SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): June 23, 1997
SHO-ME FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 0-24084 43-1676367
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) No.)
109 North Hickory Street, Mount Vernon, Missouri 65712-1004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (417) 466-3171
N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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On June 23, 1997, Sho-Me Financial Corp., a Delaware Corporation ("Sho-Me
Financial") and Union Planters Corporation, a Tennessee Corporation ("UPC")
issued a joint press release announcing the execution of an Agreement and Plan
of Reorganization, dated as of June 23, 1997, by and between, Sho-Me Financial
and UPC (the "Merger Agreement"). The Merger Agreement provides for the merger
of Sho-Me Financial with and into a subsidiary of UPC.
Under the Merger Agreement, Sho-Me Financial stockholders will receive
.7694 shares of UPC common stock in exchange for each share of Sho-Me Financial
common stock held.
Consummation of the Merger is subject to various conditions, including: (i)
approval of the Merger by the stockholders of Sho-Me Financial;(ii) approval of
the Merger by the appropriate regulatory authorities; and (iii) satisfaction of
certain other conditions.
Immediately after the execution of the Merger Agreement, UPC was issued an
option agreement (the "Stock Option Agreement") providing an option to purchase
19.9% of the voting equity position of Sho-Me Financial under certain
conditions.
The Merger Agreement, the Stock Option Agreement and the press release
issued on June 23, 1997 announcing the Merger are filed as exhibits to this
Report. The foregoing discussion does not purport to be complete and is
qualified in its entirety by reference to such exhibits.
Item 7. Financial Statements and Exhibits
---------------------------------
(i) Exhibits
The exhibits referred to in Item 5 of this Report and listed on the
accompanying Exhibit Index are filed as part of this Report and are incorporated
herein by reference.
Exhibit
Number Description
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2 Agreement and Plan of Reorganization, dated as of June
23, 1997, by and between Sho-Me Financial Corp. and Union
Planters Corporation
10 Stock Option Agreement, dated as of June 23, 1997, by and
between Sho-Me Financial Corp. and Union Planters
Corporation
99 Press release
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHO-ME FINANCIAL CORP.
Date: July 21, 1997 By: /s/ RAYMOND G. MERRYMAN
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Raymond G. Merryman
President
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EXHIBIT 2
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FINAL
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
SHO-ME FINANCIAL CORP.
AND
UNION PLANTERS CORPORATION
Dated as of June 23, 1997
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TABLE OF CONTENTS
Page
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Parties ................................................................... 1
Preamble .................................................................. 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER .............................. 1
1.1 Merger ........................................................ 1
1.2 Time and Place of Closing ..................................... 2
1.3 Effective Time ................................................ 2
1.4 Execution of Stock Option Agreement ........................... 2
1.5 Restructure of Transaction .................................... 2
ARTICLE 2 - TERMS OF MERGER ............................................... 3
2.1 Charter ....................................................... 3
2.2 By-laws ....................................................... 3
ARTICLE 3 - MANNER OF CONVERTING SHARES ................................... 3
3.1 Conversion of Shares .......................................... 3
3.2 Anti-Dilution Provisions ...................................... 3
3.3 Shares Held by SFC or UPC ..................................... 4
3.4 Fractional Shares ............................................. 4
3.5 Conversion of Stock Options ................................... 4
ARTICLE 4 - EXCHANGE OF SHARES ............................................ 5
4.1 Exchange Procedures ........................................... 5
4.2 Rights of Former SFC Shareholders ............................. 6
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF SFC ......................... 6
5.1 Organization, Standing, and Power ............................. 6
5.2 Authority; No Breach By Agreement ............................. 6
5.3 Capital Stock ................................................. 7
5.4 SFC Subsidiaries .............................................. 8
5.5 SEC Filings; Financial Statements ............................. 9
5.6 Absence of Undisclosed Liabilities ............................ 9
5.7 Absence of Certain Changes or Events .......................... 9
5.8 Tax Matters ................................................... 10
5.9 Allowance for Possible Loan Losses ............................ 11
5.10 Assets ........................................................ 11
5.11 Intellectual Property ......................................... 11
5.12 Environmental Matters ......................................... 12
5.13 Compliance With Laws .......................................... 13
5.14 Labor Relations ............................................... 13
5.15 Employee Benefit Plans ........................................ 13
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Page
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5.16 Material Contracts ............................................ 15
5.17 Legal Proceedings ............................................. 16
5.18 Reports ....................................................... 16
5.19 Statements True and Correct ................................... 16
5.20 Tax and Regulatory Matters .................................... 17
5.21 State Takeover Laws ........................................... 17
5.22 Charter Provisions ............................................ 17
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF UPC ......................... 17
6.1 Organization, Standing, and Power ............................. 17
6.2 Authority; No Breach By Agreement ............................. 18
6.3 Capital Stock ................................................. 18
6.4 UPC Subsidiaries .............................................. 19
6.5 SEC Filings; Financial Statements ............................. 19
6.6 Absence of Undisclosed Liabilities ............................ 20
6.7 Absence of Certain Changes or Events .......................... 20
6.8 Tax Matters ................................................... 20
6.9 Environmental Matters ......................................... 21
6.10 Compliance With Laws .......................................... 21
6.11 Legal Proceedings ............................................. 22
6.12 Reports ....................................................... 22
6.13 Statements True and Correct ................................... 22
6.14 Tax and Regulatory Matters .................................... 23
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION ...................... 23
7.1 Affirmative Covenants of SFC .................................. 23
7.2 Negative Covenants of SFC ..................................... 23
7.3 Covenants of UPC .............................................. 26
7.4 Adverse Changes in Condition .................................. 26
7.5 Reports ....................................................... 26
ARTICLE 8 - ADDITIONAL AGREEMENTS ......................................... 27
8.1 Registration Statement; Proxy Statement; Shareholder Approval . 27
8.2 Exchange Listing .............................................. 27
8.3 Applications .................................................. 27
8.4 Filings with State Offices .................................... 27
8.5 Agreement as to Efforts to Consummate ......................... 28
8.6 Investigation and Confidentiality ............................. 28
8.7 Press Releases ................................................ 28
8.8 Certain Actions ............................................... 28
8.9 Tax Treatment ................................................. 29
8.10 State Takeover Laws ........................................... 29
8.11 Charter Provisions ............................................ 29
8.12 Agreements of Affiliates ...................................... 29
8.13 Employee Benefits and Contracts ............................... 30
8.14 Indemnification ............................................... 30
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Page
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8.15 UPC Merger Subsidiary Organization ............................ 31
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE ............. 31
9.1 Conditions to Obligations of Each Party ....................... 31
9.2 Conditions to Obligations of UPC .............................. 33
9.3 Conditions to Obligations of SFC .............................. 33
ARTICLE 10 - TERMINATION .................................................. 34
10.1 Termination ................................................... 34
10.2 Effect of Termination ......................................... 38
10.3 Non-Survival of Representations and Covenants ................. 38
ARTICLE 11 - MISCELLANEOUS ................................................ 38
11.1 Definitions ................................................... 38
11.2 Expenses ...................................................... 46
11.3 Brokers and Finders ........................................... 47
11.4 Entire Agreement .............................................. 47
11.5 Amendments .................................................... 47
11.6 Waivers ....................................................... 47
11.7 Assignment .................................................... 48
11.8 Notices ....................................................... 48
11.9 Governing Law ................................................. 49
11.10 Counterparts .................................................. 49
11.11 Captions ...................................................... 49
11.12 Interpretations ............................................... 49
11.13 Enforcement of Agreement ...................................... 49
11.14 Severability .................................................. 50
Signatures ................................................................ 51
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LIST OF EXHIBITS
Exhibit Number Description
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1. Plan of Merger. (ss.ss. 1.1, 11.1).
2. Form of Stock Option Agreement. (ss.ss. 1.4, 11.1).
3. Form of agreement of affiliates of SFC. (ss.ss. 8.12, 9.2(d)).
4. Form of Supplemental Letter. (ss.ss. 8.13, 11.1).
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of June 23, 1997, by and between SHO-ME FINANCIAL CORP. ("SFC"),
a Delaware corporation having its principal office located in Mt. Vernon,
Missouri; and UNION PLANTERS CORPORATION ("UPC"), a Tennessee corporation having
its principal office located in Memphis, Tennessee.
Preamble
The Boards of Directors of SFC and UPC are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the acquisition of SFC by
UPC pursuant to the merger of a wholly-owned, first-tier subsidiary of UPC to be
organized under the Laws of the State of Delaware ("UPC Merger Subsidiary") with
and into SFC. At the effective time of such merger, the outstanding shares of
the common stock of SFC shall be converted into the right to receive shares of
the common stock of UPC (except as provided in Sections 3.3 and 3.4 of this
Agreement). As a result, shareholders of SFC shall become shareholders of UPC
and SFC shall continue to conduct its business and operations as a wholly-owned
subsidiary of UPC. The transactions described in this Agreement are subject to
the approvals of the shareholders of UPC and SFC, the Board of Governors of the
Federal Reserve System, and other applicable federal and state regulatory
authorities, and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that the Merger
for federal income tax purposes shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to UPC's willingness to enter into this Agreement, SFC
and UPC are entering into a stock option agreement pursuant to which SFC is
granting to UPC an option to purchase shares of SFC Common Stock.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, UPC Merger Subsidiary shall be merged with and into SFC in
accordance with
<PAGE>
the provisions of Section 251 of the DGCL and with the effect provided in
Section 259 of the DGCL (the "Merger"). SFC shall be the Surviving Corporation
resulting from the Merger and shall continue to be governed by the Laws of the
State of Delaware. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of SFC and UPC and the Plan of Merger, in substantially the form of
Exhibit 1, which has been approved and adopted by the Board of Directors of SFC
and will be approved and adopted by the Board of Directors of UPC Merger
Subsidiary and UPC (in its capacity as sole shareholder of UPC Merger
Subsidiary) upon the organization of UPC Merger Subsidiary.
1.2 Time and Place of Closing. The Closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their chief executive officers or chief financial officers, may
mutually agree. The Closing shall be held at such place as may be mutually
agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the chief
executive officers or chief financial officers of each Party, the Parties shall
use their reasonable efforts to cause the Effective Time to occur on such date
as may be designated by UPC within 30 days following the last to occur of (i)
the effective date (including expiration of any applicable waiting period) of
the last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, (ii) the date on which the shareholders of
SFC approve this Agreement and the Plan of Merger as required by applicable Law,
and (iii) the date on which all other conditions precedent to each Party's
obligations hereunder shall have been satisfied or waived (to the extent
waivable by such Party).
1.4 Execution of Stock Option Agreement. Simultaneously with the execution
of this Agreement by the Parties and as a condition hereto, SFC is executing and
delivering to UPC a stock option agreement (the "Stock Option Agreement"), in
substantially the form of Exhibit 2, pursuant to which SFC is granting to UPC an
option to purchase shares of SFC Common Stock.
1.5 Restructure of Transaction. UPC shall, in its reasonable discretion,
have the unilateral right to revise the structure of the Merger contemplated by
this Agreement in order to achieve tax benefits or for any other reason which
UPC may deem advisable; provided, however, that UPC shall not have the right,
without the approval of the Board of Directors of SFC, to make any revision to
the structure of the Merger which: (i) changes the amount of the consideration
which the holders of shares of SFC Common Stock are entitled to receive
(determined in the manner provided in Section 3.1 of this Agreement); (ii)
changes the intended tax-free effects of the Merger to UPC or the holders of
shares of SFC Common Stock; (iii) would permit UPC to pay the consideration
other than by delivery of UPC Common Stock registered with the SEC (in the
manner described in Section 4.1 of this Agreement); (iv) would be materially
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adverse to the interests of SFC or holders of shares of SFC Common Stock; (v)
would unreasonably impede or delay consummation of the Merger; or (vi) would
affect any of the provisions in Sections 8.13 or 8.14 of this Agreement. UPC may
exercise this right of revision by giving written notice to SFC in the manner
provided in Section 11.8 of this Agreement which notice shall be in the form of
an amendment to this Agreement or in the form of an Amended and Restated
Agreement and Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Charter of SFC in effect immediately prior to the
Effective Time shall be the Charter of the Surviving Corporation until otherwise
amended or repealed.
2.2 By-laws. The By-laws of SFC in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until otherwise
amended or repealed.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of UPC, UPC Merger Subsidiary, SFC, or the shareholders of either of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of UPC Capital Stock, including any associated UPC
Rights, issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding from and after the Effective Time.
(b) Each share of UPC Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for one share of SFC
Common Stock.
(c) Each share of SFC Common Stock (excluding shares held by any SFC
Company or any UPC Company, in each case other than in a fiduciary capacity
or as a result of debts previously contracted) issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive .7694 of a share of UPC Common
Stock (as subject to possible adjustment as set forth in Section 10.1(g) of
this Agreement, the "Exchange Ratio"). Pursuant to the UPC Rights
Agreement, each share of UPC Common Stock issued in connection with the
Merger upon conversion of SFC Common Stock shall be accompanied by a UPC
Right.
3.2 Anti-Dilution Provisions. In the event UPC changes the number of shares
of UPC Common Stock issued and outstanding prior to the Effective Time as a
result of a
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stock split, stock dividend, or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or similar recapitalization
for which a record date is not established) shall be prior to the Effective
Time, the Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by SFC or UPC. Each of the shares of SFC Common Stock held
by any SFC Company or by any UPC Company, in each case other than in a fiduciary
capacity or as a result of debts previously contracted, shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.4 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of SFC Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of UPC Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of UPC Common Stock multiplied
by the market value of one share of UPC Common Stock at the Effective Time. The
market value of one share of UPC Common Stock at the Effective Time shall be the
closing price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a shareholder in respect of any fractional shares.
3.5 Conversion of Stock Options.
(a) At the Effective Time, each option to purchase or other right with
respect to shares of SFC Common Stock pursuant to stock options, stock
appreciation rights or other rights, including stock awards ("SFC Options")
granted by SFC under the SFC Stock Plans, which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into and
become rights with respect to UPC Common Stock, and UPC shall assume each
SFC Option, in accordance with the terms of the SFC Stock Plan and stock
option or other agreement by which it is evidenced, except that from and
after the Effective Time, (i) UPC and its Salary and Benefits Committee
shall be substituted for SFC and the Committee of SFC's Board of Directors
(including, if applicable, the entire Board of Directors of SFC) or other
independent committee administering such SFC Stock Plan, (ii) each SFC
Option assumed by UPC may be exercised solely for shares of UPC Common
Stock, (iii) the number of shares of UPC Common Stock subject to such SFC
Option shall be equal to the number of shares of SFC Common Stock subject
to such SFC Option immediately prior to the Effective Time multiplied by
the Exchange Ratio and rounding down to the nearest whole share, and (iv)
the per share exercise price under each such SFC Option shall be adjusted
by dividing the per share exercise price under each such SFC Option by the
Exchange Ratio and rounding up to the nearest cent. Notwithstanding the
clauses (iii) and (iv) of the first sentence of this Section 3.5, each SFC
Option which is an "incentive stock option" shall be adjusted as required
by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension
or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. UPC and SFC agree to take all necessary steps to
effectuate the foregoing provisions of this Section 3.5.
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(b) As soon as practicable after the Effective Time, UPC shall deliver
to the participants in each SFC Stock Plan an appropriate notice setting
forth such participant's rights pursuant thereto and the grants subject to
such SFC Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments required by Section 3.5(a) after
giving effect to the Merger), and UPC shall comply with the terms of each
SFC Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such SFC Stock Plan, that SFC Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. Within 45 days after the
Effective Time, UPC shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), with
respect to the shares of UPC Common Stock subject to such options and shall
use its reasonable efforts to maintain the effectiveness of such
registration statements (and maintain the current status of the prospectus
or prospectuses contained therein) for so long as such options remain
outstanding.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, UPC and SFC
shall cause the exchange agent selected by UPC (the "Exchange Agent") to mail to
the former shareholders of SFC appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of SFC Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). The
Exchange Agent may establish reasonable and customary rules and procedures in
connection with its duties. After the Effective Time, each holder of shares of
SFC Common Stock (other than shares to be canceled pursuant to Section 3.3 of
this Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.4 of this Agreement, each holder of shares of SFC Common
Stock issued and outstanding at the Effective Time also shall receive, upon
surrender of the certificate or certificates representing such shares, cash in
lieu of any fractional share of UPC Common Stock to which such holder may be
otherwise entitled (without interest). UPC shall not be obligated to deliver the
consideration to which any former holder of SFC Common Stock is entitled as a
result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of SFC Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of SFC Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
Any other provision of this Agreement notwithstanding, neither UPC nor the
Exchange Agent shall be liable to a holder of SFC Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law. Adoption of this Agreement by the
shareholders of SFC shall constitute ratification of the appointment of the
Exchange Agent.
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4.2 Rights of Former SFC Shareholders. At the Effective Time, the stock
transfer books of SFC shall be closed as to holders of SFC Common Stock
immediately prior to the Effective Time and no transfer of SFC Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of SFC Common Stock (other than
shares to be canceled pursuant to Section 3.3 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.4 of this Agreement in exchange
therefor, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by SFC in respect of such shares
of SFC Common Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time. Whenever a dividend or other distribution
is declared by UPC on the UPC Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares of UPC Common Stock issuable pursuant to this
Agreement, but beginning 30 days after the Effective Time no dividend or other
distribution payable to the holders of record of UPC Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of SFC Common Stock issued and outstanding at
the Effective Time until such holder surrenders such certificate for exchange as
provided in Section 4.1 of this Agreement. However, upon surrender of such SFC
Common Stock certificate, both the UPC Common Stock certificate (together with
all such undelivered dividends or other distributions without interest) and any
undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to each share represented by such
certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SFC
SFC hereby represents and warrants to UPC as follows:
5.1 Organization, Standing, and Power. SFC is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Delaware,
and has the corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Assets. SFC is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on SFC.
5.2 Authority; No Breach By Agreement.
(a) SFC has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and the Plan of
Merger and to consummate the transactions contemplated hereby and thereby.
The execution, delivery, and performance of this Agreement and the Plan of
Merger, as appropriate, and the consummation of
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the transactions contemplated herein and therein, including the Merger,
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of SFC, subject to the approval of this
Agreement and the Plan of Merger by the holders of a majority of the
outstanding shares of SFC Common Stock, which is the only shareholder vote
required for approval of this Agreement and the Plan of Merger and
consummation of the Merger by SFC. Subject to such requisite shareholder
approval, this Agreement and the Plan of Merger (which for purposes of this
sentence shall not include the Stock Option Agreement) represent legal,
valid, and binding obligations of SFC, enforceable against SFC in
accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding may be brought).
(b) Except as set forth in Section 5.2 of the SFC Disclosure
Memorandum, neither the execution and delivery of this Agreement or the
Plan of Merger, as appropriate, by SFC, nor the consummation by SFC of the
transactions contemplated hereby or thereby, nor compliance by SFC with any
of the provisions hereof or thereof, will (i) conflict with or result in a
breach of any provision of SFC's Charter or By-laws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or result in
the creation of any Lien on any material Asset of any SFC Company under,
any Contract or Permit of any SFC Company, other than Defaults that are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on SFC, or (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b) of this Agreement, violate any Law
or Order applicable to any SFC Company or any of their respective material
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or
the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on SFC,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by SFC of the Merger and the other
transactions contemplated in this Agreement and the Plan of Merger.
5.3 Capital Stock.
(a) The authorized capital stock of SFC consists of (i) 6,000,000
shares of SFC Common Stock, of which 1,498,636 shares are issued and
outstanding (inclusive of restricted shares) as of the date of this
Agreement (exclusive of treasury shares) and not more than 1,648,882 shares
will be issued and outstanding at the Effective Time, and (ii) 1,000,000
shares of preferred stock, $0.01 par value, of which no shares are, or will
be, issued and outstanding as of the date of this Agreement or at the
Effective Time, respectively. All of the issued and outstanding shares of
capital stock of SFC are duly and validly issued and outstanding
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and are fully paid and nonassessable under the DGCL. None of the
outstanding shares of capital stock of SFC has been issued in violation of
any preemptive rights of the current or past shareholders of SFC. SFC has
reserved 286,982 shares of SFC Common Stock for issuance under the SFC
Stock Plans, pursuant to which options to purchase not more than 150,246
shares of SFC Common Stock are outstanding and 37,345 restricted shares of
SFC Common Stock are outstanding.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
provided in the Stock Option Agreement there are no shares of capital stock
or other equity securities of SFC outstanding and no outstanding Rights
relating to the capital stock of SFC.
5.4 SFC Subsidiaries. SFC has disclosed in Section 5.4 of the SFC
Disclosure Memorandum all of the SFC Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share ownership) and
all of the SFC Subsidiaries that are general or limited partnerships or other
non-corporate entities (identifying the Law under which such entity is
organized, each jurisdiction in which character of its Assets or the nature or
conduct of its business requires it to be qualified and/or licensed to transact
business, and the amount and nature of the ownership interest therein of all SFC
Companies). SFC or one of its wholly-owned Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity interests) of each SFC
Subsidiary. No capital stock (or other equity interest) of any SFC Subsidiary
are or may become required to be issued (other than to another SFC Company) by
reason of any Rights, and there are no Contracts by which any SFC Subsidiary is
bound to issue (other than to another SFC Company) additional shares of its
capital stock (or other equity interests) or Rights or by which any SFC Company
is or may be bound to transfer any shares of the capital stock (or other equity
interests) of any SFC Subsidiary (other than to another SFC Company). There are
no Contracts relating to the rights of any SFC Company to vote or to dispose of
any shares of the capital stock (or other equity interests) of any SFC
Subsidiary. All of the shares of capital stock (or other equity interests) of
each SFC Subsidiary held by a SFC Company are fully paid and nonassessable under
the applicable corporation or similar Law of the jurisdiction in which such
Subsidiary is incorporated or organized and are owned by the SFC Company free
and clear of any Lien. Each SFC Subsidiary is either a bank, a savings
association, partnership, limited liability corporation, or a corporation, and
each such Subsidiary is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each SFC Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on SFC. The only SFC Subsidiary that is a depository institution
is 1st Savings Bank. 1st Savings Bank is an "insured institution" as defined in
the Federal Deposit Insurance Act and applicable regulations thereunder, and the
deposits in which are insured by the Savings
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Association Insurance Fund. The minute book and other organizational documents
for each SFC Subsidiary have been made available to UPC for its review, and are
true and complete as in effect as of the date of this Agreement and accurately
reflect all amendments thereto and all proceedings of the Board of Directors and
shareholders thereof.
5.5 SEC Filings; Financial Statements.
(a) SFC has filed and made available to UPC all SEC Documents required
to be filed by SFC since June 30, 1994 (the "SFC SEC Reports"). The SFC SEC
Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Laws and (ii) did not, at the
time they were filed (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in such SFC SEC Reports or necessary in order to make the
statements in such SFC SEC Reports, in light of the circumstances under
which they were made, not misleading. None of SFC's Subsidiaries is
required to file any SEC Documents.
(b) Each of the SFC Financial Statements (including, in each case, any
related notes) contained in the SFC SEC Reports, including any SFC SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-QSB of the SEC), and fairly presented in all material respects the
consolidated financial position of SFC and its Subsidiaries as at the
respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount or
effect.
5.6 Absence of Undisclosed Liabilities. No SFC Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on SFC, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of SFC as of March 31, 1997, included in the
SFC Financial Statements made available prior to the date of this Agreement or
reflected in the notes thereto. No SFC Company has incurred or paid any
Liability since March 31, 1997, except for such Liabilities incurred or paid (i)
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on SFC or (ii) in connection with the transactions
contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since March 31, 1997, except as
disclosed in the SFC Financial Statements made available prior to the date of
this Agreement or contemplated by pending federal legislation applicable to
financial institutions generally, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on SFC, and (ii) the SFC Companies have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which
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action or failure, if taken after the date of this Agreement, would represent or
result in a material breach or violation of any of the covenants and agreements
of SFC contained in this Agreement.
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
SFC Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1996, and on or before the date of the most recent fiscal year
end immediately preceding the Effective Time, and, to the Knowledge of SFC,
all Tax Returns filed are complete and accurate. All Taxes shown on filed
Tax Returns have been paid. There is no audit examination, deficiency, or
refund Litigation with respect to any Taxes, except as reserved against in
the SFC Financial Statements made available prior to the date of this
Agreement and except for certain routine state tax matters which, in the
aggregate, do not exceed $5,000. All Taxes and other Liabilities due with
respect to completed and settled examinations or concluded Litigation have
been paid. There are no Liens with respect to Taxes upon any of the Assets
of the SFC Companies.
(b) None of the SFC Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination
by the Internal Revenue Service or other applicable taxing authorities)
that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of
the SFC Companies for the period or periods through and including the date
of the respective SFC Financial Statements has been made and is reflected
on such SFC Financial Statements.
(d) Deferred Taxes of the SFC Companies have been provided for in
accordance with GAAP.
(e) To the Knowledge of SFC, each of the SFC Companies is in
compliance with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under
federal, state, and local Tax Laws, and such records identify with
specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code.
(f) Except as set forth in Section 5.8 of the SFC Disclosure
Memorandum, none of the SFC Companies has made any payments, is obligated
to make any payments, or is a party to any Contract that could obligate it
to make any payments that would be disallowed as a deduction under Section
280G or 162(m) of the Internal Revenue Code.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the SFC Companies that occurred during or
after any Taxable Period in which the Companies incurred a net operating
loss that carries over to any Taxable Period ending after December 31,
1996.
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(h) Except as set forth in Section 5.8 of the SFC Disclosure
Memorandum, none of the SFC Companies is a party to any tax allocation or
sharing agreement and none of the SFC Companies has been a member of an
affiliated group filing a consolidated federal income tax return (other
than a group the common parent of which was SFC) has any Liability for
taxes of any Person (other than SFC and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law) as a transferee or successor or by Contract or otherwise.
5.9 Allowance for Possible Loan Losses. The allowance for possible loan or
credit losses (the "Allowance") shown on the consolidated balance sheets of SFC
included in the most recent SFC Financial Statements dated prior to the date of
this Agreement was, and the Allowance shown on the consolidated balance sheets
of SFC included in the SFC Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof, in the reasonable
opinion of management of SFC adequate (within the meaning of GAAP and applicable
regulatory requirements or guidelines) to provide for all known and reasonably
anticipated losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the SFC Companies and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the SFC Companies as of the dates thereof.
5.10 Assets. Except as set forth in Section 5.10 of the SFC Disclosure
Memorandum or as disclosed or reserved against in the SFC Financial Statements
made available prior to the date of this Agreement, the SFC Companies have good
and marketable title, free and clear of all material Liens, to all of their
respective Assets. All tangible properties used in the businesses of the SFC
Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with SFC's past practices.
All Assets which are material to SFC's business on a consolidated basis, held
under leases or subleases by any of the SFC Companies, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. To the Knowledge of SFC, the SFC Companies
currently maintain insurance similar in amounts, scope, and coverage to that
maintained by other peer banking organizations. None of the SFC Companies has
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no claims pending under any such policies of
insurance and no notices have been given by any SFC Company under such policies,
except for routine claims, none of which is material.
5.11 Intellectual Property. All of the Intellectual Property rights of the
SFC Companies are in full force and effect and constitute legal, valid, and
binding obligations of the respective parties thereto, and there have not been,
and, to the Knowledge of SFC, there currently are not, any Defaults thereunder
by SFC. A SFC Company owns or is the valid licensee of all
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such Intellectual Property rights free and clear of all Liens or claims of
infringement. None of the SFC Companies or, to the Knowledge of SFC, their
respective predecessors has misused the Intellectual Property rights of others
and, to the Knowledge of SFC, none of the Intellectual Property rights as used
in the business conducted by any such SFC Company infringes upon or otherwise
violates the rights of any Person, nor has any Person asserted a claim of such
infringement. To the Knowledge of SFC, no SFC Company is obligated to pay any
royalties to any Person with respect to any such Intellectual Property. To the
Knowledge of SFC, each SFC Company owns or has the valid right to use all of the
Intellectual Property rights which it is presently using, or in connection with
performance of any material Contract to which it is a party. No officer,
director, or employee of any SFC Company is party to any Contract which requires
such officer, director or employee to assign any interest in any Intellectual
Property or keep confidential any trade secrets, proprietary data, customer
information, or other business information, which restricts or prohibits such
officer, director, or employee from engaging in activities competitive with any
Person, including any SFC Company.
5.12 Environmental Matters.
(a) To the Knowledge of SFC, each SFC Company, its Participation
Facilities, and its Operating Properties are, and have been, in compliance
with all Environmental Laws, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on SFC.
(b) To the Knowledge of SFC, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any SFC Company or any of its Operating Properties or
Participation Facilities (or SFC in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation,
may be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release
into the environment of any Hazardous Material, whether or not occurring
at, on, under, adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any SFC Company or any of its Operating
Properties or Participation Facilities, except for such Litigation pending
or threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on SFC, nor is there any reasonable
basis for any Litigation of a type described in this sentence.
(c) During the period of (i) any SFC Company's ownership or operation
of any of their respective current properties, (ii) any SFC Company's
participation in the management of any Participation Facility, or (iii) any
SFC Company's holding of a security interest in a Operating Property, to
the Knowledge of SFC, there have been no releases of Hazardous Material in,
on, under, adjacent to, or affecting (or potentially affecting) such
properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on SFC. Prior to the period
of (i) any SFC Company's ownership or operation of any of their respective
current properties, (ii) any SFC Company's participation in the management
of any Participation Facility, or (iii) any SFC Company's holding of a
security interest in a Operating Property, to the Knowledge of SFC, there
were no releases of Hazardous Material in, on, under, or affecting any such
property, Participation Facility or Operating
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Property, except such as are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on SFC.
5.13 Compliance with Laws. SFC is duly registered as a savings and loan
holding company under the HOLA. Each SFC Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. None of the SFC Companies:
(a) to the Knowledge of SFC, is in violation of any material Laws,
Orders, or Permits applicable to its business or employees conducting its
business; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any SFC Company is not in
compliance with any of the Laws or Orders which such governmental authority
or Regulatory Authority enforces, (ii) threatening to revoke any Permits,
or (iii) requiring any SFC Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
5.14 Labor Relations. No SFC Company is the subject of any Litigation
asserting that it or any other SFC Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other SFC Company to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any SFC Company, pending or threatened,
or to the Knowledge of SFC, is there any activity involving any SFC Company's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
5.15 Employee Benefit Plans.
(a) SFC has disclosed in Section 5.15 of the SFC Disclosure
Memorandum, and has delivered or made available to UPC prior to the
execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee
stock ownership, severance pay, vacation, bonus, or other incentive plan,
all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans,
and all other employee benefit plans or fringe benefit plans, including
"employee benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any SFC Company or ERISA Affiliate thereof for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "SFC Benefit
Plans"). Any of the SFC Benefit Plans which is an
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"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "SFC ERISA Plan." Each SFC ERISA Plan
which is also a "defined benefit plan" (as defined in Section 414(j) of the
Internal Revenue Code) is referred to herein as a "SFC Pension Plan."
Except for the Financial Institutions Retirement Fund plan, no SFC Pension
Plan is or has been a multiemployer plan within the meaning of Section
3(37) of ERISA.
(b) All SFC Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on SFC. Each SFC ERISA Plan
which is intended to be qualified under Section 401(a) of the Internal
Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and SFC is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. No SFC
Company has engaged in a transaction with respect to any SFC Benefit Plan
that, assuming the taxable period of such transaction expired as of the
date hereof, would subject any SFC Company to a Tax imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA.
(c) No SFC Pension Plan has any "unfunded current liability," as that
term is defined in Section 302(d)(8)(A) of ERISA, and the fair market value
of the assets of any such plan equals or exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements. Since the date of the
most recent actuarial valuation, there has been (i) no material change in
the financial position of any SFC Pension Plan, (ii) no change in the
actuarial assumptions with respect to any SFC Pension Plan, and (iii) no
increase in benefits under any SFC Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on SFC or
materially adversely affect the funding status of any such plan. Neither
any SFC Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any SFC
Company, or the single-employer plan of any entity which is considered one
employer with SFC under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code or Section 302 of ERISA (whether or not waived) (an
"ERISA Affiliate") has an "accumulated funding deficiency" within the
meaning of Section 412 of the Internal Revenue Code or Section 302 of
ERISA. No SFC Company has provided, or is required to provide, security to
a SFC Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any SFC Company with respect to any ongoing,
frozen, or terminated single-employer plan or the single-employer plan of
any ERISA Affiliate. No SFC Company has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has been
required to be filed for any SFC Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof.
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(e) No SFC Company has any Liability for retiree health and life
benefits under any of the SFC Benefit Plans and there are no restrictions
on the rights of such SFC Company to amend or terminate any such retiree
health or benefit Plan without incurring Liability thereunder.
(f) Except as disclosed in Section 5.15 of the SFC Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any director or any employee of any SFC
Company from any SFC Company under any SFC Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any SFC Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any
such benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any SFC Company and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the SFC Financial Statements to the
extent required by and in accordance with GAAP.
5.16 Material Contracts. Except as disclosed in the SFC SEC Reports or as
disclosed in Section 5.16 of the SFC Disclosure Memorandum, none of the SFC
Companies, nor any of their respective Assets, businesses, or operations, is a
party to, or is bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting, or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $50,000,
(ii) any Contract relating to the borrowing of money by any SFC Company or the
guarantee by any SFC Company of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Home Loan Bank advances of depository
institution Subsidiaries, trade payables, and Contracts relating to borrowings
or guarantees made in the ordinary course of business), (iii) any Contracts
which prohibit or restrict any SFC Company from engaging in any business
activities in any geographic area, line of business, or otherwise in competition
with any other Person, (iv) any Contracts between or among SFC Companies, (v)
any exchange-traded or over-the-counter swap, forward, future, option, cap,
floor, or collar financial Contract, or any other interest rate or foreign
currency protection Contract (not disclosed in the SFC Financial Statements
delivered prior to the date of this Agreement) which is a financial derivative
Contract (including various combinations thereof), and (vi) any other Contract
or amendment thereto that would be required to be filed as an exhibit to a SFC
SEC Report filed by SFC with the SEC prior to the date of this Agreement that
has not been filed as an exhibit to a SFC SEC Report (together with all
Contracts referred to in Sections 5.10 and 5.15(a) of this Agreement, the "SFC
Contracts"). With respect to each SFC Contract: (i) the Contract is in full
force and effect; (ii) no SFC Company is in Default thereunder; (iii) no SFC
Company has repudiated or waived any material provision of any such Contract;
and (iv) no other party to any such Contract is, to the Knowledge of SFC, in
Default in any respect or
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has repudiated or waived any material provision thereunder. Except as set forth
in Section 5.16 of the SFC Disclosure Memorandum, all of the indebtedness of any
SFC Company for money borrowed is prepayable at any time by such SFC Company
without penalty or premium.
5.17 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of SFC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any SFC Company, or against any Asset, employee
benefit plan, interest, or right of any of them, that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on SFC, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any SFC Company. Section 5.17 of
the SFC Disclosure Memorandum includes a summary report of all material
Litigation as of the date of this Agreement to which any SFC Company is a party
and which names a SFC Company as a defendant or cross-defendant.
5.18 Reports. Since January 1, 1994, or the date of organization if later,
each SFC Company has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q,
Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii)
any applicable state securities or banking authorities (except, in the case of
state securities authorities, failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on SFC). As
of their respective dates, or as subsequently amended for minor corrections,
each of such reports and documents, including the financial statements,
exhibits, and schedules thereto, complied in all material respects with all
applicable Laws. As of its respective date, each such report and document did
not, in all material respects, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
5.19 Statements True and Correct. No statement, certificate, instrument, or
other writing furnished or to be furnished by any SFC Company or any Affiliate
thereof to UPC pursuant to this Agreement or any other document, agreement, or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any SFC
Company or any Affiliate thereof for inclusion in the Registration Statement to
be filed by UPC with the SEC will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any SFC Company or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to SFC's
shareholders in connection with the Shareholders' Meeting, and any other
documents to be filed by a SFC Company or any Affiliate thereof with the SEC or
any other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statement, when first mailed to the shareholders of SFC, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading,
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or, in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Shareholders' Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting. All documents that any
SFC Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.20 Tax and Regulatory Matters. No SFC Company or any Affiliate thereof
has taken any action or has any Knowledge of any fact or circumstance relating
to SFC that is reasonably likely to (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such section.
5.21 State Takeover Laws. Each SFC Company has taken all necessary action
to exempt the transactions contemplated by this Agreement and the Plan of Merger
from, or if necessary challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including Section 203 of the
DGCL.
5.22 Charter Provisions. Except as set forth in Section 5.22 of the SFC
Disclosure Memorandum, each SFC Company has taken all action so that the
entering into of this Agreement and the Plan of Merger and the consummation of
the Merger and the other transactions contemplated by this Agreement and the
Plan of Merger do not and will not result in the grant of any rights to any
Person under the Charter, By-laws or other governing instruments of any SFC
Company or restrict or impair the ability of UPC or any of its Subsidiaries to
vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of any SFC Company that may be directly or indirectly acquired or
controlled by it.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UPC
Except as disclosed in the UPC Disclosure Memorandum, UPC hereby represents
and warrants to SFC as follows:
6.1 Organization, Standing, and Power. UPC is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Tennessee,
and has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its material Assets. UPC is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or
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licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC.
6.2 Authority; No Breach By Agreement.
(a) UPC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of UPC. This Agreement (which for purposes of this sentence shall not
include the Stock Option Agreement) represents a legal, valid, and binding
obligation of UPC, enforceable against UPC in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by UPC, nor
the consummation by UPC of the transactions contemplated hereby, nor
compliance by UPC with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of UPC's Restated Charter of
Incorporation or By-laws, or (ii) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any UPC Company under, any Contract or Permit of any UPC
Company, or (iii) subject to receipt of the requisite approvals referred to
in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any UPC Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules
of the NYSE, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or
the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on UPC,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by UPC or UPC Merger Subsidiary of the
Merger and the other transactions contemplated in this Agreement and the
Plan of Merger.
6.3 Capital Stock. The authorized capital stock of UPC consists of (i)
100,000,000 shares of UPC Common Stock, of which 66,010,936 shares were issued
and outstanding as of March 31, 1997 (exclusive of treasury shares), and (ii)
10,000,000 shares of UPC Preferred Stock, of which no shares of UPC Series A
Preferred Stock, and 2,877,474 shares of UPC Series E Preferred Stock, are
issued and outstanding. All of the issued and outstanding shares of UPC Capital
Stock are, and all of the shares of UPC Common Stock to be issued in exchange
for shares of SFC Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding and
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fully paid and nonassessable under the Tennessee Business Corporation Act. None
of the outstanding shares of UPC Capital Stock has been, and none of the shares
of UPC Common Stock to be issued in exchange for shares of SFC Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive rights
of the current or past shareholders of UPC. UPC has reserved for issuance a
sufficient number of shares of UPC Common Stock for the purpose of issuing
shares of UPC Common Stock in accordance with the provisions of Sections 3.1 and
3.5 of this Agreement.
6.4 UPC Subsidiaries. UPC or one of its Subsidiaries owns all of the issued
and outstanding shares of capital stock of each UPC Subsidiary. No equity
securities of any UPC Subsidiary are or may become required to be issued (other
than to another UPC Company) by reason of any Rights, and there are no Contracts
by which any UPC Subsidiary is bound to issue (other than to another UPC
Company) additional shares of its capital stock or Rights or by which any UPC
Company is or may be bound to transfer any shares of the capital stock of any
UPC Subsidiary (other than to another UPC Company). There are no Contracts
relating to the rights of any UPC Company to vote or to dispose of any shares of
the capital stock of any UPC Subsidiary. All of the shares of capital stock of
each UPC Subsidiary held by a UPC Company are fully paid and nonassessable
(except pursuant to 12 USC Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of state depository
institutions) under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the UPC Company
free and clear of any Lien. Each UPC Subsidiary is either a bank or a
corporation, and is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each UPC Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC. Each UPC Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or Savings Association Insurance Fund.
6.5 SEC Filings; Financial Statements.
(a) UPC has filed and made available to SFC all SEC Documents required
to be filed by UPC since December 31, 1993 (the "UPC SEC Reports"). The UPC
SEC Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Laws and (ii) did not, at the
time they were filed (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in such UPC SEC Reports or necessary in order to make the
statements in such UPC SEC Reports, in light of the circumstances under
which they were made, not misleading. Except for UPC Subsidiaries that are
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registered as a broker, dealer, or investment advisor, none of UPC's
Subsidiaries is required to file any SEC Documents.
(b) Each of the UPC Financial Statements (including, in each case, any
related notes) contained in the UPC SEC Reports, including any UPC SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented in all material respects the
consolidated financial position of UPC and its Subsidiaries as at the
respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount or
effect.
6.6 Absence of Undisclosed Liabilities. No UPC Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of UPC as of March 31, 1997, included in the
UPC Financial Statements made available prior to the date of this Agreement or
reflected in the notes thereto. No UPC Company has incurred or paid any
Liability since March 31, 1997, except for such Liabilities incurred or paid (i)
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC or (ii) in connection with the transactions
contemplated by this Agreement.
6.7 Absence of Certain Changes or Events. Since March 31, 1997, except as
disclosed in the UPC Financial Statements made available prior to the date of
this Agreement or contemplated by pending federal legislation applicable to
financial institutions generally, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC, and (ii) the UPC Companies have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of UPC contained in this Agreement.
6.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
UPC Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1996, and on or before the date of the most recent fiscal year
end immediately preceding the Effective Time, and, to the Knowledge of UPC,
all Tax Returns filed are complete and accurate. All Taxes shown on filed
Tax Returns have been paid. There is no audit examination, deficiency, or
refund Litigation with respect to any Taxes, except as reserved against in
the UPC Financial Statements delivered prior to the date of this Agreement.
All Taxes and other Liabilities due with respect to completed and
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settled examinations or concluded Litigation have been paid. There are no
Liens with respect to Taxes upon any of the Assets of the UPC Companies.
(b) Adequate provision for any Taxes due or to become due for any of
the UPC Companies for the period or periods through and including the date
of the respective UPC Financial Statements has been made and is reflected
on such UPC Financial Statements.
(c) Deferred Taxes of the UPC Companies have been provided for in
accordance with GAAP.
6.9 Environmental Matters.
(a) To the Knowledge of UPC, each UPC Company, its Participation
Facilities, and its Operating Properties are, and have been, in compliance
with all Environmental Laws, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on UPC.
(b) To the Knowledge of UPC, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any UPC Company or any of its Operating Properties or
Participation Facilities (or UPC in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation,
may be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release
into the environment of any Hazardous Material, whether or not occurring
at, on, under, adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any UPC Company or any of its Operating
Properties or Participation Facilities, except for such Litigation pending
or threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC, nor is there any reasonable
basis for any Litigation of a type described in this sentence.
(c) During the period of (i) any UPC Company's ownership or operation
of any of their respective current properties, (ii) any UPC Company's
participation in the management of any Participation Facility, or (iii) any
UPC Company's holding of a security interest in a Operating Property, to
the Knowledge of UPC, there have been no releases of Hazardous Material in,
on, under, adjacent to, or affecting (or potentially affecting) such
properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on UPC. Prior to the period
of (i) any UPC Company's ownership or operation of any of their respective
current properties, (ii) any UPC Company's participation in the management
of any Participation Facility, or (iii) any UPC Company's holding of a
security interest in a Operating Property, to the Knowledge of UPC, there
were no releases of Hazardous Material in, on, under, or affecting any such
property, Participation Facility or Operating Property, except such as are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC.
6.10 Compliance with Laws. UPC is duly registered as a bank holding company
under the BHC Act and as a savings and loan holding company under the HOLA. Each
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UPC Company has in effect all Permits necessary for it to own, lease, or operate
its material Assets and to carry on its business as now conducted, and there has
occurred no Default under any such Permit. No UPC Company:
(a) to the Knowledge of UPC, is in violation of any material Laws,
Orders, or Permits applicable to its business or employees conducting its
business; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any UPC Company is not in
compliance with any of the Laws or Orders which such governmental authority
or Regulatory Authority enforces, (ii) threatening to revoke any Permits,
or (iii) requiring any UPC Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
6.11 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of UPC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any UPC Company, or against any Asset, employee
benefit plan, interest, or right of any of them, that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on UPC, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any UPC Company.
6.12 Reports. Since January 1, 1994, or the date of organization if later,
each UPC Company has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q,
Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii)
any applicable state securities or banking authorities (except, in the case of
state securities authorities, failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on UPC). As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
6.13 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by any UPC Company or any Affiliate
thereof to SFC pursuant to this Agreement or any other document, agreement, or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any UPC
Company
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or any Affiliate thereof for inclusion in the Registration Statement to be filed
by UPC with the SEC, will, when the Registration Statement becomes effective, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any UPC Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to SFC's shareholders
in connection with the Shareholders' Meeting, and any other documents to be
filed by any UPC Company or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of SFC, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any UPC Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
6.14 Tax and Regulatory Matters. No UPC Company or any Affiliate thereof
has taken any action or has any Knowledge of any fact or circumstance relating
to UPC that is reasonably likely to (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of SFC. Unless the prior written consent of UPC
shall have been obtained, and except as otherwise expressly contemplated herein
or as set forth in Section 7.1 of the SFC Disclosure Memorandum, SFC shall and
shall cause each of its Subsidiaries to (i) operate its business only in the
usual, regular, and ordinary course, (ii) preserve intact its business
organization and Assets and maintain its rights and franchises, and (iii) take
no action which would (a) materially adversely affect the ability of any Party
to obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement or prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement.
7.2 Negative Covenants of SFC. Except as specifically contemplated by this
Agreement or other documents or instruments executed in connection with this
Agreement, from
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the date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, SFC covenants and agrees that it will not do or
agree or commit to do, or permit any of its Subsidiaries to do or agree or
commit to do, any of the following without the prior written consent of the
chief executive officer, president, or chief financial officer of UPC, which
consent shall not be unreasonably withheld:
(a) amend the Charter, By-laws, or other governing instruments of any
SFC Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a SFC Company to another SFC
Company) in excess of an aggregate of $250,000 (for the SFC Companies on a
consolidated basis) except in the ordinary course of the business of SFC
Subsidiaries consistent with past practices (which shall include, for SFC
Subsidiaries that are depository institutions, creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve
Bank or Federal Home Loan Bank, and entry into repurchase agreements fully
secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any SFC Company of any Lien or permit any such
Lien to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, advances from the Federal Reserve Board or
Federal Home Loan Bank, "treasury tax and loan" accounts established in the
ordinary course of business, the satisfaction of legal requirements in the
exercise of trust powers, and Liens in effect as of the date hereof that
are disclosed in the SFC Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any SFC Company, or declare or pay any dividend or
make any other distribution in respect of SFC's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof or issuance of shares to satisfy
stock rights outstanding as of the date hereof, plus dividend and
accumulation rights, if any, and pursuant to the terms of the SFC Stock
Plans in existence on the date hereof, or pursuant to the Stock Option
Agreement, issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional
shares of SFC Common Stock or any other capital stock of any SFC Company,
or any stock appreciation rights, or any option, warrant, conversion, or
other right to acquire any such stock, or any security convertible into any
such stock; or
(e) adjust, split, combine or reclassify any capital stock of any SFC
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of SFC Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any shares of
capital stock of any SFC Subsidiary (unless any such
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shares of stock are sold or otherwise transferred to another SFC Company)
or any Asset having a book value in excess of $250,000 other than in the
ordinary course of business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities, U.S. Government
agency securities, municipal bonds, local tax exempt securities, or other
securities which in any case have maturities of five years or less, which
purchases are consistent with past practices, or Federal Home Loan Bank
Stock, purchase any securities or make any material investment, either by
purchase of stock of securities, contributions to capital, Asset transfers,
or purchase of any Assets, in any Person other than a wholly-owned SFC
Subsidiary, or otherwise acquire direct or indirect control over any
Person, other than in connection with (i) foreclosures in the ordinary
course of business, (ii) acquisitions of control by a depository
institution Subsidiary in its fiduciary capacity, or (iii) the creation of
new wholly-owned Subsidiaries organized to conduct or continue activities
otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any SFC Company, except in accordance with past practice
disclosed in Section 7.2(g) of the SFC Disclosure Memorandum or as required
by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of
this Agreement and disclosed in Section 7.2(g) of the SFC Disclosure
Memorandum; and enter into or amend any severance agreements with officers
of any SFC Company; grant any material increase in fees or other increases
in compensation or other benefits to directors of any SFC Company except in
accordance with past practice disclosed in Section 7.2(g) of the SFC
Disclosure Memorandum; or, except as disclosed in Section 7.2(g) of the SFC
Disclosure Memorandum, voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits (other than
the acceleration of vesting which occurs under a benefit plan upon a change
of control of SFC); or
(h) enter into or amend any employment Contract between any SFC
Company and any Person (unless such amendment is required by Law) that the
SFC Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time
on or after the Effective Time; or
(i) except as disclosed in Section 7.2(i) of the SFC Disclosure
Memorandum or in the Supplemental Letter, adopt any new employee benefit
plan of any SFC Company or terminate or withdraw from, or make any material
change in or to, any existing employee benefit plans of any SFC Company
other than any such change that is required by Law or that, in the opinion
of counsel, is necessary or advisable to maintain the tax qualified status
of any such plan, or make any distributions from such employee benefit
plans, except as required by Law, the terms of such plans or consistent
with past practice; or
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(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any SFC Company
for money damages in excess of $100,000 or restrictions upon the operations
of any SFC Company; or
(l) other than in the ordinary course of business consistent with past
practice or as otherwise disclosed in Section 7.2(l) of the SFC Disclosure
Memorandum, enter into, modify, amend, or terminate any material Contract
(excluding any loan Contract) or waive, release, compromise, or assign any
material rights or claims.
7.3 Covenants of UPC. From the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement, UPC covenants and
agrees that it shall (i) continue to conduct its business and the business of
its Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the UPC Common Stock and the business prospects of the UPC
Companies, and (ii) take no action which would (a) materially adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentence of Section 9.1(b) of this Agreement or prevent
the transactions contemplated hereby, including the Merger, from qualifying as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements
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contained in any other reports to another Regulatory Authority shall be prepared
in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. UPC
shall file the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue Sky
or securities Laws in connection with the issuance of the shares of UPC Common
Stock upon consummation of the Merger. SFC shall furnish all information
concerning it and the holders of its capital stock as UPC may reasonably request
in connection with such action. SFC shall call a Shareholders' Meeting, to be
held as soon as reasonably practicable after the Registration Statement is
declared effective by the SEC, for the purpose of voting upon approval of this
Agreement and the Plan of Merger and such other related matters as it deems
appropriate. In connection with the Shareholders' Meeting, (i) SFC shall prepare
and file with the SEC a Proxy Statement and mail such Proxy Statement to its
shareholders, (ii) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Proxy
Statement, (iii) the Board of Directors of SFC shall recommend (subject to
compliance with their fiduciary duties as advised by counsel) to its
shareholders the approval of the matters submitted for approval, and (iv) the
Board of Directors and officers of SFC shall (subject to compliance with their
fiduciary duties as advised by counsel) use their reasonable efforts to obtain
such shareholders' approvals.
8.2 Exchange Listing. UPC shall use its reasonable efforts to list, prior
to the Effective Time, on the NYSE, subject to official notice of issuance, the
shares of UPC Common Stock to be issued to the holders of SFC Common Stock or
SFC Options pursuant to the Merger, and UPC shall give all notices and make all
filings with the NYSE required in connection with the transactions contemplated
herein.
8.3 Applications. UPC shall prepare and file, and SFC shall cooperate in
the preparation and, where appropriate, filing of, applications with all
Regulatory Authorities having jurisdiction over the transactions contemplated by
this Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement. At least three business days prior
to filing, UPC shall provide SFC and its counsel with copies of such
applications. The Parties shall deliver to each other copies of all filings,
correspondence and orders to and from all Regulatory Authorities in connection
with the transactions contemplated hereby as soon as practicable upon their
becoming available.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, UPC Merger Subsidiary and SFC shall execute and
file the Certificate of Merger with the Secretary of State of the State of
Delaware in connection with the Closing.
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8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement or the Stock Option
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it
and its Subsidiaries and of their respective financial and legal conditions
as the other Party reasonably requests, provided that such investigation
shall be reasonably related to the transactions contemplated hereby and
shall not interfere unnecessarily with normal operations. No investigation
by a Party shall affect the representations and warranties of the other
Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to
it by the other Party concerning its and its Subsidiaries' businesses,
operations, and financial positions and shall not use such information for
any purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Effective Time,
each Party shall promptly return or certify the destruction of all
documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) SFC shall use its reasonable efforts to exercise its rights under
confidentiality agreements entered into with Persons which were considering
an Acquisition Transaction with SFC to preserve the confidentiality of the
information relating to SFC provided to such Persons and their Affiliates
and Representatives.
8.7 Press Releases. Prior to the Effective Time, SFC and UPC shall consult
with each other as to the form and substance of any press release or other
public disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 8.7 shall be deemed
to prohibit any Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's disclosure obligations
imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and the Plan of
Merger and the transactions contemplated hereby and thereby, after the date of
this Agreement,
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no SFC Company nor any Affiliate thereof nor any Representatives thereof
retained by any SFC Company shall directly or indirectly solicit any Acquisition
Proposal by any Person. Except to the extent necessary to comply with the
fiduciary duties of SFC's Board of Directors as advised by counsel, no SFC
Company or any Affiliate or Representative thereof shall furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any Contract with respect to, any Acquisition Proposal, but
SFC may communicate information about such an Acquisition Proposal to its
shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations as advised by counsel. SFC shall promptly
notify UPC orally and in writing in the event that it receives any inquiry or
proposal relating to any such transaction. SFC shall (i) immediately cease and
cause to be terminated any existing activities, discussions, or negotiations
with any Persons conducted heretofore with respect to any of the foregoing, and
(ii) direct and use its reasonable efforts to cause all of its Representatives
not to engage in any of the foregoing.
8.9 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 State Takeover Laws. Each SFC Company shall take all necessary steps
to exempt the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law.
8.11 Charter Provisions. Each SFC Company shall take all necessary action
to ensure that the entering into of this Agreement and the Plan of Merger and
the consummation of the Merger and the other transactions contemplated hereby
and thereby do not and will not result in the grant of any rights to any Person
under the Charter, By-laws, or other governing instruments of any SFC Company or
restrict or impair the ability of UPC or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of any
SFC Company that may be directly or indirectly acquired or controlled by it.
8.12 Agreement of Affiliates. SFC has disclosed in Section 8.12 of the SFC
Disclosure Memorandum all Persons whom it reasonably believes is an "affiliate"
of SFC for purposes of Rule 145 under the 1933 Act. SFC shall use its reasonable
efforts to cause each such Person to deliver to UPC not later than 30 days prior
to the Effective Time, a written agreement, substantially in the form of Exhibit
3, providing that such Person will not sell, pledge, transfer, or otherwise
dispose of the shares of SFC Common Stock held by such Person except as
contemplated by such agreement or by this Agreement and will not sell, pledge,
transfer, or otherwise dispose of the shares of UPC Common Stock to be received
by such Person upon consummation of the Merger except in compliance with
applicable provisions of the 1933 Act and the rules and regulations thereunder.
UPC shall not be required to maintain the effectiveness of the Registration
Statement under the 1933 Act for the purposes of resale of UPC Common Stock by
such affiliates.
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8.13 Employee Benefits and Contracts. Subject to the terms of the
Supplemental Letter, following the Effective Time, UPC shall provide to officers
and employees of the SFC Companies employee benefits under employee benefit and
welfare plans, on terms and conditions which when taken as a whole are
substantially similar to those currently provided by the UPC Companies to their
similarly situated officers and employees. For purposes of participation,
vesting, and (except in the case of retirement plans) benefit accrual under such
employee benefit plans, the service of the employees of the SFC Companies prior
to the Effective Time shall be treated as service with a UPC Company
participating in such employee benefit plans.
8.14 Indemnification.
(a) After the Effective Time, UPC shall indemnify, defend and hold
harmless the present and former directors, officers, employees, and agents
of the SFC Companies (each, an "Indemnified Party") (including any person
who becomes a director, officer, employee, or agent prior to the Effective
Time) against all Liabilities (including reasonable attorneys' fees, and
expenses, judgments, fines and amounts paid in settlement) arising out of
actions or omissions occurring at or prior to the Effective Time (including
the transactions contemplated by this Agreement and the Stock Option
Agreement) to the full extent permitted under Delaware Law and by SFC's
Charter and By-laws as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any Litigation.
Without limiting the foregoing, in any case in which approval by UPC is
required to effectuate any indemnification, UPC shall direct, at the
election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon between
UPC and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.14, upon learning of any such Liability or
Litigation, shall promptly notify UPC thereof, provided that the failure so
to notify shall not affect the obligations of UPC under this Section 8.14
unless and to the extent such failure materially increases UPC's liability
under this Section 8.14. In the event of any such Litigation (whether
arising before or after the Effective Time), (i) UPC or the Surviving
Corporation shall have the right to assume the defense thereof and UPC
shall not be liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
UPC or the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties advises that there are substantive
issues which raise conflicts of interest between UPC or the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and UPC or the Surviving Corporation shall
pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided, that UPC
shall be obligated pursuant to this paragraph (b) to pay for only one firm
of counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such Litigation,
and (iii) UPC shall not be liable for any settlement effected without its
prior written consent; and provided further that the Surviving Corporation
shall not have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall determine, and such
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determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law.
(c) The Surviving Corporation shall not be liable for any settlement
effected without its prior written consent which shall not be unreasonably
withheld. The Surviving Corporation shall not have any obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable Law.
(d) If the Surviving Corporation or any of its successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in
each case, proper provision shall be made so that the successors and
assigns of the Surviving Corporation shall assume the obligations set forth
in this Section 8.14.
8.15 UPC Merger Subsidiary Organization. UPC shall organize UPC Merger
Subsidiary under the Laws of the State of Delaware. Prior to the Effective Time,
the outstanding capital stock of UPC Merger Subsidiary shall consist of 1,000
shares of UPC Merger Subsidiary Common Stock, all of which shares shall be owned
by UPC. Prior to the Effective Time, UPC Merger Subsidiary shall not (i) conduct
any business operations whatsoever or (ii) enter into any Contract or agreement
of any kind, acquire any assets or incur any Liability, except as may be
specifically contemplated by this Agreement or the Plan of Merger or as the
Parties may otherwise agree. UPC, as the sole stockholder of UPC Merger
Subsidiary, shall vote prior to the Effective Time the shares of UPC Merger
Subsidiary Common Stock in favor of the Plan of Merger.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) Shareholder Approval. The shareholders of SFC shall have approved
this Agreement and the Plan of Merger, and the consummation of the
transactions contemplated hereby and thereby, including the Merger, as and
to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory
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Authority which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner (other than matters
relating to the raising of additional capital or the disposition of Assets
(including, but not limited to, any divestiture or restrictions on the
insurance activities of any SFC Companies) or deposit Liabilities and
associated branches) which in the reasonable judgment of the Board of
Directors of UPC would so materially adversely impact the financial or
economic benefits of the transactions contemplated by this Agreement that,
had such condition or requirement been known, UPC would not, in its
reasonable judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred
to in Section 9.1(b) of this Agreement) or for the preventing of any
Default under any Contract or Permit of such Party which, if not obtained
or made, is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on such Party.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement and the Plan of Merger.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of UPC Common Stock issuable
pursuant to the Merger shall have been received.
(f) Exchange Listing. The shares of UPC Common Stock issuable pursuant
to the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(g) Tax Matters. Each Party shall have received a written opinion of
counsel from Alston & Bird LLP, in form reasonably satisfactory to such
Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of SFC Common Stock
for UPC Common Stock will not give rise to gain or loss to the shareholders
of SFC with respect to such exchange (except to the extent of any cash
received), and (iii) none of SFC or UPC will recognize gain or loss as a
consequence of the Merger (except for the inclusion in income of the amount
of the bad-debt reserve maintained by 1st Savings Bank and any other
amounts resulting from any required change in accounting methods and any
income and deferred gain recognized pursuant to Treasury regulations issued
under Section 1502 of the Internal Revenue Code). In rendering such
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Tax Opinion, such counsel shall be entitled to rely upon representations of
officers of SFC and UPC reasonably satisfactory in form and substance to
such counsel.
9.2 Conditions to Obligations of UPC. The obligations of UPC to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by UPC pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of SFC set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of SFC set forth in Section 5.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimus in amount). The
representations and warranties of SFC set forth in Sections 5.20, 5.21, and
5.22 of this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
SFC set forth in this Agreement (including the representations and
warranties set forth in Sections 5.3, 5.20, 5.21, and 5.22) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have,
a Material Adverse Effect on SFC; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not
to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of SFC to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. SFC shall have delivered to UPC (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.2(a) and 9.2(b) of
this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by SFC's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement and the Plan of
Merger, and the consummation of the transactions contemplated hereby and
thereby, all in such reasonable detail as UPC and its counsel shall
request.
(d) Affiliates Agreements. UPC shall have received from each affiliate
of SFC the affiliates letter referred to in Section 8.12 of this Agreement.
9.3 Conditions to Obligations of SFC. The obligations of SFC to perform
this Agreement and the Plan of Merger and consummate the Merger and the other
transactions
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contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by SFC pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of UPC set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of UPC set forth in Section 6.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimus in amount). The
representations and warranties of UPC set forth in Section 6.14 of this
Agreement shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of UPC set
forth in this Agreement (including the representations and warranties set
forth in Sections 6.3 and 6.14) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on UPC; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of UPC to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. UPC shall have delivered to SFC (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of
this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by UPC's Board of Directors evidencing the taking
of all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as SFC and its counsel
shall request.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of SFC,
this Agreement and the Plan of Merger may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of UPC and the Board
of Directors of SFC; or
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(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of SFC and Section 9.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of SFC and Section 9.3(a) of this
Agreement in the case of UPC; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of SFC and Section 9.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot
be or has not been cured within 30 days after the giving of written notice
to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of SFC fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the DGCL and the rules of
the NASD at the Shareholders' Meeting where the transactions were presented
to such shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by June 30, 1998, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any willful breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of SFC and Section 9.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Merger cannot
be satisfied or fulfilled by the date specified in Section 10.1(e) of this
Agreement; or
(g) By the Board of Directors of SFC, if it determines by a vote of a
majority of the members of its entire Board, at any time during the ten-day
period
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commencing two days after the Determination Date, if both of the following
conditions are satisfied:
(1) the Average Closing Price shall be less than the product of
(i) 0.80 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the Average Closing
Price by the Starting Price (such number being referred to herein as
the "UPC Ratio") shall be less than (ii) the quotient obtained by
dividing the Index Price on the Determination Date by the Index Price
on the Starting Date and subtracting 0.15 from the quotient in this
clause (2)(ii) (such number being referred to herein as the "Index
Ratio");
subject, however, to the following three sentences. If SFC refuses to
consummate the Merger pursuant to this Section 10.1(g), it shall give
prompt written notice thereof to UPC; provided, that such notice of
election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing with
its receipt of such notice, UPC shall have the option to elect to increase
the Exchange Ratio to equal the lesser of (i) the quotient obtained by
dividing (1) the product of 0.80, the Starting Price, and the Exchange
Ratio (as then in effect) by (2) the Average Closing Price, and (ii) the
quotient obtained by dividing (1) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (2) the UPC Ratio. If UPC makes an
election contemplated by the preceding sentence, within such five-day
period, it shall give prompt written notice to SFC of such election and the
revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 10.1(g) and this Agreement shall remain in effect
in accordance with its terms (except as the Exchange Ratio shall have been
so modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 10.1(g).
For purposes of this Section 10.1(g), the following terms shall have
the meanings indicated:
"Average Closing Price" shall mean the average of the daily last
sales prices of UPC Common Stock as reported on the NYSE (as reported
by The Wall Street Journal or, if not reported thereby, another
authoritative source as chosen by UPC) for the 20 consecutive full
trading days in which such shares are traded on the NYSE ending at the
close of trading on the Determination Date.
"Determination Date" shall mean the later of the date (i) of the
Shareholders' Meeting and (ii) on which the last Consent of the Board
of Governors of the Federal Reserve System or the Office of Thrift
Supervision shall be received.
"Index Group" shall mean the 17 bank holding companies listed
below, the common stocks of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and
before the Determination Date, any public
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announcement of a proposal for such company to be acquired or for such
company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization. In the
event that any such company or companies are removed from the Index
Group, the weights (which shall be determined based upon the number of
outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The 17
bank holding companies and the weights attributed to them are as
follows:
Bank Holding Companies Weighting
------------------------------------ ---------
AmSouth Bancorporation 4.87%
Central Fidelity Banks, Inc. 5.11
Compass Bancshares, Inc. 3.63
Deposit Guaranty Corporation 3.56
Fifth Third Bancorp 9.24
First American Corporation 2.60
First Commerce Corporation 3.39
First Tennessee National Corporation 5.62
First Virginia Banks, Inc. 2.83
Hibernia Corporation 11.25
Huntington Bancshares, Inc. 12.35
Mercantile Bancorporation, Inc. 5.30
National Commerce Bancorp 2.14
Regions Financial Corporation 5.80
Signet Banking Corporation 5.25
Southern National Corporation 9.55
Star Banc Corporation 7.50
------
Total 100.00%
======
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Starting Date" shall mean the fourth full trading day after the
announcement by press release of the Merger.
"Starting Price" shall mean the closing price per share of UPC
Common Stock as reported on the NYSE (as reported by The Wall Street
Journal or, if not reported thereby, another authoritative source as
chosen by UPC) on the Starting Date.
If any company belonging to the Index Group or UPC declares or effects
a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the date of
this Agreement and the Determination Date, the
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prices for the common stock of such company or UPC shall be appropriately
adjusted for the purposes of applying this Section 10.1(g).
10.2 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 10.1 of this Agreement, this Agreement,
the Plan of Merger, and the Supplemental Letter shall become void and have no
effect, except that (i) the provisions of this Section 10.2 and Article 11 and
Section 8.6(b) of this Agreement shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c), or
10.1(f) of this Agreement shall not relieve the breaching Party from Liability
for an uncured willful breach of a representation, warranty, covenant, or
agreement giving rise to such termination. The Stock Option Agreement shall be
governed by its own terms as to its termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.12, 8.13 and 8.14 of this Agreement and
the provisions of the Supplemental Letter.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the assets of, such Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with such Person;
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person; or (iii) any other Person for which a Person described in
clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Reorganization,
including the Stock Option Agreement and the Exhibits delivered
pursuant hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character
and description, whether real, personal or
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mixed, tangible or intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of
such Person or any Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended.
"Certificate of Merger" shall mean the Certificate of Merger to
be executed by SFC and filed with the Secretary of State of the State
of Delaware relating to the Merger as contemplated by Section 1.1 of
this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking
of any kind or character, or other document to which any Person is a
party or that is binding on any Person or its capital stock, Assets,
or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order, or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) and
which are administered, interpreted or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution
or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of
any Hazardous Material, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Material.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exhibits" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof,
and may be referred to in this Agreement and any other related
instrument or document without being attached hereto.
"1st Savings Bank" shall mean 1st Savings Bank, f.s.b., a federal
stock savings bank and a SFC Subsidiary.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR Act" shall mean Section 7A of the Clayton Act, as added by
Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software (including
any source or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how, inventions, and other
intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean those facts that are known by the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer, or
General Counsel of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting
or licensing requirement, rule, or statute applicable to a Person or
its Assets, Liabilities or business, including those promulgated,
interpreted, or enforced by any Regulatory Authority.
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"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, deficiency, guaranty, or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention, or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable, and (ii) for depository institution Subsidiaries of a
Party, pledges to secure deposits and other Liens incurred in the
ordinary course of the banking business.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative
or other proceeding, or notice (written or oral) by any Person
alleging potential Liability or requesting information relating to or
affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement,
but shall not include regular, periodic examinations of depository
institutions and their Affiliates by Regulatory Authorities.
"Material" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change,
or occurrence which, individually or together with any other event,
change, or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of such Party
and its Subsidiaries, taken as a whole, or (ii) the ability of such
Party to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement,
provided that "Material Adverse Effect" and "material adverse impact"
shall not be deemed to include the impact of (a) changes in banking
and similar Laws of general applicability or interpretations thereof
by courts or governmental authorities, (b) changes in GAAP or
regulatory accounting principles generally applicable to banks,
savings associations, and their holding companies, (c) actions and
omissions of a Party (or any of its Subsidiaries) taken with the prior
informed written consent of the other Party in contemplation of the
transaction contemplated hereby, and (d) the direct effects of
compliance with this Agreement (including the expense associated with
the vesting of benefits under the various employee benefit plans of
SFC as a result of the Merger constituting a change of control) on the
operating performance of the Parties, including expenses incurred by
the Parties in consummating the transactions contemplated by the
Agreement.
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<PAGE>
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Nasdaq National Market" shall mean the National Market System of
the National Association of Securities Dealers Automated Quotations
System.
"NYSE" shall mean the New York Stock Exchange, Inc.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Operating Property" shall mean any property owned by the Party
in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only
with respect to such property.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local, or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"Participation Facility" shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates in
the management and, where required by the context, said term means the
owner or operator of such facility or property, but only with respect
to such facility or property.
"Party" shall mean either SFC or UPC, and "Parties" shall mean
both SFC and UPC.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"Plan of Merger" shall mean the plan of merger providing for the
Merger, in substantially the form of Exhibit 1.
"Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by SFC to
solicit the approval of its shareholders of the transactions
contemplated by this Agreement and the Plan of Merger, which shall
include the prospectus of UPC relating to the issuance of the UPC
Common Stock to holders of SFC Common Stock.
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<PAGE>
"Registration Statement" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC
by UPC under the 1933 Act with respect to the shares of UPC Common
Stock to be issued to the shareholders of SFC in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board
of the Governors of the Federal Reserve System, the Office of Thrift
Supervision (including its predecessor, the Federal Home Loan Bank
Board), the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, all state regulatory agencies having
jurisdiction over the Parties and their respective Subsidiaries, the
NYSE, the NASD, and the SEC.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of
a Person.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is
or may be bound to issue additional shares of its capital stock or
other Rights.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its Subsidiaries
with any Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Shareholders' Meeting" shall mean the meeting of the
shareholders of SFC to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or postponements thereof.
"SFC Common Stock" shall mean the $0.01 par value common stock of
SFC.
"SFC Companies" shall mean, collectively, SFC and all SFC
Subsidiaries.
"SFC Disclosure Memorandum" shall mean the written information
entitled "SFC Bancorp, Inc. Disclosure Memorandum" delivered prior to
the date of this Agreement to UPC describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for
purposes of any other Section not specifically referenced with respect
thereto.
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<PAGE>
"SFC Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of SFC
as of March 31, 1997, and December 31, 1996, 1995 and 1994, and the
related statements of earnings, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) for the
three months ended March 31, 1997, and for each of the three years
ended December 31, 1996, 1995 and 1994, as filed by SFC in SEC
Documents, and (ii) the consolidated balance sheets of SFC (including
related notes and schedules, if any) and related statements of
earnings, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to March 31, 1997.
"SFC Stock Plans" shall mean the existing stock option and other
stock-based compensation plans of SFC designated as follows: (i)
Sho-Me Financial Corp. 1994 Stock Option and Incentive Plan; and (ii)
Sho-Me Financial Corp. Management Recognition and Retention Plan.
"SFC Subsidiaries" shall mean the Subsidiaries of SFC, which
shall include the SFC Subsidiaries described in Section 5.4 of the SFC
Disclosure Memorandum and any corporation, bank, savings association,
or other organization acquired as a Subsidiary of SFC in the future
and owned by SFC at the Effective Time.
"Stock Option Agreement" shall mean the Stock Option Agreement of
even date herewith issued to UPC by SFC, substantially in the form of
Exhibit 2.
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns
or controls 10% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
10% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, there shall not be included any
such entity acquired through foreclosure or any such entity the equity
securities of which are owned or controlled in a fiduciary capacity.
"Supplemental Letter" shall mean the supplemental letter of even
date herewith relating to certain understandings and agreements in
addition to those included in this Agreement, substantially in the
form of Exhibit 4.
"Surviving Corporation" shall mean SFC as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other
taxes, assessments, charges, fares, or impositions, including
interest, penalties, and additions imposed thereon or with respect
thereto.
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"UPC Capital Stock" shall mean, collectively, the UPC Common
Stock, the UPC Preferred Stock and any other class or series of
capital stock of UPC.
"UPC Common Stock" shall mean the $5.00 par value common stock of
UPC.
"UPC Companies" shall mean, collectively, UPC and all UPC
Subsidiaries.
"UPC Disclosure Memorandum" shall mean the written information
entitled "Union Planters Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to SFC describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall be deemed to be disclosed
for purposes of any other Section not specifically referenced with
respect thereto.
"UPC Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of UPC
as of March 31, 1997, and December 31, 1996, 1995 and 1994, and the
related statements of earnings, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) for the
three months ended March 31, 1997, and for each of the three years
ended December 31, 1996, 1995 and 1994, as filed by UPC in SEC
Documents, and (ii) the consolidated balance sheets of UPC (including
related notes and schedules, if any) and related statements of
earnings, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to March 31, 1997.
"UPC Merger Subsidiary" shall mean the wholly-owned subsidiary of
UPC to be organized to effect the Merger under the Laws of the State
of Delaware and with the name of UPC Merger Subsidiary, Inc.
"UPC Merger Subsidiary Common Stock" shall mean the $1.00 par
value common stock of UPC Merger Subsidiary.
"UPC Preferred Stock" shall mean the no par value preferred stock
of UPC and shall include the (i) Series A Preferred Stock and (ii)
Series E, 8% Cumulative, Convertible Preferred Stock, of UPC ("UPC
Series E Preferred Stock").
"UPC Rights" shall mean the preferred stock purchase rights
issued pursuant to the UPC Rights Agreement.
"UPC Rights Agreement" shall mean that certain Rights Agreement,
dated January 19, 1989, between UPC and UPNB, as Rights Agent.
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"UPC Subsidiaries" shall mean the Subsidiaries of UPC and any
corporation, bank, savings association, or other organization acquired
as a Subsidiary of UPC in the future and owned by UPC at the Effective
Time.
(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections:
Allowance Section 5.9
Average Closing Price Section 10.1(g)
Closing Section 1.2
Determination Date Section 10.1(g)
Effective Time Section 1.3
ERISA Affiliate Section 5.15(c)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Indemnified Party Section 8.14(a)
Index Group Section 10.1(g)
Index Price Section 10.1(g)
Index Ratio Section 10.1(g)
Merger Section 1.1
SFC Benefit Plans Section 5.15(a)
SFC Contracts Section 5.16
SFC ERISA Plan Section 5.15(a)
SFC Options Section 3.5(a)
SFC Pension Plan Section 5.15(a)
SFC SEC Reports Section 5.5(a)
Starting Date Section 10.1(g)
Starting Price Section 10.1(g)
Takeover Laws Section 5.21
Tax Opinion Section 9.1(h)
UPC Ratio Section 10.1(g)
UPC SEC Reports Section 6.4(a)
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and
fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that UPC shall bear and pay the
filing fees payable in connection with the Registration Statement and the
Proxy Statement and the printing costs incurred in connection with the
printing of the Registration Statement and the Proxy Statement.
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<PAGE>
(b) Nothing contained in this Section 11.2 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 Brokers and Finders. Except for Friedman, Billings, Ramsey & Co, Inc.
as to SFC, each of the Parties represents and warrants that neither it nor any
of its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by SFC or UPC, each of SFC and UPC,
as the case may be, agrees to indemnify and hold the other Party harmless of and
from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein, this
Agreement (including the other documents and instruments referred to herein or
executed in connection with this Agreement) constitutes the entire agreement
between the Parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Sections 8.12 and 8.14 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement and the Plan of Merger has been obtained;
provided, that after any such approval by the holders of SFC Common Stock, there
shall be made no amendment that modifies in any material respect the
consideration to be received by the holders of SFC Common Stock without the
further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, UPC, acting through its Board
of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by SFC, to waive or extend the time for the compliance or
fulfillment by SFC of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
UPC under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of UPC.
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(b) Prior to or at the Effective Time, SFC, acting through its Board
of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by UPC, to waive or extend the time for the compliance or
fulfillment by UPC of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
SFC under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of SFC.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach
or a waiver of any other condition or of the breach of any other term of
this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
SFC: Sho-Me Financial Corp.
109 N. Hickory Street
Mt. Vernon, Missouri 65712
Telecopy Number: (417) 466-2158
Attention: Raymond G. Merryman
President and Chief
Executive Officer
Copy to Counsel: Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C. 20005
Telecopy Number: (202) 682-0354
Attention: Barry P. Taff or Martin L. Meyrowitz
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<PAGE>
UPC: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2877
Attention: Jackson W. Moore
President
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2939
Attention: E. James House, Jr.
Manager, Legal Division
Alston & Bird LLP
601 Pennsylvania Avenue
North Building, Suite 250
Washington, D.C. 20004
Telecopy Number: (202) 508-3333
Attention: Frank M. Conner III
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Tennessee, without regard to any
applicable conflicts of Laws, except to the extent the Laws of the State of
Delaware apply.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
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<PAGE>
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: SHO-ME FINANCIAL CORP.
By: /s/ Barbara Rubison By: /s/ Raymond G. Merryman
- ------------------------- -------------------------------------
Barbara Rubison Raymond G. Merryman
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. J. House, Jr. By: /s/ Jackson W. Moore
- -------------------------- -------------------------------------
E.J. House, Jr. Jackson W. Moore
Secretary President and Chief Operating Officer
[CORPORATE SEAL]
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EXHIBIT 10
<PAGE>
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of June 23, 1997, by and between Sho-Me Financial Corp., a Delaware
corporation ("Issuer"), and Union Planters Corporation, a Tennessee corporation
("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Reorganization, dated as of June 23, 1997 (the "Merger Agreement"),
providing for, among other things, the merger of a wholly-owned Subsidiary of
Grantee with and into Issuer, with Grantee as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 298,228 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $0.01 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to $37.00; provided, however,
that in no event shall the number of shares of Issuer Common Stock for which
this Option is exercisable exceed 19.9% of the Issuer's issued and outstanding
shares of Issuer Common stock without giving effect to any shares subject to or
issued pursuant to the Option.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction
in the United States shall be in effect, Holder may exercise the Option, in
whole or in part, at any time and from time to time following the
occurrence of a Purchase Event; provided that the Option shall terminate
and be of no further force and effect upon the earliest to occur of (A) the
Effective Time, (B) termination of the Merger Agreement in accordance with
the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (other than a termination of the Merger
Agreement by Grantee pursuant to (i) Section 10.1(b) thereof (but only if
<PAGE>
such termination was a result of a willful breach by Issuer) or (ii)
Section 10.1(c) thereof (each a "Default Termination")), (C) 12 months
after a Default Termination, and (D) 12 months after any termination of the
Merger Agreement (other than a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event; provided
further, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law, including, without limitation,
the Bank Holding Company Act of 1956, as amended (the "BHC Act"), and the
Home Owners' Loan Act of 1933, as amended (the "HOLA"). The term "Holder"
shall mean the holder or holders of the Option from time to time, and which
initially is the Grantee. The rights set forth in Section 8 shall terminate
when the right to exercise the Option terminates (other than as a result of
a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any Subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below). As
used herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.1 of the
Merger Agreement, the disposition, by sale, lease, exchange or
otherwise, of Assets of Issuer or any of its Subsidiaries representing
in either case 25% or more of the consolidated assets of Issuer and
its Subsidiaries, or (C) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any
similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its Subsidiaries (any of the foregoing, an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to
acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act), other than a group of which Grantee
or any of its Subsidiaries of Grantee is a member, shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 25% or more of the then-outstanding shares of Issuer
Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 25% or
more
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<PAGE>
of the then-outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall not have approved
the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have
been held or shall have been canceled prior to termination of the
Merger Agreement, or Issuer's Board of Directors shall have withdrawn
or modified in a manner adverse to Grantee the recommendation of
Issuer's Board of Directors with respect to the Merger Agreement, in
each case after it shall have been publicly announced that any person
(other than Grantee or any Subsidiary of Grantee) shall have (A) made
a proposal to engage in an Acquisition Transaction, (B) commenced a
Tender Offer or filed a registration statement under the Securities
Act with respect to an Exchange Offer, or (C) filed an application (or
given a notice), whether in draft or final form, under any federal or
state statute or regulation (including a notice filed under the HSR
Act and an application or notice filed under the BHC Act, the HOLA,
the Bank Merger Act, or the Change in Bank Control Act of 1978)
seeking the Consent to an Acquisition Transaction from any federal or
state governmental or regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"). If prior Consent of any governmental or regulatory agency or
authority is required in connection with such purchase, Issuer shall
cooperate with Holder in the filing of the required notice or application
for such Consent and the obtaining of such Consent and the Closing shall
occur immediately following receipt of such Consents (and expiration of any
mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total Profit
(as defined below) exceed $3.0 million and, if it otherwise would
exceed such amount, Holder, at its sole election, shall either (A)
reduce the number of shares of Issuer Common Stock subject to the
Option, (B) deliver to Issuer for cancellation Option Shares
previously purchased by Holder, (C) pay cash to Issuer, or (D) any
combination of the foregoing, so that Holder's actually realized Total
Profit shall not exceed $3.0 million after taking into account the
foregoing actions; and
(ii) the Option be exercised for a number of shares of Issuer
Common Stock as would, as of the date of exercise, result in a
Notional Total Profit (as defined below) of more than $3.0 million;
provided, that nothing in this clause (ii) shall restrict any exercise
of the Option permitted hereby on any subsequent date.
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<PAGE>
As used in this Agreement, the term "Total Profit" shall mean the aggregate sum
(prior to the payment of taxes) of the following: (i) the amount received by
Holder pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8; (ii) (x) the amount received by Holder pursuant to
Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with respect to any
number of shares of Issuer Common Stock as to which Holder may propose to
exercise the Option shall be the Total Profit determined as of the date of such
proposed exercise, assuming that the Option were exercised on such date for such
number of shares and assuming that such shares, together with all other Option
Shares held by Holder and its affiliates as of such date, were sold for cash at
the closing sale price per share of Issuer Common Stock as quoted on the Nasdaq
National Market (or, if Issuer Common Stock is not then quoted on the Nasdaq
National Market, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) as of the close of business on
the preceding trading day (less customary brokerage commissions).
(f) Grantee agrees, promptly following any exercise of all or any
portion of the Option, and subject to its rights under Section 8, to use
commercially reasonable efforts promptly to maximize the value of Option
Shares purchased, taking into account market conditions, the number of
Option Shares, the potential negative impact of substantial sales on the
market price for Issuer Common Stock, and availability of an effective
registration statement to permit public sale of Option Shares.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated
by Issuer, an amount equal to the Purchase Price multiplied by the number
of Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer
specified in Section 13(f) hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section
4(a), (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which
Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights,
and (B) if the Option is exercised in part only, an executed new agreement
with the same terms as this Agreement evidencing the right to purchase the
balance of the shares of Issuer Common Stock purchasable hereunder, and
(ii) Holder shall deliver to Issuer a letter agreeing that Holder shall not
offer to sell or otherwise dispose of such Option Shares in violation of
applicable federal and state law or of the provisions of this Agreement.
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<PAGE>
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT
DATED AS OF JUNE 23, 1997. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE
ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall
have delivered to Issuer a copy of a letter from the staff of the SEC, or
an opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Issuer. This Agreement has been duly executed and delivered by
Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from the
date hereof until the obligation to deliver Issuer Common Stock upon the
exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common Stock
necessary for Holder to exercise the Option, and Issuer will take all
necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may be
issued pursuant to Section 7 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option, including
all additional shares of Issuer Common Stock or other securities which may
be issuable pursuant to Section 7, upon issuance pursuant hereto, shall be
duly and validly issued, fully paid, and nonassessable, and shall be
delivered free and clear of all liens, claims, charges, and encumbrances of
any kind or nature whatsoever, including any preemptive rights of any
shareholder of Issuer.
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<PAGE>
6. Representations and Warrants of Grantee. Grantee hereby represents and
warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed and
delivered by Grantee.
(b) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Laws.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities
or property that Holder would have received in respect of Issuer Common
Stock if the Option had been exercised immediately prior to such event, or
the record date therefor, as applicable. If any additional shares of Issuer
Common Stock are issued after the date of this Agreement (other than
pursuant to an event described in the first sentence of this Section 7(a)
or pursuant to this Option), the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger; (ii) to permit any person, other than Grantee
or one of its Subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of Issuer Common Stock shall be changed into or
exchanged for stock or other securities of Issuer or any other person or
cash or any other property or the outstanding shares of Issuer Common Stock
immediately prior to such merger
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<PAGE>
shall after such merger represent less than 50% of the outstanding shares
and share equivalents of the merged company; or (iii) to sell or otherwise
transfer all or substantially all of its Assets to any person, other than
Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that
the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged
for, an option (the "Substitute Option"), at the election of Grantee, of
either (x) the Acquiring Corporation (as defined below), (y) any person
that controls the Acquiring Corporation, or (z) in the case of a merger
described in clause (ii), the Issuer (in each case, such person being
referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee. The Substitute
Option Issuer shall also enter into an agreement with the then-holder or
holders of the Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as hereinafter defined) as is equal
to the Assigned Value (as hereinafter defined) multiplied by the number of
shares of the Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common
Stock (the "Substitute Purchase Price") shall then be equal to the Purchase
Price multiplied by a fraction in which the numerator is the number of
shares of the Issuer Common Stock for which the Option was theretofore
exercisable and the denominator is the number of shares for which the
Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (y) Issuer in a merger in which Issuer is the
continuing or surviving person, and (z) the transferee of all or any
substantial part of the Issuer's assets (or the assets of its
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
per share of the Issuer Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than
Grantee), (y) the price per share of the Issuer Common Stock to be
paid by any person (other than the Grantee) pursuant to an agreement
with Issuer, and (z) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer
Common Stock is not quoted on the Nasdaq National Market, the highest
bid price per share on any day as quoted on the principal trading
market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Grantee) within the
six-month period immediately preceding the agreement; provided, that
in the event of a sale of less than all of Issuer's assets, the
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<PAGE>
Assigned Value shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment banking
firm selected by Grantee (or by a majority in interest of the Grantees
if there shall be more than one Grantee (a "Grantee Majority")),
divided by the number of shares of the Issuer Common Stock outstanding
at the time of such sale. In the event that an exchange offer is made
for the Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for the Issuer Common Stock shall be determined by a
nationally recognized investment banking firm mutually selected by
Grantee and Issuer (or if applicable, Acquiring Corporation), provided
that if a mutual selection cannot be made as to such investment
banking firm, it shall be selected by Grantee. (If there shall be more
than one Grantee, any such selection shall be made by a Grantee
Majority.)
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merger person, as
Grantee may elect.
(f) In no event pursuant to any of the foregoing paragraphs shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of
the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for this clause (f), the Substitute Option
Issuer shall make a cash payment to Grantee equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in
this clause (f) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (f). This difference in value shall
be determined by a nationally recognized investment banking firm selected
by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Section 7 are given full force and
effect (including, without limitation, any action that may be necessary so
that the shares of Substitute Common Stock are in no way distinguishable
from or have lesser economic value than other shares of common stock issued
by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in
such sections to "Issuer," "Option," "Purchase Price" and "Issuer Common
Stock" shall be deemed to be references to "Substitute Option Issuer,"
"Substitute Option," "Substitute Purchase Price" and "Substitute Common
Stock," respectively.
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<PAGE>
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a), at the request of
Holder at any time commencing upon the first occurrence of a Repurchase
Event (as defined in Section 8(d)) and ending 12 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares
of Issuer Common Stock purchased by Holder pursuant hereto with respect to
which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request
Date." Such repurchase shall be at an aggregate price (the "Section 8
Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired by Holder pursuant to the Option with
respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase
Price (subject to adjustment pursuant to Section 7), multiplied by the
number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or,
in the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder
for each share of Issuer Common Stock with respect to which the Option
has been exercised and with respect to which Holder then has
beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, and Holder shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all
liens, claims, charges and encumbrances of any kind whatsoever.
Notwithstanding the foregoing, to the extent that prior notification to or
Consent of any governmental or regulatory agency or authority is required
in connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Holder shall have the ongoing option to revoke
its request for repurchase pursuant to Section 8, in whole or in part, or
to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for Consent and
expeditiously process the same (and each party shall cooperate with the
other in the filing of any such notice or application and the obtaining of
any such Consent). If any governmental or regulatory agency or authority
disapproves of any part of Issuer's proposed repurchase pursuant to this
Section 8, Issuer shall promptly give notice of such fact to Holder. If any
governmental or regulatory agency or
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<PAGE>
authority prohibits the repurchase in part but not in whole, then Holder
shall have the right (i) to revoke the repurchase request or (ii) to the
extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what
extent to each, and Holder shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the sum of the number of shares
covered by the Option in respect of which payment has been made pursuant to
Section 8(a)(ii) and the number of shares covered by the portion of the
Option (if any) that has been repurchased. Holder shall notify Issuer of
its determination under the preceding sentence within five business days of
receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of
this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii)
the highest closing sales price per share of Issuer Common Stock quoted on
the Nasdaq National Market (or if Issuer Common Stock is not quoted on the
Nasdaq National Market, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are
traded as reported by a recognized source chosen by Holder) during the 60
business days preceding the Request Date; provided, however, that in the
event of a sale of less than all of Issuer's Assets, the Applicable Price
shall be the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by an
independent nationally recognized investment banking firm selected by
Holder and reasonably acceptable to Issuer (which determination shall be
conclusive for all purposes of this Agreement), divided by the number of
shares of the Issuer Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive
for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) shall have acquired
actual ownership or control, or any "group" (as such term is defined under
the 1934 Act) shall have been formed which shall have acquired actual
ownership or control, of 50% or more of the then-outstanding shares of
Issuer Common Stock, or (ii) any of the transactions described in Section
7(b)(i), 7(b)(ii) or 7(b)(iii) shall be consummated.
(e) In connection with the application of the provisions of this
Section 8, Grantee acknowledges (i) that Issuer's ability to fund the
Section 8 Repurchase Consideration in accordance with the provisions of
this Section 8 may be dependent upon the payment by Issuer's Subsidiaries
of a capital distribution or distributions ("Capital Distribution") to
Issuer and that any such Capital Distribution will be subject to the prior
approval of the Federal Reserve Board
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<PAGE>
and the principal federal and state regulatory agencies having jurisdiction
over Issuer's Subsidiary banks, and (ii) that, unless there has been an
agreement of the type described in Section 7(b), Issuer's obligations under
this Section 8 do not impose on Issuer an obligation to otherwise finance
the payment of the Section 8 Repurchase Consideration through the
incurrence of indebtedness or the issuance of capital instruments or
securities by Issuer in either case sufficient in amount to satisfy the
payment of the Section 8 Repurchase Consideration. Accordingly, Issuer
shall not be deemed to be in breach of this Section 8 if, after making its
best efforts to obtain regulatory authorization for a Capital Distribution
required to pay the Section 8 Repurchase Consideration, it is unable to do
so.
9. Registration Rights.
(a) Following termination of the Merger Agreement (provided that the
Option shall not have terminated), Issuer shall, subject to the conditions
of subparagraph (c) below, if requested by any Holder, including Grantee
and any permitted transferee ("Selling Holder"), as expeditiously as
possible prepare and file a registration statement under the Securities
Laws if necessary in order to permit the sale or other disposition of any
or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Selling Holder upon exercise of the Option
in accordance with the intended method of sale or other disposition stated
by Holder in such request (it being understood and agreed that any such
sale or other disposition shall be effected on a widely distributed basis
so that, upon consummation thereof, no purchaser or transferee shall
beneficially own more than 2% of the shares of Issuer Common Stock then
outstanding), including, without limitation, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor
provision, and Issuer shall use its best efforts to qualify such shares or
other securities for sale under any applicable state securities laws. Each
such Holder shall provide all information reasonably requested by Issuer
for inclusion in any registration statement to be filed hereunder.
(b) If Issuer at any time after the exercise of the Option proposes to
register any shares of Issuer Common Stock under the Securities Laws in
connection with an underwritten public offering of such Issuer Common
Stock, Issuer will promptly give written notice to Holder of its intention
to do so and, upon the written request of Holder given within 30 days after
receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by Selling Holder), Issuer will cause all such shares, the
holders of which shall have requested participation in such registration,
to be so registered and included in such underwritten public offering;
provided, that Issuer may elect to not cause any such shares to be so
registered (i) if the underwriters in good faith object for valid business
reasons, or (ii) in the case of a registration solely to implement a
dividend reinvestment or similar plan, an employee benefit plan or a
registration filed on Form S-4 or any successor form, or a registration
filed on a form which does not permit registrations of resales; provided,
further, that such election pursuant to clause (i) may only be made once.
If some but not all the shares of Issuer Common Stock, with respect to
which Issuer shall have received requests for registration pursuant to this
subparagraph (b), shall be excluded from such registration, Issuer shall
make appropriate allocation of shares to be registered among Selling
Holders and any other person (other than Issuer or any person exercising
demand registration
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<PAGE>
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested
to be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer
Common Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause the registration
statement referred to in subparagraph (a) above to become effective and to
obtain all consents or waivers of other parties which are required therefor
and to keep such registration statement effective, provided, that Issuer
may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer
shall in good faith determine that any such registration would adversely
affect an offering or contemplated offering of other securities by Issuer,
and Issuer shall not be required to register Option Shares under the
Securities Laws pursuant to subparagraph (a) above:
(i) prior to the earliest of (A) termination of the Merger
Agreement pursuant to Section 10.1 thereof, (B) failure to obtain the
requisite shareholder approval pursuant to Section 9.1(a) of the
Merger Agreement, and (C) a Purchase Event or a Preliminary Purchase
Event;
(ii) more than once;
(iii) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the Selling
Holders concerned were afforded the opportunity to register such
shares under the Securities Laws and such shares were registered as
requested; and
(iv) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option
Shares then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of 120
days from the effective date of such registration statement. Issuer shall
use all reasonable efforts to make any filings, and take all steps, under
all applicable state securities laws to the extent necessary to permit the
sale or other disposition of the Option Shares so registered in accordance
with the intended method of distribution for such shares, provided, that
Issuer shall not be required to consent to general jurisdiction or qualify
to do business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments, Issuer
will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and
expenses of Issuer's counsel), accounting expenses, printing expenses,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary special experts) in
connection with each registration pursuant to subparagraph (a) or (b) above
(including the related offerings and sales by Selling Holders) and all
other qualifications, notifications or exemptions pursuant to subparagraph
(a) or (b) above. Underwriting discounts and commissions relating to Option
Shares and any other
- 12 -
<PAGE>
expenses incurred by such Selling Holders in connection with any such
registration (including expenses of Selling Holders' counsel) shall be
borne by such Selling Holders.
(e) In connection with any registration under subparagraph (a) or (b)
above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against
all expenses, losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments
or supplements thereto) or any preliminary prospectus, or caused by any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such indemnified
party are caused by any untrue statement or alleged untrue statement that
was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Holder, or by such underwriter, as the case may
be, for all such expenses, losses, claims, damages and liabilities caused
by any untrue, or alleged untrue, statement, that was included by Issuer in
any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance
upon, and in conformity with, information furnished in writing to Issuer by
such holder or such underwriter, as the case may be, expressly for such
use.
Promptly upon receipt by a party indemnified under this subparagraph
(e) of notice of the commencement of any action against such indemnified
party in respect of which indemnity or reimbursement may be sought against
any indemnifying party under this subparagraph (e), such indemnified party
shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any indemnified
party under this subparagraph (e). In case notice of commencement of any
such action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent
it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense of such action at its own expense, with counsel
chosen by it and satisfactory to such indemnified party. The indemnified
party shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel (other than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees to pay
the same, (ii) the indemnifying party falls to assume the defense of such
action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnifying party that may be contrary to
the interest of the indemnified party, in which case the indemnifying party
shall be entitled to assume the defense of such action notwithstanding its
obligation to bear fees and expenses of such counsel. No indemnifying party
shall be liable for any settlement entered into without its consent, which
consent may not be unreasonably withheld.
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<PAGE>
If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein,
then the indemnifying party, in lieu of indemnifying such party otherwise
entitled to be indemnified, shall contribute to the amount paid or payable
by such party to be indemnified as a result of such expenses, losses,
claims, damages or liabilities in such proportion as is appropriate to
reflect the relative benefits received by Issuer, all Selling Holders and
the underwriters from the offering of the securities and also the relative
fault of Issuer, all Selling Holders and the underwriters in connection
with the statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall
be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any
action or claim; provided, that in no case shall any Selling Holder be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with
other holders.
In connection with any registration pursuant to subparagraph (a) or
(b) above, Issuer and each Selling Holder (other than Grantee) shall enter
into an agreement containing the indemnification provisions of this
subparagraph (e).
(f) Issuer shall comply with all reporting requirements and will do
all such other things as may be necessary to permit the expeditious sale at
any time of any Option Shares by Holder in accordance with and to the
extent permitted by any rule or regulation promulgated by the SEC from time
to time, including, without limitation, Rules 144 and 144A.
(g) Issuer will pay all stamp taxes in connection with the issuance
and the sale of the Option Shares and in connection with the exercise of
the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the Nasdaq National Market or any other securities exchange or
any automated quotations system maintained by a self-regulatory organization and
will use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
- 14 -
<PAGE>
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 9, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to
the subject matter hereof and (b) is not intended to confer upon any person
other than the parties hereto (other than any transferees of the Option
Shares or any permitted transferee of this Agreement pursuant to Section
12(h) and other than as provided in the Merger Agreement) any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a federal or
state governmental or regulatory agency or authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. If for any reason
such court or regulatory agency determines that the Option does not permit
Holder to acquire, or does not require Issuer to repurchase, the full
number of shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser
number of shares as may be permissible without any amendment or
modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Tennessee without regard to any
applicable conflicts of law rules.
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<PAGE>
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement(or at such other address for a party as shall be specified by
like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by
any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party, except that Grantee
may assign this Agreement to a wholly-owned Subsidiary of Grantee and
Grantee may assign its rights hereunder in whole or in part after the
occurrence of a Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive
relief and other equitable relief. Both parties further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: SHO-ME FINANCIAL CORP.
By: By:
- ----------------------------- -------------------------------------
Barbara Rubison Raymond G. Merryman
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: By:
- ----------------------------- -------------------------------------
E.J. House, Jr. Jackson W. Moore
Secretary President and Chief Operating Officer
[CORPORATE SEAL]
- 17 -
EXHIBIT 99
<PAGE>
UNION PLANTERS SIGNS DEFINITIVE AGREEMENT
TO ACQUIRE SHO-ME FINANCIAL CORPORATION
MEMPHIS, TENNESSEE; June 23, 1997 (NYSE: UPC) C Benjamin W. Rawlins Jr.,
Chairman and Chief Executive Officer of Union Planters Corporation, and Raymond
G. Merryman, President and Chief Executive Officer of Sho-Me Financial
Corporation, jointly announced today that the two companies have entered into a
definitive agreement pursuant to which Union Planters would acquire Sho-Me
Financial Corporation in a tax-free exchange of stock.
The agreement calls for Union Planters to exchange .7694 shares of its common
stock for each common share of Sho-Me Financial Corporation. The transaction
would be valued at approximately $59 million or $39.34 per share based on Union
Planters= June 23 closing stock price of $51.125. UPC will purchase
approximately 1.2 million shares in the open market to use in the exchange. The
acquisition is expected to be complete by the fourth quarter of 1997 and is
subject to shareholder and regulatory approval and the satisfaction of normal
contractual closing conditions.
As of March 31, 1997, Sho-Me Financial Corporation reported $305 million in
total assets and approximately $29 million in shareholders= equity. Sho-Me,
headquartered in Mt. Vernon, Mo., operates eight banking facilities under the
name 1st Savings Bank in Mount Vernon, Aurora, Bolivar, Republic, El Dorado
Springs and Springfield. At the conclusion of the merger, these locations will
merge with Union Planters Bank of Southwest Missouri, a $184 million-asset
affiliate of Union Planters Corporation. This combination will give Union
Planters approximately $488 million in total assets and 17 full-service
locations in Lawrence, Polk, Cedar, Greene, Christian and Taney counties.
In making the announcement, Ben Rawlins stated, "Our philosophy has been to
affiliate with well-run, community-focused institutions. The addition of Sho-Me
Financial Corporation to the Union Planters family of banks is in line with this
philosophy and strengthens our position in Southwest Missouri."
Raymond Merryman commented, "We look forward to our strategic combination with
Union Planters and the subsequent enhanced product line and customer
conveniences. Their community-
<PAGE>
oriented management structure was a main attraction for us and we look forward
to great opportunities for our customers, employees and shareholders, as well as
the communities we serve."
Union Planters Corporation, headquartered in Memphis, Tenn., is a $15 billion
multi-bank holding company with over 433 offices in Missouri, Tennessee,
Mississippi, Arkansas, Louisiana, Alabama and Kentucky.
For more information:
Union Planters Corporation:
Bill Andrews
Director of Marketing
(901) 580-2892
Sho-Me Financial Corporation:
Raymond Merryman
President and Chief Executive Officer
(417) 466-2171
