- -----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
----------
FIRST UNION CORPORATION
(Name of Issuer)
Common Stock, par value $3.33 1/3 per share
(Title of Class of Securities)
337358 10 5
(CUSIP Number)
----------
James L. Mitchell, Esq.
Executive Vice President and General Counsel
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
(201) 565-3200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With copies to:
Victor I. Lewkow, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
(212) 225-2000
June 19, 1995
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this Schedule because of Rule 13d-
1(b)(3) or (4), check the following box. [ ].
Check the following box if a fee is being paid with the statement
[X].
- -----------------------------------------------------------------<PAGE>
SCHEDULE 13D
CUSIP No. 337358 10 5
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Fidelity Bancorporation (22-2826775)
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 SOURCE OF FUNDS
OO, WC
- -----------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS / X /
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
- -----------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 34,042,001*
SHARES -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH REPORTING -------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
34,042,001*
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -----------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
34,042,001*
- -----------------------------------------------------------------
12 CHECK BOX OF THE AGGREGATE AMOUNT IN ROW (11) / X /
EXCLUDES CERTAIN SHARES
- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6**
- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO, HC
- -----------------------------------------------------------------
* Beneficial ownership of the 34,042,001 shares of First Union
Corporation's Common Stock reported hereunder is being
reported solely as the result of the option granted pursuant
to the First Union Stock Option Agreement described in Item
4 hereof. Such option has not yet become exercisable and
First Fidelity Bancorporation expressly disclaims beneficial
ownership of such shares. See Item 5 hereof.
** Based upon the 171,065,333 shares of First Union
Corporation's Common Stock reported by First Union
Corporation to be outstanding as of May 31, 1995 plus the
34,042,001 shares obtainable by First Fidelity
Bancorporation upon the exercise of the option described in
Item 4 were such option to be presently exercisable.
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value
$3.33 1/3 per share ("First Union Common Stock"), of First Union
Corporation ("First Union"), a North Carolina corporation
registered as a bank holding company under the Bank Holding
Company Act of 1956 (the "BHC Act"). The principal executive
offices of First Union are located at One First Union Center,
Charlotte, North Carolina 28288-0013.
Item 2. Identity and Background.
(a)-(c), (f) This statement is being filed by First
Fidelity Bancorporation ("First Fidelity"), a New Jersey
corporation registered as a bank holding company under the BHC
Act. The principal business offices of First Fidelity are
located at 550 Broad Street, Newark, New Jersey 07102 and 123
South Broad Street, Philadelphia, Pennsylvania 19109. First
Fidelity, through its subsidiary banks First Fidelity Bank,
National Association ("FFB-NA"), First Fidelity Bank and First
Fidelity Bank, Delaware, provides a full range of banking
services in New Jersey, eastern Pennsylvania, Connecticut,
Southern New York, Maryland and Delaware. In addition, First
Fidelity provides services closely related to banking through its
non-bank subsidiaries. The names of the directors and executive
officers of First Fidelity and their respective business
addresses or residences, citizenship and present principal
occupations or employment, as well as the names, principal
businesses and addresses of any corporations or other
organizations in which such employment is conducted, are set
forth on Schedule I hereto, which Schedule is incorporated herein
by reference.
(d) Neither First Fidelity nor, to the best of its
knowledge, any of the persons listed in Schedule I hereto has
during the last five years been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
(e) As previously reported, in January 1992, First
Fidelity Bank, N.A., New Jersey ("FFBNJ"), a bank subsidiary of
First Fidelity which was consolidated into FFB-NA in 1994,
resolved previously disclosed investigations and related
administrative proceedings regarding its participation as a
selling group member in primary distributions of certain
government-sponsored corporation securities. Without admitting
liability and in order to settle the matter, FFBNJ agreed to pay
a civil penalty of $25,000 and to cease and desist from alleged
record-keeping irregularities. As a result of the foregoing, all
investigations and administrative proceedings pertaining to
FFBNJ's selling group activities were concluded. In addition,
FFBNJ decided not to continue as a member of the selling group
for securities issued by the Federal National Mortgage
Association. Except as described herein, neither First Fidelity
nor, to the best of its knowledge, any of the persons listed in
Schedule I hereto has during the last five years been a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or
is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation of such
laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 4, First Union has
granted to First Fidelity an option pursuant to which First
Fidelity has the right, upon the occurrence of certain events
(none of which has yet occurred), to purchase up to 34,042,001
shares of First Union Common Stock at a per share price equal to
$45.875. If such option were exercisable and First Fidelity were
to exercise such option in full on the date hereof, the funds
required to purchase the shares of First Union Common Stock
issuable upon such exercise would be $1,561,676,796. It is
currently anticipated that such funds would be derived from First
Fidelity's working capital, funds available for investment and
borrowings or issuances of debt or equity securities.
Item 4. Purpose of the Transaction.
(a)-(j) The Agreement and Plan of Merger. First Union
and First Fidelity have entered into an Agreement and Plan of
Merger, dated as of June 18, 1995 (the "Plan"), pursuant to which
First Fidelity will merge with and into a wholly-owned subsidiary
of First Union (the "Merger"). In the Merger, (i) each
outstanding share of First Fidelity common stock ("First Fidelity
Common Stock") (except Treasury Shares (as defined in the Plan))
will be converted into 1.35 shares of First Union Common Stock
(subject to adjustments under certain circumstances) and (ii)
each share of the three outstanding series of First Fidelity's
preferred stock (the "First Fidelity Preferred Stock") (excluding
Treasury Shares) will be converted into one share of a new,
comparable series of First Union Class A Preferred Stock having
substantially identical terms to the series being exchanged
therefor, all subject to the terms and conditions contained in
the Plan.
Pursuant to the Plan, First Union will (i) cause six
members of First Fidelity's Board of Directors to be elected or
appointed as directors of First Union and (ii) cause three of
such new directors to be elected or appointed as members of the
Executive Committee of First Union's Board of Directors. In
addition, First Union has also agreed to elect or appoint Anthony
P. Terracciano, the current Chairman, President and Chief
Executive Officer of First Fidelity, as President of First Union.
The Merger is subject, among other things, to the
approval of the respective stockholders of First Union and First
Fidelity and the receipt of the requisite regulatory approvals.
The First Union Stock Option Agreement. On June 19,
1995, in connection with the execution of the Plan, First Union
entered into an agreement (the "First Union Option Agreement")
pursuant to which First Fidelity was granted an option (the
"First Union Option") to purchase up to 34,042,001 shares (the
"Option Shares") of First Union Common Stock at a price equal to
the closing price of First Union Common Stock on the New York
Stock Exchange ("NYSE") Composite Transactions tape on June 19,
1995 ($45.875 per share). The number of shares of First Union
Common Stock issuable pursuant to the First Union Option will
automatically increase in the event that other shares of First
Union Common Stock are issued, so that the total number of Option
Shares at all times will equal 19.9% of the shares of First Union
Common Stock then outstanding (excluding any Option Shares
outstanding by reason of exercise of the First Union Option).
The type and number of shares of First Union Common Stock
issuable pursuant to the First Union Option, and the exercise
price per share, are subject to adjustment in certain
circumstances, including in the event of stock dividends, stock
splits, recapitalizations and similar transactions. In no event,
however, will the number of Option Shares issuable upon exercise
of the First Union Option exceed 19.9% of the issued and
outstanding shares of First Union Common Stock.
Also on June 19, 1995, First Fidelity entered into an
agreement (the "First Fidelity Stock Option Agreement") pursuant
to which First Union was granted an option (the "First Fidelity
Option") to purchase up to 15,686,077 shares of First Fidelity
Common Stock at a price equal to the closing price of First
Fidelity Common Stock as reported on the NYSE Composite
Transactions tape on June 19, 1995 ($59.00 per share) on terms
substantially identical to those contained in the First Union
Stock Option Agreement. The type and number of shares of First
Fidelity Common Stock issuable pursuant to the First Fidelity
Option, and the exercise price per share, are subject to
adjustment in certain circumstances, including in the event of
stock dividends, stock splits, recapitalizations and similar
transactions. In no event, however, will the number of shares
issuable upon exercise of the First Union Option exceed 19.9% of
the issued and outstanding shares of First Fidelity Common Stock.
Provided that First Fidelity is not in material breach
of the Plan or the First Union Stock Option Agreement, First
Fidelity will become entitled to exercise the First Union Option,
in whole or in part, at any time and from time to time, subject
to compliance with applicable law and provided that a Termination
Event (as defined herein) has not occurred, following the
occurrence of a Purchase Event (as defined herein). The First
Union Option may thereafter be exercised by sending written
notice (the date of which being herein referred to as the "Notice
Date"), specifying (i) the total number of Option Shares it
intends to purchase and (ii) a place and date not earlier than
three business days nor later than 15 business days from the
Notice Date for the closing of such purchase; provided that the
first notice of exercise shall be sent to First Union within 180
days after the first Purchase Event of which First Fidelity has
been notified.
As used in the First Union Stock Option Agreement,
"Purchase Event" means the occurrence of any of the following
events or transactions:
(i) Without First Fidelity's prior written consent,
First Union shall have recommended, publicly proposed or
publicly announced an intention to authorize, recommend or
propose, or entered into an agreement with any person (other
than First Fidelity or any subsidiary of First Fidelity) to
effect (A) a merger, consolidation or similar transaction
involving First Union or any of its significant subsidiaries
(other than transactions solely between First Union's
subsidiaries that are not violative of the Plan), (B) the
disposition, by sale, lease, exchange or otherwise, of
assets or deposits of First Union or any of its significant
subsidiaries representing in either case 25% or more of the
consolidated assets or deposits of First Union and its
subsidiaries or (C) the issuance, sale or other disposition
by First Union of (including by way of merger,
consolidation, share exchange or any similar transaction)
securities representing 25% or more of the voting power of
First Union or any of its significant subsidiaries, other
than, in each case of (A), (B), or (C), any merger,
consolidation or similar transaction involving First Union
or any of its significant subsidiaries in which the voting
securities of First Union outstanding immediately prior
thereto continue to represent (by either remaining
outstanding or being converted into the voting securities of
the surviving entity of any such transaction) at least 65%
of the combined voting power of the voting securities of
First Union or the surviving entity outstanding immediately
after the consummation of such merger, consolidation, or
similar transaction (provided any such transaction is not
violative of the Plan) (each of (A), (B), or (C), an
"Acquisition Transaction"); or
(ii) any person (other than First Fidelity or any
subsidiary of First Fidelity) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of, or the right to acquire beneficial
ownership of, or any "group" (as such term is defined in
Section 13(d)(3) of the Exchange Act), other than a group of
which First Fidelity or any subsidiary of First Fidelity is
a member, shall have been formed which beneficially owns or
has the right to acquire beneficial ownership of, 25% or
more of the voting power of First Union or any of its
significant subsidiaries.
Under applicable law and in connection with the First
Union Stock Option Agreement, First Fidelity may be required to
obtain the prior approval of the Federal Reserve Board prior to
acquiring 5% or more of the issued and outstanding shares of
First Union Common Stock. Certain other regulatory approvals may
also be required before such an acquisition could be completed.
The First Union Stock Option Agreement provides that,
prior to the termination of the First Union Option, within twelve
months following the occurrence of a Repurchase Event (as defined
herein) First Fidelity will have the right to require First Union
to repurchase the First Union Option and any Option Shares
purchased through the exercise of the First Union Option to which
First Fidelity then has beneficial ownership, at prices
determined in accordance with the First Union Stock Option
Agreement.
As used in the First Union Stock Option Agreement, a
"Repurchase Event" shall occur if:
(i) any person (other than First Fidelity or any
subsidiary of First Fidelity) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of, or the right to acquire
beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act) shall have
been formed which beneficially owns or has the right to
acquire beneficial ownership of, 50% or more of the then
outstanding shares of First Union Common Stock, or
(ii) First Union enters into an agreement to (a)
consolidate with or merge into any person, other than First
Fidelity or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (b) permit any person, other than First Fidelity or
one of its subsidiaries, to merge into First Union and First
Union shall be the continuing or surviving corporation, but,
in connection with such merger, the then outstanding shares
of First Union Common Stock shall be changed into or
exchanged for stock or other securities of First Union or
any other person or cash or any other property or the
outstanding shares of First Union Common Stock immediately
prior to such merger shall after such merger represent less
than 50% of the outstanding shares and share equivalents of
the merged company, or (c) sell or otherwise transfer all or
substantially all of its assets or deposits to any person,
other than First Fidelity or one of its subsidiaries.
Further, in the event that, prior to the termination of
the First Union Option, First Union enters into certain types of
agreements related to the merger or consolidation of First Union
or the sale of substantially all of its assets or deposits, the
First Union Stock Option Agreement provides that First Union will
have the obligation to make proper provisions so that the First
Union Option will, upon consummation of such transaction, be
converted into, or exchanged for an option (the "Substitute
Option"), at the election of First Fidelity, of either (i) the
Acquiring Corporation (as defined herein), (ii) any person
controlling the Acquiring Corporation, or (iii) First Union, in
the case of a merger by any person (as defined in Sections
3(a)(9) and 13(d)(3) of the Exchange Act), other than First
Fidelity or one of its subsidiaries, into First Union and First
Union is the surviving corporation (such person referred to in
each of clauses (i), (ii) and (iii) being referred to as the
"Substitute Option Issuer"). The Substitute Option will, to the
extent legally permissible, have the same terms and conditions as
the First Union Option, and will otherwise be as similar as
possible as, and in no event less advantageous to First Fidelity
than, the First Union Option. The Substitute Option Issuer will
enter into an agreement with First Fidelity in substantially the
same form as the First Union Stock Option Agreement, which shall
be applicable to the Substitute Option.
"Acquiring Corporation" as used in the First Union
Stock Option Agreement means (i) the continuing or surviving
corporation of a consolidation or merger with First Union (if
other than First Union), (ii) First Union in a merger in which
First Union is the continuing or surviving person, or (iii) the
transferee of all or substantially all of First Union's assets
(or a substantial part of the assets of its subsidiaries taken as
a whole).
First Fidelity may assign the First Union Stock Option
Agreement only with the prior written consent of First Union,
except that First Fidelity may assign the First Union Stock
Option Agreement to a wholly-owned subsidiary of First Fidelity
and First Fidelity may assign its rights thereunder in whole or
in part after the occurrence of a Purchase Event. In addition,
the First Union Option Agreement grants certain registration
rights to First Fidelity with respect to the Option Shares.
The First Union Option will terminate upon the earliest
to occur of (i) the Effective Time (as defined in the Plan), (ii)
termination of the Plan in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (as defined herein) other than a termination
thereof by First Fidelity pursuant to the provision of the Plan
permitting First Fidelity to terminate upon a breach by First
Union of any representation or warranty or a material breach of
any covenant, or agreement in the Plan which cannot be or has not
been cured with 30 days after the giving of written notice of
such breach to First Union (but only if such breach of First
Union giving rise to such termination was willful) (a termination
of the Plan by First Fidelity as a result of such willful breach
by First Union being referred to herein as a "Default
Termination"), (iii) 15 months after the occurrence of a Default
Termination, or (iv) 15 months after termination of the Plan
(other than a Default Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event (each such event
referred to in clauses (i), (ii), (iii) and (iv) being referred
to herein as a "Termination Event").
As used in the First Union Stock Option Agreement,
"Preliminary Purchase Event" means any of the following events:
(i) any person (other than First Fidelity or any
subsidiary of First Fidelity) shall have commenced (as such
term is defined in Rule 14d-2 under the Exchange Act) or
shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"),
with respect to, a tender offer or exchange offer to
purchase any shares of First Union Common Stock such that,
upon consummation of such offer, such person would own or
control 25% or more of the then outstanding shares of First
Union Common Stock (such an offer being referred to herein
as a "Tender Offer" or an "Exchange Offer," respectively);
or
(ii) the stockholders shall not have approved the
matters relating to the Plan requiring approval by the
requisite vote at the First Union Meeting (as defined
herein), the First Union Meeting shall not have been held or
shall have been canceled prior to termination of the Plan,
or First Union's Board of Directors shall have withdrawn or
modified in a manner adverse to First Fidelity the
recommendation of First Union's Board of Directors with
respect to the matters relating to the Plan requiring
approval, in each case after it shall have been publicly
announced that any person (other than First Fidelity or any
subsidiary of First Fidelity) shall have (A) made, or
disclosed an intention to make, a bona fide proposal to
engage in an Acquisition Transaction, (B) commenced a tender
offer or filed a registration statement under the Securities
Act with respect to an exchange offer or (C) filed an
application (or given a notice), whether in draft or final
form, under the Home Owners' Loan Act, as amended, the BHC
Act, the Bank Merger Act, as amended or the Change in Bank
Control Act of 1978, as amended, for approval to engage in
an Acquisition Transaction; or
(iii) any person (other than First Fidelity or any
subsidiary of First Fidelity) shall have made a bona fide
proposal to First Union or its stockholders by public
announcement, or written communication that is or becomes
the subject of public disclosure, to engage in an
Acquisition Transaction; or
(iv) after a proposal is made by a third party to First
Union or its stockholders to engage in an Acquisition
Transaction, or such third party states its intention to
First Union to make such a proposal if the Plan terminates,
First Union shall have breached any representation,
warranty, covenant or agreement contained in the Plan and
such breach would entitle First Fidelity to terminate the
Plan under the provisions of the Plan (without regard to the
cure period provided for therein unless such cure is
promptly effected without jeopardizing consummation of the
Merger pursuant to the terms of the Plan); or
(v) any person (other than First Fidelity or any
subsidiary of First Fidelity) other than in connection with
a transaction to which First Fidelity has given its prior
written consent, shall have filed an application or notice
with any regulatory authority for approval to engage in an
Acquisition Transaction.
"First Union Meeting" means an appropriate meeting of
stockholders of First Union held to consider and vote upon the
issuance of the shares of First Union Common Stock to be issued
in the Merger pursuant to the Plan and to vote on any other
stockholder approval matters required for consummation of the
Merger.
Copies of the Plan (including the exhibits thereto) and
the First Union Stock Option Agreement are attached as exhibits
to this Schedule 13D and are incorporated herein by reference.
The foregoing summary of such documents is not intended to be
complete and is qualified in its entirety by reference to the
actual documents being filed herewith.
Item 5. Interest in Securities of the Issuer.
(a) The First Union Option. First Fidelity may be
deemed to be the beneficial owner of the Option Shares. As
provided in the First Union Stock Option Agreement, First
Fidelity may exercise the First Union Option only upon the
happening of one or more events, none of which has occurred. See
Item 4 hereof. Since the First Union Option is not currently
exercisable, First Fidelity expressly disclaims beneficial
ownership of any of the Option Shares. If the First Union Option
were currently exercisable and exercised in full, the Option
Shares would represent approximately 16.6% of the currently
outstanding First Union Common Stock (after giving effect to the
issuance of such Option Shares). First Fidelity has no right to
vote or dispose of the Option Shares unless and until such time
as the First Union Option is exercised.
In addition to the foregoing, certain subsidiary banks
of First Fidelity hold 142,023 shares of First Union Common Stock
in a fiduciary capacity. Such shares are not included in the
shares covered by this report. First Fidelity disclaims
beneficial ownership of such shares.
Except as set forth above, First Fidelity does not
beneficially own any shares of First Union Common Stock. To the
best knowledge of First Fidelity, none of the persons listed on
Schedule I hereto beneficially owns any shares of First Union
Common Stock.
(b) The First Union Option. If First Fidelity were to
exercise the First Union Option, it would have sole power to vote
and, subject to the terms of the First Union Stock Option
Agreement, sole power to direct the disposition of the Option
Shares issued as a result of such exercise.
(c) The First Union Option. First Fidelity acquired
the First Union Option in connection with the execution of the
Plan and in connection with the reciprocal grant of a
substantially identical option by First Fidelity to First Union.
See Item 4 hereof.
First Union Common Stock. Neither First Fidelity nor,
to the best of its knowledge, any of the persons listed on
Schedule I hereto has effected any transactions in First Union
Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
As provided in the Plan, First Union entered into the
Third Amendment to First Union's Shareholder Protection Rights
Agreement (the "First Union Rights Plan") in order to exempt the
First Union Option from triggering the First Union Rights Plan.
Except as described in this Item and Item 4 and Item 5
hereof, none of First Fidelity nor, to the best of its knowledge,
any of the persons listed on Schedule I hereto has any contract,
arrangement, understanding or relationship with any person with
respect to any securities of First Union, including the transfer
or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees
of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to Be Filed as Exhibits.
1. Agreement and Plan of Merger, dated as of June 18, 1995, by
and among First Union, First Fidelity and PKC, Inc.,
including the exhibits thereto.
2. First Union Stock Option Agreement, dated as of June 19,
1995, by and between First Union and First Fidelity.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
FIRST FIDELITY BANCORPORATION
Date: June 28, 1995 By: /s/ James L. Mitchell
--------------------------
Name: James L. Mitchell
Title: Executive Vice President and
General Counsel
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
FIRST FIDELITY BANCORPORATION
The names, business addresses or residences and present
principal occupations of the directors and executive officers of
First Fidelity are set forth below. If no business address is
given, the director's or officer's business address is 550 Broad
Street, Newark, New Jersey. The business address of each of the
directors of First Fidelity is also the business address of such
director's employer, if any. Directors of First Fidelity are
identified by an asterisk (*). Unless otherwise indicated, all
directors and officers listed below are citizens of the United
States.
Name Present Principal Occupation or
Employment and Address
Jay A. Anglada Executive Vice President of First
Fidelity.
*Louis E. Azzato Director, Foster Wheeler
Corporation, an engineering and
construction company, Perryville
Corporate Park, P.O. Box 4000,
Clinton, New Jersey 08809.
*Edward E. Barr Chairman, President, Chief Executive
Officer and Director of Sun Chemical
Corporation, a graphic arts
materials company, 222 Bridge Plaza
South, Fort Lee, New Jersey 07024.
*Roland K. Bullard, II Senior Executive Vice President of
First Fidelity.
Anthony R. Burriesci Executive Vice President and
Corporate Comptroller of First
Fidelity.
*Lee A. Butz President of Alvin H. Butz, Inc., a
construction management firm, Route
309, Box 509, Allentown,
Pennsylvania 18105.
*Luther R. Campbell, Jr. Certified Public Accountant,
Campbell, Rappold & Yurasits, l033
S. Cedar Crest Blvd., Allentown,
Pennsylvania 18103.
*John Gilray Christy Chairman, Chestnut Capital
Corporation, a private investment
firm, P.O. Box 22, Flourtown,
Pennsylvania 19031.
Joseph A. Cicero Vice Chairman and Chief Operating
Officer of First Fidelity Bank,
National Association - Maryland
Division, 7 East Baltimore Street,
Baltimore, Maryland 21203.
*James G. Cullen Vice Chairman of Bell Atlantic
Corporation, 1310 North Court House
Road, Arlington, Virginia 22201.
*Gonzalo de Las Heras Executive Vice President of Banco
Santander, S.A., a Spanish banking
organization, 45 East 53rd Street,
New York, New York 10022.
*E. James Ferland Chairman of the Board, President,
Chief Executive Officer and Director
of Public Service Enterprise Group
Incorporated, a public utility
holding company, 80 Park Plaza,
Newark, New Jersey 07101.
Michael A. Gallagher Executive Vice President, Corporate
Operations and Systems of First
Fidelity.
*Arthur M. Goldberg Chairman, Chief Executive Officer
and Director of Bally Entertainment
Corporation (formerly Bally
Manufacturing Corporation), a
diversified holding company engaged
in manufacturing, casino and
entertainment businesses; Chairman,
President and Chief Executive
Officer of Di Giorgio Corporation, a
food wholesaler, 380 Middlesex
Avenue, Carteret, New Jersey 07008.
*Leslie E. Goodman Senior Executive Vice President of
First Fidelity.
*Frank M. Henry President of Frank Martz Coach
Company, a transportation company,
Martz Towers, Box 1007, Wilkes-
Barre, Pennsylvania l8773.
*Juan Rodriguez Inciarte Executive Vice President and
director of Banco Santander, a
Spanish banking organization, Paseo
de la Castellana, 24 Madrid, Spain
28046. Citizen of Spain.
William A. Karmen Executive Vice President, Human
Resources of First Fidelity.
*John R. Kennedy President, Chief Executive Officer
and Director of Federal Paper Board
Company, Inc., a manufacturing
company, 75 Chestnut Ridge Road,
P.O. Box 357, Montvale, New Jersey
07645.
Michael L. LaRusso Executive Vice President and
Director of Audit and Policy
Development of First Fidelity.
*Rocco J. Marano Director of Blue Cross and Blue
Shield of New Jersey, a health
insurance company, Three Penn Plaza
East, Newark, New Jersey 07105.
James L. Mitchell Executive Vice President, General
Counsel and Secretary of First
Fidelity.
*James D. Morrissey, Jr. President and Chief Operating
Officer of James D. Morrissey, Inc.,
a heavy and highway construction
company, 9119 Frankford Avenue,
Philadelphia, Pennsylvania l9114.
*Joseph Neubauer Chairman, President, Chief Executive
Officer and Director of ARAMARK
Corporation (formerly The ARA Group,
Inc.), a services management
company, ARA Tower, 1101 Market
Street, Philadelphia, Pennsylvania
19107.
Thomas H. O'Brien, Jr. Executive Vice President of First
Fidelity and President and Chief
Operating Officer of First Fidelity
Bank, Stamford, Connecticut.
*Peter C. Palmieri Vice Chairman and Chief Credit
Officer of First Fidelity.
Donald C. Parcells Senior Executive Vice President of
First Fidelity.
Frederick H. Pennekamp Executive Vice President and
Treasurer of First Fidelity.
*Wolfgang Schoellkopf Vice Chairman and Chief Financial
Officer of First Fidelity.
*Robert M. Scott President and Chief Executive
Officer of the Philadelphia Museum
of Art, Box 7646, Philadelphia,
Pennsylvania 19101.
*Rebecca Stafford President of Monmouth University,
West Long Branch, New Jersey 07764.
*Sefton Stallard General Partner of North American
Venture Capital Fund, L.P., a
venture capital fund, Fawn Hill
Drive, P.O. Box 714, New Vernon, New
Jersey 07976.
*Anthony P. Terracciano Chairman of the Board, President,
Chief Executive Officer and Chairman
of the Executive Committee of First
Fidelity.
*Bernard C. Watson Chairman of The HMA Foundation Inc.,
1314 Chestnut Street, Philadelphia,
Pennsylvania 19107.
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
1. Agreement and Plan of Merger, dated as of June 18,
1995, by and among First Union, First Fidelity and
PKC, Inc., including the exhibits thereto.
2. First Union Stock Option Agreement, dated as of
June 19, 1995, by and between First Union and First
Fidelity.
<PAGE>
AGREEMENT AND PLAN OF MERGER
dated as of June 18, 1995
by and among
FIRST FIDELITY BANCORPORATION,
FIRST UNION CORPORATION
and
PKC, INC.
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
I. THE MERGER; EFFECTS OF THE MERGER . . . . . . . . . . . . . . . . . 3
1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . 3
1.02. Effective Date and Effective Time . . . . . . . . . . . . 3
1.03. Deposit Agreement . . . . . . . . . . . . . . . . . . . . 4
1.04. Amendment of FUNC Articles . . . . . . . . . . . . . . . . 4
II. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01. Merger Consideration . . . . . . . . . . . . . . . . . . . 4
2.02. Stockholder Rights; Stock Transfers . . . . . . . . . . . 6
2.03. Fractional Shares . . . . . . . . . . . . . . . . . . . . 6
2.04. Exchange Procedures . . . . . . . . . . . . . . . . . . . 6
2.05. Dissenting Stockholders . . . . . . . . . . . . . . . . . 8
2.06. Anti-Dilution Provisions . . . . . . . . . . . . . . . . . 8
2.07. Treasury Shares . . . . . . . . . . . . . . . . . . . . . 8
III. ACTIONS PENDING MERGER . . . . . . . . . . . . . . . . . . . . . . . 9
3.01. Ordinary Course . . . . . . . . . . . . . . . . . . . . . 9
3.02. Capital Stock . . . . . . . . . . . . . . . . . . . . . . 10
3.03. Dividends, Etc. . . . . . . . . . . . . . . . . . . . . . 10
3.04. Compensation; Employment Agreements;
Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.05. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 11
3.06. Acquisitions and Dispositions . . . . . . . . . . . . . . 11
3.07. Amendments . . . . . . . . . . . . . . . . . . . . . . . . 12
3.08. Accounting Methods . . . . . . . . . . . . . . . . . . . . 12
3.09. Adverse Actions . . . . . . . . . . . . . . . . . . . . . 12
3.10. Agreements . . . . . . . . . . . . . . . . . . . . . . . . 12
IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 13
4.01. Disclosure Letters . . . . . . . . . . . . . . . . . . . . 13
4.02. Standard . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.03. Representations and Warranties . . . . . . . . . . . . . . 13
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.01. Reasonable Best Efforts . . . . . . . . . . . . . . . . . 27
5.02. Stockholder Approvals . . . . . . . . . . . . . . . . . . 27
5.03. Registration Statement . . . . . . . . . . . . . . . . . . 27
5.04. Press Releases . . . . . . . . . . . . . . . . . . . . . . 28
5.05. Access; Information . . . . . . . . . . . . . . . . . . . 28
5.06. Acquisition Proposals . . . . . . . . . . . . . . . . . . 29
5.07. Affiliate Agreements . . . . . . . . . . . . . . . . . . . 29
5.08. Certain Modifications; Restructuring
Charges . . . . . . . . . . . . . . . . . . . . . . . . 30
<PAGE>
<PAGE>
5.09. Takeover Laws . . . . . . . . . . . . . . . . . . . . . . 30
5.10. No Rights Triggered . . . . . . . . . . . . . . . . . . . 31
5.11. Shares Listed . . . . . . . . . . . . . . . . . . . . . . 31
5.12. Regulatory Applications . . . . . . . . . . . . . . . . . 31
5.13. Indemnification . . . . . . . . . . . . . . . . . . . . . 32
5.14. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 33
5.15. Accountants' Letters . . . . . . . . . . . . . . . . . . . 34
5.16. Registration Rights . . . . . . . . . . . . . . . . . . . 34
5.17. Certain Director and Officer Positions . . . . . . . . . . 35
5.18. Notification of Certain Matters . . . . . . . . . . . . . 36
VI. CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . 36
6.01. Shareholder Vote . . . . . . . . . . . . . . . . . . . . . 36
6.02. Regulatory Approvals . . . . . . . . . . . . . . . . . . . 36
6.03. Third Party Consents . . . . . . . . . . . . . . . . . . . 36
6.04. No Injunction, Etc . . . . . . . . . . . . . . . . . . . . 36
6.05. Pooling Letters . . . . . . . . . . . . . . . . . . . . . 36
6.06. Representations, Warranties and
Covenants of FUNC . . . . . . . . . . . . . . . . . . . 36
6.07. Representations, Warranties and
Covenants of FFB . . . . . . . . . . . . . . . . . . . . 37
6.08. Effective Registration Statement . . . . . . . . . . . . . 37
6.09. Blue-Sky Permits . . . . . . . . . . . . . . . . . . . . . 37
6.10. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . 37
6.11. Articles of Amendment . . . . . . . . . . . . . . . . . . 38
6.12. NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . 38
6.13. Rights Agreements. . . . . . . . . . . . . . . . . . . . . 38
VII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.01. Termination. . . . . . . . . . . . . . . . . . . . . . . . 38
7.02. Effect of Termination and Abandonment . . . . . . . . . . 42
VIII. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.01. Survival . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.02. Waiver; Amendment . . . . . . . . . . . . . . . . . . . . 42
8.03. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 43
8.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . 43
8.05. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.06. Confidentiality . . . . . . . . . . . . . . . . . . . . . 43
8.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.08. Definitions . . . . . . . . . . . . . . . . . . . . . . . 44
8.09. Entire Understanding; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . . 45
8.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 45
<PAGE>
<PAGE>
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
A FORM OF FFB STOCK OPTION AGREEMENT
B FORM OF VOTING AND SUPPORT AGREEMENT
C FORM OF FUNC STOCK OPTION AGREEMENT
D FORM OF THIRD SUPPLEMENT TO FFB RIGHTS PLAN
E FORM OF THIRD AMENDMENT TO FUNC RIGHTS PLAN
F FORM OF FFB AFFILIATE LETTER
G FORM OF FUNC AFFILIATE LETTER
H REGISTRATION RIGHTS
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of the 18th day of June, 1995
(this "Plan"), by and among First Fidelity Bancorporation ("FFB"), First Union
Corporation ("FUNC") and PKC, Inc. ("Merger Sub").
RECITALS:
(A) FFB. FFB is a corporation duly organized and existing in good
standing under the laws of the State of New Jersey, with its principal
executive offices located in Philadelphia, Pennsylvania and Newark, New
Jersey. As of the date hereof, FFB has 150,000,000 authorized shares of
common stock, each of $1.00 par value ("FFB Common Stock"), and 10,000,000
authorized shares of preferred stock, each of $1.00 par value ("FFB Preferred
Stock"; and, together with the FFB Common Stock, "FFB Stock"), being composed
of 4,892,837 authorized shares of Series B Convertible Preferred Stock ("FFB
Series B Preferred Stock"), 350,000 authorized shares of Series D Adjustable
Rate Cumulative Preferred Stock ("FFB Series D Preferred Stock"), 1,500,000
authorized shares of Series E Junior Participating Preferred Stock ("FFB
Series E Preferred Stock") and 75,000 authorized shares of Series F 10.64%
Preferred Stock ("FFB Series F Preferred Stock") (no other class or series of
capital stock being authorized), of which 78,824,512 shares of FFB Common
Stock, 4,662,248 shares of FFB Series B Preferred Stock, 350,000 shares of FFB
Series D Preferred Stock, no shares of FFB Series E Preferred Stock and 75,000
shares of FFB Series F Preferred Stock (represented by depositary shares, each
representing a one one-fortieth interest in a share of FFB Series F Preferred
Stock ("FFB Depositary Shares")) were issued and outstanding as of May 31,
1995.
(B) FUNC. FUNC is a corporation duly organized and existing in good
standing under the laws of the State of North Carolina, with its principal
executive offices located in Charlotte, North Carolina. As of the date
hereof, FUNC has 750,000,000 authorized shares of common stock, each of $3.33
1/3 par value ("FUNC Common Stock"), 40,000,000 authorized shares of Class A
Preferred Stock, no-par value ("FUNC Class A Preferred Stock"), and 10,000,000
authorized shares of Preferred Stock, no-par value ("FUNC No-Par Preferred
Stock"; and, together with the FUNC Class A Preferred Stock, "FUNC Preferred
Stock"; and, together with the FUNC Common Stock and FUNC Class A Preferred
Stock, "FUNC Stock") (no other class or series of capital stock being
authorized), of which 171,065,333 shares of FUNC Common Stock and no shares of
FUNC Preferred Stock were issued and outstanding as of May 31, 1995.
(C) Merger Sub. Merger Sub is a corporation duly organized and existing
in good standing under the laws of the State of New Jersey. As of the date
hereof, Merger Sub has 2,500 authorized shares of common stock, without par
value ("Merger Sub Common Stock"), of which 1,000 shares are issued and
outstanding (no other class of capital stock being authorized).
(D) Stock Option Agreements; Voting and Support Agreement. As a
condition and inducement to FUNC's willingness to enter into this Plan,
following execution and delivery of this Plan, (i) FFB is entering into a
Stock Option Agreement with FUNC (the "FFB Stock Option Agreement") in
substantially the form attached hereto as Exhibit A, pursuant to which FFB
shall grant to FUNC an option to purchase, under certain circumstances, shares
of FFB Common Stock, and (ii) Banco Santander, S.A. (together with certain of
its affiliates, the "Investor") is entering into an agreement with FFB and
FUNC (the "Voting and Support Agreement") in the form attached hereto as
Exhibit B, pursuant to which the Investor, among other things, has agreed to
vote its shares of FFB Stock in favor of the transactions contemplated hereby.
As a condition and inducement to FFB's willingness to enter into this Plan,
following execution and delivery of this Plan, FUNC is entering into a Stock
Option Agreement with FFB (the "FUNC Stock Option Agreement"; and, together
with the FFB Stock Option Agreement, the "Stock Option Agreements") in
substantially the form attached hereto as Exhibit C, pursuant to which FUNC
shall grant to FFB an option to purchase, under certain circumstances, shares
of FUNC Common Stock.
(E) Intention of the Parties. It is the intention of the parties to
this Plan that the Merger (as defined in Section 1.01) shall (i) be accounted
for as a "pooling of interests" under generally accepted accounting principles
and (ii) qualify as a reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
(F) Approvals. The Board of Directors of each of FFB and FUNC (i) has
determined that this Plan and the transactions contemplated hereby are in the
best interests of FFB and FUNC, respectively, and in the best interests of
their respective stockholders, (ii) has determined that this Plan and the
transactions contemplated hereby are consistent with, and in furtherance of,
its respective business strategies and (iii) has approved, at meetings of each
of such Boards of Directors, this Plan. The Board of Directors of Merger Sub
and FUNC, as the sole stockholder of Merger Sub, have approved this Plan.
NOW, THEREFORE, in consideration of their mutual promises and
obligations, the parties hereto approve, adopt and make this Plan and
prescribe the terms and conditions hereof and the manner and basis of carrying
it into effect, which shall be as follows:
I. THE MERGER; EFFECTS OF THE MERGER
1.01. The Merger. At the Effective Time (as defined in
Section 1.02):
(A) The Continuing Corporation. FFB shall merge with and into
Merger Sub (the "Merger"), the separate existence of FFB shall cease and
Merger Sub shall survive and continue to exist as a New Jersey
corporation (Merger Sub sometimes being referred to herein as the
"Continuing Corporation" after the Effective Time).
(B) Effect of the Merger. Subject to the satisfaction or
waiver of the conditions set forth in Article VI in accordance with the
terms of this Plan, the Merger shall become effective upon the filing in
the office of the Secretary of State of New Jersey of a certificate of
merger (the "Certificate of Merger"), or such later date and time as may
be set forth in the Certificate of Merger, in accordance with
Section 14A:10-4.1 of the New Jersey Business Corporation Act (the
"NJBCA"). The Merger shall have the effects prescribed in
Section 14A:10-6 of the NJBCA.
(C) Certificate of Incorporation and By-laws. The certificate
of incorporation and by-laws of the Continuing Corporation shall be those
of Merger Sub, as in effect immediately prior to the Effective Time.
1.02. Effective Date and Effective Time. Subject to the conditions
to the obligations of the parties to effect the Merger as set forth in Article
VI, the parties shall cause the effective date of the Merger (the "Effective
Date") to occur on (1) the third business day to occur after the last of the
conditions set forth in Sections 6.01, 6.02, 6.03 and 6.12 have been satisfied
or waived in accordance with the terms of this Plan or (2) such other date to
which the parties may agree in writing. The time on the Effective Date when
the Merger shall become effective is referred to as the "Effective Time."
1.03. Deposit Agreement. Unless FUNC shall have entered into a new
deposit agreement with respect to the New FUNC Depositary Shares (as defined
below ) at the Effective Time, FUNC shall assume the obligations of FFB under
the Deposit Agreement, dated as of June 28, 1991 (the "Deposit Agreement"),
between FFB and First Fidelity Bank, N.A., as Depositary (the "Depositary"),
and shall execute an instrument confirming such assumption in form and
substance mutually acceptable to FUNC and FFB. The Continuing
Corporation shall instruct the Depositary to treat the shares of New FUNC
Series 3 Preferred Stock (as defined in Section 2.01(F)) received by the
Depositary in exchange for and upon conversion of the shares of FFB Series F
Preferred Stock as new deposited securities under the Deposit Agreement. In
accordance with clause (ii) of the first sentence of Section 4.06 of the
Deposit Agreement, the Receipts (as defined in the Deposit Agreement) then
outstanding shall thereafter represent the shares of New FUNC Series 3
Preferred Stock so received upon conversion and exchange for the shares of FFB
Series F Preferred Stock; and, in accordance with the second sentence of such
Section 4.06, the Continuing Corporation shall, at the request of FUNC,
request that the Depositary call for the surrender of all outstanding Receipts
to be exchanged for new Receipts ("New FUNC Depositary Shares") specifically
describing the New FUNC Series 3 Preferred Stock.
1.04. Amendment of FUNC Articles. At the Effective Time, the
articles of incorporation of FUNC shall be amended to fix the preferences,
limitations and relative rights of the series of FUNC Class A Preferred Stock
the shares of which are to be issued in the Merger pursuant to Article II. On
or prior to the Effective Date, FUNC shall deliver to the Secretary of State
of North Carolina for filing, pursuant to Section 55-10-06 of the Business
Corporation Act of North Carolina (the "NCBCA"), articles of amendment, in
form mutually acceptable to FUNC and FFB, giving effect to the foregoing and
containing any other provisions with respect to the aforementioned series of
FUNC Class A Preferred Stock necessary to permit consummation of the Merger in
accordance with the terms of this Plan (the "Articles of Amendment").
II. CONSIDERATION
2.01. Merger Consideration. Subject to the provisions of this Plan,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any stockholder:
(A) Outstanding FUNC Common Stock and Preferred Stock. Each
share of FUNC Common Stock (and each attached right (a "FUNC Right")
issued pursuant to the Shareholder Protection Rights Agreement, dated
December 18, 1990 (as amended, the "FUNC Rights Agreement"), between FUNC
and First Union National Bank of North Carolina, as Rights Agent) issued
and outstanding immediately prior to the Effective Time shall be
unchanged and shall remain issued and outstanding.
(B) Outstanding Merger Sub Common Stock. Each share of Merger
Sub Common Stock issued and outstanding immediately prior to the
Effective Time shall be unchanged and shall remain issued and
outstanding.
(C) Outstanding FFB Common Stock. Each share (excluding
shares held by FFB or any of its subsidiaries (as defined in
Section 8.08) or by FUNC or any of its subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously
contracted ("Treasury Shares")) of FFB Common Stock (including each
attached right (a "FFB Right") issued pursuant to the Rights Agreement,
dated as of August 17, 1989 (as amended, the "FFB Rights Agreement"),
between FFB and First Fidelity Bank, N.A., as Rights Agent) issued and
outstanding immediately prior to the Effective Time shall become and be
converted into the right to receive 1.35 shares (subject to possible
adjustment as set forth in Sections 2.06 and 7.01(E), the "Exchange
Ratio") of FUNC Common Stock (with the appropriate number of FUNC Rights,
which shall be attached thereto or represented by Rights Certificates in
accordance with the FUNC Rights Agreement).
(D) Outstanding FFB Series B Preferred Stock. If, immediately
prior to the Effective Time, there shall be issued and outstanding any
shares of FFB Series B Preferred Stock, then each such share (excluding
any Treasury Shares) of FFB Series B Preferred Stock shall become and be
converted into the right to receive one share of a newly created series
of FUNC Class A Preferred Stock ("New FUNC Series 1 Preferred Stock")
having terms (to be set forth in the Articles of Amendment) substantially
identical to those of the FFB Series B Preferred Stock (but containing a
mutually agreed upon provision limiting FUNC's creation or issuance of
shares of FUNC Preferred Stock to 10,000,000 shares in the aggregate
after the Effective Time for so long as any shares of New FUNC Series 1
Preferred Stock shall be outstanding).
(E) Outstanding FFB Series D Preferred Stock. If, immediately
prior to the Effective Time, there shall be issued and outstanding any
shares of FFB Series D Preferred Stock, then each such share (excluding
any Treasury Shares) of FFB Series D Preferred Stock shall become and be
converted into the right to receive one share of a newly created series
of FUNC Class A Preferred Stock ("New FUNC Series 2 Preferred Stock")
having terms (to be set forth in the Articles of Amendment) substantially
identical to those of the FFB Series D Preferred Stock.
(F) Outstanding FFB Series F Preferred Stock. If, immediately
prior to the Effective Time, there shall be issued and outstanding any
shares of FFB Series F Preferred Stock, then each such share (excluding
any Treasury Shares and any shares the recordholder of which properly
exercises dissenters' rights of appraisal to the extent available) of
FFB Series F Preferred Stock shall become and be converted into the
right to receive one share of a newly created series of FUNC Class A
Preferred Stock ("New FUNC Series 3 Preferred Stock"; and, together
with the New FUNC Series 1 Preferred Stock and New FUNC Series 2
Preferred Stock, "New FUNC Preferred Stock") having terms (to be set
forth in the Articles of Amendment) substantially identical to those of
the FFB Series F Preferred Stock.
2.02. Stockholder Rights; Stock Transfers. At the Effective Time,
holders of FFB Common Stock and FFB Preferred Stock shall cease to be, and
shall have no rights as, stockholders of FFB, other than to receive the
consideration provided under this Article II. After the Effective Time, there
shall be no transfers on the stock transfer books of FFB or the Continuing
Corporation of shares of FFB Stock.
2.03. Fractional Shares. Notwithstanding any other provision hereof,
no fractional shares of FUNC Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, FUNC shall pay to each holder of FFB Common Stock who would
otherwise be entitled to a fractional share an amount in cash determined by
multiplying such fraction by the average of the last sale prices of FUNC
Common Stock, as reported by the New York Stock Exchange (the "NYSE")
Composite Transactions reporting system (as reported in The Wall Street
Journal or, if not reported therein, in another authoritative source), for the
five NYSE trading days immediately preceding the Effective Date.
2.04. Exchange Procedures. (1) As promptly as practicable after the
Effective Date, FUNC shall send or cause to be sent to each former holder of
shares (other than Treasury Shares) of FFB Stock of record immediately prior
to the Effective Date transmittal materials for use in exchanging such stock-
holder's certificates formerly representing FFB Stock ("Old Certificates") for
the consideration set forth in this Article II. The certificates representing
the shares of FUNC Stock ("New Certificates") into which shares of such
stockholder's FFB Stock are converted on the Effective Date and any check in
respect of fractional share interests or dividends or distributions which such
person shall be entitled to receive will be delivered to such stockholder only
upon delivery to First Union National Bank of North Carolina, as Exchange
Agent (the "Exchange Agent") of Old Certificates representing all of such
shares of FFB Stock (or indemnity satisfactory to FUNC and the Exchange Agent,
if any of such certificates are lost, stolen or destroyed) owned by such
stockholder. No interest will be paid on any such cash to be paid in lieu
of fractional share interests or dividends or distributions which any such
person shall be entitled to receive pursuant to this Article II upon such
delivery. Old Certificates surrendered for exchange by any Affiliate (as
defined in Section 5.07) of FFB shall not be exchanged for New Certificates
until FUNC has received a written agreement from such person as specified in
Section 5.07.
(2) Notwithstanding the foregoing, neither the Exchange Agent nor
the Depositary nor any party hereto shall be liable to any former holder of
FFB Stock or FFB Depositary Shares for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(3) Notwithstanding any other provisions of this Plan, no dividends
or other distributions with a record date following the 30th day to occur
after the Effective Time shall be paid to any person holding Old Certificates
representing FFB Common Stock until such Old Certificates have been
surrendered for exchange for New Certificates. Subject to the effect of
applicable laws, (i) until such 30th day, there shall be paid to each former
holder of shares of FFB Common Stock, the amount of dividends or other
distributions with a record date after the Effective Time but on or before
such 30th day payable with respect to the shares of FUNC Common Stock into
which such FFB Common Stock has been converted pursuant to Section 2.01 and
(ii) following surrender of any such Old Certificates, there shall be paid to
the holder of the New Certificates issued in exchange therefor, without
interest, at the time of such surrender, the amount of dividends or other
distributions with a record date after such 30th day theretofore payable with
respect to the shares represented thereby.
2.05. Dissenting Stockholders. (1) In accordance with
Section 14A:11-1(1)(a) of the NJBCA, except as set forth in Section 2.05(2),
no dissenters' rights of appraisal are available to any holder of shares of
FFB Stock, or to any holder of FFB Depositary Shares. To the extent necessary
to avoid the existence of any such rights, FFB hereby agrees to use its
reasonable best efforts to continue the listing on the NYSE or another
national securities exchange of the shares of FFB Stock (other than the FFB
Series F Preferred Stock), and the FFB Depositary Shares.
(2) If any record holder of shares of FFB Series F Preferred Stock
shall be entitled to be paid the "fair value" of such shares ("Dissenter's
Shares"), as provided in Chapter 14A:11 of the NJBCA, FFB shall give FUNC
notice thereof and FUNC shall have the right to participate in all
negotiations and proceedings with respect to any such
demands. FFB shall not, except with the prior written consent of FUNC,
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for payment. If any dissenting holder of FFB Series F
Preferred Stock shall fail to perfect or shall have effectively withdrawn or
lost any right to dissent that such holder may have, the shares of FFB Series
F Preferred Stock held by such person shall thereupon be treated as though
such shares of FFB Series F Preferred Stock had been converted into shares of
FUNC Series 3 Preferred Stock pursuant to Section 2.01(F).
2.06. Anti-Dilution Provisions. In the event FUNC changes (or
establishes a record date for changing) the number of shares of FUNC Common
Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding FUNC Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
2.07. Treasury Shares. Each of the shares of FFB Stock held as
Treasury Shares immediately prior to the Effective Time, shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
2.08. Options. From and after the Effective Time, all employee and
director stock options to purchase shares of FFB Common Stock (each, an "FFB
Stock Option"), which are then outstanding and unexercised, shall be converted
into and become options to purchase shares of FUNC Common Stock, and FUNC
shall assume each such FFB Stock Option in accordance with the terms of the
plan and agreement by which it is evidenced; provided, however, that from and
after the Effective Time (i) each such FFB Stock Option assumed by FUNC may be
exercised solely to purchase shares of FUNC Common Stock, (ii) the number of
shares of FUNC Common Stock purchasable upon exercise of such FFB Stock Option
shall be equal to the number of shares of FFB Common Stock that were
purchasable under such FFB Stock Option immediately prior to the Effective
Time multiplied by the Exchange Ratio and rounding down to the nearest whole
share, with cash being paid for any fractional share interest that otherwise
would be purchasable, and (iii) the per share exercise price under each such
FFB Stock Option shall be adjusted by dividing the per share exercise price of
each such FFB Stock Option by the Exchange Ratio, and rounding up to the
nearest cent. The terms of each FFB Stock Option shall, in accordance with
its terms, be subject to further adjustment as appropriate to reflect any
stock split, stock dividend, recapitalization or other similar transaction
with respect to FUNC Common Stock on or subsequent to the Effective Date. It
is intended that the foregoing assumption shall be effected in
a manner which is consistent with the requirements of Section 424 of the Code,
as to any FFB Stock Option that is an "incentive stock option" (as defined in
Section 422 of the Code).
III. ACTIONS PENDING MERGER
From the date hereof until the Effective Time, except as expressly
contemplated in this Plan, (i) without the prior written consent of FUNC
(which consent shall not be unreasonably withheld or delayed) FFB will not,
and (except with respect to Section 3.07) will cause each of its subsidiaries
not to, and (ii) without the prior written consent of FFB (which consent shall
not be unreasonably withheld or delayed) FUNC will not, and (except with
respect to Section 3.07) will cause each of its subsidiaries not to:
3.01. Ordinary Course. Conduct the business of it and its
subsidiaries other than in the ordinary and usual course or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact their
business organizations and assets and maintain their rights, franchises and
existing relations with customers, suppliers, employees and business
associates, or take any action that would (i) adversely affect the ability of
any party to obtain any necessary approvals of any Regulatory Authorities (as
defined in Section 4.03(I)) required for the transactions contemplated hereby
without the imposition of a condition or restriction of the type referred to
in the proviso to Section 6.02 or (ii) adversely affect its ability to perform
any of its material obligations under this Plan.
3.02. Capital Stock. Other than (i) as Previously Disclosed in
Section 4.03(C) of its Disclosure Letter (as defined in Section 4.01), (ii) in
connection with acquisitions of businesses permitted in Section 3.06 or
(iii) under the Deposit Agreement or the relevant Stock Option Agreement,
(x) issue, sell or otherwise permit to become outstanding any additional
shares of capital stock, any stock appreciation rights, or any Rights (as
defined in Section 8.08), (y) enter into any agreement with respect to the
foregoing, or (z) permit any additional shares of capital stock to become
subject to new grants of employee stock options, stock appreciation rights, or
similar stock-based employee rights.
3.03. Dividends, Etc. (1) Make, declare or pay any dividend (other
than (i) in the case of FFB, quarterly cash dividends on FFB Common Stock
payable at a rate not to exceed $0.50 per share (or, beginning with the first
dividend payable during 1996, at a rate not to exceed $.55 per share)
dividends payable on FFB Preferred Stock at a rate not exceeding the rate
provided for in the terms thereof, and dividends from subsidiaries to FFB
or another subsidiary of FFB, as applicable, and (ii) in the case of FUNC
quarterly cash dividends on FUNC Common Stock and dividends from subsidiaries
to FUNC or another subsidiary of FUNC, as applicable) on or in respect of,
or declare or make any distribution on any shares of its capital stock,
(2) except as Previously Disclosed in Section 3.03 of its Disclosure
Letter or as contemplated by Section 5.08(2), directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire, any shares
of its capital stock or, (3) other than as Previously Disclosed in
Section 4.03(C) of its Disclosure Letter or as required by the
relevant Stock Option Agreement (or in the case of FUNC, intercorporate
transactions), authorize the creation or issuance of, or issue, any additional
shares of its capital stock or any Rights with respect thereto.
Notwithstanding the foregoing, in all events FFB and FUNC shall agree to
coordinate (on a mutually agreeable basis that will not materially impair KPMG
Peat Marwick LLP's ability to deliver the letters referred to in Section 6.05)
the declaration of dividends (and the record and payment dates therefor)
payable during the period preceding and including the quarter in which the
Effective Date occurs so that FFB and FUNC stockholders will receive fair
dividends and in no event shall FFB and FUNC stockholders fail to receive a
fair dividend during any quarter up to and including the quarter immediately
following the Effective Date.
3.04. Compensation; Employment Agreements; Etc. In the case of FFB
and its subsidiaries, enter into or amend any written employment, severance or
similar agreements or arrangements with any of its directors, officers or
employees, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except for (i) normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice or consistent with individual increases
by FUNC for similarly situated employees of FUNC (but not exceeding the
compensation levels of such FUNC employees) or (ii) other changes as may be
required by law or to satisfy contractual obligations existing as of the date
hereof or additional grants of awards to newly hired employees consistent with
past practice, which to the extent practicable have been Previously Disclosed
in Section 3.04 of its Disclosure Letter.
3.05. Benefit Plans. In the case of FFB and its subsidiaries, enter
into or modify (except as may be required by applicable law or to satisfy
contractual obligations existing as of the date hereof, which to the extent
practicable have been Previously Disclosed in Section 3.05 of its Disclosure
Letter) any pension, retirement, stock option, stock purchase, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance
or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any of its
directors, officers or other employees, including without limitation taking
any action that accelerates the vesting or exercise of any benefits payable
thereunder.
3.06. Acquisitions and Dispositions. Except as Previously Disclosed
in Section 3.06 of its Disclosure Letter and except for dispositions and
acquisitions of assets in the ordinary and usual course of business consistent
with past practice, dispose of or discontinue any portion of its assets,
business or properties, which is material to it and its subsidiaries taken as
a whole, or merge or consolidate with, or acquire (other than by way of
foreclosures or acquisitions of control in a bona fide fiduciary capacity or
in satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice) all
or any portion of, the business or property of any other entity which is
material to it and its subsidiaries taken as a whole (any of the foregoing, a
"Business Combination Transaction"); it being understood, for purposes of this
Section 3.06, that: (1) in the case of FFB (i) Business Combination
Transactions in which the purchase price to be paid or received by FFB and/or
its subsidiaries consists solely of cash in an amount not exceeding $150
million in any one case shall be considered not to be material to FFB and its
subsidiaries taken as a whole and (ii) no Business Combination Transaction
involving the issuance by FFB and/or its subsidiaries of shares of capital
stock would be permissible without FUNC's prior consent; and (2) in the case
of FUNC, (i) Business Combination Transactions in which the purchase price to
be paid or received by FUNC and/or its subsidiaries includes cash in an amount
not exceeding $300 million in any one case or (ii) Business Combination
Transactions in which the purchase price paid by FUNC and/or its subsidiaries
includes shares of FUNC Common Stock in a number not exceeding 4.0% of the
number of such shares outstanding on May 31, 1995 in any one case, shall be
considered not to be material to FUNC and its subsidiaries taken as a whole.
3.07. Amendments. Except, in the case of FUNC, by filing the
Articles of Amendment, amend its articles or certificate of incorporation or
by-laws (or similar constitutive documents) or, except as contemplated in
Section 4.03(P)(2), the FUNC Rights Agreement or FFB Rights Agreement, as the
case may be, redeem the FUNC Rights or FFB Rights, as the case may be, or
adopt any plan or arrangement similar to or as a substitute for the FFB Rights
Agreement or FUNC Rights Agreement, as the case may be.
3.08. Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
generally accepted accounting principles.
3.09. Adverse Actions. (1) Knowingly take any action that would, or
is reasonably likely to, prevent or impede the Merger from qualifying (i) for
pooling-of-interests accounting treatment or (ii) as a reorganization within
the meaning of Section 368(a) of the Code; provided, however, that nothing
contained herein shall limit the ability of FFB or FUNC to exercise its rights
under either Stock Option Agreement; or (2) knowingly take any action that is
intended or is reasonably likely to result in (x) any of its representations
and warranties set forth in this Plan being or becoming untrue in any material
respect at any time prior to the Effective Time, (y) any of the conditions to
the Merger set forth in Article VI not being satisfied or (z) a material
violation of any provision of this Plan except, in every case, as may be
required by applicable law.
3.10. Agreements. Agree or commit to do anything prohibited by
Sections 3.01 through 3.09.
IV. REPRESENTATIONS AND WARRANTIES
4.01. Disclosure Letters. On or prior to the date hereof, FUNC has
delivered to FFB and FFB has delivered to FUNC a letter (as the case may be,
its "Disclosure Letter") setting forth, among other things, items the
disclosure of which is necessary or appropriate in relation to any or all of
its representations and warranties; provided, that (i) no such item is
required to be set forth in a Disclosure Letter as an exception to a
representation or warranty (it being understood that items to be set forth in
response to Sections 4.03(C), (D)(1) and (2) and (M)(1) are intended as
informational disclosures and not to constitute exceptions to the applicable
representation or warranty) if its absence is not reasonably likely to result
in the related representation or warranty being deemed untrue or incorrect
under the standards established by Section 4.02, and (ii) the mere inclusion
of an item in a Disclosure Letter shall not be deemed an admission by a party
that such item represents a material exception or fact, event or circumstance
or that such item is reasonably likely to result in a Material Adverse Effect
(as defined in Section 8.08).
4.02. Standard. No representation or warranty of FUNC or FFB
contained in Section 4.03 (other than the representations and warranties
contained in (i) Sections 4.03(A) (with respect to the facts set forth in
Recitals A and B), (C) and (U)(ii), which shall be true and correct (except
for inaccuracies which are de minimis in amount) and (ii) Sections
4.03(D)(1)(i)-(iv), (F), (P) and (U)(i), which shall be true and correct in
all material respects) shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event if such fact,
circumstance or event, individually or taken together with all other facts,
circumstances or events inconsistent with any paragraph of Section 4.03 is not
reasonably likely to, have a Material Adverse Effect.
4.03. Representations and Warranties. Subject to Sections 4.01 and
4.02, FFB hereby represents and warrants to FUNC, and FUNC hereby represents
and warrants to FFB, as follows:
(A) Recitals. In the case of the representations and warranties of
FFB, the facts set forth in Recitals A, E and F of this Plan with respect to
it are true and correct. In the case of the representations and warranties of
FUNC, the facts set forth in Recitals B, C, E and F of this Plan with respect
to it and Merger Sub are true and correct.
(B) Organization, Standing, and Authority. It is duly qualified to
do business and is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified. It has in effect all
federal, state, local, and foreign governmental authorizations necessary for
it to own or lease its properties and assets and to carry on its business as
it is now conducted.
(C) Shares. (1) The outstanding shares of its capital stock are
validly issued and outstanding, fully paid and nonassessable, and subject to
no preemptive rights (and were not issued in violation of any preemptive
rights). Except as Previously Disclosed in Section 4.03(C) of its Disclosure
Letter, there are no shares of its capital stock authorized and reserved for
issuance, it does not have any Rights issued or outstanding with respect to
its capital stock, and it does not have any commitment to authorize, issue or
sell any such shares or Rights, except pursuant to this Plan, the relevant
Stock Option Agreement and the FUNC Rights Agreement or FFB Rights Agreement,
as the case may be. Since May 31, 1995, it has issued no shares of its
capital stock except pursuant to plans or commitments Previously Disclosed in
Section 4.03(C) of its Disclosure Letter.
(2) In the case of the representations and warranties of FFB, the
number of shares of FFB Common Stock which are issuable upon exercise of
FFB Stock Options as of the date hereof are Previously Disclosed in
Section 4.03(C) of FFB's Disclosure Letter.
(3) In the case of the representations and warranties of FUNC: (i)
the outstanding shares of Merger Sub Common Stock are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights; and (ii) the shares of FUNC Stock to be issued in exchange for shares
of FFB Stock in the Merger, when issued in accordance with the terms of this
Plan will be duly authorized, validly issued, fully paid and nonassessable.
(D) Subsidiaries. (1) In the case of the representations and
warranties of FFB, (i) it has Previously Disclosed in Section 4.03(D) of FFB's
Disclosure Letter a list of all its subsidiaries together with state of
incorporation for each such subsidiary and the states or jurisdictions in
which such subsidiary is qualified to conduct business, (ii) no equity
securities of any of its significant subsidiaries (as defined in Section 8.08)
are or may become required to be issued (other than to it or a subsidiary of
it) by reason of any Rights, (iii) there are no contracts, commitments,
understandings, or arrangements by which any of such significant subsidiaries
is or may be bound to sell or otherwise transfer any shares of the capital
stock of any such significant subsidiary (other than to it or a subsidiary of
it), (iv) there are no contracts, commitments, understandings, or arrangements
relating to its rights to vote or to dispose of such shares (other than to it
or a subsidiary of it), and (v) all of the shares of capital stock of each
such significant subsidiary held by it or its subsidiaries are fully paid and
(except pursuant to 12 U.S.C. Section 55 or equivalent state statutes in the
case of banking subsidiaries) nonassessable and are owned by it or its
subsidiaries free and clear of any charge, mortgage, pledge, security
interest, restriction, claim, lien, or encumbrance ("Liens").
(2) In the case of the representations and warranties of FFB, except
as Previously Disclosed in Section 4.03(D) of FFB's Disclosure Letter, FFB
does not own (other than in a bona fide fiduciary capacity or in satisfaction
of a debt previously contracted) beneficially, directly or indirectly, any
shares of any equity securities or similar interests of any person, or any
interest in a partnership or joint venture of any kind.
(3) Each of its significant subsidiaries has been duly organized and
is validly existing in good standing under the laws of the jurisdiction in
which it is incorporated or organized, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or leasing
of property or the conduct of its business requires it to be so qualified.
(E) Corporate Power. It and each of its significant subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and it (and, in the
case of the representations and warranties of FUNC, Merger Sub) has the
corporate power and authority to execute, deliver and perform its obligations
under this Plan and the Stock Option Agreements.
(F) Corporate Authority. Subject to receipt of the requisite
approval of its stockholders referred to in Section 6.01, this Plan, the Stock
Option Agreements and the Voting and Support Agreement, and the transactions
contemplated hereby and thereby have been, authorized by all necessary
corporate action of it and this Plan is a valid and binding agreement of it
(and, in the case of FUNC, Merger Sub) enforceable in accordance with its
terms, (except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
(G) No Defaults. Except as Previously Disclosed in Section 4.03(G)
of its Disclosure Letter, subject to receipt of the regulatory approvals, and
expiration of the waiting periods, referred to in Section 6.02 and the
required filings under federal and state securities laws, the execution,
delivery and performance of this Plan and the consummation of the transactions
contemplated hereby by it, do not and will not (i) constitute a breach or
violation of, or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture or
instrument of it or of any of its significant subsidiaries or to which it or
any of its significant subsidiaries or properties is subject or bound, (ii)
constitute a breach or violation of, or a default under, its articles or
certificate of incorporation or by-laws, or (iii) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license agreement, indenture or instrument.
(H) Financial Reports and SEC Documents. Its Annual Report on Form
10-K for the fiscal year ended December 31, 1994, and all other reports,
registration statements, definitive proxy statements or information statements
filed or to be filed by it or any of its subsidiaries subsequent to December
31, 1994 under the Securities Act of 1933, as amended (together with the rules
and regulations thereunder, the "Securities Act") or under Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (together with the rules and regulations thereunder, the "Exchange
Act"), in the form filed, or to be filed (collectively, its "SEC Documents"),
with the Securities and Exchange Commission (the "SEC") (i) complied or will
comply in all material respects as to form with the applicable requirements
under the Exchange Act and (ii) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into any such SEC Document
(including the related notes and schedules thereto) fairly presents and will
fairly present the financial position of the entity or entities to which it
relates as of its date and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in such report
and documents (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may
be noted therein, subject to normal and recurring year-end audit adjustments
in the case of unaudited statements.
(I) Litigation; Regulatory Action. Except as Previously Disclosed
in Section 4.03(I) of its Disclosure Letter:
(1) no litigation, proceeding or controversy before any court
or governmental agency is pending against it or any of its subsidiaries
and, to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened;
(2) neither it nor any of its subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the Office of the Comptroller of
the Currency, the Board of Governors of the Federal Reserve System and
the Federal Deposit Insurance Corporation) or the supervision or
regulation of it or any of its subsidiaries (collectively, the
"Regulatory Authorities"); and
(3) neither it nor any of its subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing
or requesting) any such order, decree, agreement, memorandum or
understanding, commitment letter or similar submission.
(J) Compliance with Laws. Except as Previously Disclosed in
Section 4.03(J) of its Disclosure Letter, it and each of its subsidiaries:
(1) is in compliance, in the conduct of its business, with all
applicable federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to
the employees conducting such businesses, including, without limitation,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory
business practices;
(2) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its knowledge,
no suspension or cancellation of any of them is threatened; and
(3) has received, since December 31, 1994, no notification or
communication from any Regulatory Authority (i) asserting that it or any
of its subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Regulatory Authority enforces
or (ii) threatening to revoke any license, franchise, permit, or
governmental authorization or (iii) threatening or contemplating
revocation or limitation of, or which would have the effect of revoking
or limiting, federal deposit insurance (nor, to its knowledge, do any
grounds for any of the foregoing exist).
(K) Defaults; Properties. (1) Except as Previously Disclosed in
Section 4.03(K) of its Disclosure Letter, neither it nor any of its
subsidiaries is in default under any contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which it is a
party, by which its respective assets, business, or operations may be bound or
affected, or under which it or its respective assets, business, or
operations receives benefits, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute
such a default.
(2) Except as disclosed or reserved against in its SEC Documents,
it and its subsidiaries have good and marketable title, free and clear of all
Liens (other than Liens for current taxes not yet delinquent or pledges to
secure deposits) to all of the material properties and assets, tangible or
intangible, reflected in its SEC Documents as being owned by it or its
subsidiaries as of the dates thereof. To its knowledge, all buildings and all
fixtures, equipment and other property and assets that are material to its
business on a consolidated basis and are held under leases or subleases by it
or its subsidiaries are held under valid leases or subleases enforceable in
accordance with their respective terms (except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability affecting creditors' rights or by
general equity principles).
(L) No Brokers. All negotiations relative to this Plan and the
transactions contemplated hereby have been carried on by it directly with the
other parties hereto and no action has been taken by it that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment, excluding, in the case of FFB, a fee to be
paid to Goldman, Sachs & Co., and, in the case of FUNC, a fee to be paid to
Lazard Freres & Co. LLC, which, in each case, has been heretofore disclosed to
the other party.
(M) Employee Benefit Plans. (1) In the case of the
representations and warranties of FFB, Section 4.03(M) of FFB's Disclosure
Letter contains a complete list of all bonus, vacation, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock and stock option
plans, all employment or severance contracts, all medical, dental, disability,
health and life insurance plans, all other employee benefit and fringe benefit
plans, contracts or arrangements and any applicable "change of control" or
similar provisions in any plan, contract or arrangement maintained or
contributed to by it or any of its subsidiaries for the benefit of officers,
former officers, employees, former employees, directors, former directors, or
the beneficiaries of any of the foregoing ("Compensation and Benefit Plans").
(2) True and complete copies of its Compensation and Benefit Plans,
including, but not limited to, any trust instruments and/or insurance
contracts, if any, forming a part thereof, and all amendments thereto have
been supplied to the other party.
(3) Each of its Compensation and Benefit Plans has been
administered in compliance with the terms thereof. All "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA ("Multiemployer Plans"), covering
employees or former employees of it and its subsidiaries (its "Plans"), to the
extent subject to ERISA, are in compliance with ERISA, the Code, the Age
Discrimination in Employment Act and other applicable laws. Each Plan of it
or its subsidiaries which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and it is not aware of
any circumstances reasonably likely to result in the revocation or denial of
any such favorable determination letter. Except as Previously Disclosed in
Section 4.03(M) of its Disclosure Letter, there is no pending or, to its
knowledge, threatened litigation or governmental audit, examination or
investigation relating to the Plans. Neither it nor any of its subsidiaries
has engaged in a transaction with respect to any Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could
subject it or any of its subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA.
(4) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by it or any of its subsidiaries with respect to
any ongoing, frozen or terminated "single-employer plan", within the meaning
of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or the single-employer plan of any entity which is considered one
employer with it under Section 4001(a)(15) of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Neither it nor any of its subsidiaries presently
contributes to a Multiemployer Plan, nor have they contributed to such a plan
within the past five calendar years. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any Pension
Plan of it or any of its subsidiaries or by any ERISA Affiliate within the
past 12 months.
(5) All contributions, premiums and payments required to be made
under the terms of any Plan of it or any of its subsidiaries have been made.
Neither any Pension Plan of it or any of its subsidiaries nor any single-
employer plan of an ERISA Affiliate of it or any of its subsidiaries
has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA.
Neither it nor any of its subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(6) Under each Pension Plan of it or any of its subsidiaries which
is a single-employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions contained in the
Plan's most recent actuarial valuation) did not exceed the then current value
of the assets of such Plan, and there has been no adverse change in the
financial condition of such Plan (with respect to either assets or benefits)
since the last day of the most recent Plan year.
(7) In the case of the representations and warranties of FFB,
neither FFB nor any of its subsidiaries has any obligations for retiree health
and life benefits under any plan, except as Previously Disclosed in Section
4.03(M) of FFB's Disclosure Letter.
(8) In the case of the representations and warranties of FFB,
except as Previously Disclosed in Section 4.03(M) of FFB's Disclosure Letter,
neither the execution and delivery of this Plan nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of FFB or any of its
subsidiaries under any Compensation and Benefit Plan or otherwise from FFB or
any of its subsidiaries, (ii) increase any benefits otherwise payable under
any Compensation and Benefit Plan or (iii) result in any acceleration of the
time of payment or vesting of any such benefit.
(N) Labor Matters. Neither it nor any of its subsidiaries is a
party to, or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is it or any of its subsidiaries the subject of a proceeding asserting that it
or any such subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel it or such
subsidiary to bargain with any labor organization as to wages and conditions
of employment, nor is there any strike or other labor dispute involving it or
any of its subsidiaries, pending or, to the best of its knowledge,
threatened, nor is it aware of any activity involving it or any of its
subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
(O) Insurance. It and its subsidiaries have taken all requisite
action (including without limitation the making of claims and the giving of
notices) pursuant to its directors' and officers' liability insurance policy
or policies in order to preserve all rights thereunder with respect to all
matters (other than matters arising in connection with this Plan and the
transactions contemplated hereby) that are known to it.
(P) Takeover Laws; Rights Plans (1) It has taken all action
required to be taken by it in order to exempt this Plan, the relevant Stock
Option Agreement and the Voting and Support Agreement, and the transactions
contemplated hereby and thereby, from, and this Plan, the Voting and Support
Agreement and the relevant Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
"moratorium", "control share", "fair price" or other antitakeover laws and
regulations (collectively, "Takeover Laws") of the States (i) of
North Carolina in the case of the representations and warranties of FUNC,
including Articles 9 and 9A of the NCBCA, and (ii) of New Jersey in the case
of the representations and warranties of FFB, including Article 14A:10A of the
NJBCA.
(2) It has (i) in the case of the representations and warranties of
FFB, duly entered into an amendment to the FFB Rights Agreement in
substantially the form of Exhibit D, (ii) in the case of the representations
and warranties of FUNC, duly entered into an amendment to the FUNC Rights
Agreement in substantially the form of Exhibit E and (iii) taken all other
action necessary or appropriate so that, the entering into of this Plan and
the Stock Option Agreements (and, in the case of the representations and
warranties of FFB, the Voting and Support Agreement), and the consummation of
the transactions contemplated hereby and thereby (including without limitation
the Merger and the exercise of the Option (as defined in the relevant Stock
Option Agreement)) do not and will not result in the ability of any person to
exercise any Rights under, in the case of FFB, the FFB Rights Agreement, and
in the case of FUNC, the FUNC Rights Agreement, or enable or require in the
case of FFB, the FFB Rights and in the case of FUNC, the FUNC Rights, to
separate from the shares of common stock to which they are attached or to be
triggered or become exercisable.
(3) In the case of the representations and warranties of FFB, no
"Distribution Date", "Shares Acquisition Date" or "Trigger Event" (as such
terms are defined in the FFB Rights Plan) has occurred; and, in the case of
the representations and warranties of FUNC, no "Separation Time", "Stock
Acquisition Date" or "Flip-in Date" (as such terms are defined in the FUNC
Rights Agreement) has occurred.
(Q) Environmental Matters. Except as Previously Disclosed in
Section 4.03(Q) of its Disclosure Letter:
(1) To its knowledge, it and each of its subsidiaries, the
Participation Facilities and the Loan/Fiduciary Properties (each as
defined below) are, and have been, in compliance with all Environmental
Laws (as defined below) and it has no knowledge of any circumstances that
with the passage of time or the giving of notice would be reasonably
likely to result in noncompliance.
(2) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency or board or other forum
in which it or any of its subsidiaries or any Participation Facility has
been, or with respect to threatened proceedings, reasonably would be
expected to be, named as a defendant or potentially responsible party (i)
for alleged noncompliance (including by any predecessor) with any
Environmental Law, or (ii) relating to the presence, release or
threatened release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site owned, leased or
operated by it or any of its subsidiaries or any Participation Facility.
(3) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency or board or other forum
in which any Loan/Fiduciary Property (or it or any of its subsidiaries
in respect of any Loan/Fiduciary Property) has been, or with respect to
threatened proceedings, reasonably would be expected to be, named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law, or (ii)
relating to the release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a Loan/Fiduciary
Property.
(4) To its knowledge, there is no reasonable basis for any
proceeding of a type described in Section 4.03(Q) (2) or (3).
(5) To its knowledge, during the period of (i) its or any of
its subsidiaries' ownership or operation of any of their respective
current properties, (ii) its or any of its subsidiaries' participation
in the management of any Participation Facility, or (iii) its or any of
its subsidiaries' holding of a security or other interest in a Loan/
Fiduciary Property, there have been no releases or threatened releases
of Hazardous Material in, on, from, under or affecting any such
property, Participation Facility or Loan/Fiduciary Property.
(6) To its knowledge, prior to the period of (i) its or any of
its subsidiaries' ownership or operation of any of their respective
current properties, (ii) its or any of its subsidiaries' participation in
the management of any Participation Facility, or (iii) its or any of its
subsidiaries' holding of a security or other interest in a Loan/Fiduciary
Property, there were no releases or threatened releases of Hazardous
Material in, on, under or affecting any such property, Participation
Facility or Loan/Fiduciary Property.
(7) With respect to either FFB or FUNC, the following
definitions apply for purposes of this Section 4.03(Q): "Loan/Fiduciary
Property" means any property owned or operated by it or any of its
subsidiaries or in which it or any of its subsidiaries holds a security
or other interest (including, without limitation, a fiduciary interest),
and, where required by the context, includes any such property where it
or any of its subsidiaries constitutes the owner or operator of such
property; "Participation Facility" means any facility in which it or any
of its subsidiaries participates in the management and, where required by
the context, includes the owner or operator of such property;
"Environmental Law" means (i) any federal, state and local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, judgment, decree, injunction,
requirement or agreement with any governmental entity, relating to (a)
the protection, preservation or restoration of the environment,
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant
and animal life or any other natural resource), or to human health or
safety, or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Material, in each case as
amended and as now in effect and includes, without limitation, the
federal Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act, the
Federal Water Pollution Control Act of 1972, the federal Clean Air
Act, the federal Clean Water Act, the federal Resource Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the federal Solid Waste Disposal Act, the federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970,
and any similar state or local laws each as amended and as now in effect,
and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Material; "Hazardous
Material" means any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or quantity,
and includes, without limitation, any oil or other petroleum product,
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, solid waste or petroleum or any derivative
or by-product thereof, radon, radioactive material, asbestos, asbestos
containing material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
(R) Tax Reports. Except as Previously Disclosed in Section 4.03(R)
of its Disclosure Letter: (i) all reports and returns with respect to Taxes
(as defined below) that are required to be filed by or with respect to it or
its subsidiaries, including without limitation consolidated federal income tax
returns of it and its subsidiaries (collectively, the "Tax Returns"), have
been timely filed, or requests for extensions have been timely filed and have
not expired, and such Tax Returns were true, complete and accurate; (ii) all
taxes (which shall include federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes imposed
on the income, properties or operations of it or its subsidiaries, together
with any interest, additions, or penalties with respect thereto and any
interest in respect of such additions or penalties, collectively the "Taxes")
shown to be due on such Tax Returns have been paid in full; (iii) all Taxes
due with respect to completed and settled examinations have been paid in full;
(iv) no issues have been raised by the relevant taxing authority in connection
with the examination of any of such Tax Returns; and (v) no waivers of
statutes of limitations (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service) have been given
by or requested with respect to any Taxes of it or any of its subsidiaries.
(S) Pooling; Reorganization. As of the date hereof, it is aware of
no reason why the Merger will fail to qualify (i) for pooling-of-interests
accounting treatment or (ii) as a reorganization under Section 368(a) of the
Code.
(T) Regulatory Approvals. As of the date hereof, it is aware of
no reason why the regulatory approvals and consents referred to in
Section 6.02 will not be received without the imposition of a condition or
requirement described in the proviso thereto.
(U) No Material Adverse Effect. Since December 31, 1994, except
as Previously Disclosed in its SEC Documents filed with the SEC on or before
the date hereof or in any Section of its Disclosure Letter, (i) it and its
subsidiaries have conducted their respective businesses in the ordinary and
usual course (excluding the incurrence of expenses related to this Plan and
the transactions contemplated hereby) and (ii) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 4.03 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
V. COVENANTS
FFB hereby covenants to and agrees with FUNC, and FUNC hereby covenants
to and agrees with FFB, that:
5.01. Reasonable Best Efforts. Subject to the terms and conditions
of this Plan, it shall use its reasonable best efforts in good faith to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Merger as promptly as reasonably practicable and to
otherwise enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other parties hereto to that end.
5.02. Stockholder Approvals. Each of them shall take, in accordance
with applicable law, NYSE rules and its respective articles or certificate of
incorporation and by-laws, all action necessary to convene, respectively, an
appropriate meeting of stockholders of FUNC to consider and vote upon the
issuance of the shares of FUNC Stock to be issued in the Merger pursuant to
this Plan and to vote on any other stockholder approval matters required for
consummation of the Merger (the "FUNC Meeting"), and an appropriate meeting of
stockholders of FFB to consider and vote upon the approval of this Plan and to
vote on any other stockholder approval matters required for consummation of
the Merger (the "FFB Meeting"; each of the FUNC Meeting and the FFB
Meeting, a "Meeting"), respectively, as promptly as practicable
after the Registration Statement (as defined in Section 5.03) is
declared effective. Subject to the next succeeding sentence, the Board of
Directors of each of FUNC and FFB will recommend such approval, and each of
FUNC and FFB will take all reasonable lawful action to solicit such approval
by its respective stockholders. The Board of Directors of FUNC or FFB, acting
on behalf of FUNC or FFB, respectively, may fail to make such recommendation,
or withdraw, modify or change any such recommendation if and only if such
Board of Directors, after having consulted with and considered the advice of
outside counsel, has determined that the making of such recommendation, or the
failure so to withdraw, modify or change its recommendation, would constitute
a breach of the fiduciary duties of such directors under applicable law.
5.03. Registration Statement. (1) Each of FUNC and FFB agrees to
cooperate in the preparation of a registration statement on Form S-4 (the
"Registration Statement") to be filed by FUNC with the SEC in connection with
the issuance of FUNC Common Stock (and, to the extent necessary, New FUNC
Preferred Stock and New FUNC Depositary Shares) in the Merger (including the
joint proxy statement and prospectus and other proxy solicitation materials of
FUNC and FFB constituting a part thereof (the "Joint Proxy Statement"). Each
of FFB and FUNC agrees to use all reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
reasonably practicable after filing thereof. FUNC also agrees to use all
reasonable efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement. FFB agrees to furnish to FUNC all information concerning FFB,
its subsidiaries, officers, directors and stockholders as may be reasonably
requested in connection with the foregoing.
(2) Each of FFB and FUNC agrees, as to itself and its subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Joint
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the times of the FUNC Meeting and the FFB
Meeting, contain any statement which, in the light of the circumstances under
which such statement is made, will be false or misleading with respect to any
material fact, or which will omit to state any material fact necessary in
order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier statement in the Joint
Proxy Statement or any amendment or supplement thereto.
(3) In the case of FUNC, FUNC will advise FFB, promptly after FUNC
receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of the FUNC
Stock or New FUNC Depositary Shares for offering or sale in any jurisdiction,
of the initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration
Statement or for additional information.
5.04. Press Releases. It will not, without the prior approval of
the other, issue any press release or written statement for general
circulation relating to the transactions contemplated hereby, except as
otherwise required by applicable law.
5.05. Access; Information. (1) Upon reasonable notice, it shall
afford the other parties and their officers, employees, counsel, accountants
and other authorized representatives, access, during normal business hours
throughout the period prior to the Effective Date, to all of its properties,
books, contracts, commitments and records and, during such period, it shall
furnish promptly to it (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal or state
securities or banking laws, and (ii) all other information concerning the
business, properties and personnel of it as the other may reasonably request;
and (2) it will not use any information obtained pursuant to this Section 5.05
for any purpose unrelated to the consummation of the transactions contemplated
by this Plan and, if this Plan is terminated, will hold all information and
documents obtained pursuant to this paragraph in confidence (as provided in
Section 8.06) unless and until such time as such information or documents
become publicly available other than by reason of any action or failure to act
by it or as it is advised by counsel that any such information or document is
required by law or applicable stock exchange rule to be disclosed. No
investigation by either party of the business and affairs of another shall
affect or be deemed to modify or waive any representation, warranty, covenant
or agreement in this Plan, or the conditions to either party's obligation to
consummate the transactions contemplated by this Plan.
5.06. Acquisition Proposals. Without the prior written consent of
the other, neither FFB nor FUNC shall, and each of them shall cause its
respective subsidiaries not to, solicit or encourage inquiries or proposals
with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any
such person relating to, any tender offer or exchange offer for, or
any proposal for the acquisition of a substantial equity interest in,
or a substantial portion of the assets of, such party or any of
its significant subsidiaries; provided, however, that the Board
of Directors of FFB or FUNC, on behalf of FFB or FUNC, respectively, may
furnish or cause to be furnished information and may participate in such
discussions and negotiations directly or through its representatives if such
Board of Directors, after having consulted with and considered the advice of
outside counsel, has determined that the failure to provide such information
or participate in such negotiations and discussions would cause the members of
such Board of Directors to breach their fiduciary duties under applicable
laws. It shall instruct its and its subsidiaries' officers, directors,
agents, advisors and affiliates to refrain from doing any of the foregoing.
5.07. Affiliate Agreements. (1) Not later than the 15th day prior to
the mailing of the Joint Proxy Statement, FUNC shall deliver to FFB, and FFB
shall deliver to FUNC, a schedule of each person that, to the best of its
knowledge, is or is reasonably likely to be, as of the date of the relevant
Meeting, deemed to be an "affiliate" of it (each, an "Affiliate") as that term
is used in Rule 145 under the Securities Act or SEC Accounting Series Releases
130 and 135.
(2) Each of FFB and FUNC shall use its respective reasonable best efforts
to cause each person who may be deemed to be an Affiliate of FFB or FUNC, as
the case may be, to execute and deliver to FFB and FUNC on or before the date
of mailing of the Joint Proxy Statement an agreement in the form attached
hereto as Exhibit F or Exhibit G, respectively.
5.08. Certain Modifications; Restructuring Charges. (1) FFB and FUNC
shall consult with respect to their loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
and FFB shall make such modifications or changes to its policies and
practices, if any, and at such date prior to the Effective Time, as may be
mutually agreed upon. FFB and FUNC shall also consult with respect to the
character, amount and timing of restructuring charges to be taken by each of
them in connection with the transactions contemplated hereby and shall take
such charges in accordance with generally accepted accounting principles, as
may be mutually agreed upon. No party's representations, warranties and
covenants contained in this Plan shall be deemed to be untrue or breached in
any respect for any purpose as a consequence of any modifications or changes
to such policies and practices which may be undertaken on account of this
Section 5.08.
(2) Each of FFB and FUNC agrees to cooperate with the other in
effecting, prior to the Effective Time, repurchases of shares of FUNC Common
Stock and/or FFB Common Stock; provided, however, that no such redemption or
repurchase shall be effected by either party (i) if KPMG Peat Marwick LLP
concludes that, as a result thereof, such firm may be unable to deliver the
letters referred to in Section 6.05, (ii) if Sullivan & Cromwell, special tax
counsel to FUNC and FFB, concludes that, as a result thereof, such firm may be
unable to deliver the opinion referred to in Section 6.10, (iii) except in
accordance with the Exchange Act and other applicable law or (iv) on any day
which FFB and FUNC reasonably conclude may fall within the period for
determining the Average Closing Price (as defined in Section 7.01(E).
(3) In the case of FFB, FFB agrees to amend its Dividend
Reinvestment Plan ("DRP") so that after the execution of this Plan, no
original issue shares of FFB Common Stock will be issued under the DRP.
5.09. Takeover Laws. No party shall take any action that would cause
the transactions contemplated by this Plan, the Voting and Support Agreement
and/or the Stock Option Agreements to be subject to requirements imposed by
any Takeover Law and each of them shall take all necessary steps within its
control to exempt (or ensure the continued exemption of) the transactions
contemplated by this Plan, the Voting and Support Agreement and the Stock
Option Agreement from, or if necessary challenge the validity or applicability
of, any applicable Takeover Law, as now or hereafter in effect, including,
without limitation, Articles 9 and 9A of the NCBCA, Article 14A:10A of the
NJBCA, other Takeover Laws of the States of North Carolina or New Jersey or
Takeover Laws of any other State that purport to apply to this Plan or the
transactions contemplated hereby or thereby.
5.10. No Rights Triggered. Each of FFB and FUNC shall take all
necessary steps to ensure that the entering into of this Plan, the Voting and
Support Agreement and the Stock Option Agreements and the consummation of the
transactions contemplated hereby and thereby and any other action or
combination of actions, or any other transactions contemplated hereby or
thereby, do not and will not result in the grant of any rights to any person
(1) under its articles or certificate of incorporation or by-laws, (2) under
any material agreement to which it or any of its subsidiaries is a party
(including without limitation, in the case of FFB, the FFB Rights Agreement,
and in the case of FUNC, the FUNC Rights Agreement) or (3) to exercise or
receive certificates for Rights, or acquire any property in respect of Rights,
under the FFB Rights Agreement or FUNC Rights Agreement, as the case may be.
5.11. Shares Listed. In the case of FUNC, FUNC shall use its
reasonable best efforts to list, prior to the Effective Date, on the NYSE,
upon official notice of issuance, the shares of FUNC Stock and New FUNC
Depositary Shares to be issued to the holders of FFB Stock and FFB Depositary
Shares in the Merger (but only to the extent that the corresponding class or
series of FFB Stock and/or the FFB Depositary Shares were so listed
immediately prior to the Effective Time).
5.12. Regulatory Applications. (1) Each party shall promptly
(i) prepare and submit applications to the appropriate Regulatory Authorities
and (ii) make all other appropriate filings to secure all other approvals,
consents and rulings, which are necessary for it to consummate the Merger.
(2) Each of FUNC and FFB agrees to cooperate with the other and,
subject to the terms and conditions set forth in this Agreement, use its
reasonable best efforts to prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to obtain all necessary permits, consents, orders, approvals
and authorizations of, or any exemption by, all third parties and Regulatory
Authorities necessary or advisable to consummate the transactions contemplated
by this Plan, including without limitation the regulatory approvals referred
to in Section 6.02. Each of FUNC and FFB shall have the right to review in
advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to all material written information submitted to, any third party
or any Regulatory Authorities in connection with the transactions contemplated
by this Plan. In exercising the foregoing right, each of the parties hereto
agrees to act reasonably and as promptly as practicable. Each party hereto
agrees that it will consult with the other party hereto with respect to the
obtaining of all material permits, consents, approvals and authorizations of
all third parties and Regulatory Authorities necessary or advisable to
consummate the transactions contemplated by this Plan and each party will keep
the other parties apprised of the status of material matters relating to
completion of the transactions contemplated hereby.
(3) Each party agrees, upon request, to furnish the other parties
with all information concerning itself, its subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its subsidiaries to any Regulatory
Authority.
5.13. Indemnification. (A) For six years after the Effective
Date, FUNC shall indemnify, defend and hold harmless the present and former
directors, officers and employees of FFB and its subsidiaries (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to
the Effective Time (including, without limitation, the transactions
contemplated by this Plan, the Voting and Support Agreement and the FFB Stock
Option Agreement) to the fullest extent that such persons are indemnified
under the laws of the State of New Jersey and FFB's certificate of
incorporation and by-laws as in effect on the date hereof (and during such
period FUNC shall also advance expenses (including expenses constituting Costs
described in Section 5.13(E)) as incurred to the fullest extent permitted
under applicable law, provided that the person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification with no bond or security
to be required); provided that any determination required to be made with
respect to whether an officer's or director's conduct complies with the
standards set forth under New Jersey law and such certificate of incorporation
and by-laws shall be made by independent counsel (which shall not be counsel
that provides material services to FUNC) selected by FUNC and reasonably
acceptable to such officer or director; and provided, further, that in the
absence of applicable New Jersey judicial precedent to the contrary, such
counsel, in making such determination, shall presume such officer's or
director's conduct complied with such standard and FUNC shall have the burden
to demonstrate that such officer's or director's conduct failed to comply with
such standard.
(B) FUNC shall maintain FFB's existing directors' and officers'
liability insurance policy (or a policy providing comparable coverage amount
on terms no less favorable, including FUNC's existing policy if it meets the
foregoing standard) covering persons who are currently covered by such
insurance for a period of three years after the Effective Date.
(C) Any Indemnified Party wishing to claim indemnification under
Section 5.13(A), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify FUNC thereof; provided
that the failure so to notify shall not affect the obligations of FUNC under
Section 5.13(A) unless and to the extent such failure materially increases
FUNC's liability under such subsection (A).
(D) If FUNC or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or
surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of FUNC shall
assume the obligations set forth in this Section 5.13.
(E) FUNC shall pay all reasonable Costs, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity and
other obligations provided for in this Section 5.13. The rights of each
Indemnified Party hereunder shall be in addition to any other rights such
Indemnified Party may have under applicable law.
5.14. Benefit Plans. As soon as administratively practicable after
the Effective Date (and unless administratively impracticable, no earlier than
January 1, 1997), FUNC shall take all reasonable action so that employees of
FFB and its subsidiaries shall be generally entitled to participate in the
pension, severance, benefit, vacation, sick pay and similar plans on
substantially the same terms and conditions as employees of FUNC and its
subsidiaries, and until such time, the plans of FFB shall remain in effect;
provided, that no employee of FFB who becomes an employee of FUNC and who
elects coverage by FUNC's medical insurance plans shall be excluded coverage
thereunder (for such employee or any other covered person) on the basis of a
preexisting condition that was not also excluded under FFB's medical insurance
plans, but to the extent such preexisting condition was excluded from coverage
under FFB's medical insurance plans, this proviso shall not require coverage
for such preexisting condition. For the purpose of determining eligibility to
participate in such plans, eligibility for benefit forms and subsidies, the
vesting of benefits under such plans and the accrual of benefits under such
plans (including, but not limited to, any pension, severance, 401(K), vacation
and sick pay), FUNC shall give effect to years of service (and for purposes of
qualified and nonqualified pension plans, prior earnings) with FFB or its
subsidiaries, as the case may be, as if they were with FUNC or its
subsidiaries. Retirees prior to January 1, 1998, shall have their retiree
welfare benefits grandfathered at the level in effect at FFB on December 31,
1996. FUNC also shall cause the Continuing Corporation and its subsidiaries
to honor in accordance with their terms all employment, severance, consulting
and other compensation contracts, disclosed in Section 4.03(M) of the FFB
Disclosure Letter, between FFB or any of its subsidiaries and any current or
former director, officer or employee thereof.
5.15. Accountants' Letters. Each of FFB and FUNC shall use its
reasonable best efforts to cause to be delivered to the other party, and such
other party's directors and officers who sign the Registration Statement, a
letter of KPMG Peat Marwick LLP, independent auditors, dated (i) the date on
which the Registration Statement shall become effective and (ii) a date
shortly prior to the Effective Date, and addressed to such other party, and
such directors and officers, in form and substance customary for "comfort"
letters delivered by independent accountants in accordance with Statement of
Accounting Standards No. 72.
5.16. Registration Rights. Each person (including its "affiliates"
and "associates", as defined under the Securities Act) who is precluded by
Rule 145 under the Securities Act from selling or disposing of all of the
shares of FUNC Common Stock received by such person in the Merger within one
calendar quarter in the absence of an effective registration statement
therefor, or another exemption from registration, under the Securities Act
(each, together with such affiliates and associates, a "Large Shareholder")
shall be entitled to registration rights for such shares as set forth in
Exhibit H.
5.17. Certain Director and Officer Positions. (1) FUNC agrees to
cause six members of FFB's Board of Directors, which members shall be
nominated by FFB and willing so to serve (subject to any applicable legal
restrictions) ("Former FFB Directors") and shall include Mr. Anthony P.
Terracciano and Mr. Juan Rodriguez Inciarte, to be elected or appointed as
directors of FUNC at, or as promptly as practicable after, the Effective Time.
At the first annual meeting of stockholders of FUNC subsequent to the
Effective Time, FUNC shall take all corporate action necessary to, and shall,
renominate Mr. Terracciano and Mr. Inciarte for election as directors of FUNC
for in each case three-year terms and shall recommend that the FUNC
stockholders vote for the election of such individuals as directors.
(2) FUNC agrees to cause three Former FFB Directors to be elected
or appointed as members of the Executive Committee of the Board of Directors
of FUNC at, or as promptly as practicable after, the Effective Time (which
Executive Committee shall at such time consist of not more than ten members)
and shall include Mr. Terracciano and two other Former FFB Directors agreed
upon by the Chief Executive Officers of FFB and FUNC prior to the Effective
Time.
(3) At the Effective Time, FUNC's Board of Directors shall elect or
appoint Mr. Terracciano as President of FUNC.
5.18. Notification of Certain Matters. Each of FFB and FUNC shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach
of any of its representations, warranties, covenants or agreements contained
herein.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the parties to consummate the Merger is
conditioned upon the satisfaction at or prior to the Effective Time of each of
the following:
6.01. Shareholder Vote. Approval of this Plan by the requisite votes
of the stockholders of FFB and FUNC;
6.02. Regulatory Approvals. Procurement by FUNC, FFB and the
Investor of all requisite approvals and consents of Regulatory Authorities and
the expiration of the statutory waiting period or periods relating thereto;
provided, however, that no such approval or consent shall have imposed any
condition or requirement which would so materially and adversely impact the
economic or business benefits to FUNC or FFB of the transactions contemplated
by this Plan that, had such condition or requirement been known, such party
would not, in its reasonable judgment, have entered into this Plan;
6.03. Third Party Consents. All consents or approvals of all persons
(other than Regulatory Authorities) required for the consummation of the
Merger shall have been obtained and shall be in full force and effect, unless
the failure to obtain any such consent or approval is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FFB or
FUNC.
6.04. No Injunction, Etc. No order, decree or injunction of any
court or agency of competent jurisdiction shall be in effect, and no law,
statute or regulation shall have been enacted or adopted, that enjoins,
prohibits or makes illegal consummation of any of the transactions
contemplated hereby;
6.05. Pooling Letters. FUNC and FFB shall have received from KPMG
Peat Marwick LLP, independent auditors for both FFB and FUNC, letters, dated
the date of or shortly prior to each of the mailing date of the Joint Proxy
Statement and the Effective Date, to the effect that such auditors are not
aware of any facts or circumstances which might cause the Merger not to
qualify for pooling of interests accounting treatment;
6.06. Representations, Warranties and Covenants of FUNC. (i) Each of
the representations and warranties contained herein of FUNC shall be true and
correct as of the date of this Plan and upon the Effective Date with the same
effect as though all such representations and warranties had been made on the
Effective Date, except for any such representations and warranties made as of
a specified date, which shall be true and correct as of such date, in any case
subject to the standards established by Section 4.02, (ii) each and all of the
agreements and covenants of FUNC to be performed and complied with pursuant to
this Plan on or prior to the Effective Date shall have been duly performed and
complied with in all material respects, and (iii) FFB shall have received a
certificate signed by the Chief Financial Officer of FUNC, dated the Effective
Date, to the effect set forth in clauses (i) and (ii);
6.07. Representations, Warranties and Covenants of FFB. (i) Each of
the representations and warranties contained herein of FFB shall be true and
correct as of the date of this Plan and upon the Effective Date with the same
effect as though all such representations and warranties had been made on the
Effective Date, except for any such representations and warranties made as of
a specified date, which shall be true and correct as of such date, in any case
subject to the standards established by Section 4.02, (ii) each and all of the
agreements and covenants of FFB to be performed and complied with pursuant to
this Plan on or prior to the Effective Date shall have been duly performed and
complied with in all material respects, and (iii) FUNC shall have received a
certificate signed by the Chief Financial Officer of FFB, dated the Effective
Date, to the effect set forth in clauses (i) and (ii);
6.08. Effective Registration Statement. The Registration Statement
shall have become effective and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority;
6.09. Blue-Sky Permits. FUNC shall have received all state
securities laws and "blue sky" permits necessary to consummate the Merger;
6.10. Tax Opinion. FUNC and FFB shall have received an opinion from
Sullivan & Cromwell, special tax counsel to FUNC and FFB, to the effect that
(i) the Merger constitutes a reorganization under Section 368 of the Code, and
(ii) no gain or loss will be recognized by stockholders of FFB who receive
shares of FUNC Stock, or New FUNC Depositary Shares, in exchange for their
shares of FFB Stock, and FFB Depositary Shares, except that gain or loss may
be recognized as to cash received in lieu of fractional share interests; in
rendering their opinion, Sullivan & Cromwell may require and rely upon
representations and agreements contained in certificates of officers of FUNC,
FFB, the Investor and others;
6.11. Articles of Amendment. The Articles of Amendment shall have
become effective in accordance with the NCBCA;
6.12. NYSE Listing. The shares of FUNC Stock and the New FUNC
Depositary Shares, issuable pursuant to this Plan shall have been approved for
listing on the NYSE (but only to the extent that the corresponding class or
series of FFB Stock and/or the FFB Depositary Shares were so listed
immediately prior to the Effective Time), subject to official notice of
issuance; and
6.13. Rights Agreements. There shall exist no "Acquiring Person" and
no "Shares Acquisition Date" or "Trigger Event" (as each of such terms are
defined in the FFB Rights Plan) shall have occurred; and there shall exist no
"Acquiring Person" and no "Stock Acquisition Date" or "Flip-in Date" (as each
of such terms are defined in the FUNC Rights Agreement) shall have occurred;
provided, however, that a failure to satisfy any of the conditions set forth
in Section 6.07 shall only constitute conditions if asserted by FUNC, and a
failure to satisfy any of the conditions set forth in Section 6.06 shall only
constitute conditions if asserted by FFB.
VII. TERMINATION
7.01. Termination. This Plan may be terminated, and the Merger may
be abandoned:
(A) Mutual Consent. At any time prior to the Effective Time, by
the mutual consent of FUNC and FFB, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(B) Breach. At any time prior to the Effective Time, by FUNC or
FFB, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the other
party of any representation or warranty contained herein (subject to the
standard established by Section 4.02), which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach; or (ii) a material breach by the other party of any of the
covenants or agreements contained herein, which breach cannot be or has not
been cured within 30 days after the giving of written notice to the breaching
party of such breach.
(C) Delay. At any time prior to the Effective Time, by FUNC or
FFB, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated
by June 30, 1996, except to the extent that the failure of the Merger then to
be consummated arises out of or results from the knowing action or inaction of
the party seeking to terminate pursuant to this Section 7.01(C).
(D) No Approval. By FFB or FUNC, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in the
event (i) the consent of the Board of Governors of the Federal Reserve System
for consummation of the Merger and the other transactions contemplated by the
Merger shall have been denied by final nonappealable action of such Regulatory
Authority or (ii) any stockholder approval required by Section 6.01 herein is
not obtained at the FFB Meeting or the FUNC Meeting.
(E) Possible Adjustment. By FFB, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, at any
time during the ten-day period commencing two days after the Determination
Date, if either (x) both of the following conditions are satisfied:
(1) the Average Closing Price on the Determination Date of shares
of FUNC Common Stock shall be less than $40.48; and
(2) (i) the number obtained by dividing the Average Closing Price
on such Determination Date by $47.625 (such number being referred to
herein as the "FUNC Ratio") shall be less than (ii) the number obtained
by dividing the Index Price on the Determination Date by the Index Price
on the Starting Date and subtracting 0.15 from the quotient in this
clause (x) (2) (ii) (such number being referred to herein as the "Index
Ratio");
or (y) the Average Closing Price on the Determination Date of shares of FUNC
Common Stock shall be less than the product of 0.75 and the Starting Price;
subject, however, to the following four sentences. If FFB elects to exercise
its termination right pursuant to the immediately preceding sentence, it shall
give prompt written notice to FUNC which notice shall specify which of clauses
(x) or (y) is applicable (or if both would be applicable, which clause is
being invoked); provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned ten-day period. During the
five-day period commencing with its receipt of such notice, FUNC shall have
the option in the case of a failure to satisfy the condition in clause (x), of
adjusting the Exchange Ratio to equal the lesser of (i) a number equal to a
quotient (rounded to the nearest one-thousandth), the numerator of which is
the product of $40.48 and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Closing Price, and (ii) a number equal to
a quotient (rounded to the nearest one-thousandth), the numerator of which is
the Index Ratio multiplied by the Exchange Ratio (as then in effect) and the
denominator of which is the FUNC Ratio. During such five-day period, FUNC
shall have the option, in the case of a failure to satisfy the condition in
clause (y), to elect to increase the Exchange Ratio to equal a number equal to
a quotient (rounded to the nearest one-thousandth), the numerator of which is
the product of 0.75, the Starting Price and the Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price. If FUNC
makes an election contemplated by either of the two preceding sentences,
within such five-day period, it shall give prompt written notice to FFB of
such election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 7.01(E) and this Plan shall remain in
effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant
to this Section 7.01(E).
For purposes of this Section 7.01(E), the following terms shall have the
meanings indicated:
"Average Closing Price" means the average of the daily last sale
prices of FUNC Common Stock as reported on the NYSE Composite
Transactions reporting system (as reported in The Wall Street Journal or,
if not reported therein, in another mutually agreed upon authoritative
source) for the ten consecutive full trading days in which such shares
are traded on the NYSE ending at the close of trading on the
Determination Date.
"Determination Date" means the date on which the approval of the
Federal Reserve Board required for consummation of the Merger shall be
received.
"Index Group" means the group of each of the 13 bank holding
companies listed below, the common stock of all of which shall be
publicly traded and as to which there shall not have been, since the
Starting Date and before the Determination Date, an announcement of a
proposal for the acquisition or sale of such company. In the event that
the common stock of any such company ceases to be publicly traded or any
such announcement is made with respect to any such company, such company
will be removed from the Index Group, and the weights (which have been
determined based on the number of outstanding shares of common stock)
redistributed proportionately for purposes of determining the Index Price.
The 13 bank holding companies and the weights attributed to them are as
follows:
Bank Holding Company Weighting
Banc One Corp. (ONE) 15.17%
Norwest Corporation (NOB) 10.91
SunTrust Banks, Inc. (STI) 7.87
KeyCorp (KEY) 8.63
Fleet Financial Group, Inc. (FLT) 6.19
NBD Bancorp, Inc. (NBD) 5.91
PNC Financial Corp (PNC) 7.34
Wachovia Corporation (WB) 7.38
First Bank System, Inc. (FBS) 6.70
Barnett Banks, Inc. (BBI) 6.10
National City Corporation (NCC) 5.22
Mellon Bank Corporation (MEL) 7.43
Boatmen's Bancshares, Inc. (BOAT) 5.15
_______
100.00%
"Index Price" on a given date means the weighted average (weighted
in accordance with the factors listed above) of the closing prices of the
companies composing the Index Group.
"Starting Date" means June 16, 1995.
"Starting Price" shall mean the last sale price per share of FUNC
Common Stock on June 19, 1995, as reported by the NYSE Composite
Transactions reporting system (as reported in The Wall Street Journal or,
if not reported therein, in another mutually agreed upon authoritative
source).
If any company belonging to the Index Group or FUNC declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting
Date and the Determination Date, the prices for the common stock of such
company or FUNC shall be appropriately adjusted for the purposes of applying
this Section 7.01(E).
(F) Stock Option Agreements; Voting and Support Agreement. By FFB,
if the FUNC Stock Option Agreement shall not have been executed and delivered
by FUNC by the close of business on the day following the date of execution of
this Plan; or by FUNC, (i) if the FFB Stock Option Agreement or the Voting and
Support Agreement shall not have been executed and delivered by FFB or, in the
case of the Voting and Support Agreement, by the Investor, by the close of
business on the day following the date of execution of this Plan or (ii) at
any time prior to the Effective Time, if the Investor materially breaches any
of its representations, warranties, covenants and agreements, which breach has
not and cannot reasonably be cured within 30 days after the giving of written
notice to the Investor of such breach, under the Voting and Support Agreement.
(G) Failure to Recommend, Etc. At any time prior to the FFB
Meeting, by FUNC if the Board of Directors of FFB shall have failed to make
its recommendation referred to in Section 5.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse to the
interests of FUNC; or at any time prior to the FUNC Meeting, by FFB if the
Board of Directors of FUNC shall have failed to make its recommendation
referred to in Section 5.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse to the interests of FFB.
7.02. Effect of Termination and Abandonment. In the event of
termination of this Plan and the abandonment of the Merger pursuant to this
Article VII, no party to this Plan shall have any liability or further
obligation to any other party hereunder except (i) as set forth in
Section 8.01, (ii) that each of the Stock Option Agreements shall be governed
by its own terms as to termination and (iii) that termination will not relieve
a breaching party from liability for any willful breach of this Plan giving
rise to such termination.
VIII. OTHER MATTERS
8.01. Survival. All representations, warranties, agreements and
covenants contained in this Plan shall not survive the Effective Time or
termination of this Plan if this Plan is terminated prior to the Effective
Time; provided, however, if the Effective Time occurs, the agreements of the
parties in Sections 5.13, 5.16, 5.17, 8.01, 8.04 and 8.09 shall survive the
Effective Time, and if this Plan is terminated prior to the Effective Time,
the agreements of the parties in Sections 5.05(2), 7.02, 8.01, 8.02, 8.04,
8.05, 8.06, 8.07 and 8.09, shall survive such termination.
8.02. Waiver; Amendment. Prior to the Effective Time, any provision
of this Plan may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing among the
parties hereto approved by their respective Boards of Directors and executed
in the same manner as this Plan, except that, after the FFB Meeting the
consideration to be received by the stockholders of FFB for each share of FFB
Stock, or FFB Depository Shares, shall not thereby be decreased.
8.03. Counterparts. This Plan may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
8.04. Governing Law. This Plan shall be governed by, and interpreted
in accordance with, the laws of the State of North Carolina, without regard to
the conflict of law principles thereof (except to the extent that mandatory
provisions of New Jersey law govern).
8.05. Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Plan and the transactions contemplated hereby,
except that printing expenses and SEC registration fees shall be shared
equally between FFB and FUNC.
8.06. Confidentiality. Except as otherwise provided in Section
5.05(2), each of the parties hereto and their respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed or as it is advised
by counsel that any such information or document is required by law or
applicable stock exchange rule to be disclosed.
8.07. Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if
personally delivered, telecopied (with confirmation) or mailed by registered
or certified mail (return receipt requested) to such party at its address set
forth below or such other address as such party may specify by notice to the
parties hereto.
If to FUNC, to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
Attention: Edward E. Crutchfield
Chairman and Chief
Executive Officer
With a copy to: Marion A. Cowell, Jr.
General Counsel
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
If to FFB, to: First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Attention: Anthony P. Terracciano
Chairman, President and
Chief Executive Officer
With copies to: James L. Mitchell
General Counsel
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
and: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Victor I. Lewkow
8.08. Definitions. Any term defined anywhere in this Plan shall have
the meaning ascribed to it for all purposes of this Plan (unless expressly
noted to the contrary). In addition:
(1) the term "Material Adverse Effect" shall mean, with respect to
FFB or FUNC, respectively, any effect that (i) is material and adverse to
the financial position, results of operations or business of FFB and its
subsidiaries taken as a whole, or FUNC and its subsidiaries taken as a
whole, respectively, or (ii) materially impairs the ability of FFB or
FUNC, respectively, to perform its obligations under this Plan or the
consummation of the Merger and the other transactions contemplated by
this Plan; provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws
of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to banks and
bank holding companies generally, (c) actions or omissions of FFB, FUNC
or Merger Sub taken with the prior informed consent of FFB or FUNC, as
applicable, in contemplation of the transactions contemplated hereby, (d)
circumstances affecting regional bank holding companies generally, and
(e) the effects of the Merger and of the actions contemplated by
Section 5.08;
(2) the term "person" shall mean any individual, bank savings
association, corporation, partnership, association, joint-stock company,
business trust or unincorporated organization;
(3) the term "Previously Disclosed" by a party shall mean
information set forth in its Disclosure Letter or a schedule that is
delivered by that party to the other parties prior to the execution of
this Plan and specifically designated as information "Previously
Disclosed" pursuant to this Plan;
(4) the term "Rights" means, with respect to any person, securities
or obligations convertible into or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or
commitments relating to, shares of capital stock of such person; and
(5) the terms "subsidiary" and "significant subsidiary" shall have
the meanings set forth in Rule 1-02 of Regulation S-X of the SEC;
provided that for purposes of Article IV, Merger Sub shall be deemed a
significant subsidiary of FUNC.
8.09. Entire Understanding; No Third Party Beneficiaries. This Plan,
the Stock Option Agreements and the Voting and Support Agreement together
represent the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and supersede any and all other
oral or written agreements heretofore made. Except for Sections 5.13, 5.16
and 5.17, nothing in this Plan expressed or implied, is intended to confer
upon any person, other than the parties hereto or their respective successors,
any rights, remedies, obligations or liabilities under or by reason of this
Plan.
8.10. Headings. The headings contained in this Plan are for
reference purposes only and are not part of this Plan.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FIRST FIDELITY BANCORPORATION
By: /s/ Anthony P. Terracciano
------------------------------
Anthony P. Terracciano
Chairman, President and Chief
Executive Officer
FIRST UNION CORPORATION
By: /s/ Edward E. Crutchfield
------------------------------
Edward E. Crutchfield
Chairman and Chief Executive Officer
PKC, INC.
By: /s/ Edward E. Crutchfield
------------------------------
Edward E. Crutchfield
President
<PAGE>
<PAGE>
Exhibit A
FORM OF FFB STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 19, 1995 (the "Agreement"),
by and between First Fidelity Bancorporation, a New Jersey corporation
("Issuer"), and First Union Corporation, a North Carolina corporation
("Grantee").
RECITALS
(A) The Plan. Grantee and Issuer have on a date prior to the date
hereof, entered into an Agreement and Plan of Merger, dated as of June 18,
1995 (the "Plan"), providing for, among other things, the merger of Issuer
with and into a wholly owned subsidiary of Grantee, with such subsidiary being
the surviving corporation.
(B) Condition to Plan. As a condition and inducement to Grantee's
execution of the Plan and Grantee's agreement referred to in the next
sentence, Grantee has required that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as hereinafter defined). As a condition and
inducement to Issuer's execution of the Plan and this Agreement, Grantee has
agreed to grant an option to Issuer on terms and conditions substantially
identical to those of the Option and this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree
as follows:
1. Defined Terms. Capitalized terms which are used but not
defined herein shall have the meanings ascribed to such terms in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase a number of shares of common stock, par value $1.00 per share
("Issuer Common Stock"), of Issuer up to 15,686,077 of such shares (as
adjusted as set forth herein, the "Option Shares", which shall include the
Option Shares before and after any transfer of such Option Shares, but in no
event shall the number of Option Shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Issuer Common Stock) at a
purchase price per Option Share (as adjusted as set forth herein, the
"Purchase Price") equal to the closing price per share of Issuer Common Stock
on June 19, 1995, as reported by the NYSE Composite Transactions reporting
system (as reported in The Wall Street Journal or, if not reported therein,
another authoritative source) but in no event may the Purchase Price, prior
to any adjustment, be less than $48.75. Each Option Share issued upon
exercise of the Option shall be accompanied by FFB Rights as provided in the
FFB Rights Agreement.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the agreements or
covenants contained in this Agreement or the Plan, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or in part,
at any time and from time to time following the occurrence of a Purchase Event
(as hereinafter defined); provided that the Option shall terminate and be of
no further force or effect upon the earliest to occur of (A) the Effective
Time, (B) termination of the Plan in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event other
than a termination thereof by Grantee pursuant to Section 7.01(B) or
7.01(F)(ii) of the Plan (but only if the breach of Issuer or the Investor,
respectively, giving rise to such termination was willful) (a termination of
the Plan by Grantee pursuant to Section 7.01(B) or 7.01(F)(ii) thereof as a
result of a willful breach by Issuer or the Investor, respectively, being
referred to herein as a "Default Termination"), (C) 15 months after a Default
Termination, or (D) 15 months after termination of the Plan (other than a
Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event; provided, however, that any purchase of shares
upon exercise of the Option shall be subject to compliance with applicable
law. The term "Holder" shall mean the holder or holders of the Option from
time to time, and which initially is Grantee. The rights set forth in Section
8 hereof shall terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as set forth
herein.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Without Grantee's prior written consent, Issuer shall
have recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any
person (other than Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving Issuer
or any of its significant subsidiaries (other than transactions solely
between Issuer's subsidiaries that are not violative of the Plan),
(B) the disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Issuer or any of its significant subsidiaries representing in
either case 25% or more of the consolidated assets or deposits of Issuer
and its subsidiaries or (C) the issuance, sale or other disposition by
Issuer of (including by way of merger, consolidation, share exchange or
any similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its significant subsidiaries, other than, in
each case of (A), (B), or (C); (x) any merger, consolidation or similar
transaction involving Issuer or any of its significant subsidiaries in
which the voting securities of Issuer outstanding immediately prior
thereto continue to represent (by either remaining outstanding or being
converted into the voting securities of the surviving entity of any such
transaction) at least 65% of the combined voting power of the voting
securities of the Issuer or the surviving entity outstanding immediately
after the consummation of such merger, consolidation, or similar
transaction (provided any such transaction is not violative of the
Plan), or (y) any acquisition of additional shares of Issuer Common Stock
by the Investor so long as the Investor is not in breach of any
representation, warranty or agreement contained in the Voting and
Support Agreement or the Investment Agreement, dated as of March 18,
1991 (as amended, the "Investment Agreement"), by and between Issuer and
the Investor (each of (A), (B), or (C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee, any subsidiary of
Grantee or the Investor (so long as the Investor is not in breach of any
representation, warranty or agreement in the Voting and Support Agreement
or the Investment Agreement)) shall have acquired beneficial ownership
(as such term is defined in Rule 13d-3 promulgated under the Exchange
Act) of or the right to acquire beneficial ownership of, or any "group"
(as such term is defined in Section 13(d)(3) of the Exchange Act), other
than a group of which Grantee, any subsidiary of Grantee, or the Investor
(so long as the Investor is not in breach of any representation, warranty
or agreement in the Voting and Support Agreement or the Investment
Agreement), is a member, shall have been formed which beneficially owns
or has the right to acquire beneficial ownership of, 25% or more of the
voting power of Issuer or any of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act, with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 15% or more
of the then outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the stockholders shall not have approved the Plan by
the requisite vote at the FFB Meeting, the FFB Meeting shall not have
been held or shall have been canceled prior to termination of the Plan,
or Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan, in each case after it shall have been
publicly announced that any person (other than Grantee or any subsidiary
of Grantee) shall have (A) made, or disclosed an intention to make, a
bona fide proposal to engage in an Acquisition Transaction, (B) commenced
a Tender Offer or filed a registration statement under the Securities Act
with respect to an Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under the Home Owners' Loan Act,
as amended ("HOLA"), the BHC Act, the Bank Merger Act, as amended (the
"BMA") or the Change in Bank Control Act of 1978, as amended (the
"CBCA"), for approval to engage in an Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide 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; or
(iv) 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 the Issuer to make such a proposal if the Plan
terminates, Issuer shall have breached any representation, warranty,
covenant or agreement contained in the Plan and such breach would entitle
Grantee to terminate the Plan under Section 7.01 thereof (without regard
to the cure period provided for therein unless such cure is promptly
effected without jeopardizing consummation of the Merger pursuant to the
terms of the Plan); or
(v) any person (other than Grantee or any subsidiary of
Grantee) other than in connection with a transaction to which Grantee has
given its prior written consent, shall have filed an application or
notice with any Regulatory Authority for approval to engage in an
Acquisition Transaction.
As used in this Agreement, (i) "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act and (ii) "Investor" shall
include any affiliate of the Investor.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition
to the right of Holder to exercise the Option.
(e) In the event Holder 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 Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided that the first notice of exercise shall be sent to Issuer
within 180 days after the first Purchase Event of which Grantee has been
notified. If prior notification to or approval of any Regulatory Authority is
required in connection with such purchase, Issuer shall cooperate with the
Holder in the filing of the required notice of application for approval and
the obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods). Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 12(f).
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all Liens and subject to
no preemptive rights, and (B) if the Option is exercised in part only,
an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer Common
Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF JUNE 19, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend relating to
the Securities Act shall be removed by delivery of substitute certificate(s)
without such legend if 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 and its counsel, to the effect
that such legend is not required for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately available funds and the tender of
this Agreement to Issuer, Holder shall be deemed to be the holder of record of
the shares of Issuer 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 Issuer Common Stock shall not then be
actually delivered to 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, issuance and delivery of stock
certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Issuer Common Stock so that the Option may be exercised without
additional authorization of Issuer Common Stock after giving effect to
all other options, warrants, convertible securities and other rights
to purchase Issuer 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 (A) complying with all premerger notification,
reporting and waiting period requirements and (B) in the event prior approval
of or notice to any Regulatory Authority is necessary before the Option may be
exercised, cooperating fully with Holder in preparing such applications or
notices and providing such information to such Regulatory Authority as it may
require) in order to permit Holder to exercise the Option and Issuer duly and
effectively to issue shares of the Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the rights of
Holder against dilution.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. 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) Beneficial Ownership. To the best knowledge of Issuer, as
of the date of this Agreement, no person or group other than the Investor
has beneficial ownership of more than 15% of the issued and outstanding
shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and 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 Issuer Common Stock equal to the maximum number of shares of
Issuer Common Stock at any time and from time to time purchasable upon
exercise of the Option, and all such shares, upon issuance pursuant
to the Option, will be duly authorized, validly issued, fully paid
an nonassessable, and will be delivered free and clear of all
claims, liens, encumbrances, and security interests (other than those
created by this Agreement) and not subject to any preemptive rights.
(d) No Violations. 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 (A) a breach or violation of, or a default under, its
certificate of incorporation or by-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) 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 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, that would, in
any case give any other person the ability to prevent or enjoin Issuer's
performance under this Agreement in any material respect.
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; 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; and this Agreement
has been duly executed and delivered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization, etc. (a) In
the event of any change in Issuer Common Stock by reason of a stock dividend,
stock split, split-up, recapitalization, combination, exchange of shares,
exercise of the FFB Rights or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date hereof or upon
conversion into Issuer Common Stock of any convertible security of Issuer
outstanding on the date hereof), the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be
deemed to affect or change, or constitute authorization for any violation of,
any of the covenants or representations in the Plan.
(b) In the event that 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 Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock immediately
prior to such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets or deposits
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
provisions 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 Holder, of either (x) the Acquiring Corporation (as hereinafter defined),
(y) any person that controls the Acquiring Corporation, or (z) in the case of
a merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(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 Holder. Substitute Option
Issuer shall also enter into an agreement with Holder 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 hereinafter defined) as is equal
to the Assigned Value (as hereinafter defined) multiplied by the number
of shares of Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined).
The exercise price of Substitute Option per share of Substitute
Common Stock (the "Substitute Option Price") shall then be equal
to the Purchase Price multiplied by a fraction in which the numerator is the
number of shares of Issuer Common Stock for which the Option was theretofore
exercisable and the denominator is the number of shares of the Substitute
Common Stock for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "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, or (iii) the transferee of all or substantially all
of Issuer's assets (or a substantial part of the assets of its
subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
(3) "Assigned Value" shall mean the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer or an Exchange Offer
therefor has been made, (x) the price per share of Issuer Common Stock to
be paid by any third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common Stock within the six-
month period immediately preceding the consolidation, merger, or sale in
question and (z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (i) the sum of the price
paid in such sale for such assets (and/or deposits) and the current
market value of the remaining assets of Issuer, as determined by a
nationally recognized investment banking firm selected by Holder divided
by (ii) the number of shares of Issuer Common Stock outstanding at such
time. In the event that a Tender Offer or an Exchange Offer is made for
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Holder.
(4) "Average Price" shall mean the average closing price of a share
of 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 Issuer, the person
merging into Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate 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 aggregate of the shares of
Substitute Common Stock but for the limitation in the first sentence of this
Section 7(f), 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 the first sentence of this Section 7(f) over (ii)
the value of the Substitute Option after giving effect to the limitation in
the first sentence of this Section 7(f). This difference in value shall be
determined by a nationally-recognized investment banking firm selected by
Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls the
Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the holders of
the other shares of common stock issued by Substitute Option Issuer are not
entitled to exercise any rights by reason of the issuance or exercise of the
Substitute Option and the shares of Substitute Common Stock are otherwise in
no way distinguishable from or have lesser economic value (other than any
diminution in value resulting from the fact that the Substitute Common Stock
are restricted securities, as defined in Rule 144 under the Securities Act or
any successor provision) than other shares of common stock issued by
Substitute Option Issuer).
8. Repurchase at the Option of Holder. (a) Subject to the last
sentence of Section 3(a), at the request of Holder at any time commencing
upon the first occurrence of a Repurchase Event (as defined in
Section 8(d)) and ending 12 months immediately thereafter, Issuer
shall repurchase from Holder (i) the Option and (ii) all shares
of Issuer Common Stock purchased by Holder pursuant hereto with respect
to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request
Date". Such repurchase shall be at an aggregate price (the "Section 8
Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within 10 business days after the Request Date, pay the Section
8 Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment, Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, and Holder shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all
Liens. Notwithstanding the foregoing, to the extent that prior notification
to or approval of any Regulatory Authority is required in connection with the
payment of all or any portion of the Section 8 Repurchase Consideration,
Holder shall have the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that Issuer
deliver from time to time that portion of the Section 8 Repurchase
Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for approval and
expeditiously process the same (and each party shall cooperate with the other
in the filing of any such notice or application and the obtaining of any such
approval). If any Regulatory Authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 8, Issuer shall promptly give
notice of such fact to Holder. If any Regulatory Authority prohibits the
repurchase in part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by such
Regulatory Authority, determine whether the repurchase should apply to the
Option and/or Option Shares and to what extent to each, and Holder shall
thereupon have the right to exercise the Option as to the number of Option
Shares for which the Option was exercisable at the Request Date less the sum
of the number of shares covered by the Option in respect of which payment has
been made pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within five (5)
business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of
termination of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock
paid for any such share by the person or groups described in Section 8(d)(i),
(ii) the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest closing sales price per share of Issuer Common Stock quoted on the
NYSE (or if Issuer Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
assets, the Applicable Price shall be 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
Holder, divided by the number of shares of the Issuer Common Stock outstanding
at the time of such sale. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in
good faith by an independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer Common
Stock, or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii)
or 7(b)(iii) shall be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), as expeditiously
as possible prepare and file a registration statement under the Securities Act
if such registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other securities
that have been acquired by or are issuable to the Selling Shareholder upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by the Selling Shareholder in such request, including
without limitation a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities for sale under any
applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common Stock under the Securities Act in connection with an underwritten
public offering of such Issuer Common Stock, Issuer will promptly give written
notice to the Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days after receipt
of any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
the Selling Shareholder), Issuer will cause all such shares for which a
Selling Shareholder requests participation in such registration, to be so
registered and included in such underwritten public offering; provided,
however, that Issuer may elect to not cause any such shares to be so
registered (i) if the underwriters in good faith object for valid
business reasons, or (ii) in the case of a registration solely to
implement an employee benefit plan or a registration filed on
Form S-4 of the Securities Act or any successor Form; provided, further,
however, that such election pursuant to (i) may only be made two
times. If some but not all the shares of Issuer Common Stock,
with respect to which Issuer shall have received requests for
registration pursuant to this Section 9(b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders desiring to register their shares
pro rata in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total number of
shares requested to be registered by all such Selling Shareholders then
desiring to have Issuer Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in Section
9(a) above to become effective and to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective, provided, however, that Issuer may delay any registration of Option
Shares required pursuant to Section 9(a) above for a period not exceeding 90
days provided Issuer shall in good faith determine that any such registration
would adversely affect an offering or contemplated offering of other
securities by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination of the Plan
pursuant to Article VII thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 6.01 of Article VI of the Plan,
and (c) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any calendar year;
(iii) within 90 days after the effective date of a
registration referred to in Section 9(b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded the
opportunity to register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common Stock
issuable upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration
of nine months from the effective date of such registration statement. Issuer
shall use all reasonable efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent necessary to permit
the sale or other disposition of the Option Shares so registered in accordance
with the intended method of distribution for such shares; provided, however,
that Issuer shall not be required to consent to general jurisdiction or
qualify to do business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits
such payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including
the fees and expenses of counsel), legal expenses, including the reasonable
fees and expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold
comfort" letters, expenses of underwriters, excluding discounts and
commissions but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to Section 9(a)
or 9(b) above (including the related offerings and sales by holders of Option
Shares) and all other qualifications, notifications or exemptions pursuant to
Section 9(a) or 9(b) above.
(e) Indemnification. In connection with any registration
under Section 9(a) or 9(b) above Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact
contained in any registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are caused
by any untrue statement or alleged untrue statement that was included
by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Shareholders, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused
by any untrue, or alleged untrue, statement, that was included by Issuer in
any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon,
and in conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section
9(e) of notice of the commencement of any action against such indemnified
party in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9(e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it of
any liability which it may otherwise have to any indemnified party under this
Section 9(e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense of
such action at its own expense, with counsel chosen by it and satisfactory to
such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party
that may be contrary to the interest of the indemnified party, in which case
the indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e)
is unavailable to a party otherwise entitled to be indemnified in
respect of any expenses, losses, claims, damages or liabilities referred
to herein, then the indemnifying party, in lieu of indemnifying such party
otherwise entitled to be indemnified, shall contribute to the amount paid or
payable by such party to be indemnified as a result of such expenses, losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative benefits received by Issuer, the Selling Shareholders and the
underwriters from the offering of the securities and also the relative fault
of Issuer, the Selling Shareholders and the underwriters in connection with
the statements or omissions which resulted in such expenses, losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim;
provided, however, that in no case shall any Selling Shareholder be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any obligation by
any holder to indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to Section 9(a) or
9(b) above, Issuer and each Selling Shareholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all
reporting requirements and will do all such other things as may be necessary
to permit the expeditious sale at any time of any Option Shares by the Selling
Shareholders thereof in accordance with and to the extent permitted by any
rule or regulation promulgated by the SEC from time to time, including,
without limitation, Rule 144A. Issuer shall at its expense provide the
Selling Shareholders with any information necessary in connection with the
completion and filing of any reports or forms required to be filed by them
under the Securities Act or the Exchange Act, or required pursuant to any
state securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in
connection with the exercise of the Option, and will save the Selling
Shareholders harmless, without limitation as to time, against any and all
liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other
securities to be acquired in connection with the exercise of the Option are
then authorized for quotation or trading or listing on the NYSE or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or such other securities exchange and will use its
best efforts to obtain approval, if required, of such quotation or listing as
soon as practicable.
11. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of 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 in the aggregate the same number of
shares of Issuer Common Stock purchasable hereunder. The terms "Agreement"
and "Option" as used herein include any other 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.
12. Miscellaneous.
(a) Expenses. 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.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement: No Third-Party Beneficiaries;
Severability. This Agreement, together with the Plan and the other documents
and instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 9(e)
and any transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h)) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or Regulatory Authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of 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 Authority determines that the Option does not permit Holder to
acquire, or does not require Issuer to repurchase, the full number of shares
of Issuer Common Stock as provided in Section 3 (as may be adjusted herein),
it is the express intention of Issuer to allow Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey without
regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in the
Plan (or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto
may be executed in two counterparts, each of which shall be considered one and
the same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that Holder may assign
this Agreement to a wholly-owned subsidiary of Holder and Holder may assign
its rights hereunder in whole or in part after the occurrence of a Purchase
Event. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by the Holder, Issuer and the Holder shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for by
such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
FIRST FIDELITY BANCORPORATION
By:_________________________________
Anthony P. Terracciano
Chairman, President, and
Chief Executive Officer
FIRST UNION CORPORATION
By:_________________________________
Edward E. Crutchfield
Chairman and Chief Executive Officer
<PAGE>
<PAGE>
EXHIBIT B
FORM OF VOTING AND SUPPORT AGREEMENT
AGREEMENT, dated June 19, 1995 (this "Agreement"), among Banco
Santander, S.A., a Spanish banking corporation (the "Investor"), FFB
Participacoes e Servieos, S.A., a Portuguese corporation ("Investor Sub"),
First Fidelity Bancorporation, a New Jersey corporation ("FFB"), and First
Union Corporation, a North Carolina corporation ("FUNC").
RECITALS:
(A) The Merger. FFB, FUNC and PKC, Inc, a New Jersey corporation
and wholly owned subsidiary of FUNC ("Merger Sub"), have entered into an
Agreement and Plan of Merger (the "Plan") pursuant to which FUNC will acquire
FFB by means of a merger of FFB with and into Merger Sub, subject to the terms
and conditions of the Plan (the "Merger"), a copy, as executed, has been
received by Investor and Investor Sub.
(B) The Shares and the Investment Agreement. As of the date
hereof, Investor Sub is the beneficial and registered owner of 25,519,943
shares (including any shares of FFB capital stock acquired after the date
hereof, the "Shares") of Common Stock, par value $1.00 per share ("FFB Common
Stock"), of FFB, constituting approximately 29.8% of the currently outstanding
shares of FFB Common Stock and, as a result of Investor's 100% ownership and
control of Investor Sub, the Investor is the beneficial owner of the Shares.
Investor is a party to an Investment Agreement, dated as of March 18, 1991
(the "Investment Agreement"), between Investor and FFB and Investor Sub is
subject to the provisions of the Investment Agreement as a result of the
transfer of the Shares by Investor to Investor Sub as if it were the Investor.
(C) Condition to Plan. As a condition and inducement to FUNC's
willingness to enter into the Plan, the Investor and the Investor Sub are
entering into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Agreement to Vote. At such time as FFB conducts a meeting of
its shareholders for the purpose of adopting and approving the Plan, the
Merger and the transactions contemplated thereby, Investor agrees to cause
Investor Sub to, and Investor Sub itself agrees to, duly and validly vote
all of the Shares in favor of adopting and approving the Plan, the Merger
and the transactions contemplated thereby, provided, that Investor and
Investor Sub may vote the Shares in their discretion with respect to the
Merger in the event the Board of Directors of FFB determines to withdraw
their recommendation in support of the Merger and so advises the
shareholders of FFB.
2. Agreement to Cooperate. In addition to the specific matters
provided for elsewhere herein, Investor and Investor Sub shall take all action
reasonably requested by FUNC and FFB to facilitate the consummation of the
Merger and the transactions contemplated by the Plan.
3. Regulatory Approvals. Investor and Investor Sub shall each use
its reasonable best efforts to obtain all permits, consents, orders, approvals
and authorizations of, and to make or provide all filings with or notices to,
all third parties and Regulatory Authorities necessary or advisable on its
part to permit the consummation of the Merger and the transactions
contemplated by the Plan, including without limitation the Regulatory
Approvals referred to in Section 6.02 of the Plan (the "Approvals").
4. Investment Agreement. Investor and Investor Sub hereby waive
any and all rights, and all lapses of, or changes in, rights or obligations,
under the Investment Agreement, and agree that they shall not exercise any
such rights, that arise out of, or result from, the entry into, and matters
preliminary to the entering into, the Plan, the Stock Option Agreements and
this Agreement and the consummation of the Merger and the transactions contem-
plated thereby and hereby including, without limitation, Sections 2.03, 5.03,
5.04, 8.04, 8.06 and 11.01(b)(iii) of the Investment Agreement. FFB hereby
consents to Investor and Investor Sub entering into this Agreement under
Section 8.04(a)(ii) and (iii) of the Investment Agreement. FFB and Investor
and Investor Sub hereby agree that to the extent that this Agreement effects
or relates to the Investment Agreement that the Investment Agreement is hereby
amended to such effect. Unless otherwise terminated in accordance with its
terms as amended hereby, the Investment Agreement shall terminate in its
entirety immediately prior to the consummation of the Merger except that
Sections 6.01, 12.03 and 12.5 shall survive. Except as otherwise provided for
herein, the Investment Agreement shall remain in full force and effect in
accordance with its terms.
5. Securities Act of 1933; Accounting Matters. Simultaneously with
the execution and delivery of this Agreement, Investor and Investor Sub are
executing and delivering to FFB and FUNC an "affiliates letter" substantially
in the form provided by the Plan for affiliates of FFB covering the Securities
Act of 1933 and accounting matters set forth therein.
6. Termination of Agreement. This Agreement shall terminate upon
termination of the Plan in accordance with its terms. In the event of the
termination of this Agreement, this Agreement shall forthwith become null and
void and there shall be no liability or obligation on the part of FFB,
Investor, Investor Sub or FUNC or their respective officers or directors,
except that nothing in this Section 7 shall relieve any party hereto from any
liability for breach of this Agreement prior to such termination.
7. Representations and Warranties of Investor and Investor Sub.
Investor and Investor Sub hereby represent and warrant to FFB and FUNC as
follows:
(a) Investor and Investor Sub each has all requisite power and
authority to execute and deliver this Agreement and to cause the voting,
or to vote, as the case may be, the Shares in accordance with Section 1
hereof and otherwise perform its obligations hereunder; such execution,
delivery, vote and performance have been duly authorized by all necessary
action on the part of each of the Investor and Investor Sub; and this
Agreement has been duly executed and delivered by each of Investor and
Investor Sub and constitutes the valid and binding agreement of each of
Investor and Investor Sub enforceable against each of Investor and
Investor Sub in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
(b) As of the date hereof, Investor and Investor Sub are aware of
no reason relating exclusively to Investor or Investor Sub or any of
their affiliates why the Approvals will not be received without the
imposition of a condition or requirement described in the proviso to
Section 6.02 of the Plan.
(c) As of the date hereof, Neither Investor nor Investor Sub or any
affiliate thereof has any exercisable right or option to acquire any
additional shares of FFB capital stock except as set forth in Schedule A.
8. Representations and Warranties of FFB and FUNC. Each of FFB and
FUNC hereby represents and warrants to the other parties hereto that it has
the corporate power and authority to execute, deliver and perform this
Agreement; such execution, delivery and performance have been duly authorized
by all necessary corporate action on its part; and this Agreement has
been duly executed and delivered by it and constitutes the valid and binding
agreement of it, enforceable against it in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency and similar laws of general appli-
cability relating to or affecting creditors' rights and to general equity
principles.
9. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed by the applicable party hereto in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that each
of the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which it is
entitled at law or in equity and that each party waives the posting of any
bond or security in connection with any proceeding related thereto.
10. Expenses. Except as may otherwise be provided herein, no party
hereto shall be responsible for the payment of any other parties' expenses
incurred in connection with this Agreement.
11. Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and its
respective successors and permitted assigns, and it is not the intention of
the parties to confer third party beneficiary rights upon any other person or
entity.
12. Amendments. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by all of the parties hereto.
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and delivered personally or by
telecopy transmission or sent by registered or certified mail or by any
express mail service, postage or fees prepaid, addressed as provided for in
the Plan or the Investment Agreement.
14. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York, without
regard to the conflict of law principles thereof, except to the extent that
the [N-BCA] shall expressly govern the matters set forth herein.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original. This
Agreement shall become effective when one counterpart signature page has been
signed by each party hereto and delivered to the other parties.
16. Effect of Heading. The descriptive headings contained herein
are for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
18. Further Assurances. Each of the parties hereto agree to
execute and deliver all such further documents, certificates and instruments
and take all such further reasonable action as may be necessary or
appropriate, in order to consummate the transactions contemplated hereby.
19. Defined Terms. Terms used herein that are not otherwise
defined herein shall have the meanings assigned to such terms in the Plan.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first written above.
BANCO SANTANDER, S.A.
By: __________________________
Name:
Title:
FFB
By: __________________________
Name:
Title:
FIRST FIDELITY BANCORPORATION
By: __________________________
Name:
Title:
FIRST UNION CORPORATION
By: __________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit C
FORM OF FUNC STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 19, 1995 (the "Agreement"),
by and between First Union Corporation, a North Carolina corporation
("Issuer"), and First Fidelity Bancorporation, a New Jersey corporation
("Grantee").
RECITALS
(A) The Plan. Grantee and Issuer have on a date prior to the date
hereof, entered into an Agreement and Plan of Merger, dated as of June 18,
1995 (the "Plan"), providing for, among other things, the merger of Grantee
with and into a wholly owned subsidiary of Issuer, with such subsidiary being
the surviving corporation.
(B) Condition to Plan. As a condition and inducement to Grantee's
execution of the Plan and Grantee's agreement referred to in the next
sentence, Grantee has required that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as hereinafter defined). As a condition and
inducement to Issuer's execution of the Plan and this Agreement, Grantee has
agreed to grant an option to Issuer on terms and conditions substantially
identical to those of the Option and this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree
as follows:
1. Defined Terms. Capitalized terms which are used but not
defined herein shall have the meanings ascribed to such terms in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase a number of shares of common stock, par value $3.33 per share
("Issuer Common Stock"), of Issuer up to 34,042,001 of such shares (as
adjusted as set forth herein, the "Option Shares", which shall include the
Option Shares before and after any transfer of such Option Shares, but in no
event shall the number of Option Shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Issuer Common Stock) at a
purchase price per Option Share (as adjusted as set forth herein, the
"Purchase Price") equal to the closing price per share of Issuer Common Stock
on June 19, 1995, as reported by the NYSE Composite Transactions reporting
system (as reported in The Wall Street Journal or, if not reported therein,
another authoritative source) but in no event may the Purchase Price, prior
to any adjustment, be less than the par value of Issuer Common Stock. Each
Option Share issued upon exercise of the Option shall be accompanied by FUNC
Rights as provided in the FUNC Rights Agreement.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the agreements or
covenants contained in this Agreement or the Plan, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or in part,
at any time and from time to time following the occurrence of a Purchase Event
(as hereinafter defined); provided that the Option shall terminate and be of
no further force or effect upon the earliest to occur of (A) the Effective
Time, (B) termination of the Plan in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event other
than a termination thereof by Grantee pursuant to Section 7.01(B) of the Plan
(but only if the breach of Issuer giving rise to such termination was willful)
(a termination of the Plan by Grantee pursuant to Section 7.01(B) thereof as a
result of a willful breach by Issuer being referred to herein as a "Default
Termination"), (C) 15 months after a Default Termination, or (D) 15 months
after termination of the Plan (other than a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event; provided,
however, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law. The term "Holder" shall mean the
holder or holders of the Option from time to time, and which initially is
Grantee. The rights set forth in Section 8 hereof shall terminate when the
right to exercise the Option terminates (other than as a result of a complete
exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Without Grantee's prior written consent, Issuer shall
have recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any
person (other than Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving Issuer or any of
its significant subsidiaries (other than transactions solely between
Issuer's subsidiaries that are not violative of the Plan), (B) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits
of Issuer or any of its significant subsidiaries representing in either
case 25% or more of the consolidated assets or deposits of Issuer and its
subsidiaries or (C) the issuance, sale or other disposition by Issuer of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power of
Issuer or any of its significant subsidiaries, other than, in each case of
(A), (B), or (C), any merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries in which the
voting securities of Issuer outstanding immediately prior thereto continue
to represent (by either remaining outstanding or being converted into the
voting securities of the surviving entity of any such transaction) at
least 65% of the combined voting power of the voting securities of the
Issuer or the surviving entity outstanding immediately after the
consummation of such merger, consolidation, or similar transaction
(provided any such transaction is not violative of the Plan) (each
of (A), (B), or (C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act), other than a group of
which Grantee or any subsidiary of Grantee is a member, shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 25% or more of the voting power of Issuer or any of its
significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act, with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 25% or more
of the then outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the stockholders shall not have approved the matters
relating to the Plan requiring approval by the requisite vote at the FUNC
Meeting, the FUNC Meeting shall not have been held or shall have
been canceled prior to termination of the Plan, or Issuer's Board of
Directors shall have withdrawn or modified in a manner adverse to Grantee
the recommendation of Issuer's Board of Directors with respect to the
matters relating to the Plan requiring approval, in each case after it
shall have been publicly announced that any person (other than Grantee or
any subsidiary of Grantee) shall have (A) made, or disclosed an
intention to make, a bona fide proposal to engage in an Acquisition
Transaction, (B)commenced a Tender Offer or filed a registration statement
under the Securities Act with respect to an Exchange Offer or (C) filed
an application (or given a notice), whether in draft or final form,
under the Home Owners' Loan Act, as amended ("HOLA"), the BHC Act, the
Bank Merger Act, as amended (the "BMA") or the Change in Bank Control
Act of 1978, as amended (the "CBCA"), for approval to engage in an
Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide 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; or
(iv) 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 the Issuer to make such a proposal if the Plan
terminates, Issuer shall have breached any representation, warranty,
covenant or agreement contained in the Plan and such breach would entitle
Grantee to terminate the Plan under Section 7.01 (without regard to the
cure period provided for therein unless such cure is promptly effected
without jeopardizing consummation of the Merger pursuant to the terms of
the Plan); or
(v) any person (other than Grantee or any subsidiary of
Grantee) other than in connection with a transaction to which Grantee has
given its prior written consent, shall have filed an application or
notice with any Regulatory Authority for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition
to the right of Holder to exercise the Option.
(e) In the event Holder 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 Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided that the first notice of exercise shall be sent to Issuer
within 180 days after the first Purchase Event of which Grantee has been
notified. If prior notification to or approval of any Regulatory Authority is
required in connection with such purchase, Issuer shall cooperate with the
Holder in the filing of the required notice of application for approval and
the obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods). Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 12(f).
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all Liens and subject to no
preemptive rights, and (B) if the Option is exercised in part only, an
executed new agreement with the same terms as this Agreement evidencing the
right to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder, and (ii) Holder shall deliver to Issuer a letter agreeing that
Holder shall not offer to sell or otherwise dispose of such Option Shares in
violation of applicable federal and state law or of the provisions of this
Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF JUNE 19, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend relating to
the Securities Act shall be removed by delivery of substitute certificate(s)
without such legend if 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 and its counsel, to the effect
that such legend is not required for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately available funds and the tender of
this Agreement to Issuer, Holder shall be deemed to be the holder of record of
the shares of Issuer 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 Issuer Common Stock shall not then be
actually delivered to 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, issuance and delivery of stock
certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Issuer Common Stock so that the Option may be exercised without
additional authorization of Issuer Common Stock after giving effect to all
other options, warrants, convertible securities and other rights to purchase
Issuer 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 (A) complying with all premerger
notification, reporting and waiting period requirements and (B) in the event
prior approval of or notice to any Regulatory Authority is necessary before
the Option may be exercised, cooperating fully with Holder in preparing such
applications or notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to exercise the
Option and Issuer duly and effectively to issue shares of the Issuer Common
Stock pursuant hereto, and (iv) promptly to take all action provided herein
to protect the rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. 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) Beneficial Ownership. To the best knowledge of Issuer, as
of the date of this Agreement, no person or group has beneficial
ownership of more than 5% of the issued and outstanding shares of Issuer
Common Stock.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and 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 Issuer Common Stock equal to the maximum number of shares of
Issuer Common Stock at any time and from time to time purchasable upon
exercise of the Option, and all such shares, upon issuance pursuant to
the Option, will be duly authorized, validly issued, fully paid an
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances, and security interests (other than those created by this
Agreement) and not subject to any preemptive rights.
(d) No Violations. 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 (A) a breach or violation of, or a default under, its
certificate of incorporation or by-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) 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 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, that would, in
any case give any other person the ability to prevent or enjoin Issuer's
performance under this Agreement in any material respect.
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; 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; and this Agreement
has been duly executed and delivered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization, etc. (a) In
the event of any change in Issuer Common Stock by reason of a stock dividend,
stock split, split-up, recapitalization, combination, exchange of shares,
exercise of the FUNC Rights or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date hereof or upon
conversion into Issuer Common Stock of any convertible security of Issuer
outstanding on the date hereof), the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be
deemed to affect or change, or constitute authorization for any violation of,
any of the covenants or representations in the Plan.
(b) In the event that 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 Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock immediately
prior to such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets or deposits
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
provisions 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 Holder, of either (x) the Acquiring Corporation (as hereinafter defined),
(y) any person that controls the Acquiring Corporation, or (z) in the case of
a merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(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 Holder. Substitute Option
Issuer shall also enter into an agreement with Holder 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 hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of
Substitute Option per share of Substitute Common Stock (the "Substitute Option
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(1) "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, or (iii) the transferee of all or substantially all
of Issuer's assets (or a substantial part of the assets of its
subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
(3) "Assigned Value" shall mean the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer or an Exchange Offer
therefor has been made, (x) the price per share of Issuer Common Stock to
be paid by any third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common Stock within the six-
month period immediately preceding the consolidation, merger, or sale in
question and (z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (i) the sum of the price
paid in such sale for such assets (and/or deposits) and the current
market value of the remaining assets of Issuer, as determined by a
nationally recognized investment banking firm selected by Holder divided
by (ii) the number of shares of Issuer Common Stock outstanding at such
time. In the event that a Tender Offer or an Exchange Offer is made for
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Holder.
(4) "Average Price" shall mean the average closing price of a share
of 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 Issuer, the person
merging into Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate 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 aggregate of the shares of
Substitute Common Stock but for the limitation in the first sentence of this
Section 7(f), 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 the first sentence of this Section 7(f) over (ii)
the value of the Substitute Option after giving effect to the limitation in
the first sentence of this Section 7(f). This difference in value shall be
determined by a nationally-recognized investment banking firm selected by
Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls the
Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the holders of
the other shares of common stock issued by Substitute Option Issuer are not
entitled to exercise any rights by reason of the issuance or exercise of the
Substitute Option and the shares of Substitute Common Stock are otherwise in
no way distinguishable from or have lesser economic value (other than any
diminution in value resulting from the fact that the Substitute Common Stock
are restricted securities, as defined in Rule 144 under the Securities Act or
any successor provision) than other shares of common stock issued by
Substitute Option Issuer).
8. Repurchase at the Option of Holder. (a) Subject to the last
sentence of Section 3(a), at the request of Holder at any time commencing upon
the first occurrence of a Repurchase Event (as defined in Section 8(d)) and
ending 12 months immediately thereafter, Issuer shall repurchase from Holder
(i) the Option and (ii) all shares of Issuer Common Stock purchased by Holder
pursuant hereto with respect to which Holder then has beneficial ownership.
The date on which Holder exercises its rights under this Section 8 is referred
to as the "Request Date". Such repurchase shall be at an aggregate price (the
"Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within 10 business days after the Request Date, pay the Section
8 Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment, Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, and Holder shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all
Liens. Notwithstanding the foregoing, to the extent that prior notification
to or approval of any Regulatory Authority is required in connection with the
payment of all or any portion of the Section 8 Repurchase Consideration,
Holder shall have the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that Issuer deliver
from time to time that portion of the Section 8 Repurchase Consideration that
it is not then so prohibited from paying and promptly file the required notice
or application for approval and expeditiously process the same (and each party
shall cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval). If any Regulatory Authority
disapproves of any part of Issuer's proposed repurchase pursuant to this
Section 8, Issuer shall promptly give notice of such fact to Holder. If any
Regulatory Authority prohibits the repurchase in part but not in whole, then
Holder shall have the right (i) to revoke the repurchase request or (ii) to
the extent permitted by such Regulatory Authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent
to each, and Holder shall thereupon have the right to exercise the Option as
to the number of Option Shares for which the Option was exercisable
at the Request Date less the sum of the number of shares covered by the Option
in respect of which payment has been made pursuant to Section 8(a)(ii) and the
number of shares covered by the portion of the Option (if any) that has been
repurchased. Holder shall notify Issuer of its determination under the
preceding sentence within five (5) business days of receipt of notice of
disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of
termination of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock
paid for any such share by the person or groups described in Section 8(d)(i),
(ii) the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest closing sales price per share of Issuer Common Stock quoted on the
NYSE (or if Issuer Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
assets, the Applicable Price shall be 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
Holder, divided by the number of shares of the Issuer Common Stock outstanding
at the time of such sale. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in
good faith by an independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer Common
Stock, or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii)
or 7(b)(iii) shall be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), as expeditiously
as possible prepare and file a registration statement under the Securities Act
if such registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other securities
that have been acquired by or are issuable to the Selling Shareholder upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by the Selling Shareholder in such request, including
without limitation a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities for sale under any
applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common Stock under the Securities Act in connection with an underwritten
public offering of such Issuer Common Stock, Issuer will promptly give written
notice to the Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days after receipt
of any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
the Selling Shareholder), Issuer will cause all such shares for which a
Selling Shareholder requests participation in such registration, to be so
registered and included in such underwritten public offering; provided,
however, that Issuer may elect to not cause any such shares to be so
registered (i) if the underwriters in good faith object for valid business
reasons, or (ii) in the case of a registration solely to implement an employee
benefit plan or a registration filed on Form S-4 of the Securities Act or any
successor Form; provided, further, however, that such election pursuant to
(i) may only be made two times. If some but not all the shares of Issuer
Common Stock, with respect to which Issuer shall have received requests for
registration pursuant to this Section 9(b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders desiring to register their shares
pro rata in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total number of
shares requested to be registered by all such Selling Shareholders then
desiring to have Issuer Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in Section
9(a) above to become effective and to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective, provided, however, that Issuer may delay any registration of Option
Shares required pursuant to Section 9(a) above for a period not exceeding 90
days provided Issuer shall in good faith determine that any such registration
would adversely affect an offering or contemplated offering of other
securities by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination of the Plan
pursuant to Article VII thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 6.01 of Article VI of the
Plan, and (c) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any calendar year;
(iii) within 90 days after the effective date of a
registration referred to in Section 9(b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded
the opportunity to register such shares under the Securities Act and
such shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common Stock
issuable upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration
of nine months from the effective date of such registration statement. Issuer
shall use all reasonable efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent necessary to permit
the sale or other disposition of the Option Shares so registered in accordance
with the intended method of distribution for such shares; provided, however,
that Issuer shall not be required to consent to general jurisdiction or
qualify to do business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits
such payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including
the fees and expenses of counsel), legal expenses, including the reasonable
fees and expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold
comfort" letters, expenses of underwriters, excluding discounts and
commissions but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to Section 9(a)
or 9(b) above (including the related offerings and sales by holders of Option
Shares) and all other qualifications, notifications or exemptions pursuant to
Section 9(a) or 9(b) above.
(e) Indemnification. In connection with any registration
under Section 9(a) or 9(b) above Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact
contained in any registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are caused by
any untrue statement or alleged untrue statement that was included by Issuer
in any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon
and in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section
9(e) of notice of the commencement of any action against such indemnified
party in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9(e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it of
any liability which it may otherwise have to any indemnified party under this
Section 9(e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense of
such action at its own expense, with counsel chosen by it and satisfactory to
such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party
that may be contrary to the interest of the indemnified party, in which case
the indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party
to be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, the Selling Shareholders and the underwriters
from the offering of the securities and also the relative fault of Issuer, the
Selling Shareholders and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The amount paid or payable by a party as a result of the expenses,
losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall any Selling
Shareholder be responsible, in the aggregate, for any amount in excess
of the net offering proceeds attributable to its Option Shares included in
the offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any holder to indemnify shall be several
and not joint with other holders.
In connection with any registration pursuant to Section 9(a) or
9(b) above, Issuer and each Selling Shareholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all
reporting requirements and will do all such other things as may be necessary
to permit the expeditious sale at any time of any Option Shares by the Selling
Shareholders thereof in accordance with and to the extent permitted by any
rule or regulation promulgated by the SEC from time to time, including,
without limitation, Rule 144A. Issuer shall at its expense provide the
Selling Shareholders with any information necessary in connection with the
completion and filing of any reports or forms required to be filed by them
under the Securities Act or the Exchange Act, or required pursuant to any
state securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in
connection with the exercise of the Option, and will save the Selling
Shareholders harmless, without limitation as to time, against any and all
liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other
securities to be acquired in connection with the exercise of the Option are
then authorized for quotation or trading or listing on the NYSE or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or such other securities exchange and will use its
best efforts to obtain approval, if required, of such quotation or listing as
soon as practicable.
11. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of 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 in the aggregate the same number of
shares of Issuer Common Stock purchasable hereunder. The terms "Agreement"
and "Option" as used herein include any other 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.
12. Miscellaneous.
(a) Expenses. 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.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement: No Third-Party Beneficiaries;
Severability. This Agreement, together with the Plan and the other documents
and instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 9(e)
and any transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h)) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or Regulatory Authority to be invalid, void or unen-
forceable, the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. If for any reason such courtor Regulatory
Authority determines that the Option does not permit Holder to acquire, or
does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided in Section 3 (as may be adjusted herein), it is the
express intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of North Carolina without
regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in the
Plan (or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto
may be executed in two counterparts, each of which shall be considered one and
the same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that Holder may assign
this Agreement to a wholly-owned subsidiary of Holder and Holder may assign
its rights hereunder in whole or in part after the occurrence of a Purchase
Event. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by the Holder, Issuer and the Holder shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for by
such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
FIRST UNION CORPORATION
By:____________________________________
Edward E. Crutchfield
Chairman and Chief Executive Officer
FIRST FIDELITY BANCORPORATION
By:____________________________________
Anthony P. Terracciano
Chairman, President, and
Chief Executive Officer
<PAGE>
<PAGE>
Exhibit D
FORM OF SUPPLEMENT TO FFB RIGHTS AGREEMENT
FOURTH SUPPLEMENT, dated as of June 18, 1995 (the "Amendment"), to
the Rights Agreement, dated as of August 17, 1989 (as heretofore supplemented
and amended, the "Rights Agreement"), between First Fidelity Bancorporation, a
New Jersey corporation (the "Company"), and First Fidelity Bank, N.A., a
national banking association (the "Rights Agent").
WITNESSETH
WHEREAS, on August 17, 1989, the Board of Directors of the Company
authorized and declared a dividend of one Right with respect to each Common
Share held as of the Record Date, each Right representing the right to
purchase one one-hundredth of a Preferred Share upon the terms and conditions
set forth in the Rights Agreement; and
WHEREAS, the Rights remain issued and outstanding and the Rights
Agreement remains in effect with respect thereto; and
WHEREAS, no Trigger Event has occurred; and
WHEREAS, the Company, FUNC, a North Carolina corporation ("FUNC"),
and a subsidiary of FUNC propose to enter into an Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which the Company would merge with and
into such subsidiary of FUNC; and
WHEREAS, after entry into the Merger Agreement, (i) the Company and
FUNC may enter into a Stock Option Agreement referred to therein (the "Stock
Option Agreement") pursuant to which the Company would grant to FUNC an option
to acquire up to 19.9% of the outstanding shares of Common Stock of the
Company under certain circumstances and (ii) Investor, Investor Sub, FUNC and
the Company may enter into an Agreement referred to therein (the "Voting
Agreement") pursuant to which the Investor and Investor Sub, among other
things, have agreed to vote their shares of Common Stock in favor of the
Merger; and
WHEREAS, in connection with the anticipated approval, execution, and
delivery of the Merger Agreement, the Board of Directors of the Company has
approved, in accordance with Section 27 of the Rights Agreement, this
Amendment and has directed the appropriate officers of the Company to take
all appropriate steps to execute and deliver this Amendment.
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein set forth, the parties hereby agree as follows:
(1) Amendment to Section 1(a)
Section 1(a) of the Rights Agreement is hereby amended in its
entirety to read as follows:
"(a) `Acquiring Person' shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined)
of 10% or more of the Common Shares of the Company then outstanding,
but shall not include any of the following:
(i) the Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the Company or
any Subsidiary of the Company, or an entity holding Common Shares
for or pursuant to the terms of any such plan,
(ii) until the termination of the Stock Option Agreement in
accordance with its terms prior to any exercise thereunder, FUNC or
any Affiliate or Associate of FUNC, or Banco Santander, S.A. (the
`Investor') or any Affiliate of the Investor, as a result of their
acquisition of Beneficial Ownership of Common Shares of the Company
by reason of the approval, execution, or delivery of the Stock
Option Agreement, the Merger Agreement or the Voting Agreement or by
reason of the consummation of any transaction or the exercise of any
option contemplated by the Stock Option Agreement, the Merger
Agreement or the Voting Agreement, so long as (A) FUNC is in
compliance with the material terms, conditions, and obligations
imposed upon it in the Stock Option Agreement and the Merger
Agreement, and (B) FUNC and any Affiliate or Associate of FUNC is
not the Beneficial Owner of any Common Shares of the Company other
than (w) Common Shares of the Company of which FUNC or any Affiliate
or Associate of FUNC is or becomes the Beneficial Owner by reason of
the approval, execution, or delivery of the Stock Option Agreement,
the Merger Agreement, or the Voting Agreement or by reason of the
consummation of any transaction or the exercising of the option,
contemplated by the Stock Option Agreement, the Merger Agreement, or
both, (x) Common Shares of the Company Beneficially Owned by FUNC or
any Affiliate or Associate of FUNC on the date hereof, (y) Common
Shares of the Company of which FUNC or any Affiliate or Associate
of FUNC inadvertently becomes the Beneficial Owner after the date
hereof, provided that the number of such shares of Common Shares
does not exceed 1% of the shares of Common Shares of the Company
outstanding on the date hereof and that FUNC or any such Affiliate
or Associate, as the case may be, divests such Common Shares as soon
as practicable after it becomes aware of such acquisition of
Beneficial Ownership, and (z) Common Shares of the Company
Beneficially Owned or otherwise held by FUNC or any Affiliate or
Associate of FUNC in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in
either case in the ordinary course of its banking business;"
(iii) the Investor and its Affiliates (A) so long as none of
the Investor and its Affiliates is in violation of the provisions of
Section 8.01 of the Investment Agreement, dated as of March 18,
1991, between the Company and the Investor (the `Investment
Agreement') as the same may be amended from time to time and (B) if
the Investment Agreement shall have terminated, if and for so long
as (and only if and for so long as) the Investor and its Affiliates
have Beneficial Ownership of 25% or less (or, if on the date of
termination of the Investment Agreement, the Investor and its
Affiliates were permitted by Section 8.01 of the Investment
Agreement to own up to 30%, 30% or less), of the Common Shares of
the Company, or
(iv) with respect to Beneficial Ownership of up to 25% or less
(or, if at the date of the bona fide pledge discussed below the
Investor was permitted by Section 8.01 of the Investment Agreement
to own up to 30%, 30% or less) of the Common Shares of the Company,
a financial institution which is granted a bona fide pledge by the
Investor of any securities of the Company entitled, in the ordinary
course, to vote in the election of directors of the Company and any
other securities or rights convertible into or exercisable (whether
immediately or otherwise) for such securities (the `Restricted
Securities'), provided that the agreement relating to the pledge
shall provide that if such financial institution forecloses on such
pledge of such Restricted Securities, such financial institution
shall be bound by the obligations of the Investor under the
Investment Agreement but shall not have any of the rights of the
Investor thereunder other than those contained in Sections 5.03 and
8.02 of the Investment Agreement, provided that for purposes of this
subsection (iv) the provisions of the Investment Agreement shall
apply during the period commencing on the date of the bona fide
pledge and ending on the four year anniversary of the foreclosure of
such pledge whether or not such provision are otherwise then in
effect.
Upon termination of the Investment Agreement, if and for so
long as the Investor is the Beneficial Owner of more than 25% (or,
if on the date of the termination of the Investment Agreement, the
Investor and its Affiliates were permitted by Section 8.01 to own up
to 30%, more than 30%) of the Common Shares then outstanding and all
of such shares were acquired in compliance with Section 8.01 of the
Investment Agreement, the Investor shall become an Acquiring Person
if it becomes the Beneficial Owner of any additional Common Shares.
If the Investment Agreement was terminated as a result of a
violation of such Agreement by the Investor, the Investor shall be
required to reduce its Beneficial Ownership to less than the
relevant percentage set forth above of the Common Shares
outstanding, within 90 days after termination of the Investment
Agreement. Failure to make such reduction shall result in the
Investor becoming an `Acquiring Person.' Notwithstanding the
foregoing, no Person shall become an `Acquiring Person' solely as
the result of any acquisition of Common Shares by the Company which,
by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to
10% or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial
Owner of 10% (or 25% (or, if on the date of termination of the
Investment Agreement, the Investor and its Affiliates were permitted
by Section 8.01 of the Investment Agreement to own up to 30%, 30% or
less) in the case of the Investor) or more of the Common Shares of
the Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company, become
the Beneficial Owner of any additional Common Shares of the Company,
then such Person shall be deemed to be an `Acquiring Person.'"
(2) Addition of Section 1(o).
A new Section 1(o) is added to the Rights Agreement, to read as
follows:
"(o) `FUNC' shall mean First Union Corporation, a corporation
duly organized and existing under the laws of the State of North
Carolina, and its successors."
(3) Addition of Section 1(p).
A new Section 1(p) is added to the Rights Agreement, to read as
follows:
"(p) `Merger Agreement' shall mean the Agreement and Plan of
Merger, dated as of June 18, 1995, by and between FUNC, the Company
and a subsidiary of FUNC, as the same may be amended from time to
time.
(4) Addition of Section 1(q).
A new Section 1(q) is added to the Rights Agreement, to read as
follows:
"(q) `Stock Option Agreement' shall mean the Stock Option
Agreement, to be dated as of June 19, 1995, by and between the
Company, as issuer, and FUNC, as grantee, as the same may be amended
from time to time.
(5) Addition of Section 1(r).
A new Section 1(r) is added to the Rights Agreement, to read as
follows:
"(r) `Voting Agreement' shall mean the Agreement, to be dated
as of June 19, 1995, among Investor, a subsidiary of Investor, the
Company and FUNC, as the same may be amended from time to time.
(6) Addition of Section 1(s).
A new Section 1(s) is added to the Rights Agreement, to read as
follows:
"(s) `Termination Time' shall be immediately prior to the
Effective Time, as defined in the Merger Agreement."
(7) Amendment to Section 7(a).
Section 7(a) of the Rights Agreement is amended to read as follows:
"(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election
to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together
with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to
the earliest of (i) the close of business on September 1, 1999 (the
"Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"),
(iii) the time at which such Rights are exchanged as provided in
Section 24 hereof, or (iv) the Termination Time."
(8) Amendment to Section 13.
The language of Section 13 of the Rights Agreement prior to Section
13, Clause (i) is amended to read as follows:
"Section 13. Consolidation, Merger or Sale or Transfer of
Assets of Earning Power. In the event, directly or indirectly, (a)
the Company shall consolidate with, or merge with and into, any
other Person, (b) any Person shall consolidate with the Company, or
merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall
be changed into or exchanged for stock or other securities of any
other Person (or the Company) or cash or any other property, (c) the
Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person other than the Company or one or
more of its wholly-owned Subsidiaries, or (d) the Company shall
acquire all or any part of its Common Shares pursuant to a binding
share exchange, provided, however that as long as the Merger
Agreement shall not have been terminated, the references to `other
Person' and `any Person' in the above transactions (a) through (d)
shall not include FUNC or any of its Affiliates, then, and in each
such case, proper provision shall be made so that"
(9) Amendment to Section 25.
Clause (iv) of Section 25(a) of the Rights Agreement is amended to
read as follows:
"(iv) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other
Person, provided, however, that as long as the Merger Agreement
shall not have been terminated, such other Person shall not, in any
such consolidation, merger, or sale or transfer of assets or earning
power, include FUNC or any of its Affiliates or Associates,"
(10) Addition of Section 35.
A new Section 35 is added to the Rights Agreement, to read as
follows:
"Section 35. Termination. This Agreement shall terminate at
the Termination Time and all rights, benefits, obligations, duties
and agencies created by this Agreement shall be terminated at such
Termination Time. All Rights issued and outstanding shall, at the
Termination Time, cease to exist and shall be terminated without any
payment to any holder thereof."
(11) Effectiveness. This Amendment shall be deemed to be in force
and effective immediately prior to the execution and delivery of the Merger
Agreement. Except as amended hereby, the Rights Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby, until the
Termination Time.
(12) Defined Terms. Unless otherwise defined herein, all defined
terms used herein shall have the same meanings given to them in the Rights
Agreement.
(13) Governing Law. This Amendment shall be deemed to be a
contract made under the laws of the State of New Jersey and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
(14) Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original and
all of which shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
FIRST FIDELITY BANCOPORATION
By:_________________________
Name:
Title:
FIRST FIDELITY BANK, N.A.
By:_________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit E
FORM OF AMENDMENT TO FUNC RIGHTS AGREEMENT
THIRD AMENDMENT, dated as of June 18, 1995 (this "Amendment"), to
the SHAREHOLDER PROTECTION RIGHTS AGREEMENT, dated December 18, 1990 (as
heretofore amended, the "Rights Agreement"), between First Union Corporation,
a North Carolina corporation (the "Company"), and First Union National Bank of
North Carolina, a national banking association (the "Rights Agent").
WITNESSETH
WHEREAS, on December 18, 1990, the Board of Directors of the Company
(i) authorized and declared a dividend of one Right with respect to each share
of Common Stock held of record as of the Record Time and (ii) authorized the
issuance of one Right with respect to each share of Common Stock issued after
the Record Time and prior to any Separation Time, each Right representing the
right to purchase securities of the Company pursuant to the terms and
conditions of the Rights Agreement; and
WHEREAS, the Rights remain issued and outstanding and the Rights
Agreement remains in effect with respect thereto; and
WHEREAS, no Separation Time or Stock Acquisition Date has occurred;
and
WHEREAS, the Company and First Fidelity Bancorporation, a New Jersey
corporation ("FFB"), propose to enter into an Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which FFB would merge with and into a
subsidiary of the Company; and
WHEREAS, after entry into the Merger Agreement, the Company and FFB
may enter into a Stock Option Agreement (the "Stock Option Agreement")
pursuant to which the Company would grant to FFB an option to acquire up to
19.9% of the outstanding shares of Common Stock of the Company under certain
circumstances; and
WHEREAS, in connection with the anticipated approval, execution, and
delivery of the Merger Agreement, the Board of Directors of the Company has
approved, in accordance with Section 5.4 of the Rights Agreement, this
Amendment and has directed the appropriate officers of the Company to take all
appropriate steps to execute and deliver this Amendment.
NOW, THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
(1) Amendment to Section 1.1
(a) Paragraph (i) of the definition of "Acquiring Person" appearing
in Section 1.1. of the Rights Agreement is amended to read in its entirety as
follows:
"(i) any Person that is a Beneficial Owner of 15% or more of
the outstanding shares of Common Stock; provided, however, that, for
the purposes of this paragraph (i), the term "Acquiring Person"
shall not include (a) any Person that shall become the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock
solely as a result of an acquisition by the Company of shares of
Common Stock, until such time thereafter as such Person shall become
the Beneficial Owner (other than by means of a stock dividend or
stock split) of any additional shares of Common Stock; (b) any
Person that acquired Beneficial Ownership of shares of Common Stock
without any plan or intention to seek or affect control of the
Company and without knowledge that such acquisition would make such
Person an Acquiring Person, if such Person, upon notice by the
Company, promptly enters into an irrevocable commitment promptly to
divest, and thereafter promptly divests (without exercising or
retaining any power, including voting, with respect to such shares),
sufficient shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) so that such
Person ceases to be the Beneficial Owner of 15% or more of the
outstanding shares of Common Stock; or (c) until the later of the
Effective Time or termination of the Stock Option Agreement in
accordance with its terms prior to any exercise thereunder, FFB or
any Affiliate or Associate of FFB that shall acquire Beneficial
Ownership of Common Stock of the Company by reason of the approval,
execution, or delivery of the Stock Option Agreement, the Merger
Agreement, or both, or by reason of the consummation of any trans-
action or the exercise of the option contemplated by the Stock
Option Agreement, the Merger Agreement, or both, so long as (A) FFB
is in compliance with the material terms, conditions, and
obligations imposed upon it in the Stock Option Agreement and, until
the Effective Time, the Merger Agreement, and (B) FFB and any
Affiliate or Associate of FFB is not the Beneficial Owner of any
Common Stock of the Company other than (w) Common Stock of the
Company of which FFB or any Affiliate or Associate of FFB is or
becomes the Beneficial Owner by reason of the approval, execution,
or delivery of the Stock Option Agreement, the Merger Agreement,
or both, or by reason of the consummation of any transaction or the
exercising of the option, contemplated by the Stock Option Agreement,
the Merger Agreement, or both, (x) Common Stock of the Company
Beneficially Owned by FFB or any Affiliate or Associate of FFB on
the date hereof, (y) Common Stock of the Company of which FFB or any
Affiliate or Associate of FFB inadvertently becomes the Beneficial
Owner after the date hereof, provided that the number of such shares
of Common Stock does not exceed 1% of the shares of Common Stock of
the Company outstanding on the date hereof and that FFB or any such
Affiliate or Associate, as the case may be, divests such Common
Stock as soon as practicable after it becomes aware of such
acquisition of Beneficial Ownership, and (z) Common Stock of the
Company Beneficially Owned or otherwise held by FFB or any Affiliate
or Associate of FFB in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in either
case in the ordinary course of its banking business;"
(b) The following new definitions shall be added to Section 1.1 of
the Rights Agreement, inserted in conformity with the alphabetical order of
Section 1.1 and shall read as follows:
"`Effective Date' and `Effective Time' shall have the
respective meanings ascribed to such terms in Section 1.02 of the
Merger Agreement.
"`Merger Agreement' shall mean the Agreement and Plan of
Merger, dated as of June 18, 1995, by and among FFB, the Company and
PKC, Inc., as the same may be from time to time amended.
"`FFB' shall mean First Fidelity Bancorporation, a corporation
duly organized and existing under the laws of the State of New
Jersey, and its successors.
"`Stock Option Agreement' shall mean the Stock Option
Agreement, to be dated as of June 19, 1995, by and between Company,
as issuer, and FFB, as grantee, as the same may be from time to time
amended."
(2) Effectiveness. This Amendment shall be deemed to be in force
and effective immediately prior to the execution and delivery of the Merger
Agreement. Except as amended hereby, the Rights Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby.
(3) Defined Terms. Unless otherwise defined herein, all defined
terms used herein shall have the same meanings given to them in the Rights
Agreement.
(4) Governing Law. This Amendment shall be deemed to be a contract
made under the laws of the State of North Carolina and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
(5) Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original and
all of which shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
FIRST UNION CORPORATION
By:____________________________________
Edward E. Crutchfield
Chairman and Chief Executive Officer
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:_____________________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit F
FORM OF FFB AFFILIATE'S LETTER
_____________, 1995
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
June 18, 1995 (the "Plan"), by and among First Union Corporation ("FUNC"),
First Fidelity Bancorporation ("FFB") and PKC, Inc. ("Merger Sub"), FFB plans
to merge with and into Merger Sub (the "Merger"). As a result of the Merger,
the undersigned may receive shares of FUNC common stock, par value $3.33 per
share, FUNC Class A Preferred Stock, no-par value, and/or depositary receipts
representing shares of FUNC Preferred Stock (collectively, "FUNC Stock") in
exchange for shares (or options on shares) of FFB common stock, par value
$1.00 per share, shares of FFB preferred stock, par value $1.00 per share,
and/or depositary receipts representing FFB preferred stock (collectively,
"FFB Stock").
The undersigned hereby represents, warrants and covenants with and to
FUNC that in the event the undersigned receives any FUNC Stock as a result of
the Merger:
(A) The undersigned will not sell, transfer or otherwise dispose of
such FUNC Stock unless (i) such sale, transfer or other disposition has
been registered under the Securities Act of 1933, as amended (the "Act"),
(ii) such sale, transfer or other disposition is made in conformity with
the provisions of Rule 145 under the Act (as such rule may be hereafter
from time to time be amended), or (iii) in the opinion of counsel in form
and substance reasonably satisfactory to FUNC, or under a "no-action"
letter obtained by the undersigned from the staff of the Securities and
Exchange Commission (the "SEC"), such sale, transfer or other disposition
will not violate or is otherwise exempt from registration under the Act.
(B) The undersigned understands that, except as expressly provided
in the Plan, FUNC is under no obligation to register the sale, transfer
or other disposition of shares of FUNC Stock by the undersigned or on the
undersigned's behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
(C) The undersigned also understands that stop transfer
instructions will be given to FUNC's transfer agent with respect to the
shares of FUNC Stock issued to the undersigned as a result of the Merger
and that there will be placed on the certificates for such shares, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in
a transaction to which Rule 145(d) under the Securities
Act of 1933 applies. The shares represented by this cer-
tificate may only be transferred in accordance with the
terms of a letter agreement between the registered holder
hereof and FUNC, a copy of which agreement is on file at
the principal offices of FUNC."
(D) The undersigned also understands that, unless the transfer by
the undersigned of the FUNC Stock issued to the undersigned as a result
of the Merger have been registered under the Act or a sale made in
conformity with the provisions of Rule 145(d) under the Act, FUNC
reserves the right, in its sole discretion, to place the following legend
on the certificates issued to any transferee of such FUNC Stock from the
undersigned:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 under the Securities Act of
1933 applies. The shares have been acquired by the holder
not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities
Act of 1933 and may not be offered, sold, pledged or
otherwise transferred except in accordance with an
exemption from the registration requirements of the
Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs
(C) and (D) above shall be removed by delivery of substitute certificates
without such legend if the undersigned shall have delivered to FUNC (i) a
copy of a "no action" letter from the staff of the SEC, or an opinion of
counsel in form and substance reasonably satisfactory to FUNC, to the
effect that such legend is not required for purposes of the Act, or
(ii) evidence or representations satisfactory to FUNC that the FUNC Stock
represented by such certificates is being or has been sold in a
transaction made in conformity with the provisions of Rule 145(d).
(E) The undersigned further represents, warrants and covenants with
and to, FUNC that the undersigned will not sell, transfer or otherwise
dispose of his or her interests in, or reduce his or her risk relative
to, any shares of FUNC Stock or FFB Stock beneficially owned by the
undersigned during the period commencing 30 days prior to the effective
date of the Merger and ending at such time as FUNC notifies the
undersigned that results covering at least 30 days of combined operations
of FUNC after the Merger have been published by FUNC, which FUNC agrees
to publish consistent with its normal financial reporting practice.
(F) The undersigned further represents, warrants and covenants with
and to FUNC that the undersigned will, and will cause each of the other
parties whose shares are deemed to be beneficially owned by the
undersigned pursuant to paragraph (G) below to, have all shares of FFB
Stock owned by the undersigned or such parties registered in the name of
the undersigned or such parties, as applicable, prior to the effective
date of the Merger and not in the name of any bank, broker-dealer,
nominee or clearing house.
(G) The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of FFB and FUNC
that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws.
(H) The undersigned has carefully read this letter and discussed
its requirements and other applicable limitations upon the undersigned's
ability to sell, transfer or otherwise dispose of the capital stock of
FFB or FUNC, to the extent the undersigned felt necessary, with the
undersigned's counsel or counsel for FFB.
Very truly yours,
________________________
Name:
[add below the signatures
of all registered owners
of shares deemed
beneficially
owned by the affiliate]
_________________________
Name:
_________________________
Name:
_________________________
Name:
Acknowledged this ______ day of
______________, 1995.
FIRST UNION CORPORATION
By:___________________________
Name:
Title:
FIRST FIDELITY BANCORPORATION
By:___________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit G
FORM OF FUNC AFFILIATE'S LETTER
_____________, 1995
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
June 18, 1995 (the "Plan"), by and among First Union Corporation ("FUNC"),
First Fidelity Bancorporation ("FFB") and PKC, Inc. ("Merger Sub"), FFB plans
to merge with and into Merger Sub (the "Merger").
The undersigned hereby represents, warrants and covenants with and to
FUNC that:
(A) The undersigned will not sell, transfer or otherwise dispose of his
or her interests in, or reduce his or her risk relative to, any shares of
common stock, preferred stock or depositary receipts of either FUNC or FFB
beneficially owned by the undersigned, during the period commencing 30 days
prior to the effective date of the Merger and ending at such time as FUNC
notifies the undersigned that results covering at least 30 days of combined
operations of FUNC after the Merger have been published by FUNC.
(B) The undersigned understands and agrees that this letter agreement
shall apply to all shares of the capital stock of FFB and FUNC that are deemed
to be beneficially owned by the undersigned under applicable federal
securities law.
Very truly yours,
________________________
Name:
[add below the signatures
of all registered owners
of shares deemed
beneficially
owned by the affiliate]
_________________________
Name:
_________________________
Name:
_________________________
Name:
Acknowledged this ______ day of
______________, 1995.
FIRST UNION CORPORATION
By:___________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit H
REGISTRATION RIGHTS
I. DEFINITIONS
1.1. Definitions. Terms defined in the Agreement and Plan of Merger,
dated as of June 18, 1995 (the "Plan"), by and among First Fidelity
Bancoporation ("FFB"), First Union Corporation ("FUNC") and PKC, Inc. ("Merger
Sub"), are used herein as therein defined. In addition, the following terms,
as used herein, have the following meanings:
"Demand Registration" means a Demand Registration as defined in
Section 2.1.
"Piggyback Registration" means a Piggyback Registration as defined in
Section 2.2.
"Registrable Securities" means shares of FUNC Common Stock owned from
time to time by the Large Shareholder and its Affiliates.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
II. REGISTRATION RIGHTS
2.1. Demand Registration. (a) A Large Shareholder may make a written
request for registration under the Securities Act of all or part of its
Registrable Securities (a "Demand Registration"); provided that FUNC shall not
be obligated (i) to effect more than one Demand Registration in any 12-month
period, (ii) to effect a Demand Registration for less than two million shares
of FUNC Common Stock or (iii) to effect a Demand Registration within 6 months
of Large Shareholder selling any Registrable Securities pursuant to a
Piggyback Registration under Section 2.2. Such request will specify the
number of shares of Registrable Securities proposed to be sold and will also
specify the intended method of disposition thereof. A registration will not
count as a Demand Registration until it has become effective.
(b) If such Large Shareholder so elects, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of an underwritten offering. Such Large Shareholder shall select the
book-running and other managing Underwriters in connection with such offering
and any additional investment bankers and managers to be used in connection
with the offering. Such book-running and other managing Underwriters shall be
reasonably satisfactory to FUNC.
2.2. Piggyback Registration. If FUNC proposes to file a registration
statement under the Securities Act with respect to an offering of FUNC Common
Stock (i) for FUNC's own account (other than a registration statement on
Form S-4 or S-8 or relating solely to securities issued pursuant to any
benefit plan (or any substitute form that may be adopted by the Commission) or
(ii) for the account of any of the holders of FUNC Common Stock, then FUNC
shall give written notice of such proposed filing to the Large Shareholder as
soon as practicable (but in no event less than 10 days before the anticipated
filing date), and such notice shall offer subject to the terms and conditions
hereof, Large Shareholder the opportunity to register such Registrable
Securities as such Large Shareholder may request on the same terms and
conditions as FUNC's or such holders' FUNC Common Stock (a "Piggyback
Registration").
2.3. Reduction of Offering. Notwithstanding anything contained herein,
if the managing Underwriter or Underwriters of an offering described in
Section 2.1 or 2.2 shall advise FUNC that (i) the size of the offering that
Large Shareholder, FUNC and any other persons intend to make or (ii) the kind
of securities that Large Shareholder, FUNC and such other persons intend to
include in such offering are such that the success of the offering would be
materially and adversely affected, then (A) if the size of the offering is the
basis of such Underwriter's advice, the amount of Registrable Securities to be
offered for the account of such Large Shareholder shall be reduced to the
extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing Underwriter or
Underwriters; provided that (x) in the case of a Demand Registration, the
amount of Registrable Securities to be offered for the account of such Large
Shareholder shall be reduced only after the amount of securities to be offered
for the account of FUNC and such other persons has been reduced to zero, and
(y) in the case of a Piggyback Registration, if securities are being offered
for the account of persons other than FUNC, then the proportion by which the
amount of such Registrable Securities intended to be offered for the account
of such Large Shareholder is reduced shall not exceed the proportion by which
the amount of such securities intended to be offered for the account of such
other persons is reduced; and (B) if the combination of securities to be
offered is the basis of such Underwriter's advice, (x) the Registrable
Securities to be included in such offering shall be reduced as described in
clause (A) above (subject to the proviso in clause (A)), or (y) in the case of
a Piggyback Registration, if the actions described in sub-clause (x) of this
clause (B) would, in the judgment of the managing Underwriter, be insufficient
to eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
III. REGISTRATION PROCEDURES
3.1. Filings; Information. Whenever a Large Shareholder requests that
any Registrable Securities be registered pursuant to Section 2.1 hereof, FUNC
will use its reasonable efforts to effect the registration of such Registrable
Securities as soon as reasonably practicable, and in connection with any such
request:
(a) FUNC will as soon as reasonably practicable prepare and file
with the SEC a registration statement on any form for which FUNC then
qualifies and which counsel for FUNC shall deem appropriate and available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use
reasonable efforts to cause such filed registration statement to become
and remain effective for a period of not less than 90 days; provided that
if FUNC shall furnish to such Large Shareholder a certificate signed by
its Chairman, Chief Executive Officer, Chief Financial Officer or any
Executive Vice President stating that in his or her good faith judgment
it would be detrimental or otherwise disadvantageous to FUNC or its
shareholders for such a registration statement to be filed, or, in the
case of an effective registration statement, for sales to be effected
thereunder, FUNC shall have a period of not more than 120 days within
which to file such registration statement measured from the date of
receipt of the request in accordance with Section 2.1 or, in the case of
an effective registration statement, FUNC shall be entitled to require
such Large Shareholder to refrain from selling Registrable Securities
under such registration statement for a period of up to 120 days. If
FUNC furnishes a notice under this paragraph at a time when a
registration statement filed pursuant to this Agreement is effective,
FUNC shall extend the period during which such registration statement
shall be maintained effective as provided in this Section 3.1 (a) hereof
by the number of days during the period from and including the date of
the giving of notice under this paragraph to the date when sales under
the registration statement may recommence.
(b) FUNC will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the Large
Shareholder requesting registration and each managing Underwriter, if
any, copies thereof, and thereafter furnish to such Large Shareholder and
each such Underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case including
all exhibits thereto and documents incorporated by reference therein) and
the prospectus included in such registration statement (including each
preliminary prospectus) as such Large Shareholder or such Underwriter may
reasonably request in order to facilitate the sale of the Registrable
Securities.
(c) After the filing of the registration statement, FUNC will
promptly notify such Large Shareholder of any stop order issued or, to
the knowledge of FUNC, threatened to be issued by the SEC and take all
necessary actions required to prevent the entry of such stop order or to
remove it if entered.
(d) FUNC will use its reasonable efforts to qualify the Registra-
ble Securities for offer and sale under such other securities or blue sky
laws of such jurisdictions in the United States as such Large Shareholder
reasonably (in light of such Large Shareholder's intended plan of
distribution) requests; provided that FUNC will not be required to
(i) qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph (d), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to
service of process in any such jurisdiction.
(e) FUNC shall, as promptly as reasonably practicable, notify
each Large Shareholder that has sold, or is selling, Registrable
Securities hereunder, at any time when a prospectus relating to the sale
of the Registrable Securities is required by law to be delivered in
connection with sales by an Underwriter or dealer, of the occurrence of
an event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and as promptly as practicable make available to each such Large
Shareholder and to the Underwriters any such supplement or amendment.
Each Large Shareholder, by requesting a registration or selling
Registrable Securities hereunder, shall be deemed to agree with FUNC
that, upon receipt of any notice from FUNC of the happening of any event
of the kind described in the preceding sentence, such Large Shareholder
will forthwith discontinue the offer and sale of Registrable Securities
pursuant to the registration statement covering such Registrable
Securities until receipt of the copies of such supplemented or amended
prospectus and, if so directed by FUNC, such Large Shareholder will
deliver to FUNC all copies, other than permanent file copies then in
Large Shareholder's possession, of the most recent prospectus covering
such Registrable Securities at the time of receipt of such notice. In
the event FUNC shall give such notice, FUNC shall extend the period
during which any registration statement shall be maintained effective as
provided in Section 3.1 (a) hereof by the number of days during the
period from and including the date of the giving of such notice to the
date when FUNC shall make available such supplemented or amended
prospectus.
(f) FUNC will enter into customary agreements (including an
underwriting agreement in customary form and satisfactory in form and
substance to FUNC in its reasonable judgment) and take such other actions
as are reasonably required in order to expedite or facilitate the sale of
such Registrable Securities.
(g) FUNC will furnish to each Large Shareholder that sells
Registrable Securities hereunder and to each managing Underwriter, if
any, a signed counterpart, addressed to such Large Shareholder and each
Underwriter, of (i) an opinion or opinions of counsel to FUNC and (ii) a
comfort letter or comfort letters from FUNC's independent auditors
pursuant to SAS 72, each in customary form and covering such matters of
the type customarily covered by opinions or comfort letters delivered to
such parties.
(h) FUNC will make generally available to its securityholders, as
soon as reasonably practicable, an earnings statement covering a period
of 12 months, beginning within three months after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the SEC thereunder.
(i) FUNC will use reasonable efforts to cause all such
Registrable Securities to be listed on each securities exchange on which
similar securities issued by FUNC are then listed.
FUNC may require each Large Shareholder that requests a registration or
is selling Registrable Securities hereunder promptly to furnish in writing to
FUNC such information regarding such Large Shareholder, the plan of distribu-
tion of the Registrable Securities and other information as FUNC may from time
to time reasonably request or as may be legally required in connection with
such registration.
3.2. Registration Expenses. In connection with any Demand Registration
or Piggyback Registration by or for a Large Shareholder, FUNC shall pay the
following expenses incurred in connection with such registration (the
"Registration Expenses"): (i) all filing fees with the SEC, (ii) fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications
of the Registrable Securities), (iii) printing expenses, (iv) the fees and
expenses incurred in connection with the listing of the Registrable
Securities, (v) fees and expenses of counsel and independent certified public
accountants for FUNC (including the expenses of any comfort letters pursuant
to Section 3.1(g) hereof) and (vi) the reasonable fees and expenses of any
additional experts retained by FUNC in connection with such registration.
Such Large Shareholder shall pay any underwriting fees, discounts or
commissions attributable to the sale of Registrable Securities, and any
out-of-pocket expenses of Large Shareholder, including such Large
Shareholder's counsel's fees and expenses. FUNC shall pay internal FUNC
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties).
IV. INDEMNIFICATION AND CONTRIBUTION
4.1. Indemnification by FUNC. FUNC agrees to indemnify and hold
harmless each Large Shareholder, its officers and directors, and each person,
if any, who controls Large Shareholder within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if FUNC shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished in writing to FUNC by or on behalf of any Large
Shareholder or Underwriter for any Large Shareholder expressly for use
therein; provided that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Large Shareholder
if a copy of the current prospectus was not provided to purchaser and such
current prospectus would have cured the defect giving rise to such loss,
claim, damage or liability or for any sales occurring after FUNC has informed
such Large Shareholder under Section 3.1(e) and prior to the delivery by FUNC
of any supplement or amendment to such prospectus. FUNC also agrees to
indemnify any Underwriters of the Registrable Securities, their officers and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of such Large Shareholder provided
in this Section 4.1.
4.2. Indemnification by Large Shareholders. Each Large Shareholder,
by requesting any registration or making any Sale of Registrable Securities
hereunder, shall be deemed to agree to indemnify and hold harmless FUNC, its
officers and directors, and each person, if any, who controls FUNC within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from FUNC to Large
Shareholder, but only with reference to information furnished in writing by or
on behalf of Large Shareholder expressly for use in any registration statement
or prospectus relating to such Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus. Each such Large
Shareholder also shall be deemed to agree to indemnify and hold harmless
Underwriters of the Registrable Securities, their officers and directors and
each person who controls such Underwriters on substantially the same basis as
that of the indemnification of FUNC provided in this Section 4.2.
4.3. Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 4.1 or
4.2, such Person (the "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party, upon the request of the Indemnified Party,
shall retain counsel reasonably satisfactory to such Indemnified Party to
represent such Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying
Party shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for
the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
4.4. Contribution. If the indemnification provided for in this
Article IV is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by FUNC, any Large Shareholder and the
Underwriters from the offering of the securities, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of FUNC, such Large
Shareholder and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by FUNC, such Large Shareholder and the Underwriters shall be deemed
to be in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by each of FUNC and such Large Shareholder and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the prospectus, bear to the aggregate
public offering price of the securities. The relative fault of FUNC, a Large
Shareholder and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by or on behalf of such party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
FUNC and each Large Shareholder shall be deemed to agree that it would
not be just and equitable if contribution pursuant to this Section 4.4 were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 4.4, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and
Large Shareholder shall not be required to contribute any amount in excess of
the amount by which the net proceeds of the offering (before deducting
expenses) received by Large Shareholder exceeds the amount of any damages
which Large Shareholder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
V. MISCELLANEOUS
5.1. Participation in Underwritten Registrations. No person may
participate in any underwritten registered offering contemplated hereunder
unless such person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting arrangements and
other documents reasonably required under the terms of such underwriting
arrangements and these Registration Rights.
5.2. Rule 144. FUNC covenants that it will use reasonable efforts to
file any reports required to be filed by it under the Securities Act and the
Exchange Act and that it will take such further action as any Large
Shareholder may reasonably request, all to the extent required from time to
time to enable such Large Shareholder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Large Shareholder, FUNC will deliver to
such Large Shareholder a written statement as to whether it has complied with
such requirements.
<PAGE>
<PAGE>
STOCK OPTION AGREEMENT, dated as of June 19, 1995 (the "Agreement"),
by and between First Union Corporation, a North Carolina corporation
("Issuer"), and First Fidelity Bancorporation, a New Jersey corporation
("Grantee").
RECITALS
(A) The Plan. Grantee and Issuer have on a date prior to the date
hereof, entered into an Agreement and Plan of Merger, dated as of June 18,
1995 (the "Plan"), providing for, among other things, the merger of Grantee
with and into a wholly owned subsidiary of Issuer, with such subsidiary being
the surviving corporation.
(B) Condition to Plan. As a condition and inducement to Grantee's
execution of the Plan and Grantee's agreement referred to in the next
sentence, Grantee has required that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as hereinafter defined). As a condition and
inducement to Issuer's execution of the Plan and this Agreement, Grantee has
agreed to grant an option to Issuer on terms and conditions substantially
identical to those of the Option and this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree
as follows:
1. Defined Terms. Capitalized terms which are used but not
defined herein shall have the meanings ascribed to such terms in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase a number of shares of common stock, par value $3.33 per share
("Issuer Common Stock"), of Issuer up to 34,042,001 of such shares (as
adjusted as set forth herein, the "Option Shares", which shall include the
Option Shares before and after any transfer of such Option Shares, but in no
event shall the number of Option Shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Issuer Common Stock) at a
purchase price per Option Share (as adjusted as set forth herein, the
"Purchase Price") equal to the closing price per share of Issuer Common Stock
on June 19, 1995, as reported by the NYSE Composite Transactions reporting
system (as reported in The Wall Street Journal or, if not reported therein,
another authoritative source) but in no event may the Purchase Price, prior to
any adjustment, be less than the par value of Issuer Common Stock. Each
Option Share issued upon exercise of the Option shall be accompanied by FUNC
Rights as provided in the FUNC Rights Agreement.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the agreements or
covenants contained in this Agreement or the Plan, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or in part,
at any time and from time to time following the occurrence of a Purchase Event
(as hereinafter defined); provided that the Option shall terminate and be of
no further force or effect upon the earliest to occur of (A) the Effective
Time, (B) termination of the Plan in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event other
than a termination thereof by Grantee pursuant to Section 7.01(B) of the Plan
(but only if the breach of Issuer giving rise to such termination was willful)
(a termination of the Plan by Grantee pursuant to Section 7.01(B) thereof as a
result of a willful breach by Issuer being referred to herein as a "Default
Termination"), (C) 15 months after a Default Termination, or (D) 15 months
after termination of the Plan (other than a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event; provided,
however, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law. The term "Holder" shall mean the
holder or holders of the Option from time to time, and which initially is
Grantee. The rights set forth in Section 8 hereof shall terminate when the
right to exercise the Option terminates (other than as a result of a complete
exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Without Grantee's prior written consent, Issuer shall
have recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any
person (other than Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving Issuer or any of
its significant subsidiaries (other than transactions solely between
Issuer's subsidiaries that are not violative of the Plan), (B) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits
of Issuer or any of its significant subsidiaries representing in either
case 25% or more of the consolidated assets or deposits of Issuer and its
subsidiaries or (C) the issuance, sale or other disposition by Issuer of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power of
Issuer or any of its significant subsidiaries, other than, in each case
of (A), (B), or (C), any merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries in which the
voting securities of Issuer outstanding immediately prior thereto
continue to represent (by either remaining outstanding or being converted
into the voting securities of the surviving entity of any such
transaction) at least 65% of the combined voting power of the voting
securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or
similar transaction (provided any such transaction is not violative of
the Plan) (each of (A), (B), or (C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act), other than a group of
which Grantee or any subsidiary of Grantee is a member, shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 25% or more of the voting power of Issuer or any of its
significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act, with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 25% or more
of the then outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the stockholders shall not have approved the matters
relating to the Plan requiring approval by the requisite vote at the FUNC
Meeting, the FUNC Meeting shall not have been held or shall have been
canceled prior to termination of the Plan, or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to Grantee the
recommendation of Issuer's Board of Directors with respect to the matters
relating to the Plan requiring approval, in each case after it shall have
been publicly announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (A) made, or disclosed an intention to
make, a bona fide proposal to engage in an Acquisition Transaction, (B)
commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer or (C) filed an
application (or given a notice), whether in draft or final form,
under the Home Owners' Loan Act, as amended ("HOLA"), the BHC Act, the
Bank Merger Act, as amended (the "BMA") or the Change in Bank Control Act
of 1978, as amended (the "CBCA"), for approval to engage in an
Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide 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; or
(iv) 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 the Issuer to make such a proposal if the Plan
terminates, Issuer shall have breached any representation, warranty,
covenant or agreement contained in the Plan and such breach would entitle
Grantee to terminate the Plan under Section 7.01 (without regard to the
cure period provided for therein unless such cure is promptly effected
without jeopardizing consummation of the Merger pursuant to the terms of
the Plan); or
(v) any person (other than Grantee or any subsidiary of
Grantee) other than in connection with a transaction to which Grantee has
given its prior written consent, shall have filed an application or
notice with any Regulatory Authority for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition
to the right of Holder to exercise the Option.
(e) In the event Holder 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 Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided that the first notice of exercise shall be sent to Issuer
within 180 days after the first Purchase Event of which Grantee has been
notified. If prior notification to or approval of any Regulatory Authority is
required in connection with such purchase, Issuer shall cooperate with the
Holder in the filing of the required notice of application for approval and
the obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods). Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 12(f).
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all Liens and subject to no
preemptive rights, and (B) if the Option is exercised in part only, an
executed new agreement with the same terms as this Agreement evidencing the
right to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder, and (ii) Holder shall deliver to Issuer a letter agreeing that
Holder shall not offer to sell or otherwise dispose of such Option Shares in
violation of applicable federal and state law or of the provisions of this
Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
JUNE 19, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend relating to
the Securities Act shall be removed by delivery of substitute certificate(s)
without such legend if 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 and its counsel, to the effect
that such legend is not required for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately available funds and the tender of
this Agreement to Issuer, Holder shall be deemed to be the holder of record of
the shares of Issuer 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 Issuer Common Stock shall not then be
actually delivered to 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, issuance and delivery of stock
certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Issuer Common Stock so that the Option may be exercised without
additional authorization of Issuer Common Stock after giving effect to all
other options, warrants, convertible securities and other rights to purchase
Issuer 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 (A) complying with all premerger
notification, reporting and waiting period requirements and (B) in the event
prior approval of or notice to any Regulatory Authority is necessary before
the Option may be exercised, cooperating fully with Holder in preparing such
applications or notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to exercise the Option
and Issuer duly and effectively to issue shares of the Issuer Common Stock
pursuant hereto, and (iv) promptly to take all action provided herein to
protect the rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. 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) Beneficial Ownership. To the best knowledge of Issuer, as
of the date of this Agreement, no person or group has beneficial
ownership of more than 5% of the issued and outstanding shares of Issuer
Common Stock.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and 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 Issuer Common Stock equal to the maximum number of shares of
Issuer Common Stock at any time and from time to time purchasable upon
exercise of the Option, and all such shares, upon issuance pursuant to
the Option, will be duly authorized, validly issued, fully paid an
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances, and security interests (other than those created by this
Agreement) and not subject to any preemptive rights.
(d) No Violations. 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 (A) a breach or violation of, or a default under, its
certificate of incorporation or by-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) 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 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, that would, in any case
give any other person the ability to prevent or enjoin Issuer's
performance under this Agreement in any material respect.
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; 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; and this Agreement
has been duly executed and delivered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization, etc. (a) In
the event of any change in Issuer Common Stock by reason of a stock dividend,
stock split, split-up, recapitalization, combination, exchange of shares,
exercise of the FUNC Rights or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date hereof or upon
conversion into Issuer Common Stock of any convertible security of Issuer
outstanding on the date hereof), the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be
deemed to affect or change, or constitute authorization for any violation of,
any of the covenants or representations in the Plan.
(b) In the event that 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 Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock immediately
prior to such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets or deposits
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
provisions 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 Holder, of either (x) the Acquiring Corporation (as hereinafter defined),
(y) any person that controls the Acquiring Corporation, or (z) in the case of
a merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(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 Holder. Substitute Option
Issuer shall also enter into an agreement with Holder 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 hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of
Substitute Option per share of Substitute Common Stock (the "Substitute Option
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(1) "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, or (iii) the transferee of all or substantially all
of Issuer's assets (or a substantial part of the assets of its
subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
(3) "Assigned Value" shall mean the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer or an Exchange Offer
therefor has been made, (x) the price per share of Issuer Common Stock to
be paid by any third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common Stock within the six-
month period immediately preceding the consolidation, merger, or sale in
question and (z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (i) the sum of the price
paid in such sale for such assets (and/or deposits) and the current
market value of the remaining assets of Issuer, as determined by a
nationally recognized investment banking firm selected by Holder divided
by (ii) the number of shares of Issuer Common Stock outstanding at such
time. In the event that a Tender Offer or an Exchange Offer is made for
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Holder.
(4) "Average Price" shall mean the average closing price of a share
of 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 Issuer, the person
merging into Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate 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 aggregate of the shares of
Substitute Common Stock but for the limitation in the first sentence of this
Section 7(f), 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 the first sentence of this Section 7(f) over (ii)
the value of the Substitute Option after giving effect to the limitation in
the first sentence of this Section 7(f). This difference in value shall be
determined by a nationally-recognized investment banking firm selected by
Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls the
Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the holders of
the other shares of common stock issued by Substitute Option Issuer are not
entitled to exercise any rights by reason of the issuance or exercise of the
Substitute Option and the shares of Substitute Common Stock are otherwise in
no way distinguishable from or have lesser economic value (other than any
diminution in value resulting from the fact that the Substitute Common Stock
are restricted securities, as defined in Rule 144 under the Securities Act or
any successor provision) than other shares of common stock issued by
Substitute Option Issuer).
8. Repurchase at the Option of Holder. (a) Subject to the last
sentence of Section 3(a), at the request of Holder at any time commencing upon
the first occurrence of a Repurchase Event (as defined in Section 8(d)) and
ending 12 months immediately thereafter, Issuer shall repurchase from Holder
(i) the Option and (ii) all shares of Issuer Common Stock purchased by Holder
pursuant hereto with respect to which Holder then has beneficial ownership.
The date on which Holder exercises its rights under this Section 8 is referred
to as the "Request Date". Such repurchase shall be at an aggregate price (the
"Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within 10 business days after the Request Date, pay the Section
8 Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment, Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, and Holder shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all
Liens. Notwithstanding the foregoing, to the extent that prior notification
to or approval of any Regulatory Authority is required in connection with the
payment of all or any portion of the Section 8 Repurchase Consideration,
Holder shall have the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that Issuer deliver
from time to time that portion of the Section 8 Repurchase Consideration that
it is not then so prohibited from paying and promptly file the required notice
or application for approval and expeditiously process the same (and each party
shall cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval). If any Regulatory Authority
disapproves of any part of Issuer's proposed repurchase pursuant to this
Section 8, Issuer shall promptly give notice of such fact to Holder. If any
Regulatory Authority prohibits the repurchase in part but not in whole, then
Holder shall have the right (i) to revoke the repurchase request or (ii) to
the extent permitted by such Regulatory Authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent
to each, and Holder shall thereupon have the right to exercise the Option as
to the number of Option Shares for which the Option was exercisable at the
Request Date less the sum of the number of shares covered by the Option in
respect of which payment has been made pursuant to Section 8(a)(ii) and the
number of shares covered by the portion of the Option (if any) that has been
repurchased. Holder shall notify Issuer of its determination under the
preceding sentence within five (5) business days of receipt of notice of
disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of
termination of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock
paid for any such share by the person or groups described in Section 8(d)(i),
(ii) the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest closing sales price per share of Issuer Common Stock quoted on the
NYSE (or if Issuer Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
assets, the Applicable Price shall be 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
Holder, divided by the number of shares of the Issuer Common Stock outstanding
at the time of such sale. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in
good faith by an independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer Common
Stock, or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii)
or 7(b)(iii) shall be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), as expeditiously
as possible prepare and file a registration statement under the Securities Act
if such registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other securities
that have been acquired by or are issuable to the Selling Shareholder upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by the Selling Shareholder in such request, including
without limitation a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities for sale under any
applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common Stock under the Securities Act in connection with an underwritten
public offering of such Issuer Common Stock, Issuer will promptly give written
notice to the Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days after receipt
of any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
the Selling Shareholder), Issuer will cause all such shares for which a
Selling Shareholder requests participation in such registration, to be so
registered and included in such underwritten public offering; provided,
however, that Issuer may elect to not cause any such shares to be so
registered (i) if the underwriters in good faith object for valid business
reasons, or (ii) in the case of a registration solely to implement an employee
benefit plan or a registration filed on Form S-4 of the Securities Act or any
successor Form; provided, further, however, that such election pursuant to
(i) may only be made two times. If some but not all the shares of Issuer
Common Stock, with respect to which Issuer shall have received requests for
registration pursuant to this Section 9(b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders desiring to register their shares
pro rata in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total number of
shares requested to be registered by all such Selling Shareholders then
desiring to have Issuer Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use
all reasonable efforts to cause each registration statement referred
to in Section 9(a) above to become effective and to obtain all consents
or waivers of other parties which are required therefor and to keep
such registration statement effective, provided, however, that
Issuer may delay any registration of Option Shares required pursuant to
Section 9(a) above for a period not exceeding 90 days provided Issuer shall in
good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Act
pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination of the Plan
pursuant to Article VII thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 6.01 of Article VI of the
Plan, and (c) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any calendar year;
(iii) within 90 days after the effective date of a
registration referred to in Section 9(b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded
the opportunity to register such shares under the Securities Act and
such shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common Stock
issuable upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration
of nine months from the effective date of such registration statement. Issuer
shall use all reasonable efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent necessary to permit
the sale or other disposition of the Option Shares so registered in accordance
with the intended method of distribution for such shares; provided, however,
that Issuer shall not be required to consent to general jurisdiction or
qualify to do business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits
such payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses
(including the fees and expenses of counsel), legal expenses,
including the reasonable fees and expenses of one counsel to
the holders whose Option Shares are being registered, printing expenses
and the costs of special audits or "cold comfort" letters, expenses
of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so
require, and the reasonable fees and expenses of any necessary special
experts) in connection with each registration pursuant to Section 9(a)
or 9(b) above (including the related offerings and sales by holders of Option
Shares) and all other qualifications, notifications or exemptions pursuant to
Section 9(a) or 9(b) above.
(e) Indemnification. In connection with any registration
under Section 9(a) or 9(b) above Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact
contained in any registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are caused by
any untrue statement or alleged untrue statement that was included by Issuer
in any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon
and in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section
9(e) of notice of the commencement of any action against such indemnified
party in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9(e), such indemnified
party shall notify the indemnifying party in writing of the commencement of
such action, but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any indemnified
party under this Section 9(e). In case notice of commencement of any such
action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense of such action at its own expense, with counsel chosen by
it and satisfactory to such indemnified party. The indemnified party shall
have the right to employ separate counsel in any such action and participate
in the defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (i) the indemnifying party either agrees to pay the same, (ii) the
indemnifying party fails to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligation to bear fees and
expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this Section 9(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party
to be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, the Selling Shareholders and the underwriters
from the offering of the securities and also the relative fault of Issuer, the
Selling Shareholders and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
amount paid or payable by a party as a result of the expenses, losses, claims,
damages and liabilities referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, however, that in no
case shall any Selling Shareholder be responsible, in the aggregate, for any
amount in excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Any obligation by any holder to indemnify shall
be several and not joint with other holders.
In connection with any registration pursuant to Section 9(a) or
9(b) above, Issuer and each Selling Shareholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all
reporting requirements and will do all such other things as may be necessary
to permit the expeditious sale at any time of any Option Shares by the Selling
Shareholders thereof in accordance with and to the extent permitted by any
rule or regulation promulgated by the SEC from time to time, including,
without limitation, Rule 144A. Issuer shall at its expense provide the
Selling Shareholders with any information necessary in connection with the
completion and filing of any reports or forms required to be filed by them
under the Securities Act or the Exchange Act, or required pursuant to any
state securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in
connection with the exercise of the Option, and will save the Selling
Shareholders harmless, without limitation as to time, against any and all
liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other
securities to be acquired in connection with the exercise of the Option are
then authorized for quotation or trading or listing on the NYSE or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or such other securities exchange and will use its
best efforts to obtain approval, if required, of such quotation or listing as
soon as practicable.
11. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entit-
ling the holder thereof to purchase in the aggregate the same number of shares
of Issuer Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any other 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.
12. Miscellaneous.
(a) Expenses. 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.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement: No Third-Party Beneficiaries;
Severability. This Agreement, together with the Plan and the other documents
and instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 9(e)
and any transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h)) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or Regulatory Authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of 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 Authority determines that the Option does not permit Holder to
acquire, or does not require Issuer to repurchase, the full number of shares
of Issuer Common Stock as provided in Section 3 (as may be adjusted herein),
it is the express intention of Issuer to allow Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of North Carolina without
regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in the
Plan (or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto
may be executed in two counterparts, each of which shall be considered one and
the same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that Holder may assign
this Agreement to a wholly-owned subsidiary of Holder and Holder may assign
its rights hereunder in whole or in part after the occurrence of a Purchase
Event. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by the Holder, Issuer and the Holder shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for by
such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
FIRST UNION CORPORATION
By: /s/ Edward E. Crutchfield
------------------------------------
Edward E. Crutchfield
Chairman and Chief Executive Officer
FIRST FIDELITY BANCORPORATION
By: /s/ Wolfgang Schoellkopf
------------------------------------
Wolfgang Schoellkopf
Vice Chairman and
Chief Financial Officer
<PAGE>
