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Item 1.01
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Entry into a Material Definitive Agreement
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On April 17, 2017, Synovus Bank
(“Synovus”), a Georgia state member bank and a wholly-owned subsidiary of Synovus Financial Corp., entered into (1) a Framework Agreement with Cabela’s Incorporated, a Delaware corporation (“Cabela’s”),
World’s Foremost Bank, a Nebraska banking corporation (“WFB”), Capital One Bank (USA), National Association (“Capital One”) and Capital One, National Association, a national banking association (“CONA”), (2) an
Asset and Deposit Purchase Agreement, dated as of April 17, 2017 (the “Synovus Asset Purchase Agreement”), with Cabela’s and WFB, and (3) an Asset Purchase Agreement, dated as of April 17, 2017 (the “Capital One
Asset Purchase Agreement” and, together with the Synovus Asset Purchase Agreement, the “Asset Purchase Agreements”), with Capital One (the Framework Agreement together with the Asset Purchase Agreements and the schedules to the
Framework Agreement, the “Agreements”).
The Agreements amend and restate the Sale and Purchase Agreement, dated as of October 3, 2016, by
and among Cabela’s, WFB and CONA, such that Synovus accedes as a party thereto and Capital One is novated for CONA as a party thereto.
Transaction Structure
Pursuant to the Agreements and an
Asset Purchase Agreement entered into among Cabela’s, WFB and Capital One on April 17, 2017, by way of three transactions, (1) Synovus has agreed to acquire certain credit card assets and assume certain deposit and related liabilities
of WFB, which collectively constitute substantially all of the business of WFB, (2) Capital One has agreed to acquire certain other assets and assume certain other liabilities of WFB, and (3) immediately following the transaction referred
to in the foregoing clause (1), Synovus has agreed to assign to Capital One, and Capital One has agreed to acquire and assume, certain of such assets and liabilities acquired and assumed by Synovus from WFB, such that Synovus retains all deposits of
WFB and certain other assets and liabilities relating to deposits of WFB and Capital One acquires the assets and liabilities relating to the Cabela’s CLUB
co-branded
credit card accounts and equity
interests in certain securitization funding vehicles. The foregoing transactions are referred to collectively as the “Transactions.”
As of
April 17, 2017, the deposit liabilities of WFB consisted of approximately $1.2 billion of brokered certificates of deposit.
If the Transaction
between Synovus and Capital One referred to in clause (3) above does not occur immediately after the other two Transactions, then the other two Transactions will be rescinded, including repayment of any cash amounts paid and return of any
assets and liabilities transferred, such that Cabela’s, WFB, Capital One and Synovus will be in the same position as if the other two Transactions had never occurred.
Consideration
Pursuant to the Agreements, the purchase price payable by Synovus to WFB will equal the net book value of the assets and liabilities of WFB acquired and
assumed by Synovus from WFB less $70 million. The purchase price payable by Capital One to Synovus will equal the net book value of the credit card assets and related liabilities acquired and assumed by Capital One from Synovus plus
$5 million, subject to certain adjustments.
Closing Conditions
The consummation of the Transactions is subject to the satisfaction or waiver of customary closing conditions, including (i) the filing of required
notices and obtaining required consents from applicable regulators and rating agencies; (ii) the absence of any order prohibiting or making illegal the Transactions; (iii) the continued effectiveness of the credit card program agreement
between Cabela’s and Capital One; (iv) the satisfaction or waiver of the conditions to closing set forth in the Agreement and Plan of Merger, dated October 3, 2016, by and among Bass Pro Group, LLC, Prairie Merger Sub, Inc., and
Cabela’s; (v) in the case of Capital One and Synovus, the absence of certain burdensome conditions on the receipt of the required approvals, including regulatory approvals; and (vi) receipt by Synovus and Capital One of notifications
that Capital One and Synovus, respectively, are ready, willing and able to consummate the Transaction between Synovus and Capital One immediately after the other Transactions.
The consummation of the Transaction between Synovus and Capital One is subject to the satisfaction or waiver of the following conditions: (i) the other
Transactions shall have occurred, and (ii) the absence of any order prohibiting or making illegal the Transactions.
On April 19, 2017, Synovus
will submit an application to the Board of Governors of the Federal Reserve System to obtain certain approvals required to consummate the Transactions by Section 18(c) of the Federal Deposit Insurance Act.
Termination; Termination Fees
The Framework Agreement
provides for termination rights for each of the parties under prescribed circumstances, including by Synovus, Capital One or Cabela’s if the Transactions have not been consummated on or prior to October 3, 2017. Upon the termination of the
Agreements for any reason other than certain defined defaults by Synovus, Capital One would be obligated to pay a termination fee of up to $10,000,000 to Synovus.
Indemnification
The Framework Agreement obligates each
of Cabela’s and Capital One to indemnify each other for losses arising from or relating to any of the following: a breach by such party of its representations and warranties; the failure by such party to perform any of its covenants under the
Framework Agreement and certain ancillary agreements; the assets and liabilities that such party ultimately is retaining (in the case of Cabela’s) and assuming (in the case of Capital One); and certain taxes for which such party has agreed to
be responsible.
The Framework Agreement generally obligates Cabela’s to indemnify Synovus for losses arising from or relating to the assets and
liabilities it is retaining and certain taxes for which Cabela’s has agreed to be responsible.
The Framework Agreement generally obligates Capital
One to indemnify Synovus for losses arising from or relating to: a breach of Capital One’s or Cabela’s representations and warranties; the failure by Cabela’s or Capital One to perform any of its respective covenants under the
Framework Agreement and certain ancillary agreements; the assets and liabilities that Capital One is acquiring and assuming, as appropriate; WFB’s credit card program, and certain taxes for which Capital One has agreed to be responsible.
Further, the Framework Agreement generally obligates Capital One to indemnify Synovus for losses arising from or relating to the Agreement or the Transactions contemplated by the Agreements.
Synovus is generally obligated to indemnify Cabela’s and Capital One for any losses arising from or relating
to: a breach of Synovus’s representations and warranties; the failure by Synovus to perform any of its covenants under the Framework Agreement; the assets and liabilities that Synovus ultimately assumes in the Transactions; and certain taxes
for which Synovus has agreed to be responsible.
The representations and warranties of Cabela’s, WFB and Capital One survive the closing of the
Transactions for a period of fifteen (15) months, subject to certain exceptions. The representations, warranties and covenants of Synovus survive the closing of the Transactions for a period of fifteen (15) months, subject to certain
exceptions.