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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) June 28, 1999
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Merit Holding Corporation
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(Exact name of registrant as specified in its charter)
Georgia 033-39451 58-1934011
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5100 LaVista Road, P.O. Box 49, Tucker, Georgia 30085-0049
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 491-8808
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Not applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On June 28, 1999, Merit Holding Corporation, a Georgia corporation
("Merit") signed a definitive Agreement and Plan of Merger which provides for
the merger of Merit with and into Synovus Financial Corp., a Georgia corporation
("Synovus"). Under the terms of the Merger Agreement, at the effective time of
the merger each outstanding share of Merit common stock will be converted into
the right to receive between 1.0537 and 1.4132 shares of Synovus common stock.
The exact exchange ratio will be calculated based on the average closing price
of Synovus common stock over a 20-day measurement period which will end five
days prior to the date of the special shareholders' meeting at which Merit
shareholders will vote on approval of the merger.
The merger is intended to constitute a tax-free reorganization under
the Internal Revenue Code of 1986, as amended, and to be accounted for as a
pooling of interests.
The Merger Agreement provides that each option granted by Merit to
purchase shares of Merit common stock which is outstanding and unexercised
immediately prior to the effective time of the merger will be converted into and
become a right to purchase shares of Synovus common stock. The number of shares
of Synovus common stock subject to each Merit option will be equal to the number
of shares of Merit common stock subject to such option immediately prior to the
effective time of the merger multiplied by the exchange ratio, and the per share
exercise price of Synovus common stock purchasable thereunder or upon which the
amount of a cash payment is determined shall be that specified in the option
divided by the exchange ratio.
Each holder of Merit common stock who would otherwise be entitled to
receive a fractional share of Synovus Common Stock (after taking into account
all of a shareholder's certificates) will receive, in lieu thereof, the
equivalent cash value of such fractional share, without interest.
Consummation of the merger is subject to various conditions, including:
(i) approval of the Merger Agreement and the merger by the shareholders of
Merit, as required under Georgia law; (ii) receipt of certain regulatory
approvals from the Board of Governors of the Federal Reserve System and the
Department of Banking and Finance of the State of Georgia; (iii) receipt of the
opinion of KPMG LLP as to the tax-free nature of certain aspects of the Merger;
(iv) receipt of a letter from each of KPMG LLP, Synovus' independent public
accountants, and PricewaterhouseCoopers LLP, Merit's independent public
accountants, relating to the pooling of interests accounting treatment of the
Merger; (v) receipt by Merit of the opinion of T. Stephen Johnson & Associates,
Inc., dated not more than five days prior to the date of the proxy statement
mailed to Merit shareholders in connection with the Merit special meeting, to
the effect that the exchange ratio is fair, from a financial point of view, to
holders of Merit common stock; and (vi) satisfaction of certain other
conditions.
Prior to the Merit special meeting, Synovus will file a registration
statement with the Securities and Exchange Commission registering under the
Securities Act of 1933, as amended, the Synovus common stock to be issued
pursuant to the Merger Agreement in exchange for the outstanding shares of Merit
common stock.
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The preceding description of certain terms of the Merger Agreement is
qualified in its entirety by reference to the copy of the Merger Agreement
included as an Exhibit to this Current Report on Form 8-K and which is
incorporated by reference.
The merger is expected to be consummated in August or September of
1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. Not Applicable
(b) Pro Forma Financial Information. Not Applicable
(c) Exhibits. The following exhibit is filed with this Report:
* 2.1 Agreement and Plan of Merger, dated as of June 28,
1999, by and between Synovus Financial Corp. and
Merit Holding Corporation.
* The disclosure letter referenced in the first sentence of
Article III of the Merger Agreement is omitted from this
filing. Merit agrees to furnish to the Commission upon request
a copy of the disclosure letter.
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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.
MERIT HOLDING CORPORATION
Dated: June 30, 1999 By: /s/ J. Randall Carroll
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J. Randall Carroll, Chairman of the
Board and Chief Executive Officer
Dated: June 30, 1999 By: /s/ Ronald H. Francis
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Ronald H. Francis
President and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<S> <C>
2.1 Agreement and Plan of Merger, dated as of June 28, 1999, by
and between Synovus Financial Corp. and Merit Holding
Corporation.
</TABLE>
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 28th day of June, 1999
(the "Plan" or the "Agreement") by and between SYNOVUS FINANCIAL CORP.
("Synovus") and MERIT HOLDING CORPORATION ("Merit").
RECITALS:
A. SYNOVUS. Synovus has been duly incorporated and is an existing
corporation in good standing under the laws of Georgia, with its principal
executive offices located in Columbus, Georgia. As of May 31, 1999, Synovus had
600,000,000 authorized shares of common stock, par value $1.00 per share
("Synovus Common Stock"), of which 271,314,672 shares are outstanding. All of
the issued and outstanding shares of Synovus Common Stock are duly and validly
issued and outstanding and are fully paid and nonassessable and not subject to
any preemptive rights. Synovus has 36 wholly-owned banking subsidiaries (as
defined in Rule 1-02 of Regulation S-X promulgated by the Securities and
Exchange Commission, a "Subsidiary") and other non-banking Subsidiaries as of
the date hereof. Each subsidiary that is a depository institution is an "insured
institution" as defined in the Federal Deposit Insurance Act and the applicable
regulations thereunder, and the deposits in which are insured by the Federal
Deposit Insurance Corporation.
B. MERIT. Merit has been duly incorporated and is an existing
corporation in good standing under the laws of Georgia, with its principal
executive offices located in Tucker, Georgia. As of the date hereof, Merit has
10,000,000 authorized shares of common stock, par value $2.50 per share ("Merit
Common Stock"), of which 4,777,316 shares are outstanding as of the date hereof.
All of the issued and outstanding shares of Merit Common Stock are duly and
validly issued and outstanding and are fully paid and nonassessable and not
subject to any preemptive rights. Merit has two wholly-owned banking
Subsidiaries, one of which owns a Subsidiary which engages in leasing
activities, as of the date hereof. Each subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and the applicable regulations thereunder, and the deposits in
which are insured by the Federal Deposit Insurance Corporation.
C. RIGHTS, ETC. Neither Synovus nor Merit has any shares of its
capital stock reserved for issuance, any outstanding option, call or commitment
relating to shares of its capital stock or any outstanding securities,
obligations or agreements convertible into or exchangeable for, or giving any
person any right (including, without limitation, preemptive rights) to subscribe
for or acquire from it, any shares of its capital stock except as described in
filings made with the Securities and Exchange Commission ("SEC") by Synovus and
Merit ("Public Filings") or except as otherwise disclosed in the letter referred
to in Article III below.
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D. BOARD APPROVALS. The respective Boards of Directors of Synovus
and Merit have unanimously approved and adopted the Plan and have duly
authorized its execution. In the case of Merit, the Board of Directors has
unanimously voted to recommend to its stockholders that the Plan be approved.
E. MATERIALITY. Unless the context otherwise requires, any
reference in this Agreement to materiality with respect to any party shall be
deemed to be with respect to such party and its Subsidiaries taken as a whole.
In consideration of their mutual promises and obligations hereunder,
and intending to be legally bound hereby, Synovus and Merit adopt the Plan and
prescribe the terms and conditions hereof and the manner and basis of carrying
it into effect, which shall be as follows:
I. THE MERGER
(A) STRUCTURE OF THE MERGER. On the Effective Date (as defined in
Article VII), Merit will merge (the "Merger") with and into Synovus, with
Synovus being the surviving corporation (the "Surviving Corporation") under the
name Synovus Financial Corp. pursuant to the applicable provisions of the
Georgia Business Corporation Code ("Georgia Act"). On the Effective Date, the
articles of incorporation and bylaws of the Surviving Corporation shall be the
articles of incorporation and bylaws of Synovus in effect immediately prior to
the Effective Date.
(B) EFFECT ON OUTSTANDING SHARES. By virtue of the Merger,
automatically and without any action on the part of the holder thereof, each
share of Merit Common Stock issued and outstanding on the Effective Date shall
be converted into and exchanged for shares of Synovus Common Stock, with the
exact number of shares of Synovus Common Stock into which each such share of
Merit Common Stock is to be converted to be determined in accordance with the
conversion ratio table set forth in Appendix "A" attached hereto and made a part
hereof ("Per Share Exchange Ratio"). As of the Effective Date, each share of
Merit Common Stock held as treasury stock of Merit shall be canceled, retired
and cease to exist, and no payment shall be made in respect thereof.
No fractional shares of Synovus Common Stock shall be issued in
connection with the Merger. Each holder of Merit Common Stock who would
otherwise have been entitled to receive a fraction of a share of Synovus Common
Stock shall receive, in lieu thereof, cash (without interest) in an amount equal
to such fractional part of a share of Synovus Common Stock multiplied by the
closing price per share of Synovus Common Stock on the New York Stock Exchange
("NYSE") on the fifth business day immediately preceding the Effective Date of
the Merger.
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Each shareholder of Merit Common Stock will be entitled to ten votes
for each share of Synovus Common Stock to be received by him/her on the
Effective Date pursuant to a set of resolutions adopted by the Board of
Directors of Synovus on June 28, 1999 in accordance with and subject to those
certain Articles of Amendment to Synovus' Articles of Incorporation, dated April
24, 1986. Synovus shall provide Merit with certified copies of such resolutions
prior to the Effective Date.
The shares of the Synovus Common Stock issued and outstanding
immediately prior to the Effective Date shall remain outstanding and unchanged
after the Merger.
In the event that, subsequent to the date of this Plan but prior to the
Effective Date, the outstanding shares of Synovus Common Stock shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
like changes in Synovus' capitalization, then an appropriate and proportionate
adjustment shall be made to the Per Share Exchange Ratio so as to prevent the
dilutive effect of such transaction on a percentage of ownership basis.
The shareholders of Merit Common Stock shall not be entitled to rights
of dissent and appraisal in connection with the Merger pursuant to the Georgia
Act.
(C) PROCEDURES. Certificates which represent shares of Merit
Common Stock that are outstanding on the Effective Date (each, a "Certificate")
and are converted into shares of Synovus Common Stock pursuant to the Plan
shall, after the Effective Date, be deemed to represent shares of the Synovus
Common Stock into which such shares have become converted and shall be
exchangeable by the holders thereof in the manner provided in the transmittal
materials described below for new certificates representing the shares of
Synovus Common Stock into which such shares have been converted.
As promptly as practicable after the Effective Date, Synovus shall send
to each holder of record of shares of Merit Common Stock outstanding on the
Effective Date transmittal materials for use in exchanging the Certificates for
such shares for certificates for shares of the Synovus Common Stock into which
such shares of the Merit Common Stock have been converted pursuant to the Plan.
Upon surrender of a Certificate, duly endorsed as Synovus may require, the
holder of such Certificate shall be entitled to receive in exchange therefor the
consideration set forth in Paragraph I(B) hereof and such Certificate shall
forthwith be canceled. No dividend or other distribution payable after the
Effective Date with respect to the Synovus Common Stock shall be paid to the
holder of any unsurrendered Certificate until the holder thereof surrenders such
Certificate, at which time such holder shall receive all dividends and
distributions, without interest thereon, previously withheld from such holder
pursuant hereto. After the Effective Date, there shall be no transfers on the
stock transfer books of Merit of shares of Merit Common Stock which were issued
and outstanding on the Effective Date and converted pursuant to the
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provisions of the Plan. If after the Effective Date, Certificates are presented
for transfer to Merit, they shall be canceled and exchanged for the shares of
Synovus Common Stock deliverable in respect thereof as determined in accordance
with the provisions of Paragraph (B) of Article I and in accordance with the
procedures set forth in this Paragraph. In the case of any lost, mislaid, stolen
or destroyed Certificate, the holder thereof may be required, as a condition
precedent to the delivery to such holder of the consideration described in
Paragraph B, to deliver to Synovus a bond in such sum as Synovus may direct as
indemnity against any claim that may be made against the exchange agent, Synovus
or Merit with respect to the Certificate alleged to have been lost, mislaid,
stolen or destroyed.
After the Effective Date, holders of Merit Common Stock shall cease to
be, and shall have no rights as, stockholders of Merit, other than to receive
shares of Synovus Common Stock into which such shares have been converted,
fractional share payments pursuant to the Plan and any dividends or
distributions with respect to such shares of Synovus Common Stock. Until 90 days
after the Effective Date, former shareholders of record of Merit shall be
entitled to vote at any meeting of Synovus shareholders the number of shares of
Synovus Common Stock into which their respective Merit Common Stock are
converted regardless of whether such holders have exchanged their certificates
pursuant to the Plan.
Notwithstanding the foregoing, neither Synovus nor Merit nor any other
person shall be liable to any former holder of shares of Merit Common Stock for
any amounts paid or property delivered in good faith to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(D) OPTIONS. On the Effective Date, each option granted by Merit
to purchase shares of Merit Common Stock, which is outstanding and unexercised
immediately prior thereto, shall be converted automatically into an option to
purchase shares of Synovus Common Stock in an amount and at an exercise price
determined as provided below (and otherwise having the same duration and other
terms as the original option):
(1) The number of shares of Synovus Common Stock to be
subject to the new option shall be equal to the product of the number of shares
of Merit Common Stock subject to the original option multiplied by the Per Share
Exchange Ratio provided that any fractional shares of Synovus Common Stock
resulting from such multiplication shall be rounded to the nearest whole share;
and
(2) The exercise price per share of Synovus Common Stock
under the new option shall be equal to the exercise price per share of Merit
Common Stock under the original option divided by the Per Share Exchange Ratio
provided that such exercise price shall be rounded up to the nearest cent.
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The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986 (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code.
Within thirty (30) days after the Effective Date, Synovus shall notify
each holder of an option to purchase Merit Common Stock of the assumption of
such options by Synovus and the revisions to the options shall be effected
thereby. No payment shall be made for fractional interests. From and after the
date hereof, no additional options to purchase Merit Common Stock shall be
granted.
II. ACTIONS PENDING MERGER
(A) Merit and its Subsidiaries shall conduct their business only
in the ordinary course and shall not, without the prior written consent of
Synovus, which consent will not be unreasonably withheld: (1) issue any options
to purchase capital stock or issue any shares of capital stock, other than
shares of Merit Common Stock issued in connection with the exercise of currently
outstanding options to purchase shares of Merit Common Stock; (2) declare, set
aside, or pay any dividend or distribution with respect to the capital stock of
Merit other than normal and customary quarterly cash dividends in accordance
with past practices; (3) directly or indirectly redeem, purchase or otherwise
acquire any capital stock of Merit or its Subsidiaries; (4) effect a split or
reclassification of the capital stock of Merit or its Subsidiaries or a
recapitalization of Merit or its Subsidiaries; (5) amend the articles of
incorporation or by-laws of Merit or its Subsidiaries; (6) grant any increase in
the salaries payable or to become payable by Merit or its Subsidiaries to any
employee and other than normal, annual salary increases to be made with regard
to the employees of Merit or its Subsidiaries; (7) make any change in any bonus,
group insurance, pension, profit sharing, deferred compensation, or other
benefit plan, payment or arrangement made to, for or with respect to any
employees or directors of Merit or its Subsidiaries, except to the extent such
changes are required by applicable laws or regulations; (8) enter into,
terminate, modify or amend any contract, lease or other agreement with any
officer or director of Merit or its Subsidiaries or any "associate" of any such
officer or director, as such term is defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), other than in the
ordinary course of their banking business; (9) incur or assume any liabilities,
other than in the ordinary course of their business; (10) dispose of any of
their assets or properties, other than in the ordinary course of their business;
(11) solicit, encourage or authorize any individual, corporation or other
entity, including its directors, officers and other employees, to solicit from
any third party any inquiries or proposals relating to the disposition of its
business or assets, or the acquisition of its voting securities, or the merger
of it or its Subsidiaries with any corporation or other entity other than as
provided by this Agreement, or subject to the fiduciary obligations of its Board
of Directors, provide any individual, corporation or other entity with
information or assistance or negotiate with
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any individual, corporation or other entity in furtherance of such inquiries or
to obtain such a proposal (and Merit shall promptly notify Synovus of all of the
relevant details relating to all inquiries and proposals which it may receive
relating to any of such matters); (12) take any other action or permit its
Subsidiaries to take any action not in the ordinary course of business of it and
its Subsidiaries; or (13) directly or indirectly agree to take any of the
foregoing actions.
(B) Without the prior written consent of Merit, which consent will
not be unreasonably withheld, Synovus will not: (1) declare, set aside or pay
any cash dividend on its Common Stock other than normal and customary quarterly
cash dividends in accordance with Synovus' current Dividend Policy; or (2) take
any action that would: (a) delay or adversely affect the ability of Synovus to
obtain any necessary approvals of regulatory authorities required for the
transactions contemplated hereby; or (b) adversely affect its ability to perform
its covenants and agreements on a timely basis under this Plan.
III. REPRESENTATIONS AND WARRANTIES
Synovus hereby represents and warrants to Merit, and Merit represents
and warrants to Synovus, that, except as previously disclosed in a letter of
Synovus or Merit, respectively, of even date herewith delivered to the other
party:
(A) the representations set forth in Recitals A through D of the
Plan with respect to it are true and correct and constitute representations and
warranties for the purpose of Article V, hereof;
(B) the outstanding shares of capital stock of it and its
Subsidiaries are duly authorized, validly issued and outstanding, fully paid and
(subject to 12 U.S.C. ss.55 in the case of a national bank subsidiary)
non-assessable, and subject to no preemptive rights of current or past
shareholders;
(C) each of it and its Subsidiaries has the power and authority,
and is duly qualified in all jurisdictions (except for such qualifications the
absence of which will not as a whole have an adverse effect on the business,
results of operations or financial condition of it or its Subsidiaries which is
material to it and its Subsidiaries, taken as a whole ("Material Adverse
Effect") provided that "Material Adverse Effect" shall not be deemed to include:
(1) the impact of changes in banking or similar laws of general applicability or
interpretations thereof by courts or governmental authorities; or (2) changes in
generally accepted accounting principles applicable to banks and their holding
companies) where such qualification is required to carry on its business as it
is now being conducted, to own all its material properties and assets, and has
all federal, state, local, and foreign governmental authorizations necessary for
it to own or lease its properties and assets and to carry on its business as it
is now being conducted, except for such authorizations the absence of which,
either individually or in the aggregate, would not have a Material Adverse
Effect;
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(D) the shares of capital stock of each of its Subsidiaries are
owned by it (except for director's qualifying shares) free and clear of all
liens, claims, encumbrances and restrictions on transfer;
(E) subject, in the case of Merit, to the receipt of any required
shareholder approval of this Plan, the Plan has been authorized by all necessary
corporate action of it and, subject to receipt of such approvals of shareholders
and required regulatory approvals, is a legal, valid and binding agreement of it
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles involving specific performance or injunctive relief;
(F) the execution, delivery and performance of the Plan by it does
not, and the consummation of the transactions contemplated hereby by it will
not, constitute: (1) a breach or violation of, or a default under, any law, rule
or regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of it or its Subsidiaries or to which it or
its Subsidiaries (or any of their respective properties) is subject which
breach, violation or default would have a Material Adverse Effect, or enable any
person to enjoin any of the transactions contemplated hereby; or (2) a breach or
violation of, or a default under, the certificate or articles of incorporation
or by-laws of it or any of its Subsidiaries; and the consummation of the
transactions contemplated hereby will not require any consent or approval under
any such law, rule, regulation, judgment, decree, order, governmental permit or
license or the consent or approval of any other party to any such agreement,
indenture or instrument, other than the required approvals of applicable
regulatory authorities and the approval of the shareholders of Merit, both of
which are referred to in Paragraph (A) of Article V and any consents and
approvals the absence of which will not have a Material Adverse Effect;
(G) since December 31, 1996, Merit and Synovus have filed all
forms, reports and documents with the SEC required to be filed by it pursuant to
the federal securities laws and SEC rules and regulations thereunder (the "SEC
Reports,") each of which complied as to form, at the time such form, report or
document was filed, in all material respects with the applicable requirement of
the Securities Act of 1933, as amended ("Securities Act"), the Exchange Act and
the applicable rules and regulations thereunder. As of their respective dates,
none of the SEC Reports, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. Each of the balance sheets in or incorporated by
reference into the SEC Reports (including the related notes and schedules)
fairly presents the financial position of the entity or entities to which it
relates as of its date and each of
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the statements of operations and retained earnings and of cash flows and changes
in financial position or equivalent statements in or incorporated by reference
into the SEC Reports (including any related notes and schedules) fairly presents
the results of operations, retained earnings and cash flows and changes in
financial position, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject, in the case of unaudited
interim statements, to normal year-end audit adjustments that are not material
in amount or effect), in each case in accordance with generally accepted
accounting principles applicable to bank holding companies consistently applied
during the periods involved, except as may be noted therein. It has no material
obligations or liabilities (contingent or otherwise) except as disclosed in the
SEC Reports. For purposes of this paragraph, material shall have the meaning as
defined under the Securities Act, the Exchange Act and the rules promulgated
thereunder;
(H) it has no material liabilities and obligations secured or
unsecured, whether accrued, absolute, contingent or otherwise, known or unknown,
due or to become due, including, but not limited to tax liabilities, that should
have been but are not reflected in or reserved against in its audited financial
statements as of December 31, 1998 or disclosed in the notes thereto;
(I) there has not been the occurrence of one or more events,
conditions, actions or states of facts which have caused a Material Adverse
Effect with respect to it since December 31, 1998;
(J) all material federal, state, local, and foreign tax returns
required to be filed by or on behalf of it or any of its Subsidiaries have been
timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired; and to the best of its
knowledge, all such returns filed are complete and accurate in all material
respects. All taxes shown on returns filed by it have been paid in full or
adequate provision has been made for any such taxes on its balance sheet (in
accordance with generally accepted accounting principles). As of the date of the
Plan, there is no audit examination, deficiency, or refund litigation with
respect to any taxes of it that would result in a determination that would have
a Material Adverse Effect. All taxes, interest, additions, and penalties due
with respect to completed and settled examinations or concluded litigation
relating to it have been paid in full or adequate provision has been made for
any such taxes on its balance sheet (in accordance with generally accepted
accounting principles). It has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any material tax due
that is currently in effect. Deferred taxes have been provided for in its
financial statements in accordance with generally accepted accounting principles
applied on a consistent basis;
(K)(1) no litigation, proceeding or controversy before any court or
governmental agency is pending, and there is no pending claim, action or
proceeding against it or any of its Subsidiaries, which is likely to have a
Material Adverse Effect or to prevent consummation of the transactions
contemplated hereby, and, to the best of its knowledge, no such litigation,
proceeding,
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controversy, claim or action has been threatened or is contemplated; and (2)
neither it nor any of its Subsidiaries is subject to any agreement, memorandum
of understanding, commitment letter, board resolution or similar arrangement
with, or transmitted to, any regulatory authority materially restricting its
operations as conducted on the date hereof or requiring that certain actions be
taken which could reasonably be expected to have a Material Adverse Effect;
(L) neither it nor its Subsidiaries are in default in any material
respect under any material contract (as defined in Item 601(b)(10)(i) and (ii)
of Regulation S-K) and there has not occurred any event that with the lapse of
time or the giving of notice or both would constitute such a default;
(M) all "employee benefit plans," as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA"), that cover any of
its or its Subsidiaries' employees, comply in all material respects with all
applicable requirements of ERISA, the Code and other applicable laws; neither it
nor any of its Subsidiaries has engaged in a "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any
such plan which is likely to result in any material penalties or taxes under
Section 502(i) of ERISA or Section 4975 of the Code; no material liability to
the Pension Benefit Guaranty Corporation has been or is expected by it or them
to be incurred with respect to any such plan which is subject to Title IV of
ERISA ("Pension Plan"), or with respect to any "single-employer plan" (as
defined in Section 4001(a)(15) of ERISA) currently or formerly maintained by it,
them or any entity which is considered one employer with it under Section 4001
of ERISA or Section 414 of the Code; no Pension Plan had an "accumulated funding
deficiency" (as defined in Section 302 of ERISA (whether or not waived) as of
the last day of the end of the most recent plan year ending prior to the date
hereof; the fair market value of the assets of each Pension Plan exceeds the
present value of the "benefit liabilities" (as defined in Section 4001(a)(16) of
ERISA) under such Pension Plan as of the end of the most recent plan year with
respect to the respective Plan ending prior to the date hereof, calculated on
the basis of the actuarial assumptions used in the most recent actuarial
valuation for such Pension Plan as of the date hereof; to the actual knowledge
of its executive officers, there are no pending or anticipated material claims
against or otherwise involving any of its employee benefit plans and no suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of activities of such plans) has been brought against or with
respect to any such plan, except for any of the foregoing which would not have a
Material Adverse Effect; no notice of a "reportable event" (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any Pension Plan within the 12-month
period ending on the date hereof; it and its Subsidiaries have not contributed
to a "multi-employer plan", as defined in Section 3(37) of ERISA; and it and its
Subsidiaries do not have any obligations for retiree health and life benefits
under any benefit plan, contract or arrangement, except as required by Section
4980B of the Code and Part 6 of Subtitle B of Title I of ERISA;
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<PAGE> 10
(N) each of it and its Subsidiaries has good and marketable title
to its respective properties and assets, tangible or intangible (other than
property as to which it is lessee), except for such defects in title which would
not, in the aggregate, have a Material Adverse Effect;
(O) it knows of no reason why the regulatory approvals referred to
in Paragraphs (A)(2) and (A)(3) of Article V should not be obtained without the
imposition of any condition of the type referred to in the proviso following
such Paragraphs (A)(2) and (A)(3) or why the accountants' letter referred to in
Paragraph (A)(10) of Article V cannot be obtained;
(P) its reserve for possible loan and lease losses as shown in its
audited financial statements as of December 31, 1998 was, and its reserve for
possible loan and lease losses as shown in all Quarterly Reports on Form 10-Q
filed prior to the Effective Date will be, adequate in all material respects
under generally accepted accounting principles applicable to banks and bank
holding companies;
(Q) it and each of its Subsidiaries has all material permits,
licenses, certificates of authority, orders, and approvals of, and has made all
filings, applications, and registrations with, federal, state, local, and
foreign governmental or regulatory bodies that are required in order to permit
it to carry on its business as it is presently conducted and the absence of
which would have a Material Adverse Effect; all such permits, licenses,
certificates of authority, orders, and approvals are in full force and effect,
and to the best knowledge of it no suspension or cancellation of any of them is
threatened;
(R) in the case of Synovus, the shares of capital stock to be
issued pursuant to the Plan, when issued in accordance with the terms of the
Plan, will be duly authorized, validly issued, fully paid and nonassessable and
subject to no preemptive rights of any current or past shareholders;
(S) neither it nor any of its Subsidiaries is a party to, or is
bound by, any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is it or any of its
Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice or seeking to compel it or
such Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or threatened;
(T) other than services provided by T. Stephen Johnson &
Associates, Inc., which has been retained by Merit and the arrangements with
which, including fees, have been disclosed to Synovus prior to the date hereof,
neither it nor any of its Subsidiaries, nor any of their respective officers,
directors, or employees, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions, or
finder's fees, and no broker or finder has acted directly or indirectly for it
or any of its Subsidiaries, in connection with the Plan or the transactions
contemplated hereby;
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<PAGE> 11
(U) the information to be supplied by it for inclusion in: (1) the
Registration Statement on Form S-4 and/or such other form(s) as may be
appropriate to be filed under the Securities Act, with the SEC by Synovus for
the purpose of, among other things, registering the Synovus Common Stock to be
issued to the shareholders of Merit in the Merger (the "Registration
Statement"); or (2) the proxy statement to be filed with the SEC under the
Exchange Act and distributed in connection with Merit's meeting of its
shareholders to vote upon this Plan (as amended or supplemented from time to
time, the "Proxy Statement", and together with the prospectus included in the
Registration Statement, as amended or supplemented from time to time, the "Proxy
Statement/Prospectus") will not at the time such Registration Statement becomes
effective, and in the case of the Proxy Statement/Prospectus at the time it is
mailed and at the time of the meeting of stockholders contemplated under this
Plan, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading;
(V) for purposes of this section, the following terms shall have
the indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to: (1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource); and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Substances. The term
Environmental Law includes without limitation: (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss. 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss. 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss. 7401, et
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251, et
seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss. 9601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss. 11001, et
seq; the Safe Drinking Water Act, 42 U.S.C. ss. 300f, et seq; all accompanying
federal regulations and all comparable state and local laws; and (2) any common
law (including without limitation common law that may impose strict liability)
that may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous
Substance.
"Hazardous Substance" means any substance or waste presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any material containing any such
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<PAGE> 12
substance as a component. Hazardous Substances include without limitation
petroleum or any derivative or by-product thereof, asbestos, radioactive
material, and polychlorinated biphenyls.
"Loan Portfolio Properties and Other Properties Owned" means those
properties owned or operated by Synovus or Merit as applicable, or any of their
respective Subsidiaries.
(1) there are no actions, suits, demands, notices,
claims, investigations or proceedings pending or, to the actual knowledge of its
executive officers, threatened against it and its Subsidiaries relating to the
Loan Portfolio Properties and Other Properties Owned by it or its Subsidiaries
under any Environmental Law, including without limitation any notices, demand
letters or requests for information from any federal or state environmental
agency relating to any such liabilities under or violations of Environmental
Law, nor, in the actual knowledge of its executive officers and the executive
officers of its Subsidiaries, are there any circumstances which could lead to
such actions, suits, demands, notices, claims, investigations or proceedings,
except such which will not have, or result in, a Material Adverse Effect;
(W) in the case of Merit, all securities issued by it (or any
other person), convertible into Merit Common Stock shall, as a result and upon
consummation of the Merger be convertible only into Synovus Common Stock; and
(X) it has adopted and is in the process of implementing policies
and procedures to ensure that it will be in material compliance with the Federal
Financial Institutions Examination Counsel's May 5, 1997 Interagency Statement
on Year 2000 Project Management Awareness and subsequent regulatory directives
with respect to Year 2000 issues.
IV. COVENANTS
Synovus hereby covenants to Merit, and Merit hereby covenants to
Synovus, that:
(A) it shall take or cause to be taken all action necessary or
desirable under the Plan on its part as promptly as practicable, including the
filing of all necessary applications and the Registration Statement, so as to
permit the consummation of the transactions contemplated by the Plan at the
earliest possible date and cooperate fully with the other party hereto to that
end;
(B) in the case of Merit, it shall: (1) take all steps necessary
to duly call, give notice of, convene and hold a meeting of its shareholders for
the purpose of approving the Plan as soon as is reasonably practicable; (2)
distribute to its shareholders the Proxy Statement/Prospectus in accordance with
applicable federal and state law and with its articles of incorporation and
by-laws; (3) recommend to its shareholders that they approve the Plan (unless
such recommendation would constitute a breach of its fiduciary duties as
determined in good faith after
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<PAGE> 13
consultation with counsel); and (4) cooperate and consult with Synovus with
respect to each of the foregoing matters;
(C) it will cooperate in the preparation and filing of the Proxy
Statement/Prospectus and Registration Statement in order to consummate the
transactions contemplated by the Plan as soon as is reasonably practicable;
(D) Synovus will advise Merit, promptly after Synovus receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of the shares of Synovus Common Stock
issuable pursuant to the Plan for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose or of any request by
the SEC for the amendment or supplement of the Registration Statement or for
additional information;
(E) in the case of Synovus, it shall take all actions to obtain,
prior to the effective date of the Registration Statement, all applicable state
securities law or "Blue Sky" permits, approvals, qualifications or exemptions
for the Synovus shares to be issued pursuant to this Plan;
(F) subject to its disclosure obligations imposed by law, unless
reviewed and agreed to by the other party hereto in advance, it will not issue
any press release or written statement for general circulation relating to the
transactions contemplated hereby; provided however, that nothing in this
Paragraph (F) shall be deemed to prohibit either party from making any
disclosure which its counsel deems necessary or advisable in order to satisfy
such party's disclosure obligations imposed by law;
(G) from and subsequent to the date hereof, it will: (1) give to
the other party hereto and its respective counsel and accountants reasonable
access to its premises and books and records during normal business hours for
any reasonable purpose related to the transactions contemplated hereby; and (2)
cooperate and instruct its respective counsel and accountants to cooperate with
the other party hereto and with its respective counsel and accountants with
regard to the formulation and production of all necessary information,
disclosures, financial statements, registration statements and regulatory
filings with respect to the transactions encompassed by the Plan. Any nonpublic
information regarding either party shall be held subject to the terms of that
certain letter agreement between Synovus and Merit dated March 23, 1999;
(H) it shall notify the other party hereto as promptly as
practicable of: (1) any breach of any of its representations, warranties or
agreements contained herein; (2) any occurrence, or impending occurrence, of any
event or circumstance which would cause or constitute a material breach of any
of the representations, warranties or agreements of it contained herein; and (3)
any material adverse change in its financial condition, results of operations or
business; and (4) it shall use its best efforts to prevent or remedy the same;
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<PAGE> 14
(I) it shall cooperate and use its best efforts to promptly
prepare and file all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents, and to obtain all
necessary permits, consents, approvals and authorizations of all third parties
and governmental bodies or agencies, including, in the case of Synovus,
submission of applications for approval of the Plan and the transactions
contemplated hereby to the Board of Governors of the Federal Reserve System (the
"Board of Governors") in accordance with the provisions of the Bank Holding
Company Act of 1956, as amended (the "BHC Act") and the Georgia Department of
Banking and Finance ("Georgia Department"), and to such other regulatory
agencies as required by law;
(J) it will use its best efforts to cause the Merger to qualify
for pooling of interests accounting treatment and to qualify as a reorganization
within the meaning of Section 368(a) of the Code for federal income tax
purposes;
(K) Synovus shall use its best efforts to cause the shares of
Synovus Common Stock to be issued pursuant to the terms of this Plan to be
approved for listing on the NYSE, and each such share shall be entitled to ten
votes per share in accordance with and subject to those certain Articles of
Amendment to Synovus' Articles of Incorporation dated April 24, 1986;
(L) following the Effective Date, Synovus shall continue to
provide generally to officers and employees of Merit and its Subsidiaries
employee benefits, including without limitation pension benefits, health and
welfare benefits, life insurance and vacation and severance arrangements
(collectively, "Employee Benefits"), on terms and conditions which, when taken
as a whole, are substantially similar to those currently provided by Merit and
its Subsidiaries. As soon as administratively and financially practicable
following the Effective Date, Synovus shall provide generally to officers and
employees of Merit and its Subsidiaries Employee Benefits which, when taken as a
whole, are substantially similar to those provided from time to time by Synovus
and its Subsidiaries to their similarly situated officers and employees. With
respect to Employee Benefits maintained by Synovus in which Merit participates
after the Effective Date, Synovus agrees: (1) to treat service by Merit
employees prior to the Effective Date as service with Synovus for eligibility
and vesting purposes only; and (2) to waive pre-existing condition limitations,
if any, as would otherwise be applied to participating employees of Merit upon
the implementation of such Employee Benefits constituting "group health plans"
within the meaning of Section 5000(b)(i) of the Code;
(M) it shall promptly furnish the other party with copies of all
documents filed prior to the Effective Date with the SEC and all documents filed
with other governmental or regulatory agencies or bodies in connection with the
Merger;
(N) Merit shall use its best efforts to cause each director,
executive officer and other person who is an "affiliate" (for purposes of Rule
145 under the Securities Act and for purposes
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<PAGE> 15
of qualifying for "pooling-of interests" treatment as described below) to
deliver to Synovus as soon as practicable after the date hereof, but in no event
after the date of the Merit shareholders meeting called to approve the Merger, a
written agreement providing that such person will not sell, pledge, transfer or
otherwise dispose of any shares of Merit Common Stock held by such "affiliate"
and the shares of Synovus Common Stock to be received by such "affiliate" in the
Merger: (1) in the case of shares of Synovus Common Stock only, except in
compliance with the applicable provisions of the Securities Act and the rules
and regulations thereunder; and (2) during the periods during which any such
sale, pledge, transfer or other disposition would, under generally accepted
accounting principles or the rules, regulations or interpretations of the SEC,
disqualify the Merger for "pooling-of-interests" accounting treatment, except as
permitted by Staff Accounting Bulletin No. 76 issued by the SEC. The
certificates of Synovus Common Stock issued to affiliates of Merit will bear an
appropriate legend reflecting the foregoing. The parties understand that such
periods in general encompass the period commencing 30 days prior to the Merger
and ending at the time of the publication of financial results covering at least
30 days of combined operations of Synovus and Merit within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies;
(O) it will not directly or indirectly take any action or omit to
take any action to cause any of its representations and warranties made in this
Plan to become untrue;
(P) in the case of Synovus, it shall take no action which would
cause the shareholders of Merit to recognize gain or loss as a result of the
Merger to the extent such shareholders would not otherwise recognize gain or
loss as described in Paragraph (A)(8) of Article V;
(Q) it shall take no action which would prevent the issuance of
the accountants' letter referred to in Paragraph (A)(10) of Article V,
including, in the case of Merit, the discretionary vesting of outstanding stock
options;
(R) Merit shall coordinate with Synovus the declaration of any
dividends in respect of Merit Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties hereto that
holders of Merit Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with respect to their
shares of Merit Common Stock and any shares of Synovus Common Stock any such
holder receives in exchange therefor in the Merger;
(S) Merit will, within 30 days after the date hereof, engage a
firm satisfactory to Synovus to conduct: (a) a phase one environmental
assessment of the banking facilities currently owned by Merit upon which Merit
is conducting a banking business, which assessment shall meet the standards of
ASTM E1527-97 and shall include at a minimum a site history, on-site
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<PAGE> 16
inspection, asbestos report, evaluation of surrounding properties and soil tests
in the event any underground storage tanks are discovered; and (b) a transaction
screen that meets the standards of ASTM E 1528 for the properties that Merit
leases, which are known as Riverside, Stone Mountain and Peachtree Corners
branches and in addition, Merit agrees to conduct a phase one assessment of the
leased properties if, in Synovus' reasonable judgment, the transaction screen
indicates potential environmental liabilities associated with the leased
properties. Synovus has requested such inspection and testing in an effort to
reasonably determine whether potential liabilities exist relating to
Environmental Law. Delivery of the phase one assessments and transaction screens
satisfactory to Synovus is an express condition precedent to the consummation of
the Merger. Within 15 days after receipt of these reports, Synovus shall notify
Merit in writing whether or not, in the reasonable judgment of Synovus, the
results of such reports will have a Material Adverse Effect on Merit. In the
event that Synovus determines, in its reasonable judgment, that the results of
such reports will have a Material Adverse Effect on Merit, such written
notification shall include a statement by Synovus regarding whether or not it
intends to terminate this Agreement based upon the results of such reports. The
Parties agree that Synovus has given Merit good and valuable consideration for
its agreement to obtain and pay the cost of such inspection and testing, and
Synovus shall be entitled to rely on same;
(T) Prior to the Effective Date, Merit shall purchase for, and on
behalf of, its current and former officers and directors, extended coverage
under the current directors' and officers' liability insurance policy maintained
by Merit to provide for continued coverage of such insurance for a period of
three years following the Effective Date with respect to matters occurring prior
to the Effective Date; and
(U)(1) in the case of Synovus, subject to the conditions set forth in
Paragraph (2) below, for a period of three years after the Effective Date,
Synovus shall indemnify, defend and hold harmless each person entitled to
indemnification from Merit and its Subsidiaries (each, an "Indemnified Party")
against all liabilities arising out of actions or omissions occurring at or
prior to the Effective Date (including the transactions contemplated by this
Agreement) to the fullest extent permitted under Georgia law and by Merit's and
its Subsidiaries' Articles of Incorporation and bylaws 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 Synovus is required to effectuate any indemnification, Synovus 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
Synovus and the Indemnified Party.
(2) Any Indemnified Party wishing to claim indemnification under
Paragraph (R)(1) upon learning of any such liability or litigation, shall
promptly notify Synovus thereof. In the event of any such litigation (whether
arising before or after the Effective Date), (a) Synovus shall have the right to
assume the defense thereof, and Synovus shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by
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<PAGE> 17
such Indemnified Parties in connection with the defense thereof, except that if
Synovus elects not to assume such defense or counsel for the Indemnified Parties
advises that there are substantive issues which raise conflicts of interest
between Synovus and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Synovus shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that Synovus shall be obligated pursuant to
this Paragraph (2) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (b) the Indemnified Parties will cooperate in the
defense of any such litigation, and (c) Synovus shall not be liable for any
settlement effected without its prior written consent; and provided further,
that Synovus 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.
V. CONDITIONS TO CONSUMMATION
(A) The respective obligations of Synovus and of Merit to effect
the Merger shall be subject to the satisfaction prior to the Effective Date of
the following conditions:
(1) the Plan and the transactions contemplated hereby
shall have been approved by the requisite vote of the shareholders of Merit in
accordance with applicable law and Merit shall have furnished to Synovus
certified copies of resolutions duly adopted by Merit's shareholders evidencing
the same;
(2) the procurement by Synovus and Merit of approval of
the Plan and the transactions contemplated hereby by the Board of Governors and
by the Georgia Department;
(3) procurement of all other regulatory consents and
approvals which are necessary to the consummation of the transactions
contemplated by the Plan; provided, however, that no approval or consent in
Paragraphs (A)(2) and (A)(3) of this Article V shall be deemed to have been
received if it shall include any conditions or requirements (other than
conditions or requirements which are customarily included in such an approval or
consent) which would have such a material adverse impact on the economic or
business benefits of the transactions contemplated hereby as to render
inadvisable the consummation of the Merger in the reasonable opinion of the
Board of Directors of Synovus or Merit;
(4) the satisfaction of all other statutory or regulatory
requirements which are necessary to the consummation of the transactions
contemplated by the Plan;
(5) no party hereto shall be subject to any order, decree
or injunction or any other action of a United States federal or state court of
competent jurisdiction permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement;
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<PAGE> 18
(6) no party hereto shall be subject to any order, decree
or injunction or any other action of a United States federal or state
governmental, regulatory or administrative agency or commission permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement;
(7) the Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC,
and Synovus shall have received all state securities law and "Blue Sky" permits,
approvals, qualifications or exemptions necessary to consummate the transactions
contemplated hereby;
(8) each party shall have received an opinion ("Tax
Opinion") from KPMG LLP, certified public accountants ("KPMG"), updated as of
the Effective Date, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a)(1)(A) of the Code and that, accordingly: (i) no gain or loss will be
recognized by Synovus or Merit as a result of the Merger; and (ii) no gain or
loss will be recognized by the shareholders of Merit who exchange their shares
of Merit Common Stock solely for shares of Synovus Common Stock pursuant to the
Merger;
(9) each party shall have delivered to the other party a
certificate, dated as of the Effective Date, signed by its Chairman of the
Board, or its Chief Financial Officer, and by its Controller to the effect that,
to the best knowledge and belief of such officers, the statement of facts and
representations made on behalf of the management of such party, presented to
KPMG in delivering the Tax Opinion, were at the date of such presentation true,
correct and complete. Each party shall have received a copy of the Tax Opinion
referred to in Paragraph (A)(8) of this Article V; and
(10) Synovus shall have received a letter dated as of the
Effective Date from KPMG, its independent certified public accountants, to the
effect that the Merger will qualify for pooling of interests accounting
treatment. Prior to the receipt of said letter, Synovus and Merit shall have
received a letter from PricewaterhouseCoopers LLP, Merit's certified public
accountants, stating that Merit meets the criteria for pooling of interests
accounting treatment.
(B) The obligation of Synovus to effect the Merger shall be
subject to the satisfaction prior to the Effective Date of the following
additional conditions:
(1) each of the representations, warranties and covenants
contained herein of Merit shall be true on, or complied with by, the Effective
Date in all material respects as if made on such date (or on the date when made
in the case of any representation or warranty which
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<PAGE> 19
specifically relates to an earlier date) and Synovus shall have received a
certificate signed by the Chief Executive Officer of Merit, dated the Effective
Date, to such effect;
(2) there shall be no discovery of facts, or actual or
threatened causes of action, investigations or proceedings by or before any
court or other governmental body that relates to or involves either Merit or its
Subsidiaries: (a) which, in the reasonable judgment of Synovus, would have a
Material Adverse Effect upon Merit or the consummation of the transactions
contemplated by this Agreement; (b) that challenges the validity or legality of
this Agreement or the consummation of the transactions contemplated by this
Agreement; or (c) that seeks to restrain or invalidate the consummation of the
transactions contemplated by this Agreement or seeks damages in connection
therewith;
(3) Synovus shall not have learned of any fact or
condition with respect to the business, properties, assets, liabilities, deposit
relationships or earnings of Merit which, in the reasonable judgment of Synovus,
is materially at variance with one or more of the warranties or representations
set forth in this Agreement or which, in the reasonable judgment of Synovus, has
or will have a Material Adverse Effect on Merit;
(4) J. Randall Carroll and Ronald H. Francis shall have
entered into employment agreements with Synovus as proposed by Synovus and
approved by Messrs. Carroll and Francis which will become effective as of the
Effective Date;
(5) on the Effective Date, Mountain National Bank and
Charter Bank & Trust Co. will each have a CAMEL rating of at least 2 and a
Compliance Rating and Community Reinvestment Act Rating of at least
Satisfactory;
(6) on the Effective Date, Merit will have a loan loss
reserve of at least 1.50% of loans and which will be adequate in all material
respects under generally accepted accounting principles applicable to banks;
(7) Merit shall have delivered to Synovus the
environmental reports referenced in Paragraph (V) of Article III;
(8) the results of any regulatory exam of Merit and its
Subsidiaries occurring between the date hereof and the Effective Date shall be
reasonably satisfactory to Synovus; and
(9) each of the officers and directors of Merit shall
have delivered a letter to Synovus to the effect that such person is not aware
of any claims he might have against Merit other than routine compensation,
benefits and the like as an employee, or ordinary rights as a customer.
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<PAGE> 20
(C) The obligation of Merit to effect the Merger shall be subject
to the satisfaction prior to the Effective Date of the following additional
conditions:
(1) each of the representations, warranties and covenants
contained herein of Synovus shall be true on, or complied with by, the Effective
Date in all material respects as if made on such date (or on the date when made
in the case of any representation or warranty which specifically relates to an
earlier date) and Merit shall have received a certificate signed by the Chief
Executive Officer of Synovus, dated the Effective Date, to such effect;
(2) the listing for trading of the shares of Synovus
Common Stock which shall be issued pursuant to the terms of this Plan on the
NYSE shall have been approved by the NYSE subject to official notice of
issuance;
(3) there shall be no discovery of facts, or actual or
threatened causes of action, investigations or proceedings by or before any
court or other governmental body that relates to or involves either Synovus or
its Subsidiaries: (a) which, in the reasonable judgment of Merit, would have a
Material Adverse Effect upon either Synovus or the consummation of the
transactions contemplated by this Agreement; (b) that challenges the validity or
legality of this Agreement or the consummation of the transactions contemplated
by the Agreement; or (c) that seeks to restrain or invalidate the consummation
of the transactions contemplated by this Agreement or seeks damages in
connection therewith;
(4) Merit shall not have learned of any fact or condition
with respect to the business, properties, assets, liabilities, deposit
relationships or earnings of Synovus which, in the reasonable judgment of Merit,
is materially at variance with one or more of the warranties or representations
set forth in this Agreement or which, in the reasonable judgment of Merit, has
or will have a Material Adverse Effect on Synovus;
(5) Merit shall have received from the Deputy General
Counsel of Synovus an opinion to the effect that Synovus is duly organized,
validly existing and in good standing, the Plan has been duly and validly
authorized by all necessary corporate action on the part of Synovus, has been
duly and validly executed and delivered by Synovus, is the valid and binding
obligation of Synovus, enforceable in accordance with its terms except as such
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and
that the shares of Synovus Common Stock to be issued in the Merger are duly
authorized, validly issued, fully paid, nonassessable, and not subject to any
preemptive rights of any current or past shareholders; and
(6) Merit shall have received from T. Stephen Johnson &
Associates, Inc. a letter, dated not more than five (5) business days prior to
the date of the Proxy Statement, to the effect that, in the opinion of such
firm, the Exchange Ratio is fair, from a financial point of view, to the holders
of Merit Common Stock.
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VI. TERMINATION
A. The Plan may be terminated prior to the Effective Date, either
before or after its approval by the stockholders of Merit:
(1) by the mutual consent of Synovus and Merit, if the
Board of Directors of each so determines by vote of a majority of the members of
its entire Board;
(2) by Synovus or Merit if consummation of the Merger
does not occur by reason of the failure of any of the conditions precedent set
forth in Article V hereof unless the failure to meet such condition precedent is
due to a breach of the Plan by the party seeking to terminate;
(3) by Synovus or Merit if its Board of Directors so
determines by vote of a majority of the members of its entire Board in the event
that the Merger is not consummated by November 30, 1999 unless the failure to so
consummate by such time is due to the breach of the Plan by the party seeking to
terminate;
(4) by Merit, if the average closing price of Synovus
Common Stock on the NYSE is below $17.00 per share for the 20 trading day period
ending five business days prior to the shareholders' meeting called to vote on
the Merger ("Measurement Period"). Merit shall have three business days after
such time in which to make a determination to terminate this Agreement; and
(5) by Synovus, if the average closing price of Synovus
Common Stock on the NYSE is above $25.00 per share for the Measurement Period.
Synovus shall have three business days after such time in which to make a
determination to terminate this Agreement.
B. In the event of the termination and abandonment of this
Agreement pursuant to Article VI(A) of this Agreement, this Agreement shall
become void and have no effect, except as set forth in Paragraph (A) of Article
VIII, and there shall be no liability on the part of any party hereto or their
respective officers or directors; provided, however, that: (1) Merit shall be
entitled to a cash payment from Synovus for Merit's reasonable out-of-pocket
expenses relating to the Merger in an amount not to exceed $150,000, which
amount shall not be deemed an exclusive remedy or liquidated damages, in the
event of the termination of this Agreement due to (i) the failure by Synovus to
satisfy any of its representations, warranties or covenants set forth herein; or
(ii) withdrawal of the fairness opinion of T. Stephen Johnson & Associates,
Inc., other than a withdrawal due to materially inaccurate or fraudulent
information having been provided by Merit to T. Stephen Johnson & Associates,
Inc.; and (2) Synovus shall be entitled to a cash payment
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<PAGE> 22
from Merit for Synovus' reasonable out-of-pocket expenses relating to the Merger
in an amount not to exceed $150,000, which amount shall not be deemed an
exclusive remedy or liquidated damages, in the event of the termination of this
Agreement due to the failure by Merit to satisfy any of its representations,
warranties or covenants set forth herein.
VII. EFFECTIVE DATE
The "Effective Date" shall be the date on which the Merger becomes
effective as specified in the Certificate of Merger to be filed with the
Secretary of State of Georgia approving the Merger.
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<PAGE> 23
VIII. OTHER MATTERS
(A) The agreements and covenants of the parties which by their
terms apply in whole or in part after the Effective Date shall survive the
Effective Date. Except for Paragraph (R) of Article III, and Paragraph (N) of
Article IV which shall survive the Effective Date, no other representations,
warranties, agreements and covenants shall survive the Effective Date. If the
Plan shall be terminated, the agreements of the parties in Paragraph (G) of
Article IV, Paragraph (B) of Article VI and Paragraphs (E) and (F) of this
Article shall survive such termination.
(B) Prior to the Effective Date, any provision of the Plan may be:
(1) waived by the party benefitted by the provision or by both parties; or (2)
amended or modified at any time (including the structure of the transaction) by
an agreement in writing between the parties hereto approved by their respective
Boards of Directors (to the extent allowed by law) or by their respective Boards
of Directors.
(C) This Plan may be executed in multiple and/or facsimile
originals, and each copy of the Plan bearing the manually executed, facsimile
transmitted or photocopied signature of each of the parties hereto shall be
deemed to be an original.
(D) The Plan shall be governed by, and interpreted in accordance
with, the laws of the State of Georgia.
(E) Each party hereto will bear all expenses incurred by it in
connection with the Plan and the transactions contemplated hereby, including,
but not limited to, the fees and expenses of its respective counsel and
accountants.
(F) Each of the parties and its respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed unless it is advised
by counsel that any such information is required by law to be disclosed.
(G) All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, telecopy, telegram or telex
(confirmed in writing), by overnight courier or sent by registered or certified
mail, postage paid, to such party at its address set forth below or such other
address as such party may specify by notice to the other party hereto.
If to Synovus, to Mr. Thomas J. Prescott, Executive Vice President and
Chief Financial Officer of Synovus, Suite 301, 901 Front Avenue, Columbus,
Georgia 31901 (Fax Number 706/649-2342), with a copy to Ms. Kathleen Moates at
the same address.
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<PAGE> 24
If to Merit to J. Randall Carroll, Chairman of the Board and Chief
Executive Officer, Merit Holding Corporation, 5100 LaVista Road, Tucker, Georgia
30085-0049, (Fax Number 770/270/9132), Ronald H. Francis, President, Merit
Holding Corporation, 269 Roswell Street, Marietta, Georgia 30060, (Fax Number
770/428-1409), with a copy to Robert C. Schwartz, Smith, Gambrell & Russell,
LLP, Suite 3100, Promenade II, Atlanta, Georgia 30309-3592, (Fax Number
404/685-7058.
(H) All terms and provisions of the Plan shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Except as expressly provided for herein, nothing in this Plan is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Plan.
(I) The Plan represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes any
and all other oral or written agreements heretofore made.
(J) This Plan may not be assigned by any party hereto without the
written consent of the other parties.
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<PAGE> 25
In Witness Whereof, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers as of the day and
year first above written.
SYNOVUS FINANCIAL CORP.
By: /s/ Thomas Prescott
-----------------------------------------------------
Title: Executive Vice President and Chief
Financial Officer
-------------------------------------------
Attest: /s/ Kathleen Moates
-------------------------------------------------
Title: Assistant Secretary
-------------------------------------------
MERIT HOLDING CORPORATION
BY: /s/ J. Randall Carroll
-----------------------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------------
Attest: /s/ Ronald H. Francis
-------------------------------------------------
Title: President and Chief Financial Officer
-------------------------------------------
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<PAGE> 26
Appendix "A"
Conversion Ratio Table
The conversion ratio of shares of Synovus Common Stock for Merit Common
Stock to be issued upon consummation of the Merger shall be computed using the
following table:
Average of the Closing Prices Per
Share of Synovus Common Stock on Per Share Ratio of
the 20 Trading Days ending on the 5th Conversion-Shares of Synovus
Business Day Before the Merit Common Stock To
Special Shareholders' Meeting Merit Common Stock
- ----------------------------- -------------------
<TABLE>
<S> <C>
$22.80 and above 1.0537:1
22.00 1.0920:1
21.00 1.1440:1
20.00 1.2012:1
19.00 1.2644:1
18.00 1.3347:1
17.00 or below 1.4132:1
</TABLE>
In the event the above-described average of the closing prices per
share of Synovus Common Stock is greater than $17.00 per share but less than
$22.80 per share, such conversion ratio shall be interpolated and arrived at in
a manner consistent with this Table.
The minimum conversion ratio of shares of Synovus Common Stock for
shares of Merit Common Stock upon consummation of the Merger shall be 1.0537:1.
The maximum conversion ratio of shares of Synovus Common Stock for
shares of Merit Common Stock upon consummation of the Merger shall be 1.4132:1.
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