EXHIBIT 2.1
AMENDMENT NO. 3
TO
AFFILIATION AGREEMENT
BY AND AMONG
FRANKLIN FINANCIAL CORPORATION,
FIFTH THIRD BANCORP
AND
FIFTH THIRD FINANCIAL CORPORATION
This AMENDMENT NO. 3 dated as of this 27th day of March, 2003 to that
certain Affiliation Agreement dated as of July 23, 2002, as amended by Amendment
No. 1 dated as of September 9, 2002 and Amendment No. 2 dated as of December 10,
2002 (the "Agreement") by and among Franklin Financial Corporation ("Franklin"),
Fifth Third Bancorp ("Fifth Third") and Fifth Third Financial Corporation
("Fifth Third Financial").
WITNESSETH:
WHEREAS, each of Franklin, Fifth Third and Fifth Third Financial agree
that it is in their mutual best interests to enter into this Amendment No. 3 to
further facilitate the orderly consummation of the transactions contemplated by
the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
1. DEFINED TERMS. Except for capitalized terms, which are expressly
defined in this Amendment No. 3, all capitalized terms shall have the meanings
set forth in the Agreement.
2. AMENDMENT TO SECTION I.C.1. The parties hereby agree that Section
I.C.1 of the Agreement is hereby deleted in its entirety and the following new
Section I.C.1 is hereby inserted in place thereof:
"C. Treatment of Franklin Stock. 1. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any
shares of Franklin Common Stock, subject to this Section I.C.1 and
Section I.F., each share of Franklin Common Stock (excluding treasury
shares) that is issued and outstanding immediately prior to the
Effective Time will be converted into that number of shares of Fifth
Third Common Stock (or cash in lieu thereof for fractional shares, if
any, as described in Section I.E. below) (the "Exchange Ratio") equal
to (i) the sum of $31.00 plus the Franklin Book Value Per Share
Adjustment (as defined below in this Section I.C.1), divided by (ii)
the Average Closing Price (as defined in Section I.D.1 below).
"Franklin Book Value Per Share Adjustment" shall be calculated
as the amount equal to (i) the Franklin Book Value as of the end of the
fiscal quarter preceding the Effective Time divided by the number of
shares of Franklin Common Stock outstanding as of the end of such
fiscal quarter minus (ii) the Franklin Book Value as of March 31, 2003
divided by the number of shares of Franklin Common Stock outstanding as
of March 31, 2003. "Franklin Book Value" shall be calculated as the
aggregate amount of consolidated shareholders' equity (including common
stock, additional paid-in capital and retained earnings and excluding
treasury stock) of Franklin as of the relevant fiscal quarter end, as
shown by and reflected in its books and records of accounts on a
consolidated basis in accordance with GAAP, consistently applied, but
excluding any expenses or accruals after March 31, 2003 relating to (i)
the adjustments contemplated by Section IV.C. herein, (ii) termination
or funding of any Benefit Plans of Franklin and the Franklin
Subsidiaries as contemplated herein, (iii) expenses associated with
this Agreement and the transactions contemplated herein, and (iv)
expenses and gains or losses associated with the xxxx to market value
of Franklin's or any of the Franklin Subsidiaries' investments as
required by GAAP (including SFAS 115).
The parties agree that Deloitte & Touche LLP, or such other
firm of independent certified public accountants as the parties may
mutually agree upon, shall review and confirm the calculation of the
Franklin Book Value as of each of the relevant calculation dates and
the calculation of the Franklin Book Value Per Share Adjustment,
including the conformity of such calculations with GAAP, consistently
applied. The parties further agree that they shall act in good faith to
promptly resolve any disagreements as to such calculations so as not to
delay the Closing.
At the Effective Time, all shares of Franklin Common Stock
held as treasury shares and all shares of Franklin 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."
4. AMENDMENT TO SECTION VIII.A.2. The parties hereby agree that Section
VIII.A.2 is hereby amended to replace the date "April 1, 2003" with the date
"June 30, 2004".
5. AMENDMENT TO SECTION VIII.A.5. The parties hereby agree that Section
VIII.A.5 of the Agreement is hereby deleted in its entirety and the following
new Section VIII.A.5 is hereby inserted in place thereof:
" 5. By Fifth Third if any event occurs which renders impossible of
satisfaction one or more of the conditions to the obligations of Fifth
Third and Fifth Third Financial to effect the Merger set forth in
Sections VI.A and VI.B herein and non-compliance is not waived by Fifth
Third and Fifth Third Financial, provided, however, that neither Fifth
Third nor Fifth Third Financial may terminate this Agreement on or
before May 31, 2004 based upon any alleged impossibility of satisfying
the condition that all approvals required to be obtained from the Board
of Governors of the Federal Reserve System as are necessary to
consummate the Merger have been obtained."
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6. INSERTION OF NEW SECTION VIII.A. 9. The parties hereby agree that
the following new Section VIII.A.9 shall be, and hereby is, added to the
Agreement immediately following Section VIII.A.8.:
" 9. By Franklin, if the Board of Governors of the Federal Reserve
System has not granted, on or before May 31, 2004, to Fifth Third and
Franklin all approvals required to be obtained from such Board of
Governors as are necessary to consummate the Merger, provided that
Franklin shall not be in material breach or default of any
representation, warranty or covenant contained herein on the date of
such termination."
7. AMENDMENT TO SECTION VIII.B.. The parties hereby agree that Section
VIII.B. is hereby deleted in its entirety and the following new Section VIII.B.
is hereby inserted in place thereof:
"B. Effect of Termination. Upon termination as provided in this Article
VIII, this Agreement, except for the provisions of Sections V.D.2.,
VII.F., VII.J. or VIII.C. hereof, shall be void and of no further force
or effect, and except as set forth in Section VIII.C. below, no party
hereto (nor any of their respective officers, directors or
subsidiaries) shall have any liability of any kind to any 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."
8. INSERTION OF NEW SECTION VIII.C.. The parties hereby agree that the
following new Section VIII.C. shall be, and hereby is, added to the Agreement
immediately following Section VIII.B.:
"C. Termination Fee. In the event that Franklin validly terminates the
Agreement pursuant to Section VIII.A.9, then Fifth Third shall pay
Franklin the amount of Twenty Seven Million Dollars ($27,000,000) (the
"Termination Fee") by wire transfer of immediately available funds
within five business days following Fifth Third's receipt of written
notice of such termination. The payment by Fifth Third of the
Termination Fee pursuant to the preceding sentence shall be Franklin's
exclusive remedy against Fifth Third and Fifth Third Financial upon
such termination event. The parties further agree that simultaneously
with the payment and receipt of the Termination Fee they shall execute
a full release and waiver of all claims that they may have against each
other."
9. REAFFIRMATION. Except as expressly modified by this Amendment No. 3,
the parties hereby ratify and confirm each and every provision of the Agreement.
The parties further agree that neither the extensions of the time periods as set
forth above nor any fact or circumstance which may have necessitated such
extensions constitute any breach or default of any provision of the Agreement.
10. ENTIRE AGREEMENT. The terms and provisions of the Agreement
(including the documents and instruments referred to therein and Amendments No.
1 and Amendment No. 2), together with this Amendment No. 3, constitute the
entire agreement among the parties and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
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11. COUNTERPARTS. This Amendment No. 3 may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that the parties need not
sign the same counterpart.
12. GOVERNING LAW. This Amendment No. 3 shall be governed and construed
in accordance with the laws of the State of Ohio, without regard to any
applicable conflicts of law principles (except to the extent that mandatory
provisions of federal or state law apply).
IN WITNESS WHEREOF, Franklin Financial Corporation, Fifth Third Bancorp
and Fifth Third Financial Corporation have caused this Amendment No. 3 to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
FRANKLIN FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
Chairman, President and Chief
Executive Officer
FIFTH THIRD BANCORP
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxx
Executive Vice President
FIFTH THIRD FINANCIAL CORPORATION
By:/s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxxx
Executive Vice President
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