Exhibit 2.2(b)
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated March 17, 2000, between
National Commerce Bancorporation, a Tennessee corporation
("Issuer"), and CCB Financial Corporation, a North Carolina
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an
Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), which agreement has been executed by the parties
hereto immediately prior to this Stock Option Agreement (the
"Agreement"); and
WHEREAS, as a condition to Grantee's entering into the
Merger Agreement and in consideration therefor and for Grantee's
entering into the CCB Option Agreement, Issuer has agreed to
grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements set forth herein and in the
Merger Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 21,527,748 fully paid and nonassessable
shares of Issuer's Common Stock, par value $2.00 per share
("Common Stock"), at a price of $20.3125 per share (the "Option
Price"); provided, however, that in no event shall the number of
shares of Common Stock for which this Option is exercisable
exceed 19.9% of the Issuer's issued and outstanding shares of
Common Stock without giving effect to any shares subject to or
issued pursuant to the Option. The number of shares of Common
Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the
date of this Agreement (other than pursuant to this Agreement) or
(ii) redeemed, repurchased, retired or otherwise cease to be
outstanding after the date of the Agreement, the number of shares
of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such
number equals 19.9% of the number of shares of Common Stock then
issued and outstanding without giving effect to any shares
subject or issued pursuant to the Option. Nothing contained in
this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise
the Option, in whole or part, and from time to time, if, but only
if, both an Initial Triggering Event (as hereinafter defined) and
a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within 90 days following such
Subsequent Triggering Event. Each of the following shall be an
"Exercise Termination Event": (i) the Effective Time (as defined
in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial
Triggering Event, except a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by
Issuer giving rise to such right of termination is non-
volitional); or (iii) the passage of 12 months after termination
of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by
Grantee pursuant to Section 8.1(d) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of
termination is non-volitional) (provided that if an Initial
Triggering Event continues or occurs beyond such termination and
prior to the passage of such 12-month period, the Exercise
Termination Event shall be 12 months from the expiration of the
Last Triggering Event but in no event more than 18 months after
such termination). The "Last Triggering Event" shall mean the
last Initial Triggering Event to expire. The term "Holder" shall
mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of
the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person
(the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the rules and regulations thereunder) other than Grantee or any
of its Subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the Shareholders
of Issuer approve or accept any Acquisition Transaction. For
purposes of this Agreement, "Acquisition Transaction" shall mean
(w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC")) of Issuer, (x) a purchase, lease
or other acquisition or assumption of all or a substantial
portion of the assets or deposits of Issuer or any Significant
Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting
power of Issuer, or (z) any substantially similar transaction;
provided, however, that in any event neither the Piedmont Merger
nor any merger, consolidation, purchase or similar transaction
involving (A) only the Issuer and one or more of its Subsidiaries
or involving only any two or more of such Subsidiaries, provided
that any such transaction is not entered into in violation of the
terms of the Merger Agreement, or (B) any pending acquisition by
Issuer disclosed by Issuer in its disclosure schedule delivered
to Grantee in connection with entering into the Merger Agreement
and consummated pursuant to such disclosed terms, be deemed to be
an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have authorized,
recommended, proposed or publicly announced its intention to
authorize, recommend or propose, to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee
Subsidiary, or the Board of Directors of Issuer shall have
publicly withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the Shareholders of Issuer approve the
transactions contemplated by the Merger Agreement in anticipation
of engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary
capacity in the ordinary course of its business shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of
the 1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its
Shareholders by public announcement or written communication that
is or becomes the subject of public disclosure to engage in an
Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or
its Shareholders to engage in an Acquisition Transaction, Issuer
shall have breached any covenant or obligation contained in the
Merger Agreement and such breach (x) would entitle Grantee to
terminate the Merger Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after
the date hereof:
(i) The acquisition by any person of beneficial ownership
of 20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (b) of this Section 2,
except that the percentage referred to in clause (y) shall be
20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent
Triggering Event of which it has notice (together, a "Triggering
Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice
(the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing
Date"); provided that if prior notification to or approval of the
Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall promptly file
the required notice or application for approval and shall
expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained
and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase
price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this
Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of
Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended
(the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form
and substance reasonably satisfactory to Issuer, to the effect
that such legend is not required for purposes of the 1933 Act;
(ii) the reference to the provisions to this Agreement in the
above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection
(e) of this Section 2 and the tender of the applicable purchase
price in immediately available funds, the Holder shall be deemed,
subject to the receipt of applicable regulatory approvals, to be
the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing
such shares of Common Stock shall not then be actually delivered
to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name
of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option
may be exercised without additional authorization of Common Stock
after giving effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock; (ii) that
it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions
to be observed or performed hereunder by Issuer; (iii) promptly
to take all action as may from time to time be required
(including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C.
18a and regulations promulgated thereunder and (y) in the
event, under the Bank Holding Company Act of 1956, as amended
(the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to
the Federal Reserve Board or to any state regulatory authority is
necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such
state regulatory authority as they may require) in order to
permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and
(iv) promptly to take all action provided herein to protect the
rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of
Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated,
Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed
or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares
of Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares of
Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on
or in respect of the Common Stock, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof
and the Option Price shall be appropriately adjusted in such
manner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations
hereunder.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall,
at the request of Grantee delivered within 90 days of such
Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration
statement under the 1933 Act covering this Option and any shares
issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to
become effective and remain current in order to permit the sale
or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best
efforts to cause such registration statement first to become
effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first
becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee
shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as
provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters,
of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option
Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that
after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold
by the Holder and Issuer in the aggregate; and provided further,
however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as
practical and no reduction shall thereafter occur. Each such
Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with
such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof
to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two
registrations pursuant to this Section 6 by reason of the fact
that there shall be more than one Grantee as a result of any
assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request of
the Holder, delivered prior to an Exercise Termination Event,
Issuer (or any successor thereto) shall repurchase the Option
from the Holder at a price (the "Option Repurchase Price") equal
to the amount by which (A) the Market/Offer Price (as defined
below) exceeds (B) the Option Price, multiplied by the number of
shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the
"Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase
such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price")
equal to the Market/Offer Price multiplied by the number of
Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at
which a tender offer or exchange offer therefor has been made,
(ii) the price per share of Common Stock to be paid by any third
party pursuant to an agreement with Issuer, (iii) the highest
closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice
of the required repurchase of Option Shares, as the case may be,
or (iv) in the event of a sale of all or a substantial portion of
Issuer's assets, the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may
be, and reasonably acceptable to the Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the Market/Offer Price, the
value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to
the Issuer.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and
any Option Shares pursuant to this Section 7 by surrendering for
such purpose to Issuer, at its principal office, a copy of this
Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer
to repurchase this Option and/or the Option Shares in accordance
with the provisions of this Section 7. Within the latter to
occur of (x) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is not so
prohibited from delivering, within five business days after the
date on which Issuer is not so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 7 is
prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal
approvals and to file any required notices, in each case as
promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price or the
Option Share Repurchase Price that Issuer is not prohibited from
delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the
Holder to purchase that number of shares of Common Stock obtained
by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator
of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation or similar transaction involving Issuer or
any purchase, lease or other acquisition of all or a substantial
portion of the assets of Issuer, other than any such transaction
which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or more
of the then outstanding shares of Common Stock, provided that no
such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares
under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge
into Issuer and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of
Common Stock shall after such merger represent less than 50% of
the outstanding voting shares and voting share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee
or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision
so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein,
be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person
that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Issuer
(if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving person, and (iii) the transferee
of all or substantially all of Issuer's assets.
(B) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of
the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock
for the one year immediately preceding the
consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer
is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of
common stock issued by the person merging into Issuer
or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common Stock
for which the Option is then exercisable, divided by the Average
Price. The exercise price of the Substitute Option per share of
Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of
shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the shares of Substitute Common Stock outstanding
prior to exercise of the Substitute Option. In the event that
the Substitute Option would be exercisable for more than 19.9% of
the shares of Substitute Common Stock outstanding prior to
exercise but for this clause (e), the issuer of the Substitute
Option (the "Substitute Option Issuer") shall make a cash payment
to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in
value shall be determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may
be, and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described
in subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute
Option Holder at a price (the "Substitute Option Repurchase
Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of
the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then
be exercised, and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute
Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The
term "Highest Closing Price" shall mean the highest closing price
for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives
notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of
the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to
require the Substitute Option Issuer to repurchase the Substitute
Option and the Substitute Shares pursuant to this Section 9 by
surrendering for such purpose to the Substitute Option Issuer, at
its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by
a written notice or notices stating that the Substitute Option
Holder or the Substitute Share Owner, as the case may be, elects
to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with
the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of
the Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating
thereto, the Substitute Option Issuer shall deliver or cause to
be delivered to the Substitute Option Holder the Substitute
Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or, in either case,
the portion thereof which the Substitute Option Issuer is not
then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing
the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner
and thereafter deliver or cause to be delivered, from time to
time, to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is not prohibited from
delivering, within five business days after the date on which the
Substitute Option Issuer is not so prohibited; provided, however,
that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation from
delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts
to obtain all required regulatory and legal approvals, in each
case as promptly as practicable, in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share
Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option
Holder or Substitute Share Owner, as appropriate, that portion of
the Substitute Option Repurchase Price or the Substitute Share
Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock
obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered
to the Substitute Option Holder and the denominator of which is
the Substitute Option Repurchase Price, or (B) to the Substitute
Share Owner, a certificate for the Substitute Common Shares it is
then so prohibited from repurchasing.
10. The 90-day, or 6-month periods for exercise of certain
rights under Sections 2, 6, 7, 13 and 15 shall be extended: (i)
to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, for the expiration of all statutory
waiting periods; (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise;
and (iii) during any period in which Grantee is precluded from
exercising such rights due to an injunction or other legal
restriction, plus in each case such additional period as is
reasonably necessary for the exercise of such rights promptly
following the obtaining of such approvals or the expiration of
such periods.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon
the exercise of the Option, that number of shares of Common Stock
equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and
clear of all claims, liens, encumbrance and security interests
and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority
to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly
executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock
or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express
written consent of the other party, except that in the event a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as provided in Section
10); provided, however, that until the date 15 days following the
date on which the Federal Reserve Board approves an application
by Grantee under the BHCA to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under
the Option except in (i) a widely dispersed public distribution,
(ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii)
an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf, or (iv) any other manner
approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement,
including without limitation making application to authorize for
quotation the shares of Common Stock issuable hereunder on the
National Market System of the Nasdaq Stock Market, Inc. upon
official notice of issuance and applying to the Federal Reserve
Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state
banking authorities for approval to acquire the shares of Common
Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
15. (a) Grantee in its sole discretion may, at any time
during which Issuer would be required to repurchase the Option or
any Option Shares pursuant to Section 7, surrender the Option
(together with any Option Shares issued to and then owned by the
Holder) to Issuer in exchange for a cash payment equal to the
Surrender Price (as defined herein); provided, however, that
Grantee may not exercise its rights pursuant to this Section 15
if Issuer has previously repurchased the Option (or any portion
thereof) or any Option Shares pursuant to Section 7. The
"Surrender Price" shall be equal to (i) $45,000,000, plus (ii) if
applicable, the aggregate purchase price previously paid pursuant
hereto by Grantee with respect to any Option Shares, minus (iii)
if applicable, the excess of (A) the net cash, if any, received
by Grantee pursuant to the arm's-length sale of Option Shares (or
any other securities into which such Option Shares were converted
or exchanged) to any party not affiliated with Grantee, over (B)
the purchase price paid by Grantee with respect to such Option
Shares.
(b) Grantee may exercise its right to surrender the Option
and any Option Shares pursuant to this Section 15 by surrendering
for such purchase to Issuer, at its principal office, a copy of
this Agreement, together with certificates for Option Shares, if
any, accompanied by a written notice stating (i) that Grantee
elects to surrender the Option and Option Shares, if any, in
accordance with the provisions of this Section 15 and (ii) the
Surrender Price. Within two business days after the surrender of
the Option and the Option Shares, if applicable, Issuer shall
deliver or cause to be delivered to Grantee the Surrender Price.
(c) To the extent that the Issuer is prohibited under
applicable law or regulation from paying the Surrender Price to
Grantee in full, Issuer shall immediately so notify Grantee and
thereafter deliver, or cause to be delivered, from time to time,
to Grantee, that portion of the Surrender Price that Issuer is
not or no longer prohibited from paying, within two business days
after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a
notice of Surrender pursuant to Section 15(b) is prohibited under
applicable law or regulation from paying to Grantee the Surrender
Price in full, (i) Issuer shall (A) use its best efforts to
obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to make
such payments, (B) within two business days of the submission or
receipt of any documents relating to any such regulatory and
legal approvals, provide Grantee with copies of the same, and (C)
keep Grantee advised of both the status of any such request for
regulatory and legal approvals and any discussions with any
relevant regulatory or other third party reasonably related to
the same, and (ii) Grantee may revoke such notice of surrender by
delivery of a notice of revocation, the Exercise Termination
Event shall be extended to a date six months from the date on
which the Exercise Termination Event would have occurred if not
for the provisions of this Section 15(c) (during which period
Grantee may exercise any of its rights hereunder, including any
and all rights pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to
those set forth in paragraphs (a), (b) and (c) of this Section 15
with respect to the Substitute Option and the Substitute Option
Issuer during any period in which the Substitute Option Issuer
would be required to repurchase the Substitute Option pursuant to
Section 9.
16. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
17. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that the Holder is not permitted to
acquire, or Issuer or Substitute Option Issuer, as the case may
be, is not permitted to repurchase pursuant to Section 7 or
Section 9, as the case may be, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), or Issuer or Substitute
Option Issuer is not permitted to pay the full Surrender Price,
it is the express intention of Issuer (which shall be binding on
the Substitute Option Issuer) to allow the Holder to acquire or
to require Issuer or the Substitute Option Issuer, as the case
may be, to repurchase such lesser number of shares, or to pay
such portion of the Surrender Price, as may be permissible,
without any amendment or modification hereof.
18. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given
when delivered in person, by cable, telegram, telecopy or telex,
or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set
forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles
of conflicts of laws thereof (except to the extent that mandatory
provisions of federal or Tennessee law apply).
20. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
21. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses
of its own financial consultants, investment bankers, accountants
and counsel.
22. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided
herein.
23. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the
Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
NATIONAL COMMERCE BANCORPORATION
By:
CCB FINANCIAL CORPORATION
By:
