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EXHIBIT 4.1
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated June 16, 1999 between CNB
Bancshares, Inc., an Indiana corporation ("ISSUER"), and Fifth Third Bancorp,
an Ohio corporation ("GRANTEE").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Affiliation
Agreement of even date herewith (the "AFFILIATION AGREEMENT"), which agreement
has been executed by the parties hereto concurrently with this Stock Option
Agreement (the "AGREEMENT"); and
WHEREAS, as a condition to Grantee's entering into the
Affiliation Agreement and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Affiliation
Agreement, the parties hereto agree as follows:
1. THE OPTION. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "OPTION") to purchase, subject to the
terms hereof, up to 6,921,479 fully paid and nonassessable shares of Issuer's
common stock, without par value (the "COMMON STOCK"), at a price of $42.96 per
share (the "OPTION Price"); PROVIDED, however, that in the event Issuer issues
or agrees to issue any shares of Common Stock (other than as permitted under
the Affiliation Agreement) at a price less than the Option Price (as adjusted
pursuant to Section 5), the Option Price shall be equal to such lesser price;
PROVIDED, further, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock at the time of exercise without giving
effect to any shares subject or issued pursuant to the Option. The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price is subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement and other than an event described in
Section 5 hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number (including the
number of shares theretofor issued pursuant to this Option) equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer to breach any provision of the Affiliation Agreement.
2. EXERCISE; CLOSING. (a) The Holder (as defined below) may
exercise the Option, in whole or part, and from time to time, if, but only if,
both an Initial Triggering Event (as defined below) and a Subsequent Triggering
Event (as defined below) shall have occurred
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prior to the occurrence of an Exercise Termination Event (as defined below),
PROVIDED that the Holder shall have sent written notice of such exercise (as
provided in subsection (f) of this Section 2) within 180 days following such
Subsequent Triggering Event (or such later period as provided in Section 10).
(b) Each of the following shall be an "EXERCISE TERMINATION
EVENT":
(i) the Effective Time (as defined in the
Affiliation Agreement) of the Merger;
(ii) termination of the Affiliation Agreement in
accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event, except a
termination by Grantee pursuant to Section VIII.A.1. of the
Affiliation Agreement (provided that the breach by Issuer giving rise
to the termination by Grantee under Section VIII.A.1. of the
Affiliation Agreement was willful (a "Listed Termination")); or
(iii) the passage of 18 months after termination of
the Affiliation Agreement (or such later period as provided in Section
10) if such termination (A) follows or is concurrent with the
occurrence of an Initial Triggering Event or (B) is a Listed
Termination.
The term "HOLDER" shall mean Grantee and any other person
that shall become a holder of the Option in accordance with the terms of this
Agreement. Notwithstanding anything to the contrary contained herein, this
Agreement shall automatically terminate upon the proper termination of the
Affiliation Agreement by Issuer pursuant to Section VIII.A.1. thereof.
(c) The term "INITIAL TRIGGERING EVENT" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission (the "SEC")) (each an "ISSUER SUBSIDIARY"),
without having received Grantee's prior written consent, shall have
entered into an agreement to engage in an Acquisition Transaction (as
defined below) 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
"EXCHANGE 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
stockholders of Issuer approve or accept any Acquisition Transaction
(other than the Merger referred to in the Affiliation Agreement). For
purposes of this Agreement, "ACQUISITION TRANSACTION" shall mean (x) a
merger or consolidation, or any similar transaction, involving Issuer
or any Significant Subsidiary of Issuer, (y) a purchase, lease or
other acquisition or assumption of all or a substantial portion of the
assets or deposits of Issuer or all or substantially all of the assets
or deposits of any Significant Subsidiary of Issuer, (z) a purchase or
other acquisition
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(including by way of merger, consolidation, share exchange or
otherwise) of beneficial ownership (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the Exchange Act, and the rules and regulations
thereunder) of securities representing 10% or more of the voting power
of Issuer or more than 10% of any Significant Subsidiary of Issuer;
PROVIDED, however, that in no event shall any merger, consolidation,
purchase or similar transaction involving only the Issuer and one or
more of its wholly-owned Subsidiaries or involving only any two or more
of such wholly-owned Subsidiaries, be deemed to be an Acquisition
Transaction, if such transaction is not entered into in violation of
the terms of the Affiliation Agreement;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have authorized,
recommended, proposed or publicly announced its intention to
authorize, recommend or propose, to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary
or shall have authorized or engaged in, or announced its intention to
authorize or engage in, any negotiations regarding an Acquisition
Transaction with any person other than the Grantee or a Grantee
Subsidiary, or the Board of Directors of Issuer shall have failed to
recommend or shall have publicly withdrawn or modified, or publicly
disclosed that, in the absence of the Option it would withdraw or
modify, or publicly announced its intention to withdraw or modify, in
any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the Merger;
(iii) The shareholders of Issuer shall have voted
and failed to approve the Merger and the plan of merger contained in
the Affiliation Agreement at a meeting which has been held for that
purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Affiliation Agreement or
shall have been canceled prior to termination of the Affiliation
Agreement if, prior to such meeting (or if such meeting shall not have
been held or shall have been canceled, prior to such termination), any
person (other than the Grantee or a Grantee Subsidiary) shall have
made a proposal to Issuer or its stockholders by public announcement
or written communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(iv) (a) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in
the ordinary course of its business, shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 10% or more
of the then outstanding shares of Common Stock or (b) any group (the
term "GROUP" having the meaning assigned in Section 13(d)(3) of the
Exchange Act), other than a group of which the Grantee or any Grantee
Subsidiary is a member, shall have been formed that beneficially owns
10% or more of the shares of Common Stock then outstanding;
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(v) Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to Issuer or its
stockholders to engage in an Acquisition Transaction and such proposal
shall have been publicly announced;
(vi) After a proposal is made by a third party to
Issuer or its stockholders to engage in an Acquisition Transaction or
such third party states its intention to make such a proposal if the
Affiliation Agreement terminates, Issuer shall have willfully breached
any covenant or obligation contained in the Affiliation Agreement and
such breach would entitle Grantee to terminate the Affiliation
Agreement (without regard to the cure period provided for therein); or
(vii) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed with any
federal or state regulatory or governmental authority an application
for approval or notice of intention to engage in an Acquisition
Transaction.
(d) The term "SUBSEQUENT TRIGGERING EVENT" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person or by a group
other than Grantee, any Grantee Subsidiary or any Issuer Subsidiary
acting in a fiduciary capacity in the ordinary course of its business,
of beneficial ownership of 25% or more of the then outstanding Common
Stock; or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (c) of this Section 2, except
that references to 10% in clause (z) shall be 25%.
(e) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "TRIGGERING EVENT"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(f) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), it shall send to Issuer a written
notice (the date of which being herein referred to as the "NOTICE Date")
specifying (i) the total number of shares it will purchase pursuant to such
exercise and the aggregate purchase price as provided herein and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "CLOSING DATE");
PROVIDED 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
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periods shall have passed. Any exercise of the Option shall be deemed to occur
on the Notice Date relating thereto.
(g) At the closing referred to in subsection (f) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer and present and surrender this Agreement to Issuer at its principal
executive offices; PROVIDED that failure or refusal of Issuer to designate such
a bank account shall not preclude the Holder from exercising the Option.
(h) At such closing subject to any regulatory notification
and/or approval having been made or given and being in full force and effect,
simultaneously with the delivery of immediately available funds as provided in
subsection (g) of this Section 2, Issuer shall deliver to the Holder a
certificate or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part only, a
new Option evidencing the rights of the Holder thereof to purchase the balance
of the shares of Common Stock purchasable hereunder, and the Holder shall
deliver to Issuer this Agreement and a letter agreeing that the Holder will not
offer to sell or otherwise dispose of such shares in violation of applicable
law or the provisions of this Agreement.
(i) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate
is subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Holder shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance reasonably satisfactory to Issuer, to the effect that
such legend is not required for purposes of the Securities Act; (ii) the
reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares of Common Stock delivered pursuant hereto have been sold or transferred
in compliance with the provisions of this Agreement under circumstances that do
not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
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(j) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (f) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed, subject to the receipt of any
necessary regulatory approvals, to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates representing
such shares of Common Stock shall not then be actually delivered to the Holder.
Issuer shall pay all expenses, and any and all United States federal, state and
local taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its permitted assignee, transferee or designee.
3. COVENANTS OF ISSUER. In addition to its other agreements
and covenants herein, Issuer agrees: (i) that it shall at all times maintain,
free from subscriptive or preemptive rights, sufficient authorized but unissued
or treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA") or the Change in Bank Control Act of 1978, as
amended, or any state or other federal banking law, prior approval of or notice
to the Federal Reserve Board or to any state or other federal regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state or other federal
regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer to duly and effectively issue shares of Common
Stock pursuant hereto; (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution; and (v) not to enter or
agree to enter into any Acquisition Transaction unless the other party or
parties thereto agree to assume in writing all of Issuer's obligations
hereunder; PROVIDED that nothing in this Section 3 or elsewhere in this
Agreement shall be deemed to authorize Issuer to breach any provision of the
Affiliation Agreement. Notwithstanding any notice of revocation delivered
pursuant to the proviso to Section 7(c), a Holder may require such other party
or parties to perform Issuer's obligations under Section 7(a) unless such other
party or parties are prohibited by law or regulation from such performance.
4. EXCHANGE; REPLACEMENT. This Agreement (and the Option
granted 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 Agreements and related Options for which
this Agreement (and the Option granted
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hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. ADJUSTMENTS. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and proper
provision shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise become outstanding as a result of
any such change (other than pursuant to an exercise of the Option), the number
of shares of Common Stock that remain subject to the Option shall be increased
so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on
account of any of the foregoing changes in the Common Stock), it equals 19.9%
of the number of shares of Common Stock then issued and outstanding. Whenever
the number of shares of Common Stock purchasable upon exercise hereof is
adjusted as provided in this Section 5, the Option Price shall be adjusted by
multiplying the Option Price by a fraction, the numerator of which shall be
equal to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Common Stock purchasable after the adjustment.
6. REGISTRATION. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within twelve (12) months (or such
later period as provided in Section 10) of such Subsequent Triggering Event
(whether on its own behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration statement under
the 1933 Act covering any shares issued and issuable pursuant to this Option
and shall use its reasonable best efforts to cause such registration statement
to become effective and remain current in order to permit the sale or other
disposition of any shares of Common Stock issued upon total or partial exercise
of this Option ("OPTION SHARES") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement promptly to become effective and then to remain
effective for a period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary, in the judgment of the Grantee or the Holder, to effect such sales
or other dispositions. Grantee shall have the right to demand two such
registrations. The Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers' fees).
The foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing
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underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would interfere
with the successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; PROVIDED, however, that after any
such required reduction of the number 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 of such shares of Common Stock
issuable pursuant to this Option as promptly as practical following such
reduction and no reduction in the number of shares of Common Stock to be sold by
the Holder shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in 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 the number of registrations that
Issuer is obligated to effect pursuant to this Section 6 be increased by reason
of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. REPURCHASE OF OPTION AND/OR OPTION SHARES. (a) At any time
after the occurrence of a Repurchase Event (as defined below), (i) at the
request of the Holder, delivered prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer (or any successor thereto)
shall repurchase the Option from the Holder at a price (the "OPTION REPURCHASE
PRICE") equal to the amount by which (A) the Market/Offer Price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which this Option may then be exercised and (ii) at the request of the owner of
Option Shares from time to time (the "OWNER"), delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "OPTION SHARE 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
after the date hereof, (ii) the price per share of Common Stock to be paid by
any third party pursuant to an agreement with Issuer, (iii) the highest closing
price per share of Common Stock as reported in the Wall Street Journal within
the six-month period immediately preceding the date on which the Holder gives
notice of the required repurchase of this Option or the Owner gives notice of
the required repurchase of Option Shares, as the case may be, or (iv) in the
event of a sale of all or a substantial portion of Issuer's assets, the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by a nationally recognized investment
banking
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firm selected by the Holder or the Owner, as the case may be, and reasonably
acceptable to the Issuer, divided by the number of shares of Common Stock of
Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm mutually selected by the Holder or
Owner, as the case may be, and reasonably acceptable to the Issuer. The costs of
any such investment banking firm shall be paid equally by Issuer and such
Holders or Owners.
(b) The Holder or the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer to repurchase
this Option and/or the Option Shares, as the case may be, in accordance with
the provisions of this Section 7. As promptly as practicable and in any event
within five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price or the
portion thereof that Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter shall deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from
delivering, in each case within five business days after the date on which
Issuer is no longer so prohibited; PROVIDED, however, that if Issuer at any
time after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, from delivering to the Holder and/or the Owner, as
the case may be, the Option Repurchase Price or the Option Share Repurchase
Price, respectively, in full (and Issuer hereby undertakes to use its best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option and/or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver
to the Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price and/or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares
of Common Stock for which the surrendered Agreement was exercisable at the time
of delivery of the notice of repurchase by a fraction, the numerator of which
is the Option Repurchase Price less the portion thereof theretofore delivered
to the Holder and the denominator of which is the Option Repurchase Price, or
(B) to the Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior
to the date of the notice by Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after
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such date, the Holder shall nonetheless have the right to exercise the Option
until the expiration of such 30-day period.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred upon the occurrence of any of the following events
or transactions after the date hereof:
(i) the acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of 50% or
more of the then outstanding Common Stock; or
(ii) the consummation of any Acquisition
Transaction described in Section 2(c)(i) hereof, except that the
percentages referred to in clause (z) shall be 50%.
8. SUBSTITUTE OPTION. (a) In the event that prior to an
Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of
Grantee's Subsidiaries, or engage in a plan of exchange with any person other
than Grantee or one of Grantee's Subsidiaries, and Issuer shall not be the
continuing or surviving corporation of such consolidation or merger or the
acquiror in such plan of exchange, (ii) to permit any person, other than
Grantee or one of its Subsidiaries, to merge into Issuer or be acquired by
Issuer in a plan of exchange and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding voting shares and voting
share equivalents of the merged or acquiring company, or (iii) to sell or
otherwise transfer all or substantially all of its or any Significant
Subsidiary's assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "SUBSTITUTE
OPTION"), at the election of the Holder, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "ACQUIRING CORPORATION" shall mean (i) the
continuing or surviving person of a consolidation or merger with
Issuer (if other than Issuer), (ii) the acquiring person in a plan of
exchange in which Issuer is acquired, (iii) Issuer in a merger or plan
of exchange in which Issuer is the continuing, surviving or acquiring
person, and (iv) the transferee of all or substantially all of
Issuer's assets or deposits.
(2) "SUBSTITUTE COMMON STOCK" shall mean the common
stock (or similar equity interest) issued by the issuer of the
Substitute Option upon exercise of the Substitute Option.
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(3) "ASSIGNED VALUE" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "AVERAGE PRICE" shall mean the average closing
price of a share of the Substitute Common Stock for the year
immediately preceding the consolidation, merger or sale in question
but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation,
merger or sale; PROVIDED that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to
a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option; PROVIDED, that if the terms of the Substitute Option may not, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
to the terms of the Option and in no event less advantageous to the Holder. The
issuer of the Substitute Option shall also enter into an agreement with the
then Holder or Holders of the Substitute Option in substantially the same form
as this Agreement (after giving effect for such purpose to the provisions of
Section 9), which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
and the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "SUBSTITUTE
OPTION ISSUER") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be and reasonably acceptable to the
Substitute Issuer, and all fees and expenses of such investment banking firm
shall be shared equally.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
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9. REPURCHASE OF SUBSTITUTE OPTION AND/OR OPTION SHARES. (a)
At the request of the holder of the Substitute Option (the "SUBSTITUTE OPTION
HOLDER"), the Substitute Option Issuer shall repurchase the Substitute Option
from the Substitute Option Holder at a price (the "SUBSTITUTE OPTION REPURCHASE
PRICE") equal to the amount by which (i) the Highest Closing Price (as defined
below) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "SUBSTITUTE SHARE
OWNER") of shares of Substitute Common Stock (the "SUBSTITUTE SHARES"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"SUBSTITUTE SHARE REPURCHASE PRICE") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "HIGHEST
CLOSING PRICE" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise their respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal executive office, the agreement for
such Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares, as the case may be, in
accordance with the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of the
Substitute Option and/or certificates representing Substitute Shares and the
receipt of such notice or notices relating thereto, the Substitute Option
Issuer shall deliver or cause to be delivered to the Substitute Option Holder
the Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price or, in either case, the portion thereof which
the Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer, following a
request for repurchase pursuant to this Section 9, shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and shall
thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price and/or the Substitute
Share Repurchase Price, respectively, which it is no longer prohibited from
delivering, in each case, within five business days after the date on which the
Substitute Option Issuer is no longer so prohibited; PROVIDED, however, that if
the Substitute Option Issuer at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
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Substitute Option Issuer shall use its best efforts to receive all required
regulatory and legal approvals as promptly as practicable in order to accomplish
such repurchase), the Substitute Option Holder and/or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. EXTENSION. The period for exercise of certain rights
under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (provided and
for so long as the Grantee or the Holder is using commercially reasonable
efforts to obtain such regulatory approvals), and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant
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hereto, will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(c) The execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of or a default under, its articles or certificate of incorporation or by-laws,
or the comparable governing instruments of any of its subsidiaries, or (ii) a
breach or violation of or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or to the best of Issuer's knowledge under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its subsidiaries is
subject.
(d) To the best of Issuer's knowledge neither Section 23-1-42
or 23-1-43 of the Indiana Business Corporation Law nor any other "fair price",
"moratorium", "control share acquisition" or other similar anti-takeover
statute or regulation enacted under state or federal laws in the United States
applicable to the Issuer or any of its Subsidiaries is applicable to this
Agreement or any of the transactions contemplated hereby.
12. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority
to enter into this Agreement and, subject to any approvals or consents referred
to herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Grantee. This Agreement has been duly executed and delivered by
Grantee.
(b) The Option is not being, and any shares of Common Stock
or other securities acquired by Grantee upon exercise of the Option will not
be, acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
13. ASSIGNMENT. Neither of the parties hereto may assign any
of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder; PROVIDED, however, that until the date 15 days following
the date on which the Federal Reserve Board approves an application by Grantee
under the BHCA to acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (E.G.,
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a broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee's behalf, or (iv) any other manner approved by
the Federal Reserve Board.
14. VOTING. Except to the extent Grantee exercises the Option,
Grantee shall have no rights to vote or receive dividends or have any other
rights as a shareholder with respect to shares of Common Stock covered hereby.
15. BEST EFFORTS. Each of Grantee and Issuer will use its
reasonable best efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary for the consummation
of the transactions contemplated by this Agreement, including without
limitation making application to list the shares of Common Stock issuable
hereunder on the New York Stock Exchange upon official notice of issuance and,
in the case of the Grantee, applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
16. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other equitable
relief. In connection therewith both parties waive the posting of any bond or
similar requirement.
17. SEVERABILITY. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason
such court or regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the
full number of shares of Common Stock provided in Section 1(a) hereof (as
adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention of
Issuer to allow the Holder to acquire or to require Issuer to repurchase such
lesser number of shares as may be permissible, without any amendment or
modification hereof.
18. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Affiliation Agreement or such other address as
shall be provided in writing.
19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the conflict of law principles thereof.
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20. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
21. EXPENSES. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
22. ENTIRE AGREEMENT. Except as otherwise expressly provided
herein or in the Affiliation Agreement, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
23. CAPTIONS; CAPITALIZED TERMS. The section and paragraph
captions herein are for convenience of reference only, do not constitute part
of this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Affiliation Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
Fifth Third Bancorp
By /s/ Neal E. Arnold
-------------------------------------
Name: Neal E. Arnold
Title: Chief Financial Officer,
Executive Vice President and
Treasurer
By /s/ Paul L. Reynolds
-------------------------------------
Name: Paul L. Reynolds
Title: Senior Vice President and
Assistant Secretary
CNB Bancshares, Inc.
By: /s/ James J. Giancola
-------------------------------------
Name: James J. Giancola
Title: President and Chief Executive
Officer
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