Exhibit 2
AFFILIATION AGREEMENT
BETWEEN
FIFTH THIRD BANCORP
AND
CNB BANCSHARES, INC.
iv
TABLE OF CONTENTS
Article I.
Mode of Effectuating Conversion of Shares; Effects of the Merger.....2
A. The Merger.....................................................2
B. Treatment of Fifth Third Stock.................................2
C. Treatment of CNB Bancshares Stock..............................2
D. Treatment of CNB Bancshares Options............................2
E. Exchange Procedures............................................4
F. Adjustments to Exchange Ratio..................................5
G. Convertible Debentures.........................................6
H. Effectiveness of Merger; Surviving Corporation.................6
I. Articles of the Surviving Corporation..........................6
J. Directors and Officers of the Surviving Corporation............6
K. Regulations of the Surviving Corporation.......................6
L. Effects of the Merger..........................................7
M. Further Actions................................................7
N. Filing of Documents............................................7
O. Tax and Accounting Treatment...................................7
P. No Dissenters' Rights..........................................7
Q. Consolidation of Entities; Changes to Form of Merger...........7
R. Plan or Articles of Merger.....................................8
S. Disclosure Schedule; Standard..................................8
Article II.
Representations and Warranties of CNB Bancshares....................9
A. Organization; Capitalization; Subsidiaries....................9
B. Bank Subsidiary..............................................10
C. Financial Statements; Regulatory Reports.....................10
D. Title to Properties..........................................12
E. No Material Adverse Effect...................................12
F. Litigation; Regulatory Action................................12
G. Ordinary Course of Business..................................13
H. Taxes; Accounting............................................13
i
I. Contracts....................................................13
J. Loan Losses..................................................14
K. Broker.......................................................14
L. Board Approval; Corporate Authority; No Breach...............14
M. Articles and By-laws.........................................15
N. Compliance with Law..........................................16
O. Intentionally Omitted........................................16
P. Environmental Matters........................................16
Q. Employment Matters...........................................17
R. Investment Portfolio.........................................20
S. Anti-takeover Provisions; No Impediments.....................21
T. Derivative Instruments.......................................21
U. Year 2000....................................................21
V. Fairness Opinion.............................................22
W. Transactions with Affiliates.................................22
X. Expiration of Representations and Warranties.................22
Article III.
Representations and Warranties of Fifth Third......................22
A. Organization.................................................22
B. Capitalization...............................................22
C. Intentionally Omitted........................................23
D. Due Issuance.................................................23
E. Financial Statements.........................................23
F. No Material Adverse Effect...................................23
G. Board Approval; Corporate Authority; No Breach...............23
H. Articles and Regulations.....................................24
I. Compliance with Law..........................................24
J. SEC Filings; Regulatory Reports..............................25
K. Litigation; Regulatory Action................................25
L. Loan Losses..................................................26
M. Tax Returns..................................................26
N. Broker.......................................................26
O. Investment Portfolio.........................................26
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P. Taxes; Accounting............................................27
Q. Year 2000....................................................27
R. Expiration of Representations and Warranties.................27
Article IV.
Obligations of CNB Bancshares Between the Date of this Agreement and
the Effective Time.................................................27
A. Shareholders' Meeting .......................................27
B. No Solicitation..............................................28
C. Valuation Adjustment.........................................29
D. Operations in the Ordinary Course; Forbearances..............29
Article V.
Cooperation and Other Obligations and Other Covenants..............30
A. Registration Statement and Proxy Statement...................30
B. Regulatory Approvals.........................................31
C. Reasonable Best Efforts......................................32
D. Access to Information........................................32
E. Employee Benefit Matters.....................................33
F. State Takeover Statutes......................................35
G. Affiliates...................................................35
H. Exemption from Liability Under Section 16(b).................36
I. Employment Agreement.........................................36
J. Forbearances of Fifth Third..................................36
K. Coordination of Dividends....................................36
Article VI.
Conditions Precedent to Closing....................................37
A. Conditions to the Obligations of Each of the Parties.........37
B. Additional Conditions to the Obligations of Fifth Third......38
C. Additional Conditions to the Obligations of CNB Bancshares...38
Article VII.
Additional Covenants...............................................39
A. Bank Merger..................................................39
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B. Employment Arrangements......................................39
C. Director, Officer and Employee Indemnification...............41
D. Notices......................................................42
E. Entire Agreement.............................................43
F. Electronic Funds Transfers...................................43
G. Press Releases...............................................43
H. Expenses.....................................................43
I. Advice of Changes............................................43
J. Tax and Accounting Treatment.................................44
K. Enforcement of this Agreement................................44
Article VIII.
Termination........................................................44
A. Bases for Termination........................................44
B. Effect of Termination........................................45
Article IX.
Closing and Effective Time.........................................45
Article X.
Amendment..........................................................45
Article XI.
General............................................................46
Article XII.
Counterparts.......................................................46
APPENDIX A OPTION AGREEMENT
APPENDIX B FORM OF CNB BANCSHARES AFFILIATE LETTER
APPENDIX C FORM OF FIFTH THIRD AFFILIATE LETTER
iv
AFFILIATION AGREEMENT
This Affiliation Agreement (this "Agreement") dated as of June 16, 1999 is
entered into by and between FIFTH THIRD BANCORP, a corporation organized and
existing under the corporation laws of the State of Ohio with its principal
office located in Cincinnati, Xxxxxxxx County, Ohio ("Fifth Third"), and CNB
BANCSHARES, INC., a corporation organized and existing under the corporation
laws of the State of Indiana, with its principal office located in Evansville,
Vanderburgh County, Indiana ("CNB Bancshares").
W I T N E S S E T H :
WHEREAS, Fifth Third is a registered multi-bank holding company under the Bank
Holding Company Act of 1956, as amended, and CNB Bancshares is a registered
bank holding company registered under the Bank Holding Company Act of 1956, as
amended, and Fifth Third and CNB Bancshares desire to effect a merger under the
authority and provisions of the corporation laws of the State of Ohio and the
State of Indiana pursuant to which at the Effective Time (as herein defined in
Article IX) CNB Bancshares will be merged with and into Fifth Third, with Fifth
Third as the surviving corporation (the "Merger");
WHEREAS, the Board of Directors of CNB Bancshares has determined
that it is in the best interests of CNB Bancshares and its stockholders to
consummate the Merger, subject to the terms and conditions set forth herein;
WHEREAS, the Board of Directors of Fifth Third has determined that
it is in the best interests of Fifth Third and its stockholders to consummate
the Merger, subject to the terms and conditions set forth herein;
WHEREAS, under the terms of this Agreement each share of Common Stock, no par
value per share, of CNB Bancshares (the "CNB Bancshares Common Stock"), which
is issued and outstanding (excluding any treasury shares) immediately prior to
the Effective Time will at the Effective Time be canceled and extinguished and
converted into shares of Common Stock, without par value, of Fifth Third
("Fifth Third Common Stock"), all as more fully provided in this Agreement;
WHEREAS, the parties to this Agreement intend that the Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code") and for pooling-of-interests accounting
treatment;
WHEREAS, as an inducement and condition to, and concurrently with, the
execution of, this Agreement, Fifth Third and CNB Bancshares are entering into
a stock option agreement (the "Option Agreement") in the form attached hereto
as Appendix A;
WHEREAS, prior to the date hereof, the Board of Directors of CNB Bancshares
has approved, adopted and recommended this Agreement and the Merger, upon the
terms and subject to the conditions set forth herein, and has approved
(including for purposes of Chapter 42 and Chapter 43 of the Indiana Business
Corporation Law (the "IBCL")) the Option Agreement, upon the terms and subject
to the conditions set forth herein and therein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
Fifth Third and CNB Bancshares, agree together as follows:
ARTICLE I. MODE OF EFFECTUATING CONVERSION OF SHARES; EFFECTS OF THE MERGER
A. The Merger. Upon the terms and conditions set forth in this
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Agreement, CNB Bancshares shall be merged with and into Fifth Third.
B. Treatment of Fifth Third Stock. At the Effective Time (as
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defined in Article IX) all of the shares of Fifth Third Common Stock that are
issued and outstanding or held by Fifth Third as treasury shares immediately
prior to the Effective Time will remain unchanged and will remain outstanding
or as treasury shares, as the case may be, of the Surviving Corporation. Any
stock options, subscription rights, warrants or other securities outstanding
immediately prior to the Effective Time, entitling the holders to
subscribe for purchase of any shares of the capital stock of any class of Fifth
Third, and any securities outstanding at such time that are convertible into
shares of the capital stock of any class of Fifth Third will remain unchanged
and will remain outstanding, with the holders thereof entitled to subscribe
for, purchase or convert their securities into the number of shares of the class
of capital stock of Fifth Third to which they are entitled under the terms of
the governing documents.
C. Treatment of CNB Bancshares Stock. 1. At the Effective Time,
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each share of CNB Bancshares Common Stock (excluding treasury shares) that is
issued and outstanding immediately prior to the Effective Time will be
converted by virtue of the Merger and without further action, into .8825
shares of Fifth Third Common Stock (the "Exchange Ratio"), or cash in lieu
thereof for fractional shares, if any, as described in Section I.E. below,
subject to adjustment as provided in Section I.F. below. At the Effective
Time, all shares of CNB Bancshares Common Stock held as treasury shares and
all shares of CNB Bancshares Common Stock owned by Fifth Third or any of its
wholly-owned subsidiaries (other than in a fiduciary, custodial or similar
capacity or owned as a result of a debt previously contracted) will be canceled
and terminated and no shares of Fifth Third or other consideration will be
issued in exchange therefor.
2. At the Effective Time, all of the shares of CNB Bancshares
Common Stock, whether issued or unissued (including treasury shares), will
be converted as provided in this Article I, canceled and extinguished and
the holders of certificated or uncertificated shares thereof shall cease to
have any rights as shareholders of CNB Bancshares, other than the right to
receive any dividend or other distribution with respect to such CNB
Bancshares Common Stock with a record date occurring prior to the Effective
Time and the right to receive the consideration provided in this Article I.
After the Effective Time, there shall be no transfers on the stock transfer
books of CNB Bancshares of shares of CNB Bancshares Common Stock.
D. Treatment of CNB Bancshares Options. 1. At the Effective
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Time, each award, option, or other right to purchase or acquire shares of CNB
Bancshares Common Stock pursuant to stock options ("CNB Bancshares Rights")
granted by CNB Bancshares under the stock option plans identified in the
Disclosure Schedule (as defined below) ("Stock Plan"), which are outstanding
at the Effective Time, whether or not vested or exercisable, shall
automatically be converted into and become options with respect to Fifth Third
Common Stock, and Fifth Third shall assume each CNB Bancshares Right, in
accordance with the same terms and conditions of the Stock Plan and stock
option agreement by which the CNB Bancshares Right is evidenced (including
the immediate vesting of such CNB Bancshares Rights if provided by the terms
thereof), except from and after the Effective Time, (i) Fifth Third and its
Compensation Committee shall be substituted for the Committee of CNB
Bancshares' Board of Directors (including, if applicable, the entire Board of
Directors of CNB Bancshares) administering such Stock Plan, (ii) each CNB
Bancshares Right assumed by Fifth Third may be exercised solely for shares
of Fifth Third
Common Stock, (iii) the number of shares of Fifth Third Common Stock subject to
such CNB Bancshares Right shall be equal to the number of shares of CNB
Bancshares Common Stock subject to such CNB Bancshares Right immediately prior
to the Effective Time multiplied by the Exchange Ratio, and (iv) the per share
exercise price under each such CNB Bancshares Right shall be adjusted by
dividing the per share exercise price under each such CNB Bancshares Right by
the Exchange Ratio and rounding to the nearest four decimal places.
Notwithstanding, the provisions of clause (iii) of the preceding sentence,
Fifth Third shall not be obligated to issue any fraction of a share of Fifth
Third Common Stock upon exercise of CNB Bancshares Rights and any fraction of
a share of Fifth Third Common Stock that otherwise would be subject to a
converted CNB Bancshares Right shall represent the right to receive a cash
payment equal to the product of such fraction and the excess, if any, of the
Applicable Market Value Per Share of Fifth Third Common Stock as defined in
Section I.E. hereof over the per share exercise price of such CNB Bancshares
Right (as adjusted in accordance with subparagraph (iv) of this Section
I.C.2.). In addition, notwithstanding the foregoing, each CNB Bancshares Right
which is an "incentive stock option" shall be adjusted as required by Section
424 of the Code so as not to constitute a modification, extension, or renewal
of the option, within the meaning of Section 424(h) of the Code. Fifth Third
agrees to take all reasonable steps which are necessary to effectuate the
foregoing provisions of this Section.
2. At or prior to the Effective Time, Fifth Third shall take all
corporate action necessary to reserve for issuance sufficient shares of Fifth
Third Common Stock for delivery upon exercise of CNB Bancshares Rights assumed
by Fifth Third in accordance with this Section.
3. As soon as practicable after the Effective Time, Fifth Third shall
deliver to each holder of CNB Bancshares Rights appropriate notices setting
forth such holders' rights pursuant to the Stock Plan, and the agreements
evidencing the grants of such CNB Bancshares Rights shall continue in effect
on the same terms and conditions (subject to the conversion required by this
Section I.C. after giving effect to the Merger and the assumption by Fifth
Third as set forth above). To the extent necessary to effectuate the provisions
of this Section I.C., Fifth Third shall deliver new or amended agreements
reflecting the terms of each CNB Bancshares Rights assumed by Fifth Third and
amend the Stock Plan to reflect the terms hereof.
4. As soon as practicable after the Effective Time, Fifth Third shall
file with the SEC a registration statement on the appropriate form with
respect to the shares of Fifth Third Common Stock subject to such options and
shall use its best efforts to maintain the effectiveness of such registration
statement or registration statements (and to maintain the current status of
the prospectus or prospectuses with respect thereto) for so long as such
options remain outstanding.
E. Exchange Procedures. 1. After the Effective Time, each holder
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of a certificate or certificates for shares of CNB Bancshares Common Stock as
of the Effective Time, upon surrender of the same duly transmitted to Fifth
Third Trust Department, as exchange agent (the "Exchange Agent") (or in lieu
of surrendering such certificates, in the case of uncertificated shares or
lost, stolen, destroyed or mislaid certificates, upon execution of such
documentation as may be reasonably required by Fifth Third), shall be entitled
to receive in exchange therefor a certificate or certificates representing the
number of whole shares of Fifth Third Common Stock into which such holder's
shares of CNB Bancshares Common Stock shall have been converted by the Merger
pursuant to the Exchange Ratio, plus a cash payment for any fraction of a share
to which the holder is entitled, in lieu of such fraction of a share, without
any interest thereon, equal in amount to the product resulting from multiplying
such fraction by the per share price of Fifth Third Common Stock as reported
for the NASDAQ National Market System as of the close of business on the date
of the Effective Time (the "Applicable Market Value Per Share of Fifth Third
Common Stock") (such certificates and cash being hereinafter collectively
referred to as the "Exchange Fund"); provided, however, that if CNB Bancshares'
Dividend Reinvestment Plan is merged with Fifth Third's Dividend Reinvestment
Plan, the shares of CNB Bancshares Common Stock held through CNB Bancshares'
Dividend Reinvestment Plan shall be converted in the Merger into whole shares
and fractional shares of Fifth Third Common Stock at the Exchange Ratio and
such shares shall be held through Fifth Third's Dividend Reinvestment Plan.
Within seven (7) business days after the Effective Time, the Exchange Agent
will send a notice and transmittal form to each CNB Bancshares shareholder of
record at the Effective Time advising such shareholder of the effectiveness of
the Merger and the procedures for surrendering to the Exchange Agent
outstanding certificates formerly evidencing CNB Bancshares Common Stock in
exchange for new certificates of Fifth Third Common Stock and cash in lieu of
fractional shares, or for receiving certificates of Fifth Third Common Stock
and cash in lieu of fractional shares with respect to uncertificated shares of
CNB Bancshares Common Stock. Until so surrendered, as applicable, each
uncertificated share and outstanding certificate that prior to the Effective
Time represented shares of CNB Bancshares Common Stock shall be deemed for all
corporate purposes to represent the right to receive the number of full shares
of Fifth Third Common Stock and cash in lieu of fractional share interests into
which the same shall have been converted; provided, however, that dividends or
distributions otherwise payable with respect to shares of Fifth Third Common
Stock into which CNB Bancshares Common Stock shall have been so converted shall
be paid with respect to such shares only when the transmittal form shall have
been validly executed and delivered (and, in the case of certificated shares,
the certificate or certificates evidencing shares of CNB Bancshares Common
Stock shall have been so surrendered, or in lieu of surrendering such
certificates in the case of lost, stolen, destroyed or mislaid certificates,
upon execution of such documentation as may be reasonably required by Fifth
Third) and thereupon any such dividends and distributions shall be paid,
without interest, to the holder entitled thereto subject however to the
operation of any applicable escheat or similar laws relating to unclaimed
funds.
2. Any portion of the Exchange Fund that remains unclaimed by the
stockholders of CNB Bancshares for twelve months after the Effective Time shall
be paid to Fifth Third. Any stockholders of CNB Bancshares who have not
theretofore complied with this Section I.E. shall thereafter only look to
Fifth Third for payment of the shares of CNB Bancshares Common Stock and cash
in lieu of any fractional shares deliverable in respect of each share of CNB
Bancshares Common Stock such stockholder holds as determined pursuant to this
Agreement, without any interest thereon. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to any former
holder of CNB Bancshares Common Stock for any amount or security delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
F. Adjustments to Exchange Ratio. 1. The Exchange Ratio
-----------------------------
referred to in Section I.C. shall be adjusted so as to give the CNB Bancshares
shareholders the economic benefit of any stock dividends, reclassifications,
recapitalizations, split-ups, exchanges of shares, or combinations or
subdivisions of Fifth Third Common Stock (each, a "Share Adjustment")
effected between the date of this Agreement and the Effective Time. In
particular, without limiting the foregoing, if, prior to the Effective Time,
Fifth Third should effect a split, reclassification or combination of
the Fifth Third Common Stock, or pay or declare a stock dividend
or other stock distribution in Fifth Third Common Stock, as of a
record date prior to the Effective Time, appropriate and
proportionate adjustments (rounded to the nearest one-ten-
thousandth of a share of Fifth Third Common Stock) will be made to
the Exchange Ratio and the total number of shares of Fifth Third
Common Stock to be issued in the transaction so that each
shareholder of CNB Bancshares shall be entitled to receive such
number of shares of Fifth Third Common Stock as such shareholder
would have received pursuant to such Share Adjustment had the
record date and the payment date therefor
been immediately following the Effective Time of the Merger. In
the event of a Share Adjustment with a record date between the
date of this Agreement and the Effective Time but a payment date
subsequent to the Effective Time, Fifth Third shall take all
actions necessary such that on such payment date, any holder of
CNB Bancshares Common Stock as of the Effective Time shall be
entitled to receive such number of shares of Fifth Third Common
Stock as such shareholder would have received as a result of such
Share Adjustment if the record date for such Share Adjustment had
been immediately after the Effective Time.
2. If, between the date hereof and the Effective Time,
Fifth Third shall consolidate with or be merged with or into any
other corporation (a "Business Combination") and the terms thereof
shall provide that Fifth Third Common Stock shall be converted
into or exchanged for the shares of any other corporation or
entity, then provision shall be made as part of the terms of such
Business Combination so that each shareholder of CNB Bancshares
who would be entitled to receive shares of Fifth Third Common
Stock pursuant to this Agreement shall be entitled to receive, in
lieu of each share of Fifth Third Common Stock issuable to such
shareholder as provided herein, the same kind and amount of
securities or assets as such shareholder would have received with
respect to such shares if the Merger had been consummated, and
such shareholder had received shares of Fifth Third Common Stock,
immediately prior to the consummation of such Business
Combination.
3. If, prior to the Effective Time, CNB Bancshares should
pay or declare a stock dividend, an appropriate adjustment
(rounded to the nearest one-ten-thousandth of a share of Fifth
Third Common Stock) will be made to the Exchange Ratio so as to
maintain (as closely as practicable) the proportional interest in
Fifth Third Common Stock which the shareholders of CNB Bancshares
would otherwise have received (it being understood that in the
event that CNB Bancshares shall pay or declare a 5% (1-for-20)
stock dividend, in keeping with CNB Bancshares' past practice,
prior to the Effective Time and CNB Bancshares does not pay or
declare any other stock dividend, the Exchange Ratio would be
adjusted to equal .8405).
G. Convertible Debentures. CNB Bancshares' outstanding 6%
----------------------
Convertible Subordinated Debentures due June 30, 2028 (the
"Convertible Debentures"), issued to CNB Capital Trust I (of which
CNB Bancshares is the beneficial owner of all of the beneficial
ownership interests represented by common securities) shall remain
outstanding, unchanged by reason of the Merger, except that, in
accordance with the applicable provisions of the indenture under
which the Convertible Debentures were issued, without any action
on the part of the holder thereof, the Convertible Debentures
shall no longer be convertible into CNB Bancshares Common Stock
but shall thereafter be convertible only into the right to receive
the number of shares of Fifth Third Common Stock the holder
thereof would have been entitled to receive had such holder
converted such Convertible Debentures into CNB Bancshares Common
Stock immediately prior to the Effective Time. At the Effective
Time, Fifth Third shall expressly assume CNB Bancshares'
obligations under the Convertible Debentures as required by such
indenture.
H. Effectiveness of Merger; Surviving Corporation. At the
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Effective Time, the Merger shall become effective, the separate
existence of CNB Bancshares shall cease and CNB Bancshares shall
be merged into Fifth Third (which will be the "Surviving
Corporation"), and which shall continue its corporate existence
under the laws of the State of Ohio under the name "Fifth Third
Bancorp".
I. Articles of the Surviving Corporation. The Second Amended
-------------------------------------
Articles of Incorporation, as amended, of Fifth Third of record
with the Secretary of State of Ohio as of the Effective Time shall
be the Articles of Incorporation of the Surviving Corporation,
until further amended as provided by law.
J. Directors and Officers of the Surviving Corporation. 1. The
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Directors of Fifth Third who are in office at the Effective Time
shall be the directors of the Surviving Corporation, each of whom
shall continue to serve as a Director for the term for which he
was elected, subject to the Regulations of the Surviving
Corporation and in accordance with applicable law. At the first
Board of Directors meeting held after the Effective Time, Fifth
Third shall take all steps necessary to elect or appoint as
Directors of Fifth Third three persons who are directors of CNB
Bancshares on the date hereof (mutually selected by Fifth Third
and CNB Bancshares prior to the Effective Time), with each of such
persons to serve in a different class of the Fifth Third Board of
Directors.
2. The officers of Fifth Third who are in office at the time
the Merger becomes effective shall continue as officers of the
Surviving Corporation, subject to the Regulations of the Surviving
Corporation and in accordance with law.
K. Regulations of the Surviving Corporation. The Regulations of
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Fifth Third at the Effective Time shall be the Regulations of the
Surviving Corporation, until amended as provided therein and in
accordance with law.
L. Effects of the Merger. At the Effective Time, the effects of
---------------------
the Merger shall be as provided by the applicable provisions of
the laws of Ohio and, to the extent applicable, Indiana. Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time: the separate existence of CNB Bancshares
shall cease; Fifth Third as the Surviving Corporation shall
possess and have title to all assets and property (including all
real estate) of every description, and every interest therein,
wherever located, without reversion or impairment; and the rights,
privileges, immunities, powers, franchises and authority, of a
public as well as a private nature, of each of Fifth Third and CNB
Bancshares, and all obligations owing by or due each of Fifth
Third and CNB Bancshares shall be vested in, and become the
obligations of, Fifth Third, without further act or deed; and all
rights of creditors of each of Fifth Third and CNB Bancshares
shall be preserved unimpaired, and all liens upon the property of
each of Fifth Third and CNB Bancshares shall be preserved
unimpaired, on only the property affected by such liens
immediately prior to the Effective Time; and any proceeding
pending against CNB Bancshares may be continued as if the Merger
did not occur or the Surviving Corporation may be substituted in
the proceeding for CNB Bancshares.
M. Further Actions. From time to time as and when requested by the
---------------
Surviving Corporation, or by its successors or assigns, the
officers and Directors of CNB Bancshares in office immediately
prior to the Effective Time shall execute and deliver such
instruments and shall take or cause to be taken such further or
other action as shall be necessary in order to vest or perfect in
the Surviving Corporation or to confirm of record or otherwise,
title to, and possession of, all the assets, property, interests,
rights, privileges, immunities, powers, franchises and authority
of CNB Bancshares and otherwise to carry out the purposes of this
Agreement.
N. Filing of Documents. A certificate or articles of merger (and,
-------------------
if required, this Agreement) shall be filed and/or recorded in
accordance with the requirements of the laws of the States of Ohio
and Indiana, respectively, as provided in Article IX. Such filing
shall not be made until, but shall be filed promptly after, all of
the conditions precedent to consummating the Merger as contained
in Article VI of this Agreement shall have been fully satisfied or
effectively waived at the Closing contemplated by Article IX
hereof.
O. Tax and Accounting Treatment. 1. The parties intend that the
----------------------------
Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Code.
The Agreement is intended to be a "plan of reorganization" within
the meaning of the regulations promulgated under the Code and for
purposes of Section 354 and 361 of the Code.
2. The Merger is intended to qualify for pooling-of-interests
accounting treatment.
P. No Dissenters' Rights. No holder of Fifth Third Common Stock or
---------------------
CNB Bancshares Common Stock shall be entitled to relief as a
dissenting shareholder pursuant to the IBCL, the Ohio General
Corporation Law (the "OGCL") or otherwise.
Q. Consolidation of Entities; Changes to Form of Merger. The
----------------------------------------------------
parties agree to cooperate and take all reasonable requisite
action prior to or following the Effective Time to merge or
otherwise consolidate legal entities (effective at or after the
Effective Time) to the extent desirable in Fifth Third's good
faith judgment for commercial, regulatory or other reasons, and
further agree that Fifth Third may, at any time, change the legal
method of effecting the Merger (including without limitation the
provisions of Article I hereof) or the contemplated merger of the
Bank Subsidiary (as defined below) with and into Fifth Third Bank,
Indiana on a date at or after the Effective Time to be determined
by Fifth Third, with Fifth Third Bank, Indiana as the surviving
corporation (the "Subsidiary Merger"), if and to the extent Fifth
Third reasonably deems such change to be desirable, including,
without limitation, to provide for the merger of CNB Bancshares
with a wholly-owned subsidiary of Fifth Third or the merger of
Civitas Bank, a Michigan banking corporation, formerly known as
Citizens Bank of the MidAmerica (the "Bank Subsidiary"), with
another wholly-owned subsidiary of Fifth Third; provided, however,
that no such change shall (A) alter or change the amount or kind
of the consideration for the Merger to be received by the
shareholders of CNB Bancshares in the Merger, (B) adversely affect
the tax treatment to shareholders of CNB Bancshares, or (C)
materially impede or delay receipt of any approvals referred to
herein or the consummation of the transactions contemplated
hereby.
R. Plan or Articles of Merger. At the request of Fifth Third, CNB
--------------------------
Bancshares shall enter into a separate plan of merger or articles
of merger reflecting the terms hereof (including Section I.Q.
hereof) for purposes of any filing required by the IBCL or the
OGCL.
S. Disclosure Schedule; Standard. 1. CNB Bancshares has delivered
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to Fifth Third a confidential schedule (the "Disclosure
Schedule"), executed by both CNB Bancshares and Fifth Third
concurrently with the delivery and execution hereof, setting
forth, among other things, in each case with respect to specified
sections of this Agreement, items the disclosure of which shall be
necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained
in Article II hereof, provided, however, that notwithstanding
anything in this Agreement to the contrary (i) no such item shall
be required to be set forth in the Disclosure Schedule as an
exception to a representation or warranty if its absence would not
be reasonably likely to result in the related representation or
warranty being deemed untrue or incorrect under the standard
established by Section I.S.2., and (ii) the mere inclusion of an
item in the Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by CNB
Bancshares that such item represents a material exception or fact,
event or circumstance or that such item is reasonably likely to
result in a Material Adverse Effect (as defined in Section I.S.2.).
2. No representation or warranty of CNB Bancshares
contained in Article II hereof (other than Section II.A.1., the
first sentence of Section II.A.2., Section II.E. and Section
II.L.3(i)(x).) or Fifth Third contained in Article III hereof
(other than Section III.F.) shall be deemed
untrue or incorrect, and CNB Bancshares and Fifth Third, as the
case may be, shall not be deemed to have breached a representation
or warranty, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstance or event,
individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warrant
contained in Article II hereof, in the case of CNB Bancshares, or
Article III hereof, in the case of Fifth Third, has had or is
reasonably likely to have a Material Adverse Effect on the party
making such representation or warranty. The representation and
warranty contained in Section II.A.1. shall not be deemed untrue
or incorrect, and CNB Bancshares shall not be deemed to have
breached such representation or warranty, if such representation
and warranty is untrue or incorrect only in a de minimis
-- -------
respect. As used herein, the term "Material Adverse Effect"
means, with respect to CNB Bancshares or Fifth Third, any effect
that (i) is, or is reasonably expected to be, material and adverse
to the financial position, results of operations or business of
CNB Bancshares and its subsidiaries taken as a whole, or Fifth
Third and its subsidiaries taken as a whole, respectively, or (ii)
would materially impair the ability of either CNB Bancshares or
Fifth Third to perform its obligations under this Agreement or
would otherwise materially threaten or materially impede the
consummation of the Merger and other transactions contemplated by
this Agreement; provided, however, that Material Adverse Effect
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 requirements applicable
to banks and their holding companies generally, and (c) any
modifications or changes to valuation or reserve policies and
practices in connection with or in anticipation of the Merger.
Except with respect to the representations and warranties of CNB
Bancshares set forth in Section II.A.1., the first sentence of
Section II.A.2. and Section II.L.3(i)(x), for all purposes of
determining whether any facts or events contravening a
representation or warranty contained herein constitute,
individually or in the aggregate, a Material Adverse Effect,
representations and warranties contained in Article II (other than
Section II.E.) or Article III (other than Section III.F.) shall be
read without regard to any reference to materiality or Material
Adverse Effect set forth therein.
3. CNB Bancshares shall be permitted to update and
supplement the Disclosure Schedule so as to disclose exceptions to
one or more representations or warranties contained in Article II
hereof which shall have arisen between the date hereof and the
Closing Date; provided, however, that, anything herein to the
contrary notwithstanding, the exceptions and other information set
forth on any such updated or supplemented Disclosure Schedule
shall not be taken into consideration in determining, for purposes
of this Agreement, whether the condition set forth in Section
VI.B.1. hereof shall have been satisfied.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF CNB BANCSHARES
CNB Bancshares represents and warrants to Fifth Third that as of
the date hereof or as of the indicated date, as appropriate, and
subject to the standard set forth in Section I.S. except as
otherwise disclosed in the Disclosure Schedule:
A. Organization; Capitalization; Subsidiaries. 1. CNB Bancshares
------------------------------------------
(i) is duly incorporated, validly existing and in good standing as
a corporation under the corporation laws of the State of Indiana
and is a registered bank holding company under the Bank Holding
Company Act; (ii) is duly authorized, in all material respects, to
conduct the business in which it is engaged in all material
respects; (iii) has an authorized capital stock consisting
entirely of 100,000,000 shares of CNB Bancshares Common Stock and
2,000,000 shares of preferred stock, no par value per share ("CNB
Bancshares Preferred Stock"); (iv) has no outstanding securities
of any kind, nor any outstanding options, warrants or other
rights, contracts, understandings or commitments entitling another
person to acquire (or to receive consideration based on the value
of) any securities of CNB Bancshares of any kind, other than (a)
34,781,304 shares of CNB Bancshares Common Stock, which are
authorized, duly issued and outstanding as of June 11, 1999
(which amount includes shares held through CNB Bancshares'
Dividend Reinvestment Plan (the "Dividend Reinvestment Plan")),
all of which shares are fully paid and non-assessable, (b) options
to purchase a total of not more than 1,500,000 shares of CNB
Bancshares Common Stock as of June 11, 1999, which were granted to
and are currently held by the present and former employees,
officers, Directors and advisory directors of CNB Bancshares
and/or the Bank Subsidiary or other subsidiaries of CNB
Bancshares, (c) 3,336,150 shares of CNB Bancshares Common Stock
issuable upon conversion of the Convertible Debentures and (d)
937,005 shares issuable pursuant to certain Benefits Plans (as
defined below) as set forth in the Disclosure Schedule. Since the
date referred to in clause (iv) of the preceding sentence to the
date hereof, CNB Bancshares has not issued any shares, except in
connection with the exercise of the options referred to in clause
(iv)(b), conversion of the Convertible Debentures referred to in
clause (iv)(c), or under the Benefit Plans as set forth in the
Disclosure Schedule, or any additional options. CNB Bancshares
has made available to Fifth Third a correct and complete list of
all options referred to in clause (iv)(b), together with the name
of the holder, the exercise price, and vesting information.
2. CNB Bancshares owns of record and beneficially free
and clear of all liens and encumbrances, all of the outstanding
shares of the common stock of the Bank Subsidiary, no par value
per share. The Disclosure Schedule sets forth a complete and
correct list of all of the CNB Bancshares' subsidiaries (the "CNB
Subsidiaries"). Except for the capital stock and securities
referred to in the immediately following sentence, there are no
outstanding shares of capital stock or other equity securities of
any such CNB Subsidiary, options, warrants, stock appreciation
rights, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into, shares of any capital stock or other equity
securities of any such CNB Subsidiary, or contracts, commitments,
understandings or arrangements by which any such CNB Subsidiary
may become bound to issue additional shares of its capital stock
or other equity securities, or options, warrants, scrip or rights
to purchase, acquire, subscribe to, calls on or commitments for
any shares of its capital stock or other equity securities. All
of the outstanding shares of capital stock or other securities
evidencing ownership of the CNB Subsidiaries are validly issued,
fully paid and (except as otherwise required by law) non-
assessable and such shares or other securities are owned by CNB
Bancshares or its wholly-owned CNB Subsidiaries free and clear of
any lien, claim, charge, option, encumbrance, mortgage, pledge or
security interest with respect thereto. Other than as set forth
on the Disclosure Schedule, CNB Bancshares does not own (other
than in a bona fide fiduciary capacity or in satisfaction of a
debt previously contracted) beneficially, directly or indirectly,
shares or equity securities or similar interests of any person or
any interest in a partnership or joint venture of any kind, other
than shares, securities and interests as are not material.
B. Bank Subsidiary. The Bank Subsidiary is duly incorporated,
---------------
validly existing and in good standing as a Michigan banking
corporation under the laws of the State of Michigan, and has all
the requisite power and authority to conduct the banking business
as now conducted by it.
C. Financial Statements; Regulatory Reports. 1. CNB Bancshares
----------------------------------------
has previously furnished to Fifth Third its audited, consolidated
balance sheets, statements of income, changes in shareholders'
equity and cash flows as of and at December 31, 1998, and for the
year then ended, together with the opinion of its independent
certified public accountants associated therewith. CNB Bancshares
has made available to
Fifth Third the Call Reports as filed with the applicable federal
banking agency of the Bank Subsidiary as of and at December 31,
1996, 1997 and 1998. CNB Bancshares also has furnished to Fifth
Third (i) its unaudited, consolidated condensed financial
statements as at March 31, 1999, and for the three (3) months then
ended, and (ii) the Bank Call Report as filed with the Federal
Reserve Bank of the Bank Subsidiary for the quarter ended March
31, 1999. Such audited and unaudited consolidated financial
statements of CNB Bancshares fairly present or will fairly
present, as applicable, the consolidated financial condition,
results of operations and cash flows of CNB Bancshares as of the
date thereof, and for the years or periods covered thereby, in
conformity with generally accepted accounting principles ("GAAP"),
consistently applied (except as stated therein and except for the
omission of notes to unaudited statements and except for year-end
adjustments (consisting of normal recurring accruals)). There are
no material liabilities, obligations or indebtedness of CNB
Bancshares or any of the CNB Subsidiaries required to be disclosed
in the financial statements (or in the footnotes to the financial
statements) so furnished other than the liabilities, obligations
or indebtedness disclosed in such financial statements (including
footnotes). Since March 31, 1999, CNB Bancshares and the CNB
Subsidiaries have not incurred any liabilities outside the
ordinary course of business consistent with past practice.
2. CNB Bancshares has made available to Fifth Third an
accurate and complete copy (including all exhibits and all
documents incorporated by reference) of each of the following
documents as filed by CNB Bancshares with the SEC: (a) each final
registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1997 by CNB
Bancshares or the Bank Subsidiary with the Securities and Exchange
Commission (the "SEC"), pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act ("CNB
Bancshares Reports"), and (b) each communication mailed by CNB
Bancshares to its stockholders since January 1, 1997. Since
January 1, 1997, CNB Bancshares has timely filed (and will timely
file after the date of this Agreement) all reports and other
documents required to be filed by it under the Securities Act and
the Exchange Act, and, as of their respective dates, all such
reports complied (and, in the case of all reports and other
documents filed after the date of this Agreement, will comply) in
all material respects with the published rules and regulations of
the SEC with respect thereto. As of the date of filing or
mailing, as the case may be, no such registration statement,
prospectus, report or proxy statement contained (and no
registration statement, prospectus, report or proxy statement
filed or mailed after the date of this Agreement will contain) any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in
which they were made, not misleading, except that information as
of a later date (but filed before the date hereof) shall be deemed
to modify information as of an earlier date. No event has
occurred subsequent to December 31, 1998 which CNB Bancshares is
required to describe in a Current Report on Form 8-K other than
the Current Reports heretofore furnished by CNB Bancshares to
Fifth Third. Other than CNB Capital Trust I, none of the CNB
Subsidiaries has any class of securities registered, or is
obligated to register any class of securities, under Section 12 of
the Exchange Act.
3. CNB Bancshares and the CNB Subsidiaries have filed all
reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they
were required to file since January 1, 1997 with any applicable
industry self-regulatory organization or stock exchange ("SRO")
and any other federal, state, local or foreign governmental or
regulatory agency or authority (collectively with the SEC and the
SROs, "Regulatory Agencies"), and all other reports, registrations
and statements required to be filed by them since January 1, 1997,
including, without limitation, any report or statement required to
be filed pursuant to the laws, rules or regulations of the United
States, any state, or any Regulatory Agency, and have paid all
fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of CNB Bancshares and the CNB
Subsidiaries, no Regulatory Agency has initiated any proceeding
or, to the best knowledge of CNB Bancshares, investigation into
the business or operations of CNB Bancshares or the CNB
Subsidiaries since January 1, 1997. To the best knowledge of CNB
Bancshares, there is no unresolved violation, or material criticism
or exception, by any bank Regulatory Agency with respect to any
report, registration or statement relating to any examinations of
CNB Bancshares or the CNB Subsidiaries.
D. Title to Properties. CNB Bancshares and the CNB Subsidiaries
-------------------
have good and marketable title to all of the material properties
and assets reflected in CNB Bancshares statement of financial
condition as at December 31, 1998, other than properties and
assets sold in the ordinary course of business since that date,
and each has good and marketable title to all material properties
and assets acquired by it after such date (other than properties
and assets subsequently sold in the ordinary course of business),
subject to (i) any liens and encumbrances that do not materially
adversely impair the use of the property, (ii) statutory liens for
taxes not yet due and payable, and (iii) minor defects and
irregularities in title that do not materially adversely impair
the use of the property.
E. No Material Adverse Effect. Since December 31, 1998, no event
--------------------------
has occurred and no fact or circumstance shall have come to exist
or come to be known which, directly or indirectly, individually or
taken together with all other facts, circumstances and events
(described in any paragraph of this Article II or otherwise), has
had, or is reasonably likely to have, a Material Adverse Effect
with respect to CNB Bancshares.
F. Litigation; Regulatory Action. 1. There are no actions, suits,
-----------------------------
proceedings, investigations or assessments of any kind pending, or
to the best knowledge of CNB Bancshares, threatened against CNB
Bancshares or the Bank Subsidiary which reasonably can be expected
to result in any material liability or any material adverse change
in the financial condition, operations or business of CNB
Bancshares and the Bank Subsidiary on a consolidated or separate
basis, or reasonably likely to prevent or delay the consummation
of the transactions contemplated by this Agreement. The
Disclosure Schedule lists all pending or, to the knowledge of CNB
Bancshares, threatened claims and proceedings which, in each case,
seek, or could result in, damages or other amounts payable by CNB
Bancshares or the CNB Subsidiaries, in excess of $1,000,000.
2. There are no actions, suits, claims, proceedings,
investigations or assessments of any kind pending, or to the best
knowledge of CNB Bancshares, threatened against any of the
Directors or officers of CNB Bancshares or the Bank Subsidiary in
their capacities as such, and no Director or officer of CNB
Bancshares or the Bank Subsidiary currently is being indemnified
or seeking to be indemnified by either CNB Bancshares or any of
the CNB Subsidiaries pursuant to applicable law or applicable
articles of incorporation, bylaws or other constituent documents
or any indemnity agreements.
3. Neither CNB Bancshares nor any of the CNB Subsidiaries is
subject to any cease-and-desist or other order issued by, or is a
party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive
by, or is a recipient of any supervisory letter from or has
adopted any board resolutions at the request of, any Regulatory
Agency or other governmental entity, that restricts the conduct of
its business or has resulted, or could reasonably be expected to
result, in a liability or that in any manner relates to its
capital adequacy, its credit policies, its management or its
business (each a "CNB Regulatory Agreement"), nor has CNB
Bancshares or the Bank Subsidiary (a) been advised since January
1, 1996 by any Regulatory Agency or other governmental entity that
it is considering issuing or requesting
any such CNB Regulatory Agreement or (b) any actual knowledge of
any pending or threatened regulatory investigation.
G. Ordinary Course of Business. Except as disclosed in the CNB
---------------------------
Bancshares Reports filed prior to the date hereof, since December
31, 1998, CNB Bancshares and the CNB Subsidiaries have each been
operated in the ordinary course of business, have not made any
changes in their respective capital or corporate structures, nor
any material changes in their methods of business operations and
have not provided any increases in employee salaries or benefits
other than increases in the ordinary course of business, and have
not instituted or made any announcements to institute or amend any
existing employee benefit plan, policy or arrangement or any
employment contract or policy. Except as disclosed in the CNB
Bancshares Reports filed prior to the date hereof, since December
31, 1998 to the date hereof, CNB Bancshares has not declared or
paid any dividends nor made any distributions of any other kind to
its shareholders except for regular quarterly dividends not in
excess of $0.24 per share.
H. Taxes; Accounting. 1. CNB Bancshares and the Bank Subsidiary
-----------------
have timely filed all federal, state and local tax returns
required to be filed (after giving effect to all extensions) by
them, respectively, and have paid or provided for all tax
liabilities shown to be due thereon or which have been assessed
against them, respectively. All tax returns filed by CNB
Bancshares or the Bank Subsidiary through the date hereof are
complete and accurate in all material respects.
2. CNB Bancshares has no reason to believe that any
conditions exist that might prevent or impede the Merger from
qualifying as a "reorganization" within the meaning of Section
368(a) of the Code or for pooling-of-interests accounting
treatment.
3. Since December 31, 1998, except insofar as required by
a change in GAAP, there has been no material change in any
material accounting methods, principles or practices of CNB
Bancshares or the Bank Subsidiary.
I. Contracts. Neither CNB Bancshares nor any of the CNB
---------
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (a) as of the date hereof, with
respect to the employment, termination or compensation of any
directors, executive officers, employees or material consultants
(other than oral contracts of employment at will or engagement of
consultants which may be terminated without material penalty), (b)
which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) that has not been filed
with or incorporated by reference in the CNB Bancshares Reports,
(c) which contains any material non-compete or exclusivity
provisions with respect to any business or geographic area in
which business is conducted by CNB Bancshares or any of its
Significant Subsidiaries (as defined in Regulation S-X of the SEC)
or which restricts the conduct of any business by CNB Bancshares
or any of its Significant Subsidiaries or any geographic area in
which CNB Bancshares or any of its Significant Subsidiaries may
conduct business or requires exclusive referrals of any business,
(d) except as contemplated by Article I hereof or as set forth in
the Disclosure Schedule (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase
plan) any of the benefits of which will be increased, or the
funding, vesting or payment of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement (either alone or together with any
other event), or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement or (e) which would prohibit or materially delay the
consummation of the Merger. CNB Bancshares has previously made
available to Fifth Third true and correct copies of all
employment, termination, compensation, change of control, and
similar agreements (including deferred compensation) with
executive officers, key employees
or material consultants which are in writing and to which CNB
Bancshares or any of the CNB Subsidiaries are a party. Each
contract, arrangement, commitment or understanding of the type
described in this Section II.I., and every agreement relating to
the Convertible Debentures, whether or not set forth in the
Disclosure Schedule, is referred to herein as a "CNB Contract",
and neither CNB Bancshares nor any of the CNB Subsidiaries has
knowledge of, or has received notice of, any violation of any CNB
Contract by it or any of the other parties thereto.
J. Loan Losses. Since December 31, 1998, to the date hereof,
-----------
except as disclosed in CNB Bancshares Reports filed prior to the
date hereof, the Bank Subsidiary has not incurred any unusual or
extraordinary loan losses which are material to CNB Bancshares and
the CNB Subsidiaries on a consolidated basis; to the best
knowledge of CNB Bancshares and in light of the Bank Subsidiary's
historical loan loss experience and its management's analysis of
the quality and performance of its loan portfolio, as of December
31, 1998, its reserve for loan losses was, in the opinion of CNB
Bancshares, adequate to absorb potential loan losses determined on
the basis of management's continuing review and evaluation of the
loan portfolio and its judgment as to the impact of economic
conditions on the portfolio.
K. Broker. Except for Xxxxxxxxx, Xxxxxx & Xxxxxxxx Incorporated
------
("DLJ"), whose fee in connection with the transactions
contemplated by this Agreement is disclosed in the Disclosure
Schedule, neither CNB Bancshares nor any of the CNB Subsidiaries
has a direct or indirect commitment to any investment banker,
broker, or finder in connection with this transaction and neither
has incurred or will incur any obligation for any investment
banker's, broker's or finder's fee or commission in connection
with the transactions provided for in this Agreement.
L. Board Approval; Corporate Authority; No Breach. 1. The
----------------------------------------------
Directors of CNB Bancshares, by resolution adopted by the
unanimous vote of all Directors present at a meeting duly called
and held in accordance with applicable law, have duly approved
this Agreement and the Option Agreement and have adopted this
Agreement as a "plan of merger" within the meaning of Section 23-1-
40-1 of the IBCL. The Directors of CNB Bancshares have directed
that the plan of merger contained in this Agreement be submitted
to a vote of CNB Bancshares' shareholders at the annual or a
special meeting of the shareholders to be called for that purpose.
2. CNB Bancshares has the corporate power and authority
to enter into this Agreement and the Option Agreement and to carry
out its obligations hereunder and thereunder subject to required
regulatory approvals and, in the case of consummation of the
Merger, subject to approval by the holders of a majority of the
outstanding shares of CNB Bancshares Common Stock, which is the
only approval of shareholders required. This Agreement and the
Option Agreement have each been duly authorized. This Agreement
constitutes the valid and binding obligation of CNB Bancshares,
enforceable in accordance with its terms, except to the extent
that (i) enforceability thereof may be limited by
insolvency, reorganization, liquidation, bankruptcy, readjustment
of debt or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii)
the availability of certain remedies may be precluded by general
principles of equity.
3. Neither the execution of the Agreement or the Option
Agreement, nor the consummation of the transactions contemplated
hereby and thereby (either alone or together with any other
event), (i) conflicts with, results in a breach of, violates or
constitutes a default under, (x) CNB Bancshares' Restated Articles
of Incorporation or Amended By-laws or, to the best knowledge of
CNB Bancshares, any federal, state or local law, statute,
ordinance, rule, regulation or court or administrative order, or
(y) any agreement, arrangement, or commitment, to which CNB
Bancshares or the Bank Subsidiary is subject or
bound; (ii) to the knowledge of CNB Bancshares, results in the
creation of or gives any person the right to create any material
lien, charge, encumbrance, or security agreement or any other
material rights of others or other material adverse interest upon
any material right, property or asset belonging to CNB Bancshares
or the Bank Subsidiary; (iii) terminates or gives any person the
right to terminate, amend, abandon, or refuse to perform any
material agreement, arrangement or commitment to which CNB
Bancshares or the Bank Subsidiary is a party or by which CNB
Bancshares' or the Bank Subsidiary's rights, properties or assets
are subject or bound; or (iv) to the knowledge of CNB Bancshares,
accelerates or modifies, or gives any party thereto the right to
accelerate or modify, the time within which, or the terms
according to which, CNB Bancshares or the Bank Subsidiary is to
perform any duties or obligations or receive any rights or
benefits under any material agreements, arrangements or
commitments. For purposes of clauses (iii) and (iv) immediately
preceding, material agreements, arrangements or commitments
exclude (without limitation) agreements, arrangements or
commitments having a term expiring less than twelve (12) months
from the date of this Agreement or which do not require the
expenditure of more than $500,000 over the term of the agreement,
arrangement or commitment (but shall include all agreements,
arrangements or commitments pursuant to which credit has been
extended by the Bank Subsidiary).
4. As of the date hereof, CNB Bancshares is not aware of
the existence of any factor that would materially delay or
materially hinder issuance of any of the required regulatory
approvals necessary to consummate the Merger or the other
transactions contemplated hereby.
M. Articles and By-laws. Complete and accurate copies of the (i)
--------------------
Restated Articles of Incorporation and Amended By-laws of CNB
Bancshares and (ii) the Articles of Incorporation and Bylaws of
the Bank Subsidiary in force as of the date hereof have been
delivered to Fifth Third.
N. Compliance with Law. To the knowledge of CNB Bancshares,
-------------------
neither CNB Bancshares nor any of the CNB Subsidiaries nor any
employee, officer or Director of any of them acting in such
capacity has engaged in any activity or omitted to take any action
which, in any material way, has resulted or could result in the
violation of, or material failure to comply with the regulatory
requirements of (i) any local, state or federal law (including
without limitation the Bank Secrecy Act, the Community
Reinvestment Act, applicable consumer protection and disclosure
laws and regulations, including without limitation, Truth in
Lending, Truth in Savings and similar disclosure laws and
regulations, and equal employment and employment discrimination
laws and regulations) or (ii) any regulation, order, injunction or
decree of any court or governmental body, the violation of either
of which could reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate, on the financial
condition or operations of CNB Bancshares and the CNB
Subsidiaries, and neither CNB Bancshares nor any of the CNB
Subsidiaries has received notice of any violations of any of the
above. To the best knowledge of CNB Bancshares, CNB Bancshares
and the CNB Subsidiaries possess all licenses, franchises, permits
and other authorizations necessary to continue to conduct such
businesses as they are presently conducted following the Effective
Time without material interference or interruption.
O. Intentionally Omitted.
---------------------
P. Environmental Matters. 1. CNB Bancshares has no knowledge of
---------------------
any actions, proceedings or investigations pending before any
environmental regulatory body, with respect to, or, to the
knowledge of CNB Bancshares, threatened against or affecting CNB
Bancshares or the Bank Subsidiary in respect to any "facility"
owned, leased or operated by any of them (but excluding any "facility" as to
---------
which the sole interest of CNB Bancshares or the Bank Subsidiary is that of a
lienholder or mortgagee, but including any
---------
"facility" to which title has been taken pursuant to mortgage foreclosure or
similar proceedings and including any "facility" in which CNB Bancshares or the
---------
Bank Subsidiary ever participated in the financial management of
such facility to a degree sufficient to influence, or have the
ability to influence, the facility's treatment of hazardous waste)
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or under any
Federal, state, local or municipal statute, ordinance or
regulation in respect thereof, in connection with any release of
any toxic or "hazardous substance", pollutant or contaminant into
the "environment", nor, to the best knowledge of CNB Bancshares
after reasonable inquiry, is there any reasonable basis for the
institution of any such actions or proceedings or investigations
which is probable of assertion, nor are there any such actions or
proceedings or investigations in which CNB Bancshares or the Bank
Subsidiary is a plaintiff or complainant. To the knowledge of CNB
Bancshares, neither CNB Bancshares nor the Bank Subsidiary is
liable in any material respect under any applicable law for any
release by either of them or for any release by any other "person"
of a hazardous substance caused by the spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of hazardous wastes or other
chemical substances, pollutants or contaminants into the
environment, nor, to the knowledge of CNB Bancshares, is CNB
Bancshares or the Bank Subsidiary liable for any material costs
(as a result of the acts or omissions of CNB Bancshares or the
Bank Subsidiary or, to the best knowledge of CNB Bancshares, as a
result of the acts or omissions of any other "person") of any
remedial action including, without limitation, costs arising out
of security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance undertaken
by any environmental regulatory body having jurisdiction over CNB
Bancshares or the Bank Subsidiary to prevent or minimize any
actual or threatened release by CNB Bancshares or the Bank
Subsidiary of any hazardous wastes or other chemical substances,
pollutants and contaminants into the environment which would
endanger the public health or the environment. All terms contained
in quotation marks in this paragraph and the paragraph immediately
following shall have the meaning ascribed to such terms, and
defined in, CERCLA.
2. To the best knowledge of CNB Bancshares each
"facility" owned, leased or operated by CNB Bancshares or the Bank
Subsidiary (but excluding any "facility" as to which the sole interest of CNB
---------
Bancshares or the Bank Subsidiary is that of a lienholder or mortgagee, but
including any "facility" which title has been taken pursuant to mortgage
---------
foreclosure or similar proceedings and including any "facility" in which CNB
---------
Bancshares or the Bank Subsidiary ever participated in the financial management
of such facility to a degree sufficient to influence, or have the ability to
influence, the facility's treatment of hazardous waste) is, in all material
respects, in compliance with all applicable Federal, state, local
or municipal statutes, ordinances, laws and regulations and all
orders, rulings or other decisions of any court, administrative
agency or other governmental authority relating to the protection
of the environment, except to the extent a failure to comply would
not have a Material Adverse Effect on CNB Bancshares and the Bank
Subsidiary taken as a whole.
Q. Employment Matters. 1. Benefit Plans. The Disclosure Schedule
------------------
lists the name of each Benefit Plan (as herein defined), together
with an indication of the type of plan (i.e., defined benefit,
defined contribution, health and welfare, etc.) and funding status
(e.g., funded trust, unfunded obligation or insurance policy).
For purposes hereof, the term "Benefit Plan" shall mean any plan,
program, policy, practice, arrangement or system for the benefit
of employees, former employees, directors or former directors
which is contributed to or maintained by CNB Bancshares or any of
the CNB Subsidiaries or for which CNB Bancshares or any of the CNB
Subsidiaries have any liability (contingent or otherwise) and
shall include, without limitation, (a) any retirement plan such as
a pension, profit sharing, stock bonus plan or employee stock
ownership plan ("ESOP"), (b) any plan, program or arrangement
providing deferred compensation, bonus deferral change in control
payments or benefits or incentive benefits,
whether funded or unfunded, and (c) any welfare plan, program or
policy providing vacation, severance, salary continuation,
supplemental unemployment, disability, life, health coverage,
retiree health, Voluntary Employees' Beneficiary Association,
medical expense reimbursement or dependent care assistance
benefits, in any such foregoing case without regard to whether the
Benefit Plan constitutes an employee benefit plan under Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the number of employees covered under such
Benefit Plan. Through the date of this Agreement, neither CNB
Bancshares nor any of the CNB Subsidiaries have made or have
committed to make any contributions to any Benefit Plan outside
the ordinary course of business and inconsistent with past
practice with regard to amounts. None of the Benefit Plans is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
2. Predecessor Plan. The term "Benefit Plan" for all
purposes of this Agreement shall include each Predecessor Plan (as
herein defined). For purposes hereof, "Predecessor Plan" shall
mean any plan, program, policy, practice, arrangement or system as
otherwise described in Section II.Q.1. which was maintained,
contributed to or resulted in liability to any predecessor
employer of CNB Bancshares or any of the CNB Subsidiaries since
January 1, 1996. For purposes hereof, "predecessor employer"
shall mean any employer, entity or business operation acquired by
CNB Bancshares or any of the CNB Subsidiaries in any type of
acquisition (including, without limitation, mergers, stock
acquisitions and asset acquisitions).
3. Plan Documents, Reports and Filings. CNB Bancshares or the Bank
Subsidiary has provided true, complete and correct copies of all
plan documents, or, if no plan document exists, a description of
such Benefit Plan, comprising each Benefit Plan, together with,
when applicable, (a) the most recent summary plan description and
any material modifications thereto, (b) the most recent actuarial
and financial reports and the most recent annual reports filed
with any governmental agency and (c) all Internal Revenue Service
("IRS") or other governmental agency rulings and determination
letters or any open requests for IRS rulings or letters with
respect to Benefit Plans issued within five years of the date of
this Agreement.
4. Qualified Retirement Plan Compliance. With respect to
each Benefit Plan which is an employee pension benefit plan (as
defined in Section 3(2) of ERISA) which is intended to be
qualified under Section 401 of the Code (a "Qualified Benefit
Plan"): (a) the IRS has issued a determination letter which
determined that such Qualified Benefit Plan (as amended by any and
all amendments) satisfies the requirements of Section 401(a) of
the Code, as amended by all of the laws referred to in Section 1
of Revenue Procedure 93-39, such determination letter has not been
revoked or threatened to be revoked by the IRS, and the scope of
such determination letter is complete and does not exclude, to the
best knowledge of CNB Bancshares, consideration of any of the
requirements or matters referred to in Sections 4.02 through 4.04
of Revenue Procedure 93-39; (b) except as listed in the Disclosure
Schedule, such Qualified Benefit Plan has been maintained in
accordance with and continues to be in material compliance with
all qualification requirements of Section 401(a) of the Code; (c)
such Qualified Benefit Plan has been maintained in accordance with
and continues to be in substantial compliance with all notice,
reporting and disclosure requirements of ERISA and the Code; (d)
any Qualified Benefit Plan which is an ESOP as defined in Section
4975(e)(7) of the Code (an "ESOP Qualified Benefit Plan") is in
material compliance with the applicable qualification requirements
of Section 409 of the Code; (e) to the best knowledge of CNB
Bancshares, any Qualified Benefit Plan terminated within the last
five years was terminated in material compliance with the
requirements of ERISA and the Code, has received a favorable
determination letter therefor, and the liabilities of such
Qualified Benefit Plan and the requirements of the Pension Benefit
Guaranty Corporation ("PBGC") were fully satisfied; and (f) to the
best knowledge of
CNB Bancshares, any and all amendments to the Qualified Benefit
Plans not covered by an IRS determination letter should not
adversely affect the qualified and tax exempt status of such
plans.
5. General Plan Compliance. With respect to each Benefit
Plan, except as noted on the Disclosure Schedule: (a) such
Benefit Plan, if it is intended to provide favorable tax benefits
to plan participants, has been in material compliance with
applicable Code provisions; and (b) such Benefit Plan has been, to
the best knowledge of CNB Bancshares, operated in substantial
compliance with its terms and all applicable laws, including,
without limitation, ERISA and the Code, and to the extent such
Benefit Plan is a group health plan subject to the requirements of
Section 4980B of the Code ("COBRA"), has been, to the best
knowledge of CNB Bancshares, operated in substantial compliance
with such COBRA requirements.
6. Prohibited Transactions. No prohibited transaction
under Section 406 of ERISA and not exempt under Section 408 of
ERISA has occurred with respect to any Benefit Plan which would
result, with respect to any person, in (a) the imposition,
directly or indirectly, of a material excise tax under Section
4975 of the Code or (b) material fiduciary liability under Section
409 of ERISA.
7. Lawsuits or Claims. No material actions, suits or
claims (other than routine claims of benefits) are pending or, to
the best knowledge of CNB Bancshares, threatened against any
Benefit Plan or against CNB Bancshares or any of the CNB
Subsidiaries with respect to any Benefit Plan.
8. Disclosure of Unfunded Liabilities. All material
Unfunded Liabilities (as defined below) with respect to each
Benefit Plan have been recorded and disclosed on the most recent
financial statement of CNB Bancshares and the Bank Subsidiary or,
if not, in the Disclosure Schedule. For purposes hereof, the term
"Unfunded Liabilities" shall mean any amounts properly accrued to
date under GAAP in effect as of the date of this Agreement, or
amounts not yet accrued for GAAP purposes but for which an
obligation (which has legally accrued and cannot legally be
eliminated and which is subject to reasonable estimate) exists for
payment in the future which is attributable to any Benefit Plan,
including but not limited to (a) severance pay benefits, (b)
deferred compensation or unpaid bonuses, (c) any liabilities on
account of the change in control which will result from this
Agreement, including any potential liabilities relating to excess
parachute payments under Section 280G of the Code, (d) any unpaid
pension contributions for the current plan year or any accumulated
funding deficiency under Section 412 of the Code and related
penalties under Section 4971 of the Code, including unpaid pension
contributions or funding deficiencies owed by members of a
controlled group of corporations which includes CNB Bancshares or
any of the CNB Subsidiaries and for which CNB Bancshares or any of
the CNB Subsidiaries is liable under applicable law, (e) any
authorized but unpaid profit sharing contributions or
contributions under Section 401(k) and Section 401(m) of the Code,
(f) retiree health benefit coverage and (g) unpaid premiums for
contributions required under any group health plan to maintain
such plan's coverage through the Effective Time.
9. Defined Benefit Pension Plan Liabilities. CNB
Bancshares, the CNB Subsidiaries and any entity treated as a
single employer with CNB Bancshares and any of the CNB
Subsidiaries in accordance with Section 414(b), (c), (m) and (o)
of the Code (hereinafter a "Controlled Group Member") (or any
pension plan maintained by any of them) have not incurred any
material liability to the PBGC or the IRS with respect to any
employee pension plan which is a defined benefit pension plan,
except for the payment of PBGC premiums pursuant to Section 4007
of ERISA, all of which if due prior to the date of this Agreement
have been fully paid, and no PBGC reportable event under Section
4043 of ERISA has occurred with respect to any such pension plan.
Except as otherwise disclosed in the Disclosure Schedule,
the benefit liabilities, as defined in Section 4001(a)(16) of
ERISA, of each such employee pension plan subject to Title IV of
ERISA, using the actuarial assumptions that would be used by the
PBGC in the event of termination of such plan, do not exceed the
fair market value of the assets of such plan. Neither CNB
Bancshares, any of the CNB Subsidiaries nor any Controlled Group
Member participates in, or has incurred any liability under
Sections 4201, 4063 or 4064 of ERISA for a complete or partial
withdrawal from a multiple employer plan or a multi-employer plan
(as defined in Section 3(37) of ERISA). Except as may be
otherwise contemplated hereby, no employee, former employee, plan
participant or any other party (other than CNB Bancshares or the
CNB Subsidiaries) has any entitlement (under the terms of any plan
document or otherwise) to any surplus assets in any Qualified
Benefit Plan which is a defined benefit plan as defined in Section
414(j) of the Code.
10. Third Party Plans. CNB Bancshares and the CNB
Subsidiaries (a) have not incurred any asserted or, to the best
knowledge of CNB Bancshares, unasserted material liability for
breach of duties assumed in connection with acting as an
independent trustee, custodian, agent, investment manager or
otherwise with respect to any employee benefit plan (as defined in
Section 3(3) of ERISA) which is maintained by an employer
unrelated in ownership to CNB Bancshares or any of the CNB
Subsidiaries, (b) have not authorized nor knowingly participated
in a material prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code not exempt under Section 408 of ERISA and
(c) have not received notice of any material actions, suits or
claims (other than routine claims for benefits) pending or
threatened against the unrelated employer or against them.
11. Retiree Benefits. Except as listed on the Disclosure
Schedule and identified as "Retiree Liability", CNB Bancshares and
the CNB Subsidiaries have no obligation to provide health
benefits, or life insurance benefits to or with respect to
retirees, former employees or any of their relatives, except for
any continuation coverage provided in accordance with COBRA.
12. Right to Amend and Terminate. CNB Bancshares or the
Bank Subsidiary has all power and authority necessary to amend or
terminate each Benefit Plan without incurring any penalty or
liability provided that benefits accrued as of the date of
amendment or termination are not reduced.
13. Consummation of Transactions. Except as set forth in
the Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement (alone or together with any other
event which, standing alone, would not by itself trigger such
entitlement or acceleration) will not (i) entitle any person to
any benefit under any Benefit Plan, (ii) accelerate the time of
payment or vesting, or increase the amount, of any compensation
due to any person under any Plan or (iii) result in the payment of
any "excess parachute payment" under Section 280G of the Code or
any other payment that is not deductible for any reason by the CNB
Bancshares or any of the CNB Subsidiaries or their successors.
R. Investment Portfolio. The investment portfolios of CNB
--------------------
Bancshares and the Bank Subsidiary consist in all material
respects of securities in marketable form. Since December 31,
1998 to the date hereof neither CNB Bancshares nor the Bank
Subsidiary has incurred any material and unusual or extraordinary
losses in its investment portfolio, and, except for matters of
general application to the banking industry (including, but not
limited to, changes in laws or regulations or GAAP) or for events
relating to the business environment in general, including market
fluctuations and changes in interest rates, CNB Bancshares is not
aware of any events which are reasonably certain to occur in the
future and which reasonably can be expected to result in any
material adverse change in the quality or performance of CNB
Bancshares' and the Bank Subsidiary's investment portfolio on a
consolidated basis.
S. Anti-takeover Provisions; No Impediments. The Directors of CNB
----------------------------------------
Bancshares have taken all requisite action (including, in the case
of the provisions of Chapter 42 of the IBCL, through the amendment
of CNB Bancshares' Amended By-laws) such that the freezeout,
special shareholder voting and other requirements imposed by
Article X of CNB Bancshares' Restated Articles of Incorporation,
Article XI of CNB Bancshares' Amended By-laws, Chapter 42 and
Chapter 43 of the IBCL, and the provisions of any other applicable
"freezeout", "fair price", "moratorium", "control share
acquisition" or other similar anti-takeover statute or regulation
enacted under the laws of Indiana, are not applicable to the
Merger, this Agreement, or the Option Agreement or the
transactions contemplated by this Agreement and the Option
Agreement. There is no agreement to which CNB Bancshares is a
party which (i) prohibits or restricts CNB Bancshares' ability to
perform its obligations under this Agreement or the Option
Agreement, or its ability to consummate the transactions
contemplated hereby or thereby, or (ii) would have the effect of
invalidating or voiding this Agreement or the Option Agreement, or
any provisions hereof or thereof.
T. Derivative Instruments. All swaps, caps, floors, futures,
----------------------
forward contracts, option agreements, and any other derivative
financial instruments, contracts or arrangements, whether entered
into for CNB Bancshares' own account, or by CNB Bancshares for the
account of one or more of the CNB Subsidiaries for their
respective customers, were entered into (i) in the ordinary course
of business, (ii) to the knowledge of CNB Bancshares, in
accordance with prudent banking practices and all applicable laws,
rules, regulations and regulatory policies and (iii) with counter-
parties reasonably believed by CNB Bancshares to be financially
responsible at the time; and each of them constitutes the valid
and legally binding obligation of CNB Bancshares or one of the CNB
Subsidiaries, enforceable in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and are in
full force and effect (except to the extent that they have been
fully performed or terminated) in all respects material to CNB
Bancshares. CNB Bancshares and each of the CNB Subsidiaries have
duly performed in all material respects all of their obligations
thereunder to the extent that such obligations to perform have
accrued, and, to CNB Bancshares' knowledge, there are no material
breaches, violations or defaults or allegations or assertions of
such by any party thereunder.
U. Year 2000. Neither CNB Bancshares nor any of the CNB
---------
Subsidiaries has received, nor to the knowledge of CNB Bancshares
are there facts that would reasonably be expected to form the
basis for the issuance of, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Federal Reserve's
Supervision and Regulatory Letter No. SR 98-3 (SUP), dated March
4, 1998). CNB Bancshares has made available to Fifth Third a
complete and accurate copy of its plan, including its good faith
estimate of the anticipated associated costs, for addressing the
issues set forth in the Year 2000 guidance papers issued by the
Federal Financial Institutions Examination Council, including the
statements dated May 5, 1997, entitled "Year 2000 Project
Management Awareness", December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk", and
October 15, 1998, entitled "Interagency Guidelines Establishing
Year 2000 Standards for Safety and Soundness", as such issues
affect any of CNB Bancshares or the CNB Subsidiaries. Between the
date of this Agreement and the Effective Time, CNB Bancshares
shall use its reasonable best efforts to implement such plan.
V. Fairness Opinion. On or before the date hereof, DLJ has
----------------
delivered its opinion to CNB Bancshares' Board of Directors that
the consideration to be received by the shareholders of CNB
Bancshares pursuant to this Agreement is fair, from a financial
point of view, to the holders of the CNB Bancshares Common Stock,
a true and correct form of which has been delivered to Fifth
Third.
W. Transactions with Affiliates. Except as disclosed in the CNB
----------------------------
Bancshares Reports filed prior to the date hereof, from January 1,
1999 through the date hereof there have been no transactions,
agreements, arrangements or understandings between CNB Bancshares
or any of the CNB Subsidiaries, on the one hand, and the CNB
Bancshares' affiliates (other than wholly-owned subsidiaries of
CNB Bancshares) or other persons, on the other hand, that would be
required to be disclosed under Item 404 of Regulation S-K under
the Securities Act.
X. Expiration of Representations and Warranties. All representations and
--------------------------------------------
warranties contained in this Article II shall expire at the
Effective Time, and, thereafter, CNB Bancshares and the Bank
Subsidiary shall have no further liability or obligations with
respect thereto.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF FIFTH THIRD
Fifth Third represents and warrants to CNB Bancshares that as of
the date hereof or as of the indicated date, as appropriate,
subject to the standard set forth in Section I.S.:
A. Organization. Fifth Third is duly incorporated, validly
------------
existing and in good standing as a corporation under the
corporation laws of the State of Ohio, is a registered bank
holding company under the Bank Holding Company Act of 1956, as
amended, and is duly authorized to conduct the business in which
it is engaged, and Fifth Third's wholly-owned subsidiary Fifth
Third Bank, Indiana, an Indiana banking corporation ("Fifth Third
Bank, Indiana"), is duly incorporated, validly existing and in
good standing as a corporation under the laws of the State of
Indiana and is duly authorized to conduct the business in which it
is engaged.
B. Capitalization. Pursuant to Fifth Third's Second Amended
--------------
Articles of Incorporation, as amended, the total number of shares
of capital stock Fifth Third is authorized to have outstanding is
500,500,000 of which 500,000,000shares are classified as Common
Stock without par value and 500,000 shares are classified as
Preferred Stock without par value. As of the close of business on
May 31, 1999, 268,746,761 shares of Fifth Third Common Stock were
issued and outstanding and 318,761 shares were held in its
treasury. As of the date of this Agreement, no shares of
Preferred Stock have been issued by Fifth Third. Fifth Third does
not have outstanding any stock options, subscription rights,
warrants or other securities entitling the holders to subscribe
for or purchase any shares of its capital stock other than options
granted and to be granted to employees and Directors under its
stock option plans. At May 31, 1999, (a) 16,614,000 shares of
Fifth Third Common Stock were reserved for issuance in connection
with outstanding options granted under its stock option plans and
7,417,291 shares were reserved for issuance under options to be
granted in the future, (b) 39,609,874 shares of Fifth Third Common
Stock were reserved for issuance to the shareholders of CNB
Bancshares pursuant to the terms of this Agreement.
C. Intentionally Omitted.
---------------------
D. Due Issuance. All shares of Fifth Third Common Stock to be
------------
received by the shareholders of CNB Bancshares as a result of the
Merger pursuant to the terms of this Agreement shall be, upon
transfer or issuance, duly and validly issued, fully paid and non-
assessable, and will not, upon such transfer or issuance, be
subject to the preemptive rights of any shareholder of Fifth
Third.
E. Financial Statements. Fifth Third has previously furnished to
--------------------
CNB Bancshares its audited, consolidated balance sheets,
statements of operations, statements of shareholders' equity and
cash flows as of and at December 31, 1998, and for the year then
ended, together with the opinion of its independent
certified public accountants associated therewith. Fifth Third
has made available to CNB Bancshares the Call Reports as filed
with the applicable federal banking agency of the Fifth Third
Bank, Indiana as of and at December 31, 1996, 1997 and 1998.
Fifth Third also has furnished to CNB Bancshares (i) its
unaudited, consolidated financial statements as at March 31, 1999,
and for the three (3) months then ended, and (ii) the Call Reports
as filed with the Federal Reserve Bank of the Fifth Third Bank,
Indiana for the quarter ended March 31, 1999. As soon as they are
available, Fifth Third will provide to CNB Bancshares Fifth
Third's unaudited, consolidated balance sheets, statements of
operations, statements of stockholders' equity and cash flows as
of and at June 30, 1999, and for the six months then ended. Such
audited and unaudited consolidated financial statements of Fifth
Third fairly present or will fairly present, as applicable, the
consolidated financial condition, results of operations and cash
flows of Fifth Third as of the date thereof, and for the years or
periods covered thereby, in conformity with GAAP, consistently
applied (except as stated therein and except for the omission of
notes to unaudited statements and except for normal (in nature and
amount) year-end adjustments to interim results). There are no
material liabilities, obligations or indebtedness of Fifth Third
or any of its subsidiaries required to be disclosed in the
financial statements (or in the footnotes to the financial
statements) so furnished other than the liabilities, obligations
or indebtedness disclosed in such financial statements (including
footnotes). Since March 31, 1999, Fifth Third and its
subsidiaries have not incurred any liabilities outside the
ordinary course of business consistent with past practice.
F. No Material Adverse Effect. Since December 31, 1998, no event
--------------------------
has occurred and no fact or circumstance shall have come to exist
or come to be known which, directly or indirectly, individually or
taken together with all other facts, circumstances and events
(described in any paragraph of this Article III or otherwise), has
had, or is reasonably likely to have, a Material Adverse Effect
with respect to Fifth Third.
G. Board Approval; Corporate Authority; No Breach. 1. The Board
----------------------------------------------
of Directors of Fifth Third, by resolution adopted by the members
present at a meeting duly called and held, at which meeting a
quorum was at all times present and acting, has approved this
Agreement, including reserving for issuance to CNB Bancshares
shareholders in accordance with this Agreement, a sufficient
number of shares of Fifth Third Common Stock. Approval and
adoption of this Agreement by the shareholders of Fifth Third is
not required under Ohio law or under the Second Amended Articles
of Incorporation, as amended, or Code of Regulations of Fifth
Third.
2. Fifth Third has corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder
subject to certain required regulatory approvals. This Agreement,
has been duly executed and delivered and constitutes the valid and
binding obligation of Fifth Third, enforceable in accordance with
its terms, except to the extent that (i) enforceability hereof may
be limited by insolvency, reorganization, liquidation, bankruptcy,
readjustment of debt or other laws of general application relating
to or affecting the enforcement of creditors' rights generally and
(ii) the availability of certain remedies may be precluded by general
principles of equity.
3. Neither the execution of this Agreement nor the Option
Agreement, nor the consummation of the transactions contemplated
hereby and thereby, does or will (i) conflict with, result in a
breach of, violate or constitute a default, under Fifth Third's
Second Amended Articles of Incorporation, as amended, or Code of
Regulations or, to the best knowledge of Fifth Third, any federal,
foreign, state or local law, statute, ordinance, rule, regulation
or court or administrative order, or any agreement, arrangement,
or commitment to which Fifth Third is subject or bound; (ii) to
the best knowledge of Fifth Third, result in the creation of or
give any person the right to create any material lien, charge,
encumbrance, security agreement or any other material rights of
others or other material adverse interest upon any material right,
property or asset belonging to Fifth Third or any of its
subsidiaries; (iii) terminate or give any person the right to
terminate, amend, abandon, or refuse to perform any material
agreement, arrangement or commitment to which Fifth Third is a
party or by which Fifth Third's rights, properties or assets are
subject or bound; or (iv) accelerate or modify, or give any party
thereto the right to accelerate or modify, the time within which,
or the terms according to which, Fifth Third is to perform any
duties or obligations or receive any rights or benefits under any
material agreement, arrangements or commitments.
4. As of the date hereof, Fifth Third is not aware of the
existence of any factor that would materially delay or materially
hinder issuance of any of the required regulatory approvals
necessary to consummate the Merger or the other transactions
contemplated hereby.
H. Articles and Regulations. Complete and accurate copies of (i)
------------------------
the Second Amended Articles of Incorporation, as amended, and (ii)
the Code of Regulations of Fifth Third in force as of the date
hereof have been delivered to CNB Bancshares.
I. Compliance with Law. To the knowledge of Fifth Third, neither
-------------------
Fifth Third nor any of its subsidiaries has knowingly engaged in
any activity or omitted to take any action which, in any material
way, has resulted or could result in the violation of (i) any
local, state or federal law (including without limitation the Bank
Secrecy Act, the Community Reinvestment Act, applicable consumer
protection and disclosure laws and regulations, including without
limitation, Truth in Lending, Truth in Savings and similar
disclosure laws and regulations, and equal employment and
employment discrimination laws and regulations) or (ii) any
regulation, order, injunction or decree of any court or
governmental body, the violation of either of which could
reasonably be expected to have a Material Adverse Effect on Fifth
Third and its subsidiaries taken as a whole. To the best
knowledge of Fifth Third, Fifth Third and its subsidiaries possess
all licenses, franchise, permits and other governmental
authorizations necessary for the continued conduct of their
businesses without material interference or interruption.
J. SEC Filings; Regulatory Reports. 1. Fifth Third has made
-------------------------------
available to CNB Bancshares an accurate and complete copy
(including all exhibits and all documents incorporated by
reference) of each of the following documents as filed by Fifth
Third with the SEC: (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since
January 1, 1997 by Fifth Third with the SEC, pursuant to the
Securities Act or the Exchange Act, and (b) each communication
mailed by Fifth Third to its stockholders since January 1, 1997.
Since January 1, 1997, Fifth Third has timely filed (and will
timely file after the date of this Agreement) all reports and
other documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective dates, all
such reports complied (and, in the case of all reports and other
documents filed after the date of this Agreement, will comply) in
all material respects with the published rules and regulations of
the SEC. As of the date of filing or mailing, as the case may be,
no such registration statement, prospectus, report, schedule,
proxy statement or communication contained (and no registration
statement, prospectus, report, schedule, proxy statement or
communication filed or mailed after the date of this Agreement
will contain) any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that
information as of a later date (but filed before the date hereof)
shall be deemed to modify information as of an earlier date, or
omitted any material exhibit required to be filed therewith. No
event has occurred subsequent to December 31, 1998 which Fifth
Third is required to describe in a Current Report on Form 8-K
other than the Current Reports heretofore furnished by Fifth Third
to CNB Bancshares.
2. Fifth Third and its subsidiaries have filed all
reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they
were required to file since January 1, 1997 with any SRO and any
other Regulatory Agencies, and all other reports, registrations
and statements required to be filed by them since January 1, 1997,
including, without limitation, any report or statement required to
be filed pursuant to the laws, rules or regulations of the United
States, any state, or any Regulatory Agency, and have paid all
fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of Fifth Third and its
subsidiaries, no Regulatory Agency has initiated any proceeding
or, to the best knowledge of Fifth Third, investigation into the
business or operations of Fifth Third or its subsidiaries since
January 1, 1997. To the best knowledge of Fifth Third, there is
no unresolved violation, or material criticism or exception, by
any bank Regulatory Agency with respect to any report,
registration or statement relating to any examinations of Fifth
Third or its subsidiaries.
K. Litigation; Regulatory Action. 1. There are no actions, suits,
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proceedings, investigations or assessments of any kind pending or,
to the best knowledge of Fifth Third, threatened against Fifth
Third or any Fifth Third subsidiary, which reasonably can be
expected to result in any material adverse change in the
consolidated financial condition, operations or business of Fifth
Third, or reasonably likely to prevent or delay the consummation
of the transactions contemplated by this Agreement.
2. Neither Fifth Third nor any of its subsidiaries is
subject to any cease-and-desist or other order issued by, or is a
party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive
by, or is a recipient of any supervisory letter from or has
adopted any board resolutions at the request of, any Regulatory
Agency or other governmental entity, that restricts the conduct of
its business or has resulted, or could reasonably be expected to
result, in a liability or that in any manner relates to its
capital adequacy, its credit policies, its management or its
business (each a "Fifth Third Regulatory Agreement"), nor has
Fifth Third or Fifth Third Bank, Indiana (a) been advised since
January 1, 1996 by any Regulatory Agency or other governmental
entity that it is considering issuing or requesting any such Fifth
Third Regulatory Agreement or (b) any actual knowledge of any
pending or threatened regulatory investigation.
L. Loan Losses. Since December 31, 1998 to the date hereof, none
-----------
of Fifth Third's banking subsidiaries and Bank subsidiaries has
incurred any unusual or extraordinary loan losses which would be
material to Fifth Third on a consolidated basis; and to the best
knowledge and belief of Fifth Third, and in the light of any
banking or Bank subsidiary's historical loan loss experience and
their managements' analysis of the quality and performance of
their respective loan portfolios, as of December 31, 1998, their
consolidated reserves for loan losses are adequate to absorb
potential loan losses determined on the basis of management's
continuing review and evaluation of the loan portfolio and its
judgment as to the impact of economic conditions on the portfolio.
M. Tax Returns. Fifth Third and its subsidiaries have timely filed
-----------
all federal, state and local tax returns required to be filed
(after giving effect to all extensions) by them, respectively, and
have paid or provided for all tax liabilities shown to be due
thereon or which have been assessed against them, respectively.
All tax returns filed by Fifth Third and its subsidiaries are
complete and accurate in all material respects.
N. Broker. Except for Xxxxxxx Xxxxx Xxxxxx Inc., Fifth Third has
------
no direct or indirect commitment to any investment banker, broker
or finder in connection with this transaction and has not incurred
and
will not incur any obligation for any investment banker's,
broker's or finder's fee or commission in connection with the
transactions provided for in this Agreement.
O. Investment Portfolio. The investment portfolios of Fifth Third
--------------------
and its subsidiaries and affiliates consist in all material
respects of securities in marketable form. Since December 31,
1998, to the date hereof Fifth Third and its affiliates, on a
consolidated basis, have not incurred any material and unusual or
extraordinary losses in their respective investment portfolios,
and, except for matters of general application to the banking
industry (including, but not limited to, changes in laws or
regulations or GAAP) or for events relating to the business
environment in general, including market fluctuations and changes
in interest rates, the management of Fifth Third is not aware of
any events which are reasonably certain to occur in the future and
which reasonably can be expected to result in any material adverse
change in the quality or performance of the investment portfolios
of Fifth Third and its affiliates on a consolidated basis.
P. Taxes; Accounting. Fifth Third has no reason to believe that
-----------------
any conditions exist that might prevent or impede the Merger from
qualifying as a "reorganization" within the meaning of Section
368(a) of the Code or for pooling-of-interests accounting
treatment.
Q. Year 2000. Neither Fifth Third nor any of its subsidiaries has
---------
received,nor to the knowledge of Fifth Third are there facts that
would reasonably be expected to form the basis for the issuance
of, a "Year 2000 Deficiency Notification Letter" (as such term is
employed in the Federal Reserve's Supervision and Regulatory
Letter No. SR 98-3 (SUP), dated March 4, 1998). Fifth Third has
made available to CNB Bancshares a complete and accurate copy of
its plan, including its good faith estimate of the anticipated
associated costs, for addressing the issues set forth in the Year
2000 guidance papers issued by the Federal Financial Institutions
Examination Council, including the statements dated May 5, 1997,
entitled "Year 2000 Project Management Awareness", December 17,
1997, entitled "Safety and Soundness Guidelines Concerning the
Year 2000 Business Risk", and October 15, 1998, entitled
"Interagency Guidelines Establishing Year 2000 Standards for
Safety and Soundness", as such issues affect any of Fifth Third or
its subsidiaries. Between the date of this Agreement and the
Effective Time, Fifth Third shall use its reasonable best efforts
to implement such plan.
R. Expiration of Representations and Warranties. All
--------------------------------------------
representations and warranties contained in this Article III shall
expire at the Effective Time, and thereafter, Fifth Third shall
have no further liability or obligation with respect thereto.
ARTICLE IV. OBLIGATIONS OF CNB BANCSHARES BETWEEN THE DATE OF
THIS AGREEMENT AND THE EFFECTIVE TIME.
A. Shareholders' Meeting. CNB Bancshares, in consultation with
---------------------
Fifth Third, will take all actions necessary to call and hold an
annual or a special meeting of CNB Bancshares' shareholders as
soon as practicable after the Fifth Third registration statement
relating to the shares of Fifth Third Common Stock to be issued in
the Merger has been declared effective by the SEC and under all
applicable state securities laws for the purpose of approving the
Merger and the plan of merger (within the meaning of Section 23-1-
40-1 of the IBCL) contained in this Agreement (and any other
documents or actions necessary to the consummation of the Merger)
pursuant to law. The Board of Directors of CNB Bancshares shall
be permitted to withdraw or modify in a manner adverse to Fifth
Third (or not to continue to make) its recommendation to its
shareholders (including recommending that shareholders vote
against the Merger) if, but only if, (a) in the reasonable opinion
of the Board of Directors of CNB Bancshares upon the advice of its
outside counsel, such action is required in order for the Board of
Directors of CNB Bancshares to
comply with duties applicable to directors under applicable law,
and (b) CNB Bancshares has given Fifth Third five business days'
prior notice of its intention to withdraw or modify such
recommendation and CNB Bancshares' Board of Directors has
considered any proposed changes to this Agreement (if any)
proposed by Fifth Third prior to such five day period. Without
limiting the generality of the foregoing, CNB Bancshares agrees
that its obligations pursuant to the first sentence of this
Section IV.A. shall not be altered by the commencement, public
proposal, public disclosure or communication to CNB Bancshares of
any Acquisition Proposal (as defined below), including without
limitation a Superior Proposal (as defined below), or a decision
by the Board of Directors of CNB Bancshares to withdraw or modify
in a manner adverse to Fifth Third (or not to continue to make)
its recommendation to its stockholders to approve the Merger and
the plan of merger contained in this Agreement. For the purposes
of this Agreement, "Superior Proposal" shall mean any bona fide
Acquisition Proposal for all of the outstanding shares of the CNB
Bancshares Common Stock on terms the Board of Directors of CNB
Bancshares determines in its good faith judgment (taking into
account the advice of a financial advisor of nationally recognized
reputation, taking into account all the terms and conditions of
the Acquisition Proposal, including any break-up fees, expense
reimbursement provisions and conditions to consummation) are more
favorable and provide greater value to all of CNB Bancshares'
shareholders than this Agreement and the Merger taken as a whole.
B. No Solicitation. CNB Bancshares and its subsidiaries, and the
---------------
officers, directors, financial or legal advisors of CNB Bancshares
and its subsidiaries, will not, directly or indirectly, (a) take
any action to solicit, initiate or encourage any Acquisition
Proposal or (b) engage in negotiations with, or disclose any
nonpublic information relating to CNB Bancshares or any of its
subsidiaries or afford access to the properties, books or records
of CNB Bancshares or any of its subsidiaries to, any person that
may be considering making, or has made, an Acquisition Proposal;
provided that CNB Bancshares may, in response to an unsolicited
written proposal from a third party regarding an Acquisition
Proposal engage in the activities specified in clause (b) of this
Section IV.B., if (i) in the reasonable opinion of the Board of
Directors of CNB Bancshares upon the advice of its outside
counsel, such action is required for the Board of Directors of CNB
Bancshares to comply with the duties applicable to directors under
applicable law and (ii) CNB Bancshares has received from such
third party an executed confidentiality agreement with terms not
materially less favorable to CNB Bancshares than those contained
in the confidentiality agreement entered into between CNB
Bancshares and Fifth Third dated June 14, 1999. CNB Bancshares
will immediately notify Fifth Third orally and will promptly (and
in no event later than 24 hours after the relevant event) notify
Fifth Third in writing (which oral and written notices shall
identify the person making the Acquisition Proposal or request for
information and set forth the material terms thereof) after having
received any Acquisition Proposal, or request for nonpublic
information relating to CNB Bancshares or any of its subsidiaries
or for access to the properties, books or records of CNB
Bancshares or any of its subsidiaries by any person who is
considering making or has made an Acquisition Proposal. CNB
Bancshares will keep Fifth Third fully and currently informed of
the status and details of any such Acquisition Proposal or request
and any related discussions or negotiations. CNB Bancshares
shall, and shall cause the CNB Subsidiaries and its directors,
officers and financial and legal advisors to, cease immediately
and cause to be terminated all activities, discussions or
negotiations, if any, with any persons conducted heretofore with
respect to any Acquisition Proposal. Nothing in this Section
IV.B. shall prohibit CNB Bancshares or its Board of Directors from
taking and disclosing to the stockholders of CNB Bancshares a
position with respect to an Acquisition Proposal by a third party
to the extent required under the Exchange Act or from making such
disclosure to the stockholders of CNB Bancshares which, in the
reasonable opinion of the Board of Directors of CNB Bancshares
upon the advice of its outside counsel, is required under
applicable law; provided that nothing in this sentence shall
affect the obligations of CNB Bancshares and its Board of
Directors under any other provision of this Agreement. For
purposes of this
Agreement, "Acquisition Proposal" means any offer or proposal for,
or any indication of interest in (a) a purchase or other
acquisition (including by way of merger, consolidation, share
exchange or otherwise) of beneficial ownership (the term
"beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Exchange Act, and
the rules and regulations thereunder) of securities representing
10% or more of the voting power of CNB Bancshares or more than 25%
of any Significant Subsidiary of CNB Bancshares, (b) a purchase,
lease or other acquisition or assumption of all or a substantial
portion of the assets or deposits of CNB Bancshares or all or a
substantial portion of the assets or deposits of any Significant
Subsidiary of CNB Bancshares, (c) a merger or consolidation, or
any similar transaction, involving CNB Bancshares or any
Significant Subsidiary of CNB Bancshares, or (d) any substantially
similar transaction.
C. Valuation Adjustment. Consistent with GAAP, CNB Bancshares
--------------------
agrees that on or before the Effective Time based on a review of
the Bank Subsidiary's loan losses, current classified assets and
commercial, multi-family and residential mortgage loans and
investment portfolio, CNB Bancshares will work with Fifth Third
with the goal of establishing collection procedures, internal
valuation reviews, credit policies and practices and general
valuation allowances which are consistent with the guidelines used
within the Fifth Third holding company system, provided that no
adjustment to general valuation allowances or reserves shall be
made until immediately prior to the Effective Time and all
conditions precedent to the obligations of the parties hereto have
either been satisfied or waived as confirmed by such parties in
writing. Fifth Third shall provide such assistance and direction
to CNB Bancshares as is necessary in conforming to such policies,
practices, procedures and asset dispositions which are mutually
agreeable between the date of this Agreement until the Effective Time.
D. Operations in the Ordinary Course; Forbearances. From the date
-----------------------------------------------
of this Agreement until the Effective Time, CNB Bancshares and the
CNB Subsidiaries will be operated in the ordinary course of
business, and none of them will, without the prior written consent
of Fifth Third, which consent shall not be unreasonably withheld
or unreasonably delayed: make any changes in its Restated Articles
of Incorporation, Amended By-laws, or corporate structures; issue
any additional shares of CNB Bancshares Common Stock or other
equity securities other than pursuant to the exercise of options
granted prior to the date hereof, in the form of permissible stock
dividends (as described below), upon conversion of Convertible
Debentures, pursuant to the Dividend Reinvestment Plan or as set
forth in the Disclosure Schedule pursuant to Section II.A.1. with
respect to Benefit Plans; or, issue as borrower any long term debt
or convertible or other securities of any kind, or right to
acquire any of its securities; repurchase any equity securities,
other than (subject to Section VII.J.) the repurchase of shares of
CNB Bancshares Common Stock in accordance with past practice (as
to timing and amount) and in compliance with applicable law and
the safe harbor requirements of Rule 10b-18 of the Exchange Act;
make any material changes in its method of business operations;
make, enter into any agreement to make, or become obligated to
make, any capital expenditures in excess of $500,000 (except as
set forth in the Disclosure Schedule); make, enter into or renew
any agreement for services to be provided to CNB Bancshares or the
CNB Subsidiaries or permit the automatic renewal of any such
agreement, other than the agreements identified in the Disclosure
Schedule which are specifically identified on such Schedule as
agreements which CNB Bancshares intends to renew, except any
agreement for services having a term of not more than six (6)
months and requiring the expenditure of not more than $500,000
(for this purpose the phrase "permit the automatic renewal"
includes the failure to send a notice of termination of such
contract if such failure would constitute a renewal); acquire,
become obligated to acquire, or enter into any
agreement to acquire, any banking or non-banking company or any
branch offices of any such companies or any material assets or
liabilities outside the ordinary course of business, other than
such agreements existing on the date hereof and previously
publicly announced or disclosed in the Disclosure Schedule; make,
declare, pay or set aside for payment any cash dividends on its
own stock other than normal and customary cash dividends per
quarter paid in such amounts and at such times as CNB Bancshares
historically has done on its Common Stock and which shall not
exceed $0.24 per share in the case of the dividend to be paid in
July 1999 and (subject to Section VII.J.) $0.26 per share in the
case of subsequent quarters, or be paid more frequently than once
per calendar quarter, provided this covenant shall only apply to
CNB Bancshares; make any distributions on its stock, other than
(i) stock dividends to be declared in accordance with past
practice (subject to Section VII.J. and provided that Fifth Third
has been given a reasonable opportunity prior to such declaration
to review and comment on any announcement with respect thereto)
and (ii) cash dividends, as described in the immediately preceding
clause; change or otherwise amend any Benefit Plans other than as
required by law or as contemplated herein; provide any increases
in employee salaries or benefits other than in the ordinary course
of business; or take any intentional action that is intended or
may reasonably be expected to result in any of its representations
and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective
Time, or in any of the conditions to the Merger set forth in
Article VI not being satisfied or in a violation of any provision
of this Agreement, except, in every case, as required by
applicable law, regulation or safe and sound banking practices.
CNB Bancshares agrees that it will not sell, transfer, mortgage or
otherwise dispose of or encumber any of the shares of the capital
stock of the CNB Subsidiaries which are now owned by it, and
neither CNB Bancshares nor any of the CNB Subsidiaries shall sell,
transfer, mortgage or otherwise dispose of or encumber any other
assets, except in the ordinary course of business consistent with
past practice. CNB Bancshares agrees that neither it nor the CNB
Subsidiaries will agree to, or make any commitment to, take any of
the actions prohibited by this Section IV.D.
ARTICLE V. COOPERATION AND OTHER OBLIGATIONS AND OTHER COVENANTS
A. Registration Statement and Proxy Statement. 1. Each of Fifth
------------------------------------------
Third and CNB Bancshares agree to cooperate in the preparation of
a registration statement on Form S-4 (the "Registration
Statement") to be filed by Fifth Third with the SEC in connection
with the issuance of Fifth Third Common Stock in the Merger
(including the proxy statement and prospectus and other proxy
solicitation materials of CNB Bancshares constituting a part
thereof (the "Proxy Statement") and all related documents). The
Registration Statement and the Proxy Statement shall comply as to
form in all material respects with the applicable provisions of
the Securities Act and the Exchange Act and the rules and
regulations thereunder. Fifth Third and CNB Bancshares agree to
each use their best efforts to enable CNB Bancshares to file the
Proxy Statement in preliminary form with the SEC within sixty (60)
days of the date hereof and CNB Bancshares agrees to furnish the
preliminary Proxy Statement in draft form for comments to Fifth
Third at least 5 days prior to the anticipated filing. Unless
Fifth Third elects to file the Registration Statement sooner,
Fifth Third agrees to file the Registration Statement with the SEC
as soon as reasonably practicable after any SEC comments with
respect to the preliminary Proxy Statement are resolved. Each of
Fifth Third and CNB Bancshares shall, as promptly as practicable
after receipt thereof, provide copies of any written comments
received from the SEC with respect to the Registration Statement
and the Proxy Statement, as the case may be, to the other party,
and advise the other party of any oral comments with respect to
the Registration Statement or the Proxy Statement received from
the SEC. Each of Fifth Third
and CNB Bancshares agrees to use reasonable best efforts to cause
the Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after filing
thereof. As promptly as possible after the Registration Statement
is declared effective, CNB Bancshares agrees to mail the Proxy
Statement to its shareholders. Fifth Third also agrees to use
reasonable best efforts to obtain all necessary state securities
law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by the Agreement. CNB Bancshares agrees
to furnish to Fifth Third all information concerning CNB
Bancshares, its Subsidiaries, officers, directors and stockholders
as may be reasonably requested in connection with the foregoing.
2. Each of Fifth Third and CNB Bancshares agrees, as to
itself and its subsidiaries, that none of the information supplied
or to be supplied by it for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the
Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Proxy Statement and
any amendment or supplement thereto will, at the date of mailing
to shareholders and at the time of the CNB Bancshares shareholder
meeting to approve the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not
misleading.
3. Fifth Third agrees to advise CNB Bancshares, promptly
after Fifth Third 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 Fifth Third Common Stock
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. CNB Bancshares agrees to
advise Fifth Third of any request by the SEC for the amendment or
supplement of the Proxy Statement or for additional information.
B. Regulatory Approvals. 1. Fifth Third will prepare and cause to
--------------------
be filed, at the expense of Fifth Third, such notices,
applications and other documents with the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Ohio Division of Financial Institutions, the
Michigan Financial Institutions Bureau, and any other Regulatory
Agencies or stock exchanges as are required to secure the
requisite approvals for the consummation of the transactions
provided for in this Agreement. Fifth Third shall use its
reasonable best efforts to file all such applications within forty-
five (45) days of the date of this Agreement and to use all
reasonable efforts to secure all such approvals. CNB Bancshares
agrees that it will cooperate with Fifth Third and, as promptly as
practicable after request and at its own expense, provide Fifth
Third with all information and documents concerning CNB Bancshares
and the Bank Subsidiary, as shall be required in connection with
preparing such notices, applications and other documents and in
connection with securing such approvals.
2. Fifth Third and CNB Bancshares shall promptly advise
each other upon receiving any communication from any governmental
entity whose consent or approval is required for consummation of
the transactions contemplated by this Agreement.
C. Reasonable Best Efforts. Each of the parties hereto agrees to
-----------------------
use its reasonable best efforts and to cooperate with the other
party in all reasonable respects in order to carry out and
consummate the transactions contemplated by this Agreement at the
earliest practicable time including, without limitation,
the filing of applications, notices and other documents with, and
obtaining approval from, appropriate governmental regulatory
agencies; provided that nothing in this Agreement shall obligate
Fifth Third to agree to any conditions, restraints or requirements
that would materially adversely reduce the anticipated economic or
business benefits of the Merger to Fifth Third or could reasonably
be expected to have a Material Adverse Effect on CNB Bancshares
and the CNB Subsidiaries taken as a whole (a "Burdensome
Condition") it being understood that a condition preventing the
integration of the computer systems of CNB Bancshares or any of
the CNB Subsidiaries with those of Fifth Third or its subsidiaries
until after January 1, 2000 shall not be deemed a Burdensome Condition).
D. Access to Information. 1. CNB Bancshares agrees to permit
---------------------
Fifth Third, its officers, employees, accountants, agents and
attorneys, and Fifth Third agrees to permit CNB Bancshares, its
officers, employees, accountants, agents and attorneys, to have
reasonable access during business hours to their respective books,
records and properties, and those of its respective subsidiaries
as well, for the purpose of making a detailed examination, or
updating and amplifying prior examinations, of the financial
condition, assets, liabilities, legal compliance, affairs and the
conduct of the business of CNB Bancshares and the CNB Subsidiaries
or Fifth Third and its subsidiaries, as the case may be, prior to
the Effective Time, and also to permit the monitoring of the
foregoing on an ongoing basis (such rights of examination and
monitoring to be subject to the confidentiality obligations set
forth in Section V.D.2. hereof); provided, however, no
investigation by any of the parties or their respective
representatives shall affect the representations and warranties of
the other party set forth herein.
2. Fifth Third will not disclose to others, shall not use
in respect of its (or any of its subsidiaries) business
operations, and will hold in confidence any non-public,
confidential information disclosed to it by CNB Bancshares
concerning CNB Bancshares or the Bank Subsidiary. CNB Bancshares
will not disclose to others, shall not use in respect of its (or
any of its subsidiaries) business operations, and will hold in
confidence any non-public, confidential information disclosed to
it concerning Fifth Third or any of its affiliates. In the event
the Merger is not completed, all non-public financial statements,
documents and materials, and all copies thereof, shall be returned
to CNB Bancshares or Fifth Third, as the case may be, and shall
not be used by Fifth Third or CNB Bancshares, as the case may be,
in any way detrimental to CNB Bancshares or Fifth Third.
3. As soon as they are available, CNB Bancshares will
provide to Fifth Third CNB Bancshares' unaudited, consolidated
balance sheets, statements of income, changes in stockholders'
equity and cash flows as of and at June 30, 1999, and for the six
months then ended, and shall continue to furnish such financial
information for subsequent monthly and quarterly periods to Fifth
Third, and audited, consolidated financial statements as at
December 31, 1999 and for the year then ended, as soon as
practicable, in each case, until the Closing Date. Such audited
and unaudited consolidated financial statements of CNB Bancshares
will fairly present, as applicable, the consolidated financial
condition, results of operations and cash flows of CNB Bancshares
as of the date thereof, and for the years or periods covered
thereby, in conformity with GAAP, consistently applied (except as
stated therein and except for the omission of notes to unaudited
statements and except for year-end adjustments (consisting of
normal recurring accruals)). CNB Bancshares timely shall furnish
Fifth Third with copies of all reports filed by CNB Bancshares
with the SEC subsequent to the date of this Agreement and until
the Closing Date.
4. As soon as they are available, Fifth Third will
provide to CNB Bancshares Fifth Third's unaudited, consolidated
balance sheets, statements of operations, statements of
stockholders' equity and cash flows as of and at June 30, 1999,
and for the six months then ended, and shall continue to furnish
such financial information for subsequent monthly and quarterly
periods to Fifth Third, and audited,
consolidated financial statements as at December 31, 1999 and for
the year then ended, as soon as practicable, in each case, until
the Closing Date. Such audited and unaudited consolidated
financial statements of Fifth Third will fairly present, as
applicable, the consolidated financial condition, results of
operations and cash flows of Fifth Third as of the date hereof,
and for the years or periods covered thereby, in conformity with
GAAP, consistently applied (except as stated therein and except
for the omission of notes to unaudited statements and except for
normal (in nature and amount) year-end adjustments to interim
results). Fifth Third timely shall furnish CNB Bancshares with
copies of all reports filed by Fifth Third with the SEC subsequent
to the date of this Agreement and until the Closing Date.
E. Employee Benefit Matters. 1. If Fifth Third so requests, CNB
------------------------
Bancshares or the CNB Subsidiaries shall develop a plan and
timetable for terminating any or all of the Qualified Benefit
Plans, and, with the advance written approval of Fifth Third,
shall proceed with the implementation of said termination plan and
timetable; provided that such terminations will not adversely
affect qualification of such Qualified Benefit Plans under the
Code. In the event of the termination of defined benefit plans
maintained by CNB Bancshares, such plans may be amended with the
advance written consent of Fifth Third (which shall not be
unreasonably withheld) to allow participants to elect lump sum
distributions using actuarial assumptions in the CNB Bancshares
defined benefit plan as of the date of this Agreement.
2. CNB Bancshares or the CNB Subsidiaries shall provide
to Fifth Third at least sixty (60) days prior to the Effective
Time, documentation reasonably satisfactory to Fifth Third
demonstrating that the requirements of Sections 404, 412, 415,
416, 401(k) and (m) of the Code have been satisfied by all of its
Qualified Benefit Plans for the 1996, 1997 and 1998 plan years.
3. All participants in the defined benefits plans
maintained by CNB Bancshares shall become 100% vested as of the
Effective Time. With respect to any other Benefit Plan that
provides for vesting of benefits, there shall be no discretionary
acceleration of vesting without Fifth Third's consent whether or
not such discretionary acceleration of vesting is provided under
the terms of the Benefit Plan; provided that a Benefit Plan which
pursuant to its terms provides for an acceleration of vesting upon
a change of control of CNB Bancshares shall not be deemed to
involve a discretionary acceleration of vesting and vesting
thereunder shall accelerate as of the Effective Time or any other
date as provided therein.
4. If Fifth Third so requests, CNB Bancshares or any of
the CNB Subsidiaries shall take all actions necessary to freeze
the Qualified Benefit Plans as of a date at least one day prior to
the Effective Time such that no further contributions (including
employee 401(k) contributions) shall be made under the Qualified
Benefit Plans after the Effective Time.
5. Except as provided otherwise pursuant hereto, CNB
Bancshares and any of the CNB Subsidiaries, without the advance
written consent of Fifth Third, which shall not be unreasonably
withheld or delayed, shall not (a) adopt any amendments to the
Qualified Benefit Plans after the date of this Agreement; or (b)
make any distributions from the Qualified Benefit Plans after the
date of this Agreement other than in the ordinary course of
operations of such Qualified Benefit Plans; or (c) make any
contributions to the defined benefit plans maintained by CNB
Bancshares or discretionary contributions to any of the Qualified
Benefit Plans after the date of this Agreement; or (d) take any
action which would reduce or restrict the availability of surplus
(excess of plan assets over plan liabilities) under any defined
benefit plan as defined in Section 414(j) of the Code.
6. Nonqualified Deferred Compensation Plans. For all
nonqualified deferred compensation plans maintained by CNB
Bancshares, Fifth Third will (a) not terminate the plan without
the written
consent of a majority of the participants, (b) maintain investment
alternatives in the same categories as those now available to
participants, (c) not require participants to alter their
distribution elections, (d) provide participants or beneficiaries
at least quarterly statements on their accounts, and (e) take no
action which would otherwise jeopardize the tax deferral of
benefits under the nonqualified deferred compensation plan.
7. Retiree Health Plans. Fifth Third will continue to
maintain (i) the retiree health plan maintained by CNB Bancshares
for the individuals who are listed in the Disclosure Schedule, and
(ii) the health plan for disabled employees who are listed in the
Disclosure Schedule and/or merge such plans with the retiree
medical plans provided by Fifth Third.
8. Short Term Incentive Plan and Bonus. Bonuses will be
paid by CNB Bancshares in its cash bonus plan at a rate of 8% of
compensation for the calendar year 1999. Short Term Incentive
Plan ("STIP") distributions for the calendar year 1999 will be
made at the maximum level permitted under the STIP. Employees of
CNB Bancshares and the subsidiaries of CNB Bancshares who are
terminated on or after the date of this Agreement and before
January 1, 2000, will receive a pro rata portion of the bonus
and/or STIP distribution they otherwise would have received for
the calendar year 1999. Bonuses and distributions under the STIP
will be paid on or before December 31, 1999.
9. With the advance written consent of Fifth Third (which
shall not be unreasonably withheld), CNB Bancshares may amend the
CNB Bancshares, Inc. Employees' Pension Plan to provide that (i)
compensation through December 31, 1999 shall be taken into account
notwithstanding an earlier freeze or termination of said plan and
(ii) if a participant is involuntarily terminated on or after the
date of this Agreement, his compensation for purposes of the plan
will be calculated as if such participant worked through December
31, 1999 based on his rate of pay as of his termination of
employment.
10. Defined Benefit Plan Surplus. The amount of the
surplus in the CNB Bancshares defined benefit plan will be
calculated on a plan termination basis, as of the Effective Time,
as mutually agreed by CNB Bancshares and Fifth Third's actuaries.
An amount equal to 50% of the surplus in excess of $6,000,000 will
be used to provide enhanced benefits for (i) employees of CNB
Bancshares and the subsidiaries of CNB Bancshares who are employed
by Fifth Third on December 31, 2000 and (ii) employees of CNB
Bancshares and the subsidiaries of CNB Bancshares who are
involuntarily terminated on or after the date of this Agreement
and prior to December 31, 2000. Said 50% share of the surplus in
excess of $6,000,000 shall be reduced by (i) the potential
liability determined in good faith by Fifth Third arising from the
breach of any representations and warranties in Section II.Q., to
be determined by Fifth Third as soon as practicable after the date
hereof, but in no event later than fifteen (15) days prior to the
Effective Time, and (ii) the actuarial cost (if any) determined in
good faith by Fifth Third's actuaries of the amendments referred
to in Section V.E. providing for immediate vesting, lump sum
distributions and the inclusion of compensation through December
31, 1999. The enhanced benefits will be payable within the defined
benefit plan and the nature of those benefits will be determined
by the management of CNB Bancshares subject to the approval of
Fifth Third (which approval shall not be unreasonably withheld.)
11. Employees employed by Fifth Third after the Effective
Time will be entitled to a flex dollar allocation of not less than
6% of such employees' qualifying compensation (or an allocation
comparable thereto) under the Fifth Third Section 125 Plan
allocable over the pay periods in the year 2000 (falling after the
Effective Time) in accordance with the terms of said plan.
F. State Takeover Statutes. CNB Bancshares will take all steps
-----------------------
within its reasonable control
necessary to exempt (or continue the exemption of) the Merger,
this Agreement and the Option Agreement and the transactions
contemplated hereby and thereby (including, without limitation,
exercise of the Option (as defined therein)) from any applicable
state takeover law, as now or hereafter in effect.
G. Affiliates. 1. Not later than the 15th day prior to the
----------
mailing of CNB Bancshares' Proxy Statement with respect to the
Merger, CNB Bancshares shall deliver to Fifth Third a list of each
person that, to the best of CNB Bancshares' knowledge, is or is
reasonably likely to be, as of the date of the annual or special
meeting called to approve the Merger, deemed an "affiliate" of it
as that term is used in Rule 145 under the Securities Act, or SEC
Accounting Series Releases 130 and 135 (the "CNB Bancshares
Affiliates"). CNB Bancshares shall use its best efforts to cause
each CNB Bancshares Affiliate to execute and deliver to Fifth
Third on or before the mailing of such Proxy Statement an
agreement in the form of Appendix B hereto.
2. Fifth Third shall use its best efforts to cause each
person who may be deemed to be an "affiliate" of it as that term
is used in Rule 145 under the Securities Act, or SEC Accounting
Series Releases 130 and 135, as the case may be, to execute and
deliver to Fifth Third on or before the date of mailing of the
Proxy Statement an agreement in the form of Appendix C hereto.
H. Exemption from Liability Under Section 16(b). Assuming that CNB
--------------------------------------------
Bancshares delivers to Fifth Third the Section 16 Information in a
timely fashion prior to the Effective Time, the Board of Directors
of Fifth Third, or a committee of Non-Employee Directors thereof
(as such term is defined for purposes of Rule 16b-3(d) under the
Exchange Act), shall reasonably promptly thereafter and in any
event prior to the Effective Time adopt a resolution, expressly
relying on CNB Bancshares' representation that any such options or
other grants were upon their issuance exempt from liability
pursuant to Section 16(b) under the Exchange Act, providing that
the receipt by the CNB Insiders of Fifth Third Common Stock in
exchange for shares of CNB Bancshares Common Stock, and of options
to purchase shares of Fifth Third Common Stock upon conversion of
options to purchase shares of CNB Bancshares Common Stock, in each
case pursuant to the transactions contemplated hereby and to the
extent such securities are listed in the Section 16 Information,
are intended to be exempt from liability pursuant to Section 16(b)
under the Exchange Act; provided, however, that the Board of
Directors of Fifth Third will be under no obligation to adopt such
a resolution unless it may expressly rely on a written
representation by CNB Bancshares that any such options or other
grants were, upon their issuance, exempt from liability pursuant
to Section 16(b) under the Exchange Act. "Section 16 Information"
shall mean information accurate in all respects regarding the CNB
Insiders, the number of shares of CNB Bancshares Common Stock held
by each such CNB Insider and expected to be exchanged for Fifth
Third Common Stock in the Merger, and the number and description
of the options to purchase shares of CNB Bancshares Common Stock
held by each such CNB Insider and expected to be converted into
options to purchase shares of Fifth Third Common Stock in
connection with the Merger. "CNB Insiders" shall mean those
officers and directors of CNB Bancshares who are subject to the
reporting requirements of Section 16(a) of the Exchange Act and
who are listed in the Section 16 Information.
I. Employment Agreement. Concurrently with the execution of this
--------------------
Agreement, Fifth Third is entering into an employment agreement
with Xx. Xxxxx X. Xxxxxxxx, effective as of the Effective Time.
J. Forbearances of Fifth Third. From the date of this Agreement
---------------------------
until the Effective Time, Fifth Third will not, without the prior
written consent of CNB Bancshares, which consent shall not be
unreasonably withheld or unreasonably delayed: make any changes in
its Second Amended Articles
of Incorporation or Code of Regulations in a manner adverse to the
shareholders of CNB Bancshares; make, declare, pay or set aside
for payment any extraordinary cash dividends on its own stock; or
agree to, or make any commitment to, take any of the actions
prohibited by this Section V.J.
K. Coordination of Dividends. Fifth Third and CNB Bancshares shall
-------------------------
coordinate (on a mutually agreeable basis that will not materially
impair Deloitte & Touche LLP's ability to deliver the letters
referred to in Section VI.B.6.) the timing of the declaration and
payment of dividends payable after the date hereof so that Fifth
Third and CNB Bancshares shareholders will receive during each
quarter fair dividends and in no event shall Fifth Third or CNB
Bancshares shareholders fail to receive a fair dividend, or
receive more than one fair dividend, during any quarter up to and
including the quarter immediately following the quarter during
which the Effective Time occurs.
ARTICLE VI. CONDITIONS PRECEDENT TO CLOSING
A. Conditions to the Obligations of Each of the Parties.
----------------------------------------------------
The obligation of each of the parties hereto to consummate the
transactions provided for herein is subject to the fulfillment on
or prior to the Effective Time of each of the following
conditions:
1. The shareholders of CNB Bancshares shall have duly
approved the Merger and the plan of merger contained within this
Agreement in accordance with and as required by law and in
accordance with CNB Bancshares' Restated Articles of Incorporation
and Amended Bylaws.
2. All necessary governmental and regulatory orders,
consents, clearances and approvals and requirements shall have
been secured and satisfied for the consummation of such
transactions, including without limitation, those of the Federal
Reserve System, the Ohio Division of Financial Institutions, the
Michigan Financial Institutions Bureau, and the Federal Deposit
Insurance Corporation to the extent required and, in the case of
Fifth Third's obligation, none of such orders, consents,
clearances and approvals and requirements shall be subject to a
Burdensome Condition.
3. Any waiting period mandated by law in respect of the
final requisite approval by any applicable Regulatory Agency of
the transaction contemplated herein shall have expired.
4. No order or injunction of any federal or state agency
or court shall be in effect preventing, prohibiting or enjoining
the transactions contemplated by this Agreement.
5. Fifth Third shall have registered its shares of Fifth
Third Common Stock to be issued to the CNB Bancshares shareholders
hereunder with the SEC pursuant to the Securities Act, and with
all applicable state securities authorities. The registration
statement with respect thereto shall have been declared effective
by the SEC and all applicable state securities authorities and no
stop order shall have been issued. The shares of Fifth Third
Common Stock to be issued to the CNB Bancshares shareholders
hereunder shall have been authorized for trading on the National
Market System of the National Association of Securities Dealers
upon official notice of issuance.
6. Fifth Third and CNB Bancshares shall have received
from Deloitte & Touche LLP,
independent auditors for Fifth Third, letters, dated the date of
or shortly prior to each of the mailing date of the Proxy
Statement and the Effective Date, stating its opinion that the
Merger shall qualify for pooling-of-interests accounting
treatment.
B. Additional Conditions to the Obligations of Fifth Third.
-------------------------------------------------------
The obligation of Fifth Third to consummate the transactions
provided for herein is subject to the fulfillment at or prior to
the Effective Time of each of the following additional conditions
unless waived by Fifth Third in a writing delivered to CNB
Bancshares which specifically refers to the condition or
conditions being waived:
1. All of the representations and warranties of CNB
Bancshares set forth in Article II of this Agreement shall be true
and correct (subject to the standard set forth in Section I.S.)
both as of the date of this Agreement and at and as of the Closing
Date (as hereinafter defined) as if each such representation and
warranty was given on and as of the Closing Date, except for any
such representations and warranties made as of a specified date,
which shall be true and correct (subject to the standard set forth
in Section I.S.) as of such date.
2. CNB Bancshares shall have performed all of the
obligations required of it under the terms of this Agreement in
all material respects.
3. Fifth Third shall have received a certificate from CNB
Bancshares, executed by its chief executive officer and chief
financial officer, dated the Closing Date, certifying to the best
knowledge and belief of such chief executive officer and chief
financial officer of each that the conditions set forth in Section
VI.B.1. and VI.B.2. have been satisfied.
4. Fifth Third shall have received an opinion of Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, special counsel to Fifth Third, dated
the Closing Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion (a) the
Merger constitutes a "reorganization" within the meaning of
Section 368 (a) of the Code and (b) that, accordingly, no gain or
loss will be recognized by Fifth Third as a result of the Merger.
In rendering such opinion, such counsel may require and rely upon
representations contained in letters from Fifth Third and CNB
Bancshares.
5. No investigation or action by any state or federal
agency shall have been threatened in writing or instituted seeking
to enjoin or prohibit or unwind the transactions contemplated
hereby and no governmental action or proceeding shall have been
threatened or instituted before any court or governmental body or
authority, seeking to enjoin or prohibit or unwind, the
transactions contemplated hereby or seeking to impose material
sanctions or penalties as a result thereof (other than
investigations, actions and proceedings which have been withdrawn
prior to the Closing without Material Adverse Effect on Fifth
Third or CNB Bancshares, individually or on a combined basis, and
other than regularly scheduled regulatory examinations).
C. Additional Conditions to the Obligations of CNB Bancshares.
----------------------------------------------------------
The obligation of CNB Bancshares to consummate the transactions
provided for herein is subject to the fulfillment at or prior to
the Effective Time of each of the following additional conditions
unless waived by CNB Bancshares in a writing delivered to Fifth
Third which specifically refers to the condition or conditions
being waived:
1. All of the representations and warranties of Fifth
Third set forth in Article II of this Agreement shall be true and
correct (subject to the standard set forth in Section I.S.) both
as of the date of this Agreement and at and as of the Closing Date
(as hereinafter defined) as if each such representation and
warranty was given on and as of the Closing Date, except for any
such representations and warranties made as of a specified date,
which shall be true and correct (subject to the standard set forth
in Section I.S.) as of such date.
2. Fifth Third shall have performed all of the
obligations required of it under the terms of this Agreement in
all material respects.
3. CNB Bancshares shall have received a certificate from
Fifth Third, executed by its chief executive officer and chief
financial officer, dated the Closing Date, certifying to each of
such officers' best knowledge and belief that the conditions set
forth in Section VI.C.1. and VI.C.2. have been satisfied.
4. CNB Bancshares shall have received an opinion of
Xxxxx, Rice & Xxxxxxxx, X.X., counsel to CNB Bancshares, dated the
Closing Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion (a) the
Merger constitutes a "reorganization" within the meaning of
Section 368 (a) of the Code and (b) that, (i) no gain or loss will
be recognized by CNB Bancshares as a result of the Merger and (ii)
no gain or loss will be recognized by stockholders of CNB
Bancshares who receive Fifth Third Common Stock in exchange for
shares of CNB Bancshares Common Stock, except for cash received in
lieu of fractional share interests. In rendering such opinion,
such counsel may require and rely upon reasonable assumptions and
require and rely upon representations contained in letters from
Fifth Third and CNB Bancshares.
ARTICLE VII. ADDITIONAL COVENANTS
A. Bank Merger. The Bank Subsidiary shall be merged with Fifth,
-----------
Third Bank, Indiana, to be effective at the Effective Time. The
parties hereto agree to cooperate with one another to effect such
merger. Upon consummation of any merger of the Bank Subsidiary,
the separate corporate existence of the Bank Subsidiary shall
cease by operation of law.
B. Employment Arrangements. 1. Fifth Third shall use its best
-----------------------
efforts to employ at Fifth Third or other Fifth Third subsidiaries
or affiliates as many of the employees of CNB Bancshares and all
of the subsidiaries of CNB Bancshares who desire employment within
the Fifth Third holding company system as possible, to the extent
of available positions and consistent with Fifth Third's standard
staffing levels and personnel policies. Immediately following the
Effective Time, Fifth Third shall provide the employees of CNB
Bancshares and all subsidiaries of CNB Bancshares ("Transferred
Employees") who become employees of Fifth Third or any of its
subsidiaries or affiliates at or immediately subsequent to the
Merger as a group with employee benefit plans in the aggregate
that are comparable in all material respects with the employee
benefit plans provided to similarly situated employees of Fifth
Third. Under each employee benefit plan sponsored or maintained
by Fifth Third or its subsidiaries or affiliates in which
Transferred Employees participate, prior service with CNB
Bancshares and any of the subsidiaries of CNB Bancshares
(including service prior to acquisition by CNB Bancshares to the
extent CNB Bancshares takes such service into account) shall be
taken into account for purposes of eligibility, vesting and, with
the exception of any defined benefit plan, the accrual of
benefits. In addition, with respect to any payroll practice (such
as accrued vacation) where service is utilized to determine the
amount of benefit under such practice,
prior service with CNB Bancshares and any subsidiaries of CNB
Bancshares (including service prior to acquisition by CNB
Bancshares to the extent CNB Bancshares takes such service into
account) shall be taken into account. With respect to any employee
of CNB Bancshares subsidiaries of CNB Bancshares who is not
employed by Fifth Third or one of its subsidiaries or affiliates
as of the Effective Time, Fifth Third shall be responsible for
providing continuation coverage to such employee (and his or her
dependents), as required by COBRA. With respect to any former
employee of CNB Bancshares or the CNB Subsidiaries (or their
dependents) who is receiving continuation coverage under COBRA as
of the Effective Time, Fifth Third shall be responsible to
maintain such continuation coverage in compliance with COBRA.
Notwithstanding the above, there will be no duplication of
benefits for employees of CNB Bancshares and the subsidiaries of
CNB Bancshares. Transferred Employees shall be entitled to a flex
dollar allocation (or an allocation comparable thereto) under the
Fifth Third Section 125 Plan allocable over the pay periods in the
year 2000 (falling after the Effective Time) in accordance with
the terms of said plan.
2. Those employees of CNB Bancshares and the subsidiaries
of CNB Bancshares who do not have an employment, change in control
or severance agreement and who are not employed by Fifth Third or
who are terminated or voluntarily resign after being notified
that, as a condition of employment, such employee must work at a
location more than thirty (30) miles from such employee's former
location of employment or that such employee's salary will be
materially decreased, in any case and in both cases, within ninety
(90) days after the Effective Time, and who sign and deliver a
termination and release agreement in a form acceptable to Fifth
Third, shall be entitled to severance pay equal to, in the case of
CNB Bancshares or subsidiaries of CNB Bancshares, two (2) weeks of
pay for each completed year of service (with a minimum of four (4)
weeks) up to a maximum of twenty-six (26) weeks of pay, plus any
earned but not paid vacation pay. Fifth Third shall provide
sufficient notification to CNB Bancshares of those employees it
will not be hiring in order that such employees terminated by CNB
Bancshares can be given appropriate notice of termination in
advance of the effectiveness thereof. CNB Bancshares shall
cooperate with Fifth Third to effectuate the foregoing and to
comply with, and provide notices regarding, the Workers Adjustment
and Retraining Act or any similar state or local law, including
without limitation, providing notices to employees and government
representatives. Nothing contained in this Section VII.B.2. shall be
construed or interpreted to limit or modify in any way Fifth
Third's at will employment policy.
3. Notwithstanding anything herein to the contrary, in
lieu of any severance benefits provided in Section VII.B.2. above,
Fifth Third shall acknowledge and assume, upon consummation of the
Merger, the obligations of CNB Bancshares under all existing
change in control and employment agreements specifically
identified by CNB Bancshares in Sction VII.B.3. of the Disclosure
Schedule.
4. Effective at the Effective Time, Fifth Third shall
establish a retention program (the "Retention Program") for key
employees of CNB Bancshares or the CNB Subsidiaries under which
certain key employees will be granted options on the Effective
Date to purchase shares of Fifth Third Common Stock. The number
of shares of Fifth Third Common Stock which will be reserved for
issuance under the Retention Program shall be 250,000 shares,
subject to the adjustment provided in Section I.E. hereof. Such
options will vest on the same schedule as those options regularly
granted to Fifth Third's employees. CNB Bancshares' management
team shall recommend key employees that may be eligible for grant
of an award under the Retention Program and shall cooperate with
Fifth Third's management team in identifying and determining the
key employees who will participate in the Retention Program,
provided that the final determination of which employees will
participate and the amount, terms and conditions of such awards
will be determined by Fifth Third in its sole discretion.
C. Director, Officer and Employee Indemnification. 1. From and
----------------------------------------------
after the Effective Time, Fifth Third shall assume the obligations
of CNB Bancshares and the Bank Subsidiary or any of their
subsidiaries arising under applicable Ohio, Michigan, Indiana and
Federal law in existence as of the date hereof or as amended prior
to the Effective Time and under the CNB Bancshares' Restated
Articles of Incorporation and Amended By-laws or the Bank
Subsidiary's Articles of Incorporation and Bylaws as in effect on
the date hereof, to indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date
hereof or who become, prior to the Effective Time, an officer or
director of CNB Bancshares, the Bank Subsidiary, or any of their
subsidiaries or predecessors (the "Indemnified Parties") against
losses, claims, damages, costs, expenses (including reasonable
attorneys' fees), liabilities or judgments or amounts that are
paid in settlement (which settlement shall require the prior
written consent of Fifth Third) of or in connection with any
claim, action, suit, proceeding or investigation (a "Claim") in
which an Indemnified Party is, or is threatened to be made, a
party or a witness based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a
director or officer of CNB Bancshares, the Bank Subsidiary or any
of their subsidiaries if such Claim pertains to any matter or fact
arising, existing or occurring prior to the Effective Time
(including, without limitation, the Merger and the transactions
contemplated by this Agreement), regardless of whether such Claim
is asserted or claimed prior to, at or after the Effective Time.
Fifth Third shall pay expenses in advance of the final disposition
of any such action or proceeding to each Indemnified Party to the
full extent permitted by law and under CNB Bancshares' Restated
Articles of Incorporation or Amended By-laws or the Bank
Subsidiary's Articles of Incorporation or Bylaws. Fifth Third's
assumption of the indemnification obligations of CNB Bancshares,
the Bank Subsidiary or any of their subsidiaries as provided
herein shall continue for the period of the applicable statute of
limitations after the Effective Time or, in the case of claims
asserted prior to the fifth anniversary of the Effective Time
until such matters are finally resolved. Any Indemnified Party
wishing to claim indemnification under this provision, upon
learning of any Claim shall notify Fifth Third (but the failure to
so notify Fifth Third shall not relieve Fifth Third from any
liability which Fifth Third may have under this Section VII.C.
except to the extent Fifth Third is materially prejudiced
thereby). Notwithstanding the foregoing, the Indemnified Parties
as a group may retain only one law firm to represent them with
respect to each matter under this Section VII.C. unless there is,
under applicable standards of professional conduct, a conflict on
any one significant issue between the positions of any two or more
Indemnified Parties.
2. From and after the Effective Time, the directors,
officers and employees of CNB Bancshares and its subsidiaries who
become directors, officers or employees of Fifth Third or any of
its subsidiaries, except for the indemnification rights set forth
in Section VII.C.1., shall have indemnification rights with
prospective application only. The prospective indemnification
rights shall consist of such rights to which directors, officers
or employees of Fifth Third or the subsidiary by which such person
is employed are entitled under the provisions of the Articles of
Incorporation of Fifth Third or similar governing documents of
Fifth Third or its applicable subsidiaries, as in effect from time
to time after the Effective Time, as applicable, and provisions of
applicable law as in effect from time to time after the Effective
Time.
3. The obligations of Fifth Third provided under this
Section VII.C. are intended to benefit, and be enforceable against
Fifth Third directly by, the Indemnified Parties, and shall be
binding on all respective successors of Fifth Third.
4. Fifth Third shall also purchase and keep in force for
a six (6) year period, a policy of directors' and officers'
liability insurance to provide coverage for acts or omissions of
the type currently
covered by CNB Bancshares' existing directors' and officers'
liability insurance for acts or omissions occurring on or prior to
the Effective Time, but only to the extent such insurance may be
purchased or kept in full force on commercially reasonable terms
taking into account the cost thereof and the benefits provided
thereby. It is agreed that such costs shall be commercially
reasonable so long as they do not exceed 100% per annum of the
costs currently paid per annum for such coverage by CNB
Bancshares.
5. The rights set forth in this Section VII.C. are in
addition to and not in substitution of other indemnification and
related rights that such Indemnified Parties may otherwise be
entitled to receive under CNB Bancshares' Restated Articles of
Incorporation, Amended By-laws or applicable law.
D. Notices. All notices, requests, consents, and demands under
-------
this Agreement shall be in writing and shall be sufficient in all
respects if delivered in person or mailed by certified mail,
return receipt requested, with postage prepaid, or by confirmed
air courier, and addressed, if to CNB Bancshares to Xx. Xxxxx X.
Xxxxxxxx, President and CEO, CNB Bancshares, Inc., 00 XX Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, with a copy to Xxxxxx X. Xxx,
Esq., Xxxxx, Xxxx & Fingersh, 000 Xxxxx Xxxxxxxx, Xx. Xxxxx,
Xxxxxxxx 00000; and, if to Fifth Third, to Xx. Xxxxxx X.
Xxxxxxxx, Xx., President and Chief Executive Officer, Fifth Third
Bancorp, 00 Xxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxx 00000, with a
copy to Xxxx X. Xxxxxxxx, Esq., Senior Vice President and General
Counsel, Fifth Third Bank, Legal Division, 00 Xxxxxxxx Xxxxxx
Xxxxx, X.X. 00XX00, Xxxxxxxxxx, Xxxx 00000, with a copy to Xxxxxx
X. Xxxxxx, Esq., Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. Such notices shall be deemed to
be received when delivered in person or when deposited in the mail
by certified mail, return receipt requested with postage prepaid.
If sent by confirmed air courier, such notice shall be deemed to
be given upon the earlier to occur of the date upon which it is
actually received by the addressee or the business day upon which
delivery is made at such address as confirmed by the air courier
(or if the date of such confirmed delivery is not a business day,
the next succeeding business day). If mailed, such notice shall
be sent by certified mail, postage pre-paid, return receipt
requested.
E. Entire Agreement. This Agreement, together with the written
----------------
instruments specifically referred to herein and such other written
agreements delivered by Fifth Third or CNB Bancshares to each
other pursuant hereto, constitute the entire agreement between the
parties with regard to the transactions contemplated herein and
supersede any prior agreements, whether oral or in writing. This
Agreement may be hereafter amended only by a written instrument
executed by each of the parties pursuant to Article X hereof.
F. Electronic Funds Transfers. CNB Bancshares and the Bank
--------------------------
Subsidiary shall cooperate with Fifth Third in providing for the
conversion of all of CNB Bancshares' electronic funds transfer
related services to MPS and the Xxxxxx system at, or as soon as
practicable after, the Effective Time.
G. Press Releases. Fifth Third and CNB Bancshares shall agree with
--------------
each other as to the form and substance of any press release
related to this Agreement or the transactions contemplated hereby
and thereby, and shall consult with each other as to the form and
substance of other public disclosures related thereto, provided,
however, that nothing contained herein shall prohibit either party
from making any disclosure which its outside counsel deems
required by law.
H. Expenses. Each party hereto will bear all expenses incurred by
--------
it in connection with this Agreement and the transactions
contemplated hereby, except that printing expenses for the Proxy
Statement and Registration Statement and SEC filing and
registration fees shall be shared equally between
Fifth Third and CNB Bancshares.
I. Advice of Changes. 1. Between the date hereof and the Closing
-----------------
Date, CNB Bancshares shall promptly advise Fifth Third in writing
of any fact that, if existing or known at the date hereof, would
have been required to be set forth or disclosed in or pursuant to
this Agreement or of any fact that, if existing or known at the
date hereof, would have made any of the representations contained
herein untrue to any material extent; provided, that no such
disclosure shall affect or modify any representation or warranty
of CNB Bancshares contained herein or made pursuant hereto.
2. Between the date hereof and the Closing Date, Fifth
Third shall promptly advise CNB Bancshares in writing of any fact
that, if existing or known at the date hereof, would have been
required to be set forth or disclosed in or pursuant to this
Agreement or of any fact that, if existing or known at the date
hereof, would have made any of the representations contained
herein untrue to any material extent; provided, that no such
disclosure shall affect or modify any representation or warranty
of Fifth Third contained herein or made pursuant hereto.
3. Each party hereto will promptly notify the other party
in writing of the occurrence of any event which will or may result
in the failure to satisfy any material condition precedent set
forth in this Agreement. Between the date of this Agreement and
the Closing Date, each party hereto will notify the other of the
satisfaction of such material conditions precedent as they occur.
J. Tax and Accounting Treatment. Neither Fifth Third nor CNB
----------------------------
Bancshares will take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger
from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code or as a "pooling of interests" for
accounting purposes.
K. Enforcement of this Agreement. The parties hereto agree that
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irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were 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, such
remedy being in addition to any other remedy to which any party is
entitled at law or in equity.
ARTICLE VIII. TERMINATION
A. Bases for Termination. This Agreement may be terminated at any
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time prior to the Effective Time by written notice delivered by
Fifth Third to CNB Bancshares or by CNB Bancshares to Fifth Third
in the following instances:
1. By Fifth Third or CNB Bancshares, if there has been to
the extent contemplated in Section VI.B.1. or VI.B.2. or Section
VI.C.1. or VI.C.2. herein, as the case may be, a breach of a
representation or warranty (subject to the standard in Section
I.S.) or a material breach of any covenant on the part of the
other party with respect to the representations, warranties, and
covenants set forth herein and such breach has not been cured
within thirty (30) days after receipt of written notice or is not
capable of being cured, provided, the party in breach or default
shall have no right to terminate for its own breach or default.
For purposes hereof, a breach of Sections IV.A. or IV.B. will be
deemed not capable of being cured.
2. By Fifth Third or CNB Bancshares, if the merger transaction
contemplated herein has not
been consummated by April 1, 2000, provided the terminating party
is not in material breach or default of any representations,
warranty or covenant contained herein on the date of such
termination.
3. By the mutual written consent of Fifth Third and CNB Bancshares.
4. By Fifth Third if any event occurs which renders
impossible of satisfaction one or more of the conditions to the
obligations of Fifth Third to effect the Merger set forth in
Sections VI.A. and VI.B. herein and non-compliance is not waived
by Fifth Third.
5. By CNB Bancshares if any event occurs which renders
impossible of satisfaction one or more of the conditions of the
obligations of CNB Bancshares to effect the Merger as set forth in
Sections VI.A. and VI.C. herein and non-compliance is not waived
by CNB Bancshares.
6. By Fifth Third if the Board of Directors of CNB
Bancshares shall have publicly announced its withdrawal or
modification in a manner adverse to Fifth Third of its favorable
recommendation of the Merger.
7. By Fifth Third or CNB Bancshares if CNB Bancshares
shareholders, acting at a meeting held for the purpose of voting
upon the Merger, vote not to approve the Merger in the manner
required by law.
B. Effect of Termination. Upon termination as provided in this
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Article VIII, this Agreement, except for the provisions of
Sections V.D.2. and VII.H. hereof, shall be void and of no further
force or effect, and neither party hereto (nor any of their
respective officers, directors or subsidiaries) shall have any
liability of any kind to the other party including but not limited
to liability for expenses incurred by the other party in
connection with this transaction; provided that no such
termination shall relieve a breaching party from liability for any
uncured willful breach of a covenant, undertaking, representation
or warranty giving rise to such termination, but in no event shall
any party be liable for punitive or exemplary damages.
Termination of this Agreement shall not affect the Option
Agreement except as set forth therein.
ARTICLE IX. CLOSING AND EFFECTIVE TIME
The consummation of the transactions contemplated by this
Agreement shall take place at a closing (the "Closing") to be held
at the offices of Fifth Third in Cincinnati, Ohio on a Friday
selected by Fifth Third which is not more than 15 days after the
satisfaction or waiver of all of the conditions precedent to
consummation of the Merger set forth in Article VI hereof (other
than those conditions which by their nature cannot be satisfied
until the Closing), including the expiration of all regulatory
waiting periods, have been fully met or effectively waived (the
"Closing Date"). Pursuant to the filing of a certificate or
articles of merger (which shall be prepared by Fifth Third and
reasonably satisfactory to CNB Bancshares) with the Secretary of
State of the State of Ohio and the State of Indiana, respectively,
in accordance with law and this Agreement, the Merger provided for
herein shall become effective at the close of business on said day
(the "Effective Time"). By mutual agreement of the parties, the
closing may be held at any other time or place or on any other
date and the effectiveness of the Merger (and the Effective Time)
may be changed by such mutual agreement. None of the
representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive
the Effective Time, except for agreements of the parties which by
their terms are intended to be performed after the Effective Time.
ARTICLE X. AMENDMENT
This Agreement may be amended, modified or supplemented by the
written agreement of CNB Bancshares and Fifth Third upon the
authorization of each company's respective Board of Directors at
any time before or after approval of the Merger and this Agreement
by the shareholders of CNB Bancshares, but after any such approval
by the shareholders of CNB Bancshares no amendment shall be made
(without further shareholder approval) which changes in any manner
adverse to such shareholders the consideration to be provided to
such shareholders pursuant to this Agreement.
ARTICLE XI. GENERAL
Except to the extent that provisions of the IBCL are applicable to
the Merger, this Agreement was made in the State of Ohio and shall
be interpreted under the laws of the United States and the State
of Ohio. Each of the parties hereto irrevocably waives any and
all right to trial by jury in any legal proceeding arising out of
or related to this Agreement or the transactions contemplated
hereby. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns but, with the
exception of Section I.C., Section I.D. and Section VII.C., none
of the provisions hereof shall be binding upon and inure to the
benefit of any other person, firm or corporation whomsoever.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or transferred by
operation of law or otherwise by any party hereto without the
prior written consent of the other party hereto; provided,
however, that the merger or consolidation of Fifth Third shall not
be deemed an assignment hereunder if Fifth Third is the Surviving
Corporation in such merger or consolidation and its Common Stock
shall thereafter continue to be publicly traded and issuable to
CNB Bancshares shareholders pursuant to the terms of this
Agreement. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
ARTICLE XII. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original for all purposes but such
counterparts taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereinabove set forth.
FIFTH THIRD BANCORP
(SEAL) By:/s/ Xxxx Xxxxxx
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Attest:/s/ Xxxx X. Xxxxxxxx
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CNB BANCSHARES, INC.
(SEAL) By:/s/ Xxxxx X. Xxxxxxxx
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Attest:/s/ H. Xxx Xxxxxx
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