EXHIBIT 99.7
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 27/th/ 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
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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."
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."
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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.
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
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
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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