EXHIBIT 10(d)
AGREEMENT AND PLAN OF MERGER
BETWEEN
NATIONSBANK CORPORATION
AND
CHARTER BANCSHARES, INC.
JANUARY 25, 1996
TABLE OF CONTENTS
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ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.02 Time and Place of Closing. . . . . . . . . . . . . . . . . . . . . . 7
2.03 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.04 Reservation of Right to Revise Transaction . . . . . . . . . . . . . 8
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.02 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
EXCHANGE OF SHARES
4.01 Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . . . .10
4.02 Voting and Dividends . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CHARTER
5.01 Organization, Standing, and Authority. . . . . . . . . . . . . . . .11
5.02 Charter Capital Stock. . . . . . . . . . . . . . . . . . . . . . . .11
5.03 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
5.04 Authorization of Merger and Related Transactions . . . . . . . . . .13
5.05 Securities Reporting Documents and Financial Statements . . . . . .14
5.06 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . .14
5.07 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.08 Allowance for Credit Losses. . . . . . . . . . . . . . . . . . . . .15
5.09 Other Tax and Regulatory Matters . . . . . . . . . . . . . . . . . .15
5.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . .16
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5.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .17
5.13 Commitments and Contracts. . . . . . . . . . . . . . . . . . . . . .18
5.14 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . .19
5.15 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .19
5.16 Absence of Certain Changes or Events . . . . . . . . . . . . . . . .19
5.17 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
5.18 Statements True and Correct. . . . . . . . . . . . . . . . . . . . .20
5.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.20 Labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.21 Material Interests of Certain Persons. . . . . . . . . . . . . . . .21
5.22 Registration Obligations . . . . . . . . . . . . . . . . . . . . . .21
5.23 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . .21
5.24 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . . .21
5.25 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NATIONSBANK
6.01 Organization, Standing and Authority . . . . . . . . . . . . . . . .22
6.02 NationsBank Capital Stock. . . . . . . . . . . . . . . . . . . . . .22
6.03 Authorization of Merger and Related Transactions . . . . . . . . . .23
6.04 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .23
6.05 NationsBank SEC Reports. . . . . . . . . . . . . . . . . . . . . . .24
6.06 Statements True and Correct. . . . . . . . . . . . . . . . . . . . .24
6.07 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
6.08 Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . .24
6.09 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
6.10 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 Conduct of Business Prior to the Effective Time. . . . . . . . . . .25
7.02 Forbearances . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.03 Plan Termination . . . . . . . . . . . . . . . . . . . . . . . . . .27
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Access and Information . . . . . . . . . . . . . . . . . . . . . . .27
8.02 Registration Statement; Regulatory Matters . . . . . . . . . . . . .28
8.03 Stockholders' Approval . . . . . . . . . . . . . . . . . . . . . . .29
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8.04 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . .29
8.05 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . .29
8.06 Miscellaneous Agreements and Consents; Affiliates Agreements . . . .29
8.07 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .30
8.08 SAR Plan; Restricted Stock . . . . . . . . . . . . . . . . . . . . .31
8.09 Certain Change of Control Matters. . . . . . . . . . . . . . . . . .31
8.10 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . .32
8.11 Declaration of Dividends . . . . . . . . . . . . . . . . . . . . . .32
8.12 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . .32
8.13 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.14 Acquisition Proposals. . . . . . . . . . . . . . . . . . . . . . . .33
8.15 Termination Fee. . . . . . . . . . . . . . . . . . . . . . . . . . .33
8.16 Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
8.17 Post-Closing Actions . . . . . . . . . . . . . . . . . . . . . . . .34
8.18 Prepayment of Indebtedness . . . . . . . . . . . . . . . . . . . . .34
8.19 Waiver of Restrictions in Investment Agreements . . . . . . . . . .34
ARTICLE IX
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Merger . . . . .34
9.02 Conditions to Obligations of Charter to Effect the Merger . . . . .35
9.03 Conditions to Obligations of NationsBank to Effect the Merger. . . .35
ARTICLE X
TERMINATION
10.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
10.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . .39
10.03 Non-Survival of Representations, Warranties and Covenants
Following the Effective Time . . . . . . . . . . . . . . . . . . . .39
ARTICLE XI
GENERAL PROVISIONS
11.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
11.02 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .39
11.03 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
11.04 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
11.05 No Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . .40
11.06 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
11.07 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . .41
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11.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .41
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
11.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
11.11 Severability.. . . . . . . . . . . . . . . . . . . . . . . . . . . .41
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
January 25, 1996, between NATIONSBANK CORPORATION ("NationsBank"), a North
Carolina corporation and a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and CHARTER BANCSHARES,
INC., a Texas corporation and a registered bank holding company under the BHCA
("Charter"). Capitalized terms not otherwise defined herein shall have the
meanings ascribed in Article I.
W I T N E S S E T H:
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, NationsBank will acquire Charter through the merger of Charter with
and into NB Holdings Corporation, a Delaware corporation and a wholly owned
subsidiary of NationsBank ("Holdings") or a newly formed direct wholly owned
subsidiary of NationsBank (Holdings or such new subsidiary being referred to
herein as the "Merger Subsidiary"), or by such other means as provided for
herein (the "Merger"); and
WHEREAS, the Merger is intended to qualify as a tax-free
reorganization pursuant to Section 368 of the Code; and
WHEREAS, the respective Boards of Directors of NationsBank and Charter
have resolved that the transactions described herein are in the best interests
of the parties and their respective stockholders and have approved the
transactions described herein; and
WHEREAS, NationsBank and Charter desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "ACQUISITION PROPOSAL" shall have the meaning set forth in
Section 8.14.
(b) "ACQUISITION TRANSACTION" shall have the meaning set forth
in Section 8.14.
(c) "AFFILIATE" shall mean, with respect to any Person, any
Person that, directly or indirectly, controls or is controlled by or
is under common control with such Person.
(d) "AGREEMENT" shall have the meaning set forth in the
introduction to this Agreement.
(e) "ALLOWANCE" shall have the meaning set forth in Section
5.08.
(f) "APPROVALS" shall mean any and all permits, consents,
authorizations and approvals of any governmental or regulatory
authority or of any other third person necessary to give effect to the
arrangement contemplated by this Agreement or necessary to consummate
the Merger.
(g) "AUTHORIZATIONS" shall have the meaning set forth in Section
5.01.
(h) "BHCA" shall have the meaning set forth in the introduction
to this Agreement.
(i) "CHARTER" shall have the meaning set forth in the
introduction to this Agreement.
(j) "CHARTER BENEFIT PLANS" shall have the meaning set forth in
Section 5.12(a).
(k) "CHARTER BOARD" shall mean the Board of Directors of
Charter.
(l) "CHARTER CAPITAL STOCK" shall mean collectively the Charter
Common Stock, Charter Special Common Stock and Charter Preferred
Stock.
(m) "CHARTER COMMON STOCK" shall mean the common stock, par
value $1.00 per share, of Charter.
(n) "CHARTER DISCLOSURE SCHEDULE" shall mean that document
containing the written detailed information prepared by Charter and
delivered by Charter to NationsBank.
(o) "CHARTER ERISA PLAN" shall have the meaning set forth in
Section 5.12(a).
(p) "CHARTER FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 5.05.
(q) "CHARTER PREFERRED STOCK" shall mean the Preferred Stock,
$50.00 par value, of Charter.
(r) "CHARTER SPECIAL COMMON STOCK" shall mean the Class B
Special Common Stock, par value $1.00 per share, and the Class C
Special Common Stock, par value $1.00 per share, of Charter.
(s) "CHARTER STOCK PLAN" shall have the meaning set forth in
Section 5.12.
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(t) "CLOSING" shall have the meaning set forth in Section 2.02.
(u) "CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
(v) "COMMISSIONER" shall mean the Commissioner of the Texas
Savings and Loan Department and, if its approval of the transactions
described herein is required by law, the Texas Banking Commissioner.
(w) "CONDITION" shall have the meaning set forth in Section
5.01.
(x) "DGCL" shall mean the Delaware General Corporation Law.
(y) "DEPARTMENT" shall mean the Texas Savings and Loan
Department and, if its approval of the transactions described herein
is required by law, the Texas Department of Banking.
(z) "DISSENTING SHARES" shall have the meaning set forth in
Section 3.01.
(aa) "EFFECTIVE TIME" shall have the meaning set forth in Section
2.03.
(ab) "EMPLOYEE" shall mean any current or former employee,
officer or director, independent contractor or retiree of Charter or
its Subsidiaries and any dependent or spouse thereof.
(ac) "ENVIRONMENTAL LAW" shall have the meaning set forth in
Section 5.25.
(ad) "ERISA" shall have the meaning set forth in Section 5.12.
(ae) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(af) "EXCHANGE AGENT" shall have the meaning set forth in Section
3.01(e).
(ag) "EXCHANGE RATIO" shall mean 0.385 shares of NationsBank
Common Stock for each share of Charter Common Stock or Charter Special
Common Stock.
(ah) "EXPENSES" shall have the meaning set forth in Section 8.15.
(ai) "FDIC" shall mean the Federal Deposit Insurance Corporation.
(aj) "FEDERAL RESERVE BOARD" shall mean the Board of Governors of
the Federal Reserve System and any Federal Reserve Bank.
(ak) "GAAP" shall mean generally accepted accounting principles
in the United States.
(al) "HOLDINGS" shall have the meaning set forth in the recitals
to this Agreement.
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(am) "INDEMNIFIED PARTY" shall have the meaning set forth in
Section 8.07.
(an) "LIENS" shall have the meaning set forth in Section 5.03.
(ao) "MATERIAL ADVERSE EFFECT" shall have the meaning set forth
in Section 5.01.
(ap) "MAXIMUM AMOUNT" shall have the meaning set forth in
Section 8.07.
(aq) "MERGER" shall have the meaning set forth in the recitals to
this Agreement.
(ar) "MERGER CONSIDERATION" shall mean the combination of (i)
NationsBank Common Stock and (ii) cash in lieu of fractional shares to
be issued by NationsBank in the Merger.
(as) "MERGER SUBSIDIARY" shall have the meaning set forth in the
recitals of this Agreement.
(at) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(au) "NATIONSBANK" shall have the meaning set forth in the
introduction to this Agreement.
(av) "NATIONSBANK COMMON STOCK" shall mean the common stock of
NationsBank.
(aw) "NATIONSBANK FINANCIAL STATEMENTS" shall have the meaning
set forth in Section 6.04.
(ax) "NATIONSBANK SEC DOCUMENTS" shall have the meaning set forth
in Section 6.04.
(ay) "NYSE" shall mean the New York Stock Exchange, Inc.
(az) "OCC" shall mean the Office of the Comptroller of the
Currency.
(ba) "OTS" shall mean the Office of Thrift Supervision.
(bb) "PERMITTED LIENS" are (i) Liens for current taxes not yet
due and payable and incurred in the ordinary course of business, (ii)
with respect to a lease, the interest of the lessor thereunder,
including any Liens on the interest of such lessor, and (iii) such
imperfections of title, Liens, restrictions and easements that do not
materially impair the use or value of the properties or assets or
otherwise materially impair the current operations relating to the
business of Charter or its Subsidiaries.
(bc) "PERSON" or "person" shall mean any individual, corporation,
association, partnership, group (as defined in Section 13(d)(3) of the
Exchange Act), joint venture, trust or unincorporated organization, or
a government or any agency or political subdivision thereof.
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(bd) "PROXY STATEMENT" shall have the meaning set forth in
Section 5.18.
(be) "REDEMPTION" shall have the meaning set forth in Section
3.01.
(bf) "REGISTRATION STATEMENT" shall have the meaning set forth in
Section 5.18.
(bg) "REGULATORY AGREEMENT" shall have the meaning set forth in
Section 5.11(b).
(bh) "REGULATORY AUTHORITIES" shall have the meaning set forth in
Section 5.11(b).
(bi) "REMEDIES EXCEPTION" shall mean any bankruptcy,
reorganization, insolvency, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
(bj) "REPORTS" shall have the meaning set forth in Section 5.17.
(bk) "RESTRICTED STOCK" shall have the meaning set forth in
Section 8.08.
(bl) "SAR PLAN" shall mean the 1991 Charter Bancshares, Inc.
Stock Appreciation Rights Plan.
(bm) "SEC" shall mean the Securities and Exchange Commission.
(bn) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(bo) "SECURITIES LAWS" shall have the meaning set forth in
Section 5.04(c).
(bp) "SECURITIES REPORTING DOCUMENTS" shall have the meaning set
forth in Section 5.05.
(bq) "STATE REGULATORY COMMISSIONERS" shall have the meaning set
forth in Section 5.04(c).
(br) "STOCKHOLDERS' MEETING" shall have the meaning set forth in
Section 5.18.
(bs) "SUBSIDIARY" shall mean, in the case of either NationsBank
or Charter, any corporation, association or other entity in which it
owns or controls, directly or indirectly, 25% or more of the
outstanding voting securities or 25% or more of the total equity
interest; PROVIDED, HOWEVER, that (i) the term shall not include any
such entity in which such voting securities or equity interest is
owned or controlled in a fiduciary capacity, without sole voting
power, or was acquired in securing or collecting a debt previously
contracted in good faith and (ii) in the case of NationsBank, the term
shall not include Charter.
(bt) "SUBSIDIARY BANK MERGER(S)" shall have the meaning set forth
in Section 2.04.
(bu) "SURVIVING CORPORATION" shall have the meaning set forth in
Section 2.01.
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(bv) "TAX" OR "TAXES" shall mean all federal, state, local and
foreign taxes, charges, fees, levies, imposts, duties or other
assessments, including, without limitation, income, gross receipts,
excise, employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental, federal
highway use, commercial rent, customs duties, capital stock, paid up
capital, profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
local, foreign government or subdivision or agency thereof, including,
without limitation, any interest, penalties or additions thereto.
(bw) "TAXABLE PERIOD" shall mean any period prescribed by any
governmental authority, including, but not limited to, the United
States or any state, local, foreign government or subdivision or
agency thereof for which a Tax Return is required to be filed or Tax
is required to be paid.
(bx) "TAX RETURN" shall mean any report, return, information
return or other information required to be supplied to a taxing
authority in connection with Taxes, including, without limitation, any
return of an affiliated or combined or unitary group that includes
Charter or any of its Subsidiaries.
(by) "TBCA" shall mean the Texas Business Corporation Act, as
amended.
(bz) "TERMINATION FEE" shall have the meaning set forth in
Section 8.15.
(ca) "VOTING POWER" shall mean the right to vote generally in the
election of Directors of Charter through the beneficial ownership of
Charter Capital Stock or other securities entitled to vote generally
in the election of directors of Charter.
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 MERGER.
(a) Upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the DGCL and the TBCA, at the
Effective Time, Charter shall be merged with and into Merger
Subsidiary. As a result of the Merger, the separate existence of
Charter shall thereupon cease, and Merger Subsidiary shall continue as
the surviving corporation of the Merger (the "Surviving Corporation").
NationsBank shall cause the Board of Directors of Merger Subsidiary
(i) to approve this Agreement and the transactions contemplated
hereunder and (ii) to authorize and direct an officer of Merger
Subsidiary to execute and deliver a counterpart of this Agreement.
(b) The certificate of incorporation of Merger Subsidiary as in
effect on the Effective Time (a copy of which at the date of this
Agreement is set forth as Exhibit A hereto) shall be the certificate
of incorporation of the Surviving Corporation.
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(c) The bylaws of Merger Subsidiary as in effect on the
Effective Time shall be the bylaws of the Surviving Corporation.
(d) The directors of Merger Subsidiary immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and
the officers of Merger Subsidiary immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case
until their respective successors are duly elected and qualified.
(e) The Merger shall have the effects set forth in Sections 259
and 261 of the DGCL and Section 5.06 of the TBCA.
2.02 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at the offices of counsel to
Charter in Houston, Texas at 10:00 A.M. on the date that the Effective Time
occurs, or at such other time, and at such place, as may be mutually agreed upon
by NationsBank and Charter.
2.03 EFFECTIVE TIME. On the business day selected by NationsBank
occurring within 10 business days following the date on which the expiration of
all applicable waiting periods in connection with approvals of governmental
authorities necessary to effectuate the Merger occurs and all conditions to the
consummation of this Agreement are satisfied or waived, unless an earlier or
later date has been agreed by the parties, appropriate articles of merger or
certificates of merger shall be executed in accordance with all appropriate
legal requirements and shall be filed as required by law, and the Merger
provided for herein shall become effective upon such filing or at such time as
may be specified in such articles or certificates of merger. The time of such
filing or such later effective time is herein called the "Effective Time."
2.04 RESERVATION OF RIGHT TO REVISE TRANSACTION; FURTHER ACTIONS.
(a) NationsBank may at any time change the method of effecting the acquisition
of Charter by NationsBank (including, without limitation, the provisions as set
forth in Article III) if and to the extent that it deems such a change to be
desirable; provided, however, that no such change shall (A) alter or change the
amount or the kind of the consideration to be received by the holders of Charter
Common Stock or Charter Special Common Stock as provided for in this Agreement;
(B) adversely affect the tax treatment to Charter stockholders as a result of
receiving the Merger Consideration (in the opinion of Charter's tax counsel);
(C) take the form of an asset purchase agreement; or (D) adversely affect the
timing of the transaction described herein.
(b) To facilitate the Merger and the acquisition, each of the parties
will execute such additional agreements and documents and take such other
actions as NationsBank determines necessary or appropriate, including, without
limitation, if NationsBank so elects, entering into agreements to facilitate the
merger(s) of Charter's banking Subsidiaries with and into each other or
NationsBank of Texas, National Association, simultaneously with, or promptly
following, the consummation of the Merger (the "Subsidiary Bank Merger(s)").
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ARTICLE III
MANNER OF CONVERTING SHARES
3.01 CONVERSION.
(a) Subject to the provisions of this Article III, at the
Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, the shares of the constituent
corporations shall be converted as follows:
(i) Each of the shares of common stock of Merger
Subsidiary issued and outstanding immediately prior to the
Effective Time shall remain outstanding as one share of common
stock of the Surviving Corporation; and
(ii) Except as provided in Section 3.01(c), each
share of Charter Common Stock and Charter Special Common Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into and become the right to receive a
fractional number of shares of NationsBank Common Stock equal
to the Exchange Ratio.
(b) Each share of Charter Preferred Stock issued and
outstanding at the date of this Agreement shall be redeemed prior
to the Effective Time at the $50.00 plus accrued unpaid dividend
per share price and in the manner provided in the Charter Restated
Articles of Incorporation, as amended (the "Redemption").
(c) Each of the shares of Charter Capital Stock held by
NationsBank or any of its wholly owned Subsidiaries or by Charter or
its wholly owned Subsidiaries, other than shares held by NationsBank
or any of its wholly owned Subsidiaries or Charter or its wholly owned
Subsidiaries in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
(d) Notwithstanding any other provision of this Agreement, each
holder of shares of Charter Common Stock or Charter Special Common
Stock exchanged pursuant to the Merger, who would otherwise have been
entitled to receive or purchase a fraction of a share of NationsBank
Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest)
in an amount equal to such fractional part of a share of NationsBank
Common Stock multiplied by the closing price for such share reported
by THE WALL STREET JOURNAL on the last business day prior to the
Closing Date. No such holder will be entitled to dividends, voting
rights or any other rights as a stockholder in respect of any
fractional share.
(e) At the Effective Time, the stock transfer books of Charter
shall be closed as to holders of Charter Common Stock and Charter
Special Common Stock immediately prior to the Effective Time and no
transfer of Charter Common Stock and Charter Special Common Stock by
any such holder shall thereafter be made or recognized. If, after the
Effective Time, certificates are properly presented in accordance with
Article IV of this
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Agreement to the exchange agent, which shall be selected by
NationsBank (the "Exchange Agent"), such certificates shall be
canceled and exchanged for certificates representing the
number of whole shares of NationsBank Common Stock and a check
representing the amount of cash in lieu of fractional shares, if any,
into which the Charter Common Stock or Charter Special Common Stock
represented thereby was converted in the Merger. Any other provision
of this Agreement notwithstanding, neither NationsBank, the Surviving
Corporation nor the Exchange Agent shall be liable to a holder of
Charter Capital Stock for any amount paid or property delivered in
good faith to a public official pursuant to any applicable abandoned
property, escheat, or similar law.
(f) Shares held by each holder of Charter Common Stock or
Charter Special Common Stock who has not voted such shares in favor of
the Merger and with respect to which payment for such shares shall
have been duly demanded in accordance with Section 5.12 of the TBCA
("Dissenting Shares") shall not be converted into and represent the
right to receive Merger Consideration; provided, however, that if any
such stockholder shall withdraw his or her demand for payment or shall
fail to perfect his or her dissenter's rights in accordance with the
TBCA, then such holder's Dissenting Shares shall cease to be
Dissenting Shares and shall, subject to the terms of this Agreement,
be converted into and represent the right to receive the Merger
Consideration.
3.02 ANTI-DILUTION PROVISIONS. The Exchange Ratio shall be adjusted
appropriately to reflect any stock dividends, splits, recapitalizations or other
similar transactions with respect to the NationsBank Common Stock where the
record date occurs prior to the Effective Time.
ARTICLE IV
EXCHANGE OF SHARES
4.01 EXCHANGE PROCEDURES. Before or promptly after the Effective
Time, NationsBank and Charter shall cause the Exchange Agent to mail appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Charter Common Stock or Charter Special Common Stock shall pass, only upon
proper delivery of such certificates to the Exchange Agent) to the former
stockholders of Charter. After the Effective Time, each holder of shares of
Charter Common Stock or Charter Special Common Stock issued and outstanding at
the Effective Time (other than shares to be canceled pursuant to Section
3.01(b)) shall surrender the certificate or certificates theretofore
representing such shares, together with such transmittal materials properly
executed, to the Exchange Agent and promptly upon surrender shall receive in
exchange therefor the consideration provided in Section 3.01 of this Agreement,
together with all declared but unpaid dividends in respect of such shares. The
certificate or certificates for Charter Common Stock or Charter Special Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
To the extent provided by Section 3.01(c), each holder of shares of Charter
Common Stock or Charter Special Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional shares of
NationsBank Common Stock to which such holder would otherwise be entitled.
NationsBank shall not be obligated to deliver the consideration to which any
former holder of Charter Common Stock or Charter Special Common Stock is
entitled as a result of the Merger until
9
such holder surrenders his certificate or certificates representing shares of
Charter Common Stock or Charter Special Common Stock for exchange as provided
in this Article IV. In addition, certificates surrendered for exchange by
any person constituting an "affiliate" of Charter for purposes of Rule 145(c)
under the Securities Act shall not be exchanged for certificates representing
whole shares of NationsBank Common Stock until NationsBank has received a
written agreement from such person as provided in Section 8.06. If any
certificate for shares of NationsBank Common Stock, or any check representing
cash or declared but unpaid dividends, is to be issued in a name other than
that in which a certificate surrendered for exchange is issued, the
certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and the person requesting such exchange shall affix any
requisite stock transfer tax stamps to the certificate surrendered or provide
funds for their purchase or establish to the satisfaction of the Exchange
Agent that such taxes are not payable.
4.02 VOTING AND DIVIDENDS. Former stockholders of record of Charter
shall be entitled to vote after the Effective Time at any meeting of NationsBank
stockholders the number of whole shares of NationsBank Common Stock into which
their respective shares of Charter Capital Stock are converted, regardless of
whether such holders have exchanged their certificates representing Charter
Capital Stock for certificates representing NationsBank Common Stock in
accordance with the provisions of this Agreement. Until surrendered for
exchange in accordance with the provisions of Section 4.01, each certificate
theretofore representing shares of Charter Capital Stock (other than shares to
be canceled pursuant to Section 3.01) shall from and after the Effective Time
represent for all purposes only the right to receive shares of NationsBank
Common Stock and cash, as set forth in this Agreement. No dividend or other
distribution payable to the holders of record of NationsBank Common Stock, at or
as of any time after the Effective Time, shall be paid to the holder of any
certificate representing shares of Charter Capital Stock issued and outstanding
at the Effective Time until such holder physically surrenders such certificate
for exchange as provided in Section 4.01, promptly after which time all such
dividends or distributions shall be paid (without interest).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CHARTER
Charter represents and warrants to NationsBank, subject to such
exceptions and limitations as are set forth below or in the Charter Disclosure
Schedule, as follows:
5.01 ORGANIZATION, STANDING, AND AUTHORITY. Charter is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas. Charter is duly qualified to do business and in good standing
in all jurisdictions (whether federal, state, local or foreign) where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified and in which the failure to be duly qualified would have a
material adverse effect on the financial condition, results of operations or
business (the "Condition") of Charter and its Subsidiaries on a consolidated
basis or on the ability of Charter or its Subsidiaries to consummate the
transactions contemplated hereby (a "Material Adverse Effect"). Charter has all
requisite corporate power and authority to carry on its business as now
conducted and to own, lease and operate its assets, properties and business,
except where the failure to have such power and authority would not have a
Material Adverse Effect, and to execute and deliver this Agreement and perform
the terms of this
10
Agreement. Charter is duly registered as a bank holding company under the
BHCA. Charter has in effect all federal, state, local and foreign
governmental, regulatory and other authorizations, permits and licenses
(collectively, "Authorizations") necessary for it to own or lease its
properties and assets and to carry on its business as now conducted, the
absence of which, either individually or in the aggregate, would have a
Material Adverse Effect.
5.02 CHARTER CAPITAL STOCK.
(a) At December 31, 1995, the authorized and the issued and
outstanding Charter Capital Stock consisted of the following:
ISSUED AND
AUTHORIZED OUTSTANDING
---------- -----------
Charter Common Stock: 12,000,000 6,061,627
Charter Special Common Stock:
Class B 250,000 219,718
Series C 50,000 49,518
Additional (undesignated) 2,700,000 0
Charter Preferred Stock 400,000 14,201
Since December 31, 1995, Charter has issued no additional Charter
Capital Stock and has no commitments, options or agreements to issue
any additional shares. At the same date, Charter had outstanding
shares with a par value of $7,220,000, capital surplus of $41,107,000
and undivided profits of approximately $13,480,000. All of the issued
and outstanding shares of Charter Capital Stock are duly and validly
issued and outstanding and are fully paid and nonassessable. None of
the outstanding shares of the Charter Capital Stock has been issued in
the violation of any preemptive rights or any provision of Charter's
Restated Articles of Incorporation, as amended. As of the date of
this Agreement, no shares of Charter Capital Stock have been reserved
for any purpose.
(b) Except as set forth above or in Section 5.02 of the Charter
Disclosure Schedule, there are no shares of Charter Capital Stock, or
other equity securities of Charter outstanding and no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of
Charter or contracts, commitments, understandings or arrangements by
which Charter is or may be bound to issue additional shares of its
capital stock or options, warrants or rights to purchase or acquire
any additional shares of its capital stock. There are no contracts,
commitments, understandings or arrangements by which Charter or any of
its Subsidiaries is or may be bound to transfer any shares of the
capital stock of any Subsidiary of Charter, except for a transfer to
Charter or any of its wholly owned Subsidiaries and except as set
forth in the Charter Disclosure Schedule, and there are no agreements,
understandings or commitments relating to the right of Charter to vote
or to dispose of such shares, other than such as are held in a
fiduciary capacity.
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(c) The Charter Board has duly authorized and approved the
Redemption.
(d) Except as set forth in Section 5.02(d) of the Charter
Disclosure Schedule, there are no securities required to be issued by
Charter under any Charter Stock Plan, dividend reinvestment or similar
plan.
5.03 SUBSIDIARIES. Section 5.03 of the Charter Disclosure Schedule
contains a complete list of Charter's Subsidiaries. Except as provided in the
Charter Disclosure Schedule, all of the outstanding shares of each Subsidiary
are owned by Charter and no equity securities are or may become required to be
issued by reason of any options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is bound to issue additional shares of its capital stock or options, warrants or
rights to purchase or acquire any additional shares of its capital stock. All
of the shares of capital stock of each Subsidiary are fully paid and
nonassessable and are owned free and clear of any claim, lien, pledge or
encumbrance of whatsoever kind ("Liens"). Each Subsidiary (i) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, (ii) is duly qualified to
do business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect, (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted and (iv) has in effect all Authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which Authorizations, individually or
in the aggregate, would have a Material Adverse Effect.
5.04 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (including,
without limitation, the consummation of the Merger, if any) have been
duly and validly authorized by all necessary corporate action in
respect thereof on the part of Charter, including (i) waiver by the
Charter Board of all restrictions upon ownership by NationsBank of
Charter Capital Stock contained in any agreement between the parties
hereto and (ii) approval of the Merger by the Charter Board, subject
to the approval of the Merger by the stockholders of Charter to the
extent required by the applicable law. The only stockholder approval
required for the approval of the Merger is the approval of two-thirds
of the outstanding shares of Charter Capital Stock voting together as
if a single class (and in which voting, each share of Charter Special
Common Stock shall be entitled to 14 votes). This Agreement, subject
to any requisite stockholder approval hereof with respect to the
Merger, represents a valid and legally binding obligation of Charter,
enforceable against Charter in accordance with its terms, except as
such enforcement may be limited by the Remedies Exception.
(b) Except as set forth in Section 5.04 of the Charter
Disclosure Schedule, neither the execution and delivery of this
Agreement by Charter, nor the consummation by Charter of the
transactions contemplated hereby or thereby nor compliance by Charter
with any of the provisions hereof or thereof will (i) conflict with or
result in a breach of any provision
12
of Charter's Restated Articles of Incorporation, as amended, or
amended and restated bylaws or (ii) constitute or result in a breach
of any term, condition or provision of, or constitute a default (or
an event which with notice or lapse of time or both would become a
default) under, or give rise to any right of termination, cancellation
or acceleration with respect to, or result in the creation of any Lien
upon, any property or assets of any of Charter or its Subsidiaries
pursuant to any note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation to which any of them is a
party or by which any of them or any of their properties or assets
may be subject and that would have in any such event, a Material
Adverse Effect, or (iii) subject to receipt of the requisite approvals
referred to in Sections 9.01(a) and 9.01(b) of this Agreement,
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Charter or its Subsidiaries or any of
their properties or assets.
(c) Other than (i) in connection or compliance with the
provisions of applicable state corporate and securities laws, the
Securities Act, the Exchange Act, and the rules and regulations of the
SEC promulgated thereunder (the "Securities Laws"), and (ii) consents,
authorizations, approvals or exemptions required from the Commissioner
and necessary state insurance commissioners (collectively, the "State
Regulatory Commissioners"), the OCC, the OTS, or the Federal Reserve
Board, no notice to, filing with, authorization of, exemption by, or
consent or approval of any public body or authority is necessary for
the consummation by Charter of the Merger and the other transactions
contemplated in this Agreement.
5.05 SECURITIES REPORTING DOCUMENTS AND FINANCIAL STATEMENTS.
Charter (i) has delivered to NationsBank copies of the consolidated balance
sheets and the related consolidated statements of earnings, changes in
shareholders' equity and cash flows (including related notes and schedules) of
Charter and its consolidated Subsidiaries as of and for the periods ended
September 30, 1995 and December 31, 1994 included in a quarterly report on Form
10-Q or an annual report on Form 10-K, as the case may be, filed by Charter
pursuant to the Securities Laws, and (ii) has furnished NationsBank with a true
and complete copy of each material report, schedule, registration statement and
definitive proxy statement filed by Charter with the SEC from and after January
1, 1993 (each a "Securities Reporting Document"), which are all the material
documents (other than preliminary material) that Charter was required to file
with the SEC since such date and all of which complied when filed in all
material respects with all applicable laws and regulations (clauses (i) and
(ii), and the financial statements and related notes and schedules included in
the Securities Reporting Documents, collectively, the "Charter Financial
Statements"). The Charter Financial Statements (as of the dates thereof and for
the periods covered thereby) (A) are or will be in accordance with the books and
records of Charter and its Subsidiaries, which are or will be complete and
accurate in all material respects and which have been or will have been
maintained in accordance with good business practices, and (B) present or will
present fairly the consolidated financial position and the consolidated results
of operations, changes in stockholders' equity and cash flows of Charter and its
Subsidiaries as of the dates and for the periods indicated, in accordance with
GAAP consistently applied except as disclosed, subject in the case of interim
financial statements to normal recurring year-end adjustments and except for the
absence of certain footnote information in the unaudited statements. Charter
has delivered to NationsBank (i) copies of all management letters prepared by
Deloitte & Touche LLP (and any predecessor thereto) delivered to Charter since
January 1, 1993 and (ii) copies of audited balance sheets and related statements
of income, changes in stockholders'
13
equity and cash flows for any Subsidiary of Charter since January 1, 1993 for
which a separate audit has been performed.
5.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries has any
obligations or liabilities (contingent or otherwise) in the amount of $500,000
in the aggregate, except obligations and liabilities (i) which are fully accrued
or reserved against in the consolidated balance sheet of Charter and its
Subsidiaries as of September 30, 1995 included in the Charter Financial
Statements or reflected in the notes thereto, or (ii) which were incurred after
September 30, 1995 in the ordinary course of business consistent with past
practice. Except as set forth in the Charter Disclosure Schedule, since
September 30, 1995, neither Charter nor any of its Subsidiaries has incurred or
paid any obligation or liability which would have a Material Adverse Effect.
5.07 TAX MATTERS. Except as set forth in Section 5.07 of the Charter
Disclosure Schedule:
(a) All Tax Returns required to be filed by or on behalf of
Charter or any of its Subsidiaries have been timely filed, or requests
for extensions have been timely filed, granted and have not expired,
for periods ending on or before December 31, 1995, and all such
returns filed are complete and accurate in all material respects.
(b) There is no audit examination, deficiency or refund
litigation or matter in controversy with respect to any Taxes that
might reasonably be expected to result in a determination the effect
of which would have a Material Adverse Effect. All Taxes due with
respect to completed and settled examinations or concluded litigation
have been paid or adequately reserved for.
(c) Neither Charter nor any of its Subsidiaries has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect.
(d) Adequate provision for any Taxes due or to become due for
Charter and any of its Subsidiaries for any period or periods through
and including September 30, 1995, has been made and is reflected on
the September 30, 1995 financial statements included in the Charter
Financial Statements. Deferred Taxes of Charter and its Subsidiaries
have been provided for in the Charter Financial Statements in
accordance with GAAP, applied on a consistent basis.
(e) Charter and its Subsidiaries have collected and withheld
all Taxes which they have been required to collect or withhold and
have timely submitted all such collected and withheld amounts to the
appropriate authorities. Charter and its Subsidiaries are in
compliance with the back-up withholding and information reporting
requirements under (1) the Code, and (2) any state, local or foreign
laws, and the rules and regulations, thereunder.
(f) Neither Charter nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any
contract, agreement or other arrangement that could obligate it to
make any payments that would not be deductible under Section 280G of
the Code.
14
5.08 ALLOWANCE FOR CREDIT LOSSES. The allowance for credit losses
(the "Allowance") shown on the consolidated statement of condition of Charter
and its Subsidiaries as of September 30, 1995 included in the Charter Financial
Statements and the Allowance shown on the consolidated statement of condition of
Charter and its Subsidiaries, as of such date comply in all material respects
with OCC Banking Circular 201 (and comparable regulations applicable to Charter
Bank, S.S.B.).
5.09 OTHER TAX AND REGULATORY MATTERS. Neither Charter nor any of
its Subsidiaries has taken or agreed to take any action or has any knowledge of
any fact or circumstance that would (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368 of the Code, or (ii) materially impede or delay receipt
of any approval referred to in Section 9.01(b).
5.10 PROPERTIES. Except as disclosed in any Securities Reporting
Document filed since December 31, 1994 and prior to the date hereof and except
for Permitted Liens and Liens arising in the ordinary course of business after
the date hereof, Charter and its Subsidiaries have good and marketable title,
free and clear of all Liens that are material to the Condition of Charter and
its Subsidiaries on a consolidated basis, to all their material properties and
assets whether tangible or intangible, real, personal or mixed, reflected in the
Charter Financial Statements as being owned by Charter and its Subsidiaries as
of the date hereof. All buildings, and all fixtures, equipment and other
property and assets which are material to its business on a consolidated basis,
held under leases or subleases by any of Charter or its Subsidiaries are held
under valid instruments enforceable in accordance with their respective terms,
subject to the Remedies Exception. Except where a failure to maintain would not
have a Material Adverse Effect, substantially all of Charter's and Charter's
Subsidiaries' equipment in regular use has been well maintained and is in good
serviceable condition, reasonable wear and tear excepted.
5.11 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 5.11 of the Charter
Disclosure Schedule, to the best knowledge of Charter, each of Charter
and its Subsidiaries is in compliance with all laws, rules,
regulations, policies, guidelines, reporting and licensing
requirements and orders applicable to its business or to its employees
conducting its business, and with its internal policies and procedures
except for failures to comply which will not result in a Material
Adverse Effect.
(b) Except as set forth in Section 5.11 of the Charter
Disclosure Schedule, neither Charter nor any of its Subsidiaries has
received any notification or communication from any agency or
department of any federal, state or local government, including the
Federal Reserve Board, or the OCC, the OTS, the FDIC, the State
Regulatory Commissioners, the SEC and the NASD and the staffs thereof
(collectively, the "Regulatory Authorities") (i) asserting that since
January 1, 1993, any of Charter or its Subsidiaries is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such company,
(ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to the Condition of
Charter and its Subsidiaries on a consolidated basis, (iii) requiring
or threatening to require Charter or any of its Subsidiaries, or
indicating that Charter or any of its Subsidiaries may be required to
enter into a cease and
15
desist order, agreement or memorandum of understanding or any other
agreement restricting or limiting or purporting to restrict or limit
in any manner the operations of Charter or any of its Subsidiaries,
including, without limitation, any restriction on the payment of
dividends, or (iv) directing, restricting or limiting, or purporting
to direct, restrict or limit in any manner the operations of Charter
or any of its Subsidiaries, including, without limitation, any
restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this
sentence herein referred to as a "Regulatory Agreement").
(c) Except as set forth in Section 5.11 of the Charter
Disclosure Schedule, since January 1, 1993, neither Charter nor any
of its Subsidiaries has been a party to any effective Regulatory
Agreement or memorandum of understanding.
(d) Neither Charter nor any of its Subsidiaries is required by
Section 32 of FDIA to give prior notice to a federal banking agency of
the proposed addition of an individual to its board of directors or
the employment of an individual as a senior executive officer.
5.12 EMPLOYEE BENEFIT PLANS.
(a) Charter has delivered or made available to NationsBank
prior to the execution of this Agreement true and complete copies (or,
in the case of bonus or other incentive plans, summaries thereof and
financial data with respect thereto) of all material pension,
retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other
material incentive plans, all other material employee programs,
arrangements or agreements, whether arrived at through collective
bargaining or otherwise, all material medical, vision, dental or other
health plans, all life insurance plans and all other material employee
benefit plans or fringe benefit plans, including, without limitation,
all "employee benefit plans" as that term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), currently adopted by, maintained by, sponsored in whole or
in part by, or contributed to by Charter or any of its Subsidiaries or
any affiliate thereof for the benefit of any Employee or under which
any Employee is eligible to participate and under which Charter or any
of its Subsidiaries could have any liability contingent or otherwise
(collectively, the "Charter Benefit Plans"). Any of the Charter
Benefit Plans which is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a
"Charter ERISA Plan." Any of the Charter Benefit Plans pursuant to
which Charter is or may become obligated to, or obligated to cause any
of its Subsidiaries or any other Person to, issue, deliver or sell
shares of capital stock of Charter or any of its Subsidiaries, or
grant, extend or enter into any option, warrant, call, right,
commitment or agreement to issue, deliver or sell shares, or any other
interest in respect of capital stock of Charter or any of its
Subsidiaries, is referred to herein as a "Charter Stock Plan." No
Charter Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA. Charter has set forth in Section
5.12 of the Charter Disclosure Schedule (i) a list of all of the
Charter Benefit Plans, (ii) a list of Charter Benefit Plans that are
Charter ERISA Plans, (iii) a list of Charter Benefit Plans that are
Charter Stock Plans and (iv) a list of the number of shares covered
by, exercise prices for, and holders of, all stock options granted and
available for grant under the Charter Stock Plans.
16
(b) To the best knowledge of Charter, all Charter Benefit Plans
are in substantial compliance with the applicable terms of ERISA and
the Code and any other applicable laws, rules and regulations the
breach or violation of which could reasonably be expected to result
in a Material Adverse Effect.
(c) All liabilities under any Charter Benefit Plan are fully
accrued or reserved against in the Charter Financial Statements in
accordance with GAAP. No Charter ERISA Plan is a defined benefit
pension plan subject to Title IV of ERISA.
(d) Neither Charter nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Charter
Benefit Plan or otherwise, except as set forth in the Charter
Disclosure Schedule. There are no restrictions on the rights of
Charter or its Subsidiaries to amend or terminate any such Charter
Benefit Plan without incurring any material liability thereunder,
except for such restrictions as would not have a Material Adverse
Effect.
(e) Except as set forth in Section 5.12 of the Charter
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
or thereby will (i) result in any payment (including, without
limitation, severance, golden parachute or otherwise) becoming due to
any Employees under any Charter Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Charter Benefit Plan
or (iii) result in any acceleration of the time of payment or vesting
of any such benefits.
5.13 COMMITMENTS AND CONTRACTS. Except as set forth in Section 5.13
of the Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries
is a party or subject to, or has amended or waived any rights under, any of the
following (whether written or oral, express or implied):
(a) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any Employees, including in
any such person's capacity as a consultant (other than those which
either (i) are terminable at will by Charter or such Subsidiary or
(ii) do not involve payments with a present value of more than $50,000
by Charter or such Subsidiary during the remaining term thereof
without giving effect to extensions or renewals made after the date
hereof;
(b) any labor contract or agreement with any labor union;
(c) any contract not made in the usual, regular and ordinary
course of business containing non-competition covenants which limit
the ability of Charter or any of its Subsidiaries to compete in any
line of business or which involve any restriction of the geographical
area in which Charter or its Subsidiaries may carry on its business
(other than as may be required by law or applicable Regulatory
Authorities);
(d) any other contract or agreement which would be required to
be disclosed as an exhibit to Charter's annual report on Form 10-K and
which has not been so disclosed;
17
(e) any real property lease with annual rental payments
aggregating $25,000 or more;
(f) any employment or other contract requiring the payment of
additional amounts as "change of control" payments as a result of
transactions contemplated by this Agreement;
(g) any agreement with respect to (i) the acquisition of the
bank branches or other assets or stock of another financial
institution or (ii) the sale of one or more bank branches which would
require additional payments by Charter after the date of this
Agreement; or
(h) any outstanding interest rate exchange or other derivative
contracts.
5.14 MATERIAL CONTRACT DEFAULTS. Except as set forth in Section 5.14
of the Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries
is, or has received any notice or has any knowledge that any party is, in
default in any respect under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which Charter or any of its
Subsidiaries is a party or by which Charter or any of its Subsidiaries or the
assets, business or operations thereof may be bound or affected or under which
it or its respective assets, business or operations receives benefits, except
for those defaults which would not have, individually or in the aggregate, a
Material Adverse Effect; and there has not occurred any event that with the
lapse of time or the giving of notice of both would constitute such a default.
5.15 LEGAL PROCEEDINGS. Except as set forth in Section 5.15 of the
Charter Disclosure Schedule, there are no claims or charges filed with, or
proceedings or investigations by, Regulatory Authorities or actions or suits
instituted or pending or, to the best knowledge of Charter's management,
threatened against Charter or any of its Subsidiaries, or against any property,
asset, interest or right of any of them, that might reasonably be expected to
result in a judgment in excess of $100,000 or that might reasonably be expected
to threaten or impede the consummation of the transactions contemplated by this
Agreement. Neither Charter nor any of its Subsidiaries is a party to any
agreement or instrument or is subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree, rule, regulation,
code or ordinance that, individually or in the aggregate, might reasonably be
expected to have a Material Adverse Effect or, might reasonably be expected to
threaten or impede the consummation of the transactions contemplated by this
Agreement.
5.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
except (i) as disclosed in any Securities Reporting Document filed since
December 31, 1994 and prior to the date hereof or (ii) as set forth in
Section 5.16 of the Charter Disclosure Schedule, neither Charter nor any of its
Subsidiaries has (A) incurred any liability which has had a Material Adverse
Effect, (B) suffered any change in its Condition which would have a Material
Adverse Effect, other than changes after the date hereof which affect the
banking industry as a whole, (C) failed to operate its business consistent in
all material respects with past practice or (D) changed any accounting
practices.
5.17 REPORTS. Since January 1, 1992, Charter and each of its
Subsidiaries have filed on a timely basis all reports and statements, together
with all amendments required to be made with
18
respect thereto (collectively "Reports"), that they were required to file
with (i) the SEC, including, without limitation, all Forms 10-K, 10-Q and
8-K, (ii) the Federal Reserve Board, (iii) the Commissioner, (iv) any other
applicable federal, state, municipal, local or foreign government,
securities, banking, savings and loan or other governmental or regulatory
authority and (v) the NASD. No Securities Reporting Document with respect to
periods beginning on or after January 1, 1992, contained any information that
was false or misleading with respect to any material fact or omitted to state
any material fact necessary in order to make the statements therein not
misleading.
5.18 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by Charter for inclusion in the registration statement on Form
S-4, or other appropriate form, to be filed with the SEC by NationsBank under
the Securities Act in connection with the transactions contemplated by this
Agreement (the "Registration Statement"), or the proxy statement to be used by
Charter to solicit any required approval of its stockholders as contemplated by
this Agreement (the "Proxy Statement") will, in the case of the Proxy Statement,
when it is first mailed to the stockholders of Charter, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which such statements are made, not misleading, or, in the case of the
Registration Statement, when it becomes effective, be false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements therein not misleading, or, in the case of the
Proxy Statement or any amendment thereof or supplement thereto, at the time of
the meeting of the stockholders of Charter to be held pursuant to Section 8.03
of this Agreement, including any adjournments thereof (the "Stockholders'
Meeting"), be false or misleading with respect to any material fact or omit to
state any material fact necessary to correct any statement or remedy any
omission in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that Charter is responsible
for filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable law, including applicable provisions of the Securities
Laws. The information which is deemed to be set forth in the Charter Disclosure
Schedule by Charter for the purposes of this Agreement is true and accurate in
all material respects.
5.19 INSURANCE. Charter and each of its Subsidiaries are presently
insured, and during each of the past five calendar years have been insured, for
reasonable amounts against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured. The
policies of fire, theft, liability (including directors and officers liability
insurance) and other insurance maintained with respect to the assets or
businesses of Charter and its Subsidiaries provide adequate coverage against all
pending or threatened claims, and the fidelity bonds in effect as to which any
of Charter or any of its Subsidiaries is a named insured are sufficient for
their purpose, except where the failure to have such coverage would not have a
Material Adverse Effect.
5.20 LABOR. No material work stoppage involving Charter or its
Subsidiaries is pending or, to the best knowledge of Charter's management,
threatened. Neither Charter nor any of its Subsidiaries is involved in, or, to
the best knowledge of Charter's management, threatened with or affected by, any
labor or other employment-related dispute, arbitration, lawsuit or
administrative proceeding which might reasonably be expected to have a Material
Adverse Effect. Employees of Charter and its Subsidiaries are not represented
by any labor union, and, to the best knowledge of
19
Charter's management, no labor union is attempting to organize employees of
Charter or any of its Subsidiaries.
5.21 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed
in Charter's Proxy Statement for its 1995 Annual Meeting of Stockholders or
as set forth in Section 5.21 of the Charter Disclosure Schedule, no executive
officer or director of Charter, or any "associate" (as such term is defined
in Rule 14a-1 under the Exchange Act) of any such executive officer or director,
has any material interest in any material contract or property (real or
personal), tangible or intangible, used in or pertaining to the business of
Charter or any of its Subsidiaries.
5.22 REGISTRATION OBLIGATIONS. Neither Charter nor any of its
Subsidiaries is under any obligation, contingent or otherwise, presently in
effect or which will survive the Merger by reason of any agreement to register
any of its securities under the Securities Act.
5.23 BROKERS AND FINDERS. Except as set forth in Section 5.23 of the
Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries nor any
of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Charter or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
5.24 STATE TAKEOVER LAWS. To the best of Charter's knowledge, the
transactions contemplated by this Agreement are exempt from any applicable state
takeover law and from any applicable charter or contractual provision containing
change of control or anti-takeover provisions.
5.25 ENVIRONMENTAL MATTERS. To Charter's best knowledge, neither
Charter, any of its Subsidiaries, nor any properties owned or operated by
Charter or any of its Subsidiaries or held as collateral by any of its
Subsidiaries has been or is in violation of or liable under any Environmental
Law (as hereinafter defined), except for such violations or liabilities that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect. There are no actions, suits or proceedings, or demands, claims,
notices or investigations (including without limitation notices, demand letters
or requests for information from any environmental agency) instituted or
pending, or to the best knowledge of Charter's management, threatened relating
to the liability of any properties owned or operated by Charter or any of its
Subsidiaries under any Environmental Law, except for liabilities or violations
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation,
20
processing, handling, labeling, production, release or disposal of any
substance presently listed, defined, designated or classified as hazardous,
toxic radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a component.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NATIONSBANK
NationsBank represents and warrants to Charter as follows:
6.01 ORGANIZATION, STANDING AND AUTHORITY.
(a) NationsBank is a corporation duly organized, validly
existing and in good standing under the laws of the State of North
Carolina. NationsBank is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure
to be duly qualified would have a Material Adverse Effect on the
Condition of NationsBank and its Subsidiaries taken as a whole.
NationsBank has all requisite corporate power and authority to carry
on its business as now conducted and to own, lease and operate its
assets, properties and business, and to execute and deliver this
Agreement and perform the terms of this Agreement. NationsBank is
duly registered as a bank holding company under the BHCA. NationsBank
has in effect all Authorizations necessary for it to own or lease its
properties and assets and to carry on its business as now conducted,
the absence of which, either individually or in the aggregate, would
have a material adverse effect on the Condition of NationsBank and its
Subsidiaries on a consolidated basis. At the Effective Time,
NationsBank will directly own all of the issued and outstanding shares
of Merger Subsidiary's capital stock.
(b) Holdings is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to carry on its business
as now conducted and to perform the terms of this Agreement.
6.02 NATIONSBANK CAPITAL STOCK. The authorized capital stock of
NationsBank consists of 800,000,000 shares of NationsBank Common Stock and
45,000,000 shares of Preferred Stock. At December 31, 1995, there were
outstanding approximately 274,269,000 shares of NationsBank Common Stock and
approximately 2,473,000 shares of NationsBank Preferred Stock and no other
shares of capital stock of any class. All of the issued and outstanding shares
of NationsBank Common Stock are duly and validly issued and outstanding and are
fully paid and nonassessable.
6.03 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action in respect
thereof on the part of NationsBank, to the extent required by
21
applicable law. This Agreement represents a valid and legally binding
obligation of NationsBank, enforceable against NationsBank in
accordance with its terms except as such enforcement may be limited by
the Remedies Exception.
(b) Neither the execution and delivery of this Agreement by
NationsBank, nor the consummation by NationsBank of the transactions
contemplated hereby or thereby nor compliance by NationsBank with any
of the provisions hereof or thereof will (i) conflict with or result
in a breach of any provision of NationsBank's Articles of
Incorporation or bylaws or (ii) constitute or result in a breach of
any term, condition or provision of, or constitute a default (or an
event which with notice or lapse of time or both would become a
default) under, or give rise to any right of termination, cancellation
or acceleration with respect to, or result in the creation of any Lien
upon any property or assets of any of NationsBank or its Subsidiaries
pursuant to any note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation to which any of them is a
party or by which any of them or any of their properties or assets may
be subject, and that would, in any such event, have a Material Adverse
Effect on the Condition of NationsBank and its Subsidiaries on a
consolidated basis or the transactions contemplated hereby or thereby
or (iii) subject to receipt of the requisite approvals referred to in
Section 9.01 of this Agreement, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to NationsBank or any
of its Subsidiaries or any of their properties or assets.
6.04 FINANCIAL STATEMENTS. NationsBank (i) has delivered to Charter
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders' equity
and consolidated statements of cash flows (including related notes and
schedules) of NationsBank and its consolidated Subsidiaries as of and for the
periods ended September 30, 1995 and December 31, 1994 included in a quarterly
report filed on Form 10-Q or an annual report filed on Form 10-K, as the case
may be, filed by NationsBank pursuant to the Securities Laws (a "NationsBank SEC
Document"), and (ii) until the Closing will deliver to Charter promptly upon the
filing thereof with the SEC copies of the consolidated balance sheets and
related consolidated statements of income, consolidated statements of changes in
shareholders' equity and consolidated statements of cash flows (including
related notes and schedules) included in any NationsBank SEC Documents filed
subsequent to the execution of this Agreement (clauses (i) and (ii)
collectively, the "NationsBank Financial Statements"). The NationsBank
Financial Statements (as of the dates thereof and for the periods covered
thereby) (A) are or will be in accordance with the books and records of
NationsBank and its Consolidated Subsidiaries, which are or will be complete and
accurate in all material respects and which have been or will have been
maintained in accordance with good business practices, and (B) present or will
present fairly the consolidated financial position and the consolidated results
of operations, changes in shareholders' equity and cash flows of NationsBank and
its Subsidiaries as of the dates and for the periods indicated, in accordance
with GAAP, subject in the case of interim financial statements to normal
recurring year-end adjustments and except for the absence of certain footnote
information in the unaudited statements.
6.05 NATIONSBANK SEC REPORTS. Since January 1, 1993, NationsBank has
filed on a timely basis all reports and statements, together with all amendments
required to be made with respect thereto that as an issuer it is required to
file with the SEC. No NationsBank SEC Document with respect to periods
beginning on or after January 1, 1993 and until the Closing contained or will
22
contain any information that was false or misleading with respect to any
material fact or omitted or will omit to state any material fact necessary in
order to make the statements therein not misleading.
6.06 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by NationsBank for inclusion in the Registration Statement or
the Proxy Statement will, in the case of the Proxy Statement, when it is first
mailed to the stockholders of Charter, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which such
statements are made, not misleading or, in the case of the Registration
Statement, when it becomes effective, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Stockholders'
Meeting, be false or misleading with respect to any material fact or omit to
state any material fact necessary to correct any statement or remedy any
omission in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that NationsBank is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law, including applicable provisions of the
Securities Laws.
6.07 COMMON STOCK. At the Effective Time, the NationsBank Common
Stock issued pursuant to the Merger will be duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
6.08 TAX AND REGULATORY MATTERS. Neither NationsBank nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368 of the Code, or (ii) materially impede or delay receipt
of any approval referred to in Section 9.01(b).
6.09 LITIGATION. There are no judicial proceedings of any kind or
nature pending or, to the knowledge of NationsBank, threatened against
NationsBank before any court or arbitral tribunal or before or by any
governmental department, agency or instrumentality involving the validity of the
NationsBank Common Stock or the transactions contemplated by this Agreement.
6.10 BROKERS AND FINDERS. Except as previously disclosed to Charter,
neither NationsBank nor any of its Subsidiaries nor any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
NationsBank or any of its Subsidiaries in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During the
period from the date of this Agreement to the Effective Time, Charter shall, and
shall cause each of its Subsidiaries to, (i) conduct its business in the usual,
regular and ordinary course consistent with past practice (other
23
than transactions made pursuant to contracts in existence on the date hereof
and described in Sections 7.01 or 7.02 of the Charter Disclosure Schedule),
(ii) use its best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain
the services of its officers and key Employees and (iii) in accordance with
the terms of the applicable transaction agreements, diligently proceed to
take all appropriate action to complete those pending transactions listed on
Section 5.13 of the Charter Disclosure Schedule and (iv) diligently proceed
to obtain approvals for and to complete the Redemption.
7.02 FORBEARANCES. Except as described in Section 7.02 of the
Charter Disclosure Schedule, during the period from the date of this Agreement
to the Effective Time, Charter shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of NationsBank, which consent
(in the case of subparagraphs (c), (d), (e), (h) and (p)) shall not be
unreasonably withheld (and Charter shall provide NationsBank with prompt notice
of any events referred to in this Section 7.02 occurring after the date hereof):
(a) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money (other
than short-term indebtedness incurred to refinance short-term
indebtedness and indebtedness of Charter or any of its Subsidiaries to
Charter or any of its Subsidiaries; it being understood and agreed
that incurrence of indebtedness in the ordinary course of business
shall include, without limitation, the creation of deposit
liabilities, purchases of federal funds, sales of certificates of
deposit and entering into Federal Home Loan Bank loans with a term of
six months or less or repurchase agreements), assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or
make any loan or advance other than in the ordinary course of business
consistent with past practice;
(b) adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend (other than regular quarterly cash
dividends at a rate not in excess of $0.08 per share through June 30,
1996 and $0.10 per share thereafter) or make any other distribution
on, or (other than the Redemption) directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any
shares of its capital stock, or grant any stock appreciation rights or
grant any individual, corporation or other entity any right to acquire
any shares of its capital stock; or issue any additional shares of
capital stock, or any securities or obligations convertible into or
exchangeable for any shares of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties or assets to any individual, corporation or
other entity, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, except in the
ordinary course of business consistent with past practice or pursuant
to contracts or agreements in force at the date of this Agreement;
(d) make any material investment (other than trades in
investment securities in the ordinary course) either by purchase of
stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual,
corporation or other entity;
24
(e) enter into, terminate or fail to exercise any material right
under, any contract or agreement involving annual payments in excess
of $50,000 and which cannot be terminated without penalty upon 30 days
notice, or make any change in, or extension of (other than automatic
extensions), any of its leases or contracts involving annual payments
in excess of $50,000 and which cannot be terminated without penalty
upon 30 days notice;
(f) modify the terms of any Charter Benefit Plan (including any
severance pay plan) or increase or modify in any manner the
compensation or fringe benefits of any of its Employees or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such Employees, or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of
any Employee other than routine adjustments in compensation and fringe
benefits in the ordinary course of business consistent with past
practice or accelerate the vesting of any stock options or other
stock-based compensation;
(g) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of
the Code;
(h) settle any claim, action or proceeding involving the payment
of money damages in excess of $50,000, except in the ordinary course
of business consistent with past practice;
(i) amend its Restated Articles of Incorporation, as amended, or
its amended and restated bylaws;
(j) fail to maintain its Regulatory Agreements, material
licenses and permits or to file in a timely fashion all federal,
state, local and foreign tax returns;
(k) make any capital expenditures of more than $50,000
individually or $300,000 in the aggregate;
(l) fail to maintain each Charter Benefit Plan or timely make
all contributions or accruals required thereunder in accordance with
GAAP applied on a consistent basis;
(m) issue any additional shares of Charter Capital Stock;
(n) agree to, or make any commitment to, take any of the actions
prohibited by this Section 7.02;
(o) take any 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 IX not being satisfied
or in a violation of any provision of this Agreement, except, in every
case, as may be required by applicable law; or
(p) change any methods of accounting from those used in the
Charter Financial Statements.
25
7.03 PLAN TERMINATION. Prior to the Effective Time, Charter shall
have taken all steps necessary to terminate the SAR Plan and all Charter
executive deferred compensation plans.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 ACCESS AND INFORMATION.
(a) During the period from the date of this Agreement through
the Effective Time:
(i) Charter shall, and shall cause its Subsidiaries to,
afford NationsBank, and its accountants, counsel and other
representatives, full access during normal business hours to the
properties, books, contracts, tax returns, commitments and
records of Charter and its Subsidiaries at any time, and from
time to time, for the purpose of conducting any review or
investigation reasonably related to the Merger, and Charter and
its Subsidiaries will cooperate fully with all such reviews and
investigations.
(ii) NationsBank shall upon reasonable notice make personnel
and copies of its SEC reports available to Charter and its
advisors for purposes of any review or report to its Board of
Directors in evaluating the Merger.
(b) During the period from the date of this Agreement through
the Effective Time, Charter shall furnish to NationsBank (i) all
Reports referred to in Section 5.17 promptly upon the filing thereof,
(ii) a copy of each Tax Return filed by it and (iii) monthly and other
interim financial statements in the form prepared by Charter for its
internal use. During this period, Charter also shall notify
NationsBank promptly of any material change in the Condition of
Charter or any of its Subsidiaries.
(c) Notwithstanding the foregoing provisions of this Section
8.01, no investigation by the parties hereto made heretofore or
hereafter shall affect the representations and warranties of the
parties (as modified by information (i) furnished to NationsBank
pursuant to the terms of any investment agreement, (ii) disclosed in
writing to NationsBank in its due diligence process or (iii) included
in the Charter Disclosure Schedule) which are contained herein and
each such representation and warranty shall survive such
investigation.
(d) NationsBank agrees that it will keep confidential any
information furnished to it in connection with the transactions
contemplated by this Agreement which is reasonably designated as
confidential at the time of delivery, except to the extent that such
information (i) was already known to NationsBank and was received from
a source other than Charter or any of its Subsidiaries, directors,
officers, employees or agents, (ii) thereafter was lawfully obtained
from another source, or (iii) is required to be disclosed to the SEC,
the NASD, the OCC, the OTS, the Federal Reserve Board, FDIC or any
other governmental agency or authority, or is otherwise required to be
disclosed by law. NationsBank agrees not to use such information, and
to implement safeguards and procedures that are reasonably designed
26
to prevent such information from being used, for any purpose other
than in connection with the transactions contemplated by this
Agreement. Upon any termination of this Agreement, NationsBank will
return to Charter all documents furnished NationsBank for its review
and all copies of such documents made by NationsBank.
(e) Charter shall cooperate, and shall cause its Subsidiaries,
accountants, counsel and other representatives to cooperate, with
NationsBank and its accountants, counsel and other representatives, in
connection with the preparation by NationsBank of any applications and
documents required to obtain the Approvals which cooperation shall
include providing all information, documents and appropriate
representations as may be necessary in connection therewith and, when
requested by NationsBank, preparing and filing of regulatory
applications.
(f) From and after the date of this Agreement, each of
NationsBank and Charter shall use its reasonable best efforts to
satisfy or cause to be satisfied all conditions to their respective
obligations under this Agreement. While this Agreement is in effect,
neither NationsBank nor Charter shall take any actions, or omit to
take any actions, which would cause this Agreement to become
unenforceable in accordance with its terms.
8.02 REGISTRATION STATEMENT; REGULATORY MATTERS.
(a) NationsBank shall (i) prepare and file the Registration
Statement and the Proxy Statement with the SEC as soon as is
reasonably practicable, (ii) use its best efforts to cause the
Registration Statement to become effective and (iii) take any action
required to be taken under any applicable state blue sky or securities
laws in connection therewith. Charter and its Subsidiaries shall
furnish NationsBank with all information concerning Charter, its
Subsidiaries and the holders of Charter Capital Stock as NationsBank
may reasonably request in connection with the foregoing.
(b) NationsBank and Charter shall cooperate and use their
respective best efforts (i) to prepare all documentation, to effect
all filings and to obtain all permits, consents, approvals and
authorizations of all third parties, Regulatory Authorities and other
governmental authorities necessary to consummate the transactions
contemplated by this Agreement, including, without limitation, any
such approvals or authorizations required by the Federal Reserve, the
OCC, the OTS and the Commissioner and (ii) to cause the Merger to be
consummated as expeditiously as reasonably practicable.
8.03 STOCKHOLDERS' APPROVAL. Charter shall call a meeting of its
stockholders to be held as soon as practicable for the purpose of voting upon
the Merger and related matters. The Board of Directors of Charter shall, submit
for approval of its stockholders the matters to be voted upon at the
Stockholders' Meeting, and shall recommend approval of such matters and use its
best efforts (including, without limitation, soliciting proxies for such
approvals) to obtain such stockholder approvals. The covenants under this
Section 8.03 are subject to the exercise by the Charter Board of its fiduciary
obligations.
8.04 PRESS RELEASES. Prior to the public dissemination of any press
release or other public disclosure of information about this Agreement, the
Merger or any other transaction contemplated
27
hereby, the parties to this Agreement shall mutually agree as to the form and
substance of such release or disclosure.
8.05 NOTICE OF DEFAULTS. Charter shall promptly notify NationsBank
of (i) any material change in its business, operations or prospects, (ii) any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any Regulatory Authority, (iii) the institution or
the threat of material litigation involving such party, or (iv) any event or
condition that might be reasonably expected to cause any of its representations,
warranties or covenants set forth herein not to be true and correct in all
material respects as of the Effective Time. For purpose of this paragraph, the
term material litigation shall mean any claim involving $50,000 or more. Upon
any such notice, if any event or condition stated in such notice shall entitle
NationsBank to terminate this Agreement pursuant to Section 10.01(c),
NationsBank shall not be entitled to terminate this Agreement by reason thereof
unless NationsBank exercises such right on or before the later of (i) the date
ten business days after such notification or (ii) the expiration of the cure
period described in such Section 10.01(c).
8.06 MISCELLANEOUS AGREEMENTS AND CONSENTS; AFFILIATES AGREEMENTS.
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use its respective best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously as reasonably
practicable, including, without limitation, using their respective best efforts
to lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby. NationsBank and Charter shall, and shall cause each of their respective
Subsidiaries to, use their best efforts to obtain consents of all third parties
and Regulatory Authorities necessary or, in the reasonable opinion of
NationsBank or Charter, desirable for the consummation of the transactions
contemplated by this Agreement. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of NationsBank shall be deemed to
have been granted authority in the name of Charter to take all such necessary or
desirable action.
Without limiting the foregoing, Charter will take such actions as may
be reasonably necessary to identify each of its "affiliates" for purposes of
Rule 145 under the Securities Act and to cause each person so identified to
deliver to NationsBank within 10 days after the execution of this Agreement a
written agreement in form and substance satisfactory to NationsBank providing
that such person shall not sell, pledge, transfer or otherwise dispose of any
capital stock to be received by such person as part of the Merger Consideration
except in compliance with the applicable provisions of the Securities Act. For
a period of three years after the date hereof, NationsBank will continue to file
in a timely manner all securities reports required to be filed by it pursuant to
Section 13 and Section 15(d) of the Exchange Act.
8.07 INDEMNIFICATION.
(a) NationsBank shall indemnify, defend, and hold harmless the
present and former directors, officers, employees, and agents of
Charter or its Subsidiaries (each, an "Indemnified Party") against all
losses, expenses (including reasonable attorneys' fees), claims,
damages or liabilities and amounts paid in settlement arising out of
actions or
28
omissions or alleged acts or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this
Agreement) to the full extent permitted under the TBCA and by
Charter's Restated Articles of Incorporation, as amended, and
amended and restated bylaws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in
the defense of any proceeding to the full extent permitted by the
TCBA upon receipt of any undertaking required by the TCBA, except
the right to indemnification shall not arise in those instances in
which the party seeking indemnification has participated in the
breach of any covenant or agreement contained herein or knowingly
caused any representation or warranty of Charter contained herein
to be false or inaccurate in any respect and the claim arises
principally from such breach or the falsity or inaccuracy of such
representation or warranty. Without limiting the foregoing, in any
case in which a determination by NationsBank is required to
effectuate any indemnification, NationsBank shall direct, at the
election of the Indemnified Party, that the determination shall be
made by independent counsel mutually agreed upon between
NationsBank and the Indemnified Party.
(b) NationsBank shall use its reasonable efforts (and Charter
shall cooperate prior to the Effective Time in these efforts) to
maintain in effect for a period of six years after the Effective Time
Charter's existing directors' and officers' liability insurance policy
(provided that NationsBank may substitute therefor (i) policies of at
least the same coverage and amounts containing terms and conditions
which are substantially no less advantageous or (ii) with the consent
of Charter given prior to the Effective Time, any other policy) with
31 respect to claims arising from facts or events which occurred prior
to the Effective Time and covering persons who are currently covered
by such insurance; provided, that NationsBank shall not be obligated
to make premium payments for such six-year period in respect of such
policy (or coverage replacing such policy) which exceed, for the
portion related to Charter's directors and officers, 200% of the
annual premium payments on Charter's current policy in effect as of
the date of this Agreement (the "Maximum Amount"). If the amount of
the premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, NationsBank shall use its reasonable
efforts to maintain the most advantageous policies of directors' and
officers' liability insurance obtainable for a premium equal to the
Maximum Amount.
(c) If NationsBank or any of its successors or assigns shall
consolidate with or merge into any other person and shall not be the
continuing or surviving person of such consolidation or merger or
shall transfer all or substantially all of its assets to any person,
then and in each case, proper provision shall be made so that the
successors and assigns of NationsBank shall assume the obligations set
forth in this Section 8.07.
(d) The provisions of this Section 8.07 are intended to be for
the benefit of and shall be enforceable by, each Indemnified Party,
his or her heirs and representatives.
(e) NationsBank shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in
successfully enforcing the indemnity and other obligations provided
for in this Section 8.07 if NationsBank has been finally determined to
have acted in bad faith in refusing such indemnity. The Indemnified
Party shall pay all expenses, including reasonable attorneys' fees,
incurred by NationsBank if the indemnification or other obligations
provided in this Section 8.07 are denied by a court of
29
competent jurisdiction by final and nonappealable order and such court
determines that the assertion of such claims for indemnification was
made in bad faith.
8.08 SAR PLAN; RESTRICTED STOCK.
(a) All restrictions or limitations on transfer with respect to
Charter Common Stock awarded under a Charter Stock Plan or any other
plan, program or arrangement ("Restricted Stock"), to the extent that
such restrictions or limitations shall not have already lapsed, shall
remain in full force and effect with respect to the NationsBank Common
Stock into which such Restricted Stock is converted pursuant to
Section 3.01.
(b) Except as provided herein or as otherwise agreed in writing
by the parties, the provisions of the SAR Plan and any other plan,
program or arrangement pursuant to which Charter may, or may be
required to, make payments based upon the value of the Charter Capital
Stock or issue stock or stock-based compensation, shall be terminated
by the Effective Time in accordance with the terms of the SAR Plan.
8.09 CERTAIN CHANGE OF CONTROL MATTERS. From and after the date
hereof, Charter shall take all action necessary so that the execution and
delivery of this Agreement will not increase any benefits otherwise payable
under any Charter Benefit Plan except as set forth in Sections 5.12 and 5.13 of
the Charter Disclosure Schedule or increases made with the prior written consent
of NationsBank.
8.10 STOCK EXCHANGE LISTING. NationsBank shall use its best efforts
to list, prior to the Effective Time, on the NYSE and the Pacific Stock
Exchange, upon official notice of issuance, the shares of NationsBank Common
Stock to be issued to holders of Charter Common Stock in the Merger.
8.11 DECLARATION OF DIVIDENDS. After the date of this Agreement,
Charter shall coordinate with NationsBank the declaration of any dividends in
respect of NationsBank Common Stock and Charter Common Stock and Charter Special
Common Stock and the record dates and payment dates relating thereto, it being
the intention of the parties hereto that holders of Charter Common Stock and
Charter Special Common Stock shall not receive two dividends, or fail to receive
one dividend, for any single calendar quarter with respect to their shares of
Charter Common Stock or Charter Special Common Stock.
8.12 EMPLOYEE BENEFITS. As soon as practicable following the
Effective Time, NationsBank shall provide generally to officers and employees of
Charter and its Subsidiaries employee benefits, including without limitation
pension benefits, health and welfare benefits, life insurance and vacation
arrangements, on terms and conditions which when taken as a whole are
substantially similar to those provided from time to time by NationsBank and its
Subsidiaries to their similarly situated officers and employees. In that
regard, such officers and employees of Charter shall be credited under the
employee benefit plans of NationsBank for their years of "eligibility service"
and "vesting service" earned under the Charter Benefit Plans as if such service
had been earned with NationsBank, while such officers and employees of Charter
shall be credited with "benefit service" under the employee benefit plans of
NationsBank only with respect to their period of employment with NationsBank and
its Subsidiaries after the Effective Time in accordance with the terms and
30
conditions of such employee benefit plans. As of the Effective Time, the
employees and their dependents, if any, previously covered as of the Effective
Time under Charter's health insurance plan shall be covered under NationsBank's
health insurance plan and, to the extent possible under the terms of
NationsBank's then current health insurance plan, will not be subject to any
pre-existing condition limitations or exclusions, except those excluded under
NationsBank's health insurance plan. Charter's employees shall not be required
to satisfy the deductible and employee payments required by NationsBank's
comprehensive medical and/or dental plans for the calendar year of the Effective
Time to the extent of amounts previously credited during such calendar year
under comparable plans maintained by Charter.
8.13 CERTAIN ACTIONS. No party shall take any action which would
adversely affect or delay the ability of either NationsBank or Charter to obtain
any necessary approvals of any Regulatory Authority or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement. No party shall take any action
that would prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code.
8.14 ACQUISITION PROPOSALS. Charter shall not, and shall use its
best efforts to cause its officers, directors and employees and any investment
banker, attorney, accountant, or other agent retained by it or its Subsidiaries
not to (i) initiate, encourage or solicit, directly or indirectly, the making of
any proposal or offer (an "Acquisition Proposal") to acquire all or any
significant part of the business and properties or capital stock of Charter or
its Subsidiaries, whether by merger, purchase of securities or assets, tender
offer or otherwise (an "Acquisition Transaction"), or initiate, directly or
indirectly, any contact with any person in an effort to or with a view towards
soliciting any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, an Acquisition Proposal. Notwithstanding the foregoing, Charter may
(i) furnish or cause to be furnished information subject to an appropriate
confidentiality agreement, (ii) in response to an Acquisition Proposal, issue a
communication to its security holders of the type contemplated by Rule 14d-9(e)
under the Exchange Act, and (iii) participate in discussions and negotiations
directly and through its representatives with persons who have sought the same
if the Charter Board determines, based as to legal matters on the written advice
of outside legal counsel, that the failure to furnish such information or to
negotiate with such entity or group or to take and disclose such position would
be inconsistent with the proper exercise of the fiduciary duties of the Charter
Board. In the event Charter receives an Acquisition Proposal or such
discussions are sought to be initiated or continued with Charter, it shall
promptly inform NationsBank as to the material terms thereof.
8.15 TERMINATION FEE. To compensate NationsBank for entering into
this Agreement, taking action to consummate the transactions hereunder and
incurring the costs and expenses related thereto and other losses and expenses,
including the foregoing by NationsBank of other opportunities, Charter and
NationsBank agree as follows:
(a) Provided that NationsBank shall not be in material breach of
its obligations under this Agreement (which breach has not been cured
promptly following receipt of written notice thereof by Charter
specifying in reasonable detail the basis of such alleged breach),
Charter shall pay to NationsBank the sum of $2,000,000 (the
"Termination Fee") plus reasonable out-of-pocket expenses, not in
excess of $500,000 (including, without
31
limitation, amounts paid or payable to banks and investment
bankers, fees and expenses of counsel and printing expenses) (such
expenses are hereinafter referred to as the "Expenses") incurred by
NationsBank or any of its affiliates in connection with or arising
out of transactions contemplated by this Agreement, regardless of
when those expenses are incurred, if this Agreement is terminated
by Charter under the provisions of Section 10.01(f). NationsBank
shall provide Charter with an itemization of Expenses.
(b) Any payment required by paragraph (a) of this Section shall
become payable within two business days after termination of the
Agreement.
(c) Charter acknowledges that the agreements contained in this
Section 8.15 are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, NationsBank would
not enter into this Agreement; accordingly, if Charter fails to
promptly pay the Termination Fee or Expenses when due, Charter shall
in addition thereto pay to NationsBank all costs and expenses
(including fees and disbursements of counsel) incurred in collecting
such Termination Fee or Expenses, as the case may be, together with
interest on the amount of the Termination Fee or Expenses (or any
unpaid portion thereof) from the date such payment was required to be
made until the date such payment is received by NationsBank at the
prime rate of NationsBank Texas, National Association as in effect
from time to time during such period.
8.16 ACCRUALS. Prior to the Effective Time and after consultation
with NationsBank, Charter shall, consistent with GAAP, make such changes and
modifications to its loan, accrual and reserve policies and practices (including
loan classification and allowance for credit losses levels) to bring such
policies and practices into line with those presently followed by NationsBank,
including appropriate increases in its allowance for credit losses; provided,
that all such changes or modifications shall be disregarded in determining the
truth or correctness of the representations and warranties contained herein.
8.17 POST-CLOSING ACTIONS. None of the parties shall take, or permit
any of their Subsidiaries or Affiliates to take, any action after the Closing
that would disqualify the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
8.18 PREPAYMENT OF INDEBTEDNESS. Prior to the Effective Time, Charter
shall have prepaid, or caused its Subsidiaries to prepay, all indebtedness owed
by Charter and its Subsidiaries to (i) American National Insurance Company and
(ii) First City Texas-Houston, N.A.
8.19 WAIVER OF RESTRICTIONS IN INVESTMENT AGREEMENTS. Charter hereby
waives any restrictions or limitations on the investment in or ownership of
Charter or the Charter Capital Stock contained in any agreement between the
parties including (i) the Investment Agreement by and between Charter
Bancshares, Inc. and NCNB Corporation dated as of December 17, 1986 and (ii) the
Investment Agreement by and between Charter Bancshares, Inc. and NCNB
Corporation dated as of November 6, 1987.
32
ARTICLE IX
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each of NationsBank and Charter to effect the Merger
and the other transactions contemplated hereby shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) Stockholders of Charter shall have approved all matters
relating to the Merger required under applicable law at the
Stockholders' Meeting.
(b) This Agreement, the Merger and the other transactions
contemplated hereby shall have been approved by the Federal Reserve
Board, the OCC, the OTS and any other Regulatory Authorities whose
approval is required for consummation of the transactions contemplated
hereby and all applicable waiting periods shall have expired. No such
approval or consent shall be conditioned or restricted in any manner
(including requirements relating to the disposition of assets) which
in the good faith judgment of NationsBank would so adversely impact
the economic or business benefits of the transactions contemplated by
this Agreement that, had such condition or restriction been known, it
would not have entered into this Agreement.
(c) The Registration Statement shall have been declared
effective and shall not be subject to a stop order or any threatened
stop order.
(d) Neither NationsBank nor Charter shall be subject to any
active litigation which seeks any order, decree or injunction of a
court or agency of competent jurisdiction to enjoin or prohibit the
consummation of the Merger.
(e) The shares of NationsBank Common Stock issuable pursuant to
the Merger shall have been authorized for listing on the NYSE upon
official notice of issuance.
(f) Each of NationsBank and Charter shall have received an
opinion of Xxxxxxxxxxx, Xxxxxx and Xxxxx, P.A., tax counsel to
NationsBank, or other counsel to NationsBank reasonably acceptable to
Charter, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code and no
gain or loss will be recognized by the stockholders of Charter to the
extent that they receive NationsBank Common Stock solely in exchange
for their Charter Common Stock and Charter Special Common Stock in the
Merger, which opinion shall be confirmed as of the date of Closing.
9.02 CONDITIONS TO OBLIGATIONS OF CHARTER TO EFFECT THE MERGER. The
obligations of Charter to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of NationsBank set forth in Article VI hereof shall be true
and correct in all material respects as of the date of this Agreement
and as of the Effective Time (as though made on and as of
33
the Effective Time except to the extent such representations and
warranties are by their express provisions made as of a specified
date) and Charter shall have received a certificate signed by the
chairman and chief executive officer, executive vice president or
other duly authorized officer of NationsBank to that effect.
(b) PERFORMANCE OF OBLIGATIONS. NationsBank shall have
performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Effective Time, and
Charter shall have received a certificate signed by the chairman and
chief executive officer, executive vice president or other duly
authorized officer of NationsBank to that effect and as to the absence
of litigation as described in Section 9.01(d).
9.03 CONDITIONS TO OBLIGATIONS OF NATIONSBANK TO EFFECT THE MERGER.
The obligations of NationsBank to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Charter set forth in Article V hereof shall be true and
correct in all material respects as of the date of this Agreement and
as of the Effective Time (as though made on and as of the Effective
Time except to the extent such representations and warranties are by
their express provisions made as of a specified date) and NationsBank
shall have received a certificate signed by the chairman or the chief
executive officer or other duly authorized officer of Charter to that
effect.
(b) PERFORMANCE OF OBLIGATIONS. Charter shall have performed in
all material respects all obligations required to be performed by it
under this Agreement prior to the Effective Time, and NationsBank
shall have received a certificate signed by the chairman or the chief
executive officer or other duly authorized officer of Charter to that
effect and as to the absence of litigation as described in Section
9.01(d).
(c) COMPLETION OF REDEMPTION. Charter shall have completed the
Redemption.
(d) PREPAYMENT OF INDEBTEDNESS. Charter shall have prepaid the
indebtedness described in Section 8.18.
(e) OPINION OF COUNSEL. NationsBank shall have received an
opinion of counsel for Charter addressed to NationsBank and in form
reasonably satisfactory to it as to the validity of (i) the approvals
of the Merger by the directors and stockholders of Charter and (ii)
the Redemption.
ARTICLE X
TERMINATION
10.01 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement, the Merger and
the other transactions contemplated hereby by the stockholders of NationsBank
and Charter or both, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
34
(a) by mutual consent of the Board of Directors of NationsBank
and the Board of Directors of Charter; or
(b) by the Board of Directors of NationsBank or the Board of
Directors of Charter if (i) the Federal Reserve or the OCC has denied
approval of the Merger and such denial has become final and
nonappealable or has approved the Merger subject to conditions that in
the judgment of NationsBank would restrict it or its Subsidiaries or
affiliates in their respective spheres of operations and business
activities after the Effective Time or (ii) the Effective Time does
not occur by December 31, 1996; or
(c) by NationsBank (if it is not in breach of any of its
obligations hereunder) pursuant to notice in the event of a breach or
failure by Charter that would cause a failure of the conditions in
Section 9.03, which breach or failure has not been, or cannot be,
cured within 30 days after written notice of such breach is given to
Charter; or
(d) by Charter (if it is not in breach of any of its obligations
hereunder) pursuant to notice in the event of a breach or failure by
NationsBank that would cause a failure of the conditions in
Section 9.02, which breach or failure has not been, or cannot be,
cured within 30 days after written notice of such breach is given to
NationsBank; or
(e) by NationsBank if the stockholders of Charter fail to
approve the Merger at the Stockholder's Meeting; or
(f) by Charter if (i) there shall not have been a material
breach of any covenant or agreement on the part of Charter under this
Agreement and (ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona
fide Acquisition Proposal that the Charter Board determines in its
good faith judgment and in the exercise of its fiduciary duties, based
as to legal matters on the written opinion of legal counsel and as to
financial matters on the written opinion of an investment banking firm
of national reputation, is more favorable to the Charter stockholders
than the Exchange Ratio and the Merger and that the failure to
terminate this Agreement and accept such alternative Acquisition
Proposal would be inconsistent with the proper exercise of such
fiduciary duties; PROVIDED, HOWEVER, that termination under this
clause (ii) shall not be deemed effective until payment of the
Termination Fee required by Section 8.15; or
(g) By Charter, if its Board of Directors determines by a vote
of a majority of the members of its entire Board, at any time during
the ten-day period commencing two days after the Determination Date,
if either:
(x) both of the following conditions are satisfied:
(1) the Average Closing Price on the Determination
Date of shares of NationsBank Common Stock shall be less
than $56.419; and
(2) (i) the quotient obtained by dividing the Average
Closing Price on the Determination Date by $66.375 (such
number being referred to herein as the "NationsBank Ratio")
shall be less than (ii) the quotient
35
obtained by dividing the Index Price on the Determination
Date by the Index Price on the Starting Date and subtracting
0.15 from the quotient in this clause (x)(2)(ii) (such
number being referred to herein as the "Index Ratio"); or
(y) the Average Closing Price on the Determination Date of
shares of NationsBank Common Stock shall be less than $53.100;
For purposes of this Section 10.01(g), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily
closing sales prices of NationsBank Common Stock as reported on the
NYSE-Composite Transactions List (as reported by THE WALL STREET
JOURNAL or, if not reported thereby, another authoritative source as
chosen by NationsBank) for the ten consecutive full trading days in
which such shares are traded on the NYSE ending at the close of
trading on the Determination Date.
"Determination Date" shall mean the date on which the Federal
Reserve Board (or its delegate) shall have issued its order approving
the Merger.
"Index Group" shall mean the 20 bank holding companies listed
below, the common stocks of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and
before the Determination Date, any public announcement of a proposal
for such company to be acquired or for such company to acquire another
company or companies in transactions with a value exceeding 25% of the
acquiror's market capitalization. In the event that any such company
or companies are removed from the Index Group, the weights (which have
been determined based upon the number of outstanding shares of common
stock) will be redistributed proportionately for purposes of
determining the Index Price. The 20 bank holding companies and the
weights attributed to them are as follows:
36
BANK HOLDING COMPANIES WEIGHTING
---------------------- ---------
Xxxxxxx'x Bancshares, Inc. . . . . . . . . . . . . . . 2.72%
Citicorp . . . . . . . . . . . . . . . . . . . . . . . 9.01
BankAmerica Corporation. . . . . . . . . . . . . . . . 7.84
Chase Manhattan Corporation. . . . . . . . . . . . . . 9.29
X.X. Xxxxxx & Co. Incorporated . . . . . . . . . . . . 3.98
BancOne Corporation. . . . . . . . . . . . . . . . . . 8.29
Norwest Corporation. . . . . . . . . . . . . . . . . . 7.16
First Union Corporation. . . . . . . . . . . . . . . . 5.89
Bank of New York Company . . . . . . . . . . . . . . . 4.09
KeyCorp. . . . . . . . . . . . . . . . . . . . . . . . 5.03
SunTrust Banks, Inc. . . . . . . . . . . . . . . . . . 2.40
Wachovia Corporation . . . . . . . . . . . . . . . . . 3.61
Mellon Bank Corporation. . . . . . . . . . . . . . . . 2.99
First Bank System, Inc.. . . . . . . . . . . . . . . . 2.70
PNC Bank Corp. . . . . . . . . . . . . . . . . . . . . 7.12
First Chicago NBD Corporation. . . . . . . . . . . . . 6.75
Xxxxxxx Xxxxx, Inc.. . . . . . . . . . . . . . . . . . 2.01
Bankers Trust New York Corp. . . . . . . . . . . . . . 1.67
Fleet Financial Group. . . . . . . . . . . . . . . . . 3.00
Corestates Financial Corp. . . . . . . . . . . . . . . 4.44
------
Total . . . . . . . . . . . . . . . . . . . . . . . . 100.00%
------
------
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Index Price on the Starting Date" shall mean $48.67.
"Starting Date" shall mean January 17, 1996.
If any company belonging to the Index Group or NationsBank declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the Starting
Date and the Determination Date, the prices for the common stock of such company
or NationsBank shall be appropriately adjusted for the purposes of applying this
Section 10.01(g).
10.02 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.01, this Agreement shall
become void and have no effect, except that (i) the provisions of Section
8.01(d), 8.15 and Section 11.01 shall survive any such termination and
abandonment; (ii) no party shall be relieved or released from any liability
arising out of an intentional breach of any provision of this Agreement; (iii)
in the event Charter shall have completed the Redemption, at the request of
Charter, NationsBank will purchase up to $700,000 of Charter's 8% subordinated
notes with the shortest maturity and bearing such other terms as shall be
necessary for such indebtedness to qualify for Tier 2 treatment under Federal
Reserve Board risk-based
37
guidelines and (iv) if Charter has prepaid the American National Insurance
Company loan as required by Section 8.18, NationsBank will reimburse Charter
any prepayment premium and, at Charter's request, will make or cause a
Subsidiary to make a loan to Charter in the amount and on substantially the
terms as the prepaid loan.
10.03 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
FOLLOWING THE EFFECTIVE TIME. Except for Articles III and IV and Sections 8.07,
8.08 and 8.17, none of the respective representations, warranties, obligations,
covenants and agreements of the parties shall survive the Effective Time.
ARTICLE XI
GENERAL PROVISIONS
11.01 EXPENSES. Except as provided in Section 8.15, Unless otherwise
agreed by the parties in writing, each party hereto shall bear its own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger and NationsBank shall pay all printing expenses and
filing fees incurred in connection with this Agreement, the Registration
Statement and the Proxy Statement.
11.02 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereunder and thereunder, and such
agreements supersede all prior arrangements or understandings with respect
thereto, 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. Other than Section 8.07, nothing in this Agreement,
expressed or implied, is intended to confer upon any individual, corporation or
other entity, other than NationsBank, Charter and the Bank or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
11.03 AMENDMENTS. To the extent permitted by law, this Agreement may
be amended by a subsequent writing signed by each of NationsBank and Charter;
PROVIDED, HOWEVER, that the provisions hereof relating to the manner or basis in
which shares of Charter Common Stock or Charter Special Common Stock will be
exchanged for the Merger Consideration shall not be amended after the
Stockholders' Meeting without any requisite approval of the holders of the
issued and outstanding shares of Charter capital stock entitled to vote thereon.
11.04 WAIVERS. Prior to or at the Effective Time, each of
NationsBank and Charter shall have the right to waive any default in the
performance of any term of this Agreement by the other, to waive or extend the
time for the compliance or fulfillment by the other of any and all of the
other's obligations under this Agreement and to waive any or all of the
conditions precedent to its obligations under this Agreement, except any
condition which, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
11.05 NO ASSIGNMENT. None of the parties hereto may assign any of
its rights or delegate any of its obligations under this Agreement to any other
person or entity. Any such purported
38
assignment or delegation that is made without the prior written consent of
the other parties to this Agreement shall be void and of no effect.
11.06 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, or by registered or certified mail, postage
prepaid to the persons at the addresses set forth below (or at such other
address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Charter: Charter Bancshares, Inc.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Finger, Chairman
Telecopy: (000) 000-0000
Copy to Counsel: L. Xxxxxxx Xxxxxx III
Xxxxx & Xxxxx, L.L.P.
Xxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Xxxxxxx X. Xxx
General Counsel
Charter Bancshares, Inc.
0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
NationsBank: NationsBank Corporation
XxxxxxxXxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Executive Vice President
Telecopy: (000) 000-0000
Copy to Counsel: NationsBank Corporation
NationsBank Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
General Counsel
Telecopy: (000) 000-0000
11.07 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of either party to fulfill any of its covenants and agreements
hereunder, including the failure to take all
39
such actions as are necessary on its part to cause the consummation of the
Merger, will cause irreparable injury for which damages, even if available,
will not be an adequate remedy. Accordingly, each party hereby consents to
the issuance of injunctive relief by any court of competent jurisdiction to
compel performance of the other party's obligations or any arbitration award
hereunder and to the granting by any such court of the remedy of the specific
performance hereunder.
11.08 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of Delaware.
11.09 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.10 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.11 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement, or in any other instrument referred to
herein, shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
IN WITNESS WHEREOF, NationsBank and Charter have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
NATIONSBANK CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Executive Vice President
CHARTER BANCSHARES, INC.
By: /s/ Xxxxx X. Finger
-------------------------------------
Chairman and Chief Executive Officer
40
