EXHIBIT 7.8(b)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement"), dated as of May 1, 1999, is
between National Commerce Bancorporation ("NCBC") and First Financial
Corporation ("FFC").
RECITALS
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FFC and NCBC have executed an Agreement and Plan of Merger ("Merger
Agreement"), of even date with this Agreement, under which FFC will be merged
into NCBC upon completion of the merger ("Merger") contemplated in the Merger
Agreement.
By negotiating and executing the Merger Agreement and by taking actions
necessary or appropriate to effect the transactions contemplated by the Merger
Agreement, NCBC has incurred and will incur substantial direct and indirect
costs (including, without limitation, the costs and management and employee
time) and will forgo the pursuit of certain alternative investments and
transactions.
AGREEMENT
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THEREFORE, in consideration of the promises set forth in this Agreement and
in the Merger Agreement, the parties agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth in this
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Agreement, FFC irrevocably grants an option ("Option") to NCBC to purchase that
number of authorized but unissued shares of FFC's Common Stock, $2.50 par value
per share ("FFC Common Stock"), such that immediately following such purchase
NCBC would own 19.5% of the then issued and outstanding shares (as adjusted as
set forth herein) of FFC Common Stock after giving effect to the exercise of the
Option at a per share price in cash (or immediately available funds) equal to
two times the book value of a share of FFC Common Stock as of March 31, 1999
("Option Price").
2. Exercise of Option. Subject to the provisions of this Section 2 and of
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Section 13(a) of this Agreement, this Option may be exercised by NCBC as set
forth in Section 5 of this Agreement, in whole only, at any time, in any of the
following circumstances:
(a) FFC or its board of directors enters into an agreement or recommends to
FFC shareholders an agreement (other than the Merger Agreement) under
which any entity, person or group (collectively, "Person"), within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), would: (1) merge or consolidate with, acquire
9.9% or more of the assets or liabilities of, or enter into any similar
transaction with FFC, or (2) purchase or otherwise acquire (including
by merger, reorganization, consolidation, share exchange or any similar
transaction) securities representing 9.9% or more of FFC's
voting shares;
(b) any Person (other than NCBC or any of its subsidiaries) acquires the
beneficial ownership or the right to acquire beneficial ownership of
securities which, when aggregated with other such securities owned by
such Person, represents 25% or more of the voting shares of FFC (the
term "beneficial ownership" for purposes of this Agreement has the
meaning set forth in Section 13(d) of the Exchange Act, and the
regulations promulgated under the Exchange Act);
(c) after having received a fairness opinion from its financial advisor
that the transaction is fair to FFC shareholders from a financial point
of view, failure of the board of directors of FFC to recommend the
Merger to the shareholders at the time of the calling of the special
meeting of the shareholders pursuant to the Merger Agreement; or
(d) failure of the shareholders to approve by the earliest of (1) the
termination of the Merger Agreement or (2) November 30, 1999, the
Merger by the required affirmative vote at a meeting of the
shareholders, because a third Person (other than NCBC or a subsidiary
of NCBC announces publicly or communicates, in writing, to FFC a
proposal to (1) acquire FFC(by merger, reorganization, consolidation,
the purchase of 9.9% or more of its assets or liabilities, or any other
similar transaction), (2) purchase or otherwise acquire securities
representing 9.9% or more of the voting shares of FFC or (3) change the
composition of the board of directors of FFC.
It is understood and agreed that the Option will become exercisable on
the occurrence of any of the above-described circumstances even though the
circumstance occurred as a result, in part or in whole, of the board of FFC
complying with its fiduciary duties.
Notwithstanding the foregoing, the Option may not be exercised if
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either (1) any applicable and required governmental approvals have not been
obtained with respect to such exercise or if such exercise would violate any
applicable regulatory restrictions, or (2) at the time of exercise, NCBC is
failing in any material respect to perform or observe its material covenants or
conditions under the Merger Agreement, unless the reason for such failure is
that FFC is failing to perform or observe its covenants or conditions under the
Merger Agreement.
3. Notice, Time and Place of Exercise. When NCBC wishes to exercise the
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Option, NCBC will give written notice of its intention to exercise the Option
and the place and date for the closing of the exercise (which date may not be
later than ten business days from the date such notice is mailed). If any law,
regulation or other restriction will not permit such exercise to be consummated
during this ten-day period, the date for the closing of such exercise will be
within five days following the cessation of the restriction on consummation.
4. Payment and Delivery of Certificate(s). At the closing for the
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exercise of the Option or any portion thereof, (a) NCBC and FFC will each
deliver to the other certificates as to
the accuracy, as of the closing date, of their respective representations and
warranties under this Agreement, (b) NCBC will pay the aggregate purchase price
for the shares of FFC Common Stock to be purchased by delivery of a certified or
bank cashier's check in immediately available funds payable to the order of FFC,
and (c) FFC will deliver to NCBC a certificate or certificates representing the
shares so purchased.
5. Transferabilily of the Option and Option Shares. Before the Option, or
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a portion of the Option, becomes exercisable in accordance with the provisions
of Section 2 of this Agreement, neither the Option nor any portion of the Option
will be transferable.
6. Representations, Warranties and Covenants of FFC. FFC represents and
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warrants to NCBC as follows:
(a) Due Authorization. This Agreement has been duly authorized by all
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necessary corporate action on the part of FFC, has been duly executed
by a duly authorized officer of FFC and constitutes a valid and
binding obligation of FFC. No shareholder approval by FFC shareholders
is required by applicable law or otherwise before the exercise of the
Option in whole or in part.
(b) Option Shares. FFC has taken all necessary corporate and other action
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to authorize and reserve and to permit it to issue and, at all times
from the date of this Agreement to such time as the obligation to
deliver shares under this Agreement terminates, will have reserved for
issuance, at the closing(s) upon exercise of the Option, the Option
Shares (subject to adjustment, as provided in Section 8 below), all of
which, upon issuance under this Agreement, will be duly and validly
issued, fully paid and nonassessable, and will be delivered free and
clear of all claims, liens, encumbrances and security interests,
including any preemptive right of any of the shareholders of FFC.
(c) No Conflicts. Neither the execution and delivery of this Agreement nor
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the consummation of the transactions contemplated by it will violate
or result in any violation of or be in conflict with or constitute a
default under any term of the charter or bylaws of FFC or any
agreement, instrument, judgment, decree, law, rule or order applicable
to FFC or any subsidiary of FFC or to which FFC or any such subsidiary
is a party.
(d) Notification of Record Date. At any time from and after the date of
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this Agreement until the Option is no longer exercisable, FFC will
give NCBC 30 days prior written notice before setting the record date
for determining the holders of record of the FFC Common Stock entitled
to vote on any matter, to receive any dividend or distribution or to
participate in any rights offering or other matters, or to receive any
other benefit or right, with respect to the FFC Common Stock.
7. Representations, Warranties and Covenants of NCBC. NCBC represents and
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warrants to FFC as follows:
(a) Due Authorization. This Agreement has been duly authorized by all
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necessary corporate action on the part of NCBC, has been duly executed
by a duly authorized officer of NCBC and constitutes a valid and
binding obligation of NCBC.
(b) Transfers of Common Stock. No shares of FFC Common Stock acquired upon
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exercise of the Option will be transferred except in a transaction
registered or exempt from registration under any applicable securities
laws.
(c) No Conflicts. Neither the execution and delivery of this Agreement nor
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the consummation of the transactions contemplated by it will violate
or result in any violation of or be in conflict with or constitute a
default under any term of the charter or bylaws of NCBC or any
agreement, instrument, judgment, decree, law, rule or order applicable
to NCBC or any subsidiary of NCBC or to which NCBC or any such
subsidiary is a party.
8. Adjustment Upon Changes in Capitalization. In the event of any change
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in the FFC Common Stock by reason of stock dividends, split-ups, mergers,
reorganizations, recapitalizations, combinations, exchanges of shares or the
like, the number and kind of shares or securities subject to the Option and the
purchase price per share of Common Stock will be appropriately adjusted. If,
before the Option terminates or is exercised, FFC is acquired by another party,
consolidates with or merges into another corporation or liquidates, NCBC will
thereafter receive, upon exercise of the Option, the securities or properties to
which a holder of the number of shares of Common Stock then deliverable upon the
exercise thereof would have been entitled upon such acquisition, consolidation,
merger, reorganization or liquidation, and FFC will take all steps in connection
with such acquisition, consolidation, merger, reorganization or liquidation as
may be necessary to assure that the provisions of this Agreement will thereafter
be applicable, as nearly as reasonably may be practicable, in relation to any
securities or property thereafter deliverable upon exercise of the Option.
9. Nonassignability. This Agreement binds and inures to the benefit of
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the parties and their successors. This Agreement is not assignable by either
party.
10. Regulatory Restrictions. FFC will use its best efforts to obtain or to
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cooperate with NCBC in obtaining all necessary regulatory consents, approvals,
waivers or other action (whether regulatory, corporate or other) to permit the
acquisition of any or all Option Shares by NCBC.
11. Remedies. For the purposes of this Agreement, NCBC's sole remedy
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hereunder shall be limited to the exercise of the option herein granted.
12. No Rights as Shareholder. This Option, before it is exercised, will
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not entitle its holder to any rights as a shareholder of FFC at law or in
equity. Specifically, this Option, before it is exercised, will not entitle the
holder to vote on any matter presented to the shareholders of FFC or, except as
provided in this Agreement, to any notice of any meetings of shareholders or any
other proceedings of FFC.
13. Miscellaneous.
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(a) Termination. This Agreement and the Option will terminate upon the
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earliest of (1) the mutual agreement of the parties to this Agreement; (2) the
30th day following the termination of the Merger Agreement for any reason other
than a material noncompliance or default by NCBC with respect to its obligations
under it; or (3) the date of termination of the Merger Agreement if the
termination is due to a material noncompliance or default by NCBC with respect
to its obligations under it; but if the Option has been exercised before the
termination of this Agreement, then the exercise will close under Section 4 of
this Agreement, even though that closing date is after the termination of this
Agreement. The Option granted under this Agreement shall only be exercisable one
(1) time.
(b) Amendments. This Agreement may not be modified, amended, altered or
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supplemented, except upon the execution and delivery of a written agreement
executed by the parties.
(c) Severabilily of Terms. Any provision of this Agreement that is invalid,
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illegal or unenforceable is ineffective only to the extent of the invalidity,
illegality or unenforceability without affecting in any way the remaining
provisions or rendering any other provisions of this Agreement invalid, illegal
or unenforceable. Without limiting the generality of the foregoing, if the right
of NCBC to exercise the Option in full for the total number of shares of FFC
Common Stock or other securities or property issuable upon the exercise of the
Option is limited by applicable law, or otherwise, NCBC may, nevertheless,
exercise the Option to the fullest extent permissible.
(d) Notices. All notices, requests, claims, demands and other
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communications under this Agreement must be in writing and must be given (and
will be deemed to have been duly received if so given) by delivery, by cable,
telecopies or telex, or by registered or certified mail, postage prepaid, return
receipt requested, to the respective parties at the addresses below, or to such
other address as either party may furnish to the other in writing. Change of
address notices will be effective upon receipt.
If to FFC to: First Financial Corporation
0000 Xx. Xxxxxx Xxxx
Xx. Xxxxxx, XX 00000
Attn: Xxxxx Xxxxx, President
and Chief Executive Officer
Fax: (000) 000-0000
Phone: (000) 000-0000
with a copy to: Xxxxxx X. Small
Attorney at Law
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Phone: (000) 000-0000
If to NCBC to: National Commerce Bancorporation
Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
and
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Xxxxxxx X. Xxxxx
Vice President and General Counsel
Fax: (000) 000-0000
Phone: (000) 000-0000
(a) Governing Law and Venue. The parties intend this Agreement and the
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Option, in all respects, including all matters of construction,
validity and performance, to be governed by the laws of the State of
Tennessee, without giving effect to conflicts of law principles. Any
actions brought by either party against the other arising under this
Agreement must be filed in Xxxxxx County, Tennessee, and each party
consents to personal jurisdiction in Xxxxxx County.
(b) Counterparts. This Agreement may be executed in several counterparts,
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including facsimile counterparts, each of which is an original, and
all of which together constitute one and the same agreement.
(c) Effects of Headings. The section headings in this Agreement are for
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convenience only and do not affect the meaning of its provisions.
NATIONAL COMMERCE BANCORPORATION
By: /s/ Xxxxxxx X. Xxxx, Xx.
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Xxxxxxx X. Xxxx, Xx.
Vice Chairman
FIRST FINANCIAL CORPORATION
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
President and Chief Executive Officer
