charter of Incorporation of UPC to
increase the number of authorized shares of UPC Common Stock, unless UPC gives
notice to Merchants of its intent to proceed with the Merger by acquiring the
required shares of UPC Common Stock by some other means, (viii) by Merchants,
if the Merger is not consummated by September 30, 1998, provided that the
failure to consummate is not caused by the willful breach of the Agreement by
Merchants, (ix) by UPC, if the Merger is not consummated by September 30, 1998,
provided that the failure to consummate is not caused by the willful breach of
the Agreement by UPC, provided, however, that if the shareholders of UPC do not
approve the amendment to the Restated Charter of Incorporation of UPC to
increase the number of authorized shares of UPC Common Stock, then UPC may not
terminate the Agreement pursuant to this provision, or (x) by Merchants if the
Average Closing Price (as that term is defined in the Agreement) of UPC Common
Stock (a) is less than 85% of the Starting Price (as that term is defined in
the Agreement) and (b) 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,
provided, however, that in the event Merchants gives notice of its intention to
terminate the Agreement based on such provision, UPC has the right, within five
(5) days of its receipt of such notice, to elect to adjust the Exchange Ratio
in accordance with the terms of the Agreement, and the Agreement will not
terminate.
Merchants will be obligated to pay UPC the sum of $6,200,000 if, prior
to the earlier of (i) March 31, 1999, (ii) the Effective Time, or (iii) the
date on which the Agreement is terminated pursuant to certain sections of the
Agreement, Merchants enters into, supports or indicates its support for a
letter of intent, agreement in principle, or definitive agreement (whether or
not considered binding, non-binding, conditional or unconditional) with any
third party with respect to a tender offer, exchange offer, merger,
consolidation, share exchange, business combination or similar transaction or
the acquisition by such third party of all or a substantial equity interest in,
or all or a substantial portion of the assets of, Merchants or any of
Merchants' subsidiaries.
UPC will be obligated to pay Merchants the sum of $6,200,000 if the
shareholders of UPC fail to approve an amendment to the Restated Charter of
Incorporation of UPC to increase the number of authorized shares of UPC Common
Stock and (i) UPC fails to give notice to Merchants within 30 days after the
UPC Shareholders Meeting that it intends to proceed with the Merger by
acquiring the required shares of UPC Common Stock by some other means, (ii) UPC
gives notice to Merchants within 30 days after the UPC Shareholders Meeting
that it does not intend to proceed with the Merger, or (iii) UPC gives notice
to Merchants within 30 days after the UPC Shareholders Meeting that it intends
to proceed with the Merger by acquiring the required shares of UPC Common Stock
by some other means, and the Merger is not
-2-
<PAGE> 4
consummated by the later of (A) September 30, 1998, or (B) the last day of the
calendar month containing the date which is sixty days after the conclusion of
the UPC Shareholders' Meeting, but no later than October 31, 1998.
The Agreement and the Merger will be submitted for approval at a
meeting of the shareholders of Merchants. Prior to the shareholders' meeting,
UPC will file a registration statement with the Securities and Exchange
Commission registering under the Securities Act of 1933, as amended, the shares
of UPC Common Stock to be issued in exchange for the outstanding shares of
Merchants Common Stock. Such shares of stock of UPC will be offered to the
Merchants shareholders pursuant to a prospectus that also will serve as a proxy
statement for the meeting of the shareholders of Merchants to consider and vote
upon the Agreement and the Merger.
For additional information regarding the 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.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
None
(b) PRO FORMA FINANCIAL INFORMATION.
None
(c) EXHIBITS.
EXHIBIT 2.1. Agreement and Plan of Merger, by and between
Union Planters Corporation, Union Planters
Holding Corporation and Merchants Bancshares,
Inc., dated as of January 16, 1998.
EXHIBIT 99.1. Text of press release, dated January 20,
1998, issued by Merchants Bancshares, Inc.
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS
Certain of the information contained herein may be deemed to be
forward looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995, including, without limitation, any implied
representation that the Merger will be consummated. Such statements are
qualified by the following disclaimer:
-3-
<PAGE> 5
Consummation of the Merger is subject to a number of conditions
precedent, including, without limitation, (i) receipt of the requisite approval
of the shareholders of Merchants, (ii) receipt of the requisite approval of the
shareholders of UPC of an amendment to the Restated Charter of UPC to increase
the number of authorized shares of UPC Common Stock to a sufficient number of
shares for the Merger, (iii) no governmental action which would make the
consummation of the Merger illegal, (iv) the Merger qualifying for treatment as
a "pooling of interests" for financial accounting purposes, (v) the continued
accuracy of each party's respective representations and warranties, (vi) the
performance by each party of its respective covenants, (vii) the listing of the
shares of UPC Common Stock to be issued in the Merger on the New York Stock
Exchange and (viii) the receipt of various opinions from the parties' financial
and legal advisors. Not all of such conditions are within the control of
Merchants. Accordingly, there can be no assurance that such conditions will be
satisfied or waived or that the Merger will be consummated.
-4-
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MERCHANTS BANCSHARES, INC.
(Registrant)
Date: January 22, 1998 By: /s/ J.W. Lander, Jr.
------------------------------------
J.W. Lander, Jr., Chairman
Date: January 22, 1998 By: /s/ J.W. Lander, III
------------------------------------
J.W. Lander, III, President
(Principal Financial and Chief
Accounting Officer)
-5-
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of January 16, 1998, by and between Union
Planters Holding Corporation and Merchants Bancshares, Inc. and joined in by Union
Planters Corporation.
99.1 Text of press release, dated January 20, 1998, issued by Merchants Bancshares, Inc.
</TABLE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
UNION PLANTERS CORPORATION,
UNION PLANTERS HOLDING CORPORATION
AND
MERCHANTS BANCSHARES, INC.
DATED AS OF JANUARY 16, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
------
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---- --- ----- -- -------
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
--------- ----
1.4 Restructure of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------- -- -----------
ARTICLE 2
TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------- --- --------
ARTICLE 3
MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . 2
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------- -- ------
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------- ----------
3.3 Shares Held by Subject Company or Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------ ---- -- ------- ------- -- ------
3.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------- ------
ARTICLE 4
EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------- ----------
4.2 Rights of Former Subject Company Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------ -- ------ ------- ------- ------------
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY . . . . . . . . . . . . . . . 4
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------- --------- --- -----
5.2 Authority; No Breach by Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------- -- ------ -- ---------
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------- -----
5.4 Subject Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
------- ------- ------------
5.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
--------- ----------
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------- -- ----------- -----------
5.7 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------- -- ------- ------- -- ------
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--- -------
5.9 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------
5.10 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------ --------
5.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------- -------
5.12 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------- ---- ----
5.13 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----- ---------
5.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------- ------- -----
5.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------- ---------
5.16 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----- -----------
5.17 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------
5.18 Statements True and Correct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------- ---- --- -------
5.19 Accounting, Tax, and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------- ---- --- ---------- -------
5.20 Charter Provisions; Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------- ----------- -------- ----
</TABLE>
F:\SSDATA\MEMCOMM\180364.2 i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . . . . . . . . . . . 13
6.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------- -------- --- -----
6.2 Authority; No Breach by Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------- -- ------ -- ---------
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------- -----
6.4 Parent Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------ ------------
6.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------- ----------
6.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------- -- ----------- -----------
6.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------- -- ------- ------- -- ------
6.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--- -------
6.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------- -------
6.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------- ---- ----
6.11 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------- ---------
6.12 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------
6.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----- -----------
6.14 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------
6.15 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------- ---- --- -------
6.16 Accounting, Tax, and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------- ---- --- ---------- -------
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . 19
7.1 Affirmative Covenants of Subject Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------- --------- -- ------- -------
7.2 Negative Covenants of Subject Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------- --------- -- ------- -------
7.3 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------- -- ------
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------- ------- -- ---------
7.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------
ARTICLE 8
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Registration Statement; Proxy Statement; Shareholder Approval . . . . . . . . . . . . . . . . . . . 22
------------ ---------- ----- ---------- ----------- -------
8.2 Authorization of Shares; Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------- -- ------- -------- -------
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------
8.4 Filings With State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------- ---- ----- -------
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------- -- -- ------- -- ----------
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------- --- ---------------
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----- --------
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------- -------
8.9 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------- --- --- ---------
8.10 Agreement of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------- -- ----------
8.11 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------- -------- --- ---------
8.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------------
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . . . . . . . . 27
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------- -- ----------- -- ---- -----
9.2 Conditions to Obligations of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
---------- -- ----------- -- ------
9.3 Conditions to Obligations of Subject Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------- -- ----------- -- ------- -------
</TABLE>
F:\SSDATA\MEMCOMM\180364.2 ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 10
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------ -- -----------
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------------ -- --------------- --- ---------
ARTICLE 11
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 34
11.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-----------
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--------
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
------- --- -------
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
------ ---------
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----------
11.6 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------- ---
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------
11.12 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
---------------
11.13 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
----------- -- ---------
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------
</TABLE>
EXHIBITS
EXHIBIT 1 PLAN OF MERGER
EXHIBIT 2 AFFILIATE AGREEMENT
F:\SSDATA\MEMCOMM\180364.2 iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of January 16, 1998, by and between Merchants Bancshares, Inc.,
a Texas corporation having its principal office located in Houston, Texas
("Subject Company"), Union Planters Holding Corporation, a Tennessee
corporation having its principal office located in Memphis, Tennessee ("Merger
Subsidiary"), and joined in by Union Planters Corporation, a Tennessee
corporation having its principal office located in Memphis, Tennessee
("Parent").
PREAMBLE
The Boards of Directors of Subject Company, Merger Subsidiary 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 and the Plan of Merger attached hereto at Exhibit 1 and incorporated
herein by reference provide for the acquisition of Subject Company by Parent
pursuant to the merger of Subject Company with and into Merger Subsidiary. At
the Effective Time, 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 3.1, 3.3 and 3.4 of this Agreement).
As a result, shareholders of Subject Company shall become shareholders of
Parent, and Surviving Corporation 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 FRB, the Texas State Banking Department, 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.
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
and the Plan of Merger, at the Effective Time, Subject Company shall be merged
with and into Merger Subsidiary in accordance with the provisions of Section
48-21-109 of the TBCA and Article 5.01 of the Texas BCA, and with the effect
provided in Section 48-21-108 of the TBCA and Article 5.06 of the Texas BCA
(the "Merger"). Merger Subsidiary shall be the Surviving Corporation resulting
from the Merger and shall continue to be governed by the Laws of the State of
Tennessee. The Merger shall be consummated pursuant to the terms of this
Agreement and the Plan of Merger, which have been approved and adopted by the
respective Boards of Directors of Subject Company, Parent and Merger
Subsidiary.
1.2 Time and Place of Closing. The Closing will take place at
9:00 A.M. on the date on which the Effective Time is to occur (or the
immediately preceding day if the Effective Time is to be 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 at the time the Articles
of Merger reflecting the Merger shall become effective with the Secretary of
State of the State of Tennessee and the Secretary of State of the State of
Texas (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 as
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<PAGE> 6
soon as is reasonably practicable, but in no event later than 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 (taking into account 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 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 the Texas BCA, 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; (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 and the Plan of Merger or in the form of an Amended
and Restated Agreement and Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Charter of Merger Subsidiary in effect
immediately prior to the Effective Time shall be the Charter of the Surviving
Corporation until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws 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
Bylaws 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 Bylaws of
the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this
Article 3 (and Article 3 of the Plan of Merger), 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.
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<PAGE> 7
(b) Each share of Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall represent one share of the Surviving Corporation from and
after the Effective Time.
(c) Except for Dissenting Shares, 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 one (1) share of Parent
Common Stock (subject to possible adjustment as set forth in Section 3.2 and
Section 10.1(f) 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.
(d) Dissenting Shares shall not be converted pursuant to
Section 3.1(c) in the Merger but, at and after the Effective Time, shall
represent only the right to receive payment in accordance with Article 5.12 of
the Texas BCA. If a holder of Dissenting Shares becomes ineligible for payment
under Article 5.12 of the Texas BCA, then such holder's Dissenting Shares shall
cease to be Dissenting Shares and shall be converted in the manner set forth in
Section 3.1(c) effective as of the Effective Time.
3.2 Anti-Dilution Provisions. In the event Parent changes the
number of shares of Parent Common Stock issued and outstanding after the date
of this Agreement and prior to the Effective Time as a result of a stock split,
stock dividend, subdivision, reclassification, conversion 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, subdivision, reclassification, conversion 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 reasonably 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.
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 and approve the transmittal materials. The
Exchange Agent may establish reasonable and customary rules and procedures in
connection with its duties, provided such rules and procedures do not have the
effect of limiting or eliminating the obligation of Parent and/or Merger
Subsidiary to deliver the consideration contemplated by Article 3 of this
Agreement. After the Effective Time, each holder of shares of Subject Company
Common Stock (other than
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<PAGE> 8
Dissenting Shares or 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(c) of this Agreement, together with all
undelivered dividends and other distributions, if any, 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 reasonably require. Any other provision of this Agreement
notwithstanding, neither Parent, Merger Subsidiary 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, other than with respect to Dissenting Shares, 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 Dissenting Shares or 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(c) and 3.4 of this Agreement in exchange
therefor, subject, however, to the Surviving Corporation's obligations 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. In addition,
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 and any
undelivered dividends and other distributions 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 reasonably 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 and dividends and other distributions deliverable in respect thereof
pursuant to this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent, except as
set forth on the Subject Company Disclosure Memorandum, 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 Texas, 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
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<PAGE> 9
or licensed to transact business as a foreign corporation in good standing in
each of the States of the United States and in each foreign jurisdiction 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 the Plan of Merger and to consummate
the transactions contemplated hereby and thereby. The execution, delivery, and
performance of this Agreement and the Plan of Merger, and the consummation of
the transactions contemplated herein and therein, 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 and the Plan of Merger 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, the receipt of all Consents required from Regulatory
Authorities and the expiration of all mandatory waiting periods, and assuming
due authorization, execution and delivery of this Agreement and the Plan of
Merger by each of Parent and Merger Subsidiary, this Agreement and the Plan of
Merger each 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 (including provisions of the U.S., Texas and
Tennessee Constitutions) affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement or
the Plan of Merger 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 or thereof, will (i) conflict with or result in a
breach of any provision of the Charter or Bylaws of Subject Company, 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 Subject Company or any Subject Company
Subsidiary under, any Contract or Permit of Subject Company or any Subject
Company Subsidiary, except for such Defaults and Liens which are not, and for
such Consents, which, if not obtained 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 other than Consents required from the FRB under Sections 3 and 4 of
the BHC Act and from the Texas Banking Commissioner under Sections 38.001 and
38.004 of the Texas Finance Code, 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 solely of (i) 10,000,000 shares of Subject Company Common
Stock, of which not more than 1,952,465 shares are issued and outstanding as of
the date of this Agreement (exclusive of treasury shares) and not more than
1,952,465 shares of Subject Company Common Stock will be issued and outstanding
at the Effective Time, and (ii) 2,000,000 shares of Subject Company Preferred
Stock, none of which are issued and outstanding as of the date of this
Agreement and none of which will be issued and outstanding at the Effective
Time. 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 Texas BCA and Subject Company's Charter and Bylaws.
None of the outstanding shares of capital stock
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<PAGE> 10
of Subject Company has been issued in violation of any preemptive rights of the
current or past shareholders of Subject Company.
(b) Other than as set forth in Section 5.3(a) of this
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, 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 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 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 each
of the States of the United States and in each foreign jurisdiction 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 Merchants Bank,
Houston, Texas (the "Bank"). The Bank is an "insured depository institution"
as defined in Section 3(c)(2) of the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Federal Deposit Insurance Corporation to the maximum extent permitted by the
Federal Deposit Insurance Act, as amended, and applicable regulations
thereunder. The Bank is a member of 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 Rule 1.02(w) of Regulation S-X promulgated under
the Securities Laws) have been or will be made available to Parent for its
review, and are true and complete in all material respects as in effect as of
the date of this Agreement.
5.5 Financial Statements. Each of the Subject Company Financial
Statements (including, in each case, any related notes) contained in the
Subject Company SEC Documents, including any Subject Company SEC Documents
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,
F:\SSDATA\MEMCOMM\180364.2 UPC/-Merchants Page 6
<PAGE> 11
as permitted by Regulation S-X promulgated under the Securities Laws), and
fairly presented, or will fairly present, in all material respects the
consolidated financial position of Subject Company 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 September
30, 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 September 30, 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 Documents made available
prior to the date of this Agreement or disclosed 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 related to Tax Returns and/or Taxes of
Subject Company 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 the records of Subject Company and each of the
Subject Company Subsidiaries contain all information and documents (including
properly completed Internal Revenue Service Forms W-9) necessary to comply in
all material respects with, all applicable information reporting and Tax
withholding requirements under federal, state, and local
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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
indefeasible 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, except for instances in which the failure to so be is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company. 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 (including provisions of the U.S.,
Texas and Tennessee Constitutions) affecting the enforcement of creditors'
rights generally and except that the availability of equitable remedies 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. 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 material
Defaults thereunder by Subject Company or a Subject Company Subsidiary.
Subject Company or a Subject Company Subsidiary owns, is the valid licensee of,
or otherwise has the unrestricted right to use, 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 (except to the extent any such infringement will not
have a Material Adverse Effect on Subject Company) 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.
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Except as set forth 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. To the Knowledge of Subject Company, 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 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, except any such Contracts which are not
reasonably likely to have, individually in the aggregate, a Material Adverse
Effect on Subject Company.
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. Neither Subject Company nor any of the Subject
Company Subsidiaries:
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<PAGE> 14
(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 in violation of any of the Laws or Orders which
such governmental authority or Regulatory Authority enforces (excluding
violations which would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company), (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 of Directors 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, to the Knowledge of Subject Company, threatened, nor 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 collective bargaining organizational
activity.
5.14 Employee Benefit Plans. (a) Subject Company has disclosed in
Section 5.14(a) of the Subject Company Disclosure Memorandum, and has delivered
or made available to Parent prior to the execution of this Agreement copies of
all pension, retirement, profit sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other material
incentive plans, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other material employee benefit 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, the Subject Company Subsidiaries or
any 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." Neither Subject Company nor any Subject Company
Subsidiary maintains any "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code). No Subject Company ERISA 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 material
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 is subject to a material Tax imposed by
Section 4975 of the Internal Revenue Code or a civil penalty imposed by Section
502(i) of ERISA.
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<PAGE> 15
(c) No "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code) or any "single-employer plan," within the meaning
of Section 4001(a)(15) of ERISA, 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 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) 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 set forth in Section 5.14(f) 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 set forth 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, (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
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<PAGE> 16
thereto that would be required to be filed as an exhibit to a Subject Company
SEC Document filed by Subject Company prior to the date of this Agreement if
Subject Company was required to file SEC Documents (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 material Default thereunder; (iii) neither Subject
Company nor any Subject Company Subsidiary 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. 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, (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), no Subject Company SEC Document contained any untrue statement of
a material fact or omitted 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. 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 expressly 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 expressly for inclusion in the Subject Company
Proxy Statement to be mailed to Subject Company's shareholders in connection
with the Subject Company 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 Subject Company 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 Subject
Company Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Subject Company Shareholders' Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement made by Subject Company in any earlier communication with
respect to the solicitation of any proxy for the Subject Company Shareholders'
Meeting. All documents that Subject Company or any Subject Company 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. None of the information
supplied or to be supplied by Subject Company expressly for inclusion in the
Parent Proxy
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<PAGE> 17
Statement to be mailed to Parent shareholders in connection with the Parent
Shareholders' Meeting will, at the respective time such Parent Proxy Statement
is filed, or when such Parent Proxy Statement is first mailed to the
shareholders of Parent, 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, at the time of the Parent Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to correct any statements made by Subject Company in any earlier
communication with respect to the Parent Shareholders' Meeting.
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 Charter Provisions; Takeover Laws. 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 Charter,
Bylaws 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.
Subject Company has taken all necessary action to exempt this Agreement and the
Plan of Merger from, and the transactions contemplated hereby and thereby are
exempt from, any "super-majority" voting requirements or the requirements of
any "moratorium," "fair price," "business combination," "control share," or
other anti-takeover provisions under applicable Laws, or the Charter or Bylaws
of the Subject Company or any Subject Company Subsidiary (collectively,
"Takeover Laws").
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Subject Company,
except as set forth on Parent's Disclosure Memorandum, 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 Assets. Parent is
duly qualified or licensed to transact business as a foreign corporation in
good standing in each of the States of the United States and in each foreign
jurisdiction 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) Subject to the
adoption of an amendment to the Restated Charter of Incorporation of Parent to
increase the number of authorized shares of Parent Common Stock, Parent and
Merger Subsidiary each have the corporate power and authority necessary to
execute, deliver and perform its respective obligations under this Agreement
and the Plan of Merger and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement and the
Plan of Merger by Parent and Merger Subsidiary and the consummation of the
transactions contemplated herein and therein, including the Merger, have been
duly and validly authorized by all necessary corporate action in respect
thereof on the part of Parent and Merger Subsidiary, subject to the adoption of
an amendment to the Restated Charter of Incorporation of Parent to increase the
number of authorized shares of Parent Common Stock. Subject to the receipt of
all Consents required from Regulatory Authorities and the expiration of all
mandatory waiting periods, assuming the due authorization, execution and
delivery of this Agreement and the Plan of Merger by Subject Company, this
Agreement and the Plan of Merger each represents a legal, valid, and binding
obligation of each of Parent and Merger
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<PAGE> 18
Subsidiary, enforceable against each of them in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws (including
provisions of the U.S., Texas and Tennessee Constitutions) affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement or
the Plan of Merger by Parent and/or Merger Subsidiary, nor the consummation by
Parent and Merger Subsidiary, of the transactions contemplated hereby or
thereby, nor compliance by Parent and Merger Subsidiary with any of the
provisions hereof or thereof will (i) conflict with or result in a breach of
any provision of Parent's Restated Charter of Incorporation or Bylaws (subject
to the amendment of the Parent's Restated Charter of Incorporation to increase
the number of authorized shares of Parent Common Stock) or of Merger
Subsidiary's Charter of Incorporation or Bylaws, 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 and Liens which are
not, and for such Consents which, if not obtained, are not, reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Parent
or Merger Subsidiary, 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 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 the FRB
under Sections 3 and 4 of the BHC Act and from the Texas Banking Commissioner
under Sections 38.001 and 38.006 of the Texas Finance Code, 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. (a) The authorized capital stock of Parent
consists solely of (i) 100,000,000 shares of Parent Common Stock, of which
81,650,946 shares were issued and outstanding as of December 31, 1997, and (ii)
10,000,000 shares of Parent Preferred Stock, of which 2,188,358 shares of
Parent Series E Preferred Stock were issued and outstanding as of December 31,
1997. All of the issued and outstanding shares of Parent Capital Stock are,
and, subject to the amendment of Parent's Restated Charter of Incorporation to
increase the number of authorized shares of Parent Common Stock, 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 and
in accordance with the terms of this Agreement, will be, duly and validly
authorized, issued and outstanding, and fully paid and nonassessable under the
TBCA and Parent's Restated Charter of Incorporation and Bylaws. 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 any Person. As of the date hereof and as of the
Closing Date, none of the issued and outstanding shares of Parent Capital Stock
has been or will have been issued in violation of the Securities Laws or any
other applicable securities Laws. To the Knowledge of Parent, there are no
facts or circumstances that would preclude the Parent Common Stock to be issued
in the Merger from being approved for listing on the NYSE.
(b) Except as set forth in the Parent Disclosure Memorandum,
or except for any matter under this Section 6.3(b) that would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Parent, (i) all issued and outstanding shares of the capital stock of, or other
equity interests in, any Parent Subsidiary owned by Parent or by a Parent
Subsidiary are so owned free and clear of all Liens; (ii) no shares of capital
stock of, or other equity interests in, any Parent Subsidiary are reserved for
issuance, and there are no contracts, agreements, commitments or arrangements
obligating Parent or any Parent Subsidiary (A) to offer, sell, issue, grant,
pledge, dispose of or encumber any shares of capital stock of, or other equity
interests in, or any options,
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warrants or rights of any kind to acquire any shares of capital stock of, or
other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in
any Parent Subsidiary or (B) to redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding shares of capital stock of, or other
equity interests in, or any outstanding options, warrants or rights of any kind
to acquire any shares of capital stock of or other equity interest in, or any
outstanding securities that are convertible into or exchangeable for, any
shares of capital stock of, or other equity interests in any Parent Subsidiary
or (C) to grant any Lien on any outstanding shares of capital stock of, or
other equity interest in any Parent Subsidiary.
6.4 Parent Subsidiaries. Except as set forth in Section 6.4 of
the Parent Disclosure Memorandum, Parent owns all of the issued and outstanding
capital stock of Merger Subsidiary, and 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 other Parent Subsidiaries which would
qualify as a "Significant Subsidiary" (as such term is defined in Rule 1.02(w)
of Regulation S-X promulgated under the Securities Laws) of Parent. No capital
stock (or other equity interest) of any Parent Subsidiary which is wholly-owned
by Parent or which would qualify as a Significant Subsidiary of Parent, 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 Parent or any of the
Parent Subsidiaries which are wholly-owned by parent or which is a Significant
Subsidiary of Parent, is 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 is 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 which is wholly-owned by Parent
or which would qualify as a Significant Subsidiary of Parent, to vote or to
dispose of any shares of the capital stock (or other equity interests) of any
of the Parent Subsidiaries. All of the shares of capital stock (or other
equity interests) of each Parent Subsidiary which would qualify as a
Significant Subsidiary of Parent and held by Parent or any Parent Subsidiary
have been duly and validly authorized and issued and 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. None of
the issued and outstanding shares of capital stock of Merger Subsidiary, and
none of the issued and outstanding stock of any other Parent Subsidiary which
qualifies as a Significant Subsidiary of Parent, has been issued in violation
of any preemptive rights of any Person. Each Parent Subsidiary is either a
bank, federal savings bank, or a savings association, partnership, limited
liability company or a corporation, and each such Parent Subsidiary which
qualifies as a Significant Subsidiary of Parent 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 which
qualifies as a Significant Subsidiary of Parent is duly qualified or licensed
to transact business as a foreign corporation in good standing in each of the
States of the United States and in each foreign jurisdiction 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,
Merger Subsidiary and each Parent Subsidiary that qualifies as a Significant
Subsidiary of Parent, have been made available to Subject Company for its
review, and are true and complete in all material respects as in effect as of
the date of this Agreement. A true, accurate and complete list of each Parent
Subsidiary is included in Section 6.4 of the Parent Disclosure Memorandum.
6.5 Financial Statements. Each of the Parent Financial Statements
(including, in each case, any related notes) contained in the Parent SEC
Documents, including any Parent SEC Document 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 Regulation S-X
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promulgated under the Securities Laws), 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 September 30, 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 September 30, 1997, except for such
Liabilities incurred or paid (i) 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 Documents made available prior to
the date of this Agreement, 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 in 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 related to Tax Returns and/or Taxes of Parent 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.
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(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) 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's 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 in violation of with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces (excluding violations
which would not be reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Parent), (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 Material Contracts. Except as set forth in Section 6.11 of
the Parent Disclosure Memorandum, neither Parent, the Parent Subsidiaries, nor
any of their respective Assets, businesses or operations is a party to, or is
bound or affected by, or receives benefits under, any Contract or amendment
thereto that falls within the definition of a "Material Contract" contained in
Item 601 of Regulation S-K promulgated under the Securities Laws (the "Parent
Material Contracts") that has not been filed as an exhibit to a Parent SEC
Document filed by Parent prior to the date of this Agreement. With respect to
each Parent Material Contract: (i) the Contract is in full force and effect;
(ii) neither Parent nor any Parent Subsidiary is in material Default
thereunder; (iii) neither Parent nor any Parent Subsidiary 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 Parent, in Default in any respect or
has repudiated or waived any material provision thereunder.
6.12 Assets. Except as disclosed or reserved against in the Parent
Financial Statements made available prior to the date of this Agreement, Parent
and the Parent Subsidiaries have good and indefeasible title, free and clear of
all Liens, to all of their respective material Assets. All Assets which are
material to Parent's business on a consolidated basis, held under leases or
subleases by Parent or any of the Parent 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 (including provisions of the U.S.,
Texas and Tennessee Constitutions) affecting the enforcement of creditors'
rights generally and except that the availability of
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equitable remedies 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.
6.13 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, 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 Parent, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against Parent or any Parent Subsidiary.
6.14 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, (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, no Parent SEC Document contained any untrue
statement of a material fact or omitted 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.
6.15 Statements True and Correct. None of the information supplied
or to be supplied by Parent expressly 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 expressly for inclusion in the Subject Company Proxy
Statement to be mailed to Subject Company's shareholders in connection with the
Subject Company 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 Subject
Company 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 Subject Company Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Subject Company Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to correct any statement made by Parent in any earlier
communication with respect to the solicitation of any proxy for the Subject
Company 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. None of the
information supplied or to be supplied by Parent for inclusion in the Parent
Proxy Statement to be mailed to Parent shareholders in connection with the
Parent Shareholders' Meeting will, at the respective time such Parent Proxy
Statement is filed, or when such Parent Proxy Statement is first mailed to the
shareholders of Parent, 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, at the time of the Parent Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to correct any statement made by Parent in any earlier
communication with respect to the solicitation of any proxy for the Parent
Shareholders' Meeting.
6.16 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
treatment as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
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Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement, or (iii) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment;
provided, however, that should Parent's shareholders fail to approve an
amendment to Parents Restated Charter of Incorporation to increase the number
of authorized shares of Parent Common Stock, then Parent may take actions which
would prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interest accounting treatment.
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 or expressly provided for in the Subject Company
Disclosure Memorandum from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, 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 or as and to the extent expressly disclosed or
provided for in the Subject Company Disclosure Memorandum, 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 Charter, Bylaws, 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 $100,000 (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 and 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 $0.35 per share for the
first quarter of 1998, and $0.40 for each quarter thereafter, in all cases 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
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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 for this 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 common stock or any other capital stock
of Subject Company or any Subject Company Subsidiary, 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 $50,000 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 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; 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 any Subject Company Subsidiary 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 any of 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, nor shall
Subject Company or any Subject Company Subsidiary make any distributions from
such employee benefit plans, except as required by Law, by the terms of such
plans, or in a manner consistent with past practices with respect to the
applicable plan; 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
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(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of Subject Company
or any Subject Company Subsidiary for material money damages or restrictions
upon the operations of Subject Company or any Subject Company Subsidiary; 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 or an agreement with respect to an Acquisition Proposal to be
consummated prior to the Closing Date which would effect a change in the number
or kind of shares of Parent Common Stock held by Parent shareholders
immediately prior to such consummation; 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;
provided, however, should Parent's shareholders fail to approve an amendment to
Parent's Restated Charter of Incorporation to increase the number of authorized
shares of Parent Common Stock, then Parent may take such actions as would
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment.
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 or which would prevent the satisfaction of the
conditions precedent set forth in Article 9 of this Agreement, 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 of such entity 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.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval.
As promptly as practicable after the execution of this Agreement, each of
Parent and Subject Company shall prepare and file the Registration Statement,
of which the Subject Company 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. Each of Parent
and Subject Company shall use all reasonable efforts to have or cause the
Registration Statement to become effective as promptly as practicable, and
shall take any action required to be taken under any applicable federal or
state securities Laws in connection with the issuance of shares of Parent
Common Stock in the Merger. Parent shall use its commercially reasonable best
efforts to cause the Registration Statement to remain effective through the
Effective Time. No amendment or supplement to the Registration Statement shall
be made by Parent or Subject Company without the approval of the other party.
Parent and Subject Company each will advise the other, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order suspending the effectiveness of the Registration Statement or the
solicitation of proxies pursuant to the Subject Company Proxy Statement, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, any
request by the staff of the SEC for amendment of the Registration Statement,
the Subject Company Proxy Statement or, if it relates to the proposed amendment
to increase the number of authorized shares of Parent Common Stock, the Parent
Proxy Statement, the receipt from the staff of the SEC of comments thereon or
any request by the staff of the SEC for additional information with respect
thereto. All documents that Parent or Subject Company are responsible for
filing with the SEC in connection with the transactions contemplated hereby
shall as the time of filing comply as to form in all material respects with the
applicable requirements of the 1933 Act and the 1934 Act. Subject Company
shall call the Subject Company Shareholders' Meeting, to be held after the
Registration Statement is declared effective by the SEC for the purpose of
voting upon approval of this Agreement and the Plan of Merger and such other
related matters as it deems appropriate. Assuming the Registration Statement
is then effective, the Subject Company shall call the Subject Company
Shareholders' Meeting to be held not later than 40 days after the Parent's 1998
Annual Meeting of Shareholders. Otherwise, the Subject Company shall call the
Subject Company Shareholders' Meeting as soon thereafter as practicable after
the Registration Statement is declared effective by the SEC. In connection
with the Subject Company 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 of the Merger. Parent shall
prepare and file the Parent Proxy Statement and its Annual Report on Form 10-K
with the SEC as soon as reasonably practicable following the preparation of
Parent's consolidated balance sheet (including related notes and schedules, if
any) as of December 31, 1997 and Parent's related consolidated statements of
earnings, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) for the one- year period ended December 31, 1997.
Parent shall use its commercially reasonable best efforts to (i) cause such
financial statements to be prepared as soon as possible following December 31,
1997, consistent with past practices, and (ii) respond promptly to all comments
of the SEC with respect to the Parent Proxy Statement. Each of Parent and
Subject Company shall furnish all information concerning it, its respective
Subsidiaries, officers, directors and shareholders as may be reasonably
required to comply with the 1934 Act and any comments of the SEC with respect
to the Parent Proxy Statement. Parent shall call the Parent Shareholders'
Meeting as soon as reasonably practicable following the filing of the Parent
Proxy Statement with the SEC and the completion of the SEC's review, if any, of
the Parent Proxy Statement; provided, in no event will Parent be deemed to be
required to hold the Parent Shareholders' Meeting less than thirty (30) days
following the earlier of (i) the completion of the SEC's review of the Parent
Proxy Statement or (ii) the lapse (without indication by the SEC that it
intends to review the Parent Proxy Statement) of the ten (10) day period
allocated for the SEC to indicate whether it intends to review the Parent Proxy
Statement. In connection with the
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Parent Shareholders' Meeting, (i) the Board of Directors of Parent shall
recommend (subject to compliance with its fiduciary duties as advised by
counsel) to its shareholders the approval of an amendment of the Restated
Charter of Incorporation of Parent to authorize the requested increase in its
number of authorized shares of Parent Common Stock and (ii) the Board of
Directors of Parent (subject to compliance with its fiduciary duties as advised
by counsel) and officers of Parent shall use their reasonable efforts to obtain
shareholder approval of such amendment.
8.2 Authorization of Shares; Exchange Listing. Parent shall
submit to its shareholders, at the Parent Shareholders' Meeting, a proposal to
amend the Restated Charter of Incorporation of Parent to increase the number of
authorized shares of Parent Common Stock by an amount at least sufficient to
Permit Parent to issue the number of shares of Parent Common Stock issuable in
connection with the Merger, and, subject to the approval of such amendment by
the shareholders of Parent, shall cause such amendment to become effective and
reserve 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 Section 3.1 of this Agreement and the Plan of Merger. Should
Parent's shareholders fail to approve such amendment, then within thirty (30)
days after the date of the conclusion of the Parent Shareholders' Meeting,
Parent shall provide a written notice to Subject Company stating whether or not
Parent intends to proceed with the transactions contemplated by this Agreement,
including the Merger. Should Parent's shareholders approve such amendment or
should Parent determine to proceed with the Merger notwithstanding its failure
to obtain shareholder approval of such amendment, 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 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. At
least five business days prior to each filing, Parent shall provide Subject
Company and its counsel with copies of such applications. Each of the Parties
shall deliver to each of the other Parties copies of all filings,
correspondence and orders sent by such Party to and copies of all filings,
correspondence and orders received by such Party 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, Merger Subsidiary and Subject Company
each agree to execute and file Articles of Merger with the Secretary of State
of the State of Tennessee and the Secretary of State of the State of Texas 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. Each Party shall use, and shall cause each of its
Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
8.6 Investigation and Confidentiality. (a) Prior to the Effective
Time, each Party shall keep the other Parties advised of all material
developments relevant to its business and to consummation of the Merger and
shall permit the other Parties 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 any other Party reasonably
requests, provided that such investigation shall be reasonably related to the
transactions contemplated hereby and shall not interfere unnecessarily with
normal operations. No 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
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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 any other Party.
(b) Each Party will hold, and will cause its respective
Affiliates and their respective officers, directors, employees, agents,
consultants, and other representatives to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process (including without
limitation in connection with obtaining the necessary Consents of Regulatory
Authorities) or by other requirements of Law, all confidential documents and
confidential or proprietary information concerning the other Parties gathered
from the other Parties, or their respective officers, directors, employees,
agents, consultants or Representatives, pursuant to this Agreement, except to
the extent that such documents or information can be shown to have been (a)
previously lawfully known by the Party receiving such documents or information,
(b) in the public domain through no fault of such receiving Party, or (c) later
acquired by the receiving party from other sources not themselves bound by, and
in breach of, a confidentiality agreement. Except as provided in Sections 8.1,
8.2 and 8.3 hereof, no Party will disclose or otherwise provide any such
confidential or proprietary documents or information to any other Person,
except to the Party's auditors, Representatives and other consultants and
advisors who need such documents or information in connection with this
Agreement and the transactions contemplated hereby, and the Parties agree to
cause each of the foregoing to be subject to and bound by the confidentiality
provisions hereof.
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. Parent and Subject Company agree to use
their reasonable best efforts to issue a press release announcing the execution
and delivery of this Agreement within five (5) days after the date of this
Agreement.
8.8 Certain Actions. (a) 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.
(b) As a condition of and as an inducement to Parent's
entering into this Agreement, Subject Company covenants, acknowledges, and
agrees that it shall be a specific, absolute, and unconditionally binding
condition precedent to Subject Company's entering into a letter of intent,
agreement in principle, or definitive agreement (whether or not considered
binding, non-binding, conditional or unconditional) with any third party with
respect to an Acquisition Proposal, or supporting or indicating an intent to
support an Acquisition Proposal, other than this Agreement and the transactions
contemplated in this Agreement, regardless of whether Subject Company has
otherwise complied with the provisions of Section 8.8(a) hereof, that Subject
Company or such third party which is a party of the Acquisition Proposal shall
have paid Parent, as liquidated damages, the sum of Six Million Two Hundred
Thousand Dollars ($6,200,000), which sum represents the (i) direct costs and
expenses (including, but not limited to, fees and expenses incurred by Parent's
financial or other consultants, printing costs, investment bankers,
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accountants, and counsel) incurred by or on behalf of Parent in negotiating and
undertaking to carry out the transactions contemplated by this Agreement; and
(ii) indirect costs and expenses of Parent in connection with the transactions
contemplated by this Agreement, including Parent's management time devoted to
negotiation and preparation for the transactions contemplated by this
Agreement; and (iii) Parent's loss as a result of the transactions contemplated
by this Agreement not being consummated. Accordingly, Subject Company hereby
stipulates and covenants that prior to Subject Company's entering into a letter
of intent, agreement in principle, or definitive agreement, (whether binding or
non-binding, conditional or unconditional) with any third party with respect to
an Acquisition Proposal or supporting or indicating an intent to support an
Acquisition Proposal, either Subject Company or such third party shall have
paid to Parent the amount set forth above in immediately available funds to
satisfy the specific, absolute, and unconditionally binding condition precedent
imposed by this Section 8.8. Notwithstanding anything to the contrary in this
Section 8.8(b), in the event such Acquisition Proposal should be the result of
a hostile takeover of Subject Company, any sums due Parent hereunder shall be
paid only at the closing of the transactions set forth in such Acquisition
Proposal. Parent acknowledges that under no circumstances shall any officer or
director of Subject Company) (unless such officer or director shall have an
interest in a potential acquiring party in any Acquisition Proposal) be held
personally liable to Parent for any amount of the foregoing payment. On
payment of such amount to Parent, Parent shall have no cause of action or claim
(either in law or equity) whatsoever against Subject Company, or any officer of
director of Subject Company, with respect to or in connection with such
Acquisition Proposal or this Agreement.
(c) The requirements, conditions, and obligations imposed
by Section 8.8(b) shall continue in full force and effect from the date of this
Agreement until the earlier of (i) the Effective Time or (ii) March 31, 1999;
or (iii) the date on which this Agreement shall have been terminated (A)
mutually by the Parties pursuant to Section 10.1(a) of this Agreement; (B) by
Subject Company pursuant to Section 10.1(b), 10.1(c) or 10.1(f) of this
Agreement; (C) by Subject Company pursuant to Section 10.1(e), unless the
failure to consummate the transactions contemplated by this Agreement by
September 30, 1998, results from or is related to pending or threatened
Litigation arising out of or in connection with the Merger or an Acquisition
Proposal related to Subject Company or any Subject Company Subsidiary, in which
case the date shall be extended to that date which is thirty (30) days after
the final termination of such Litigation or threatened Litigation; (D) by
either Party pursuant to Section 10.1(d)(1)(i) of this Agreement; or (E) by
Parent pursuant to Section 10.1(d)(2) of this Agreement.
(d) As a condition of and as an inducement to Subject
Company's entering into this Agreement, Parent covenants, acknowledges, and
agrees that it shall be a specific, absolute, and unconditionally binding
condition precedent to Parent's termination or deemed termination of this
Agreement pursuant to Section 10.1(d)(2) only, that Parent shall have paid
Subject Company, as liquidated damages, the sum of Six Million Two Hundred
Thousand Dollars ($6,200,000), which sum represents the (i) direct costs and
expenses (including, but not limited to, fees and expenses incurred by Subject
Company's financial or other consultants, printing costs, investment bankers,
accountants, and counsel) incurred by or on behalf of Subject Company in
negotiating and undertaking to carry out the transactions contemplated by this
Agreement; and (ii) indirect costs and expenses of Subject Company in
connection with the transactions contemplated by this Agreement, including
Subject Company's management time devoted to negotiation and preparation for
the transactions contemplated by this Agreement; and (iii) Subject Company's
loss as a result of the transactions contemplated by this Agreement not being
consummated. Accordingly, Parent hereby stipulates and covenants that prior to
terminating, or within ten days of being deemed to have terminated, this
Agreement pursuant to Section 10.1(d)(2) only, Parent shall have paid, or shall
pay, as applicable, to Subject Company the amount set forth above in
immediately available funds. Subject Company acknowledges that under no
circumstances shall any officer or director of Parent be held personally liable
to Parent for any amount of the foregoing payment. On payment of such amount
to Subject Company, Subject Company shall have no cause of action or claim
(either in law or equity) whatsoever against Parent, or any officer of director
of Parent, with respect to or in connection with such termination of this
Agreement. Subject Company acknowledges and agrees that Parent shall have no
obligation to pay the sum set forth in this Section 8.8(d) to Subject Company
should Parent terminate this Agreement pursuant to any Section of this
Agreement other than Section 10.1(d)(2).
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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;
provided, however, that should Parent's shareholders fail to approve the
amendment to Parent's Restated Charter of Incorporation to increase its number
of authorized shares of Parent Common Stock, then Parent, in its sole and
absolute discretion, may take actions which would prevent the transactions
contemplated by this Agreement, including the Merger, from qualifying for
pooling-of-interest accounting treatment.
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 2, 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. 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 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.
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) to the full extent permitted under any of
Tennessee Law, Subject Company's Charter and Bylaws 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.
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(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 four 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, including consummation of
the Merger, 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 four-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.
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:
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(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 any manner.
(c) 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.
(d) 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.
(e) 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.
(f) Tax Matters. Parent shall have received a written
opinion of counsel from Wyatt, Tarrant & Combs, and Subject Company shall have
received a written opinion of counsel from Winstead Sechrest & Minick P.C., 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) Parent, Merger Subsidiary
and Subject Company will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Internal Revenue Code; (iii) 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), (iv) 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
(reduced by any amount allocable to a fractional share interest for which cash
is received) (v) 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 (vi) 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:
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(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 immediately prior to 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 and
5.20 of this Agreement shall each 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 and 5.20) 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; provided, however, this
shall not be a condition precedent to Parent's obligation to perform this
Agreement and consummate the Merger and the other transactions contemplated
hereby if Parent takes actions which prevent the transactions contemplated by
this Agreement, including the Merger, from qualifying for such accounting
treatment.
(e) Amendment of Parent's Charter. The shareholders of
Parent shall have approved an amendment to Parent's Restated Charter of
Incorporation to increase the number of authorized shares of Parent Common
Stock to a sufficient number of authorized shares of Parent Common Stock to
enable Parent to issue authorized shares of Parent Common Stock in accordance
with its obligations under Article 3 of this Agreement and the Plan of Merger.
(f) Consents and Approvals. Subject Company shall have
obtained any and all Consents required for consummation of the Merger (other
than those set forth 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 Subject Company or Parent.
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 immediately prior to the Effective
Time (provided that representations and warranties which are confined to a
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<PAGE> 34
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 6.16 of this
Agreement shall each 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 6.16) 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 and/or Merger Subsidiary to be performed
and complied with by Parent and/or Merger Subsidiary 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, (ii) certified copies of
resolutions duly adopted by Parent's or Merger Subsidiary's Boards of Directors
and Parent's 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 Subject Company shall request, and (iii) should
Parent's shareholders approve an amendment to Parent's Restated Charter of
Incorporation to increase the number of its authorized shares of Parent Common
Stock, a copy certified by the Secretary of State of the State of Tennessee,
evidencing the amendment of the Restated Charter of Incorporation of Parent so
as to permit Parent to issue the shares of Parent Common Stock to be issued
pursuant to the Merger.
(d) Fairness Opinion. Subject Company shall have received an
opinion from Price Waterhouse LLP to the effect that the Merger is fair to
Subject Company shareholders from a financial point of view dated the date of
the Subject Company Proxy Statement.
(e) Consents and Approvals. Parent and/or Merger Subsidiary
shall have obtained any and all Consents required for consummation of the
Merger (other than those set forth 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 Parent.
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 Parent or the Board of
Directors of Subject Company (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
F:\SSDATA\MEMCOMM\180364.2 UPC/-Merchants Page 30
<PAGE> 35
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 Parent or the Board of
Directors of Subject Company (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)(1) By the Board of Directors of Parent or the Board of
Directors of Subject Company 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 non-appealable 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 Texas BCA and this Agreement at the Subject Company
Shareholders' Meeting where the transactions were presented to such
shareholders for approval and voted upon, or (2) by Parent should the
shareholders of Parent, at the Parent Shareholders' Meeting, fail to vote their
approval of an amendment to the Restated Charter of Incorporation of Parent to
increase the number of authorized shares of Parent Common Stock, to the extent
Parent would not have sufficient authorized shares of Parent Common Stock
available for issuance in the Merger. Should Parent's shareholders fail to
approve an amendment to Parent's Restated Charter of Incorporation to increase
the number of authorized shares of Parent Common Stock, then should Parent fail
to give the notice to Subject Company called for under such circumstance in
Section 8.2 of this Agreement within the time period so provided, or should
Parent's notice indicate that Parent does not intend to proceed with the
Merger, then Parent shall, in such case, be deemed to have elected to terminate
this Agreement under Section 10.1(d)(2). Should Parent's shareholders fail to
approve such amendment to increase the number of authorized shares of Parent
Common Stock and should Parent provide notice to Subject Company in accordance
with Section 8.2 of this Agreement that it intends to proceed with the Merger,
provided (i) the conditions precedent set forth in Section 9.1 shall have been
satisfied (other than conditions precedent which have not been satisfied as a
result of the acts or omissions of Parent or Merger Subsidiary) and (ii) Parent
is not entitled to terminate this Agreement pursuant to Section 10.1(a), (b),
(c) or (d)(1), then Subject Company shall have the right to declare that Parent
has terminated this Agreement pursuant to this Section 10.1(d)(2) should the
Merger fail to become effective by the later of (A) September 30, 1998, or (b)
the last day of the calendar month containing that date which is sixty days
after the conclusion of the Parent Shareholders' Meeting, not later than
October 31, 1998; provided, however, nothing in this Section 10.1(d)(2) shall
prevent Parent from terminating this Agreement, should it have the right to do
so, pursuant to any Section of this Article 10 other than Section 10.1(d)(2);
or
(e) By the Board of Directors of Parent or the Board of
Directors of Subject Company in the event that the Merger shall not have been
consummated by September 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), and should Parent's shareholders fail to approve an
amendment to Parent's Restated Charter of Incorporation to increase the number
of authorized shares of Parent Common Stock to the extent Parent would not have
sufficient authorized shares of Parent Common Stock available for issuance in
the Merger, then Parent shall no longer have the right to terminate this
Agreement pursuant to this Section 10.1(e); or
(f) 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) 0.85 and (ii) the Starting Price; and
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<PAGE> 36
(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
multiplying the quotient in this clause (2)(ii) by .85 (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(f), 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 0.85, 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(f) 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(f).
For purposes of this Section 10.1(f), 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 reasonably
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 Subject Company Shareholders' Meeting and (ii) on
which the Consent of the Board of Governors of the Federal
Reserve System shall be received (and any requisite waiting
period shall have expired).
"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:
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<PAGE> 37
<TABLE>
<CAPTION>
Bank Holding Companies Weighting
---------------------- ---------
<S> <C>
AmSouth Bancorporation 5.367%
BB&T Corporation 8.928
Commerce Bancshares, Inc. 2.474
Crestar Financial Corporation 7.353
First American Corporation 3.895
First Security Corporation 7.725
First Tennessee National Corp. 4.275
Firstar Corporation 9.654
Huntington Bancshares, Inc. 12.753
Marshall & Ilsley Corporation 6.761
Mercantile Bancorporation, Inc. 8.688
National Commerce Bancorp 3.258
Old Kent Financial Corporation 3.137
Regions Financial Corporation 9.079
SouthTrust Corporation 6.655
-----
Total 100.00%
======
</TABLE>
"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 reasonably 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(f).
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 and the Plan of Merger shall become void and have no effect, except
that (i) the provisions of this Section 10.2, Section 8.6(b), Section 8.8,
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 breach of a representation, warranty, covenant, or agreement.
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.
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<PAGE> 38
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 and the Exhibits delivered
pursuant hereto and incorporated herein by reference.
"Articles of Merger" shall mean the Articles of Merger to be executed
by Parent, Merger Subsidiary and Subject Company and filed with the Secretary
of State of the State of Tennessee and the Secretary of State of the State of
Texas 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, wherever located.
"Bank" shall mean Merchants Bank, Houston, Texas.
"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 legally binding 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.
"Dissenting Shares" shall mean any shares of Subject Company Common
Stock with respect to which the record or beneficial holder has properly
perfected the holder's rights to dissent under Article 5.12 of the Texas BCA.
"Effective Time" shall have the meaning ascribed to such term in
Section 1.3 of this Agreement.
"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
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<PAGE> 39
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 the entity under consideration would be deemed
a "single employer" within the meaning of section 4001(b) of ERISA.
"Exchange Agent" shall have the meaning ascribed to such term in
Section 4.1 of this Agreement.
"Exchange Ratio" shall have the meaning ascribed to such term in
Section 3.1(c) of this Agreement.
"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.
"FRB" shall mean the Board of Governors of the Federal Reserve System
or applicable Federal Reserve Bank.
"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).
"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.
"Indemnified Party" shall have the meaning ascribed to such term in
Section 8.12 of this Agreement.
"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.
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"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 delinquent, and
(ii) for depository institution Subsidiaries of a Party, pledges to secure
deposits, and other Liens incurred in the ordinary course of 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 condition,
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 or 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" shall mean the merger of Subject Company with and into Merger
Subsidiary.
"Merger Subsidiary" shall mean Union Planters Holding Corporation, a
wholly-owned subsidiary of Parent organized under the Laws of the State of
Tennessee.
"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.
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"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" shall mean Union Planters Corporation, a Tennessee
corporation.
"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 Contracts" shall have the meaning ascribed to such term in
Section 6.11 of this Agreement.
"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
September 30, 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 nine months ended
September 30, 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 September 30, 1997.
"Parent Material Contracts" shall have the meaning ascribed to such
term in Section 6.11 of this Agreement.
"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 Proxy Statement" shall mean a proxy statement (complying with
the requirements of the 1934 Act) to be prepared by Parent and filed by Parent
with the SEC in connection with the Parent Shareholders' Meeting.
"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 Union Planters Bank, National
Association, as Rights Agent.
"Parent Shareholders' Meeting" shall mean a meeting of the
shareholders of Parent called to consider and vote upon, among other things, a
proposal to amend the Charter of Incorporation of Parent to authorize the
issuance of at least sufficient additional shares of Parent Common Stock to
permit Parent and Merger Subsidiary to consummate the Merger upon the terms and
conditions set forth in this Agreement.
"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.
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"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 Subject Company, Merger Subsidiary or Parent, and
"Parties" shall mean, collectively, Subject Company, Merger Subsidiary 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.
"Plan of Merger" shall mean the Plan of Merger of even date herewith
entered into by Parent, Merger Subsidiary and Subject Company, in the form of
Exhibit 1.
"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 FRB, the
Department of Financial Institutions of the State of Tennessee, the Texas
Department of Banking, all state regulatory agencies having jurisdiction over
any of the Parties or 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" shall mean the Securities and Exchange Commission.
"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 the SEC pursuant to the
Securities Laws.
"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.
"Significant Subsidiary" shall have the meaning ascribed such to such
term in Rule 1-02(w) of Regulation S-X promulgated under the Securities Laws.
"Subject Company" shall mean Merchants Bancshares, Inc., a Texas
corporation.
"Subject Company Benefit Plans" shall have the meaning ascribed to
such term in Section 5.14(a) of this Agreement.
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<PAGE> 43
"Subject Company Common Stock" shall mean the common stock, $1.00 par
value per share, of Subject Company.
"Subject Company Contracts" shall have the meaning ascribed to such
term in Section 5.15 of this Agreement.
"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 ERISA Plan" shall have the meaning ascribed to such
term in Section 5.14(a) of this Agreement.
"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 September 30, 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 nine months
ended September 30, 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 September 30, 1997.
"Subject Company Preferred Stock" shall mean the $20.00 par value
preferred stock of Subject Company.
"Subject Company 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.
"Subject Company 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.
"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 with respect to
certain employment matters following the Effective Time in addition to those
included in this Agreement.
"Surviving Corporation" shall mean Merger Subsidiary as the surviving
corporation resulting from the Merger.
"Takeover Laws" shall have the meaning ascribed to such term in Section 5.20 of
this Agreement.
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<PAGE> 44
"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).
"Tax Returns" shall mean all returns and reports of or with respect to
any Tax which are required to be filed by or with respect to the applicable
Party.
"TBCA" shall mean the Tennessee Business Corporation Act.
"Texas BCA" shall mean the Texas Business Corporation Act.
"Texas Banking Commissioner" shall mean the Commissioner of the Texas
Department of Banking.
(b) 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 and in Section 8.8, 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 Subject Company Proxy Statement and
printing and mailing costs incurred in connection with the printing and mailing
of the Registration Statement and the Subject Company 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
non-breaching Party.
11.3 Brokers and Finders. 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, except as disclosed in Section 11.3 of such Party's
Disclosure Memorandum. 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, including, but not limited to, the Supplemental Letter) constitutes
the entire agreement between the Parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral, between Parent and Subject Company.
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 the Supplemental Letter and in Sections 8.11 and 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.
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<PAGE> 45
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 and/or Merger Subsidiary,
to waive or extend the time for the compliance or fulfillment by Parent and/or
Merger Subsidiary of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the 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. Except in accordance with Section 1.4 of this
Agreement, 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
prepaid, 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: Merchants Bancshares, Inc.
5005 Woodway, Suite 300 Houston, Texas
77052 Attention: J. W. Lander, III
Telecopy Number: (713) 622-8922
Copy to Subject Company Counsel: Winstead Sechrest & Minick P.C.
5400 Renaissance Tower 1201 Elm Street
Dallas, Texas 75270 Attention:
Robert E. Crawford, Jr., Esq.
Telecopy Number: (214) 745-5390
Parent: Union Planters Corporation
7130 Goodlett Farms Parkway Memphis,
Tennessee 38018 Attention: Jackson
W. Moore Telecopy Number: (901) 580-2939
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<PAGE> 46
Copy to Parent Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway Memphis,
Tennessee 38018 Attention: E.
James House, Jr., Esq. Telecopy
Number: (901) 580-2939
and
Wyatt, Tarrant & Combs 6075 Poplar
Avenue, Suite 650 Memphis, Tennessee
38017 Attention: R. Nash Neyland,
Esq. Telecopy Number: (901) 537-1010
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 agree that time is of
the essence in the performance of their respective obligations under this
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 unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
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<PAGE> 47
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: MERCHANTS BANCSHARES, INC.
By: /S/ Norman H. Bird By: /S/ J. W. Lander, III
-------------------------- --------------------------------
Norman H. Bird, Secretary J.W. Lander, III, President
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /S/ E. James House, Jr. By: /S/ Jackson W. Moore
--------------------------- -------------------------------
Jackson W. Moore
President & Chief Operating
Officer
ATTEST: UNION PLANTERS HOLDING CORPORATION
By: /S/ E. James House, Jr. By: /S/ Jackson W. Moore
--------------------------- -------------------------------
Jackson W. Moore
Chairman & Chief Operating
Officer
[CORPORATE SEAL]
F:\SSDATA\MEMCOMM\180364.2 UPC/-Merchants Page 43
<PAGE> 48
Exhibit 1
PLAN OF MERGER
OF
MERCHANTS BANCSHARES, INC.
WITH AND INTO
UNION PLANTERS HOLDING CORPORATION
Pursuant to this Plan of Merger ("Plan of Merger"), Merchants
Bancshares, Inc. ("Subject Company"), a corporation organized and existing
under the laws of the State of Texas, shall be merged with and into Union
Planters Holding Corporation ("Merger Subsidiary"), a corporation organized and
existing under the laws of the State of Tennessee and which is a wholly-owned
subsidiary of Union Planters Corporation ("Parent").
Except as otherwise provided herein, the capitalized terms set forth
below shall have the meanings ascribed thereto in that certain merger agreement
dated as of January 16, 1998 between Parent, Merger Subsidiary and Subject
Company (the "Agreement"), of which this Plan of Merger is Exhibit 1.
ARTICLE 1
TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of the Agreement
and this Plan of Merger, at the Effective Time, Subject Company shall be merged
with and into Merger Subsidiary in accordance with the provisions of Section
48-21-109 of the TBCA and Article 5.01 of the Texas BCA, and with the effect
provided in Section 48-21-108 of the TBCA and Article 5.06 of the Texas BCA
(the "Merger"). Merger Subsidiary shall be the Surviving Corporation resulting
from the Merger and shall continue to be governed by the Laws of the State of
Tennessee. The Merger shall be consummated pursuant to the terms of the
Agreement and this Plan of Merger, which have been approved and adopted by the
respective Boards of Directors of Subject Company, Parent and Merger
Subsidiary.
1.2 Time and Place of Closing. The Closing will take place at
9:00 A.M. on the date on which the Effective Time is to occur (or the
immediately preceding day if the Effective Time is to be 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 the Agreement and this Plan of Merger shall become effective at
the time the Articles of Merger reflecting the Merger shall become effective
with the Secretary of State of the States of Tennessee and Texas (the
"Effective Time").
1.4 Restructure of Transaction. Subject to the terms of the
Agreement, Parent shall, in its reasonable discretion, have the unilateral
right to revise the structure of the Merger contemplated by the Agreement and
this Plan of Merger in order to achieve tax benefits or for any other reason
which Parent may deem advisable.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Charter of Merger Subsidiary in effect
immediately prior to the Effective Time shall be the Charter of the Surviving
Corporation until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.
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<PAGE> 49
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
Bylaws 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 Bylaws of
the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this
Article 3 (and Article 3 of the Agreement), 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 remain issued and
outstanding and shall represent one share of the Surviving Corporation from and
after the Effective Time.
(c) Except for Dissenting Shares, 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 one (1) share of Parent
Common Stock (subject to possible adjustment as set forth in Section 3.2 and
Section 10.1(f) of the 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.
(d) Dissenting Shares shall not be converted pursuant to
Section 3.1(c) in the Merger but, at and after the Effective Time, shall
represent only the right to receive payment in accordance with Article 5.12 of
the Texas BCA. If a holder of Dissenting Shares becomes ineligible for payment
under Article 5.12 of the Texas BCA, then such holder's Dissenting Shares shall
cease to be Dissenting Shares and shall be converted in the manner set forth in
Section 3.1(c) effective as of the Effective Time.
3.2 Anti-Dilution Provisions. In the event Parent changes the
number of shares of Parent Common Stock issued and outstanding after the date
of this Plan of Merger and prior to the Effective Time as a result of a stock
split, stock dividend, subdivision, reclassification, conversion 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, subdivision, reclassification, conversion 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 Plan of Merger, each holder of shares of Subject Company Common Stock
exchanged pursuant to the Merger who would otherwise have been
F:\SSDATA\MEMCOMM\180364.2 Plan of Merger - 2
<PAGE> 50
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 reasonably 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.
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 and approve the transmittal materials. The
Exchange Agent may establish reasonable and customary rules and procedures in
connection with its duties, provided such rules and procedures do not have the
effect of limiting or eliminating the obligation of Parent and/or Merger
Subsidiary to deliver the consideration contemplated by Article 3 of this Plan
of Merger. After the Effective Time, each holder of shares of Subject Company
Common Stock (other than Dissenting Shares or shares to be canceled pursuant to
Section 3.3 of this Plan of Merger) 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(c) of this Plan of
Merger, together with all undelivered dividends and other distributions, if
any, in respect of such shares (without interest thereon) pursuant to Section
4.2 of this Plan of Merger. To the extent required by Section 3.4 of this Plan
of Merger, 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 reasonably require. Any other provision of
the Agreement or this Plan of Merger notwithstanding, neither Parent, Merger
Subsidiary 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, other than with respect to Dissenting Shares, 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 Plan of Merger, each certificate theretofore
representing shares of Subject Company Common Stock (other than Dissenting
Shares or shares to be canceled pursuant to Section 3.3 of this Plan of Merger)
shall from and after the Effective Time represent for all purposes only the
right to receive the consideration provided in Sections 3.1(c) and 3.4 of this
Plan of Merger in exchange therefor, subject, however, to the Surviving
Corporation's obligations 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 Plan of Merger and which remain unpaid at the
Effective Time. In addition, 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
Plan of Merger, 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
F:\SSDATA\MEMCOMM\180364.2 Plan of Merger - 3
<PAGE> 51
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
Plan of Merger. However, upon surrender of such Subject Company Common Stock
certificate, both a Parent Common Stock certificate and any undelivered
dividends and other distributions 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 reasonably
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 and dividends and other
distributions deliverable in respect thereof pursuant to this Plan of Merger.
ARTICLE 5
MISCELLANEOUS
5.1 Conditions Precedent. Consummation of the Merger by Merger
Subsidiary shall be conditioned on the satisfaction of or waiver by Parent of
the conditions precedent to the Merger set forth in Sections 9.1 and 9.2 of the
Agreement. Consummation of the Merger by Subject Company shall be conditioned
on the satisfaction of, or waiver by Subject Company of, of the conditions
precedent to the Merger set forth in Sections 9.1 and 9.3 of the Agreement.
5.2 Termination. This Plan of Merger may be terminated at any
time prior to the Effective Time by the Parties hereto as provided in Article
10 of the Agreement.
5.3 Amendments. To the extent permitted by Law, this Plan of
Merger 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 the Agreement and this Plan of Merger
has been obtained; provided, that after any such approval by the holders of
Subject Company Common Stock, there shall be made no amendment that modifies in
any material respect the consideration to be received by the Subject Company
shareholders.
5.4 Assignment. Except as expressly contemplated hereby, neither
this Plan of Merger nor the Agreement, nor any of the rights, interests, or
obligations hereunder or thereunder 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, the Agreement and this
Plan of Merger will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
5.5 Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the Laws of the State of Tennessee, without regard
to any applicable conflicts of Laws.
5.6 Counterparts. This Plan of Merger 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 document.
5.7 Captions. The captions contained in this Plan of Merger are
for reference purposes only and are not part of this Plan of Merger.
F:\SSDATA\MEMCOMM\180364.2 Plan of Merger - 4
<PAGE> 52
IN WITNESS WHEREOF, each of the Parties hereto has duly
executed and delivered this Plan of Merger or has caused this Plan of Merger to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the date first written above.
ATTEST: MERCHANTS BANCSHARES, INC.
By:__________________________ By:____________________________
Norman H. Bird, Secretary J.W. Lander, III, President
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By:___________________________ By:_________________________________
Jackson W. Moore
President & Chief Operating
Officer
ATTEST: UNION PLANTERS HOLDING CORPORATION
By:___________________________ By:_________________________________
Jackson W. Moore
Chairman & Chief Operating Officer
[CORPORATE SEAL]
F:\SSDATA\MEMCOMM\180364.2 Plan of Merger - 5
<PAGE> 53
Exhibit 2
AFFILIATE AGREEMENT
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38108
Attention: Jackson W. Moore, President
and Chief Operating Officer
Gentlemen:
The undersigned is a shareholder of Merchants Bancshares, Inc.,
("Subject Company") a corporation organized and existing under the laws of the
State of Texas, and will become a shareholder of Union Planters Corporation
("Parent") pursuant to the transactions described in the Agreement and Plan of
Merger, dated as of January 16, 1998, (the "Agreement"), by and between Parent,
Union Planters Holding Corporation ("Merger Subsidiary"), and Subject Company.
Under the terms of the Agreement, Subject Company will be merged with and into
Merger Subsidiary (the "Merger"), and shares of the $_____ par value common
stock of Subject Company ("Subject Company Common Stock") will be converted
into and exchanged for shares of the $5.00 par value common stock of Parent
("Parent Common Stock"). This Affiliate Agreement represents an agreement
between the undersigned and Parent regarding rights and obligations of the
undersigned in connection with the shares of Parent Common Stock to be received
by the undersigned as a result of the Merger. Except as otherwise provided
herein, capitalized terms set forth below shall have the meanings ascribed
thereto in the Agreement.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and Parent hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that
as to Subject Company the undersigned is an "affiliate" under Rule 145(c) as
defined in Rule 405 of the Rules and Regulations of the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended ("1933 Act"),
and the undersigned anticipates that the undersigned will be such an
"affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees
that the undersigned will not sell, transfer, or otherwise dispose of the
undersigned's interest in, or reduce the under-signed's risk relative to, any
of the shares of Parent Common Stock into which the undersigned's shares of
Subject Company Common Stock are converted upon consummation of the Merger
until such time as the requirements of SEC Accounting Series Release Nos. 130
and 135 ("ASR 130 and 135") have been met. The undersigned understands that
ASR 130 and 135 relate to publication of financial results of post-Merger
combined operations of Parent and Subject Company. Parent agrees that it will
publish such results within 45 days after the end of the first fiscal quarter
of Parent containing the required period of post-Merger combined operations and
that it will notify the undersigned promptly following such publication.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants, and agrees that:
(a) During the 30 days immediately preceding the Effective Time of
the Merger, the undersigned will not sell, transfer or otherwise dispose of the
undersigned's interest in, or reduce the undersigned's risk relative to, any of
the shares of Subject Company Common Stock beneficially owned by the
undersigned as of the date of the Subject Company Shareholders' Meeting held to
approve the Merger.
F:\SSDATA\MEMCOMM\180364.2 UPC - Merchants Affiliate's Agreement - -Page i
<PAGE> 54
(b) The Parent Common Stock received by the undersigned as a
result of the Merger will be taken for the undersigned's own account and not
for others, directly or indirectly, in whole or in part.
(c) Parent has informed the undersigned that any distribution by
the undersigned of Parent Common Stock has not been registered under the 1933
Act and that shares of Parent Common Stock received pursuant to the Merger can
only be sold by the undersigned (1) following registration under the 1933 Act,
or (2) in conformity with the volume and other requirements of Rule 145(d)
promulgated by the SEC as the same now exists or may hereafter be amended, or
(3) to the extent some other exemption from registration under the 1933 Act
might be available. The undersigned understands that Parent is under no
obligation to file a registration statement with the SEC covering the
disposition of the undersigned's shares of Parent Common Stock or to take any
other action necessary to make compliance with an exemption from such
registration available.
(d) The undersigned will register, and will cause each of the
other parties whose shares are deemed to be beneficially owned by the
undersigned pursuant to Section 8 hereof to have all shares of Subject Company
Common Stock beneficially owned by the undersigned registered in the name of
the undersigned or such parties, as applicable, prior to the Effective Date of
the Merger and not in the name of any bank, broker-dealer, nominee, or
clearinghouse.
(e) The undersigned is aware that Parent intends to treat the
Merger as a tax-free reorganization under Section 368 of the Internal Revenue
Code ("Code") for federal income tax purposes. The undersigned agrees to treat
the transaction in the same manner as Parent for federal income tax purposes.
The undersigned acknowledges that Section 1.368-1(b) of the Income Tax
Regulations requires "continuity of interest" in order for the Merger to be
treated as tax-free under Section 368 of the Code. This requirement is
satisfied if, taking into account those Subject Company shareholders who
receive cash in exchange for their stock, who receive cash in lieu of
fractional shares, or who dissent from the Merger, there is no plan, or
intention on the part of the Subject Company shareholders to sell or otherwise
dispose of the Parent Common Stock to be received in the Merger. The
undersigned has no prearrangement, plan, or intention to sell or otherwise
dispose of an amount of his Parent Common Stock to be received in the Merger
which would cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and
agrees that stop order instructions with respect to the shares of Parent Common
Stock received by the undersigned pursuant to the Merger will be given to
Parent's transfer agent and that there will be placed on the certificates for
such shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a
"pooling-of-interests" and may not be sold, nor may the owner thereof
reduce his risks relative thereto in any way, until such time as Union
Planters Corporation ("Parent") has published the financial results
covering at least 30 days of combined operations after the effective
date of the merger through which the business combination was
effected. In addition, the shares represented by this certificate may
not be sold, transferred, or otherwise disposed of except or unless
(1) covered by an effective registration statement under the
Securities Act of 1933, as amended, (2) in accordance with (i) Rule
145(d) (in the case of shares issued to an individual who is not an
affiliate of Parent) or (ii) Rule 144 (in the case of shares issued to
an individual who is an affiliate of Parent) of the Rules and
Regulations of such Act, or (3) in accordance with a legal opinion
satisfactory to counsel for Parent that such sale or offer is
otherwise exempt from the registration requirements of such Act."
Such legend will also be placed on any certificate
representing Parent securities issued subsequent to the original issuance of
the Parent Common Stock pursuant to the Merger as a result of any offer of such
shares or any stock dividend, stock split, or other recapitalization as long as
the Parent Common Stock issued to the undersigned pursuant to the Merger has
not been transferred in such manner to justify the removal of the legend
therefrom. Upon the request of the undersigned, Parent shall cause the
certificates representing the shares of Parent
F:\SSDATA\MEMCOMM\180364.2 UPC - Merchants Affiliate's Agreement - - Page ii
<PAGE> 55
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to restrictions on transfer by virtue of
ASR 130 and 135 as soon as practicable after the requirements of ASR 130 and
135 have been met. In addition, if the provisions of Rules 144 and 145 are
amended to delete restrictions applicable to the Parent Common Stock received
by the undersigned pursuant to the Merger, or at the expiration of the
restrictive period set forth in Rule 145(d), Parent, upon the request of the
undersigned, will cause the certificates representing the shares of Parent
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to the restrictions set forth in Rules 144
and 145(d) upon receipt by Parent of an opinion of its counsel to the effect
that such legend may be removed.
5. Understanding of Restrictions on Dispositions. The
undersigned has carefully read the Agreement and this Affiliate Agreement and
discussed their requirements and impact upon his ability to sell, transfer, or
otherwise dispose of the shares of Parent Common Stock received by the
undersigned, to the extent he believes necessary, with his counsel or counsel
for Subject Company.
6. Filing of Reports by Parent. Parent agrees, for a period of
three years after the Effective Time of the Merger, to file on a timely basis
all reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, so that the public information provisions of
Rule 145(d) promulgated by the SEC as the same are presently in effect will be
available to the undersigned in the event the undersigned desires to transfer
any shares of Parent Common Stock issued to the undersigned pursuant to the
Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to
sell or otherwise transfer the shares of Parent Common Stock received by him in
connection with the Merger at any time during the restrictive period set forth
in Rule 145(d), the undersigned will provide the necessary representation
letter to the transfer agent for Parent Common Stock together with such
additional information as the transfer agent for Parent Common Stock may
reasonably request. If Parent's counsel concludes that such proposed sale or
transfer complies with the requirements of Rule 145(d), Parent shall cause such
counsel to provide such opinions as may be necessary to Parent's transfer agent
so that the undersigned may complete the proposed sale or transfer.
8. Acknowledgments. The undersigned recognizes and agrees that
the foregoing provisions also apply to all shares of the capital stock of
Subject Company and Parent that are deemed to be beneficially owned by the
undersigned pursuant to applicable federal securities laws, which the
undersigned agrees may include, without limitation, shares owned or held in the
name of (i) the undersigned's spouse, (ii) any relative of the undersigned or
of the undersigned's spouse who has the same home as the undersigned, (iii) any
trust or estate in which the undersigned, the undersigned's spouse, and any
such relative collectively own at least a 10% beneficial interest or of which
any of the foregoing serves as trustee, executor, or in any similar capacity,
and (iv) any corporation or other organization in which the undersigned, the
undersigned's spouse and any such relative collectively own at least 10% of any
class of equity securities or of the equity interest. The undersigned further
recognizes that, in the event that the undersigned is a director or officer of
Parent or becomes a director or officer of Parent upon consummation of the
Merger, among other things, any sale of Parent Common Stock by the undersigned
within a period of less than six months following the Effective Time of the
Merger may subject the undersigned to liability pursuant to Section 16(b) of
the Securities Exchange Act of 1934, as amended.
9. Miscellaneous. This Affiliate Agreement is the complete
agreement between Parent and the undersigned concerning the subject matter
hereof. Any notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses set
forth herein or such other address as shall be furnished in writing by the
parties. This Affiliate Agreement shall be governed by the laws of the State
of Tennessee.
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<PAGE> 56
This Affiliate Agreement is executed as of the __ day of _____________, 199_.
Very truly yours,
______________________________
Affiliate Signature
______________________________
Printed Name
______________________________
______________________________
______________________________
Address
Add below the signatures of all registered owners of shares
deemed to be beneficially owned by the Affiliate.
______________________________
Name:_________________________
______________________________
Name:_________________________
______________________________
Name:_________________________
AGREED TO AND ACCEPTED as of ______________________, 1998.
UNION PLANTERS CORPORATION
By: __________________________
Jackson W. Moore
President & Chief Operating Officer
F:\SSDATA\MEMCOMM\180364.2 UPC - Merchants Affiliate's Agreement - -Page iv
<PAGE> 1
EXHIBIT 99.1
<PAGE> 2
FOR IMMEDIATE RELEASE
MERCHANTS BANCSHARES TO AFFILIATE WITH UNION PLANTERS
MEMPHIS, TENNESSEE - January 20, 1998 - Benjamin W. Rawlins, Jr., Chairman and
Chief Executive Officer of Union Planters Corporation (NYSE:UPC), and J. W.
(Trey) Lander, III, President of Merchants Bancshares, Inc. (parent company of
Merchants Bank) jointly announced today that a definitive agreement has been
signed to merge Merchants with Union Planters Corporation.
Under the agreement, in a tax-free exchange, Union Planters would exchange one
share of its common stock for each common share of Merchants. The transaction
is valued at approximately $124 million. The acquisition is expected to be
accounted for as a pooling of interests and is scheduled to close in the second
quarter of 1998. The affiliation is also subject to shareholder and regulatory
approval and the satisfaction of normal contractual closing conditions.
Merchants Bancshares, Inc. had approximately $550 million in total assets at
December 31, 1997. Merchants offers a complete range of commercial and
personal banking services through 14 banking facilities in Harris, Galveston
and Brazoria Counties in Texas.
"Union Planters is a very community-oriented company, which is why we believe
they are a great match for us," Lander said. "Union Planters places the same
emphasis on quality service as we do. We will continue to operate as Merchants
Bank with an emphasis on keeping the same customer contact staff that our
customers have come to know and trust."
"All Union Planters affiliates operate independently within the unique
communities they serve," Lander added. "Decisions at our bank will continue to
be made by people our customers know and enjoy doing business with."
In making the announcement, Ben Rawlins stated, "We welcome the employees and
customers of Merchants into the Union Planters group of banks. We were
especially attracted by Merchants by their community banking focus and look
forward to supporting their management and employee team."
Chairman of the Board Jack W. Lander, Jr. commented, "Our board did an
excellent job in determining the best long term course for our customers,
employees and shareholders alike. Our goal was to enhance the direction we
have established with our employees, continue to operate as a community bank
and to provide liquidity for our shareholders. Our affiliation with Union
Planters will help us reach each of those goals in a more timely and efficient
manner."
Donald R. Harding, president of Merchants Bank added, "I personally look
forward to the opportunities that are ahead. We have always shared Union
Planters' commitment to community management and we look forward to continuing
this tradition."
<PAGE> 3
Union Planters Corporation, which was founded in 1869, has over $18 billion in
assets and is ranked as one of the top 50 banks in the United States. Over 500
full service offices and over 600 ATM's may be found in Tennessee, Mississippi,
Missouri, Florida, Louisiana, Arkansas, Alabama and Kentucky.
For More Information:
At Merchants Bancshares:
Trey Lander
President
(713) 622-0042
At Union Planters:
Financial
Jack Parker
Chief Financial Officer
(901) 580-6781
Media
Bill Andrews
Senior Vice President
(901) 580-2892
