EXHIBIT 99(A)
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated June 16, 1999 between CNB Bancshares,
Inc., an Indiana corporation ("Issuer"), and Fifth Third Bancorp, an Ohio
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corporation ("Grantee").
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W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Affiliation Agreement
of even date herewith (the "Affiliation Agreement"), which agreement has been
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executed by the parties hereto concurrently with this Stock Option Agreement
(the "Agreement"); and
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WHEREAS, as a condition to Grantee's entering into the Affiliation
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Affiliation Agreement, the
parties hereto agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an unconditional,
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irrevocable option (the "Option") to purchase, subject to the terms hereof, up
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to 6,921,479 fully paid and nonassessable shares of Issuer's common stock,
without par value (the "Common Stock"), at a price of $42.96 per share (the
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"Option Price"); provided, however, that in the event Issuer issues or agrees
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to issue any shares of Common Stock (other than as permitted under
the Affiliation Agreement) at a price less than the Option Price (as adjusted
pursuant to Section 5), the Option Price shall be equal to such lesser price;
provided, further, that in no event shall the number of shares of Common Stock
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for which this Option is exercisable exceed 19.9% of the Issuer's
issued and outstanding shares of Common Stock at the time of
exercise without giving effect to any shares subject or issued
pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option
Price is subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than an event described in Section 5
hereof), the number of shares of Common Stock subject to the Option shall be
increased so that, after such issuance, such number (including the number of
shares theretofor issued pursuant to this Option) equals 19.9% of the number of
shares of Common Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the Option. Nothing contained in this
Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
to breach any provision of the Affiliation Agreement.
2. Exercise; Closing. (a) The Holder (as defined below) may exercise
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the Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as defined below) and a Subsequent Triggering Event
(as defined below) shall have occurred prior to the occurrence of an Exercise
Termination Event (as defined below), provided that the Holder shall have sent
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written notice of such exercise (as provided in subsection (f) of this Section
2) within 180 days following such Subsequent Triggering Event (or such later
period as provided in Section 10).
(b) Each of the following shall be an "Exercise Termination Event":
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(i) the Effective Time (as defined in the Affiliation Agreement)
of the Merger;
(ii) termination of the Affiliation Agreement in accordance with
the provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event, except a termination by
Grantee pursuant to Section VIII.A.1. of the Affiliation Agreement
(provided that the breach by Issuer giving rise to the termination
by Grantee under Section VIII.A.1. of the Affiliation Agreement was
willful (a "Listed Termination")); or
(iii) the passage of 18 months after termination of the
Affiliation Agreement (or such later period as provided in Section 10)
if such termination (A) follows or is concurrent with the occurrence of
an Initial Triggering Event or (B) is a Listed Termination.
The term "Holder" shall mean Grantee and any other person that shall
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become a holder of the Option in accordance with the terms of this Agreement.
Notwithstanding anything to the contrary contained herein, this Agreement shall
automatically terminate upon the proper termination of the Affiliation
Agreement by Issuer pursuant to Section VIII.A.1. thereof.
(c) The term "Initial Triggering Event" shall mean any of the following
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events or transactions occurring after the date hereof:
(i) Issuer or any Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) (each an "Issuer Subsidiary"), without having received Grantee's
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prior written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as defined below) with any person (the term "person"
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for purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder) other than Grantee
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or any of its Subsidiaries (each a "Grantee Subsidiary") or the Board of
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Directors of Issuer shall have recommended that the stockholders
of Issuer approve or accept any Acquisition Transaction (other than the
Merger referred to in the Affiliation Agreement). For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
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consolidation, or any similar transaction, involving Issuer or any Significant
Subsidiary of Issuer, (y) a purchase, lease or other acquisition or assumption
of all or a substantial portion of the assets or deposits of Issuer or all or
substantially all of the assets or deposits of any Significant
Subsidiary of Issuer, (z) 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 Issuer or more than 10% of any Significant Subsidiary of
Issuer; provided, however, that in no event shall any merger, consolidation,
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purchase or similar transaction involving only the Issuer and one or more
of its wholly-owned Subsidiaries or involving only any two or more of
such wholly-owned Subsidiaries, be deemed to be an Acquisition Transaction,
if such transaction is not entered into in violation of the terms of the
Affiliation Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized,
recommended, proposed or publicly announced its intention to
authorize, recommend or propose, to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee
Subsidiary or shall have authorized or engaged in, or announced
its intention to authorize or engage in, any negotiations
regarding an Acquisition Transaction with any person other than
the Grantee or a Grantee Subsidiary, or the Board of Directors of
Issuer shall have failed to recommend or shall have publicly
withdrawn or modified, or publicly disclosed that, in the absence
of the Option it would withdraw or modify, or publicly announced
its intention to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of Issuer
approve the Merger;
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger and the plan of merger contained in the Affiliation
Agreement at a meeting which has been held for that purpose or any
adjournment or postponement thereof, or such meeting shall not have been
held in violation of the Affiliation Agreement or shall have been canceled
prior to termination of the Affiliation Agreement if, prior to such meeting
(or if such meeting shall not have been held or shall have been canceled,
prior to such termination), any person (other than the Grantee or
a Grantee Subsidiary) shall have made a proposal to Issuer or its
stockholders by public announcement or written communication that
is or becomes the subject of public disclosure to engage in an
Acquisition Transaction;
(iv) (a) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business, shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the then outstanding shares of Common
Stock or (b) any group (the term "group" having the meaning assigned in Section
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13(d)(3) of the Exchange Act), other than a group of which the Grantee or any
Grantee Subsidiary is a member, shall have been formed that beneficially owns
10% or more of the shares of Common Stock then outstanding;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders to engage in an
Acquisition Transaction and such proposal shall have been publicly announced;
(vi) After a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction or such third party states
its intention to make such a proposal if the Affiliation Agreement terminates,
Issuer shall have willfully breached any covenant or obligation contained in
the Affiliation Agreement and such breach would entitle Grantee to terminate
the Affiliation Agreement (without regard to the cure period provided for
therein); or
(vii) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has
given its prior written consent, shall have filed with any federal
or state regulatory or governmental authority an application for approval or
notice of intention to engage in an Acquisition Transaction.
(d) The term "Subsequent Triggering Event" shall mean either of the
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following events or transactions occurring after the date hereof:
(i) The acquisition by any person or by a group other
than Grantee, any Grantee Subsidiary or any Issuer Subsidiary
acting in a fiduciary capacity in the ordinary course of its
business, of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (c) of this Section 2, except that references to
10% in clause (z) shall be 25%.
(e) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent
Triggering Event (together, a "Triggering Event"), it being understood that
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the giving of such notice by Issuer shall not be a condition to the right of
the Holder to exercise the Option.
(f) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
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total number of shares it will purchase pursuant to such exercise and the
aggregate purchase price as provided herein and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
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that if prior notification to or approval of the Federal Reserve
Board or any other regulatory agency is required in connection
with such purchase, the Holder shall promptly file the required
notice or application for approval and shall expeditiously process
the same and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or
such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
(g) At the closing referred to in subsection (f) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the
Option in immediately available funds by wire transfer to a bank
account designated by Issuer and present and surrender this
Agreement to Issuer at its principal executive offices;
provided that failure or refusal of Issuer to designate such a bank account
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shall not preclude the Holder from exercising the Option.
(h) At such closing subject to any regulatory notification and/or
approval having been made or given and being in full force and effect,
simultaneously with the delivery of immediately available funds as provided in
subsection (g) of this Section 2, Issuer shall deliver to the Holder a
certificate or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part only, a
new Option evidencing the rights of the Holder thereof to purchase the balance
of the shares of Common Stock purchasable hereunder, and the Holder shall
deliver to Issuer this Agreement and a letter agreeing that the Holder will not
offer to sell or otherwise dispose of such shares in violation of applicable
law or the provisions of this Agreement.
(i) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "Securities Act"),
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in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that such legend is
not required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed
by delivery of substitute certificate(s) without such reference if
the shares of Common Stock delivered pursuant hereto have been
sold or transferred in compliance with the provisions of this
Agreement under circumstances that do not require the retention of
such reference; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other
legend as may be required by law.
(j) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (f) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of
the Holder or its permitted assignee, transferee or designee.
3. Covenants of Issuer. In addition to its other agreements and
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covenants herein, Issuer agrees: (i) that it shall at all times
maintain, free from subscriptive or preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option may be
exercised without additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities and other
rights to purchase Common Stock; (ii) that it will not, by charter amendment
or through reorganization, consolidation, merger, dissolution or sale of
assets, or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by Issuer; (iii) promptly to take all action as may
from time to time be required (including (x) complying with all premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event,
under the Bank Holding Company Act of 1956, as amended (the "BHCA") or the
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Change in Bank Control Act of 1978, as amended, or any state or other federal
banking law, prior approval of or notice to the Federal Reserve Board or to
any state or other federal regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing
such applications or notices and providing such information to the Federal
Reserve Board or such state or other federal regulatory authority as they
may require) in order to permit the Holder to exercise the Option and
Issuer to duly and effectively issue shares of Common Stock pursuant
hereto; (iv) promptly to take all action provided herein to protect
the rights of the Holder against dilution; and (v) not to enter or
agree to enter into any Acquisition Transaction unless the other party
or parties thereto agree to assume in writing all of Issuer's obligations
hereunder; provided that nothing in this Section 3 or elsewhere in this
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Agreement shall be deemed to authorize Issuer to breach any
provision of the Affiliation Agreement. Notwithstanding any
notice of revocation delivered pursuant to the proviso to Section
7(c), a Holder may require such other party or parties to perform
Issuer's obligations under Section 7(a) unless such other party or
parties are prohibited by law or regulation from such performance.
4. Exchange; Replacement. This Agreement (and the Option granted
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hereby) are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
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used herein include any Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. Adjustments. In the event of any change in, or distributions
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in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper
provision shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise become outstanding as a
result of any such change (other than pursuant to an exercise of
the Option), the number of shares of Common Stock that remain
subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously
issued pursuant to the exercise of the Option (as adjusted on
account of any of the foregoing changes in the Common Stock), it
equals 19.9% of the number of shares of Common Stock then issued
and outstanding. Whenever the number of shares of Common Stock
purchasable upon exercise hereof is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the
Option Price by a fraction, the numerator of which shall be equal
to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Registration. Upon the occurrence of a Subsequent Triggering
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Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee delivered within twelve (12) months (or such later period as
provided in Section 10) of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a shelf registration statement under the
1933 Act covering any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause such
registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of
Common Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition requested
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by Grantee. Issuer will use its reasonable best efforts to cause
such registration statement promptly to become effective and then
to remain effective for a period not in excess of 180 days from
the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary, in the judgment
of the Grantee or the Holder, to effect such sales or other
dispositions. Grantee shall have the right to demand two such
registrations. The Issuer shall bear the costs of such
registrations (including, but not limited to, Issuer's attorneys'
fees, printing costs and filing fees, except for underwriting
discounts or commissions, brokers' fees). The foregoing
notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of
shares of Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion
of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by
Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction of the number
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of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares
to be sold by the Holder and Issuer in the aggregate; and provided further,
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however, that if such reduction occurs, then the Issuer shall file
a registration statement for the balance of such shares
of Common Stock issuable pursuant to this Option as promptly as
practical following such reduction and no reduction in the number
of shares of Common Stock to be sold by the Holder shall
thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in an registration
statement to be filed hereunder. If requested by any such Holder
in connection with such registration, Issuer shall become a party to
any underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary offering
underwriting agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained
herein, in no event shall the number of registrations that Issuer
is obligated to effect pursuant to this Section 6 be increased by
reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. Repurchase of Option and/or Option Shares. (a) At any time
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after the occurrence of a Repurchase Event (as defined below), (i) at the
request of the Holder, delivered prior to an Exercise Termination
Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder
at a price (the "Option Repurchase Price") equal to the amount by
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which (A) the Market/Offer Price (as defined below)exceeds (B) the
Option Price, multiplied by the number of shares for which this Option
may then be exercised and (ii) at the request of the owner of Option Shares
from time to time (the "Owner"), delivered prior to an Exercise
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Termination Event (or such later period as provided in Section
10), Issuer shall repurchase such number of the Option Shares from
the Owner as the Owner shall designate at a price (the "Option Share
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Repurchase Price") equal to the Market/Offer Price multiplied by the
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number of Option Shares so designated. The term "Market/Offer Price" shall
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mean the highest of (i) the price per share of Common Stock at which a
tender offer or exchange offer therefor has been made after the date hereof,
(ii) the price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest closing price per share
of Common Stock as reported in the Wall Street Journal within the
six-month period immediately preceding the date on which the
Holder gives notice of the required repurchase of this Option or
the Owner gives notice of the required repurchase of Option
Shares, as the case may be, or (iv) in the event of a sale of all
or a substantial portion of Issuer's assets, the sum of the price
paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm mutually
selected by the Holder or Owner, as the case may be, and reasonably
acceptable to the Issuer. The costs of any such investment banking firm
shall be paid equally by Issuer and such Holders or Owners.
(b) The Holder or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares, as the case may be, in accordance with the
provisions of this Section 7. As promptly as practicable and in any event
within five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto,
Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price or the
portion thereof that Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law
or regulation, or as a consequence of administrative policy, from repurchasing
the Option and/or the Option Shares in full, Issuer shall immediately so
notify the Holder and/or the Owner and thereafter shall deliver or cause to
be delivered, from time to time, to the Holder and/or the Owner,
as appropriate, that portion of the Option Repurchase Price and
the Option Share Repurchase Price, respectively, that it is no
longer prohibited from delivering, in each case within five
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a
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notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Holder and/or the Owner, as the
case may be, the Option Repurchase Price or the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the Option and/or
the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver
to the Holder and/or the Owner, as appropriate, that portion of
the Option Repurchase Price and/or the Option Share Repurchase
Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and
the denominator of which is the Option Repurchase Price, or (B) to
the Owner, a certificate for the Option Shares it is then so
prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer
described in the first sentence of this subsection (c), or shall
be scheduled to occur at any time before the expiration of a
period ending on the thirtieth day after such date, the Holder
shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction
described in Section 2(c)(i) hereof, except that the percentages
referred to in clause (z) shall be 50%.
8. Substitute Option. (a) In the event that prior to an Exercise
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Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or one of Grantee's Subsidiaries,
or engage in a plan of exchange with any person other
than Grantee or one of Grantee's Subsidiaries, and Issuer shall not be the
continuing or surviving corporation of such consolidation or merger or the
acquiror in such plan of exchange, (ii) to permit any person, other than
Grantee or one of its Subsidiaries, to merge into Issuer or be acquired
by Issuer in a plan of exchange and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger or plan
of exchange, the then outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of
Common Stock shall after such merger or plan of exchange represent
less than 50% of the outstanding voting shares and voting share
equivalents of the merged or acquiring company, or (iii) to sell
or otherwise transfer all or substantially all of its or any
Significant Subsidiary's assets to any person, other than Grantee
or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision
so that the Option shall, upon the consummation of any such transaction
and upon the terms and conditions set forth herein, be converted into,
or exchanged for, an option (the "Substitute Option"), at the election
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of the Holder, of either (x) the Acquiring Corporation (as defined below)
or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
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surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) Issuer in a merger or plan of exchange in which Issuer is the
continuing, surviving or acquiring person, and (iv) the transferee of all or
substantially all of Issuer's assets or deposits.
(2) "Substitute Common Stock" shall mean the common stock (or
-----------------------
similar equity interest) issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as
--------------
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
-------------
share of the Substitute Common Stock for the year immediately preceding the
consolidation, merger or sale in question but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer of
--------
the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by the person merging
into Issuer or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option;
provided, that if the terms of the Substitute Option may not, for legal
--------
reasons, be the same as the Option, such terms shall be as similar
as possible to the terms of the Option and in no event less
advantageous to the Holder. The issuer of the Substitute Option
shall also enter into an agreement with the then Holder or Holders
of the Substitute Option in substantially the same form as this
Agreement (after giving
effect for such purpose to the provisions of Section 9), which agreement shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a), and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the issuer
of the Substitute Option (the "Substitute Option Issuer") shall make
------------------------
a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this clause (e). This difference in value shall
be determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be and
reasonably acceptable to the Substitute Issuer, and all fees and
expenses of such investment banking firm shall be shared equally.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation
and any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder.
9. Repurchase of Substitute Option and/or Option Shares. (a) At
----------------------------------------------------
the request of the holder of the Substitute Option (the "Substitute Option
-----------------
Holder"), the Substitute Option Issuer shall repurchase the Substitute Option
------
from the Substitute Option Holder at a price (the "Substitute Option Repurchase
----------------------------
Price") equal to the amount by which (i) the Highest Closing Price (as defined
-----
below) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
----------------
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
----- -----------------
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
---------------------------------
multiplied by the number of Substitute Shares so designated. The term "Highest
-------
Closing Price" shall mean the highest closing price for shares of Substitute
-------------
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute
Share Owner, as the case may be, may exercise their respective
right to require the Substitute Option Issuer to repurchase the
Substitute Option and the Substitute Shares pursuant to this
Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal executive office, the agreement
for such Substitute Option (or, in the absence of such an agreement, a
copy of this Agreement) and certificates for Substitute Shares accompanied
by a written notice or notices stating that the Substitute Option Holder or the
Substitute Share Owner elects to require the Substitute Option Issuer to
repurchase the Substitute Option and/or the Substitute Shares, as the case may
be, in accordance with the provisions of this Section 9. As promptly as
practicable, and in any event within five business days after the surrender of
the Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price or, in either case, the portion
thereof which the Substitute Option Issuer is not then prohibited
under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Substitute Option and/or the Substitute Shares in
part or in full, the Substitute Option Issuer, following a request for
repurchase pursuant to this Section 9, shall immediately so notify the
Substitute Option Holder and/or the Substitute Share Owner and shall thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase
Price, respectively, which it is no longer prohibited from delivering, in
each case, within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that if the
--------
Substitute Option Issuer at any time after delivery of a notice of repurchase
pursuant to subsection (b) of this Section 9 is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts
to receive all required regulatory and legal approvals as promptly
as practicable in order to accomplish such repurchase), the Substitute Option
Holder and/or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute Option
Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option
Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or
(B) to the Substitute Share Owner, a certificate for the
Substitute
Common Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the
notice by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after such date, the
Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period.
10. Extension. The period for exercise of certain rights under
---------
Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (provided and
for so long as the Grantee or the Holder is using commercially reasonable
efforts to obtain such regulatory approvals), and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Representations and Warranties of Issuer. Issuer hereby
----------------------------------------
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and
validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its
terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum
number of shares of Common Stock at any time and from time to time
issuable hereunder, and all such shares, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(c) The execution, delivery and performance of this Agreement does
not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of or a default under, its articles or certificate of incorporation or by-laws,
or the comparable governing instruments of any of its subsidiaries, or (ii) a
breach or violation of or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation of it
or any of its subsidiaries (with or without the giving of notice, the lapse of
time or both) or to the best of Issuer's knowledge under any law, rule,
ordinance or regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its subsidiaries
is subject.
(d) To the best of Issuer's knowledge neither Section 23-1-42 or
23-1-43 of the Indiana Business Corporation Law nor any other "fair price",
"moratorium", "control share acquisition" or other similar anti-takeover
statute or regulation enacted under state or federal laws in
the United States applicable to the Issuer or any of its Subsidiaries is
applicable to this Agreement or any of the transactions contemplated hereby.
12. Representations and Warranties of Grantee. Grantee hereby
-----------------------------------------
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
13. Assignment. Neither of the parties hereto may assign any of
----------
its rights or obligations under this Agreement or the Option created hereunder
to any other person, without the express written consent of the other party,
except that in the event a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder; provided, however, that until the date 15 days following the date on
--------
which the Federal Reserve Board approves an application by Grantee
under the BHCA to acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (e.g., a broker or investment banker)
----
for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Voting. Except to the extent Grantee exercises the Option,
------
Grantee shall have no rights to vote or receive dividends or have any other
rights as a shareholder with respect to shares of Common Stock covered hereby.
15. Best Efforts. Each of Grantee and Issuer will use its
------------
reasonable best efforts to make all filings with, and to obtain
consents of, all third parties and governmental authorities
necessary for the consummation of the transactions contemplated by
this Agreement, including without limitation making application to
list the shares of Common Stock issuable hereunder on the New York
Stock Exchange upon official notice of issuance and, in the case
of the Grantee, applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities
for approval to acquire the shares of Common Stock issuable hereunder
until such time, if ever, as it deems appropriate to do so.
16. Specific Performance. The parties hereto acknowledge that
--------------------
damages would be an inadequate remedy for a breach of this Agreement by
either party hereto and that the obligations of the parties hereto shall
be enforceable by either party hereto through injunctive or other
equitable relief. In connection therewith both parties waive the
posting of any bond or similar requirement.
17. Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer
is not permitted to repurchase pursuant to Section 7, the full number of
shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant
to Section 1(b) or 5 hereof), it is the express intention of Issuer to allow
the Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
18. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Affiliation Agreement or such other address as
shall be provided in writing.
19. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Ohio, without regard to
the conflict of law principles thereof.
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
21. Expenses. Except as otherwise expressly provided herein, each
--------
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
22. Entire Agreement. Except as otherwise expressly provided
----------------
herein or in the Affiliation Agreement, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
23. Captions; Capitalized Terms. The section and paragraph
---------------------------
captions herein are for convenience of reference only, do not
constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof. Capitalized
terms used in this Agreement and not defined herein shall have the
meanings assigned thereto in the Affiliation Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
Fifth Third Bancorp
By /s/ Xxxx Xxxxxx
---------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
and Executive Vice President
By /s/ Xxxx X. Xxxxxxxx
--------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Secretary
CNB Bancshares, Inc.
By /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief
Executive Officer
