SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 1996
Allegiance Banc Corporation
(Exact name of registrant as specified in its charter)
Maryland 0-16706 52-1494123
(State or other jurisdiction (Commission file IRS Employer
of incorporation), number) Identification Number)
4719 Hampden Lane, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (301) 656-5300Item 5.
Other Events.
On April 22, 1996 Allegiance Banc Corporation (the "Company") entered
into an Agreement and Plan of Reorganization ("Agreement") with F&M
National Corporation ("F&M"), pursuant to which the Company would be merged
with and into F&M (the "Merger"), with F&M being the
surviving company in the Merger. Upon consummation of the Merger, each
outstanding share of the common stock, $1.00 par value, of the Company
(the "Company Common Stock") would automatically be converted into and
represent the number of shares of common stock, $2.00 par value, of
F&M ("F&M Common Stock") having a value equal to $15.00. For purposes of
the Agreement, the value of a share of F&M Common Stock shall be equal to
the average closing price of F&M Common Stock on the New York Stock Exchange
for the ten full trading days ending on the second day prior to the
effectiveness of the Merger. Each outstanding option and warrant to
acquire Company Common Stock outstanding as of the effectiveness of the Merger
will be converted into a proportionately adjusted option to acquire F&M
Common Stock.
Following consummation of the Merger, the Company's wholly owned
subsidiary, Allegiance Bank, N.A., Bethesda, Maryland, will become and
continue as a wholly owned subsidiary of F&M. One member of the Company's
Board of Directors will become a member of the Board of Directors of
F&M upon consummation.
In connection with the Agreement, the Company entered into a Stock Option
Agreement pursuant to which it granted F&M an option to acquire 343,785 shares
of Company Common Stock at an exercise price of $11.50 per share in the event
that a "Purchase Event", as defined in the Stock Option Agreement, occurs.
The Merger is subject to the satisfaction or waiver of numerous
conditions, including the receipt of all required regulatory approvals, and
the approval of the Company's shareholders. It is anticipated that the Merger
will be accounted for as a pooling of interests and will constitute a tax
free reorganization within the meaning of Section 368 of the Internal Revenue
Code. It is currently expected that the Merger will be consummated late in
the third quarter or early in the fourth quarter of 1996.
Item 7. Financial Statements and Exhibits.
(a) Exhibit 2 - Agreement and Plan of Reorganization, dated as of April 22,
1996, by and between Allegiance Banc Corporation and F&M National Corporation
(b) Exhibit 99 - Press Release dated April 22, 1996Signatures
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.
Allegiance Banc Corporation
By: /s/ Leonard L. Abel
Leonard L. Abel
Chairman of the Board
Dated : April 26, 1996
EXHIBIT 2
[EXECUTION COPY}
AGREEMENT AND PLAN OF REORGANIZATION
by and between
F&M NATIONAL CORPORATION
and
ALLEGIANCE BANC CORPORATION
____________________________
April 22, 1996
____________________________
TABLE OF CONTENTS
Page
Article 1.
The Merger and Related Matters . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Conversion of ABC Stock. . . . . . . . . . . . . . . . . . . . .1
1.3 Board of Directors of F&M and Allegiance Bank; Officers and
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 The Effective Date . . . . . . . . . . . . . . . . . . . . . . .2
1.5 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .2
Article 2.
Representations and Warranties of ABC . . . . . . . . . . . . . . . . . .3
2.1 Organization, Standing and Power . . . . . . . . . . . . . . . .3
2.2 Organization, Standing and Power of Allegiance Bank. . . . . . .3
2.3 Authorized and Effective Agreement; Affiliated Transaction
Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . .4
2.5 Financial Statements; Books and Records; Minute Books. . . . . .5
2.6 Material Adverse Change. . . . . . . . . . . . . . . . . . . . .5
2.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . .5
2.8 Legal Proceedings; Compliance with Laws. . . . . . . . . . . . .5
2.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.10 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . .6
2.12 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.13 Allowance for Loan Losses. . . . . . . . . . . . . . . . . . . .7
2.14 Environmental Matters. . . . . . . . . . . . . . . . . . . . . .7
2.15 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . .9
2.16 Statements True and Correct. . . . . . . . . . . . . . . . . . .9
Article 3.
Representations and Warranties of F&M . . . . . . . . . . . . . . . . . .9
3.1 Organization, Standing and Power . . . . . . . . . . . . . . . .9
3.2 Organization, Standing and Power of F&M Subsidiaries . . . . . .9
3.3 Authorized and Effective Agreement . . . . . . . . . . . . . . 10
3.4 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Financial Statements; Books and Records; Minute Books. . . . . 11
3.6 Material Adverse Change. . . . . . . . . . . . . . . . . . . . 11
3.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . 11
3.8 Legal Proceedings; Compliance with Laws. . . . . . . . . . . . 11
3.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . 12
3.11 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Allowance for Loan Losses. . . . . . . . . . . . . . . . . . . 13
3.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 13
3.14 Statements True and Correct. . . . . . . . . . . . . . . . . . 13
Article 4.
Covenants and Agreements. . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Investigation and Confidentiality. . . . . . . . . . . . . . . 13
4.2 Registration Statement; Shareholder Approval . . . . . . . . . 14
4.3 Operation of the Business of ABC . . . . . . . . . . . . . . . 14
4.4 Operation of the Business of F&M . . . . . . . . . . . . . . . 15
4.5 Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Public Announcements . . . . . . . . . . . . . . . . . . . . . 16
4.7 Accounting Treatment . . . . . . . . . . . . . . . . . . . . . 16
4.8 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.10 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.11 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 17
4.12 ABC Stock Options. . . . . . . . . . . . . . . . . . . . . . . 17
4.13 Stock Option Agreement . . . . . . . . . . . . . . . . . . . . 18
4.14 Restrictions on Trading in F&M Common Stock. . . . . . . . . . 18
Article 5.
Conditions to the Merger. . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 General Conditions . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Conditions to Obligations of F&M . . . . . . . . . . . . . . . 19
5.3 Conditions to Obligations of ABC . . . . . . . . . . . . . . . 19
Article 6.
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
6.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . 21
6.3 Survival of Representations, Warranties and Covenants. . . . . 21
6.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Article 7.
General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Binding Effect; No Third-Party Rights. . . . . . . . . . . . . 22
7.3 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . 22
7.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 23
Exhibit A -- Plan of MergerAGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of April 22, 1996, by and between F&M NATIONAL CORPORATION,
a Virginia corporation ("F&M"), and ALLEGIANCE BANC CORPORATION, a
Delaware corporation ("ABC").
WITNESSETH:
WHEREAS, the respective Boards of Directors of F&M and ABC have approved
the affiliation of their companies through the merger of ABC with and into
F&M pursuant to and subject to the terms and conditions of this Agreement and
the Plan of Merger in the form attached hereto as Exhibit A (the "Plan of
Merger"); and
WHEREAS, the parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated hereby;
NOW, THEREFORE, in consideration of the mutual warranties, covenants and
agreements set forth herein, the parties agree as follows.
ARTICLE 1
The Merger and Related Matters
1.1 The Merger
Subject to the terms and conditions of this Agreement, at the Effective Date
as defined in Section 1.4 hereof, ABC shall be merged with and into F&M
pursuant to the Plan of Merger attached hereto as Exhibit A and made a part
hereof (the "Merger"). The separate corporate existence of ABC shall thereupon
cease, and F&M will be the surviving corporation in the Merger.
1.2 Conversion of ABC Stock
At the Effective Date, by virtue of the Merger and without any action on the
part of the holders thereof, each share of common stock, par value $1.00 per
share, of ABC ("ABC Common Stock") issued and outstanding immediately prior to
the Effective Date shall cease to be outstanding and shall be converted into
and exchanged for shares of common stock, par value $2.00 per share, of F&M
("F&M Common Stock") whose aggregate market value equals $15.00, plus cash
for fractional shares, pursuant to the terms and conditions set forth in the
Plan of Merger. Each share of F&M Common Stock issued and outstanding
immediately prior to the Effective Date shall continue unchanged as an
outstanding share common stock of F&M, as the successor corporation.
1.3 Board of Directors of F&M and Allegiance Bank; Officers and Employees
(a) F&M shall take all such action as shall be necessary to elect or appoint
Leonard L. Abel (or in the event that he is unavailable to serve, Ronald D.
Paul, or in the event of his unavailablity such other person selected by the
Board of Directors of ABC and acceptable to F&M) to the Board of Directors of
F&M at, or as promptly as practicable after, the Effective Date.
(b) The officers and employees of Allegiance Bank, N.A., the national
banking subsidiary of ABC ("Allegiance Bank"), will not change as a result of
the Merger.
(c) The Board of Directors of Allegiance Bank in office at the Effective
Date, together with a person designated by F&M, shall serve as the Board of
Directors of Allegiance Bank following the Effective Date until the 1997 Annual
Meeting of Allegiance Bank and until their successors shall be duly elected and
qualified.
1.4 The Effective Date
Subject to the conditions to the obligations of the parties to effect the
Merger as set forth in Article 5, the parties shall cause the effective date
of the Merger (the "Effective Date") to occur on such date as the parties may
agree within five days (or as soon as reasonably practicable thereafter) after
the receipt of the approval of shareholders of ABC and the satisfaction or
waiver of all conditions to either party's obligation to effect the Merger;
it being the intent of the parties that all regulatory approvals be obtained
and all statutory and regulatory waiting periods have expired prior to the
date on which the ABC shareholder meeting is held.
1.5 Definitions
Any term defined in this Agreement and the Plan of Merger shall have the
meaning ascribed to it for purposes of this Agreement. In addition:
(a) the term "Knowledge" when used with respect to a party shall mean the
current and conscious knowledge, after conducting a reasonable investigation,
of any "Executive Officer" of such party, as such term is defined in
Regulation O of the Federal Reserve Board. Any reference herein to the
Knowledge of ABC shall also be deemed to include the Knowledge of any
Executive Officer of Allegiance Bank;
(b) the term "Material Adverse Effect", when applied to a party,
shall mean any condition, event, change or occurrence (including, without
limitation, (I) the making of any provisions for possible loan and lease
losses, write-downs of other real estate and taxes and (ii) any breach of a
representation or warranty by such party) that individually, or in the
aggregate with any other condition, event, change or occurrence, has or is
reasonably likely to have a material negative effect upon (I) the financial
condition, results of operations or business of the party and its subsidiaries,
taken as a whole, or (ii) the ability of a party to perform its obligations
under, and to consummate the transactions contemplated by, this Agreement.
(c) the term "Previously Disclosed" shall mean information set forth in a
letter from one party to the other party delivered and dated not later than
5:00 p.m. on April 19, 1996, specifically designated as information
"Previously Disclosed" pursuant to this Agreement.
ARTICLE 2
Representations and Warranties of ABC
ABC represents and warrants to F&M as follows:
2.1 Organization, Standing and Power
ABC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with full corporate power and authority
to carry on its business as now conducted. ABC is duly registered as a bank
holding company under the Bank Holding Company Act of 1956.
2.2 Organization, Standing and Power of Allegiance Bank
Allegiance Bank is the only subsidiary of ABC (collectively with ABC, the
"ABC Companies"), is a duly organized and validly existing national banking
association in good standing under the national banking laws with full
corporate power and authority to carry on its business as now conducted and is
qualified to do business in each state or other jurisdiction of the United
States where its ownership or leasing of property or the conduct of its
business requires qualification to do business and where the failure to so
qualify would have a Material Adverse Effect on ABC on a consolidated basis.
Except as Previously Disclosed, ABC does not own, directly or indirectly, any
outstanding capital stock or other voting securities or ownership interests
of any corporation, bank or savings association, partnership or other
organization, except for Allegiance Bank. The outstanding shares of
capital stock of Allegiance Bank are validly issued and outstanding and fully
paid and all such shares are directly owned by ABC free and clear of all liens,
claims and encumbrances or preemptive rights of any person.
2.3 Authorized and Effective Agreement; Affiliated Transaction Approval
(a) ABC has all requisite corporate power and authority to enter into and
(subject to the receipt of all necessary governmental approvals and the
approval of the shareholders of ABC of this Agreement and the Plan of Merger)
to perform all of its obligations under this Agreement, the Plan of Merger
and the Stock Option Agreement of even date herewith between ABC and F&M (the
"Option Agreement"). The execution, adoption and delivery of this Agreement,
the Plan of Merger and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of ABC, except, in the
case of this Agreement and the Plan of Merger, the approval of shareholders.
This Agreement, the Plan of Merger and the Option Agreement represent the
legal, valid, and binding obligations of ABC, enforceable against ABC in
accordance with their respective terms, in each case subject as to
enforceability to (I) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, conservatorship, receivership and similar laws
affecting the enforcement of rights of creditors of FDIC-insured institutions
or the enforcement of creditors' rights generally, (ii) laws relating to the
safety and soundness of depository institutions and their holding companies,
(iii) general principles of equity, and (iv) in the case of the Option
Agreement, the statutory and common law of Delaware applicable to corporations
organized under Delaware law.
(b) Neither the execution and delivery of this Agreement the Plan of
Merger and the Option Agreement nor the consummation of the transactions
contemplated herein or therein, nor compliance by ABC with any of the
provisions hereof or thereof will: (I) conflict with or result in a breach
of any provision of the Articles of Incorporation or Bylaws of ABC or
Allegiance Bank; (ii) except as Previously Disclosed, constitute or result
in the breach of any term, condition or provision of, or constitute a default
under, or give rise to any right of termination, cancellation or acceleration
with respect to, or result in the creation of any lien, charge or encumbrance
upon, any property or asset of ABC or Allegiance Bank pursuant to any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation, or (iii) subject to the receipt of all required regulatory
approvals, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to ABC or Allegiance Bank, except insofar as the
statutory and common law of Delaware applicable to corporations organized
under Delaware law may affect the validity or enforceability of the Option
Agreement.
(c) In accordance with Title 8, Chapter 1, Subchapter VI, Section 203
et. seq. of the Delaware Corporation Law Annotated (the "Affiliated
Transactions Statute"), the Board of Directors of ABC has, by resolution
adopted by its Board of Directors, approved this Agreement and the Option
Agreement, and has given prior approval of F&M's becoming an "interested
stockholder" (as defined in Section 203(c)(5) of the Affiliated Transactions
Statute), all in accordance with Section 203(a)(1) of the Affiliated
Transactions Statute.
2.4 Capital Structure
The authorized capital stock of ABC consists of (I) 10,000,000 shares of
common stock, par value $1.00 per share. As of the date hereof, there are
1,727,563 shares of ABC Common Stock issued and outstanding. All outstanding
shares of ABC Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable and have not been issued in violation of the
preemptive rights of any person. As of the date hereof, there are
(a) warrants held by directors of ABC that represent rights to purchase
102,000 shares of ABC Common Stock at a price of $5.00 per share and 35,000
shares of ABC Common Stock at a price of $6.50 per share, and (b) options
held by officers and employees of ABC that represent rights to purchase a
total of 73,480 shares of ABC Common Stock. Copies of the warrant and stock
option agreements have been Previously Disclosed. No shares of ABC Common
Stock have been reserved for any purpose, except for the 210,480 shares of ABC
Common Stock reserved in connection with the options and warrants described
herein and the 343,785 shares of ABC Common Stock reserved in connection with
the Option Agreement.
2.5 Financial Statements; Books and Records; Minute Books
The ABC Financial Statements (as defined below) fairly present or will fairly
present, as the case may be, the consolidated financial position of ABC as of
the dates indicated and the consolidated results of operations, changes in
shareholders' equity and statements of cash flows for the periods then
ended (subject, in the case of unaudited interim statements, to normal year-end
audit adjustments that are not material in amount or effect) in conformity
with generally accepted accounting principles applicable to financial
institutions applied on a consistent basis. The books and records of the ABC
and Allegiance Bank fairly reflect the transactions to which each company
is a party or by which its properties are subject or bound. Such books and
records have been properly kept and maintained and are in compliance in all
material respects with all applicable legal and accounting requirements. The
minute books of ABC and Allegiance Bank contain accurate records of all
corporate actions of their respective shareholders and Boards of Directors
(including committees of its Board of Directors). The ABC Financial Statements
shall mean (I) the consolidated balance sheets of ABC as of December 31,
1995 and 1994 and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years ended December 31, 1995,
1994 and 1993 (including related notes and schedules, if any) and (ii) the
consolidated balance sheets of ABC and related consolidated statements
of income, shareholders' equity and cash flows (including related notes and
schedules, if any) with respect to periods ended subsequent to December 31,
1995.
2.6 Material Adverse Change
Since December 31, 1995 and except as Previously Disclosed, there has not
been any change in the financial condition or results of operations of ABC or
Allegiance Bank which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect (other than as a
result of changes in banking laws or regulations of general applicability or
interpretations thereof).
2.7 Absence of Undisclosed Liabilities
Neither ABC nor Allegiance Bank has any liability (contingent or otherwise)
that is material to ABC on a consolidated basis or that, when combined with
all similar liabilities, would be material to ABC on a consolidated basis,
except as Previously Disclosed or as disclosed in the ABC Financial Statements
and except for liabilities incurred in the ordinary course of business
consistent with past practice since the date of the most recent ABC Financial
Statements.
2.8 Legal Proceedings; Compliance with Laws
Except as Previously Disclosed, there are no actions, suits or proceedings
instituted or pending or, to the Knowledge of ABC, threatened against ABC or
Allegiance Bank or against any property, asset, interest or right of ABC or
Allegiance Bank, or against any officer, director or employee of ABC or
Allegiance Bank that would, if determined adversely to ABC or Allegiance Bank,
have a Material Adverse Effect on ABC on a consolidated basis. To the
Knowledge of ABC, ABC and Allegiance Bank have complied in all material
respects with all laws, ordinances, requirements, regulations or orders
applicable to its business (including environmental laws, ordinances,
requirements, regulations or orders).
2.9 Tax Matters
ABC has filed all federal, state and local tax returns and reports required
to be filed, and all taxes shown by such returns to be due and payable have
been paid or are reflected as a liability in the ABC Financial Statements or
are being contested in good faith and have been Previously Disclosed.
Except to the extent that tax liabilities are specifically reflected in the
ABC Financial Statements or are being contested in good faith, there are no
federal, state or local tax liabilities of ABC other than liabilities that
have arisen since December 31, 1995, all of which have been properly accrued
or otherwise provided for on the books and records of ABC. Except as
Previously Disclosed, no tax return or report of ABC or Allegiance Bank is
under examination by any taxing authority or the subject of any administrative
or judicial proceeding, and no unpaid tax deficiency has been asserted
against either ABC or Allegiance Bank by any taxing authority.
2.10 Property
Except As Previously Disclosed or reserved against in the ABC Financial
Statements, ABC and Allegiance Bank have good and marketable title free and
clear of all material liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, reflected
in the balance sheet included in the ABC Financial Statements as of December
31, 1995 or acquired after such date. To the Knowledge of ABC, all buildings,
and all fixtures, equipment, and other property and assets that are material
to its business, held under leases or subleases, are held under valid
instruments enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws. To the
Knowledge of ABC, the buildings, structures, and appurtenances owned, leased,
or occupied by ABC and Allegiance Bank are in good operating condition and in
a state of good maintenance and repair and comply in all material respects with
applicable zoning and other municipal laws and regulations.
2.11 Employee Benefit Plans
(a) ABC has Previously Disclosed true and complete copies of all material
retirement, profit-sharing, stock option, bonus, vacation or other material
incentive plans or agreements, all material medical, dental or other health
plans, all life insurance plans and all other material employee benefit plans
or fringe benefit plans, including, without limitation, all "employee benefit
plans" as that term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by
ABC or Allegiance Bank for the benefit of employees, retirees or other
beneficiaries eligible to participate (collectively, the "ABC Benefit Plans").
Any of the ABC 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 an "ABC ERISA Plan." No ABC Benefit Plan is or has been a multi-employer
plan within the meaning of Section 3(37) of the ERISA.
(b) Except as Previously Disclosed, all ABC Benefit Plans are in compliance
with the applicable terms of the Internal Revenue Code of 1986, as amended
(the "Code"), and any other applicable laws, rules and regulations, the breach
or violation of which could result in a material liability to ABC on a
consolidated basis.
(c) No ABC ERISA Plan that is a defined benefit pension plan has any
"unfunded current liability," as that term is defined in Section 302(d)(8)(A)
of ERISA, and the present fair market value of the assets of any such plan
exceeds the plan's "benefit liabilities," as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan was terminated in accordance with all applicable legal
requirements.
2.12 Insurance
Each of ABC and Allegiance Bank currently maintains insurance in amounts
reasonably necessary for its operations and, to the Knowledge of ABC, similar
in scope and coverage to that maintained by other entities similarly situated.
Except as Previously Disclosed, neither ABC nor Allegiance Bank has received
any notice of a premium increase or cancellation or a failure to renew
with respect to any insurance policy or bond and, within the last three years,
neither ABC nor Allegiance Bank has been refused any insurance coverage sought
or applied for, and ABC has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability of coverage that do not result from
any extraordinary loss experience on the part of ABC or Allegiance Bank.
2.13 Allowance for Loan Losses
he allowance for loan losses reflected on the balance sheets included in the
ABC Financial Statements, as of their respective dates, is adequate in all
material respects under the requirements of generally accepted accounting
principles and regulatory accounting principles to provide for reasonably
anticipated losses on outstanding loans.
2.14 Environmental Matters
(a) Except as Previously Disclosed and to the Knowledge of ABC, the ABC
Companies are in substantial compliance with all Environmental Laws (as defined
below). Neither ABC nor Allegiance Bank has received any communication
alleging that ABC or Allegiance Bank is not in such compliance and, to the
Knowledge of ABC, there are no present circumstances that would prevent or
interfere with the continuation of such compliance.
(b) ABC and Allegiance Bank have not received notice of pending, and are not
aware of any threatened, legal, administrative, arbitral or other proceedings,
asserting Environmental Claims (as defined below) or other claims, causes of
action or governmental investigations of any nature, seeking to impose, or
that could result in the imposition of, any material liability arising under
any Environmental Laws upon (I) ABC or Allegiance Bank, (ii) any person or
entity whose liability for any Environmental Claim (as defined below) ABC or
Allegiance Bank has or may have retained either contractually or by operation
of law, (iii) any real or personal property owned or leased by ABC or
Allegiance Bank, or any real or personal property which ABC or Allegiance Bank
has been, or is, judged to have managed or to have supervised or to have
participated in the management of, or (iv) any real or personal property in
which Allegiance Bank holds a security interest securing a loan recorded
on the books of Allegiance Bank. Neither ABC nor Allegiance Bank is subject
to any agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
(c) With respect to all real and personal property owned or leased by ABC
or Allegiance Bank, or all real and personal property which ABC or Allegiance
Bank has been, or is, judged to have managed or to have supervised or to have
participated in the management of, ABC will promptly provide F&M with access
to copies of any environmental audits, analyses and surveys that have been
prepared relating to such properties (a list of which will be been Previously
Disclosed). To the Knowledge of ABC, the ABC Companies are in compliance in
all material respects with all recommendations contained in any such
environmental audits, analyses and surveys.
(d) To the Knowledge of ABC, there are no past or present actions,
activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action
or governmental investigation that could result in the imposition of any
liability arising under any Environmental Laws against ABC or Allegiance Bank
or against any person or entity whose liability for any Environmental Claim
ABC or Allegiance Bank has or may have retained or assumed either
contractually or by operation of law.
(e) For purposes of this Agreement, the following terms shall have the
following meanings:
(1) "Environmental Claim" means any written notice from any
governmental authority or third party alleging potential liability
(including, without limitation, potential liability for
investigatory costs, clean-up, governmental response costs,
natural resources damages, property damages, personal injuries or
penalties) arising out of, based upon, or resulting from the
presence, or release into the environment, of any Materials of
Environmental Concern.
(2) "Environmental Laws" means all applicable federal, state and local
laws and regulations, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, that
relate to pollution or protection of human health or the
environment.
(3) "Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any
other materials regulated under Environmental Laws.
2.15 Brokers and Finders
Neither ABC nor any of its officers, directors or employees has employed
any broker, finder or financial advisor or incurred any liability for any
fees or commissions in connection with transactions contemplated by this
Agreement, except for Scott & Stringfellow, Inc.
2.16 Statements True and Correct
When the Registration Statement on Form S-4 (the "Registration Statement")
to be filed by F&M with the Securities and Exchange Commission (the "SEC")
shall become effective, and at all times subsequent thereto up to and including
the ABC shareholders' meeting to vote upon the Merger, such Registration
Statement and all amendments or supplements thereto, with respect to all
information set forth therein furnished by ABC relating to ABC and Allegiance
Bank, (I) shall comply in all material respects with the applicable provisions
of the federal and state securities laws, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements contained therein not
misleading.
ARTICLE 3
Representations and Warranties of F&M
F&M represents and warrants to ABC as follows:
3.1 Organization, Standing and Power
F&M is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia, with full corporate
power and authority to carry on its business as now conducted. F&M is duly
registered as a bank holding company under the Bank Holding Company Act of
1956.
3.2 Organization, Standing and Power of F&M Subsidiaries
Each subsidiary of F&M (the "F&M Subsidiaries" and, collectively
with F&M, the "F&M Companies") is a duly organized corporation, validly
existing and in good standing in their respective states of incorporation.
Each F&M Subsidiary (I) has full corporate power and authority to carry on
its business as now conducted and (ii) is duly qualified to do business in
the states where its ownership or leasing of property or the conduct of
its business requires such qualification and where the failure to so qualify
would have a material adverse effect on F&M on a consolidated basis. The
outstanding shares of capital stock of each of the F&M Subsidiaries are
validly issued and outstanding, fully paid and nonassessable and all such
shares are directly or indirectly owned by F&M free and clear of all liens,
claims and encumbrances or preemptive rights of any person.
3.3 Authorized and Effective Agreement
(a) F&M has all requisite corporate power and authority to
enter into and to perform all of its obligations under this Agreement and the
Plan of Merger. The execution, adoption and delivery of this Agreement and
the Plan of Merger and the consummation of the Merger have been duly and
validly authorized by all necessary corporate action on the part of F&M.
This Agreement and the Plan of Merger represent the legal, valid, and binding
obligations of F&M, enforceable against F&M in accordance with their
respective terms, in each case subject as to enforceability to
(I) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
conservatorship, receivership or other similar laws affecting the enforcement
of rights of creditors of FDIC-insured institutions or the enforcement of
creditors' rights generally, (ii) laws relating to the safety and soundness of
depository institutions and their holding companies, and (iii) general
principles of equity.
(b) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated herein, nor compliance by F&M
with any of the provisions hereof will: (I) conflict with or result in a
breach of any provision of the Articles of Incorporation or Bylaws of F&M
or any F&M Subsidiary; (ii) constitute or result in the breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result
in the creation of any lien, charge or encumbrance upon, any property or asset
of F&M or any F&M Subsidiary pursuant to any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation that would have a
material adverse effect on the business, operations or financial condition of
F&M on a consolidated basis, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to F&M or any F&M Subsidiary.
3.4 Capital Structure
The authorized capital stock of F&M consists of: (I) 5,000,000
shares of preferred stock, no par value per share, of which none are issued
and outstanding; and (ii) 30,000,000 shares of common stock, par value
$2.00 per share, of which 19,095,859 shares were issued and outstanding on
March 31, 1996. All outstanding shares of F&M Common Stock have been duly
issued and are validly outstanding, fully paid and nonassessable and have not
been issued in violation of the preemptive rights of any person. The shares
of F&M Common Stock to be issued in exchange for shares of ABC Common Stock
upon consummation of the Merger will have been duly authorized and, when
issued in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, will not be issued in violation of the preemptive
rights of any person, and will be duly registered under the applicable federal
and state securities laws.
3.5 Financial Statements; Books and Records; Minute Books
The F&M Financial Statements (as defined below) fairly present or
will fairly present, as the case may be, the consolidated financial position
of F&M as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity and statements of cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to normal
year-end audit adjustments that are not material in amount or effect) in
conformity with generally accepted accounting principles applicable to
financial institutions applied on a consistent basis. The books and records
of the F&M Companies fairly reflect the transactions to which each company
is a party or by which its properties are subject or bound. Such books and
records have been properly kept and maintained and are in compliance in all
material respects with all applicable legal and accounting requirements.
The minute books of the F&M Companies contain accurate records of all
corporate actions of their respective shareholders and Boards of Directors
(including committees of its Board of Directors). The F&M Financial
Statements shall mean (I) the consolidated balance sheets of F&M as of
December 31, 1995 and 1994 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years ended
ecember 31, 1995, 1994 and 1993 (including related notes and schedules,
if any) and (ii) the consolidated balance sheets of F&M and related
consolidated statements of income, shareholders' equity and cash flows
(including related notes and schedules, if any) with respect to periods ended
subsequent to December 31, 1995.
3.6 Material Adverse Change
Since December 31, 1995, there has not been any change in the
financial condition or results of operations of F&M or the F&M Subsidiaries
which, individually or in the aggregate, has had, or is reasonably likely
to have, a Material Adverse Effect (other than as a result of changes in
banking laws or regulations of general applicability or interpretations
thereof).
3.7 Absence of Undisclosed Liabilities
Neither F&M nor any F&M Subsidiary has any liability (contingent
or otherwise) that is material to F&M on a consolidated basis or that, when
combined with all similar liabilities, would be material to F&M on a
consolidated basis, except as disclosed in the F&M Financial Statements and
except for liabilities incurred in the ordinary course of business consistent
with past practice since the date of the most recent F&M Financial Statements.
3.8 Legal Proceedings; Compliance with Laws
There are no actions, suits or proceedings instituted or pending
or, to the Knowledge of F&M, threatened against any of the F&M Companies or
against any property, asset, interest or right of any of the F&M Companies or
against any officer, director or employee of any of the F&M Companies that
would, if determined adversely to F&M or any F&M Subsidiary, have a Material
Adverse Effect on F&M on a consolidated basis. To the Knowledge of F&M, the
F&M Companies have complied in all material respects with all laws, ordinances,
requirements, regulations or orders applicable to their respective businesses
(including environmental laws, ordinances, requirements, regulations or orders).
3.9 Tax Matters
F&M has filed all federal, state and local tax returns and reports
required to be filed, and all taxes shown by such returns to be due and
payable have been paid or are reflected as a liability in the F&M Financial
Statements or are being contested in good faith and have been Previously
Disclosed. Except to the extent that tax liabilities are specifically
reflected in the F&M Financial Statements or are being contested in good faith,
there are no federal, state or local tax liabilities of F&M other than
liabilities that have arisen since December 31, 1995, all of which have been
properly accrued or otherwise provided for on the books and records of F&M.
Except as Previously Disclosed, no tax return or report of F&M or any F&M
Subsidiary is under examination by any taxing authority or the subject of any
administrative or judicial proceeding, and no unpaid tax deficiency has been
asserted against any of the F&M Companies by any taxing authority.
3.10 Employee Benefit Plans
(a) All F&M employee benefit plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws, rules
and regulations, the breach or violation of which could result in a material
liability to F&M on a consolidated basis.
(b) No F&M employee benefit plan subject to ERISA that is a
defined benefit pension plan has any "unfunded current liability," as that
term is defined in Section 302(d)(8)(A) of ERISA, and the present fair market
value of the assets of any such plan exceeds the plan's 'benefit liabilities,'
as that term is defined in Section 4001(a)(16) of ERISA, when determined
under actuarial factors that would apply if the plan was terminated in
accordance with all applicable legal requirements.
3.11 Insurance
Each of the F&M Companies currently maintains insurance in amounts
reasonably necessary for its operations and, to the Knowledge of F&M, similar
in scope and coverage to that maintained by other entities similarly situated.
None of the F&M Companies has received any notice of a premium increase or
cancellation or a failure to renew with respect to any insurance policy or bond
and, within the last three years, none of the F&M Companies has been refused
any insurance coverage sought or applied for, and F&M has no reason to believe
that existing insurance coverage cannot be renewed as and when the same shall
expire upon terms and conditions as favorable as those presently in effect,
other than possible increases in premiums or unavailability of coverage that
do not result from any extraordinary loss experience on the part of the F&M
Companies.
3.12 Allowance for Loan Losses
The allowance for loan losses reflected on the balance sheets
included in the F&M Financial Statements, as of their respective dates, is
adequate in all material respects under the requirements of generally accepted
accounting principles and regulatory accounting principles to provide for
reasonably anticipated losses on outstanding loans.
3.13 Environmental Matters
To the Knowledge of F&M, the F&M Companies are in substantial
compliance with all Environmental Laws (as defined in Section 2.14). None
of the F&M Companies has received any communication alleging that F&M or any
F&M Subsidiary is not in such compliance and, to the Knowledge of F&M, there
are no present circumstances that would prevent or interfere with the
continuation of such compliance.
3.14 Statements True and Correct
When the Registration Statement to be filed by F&M with the SEC
shall become effective, and at all times subsequent thereto up to and
including the ABC shareholders' meeting to vote upon the Merger, such
Registration Statement and all amendments or supplements thereto, with
respect to all information set forth therein furnished by F&M relating to
F&M (I) shall comply in all material respects with the applicable provisions
of the federal and state securities laws, and (ii) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.
ARTICLE 4
Covenants and Agreements
4.1 Investigation and Confidentiality
ABC will keep F&M advised of all material developments relevant to its
business and to consummation of the Merger, and F&M will advise ABC of any
material adverse change in its financial condition or operations and all
material developments that may adversely affect consummation of the Merger.
F&M and ABC each may make or cause to be made such further investigation of
the financial and legal condition of the other as such party reasonably deems
necessary or advisable in connection with the Merger, provided, however,
that such investigation shall not interfere unnecessarily with normal
operations. F&M and ABC agree to furnish the other and the other's advisors
with such financial data and other information with respect to its business and
properties as such other party shall from time to time reasonably request.
Each party hereto shall, and shall cause each of its directors, officers,
attorneys and advisors, to maintain the confidentiality of all
information obtained in such investigation which is not otherwise publicly
disclosed by the other party, such undertaking with respect to confidentiality
to survive any termination of this Agreement. In the event of the termination
of this Agreement, each party shall return to the furnishing party or, at the
request of the furnishing party, destroy and certify the destruction of all
confidential information previously furnished in connection with the
transactions contemplated by this Agreement.
4.2 Registration Statement; Shareholder Approval
(a) Subject to the timely effectiveness of the Registration Statement
to be prepared by F&M, ABC shall submit this Agreement and the Plan of Merger
to its shareholders for approval at an annual or special meeting to be held
on or before September 30, 1996 or as soon thereafter as practicable (the "ABC
Meeting"). Subject to the fiduciary duties of the Board of Directors of ABC,
the ABC Board of Directors shall unanimously recommend approval of the Merger
and shall use its best efforts to solicit and obtain votes of the holders of
ABC Common Stock in favor of the Merger. Each member of the ABC Board of
Directors agrees to vote all shares of ABC Common Stock under his control
(and not held in a fiduciary capacity) in favor of the Merger.
(b) F&M and ABC will prepare jointly the proxy statement/prospectus to be
used in connection with the ABC Meeting (the "Proxy Statement/Prospectus").
F&M will prepare and file with the SEC a Registration Statement, of which such
Proxy Statement/Prospectus shall be a part, and will use its best efforts to
have the Registration Statement declared effective as promptly as possible.
When the Registration Statement or any post-effective amendment or supplement
thereto shall become effective and at all times subsequent to such
effectiveness, up to and including the date of the ABC Meeting, such
Registration Statement and all amendments or supplements thereto, with
respect to all information set forth therein furnished or to be furnished by
ABC relating to ABC or Allegiance Bank and by F&M relating to the F&M
Companies, will conform in all material respects with the provisions of the
Securities Act of 1933, as amended, and any other applicable statutory or
regulatory requirements.
4.3 Operation of the Business of ABC
Between the date of this Agreement and the Effective Date, ABC agrees that
each of ABC and Allegiance Bank will operate its business substantially as
presently operated and only in the ordinary course and will use its best
efforts to preserve its properties, business and relationships with customers,
employees and other persons having business dealings with it. Without
limiting the generality of the foregoing, ABC agrees that it will not, without
the prior written consent of F&M:
(a) Make any change in its authorized capital stock, or issue, grant or
sell any additional shares of, securities convertible into or exchangeable
for, or options, warrants or rights to purchase, its capital stock, nor shall
it purchase, redeem or otherwise acquire any of its outstanding shares of
capital stock, except that ABC shall not be restricted from acquiring any
shares of ABC Common Stock that secure an extension of credit made by ABC or
Allegiance Bank that is in default and selling, in the ordinary course, any
such re-acquired shares or from issuing shares of ABC Common Stock pursuant
to the exercise of options and warrants in accordance with the terms thereof
and which are outstanding on the date hereof;
(b) Increase the rate of compensation of any of its directors, officers
or employees, or pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers or employees,
except in a manner and amount consistent with past practice, any of which
changes shall be reported promptly to F&M;
(c) Enter into any bonus, incentive compensation, stock option, deferred
compensation, profit sharing, thrift, retirement, pension, group insurance or
other benefit plan or any employment or consulting agreement;
(d) Incur any obligation or liability (whether absolute or contingent,
excluding suits instituted against it), make any pledge, or encumber any of
its assets, nor dispose of any of its assets in any other manner, except in
the ordinary course of its business and for adequate value, or as otherwise
specifically permitted in this Agreement;
(e) Solicit or encourage inquiries or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, ABC or
Allegiance Bank or any business combination with ABC other than as
contemplated by this Agreement; (except where the Board of Directors of ABC
determines, based on the advice of counsel, that failure to furnish such
information or participate in such negotiations or discussions would constitute
a breach of the fiduciary or legal obligations of ABC's Board of Directors to
its shareholders); or authorize or permit any officer, director, agent or
affiliate of ABC or Allegiance Bank to do any of the above; or fail to notify
F&M immediately if any such inquiries or proposals are received by ABC;
(f) Change its lending, investment, asset/liability management or other
material banking policies in any material respect, except as may be required
by applicable law;
(g) Alter, amend or repeal its Bylaws or Articles of Incorporation; or
(h) Declare or pay any cash or stock dividend or make any other
distribution in respect of the ABC Common Stock; or
(I) Propose or take any other action which would make any representation
or warranty in Article 2 hereof untrue.
4.4 Operation of the Business of F&M
Between the date of this Agreement and the Effective Date, F&M agrees that
each of the F&M Companies will operate its business substantially as presently
operated and only in the ordinary course and will use its best efforts to
preserve its properties, business and relationships with customers, employees
and other persons having business dealings with it. In addition, F&M agrees
that it will not solicit or encourage inquiries or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, F&M or any
business combination with F&M which may, as a condition thereof, result in the
termination of this Agreement and the Plan of Merger (except where the failure
to furnish such information or participate in such negotiations or discussions
would, on the advice of counsel, constitute a breach of the fiduciary or legal
obligations of F&M's Board of Directors to its shareholders); or authorize or
permit any officer, director, agent or affiliate of F&M to do any of the above.
4.5 Regulatory Filings
F&M and ABC shall use their best efforts to prepare and file as soon as
practicable after the date hereof all required applications for regulatory
approval of the Merger. F&M shall use its best efforts to obtain prompt
approval of each required application.
4.6 Public Announcements
Each party will consult with the other before issuing any press release or
otherwise making any public statements with respect to the Merger and shall
not issue any such press release or make any such public statement prior to
such consultations, except as may be required by law.
4.7 Accounting Treatment
F&M and ABC shall each use their best efforts to ensure that the Merger
qualifies for pooling-of-interests accounting treatment.
4.8 Affiliates
ABC shall identify those persons who may deemed to be "affiliates" of ABC
with the meaning of Rule 145 promulgated under the Securities Act. ABC shall
cause each person so identified to deliver to F&M at least 30 days prior to
the Effective Date a written agreement providing that such person will not
dispose of F&M Common Stock received in the Merger, except in a manner that
(I) complies with the Securities Act of 1933 and the rules and regulations
promulgated thereunder, and (ii) is consistent with the qualification of the
transactions contemplated hereby for pooling of interests accounting treatment.
4.9 Benefit Plans
Upon consummation of the Merger, as soon as administratively practicable,
employees of ABC shall be entitled to participate in the F&M pension, health
and welfare benefit and similar plans on the same terms and conditions as
employees of the F&M Companies, giving effect to years of service with ABC as
if such service were with F&M.
4.10 NYSE Listing
F&M shall list on the New York Stock Exchange the shares of F&M Common
Stock to be issued in the Merger.
4.11 Indemnification
F&M agrees that following the Effective Date, it shall indemnify, defend
and hold harmless any person who has rights to indemnification from ABC, to
the same extent and on the same conditions as such person is entitled to
indemnification pursuant to Virginia law and ABC's Articles of Incorporation
or Bylaws, as in effect on the date of this Agreement, to the extent legally
permitted to do so with respect to matters occurring on or prior to the
Effective Date. Without limiting the foregoing, in any case in which corporate
approval may be required to effectuate any indemnification, F&M shall direct,
at the election of the party to be indemnified, that the determination of
permissibility of indemnification shall be made by independent counsel
mutually agreed upon between F&M and the indemnified party. F&M shall use
its reasonable best efforts to maintain ABC's existing directors' and officers'
liability policy, or some other policy, including F&M's existing policy,
providing at least comparable coverage, covering persons who are currently
covered by such insurance of ABC for a period of three years after the
Effective Date on terms no less favorable than those in effect on the date
hereof.
4.12 ABC Stock Options
From and after the Effective Date, all employee and officer stock options
and director stock warrants to purchase shares of ABC Common Stock (each, an
"ABC Stock Option" or an "ABC Stock Warrant"), that are then outstanding and
unexercised, shall be converted into and become options to purchase shares
of F&M Common Stock, and F&M shall assume each such ABC Stock Option and ABC
Stock Warrant in accordance with the terms of the plan and agreement by which
it is evidenced; provided, however, that from and after the Effective Date
(I) each such ABC Stock Option and ABC Stock Warrant assumed by F&M may be
exercised solely to purchase shares of F&M Common Stock, (ii) the number of
shares of F&M Common Stock purchasable upon exercise of such ABC Stock
Option or ABC Stock Warrant shall be equal to the number of shares of ABC
Common Stock that were purchasable under such ABC Stock Option or ABC Stock
Warrant immediately prior to the Effective Date multiplied by the Exchange
Ratio and rounding down to the nearest whole share, with cash being paid for
any fractional share interest that otherwise would be purchasable, and (iii)
the per share exercise price under each such ABC Stock Option or ABC Stock
Warrant shall be adjusted by dividing the per share exercise price of each
such ABC Stock Option or ABC Stock Warrant by the Exchange Ratio, and rounding
to the nearest cent. The terms of each ABC Stock Option or ABC Stock Warrant
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapitalization or
other similar transaction with respect to F&M Common Stock on or subsequent to
the Effective Date.
4.13 Stock Option Agreement
ABC shall grant to F&M an option to acquire such number of shares of ABC
Common Stock that would equate to 19.9% of the issued and outstanding common
stock of ABC as of the date hereof, all in accordance with the Option
Agreement.
4.14 Restrictions on Trading in F&M Common Stock
Neither F&M, ABC, any subsidiary of F&M or ABC, nor any director or
executive officer of F&M or ABC or their respective subsidiaries shall
directly or indirectly purchase or sell on the NYSE, or submit a bid to
purchase or offer to sell on the NYSE, any shares of F&M Common Stock, or any
options, rights, warrants or other securities convertible into or exercisable
for shares of F&M Common Stock during the Exchange Ratio Determination Period
(as such term is defined in Section 2.1(a) of the Plan of Merger).
ARTICLE 5
Conditions to the Merger
5.1 General Conditions
The respective obligations of each of F&M and ABC to effect the Merger
shall be subject to the fulfillment, or waiver in the case of Section 5.1(e)
below, at or prior to the Effective Date of the following conditions:
(a) Corporate Action. All corporate action necessary to authorize the
execution, delivery and performance of this Agreement and consummation of the
transactions contemplated hereby shall have been duly and validly taken,
including without limitation the approval of the shareholders of ABC.
(b) Registration Statement. The Registration Statement shall have been
declared effective and shall not be subject to a stop order or any threatened
stop order of the SEC or any state securities commissioner.
(c) Regulatory Approvals. F&M and ABC shall have received all regulatory
approvals required in connection with the transactions contemplated by this
Agreement, all notice periods and waiting periods required after the granting
of any such approvals shall have passed, and all such approvals shall be in
effect; provided, however, that no such approvals shall have imposed any
condition or requirement which, in the reasonable opinion of the Boards of
Directors of F&M or ABC, would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement as to
render consummation of the Merger inadvisable or unduly burdensome.
(d) Tax Opinion. F&M and ABC shall have received an opinion of F&M's
counsel in form and substance satisfactory to F&M and ABC to the effect that
the Merger will constitute a reorganization within the meaning of Section 368
of the Code and that no gain or loss will be recognized by the shareholders of
ABC to the extent they receive F&M Common Stock solely in exchange for their
ABC Common Stock in the Merger.
(e) Opinions of Counsel. ABC shall have delivered to F&M and F&M shall
have delivered to ABC opinions of counsel, dated as of the Effective Date,
as to such matters as they may each reasonably request with respect to the
transactions contemplated by this Agreement and in a form reasonably
acceptable to each of them.
(f) Legal Proceedings. Neither F&M nor ABC shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the Merger.
5.2 Conditions to Obligations of F&M
The obligations of F&M to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Date of the following
additional conditions:
(a) Representations and Warranties. The representations and warranties
of ABC set forth in Article 2 shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Date as
though made on the Effective Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise expressly contemplated by this Agreement or consented to
in writing by F&M.
(b) Performance of Obligations. ABC shall have performed in all material
respects all obligations required to be performed by it under this Agreement
prior to the Effective Date.
(c) Officers' Certificate. ABC shall have delivered to F&M a
certificate, dated the Effective Date and signed by its Chairman or President,
to the effect that the conditions set forth in Sections 5.1(a), 5.2(a) and
5.2(b) have been satisfied.
(d) Affiliate Letters. F&M shall have received the written agreements
from the affiliates as specified in Section 4.8 hereof.
(e) Accountants' Letters. F&M shall have received a letter, dated as
of the Effective Date, from Yount, Hyde & Barbour, P.C., satisfactory in
form and substance to F&M, that the Merger will qualify for pooling-of-
interests accounting treatment.
5.3 Conditions to Obligations of ABC
The obligations of ABC to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Date of the following
additional conditions:
(a) Representations and Warranties. The representations and warranties
of F&M set forth in Article 3 shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Date as
though made on the Effective Date (or on the date when made in the case of
any representation and warranty which specifically relates to an earlier date),
except as otherwise expressly contemplated by this Agreement or consented
to in writing by ABC.
(b) Performance of Obligations. F&M shall have performed in all material
respects all obligations required to be performed by it under this Agreement
prior to the Effective Date.
(c) Officers' Certificate. F&M shall have delivered to ABC a certificate,
dated the Effective Date and signed by its Chairman or President, to the
effect that the conditions set forth in Sections 5.1(a), 5.1(b), 5.1(c),
5.3(a) and 5.3(b) have been satisfied.
(d) Investment Banking Letter. ABC shall have received an updated
fairness opinion from Scott & Stringfellow, Inc., financial advisor to ABC,
addressed to ABC and dated on or about the date the Proxy Statement/Prospectus
is mailed to shareholders of ABC, to the effect that the terms of the Merger
are fair to the shareholders of ABC from a financial point of view.
ARTICLE 6
Termination
6.1 Termination
This Agreement and the Plan of Merger may be terminated at any time before
the Effective Date, whether before or after approval thereof by the
shareholders of ABC, as provided below:
(a) Mutual Consent. By mutual consent of the parties, evidenced by their
written agreement.
(b) Closing Delay. At the election of either party, evidenced by written
notice, if the Closing shall not have occurred on or before January 15, 1997,
or such later date as shall have been agreed to in writing by the parties;
provided, however, that the right to terminate under this Section 6.1(b) shall
not be available to either party whose failure to perform an obligation
hereunder has been the cause of, or has resulted in, the failure of the
Closing to occur on or before such date.
(c) Conditions to F&M Performance Not Met. By F&M upon delivery of
written notice of termination to ABC if any event occurs which renders
impossible the satisfaction in any material respect of one or more of the
conditions to the obligations of F&M to effect the Merger set forth in
Sections 5.1 and 5.2, and such noncompliance is not waived by F&M.
(d) Conditions to ABC Performance Not Met. By ABC upon delivery of
written notice of termination to F&M if any event occurs which renders
impossible the satisfaction in any material respect of one or more of the
conditions to the obligations of ABC to effect the Merger set forth in
Sections 5.1 and 5.3, and such noncompliance is not waived by ABC.
6.2 Effect of Termination
In the event this Agreement is terminated pursuant to Section 6.1 hereof,
both this Agreement and the Plan of Merger shall become void and have no
effect, except that (I) the provisions hereof relating to confidentiality,
press releases and expenses set forth in Sections 4.1, 4.7 and 6.4,
respectively, shall survive any such termination and (ii) a termination
pursuant to 6.1(c) or 6.1(d) hereof shall not relieve the breaching party from
liability for an uncured intentional breach of any provision of this Agreement
giving rise to such termination.
6.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement and the
Plan of Merger shall not survive the Effective Date and shall be terminated
and extinguished at the Effective Date. From and after the Effective Date,
the parties hereto shall have no liability to the other on account of any
breach of any of those representations, warranties and covenants; provided,
however, that the foregoing clause shall not (I) apply to agreements of the
parties which by their terms are intended to be performed after the Effective
Date, and (ii) shall not relieve any person for liability for fraud, deception
or intentional misrepresentation.
6.4 Expenses
(a) Except as provided below, each of the parties shall bear and pay all
costs and expenses incurred by it in connection with the transactions
contemplated herein, including fees and expenses of its own financial
consultants, accountants and counsel, except that F&M agrees to bear and pay
the cost of printing and mailing the Proxy Statement/Prospectus.
(b) Notwithstanding the provisions of Section 6.4(a) hereof, if for any
reason the Merger is not approved by ABC's shareholders at the ABC Meeting or
any adjournment thereof, ABC shall reimburse F&M for one-half of all
reasonable out-of-pocket expenses incurred by F&M in connection with the
transactions contemplated by this Agreement, provided that the maximum amount
that ABC shall be responsible to F&M for under this Section 6.4(b) shall be
limited to $50,000.
(c) If this Agreement is terminated by F&M or ABC because of a willful
and material breach by the other of any representation, warranty, covenant,
undertaking or restriction set forth herein, and provided that the terminating
party shall not have been in breach (in any material respect) of any
representation and warranty, covenant, undertaking or restriction contained
herein, then the breaching party shall reimburse the other party of all
reasonable out-of-pocket expenses incurred by it in connection with the
transactions contemplated by this Agreement.
(d) Final settlement with respect to the reimbursement of such fees and
expenses by the parties shall be made within thirty days after the termination
of this Agreement.
ARTICLE 7
General Provisions
7.1 Entire Agreement
This Agreement contains the entire agreement among F&M and ABC with respect
to the Merger and the related transactions and supersedes all prior
arrangements or understandings with respect thereto.
7.2 Binding Effect; No Third Party Rights
This Agreement shall bind F&M and ABC and their respective successors and
assigns. Other than Section 4.11, nothing in this Agreement is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights or remedies under or by reason of this Agreement.
7.3 Waiver and Amendment
Any term or provision of this Agreement may be waived in writing at any
time by the party that is, or whose shareholders are, entitled to the benefits
thereof, and this Agreement may be amended or supplemented by a written
instrument duly executed by the parties hereto at any time, whether before or
after the ABC Meeting, except statutory requirements and requisite approvals
of shareholders and regulatory authorities.
7.4 Governing Law
This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Virginia without regard to the conflict of
law principles thereof.
7.5 Notices
All notices or other communications that are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent
by registered or certified mail, postage prepaid, addressed as follows:
If to F&M:
Alfred B. Whitt
F&M National Corporation
38 Rouss Avenue
P. O. Box 2800
Winchester, Virginia 22604
Copy to:
George P. Whitley, Esq.
LeClair Ryan
707 East Main Street; 11th Floor
Richmond, Virginia 23219
If to ABC:
Ronald D. Paul
Allegiance Banc Corporation
4719 Hampden Lane
Bethesda, Maryland 20814
Copy to:
David H. Baris, Esq.
Kennedy & Baris, L.L.P.
4719 Hampden Lane, Suite 300
Bethesda, Maryland 20814
7.6 Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but such counterparts together shall constitute
one and the same agreement.
7.7 Severability
In the event that any provision of this Agreement shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provisions hereof. Any
provision of this Agreement held invalid or unenforceable only in part or
degree shall remain in full force and effect to the extent not held invalid
or unenforceable. Further, the parties agree that a court of competent
jurisdiction may reform any provision of this Agreement held invalid or
unenforceable so as to reflect the intended agreement of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seals to be affixed hereto, all as of the date first written above.
F&M NATIONAL CORPORATION
Winchester, Virginia
By: __________________________
Jack R. Huyett
President and Chief
Administrative Officer
ATTEST:
By: __________________________
Alfred B. Whitt
Secretary
ALLEGIANCE BANC CORPORATION
Bethesda, Maryland
By: __________________________
Leonard L. Abel
Chairman of the Board
ATTEST:
By: __________________________
Mary C. McQuillen
Corporate Secretary
ALLEGIANCE BANC CORPORATION
BOARD OF DIRECTORS
Each of the undersigned members of the Board of Directors of Allegiance Banc
Corporation agrees to be bound by his personal obligations as provided in
Section 4.2(a) and 4.3(e) of the Agreement and Plan of Reorganization.
Leonard L. Abel
Dudley C. Dworken
William A. Koier
Ronald D. Paul
Thomas L. Phillips
EXHIBIT A
To the Agreement and Plan of Reorganization
PLAN OF MERGER BETWEEN ALLEGIANCE BANC CORPORATION
AND F&M NATIONAL CORPORATION
Pursuant to this Plan of Merger ("Plan of Merger"), Allegiance Banc
Corporation, a Delaware corporation ("ABC"), shall merge with and into F&M
National Corporation, a Virginia corporation ("F&M").
ARTICLE I
Terms of the Merger
1.1 The Merger
Subject to the terms and conditions of the Agreement and Plan of
Reorganization, dated as of April 22, 1996 (the "Agreement"), between F&M
and ABC, at the Effective Date ABC shall be merged with and into F&M in
accordance with the provisions of Virginia and Delaware law and with the
effect specified in Section 13.1-721 of the Virginia Stock Corporation Act
(the "Merger"). F&M shall be the surviving corporation of the Merger. The
Merger shall become effective on such date as may be determined in accordance
with Section 1.4 of the Agreement (the "Effective Date").
1.2 Articles of Incorporation and Bylaws
The Articles of Incorporation and Bylaws of F&M in effect immediately
prior to the consummation of the Merger shall remain in effect following the
Effective Date until otherwise amended or repealed.
ARTICLE II
Manner of Converting Shares
2.1 Conversion of Shares
Upon and by reason of the Merger becoming effective and except as set
forth in Section 2.3 below, no cash shall be allocated to the shareholders of
ABC and stock shall be issued and allocated as follows:
(a) Each share of common stock, par value $1.00 per share, of ABC
("ABC Common Stock") issued and outstanding immediately prior to the Effective
Date shall, by operation of law, be automatically exchanged for the number of
shares of F&M Common Stock whose aggregate market value equals $15.00. The
market value of F&M Common Stock will be its average closing price as reported
on the New York Stock Exchange (the "NYSE") for each of the ten full trading
days ending on the second day prior to the Effective Date (the "Average
Closing Price") (the ten full trading day period during which the Exchange
Ratio will be determined is referred to as the "Exchange Ratio Determination
Period"). The ratio of shares of F&M Common Stock that will be exchanged for
each outstanding share of ABC Common Stock shall be referred to herein as
the "Exchange Ratio," which shall be rounded to the nearest third decimal
point. Notwithstanding the foregoing, in the event: (A) F&M shall have entered
into an agreement with any person to (I) acquire, merge or consolidate, or
enter into any similar transaction, with F&M, (ii) purchase, lease or
otherwise acquire all or substantially all of the assets of F&M or
(iii) purchase or otherwise acquire securities representing 10% or more of
the voting power of F&M; or (B) any person shall have made a bona fide
proposal to F&M by public announcement or written communication that is or
becomes the subject of public disclosure to acquire F&M by merger, share
exchange, consolidation, purchase of all or substantially all of its assets
or any similar transaction, the Average Closing Price will be based on the
average closing price of F&M Common Stock for each of the ten trading days
immediately preceding the public announcement of a transaction or event
described in either (A) or (B).
(b) Each holder of a certificate representing shares of ABC Common
Stock upon the surrender of his ABC stock certificates to F&M, duly endorsed
for transfer in accordance with Section 2.2 below, will be entitled to receive
in exchange therefor a certificate or certificates representing the number of
shares of F&M Common Stock that his shares shall be converted into pursuant to
the Exchange Ratio. Each such holder of ABC Common Stock shall have the right
to receive the consideration described in this Section 2.1 and Section 2.3
upon the surrender of such certificate in accordance with Section 2.2. In the
event F&M changes the number of shares of F&M Common Stock issued and
outstanding prior to the Effective Date as a result of any stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding shares of F&M Common Stock and the record date therefor shall be
on or after the first full trading day of the Exchange Ratio Determination
Period but before the Effective Date, the Exchange Ratio shall be
proportionately and equitably adjusted.
(c) Shares of F&M Common Stock issued and outstanding
immediately prior to the Effective Date shall continue unchanged as an
outstanding share of Common Stock of F&M, as the successor corporation.
(d) From and after the Effective Date, all employee and officer stock
options and director stock warrants to purchase shares of ABC Common Stock
(each, an "ABC Stock Option" or an "ABC Stock Warrant"), that are then
outstanding and unexercised, shall be converted into and become options to
purchase shares of F&M Common Stock, and F&M shall assume each such ABC
Stock Option or ABC Stock Warrant in accordance with the terms of the plan
and agreement by which it is evidenced; provided, however, that from and
after the Effective Date (I) each such ABC Stock Option or ABC Stock Warrant
assumed by F&M may be exercised solely to purchase shares of F&M
Common Stock, (ii) the number of shares of F&M Common Stock purchasable upon
exercise of such ABC Stock Option or ABC Stock Warrant shall be equal to the
number of shares of ABC Common Stock that were purchasable under such ABC
Stock Option or ABC Stock Warrant immediately prior to the Effective Date
multiplied by the Exchange Ratio and rounding down to the nearest whole share,
with cash being paid for any fractional share interest that otherwise would
be purchasable, and (iii) the per share exercise price under each such ABC
Stock Option or ABC Stock Warrant shall be adjusted by dividing the per share
exercise price of each such ABC Stock Option or ABC Stock Warrant by the
Exchange Ratio, and rounding to the nearest cent. The terms of each ABC Stock
Option or ABC Stock Warrant shall, in accordance with its terms, be subject
to further adjustment as appropriate to reflect any stock split, stock
dividend, recapitalization or other similar transaction with respect to F&M
Common Stock on or subsequent to the Effective Date. It is intended that the
foregoing assumption shall be effected in a manner that is consistent with the
requirements of Section 424 of the Internal Revenue Code of 1986, as amended
(the "Code") as to any ABC Stock Option or ABC Stock Warrant that is an
"incentive stock option" (as defined in Section 422 of the Code).
2.2 Manner of Exchange of ABC Stock Certificates
As promptly as practicable after the Effective Date, F&M shall cause
American Stock Transfer & Trust Company, acting as the exchange agent
("Exchange Agent"), to send to each former shareholder of record of ABC
immediately prior to the Effective Date transmittal materials for
use in exchanging such shareholder's certificates of ABC Common Stock for the
consideration set forth in Section 2.1 above and Section 2.3 below. Any
checks for cash in lieu of fractional shares which an ABC shareholder shall
be entitled to receive in exchange for such shareholder's shares of ABC
Common Stock, and any dividends paid on any shares of F&M Common Stock,
that such shareholder shall be entitled to receive prior to the delivery to
the Exchange Agent of such shareholder's certificates representing all of such
shareholder's shares of ABC Common Stock will be delivered to such
shareholder only upon delivery to the Exchange Agent of the certificates
representing all of such shares (or indemnity satisfactory to F&M and the
Exchange Agent, in their judgment, if any of such certificates are lost,
stolen or destroyed). No interest will be paid on any such cash in lieu of
fractional shares checks or dividends to which the holder of such shares shall
be entitled to receive upon such delivery.
2.3 No Fractional Shares
No certificates or scrip for fractional shares of F&M Common Stock
will be issued. In lieu thereof, F&M will pay the value of such fractional
shares in cash on the basis of the average closing price of F&M Common Stock
as determined pursuant to Section 2.1(a) hereof.
2.4 Dividends
No dividend or other distribution payable to the holders of record of F&M
Common Stock at or as of any time after the Effective Date shall be paid to
the holder of any certificate representing shares of ABC Common Stock issued
and outstanding at the Effective Date until such holder physically surrenders
such certificate for exchange as provided in Section 2.2 of this Plan of
Merger, promptly after which time all such dividends or distributions shall be
paid (without interest).
ARTICLE III
Termination
This Plan of Merger may be terminated at any time prior to the Effective
Date by the parties hereto as provided in Article 6 of the Agreement between
the parties.
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of April 22, 1996 (the "Option
Agreement"), by and between ALLEGIANCE BANC CORPORATION, a Delaware corporation
("ABC"), and F&M NATIONAL CORPORATION, a Virginia corporation ("F&M").
WITNESSETH
WHEREAS, the Boards of Directors of the parties hereto approved an
Agreement and Plan of Reorganization (the "Reorganization Agreement") and have
adopted a related Plan of Merger, dated as of the date hereof (together
referred to herein as the "Merger Agreements"), providing for the merger of
ABC with and into F&M (the "Merger"); and
WHEREAS, as a condition to and as consideration for F&M's entry into the
Merger Agreements and to induce such entry, ABC has agreed to grant to F&M
the option set forth herein to acquire authorized but unissued shares of ABC
Common Stock;
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Definitions
Capitalized terms used but not defined herein and defined in the Merger
Agreements shall have the same meanings as in the Merger Agreements.
2. Grant of Option
Subject to the terms and conditions set forth herein, ABC hereby grants to
F&M an option (the "Option") to acquire up to 343,785 shares of ABC Common
Stock at a price of $11.50 per share (the "Exercise Price") in exchange for
the consideration provided in Section 4 hereof; provided, however, that in
the event ABC issues or agrees to issue any shares of ABC Common Stock (other
than as permitted under the Merger Agreements) at a price less than $11.50
per share (as adjusted pursuant to Section 6 hereof), the Exercise Price
shall be equal to such lesser price. Notwithstanding anything else in this
Option Agreement to the contrary, the number of shares of ABC Common Stock
subject to the Option shall be reduced if and to the extent necessary so
that the number of shares for which this Option is exercisable shall not
exceed 19.9% of the issued and outstanding shares of ABC Common Stock, before
giving effect to the exercise of the Option. The number of shares of ABC
Common Stock that may be received upon the exercise of the Option is subject
to adjustment as set forth herein.
3. Exercise of Option
(a) Subject to compliance with applicable law and regulation, F&M may
exercise the Option, in whole or part, at any time or from time to time if a
Purchase Event (as defined below) shall have occurred and be continuing.
(b) ABC shall notify F&M promptly in writing of the occurrence of any
transaction, offer or event giving rise to a Purchase Event. If more than
one of the transactions, offers or events giving rise to a Purchase Event is
undertaken or effected by the same person or occurs at the same time,
then all such transactions, offers and events shall give rise only to one
Purchase Event, which Purchase Event shall be deemed continuing for all
purposes hereof until all such transactions are terminated or abandoned by
such person and all such events have ceased or ended.
(c) In the event that F&M wishes to exercise the Option, it shall send ABC
a written notice (the date of which being herein referred to as the "Notice
Date") specifying (I) the total number of shares it will acquire pursuant to
such exercise, and (ii) a place and date not earlier than three business days
nor later than 60 business days from the Notice Date for the closing of such
transaction (the "Closing Date"); provided that if prior notification to or
approval of any federal or state regulatory agency is required in connection
with such acquisition, F&M shall promptly file the required notice or
application for approval and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired
or been terminated or such approval has been obtained and any requisite
waiting period shall have passed.
(d) The Option shall expire and terminate, to the extent not previously
exercised, upon the earlier of: (I) the Effective Date of the Merger;
(ii) upon termination of the Merger Agreements in accordance with the
provisions thereof, other than a termination based upon, following or in
connection with either (A) a material breach by ABC of a Specified Covenant
(as defined below) or (B) the failure of ABC to obtain shareholder approval
of the Merger Agreements by the vote required under applicable law, in the
case that either (A) or (B) follow the occurrence of a Purchase Event; or
(iii) 12 months after termination of the Merger Agreements based upon a
material breach by ABC of a Specified Covenant or the failure of ABC to obtain
shareholder approval of the Merger Agreements by the vote required under
applicable law, in either case following the occurrence of a Purchase Event.
(e) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(1) ABC or Allegiance Bank, N.A. (the "Bank"), without having received
F&M's prior written consent, shall have entered into an agreement with any
person to (I) acquire, merge or consolidate, or enter into any similar
transaction, with ABC or the Bank, (ii) purchase, lease or otherwise acquire
all or substantially all of the assets of ABC or the Bank or (iii) purchase
or otherwise acquire, directly from ABC or the Bank, securities representing
10% or more of the voting power of ABC or the Bank;
(2) any person shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 20% or more of the outstanding shares of ABC
Common Stock after the date hereof (the term "beneficial ownership" for
purposes of this Option Agreement having the meaning assigned thereto in
Section 13(d) of the Exchange Act and the regulations promulgated thereunder);
or
(3) any person shall have made a bona fide proposal to ABC by public
announcement or written communication that is or becomes the subject of public
disclosure to acquire ABC or the Bank by merger, share exchange, consolidation,
purchase of all or substantially all of its assets or any other similar
transaction, and following such bona fide proposal the shareholders of ABC
vote not to approve the Merger Agreements; or
(f) As used herein, "Specified Covenant" means any covenant or agreement
contained in the Merger Agreements.
4. Payment and Delivery of Certificates
(a) At the Closing Date, F&M shall tender certified funds in an amount
equal to the aggregate Exercise Price for the number of shares with respect
to which F&M is exercising the Option.
(b) At such closing, ABC shall deliver to F&M a certificate or certificates
representing the number of shares of ABC Common Stock exchanged for the
Exercise Price and F&M shall deliver to ABC a letter agreeing that F&M will
not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) Certificates for ABC Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend which shall read substantially as follows:
"The transfer of the shares represented by this Certificate is subject to
certain provisions of an agreement between the registered holder hereof
and Allegiance Banc Corporation and to resale restrictions arising under
the Securities Act of 1933, as amended, a copy of which agreement is on
file at the principal office of Allegiance Banc Corporation. A copy of
such agreement will be provided to the holder thereof without charge upon
receipt by Allegiance Banc Corporation of a written request."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if F&M shall have delivered
to ABC a copy of a letter from the staff of the Securities and Exchange
Commission (the "Commission"), or an opinion of counsel, in form and substance
satisfactory to ABC, to the effect that such legend is not required for
purposes of the Securities Act of 1933 (the "Securities Act").
5. Representations
ABC hereby represents, warrants and covenants to F&M as follows:
(a) ABC shall at all times maintain sufficient authorized but unissued
shares of ABC Common Stock so that the Option may be exercised without
authorization of additional shares of ABC Common Stock.
(b) The shares to be issued upon due exercise, in whole or in part, of the
Option, when paid for as provided herein, will be duly authorized, validly
issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization
In the event of any change in ABC Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, exchanges of shares or
the like, the type and number of shares subject to the Option, and the
purchase price per share, as the case may be, shall be adjusted appropriately.
In the event that any additional shares of ABC Common Stock are issued or
otherwise become outstanding after the date of this Option Agreement (other
than pursuant to this Option Agreement or pursuant to the exercise of warrants
or options to acquire shares of ABC Common Stock outstanding as of the date
of the Reorganization Agreement or that may be issued after the date of the
Reorganization Agreement without constituting a breach thereof), the number
of shares of ABC Common Stock subject to the Option shall be adjusted so that,
after such issuance, it equals 19.9% of the number of shares of ABC Common
Stock then issued and outstanding without giving effect to any shares subject
or issued pursuant to the Option or any shares issued pursuant to the exercise
of warrants or options to acquire shares of ABC Common Stock outstanding as of
the date of the Reorganization Agreement or that may be issued after the date
of the Reorganization Agreement without constituting a breach thereof.
Nothing contained in this Section 6 shall be deemed to authorize ABC to breach
any provision of the Merger Agreements.
7. Registration Rights
ABC shall, if requested by F&M, as expeditiously as possible file a
registration statement on a form of general use under the Securities Act if
necessary in order to permit the sale or other disposition of the shares of
ABC Common Stock that are acquired upon exercise of the Option in accordance
with the intended method of sale or other disposition requested by F&M.
F&M shall provide all information reasonably requested by ABC for inclusion
in any registration statement to be filed hereunder. ABC will use its best
efforts to cause such registration statement first to become effective and
then to remain effective for such period not in excess of 270 days from the
date on which such registration statement first becomes effective as may be
reasonably necessary to effect such sales or other dispositions. The first
registration effected under this Section 7 shall be at ABC's expense except
for underwriting commissions and the fees and disbursements of F&M's counsel
attributable to the registration of such ABC Common Stock. A second
registration statement may be requested hereunder at F&M's expense. In no
event shall ABC be required to effect more than two registrations hereunder.
The filing of any registration statement hereunder may be delayed for
such period of time as may reasonably be required to facilitate any public
distribution by ABC of ABC Common Stock. If requested by F&M, in connection
with any such registration, ABC will become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements.
Upon receiving any request from F&M or an assignee of F&M under this
Section 7, ABC agrees to send a copy thereof to F&M and to any assignee of
F&M known to ABC, in each case by promptly mailing the same, postage prepaid,
to the address of record of the persons entitled to receive such copies.
8. Severability
If any term, provision, covenant or restriction contained in this Option
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in
this Option Agreement shall remain in full force and effect, and shall in no
way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option Agreement will not permit the
holder to acquire the full number of shares of ABC Common Stock provided in
Section 2 hereof (as adjusted pursuant to Section 6 hereof), it is the express
intention of ABC to allow the holder to acquire, or to require ABC to
repurchase, such number of shares as may be necessary to comply with such
court or regulatory agency's determination of the permissible number of
shares, without any amendment or modification hereof.
9. Miscellaneous
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein, this
Option Agreement contains 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. The
terms and conditions of this Option Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns. Nothing in this Option Agreement, expressed or implied, is intended
to confer upon any party, other than the parties hereto and their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Option Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto may assign any of its rights
or obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party,
except that F&M may assign in whole or in part the Option and other benefits
and obligations hereunder without limitation to any of its wholly-owned
subsidiaries, and F&M may assign in whole or in part the Option and other
benefits and obligations hereunder without limitation in the event a Purchase
Event shall have occurred and F&M shall have delivered to ABC a copy of a
letter from the staff of the Commission, or an opinion of counsel, in
form and substance reasonably satisfactory to ABC, to the effect that such
assignment will not violate the requirements of the Securities Act; provided
that prior to any such assignment, F&M shall give written notice of the
proposed assignment to ABC, and within 24 hours of such notice of a bona
fide proposed assignment, ABC may purchase the Option at a price and on other
terms at least as favorable to F&M as that set forth in the notice of
assignment.
(d) Notices. All notices or other communications that are required or
permitted hereunder shall be in writing and sufficient if delivered in the
manner and to the address provided for in or pursuant to Section 7.5 of the
Reorganization Agreement.
(e) Counterparts. This Option Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Option Agreement
by either party hereto and that this Option Agreement may be enforced by
either party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia,
without regard to the conflict of law principles thereof (except to the extent
that Delaware law governs the validity of the Option).
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
ALLEGIANCE BANC CORPORATION
By: ______________________________
Leonard L. Abel
Chairman of the Board
F&M NATIONAL CORPORATION
By: ______________________________
Alfred B. Whitt
Senior Vice President
EXHIBIT 99 Contact: Leonard L. Abel, Chairman of the Board
Allegiance Banc Corporation (301)656-5300
Alfred B. Whitt, Senior Vice President/Secretary
F&M National Corporation (540) 665-4282
For Release: April 22, 1996
Allegiance Banc Corporation
4719 Hampden Lane, Bethesda, MD 20814
NEWS RELEASE
FOR IMMEDIATE RELEASE
ALLEGIANCE BANC CORPORATION
OF BETHESDA, MARYLAND
ANNOUNCES PLAN OF AFFILIATION WITH F&M CORPORATION
WINCHESTER, VIRGINIA, April 22, 1996 (NYSE: FMN) W.M. Feltner, Chairman of
the Board of F&M National Corporation, Winchester, Virginia, together with
Leonard L. Abel and Ronald D. Paul, Chairman of the Board and President,
respectively of Allegiance Banc Corporation, jointly announced today that
their respective Boards of Directors have approved a definitive agreement for
the affiliation of Allegiance Banc Corporation with F&M National Corporation.
Allegiance Banc Corporation is the parent company for Allegiance Bank, N.A.,
based in Bethesda, Maryland. The agreement requires the approval of various
regulatory agencies and the shareholders of Allegiance Banc Corporation and
satisfaction of other standard conditions.
Under the terms of the Agreement, F&M would exchange the number of its shares
of common stock whose aggregate market value determined as of the date of
closing equals $15.00, giving the transaction an indicated value of
approximately $29.0 million. The transaction is intended to qualify as a
tax-free exchange and be accounted for as a pooling of interests. Allegiance
Banc Corporation also granted F&M an option exercisable under certain
circumstances, to acquire 343,785 shares of Allegiance common stock (subject
to adjustment) at a price of $11.50 per share.
In announcing the transaction, Mr. Feltner commented, "We are extremely
pleased to have such a quality institution join the F&M family of community
banks. We are very excited about the prospect of entering the Maryland market.
Allegiance provides a strong foundation on which to build and expand our
Maryland franchise. The affiliation is a positive one for both our
organizations, as well as our respective shareholders and customers."
Mr. Abel added, "The transaction will enhance our already strong bank. We
will have a larger partner to help us expand the products and services
available to our customers. F&M has a long history of permitting its banking
affiliates to continue to operate under their own name and in the best
interests of the communities they serve, while offering to these communities
the advantages that are derived from a much larger banking organization. Our
management team is excited about the challenge of building the F&M franchise
in Maryland."
F&M, with assets in excess of $2 billion, is a multi-bank holding company
headquartered in Winchester, Virginia. It has nine banking affiliates in
Virginia, the largest of which is F&M Bank-Winchester, and three banking
affiliates in West Virginia. The transaction announced today will be F&M's
first entry into Maryland. F&M's common stock is listed on the New York Stock
Exchange under the symbol "FMN."
Allegiance Banc Corporation reported total assets of approximately
$138.0 million as of March 31, 1996, and through Allegiance Bank, N.A.,
operates 7 banking offices in the Montgomery County and Prince George's County
areas. Allegiance's common stock is traded on the Nasdaq National Market
under the symbol "ALLG."
Scott & Stringfellow, Inc. is serving as financial advisor to Allegiance Banc
Corporation for this transaction.
