<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 1995
REGISTRATION NO. 33-58261
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST UNION CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
NORTH CAROLINA 6711 56-0898180
(State or other jurisdiction (Primary standard (I.R.S. employer
of incorporation or organization) industrial classification code number) identification number)
</TABLE>
ONE FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28288-0013
(704) 374-6565
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
MARION A. COWELL, JR., ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
FIRST UNION CORPORATION
ONE FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28288-0013
(704) 374-6828
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
SHEILA A. HALPERN, P.A.
STEEL HECTOR & DAVIS
200 SOUTH BISCAYNE BLVD.
MIAMI, FL 33131-2398
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC:
As promptly as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
the General Instruction G, check the following box: ( )
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
FIRST UNION CORPORATION PROSPECTUS
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE RESPONSES
TO THE ITEMS OF PART I OF FORM S-4.
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FORM S-4 ITEM LOCATION IN PROSPECTUS
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1. Forepart of Registration Statement and Outside Front Cover Page of
Prospectus......................................................... Outside front cover page; facing page
2. Inside Front and Outside Back Cover Pages of Prospectus............ AVAILABLE INFORMATION; TABLE OF CONTENTS
3. Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information........................................................ SUMMARY
4. Terms of the Transaction........................................... SUMMARY; RECENT DEVELOPMENTS; GENERAL
INFORMATION; THE MERGER; DESCRIPTION OF FUNC
CAPITAL STOCK; CERTAIN DIFFERENCES IN THE RIGHTS
OF ASF AND FUNC STOCKHOLDERS; ANNEX A; ANNEX B;
ANNEX C; ANNEX D
5. Pro Forma Financial Information.................................... *
6. Material Contacts with the Company Being Acquired.................. THE MERGER; ADDITIONAL MATTERS
7. Additional Information Required for Reoffering by Persons and
Parties Deemed to Be Underwriters.................................. *
8. Interests of Named Experts and Counsel............................. LEGAL OPINIONS; EXPERTS
9. Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.................................................... *
10. Information with Respect to S-3 Registrants........................ INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
SUMMARY; RECENT DEVELOPMENTS; FUNC
11. Incorporation of Certain Information by Reference.................. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
12. Information with Respect to S-2 or S-3 Registrants................. *
13. Incorporation of Certain Information by Reference.................. *
14. Information with Respect to Registrants Other Than S-3 or S-2
Registrants........................................................ *
15. Information with Respect to S-3 Companies.......................... *
16. Information with Respect to S-2 or S-3 Companies................... INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
SUMMARY; RECENT DEVELOPMENTS; ASF
17. Information with Respect to Companies Other Than S-2 or S-3
Companies.......................................................... *
18. Information if Proxies, Consents or Authorizations are to be
Solicited.......................................................... INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
SUMMARY; GENERAL INFORMATION; THE MERGER; ASF;
FUNC; EXPERTS
19. Information if Proxies, Consents or Authorizations are not to be
Solicited, or in an Exchange Offer................................. *
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* Not applicable.
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(LOGO of American Savings of Florida, F.S.B appears here)
STEPHEN D. TAYLOR
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
May 11, 1995
Dear Stockholder:
You are cordially invited to attend the Special and Annual Meeting of
Stockholders (the "Meeting") of American Savings of Florida, F.S.B. ("ASF"). The
Meeting will be held at 10:00 a.m., Miami time, on Wednesday, June 14, 1995, at
the Hotel Inter-Continental Miami (Theatre Room), 100 Chopin Plaza, Miami,
Florida (telephone: (305) 577-1000). At the Meeting you will be asked to
consider a special proposal in addition to annual meeting proposals. The
proposals are explained in detail in the accompanying Proxy
Statement/Prospectus.
You will be asked to vote on a proposal to approve an Agreement and Plan of
Merger (the "Merger Agreement") between ASF and First Union Corporation
("FUNC"), which provides for the merger of ASF into a subsidiary national bank
of FUNC (the "Merger"). Upon consummation of the Merger, each outstanding share
of ASF common stock will be converted into the right to receive shares of FUNC
common stock having a value of $21.00, based on the average closing price of
FUNC common stock on the New York Stock Exchange Composite Transactions Tape
(the "NYSE Tape") for the ten consecutive trading days ending on the last
trading day prior to the effective date of the Merger, in a transaction that is
intended to be tax-free for federal income tax purposes, all as more fully
discussed in the accompanying Proxy Statement/Prospectus. The last reported sale
price of FUNC common stock on the NYSE Tape on May 5, 1995, was $46.50 per
share. FUNC is the ninth largest bank holding company in the nation, based on
total assets of $77.3 billion at December 31, 1994.
The proposed Merger has been approved by the Boards of Directors of ASF and
FUNC and is subject to certain conditions, including approval of the Merger and
the Merger Agreement by ASF stockholders and approval of the Merger by various
regulatory agencies.
You will also be asked to approve a proposal to adjourn the Meeting if
there are not enough votes to approve the Merger Agreement, in order to solicit
additional votes on the Merger Agreement and the other matters to be considered
at the Meeting. In addition, you will be asked to vote on standard annual
meeting matters, including the election of directors and ratification of the
appointment of auditors, as well as any other business that may properly come
before the Meeting.
I urge you to carefully review the information contained in the Proxy
Statement/Prospectus and the attached ANNEXES, information about ASF contained
in ASF's 1994 Annual Report to Stockholders which accompanies this Proxy
Statement/Prospectus, and information about FUNC which you may obtain as
indicated in the accompanying Proxy Statement/Prospectus under "AVAILABLE
INFORMATION".
The Board of Directors of ASF believes that the Merger and each of the
other matters to be presented at the Meeting are in the best interests of ASF
and its stockholders and recommends that you vote "FOR" each of the proposals
described in the accompanying Proxy Statement/Prospectus.
IT IS VERY IMPORTANT THAT YOUR SHARES BE VOTED AT THE MEETING, REGARDLESS
OF WHETHER YOU ATTEND IN PERSON. PLEASE COMPLETE THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED POSTAGE-PAID, RETURN ADDRESSED ENVELOPE. YOU SHOULD NOT
FORWARD YOUR STOCK CERTIFICATES AT THIS TIME. IF THE MERGER IS CONSUMMATED, YOU
WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR EXISTING STOCK
CERTIFICATES.
Yours very truly,
(Signature of Stephen D. Taylor appears here)
STEPHEN D. TAYLOR
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
EXECUTIVE OFFICES/MAIL STOP OC216: 17801 NORTHWEST SECOND AVENUE,
MIAMI, FLORIDA 33169-5089
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AMERICAN SAVINGS OF FLORIDA, F.S.B.
17801 N.W. SECOND AVENUE
MIAMI, FLORIDA 33169-5089
(305) 653-5353
NOTICE OF SPECIAL AND ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 1995
May 11, 1995
NOTICE IS HEREBY GIVEN that the Special and Annual Meeting of Stockholders
(the "Meeting") of American Savings of Florida, F.S.B. ("ASF") will be held at
10:00 a.m., Miami time, on Wednesday, June 14, 1995, at the Hotel
Inter-Continental Miami (Theatre Room), 100 Chopin Plaza, Miami, Florida
(telephone: (305) 577-1000, for the following purposes, all of which are set
forth more completely in the accompanying Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve an Agreement and Plan of
Merger, dated as of December 4, 1994, as amended as of March 27, 1995
(the "Merger Agreement"), between ASF and First Union Corporation
("FUNC"), pursuant to which (i) ASF will merge (the "Merger") with and
into a subsidiary national bank of FUNC, and (ii) each outstanding share
of ASF common stock will be converted into the right to receive a number
of shares of FUNC common stock equal to the quotient of (x) $21.00 and
(y) the average closing price of FUNC common stock on the New York Stock
Exchange Composite Transactions Tape for the ten consecutive trading
days ending on the last trading day prior to the effective date of the
Merger, all on and subject to the terms and conditions contained therein
(as part of the same proposal, stockholders will be voting on the
approval of the Merger itself);
2. To adjourn the Meeting (if the Merger Agreement has not been terminated
at the time of the Meeting) to another time and/or place in the event
that there are not sufficient votes at the time of the Meeting to
approve the Merger and the Merger Agreement, for the purpose of
soliciting additional votes in favor of the Merger and the Merger
Agreement, the election of each of the nine nominees for director and
the ratification of KPMG Peat Marwick LLP as independent auditors;
3. To elect each of the nine nominees for director to serve until the 1996
Annual Meeting of Stockholders of ASF and until their successors are
duly elected and qualified;
4. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending December 31, 1995; and
5. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
A copy of the Merger Agreement is set forth in ANNEX A to the accompanying
Proxy Statement/Prospectus. Upon consummation of the Merger, the terms of the
directors will terminate as provided in the Merger Agreement and the term of the
auditors will terminate as ASF will cease to exist as an independent entity.
The Board of Directors of ASF has fixed the close of business on May 8,
1995, as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting.
THE BOARD OF DIRECTORS OF ASF RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AND THE MERGER AGREEMENT, "FOR" ADJOURNMENT OF THE
MEETING, IF NECESSARY TO SOLICIT ADDITIONAL PROXIES IN FAVOR OF THE MERGER AND
THE MERGER AGREEMENT, AMONG OTHER THINGS, "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR LISTED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS AND
"FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF THE INDEPENDENT AUDITORS.
By Order of the Board of Directors of
AMERICAN SAVINGS OF FLORIDA, F.S.B.
(Signature of Alan B. Goldstein appeas here)
ALAN B. GOLDSTEIN
SECRETARY
EVEN STOCKHOLDERS WHO EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO DATE,
SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. WHETHER OR NOT YOU ATTEND
THE MEETING, YOU MAY REVOKE YOUR APPOINTMENT OF PROXY.
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PROSPECTUS PROXY STATEMENT
FIRST UNION CORPORATION AMERICAN SAVINGS OF FLORIDA, F.S.B.
COMMON STOCK SPECIAL AND ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
(PAR VALUE $3.33 1/3 PER SHARE) JUNE 14, 1995
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This Proxy Statement/Prospectus is being furnished by American Savings of
Florida, F.S.B. ("ASF") to the holders of ASF common stock, par value $0.01 per
share ("ASF Common Stock"), as a proxy statement in connection with the
solicitation of proxies by the Board of Directors of ASF (the "ASF Board") for
use at the Special and Annual Meeting of Stockholders of ASF to be held at 10:00
a.m., Miami time, on June 14, 1995, at the Hotel Inter-Continental Miami
(Theatre Room), 100 Chopin Plaza, Miami, Florida (the "Meeting"), and at any
adjournment or adjournments thereof. Proxies will not be used for any other
meeting, nor will any proxy be valid after 11 months from the date of its
execution.
This Proxy Statement/Prospectus, the accompanying Notice of Special and
Annual Meeting and the form of proxy enclosed herewith are first being mailed to
the stockholders of ASF on or about May 11, 1995.
At the Meeting, ASF stockholders will have the opportunity to consider and
vote upon a proposal to approve an Agreement and Plan of Merger, dated as of
December 4, 1994, as amended as of March 27, 1995 (the "Merger Agreement"),
between ASF and First Union Corporation, a North Carolina corporation ("FUNC"),
pursuant to which ASF will merge with and into a subsidiary national bank (the
"Subsidiary") of FUNC (the "Merger"), all on and subject to the terms and
conditions contained therein. See "SUMMARY", "THE MERGER" and ANNEX A to this
Proxy Statement/Prospectus. As part of the same proposal, stockholders will be
voting on the approval of the Merger itself.
ASF Stockholders will also have the opportunity to vote on the following
proposals: a proposal to adjourn the Meeting (if the Merger Agreement has not
been terminated at the time of the Meeting) to another time and/or place in the
event that there are not sufficient votes at the time of the Meeting to approve
the Merger and the Merger Agreement, for the purpose of soliciting additional
votes in favor of the Merger and the Merger Agreement, the election of each of
the nine nominees for director and the ratification of ASF's independent
auditors; a proposal to elect each of the nine nominees for director to serve on
the ASF Board until the 1996 Annual Meeting of Stockholders of ASF, if held, and
until their successors are duly elected and qualified; and a proposal to ratify
ASF's independent auditors for the fiscal year ending December 31, 1995.
Upon consummation of the Merger, each outstanding share of ASF Common Stock
will be converted into the right to receive a number of shares of FUNC common
stock, par value $3.33 1/3 per share (together with the FUNC Rights (as
hereinafter defined) attached thereto, "FUNC Common Stock"), equal to the
quotient (the "Exchange Ratio") of (i) $21.00 and (ii) the average closing price
of FUNC Common Stock on the New York Stock Exchange (the "NYSE") Composite
Transactions Tape (the "NYSE Tape") for the ten consecutive trading days ending
on the last trading day prior to the effective date of the Merger (the
"Effective Date") (such average, the "FUNC Average Closing Price"), with cash in
lieu of the issuance of any fractional share interest. Assuming that the last
reported sale price of FUNC Common Stock on May 5, 1995 ($46.50) was the FUNC
Average Closing Price, the Exchange Ratio would be 0.4516 (the "Current Exchange
Ratio"). The actual Exchange Ratio will depend on the FUNC Average Closing Price
and may be higher or lower than the Current Exchange Ratio.
This document also constitutes a prospectus of FUNC relating to the shares
(the "FUNC Shares") of FUNC Common Stock that are issuable upon consummation of
the Merger. See "DESCRIPTION OF FUNC CAPITAL STOCK" and "CERTAIN DIFFERENCES IN
THE RIGHTS OF ASF AND FUNC STOCKHOLDERS".
Based on the 11,755,943 shares of ASF Common Stock outstanding on the
Record Date (as hereinafter defined) and the 394,517 shares of ASF Common Stock
issuable upon the exercise of outstanding employee and director stock options on
that date, and assuming the Current Exchange Ratio is the actual Exchange Ratio,
approximately 5,487,305 FUNC Shares will be issuable upon consummation of the
Merger (the "Projected Number of FUNC Shares").
On December 2, 1994, the last business day prior to public announcement of
the execution of the Merger Agreement, the last reported sale prices per share
of FUNC Common Stock on the NYSE Tape and of ASF Common Stock on The Nasdaq
Stock Market (formerly known as the Nasdaq National Market system) were $40.00
and $16.4375, respectively. On May 5, 1995, such prices were $46.50 and
$20.4375, respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION,
THE OFFICE OF THRIFT SUPERVISION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE FUNC SHARES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS MAY 11, 1995.
<PAGE>
AVAILABLE INFORMATION
FUNC and ASF are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), and, in accordance therewith, file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"), as to FUNC, and with the Office of Thrift
Supervision (the "OTS"), as to ASF. Reports, proxy statements and other
information filed by FUNC can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's Regional Offices in New York (7 World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60621) and copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Reports,
proxy statements and other information filed by ASF can be inspected and copied
at the public reference facilities maintained by the OTS at the Office of Public
Information, OTS, 1700 G Street, N.W., Washington, D.C. 20552, and can be
obtained by written request from such office, at prescribed rates. Reports,
proxy statements and other information relating to FUNC can also be inspected at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Proxy Statement/Prospectus does not contain all of the information set
forth in the Registration Statement on Form S-4 (File No. 33-58261), of which
this Proxy Statement/Prospectus is a part, and the exhibits thereto (together
with any amendments or supplements thereto, the "Registration Statement"), which
has been filed by FUNC with the Commission under the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"),
certain portions of which have been omitted pursuant to the rules and
regulations of the Commission and to which portions reference is hereby made for
further information.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE
RELATED TO FUNC WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF
SUCH DOCUMENTS ARE AVAILABLE WITHOUT CHARGE (OTHER THAN CERTAIN EXHIBITS TO SUCH
DOCUMENTS) TO EACH ASF STOCKHOLDER, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS
PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST, FROM
FIRST UNION CORPORATION, INVESTOR RELATIONS, TWO FIRST UNION CENTER, CHARLOTTE,
NORTH CAROLINA 28288-0206 (TELEPHONE NUMBER (704) 374-6782). IN ORDER TO ENSURE
TIMELY DELIVERY OF SUCH DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE BY JUNE 7,
1995.
All information contained or incorporated by reference in this Proxy
Statement/Prospectus with respect to FUNC has been supplied by FUNC, and all
information contained or incorporated by reference in this Proxy
Statement/Prospectus with respect to ASF has been supplied by ASF.
No person has been authorized to give any information or to make any
representations other than those contained in this Proxy Statement/Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by FUNC or ASF. Neither the delivery of this
Proxy Statement/Prospectus nor any distribution of the securities to which this
Proxy Statement/Prospectus relates shall, under any circumstances, create any
implication that there has been no change in the affairs of FUNC or ASF since
the date hereof or that the information contained herein is correct as of any
time subsequent to its date. This Proxy Statement/Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities other than
the securities to which it relates or an offer to sell or solicitation of an
offer to buy such securities in any circumstances in which such an offer or
solicitation is not lawful.
The Commissioner of Insurance of the State of North Carolina (the
"Commissioner") has not approved or disapproved this offering nor has the
Commissioner passed upon the accuracy or adequacy of this Proxy
Statement/Prospectus.
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by FUNC with the Commission (File No.
1-10000) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference in this Proxy Statement/Prospectus:
(i) FUNC's Annual Report on Form 10-K for the year ended December 31, 1994;
and
(ii) All documents filed by FUNC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the Meeting
are hereby incorporated by reference into this Proxy Statement/Prospectus and
shall be deemed a part hereof from the date of filing of such documents.
Certain information concerning ASF may be found in the copy of ASF's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994, as amended by
Form 10-K/A No. 1, dated April 28, 1995 ("ASF's 1994 Form 10-K"), which is
included in ASF's 1994 Annual Report to Stockholders, a copy of which is being
delivered with this Proxy Statement/Prospectus. Specifically, the information
contained in Part I and Part II of ASF's 1994 Form 10-K and the Financial
Statements and Schedules contained (but not the exhibits referred to) in Part IV
of ASF's 1994 Form 10-K are hereby incorporated by reference in the Proxy
Statement/Prospectus. Only those portions of ASF's 1994 Form 10-K which have
been incorporated by reference in the preceding sentence are incorporated by
reference herein. Copies of such portions so incorporated by reference have been
filed as Exhibit 99(b) to the Registration Statement of which this Proxy
Statement/Prospectus is a part. The remaining portions of ASF's Annual Report to
Stockholders are not incorporated by reference.
Any statement contained herein, in any supplement hereto, or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Proxy Statement/Prospectus to the extent that a statement contained herein, in
any supplement hereto, or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement, this Proxy Statement/Prospectus or any supplement hereto.
3
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TABLE OF CONTENTS
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AVAILABLE INFORMATION.................................................................................................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................................................ 3
SUMMARY................................................................................................................ 6
RECENT DEVELOPMENTS
Certain Financial Data for the Three Months Ended March 31, 1995..................................................... 18
FUNC Acquisitions.................................................................................................... 19
GENERAL INFORMATION.................................................................................................... 20
General.............................................................................................................. 20
Record Date; Votes Required.......................................................................................... 21
PROPOSAL 1
THE MERGER............................................................................................................. 22
General.............................................................................................................. 22
Effective Date....................................................................................................... 22
Management After the Merger.......................................................................................... 22
Exchange of ASF Stock Certificates................................................................................... 22
Background and Reasons............................................................................................... 23
Opinions of Financial Advisors....................................................................................... 30
Interests of Certain Persons......................................................................................... 39
Effect on ASF Employee Benefit Programs.............................................................................. 40
Certain Federal Income Tax Consequences.............................................................................. 41
Business Pending Consummation........................................................................................ 42
No Solicitation...................................................................................................... 42
Regulatory Approvals................................................................................................. 42
Conditions to Consummation; Termination.............................................................................. 43
Waiver; Amendment.................................................................................................... 44
Survival............................................................................................................. 44
No Appraisal Rights.................................................................................................. 44
Accounting Treatment................................................................................................. 44
Expenses............................................................................................................. 44
Stock Option Agreement............................................................................................... 44
Voting Agreement; Escrow Agreement................................................................................... 46
Market Prices........................................................................................................ 47
Dividends............................................................................................................ 48
ASF.................................................................................................................... 49
General.............................................................................................................. 49
History and Business................................................................................................. 49
FUNC................................................................................................................... 50
General.............................................................................................................. 50
History and Business................................................................................................. 50
Common Stock Repurchase.............................................................................................. 51
Certain Regulatory Considerations.................................................................................... 51
DESCRIPTION OF FUNC CAPITAL STOCK...................................................................................... 54
Authorized Capital................................................................................................... 54
FUNC Common Stock.................................................................................................... 55
FUNC Preferred Stock................................................................................................. 55
FUNC Class A Preferred Stock......................................................................................... 55
Rights Plan.......................................................................................................... 55
Other Provisions..................................................................................................... 56
CERTAIN DIFFERENCES IN THE RIGHTS OF ASF AND FUNC STOCKHOLDERS......................................................... 56
General.............................................................................................................. 56
Authorized Capital................................................................................................... 57
Amendment of Articles of Incorporation or Bylaws..................................................................... 57
Size and Classification of Board of Directors........................................................................ 58
Removal of Directors by Stockholders................................................................................. 58
Director Exculpation................................................................................................. 58
Director Conflict of Interest Transactions........................................................................... 59
Stockholder Meetings................................................................................................. 59
Director Nominations................................................................................................. 59
Stockholder Proposals................................................................................................ 60
Stockholder Protection Rights Plan................................................................................... 60
</TABLE>
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</TABLE>
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Stockholder Inspection Rights; Stockholder Lists..................................................................... 60
Required Stockholder Vote for Certain Actions........................................................................ 61
Anti-Takeover Provisions............................................................................................. 62
Dissenters' or Appraisal Rights...................................................................................... 63
Dividends and Other Distributions.................................................................................... 63
Voluntary Dissolution................................................................................................ 63
RESALE OF FUNC COMMON SHARES........................................................................................... 64
ADDITIONAL MATTERS..................................................................................................... 64
LEGAL OPINIONS......................................................................................................... 64
EXPERTS................................................................................................................ 64
OTHER PROPOSALS........................................................................................................ 65
PROPOSAL 2
ADJOURNMENT OF MEETING................................................................................................. 65
General.............................................................................................................. 65
Vote Required and Recommendation..................................................................................... 65
PROPOSAL 3
ELECTION OF DIRECTORS.................................................................................................. 66
Nominees for Director................................................................................................ 66
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................................... 67
Security Ownership of Certain Beneficial Owners...................................................................... 67
Potential Change in Control.......................................................................................... 67
Security Ownership of Management..................................................................................... 68
BOARD OF DIRECTORS AND COMMITTEES...................................................................................... 70
General Information.................................................................................................. 70
Committees........................................................................................................... 70
Compensation Committee Interlocks and Insider Participation.......................................................... 71
Director Compensation................................................................................................ 72
EXECUTIVE COMPENSATION................................................................................................. 74
Summary Compensation Table........................................................................................... 74
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values.................................... 75
Report of the Compensation and Stock Option Committees on Executive Compensation..................................... 76
Compensation Committee -- Policy and Procedural Framework............................................................ 76
Compensation Committee -- CEO Compensation........................................................................... 76
Compensation Committee -- Other Executive Officer Compensation....................................................... 77
Stock Option Committee............................................................................................... 77
ASF Board's Review................................................................................................... 77
Stock Price Performance Graph........................................................................................ 78
Termination of Employment, Change-in-Control Arrangements and Employment Contracts................................... 79
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................................................................... 80
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT...................................................................... 80
VOTE REQUIRED AND RECOMMENDATION....................................................................................... 80
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.................................................................... 81
OTHER MATTERS.......................................................................................................... 81
STOCKHOLDER PROPOSALS TO BE PRESENTED AT 1996 ANNUAL MEETING OF ASF STOCKHOLDERS....................................... 81
ANNEXES:
ANNEX A -- THE MERGER AGREEMENT (INCLUDING THE STOCK OPTION AGREEMENT)............................................... A-1
ANNEX B -- THE VOTING AGREEMENT (INCLUDING THE ESCROW AGREEMENT)..................................................... B-1
ANNEX C -- OPINION OF GOLDMAN SACHS.................................................................................. C-1
ANNEX D -- OPINION OF BEAR STEARNS................................................................................... D-1
</TABLE>
5
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION RELATING TO THE
MERGER AND THE OTHER MATTERS TO BE CONSIDERED AT THE MEETING. THIS SUMMARY IS
NOT INTENDED TO BE A SUMMARY OF ALL MATERIAL INFORMATION RELATING TO SUCH
MATTERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MORE DETAILED
INFORMATION CONTAINED ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, INCLUDING
THE ANNEXES HERETO, AND IN THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS. COPIES OF THE MERGER AGREEMENT (INCLUDING THE STOCK OPTION
AGREEMENT (AS HEREINAFTER DEFINED)) AND THE VOTING AGREEMENT (AS HEREINAFTER
DEFINED) (INCLUDING THE ESCROW AGREEMENT (AS HEREINAFTER DEFINED)) ARE SET FORTH
IN ANNEXES A AND B, RESPECTIVELY, TO THIS PROXY STATEMENT/PROSPECTUS AND
REFERENCE IS MADE THERETO FOR A COMPLETE DESCRIPTION OF THE TERMS OF THE MERGER.
STOCKHOLDERS ARE URGED TO READ CAREFULLY THIS ENTIRE PROXY STATEMENT/PROSPECTUS,
INCLUDING THE ANNEXES HERETO. AS USED IN THIS PROXY STATEMENT/PROSPECTUS, THE
TERMS "FUNC" AND "ASF" REFER TO SUCH ORGANIZATIONS, RESPECTIVELY, AND, UNLESS
THE CONTEXT OTHERWISE REQUIRES, SUCH ORGANIZATIONS AND THEIR RESPECTIVE
SUBSIDIARIES.
PROPOSAL 1: THE MERGER AND THE MERGER AGREEMENT
PARTIES TO THE MERGER
FUNC; THE SUBSIDIARY
FUNC is a North Carolina-based multi-bank holding company registered under
the Bank Holding Company Act of 1956, as amended, and the rules and regulations
thereunder (the "BHCA"). FUNC provides a wide range of commercial and retail
banking services and trust services in North Carolina, Florida, South Carolina,
Georgia, Tennessee, Virginia, Maryland and Washington, D.C. FUNC also provides
various other financial services, including mortgage banking, capital markets
services, insurance and securities' brokerage services, through other
subsidiaries. As of December 31, 1994, and for the year then ended, FUNC
reported assets of $77.3 billion, net loans of $54.0 billion, deposits of $59.0
billion, stockholders' equity of $5.4 billion and net income applicable to
common stockholders before a redemption premium on preferred stock of $900
million, and as of such date FUNC operated through 1,562 offices in 42 states,
Washington, D.C. and two foreign countries. FUNC is the ninth largest bank
holding company in the United States, based on total assets at December 31,
1994. The principal executive offices of FUNC are located at One First Union
Center, Charlotte, North Carolina 28288-0013, and its telephone number is (704)
374-6565.
Pursuant to the Merger Agreement, FUNC will organize the Subsidiary to
facilitate the Merger. The Merger Agreement also provides that FUNC may change
the structure of the Merger, under certain conditions, including substituting an
existing subsidiary national bank (E.G., First Union National Bank of Florida
("FUNB-FL")) for the Subsidiary, in which case ASF would merge with and into
FUNB-FL instead of the Subsidiary. However, any such change may not adversely
affect the consideration to be received by ASF stockholders or the tax treatment
of such stockholders or delay the consummation of the Merger. If ASF merges with
and into FUNB-FL, the term "Subsidiary," as used in this Proxy
Statement/Prospectus, shall be deemed to include FUNB-FL.
FUNB-FL is a national banking association that provides a wide range of
commercial and retail banking services and trust services in Florida. As of
December 31, 1994, and for the year then ended, FUNB-FL's call report reflected
assets of $31.3 billion, net loans of $21.3 billion, deposits of $25.9 billion,
stockholder's equity of $2.5 billion and net income of $475 million, and as of
such date FUNB-FL operated through 553 banking offices in Florida and one
foreign country. The principal executive offices of FUNB-FL are located at 225
Water Street, Jacksonville, Florida 32202, and its telephone number is (904)
361-2265.
FUNC is continually evaluating acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of FUNC's book value and net income
per common share may occur in connection with any future transactions.
See "FUNC".
ASF
ASF is a federally chartered stock savings bank. ASF is primarily engaged
in the business of attracting deposits from the general public and using such
deposits to originate mortgage loans, consumer loans and commercial real estate
and residential construction loans. ASF is a member of the Federal Home Loan
Bank (the "FHLB") of Atlanta and its deposits are
6
<PAGE>
insured by the Savings Association Insurance Fund (the "SAIF") of the Federal
Deposit Insurance Corporation (the "FDIC"). As of December 31, 1994, and for the
year then ended, ASF reported assets of $3.6 billion, loans receivable, net and
loans held for sale of $2.0 billion, deposits of $2.3 billion, stockholders'
equity of $217 million and net income of $19 million, and as of such date ASF
operated through 29 retail offices in south Florida, eight mortgage origination
offices in Florida and two loan production offices in Chicago, Illinois. The
principal executive offices of ASF are located at 17801 N.W. Second Avenue,
Miami, Florida 33169-5089, and its telephone number is (305) 653-5353. See
"ASF". Further information about ASF is contained in ASF's 1994 Form 10-K which
is incorporated by reference into this Proxy Statement/Prospectus and is set
forth in ASF's 1994 Annual Report to Stockholders which accompanies this Proxy
Statement/Prospectus.
MEETING; RECORD DATE
The Meeting will be held on Wednesday, June 14, 1995, at 10:00 a.m., Miami
time, at the Hotel Inter-Continental Miami (Theatre Room), 100 Chopin Plaza,
Miami, Florida (telephone: (305) 577-1000), for the purpose of ASF stockholders
considering and voting upon the following proposals: (1) a proposal to approve
the Merger and the Merger Agreement ("Proposal 1" or the "Merger Proposal"); (2)
a proposal to adjourn the Meeting (if the Merger Agreement has not been
terminated at the time of the Meeting) to another time and/or place in the event
that there are not sufficient votes at the time of the Meeting to approve the
Merger and the Merger Agreement for the purpose of soliciting additional votes
in favor of the Merger and the Merger Agreement, the election of each of the
nine nominees for director and the ratification of ASF's independent auditors
("Proposal 2" or the "Adjournment Proposal"); (3) a proposal to elect each of
the nine nominees for director to serve on the ASF Board until the 1996 Annual
Meeting of Stockholders of ASF, if held, and until their successors are duly
elected and qualified ("Proposal 3" or the "Election Proposal"); and (4) a
proposal to ratify the appointment of ASF's independent auditors for the fiscal
year ending December 31, 1995 ("Proposal 4" or the "Auditors Proposal").
The ASF Board has fixed the close of business on Monday, May 8, 1995, as
the record date for stockholders entitled to notice of and to vote at the
Meeting (the "Record Date"). As of such date, there were 11,755,943 shares of
ASF Common Stock outstanding and entitled to be voted at the Meeting.
See "GENERAL INFORMATION".
THE MERGER
Under the terms of the Merger Agreement, ASF will merge with and into the
Subsidiary. Upon consummation of the Merger, each outstanding share of ASF
Common Stock will be converted into the right to receive a number of shares of
FUNC Common Stock equal to the Exchange Ratio (I.E., the quotient of (i) $21.00
and (ii) the FUNC Average Closing Price), with cash in lieu of the issuance of
any fractional share interest. See "DESCRIPTION OF FUNC CAPITAL STOCK" and
"CERTAIN DIFFERENCES IN THE RIGHTS OF ASF AND FUNC STOCKHOLDERS".
VOTES REQUIRED
Approval of the Merger and the Merger Agreement requires the affirmative
votes of at least (i) two-thirds of the shares of ASF Common Stock issued and
outstanding on the Record Date (the "General Approval") and (ii) a majority of
the Non-interested Shares (as hereinafter defined) represented and voted at the
Meeting (the "Special Approval"). The "Non-interested Shares" are the
outstanding shares of ASF Common Stock other than shares held beneficially by
(x) The Enstar Group, Inc. ("Enstar"), the holder as of the Record Date of
approximately 48.4 percent of the outstanding shares of ASF Common Stock, (y)
the directors and certain officers of ASF, and (z) the directors and officers of
Enstar. In connection with the execution of the Merger Agreement, Enstar agreed
to vote its shares of ASF Common Stock in favor of approval of the Merger and
the Merger Agreement at the Meeting. See "THE MERGER -- Voting Agreement; Escrow
Agreement" and ANNEX B.
Approval of Proposals 2, 3 and 4 and of all other matters which may come
before the Meeting require the affirmative vote of a majority of the votes cast,
in person or by proxy, by persons entitled to vote at the Meeting. Enstar has
not informed ASF of how it intends to vote its shares (approximately 48.4
percent of the outstanding shares of ASF Common Stock as of the Record Date) in
connection with Proposals 2, 3 and 4. For a discussion of Enstar's right to vote
its shares of ASF Common Stock at the Meeting, see "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Potential Change in Control".
The directors and executive officers of ASF (including certain of their
related interests, among them Enstar) beneficially owned, as of the Record Date,
and are entitled to vote at the Meeting, 6,237,521 shares of outstanding ASF
Common Stock, which represent approximately 53.1 percent of the outstanding
shares of ASF Common Stock entitled to be voted at the Meeting. However, only
Non-interested Shares will be counted for purposes of the Special Approval. The
Merger Agreement
7
<PAGE>
provides that ASF shall use its reasonable efforts to cause its directors and
certain officers, Enstar and the directors and officers of Enstar to enter into
an agreement prohibiting such persons from acquiring additional shares of ASF
Common Stock on or before the Record Date. Enstar and substantially all of such
officers and directors entered into such an agreement.
See "GENERAL INFORMATION -- Record Date; Votes Required".
A FAILURE TO VOTE ON PROPOSAL 1, EITHER BY NOT RETURNING THE ENCLOSED PROXY
OR BY CHECKING THE "ABSTAIN" BOX THEREON, WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST APPROVAL OF THE MERGER AND THE MERGER AGREEMENT FOR PURPOSES OF THE
GENERAL APPROVAL AND WILL NOT COUNT FOR PURPOSES OF THE SPECIAL APPROVAL.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED AS FOLLOWS: "FOR" THE MERGER
PROPOSAL, "FOR" THE ADJOURNMENT PROPOSAL, "FOR" THE ELECTION OF EACH OF THE NINE
NOMINEES NAMED ON THE FORM OF PROXY AS DIRECTORS OF ASF AND "FOR" THE AUDITORS
PROPOSAL. PURSUANT TO ASF'S BYLAWS, IF ANY OTHER MATTERS ARE PROPERLY BROUGHT
BEFORE THE MEETING, THE PERSONS NAMED IN THE FORM OF PROXY WILL VOTE THE SHARES
REPRESENTED BY SUCH PROXY AS DETERMINED BY A MAJORITY OF THE ASF BOARD. IF NO
SUCH ASF BOARD DETERMINATION IS MADE, THE PERSONS NAMED WILL VOTE THE SHARES IN
THEIR OWN JUDGMENT.
EFFECTIVE DATE
Subject to the terms and conditions of the Merger Agreement, the Effective
Date will occur on the first business day of the month following the month in
which the last of the conditions to the consummation of the Merger (other than
the delivery of certificates, opinions, comfort letters and the like) is
satisfied or waived, or such other date as shall be mutually agreed upon by FUNC
and ASF. Subject to the foregoing, it is currently anticipated that the Merger
will be consummated in the second or third quarter of 1995. If the Merger is
consummated in either of such quarters, or in any other quarter, ASF
stockholders should not assume or expect that the Effective Date will precede
the record date for the dividend on FUNC Common Stock for that quarter, so as to
enable such stockholders to receive such dividend. See "THE MERGER -- Exchange
of ASF Certificates" and " -- Conditions to Consummation; Termination".
MANAGEMENT AFTER THE MERGER
The directors and officers of the Subsidiary in office prior to the
Effective Date will be the directors and officers of the surviving entity. At
the Effective Date, the directors listed in Proposal 3 below will not become
directors of FUNC or the Subsidiary.
RECOMMENDATION OF THE ASF BOARD
The ASF Board has approved the Merger Agreement, believes that the Merger
is in the best interests of ASF and its stockholders and is fair to the
stockholders, and recommends approval of the Merger and the Merger Agreement by
ASF stockholders. See "THE MERGER -- Background and Reasons; ASF". The ASF Board
also recommends that stockholders vote "FOR" the Adjournment Proposal, "FOR" the
election of each of the nominees for director under Proposal 3 and "FOR" the
Auditors Proposal.
OPINIONS OF FINANCIAL ADVISORS
By a letter dated December 4, 1994 and confirmed on the date hereof,
Goldman, Sachs & Co. ("Goldman Sachs") advised the ASF Board that, in its
opinion, the consideration to be received by ASF stockholders for each share of
ASF Common Stock is fair, as of such dates, to the holders of ASF Common Stock.
By a letter dated December 9, 1994, and confirmed on the date hereof, Bear,
Stearns & Co. Inc. ("Bear Stearns") advised the ASF Board that, in its opinion,
the consideration to be received by ASF stockholders for each share of ASF
Common Stock is fair to such stockholders from a financial point of view as of
such dates. The full text of Goldman Sachs' opinion, dated the date hereof, and
Bear Stearns' opinion, dated the date hereof, which describe the procedures
followed, assumptions made, limitations on the review undertaken, and other
matters in connection with rendering the opinions, are set forth in ANNEXES C
and D to this Proxy Statement/Prospectus and should be read in their entirety by
ASF stockholders. Neither the Goldman Sachs opinion nor the Bear Stearns opinion
is a condition to consummation of the Merger. See "THE MERGER -- Opinions of
Financial Advisors", ANNEX C and ANNEX D.
8
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of ASF's management and of the ASF Board have interests in
the Merger that are in addition to their interests as stockholders of ASF
generally. These interests include, among others, provisions in the Merger
Agreement relating to indemnification, directors' and officers' liability
insurance, cash payment for unexercised stock options, and continuation or
improvement of severance and certain other employee benefits.
Under the Bankruptcy Plan of Enstar, as modified (as hereinafter defined),
Enstar must sell or dispose of its shares of ASF Common Stock prior to June 1,
1995. Messrs. T. Wayne Davis and Nimrod T. Frazer, who are directors of ASF, are
also directors of Enstar and have interests in the Merger in that capacity. In
addition, Messrs. Davis and Frazer have personal interests in the Merger.
See "THE MERGER -- Interests of Certain Persons" and " -- Background and
Reasons; ASF".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Merger is conditioned upon receipt by FUNC and by ASF
of an opinion of Sullivan & Cromwell, special counsel for FUNC, to the effect
that no gain or loss will be recognized for federal income tax purposes by
stockholders of ASF who receive FUNC Shares in exchange for their shares of ASF
Common Stock, other than in respect of cash received in lieu of fractional share
interests. See "THE MERGER -- Certain Federal Income Tax Consequences".
BECAUSE CERTAIN TAX CONSEQUENCES MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH ASF STOCKHOLDER, IT IS RECOMMENDED THAT ASF STOCKHOLDERS
CONSULT THEIR TAX ADVISORS CONCERNING THE FEDERAL (AND ANY STATE AND LOCAL) TAX
CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR CIRCUMSTANCES.
RESALE OF FUNC SHARES
The FUNC Shares will be freely transferable by the holders of such shares,
except for those shares held by those holders who may be deemed to be
"affiliates" (generally including directors, certain executive officers and ten
percent or more stockholders) of ASF under applicable federal securities laws.
See "RESALE OF FUNC COMMON SHARES". In addition, FUNC will repurchase from
Enstar on the Effective Date for approximately $82.5 million the shares of FUNC
Common Stock exchanged for 3,926,422 shares of ASF Common Stock. See "THE
MERGER -- Voting Agreement; Escrow Agreement" and ANNEX B.
BUSINESS PENDING CONSUMMATION
The Merger Agreement provides that, without the prior written consent of
FUNC or except as otherwise permitted by the Merger Agreement, ASF will
generally conduct its business only in the ordinary and usual course consistent
with past practice, and not take certain actions relating to the operation of
ASF pending consummation of the Merger or the termination of the Merger
Agreement. These actions include, without limitation: (i) paying dividends,
redeeming or otherwise acquiring shares of its capital stock, issuing additional
shares of its capital stock or giving any person the right to acquire any such
shares or incurring any debt; (ii) increasing the rate of compensation or paying
any bonuses to any of its directors, officers or employees; (iii) entering into
or modifying any employment agreements or employee benefit plans; (iv) disposing
of any material portions of its assets or acquiring any substantial portions of
the business or property of any other entities; (v) changing its lending,
investment, liability management, accounting procedures, or other material
banking policies in any material respect; (vi) incurring any capital
expenditures in excess of $100,000 individually or $500,000 in the aggregate;
(vii) taking any action that would impair ASF's allowed claim in the bankruptcy
proceedings of Enstar; (viii) entering into, terminating or changing any
material agreements, except for those agreements that are terminable by ASF
without penalty in excess of $100,000 upon not more than 60 days' prior written
notice; (ix) settling any claims involving money damages in excess of $250,000
or restrictions on the operations of ASF; or (x) acquiring private label
mortgage-backed securities.
The Merger Agreement also provides that, consistent with generally accepted
accounting principles and regulatory accounting principles, ASF will use its
best efforts to record any accounting adjustments required to conform its loan,
litigation and other reserve and real estate valuation policies and practices
(including loan classifications and levels of reserves) so as to be consistent
with those policies and practices applied by FUNC, provided that ASF shall not
be obligated to record any such accounting adjustments (i) unless and until ASF
is satisfied that the conditions to the obligations of the parties to consummate
the Merger will be satisfied or waived on or before the Effective Date, and (ii)
in no event until the day prior to the Effective Date.
9
<PAGE>
See "THE MERGER -- Business Pending Consummation".
NO SOLICITATION
The Merger Agreement provides that neither ASF nor any of its officers,
directors, agents or representatives will initiate, solicit, encourage, enter
into discussions or negotiations in furtherance of, or endorse a Competing
Transaction (as defined in the Merger Agreement). The Merger Agreement does not
prohibit ASF from furnishing information to, or entering into discussions with,
any person that makes a bona fide proposal to enter into, and may recommend,
endorse or enter into a definitive agreement with respect to, a Competing
Transaction, under certain circumstances. See "THE MERGER -- No Solicitation".
REGULATORY APPROVALS
The Merger is subject to the prior approval of the Office of the
Comptroller of the Currency (the "OCC"), and to prior notice to the OTS. An
application has been filed with the OCC and a notice has been given to the OTS.
Enstar has filed a separate notice with the OTS and has received permission from
the OTS to dispose of its ASF Common Stock. There can be no assurance that the
necessary regulatory approvals will be obtained or as to the timing or
conditions of such approvals. See "THE MERGER -- Regulatory Approvals".
CONDITIONS TO CONSUMMATION; TERMINATION
Consummation of the Merger is subject, among other things, to: (i) approval
of the Merger Agreement and the Merger by the stockholders of ASF; (ii) receipt
of the regulatory approvals referred to above without any restrictions or
conditions which in the good faith, reasonable opinion of FUNC would so
materially adversely impact the economic or business benefits to FUNC of the
transactions contemplated by the Merger Agreement so as to render inadvisable
the consummation of the Merger; (iii) no court or governmental or regulatory
authority having taken any action which prohibits the Merger; (iv) receipt by
FUNC and ASF of the opinion of Sullivan & Cromwell as to certain federal income
tax consequences of the Merger; (v) the FUNC Shares having been approved for
listing on the NYSE, subject to official notice of issuance; (vi) all Stock
Options (as hereinafter defined) having been cancelled and paid for; (vii) the
continued effectiveness of the Registration Statement; (viii) the receipt of all
required "blue sky" permits; and (ix) the receipt of various third party
consents to the Merger.
The Merger Agreement may be terminated by mutual agreement of the Boards of
Directors of FUNC and ASF. The Merger Agreement may also be terminated by the
Board of Directors of either FUNC or ASF if the Merger does not occur on or
before August 25, 1995 (provided that the terminating party is not in breach of
the Merger Agreement) or upon the occurrence of certain specified events or if
certain other conditions set forth in the Merger Agreement are not met.
See "THE MERGER -- Conditions to Consummation; Termination".
NO APPRAISAL RIGHTS
Holders of ASF Common Stock do not have appraisal rights under applicable
provisions of OCC and OTS regulations. See "THE MERGER -- No Appraisal Rights".
STOCK OPTION AGREEMENT
As an inducement and condition to FUNC's willingness to enter into the
Merger Agreement, ASF entered into a Stock Option Agreement with FUNC, dated as
of December 4, 1994 (the "Stock Option Agreement"). The Stock Option Agreement
is set forth in Exhibit C to the Merger Agreement, which is set forth in ANNEX A
to this Proxy Statement/Prospectus. Pursuant to the Stock Option Agreement, ASF
granted to FUNC an irrevocable option (the "Option"), exercisable only under
certain limited and specifically defined circumstances, none of which, to the
best of ASF's and FUNC's knowledge, has occurred as of the date hereof, to
purchase up to 2,288,700 authorized but unissued shares of ASF Common Stock for
a purchase price of $19.5625 per share (the "Purchase Price"), subject to
adjustment in certain circumstances. The last sale price per share of ASF Common
Stock on the Nasdaq National Market on December 2, 1994, the last business day
prior to the date on which the Stock Option Agreement was executed, was
$16.4375. The number of shares of ASF Common Stock subject to the Option
represented approximately 19.9 percent of the outstanding shares of ASF Common
Stock on December 4, 1994, and approximately 19.5 percent of the outstanding
shares of ASF Common Stock on the Record Date, in each case before giving effect
to the issuance of such shares. FUNC does not have any voting rights with
respect to the shares of ASF Common Stock subject to the Option, prior to
exercise of the Option. The purchase of any shares of ASF Common
10
<PAGE>
Stock by FUNC pursuant to the Option is subject to compliance with applicable
law, including receipt of necessary approvals under the BHCA and the Home
Owners' Loan Act of 1933, as amended (the "HOLA").
The Stock Option Agreement and the Option were intended to increase the
likelihood that the Merger will be consummated on the terms set forth in the
Merger Agreement, and may be expected to discourage competing offers to acquire
ASF from potential third party acquirors because the Option could increase the
cost of such an acquisition.
See "THE MERGER -- Stock Option Agreement".
VOTING AGREEMENT; ESCROW AGREEMENT
As an inducement to and a condition of FUNC's willingness to enter into the
Merger Agreement, Enstar entered into a Shareholder Voting Agreement with FUNC,
dated as of December 4, 1994 (the "Voting Agreement"). In connection therewith
Enstar and FUNC also entered into an Escrow Agreement, dated as of December 4,
1994 (the "Escrow Agreement"), with First Union National Bank of North Carolina
(the "Escrow Agent").
The Voting Agreement provides, among other things, that Enstar will vote
its shares of ASF Common Stock in favor of approval of the Merger and the Merger
Agreement and sets forth provisions relating to payment by Enstar to ASF of a
bankruptcy claim in the principal amount of approximately $32.0 million, which
was reduced by a subsequent distribution from the Enstar estate to approximately
$27.5 million (the "Bankruptcy Claim"), and certain other allowed claims of
certain senior creditors (the "Senior Claims") payable pursuant to the
Bankruptcy Plan, as modified.
In order to facilitate payment of the Bankruptcy Claim to the Subsidiary,
as the successor to ASF following consummation of the Merger, Enstar has
delivered 3,926,422 shares of ASF Common Stock (the "Escrowed Shares") to the
Escrow Agent to be held under the Escrow Agreement pending consummation of the
Merger.
The Voting Agreement and the Escrow Agreement provide that on the Effective
Date the Escrowed Shares will be exchanged for FUNC Shares pursuant to the
Merger Agreement and FUNC will purchase such FUNC Shares from the Escrow Agent
for approximately $82.5 million ($21.00 per share of ASF Common Stock exchanged
for such FUNC Shares), whereupon the Escrow Agent will make payment on behalf of
Enstar of all or substantially all of the Bankruptcy Claim following payment of
the Senior Claims that are required by the Bankruptcy Plan, as modified, to be
paid before the Bankruptcy Claim can be paid.
The Voting Agreement and the Escrow Agreement also provide for the deposit
with the Escrow Agent on the Effective Date of certain additional FUNC Shares to
be received by Enstar in exchange for shares of ASF Common Stock held by Enstar,
which FUNC Shares are to be held by the Escrow Agent pending payment in full of
any balance remaining due under the Bankruptcy Claim and the interest payable on
the Bankruptcy Claim. The Voting Agreement further provides that, under certain
circumstances, Enstar has the right to receive such additional FUNC Shares (or
any cash or other securities then held in lieu thereof) to pay certain
obligations under the Bankruptcy Plan, as modified, which may be required to be
paid prior to payment of the balance due on the Bankruptcy Claim and any
interest payable thereon. See "THE MERGER -- Voting Agreement; Escrow Agreement"
and ANNEX B.
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following unaudited information, adjusted for any stock dividends and
stock splits, reflects, where applicable, certain comparative per share data
related to book value, cash dividends paid, net income and market value: (i) on
a historical basis for FUNC and ASF; (ii) on a pro forma combined basis per
share of FUNC Common Stock reflecting consummation of the Merger (and no other
pending acquisitions by FUNC) with the Current Exchange Ratio; and (iii) on an
equivalent pro forma basis per share of ASF Common Stock reflecting consummation
of the Merger (and no other pending acquisitions by FUNC) with the Current
Exchange Ratio. Such information has been prepared giving effect to the Merger
on a purchase accounting basis. See "THE MERGER -- Accounting Treatment". The
actual Exchange Ratio will depend on the FUNC Average Closing Price and may be
higher or lower than the Current Exchange Ratio. Since purchase accounting does
not permit restatement of results for prior periods following consummation of
the Merger, consummation of the Merger will not affect FUNC's historical results
for the periods indicated.
Pro forma financial presentations provide information on the impact of the
Merger by showing how the Merger might have affected historical financial
statements if the Merger had been consummated at an earlier time. The pro forma
combined selected financial data do not purport to be indicative of the results
that actually would have been realized had FUNC and ASF been a single entity in
1994 or indicative of the combined financial position or results of operations
of future periods.
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The information shown below should be read in conjunction with the
historical financial statements of FUNC and ASF, including the respective notes
thereto, which are incorporated herein by reference and (with respect to ASF) in
ASF's 1994 Form 10-K set forth in ASF's 1994 Annual Report to Stockholders which
accompanies this Proxy Statement/Prospectus. See "AVAILABLE INFORMATION",
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "FUNC -- History and
Business". Certain information relating to certain pending acquisitions by FUNC
is set forth in Exhibit (99)(b) to FUNC's Annual Report on Form 10-K for the
year ended December 31, 1994. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE".
<TABLE>
<CAPTION>
DECEMBER 31,
1994
<S> <C>
BOOK VALUE PER COMMON SHARE:
Historical:
FUNC....................................................................................................... $30.66
ASF........................................................................................................ 18.76
Pro forma combined per FUNC common share (1).................................................................. 30.79
Equivalent pro forma per ASF common share (2)................................................................. $13.90
</TABLE>
(1) The pro forma combined book value per FUNC common share amount represents
(i) FUNC's historical common stockholders' equity adjusted for the issuance
of the Projected Number of FUNC Shares, assuming a market price of $46.50
per FUNC common share and reflecting the purchase of 3.8 million shares of
FUNC Common Stock by FUNC at a cost of $161 million and the purchase of the
approximately 1.9 million shares of FUNC Common Stock expected to be issued
to Enstar at a cost of $82 million and the subsequent cancellation of such
shares (the "Repurchased Shares"), divided by (ii) pro forma combined
period-end common shares outstanding. See "The Merger -- Voting Agreement;
Escrow Agreement".
(2) The equivalent pro forma book value per ASF common share amount represents
the pro forma combined book value per FUNC common share amount, multiplied
by the Current Exchange Ratio.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
<S> <C>
CASH DIVIDENDS PAID PER COMMON SHARE:
Historical:
FUNC.................................................................................................. $1.72
ASF................................................................................................... --
Pro forma combined per FUNC common share (3)............................................................. 1.72
Equivalent pro forma per ASF common share (4)............................................................ $ .78
</TABLE>
(3) The pro forma combined cash dividends paid per FUNC common share amount
represents pro forma combined cash dividends paid on common stock
outstanding, divided by pro forma combined average common shares
outstanding, rounded to the nearest cent.
(4) The equivalent pro forma cash dividends paid per ASF common share amount
represents the pro forma combined per FUNC common share amount, multiplied
by the Current Exchange Ratio, rounded to the nearest cent. The current
annualized dividend rate per share for FUNC Common Stock, based upon the
most recently declared quarterly dividend rate of $.46 per share payable on
June 15, 1995, would be $1.84. On an equivalent pro forma basis, such
current annualized FUNC dividend per ASF common share would be $.84, based
on the Current Exchange Ratio, rounded to the nearest cent. Future FUNC and
ASF dividends are dependent upon their respective earnings and financial
conditions, government regulations and policies, and other factors. See "THE
MERGER -- Exchange of ASF Certificates" and " -- Business Pending
Consummation".
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
<S> <C>
NET INCOME PER SHARE APPLICABLE TO COMMON STOCKHOLDERS:
Historical:
FUNC (before redemption premium on preferred stock)........................................................ $ 5.22
FUNC (after redemption premium on preferred stock)......................................................... 4.98
ASF........................................................................................................ 1.60
Pro forma combined per FUNC common share (before redemption premium on preferred stock) (5)................... 5.21
Equivalent pro forma per ASF common share (before redemption premium on preferred stock) (6).................. $ 4.97
</TABLE>
12
<PAGE>
(5) The pro forma combined income per FUNC common share amount represents (i)
pro forma combined FUNC net income applicable to common stockholders, ASF
net income and the related purchase accounting adjustments described in
footnote (1) to the table under " -- Selected Financial Data" titled "FUNC
and ASF -- Pro Forma Combined Selected Financial Data" (assuming the Merger
had been effective January 1, 1994), divided by (ii) pro forma combined
average common shares outstanding, adjusted for the issuance of the
Projected Number of FUNC Shares, less the Repurchased Shares.
(6) The equivalent pro forma income per ASF common share amount represents the
pro forma combined income per FUNC common share amount, multiplied by the
Current Exchange Ratio.
<TABLE>
<CAPTION>
HISTORICAL EQUIVALENT PRO FORMA
FUNC ASF PER ASF COMMON SHARE (7)
<S> <C> <C> <C>
MARKET VALUE PER SHARE:
December 2, 1994............................................................ $40.00 16.4375 19.25
May 5, 1995................................................................. $46.50 20.4375 21.00
</TABLE>
(7) The equivalent pro forma market values per ASF common share amounts
represent the historical market values per share of FUNC Common Stock,
multiplied by the Current Exchange Ratio, rounded down to the nearest
one-eighth. The FUNC and ASF historical market values per share represent
the last reported sale price per share of FUNC Common Stock on the NYSE Tape
and of ASF Common Stock on the Nasdaq National Market (i) on December 2,
1994, the last business day preceding public announcement of the execution
of the Merger Agreement, and (ii) on May 5, 1995. See "THE MERGER -- Market
Prices". Because the market price of FUNC Common Stock is subject to
fluctuation, the market value of the FUNC Shares that holders of ASF Common
Stock will receive upon consummation of the Merger may increase or decrease
prior to, as well as after, the receipt of such shares following the
Effective Date. ASF stockholders are urged to obtain current market
quotations for FUNC Common Stock. See "FUNC -- Common Stock Repurchase".
SELECTED FINANCIAL DATA
The following tables set forth certain unaudited historical consolidated
selected financial information for FUNC and ASF and certain unaudited pro forma
combined selected financial data, giving effect to the Merger (and no other
pending aquisitions by FUNC) with the Current Exchange Ratio on a purchase
accounting basis. See "THE MERGER -- Accounting Treatment". For a description of
the terms of the Merger Agreement, see "THE MERGER -- General". The actual
Exchange Ratio will depend on the FUNC Average Closing Price and may be higher
or lower than the Current Exchange Ratio. Pro forma financial data are presented
as of and for the year ended December 31, 1994, and are intended to show how the
Merger might have affected historical financial statements if the Merger were
consummated at an earlier time. The pro forma combined selected financial data
do not purport to be indicative of the results that actually would have been
realized had FUNC and ASF been a single entity in 1994 or indicative of the
combined financial position or results of operations of future periods. This
information should be read in conjunction with the historical financial
statements of FUNC and ASF, including the respective notes thereto, which are
incorporated herein by reference and (with respect to ASF) in ASF's 1994 Form
10-K set forth in ASF's 1994 Annual Report to Stockholders which accompanies
this Proxy Statement/Prospectus. See "AVAILABLE INFORMATION", "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE", "FUNC -- History and Business" and
"ASF -- History and Business". Certain information relating to certain pending
acquisitions by FUNC is set forth in Exhibit (99)(b) to FUNC's Annual Report on
Form 10-K for the year ended December 31, 1994. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE". Since purchase accounting does not require restatement
of results for prior periods following consummation of the Merger, consummation
of the Merger will not affect FUNC's historical results for the periods
indicated.
13
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993 1992 1991
<S> <C> <C> <C> <C>
FUNC (HISTORICAL)
CONSOLIDATED SUMMARIES OF INCOME
(In thousands except per share data)
Interest income......................................................... $ 5,094,661 4,556,332 4,479,385 4,647,440
Interest expense........................................................ 2,060,946 1,790,439 2,020,968 2,742,996
Net interest income..................................................... 3,033,715 2,765,893 2,458,417 1,904,444
Provision for loan losses............................................... 100,000 221,753 414,708 648,284
Net interest income after provision for loan losses..................... 2,933,715 2,544,140 2,043,709 1,256,160
Securities available for sale transactions.............................. (11,507) 25,767 34,402 --
Investment security transactions........................................ 4,006 7,435 (2,881) 155,048
Noninterest income...................................................... 1,166,470 1,165,086 1,032,651 914,511
Noninterest expense..................................................... 2,677,228 2,521,647 2,526,678 1,905,918
Income before income taxes.............................................. 1,415,456 1,220,781 581,203 419,801
Income taxes............................................................ 490,076 403,260 196,152 71,070
Net income.............................................................. 925,380 817,521 385,051 348,731
Dividends on preferred stock............................................ 25,353 24,900 31,979 34,570
Net income applicable to common stockholders before redemption
premium............................................................... 900,027 792,621 353,072 314,161
Redemption premium on preferred stock................................... 41,355 -- -- --
Net income applicable to common stockholders after redemption premium... $ 858,672 792,621 353,072 314,161
PER COMMON SHARE DATA
Net income before redemption premium.................................... $ 5.22 4.73 2.23 2.24
Net income after redemption premium..................................... 4.98 4.73 2.23 2.24
Cash dividends.......................................................... 1.72 1.50 1.28 1.12
Book value.............................................................. 30.66 28.90 25.25 23.23
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands).......................................................... 297,902 243,845 167,601 126,029
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets.................................................................. 77,313,505 70,786,969 63,828,031 59,273,177
Loans, net of unearned income........................................... 54,029,752 46,876,177 41,923,767 41,383,580
Deposits................................................................ 58,958,273 53,742,411 49,150,965 47,176,223
Long-term debt.......................................................... 3,428,514 3,061,944 3,151,260 2,630,930
Preferred stockholders' equity.......................................... -- 284,041 297,215 397,356
Common stockholders' equity............................................. 5,397,517 4,923,584 4,161,948 3,463,441
Total stockholders' equity.............................................. $ 5,397,517 5,207,625 4,459,163 3,860,797
Preferred shares outstanding............................................ -- 6,318 6,846 10,851
Common shares outstanding............................................... 176,034 170,338 164,849 149,112
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets.................................................................. $72,670,694 68,101,222 61,145,974 55,095,439
Loans, net of unearned income........................................... 49,055,215 43,631,410 41,270,991 37,314,358
Deposits................................................................ 53,244,751 50,248,848 47,173,706 40,482,433
Long-term debt.......................................................... 3,213,607 3,006,560 2,789,653 2,187,595
Common stockholders' equity*............................................ 5,282,412 4,550,048 3,889,256 3,131,716
Total stockholders' equity*............................................. $ 5,554,390 4,839,397 4,213,896 3,467,437
Common shares outstanding............................................... 172,543 167,692 158,683 140,003
CONSOLIDATED PERCENTAGES
Net income applicable to common stockholders before redemption premium
to average common stockholders' equity................................ 17.04% 17.42 9.08 10.03
Net income applicable to common stockholders after redemption premium to
average common stockholders' equity................................... 16.26 17.42 9.08 10.03
Net income to:
Average total stockholders' equity.................................... 16.66 16.89 9.14 10.06
Average assets........................................................ 1.27 1.20 .63 .63
Average stockholders' equity to average assets.......................... 7.52 7.11 6.89 6.29
Allowance for loan losses to:
Net loans............................................................. 1.81 2.18 2.24 2.06
Nonaccrual and restructured loans..................................... 245 147 96 72
Nonperforming assets.................................................. 175 111 70 50
Net charge-offs to average net loans.................................... .33 .58 .86 1.48
Nonperforming assets to loans, net and foreclosed
properties............................................................ 1.03 1.95 3.19 4.10
Capital ratios:**
Tier 1 capital........................................................ 7.76 9.14 9.22 7.56
Total capital......................................................... 12.94 14.64 14.31 11.76
Leverage.............................................................. 6.12 6.13 6.55 5.31
Net interest margin..................................................... 4.77% 4.78 4.77 4.08
<CAPTION>
1990
<S> <C>
FUNC (HISTORICAL)
CONSOLIDATED SUMMARIES OF INCOME
(In thousands except per share data)
Interest income......................................................... 4,829,520
Interest expense........................................................ 3,094,334
Net interest income..................................................... 1,735,186
Provision for loan losses............................................... 425,409
Net interest income after provision for loan losses..................... 1,309,777
Securities available for sale transactions.............................. --
Investment security transactions........................................ 7,884
Noninterest income...................................................... 690,672
Noninterest expense..................................................... 1,680,973
Income before income taxes.............................................. 327,360
Income taxes............................................................ 64,993
Net income.............................................................. 262,367
Dividends on preferred stock............................................ 33,868
Net income applicable to common stockholders before redemption
premium............................................................... 228,499
Redemption premium on preferred stock................................... --
Net income applicable to common stockholders after redemption premium... 228,499
PER COMMON SHARE DATA
Net income before redemption premium.................................... 1.68
Net income after redemption premium..................................... 1.68
Cash dividends.......................................................... 1.08
Book value.............................................................. 21.81
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands).......................................................... 116,696
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets.................................................................. 54,588,410
Loans, net of unearned income........................................... 36,050,719
Deposits................................................................ 38,194,268
Long-term debt.......................................................... 1,850,860
Preferred stockholders' equity.......................................... 317,011
Common stockholders' equity............................................. 2,983,361
Total stockholders' equity.............................................. 3,300,372
Preferred shares outstanding............................................ 7,293
Common shares outstanding............................................... 136,777
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets.................................................................. 52,124,595
Loans, net of unearned income........................................... 35,877,585
Deposits................................................................ 36,209,083
Long-term debt.......................................................... 1,587,497
Common stockholders' equity*............................................ 2,937,441
Total stockholders' equity*............................................. 3,244,473
Common shares outstanding............................................... 135,622
CONSOLIDATED PERCENTAGES
Net income applicable to common stockholders before redemption premium
to average common stockholders' equity................................ 7.78
Net income applicable to common stockholders after redemption premium to
average common stockholders' equity................................... 7.78
Net income to:
Average total stockholders' equity.................................... 8.09
Average assets........................................................ .50
Average stockholders' equity to average assets.......................... 6.22
Allowance for loan losses to:
Net loans............................................................. 1.95
Nonaccrual and restructured loans..................................... 77
Nonperforming assets.................................................. 56
Net charge-offs to average net loans.................................... .68
Nonperforming assets to loans, net and foreclosed
properties............................................................ 3.42
Capital ratios:**
Tier 1 capital........................................................ 6.53
Total capital......................................................... 10.83
Leverage.............................................................. 4.90
Net interest margin..................................................... 3.99
</TABLE>
* Average common stockholders' equity and total stockholders' equity exclude
net unrealized losses on debt and equity securities in 1994.
** The 1990-1992 capital ratios are not restated for pooling of interests
acquisitions. The Tier I capital and total capital ratios for FUNC and for
ASF are based on risk-weighted assets pursuant to the requirements of their
respective primary federal regulators, which requirements differ in certain
respects.
14
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993 1992 1991
<S> <C> <C> <C> <C>
ASF (HISTORICAL)
CONSOLIDATED SUMMARIES OF OPERATIONS
(In thousands except per share data)
Interest income......................................................... $ 195,534 179,395 210,399 304,531
Interest expense........................................................ 117,095 110,141 144,912 240,950
Net interest income..................................................... 78,439 69,254 65,487 63,581
Provision for loan losses............................................... 600 650 6,600 11,151
Net interest income (loss) after provision for loan losses.............. 77,839 68,604 58,887 52,430
Securities available for sale transactions.............................. 3,672 425 15,969 2,923
Investment security transactions........................................ -- -- 3,312 19,111
Litigation recoveries................................................... -- -- 8,881 --
Recovery from Enstar.................................................... -- -- 4,006 --
Gains on sales of branches.............................................. -- -- -- 4,255
Noninterest income...................................................... 7,661 10,834 10,630 6,492
Noninterest expense..................................................... 67,074 60,565 57,901 64,804
Income before income tax expense (benefit), discontinued operations,
extraordinary items and accounting change............................. 22,098 19,298 43,784 20,407
Income tax expense (benefit)............................................ 2,871 (11,200) 17,526 9,666
Income (loss) from continuing operations................................ 19,227 30,498 26,258 10,741
Net loss from discontinued operations................................... -- -- -- --
Extraordinary items and accounting change............................... -- (2,159) 17,400 8,966
Net income (loss)....................................................... 19,227 28,339 43,658 19,707
Dividends on preferred stock............................................ -- -- 97 120
Net income (loss) applicable to common stockholders..................... $ 19,227 28,339 43,561 19,587
PER COMMON SHARE DATA*
Fully diluted net income (loss)......................................... $ 1.60 2.38 3.71 1.75
Cash dividends.......................................................... -- -- -- --
Book value.............................................................. 18.76 18.42 15.51 11.99
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands).......................................................... -- -- -- --
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets.................................................................. 3,560,612 3,117,032 2,955,099 3,373,330
Loans receivable, net and loans held for sale........................... 2,011,882 1,690,739 1,238,965 964,402
Deposits................................................................ 2,335,627 2,228,090 2,261,667 2,467,529
Borrowings.............................................................. 955,863 617,832 476,899 741,853
Preferred stockholders' equity.......................................... -- -- -- 938
Common stockholders' equity............................................. $ 216,534 207,867 173,855 131,638
Common shares outstanding*.............................................. 11,543 11,287 11,207 11,053
CONSOLIDATED PERCENTAGES
Net income (loss) applicable to common stockholders to average common
stockholders' equity.................................................. 9.16% 15.14 29.17 15.82
Net income (loss) to:
Average stockholders' equity.......................................... 9.16 15.14 29.09 15.77
Average assets........................................................ .58 .93 1.40 .53
Allowance for loan losses to:
Loans receivable, net................................................. .97 1.28 2.93 3.07
Nonperforming assets.................................................. 76.53 71.21 59.12 21.88
Net charge-offs to average loans receivable, net........................ .15 1.37 .35 2.03
Nonperforming loans to loans receivable, net and real estate acquired in
settlement of loans, net.............................................. 1.26 1.79 4.83 11.08
Capital ratios:
Tier 1 risk-based capital**........................................... 10.11 11.47 10.91 7.48
Total risk-based capital**............................................ 11.06 12.68 12.16 8.56
Leverage.............................................................. 5.09% 5.53 4.71 3.29
<CAPTION>
1990
<S> <C>
ASF (HISTORICAL)
CONSOLIDATED SUMMARIES OF OPERATIONS
(In thousands except per share data)
Interest income......................................................... 431,115
Interest expense........................................................ 365,103
Net interest income..................................................... 66,012
Provision for loan losses............................................... 72,922
Net interest income (loss) after provision for loan losses.............. (6,910)
Securities available for sale transactions.............................. (146)
Investment security transactions........................................ 1,677
Litigation recoveries................................................... 3,247
Recovery from Enstar.................................................... --
Gains on sales of branches.............................................. 745
Noninterest income...................................................... 12,310
Noninterest expense..................................................... 81,657
Income before income tax expense (benefit), discontinued operations,
extraordinary items and accounting change............................. (70,734)
Income tax expense (benefit)............................................ --
Income (loss) from continuing operations................................ (70,734)
Net loss from discontinued operations................................... (11,094)
Extraordinary items and accounting change............................... 9,100
Net income (loss)....................................................... (72,728)
Dividends on preferred stock............................................ 445
Net income (loss) applicable to common stockholders..................... (73,173)
PER COMMON SHARE DATA*
Fully diluted net income (loss)......................................... (6.63)
Cash dividends.......................................................... --
Book value.............................................................. 10.29
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands).......................................................... --
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets.................................................................. 4,400,121
Loans receivable, net and loans held for sale........................... 1,261,531
Deposits................................................................ 3,266,132
Borrowings.............................................................. 966,301
Preferred stockholders' equity.......................................... 1,665
Common stockholders' equity............................................. 111,814
Common shares outstanding*.............................................. 11,029
CONSOLIDATED PERCENTAGES
Net income (loss) applicable to common stockholders to average common
stockholders' equity.................................................. (41.74)
Net income (loss) to:
Average stockholders' equity.......................................... (39.90)
Average assets........................................................ (1.50)
Allowance for loan losses to:
Loans receivable, net................................................. 5.45
Nonperforming assets.................................................. 23.14
Net charge-offs to average loans receivable, net........................ 1.06
Nonperforming loans to loans receivable, net and real estate acquired in
settlement of loans, net.............................................. 21.71
Capital ratios:
Tier 1 risk-based capital**........................................... 4.47
Total risk-based capital**............................................ 5.42
Leverage.............................................................. 2.04
</TABLE>
* Adjusted for a one-for-five reverse common stock split effected at the close
of business on April 27, 1993.
** The Tier I capital and total capital ratios for ASF and for FUNC are based on
risk-weighted assets pursuant to the requirements of their respective primary
federal regulators, which requirements differ in certain respects.
15
<PAGE>
<TABLE>
<CAPTION>
AS OF AND
FOR
THE YEAR
ENDED
DECEMBER
31,
1994
<S> <C>
FUNC AND ASF
PRO FORMA COMBINED SELECTED FINANCIAL DATA (1)(2)
CONSOLIDATED SUMMARIES OF INCOME
(In thousands except per share data)
Interest income.............................................................................................. $ 5,272,106
Interest expense............................................................................................. 2,178,041
Net interest income.......................................................................................... 3,094,065
Provision for loan losses.................................................................................... 100,600
Net interest income after provision for loan losses.......................................................... 2,993,465
Securities available for sale transactions................................................................... (7,835)
Investment security transactions............................................................................. 4,006
Noninterest income........................................................................................... 1,174,131
Noninterest expense.......................................................................................... 2,752,324
Income before income taxes................................................................................... 1,411,443
Income taxes................................................................................................. 483,341
Net income................................................................................................... 928,102
Dividends on preferred stock................................................................................. 25,353
Net income applicable to common stockholders before redemption premium....................................... 902,749
Redemption premium on preferred stock........................................................................ 41,355
Net income applicable to common stockholders after redemption premium........................................ $ 861,394
PER COMMON SHARE DATA
Net income applicable to common stockholders before redemption premium....................................... $ 5.21
Net income applicable to common stockholders after redemption premium........................................ 4.97
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
Assets....................................................................................................... 80,744,407
Loans, net of unearned income................................................................................ 56,060,721
Deposits..................................................................................................... 61,293,900
Long-term debt............................................................................................... 3,896,843
Total stockholders' equity................................................................................... $ 5,446,849
CONSOLIDATED PERCENTAGES
Allowance for loan losses to:
Net loans.................................................................................................. 1.78%
Nonperforming assets....................................................................................... 167
Net charge-offs to average net loans......................................................................... .33
Nonperforming assets to loans, net and foreclosed properties................................................. 1.06%
</TABLE>
(1) Based on the assumptions indicated above and below, on a pro forma basis the
Merger will increase FUNC's goodwill by $128,983,000, which will be
amortized on a straight-line basis over 25 years, and FUNC's deposit base
premium by $33,992,000, which will be amortized on an accelerated basis over
a ten-year period. The following assumptions were used to arrive at the pro
forma results of operations: cost of funds for the purchase of the
Repurchased Shares of 4.08 percent; applying a straight-line amortization
method over six years for the excess cost of carrying value over market
value of securities; applying straight-line depreciation over ten years for
premises and equipment; and merger-related accruals of $19 million for
branch closings, employee and occupancy-related costs, and other
merger-related expenses.
(2) Certain information relating to certain pending acquisitions by FUNC is set
forth in Exhibit (99)(b) to FUNC's Annual Report on Form 10-K for the year
ended December 31, 1994. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE".
16
<PAGE>
PROPOSAL 2: ADJOURNMENT OF MEETING
If the Merger Agreement has not been terminated at the time of the Meeting,
ASF stockholders will be asked at the Meeting to consider and vote on a proposal
to adjourn the Meeting in the event that there are not sufficient votes at the
Meeting to approve the Merger Proposal, for the purpose of soliciting additional
votes in favor of the Merger Proposal, the Auditors Proposal and in favor of the
election of each of the nine nominees for director in Proposal 3. If it is
necessary to adjourn the Meeting and the adjournment is for a period of less
than 30 days, no notice of the time and place of the adjourned meeting will be
given to ASF stockholders, other than an announcement made at the Meeting. If
the Meeting is adjourned, Proposals 1, 3 and 4 will be determined at the
reconvened Meeting. See "ADJOURNMENT OF MEETING".
PROPOSAL 3: ELECTION OF DIRECTORS
At the Meeting, ASF stockholders will be asked to consider and vote on a
proposal to elect each of the nine nominees for director to serve on the ASF
Board until the 1996 Annual Meeting of Stockholders of ASF, and until their
successors are duly elected and qualified. At the Effective Date, the directors
listed in Proposal 3 will not become directors of FUNC or the Subsidiary. All of
the nine director nominees currently serve as directors on the ASF Board. See
"ELECTION OF DIRECTORS". Included in Proposal 3 is information about the
nominees for director, security ownership of beneficial owners of more than five
percent of ASF Common Stock and ASF's management, potential changes in control,
compensation committee interlocks, the committees of the ASF Board and their
composition, the compensation paid to ASF's directors and certain executive
officers of ASF, stock options, the report of the compensation and the stock
option committees of the ASF Board and other matters relating to the executive
officers, directors and certain holders of ASF Common Stock.
If the Merger Agreement has been terminated at or prior to the time of the
Meeting, ASF stockholders will nevertheless proceed with annual meeting matters
and will consider the Election Proposal. See "THE MERGER -- Conditions to
Consummation; Termination".
PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
At the Meeting, ASF stockholders will be asked to consider and vote on a
proposal to ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending December 31, 1995. KPMG Peat Marwick LLP was
appointed by the ASF Board to audit the books and records of ASF for the year
ending December 31, 1995. The term of KPMG Peat Marwick LLP as independent
auditors of ASF will terminate if the Merger is consummated, as of the Effective
Date. See "RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS".
If the Merger Agreement has been terminated at or prior to the time of the
Meeting, ASF stockholders will nevertheless proceed with annual meeting matters
and will consider the Auditors Proposal. See "THE MERGER -- Conditions to
Consummation; Termination".
17
<PAGE>
RECENT DEVELOPMENTS
CERTAIN FINANCIAL DATA FOR THE THREE MONTHS ENDED MARCH 31, 1995
FUNC
FUNC's earnings applicable to common stockholders were $230 million in the
first quarter of 1995, a six percent increase from $217 million in the first
quarter of 1994 and two percent from $225 million in the fourth quarter of 1994
(before a redemption premium on preferred stock). Net income per common share
increased to $1.32 from $1.27 in the first quarter of 1994 and $1.28 in the
fourth quarter of 1994 (before a redemption premium on preferred stock).
FUNC's return on average common equity was 16.71 percent and its return on
average assets was 1.24 percent in the first quarter of 1995, compared with
17.54 percent and 1.28 percent, respectively, in the first quarter of 1994 and
15.92 percent and 1.22 percent, respectively, in the fourth quarter of 1994
(before a redemption premium on preferred stock).
Important factors in FUNC's first quarter 1995 earnings performance
included:
(Bullet) three percent growth in loans, up $1.7 billion since year-end
1994;
(Bullet) three percent decrease in expenses from the fourth quarter of
1994; and
(Bullet) 13 percent growth in capital management income and 13 percent
growth in mortgage banking income from the fourth quarter of 1994.
Tax-equivalent net interest income increased to $801.8 million from $750.4
million in the first quarter of 1994 and $801.7 million in the fourth quarter of
1994.
Nonperforming assets declined to $577 million, or 1.03 percent of net loans
and foreclosed properties, at March 31, 1995, compared with $796 million, or
1.70 percent, at the end of the first quarter a year ago, and increased from
$558 million, or 1.03 percent, at December 31, 1994.
Annualized net charge-offs as a percentage of average net loans were .31
percent in the first quarter of 1995, compared with .27 percent in the first
quarter of 1994 and .40 percent in the fourth quarter of 1994. The loan loss
provision was $32 million, compared to $25 million in the first quarter of 1994
and $25 million in the fourth quarter of 1994.
Net loans at March 31, 1995, were $55.8 billion, compared with $46.7
billion at the end of first quarter of 1994 and $54.0 billion at year-end 1994.
Deposits were $56.8 billion at March 31, 1995, compared with $52.1 billion
at the end of the first quarter a year ago and $59.0 billion at year-end 1994.
Total stockholders' equity was $5.49 billion at March 31, 1995, compared with
$5.28 billion at March 31, 1994 and $5.40 billion at year-end 1994.
At March 31, 1995, FUNC had assets of $77.9 billion and operated 1,285
banking offices in Florida, North Carolina, Georgia, Virginia, South Carolina,
Tennessee, Maryland and Washington, D.C.
ASF
ASF reported net income of $7.2 million, or $0.59 per share (primary and
fully diluted) for the first quarter of 1995, compared with $4.1 million, or
$0.34 per share (primary and fully diluted) for the first quarter of 1994.
Pretax core earnings increased to $5.5 million for the first quarter of 1995,
from $5.1 million in the first quarter of 1994.
The 1995 first quarter core earnings improvement primarily reflected an
increase in net interest income, partially offset by an increase in operating
expenses. The increase in operating expenses was largely due to lower gains on
sales of real estate owned recorded in the first quarter of 1995 compared with
the same period last year.
First quarter 1995 earnings also included nonrecurring pretax recoveries
from litigation aggregating $3.4 million, in settlement of claims against
Michael Milken and certain of his affiliates. ASF also received a distribution
of $4.5 million from Enstar, in the first quarter of 1995, in partial
satisfaction of ASF's allowed claim against the Enstar estate, pursuant to the
Bankruptcy Plan (as hereinafter defined), as modified, which reduced ASF's claim
against the Enstar estate from approximately $32 million to approximately $27.5
million. See "BOARD OF DIRECTORS AND COMMITTEES -- Compensation Committee
Interlocks and Insider Participation; OTHER TRANSACTIONS WITH ENSTAR
AFFILIATES".
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Income tax expense for the first quarter of 1995 was recorded at an
effective rate of 45 percent, compared with an effective rate of only 20 percent
for the first quarter of 1994. First quarter 1994 income tax expense was lower
as a result of recording the benefit of net operating loss carryforwards.
At March 31, 1995, nonperforming assets amounted to $24.5 million (0.71
percent of total assets), compared with $24.9 million (0.70 percent of total
assets) at December 31, 1994 and $23.3 million (0.72 percent of total assets) at
March 31, 1994. Additionally, at March 31, 1995, ASF's allowance for losses on
loans represented 96.74 percent of nonaccrual loans.
ASF exceeded its tangible, core and risk-based capital requirements by
$118.2 million, $72.9 million and $52.3 million, respectively, at March 31,
1995.
ASF had total assets of $3.5 billion and a book value per share of ASF
common stock of $19.39, compared with $3.2 billion in assets and a book value
per share of $18.00 at March 31, 1994.
In order to take advantage of market conditions and reduce interest rate
risk, during April 1995, ASF sold substantially all of its portfolio of
securities available for sale and recognized a pretax loss of $4.2 million.
These securities are reflected at market value in ASF's Statement of
Consolidated Financial Condition, through a charge to capital at March 31, 1995.
Additionally, ASF sold its $70 million notional principal amount reverse
interest rate swap for a pretax loss of $862,000, which was deferred and will be
amortized to interest expense over the remaining term of liabilities which were
being hedged.
In the proceedings styled THE UNSECURED CREDITORS' COMMITTEE OF GENERAL
HOMES CORPORATION V AMERICAN SAVINGS & LOAN ASSOCIATION OF FLORIDA, ET AL.,
discussed in Part I, Item 3, Legal Proceedings in ASF's 1994 Form 10-K, included
in ASF's 1994 Annual Report to Stockholders which accompanies this Proxy
Statement/Prospectus and is incorporated by reference herein, the United States
Bankruptcy Court for the Southern District of Texas denied the motion for
approval of the proposed settlement among the parties without prejudice to the
submission by the parties of another settlement agreement. The proposed
settlement was not approved, in part, because its terms would have required the
Texas bankruptcy court to vacate its earlier memorandum opinion sanctioning the
General Homes Corporation's creditors' committee for having filed its complaint
in the proceedings without first obtaining approval from the bankruptcy court.
FUNC ACQUISITIONS
On April 1, 1995, FUNC acquired Ameribanc Investors Group ("Ameribanc"),
Annandale, Virginia. As of December 31, 1994, Ameribanc had $1.1 billion in
assets and through a subsidiary operated 29 federal savings bank offices in
Virginia. FUNC paid approximately $115 million in cash for the acquisition,
which has been accounted for as a purchase.
On April 6, 1995, FUNC announced an agreement to acquire Columbia First
Bank, FSB ("Columbia First"), Arlington, Virginia. As of December 31, 1994,
Columbia First had $2.9 billion in assets and operated 33 federal savings bank
branches in Virginia, Maryland, and Washington, D.C. In connection with this
acquisition, FUNC agreed to issue shares of FUNC Common Stock equal to $60.00
for each share of Columbia First common stock, which, based on the number of
shares of Columbia First common stock outstanding as of April 6, 1995, would
result in approximately $222 million of FUNC Common Stock being issued. The
acquisition, to be accounted for as a purchase, is expected to close in the
second half of 1995, subject to regulatory approval, Columbia First stockholder
approval and other conditions of closing.
On April 18, 1995 FUNC's Board of Directors renewed its authorization to
repurchase on the open market of up to 15 million shares of FUNC Common Stock
from time to time. The repurchases will depend upon management's assessment of
the capital position of FUNC, management's assessment of the underlying value of
FUNC Common Stock versus the market price thereof and will be made in connection
with purchase accounting acquisitions involving the issuance of FUNC Common
Stock as consideration and for other corporate purposes. As of May 5, 1995,
there were 13.9 million such shares remaining that could be repurchased on the
open market pursuant to such authorization. See "FUNC -- Common Stock
Repurchase".
FUNC is continually evaluating acquisiton opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations, frequently
take place and future acquisitions involving cash, debt or equity securities can
be expected. Acquisitions typically involve the payment of a premium over book
and market values, and therefore some dilution of FUNC's book value and net
income per common share may occur in connection with future transactions.
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GENERAL INFORMATION
GENERAL
This Proxy Statement/Prospectus is being furnished by ASF to its
stockholders as a proxy statement in connection with the solicitation of proxies
by the ASF Board for use at the Meeting to be held on Wednesday, June 14, 1995,
and any adjournment or adjournments thereof, to consider and vote upon (i) a
proposal to approve the Merger and the Merger Agreement ("Proposal 1" or the
"Merger Proposal"); (ii) a proposal to adjourn the Meeting (if the Merger
Agreement has not been terminated at the time of the Meeting) to another time
and/or place in the event that there are not sufficient votes at the time of the
Meeting to approve the Merger and the Merger Agreement for the purpose of
soliciting additional votes in favor of the Merger and the Merger Agreement, the
election of each of the nine nominees for director and the ratification of ASF's
independent auditors ("Proposal 2" or the "Adjournment Proposal"); (iii) a
proposal to elect each of the nine nominees for director to the ASF Board to
serve until the 1996 Annual Meeting of Stockholders of ASF and until their
successors are duly elected and qualified ("Proposal 3" or the "Election
Proposal"); (iv) a proposal to ratify the appointment of ASF's independent
auditors for the fiscal year ending December 31, 1995 ("Proposal 4" or the
"Auditors Proposal"); and (v) such other business as may come before the Meeting
or any adjournment or adjournments thereof. In the event the Merger is
consummated, the directors nominated in the Election Proposal will not serve as
directors for FUNC or the Subsidiary. The term of KPMG Peat Marwick LLP as
independent auditors of ASF will terminate if the Merger is consummated, as of
the Effective Date. KPMG Peat Marwick LLP also serves as independent auditors of
FUNC.
This document is also furnished by FUNC to the holders of ASF Common Stock
as a prospectus in connection with the issuance of the FUNC Shares upon
consummation of the Merger.
After having been submitted, the enclosed proxy may be revoked by the
person giving it, at any time before it is exercised, by submitting written
notice of revocation of such proxy to the Secretary of ASF, by completing,
signing and delivering to the Secretary of ASF a proxy having a later date or by
attending the Meeting and voting in person, with respect to the same proposal(s)
as referenced in the proxy to be revoked. Attendance at the Meeting without
further action will not automatically revoke a proxy. If the enclosed form of
proxy is properly executed and returned to ASF in time to be voted at the
Meeting, the shares represented by that proxy will be voted in accordance with
the instructions marked on the proxy. EXECUTED BUT UNMARKED PROXIES WILL BE
VOTED AS FOLLOWS: "FOR" THE MERGER PROPOSAL, "FOR" THE ADJOURNMENT PROPOSAL,
"FOR" THE ELECTION OF EACH OF THE NINE NOMINEES NAMED ON THE FORM OF PROXY AS
DIRECTORS OF ASF AND "FOR" THE AUDITORS PROPOSAL. PURSUANT TO ASF'S BYLAWS, IF
ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE MEETING, THE PERSONS NAMED IN
THE FORM OF PROXY WILL VOTE THE SHARES REPRESENTED BY SUCH PROXY AS DETERMINED
BY A MAJORITY OF THE ASF BOARD. IF NO DETERMINATION IS MADE, THE PERSONS NAMED
WILL VOTE THE SHARES IN THEIR OWN JUDGMENT.
Directors, officers and employees of ASF may solicit proxies from ASF
stockholders, either personally or by telephone, telecopier or other form of
communication. Such persons will receive no additional compensation for such
services. ASF has retained Georgeson & Company Inc. to assist in soliciting
proxies from brokers, banks, other institutional holders and certain beneficial
owners and individual holders of record, and to send proxy materials to banks,
brokers and other institutional holders and nominees for transmittal to their
principals, at a fee of $7,000, plus $4.50 per call for the first 1,000
telephone calls, and $3.50 per call for calls in excess of 1,000, to beneficial
owners and individual holders of record, plus out-of-pocket expenses. All
expenses associated with the solicitation of proxies in the form enclosed will
be borne by the party incurring the same. ASF will reimburse persons holding
stock as nominees for reasonable expenses in sending proxy materials to their
principals. The ASF Board has appointed a representative of The First National
Bank of Boston to serve as the Inspector of Elections. The Inspector of
Elections will tabulate the votes of stockholders entitled to vote at the
Meeting, whether cast in person or by proxy, in order to determine stockholder
approval or disapproval of Proposals 1, 2 and 4 and election of each nominee
under Proposal 3.
THE ASF BOARD HAS APPROVED ALL OF THE PROPOSALS TO BE PRESENTED AT THE
MEETING. THE ASF BOARD HAS APPROVED THE MERGER AGREEMENT, BELIEVES THE MERGER IS
IN THE BEST INTERESTS OF ASF AND ITS STOCKHOLDERS AND IS FAIR TO THE
STOCKHOLDERS, AND RECOMMENDS APPROVAL OF THE MERGER AND THE MERGER AGREEMENT BY
ASF STOCKHOLDERS. SEE "THE MERGER -- BACKGROUND AND REASONS; ASF". THE ASF BOARD
ALSO RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ADJOURNMENT PROPOSAL, "FOR" THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR UNDER THE ELECTION PROPOSAL AND
"FOR" THE AUDITORS PROPOSAL.
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RECORD DATE; VOTES REQUIRED
The ASF Board has fixed the close of business on May 8, 1995, as the Record
Date for stockholders entitled to notice of and to vote at the Meeting, and
accordingly, only holders of ASF Common Stock of record at the close of business
on that day will be entitled to notice of and to vote at the Meeting. The number
of shares of ASF Common Stock outstanding on the Record Date was 11,755,943,
each of such shares being entitled to one vote, either in person or by proxy, on
each matter to come before the Meeting.
The presence, in person or by proxy, of a majority of the shares of ASF
Common Stock outstanding on the Record Date is necessary to constitute a quorum
of the stockholders in order to take action at the Meeting. For these purposes,
shares of ASF Common Stock which are present, or represented by proxy, at the
Meeting will be counted for quorum purposes regardless of whether the holder of
the shares or proxy votes at the meeting or whether a broker with discretionary
authority exercises discretionary voting authority with respect to the proposals
to be voted on at the Meeting. Once a quorum is established, approval of the
Merger and the Merger Agreement requires the affirmative votes of the holders of
at least (i) two-thirds of the issued and outstanding shares of ASF Common Stock
(the "General Approval") and (ii) a majority of the Non-interested Shares
represented and voted at the Meeting (the "Special Approval"). For purposes of
the General Approval vote, abstentions and broker non-votes will have the same
effect as votes against the Merger and the Merger Agreement. For purposes of the
Special Approval, abstentions and broker non-votes will not be counted. In
connection with the execution of the Merger Agreement, Enstar, the holder on the
Record Date of approximately 48.4 percent of the outstanding shares of ASF
Common Stock, agreed to vote its shares of ASF Common Stock in favor of approval
of the Merger and the Merger Agreement. See "THE MERGER -- Voting Agreement;
Escrow Agreement" and ANNEX B.
Approval of Proposals 2 and 4, election of directors under Proposal 3 and
approval of all other matters which may properly come before the Meeting require
the affirmative vote of a majority of the votes cast, in person or by proxy, by
persons entitled to vote at the Meeting. Enstar has not informed ASF of how it
intends to vote its shares (approximately 48.4 percent of the outstanding shares
of ASF Common Stock as of the Record Date) in connection with Proposals 2, 3 and
4. For a discussion of Enstar's right to vote its shares of ASF Common Stock at
the Meeting, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Potential Change in Control". A vote to withhold authority for the
election of any director will be counted as a vote cast against that director
for purposes of the Election Proposal. Abstentions and broker non-votes will not
be counted for purposes of determining approval of the Adjournment Proposal, the
Election Proposal and the Auditors Proposal. Votes cast will be tabulated by the
transfer agent for ASF Common Stock, a representative of which will be the
Inspector of Elections present at the Meeting.
The directors and executive officers of ASF (including certain of their
related interests, among them Enstar) beneficially owned, as of the Record Date,
and are entitled to vote at the Meeting 6,237,521 shares of outstanding ASF
Common Stock, which represent approximately 53.1 percent of the outstanding
shares of ASF Common Stock entitled to be voted at the Meeting. However, only
Non-interested Shares represented and voted at the Meeting will be counted for
purposes of the Special Approval. The Merger Agreement provides that ASF shall
use its reasonable efforts to cause its directors and certain officers, Enstar
and the directors and officers of Enstar to enter into an agreement prohibiting
such persons from acquiring additional shares of ASF Common Stock on or before
the Record Date. Enstar and substantially all of such officers and directors
entered into such an agreement.
If the Merger Agreement has been terminated at the time of the Meeting, ASF
stockholders will nevertheless proceed with the Meeting and consider the
Election Proposal and the Auditors Proposal.
IF YOU ARE PLANNING TO ATTEND THE MEETING PERSONALLY AND HAVE A DISABILITY
COVERED UNDER THE AMERICANS WITH DISABILITIES ACT, PLEASE NOTIFY THE SECRETARY
OF ASF BEFORE JUNE 7, 1995, OF YOUR SPECIAL NEEDS WHEN ATTENDING THE MEETING.
A FAILURE TO VOTE ON THE MERGER PROPOSAL, EITHER BY NOT RETURNING THE
ENCLOSED PROXY OR BY CHECKING THE "ABSTAIN" BOX ON THE MERGER PROPOSAL, WILL
HAVE THE SAME EFFECT AS A VOTE "AGAINST" APPROVAL OF THE MERGER AND THE MERGER
AGREEMENT FOR PURPOSES OF THE GENERAL APPROVAL AND WILL NOT COUNT FOR PURPOSES
OF THE SPECIAL APPROVAL.
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PROPOSAL 1
THE MERGER
THE FOLLOWING INFORMATION RELATING TO THE MERGER IS NOT INTENDED TO BE A
COMPLETE DESCRIPTION OF ALL MATERIAL INFORMATION RELATING TO THE MERGER AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, INCLUDING THE ANNEXES HERETO, AND
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. COPIES OF THE MERGER AGREEMENT
(INCLUDING THE STOCK OPTION AGREEMENT) AND THE VOTING AGREEMENT (INCLUDING THE
ESCROW AGREEMENT) ARE SET FORTH IN ANNEX A AND ANNEX B, RESPECTIVELY, TO THIS
PROSPECTUS/PROXY STATEMENT, AND INCORPORATED HEREIN BY REFERENCE, AND REFERENCE
IS MADE THERETO FOR A COMPLETE DESCRIPTION OF THE TERMS OF THE MERGER.
STOCKHOLDERS OF ASF ARE URGED TO READ THE MERGER AGREEMENT CAREFULLY.
GENERAL
Under the terms of the Merger Agreement, ASF will merge with and into the
Subsidiary. Upon consummation of the Merger, each outstanding share of ASF
Common Stock will be converted, automatically and without any action on the part
of the holder thereof, into the right to receive a number of shares of FUNC
Common Stock equal to the Exchange Ratio (I.E., the quotient of (i) $21.00 and
(ii) the FUNC Average Closing Price). Each holder of ASF Common Stock who would
otherwise be entitled to a fractional share of FUNC Common Stock will receive
cash in lieu thereof in an amount determined by multiplying (x) the FUNC Average
Closing Price by (y) the fraction of a share of FUNC Common Stock to which such
holder would otherwise be entitled. If, prior to the Effective Date, FUNC Common
Stock undergoes a reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or in the event that a stock dividend on
FUNC Common Stock is declared with a record date in that same period, the
consideration to be received by ASF stockholders pursuant to the Merger will be
correspondingly adjusted.
EFFECTIVE DATE
Subject to the terms and conditions of the Merger Agreement, the Effective
Date will occur on the first business day of the month following the month in
which the last of the conditions to the obligations of the parties to consummate
the Merger (other than the delivery of certificates, opinions, comfort letters
and the like) is satisfied or waived, or such other date as shall be mutually
agreed upon by FUNC and ASF. Subject to the foregoing, and although there can be
no assurances, it is currently anticipated that the Merger will be consummated
in the second or third quarter of 1995. If the Merger is consummated in either
of such quarters, or in any other quarter, ASF stockholders should not assume or
expect that the Effective Date will precede the record date for the dividend on
FUNC Common Stock for that quarter, so as to enable such stockholders to receive
such dividend. The Board of Directors of either FUNC or ASF may terminate the
Merger Agreement if the Effective Date does not occur on or before August 25,
1995, provided that the terminating party is not in breach of any of the
covenants or agreements of the Merger Agreement. See " -- Exchange of ASF
Certificates" and " -- Conditions to Consummation; Termination".
MANAGEMENT AFTER THE MERGER
The directors and officers of the Subsidiary in office prior to the
Effective Date will be the directors and officers of the surviving entity. At
the Effective Date, the directors listed in Proposal 3 will not become directors
of FUNC or the Subsidiary.
EXCHANGE OF ASF STOCK CERTIFICATES
As promptly as practicable after the Effective Date, FUNC will direct First
Union National Bank of North Carolina (the "Exchange Agent") to send to each
holder of record of ASF Common Stock on the Effective Date, transmittal
materials for use in exchanging all of such holder's certificates representing
ASF Common Stock for a certificate or certificates representing the FUNC Shares
to which such holder is entitled and a check for such holder's fractional share
interest, as appropriate. The transmittal materials will contain information and
instructions with respect to the surrender and exchange of such certificates.
ASF STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender of all of the certificates for ASF Common Stock registered
in the name of a holder of such certificates (or indemnity satisfactory to FUNC
and the Exchange Agent if any of such certificates are lost, stolen or
destroyed), in
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accordance with a letter of transmittal, the Exchange Agent will mail to such
holder a certificate or certificates representing the number of FUNC Shares to
which such holder is entitled, together with all undelivered dividends or
distributions in respect of such shares and, where applicable, a check for any
fractional share interest (in each case, without interest).
All FUNC Shares issued to the holders of ASF Common Stock pursuant to the
Merger will be deemed issued as of the Effective Date. After the Effective Date,
former holders of record of ASF Common Stock will be entitled to vote at any
meeting of holders of FUNC Common Stock the number of FUNC Shares into which
their shares of ASF Common Stock have been converted, regardless of whether they
have surrendered their ASF Common Stock certificates. FUNC dividends having a
record date on or after the Effective Date will include dividends on all FUNC
Shares issued in the Merger, but no dividend or other distribution payable to
the holders of record of FUNC Shares on or after the Effective Date will be
distributed to the holder of any ASF Common Stock certificates until such holder
physically surrenders all such certificates as hereinabove described. Promptly
after such surrender, all undelivered dividends and other distributions and,
where applicable, a check for any fractional share interest, will be delivered
to such holder (in each case, without interest). FUNC dividends having a record
date before the Effective Date (which record date may, in FUNC's sole
discretion, be the day immediately preceding the Effective Date or any other day
prior to the Effective Date) will not include dividends on the FUNC Shares
issued in the Merger. As of the Effective Date, the stock transfer books of ASF
will be closed, and there will be no transfers on the transfer books of ASF of
the shares of ASF Common Stock that were outstanding immediately prior to the
Effective Date.
Notwithstanding the foregoing, the Merger Agreement provides that the
shares of ASF Common Stock held by those stockholders deemed to be "affiliates"
of ASF (as defined under the Securities Act, but generally including directors,
certain executive officers and ten percent or more stockholders) shall not be
exchanged for FUNC Shares until FUNC receives a written agreement from such
stockholders as contemplated by the Merger Agreement to the effect that they
will not sell the FUNC Shares except in accordance with Rule 145 of the
Securities Act. See "RESALE OF FUNC COMMON SHARES".
BACKGROUND AND REASONS
ASF
BACKGROUND OF THE MERGER. On April 29, 1988, ASF became an indirect
wholly-owned subsidiary of Enstar. From April 29, 1988 until March 6, 1990, all
of the outstanding ASF Common Stock was owned directly or indirectly by Enstar.
On March 6, 1990, Enstar transferred 50 percent of the then outstanding shares
of ASF Common Stock to a trust for the benefit of Enstar stockholders. The trust
distributed the shares it held on July 2, 1990 to Enstar's stockholders. As of
the Record Date, Enstar held approximately 48.4 percent of the outstanding
shares of ASF Common Stock.
On May 31, 1991, Enstar filed for protection under Chapter 11 of the United
States Bankruptcy Code. Its plan of reorganization (the "Bankruptcy Plan") was
initially confirmed by the bankruptcy court on February 24, 1992, and became
effective on June 1, 1992. The Bankruptcy Plan was the result of negotiations
among Enstar, ASF (which was a creditor of Enstar) and Enstar's other major
creditors. The Bankruptcy Plan provided generally that ASF release its security
interest in all property, including the ASF Common Stock held by Enstar,
securing ASF's claim against Enstar in the bankruptcy proceedings, and provided
ASF with an allowed unsecured claim of $36,000,000 against Enstar's estate. The
claim was reduced to approximately $32,000,000 in 1992 as a result of
distributions from the Enstar estate, and to approximately $27,500,000 on March
31, 1995, as a result of a distribution on that date of approximately
$4,500,000. See "BOARD OF DIRECTORS AND COMMITTEES -- Compensation Committee
Interlocks and Insider Participation; OTHER TRANSACTIONS WITH ENSTAR
AFFILIATES". Under the Bankruptcy Plan, among other things: (i) ASF was entitled
to receive 66.66 percent of all distributions from the Enstar estate until ASF's
claim was paid in full, but was not entitled to any proceeds from the sale or
distribution of Enstar's ASF Common Stock; (ii) Enstar was given until June 1,
1995 to sell its ASF Common Stock, unless otherwise agreed by certain classes of
creditors; and (iii) certain creditors, other than ASF, were permitted under
certain circumstances to require Enstar to sell their respective pro rata
portions of the ASF Common Stock earlier than that date. After public disclosure
of the terms of the Bankruptcy Plan, ASF received, directly or indirectly
(through Enstar), inquiries from third parties relating to their possible
interest in acquiring ASF. For a further discussion of Enstar's bankruptcy and
the Bankruptcy Plan, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Potential Change in Control" and "BOARD OF DIRECTORS AND
COMMITTEES -- Compensation Committee Interlocks and Insider Participation;
ENSTAR CHAPTER 11 PROCEEDINGS".
On August 25, 1993, Enstar's modified plan of reorganization was confirmed
by the bankruptcy court. Generally, the modifications to the Bankruptcy Plan
provided, among other things, that ASF continued to be entitled to receive 66.66
percent of all distributions from the Enstar estate until ASF's allowed claim is
paid in full, and became eligible to participate
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in the distribution of proceeds from the sale of Enstar's ASF Common Stock after
certain other classes of creditors are paid in full. At such time ASF is
entitled to receive all distributions of remaining property, if any, from the
estate, including proceeds from the sale of ASF Common Stock, until its allowed
claim is paid in full. Under the modified Bankruptcy Plan, Enstar is obligated
to sell or distribute its ASF Common Stock before June 1, 1995, unless otherwise
agreed by certain classes of creditors whose claims have not been satisfied.
The Enstar claim is not reflected as an asset on ASF's consolidated balance
sheet because in 1991 ASF charged off all amounts receivable from Enstar,
including accrued interest, due to a determination that such amounts were
uncollectible. The Enstar claim, plus accrued interest from June 1, 1992 (the
"Enstar Receivable"), if fully collected, would result in a recovery to ASF of
approximately $19.2 million, net after taxes (assuming a 38 percent tax rate),
or approximately $1.58 per share of ASF Common Stock, as of March 31, 1995. For
purposes of this section, " -- Background and Reasons; ASF", per share amounts
calculated by ASF are based upon an aggregate of outstanding shares of ASF
Common Stock and shares subject to director or employee stock options.
During 1992, the ASF Board considered from time to time the effect which
Enstar's obligations under the Bankruptcy Plan could have on ASF and its public
stockholders, as well as the impact of regulatory capital requirements on ASF
and the occasional informal inquiries received by ASF concerning potential
acquisition. In view of these factors, the ASF Board determined in December 1992
to entertain presentations from a number of investment banking firms with a view
towards retaining such a firm to render advice to the ASF Board concerning the
strategic alternatives available for enhancing stockholder value (including a
possible sale of ASF), and the feasibility of pursuing the various alternatives
given the constraints which ASF was then facing, including the possibility that
Enstar would seek to cause a sale of ASF in order to facilitate the sale of
Enstar's ASF Common Stock then mandated by the Bankruptcy Plan.
In June 1993, the ASF Board determined to engage Dillon, Read & Co. Inc.
("Dillon Read") as ASF's financial advisor to advise the Board regarding the
alternative actions and determinations to be made by the ASF Board in view of
possible action by Enstar and the uncertainty of Enstar's plans with respect to
its ASF Common Stock.
During the periods preceding and following the retention of Dillon Read,
representatives of ASF (and upon its formation, the Independent Committee, as
defined below) met from time to time with representatives of Enstar to explore
potential alternatives intended to satisfy Enstar's obligations under the
Bankruptcy Plan while at the same time furthering the interests of ASF's public
stockholders. See " -- Reasons for the Merger and Recommendation of the ASF
Board".
From time to time after Enstar filed the Bankruptcy Plan, the ASF Board
considered the potential conflict of interest between Enstar and ASF's other
stockholders. See " -- Interests of Certain Persons". In particular, members of
the ASF Board were concerned that Enstar's obligation to dispose of its ASF
Common Stock before June 1, 1995 could lead Enstar to seek (i) to sell its
shares of ASF Common Stock in a transaction not involving a sale of ASF as a
whole (see " -- Reasons for the Merger and Recommendation of the ASF Board") or
(ii) to cause a sale of ASF at a time when such a sale would not be in the best
interests of ASF's other stockholders. The ASF Board also recognized that
potential acquirors might perceive that the pressure for a sale prior to the
June 1, 1995 deadline could result in ASF receiving lower offers for ASF than
might otherwise be available if no such deadline existed.
The ASF Board believed that given the potential conflicts of interest, it
was appropriate to form the Special Advisory Committee of the ASF Board (the
"Independent Committee") to make recommendations to the full ASF Board with
respect to strategic alternatives for enhancing stockholder value, including a
potential sale or other transaction involving a change of control of ASF. The
ASF Board also authorized the Independent Committee to be involved in any
initial discussions and negotiations concerning any such transaction and, if
necessary, to retain separate professional advisors. The Independent Committee
was ultimately composed of three non-employee directors of ASF (with ASF's
president, Mr. Stephen D. Taylor, serving as an ex-officio non-voting member)
who were believed to be independent of all relationships with Enstar, Mr. Nimrod
T. Frazer (the Chairman of the Board of Enstar and a director of ASF) and any
other party which might seek to acquire control of ASF. In August 1993, Erwin
Allen, William H. Dukelow and Dr. Barbara W. Gothard were elected to the
Independent Committee. The Independent Committee then selected legal counsel and
in April 1994 retained Bear Stearns as the committee's financial advisor. Upon
its engagement as financial advisor to the Independent Committee, Bear Stearns
conducted a review of ASF's five-year business plan (1993-1997) (the "Business
Plan"), its underlying assumptions and ASF's managerial and other resources, for
the purpose of establishing an estimated net present value of shares of ASF
Common Stock based upon various multiples of projected earnings and at various
discount rates.
In April 1994, Mr. Frazer delivered a letter to the ASF Board, on behalf of
Enstar, stating his intent to propose at the next ASF Board meeting that the ASF
Board retain an investment banking firm to begin immediately the process for the
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orderly marketing and sale of ASF. At a regular meeting held on April 26, 1994,
the ASF Board reviewed this letter and its potential impact on ASF and its
public stockholders and discussed the various strategic alternatives available
to ASF and the need to have procedures in place designed to protect ASF's public
stockholders. The ASF Board instructed that the Independent Committee make a
recommendation to the full ASF Board concerning the final selection of a
financial advisor for ASF and the ASF Board, which financial advisor would be
instructed to provide advice to ASF concerning and to explore available
strategic alternatives, including a potential sale. In addition, at the meeting,
Mr. Frazer and Mr. T. Wayne Davis, a director of ASF and a director of Enstar,
agreed to refrain from participating in substantive deliberations relating to,
and from voting on, any matters potentially involving a change in control of
ASF. It was agreed that Mr. Taylor, the sole member of ASF management on the ASF
Board, also would refrain from such participation. See " -- Interests of Certain
Persons".
In May 1994, Bear Stearns provided the Independent Committee with an
assessment of the potential market value of ASF by performing a discounted cash
flow analysis which used projections of ASF's future earnings derived from ASF's
Business Plan and applied assumed multiples of earnings which ranged from 9.0
times to 11.0 times and discount rates ranging from 12.5 percent to 17.5
percent. This analysis resulted in estimates of the net present value of a share
of ASF Common Stock which ranged from $19.49 to $28.71, with a median of $23.70
per share, assuming repayment in full to ASF of the Enstar Receivable (as then
valued by Bear Stearns), and which ranged from $17.77 to $26.99, with a median
of $21.98 per share, assuming no portion of the Enstar Receivable was repaid.
During the first quarter of 1995, ASF received, net of
taxes (assuming a 38 percent tax rate), a distribution from the Enstar estate of
a portion of the Enstar Receivable equivalent to approximately $.23 per share of
ASF Common Stock. See "BOARD OF DIRECTORS AND COMMITTEES -- Compensation
Committee Interlocks and Insider Participation; OTHER TRANSACTIONS WITH ENSTAR
AFFILIATES".
In May 1994, upon the recommendation of the Independent Committee, the ASF
Board selected Goldman Sachs as its financial advisor. In June 1994, Dillon Read
was retained by Enstar to serve as its financial advisor after termination of
Dillon Read's agreement with, and without objection from, ASF. In accordance
with the recommendation of the Independent Committee, the ASF Board authorized
Goldman Sachs, in connection with its review of strategic alternatives, to
contact potential acquirors, provide such acquirors with confidential
information and solicit indications of interest with a view towards ascertaining
the values which potentially could be realized if a sale of ASF were to be
pursued. Goldman Sachs was instructed to report directly to the Independent
Committee concerning the work performed pursuant to its engagement.
During June and July 1994, Goldman Sachs contacted more than two dozen
potential acquirors, a majority of which executed customary confidentiality
agreements and were provided with confidential information concerning ASF.
Thereafter, a number of potential acquirors submitted written or oral
preliminary indications of interest on or prior to the July 22, 1994 deadline
established by Goldman Sachs. On July 25, 1994, the Independent Committee
received a presentation from Goldman Sachs outlining the material terms of the
preliminary indications of interest. After considering this presentation and the
advice of Goldman Sachs, the Independent Committee determined to permit three
potential acquirors (including FUNC) to conduct a due diligence review of the
business and affairs of ASF. These three potential acquirors were believed by
the Independent Committee to have submitted the preliminary indications of
interest which would provide the highest potential value to ASF stockholders. In
addition, the Independent Committee instructed Goldman Sachs to further research
the potential value of a preliminary indication of interest submitted by a
fourth potential acquiror and to continue to engage in discussions with all of
the potential acquirors who had not been selected to conduct due diligence, in
each case in order to attempt to solicit more advantageous indications of
interest. Representatives of Enstar reported to the ASF Board that they had
separate conversations from time to time throughout the summer and fall of 1994
with potential acquirors, including those that had been selected to conduct due
diligence.
Throughout August and early September, the three selected potential
acquirors performed due diligence and engaged in discussions with Goldman Sachs
and representatives of ASF. Such potential acquirors were also furnished with a
draft merger agreement and instructed to submit a definitive indication of
interest, together with a detailed mark-up of the draft merger agreement, by
September 23, 1994. On that date, one of the potential acquirors that had
conducted due diligence declined to submit a definitive indication of interest,
a second offered only to purchase certain specified assets of ASF, and the
third, FUNC, submitted a definitive indication of interest for all of ASF and
was the sole potential acquiror to submit a mark-up of the proposed merger
agreement. The fourth potential acquiror which had submitted a preliminary
indication of interest, but had not been invited to conduct due diligence, also
submitted a second indication of interest.
The indication of interest submitted by FUNC on September 23, 1994, as
modified by subsequent negotiations between the parties (the "Original FUNC
Proposal") contemplated an acquisition of all of the shares of ASF at a price
per share of $21.80, subject to downward adjustment to reflect the after-tax
loss expected to be incurred by ASF as a result of the sale of
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its private label mortgage-backed securities portfolio (the "MBS Portfolio").
The sale of the MBS Portfolio, which had a principal value of approximately $500
million at that time, was required by FUNC as a condition to its obligation to
consummate an acquisition of ASF. At the time the Original FUNC Proposal was
received on September 23, 1994, ASF anticipated that the downward adjustment
which would result from the portfolio sale would be approximately $.50 to $.75
per share of ASF Common Stock. The consideration to be paid to ASF stockholders
was to consist of a combination of cash and FUNC Common Stock, with a maximum of
80 percent of the aggregate consideration to consist of FUNC Common Stock. To
the extent that stock would be received by an ASF stockholder, the transaction
was intended to constitute a tax-free exchange for federal income tax purposes.
On September 26, 1994, the Independent Committee received presentations
from ASF management concerning ASF's business, results of operations and future
prospects, including its progress to date under ASF's Business Plan, and a
presentation from Goldman Sachs outlining the terms of the indications of
interest and the potential sales process generally. Goldman Sachs advised the
Independent Committee that, of the indications of interest received, FUNC's
definitive indication of interest was superior from a financial point of view.
Representatives of Enstar also addressed the Independent Committee and confirmed
Enstar's position that a sale transaction be pursued. Following deliberations,
the Independent Committee determined to recommend to the ASF Board that Goldman
Sachs be instructed to negotiate with FUNC with a view towards improving its
offer to a price which was higher in Bear Stearns' range of estimated net
present values, to continue discussions with other potential acquirors and to
continue to explore alternatives to a sale.
On September 27, 1994, the ASF Board met to consider the recommendations of
the Independent Committee. At that meeting, Goldman Sachs repeated its
presentation concerning the various indications of interest. The ASF Board also
discussed alternatives available to ASF if a sale transaction were not pursued.
After analyzing and discussing the Goldman Sachs presentation and the other
matters previously considered by the Independent Committee, the ASF Board
determined to authorize Goldman Sachs to proceed with discussions with potential
acquirors (including FUNC) in accordance with the recommendations of the
Independent Committee.
In the days that followed, no indication of interest which was superior
from a financial or overall point of view to the Original FUNC Proposal was
received. At meetings held on October 4 and 5, 1994, the Independent Committee
met to consider whether to continue to pursue the Original FUNC Proposal. In its
deliberations, the Independent Committee consulted with its legal and financial
advisors and received presentations from Goldman Sachs, Bear Stearns and ASF
management, including presentations from ASF management concerning its estimate
of the values which could be achieved if ASF remained independent and pursued
its Business Plan, as revised in the weeks preceding the October 4 meeting (the
"Revised Business Plan"). Management's estimates of value were based upon the
same multiples of projected earnings and discount rates used by Bear Stearns in
its presentation to the Independent Committee in May 1994, but utilized the
projected 1997 earnings contained in the Revised Business Plan. The analysis
assumed that no recovery of the Enstar Receivable would be realized, and
resulted in an estimated range of net present values for ASF Common Stock of
$17.82 to $24.81 per share, with a median of $21.12. Management also estimated
net present values based upon an adjustment to the Revised Business Plan which
included potential expansion through ASF's hypothetical acquisition of two
in-market financial institutions, and resulted in a range of net present values
per share of ASF Common Stock of $21.31 to $29.68 per share, with a median of
$25.26. The Independent Committee was aware that the values might have been
increased assuming the realization of (i) the Enstar Receivable and (ii)
potential litigation recoveries. At that time, the Enstar Receivable had an
estimated recovery value, net of taxes (assuming a 38 percent tax rate), ranging
from $0.00 (zero) per share, if nothing were collectible, to $1.81 per share, if
fully collectible, and the estimated value, net of taxes, of potential
litigation recoveries was approximately $.30 to $.50 per share. During the first
quarter of 1995, ASF received, net of taxes, a distribution from the Enstar
estate of a portion of the Enstar Receivable equivalent to approximately $.23
per share of ASF Common Stock and a litigation recovery equivalent to
approximately $.17 per share of ASF Common Stock. See "BOARD OF DIRECTORS AND
COMMITTEES -- Compensation Committee Interlocks and Insider Participation; OTHER
TRANSACTIONS WITH ENSTAR AFFILIATES". The Independent Committee recognized the
uncertainty as to whether ASF would achieve the increases in earnings projected
in the Revised Business Plan, particularly in light of rising short-term
interest rates and the deterioration of the operating environment for thrift
institutions in general, and contrasted this uncertainty with the relative
certainty of the value which might be obtained with the Original FUNC Proposal.
Enstar and its legal and financial advisors also addressed the Independent
Committee at these meetings to reiterate Enstar's support for the Original FUNC
Proposal, emphasizing the extensiveness of the process from which it resulted
and the proposal's perceived fairness to ASF stockholders. Following
deliberations, the Independent Committee determined to recommend that a
transaction with FUNC be pursued, subject to the negotiation of an acceptable
definitive merger agreement.
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On October 5, 1994, the ASF Board met, reviewed the terms of the Original
FUNC Proposal, received presentations from its legal and financial advisors and
a synopsis of the revised business plan and considered the Independent
Committee's recommendations. Thereafter, the ASF Board ratified such
recommendations and instructed Goldman Sachs and the Independent Committee to
proceed in accordance therewith.
Over the next several weeks, ASF's legal and financial advisors, in
consultation with the Independent Committee, engaged in continuous negotiations
with FUNC and its representatives concerning the terms of a merger agreement and
a stock option agreement. Concurrently, Enstar and FUNC negotiated the terms of
a stockholder voting agreement. See " -- Voting Agreement; Escrow Agreement".
During the period in which negotiations continued, the Independent
Committee identified a number of potential risks associated with the terms of
the Original FUNC Proposal. Rising interest rates and related market conditions
caused the estimated loss on the sale on the MBS Portfolio to increase to an
amount in excess of $1.00 per share by the end of October 1994, resulting in a
comparable decrease in the value expected to be received by ASF stockholders
under the Original FUNC Proposal. Accordingly, the Independent Committee
determined it would be advisable to consummate the sale of the MBS Portfolio as
soon as possible after entering into a merger agreement with FUNC in order to
avoid any further reduction in the value of the Original FUNC Proposal. An
immediate sale of the MBS Portfolio would have reduced ASF's capital position
and could have undermined its earning power. Moreover, the Independent Committee
was advised that, at that time, holding the MBS Portfolio after the execution of
a merger agreement contemplating a sale of the MBS Portfolio also would have had
an immediate negative effect on ASF's capital. The Independent Committee became
aware of regulatory concerns about this negative effect on capital, particularly
if the Merger failed to be consummated. In addition, under the Original FUNC
Proposal, the closing of the transaction was conditioned upon, among other
things, repayment of substantially all of the Enstar Receivable, which raised
concerns about the relative likelihood that the transaction would be
consummated. The Independent Committee also believed that the likelihood that
the transaction would qualify as a tax-free reorganization for federal tax
purposes (which was also a condition to closing) would be enhanced if the
consideration in the transaction which was to consist of FUNC Common Stock were
increased. Finally, the Independent Committee had reservations regarding certain
employment arrangements which led to concerns that a number of employees might
terminate their employment with ASF pending consummation of the Merger, which
could have had an adverse effect on ASF if the Merger failed to close.
On October 27, 1994, ASF issued a press release stating that it was
considering a possible sale transaction.
Over the five-day period between October 27 and October 31, the Independent
Committee met to consider and analyze the proposed transaction. The Independent
Committee, through ASF's advisors, also continued to attempt without success to
improve the terms of the Original FUNC Proposal.
During its deliberations, the Independent Committee reexamined with its
legal and financial advisors the unresolved issues involved in the Original FUNC
Proposal and the Independent Committee's concerns. It also reconsidered the
Revised Business Plan and renewed its consideration of alternatives to a sale of
ASF. In addition, the Independent Committee received presentations from Enstar
and its legal and financial advisors, urging approval of the Original FUNC
Proposal. Finally, the Independent Committee was informed that Goldman Sachs was
prepared to issue a fairness opinion with respect to the consideration to be
received in the transaction. Members of the Bear Stearns advisory team informed
the Independent Committee of their view that the proposed price was toward the
lower end of, but within, the range of fairness, but that Bear Stearns'
valuation committee, whose approval is required before an opinion may be issued,
had not met to determine its conclusion. However, in light of all of the terms
and conditions of the Original FUNC Proposal, the Bear Stearns advisory team
indicated to the Independent Committee that they were prepared to recommend to
Bear Stearns' valuation committee that Bear Stearns issue its opinion that the
proposed transaction was inadequate. After the Independent Committee determined
that it was unable to recommend acceptance of the proposed transaction, Bear
Stearns issued such an inadequacy opinion. See " -- Opinions of Financial
Advisors; BEAR STEARNS".
On November 1, 1994, ASF issued a press release announcing that it had
determined not to pursue the sale transaction the consideration of which had
been publicly announced the previous week, and that it was continuing to review
its strategic alternatives.
In the weeks that followed the November 1, 1994 press release, the
Independent Committee and the ASF Board continued to examine the strategic
alternatives which were available to ASF. See " -- Reasons for the Merger and
Recommendation of the ASF Board". During this period, ASF and Goldman Sachs also
received indications of interest concerning an acquisition of either ASF or the
shares of ASF Common Stock owned by Enstar. Goldman Sachs also contacted a
number of other potential acquirors in an effort to solicit a proposal to
acquire ASF on acceptable terms and conditions.
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On November 9, 1994, Donald T. Senterfitt was elected to the ASF Board
after being recommended for nomination by Enstar. For a discussion of Mr.
Senterfitt's background, see "ELECTION OF DIRECTORS -- Nominees for Director".
On November 23, 1994, FUNC expressed an interest in acquiring ASF for a
fixed value of $21.00 per share of ASF Common Stock. This expression of interest
was superior from a financial point of view to all of the other indications of
interest which had been received subsequent to the November 1, 1994 press
release. Under FUNC's revised proposal, ASF would not be required to sell the
MBS Portfolio prior to the consummation of the merger, and accordingly, no
adjustments to the purchase price would be made. FUNC thereafter agreed that 100
percent of the consideration to be received by ASF stockholders would consist of
FUNC Common Stock (although the FUNC Common Stock exchanged for the Escrowed
Shares will be repurchased by FUNC). See " -- Voting Agreement; Escrow
Agreement". As compared with the Original FUNC Proposal, the revised proposal
provided greater certainty as to (although still not assuring) the tax-free
nature of the transaction for federal income tax purposes and eliminated the
repayment of the Enstar Receivable as a condition to closing, thereby increasing
the likelihood that the merger would be consummated. ASF's concerns regarding
employees were also resolved to the satisfaction of the Independent Committee.
Because FUNC had also previously completed due diligence and because FUNC and
ASF had substantially negotiated the terms of transaction agreements, it was
believed that definitive agreements concerning a transaction could be negotiated
promptly.
In a series of formal meetings and telephone conferences held during the
ten days prior to and on December 4, 1994, the Independent Committee completed
its review of the proposed transaction. The Independent Committee carefully
reviewed the terms of the Merger Agreement and the Stock Option Agreement, and
received presentations from ASF management, the Independent Committee's and
ASF's legal counsel and each of Goldman Sachs and Bear Stearns. See
" -- Opinions of Financial Advisors". The Independent Committee also received a
presentation from Enstar's legal counsel concerning the Voting Agreement. On
December 4, 1994, the Independent Committee unanimously determined that the
terms of the proposed Merger were in the best interests of ASF and all of its
stockholders, and recommended that the ASF Board approve the Merger Agreement
and the Stock Option Agreement.
On December 4, 1994, the ASF Board met to consider the proposed
transactions. At this meeting, the ASF Board reviewed the recommendations of the
Independent Committee and the reasons for such recommendations, and received
presentations from ASF management, Goldman Sachs, Bear Stearns and ASF's legal
advisors which were substantially similar to those received by the Independent
Committee. Consistent with prior practice and by prior agreement, Messrs. Davis,
Frazer and Taylor did not participate in the final substantive discussions or
the vote on the Merger Agreement. After extensive deliberations, for the reasons
set forth below, the ASF Board concluded that the Merger was in the best
interests of ASF and its stockholders and approved the Merger Agreement and the
Stock Option Agreement, which were then executed.
REASONS FOR THE MERGER AND RECOMMENDATION OF THE ASF BOARD. The ASF Board
believes that the Merger is fair to, and in the best interests of, ASF and all
of its stockholders. Accordingly, the ASF Board (with three directors leaving
the meeting and not present for substantive deliberations or voting) approved
the Merger Agreement and the Stock Option Agreement. Throughout the process
which culminated in the approval of the Merger Agreement, the ASF Board relied
heavily on the deliberations and recommendations of the Independent Committee,
the members of which constituted one-half (after the election of Mr. Senterfitt)
of the members of the ASF Board who would vote on the Merger. In reaching their
determinations, both the Independent Committee and the ASF Board considered the
factors outlined below.
A significant factor in the Independent Committee's and the ASF Board's
determinations to approve the Merger Agreement was the risks to ASF's public
stockholders which arose as a result of Enstar's obligation to dispose of its
shares of ASF Common Stock before June 1, 1995. The Independent Committee and
the ASF Board were particularly concerned with the potential adverse
consequences to ASF's public stockholders which might occur if Enstar disposed
of its shares in a transaction not involving a sale of ASF as a whole. Such
adverse consequences included (i) a possible immediate drop in the market price
of shares of ASF Common Stock which could result from the increase in the supply
of such shares available for sale if Enstar were to distribute its ASF Common
Stock to Enstar creditors, (ii) the possibility that a sale of the entire block
of Enstar's shares to a single party might prevent all other ASF stockholders
from realizing a control premium for their shares, and (iii) the uncertainties
for the future of ASF under policies which might be instituted if a purchaser of
the Enstar block assumed control of ASF.
In addition to their concerns relating to Enstar's obligation to dispose of
its shares of ASF Common Stock, the Independent Committee and the ASF Board
considered the following matters in reaching their respective determinations to
approve and adopt the Merger Agreement:
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(i) ASF's and Goldman Sachs' discussions with other potential acquirors and
Goldman Sachs' extensive efforts to solicit potential acquirors during the
summer and early fall of 1994 and during the period following the rejection of
the Original FUNC Proposal. In this regard, the Independent Committee and the
ASF Board noted that no alternative acquiror approached ASF to discuss a
transaction superior to the Merger notwithstanding (a) the fact that Enstar's
obligations under the Bankruptcy Plan had been publicly disclosed for several
years, (b) the efforts of Goldman Sachs to solicit potential acquirors and (c)
ASF's October 27, 1994 and November 1, 1994 press releases concerning a
potential sale;
(ii) the Independent Committee's and the ASF Board's review, based in part
on the advice of Goldman Sachs, Bear Stearns and ASF's management, of
alternatives to the Merger, the range of possible values to ASF's stockholders
obtainable through implementation of such alternatives and the timing and
likelihood of actually receiving such values. The alternatives considered
included remaining independent and growing internally, remaining independent and
growing through future acquisitions, and the alternative of pursuing either of
such independence strategies combined with a recapitalization transaction
involving the repurchase of a portion of Enstar's shares of ASF Common Stock,
the retirement of other shares of ASF Common Stock held by Enstar in
satisfaction of ASF's bankruptcy claim against Enstar and a public offering of
convertible preferred stock by ASF. In this regard, both the Independent
Committee and the ASF Board recognized the uncertainty as to whether (a) ASF
would achieve the increases in earnings projected in its Revised Business Plan,
(b) potential target institutions would be available for purchase by ASF at
favorable prices and (c) the ASF Common Stock would actually trade at the
multiples indicated in the Bear Stearns presentation even if the earnings
projections contained in the Revised Business Plan were achieved. The
Independent Committee and the ASF Board contrasted these uncertainties with the
relative certainty of the value which could be realized in the Merger. Moreover,
with respect to the recapitalization alternative, the Independent Committee and
the ASF Board noted potential regulatory constraints on and potential
stockholder objections to purchases of Enstar's ASF Common Stock at above-market
prices and Enstar's reluctance to approve this alternative (which approval would
be required) in light of the availability of a sale to FUNC at a price which
Enstar viewed as in the best interests of ASF's stockholders. See " -- Opinions
of Financial Advisors; BEAR STEARNS";
(iii) the Independent Committee's and the ASF Board's familiarity with and
review of ASF's business, operations, financial condition, earnings and
prospects;
(iv) the current and prospective economic and competitive environment
facing financial institutions, including ASF and FUNC;
(v) the financial presentations of Goldman Sachs and Bear Stearns and the
respective opinions of Goldman Sachs and Bear Stearns as to the fairness of the
consideration to be received by stockholders of ASF pursuant to the Merger
Agreement. See " -- Opinions of Financial Advisors", ANNEX C and ANNEX D;
(vi) the Independent Committee's and the ASF Board's review, based in part
on presentations by Goldman Sachs and Bear Stearns, of the business, operations,
earnings and financial condition of FUNC on both a historical and a prospective
basis;
(vii) the Independent Committee's and the ASF Board's belief that the terms
of the Merger Agreement are attractive in that the agreement allows ASF
stockholders to become stockholders in FUNC, which, as of September 30, 1994, in
terms of asset size, was the ninth largest bank holding company in the United
States;
(viii) the fact that the market for FUNC Common Stock is far more liquid
than that for ASF Common Stock and that historically FUNC has paid dividends,
unlike ASF, which has not paid dividends since 1989, when it paid a dividend to
Enstar (which then owned 100 percent of the ASF Common Stock). See
"SUMMARY -- Cash Dividends Paid Per Share";
(ix) the expectation that the Merger will generally be a tax-free
reorganization for federal income tax purposes. See "THE MERGER -- Certain
Federal Income Tax Consequences"; and
(x) the terms and conditions of the Merger Agreement, and the improvements
to such terms and conditions relative to those contained in the Original FUNC
Proposal. See " -- Background and Reasons; ASF".
In view of the wide variety of factors considered in connection with their
evaluation of the Merger, neither the Independent Committee nor the ASF Board
found it practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in reaching its
determination.
THE ASF BOARD RECOMMENDS THAT ASF STOCKHOLDERS VOTE "FOR" APPROVAL OF THE
MERGER AND THE MERGER AGREEMENT.
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FUNC
FUNC believes that it is advantageous to build a multi-state banking
organization. The economies of scale in banking favor such an organization as a
way of gaining efficiency and spreading costs over a large base, as well as
providing diversification. To further its objective to build a multi-state
banking organization, FUNC has heretofore concentrated its efforts on what it
perceives to be some of the better banking markets in the southeast and south
atlantic regions of the United States, and on advantageous ways of entering or
expanding its presence in those markets. FUNC believes that Florida is among the
better banking markets in such regions and that joining with ASF is an
attractive way to expand FUNC's presence in the southeastern Florida market.
FUNC is continually evaluating acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of FUNC's book value and net income
per common share may occur in connection with any future transactions. See
"FUNC -- History and Business".
OPINIONS OF FINANCIAL ADVISORS
GOLDMAN SACHS
Pursuant to an engagement letter dated May 31, 1994 (the "Engagement
Letter"), ASF retained Goldman Sachs to act as its financial advisor regarding
alternative actions and determinations to be made by the ASF Board, including
possible transactions involving ASF Common Stock or other securities, a
reorganization, recapitalization, merger, consolidation or other corporate
transaction, and specifically including a possible sale of ASF. Goldman Sachs is
an internationally recognized investment banking firm and is continually engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estates, corporate and other purposes. Goldman Sachs is familiar
with ASF, having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to the Merger Agreement.
Goldman Sachs has also provided, and may provide in the future, certain
investment banking services to FUNC, for which Goldman Sachs receives customary
compensation. Investment banking services provided to FUNC since January 1, 1993
include services in connection with several debt offerings, derivative swaps, a
stock repurchase program and an acquisition advisory project unrelated to the
savings and loan industry, for which Goldman Sachs received aggregate
compensation from FUNC in the amount of approximately $3.0 million. Goldman
Sachs has also managed offerings of debt and common stock for FUNC prior to
1993. In the course of trading activities, Goldman Sachs had accumulated a net
long position of 3,166 shares of FUNC Common Stock and a net long position of
$3.0 million in various nonconvertible debentures of FUNC as of December 4,
1994, and a net long position of 140,617 shares of FUNC Common Stock and a net
short position of $2.0 million in various nonconvertible debentures of FUNC as
of May 4, 1995. The ASF Board selected Goldman Sachs to act as ASF's financial
advisor based on Goldman Sachs' substantial experience in mergers and
acquisitions and in securities valuations generally and their reputation in the
banking and investment banking communities.
By letter dated December 4, 1994, Goldman Sachs delivered their written
opinion to the ASF Board that, as of such date, the consideration to be received
by the holders of ASF Common Stock pursuant to the Merger Agreement is fair to
such holders. Goldman Sachs subsequently confirmed their December 4, 1994
written opinion by delivery of their written opinion dated the date hereof,
provided in connection with the mailing of this Proxy Statement/Prospectus.
THE FULL TEXT OF THE GOLDMAN SACHS WRITTEN OPINION DATED THE DATE HEREOF,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS ON THEIR
REVIEW, IS ATTACHED HERETO AS ANNEX C. HOLDERS OF SHARES OF ASF COMMON STOCK ARE
URGED TO AND SHOULD READ SUCH OPINION IN ITS ENTIRETY. NEITHER OF THE GOLDMAN
SACHS WRITTEN OPINIONS DISCUSSED HEREIN IS A CONDITION TO CONSUMMATION OF THE
MERGER.
Goldman Sachs' opinions are addressed only to the ASF Board and do not
constitute a recommendation to any ASF stockholder as to how such stockholder
should vote with respect to the Merger.
In connection with their opinions dated December 4, 1994 and the date
hereof, Goldman Sachs reviewed, among other things: a draft of the Registration
Statement (with respect to the opinion dated as of the date hereof); the Merger
Agreement; the Voting Agreement; Annual Reports to Stockholders and Annual
Reports on Form 10-K since December 31, 1990 for ASF and since December 31, 1989
for FUNC; certain interim reports to stockholders and Quarterly Reports on Form
10-Q; certain other communications from ASF and FUNC to their stockholders; and
certain internal financial analyses and forecasts for ASF prepared by its
management. Goldman Sachs also held discussions with members of the senior
management of ASF and
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FUNC regarding the past and current business operations, financial condition and
future prospects of their respective companies. Goldman Sachs reviewed the
reported price and trading activity for ASF Common Stock and FUNC Common Stock,
compared certain financial and stock market information for ASF and FUNC with
similar information for certain other companies, the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the commercial banking and savings and loan industries and
performed such other studies and analyses as Goldman Sachs considered
appropriate.
Goldman Sachs relied, without assuming responsibility for the independent
verification of such information, upon the accuracy and completeness of all of
the financial and other information reviewed by them for purposes of their
opinions. Goldman Sachs are not experts in the evaluation of loan and lease
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto and have assumed, with the consent of ASF, that such
allowances for each of ASF and FUNC are in the aggregate adequate to cover all
such losses. Goldman Sachs did not review individual credit files nor did they
make an independent evaluation or appraisal of the assets and liabilities of ASF
or FUNC or any of their respective subsidiaries and Goldman Sachs have not been
furnished with any such evaluation or appraisal. Goldman Sachs also assumed that
FUNC will receive all necessary regulatory approvals without undue delay. The
ASF Board did not impose any limitations upon Goldman Sachs with respect to
investigations made or procedures followed by Goldman Sachs in rendering its
opinions. The consideration to be paid by FUNC pursuant to the Merger was
determined pursuant to negotiations between the respective representatives and
managements of ASF, including Goldman Sachs, and FUNC.
Pursuant to the terms of the Engagement Letter, ASF has agreed to pay
Goldman Sachs, if the Merger is consummated, a transaction fee equal to 0.625
percent of the aggregate consideration paid in such transaction. Based on the
terms of the Merger Agreement, the transaction fee payable to Goldman Sachs will
be approximately $1.6 million. No additional fee is required for Goldman Sachs'
opinions as to the fairness of the financial consideration to be received by
holders of shares of ASF Common Stock. In addition, ASF has agreed to reimburse
Goldman Sachs for their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of their counsel, retained with ASF's prior
written consent, plus any sales, use or similar taxes (including any interest,
penalties or other supplemental charges related thereto) arising in connection
with any matter referred to in the Engagement Letter, and to indemnify Goldman
Sachs against certain liabilities relating to or arising out of their
engagement, including liabilities under federal securities laws.
SUMMARY OF FINANCIAL ANALYSES. Prior to rendering its written opinion of
the same date, Goldman Sachs rendered an oral opinion to the ASF Board on
December 4, 1994, to the effect that, as of such date, the consideration to be
received by the holders of ASF Common Stock pursuant to the Merger Agreement was
fair to such holders. Set forth below is a summary of the financial analyses
that Goldman Sachs presented to the ASF Board on December 4, 1994 in connection
with its oral and written opinion. Goldman Sachs utilized substantially the same
types of analyses, appropriately updated, in preparing its written opinion dated
the date hereof as Goldman Sachs utilized in connection with its December 4,
1994 opinion. For purposes of certain analyses, Goldman Sachs adjusted ASF's
historical net income to reflect normalized after-tax core earnings before
extraordinary items.
SUMMARY OF FUNC PROPOSAL. Goldman Sachs noted that upon consummation of the
Merger, each outstanding share of ASF Common Stock would be converted into the
right to receive shares of FUNC Common Stock having a value of $21.00, the total
consideration being approximately $253 million (assuming 12.15 million
fully-diluted shares, including 651,584 options (as of December 4, 1994) with a
weighted average exercise price of $3.50). Goldman Sachs also noted that the
transaction would be for all stock consideration and is intended to be a
tax-free reorganization for federal income tax purposes, but would be treated as
a purchase accounting transaction rather than a pooling of interests transaction
since FUNC planned to repurchase in the open market a number of shares of FUNC
Common Stock equal to between 50 percent and 100 percent of the number of shares
of FUNC Common Stock to be issued in the transaction. Goldman Sachs explained
that the proposed consideration is based on a fixed price, rather than a fixed
exchange ratio, and that the precise number of FUNC shares to be issued in the
Merger would be determined based upon the average trading price of the FUNC
shares during a measurement period prior to the effective time of the Merger as
more fully set forth in the Merger Agreement.
PER SHARE EXCHANGE ANALYSIS. Goldman Sachs reviewed certain historical
financial information for ASF and FUNC and calculated the imputed value of the
FUNC transaction to holders of ASF Common Stock. Goldman Sachs compared the
fully diluted earnings per share of the ASF Common Stock in the years 1993, 1994
and 1995 on an adjusted actual, expected and projected basis, respectively, to
the fully diluted earnings represented by 0.525 shares of FUNC Common Stock
(representing the number of shares of FUNC Common Stock that ASF stockholders
would receive based upon a $40.00 per share price for the FUNC Shares). This
analysis showed that ASF stockholders would get a significant increase in their
earnings per share as a result of the Merger. Goldman Sachs also compared the
book value and the tangible book value of the ASF Common Stock
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of $17.56 and $12.28, respectively, to the book value and tangible book value
represented by 0.525 shares of FUNC Common stock of $16.45 and $12.74,
respectively. The FUNC earnings and book value numbers utilized in this
comparison were not adjusted for the pro forma impact of the Merger. In
addition, Goldman Sachs stated that while no dividends were currently being paid
on ASF Common Stock, dividends of $0.97 are currently paid on 0.525 shares of
FUNC Common Stock, reflecting a 4.6 percent dividend yield.
COMPARISON OF SELECTED COMPARABLES. Goldman Sachs compared the financial
performance of ASF and FUNC to that of a group of selected thrifts based on
various financial measures of earnings performance, capital adequacy and asset
quality, utilizing financial data as of September 30, 1994. This analysis showed
that a group of selected Florida thrifts comprised of BankAtlantic, Coral Gables
and CSF Holdings ("Group One") had a median price to estimated 1994 earnings
ratio of 6.0 and a range from 5.5 to 9.0 and that a second group of thrifts not
located principally in Florida comprised of H.F. Ahmanson, Charter One
Financial, FirstFed Michigan, Golden West, Great Western and Standard Federal
Bank ("Group Two") had a median price to estimated 1994 earnings ratio of 7.7
and a range from 5.0 to 11.0, as compared to corresponding ratios of 10.0 for
ASF and 7.6 for FUNC. Group One had a median price to estimated 1995 earnings
ratio of 7.0 and a range from 5.8 to 9.8 and Group Two had a price to earnings
ratio of 6.5 and a range from 4.2 to 8.0, as compared to corresponding ratios of
9.4 for ASF and 7.0 for FUNC. Group One had a median return on assets in the
latest twelve months ("LTM") of 1.17 percent and a range from 1.07 percent to
1.25 percent and Group Two had a median LTM return on assets of .68 percent and
a range from .38 percent to 1.19 percent, as compared to corresponding returns
of .44 percent for ASF on an adjusted basis and 1.24 percent for FUNC. Group One
had a median LTM return on equity of 20.10 percent and a range from 8.47 percent
to 20.42 percent and Group Two had a median LTM return on equity of 11.41
percent and a range from 6.75 percent to 18.10 percent, as compared to
corresponding returns of 7.13 percent for ASF on an adjusted basis and 17.44
percent for FUNC. Group One had a median price to tangible book value ratio of
.87 and a range from .86 to 1.03 and Group Two had a median price to tangible
book value ratio of 1.16 and a range from 0.59 to 1.25, as compared to
corresponding ratios of 1.34 for ASF and 1.72 for FUNC. Group One had a median
tangible common equity to tangible assets ratio of 6.3 percent and a range from
5.5 percent to 14.2 percent and Group Two had a median tangible common equity to
tangible assets ratio of 5.4 percent and a range from 3.6 percent to 6.4
percent, as compared to corresponding ratios of 4.4 percent for ASF and 5.9
percent for FUNC. Group One had a median nonperforming assets to loans and other
real estate owned ("OREO") ratio of 2.2 percent and a range from 1.1 percent to
4.2 percent and Group Two had a median nonperforming assets to loans and OREO
ratio of 1.4 percent and a range from 0.5 percent to 3.7 percent, as compared to
corresponding ratios of 1.4 percent for ASF and 1.3 percent for FUNC. Group One
had a median loan loss reserve to nonperforming loans ratio of 94.6 percent and
a range from 21.5 percent to 206.6 percent and Group Two had a median loan loss
reserve to nonperforming loans ratio of 72.8 percent and a range from 29.7
percent to 132.6 percent, as compared to corresponding ratios of 41.5 percent
for ASF and 203.0 percent for FUNC. This analysis also showed that FUNC had a
higher dividend yield (at 4.6 percent) than all but two of the companies in
either of Group One or Group Two, with a number of the companies, including ASF,
paying no current dividend.
Goldman Sachs compared the financial performance of FUNC to that of a group
of 23 selected super-regional bank holding companies, based on various market
performance measures. This analysis showed that (i) FUNC had a price to es-
timated 1994 earnings ratio of 7.6 compared to a median ratio of 8.4 for the
group of super-regional bank holding companies; (ii) FUNC had a price to
estimated 1995 earnings ratio of 7.0 compared to a median ratio of 7.6 for the
group of super-regional bank holding companies; (iii) FUNC had a price to book
value ratio of 1.28 compared to a median ratio of 1.39 for the group of
super-regional bank holding companies; and (iv) FUNC had a price to tangible
book value of 1.72 compared to a median ratio of 1.55 for the group of
super-regional bank holding companies.
SUMMARY OF COMPARABLE THRIFT ACQUISITION STATISTICS. Goldman Sachs analyzed
and compared acquisition ratios for (i) the proposed FUNC acquisition of ASF,
(ii) a group of 9 FUNC acquisitions since 1992, (iii) a group of 13 selected
acquisitions in the southeastern United States since January 1, 1993 with a
transaction value in excess of $50 million, and (iv) a group of 69 selected
nationwide acquisitions since January 1, 1993 with a transaction value in excess
of $50 million. This analysis indicated that the price to book value ratio of
FUNC's acquisition of ASF is 1.19, compared to the median ratio for FUNC
acquisitions since 1992 of 1.36 and a range from 0.69 to 1.87; the median ratio
for the selected southeastern acquisitions of 1.56 and a range from 0.71 to
2.05; and the median ratio for the selected nationwide acquisitions of 1.60 and
a range from 0.65 to 2.62. The price to tangible book value ratio of FUNC's
acquisition of ASF is 1.69 or 1.47 after adjustment to reflect recovery of the
Bankruptcy Claim, compared to the median ratio for FUNC acquisitions since 1992
of 1.39 and a range from 1.01 to 1.87; the median ratio for the selected
southeastern acquisitions of 1.69 and a range from 1.11 to 2.21, and the median
ratio for the selected nationwide acquisitions of 1.69 and a range from 1.11 to
2.63. The price to LTM net income ratio of FUNC's acquisition of ASF is 17.7 on
an adjusted basis, compared to the median ratio for FUNC acquisitions since 1992
of 15.0 and a range from 3.9 to 33.3; the median ratio for the selected
southeastern acquisitions of 17.6 and a range
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from 8.9 to 21.3; and the median ratio for the selected nationwide acquisitions
of 14.8 and a range from 6.6 to 32.8. The deposit premium percentage of FUNC's
acquisition of ASF is 4.56 percent or 3.55 percent, after adjustment to reflect
recovery of the Bankruptcy Claim, compared to the percentage for FUNC
acquisitions since 1992 of 4.19 percent and a range from 0.05 percent to 8.24
percent; the median percentage for the selected southeastern acquisitions of
6.42 percent and a range from 0.24 percent to 14.15 percent; and the median
percentage for the selected nationwide acquisitions of 8.19 percent and a range
from 0.24 percent to 24.3 percent.
No company or transaction used in the above analyses as a comparison is
identical to ASF, FUNC or the Merger. Accordingly, an analysis of the results of
the foregoing is not mathematical, rather, it involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the companies and other factors that could affect the public trading value of
the companies to which they are being compared.
OVERVIEW OF FUNC. Goldman Sachs presented selected information concerning
FUNC and its historical operating and market performance. Goldman Sachs reviewed
and analyzed the historical trading prices of FUNC Common Stock from December
1984 through December 1994, selected investment research reports for FUNC and
analyzed available information regarding the ownership and ownership profiles of
shares of FUNC Common Stock.
GENERAL. The foregoing is a summary description of the material analyses
prepared by Goldman Sachs in connection with its December 4, 1994 oral and
written opinion, but does not purport to be a complete description of the
analyses performed by Goldman Sachs. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Goldman Sachs believes that its analyses and the summary
set forth above must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, or selecting part or all of the
above summary, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses set forth in the Goldman
Sachs presentations and opinions. The ranges of valuations resulting from any
par-ticular analysis described above should not be taken to be Goldman Sachs'
view of the actual value of ASF or FUNC. The fact that any specific analysis has
been referred to in the summary above is not meant to indicate that such
analysis was given more weight than any other analyses.
In performing its analyses, Goldman Sachs made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of ASF or FUNC. The analyses
performed by Goldman Sachs are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Goldman Sachs' analysis of the fairness of the consideration to be received by
holders of ASF Common Stock pursuant to the Merger Agreement and were provided
to the ASF Board in connection with the delivery of Goldman Sachs' opinion. The
analyses do not purport to be appraisals or to reflect the prices at which a
company might actually be sold or the prices at which any securities may trade
at the present time or at any time in the future. In addition, as described
above, Goldman Sachs' opinion and presentation to the ASF Board is just one of
many factors taken into consideration by the ASF Board in making its
determination to approve the Merger Agreement.
BEAR STEARNS
The Independent Committee and ASF retained Bear, Stearns in April 1994 to
act as financial advisor to the Independent Committee in connection with its
examination of available strategic alternatives, including the possible sale of
ASF. Bear Stearns was selected to act as the Independent Committee's financial
advisor because of Bear Stearns' reputation as a nationally recognized
investment banking firm with substantial experience in mergers and acquisitions
and corporate restructurings. No limitations were imposed by the Independent
Committee or ASF upon Bear Stearns with respect to the investigations made or
procedures followed by it in rendering its opinions. On December 4, 1994,
members of the Bear Stearns advisory team informed the ASF Board and the
Independent Committee of their view that the Merger was fair, from a financial
point of view, to the stockholders of ASF, but that Bear Stearns' valuation
committee, whose approval is required before an opinion may be issued, had not
met to determine its conclusion. The Bear Stearns advisory team indicated to the
ASF Board and the Independent Committee that they were prepared to recommend to
the Bear Stearns valuation committee that Bear Stearns issue its opinion that
the Merger was fair, from a financial point of view, to the stockholders of ASF.
Subsequently, Bear Stearns delivered its written opinion dated December 9, 1994,
that the Merger is fair, from a financial point of view to the stockholders of
ASF, and confirmed its opinion in writing on the date hereof (such opinion, as
updated on the date hereof, being referred to herein as the "Fairness Opinion").
Bear Stearns had previously delivered its written opinion dated November 8, 1994
regarding the Original FUNC Proposal (the "Inadequacy Opinion"), which is
discussed below.
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THE FULL TEXT OF THE WRITTEN FAIRNESS OPINION OF BEAR STEARNS, DATED THE
DATE HEREOF, WHICH SETS FORTH CERTAIN ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEWS UNDERTAKEN, IS ATTACHED HERETO AS ANNEX D AND SHOULD
BE READ IN ITS ENTIRETY IN CONNECTION WITH THIS PROXY STATEMENT/PROSPECTUS. THE
SUMMARY OF THE FAIRNESS OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE OPINION. THE FAIRNESS OPINION DISCUSSED HEREIN IS NOT A
CONDITION TO CONSUMMATION OF THE MERGER.
The Fairness Opinion is directed only to the fairness of the Merger to
ASF's stockholders from a financial point of view and does not constitute a
recommendation to any ASF stockholder as to how such stockholder should vote at
the Meeting.
BEAR STEARNS' FAIRNESS OPINION REGARDING THE MERGER. The consideration to
be paid by FUNC in the Merger was determined pursuant to negotiations between
the respective representatives and managements of ASF and FUNC. During these
negotiations, Bear Stearns advised the Independent Committee with respect to
potential forms of consideration that were discussed, the effects of such forms
of consideration on ASF and related matters. For purposes of rendering its
Fairness Opinion and reviewing the proposed Merger, Bear Stearns:
i. reviewed the Proxy Statement/Prospectus in substantially the form
to be sent to stockholders, including a copy of the Merger Agreement;
ii. reviewed ASF's annual reports to stockholders and its annual
reports on Form 10-K for the fiscal years ended December 31, 1990 through
1994 and its announced results for the quarter ended March 31, 1995;
iii. reviewed FUNC's annual reports to stockholders and annual reports
on Form 10-K for the fiscal years ended December 31, 1991 through 1994 and
its announced results for the quarter ended March 31, 1995;
iv. met with certain members of ASF's senior management and its legal
and financial advisors to review and discuss ASF's financial and operating
position, competition, management, employees, status with the OTS and the
FDIC, lending procedures, loan portfolio, deposits and branch network;
v. met with certain members of ASF's senior management and its
financial advisors to review and discuss certain operating and financial
information including management's Revised Business Plan, provided to Bear
Stearns by the management of ASF, relating to its business and prospects;
vi. met with the Chairman of Enstar, then the holder of approximately
48 percent of the outstanding shares of ASF Common Stock, and Enstar's
financial and legal advisors to discuss the status of legal proceedings and
other matters related to the bankruptcy administration of Enstar;
vii. reviewed the Revised Business Plan and the likelihood of ASF
achieving the projected results contained therein, and the possible trading
and acquisition valuations for the shares of ASF Common Stock which could
result;
viii. reviewed the process used by ASF and Goldman Sachs to solicit
acquisition proposals for ASF, and the proposals which were received;
ix. met with certain members of FUNC's senior management to review and
discuss FUNC's financial and operating position and business prospects;
x. reviewed the historical stock prices and trading volumes of FUNC
Common Stock and ASF Common Stock;
xi. reviewed publicly available financial data and stock market
performance data of publicly traded financial institutions which Bear
Stearns deemed generally comparable to ASF;
xii. reviewed the terms of recent acquisitions of publicly traded
institutions which Bear Stearns deemed generally comparable to the Merger;
xiii. reviewed the terms and structure of the Merger, including the
anticipated tax treatment of FUNC Common Stock to be received by ASF
stockholders; and
xiv. conducted such other studies, analyses, inquiries and
investigations as were deemed appropriate.
Bear Stearns performed substantially the same types of reviews in rendering
its written opinion dated December 9, 1994.
In conducting its review and arriving at and updating its Fairness Opinion,
Bear Stearns relied upon and assumed the accuracy and completeness of all of the
financial and other information regarding ASF and FUNC provided to it or
publicly available, and Bear Stearns did not independently verify such
information. Bear Stearns assumed that the projected financial results contained
in the Revised Business Plan had been reasonably prepared on bases reflecting
the best currently available
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estimates and judgments of ASF's management as to ASF's expected future
performance. Bear Stearns did not assume any responsibility for the information
or projections provided to Bear Stearns and relied upon the assurances of ASF's
management that it was unaware of any facts that would make the information or
projections provided to Bear Stearns incomplete or misleading. In arriving at
and updating its Fairness Opinion, Bear Stearns did not perform or obtain any
independent appraisal of the assets of ASF or FUNC.
The following is a summary of the analyses performed by Bear Stearns in
connection with its opinion rendered on December 9, 1994 (which are
substantially the same types of analyses performed by Bear Stearns in connection
with its updated Fairness Opinion):
ANALYSIS OF ASF'S STOCK PRICE PERFORMANCE. Bear Stearns reviewed the
trading prices for ASF Common Stock over the period from January 1, 1991 to
November 30, 1994, and in particular, noted the changes in trading prices which
resulted after ASF's October 27, 1994 public announcement that it was
considering a possible sale transaction and its November 1, 1994 public
announcement that it had determined not to pursue such transaction.
ANALYSIS OF COMPANIES COMPARABLE TO ASF. Bear Stearns performed an analysis
of ASF's financial performance and stock market trading data by comparing the
stock price to book value, stock price to tangible book value, stock price to
LTM earnings per share ("LTM EPS") and stock price to estimated 1995 earnings
per share ("EPS") of ASF to the following two subsets of publicly traded savings
institutions: (i) four institutions located in southern Florida with total
assets of $1.0 billion to $5.0 billion (the "Florida Institutions"), and (ii)
the fifty largest institutions nationwide based on total assets (the "National
Institutions"). The Florida Institutions included: CSF Holdings; Coral Gables
Fedcorp, Inc.; BankAtlantic Bancorp, Inc.; and Home Financial Corp. The National
Institutions included, in addition to ASF: H.F. Ahmanson & Company; Great
Western Financial Corporation; Golden West Financial Corporation; Washington
Mutual Savings Bank; Glendale Federal Bank, FSB; California Federal Bank, FSB;
Standard Federal Bank; Anchor Bancorp, Inc.; Dime Bancorp, Incorporated;
Roosevelt Financial Group, Inc.; FirstFed Michigan Corporation; Coast Savings
Financial; Metropolitan Financial Corporation; GP Financial Corporation;
People's Bank, MHC; Charter One Financial, Inc.; Sovereign Bancorp; Commercial
Federal Corporation; First Financial Corporation; TCF Financial Corp.;
Collective Bancorp, Inc.; Astoria Financial Corporation; CSF Holdings; Long
Island Bancorp; Brooklyn Bancorp, Inc.; St. Paul Bancorp, Inc.; FirstFed
Financial Corp.; Downey Savings and Loan Association; Washington Federal Savings
& Loan Association; SFFed Corp.; Rochester Community Savings Bank; Northeast
Federal Corp.; Bay View Capital Corporation; Centerbank; Columbia First Bank,
FSB; ALBANK Financial Corporation; Great Lakes Bancorp, FSB; Security Capital
Corporation; Webster Financial Corporation; Peoples Heritage Financial Group;
The Greater New York Savings Bank; NBB Bancorp, Inc.; Coral Gables Fedcorp,
Inc.; Westcorp Inc.; TR Financial Corp.; Loyola Capital Corporation; America
First Financial Fund 1987-A LP; Coastal Bancorp, Inc.; and Leader Financial
Corp.
Bear Stearns compared the multiples of stock price to book value, tangible
book value, LTM EPS and estimated 1995 EPS of ASF to the respective harmonic
means of these multiples for the Florida Institutions and the National
Institutions. Bear Stearns calculated (i) a stock price to book value multiple
for ASF of 0.87 times, and a multiple of 0.78 times when ASF's book value was
adjusted to reflect an estimate of the anticipated after tax gains which ASF
would realize on certain litigation claims, including full recovery of the
Enstar Receivable (the "Estimated Litigation Claims"), as compared to harmonic
means of 1.04 times and 0.90 times for the Florida Institutions and the National
Institutions, respectively, (ii) a stock price to tangible book value multiple
for ASF of 1.25 times, and a multiple of 1.07 times when ASF's book value was
adjusted to reflect the Estimated Litigation Claims, as compared to harmonic
means of 1.04 times and 0.96 times for the Florida Institutions and the National
Institutions, respectively, (iii) a stock price to LTM EPS multiple for ASF of
7.0 times when adjusted to reflect certain tax benefits available to ASF, and
16.1 times when adjusted to reflect ASF's having an assumed tax rate of 38
percent, as compared to harmonic means of 7.8 times and 9.2 times for the
Florida Institutions and the National Institutions, respectively, and (iv) a
price to estimated 1995 EPS for ASF of 9.1 times (based on projections from the
Revised Business Plan), as compared to harmonic means of 7.2 times and 7.8 times
for the Florida Institutions and the National Institutions, respectively.
ANALYSIS OF TRANSACTIONS COMPARABLE TO THE MERGER. Bear Stearns performed
an analysis of the consideration offered to ASF stockholders in the Merger by
comparing the multiples represented by such consideration to the book value,
tangible book value, LTM EPS and premium over tangible book value to core
deposits for ASF to the respective multiples of the consideration received by
stockholders in the following two subsets of savings institutions acquisitions:
(i) eleven transactions valued at over $10 million announced since January 1,
1993 where the seller was located in Florida (the "Florida Transactions"), and
(ii) thirty-five transactions valued at over $100 million announced since
January 1, 1993 (the "Nationwide Transactions"). The Florida Transactions
included (acquiror/acquiree): First National Bancorp/FF Bancorp Inc; PNC Bank
Corp/Indian River FSB; First of America/Presidential Holding; First of
America/F&C Bancshares Inc;
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FUNC/BancFlorida Financial Corporation; SunTrust Banks, Inc/Regional Investment
Corporation; AmSouth Bancorporation/Fortune Bancorp; AmSouth
Bancorporation/FloridaBank, A Federal Savings Bank; AmSouth
Bancorporation/Mid-State Federal Savings Bank; Regions Financial
Corporation/First Federal Enterprises; and Compass Bancshares/First Federal
Savings Bank of Northwest Florida. The Nationwide Transactions included
(acquiror/acquiree): FUNC/Ameribanc Investors Group; TCF Financial Corp/Great
Lakes Bancorp; Firstar Corporation/Investors Bank Corp; First Bancorporation of
Ohio/CIVISTA Corporation; Investor Group/Fidelity Federal Bank, FSB; Astoria
Financial Corporation/Fidelity New York, FSB; First Interstate
Bancorp/University Savings Bank; Dime Bancorp/Anchor Bancorp, Inc; First Bank
System, Inc/Metropolitan Financial Corporation; New York Bancorp, Inc/Hamilton
Bancorp, Inc; North Fork Bancorporation/Metro Bancshares, Inc; Citizens
Financial Group, Inc/Quincy Savings Bank; Shawmut National Corporation/Northeast
Federal Corporation; First Interstate, Bancorp/Sacramento Savings Bank; Fleet
Financial Group, Inc./NBB Bancorp, Inc.; MacAndrews & Forbes Holdings Inc/First
Nationwide Bank, A FSB; NBD Bancorp, Inc/AmeriFed Financial Corporation;
CoreStates Financial Corp/Germantown Savings Bank; Bank of Boston
Corporation/Pioneer Financial Cooperative Bank; FUNC/BancFlorida Financial
Corporation; Fifth Third Bancorp/Cumberland Federal Bancorporation; Roosevelt
Financial Group/Farm & Home Financial Corporation; Shawmut National
Corporation/Gateway Financial Corporation; Citizens Financial Group,
Inc./Neworld Bancorp; Fleet Financial Group, Inc./Sterling Bancshares
Corporation; Bank of Boston Corporation/BankWorcester Corporation; Shawmut
National Corporation/Peoples Bancorp of Worcester; Mercantile Bancorporation,
Inc/United Postal Bancorp; Southern National Corporation/The First Savings Bank,
FSB; Standard Federal Bank/Heritage Bankcorp; ABN-AMRO Holding NV/Cragin
Financial Corporation; Regions Financial Corporation/Secor Bank, Federal Savings
Bank; PNC Bank Corp/United Federal Bancorp; First Fidelity
Bancorporation/Peoples Westchester Savings Bank; and Temple-Inland Inc/American
Federal Bank FSB.
Bear Stearns compared the multiples of the $21.00 value per share of ASF
Common Stock of the consideration expected to be received in the Merger to ASF's
book value, tangible book value and LTM EPS to the respective harmonic means of
these multiples for the Florida Transactions and the Nationwide Transactions.
Bear Stearns calculated (i) an acquisition price to book value multiple for the
Merger of 1.14 times, and a multiple of 1.02 times when ASF's book value was
adjusted to reflect the Estimated Litigation Claims, as compared to harmonic
means of 1.67 times and 1.57 times for the Florida Transactions and the
Nationwide Transactions, respectively, (ii) an acquisition price to tangible
book value multiple for the Merger of 1.63 times, and a multiple of 1.40 times
when ASF's book value was adjusted to reflect the Estimated Litigation Claims,
as compared to harmonic means of 1.72 times and 1.70 times for the Florida
Transactions and the Nationwide Transactions, respectively, (iii) an acquisition
price to LTM EPS multiple for the Merger of 9.2 times when adjusted to reflect
certain tax benefits available to ASF, and 21.0 times when adjusted to reflect
ASF's having an assumed tax rate of 38 percent, as compared to harmonic means of
15.4 times and 14.4 times for the Florida Transactions and the Nationwide
Transactions, respectively. Bear Stearns also compared the premium represented
by the $21.00 value per share of ASF Common Stock of the consideration expected
to be received in the Merger over ASF's tangible book value to core deposits of
4.50 percent (3.31 percent when ASF's book value was adjusted to reflect the
Estimated Litigation Claims) to the median values for the Florida Transactions
(7.62 percent) and the Nationwide Transactions (7.70 percent) and the mean
values for the Florida Transactions (8.07 percent) and the Nationwide
Transactions (7.67 percent). Bear Stearns also reviewed the ratios of tangible
equity to assets, LTM return on average assets, LTM return on average equity and
nonperforming assets to assets for ASF compared to the acquired companies in
each of the Florida Transactions and the Nationwide Transactions and calculated
median ratios for the respective groups of such acquired companies. Bear Stearns
calculated (i) a tangible equity to assets ratio for ASF of 4.33 percent, and a
ratio of 5.01 percent when ASF's book value was adjusted to reflect the
Estimated Litigation Claims, as compared to median ratios of 7.35 percent and
6.66 percent for the acquired companies in the Florida Transactions and the
Nationwide Transactions, respectively, (ii) an LTM return on average assets for
ASF of 0.72 percent, and 0.37 percent when adjusted to reflect ASF's having an
assumed tax rate of 38 percent, as compared to median ratios of 0.98 percent and
0.93 percent for the acquired companies in the Florida Transactions and the
Nationwide Transactions, respectively, (iii) an LTM return on average equity for
ASF of 11.26 percent, and 5.87 percent when ASF's book value was adjusted to
reflect ASF's having an assumed tax rate of 38 percent, as compared to median
ratios of 9.40 percent and 11.45 percent for the acquired companies in the
Florida Transactions and the Nationwide Transactions, respectively, and (iv) a
ratio of nonperforming assets to assets for ASF of 1.28 percent, as compared to
median ratios of 1.89 percent and 1.45 percent for the acquired companies in the
Florida Transactions and the Nationwide Transactions, respectively.
DISCOUNTED CASH FLOW ANALYSIS OF ASF. Bear Stearns performed a discounted
cash flow analysis of ASF on a stand-alone basis and on the basis of ASF being
acquired at the end of a five-year period. Bear Stearns reviewed management's
Revised Business Plan and determined a range of net present values for the
shares of ASF Common Stock which could result based upon assumed multiples of
projected earnings contained in the Revised Business Plan and assumed discount
rates. Bear Stearns applied assumed multiples ranging from 6.8 times to 14.3
times for the stand-alone case (a range based on the
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harmonic mean of the market price to LTM EPS for the National Institutions, plus
or minus one standard deviation), and from 11.0 times to 21.0 times for the case
of a subsequent acquisition (a range based on the harmonic mean of the
acquisition price to LTM EPS for the Nationwide Transactions, plus or minus one
standard deviation), in each case using discount rates ranging from 12.5 percent
to 17.5 percent. The analysis resulted in a range of net present values for ASF
as a stand-alone entity of $14.96 to $38.89 (excluding the Enstar Receivable, as
then valued by Bear Stearns) and $16.79 to $40.72 (including the Enstar
Receivable); for the case in which ASF would be acquired in five years, the
resulting ranges were $24.10 to $57.28 (excluding the Enstar Receivable) and
$25.93 to $59.11 (including the Enstar Receivable). The compound annual increase
in pretax core income under the Revised Business Plan (1994-1998) approximated
36 percent. Bear Stearns considered the likelihood of ASF's achieving the
projected results contained in the Revised Business Plan in light of the
deterioration of the operating environment for thrift institutions resulting
from recent increases in short-term interest rates and the Independent
Committee's expressed concern about ASF's ability to meet plan projections given
market conditions. In light of these considerations, Bear Stearns also performed
a discounted cash flow analysis which utilized a more conservative earnings
projection assuming a 10 percent annual increase in earnings over a five-year
period (1995-1999). Utilizing the more conservative projections and assuming the
same multiples and discount rates, the estimated range of net present values
resulting for the stand-alone case was $8.13 to $21.25 (excluding the Enstar
Receivable) and $9.96 to $23.08 (including the Enstar Receivable) and, for the
case of a subsequent acquisition, a range of net present values of $13.15 to
$31.20 (excluding the Enstar Receivable) and $14.98 to $33.03 (including the
Enstar Receivable). Bear Stearns determined that the $21.00 value per share of
ASF Common Stock of the consideration expected to be received in the Merger was
within the ranges of net present values which resulted, except in the case of a
subsequent acquisition, based upon ASF's Revised Business Plan.
ANALYSIS OF RELATIVE CONTRIBUTION. Bear Stearns determined the relative
contribution of ASF to FUNC after giving PRO FORMA effect to the Merger, using
an exchange ratio based on FUNC's then current stock price and other data as of
September 30, 1994. Bear Stearns determined that ASF stockholders would receive
approximately 3.5 percent of the PRO FORMA ownership of the combined company,
while ASF would contribute to the combined company approximately 4.5 percent of
the assets (after adjusting ASF's book value to reflect the Estimated Litigation
Claims), approximately 3.7 percent of the tangible equity (after adjusting ASF's
book value to reflect the Estimated Litigation Claims), approximately 3.6
percent of the loans, approximately 4.0 percent of the deposits, and
approximately 1.4 percent of LTM pretax income.
GOING CONCERN VALUATION OF FUNC. Bear Stearns compared certain financial
performance measures and stock market trading data for FUNC to 13 commercial
banking companies having total assets greater than $50 billion. These companies
included Citicorp, Bank America Corporation, NationsBank Corporation, Chemical
Banking Corp., The Chase Manhattan Corporation, Banc One Corporation, First
Interstate Bancorp, Key Corp, Wells Fargo & Company, Norwest Corporation, The
Bank of New York Company, Inc., PNC Bank Corp. and First Chicago Corporation.
Bear Stearns determined harmonic means for the stock price to book value,
the stock price to tangible book value, the stock price to LTM EPS and stock
price to estimated 1995 EPS for these commercial banking companies. FUNC's stock
price to book value was slightly below, its stock price to tangible book value
was slightly above, its stock price to LTM EPS was slightly below, and its stock
price to estimated 1995 earnings per share slightly above the respective
harmonic means for these commercial banking companies.
Bear Stearns' opinion dated December 9, 1994 and its updated Fairness
Opinion were based solely upon the information available to it and economic,
market and other conditions as they existed as of the dates of such opinions;
events occurring thereafter could materially affect the assumptions used in
preparing the opinions. Bear Stearns has not undertaken to reaffirm or revise
the Fairness Opinion or otherwise comment upon any events occurring after the
date thereof.
In connection with rendering the opinion dated December 9, 1994 and its
updated Fairness Opinion, Bear Stearns performed a variety of financial
analyses. The evaluation of the fairness, from a financial point of view, of the
consideration to be paid in the Merger was to some extent a subjective one based
on the experience and judgment of Bear Stearns, and not merely the result of
mathematical analysis of financial data. Accordingly, Bear Stearns believes that
its analyses must be considered as a whole and that considering portions of such
analyses or certain of the factors considered by Bear Stearns without
considering all such analyses and factors could create an incomplete view of the
process underlying the opinion. In its analyses, Bear Stearns made numerous
assumptions with respect to business, market, monetary and economic conditions,
industry performance, business and economic conditions and other matters, many
of which are beyond ASF's and FUNC's control. Any estimates contained in Bear
Stearns' analyses are not necessarily indicative of future results or actual
values, which may be significantly more or less favorable than such estimates.
No company or transaction used in the above analyses as a comparison is
identical to ASF, FUNC or the contemplated transaction. Accordingly, an analysis
of the results of the foregoing is not mathematical, rather, it involves complex
considerations and judgments concerning differences in financial
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and operating characteristics of the companies and other factors that could
affect the public trading value of the companies to which they are being
compared. The analyses performed by Bear Stearns are not necessarily indicative
of actual values or actual future results, which may be significantly more or
less favorable than suggested by such analyses. Such analyses were prepared
solely as part of Bear Stearns' analysis of the fairness of the Merger to ASF
stockholders. The analyses do not purport to be appraisals or to reflect the
prices at which a company might actually be sold or the prices at which any
securities may trade at the present time or at any time in the future.
Based upon these analyses, Bear Stearns has delivered its opinion that the
Merger is fair, from a financial point of view, to the stockholders of ASF.
BEAR STEARNS' INADEQUACY OPINION REGARDING THE ORIGINAL PROPOSAL. For
purposes of rendering the Inadequacy Opinion and reviewing the Original FUNC
Proposal, Bear Stearns conducted analyses based upon information available to
Bear Stearns at the time which were similar in scope to those made for purposes
of rendering the Fairness Opinion and reviewing the Merger, and which were
subject to similar qualifications and limitations. Based upon such analyses,
Bear Stearns delivered the Inadequacy Opinion on November 8, 1994 which
concluded that the Original FUNC Proposal would have been inadequate, from a
financial point of view, to the stockholders of ASF. The following is a summary
of the differences between certain terms of the Original FUNC Proposal and the
proposed Merger of which Bear Stearns was informed, and the principal
considerations thereupon deemed relevant by Bear Stearns which led Bear Stearns
to render the Inadequacy Opinion with respect to the Original FUNC Proposal, and
the Fairness Opinion with respect to the proposed Merger:
PRICE ADJUSTMENT FOR SALE OF MBS PORTFOLIO. The Original FUNC Proposal
provided that the value of the consideration to be paid to ASF's
stockholders would have been adjusted to reflect any loss from ASF's sale
of the MBS Portfolio, and that the MBS Portfolio be sold as a condition to
FUNC's obligation to consummate the Original FUNC Proposal. As of October
31, 1994, based upon the value of the MBS Portfolio on such date, the value
of the Original FUNC Proposal would have been approximately $20.71 per
share of ASF Common Stock. Moreover, such value was subject to further
downward adjustment to the extent that the value of the MBS Portfolio
further declined following such date. In the Original FUNC Proposal there
were circumstances in which FUNC would not reimburse ASF for any loss from
the sale of the MBS Portfolio even if the acquisition of ASF did not close.
Whether or not the acquisition of ASF contemplated by the Original FUNC
Proposal was consummated, ASF's agreeing to the Original FUNC Proposal at
that time would have required ASF to recognize immediately the unrealized
net after tax loss inherent in the MBS Portfolio, thereby materially
reducing ASF's regulatory capital. The sale of the MBS Portfolio is not a
condition to closing of the Merger.
VALUE OF CONSIDERATION OFFERED. Bear Stearns compared the estimated
value of approximately $20.71 per share of ASF Common Stock in the Original
FUNC Proposal to the consideration received by stockholders in two subsets
of savings institution acquisitions. Bear Stearns reviewed the price to
adjusted book value, the price to adjusted tangible book value, the price
to LTM EPS and premium over tangible book value to core deposits paid in
each such transaction and calculated high, low, median and harmonic means
(however, with respect to premium over tangible book value to core
deposits, the arithmetic mean) for the respective groups of transactions.
These valuation ratios for the Original FUNC Proposal were below the
respective harmonic mean or median values of the valuation ratios of both
groups of comparable transactions. The estimated value of the Original FUNC
Proposal was below the mid-point of a range of present values based upon a
discounted dividend model applied by Bear Stearns to the projections
included in the Revised Business Plan. The estimated value of the Original
FUNC Proposal was also below the mid-point of a range of present values
determined by applying assumed acquisition multiples to projected earnings
derived from the Revised Business Plan.
LEGAL OPINION REGARDING CERTAIN TAX MATTERS. Both the Original FUNC
Proposal and the Merger provide that FUNC's obligation to consummate the
transaction is conditioned on receipt of an opinion from FUNC's legal
counsel that the acquisition of ASF by FUNC constitutes a "reorganization"
under Section 368(a) of the Code. Because the consideration in the Merger
will be entirely FUNC Common Stock (except for cash payments in lieu of
fractional shares), rather than 80 percent FUNC Common Stock as
contemplated by the Original FUNC Proposal, the necessary factual predicate
for the opinion is more likely to exist at the time of the closing of the
Merger.
AGREEMENTS WITH BEAR STEARNS; FEES. In a letter agreement dated April 26,
1994, the Independent Committee and ASF retained Bear Stearns to act as
financial advisor to the Independent Committee concerning its examination of
available strategic alternatives, including the possible sale of ASF. Pursuant
to such letter agreement, ASF paid Bear Stearns an initial fee of $75,000, an
additional fee of $75,000 when Bear Stearns provided the Independent Committee
with its first periodic evaluation of ASF in May 1994, and additional quarterly
fees of $15,000 starting in June 1994. This first letter agreement also
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provided that the Independent Committee could request other services and that
Bear Stearns fees for such services would be reasonable and customary for such
services. Pursuant to a second letter agreement dated as of October 31, 1994,
the Independent Committee and ASF requested that Bear Stearns provide its
opinion as to whether the Original FUNC Proposal would have been adequate, from
a financial point of view, to ASF's stockholders. The Inadequacy Opinion was
provided pursuant to this second letter agreement for a fee of $200,000.
Pursuant to a third letter agreement dated as of December 1, 1994, the
Independent Committee and ASF requested that Bear Stearns provide its opinion as
to whether the Merger was fair, from a financial point of view, to ASF's
stockholders. The opinion dated December 9, 1994 and the updated Fairness
Opinion were provided pursuant to this third letter agreement for a total fee of
$150,000, $75,000 of which was paid when Bear Stearns informed the Independent
Committee that it was prepared to deliver such opinions, and $75,000 of which
will be paid upon consummation of the Merger. In addition, ASF has agreed to
reimburse Bear Stearns for its reasonable out-of-pocket costs and expenses
incurred in connection with the services rendered to the Independent Committee
pursuant to these letter agreements, including the fees and expenses of its
legal counsel. Pursuant to these letter agreements, ASF has agreed to indemnify
Bear Stearns, its affiliates and their respective partners, directors, officers,
agents, consultants, employees and controlling persons against certain expenses
and liabilities, including liabilities under the federal securities laws.
INTERESTS OF CERTAIN PERSONS
Certain members of ASF's management and the ASF Board may be deemed to have
interests in the Merger in addition to their interests as stockholders of ASF
generally. In each case, the ASF Board was aware of these factors and considered
them, among others, in approving the Merger Agreement.
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE
The Merger Agreement provides that FUNC will indemnify the past and present
directors and officers of ASF against certain liabilities for six years
following the Effective Date to the maximum extent that ASF would have been
allowed to indemnify such persons under OTS regulations as in effect on the date
of the Merger Agreement. FUNC will also indemnify, to the fullest extent allowed
by Florida law, the officers and directors of ASF against certain liabilities
arising in connection with the Merger and other transactions contemplated by the
Merger Agreement and the Stock Option Agreement for six years following the
Effective Date. The Merger Agreement also provides that FUNC will use its
reasonable best efforts to maintain ASF's existing directors and officers
liability insurance policies (and to obtain coverage for certain claims that are
excluded under such policies) or a policy (including FUNC's policy) covering
persons covered by such policies on the date of the Merger Agreement on similar
terms which are no less favorable to such persons, for a period of three years
after the Effective Date at an annual cost not to exceed $1,000,000 for the
portion of the premium related to ASF's officers and directors. Under the Voting
Agreement, the directors of Enstar, including Messrs. Davis and Frazer, will be
indemnified by FUNC, to the fullest extent permitted by Delaware law, against
certain liabilities arising in connection with the Voting Agreement and the
Merger Agreement.
See ANNEX A and ANNEX B.
TREATMENT OF STOCK OPTIONS AND SENIOR EXECUTIVE SEVERANCE PLAN
The Merger Agreement provides that all options (other than the Option) to
purchase shares of ASF Common Stock which are outstanding immediately prior to
the Effective Date, whether or not vested or exercisable (each, a "Stock
Option") shall be cancelled by ASF. Each holder of a Stock Option with an
exercise price per share that is less than $21.00 is entitled to receive
immediately prior to the Effective Date a cash payment equal to the difference
between $21.00 and the exercise price per share of the Stock Option, times the
total number of shares covered by the Stock Option. See "BOARD OF DIRECTORS AND
COMMITTEES -- Director Compensation" and " -- Executive Compensation" below
regarding the ownership of Stock Options by certain officers and directors of
ASF.
The Merger Agreement provides that FUNC and the Subsidiary will honor,
among other agreements, the ASF Senior Executive Employee Severance Pay Plan
(the "Severance Plan") covering certain management employees of ASF (the
"Severance Beneficiaries") unless an affected management employee would receive
better benefits under FUNC's severance plan and such employee accepts FUNC's
severance plan in lieu of the Severance Plan. See "EXECUTIVE
COMPENSATION -- Termination of Employment, Change-in-Control Arrangements and
Employment Contracts". The Severance Plan provides benefits in situations in
which a Severance Beneficiary's employment is terminated other than for just
cause (as defined in the Severance Plan), death or disability or the Severance
Beneficiary resigns after having his or her terms of employment adversely
affected, in connection with a change in control. The approval by ASF
stockholders of the Merger would constitute a change in control for purposes of
the Severance Plan. In the event of a termination in connection with a change in
control, the Chief
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Executive Officer of ASF would receive 52 weeks' salary under the Severance Plan
and other executive officers would receive 40 weeks' salary, in addition to
bonuses for both the CEO and the executive officers. For additional information
regarding the circumstances giving rise to payments under the Severance Plan,
the calculation of "weeks salary," the determination of the bonuses to be paid
to Severance Beneficiaries, and the treatment of ASF's matching contributions to
a 401(k) Plan, see "EXECUTIVE COMPENSATION -- Termination of Employment,
Change-in-Control Arrangements and Employment Contracts".
INTEREST OF ENSTAR AND CERTAIN ASF DIRECTORS IN MATTERS TO BE ACTED UPON
Enstar is currently the owner of approximately 48.4 percent of the
outstanding shares of ASF Common Stock. Under the Bankruptcy Plan, as modified,
Enstar is obligated to sell or distribute its shares of ASF Common Stock before
June 1, 1995, unless otherwise agreed by certain classes of creditors whose
claims have not been satisfied. The Merger would allow Enstar to dispose of its
shares of ASF Common Stock as required by the Bankruptcy Plan and to satisfy
certain of its creditors in accordance with the Bankruptcy Plan. See "THE
MERGER -- Background and Reasons; ASF".
Messrs. T. Wayne Davis and Nimrod T. Frazer, directors of ASF, are also
directors of Enstar. Mr. Frazer is Chairman of the Board, President and Chief
Executive Officer of Enstar. The Enstar Board of Directors has adopted a
resolution which allows for the creation of an incentive bonus pool (the "Enstar
Incentive Bonus Pool") for its outside directors, including Mr. Davis and
certain employees other than Mr. Frazer in the event that all of Enstar's
creditors are paid in full and property remains for distribution pursuant to the
Bankruptcy Plan to Enstar's former stockholders. In January 1993, after
receiving no objections to its inquiry from Enstar's creditors or the OTS,
Enstar engaged Mr. Frazer on an exclusive basis to market and sell Enstar's
shares of ASF Common Stock, for a commission in an amount equal to one percent
of the aggregate value of the shares of ASF Common Stock owned by Enstar upon
the sale or other disposition of those shares pursuant to the Bankruptcy Plan.
Based on the $21 value of the FUNC Shares to be received for each share of ASF
Common Stock pursuant to the Merger, Mr. Frazer would realize a commission from
Enstar of approximately $1.2 million upon the consummation of the Merger. In
addition, Mr. Frazer and Mr. Davis hold the rights to 77,316 and 279,565
cancelled shares of the common stock of Enstar, respectively (each less than one
percent of the class), which were cancelled in the Enstar bankruptcy proceeding
(the "Old Enstar Common Stock") and will benefit from the sale or disposition of
Enstar's ASF Common Stock to the extent that the proceeds from that sale or
disposition, combined with the value of Enstar's other assets, exceed the total
amounts owed Enstar's creditors, plus the interest on those amounts owed, and
any reserves for taxes and expenses established by Enstar as permitted under the
Bankruptcy Plan, as modified. In addition, (i) Mr. Davis serves as President and
Chairman of the Board of Tine W. Davis Family -- WD Charities, Inc., in which
capacity he exercises voting power over 47,250 shares of FUNC Common Stock; (ii)
Mr. Davis' first cousin, Robert D. Davis, is a member of the FUNC Board of
Directors; (iii) Mr. Davis' first cousin, A. Dano Davis, is a member of the
board of directors of FUNB-FL; and (iv) Mr. Davis is Vice President, owns
approximately 27 percent of the outstanding capital stock, and serves, along
with Robert D. Davis, A. Dano Davis and three other directors, on the board of
directors, of a private company, which company has voting power with respect to
900,000 shares of FUNC Common Stock. In addition, directors of ASF have various
banking relationships with affiliates of FUNC, including loans and deposit
accounts.
EFFECT ON ASF EMPLOYEE BENEFIT PROGRAMS
FUNC agreed in the Merger Agreement that as soon as administratively
practicable following the Effective Date, (i) employees of ASF generally will be
entitled to participate in FUNC's pension, severance, employee benefit, health,
welfare and similar plans on substantially the same terms and conditions as
employees of FUNC, giving effect, for eligibility and vesting of benefits (but
not for accrual of benefits), to years of service with ASF as if such service
were with FUNC, provided that ASF employees (a) participating in ASF's medical
plan will not be precluded from participating in FUNC's medical plan on account
of a pre-existing medical condition, and (b) will receive credit toward any
deductible and co-payment under applicable welfare benefit plans of FUNC to the
extent such deductibles and co-payments have been satisfied under applicable ASF
welfare benefit plans; and (ii) all participants in ASF's 401(k) Plan will be
fully vested in amounts contained in or allocable to their accounts in
accordance with the terms of such plan, which will be merged into FUNC's 401(k)
Plan. ASF's employees who remain employees of FUNC or any subsidiary of FUNC
will have the right to participate in FUNC's 401(k) Plan, and all other ASF
employees will be entitled to roll their accounts in ASF's 401(k) Plan into
individual retirement accounts and to otherwise deal with their accounts as if
they had been fully vested and had terminated their employment with ASF prior to
the Effective Date.
The Merger Agreement provides that in addition to honoring ASF's Severance
Plan, FUNC and the Subsidiary will honor ASF's existing severance program for
employees other than participants in the Severance Plan (unless FUNC's plan is
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better for such employees), as well as job continuation and severance payment
agreements with certain information services employees not eligible to
participate in the Severance Plan.
FUNB-FL has agreed that if an employee of ASF or its subsidiaries is
terminated during the 12 months following the Effective Date as a result of job
elimination, such employee will be entitled to the better of the severance
packages provided by ASF and FUNB-FL. The employees of ASF will be entitled to
participate in FUNB-FL's pension, severance, employee benefit, health, welfare
and similar plans on substantially the same terms and conditions as employees of
FUNB-FL, giving effect (except for the accrual of benefits under such plans) to
years of service with ASF and its subsidiaries as if such service were with
FUNB-FL.
See " -- Interests of Certain Persons; TREATMENT OF STOCK OPTIONS AND
SENIOR EXECUTIVE SEVERANCE PLAN".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER BUT IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF THOSE
CONSEQUENCES. THE DISCUSSION IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY
AND MAY NOT APPLY TO SPECIAL SITUATIONS, SUCH AS ASF STOCKHOLDERS, IF ANY, WHO
RECEIVED THEIR ASF COMMON STOCK UPON THE EXERCISE OF EMPLOYEE STOCK OPTIONS, OR
OTHERWISE AS COMPENSATION, THAT HOLD THEIR ASF COMMON STOCK AS PART OF A
"STRADDLE" OR "CONVERSION TRANSACTION," OR THAT ARE INSURANCE COMPANIES,
SECURITIES DEALERS, FINANCIAL INSTITUTIONS OR FOREIGN PERSONS, AND DOES NOT
DISCUSS ANY ASPECTS OF STATE, LOCAL OR FOREIGN TAXATION. THIS DISCUSSION IS
BASED UPON LAWS, REGULATIONS, RULINGS, AND DECISIONS NOW IN EFFECT AND ON
PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE (POSSIBLY WITH
RETROACTIVE EFFECT) BY LEGISLATION, ADMINISTRATIVE ACTION OR JUDICIAL DECISION.
NO RULING HAS BEEN OR WILL BE REQUESTED FROM THE INTERNAL REVENUE SERVICE (THE
"SERVICE") ON ANY TAX MATTER RELATING TO THE TAX CONSEQUENCES OF THE MERGER.
Sullivan & Cromwell, special counsel for FUNC, has advised FUNC and ASF
that in its opinion:
(i) No gain or loss will be recognized for federal income tax
purposes by ASF stockholders upon the exchange in the Merger of shares of
ASF Common Stock solely for FUNC Shares (except with respect to cash
received in lieu of a fractional share interest in FUNC Shares).
(ii) The basis of FUNC Shares received in the Merger by ASF
stockholders (including the basis of any fractional share interest in FUNC
Shares) will be the same as the basis of the shares of ASF Common Stock
surrendered in exchange therefor.
(iii) The holding period of FUNC Shares received in the Merger by an
ASF stockholder (including the holding period of any fractional share
interest in FUNC Shares) will include the holding period during which the
shares of ASF Common Stock surrendered in exchange therefor were held by
the ASF stockholder, provided such shares of ASF Common Stock were held as
capital assets.
(iv) Cash received by a holder of ASF Common Stock in lieu of a
fractional share interest in FUNC Shares will be treated as received in
exchange for such fractional share interest, and, provided the fractional
share would have constituted a capital asset in the hands of such holder,
the holder should in general recognize capital gain or loss in an amount
equal to the difference between the amount of cash received and the portion
of the adjusted tax basis in ASF Common Stock allocable to the fractional
share interest.
In addition, consummation of the Merger is conditioned on receipt by FUNC
and ASF of an opinion of Sullivan & Cromwell to the effect that (i) the Merger
constitutes a reorganization under Section 368(a) of the Code, and (ii) no gain
or loss will be recognized by ASF stockholders who receive FUNC Shares in
exchange for their shares of ASF Common Stock, except that gain or loss may be
recognized as to cash received in lieu of fractional share interests. Unlike a
ruling from the Service, an opinion of counsel is not binding on the Service and
there can be no assurance that the Service will not take a position contrary to
one or more of the positions reflected herein or that the positions herein will
be upheld by the courts if challenged by the Service.
The opinions of Sullivan & Cromwell summarized above are or will be based,
among other things, on representations contained in certificates of officers of
ASF, Subsidiary, FUNC and others, and on representations and agreements
contained in the Voting Agreement. In addition, the opinion is based on an
assumption, set forth therein, that the price of shares of FUNC Common Stock on
the Effective Date will not be less than 80 percent of the FUNC Average Closing
Price. If such assumption were to be incorrect, Sullivan & Cromwell may be
unable to deliver the foregoing opinion as of the Effective Date (the delivery
of which is a condition to consummation of the Merger).
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER AND OTHER FACTORS, EACH STOCKHOLDER
OF ASF IS
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URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO SUCH HOLDER OF THE MERGER (INCLUDING THE APPLICATION AND EFFECT
OF STATE AND LOCAL INCOME AND OTHER TAX LAWS).
BUSINESS PENDING CONSUMMATION
The Merger Agreement provides that, without the prior written agreement of
FUNC or except as otherwise permitted by the Merger Agreement, ASF will
generally conduct its business only in the ordinary and usual course consistent
with past practice, and not take certain actions relating to the operation of
ASF pending consummation of the Merger or termination of the Merger Agreement.
These actions include, without limitation: (i) paying dividends, redeeming or
otherwise acquiring shares of its capital stock, issuing additional shares of
its capital stock or giving any person the right to acquire any such shares, or,
incurring any debt; (ii) increasing the rate of compensation or paying bonuses
to any of its directors, officers or employees; (iii) entering into or modifying
any employment agreements or employee benefit plans; (iv) disposing of any
material portions of its assets or acquiring any substantial portions of the
business or property of any other entities; (v) changing its lending,
investment, liability management, accounting procedure, or other material
banking policies in any material respect; (vi) incurring any capital
expenditures in excess of $100,000 individually or $500,000 in the aggregate;
(vii) taking any action that would impair the Bankruptcy Claim; (viii) entering
into, terminating or changing any material agreements, except for those
agreements that are terminable by ASF without penalty in excess of $100,000 upon
not more than 60 days' prior written notice; (ix) settling any claims involving
money damages in excess of $250,000 or any restrictions on the operations of
ASF; or (x) acquiring private label mortgage-backed securities.
The Merger Agreement also provides that, consistent with generally accepted
accounting principles and regulatory accounting principles, ASF will use its
best efforts to record any accounting adjustments required to conform its loan,
litigation, and other reserve and real estate valuation policies and practices
(including loan classifications and levels of reserves) so as to be consistent
with those policies and practices applied by FUNC, provided that ASF shall not
be obligated to record any such accounting adjustments (i) unless and until ASF
is satisfied that the conditions to the obligations of the parties to consummate
the Merger will be satisfied or waived on or before the Effective Date, and (ii)
in no event until the day prior to the Effective Date.
NO SOLICITATION
The Merger Agreement provides that neither ASF nor any of its officers,
directors, agents and representatives (the "Restricted Parties") will initiate,
solicit or encourage inquiries or proposals that would constitute or that would
lead to a Competing Transaction. The Merger Agreement defines a "Competing
Transaction" as any of the following involving ASF: (i) any merger,
consolidation, share exchange, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20 percent or more of the assets or deposits of ASF, in a single
transaction or a series of related transactions; or (iii) any tender offer or
exchange offer for 20 percent or more of the outstanding shares of ASF Common
Stock or the filing of a registration statement under the Securities Act in
connection therewith. The Merger Agreement also prohibits the Restricted Parties
from entering into discussions or negotiations with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction, or agreeing
to endorse or endorsing any Competing Transaction, or authorizing any of the
officers or directors of ASF or its subsidiaries to take such action. ASF has
agreed to use its reasonable best efforts to cause its directors, officers (vice
president and above), agents and representatives (including, without limitation,
any investment banker, financial advisor, attorney or accountant retained by
ASF) not to take any of the prohibited actions.
The Merger Agreement does not prohibit ASF from furnishing information to,
or entering into discussions or negotiations with, any person that makes a bona
fide proposal to enter into a Competing Transaction after December 4, 1994, as
long as such proposal is not solicited or encouraged by ASF after that date. In
addition, ASF may recommend or endorse or enter into a definitive agreement with
respect to the Competing Transaction as long as: (i) the ASF Board determines in
good faith (after considering the advice of outside counsel) that such action is
required for the ASF Board to comply with its fiduciary duties to ASF's
stockholders under applicable law, (ii) the ASF Board reasonably believes that
the proposal is made in good faith, (iii) prior to furnishing such information
to such person, ASF receives from such person an executed confidentiality
agreement, with terms reasonably satisfactory to ASF, and (iv) ASF provides
prior notice to FUNC.
REGULATORY APPROVALS
The Merger is subject to the prior approval of the OCC under the Bank
Merger Act (the "BMA") and Section 5(d)(3) of the Federal Deposit Insurance Act
(the "FDI Act"). The BMA requires that the OCC take into consideration, among
other
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<PAGE>
factors, the financial and managerial resources and future prospects of the
institutions, and the convenience and needs of the communities to be served
(including compliance with fair lending laws). The BMA prohibits the OCC from
approving the Merger (i) if it would result in a monopoly or be in furtherance
of any combination or conspiracy to monopolize, or to attempt to monopolize, the
business of banking in any part of the United States, or (ii) if its effect in
any section of the country may be substantially to lessen competition or to tend
to create a monopoly, or if it would in any other manner be a restraint of
trade, unless the OCC finds that the anti-competitive effects of such merger are
clearly outweighed by the public interest and by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. The OCC has the authority to deny an application if it concludes that
the combined organization would have an inadequate capital position or if the
acquiring organization does not meet the requirements of the Community
Reinvestment Act of 1977 (the "CRA"). Under the FDI Act and the BMA, the Merger
may not be consummated until the 30th day (which may, in certain circumstances,
be reduced to the 15th day) following the date of the approval of the relevant
regulatory agency, during which time the United States Department of Justice may
challenge the Merger on antitrust grounds. The commencement of an antitrust
action would stay the effectiveness of such an approval unless a court
specifically orders otherwise. The Merger is also subject to prior notice being
given to the OTS. An application for approval of the Merger by the OCC has been
filed with the OCC and accepted as complete on April 4, 1995. The OCC has
informed FUNC that the OCC will decide on such application on or before June 2,
1995. Notice has been given to the OTS which has informed ASF that such notice
contains sufficient information and has been considered notification. Because
Enstar is subject to a capital maintenance obligation with respect to ASF under
the Capital Maintenance Agreement, Enstar has filed a separate notice with and
has obtained the consent of the OTS to dispose of the shares of ASF Common Stock
it owns. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Potential Change in Control".
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. THERE CAN BE NO ASSURANCE THAT SUCH REGULATORY APPROVALS WILL BE
OBTAINED OR AS TO THE DATES OF ANY OF SUCH APPROVALS. THERE CAN ALSO BE NO
ASSURANCE THAT SUCH APPROVALS WILL NOT CONTAIN A CONDITION OR REQUIREMENT WHICH
CAUSES SUCH APPROVALS TO FAIL TO SATISFY THE CONDITION SET FORTH IN THE MERGER
AGREEMENT AND DESCRIBED BELOW UNDER " -- CONDITIONS TO CONSUMMATION;
TERMINATION". THERE CAN LIKEWISE BE NO ASSURANCE THAT THE UNITED STATES
DEPARTMENT OF JUSTICE WILL NOT CHALLENGE THE MERGER, OR, IF SUCH A CHALLENGE IS
MADE, AS TO THE RESULT THEREOF. ANY APPROVAL, IF AND WHEN RECEIVED FROM THE OCC,
DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE MERGER BY SUCH
AGENCY.
CONDITIONS TO CONSUMMATION; TERMINATION
Consummation of the Merger is subject, among other things, to: (i) approval
of the Merger and the Merger Agreement by the stockholders of ASF; (ii) receipt
of the regulatory approvals referred to above without any restrictions or
conditions which in the good faith reasonable opinion of FUNC would so
materially adversely impact the economic or business benefits to FUNC of the
transactions contemplated by the Merger Agreement so as to render inadvisable
the consummation of the Merger; (iii) no court or governmental or regulatory
authority having taken any action which prohibits the Merger; (iv) receipt by
FUNC and ASF of the opinion of Sullivan & Cromwell as to certain federal income
tax consequences of the Merger; (v) the FUNC Shares having been approved for
listing on the NYSE, subject to official notice of issuance; (vi) all Stock
Options having been cancelled and paid for; (vii) the continued effectiveness of
the Registration Statement; (viii) the receipt of all required "blue sky"
permits; and (ix) the receipt of various third party consents to the Merger.
Consummation of the Merger is also subject to the satisfaction or waiver of
various other conditions specified in the Merger Agreement, including, among
others: (i) the delivery by ASF and FUNC, each to the other, of (a) opinions of
their respective counsel, and (b) certificates executed by certain of their
respective executive officers as to compliance with the Merger Agreement; (ii)
the accuracy of the representations and warranties, and compliance in all
material respects with the agreements and covenants, of the parties to the
Merger Agreement; and (iii) the receipt by FUNC of letters from ASF's
independent certified public accountants with respect to ASF's financial
position and results of operations, which letters shall be based upon procedures
customarily undertaken by such firm.
The Merger Agreement provides that, whether before or after the required
approval of the Merger and the Merger Agreement by the stockholders of ASF, the
Merger Agreement may be terminated, and the Merger abandoned, at any time prior
to the Effective Date: (i) by mutual consent of FUNC and ASF; (ii) by either
FUNC or ASF (a) if the stockholders of ASF fail to approve the Merger Agreement,
(b) in the event of a breach by the other party of any representation or
warranty contained in the Merger Agreement, which breach is not cured after 30
days' written notice thereof is given to the party committing such breach which
would result in a failure to satisfy any of the conditions to the consummation
of the Merger described above, (c) in the event of a material breach by the
other party of any of the covenants or agreements contained in the Merger
Agreement, which breach is not cured after 30 days' written notice thereof is
given to the party committing such
43
<PAGE>
breach, (d) if any required governmental approval has been denied or required to
be withdrawn, or the applicable governmental authority has indicated an
intention to deny or impose a condition or requirement which would materially
adversely impact the economic or business benefits to FUNC of the Merger, (e) if
a court order restrains or prohibits the Merger or any action is taken by any
governmental authority which would make the Merger illegal, or (f) if the Merger
is not consummated on or before August 25, 1995, provided that the party seeking
to terminate the Merger is not in breach of any of the covenants or agreements
of the Merger Agreement; (iii) by FUNC if the ASF Board fails to recommend the
Merger to ASF stockholders or withdraws, modifies or changes its recommendation
of the Merger or the Merger Agreement to the stockholders of ASF; or (iv) by
ASF, if in the exercise of its good faith judgment as to its fiduciary duties to
its stockholders the ASF Board determines that such termination is required, and
ASF shall have agreed to a Competing Transaction.
WAIVER; AMENDMENT
Prior to the Effective Date, any provision of the Merger Agreement may be:
(i) waived by the party benefitted by the provision; or (ii) amended or modified
at any time (including the structure of the transaction) by an agreement in
writing among the parties thereto, approved by their respective Boards of
Directors and executed in the same manner as the Merger Agreement, provided that
after approval by the stockholders of ASF, the consideration to be received by
the stockholders of ASF may not thereby be decreased.
SURVIVAL
No representations, warranties, agreements or obligations of FUNC or ASF
under the Merger Agreement survive the Effective Date, except for provisions of
the Merger Agreement regarding the applicability of Florida law and
indemnification of and insurance for ASF's officers and directors.
NO APPRAISAL RIGHTS
Holders of ASF Common Stock do not have appraisal rights under the
applicable provisions of OCC regulations or OTS regulations. In a transaction
such as the Merger, OCC regulations provide that OTS regulations shall determine
whether or not ASF stockholders have any appraisal rights. In accordance with
OTS regulations, holders of ASF Common Stock will have no appraisal rights if
the FUNC Common Stock remains listed on the NYSE on the Effective Date and the
ASF Common Stock remains quoted on The Nasdaq Stock Market on the date of the
Meeting. See "CERTAIN DIFFERENCES IN THE RIGHTS OF ASF AND FUNC
STOCKHOLDERS -- Dissenters' or Appraisal Rights; ASF".
ACCOUNTING TREATMENT
It is expected that the purchase method of accounting will be used to
account for the Merger upon consummation. As required by generally accepted
accounting principles, under purchase accounting, the assets and liabilities of
ASF as of the Effective Date will be recorded at their respective fair market
values and added to those of FUNC. Financial statements of FUNC issued after
consummation of the Merger would reflect such values. Financial statements of
FUNC issued before consummation of the Merger would not be restated
retroactively to reflect ASF's historical financial position or results of
operations. The unaudited pro forma financial information contained in this
Proxy Statement/Prospectus has been prepared using the purchase method of
accounting to account for the Merger. See "SUMMARY".
EXPENSES
All expenses incurred by or on behalf of the parties in connection with the
Merger Agreement and the transactions contemplated thereby will be borne by the
party incurring the same, except for (i) the fees and expenses of Sullivan &
Cromwell in rendering a tax opinion in connection with the Merger, which fees
and expenses will be paid by FUNC and (ii) in the event of a willful breach of
the Merger Agreement, the costs, fees and expenses of counsel of the
non-breaching parties will be paid by the breaching party.
STOCK OPTION AGREEMENT
As an inducement and condition to FUNC's willingness to enter into the
Merger Agreement, ASF issued to FUNC the Option to purchase, under certain
conditions, up to 2,288,700 shares of ASF Common Stock at a Purchase Price of
$19.5625 per share, subject to adjustment in certain circumstances. The Option
was granted to FUNC pursuant to the Stock Option Agreement. The last sale price
of ASF Common Stock on the Nasdaq National Market on December 2, 1994, the last
business day prior to the date on which the Stock Option Agreement was executed,
was $16.4375. The number of shares of ASF Common Stock subject to the Option
represented approximately 19.9 percent of the then outstanding shares of ASF
Common
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<PAGE>
Stock, on December 4, 1994 and represents approximately 19.5 percent of the
outstanding shares of ASF Common Stock as of the Record Date, in each case
before giving effect to the issuance of such shares, and may not exceed such
percentage at the time of exercise. FUNC does not have any voting rights with
respect to the shares of ASF Common Stock subject to the Option prior to
exercise of the Option.
If FUNC is not in material breach of the Stock Option Agreement or the
Merger Agreement and no injunction against delivery of the shares covered by the
Option is in effect, FUNC may exercise the Option, in whole or in part, at any
time and from time to time following the happening of certain events (each a
"Purchase Event"), including, among others:
(i) ASF taking certain actions without FUNC's prior written consent,
including, among others, authorizing, recommending or entering into an
agreement with any third party to effect any of the following (each, an
"Acquisition Transaction") (a) a merger, consolidation or similar
transaction involving ASF or any of its significant subsidiaries, (b) the
sale, lease, exchange or other disposition of 20 percent or more of the
consolidated assets or deposits of ASF and its subsidiaries, or (c) the
issuance, sale or other disposition of 20 percent or more of the voting
power of ASF or any of its significant subsidiaries; or
(ii) the acquisition by any third party of the beneficial ownership,
or the right to acquire beneficial ownership, of 20 percent or more (or if
such party is the beneficial owner of 20 percent or more on the date of the
Option Agreement, such party acquires an additional five percent or more)
of the voting power of ASF or any of its significant subsidiaries, without
FUNC's prior written consent.
The Option will terminate upon the earliest of certain events, including:
(i) consummation of the Merger; (ii) termination of the Merger Agreement prior
to the happening of a Purchase Event or a Preliminary Purchase Event (as defined
below), unless ASF has engaged in discussions with any third party regarding an
Acquisition Transaction since December 4, 1994 and prior to such termination; or
(iii) 18 months after any other termination of the Merger Agreement. A
"Preliminary Purchase Event" is defined to include, among other events: (a)
commencement by any third party of a tender or exchange offer to purchase 20
percent or more of the outstanding shares of ASF Common Stock, (b) failure of
the stockholders of ASF to approve the Merger Agreement, or the ASF Board shall
have withdrawn or modified in any manner adverse to FUNC its recommendation with
respect to the Merger Agreement, or the Meeting shall not have been held or
shall have been cancelled prior to termination of the Merger Agreement, in each
case after public announcement that a third party (x) proposes to engage in an
Acquisition Transaction, (y) commences a tender offer to purchase 20 percent or
more of the outstanding shares of ASF Common Stock, or (z) files an application
under certain federal statutes relating to the regulation of banks and other
financial institutions or their holding companies, to engage in an Acquisition
Transaction, (c) any third party shall have proposed to ASF or its stockholders,
publicly or in any writing that becomes publicly disclosed, to engage in an
Acquisition Transaction; (iv) ASF furnishes information or enters into
discussions or negotiations pursuant to the Merger Agreement with any third
party that makes an unsolicited, bona fide expression of interest in acquiring
ASF; (v) after a bona fide proposal by a third party to ASF or its stockholders
to engage in an Acquisition Transaction, ASF breaches any covenant or obligation
in the Merger Agreement which, under the terms of the Merger Agreement, would
entitle FUNC to terminate the Merger Agreement; or (vi) any third party files an
application with any federal or state bank regulatory authority for approval to
engage in an Acquisition Transaction.
Upon the occurrence of certain events set forth in the Option Agreement,
the Option must be converted into, or exchanged for an option, at the election
of FUNC, of another corporation or ASF (the "Substitute Option"). In addition,
the Option Agreement grants certain registration rights ("Registration Rights")
to FUNC with respect to the shares covered by the Option, and contains certain
agreements by FUNC with respect to the voting of such shares in connection with
any meeting of ASF stockholders to vote on an Acquisition Transaction with a
third party ("Voting Arrangements"). The terms of such Substitute Option,
Registration Rights and Voting Arrangements are set forth in the Stock Option
Agreement.
The Stock Option Agreement and the Option are intended to increase the
likelihood that the Merger will be consummated according to the terms set forth
in the Merger Agreement, and may be expected to discourage competing offers to
acquire ASF from potential third party acquirors because the Option could
increase the cost of such an acquisition.
To the knowledge of ASF's and FUNC's executive management, no event giving
rise to exercise of the Option has occurred as of the date of this Proxy
Statement/Prospectus.
A copy of the Stock Option Agreement is set forth in Exhibit C to the
Merger Agreement, which is set forth in ANNEX A to this Proxy
Statement/Prospectus, and reference is made thereto for the complete terms of
the Stock Option Agreement and the Option. The foregoing discussion is qualified
in its entirety by reference to the Stock Option Agreement.
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<PAGE>
VOTING AGREEMENT; ESCROW AGREEMENT
As an inducement to and a condition of FUNC's willingness to enter into the
Merger Agreement, Enstar entered into the Voting Agreement, and in connection
therewith Enstar and FUNC also entered into the Escrow Agreement with the Escrow
Agent.
The Voting Agreement provides, among other things, that Enstar will vote
its shares of ASF Common Stock in favor of approval of the Merger and the Merger
Agreement and sets forth provisions relating to payment by Enstar to ASF of the
Bankruptcy Claim in the then outstanding principal amount owing from Enstar to
ASF and certain other Senior Claims payable pursuant to the Bankruptcy Plan, as
modified.
In order to facilitate the payment of the Bankruptcy Claim to the
Subsidiary, as the successor to ASF following consummation of the Merger, Enstar
delivered the 3,926,422 Escrowed Shares to the Escrow Agent to be held under the
Escrow Agreement pending consummation of the Merger.
The Voting Agreement and the Escrow Agreement provide that on the Effective
Date the Escrowed Shares will be exchanged for FUNC Shares pursuant to the
Merger Agreement and FUNC will purchase such FUNC Shares from the Escrow Agent
for approximately $82.5 million ($21.00 per share of ASF Common Stock exchanged
for such FUNC Shares), whereupon the Escrow Agent will make payment on behalf of
Enstar of all or substantially all of the Bankruptcy Claim following payment of
the Senior Claims that are required by the Bankruptcy Plan to be paid under the
Bankruptcy Plan, as modified, before the Bankruptcy Claim can be paid.
The Voting Agreement and the Escrow Agreement also provide for the deposit
with the Escrow Agent on the Effective Date of certain additional shares of FUNC
Common Stock to be received by Enstar in exchange for shares of ASF Common Stock
held by Enstar, which FUNC Shares are to be held by the Escrow Agent pending
payment in full of any balance remaining due under the Bankruptcy Claim and the
interest payable on the Bankruptcy Claim. The Voting Agreement further provides
that, under certain circumstances, Enstar has the right to receive any FUNC
Shares, cash or other securities then held by the Escrow Agent to pay certain
obligations under the Bankruptcy Plan, as modified, which may be required to be
paid prior to payment of the balance due on the Bankruptcy Claim and any
interest payable thereon.
A copy of the Voting Agreeement is set forth in ANNEX B to this
Prospectus/Proxy Statement and a copy of the Escrow Agreement is set forth in
Exhibit A to the Voting Agreement. Reference is made to ANNEX B for the complete
terms of the Voting Agreement and the Escrow Agreement. The foregoing discussion
is qualified in its entirety by reference to the Voting Agreement and the Escrow
Agreement.
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<PAGE>
MARKET PRICES
The following table sets forth (i) the high, low and last reported sale
prices per share of FUNC Common Stock on the NYSE Tape and of ASF Common Stock
on the Nasdaq Small Cap Market (for the first and second quarters of 1993) or
The Nasdaq Stock Market (for each quarterly period thereafter), and (ii) the
equivalent pro forma market values per share of ASF Common Stock, based on the
Current Exchange Ratio. The actual Exchange Ratio will depend on the FUNC
Average Closing Price and may be higher or lower than the Current Exchange
Ratio.
<TABLE>
<CAPTION>
FUNC ASF
HIGH LOW LAST HIGH LOW
<S> <C> <C> <C> <C> <C>
1993
First quarter.......................................... $ 50 7/8 42 1/4 47 3/4 13 1/8 10 5/16
Second quarter......................................... 51 1/2 40 48 1/2 13 1/8 9 3/4
Third quarter.......................................... 49 5/8 43 1/2 47 5/8 18 3/4 11 3/8
Fourth quarter......................................... 48 1/8 37 7/8 41 1/4 20 3/8 17 1/2
1994
First quarter.......................................... 43 3/4 39 3/4 41 5/8 22 1/4 17 1/2
Second quarter......................................... 47 5/8 41 1/4 46 1/8 23 1/4 20 5/8
Third quarter.......................................... 47 1/4 43 1/4 43 1/4 23 3/8 17 7/8
Fourth quarter......................................... 45 1/4 39 3/8 41 3/8 21 3/4 15 1/8
1995
First quarter.......................................... 45 1/8 41 3/8 43 3/8 20 1/2 19 5/8
Second quarter (through May 5, 1995)................... $ 46 1/2 42 7/8 46 1/2 20 1/2 20 1/4
<CAPTION>
EQUIVALENT PRO FORMA PER ASF COMMON
SHARE (1)
LAST HIGH LOW LAST
<S> <C> <C> <C> <C>
1993
First quarter.......................................... 12 3/16 22 7/8 19 21 1/2
Second quarter......................................... 11 1/2 23 1/4 18 21 7/8
Third quarter.......................................... 18 3/8 22 3/8 19 5/8 21 1/2
Fourth quarter......................................... 19 1/8 21 5/8 17 18 5/8
1994
First quarter.......................................... 21 1/4 19 3/4 17 7/8 18 3/4
Second quarter......................................... 21 3/4 21 1/2 18 5/8 20 3/4
Third quarter.......................................... 18 3/8 21 1/4 19 1/2 19 1/2
Fourth quarter......................................... 19 5/8 20 3/8 17 3/4 18 5/8
1995
First quarter.......................................... 20 1/4 20 3/8 18 5/8 19 1/2
Second quarter (through May 5, 1995)................... 20 7/16 21 19 3/8 21
</TABLE>
(1) Equivalent pro forma market values per ASF common share amounts represent
the high, low and last reported sales prices per share of FUNC Common Stock,
multiplied by the Current Exchange Ratio, rounded down to the nearest one-
eighth.
On December 2, 1994, the last business day prior to public announcement of
the execution of the Merger Agreement, the high, low and last reported sale
prices per share of FUNC Common Stock on the NYSE Tape and of ASF Common Stock
on The Nasdaq Stock Market were $40.00, $39.625, $40.00 and $16.50, $15.625,
$16.4375, respectively. On May 5, 1995, such prices were $46.875, $46.375,
$46.50 and $20.50, $20.25, $20.4375, respectively. See "FUNC -- Common Stock
Repurchase".
ASF stockholders are advised to obtain current market quotations for FUNC
Common Stock and ASF Common Stock. No assurance can be given as to the market
prices of FUNC Common Stock or ASF Common Stock at any time before the Effective
Date or as to the market price of FUNC Common Stock thereafter.
The Merger Agreement provides for the filing of a listing application with
the NYSE covering the FUNC Shares. It is a condition to consummation of the
Merger that the FUNC Shares be authorized for listing on the NYSE, effective
upon official notice of issuance. See " -- Conditions to Consummation;
Termination".
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<PAGE>
DIVIDENDS
The following table sets forth (i) the cash dividends paid or declared on
FUNC Common Stock and ASF Common Stock with respect to each calendar quarter
since January 1, 1993, and (ii) the equivalent pro forma cash dividends paid per
share of ASF Common Stock, based on the Current Exchange Ratio. The actual
Exchange Ratio will depend on the FUNC Average Closing Price and may be higher
or lower than the Current Exchange Ratio.
<TABLE>
<CAPTION>
EQUIVALENT PRO FORMA
FUNC ASF PER ASF COMMON SHARE (1)
<S> <C> <C> <C>
1993
First quarter.............................................................. $.35 -- .16
Second quarter............................................................. .35 -- .16
Third quarter.............................................................. .40 -- .18
Fourth quarter............................................................. .40 -- .18
1994
First quarter.............................................................. .40 -- .18
Second quarter............................................................. .40 -- .18
Third quarter.............................................................. .46 -- .21
Fourth quarter............................................................. .46 -- .21
1995
First quarter.............................................................. .46 -- .21
Second quarter............................................................. $.46 -- .21
</TABLE>
(1) Equivalent pro forma cash dividends paid per ASF common share amounts
represent FUNC historical dividend rates per share, multiplied by the
Current Exchange Ratio, rounded to the nearest cent. The current annualized
dividend rate per share for FUNC Common Stock, based upon the most recently
declared quarterly dividend rate of $.46 per share payable on June 15, 1995,
would be $1.84. On an equivalent pro forma basis, such current annualized
FUNC dividend per ASF common share would be $.84, based on the Current
Exchange Ratio. Future FUNC and ASF dividends are dependent upon their
respective earnings and financial condition, government regulations and
policies, and other factors.
See "FUNC -- Certain Regulatory Considerations; PAYMENT OF DIVIDENDS" AND
"DESCRIPTION OF FUNC CAPITAL STOCK".
As to the securities of ASF or FUNC, as of the date of this Proxy
Statement/Prospectus, no dividends are in arrears nor does there exist any
default in principal or interest of such securities.
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<PAGE>
ASF
GENERAL
Financial and other information relating to ASF, including information
relating to ASF's directors and executive officers, is set forth in (i) ASF's
1994 Form 10-K, a copy of which is set forth in ASF's 1994 Annual Report to
Stockholders which accompanies this Proxy Statement/Prospectus, and (ii)
sections of this Proxy Statement/Prospectus under the following headings:
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT", "ELECTION OF
DIRECTORS", "BOARD OF DIRECTORS AND COMMITTEES", "EXECUTIVE COMPENSATION", and
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS". The following is a brief
summary of ASF's history and business, and is qualified in its entirety by
reference to more detailed information contained in ASF's 1994 Form 10-K.
HISTORY AND BUSINESS
Headquartered in Miami, Florida, ASF was originally chartered in 1950 by
the Florida Department of Banking and Finance as a mutual savings and loan
association and was converted into a Florida capital stock savings and loan
association in 1976. On May 14, 1991, ASF converted into a federally-chartered
stock savings bank. ASF is one of the largest thrift institutions headquartered
in Florida based on total assets. As of December 31, 1994 and for the year then
ended, ASF reported assets of $3.6 billion, loans receivable, net and loans held
for sale of $2.0 billion, deposits of $2.3 billion, stockholders' equity of $217
million and net income of $19 million, and as of such date ASF operated through
29 retail offices in south Florida, eight mortgage origination offices in
Florida and two loan production offices in Chicago. As of December 31, 1994, ASF
employed 725 full-time employees.
As a member of the Federal Home Loan Bank System with deposits insured by
the FDIC through the SAIF, ASF is subject to supervision, examination and
regulation by the OTS and the FDIC, and also is subject to the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") and the Federal Housing Finance Board.
As of the Record Date, Enstar owned approximately 48.4 percent of the
outstanding shares of ASF Common Stock. The remaining shares are publicly held
and trade on the Nasdaq National Market under the symbol "ASFL". Enstar is a
unitary savings and loan holding company of ASF. See "THE MERGER -- Background
and Reasons; ASF" and "BOARD OF DIRECTORS AND COMMITTEES -- Compensation
Committee Interlocks and Insider Participation; ENSTAR CHAPTER 11 PROCEEDINGS".
ASF's principal business is attracting deposits from the public and
originating and investing in residential real estate mortgage and consumer loans
and investing in mortgage-backed securities ("MBSs") such as those guaranteed by
the Federal National Mortgage Association, Federal Home Loan Mortgage
Corporation, or Government National Mortgage Association, and has included
privately issued MBSs. ASF's primary sources of revenues are interest earned on
mortgage loans and MBSs, fees earned in connection with loans and deposits and
income earned on its portfolio of loans serviced for others. Its principal
expense is interest incurred on interest bearing liabilities, including deposits
and borrowings.
ASF's operating results depend to a significant degree on the spread
between the interest income it receives from loans and investments and the
interest cost of deposits and borrowings.
ASF's sources of new funds are primarily deposits, MBSs, collateralized
mortgage obligations, loan repayments, reverse repurchase agreements and
borrowings from the FHLB of Atlanta. ASF leases office space in its retail
facilities to American Securities Investment Corp., a wholly-owned subsidiary of
ASF, which contracts with an unaffiliated company (licensed as a securities
broker/dealer) for the distribution of securities to the public, including ASF's
customers. ASF also subleases space to a corporate affiliate of the third party
to distribute insurance products, such as annuities.
ASF's lending operations currently consist of permanent residential real
estate lending, residential land and construction lending, commercial real
estate lending and consumer lending (including automobile loans, guaranteed
student loans and home equity lines of credit).
ASF's operating strategy has emphasized traditional thrift activities
uniquely suited to community needs through the expansion of its retail banking
activities and loan originations. In particular, efforts to achieve continuing
core earnings focus primarily on strengthening (i) originations of residential
first and second mortgage loans and multifamily first mortgage loans on existing
properties, (ii) the indirect automobile lending business, (iii) residential
land and construction lending and (iv) student lending. ASF has agreed with FUNC
in the Merger Agreement to operate its business in the ordinary course and in
accordance with past practices (subject to restrictions and exceptions contained
in the Merger Agreement) pending consummation of the Merger. See "THE
MERGER -- Business Pending Consummation".
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FUNC
GENERAL
Financial and other information relating to FUNC, including information
relating to FUNC's directors and executive officers, is set forth in FUNC's 1994
Annual Report on Form 10-K and 1995 Annual Meeting Proxy Statement, copies of
which may be obtained from FUNC as indicated under "AVAILABLE INFORMATION".
HISTORY AND BUSINESS
FUNC was incorporated under the laws of North Carolina in 1967 and is
registered as a bank holding company under the BHCA. Pursuant to a corporate
reorganization in 1968, First Union National Bank of North Carolina ("FUNB-NC")
and First Union Mortgage Corporation, a mortgage banking firm acquired by
FUNB-NC in 1964, became subsidiaries of FUNC.
In addition to FUNB-FL and FUNB-NC, FUNC also operates banks in North
Carolina, South Carolina, Georgia, Tennessee, Virginia, Maryland and Washington,
D.C. In addition to providing a wide range of commercial and retail banking and
trust services through its banking subsidiaries, FUNC also provides various
other financial services, including mortgage banking, capital markets services,
insurance and securities' brokerage services, through other subsidiaries.
Since the 1985 Supreme Court decision upholding regional interstate banking
legislation, FUNC has concentrated its efforts on building a large, regional
banking organization in what it perceives to be some of the better banking
markets in the southeastern and south atlantic regions of the United States.
Since November 1985, FUNC has completed 50 banking related acquisitions,
including the more significant completed acquisitions (I.E., involving the
acquisition of $3.0 billion or more of assets or deposits) set forth in the
following table.
<TABLE>
<CAPTION>
ASSETS/ CONSIDERATION/
NAME HEADQUARTERS DEPOSITS(1)(2) ACCOUNTING TREATMENT COMPLETION DATE
<S> <C> <C> <C> <C>
Atlantic Bancorporation....................... Florida $3.8 billion common stock/pooling November 1985
Northwestern Financial Corporation............ North Carolina 3.0 billion common stock/pooling December 1985
First Railroad & Banking Company of Georgia... Georgia 3.7 billion common stock/pooling November 1986
Florida National Banks of Florida, Inc........ Florida 7.9 billion cash and preferred January 1990
stock/purchase
Southeast banks............................... Florida 9.9 billion cash, notes and preferred September 1991
stock/
purchase
Resolution Trust Company ("RTC") 5.3 billion cash/purchase 1991-1994
acquisitions................................ Florida,
Georgia,
Virginia
Dominion Bankshares Corporation............... Virginia 8.9 billion common stock and March 1993
preferred stock/pooling
Georgia Federal Bank, FSB..................... Georgia 4.0 billion cash/purchase June 1993
First American Metro Corp..................... Virginia 4.6 billion cash/purchase June 1993
ASF........................................... Florida $3.6 billion common stock/purchase
</TABLE>
(1) The dollar amounts indicated represent the assets of the related
organization as of the last reporting period prior to acquisition, except
for (i) the dollar amount relating to RTC acquisitions, which represents
savings and loan deposits acquired from the RTC and (ii) the dollar amount
relating to Southeast banks, which represent assets of the two banking
subsidiaries of Southeast Banking Corporation acquired from the FDIC.
(2) In addition, FUNC purchased Lieber & Company ("Lieber"), a mutual fund
advisory company with approximately $3.4 billion in assets under management,
in June 1994. Since such assets are not owned by Lieber, they are not
reflected on FUNC's balance sheet.
FUNC is continually evaluating acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of FUNC's book value and net income
per common share
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may occur in connection with any future transactions. See " -- Certain
Regulatory Considerations; INTERSTATE BANKING AND BRANCHING LEGISLATION".
COMMON STOCK REPURCHASE
Between December 5, 1994 and February 14, 1995, FUNC has repurchased in the
open market 3.8 million shares of FUNC Common Stock of the shares of FUNC Common
Stock expected to be issued in the Merger, at a cost of $161 million. In
addition, between February 28, 1995 and May 5, 1995, FUNC has repurchased in the
open market an additional 2.7 million shares of FUNC Common Stock in connection
with pending purchase accounting acquisitions involving the issuance of FUNC
Common Stock as consideration, at a cost of $122 million. The Board of Directors
of FUNC has also authorized the repurchase from time to time of up to 13.9
million additional shares of FUNC Common Stock. See "RECENT DEVELOPMENTS -- FUNC
Acquisitions".
CERTAIN REGULATORY CONSIDERATIONS
AS A BANK HOLDING COMPANY, FUNC IS SUBJECT TO REGULATION UNDER THE BHCA AND
TO ITS EXAMINATION AND REPORTING REQUIREMENTS. THE FOLLOWING DISCUSSION SETS
FORTH CERTAIN OF THE MATERIAL ELEMENTS OF THE REGULATORY FRAMEWORK APPLICABLE TO
BANK HOLDING COMPANIES AND THEIR SUBSIDIARIES AND PROVIDES CERTAIN SPECIFIC
INFORMATION RELEVANT TO FUNC. TO THE EXTENT THAT THE FOLLOWING INFORMATION
DESCRIBES STATUTORY AND REGULATORY PROVISIONS, IT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE PARTICULAR STATUTORY AND REGULATORY PROVISIONS. A CHANGE IN
APPLICABLE STATUTES, REGULATIONS OR REGULATORY POLICY MAY HAVE A MATERIAL EFFECT
ON THE BUSINESS OF FUNC.
GENERAL
FUNC is a bank holding company within the meaning of the BHCA and is
registered as such with the Federal Reserve Board. Under the BHCA, bank holding
companies may not directly or indirectly acquire the ownership or control of
more than five percent of the voting shares or substantially all of the assets
of any company, including a bank, without the prior approval of the Federal
Reserve Board. Federal Reserve Board approval is not required for the Merger
because a national bank, the Subsidiary, will actually acquire ASF. See "THE
MERGER -- Regulatory Approvals". In addition, bank holding companies are
generally prohibited under the BHCA from engaging in nonbanking activities,
subject to certain exceptions.
The earnings of FUNC are affected by general economic conditions,
management policies and the legislative and governmental actions of various
regulatory authorities, including the Federal Reserve Board and the OCC. In
addition, there are numerous governmental requirements and regulations which
affect the activities of FUNC.
PAYMENT OF DIVIDENDS
FUNC is a legal entity separate and distinct from its banking and other
subsidiaries. A major portion of FUNC's revenues result from amounts paid as
dividends to FUNC by its national bank subsidiaries. The prior approval of the
OCC is required if the total of all dividends declared by a national bank in any
calendar year will exceed the sum of such bank's net profits for that year and
its retained net profits for the preceding two calendar years, less any required
transfers to surplus. Federal law also prohibits any national bank from paying
dividends which would be greater than such bank's undivided profits after
deducting statutory bad debt in excess of such bank's allowance for loan losses.
Under the foregoing dividend restrictions and certain restrictions
applicable to certain of FUNC's nonbanking subsidiaries, as of December 31,
1994, FUNC's subsidiaries, without obtaining affirmative governmental approvals,
could pay aggregate dividends of $397 million to FUNC. During 1994, FUNC's
subsidiaries paid $682 million in cash dividends to FUNC.
In addition, FUNC and its national bank subsidiaries are subject to various
general regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain adequate capital above regulatory
minimums. The appropriate federal regulatory authority is authorized to
determine under certain circumstances relating to the financial condition of a
national bank or bank holding company that the payment of dividends would be an
unsafe or unsound practice and to prohibit payment thereof. The OCC and the FDIC
have indicated that paying dividends that deplete a bank's capital base to an
inadequate level would be an unsound and unsafe banking practice. The OCC, the
FDIC and the Federal Reserve Board have each indicated that banking
organizations should generally pay dividends only out of current operating
earnings.
BORROWINGS
There are also various legal restrictions on the extent to which each of
FUNC and its nonbank subsidiaries can borrow or otherwise obtain credit from its
bank subsidiaries. In general, these restrictions require that any such
extensions of credit must
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be secured by designated amounts of specified collateral and are limited, as to
any one of FUNC or such nonbank subsidiaries, to ten percent of the lending
bank's capital stock and surplus, and as to FUNC and all such nonbank
subsidiaries in the aggregate, to 20 percent of such lending bank's capital
stock and surplus.
CAPITAL
The minimum guidelines for the ratio of capital to risk-weighted assets
(including certain off-balance sheet activities, such as standby letters of
credit) is eight percent. At least half of the total capital is to be composed
of common equity, retained earnings and a limited amount of qualifying perpetual
preferred stock, less certain intangibles ("tier 1 capital" and together with
tier 2 capital "total capital"). The remainder may consist of subordinated debt,
qualifying preferred stock and a limited amount of the loan loss allowance
("tier 2 capital"). At December 31, 1994, FUNC's tier 1 and total capital ratios
were 7.76 percent and 12.94 percent, respectively. On an FUNC and ASF combined
basis, such ratios at December 31, 1994, would have been 7.50 percent and 12.57
percent, respectively.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum leverage ratio of tier 1 capital to adjusted average quarterly assets
("leverage ratio") equal to three percent for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating. All
other bank holding companies will generally be required to maintain a leverage
ratio of from at least four to five percent. FUNC's leverage ratio at December
31, 1994, was 6.12 percent. On an FUNC and ASF combined basis, such ratio at
December 31, 1994, would have been 5.82 percent. The guidelines also provide
that bank holding companies experiencing internal growth or making acquisitions
will be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "tangible tier 1 leverage ratio" (deducting all
intangibles) in evaluating proposals for expansion or new activity. The Federal
Reserve Board has not advised FUNC of any specific minimum leverage ratio or
tangible tier 1 leverage ratio applicable to it.
Each of FUNC's subsidiary national banks is subject to similar capital
requirements adopted by the OCC. Each of FUNC's subsidiary banks had a leverage
ratio in excess of 5.68 percent, as of December 31, 1994. The OCC has not
advised any of the subsidiary national banks of any specific minimum leverage
ratio applicable to it.
As of December 31, 1994, the capital ratios of FUNC's banking subsidiaries,
which consist of FUNB-NC, First Union National Bank of South Carolina
("FUNB-SC"), First Union National Bank of Georgia ("FUNB-GA"), FUNB-FL, First
Union National Bank of Washington, D.C. ("FUNB-DC"), First Union National Bank
of Maryland ("FUNB-MD"), First Union National Bank of Tennessee ("FUNB-TN"),
First Union National Bank of Virginia ("FUNB-VA") and First Union Home Equity
Bank, N.A. ("FUHEB") were as follows:
<TABLE>
<CAPTION>
REGULATORY
MINIMUM FUNB-NC FUNB-SC FUNB-GA FUNB-FL FUNB-DC FUNB-MD FUNB-TN FUNB-VA FUHEB
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tier 1 capital ratio......... 4% 7.32 7.88 8.26 7.95 16.75 20.53 12.76 9.21 7.60
Total capital ratio.......... 8 10.69 12.15 11.18 10.76 18.03 21.81 14.02 13.11 12.10
Leverage ratio............... 3-5% 6.10 5.77 5.69 5.91 8.33 12.82 8.47 7.10 7.22
</TABLE>
Banking regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations, including a proposal to add an
interest rate risk component to risk-based capital guidelines.
FIRREA
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), among other things, imposes liability on an institution the deposits
of which are insured by the FDIC, such as FUNC's subsidiary national banks, for
certain potential obligations to the FDIC incurred in connection with other
FDIC-insured institutions under common control with such institution.
Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the bank's stockholders, pro rata and, to the
extent necessary, if any such assessment is not paid by any stockholder after
three months notice, to sell the stock of such stockholder to make good the
deficiency. Under Federal Reserve Board policy, FUNC is expected to act as a
source of financial strength to each of its subsidiary banks and to commit
resources to support each of such subsidiaries. This support may be required at
times when, absent such Federal Reserve Board policy, FUNC may not find itself
willing or able to provide it.
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Any capital loans by a bank holding company to any of its subsidiary banks
are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary banks. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
FDICIA
In December 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 (as amended, "FDICIA") was enacted, which substantially revises the bank
regulatory and funding provisions of the FDI Act and makes revisions to several
other federal banking statutes.
Among other things, the FDICIA requires the federal banking agencies to
take "prompt corrective action" in respect of depository institutions that do
not meet minimum capital requirements. The FDICIA establishes five capital
tiers: "well capitalized"; "adequately capitalized"; "undercapitalized";
"significantly undercapitalized"; and "critically undercapitalized". A
depository institution's capital tier will depend upon how its capital levels
compare to various relevant capital measures and certain other factors, as
established by regulation.
Each of the OCC and the FDIC has adopted substantially identical
regulations establishing relevant capital measures and relevant capital levels.
The relevant capital measures are the total capital ratio, tier 1 capital ratio
and the leverage ratio. Under the regulations, a regulated bank will be (i)
"well capitalized" if it has a total capital ratio of ten percent or greater, a
tier 1 capital ratio of six percent or greater and a leverage ratio of five
percent or greater and is not subject to any order or written directive by the
OCC or the FDIC, as the case may be, to meet and maintain a specific capital
level for any capital measure; (ii) "adequately capitalized" if it has a total
capital ratio of eight percent or greater, a tier 1 capital ratio of four
percent or greater and a leverage ratio of four percent or greater (three
percent in certain circumstances) and is not "well capitalized"; (iii)
"undercapitalized" if it has a total capital ratio of less than eight percent, a
tier 1 capital ratio of less than four percent or a leverage ratio of less than
four percent (three percent in certain circumstances); (iv) "significantly
undercapitalized" if it has a total capital ratio of less than six percent, a
tier 1 capital ratio of less than three percent or a leverage ratio of less than
three percent; and (v) "critically undercapitalized" if its tangible equity is
equal to or less than two percent of average quarterly tangible assets. As of
December 31, 1994, all of FUNC's subsidiary banks had capital levels that
qualify them as being "well capitalized" under such regulations.
The FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
"undercapitalized". "Undercapitalized" depository institutions are subject to
growth limitations and are required to submit a capital restoration plan. The
federal banking agencies may not accept a capital plan without determining,
among other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital. In
addition, for a capital restoration plan to be acceptable, the depository
institution's parent holding company must guarantee that the institution will
comply with such capital restoration plan. The aggregate liability of the parent
holding company is limited to the lesser of: (i) an amount equal to five percent
of the depository institution's total assets at the time it became
"undercapitalized"; and (ii) the amount which is necessary (or would have been
necessary) to bring the institution into compliance with all capital standards
applicable with respect to such institution as of the time it fails to comply
with the plan. If a depository institution fails to submit an acceptable plan,
it is treated as if it is "significantly undercapitalized".
"Significantly undercapitalized" depository institutions may be subject to
a number of requirements and restrictions, including orders to sell sufficient
voting stock to become "adequately capitalized", requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
"Critically undercapitalized" institutions are subject to the appointment of a
receiver or conservator.
The FDICIA directs that each federal banking agency prescribe standards, in
some cases to the extent such agency determines such standards to be
appropriate, for depository institutions relating to internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth and quality, compensation,
earnings and stock valuation, and such other standards as the agency deems
appropriate.
The FDICIA also contains a variety of other provisions that may affect the
operations of FUNC, including new reporting requirements, regulatory standards
or guidelines for real estate lending, "truth in savings" provisions, the
requirement that a depository institution give 90 days' prior notice to
customers and regulatory authorities before closing any branch and a prohibition
on the acceptance or renewal of brokered deposits by depository institutions
that are not "well capitalized" or are
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<PAGE>
"adequately capitalized" and have not received a waiver from the FDIC. Under
regulations relating to the brokered deposit prohibition, all of FUNC's
subsidiary banks are "well capitalized" and not subject to the prohibition.
DEPOSITOR PREFERENCE STATUTE
Legislation has been enacted providing that deposits and certain claims for
administrative expenses and employee compensation against an insured depository
institution would be afforded a priority over other general unsecured claims
against such an institution, including federal funds and letters of credit, in
the "liquidation or other resolution" of such an institution by any receiver.
INTERSTATE BANKING AND BRANCHING LEGISLATION
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic limitation beginning one year after enactment. In
addition, beginning June 1, 1997, a bank may merge with a bank in another state
as long as neither of the states has opted out of interstate branching between
the date of enactment of the IBBEA and May 31, 1997. The IBBEA further provides
that states may enact laws permitting interstate merger transactions prior to
June 1, 1997. A bank may establish and operate a DE NOVO branch in a state in
which the bank does not maintain a branch if that state expressly permits DE
NOVO branching. Once a bank has established branches in a state through an
interstate merger transaction, the bank may establish and acquire additional
branches at any location in the state where any bank involved in the interstate
merger transaction could have established or acquired branches under applicable
federal or state law. A bank that has established a branch in a state through DE
NOVO branching may establish and acquire additional branches in such state in
the same manner and to the same extent as a bank having a branch in such state
as a result of an interstate merger. If a state opts out of interstate branching
within the specified time period, no bank in any other state may establish a
branch in the opting out state, whether through an acquisition or DE NOVO.
BHCA LEGISLATION
Various bills have been introduced into the United States Congress that
would repeal in some respects the provisions of the Glass-Steagall Act
prohibiting certain banking organizations from engaging in certain securities
activities and the provisions of the BHCA prohibiting affiliations between
banking organizations and non-banking organizations. FUNC cannot predict if and
when any such legislation or any similar legislation may be enacted.
DESCRIPTION OF FUNC CAPITAL STOCK
THE DESCRIPTIVE INFORMATION SUPPLIED HEREIN OUTLINES CERTAIN PROVISIONS OF
THE ARTICLES OF INCORPORATION, AS AMENDED (THE "ARTICLES"), AND BYLAWS OF FUNC
AND THE NORTH CAROLINA BUSINESS CORPORATION ACT (THE "NCBCA"). THE INFORMATION
DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ALL RESPECTS BY REFERENCE TO
THE PROVISIONS OF FUNC'S ARTICLES AND BYLAWS AND THE NCBCA.
AUTHORIZED CAPITAL
The authorized capital stock of FUNC consists of 750,000,000 shares of FUNC
Common Stock, 10,000,000 shares of Preferred Stock, no-par value per share
("FUNC Preferred Stock"), and 40,000,000 shares of FUNC Class A Preferred Stock,
no-par value per share ("FUNC Class A Preferred Stock"). As of December 31,
1994, there were 176,033,912 shares of FUNC Common Stock, 6,318,350 shares of
Series 1990 Cumulative Perpetual Adjustable Rate Preferred Stock (the "FUNC
Series 1990 Preferred Stock"), constituting a single series of FUNC Preferred
Stock, and no shares of FUNC Class A Preferred Stock issued and outstanding. The
FUNC Preferred Stock and FUNC Class A Preferred Stock are each issuable in one
or more series and, with respect to any series, the Board of Directors of FUNC,
subject to certain limitations, is authorized to fix the numbers of shares,
dividend rates, liquidation prices, liquidation rights of holders, redemption,
conversion and voting rights and other terms of the series. Shares of FUNC Class
A Preferred Stock and FUNC Preferred Stock that are redeemed, repurchased or
otherwise acquired by FUNC have the status of authorized, unissued and
undesignated shares of FUNC Class A Preferred Stock and FUNC Preferred Stock,
respectively, and may be reissued. On December 20, 1994, the Board of Directors
of FUNC called the FUNC Series 1990 Preferred Stock for redemption on March 31,
1995, at the redemption price of $51.50 per share.
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FUNC COMMON STOCK
Subject to the prior rights of the holders of any FUNC Preferred Stock and
any FUNC Class A Preferred Stock then outstanding, holders of FUNC Common Stock
are entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor and, in the event of
liquidation or dissolution, to receive the net assets of FUNC remaining after
payment of all liabilities and after payment to holders of all shares of FUNC
Preferred Stock and FUNC Class A Preferred Stock of the full preferential
amounts to which such holders are respectively entitled, in proportion to their
respective holdings.
See "FUNC -- Certain Regulatory Considerations; PAYMENT OF DIVIDENDS".
Subject to the rights of the holders of any FUNC Preferred Stock and any
FUNC Class A Preferred Stock then outstanding, all voting rights are vested in
the holders of the shares of FUNC Common Stock, each share being entitled to one
vote on all matters requiring stockholder action and in the election of
directors. Holders of FUNC Common Stock have no preemptive, subscription or
conversion rights. All of the outstanding shares of FUNC Common Stock are fully
paid and nonassessable, and the shares issuable to the stockholders of ASF upon
consummation of the Merger will, upon issuance, be fully paid and nonassessable.
FUNC PREFERRED STOCK
All shares of each series of FUNC Preferred Stock must be of equal rank and
have the same powers, preferences and rights and are subject to the same
qualifications, limitations and restrictions, except with respect to dividend
rates, redemption prices, liquidation amounts, terms of conversion or exchange
and voting rights.
FUNC CLASS A PREFERRED STOCK
Shares of FUNC Class A Preferred Stock rank prior or superior to FUNC
Common Stock and on a parity with or junior to (but not prior or superior to)
FUNC Preferred Stock or any series thereof, in respect of the right to receive
dividends and/or the right to receive payments out of the net assets of FUNC
upon any involuntary or voluntary liquidation, dissolution or winding up of
FUNC. However, shares of FUNC Class A Preferred Stock do not have the right to
vote with shares of FUNC Series 1990 Preferred Stock for purposes of electing
two directors in the event of dividend arrearages, as described under " -- FUNC
Preferred Stock" above. Subject to the foregoing and the terms of any particular
series of FUNC Class A Preferred Stock, series of FUNC Class A Preferred Stock
may vary as to priority.
RIGHTS PLAN
Each share of FUNC Common Stock has attached to it one right (a "FUNC
Right") issued pursuant to a Shareholder Protection Rights Agreement (as
amended, the "FUNC Rights Agreement"). Each FUNC Right entitles its registered
holder to purchase one one-hundredth of a share of a junior participating series
of FUNC Class A Preferred Stock designed to have economic and voting terms
similar to those of one share of FUNC Common Stock, for $110.00 (the "Rights
Exercise Price"), subject to adjustment, after the earlier of: (i) the tenth
business day (subject to extension) after commencement of a tender or exchange
offer which, if consummated, would result in a person becoming the beneficial
owner of 15 percent or more of the outstanding shares of FUNC Common Stock (an
"Acquiring Person"); and (ii) the tenth business day after the first date (the
"Flip-in Date") of a public announcement that a person has become an Acquiring
Person (in either case, the "Separation Time"). The FUNC Rights will not trade
separately from the shares of FUNC Common Stock unless and until the Separation
Time occurs.
The FUNC Rights will not be exercisable until the business day following
the Separation Time. The FUNC Rights will expire on the earliest of: (i) the
Exchange Time (as defined below); (ii) the close of business on December 28,
2000; and (iii) the date on which the FUNC Rights are redeemed or terminated as
described below (in any such case, the "Expiration Time"). The Rights Exercise
Price and the number of FUNC Rights outstanding, or in certain circumstances the
securities purchasable upon exercise of the FUNC Rights, are subject to
adjustment upon the occurrence of certain events.
In the event that prior to the Expiration Time a Flip-in Date occurs, FUNC
will take such action as shall be necessary to ensure and provide that each FUNC
Right (other than FUNC Rights beneficially owned by an Acquiring Person or any
affiliate, associate or transferee thereof, which FUNC Rights shall become void)
shall constitute the right to purchase, from FUNC, shares of FUNC Common Stock
having an aggregate market price equal to twice the Rights Exercise Price for an
amount in cash equal to the then current Rights Exercise Price. In addition, the
Board of Directors of FUNC may, at its option, at any time after a Flip-in Date
and prior to the time that an Acquiring Person becomes the beneficial owner of
more
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than 50 percent of the outstanding shares of FUNC Common Stock, elect to
exchange all of the then outstanding FUNC Rights for shares of FUNC Common
Stock, at an exchange ratio of two shares of FUNC Common Stock per FUNC Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the Separation Time (the "Rights Exchange Rate").
Immediately upon such action by the Board of Directors (the "Exchange Time"),
the right to exercise the FUNC Rights will terminate and each FUNC Right will
thereafter represent only the right to receive a number of shares of FUNC Common
Stock equal to the Rights Exchange Rate. If FUNC becomes obligated to issue
shares of FUNC Common Stock upon exercise of or in exchange for FUNC Rights,
FUNC, at its option, may substitute therefor shares of junior participating FUNC
Class A Preferred Stock upon exercise of each FUNC Right at a rate of two
one-hundredths of a share of junior participating FUNC Class A Preferred Stock
upon the exchange of each FUNC Right.
The FUNC Rights are redeemable by FUNC at $0.01 per right, subject to
adjustment upon the occurrence of certain events, at any date prior to the date
on which they become exercisable and, in certain events, may be canceled and
terminated without any payment to the holders thereof. The FUNC Rights have no
voting rights and are not entitled to dividends.
The FUNC Rights will not prevent a takeover of FUNC. The FUNC Rights,
however, may cause substantial dilution to a person or group that acquires 15
percent or more of FUNC Common Stock unless the FUNC Rights are first redeemed
or terminated by the Board of Directors of FUNC. Nevertheless, the FUNC Rights
should not interfere with a transaction that is in the best interests of FUNC
and its stockholders because the FUNC Rights can be redeemed or terminated, as
hereinabove described, before the consummation of such transaction.
The complete terms of the FUNC Rights are set forth in the FUNC Rights
Agreement. The FUNC Rights Agreement is incorporated by reference as an exhibit
to the Registration Statement. A copy of the FUNC Rights Agreement can be
obtained upon written request to the Rights Agent, First Union National Bank of
North Carolina, Two First Union Center, Charlotte, North Carolina 28288-1154.
OTHER PROVISIONS
The Articles and Bylaws of FUNC contain a number of provisions which may be
deemed to have the effect of discouraging or delaying attempts to gain control
of FUNC, including provisions in the Articles: (i) classifying the Board of
Directors into three classes with each class to serve for three years with one
class being elected annually; (ii) authorizing the Board of Directors to fix the
size of the Board of Directors between nine and 30 directors; (iii) authorizing
directors to fill vacancies on the Board of Directors that occur between annual
meetings, except that vacancies resulting from a removal of a director by a
stockholder vote may only be filled by a stockholder vote; (iv) providing that
directors may be removed only for cause and only by affirmative vote of the
majority of shares entitled to be voted in the election of directors, voting as
a single class; (v) authorizing only the Board of Directors, the Chairman of the
Board or the President to call a special meeting of stockholders (except for
special meetings called under specified circumstances for holders of classes or
series of stock ranking superior to the FUNC Common Stock); and (vi) requiring
an 80 percent vote of stockholders entitled to vote in the election of
directors, voting as a single class, to alter any of the foregoing provisions.
The Bylaws include provisions setting forth specific conditions under
which: (i) business may be transacted at an annual meeting of stockholders; and
(ii) persons may be nominated for election as directors of FUNC at an annual
meeting of stockholders.
Two North Carolina "anti-takeover" statutes adopted in 1990, The North
Carolina Shareholder Protection Act and The North Carolina Control Share
Acquisition Act, allowed North Carolina corporations to elect to either be
covered or not be covered by such statutes. FUNC elected not to be covered by
such statutes.
In addition to the foregoing, in certain instances the issuance of
authorized but unissued shares of FUNC Common Stock, FUNC Class A Preferred
Stock or FUNC Preferred Stock may have an anti-takeover effect.
CERTAIN DIFFERENCES IN THE RIGHTS OF ASF AND FUNC STOCKHOLDERS
GENERAL
ASF is a federal savings bank subject to the provisions of the HOLA, the
rules and regulations of the OTS promulgated thereunder and, under certain
circumstances, Florida law. FUNC is a North Carolina corporation subject to the
provisions of the NCBCA. Stockholders of ASF will, upon consummation of the
Merger, become stockholders of FUNC. The rights of such stockholders as
stockholders of FUNC will then be governed by the Articles and Bylaws of FUNC,
in addition to the NCBCA.
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Set forth below are certain differences between the rights of an ASF
stockholder under ASF's Charter and Bylaws and the HOLA, on the one hand, and
the rights of an FUNC stockholder under FUNC's Articles and Bylaws and the
NCBCA, on the other hand.
The following summary does not reflect any rules of the NYSE or The Nasdaq
Stock Market that may apply to FUNC or ASF, respectively, in connection with the
matters discussed. THIS SUMMARY DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE HOLA, THE NCBCA, AND THE
ARTICLES OR CHARTER AND BYLAWS OF EACH CORPORATION.
AUTHORIZED CAPITAL
ASF. The authorized capital stock of ASF as set forth in ASF's Charter
consists of 24,000,000 shares of ASF Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share (the "ASF Preferred Stock"). Shares of
capital stock may be issued from time to time, for not less than their par
value, as authorized by the ASF Board, without approval of the stockholders,
except as otherwise provided in the Federal Stock Charter of ASF (the "ASF
Charter") or as required by applicable law, rule or regulation. Promissory notes
and future services may not constitute any portion of the consideration for the
stock. No shares of capital stock may be issued directly or indirectly to
officers, directors or controlling persons of ASF other than as part of a
general public offering or as directors' qualifying shares unless their issuance
or the plan under which they would be issued is approved by a majority of the
votes eligible to be cast at a meeting of ASF stockholders. Shares of ASF
Preferred Stock may be issued in one or more series, and the ASF Board may,
subject to certain limitations, fix and determine the relative rights and
preferences of the shares in any series, to the extent permitted by applicable
law. As of May 8, 1995, there were 11,755,943 shares of ASF Common Stock issued
and outstanding, 394,517 shares reserved for issuance upon the exercise of
unexercised employee stock options, 2,288,700 shares reserved for issuance upon
exercise of the Option and no shares of ASF Preferred Stock outstanding. The ASF
Charter was adopted by ASF's stockholders in connection with ASF's conversion
(the "Conversion") in 1991 from a Florida-chartered stock savings and loan
association to a federally-chartered stock savings bank. At that time, 2,750,000
shares of preferred stock were designated as $2.19 Cumulative Convertible
Preferred Stock, Series A of American Savings of Florida, F.S.B. ("Series A
Preferred Stock") and there were issued and outstanding 59,812 shares of Series
A Preferred Stock, all of which subsequently have been either converted or
redeemed in accordance with their express terms. Although the terms of the
Series A Preferred Stock contained in the Supplement to the ASF Charter provide
that these shares assume the status of authorized but unissued shares of
preferred stock (and shall not be reissued as shares of Series A Preferred
Stock), the ASF Charter provides that shares of preferred stock which are
converted or redeemed in accordance with their express terms shall be cancelled
and not reissued.
All of the outstanding shares of ASF Common Stock are fully paid and
nonassessable. Each holder of ASF Common Stock is entitled to one vote for each
share held. The holders of the capital stock of ASF are not entitled to
preemptive rights or cumulative voting. In addition to the voting rights granted
to holders of each class and series of capital stock of ASF under the ASF
Charter and the Amended and Restated Bylaws of ASF (the "ASF Bylaws"), the ASF
Charter provides that such holders have the rights to vote on amendments to the
ASF Charter and other transactions and matters, separately as a group, that
holders of the same class and series had under Florida law in effect immediately
prior to ASF's conversion (the "Conversion") in 1991 from a Florida-chartered
stock savings and loan association to a federally-chartered stock savings bank.
See " -- Anti-Takeover Provisions; ASF". The votes required under Florida law
for approval of the Merger Proposal, the Adjournment Proposal, the Election
Proposal and the Auditors Proposal will be satisfied if the votes required under
OTS regulations and the ASF Bylaws, as set forth in each proposal, are
satisfied.
In the event of liquidation or dissolution, holders of ASF Common Stock are
entitled to receive the net assets of ASF remaining after payment of all
liabilities in proportion to their respective holdings. See " -- Dividends and
Other Distributions; ASF".
FUNC. FUNC's authorized capital is set forth under "DESCRIPTION OF FUNC
CAPITAL STOCK -- Authorized Capital".
AMENDMENT OF ARTICLES OF INCORPORATION OR BYLAWS
ASF. An amendment to the ASF Charter must be proposed by the ASF Board,
preliminarily approved by the OTS and approved by the stockholders of ASF by a
majority of the total votes eligible to be cast at a meeting. To the extent
shares of stock are issued and outstanding in a given class or series, the ASF
Charter provides for voting by class or series in the event that a charter
amendment is proposed that would adversely affect the specific terms of any
class or series of capital stock as set forth in the charter. The ASF Bylaws may
be amended in a manner consistent with OTS regulations at any time by a majority
vote of the full ASF Board or a majority vote of the votes cast by stockholders
of ASF at a meeting of stockholders.
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FUNC. Under North Carolina law, an amendment to the Articles of FUNC
generally requires the recommendation of the Board of Directors of FUNC and the
approval of either a majority of all shares entitled to vote thereon or a
majority of the votes cast thereon, depending on the nature of the amendment. In
accordance with North Carolina law, the Board of Directors of FUNC may condition
its submission of the proposed amendment on any basis. An amendment to the
Bylaws of FUNC generally requires the approval of either the stockholders or the
Board of Directors of FUNC. The Board of Directors of FUNC generally may not
amend any Bylaw approved by the stockholders. Under certain circumstances, the
approval of the holders of at least two-thirds, or in some cases a majority, of
the outstanding shares of any series of FUNC Preferred Stock or FUNC Class A
Preferred Stock may be required to amend the FUNC Articles. In addition, certain
amendments to the Articles or Bylaws require the approval of not less than 80
percent of the outstanding shares of FUNC entitled to vote in the election of
directors, voting together as a single class. See "DESCRIPTION OF FUNC CAPITAL
STOCK".
SIZE AND CLASSIFICATION OF BOARD OF DIRECTORS
ASF. The ASF Charter provides that the authorized number of directors shall
be between six and fifteen, except when a greater number is approved by the
Director of the OTS. Subject to this limitation, the number of directors at any
time is designated in the ASF Bylaws, which currently set the size of the ASF
Board at nine directors. The ASF Bylaws may be amended, and therefore the number
of directors may be determined, by a majority vote of the full ASF Board. See
" -- Amendment of Articles of Incorporation or Bylaws; ASF". The ASF Bylaws
provide that a meeting for the election of directors shall occur annually and
that directors shall serve until the next succeeding annual meeting and until
their successors are elected and qualified. The ASF Board is not divided into
classes for election purposes.
FUNC. The size of the Board of Directors of FUNC is determined by the
affirmative vote of a majority of the Board of Directors of FUNC, provided that
the FUNC Board of Directors may not set the number of directors at less than
nine nor more than 30, and provided further that no decrease in the number of
directors may shorten the term of any director then in office. The number of
directors of FUNC is currently set at 25. The FUNC Board of Directors is divided
into three classes, each as nearly as possible equal in number as the others,
with one class being elected annually. See "DESCRIPTION OF FUNC CAPITAL STOCK".
REMOVAL OF DIRECTORS BY STOCKHOLDERS
ASF. Except for directors elected under specified circumstances by holders
of any class or series of stock, directors of ASF may be removed only for cause
and only at a meeting of stockholders called expressly for that purpose, by a
vote of the holders of a majority of the shares then entitled to vote at an
election of directors. Directors who were elected by holders of any class or
series of stock may be removed for cause only by a vote of the holders of a
majority of the shares of such class or series then entitled to vote at an
election of directors. If less than the entire board is to be removed, no one of
the directors may be removed if the votes cast against the removal would be
sufficient to elect a director if then voted at an election of directors.
FUNC. Except for directors elected under specified circumstances by holders
of any class or series of stock having a preference over the FUNC Common Stock
as to dividends or upon liquidation, directors of FUNC may be removed only for
cause and only by a vote of the holders of a majority of the shares then
entitled to vote in the election of directors, voting together as a single
class.
DIRECTOR EXCULPATION
ASF. The Florida Business Corporation Act (the "FBCA") provides that a
director is not personally liable for monetary damages to a corporation or any
other person, including its stockholders, for any statement, vote, decision or
failure to act, regarding corporate management or policy, unless: (i) the
director breached or failed to perform his duties as a director; and (ii) the
breach or failure constitutes (a) a violation of criminal law (with certain
exceptions), (b) a transaction from which the director derived an improper
personal benefit, (c) a circumstance in which the director would be liable for
an unlawful distribution under the FBCA, (d) in a proceeding by or in the right
of a corporation to procure a judgment in its favor or by or in the right of a
stockholder, conscious disregard for the best interest of the corporation, or
willful misconduct, or (e) in a proceeding by or in the right of someone other
than the corporation or a stockholder, recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property. The term
"recklessness," as used above, means the action, or omission to act, in
conscious disregard of a risk: (x) known, or so obvious that it should have been
known, to the director; and (y) known to the director, or so obvious that it
should have been known, to be so great as to make it highly probable that harm
would follow from such action or omission. Under the FBCA this limitation of
directors' liability need not be set forth in the corporation's charter.
Although
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the state of the law in this area is not settled, to the extent not preempted by
federal law or regulation, this limitation of liability may apply to ASF.
FUNC. FUNC's Articles provide for the elimination of personal liability of
each director of FUNC to the fullest extent permitted by the provisions of the
NCBCA, as the same may be in effect from time to time. The NCBCA does not permit
the elimination of such liability with respect to (i) acts or omissions the
director believed were clearly in conflict with the best interests of FUNC, (ii)
any liability under the NCBCA for unlawful distributions by FUNC, or (iii) any
transaction from which the director derived an improper personal benefit.
DIRECTOR CONFLICT OF INTEREST TRANSACTIONS
ASF. Under OTS regulations, each director or other affiliated person of ASF
must avoid placing himself or herself in a position which creates, or which
leads to or could lead to a conflict of interest or appearance of a conflict of
interest between the personal financial interests of that person and
accomplishment of the purposes of the HOLA. Under OTS guidelines, ASF directors
are prohibited from advancing their own personal or business interests, or those
of others, at the expense of ASF. The OTS has taken the position that a director
of an OTS-regulated institution with a potential conflict of interest in any
matter must disclose to the institution's board of directors the nature and
extent of the conflicting interest and the facts known to the director as to the
matter under consideration, and must refrain from participation in the
deliberations, voting and any other involvement in the matter.
Under OTS regulations, extensions of credit (including loans) to directors
of ASF and companies controlled by them (i) must be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, (ii) may not involve more
than the normal risk of repayment or present other unfavorable features, (iii)
are limited in amount (based in part on the capital position of ASF) and (iv)
may be subject to prior approval of a majority of the entire ASF Board with the
interested director not participating, directly or indirectly, in the vote. The
regulations provide further that a director's participation in the discussion,
or attempt to influence the voting, by the ASF Board constitutes indirect
participation in the vote.
FUNC. North Carolina law generally permits transactions involving a North
Carolina corporation and an interested director of that corporation if: (i) the
material facts of the transaction and the director's interest are disclosed and
a majority of disinterested shares entitled to vote thereon authorizes, approves
or ratifies the transaction; (ii) the material facts are disclosed and a
majority of disinterested directors or a committee of the board of directors
authorizes, approves or ratifies the transaction; or (iii) the transaction is
fair to the corporation. North Carolina law prohibits loans to directors or the
guaranteeing of their obligations by a North Carolina corporation unless
approved by a majority vote of disinterested stockholders or unless the
corporation's board of directors determines that the loan or guarantee benefits
the corporation and either approves the specific loan or guarantee or a general
plan of loans and guarantees by the corporation.
STOCKHOLDER MEETINGS
ASF. Special meetings of ASF stockholders may be called for any purpose,
unless otherwise prescribed by the regulations of the OTS, by the Chairman of
the Board, the President, or a majority of the ASF Board, and shall be called
upon the written request of the holders of not less than one-tenth of the
outstanding capital stock of ASF entitled to vote at the meeting. A majority of
the outstanding shares of ASF entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders. Except as
otherwise provided in the ASF Charter, the ASF Bylaws, or the rules and
regulations of the OTS, a majority of the votes cast is generally required for
any action by ASF stockholders.
FUNC. A special meeting of stockholders may be called for any purpose only
by the Board of Directors of FUNC, by the Chairman of FUNC's Board of Directors
or by FUNC's President (except for special meetings called under specified
circumstances for holders of any class or series of stock having a preference
over the FUNC Common Stock as to dividends or upon liquidation). A quorum for a
meeting of the stockholders of FUNC is a majority of the outstanding shares of
FUNC entitled to vote. Except as provided in FUNC's Articles or the NCBCA, a
majority of the votes cast is generally required for any action by the
stockholders of FUNC. North Carolina law provides that such quorum and voting
requirements may be increased only with the approval of the stockholders of
FUNC.
DIRECTOR NOMINATIONS
ASF. Under the ASF Bylaws, stockholders may nominate candidates for the ASF
Board by delivering to the Secretary of ASF a written nomination at least five
days prior to the date of an annual meeting; provided, however, that if the ASF
Board, acting as the nominating committee, fails to forward its slate of
nominees to the Secretary of ASF at least 20 days prior to the
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date of an annual meeting, nominations for directors may be made at the annual
meeting by any stockholder entitled to vote and shall be voted upon.
FUNC. FUNC's Bylaws establish procedures that must be followed for
stockholders to nominate persons for election to FUNC's Board of Directors. Such
nominations must be made by delivering written notice to the Secretary of FUNC
not less than 60 or more than 90 days prior to the annual meeting at which
directors will be elected; provided, however, that if less than 70 days' notice
of the date of the meeting is given, such written notice by the stockholder must
be so delivered not later than the tenth day after the day on which such notice
of the date of the meeting was given. Notice will be deemed to have been given
more than 70 days prior to the meeting if the meeting is called on the third
Tuesday of April regardless as to when public disclosure is made. The nomination
notice must set forth certain information about the person to be nominated
similar to that required to be disclosed in the solicitation of proxies for
election of directors pursuant to Items 7(a) and 7(b) of Regulation 14A under
the Exchange Act, and such person's written consent to being nominated and to
serving as a director if elected. The nomination notice must also set forth
certain information about the person submitting the notice, including the name
and address of the stockholder and the class and number of shares of FUNC owned
of record or beneficially by such stockholder. The Chairman of the meeting will,
if the facts warrant, determine that a nomination was not made in accordance
with the provisions prescribed by the Bylaws and the defective nomination will
be disregarded. The foregoing procedures do not apply to any director who is
nominated under specified circumstances by holders of any class or series of
stock having a preference over FUNC Common Stock as to dividends or upon
liquidation.
STOCKHOLDER PROPOSALS
ASF. Under the ASF Bylaws, any stockholder may make a proposal at an annual
meeting and the same may be discussed and considered, but unless stated in
writing and filed with the Secretary of ASF at least five days before the
meeting, a proposal shall be laid over for action at an adjourned, special, or
annual meeting of the stockholders taking place 30 days or more thereafter.
However, federal law requires that a stockholder proposal made in connection
with an annual meeting and submitted for inclusion in ASF's proxy statement
under Regulation 14A of the Exchange Act must be received at ASF's principal
executive offices not less than 120 calendar days in advance of the date of
ASF's proxy statement sent to stockholders in connection with the previous
year's annual meeting of stockholders, except in limited circumstances in which
a "reasonable time" prior to the proxy solicitation is required. The stockholder
also must comply with requirements concerning, among other things, minimum stock
ownership, notice and timeliness.
FUNC. FUNC's Bylaws establish procedures that must be followed for a
stockholder to submit a proposal to a vote of the stockholders of FUNC at an
annual meeting of stockholders. Such proposal must be made by the stockholder
delivering written notice to the Secretary of FUNC not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that if less than 70
days' notice of the date of the meeting is given, such written notice by the
stockholder must be so delivered not later than the tenth day after the day on
which such notice of the date of the meeting was given. Notice will be deemed to
have been given more than 70 days prior to the meeting if the meeting is called
on the third Tuesday of April. The stockholder proposal notice must set forth:
(i) a brief description of the proposal and the reasons for its submission; (ii)
the name and address of the stockholder, as they appear on FUNC's books; (iii)
the classes and number of shares of FUNC owned by the stockholder; and (iv) any
material interest of the stockholder in such proposal other than such holder's
interest as a stockholder of FUNC. The Chairman of the meeting will, if the
facts warrant, determine that any proposal was not properly submitted in
accordance with the provisions prescribed by the Bylaws and the defective
proposal will not be submitted to the meeting for a vote of the stockholders.
STOCKHOLDER PROTECTION RIGHTS PLAN
ASF. ASF does not have a stockholder protection rights plan.
FUNC. FUNC has adopted the FUNC Rights Agreement. See "DESCRIPTION OF FUNC
CAPITAL STOCK -- Rights Plan".
STOCKHOLDER INSPECTION RIGHTS; STOCKHOLDER LISTS
ASF. Under OTS regulations, qualified stockholders of ASF have the right,
upon making written demand stating a proper purpose, to examine, in person or by
agent or attorney, at any reasonable time or times, ASF's books and records of
account, minutes and record of stockholders and to make extracts therefrom. Such
right is limited to a stockholder or group of stockholders holding of record
shares of ASF Common Stock (i) having a cost of not less than $100,000 or
constituting not less than one percent of the outstanding ASF Common Stock,
provided in either case such stockholder or stockholders have
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held such stock for a period of at least six months before making such demand,
or (ii) constituting not less than five percent of the outstanding ASF Common
Stock.
In addition, after fixing a record date for a stockholders' meeting and at
least 20 days before such meeting, ASF is required under the ASF Bylaws to
prepare a list of stockholders entitled to vote at such stockholders' meeting
and to make the list available at the home office of ASF to any stockholder at
any time during usual business hours for a period of 20 days prior to such
meeting. This list is also available at the time and place of the meeting for
inspection by stockholders during the entire meeting. A stockholder list for the
Meeting is available for inspection by ASF stockholders in the manner described
above.
The above inspection rights may be denied to any stockholder or group of
stockholders if such person or persons refuses to furnish ASF, its transfer
agent or registrar, with an affidavit that such examination or inspection is not
for any purpose which is in the interest of a business or object other than the
business of ASF, that such stockholder has not within the five years preceding
the date of the affidavit sold or offered for sale, and does not now intend to
sell or offer for sale, any list of stockholders of ASF or any other
corporation, and that such stockholder has not within said five-year period
aided or abetted any other person in procuring any list of stockholders for the
purpose of selling or offering for sale such list. In addition, no stockholder
has the right to obtain, inspect or copy any portion of ASF's books and records
containing certain information relating to ASF's depositors and borrowers.
FUNC. Under the NCBCA, qualified stockholders have the right to inspect and
copy certain records of FUNC if their demand is made in good faith and for a
proper purpose. Such right of inspection requires that the stockholder give FUNC
at least five business days' written notice of the demand, describing with
reasonable particularity his purpose and the requested records. The records must
be directly connected with the stockholder's purpose. The rights of inspection
and copying extend not only to stockholders of record but also to beneficial
ownership which is certified to FUNC by the stockholder of record. However, FUNC
is under no duty to provide any accounting records or any records with respect
to any matter that FUNC determines in good faith may, if disclosed, adversely
affect FUNC in the conduct of its business or may constitute material non-public
information, and the rights of inspection and copying are limited to
stockholders who either have been stockholders for at least six months or who
hold at least five percent of the outstanding shares of any class of stock of
FUNC. A stockholder's agent or attorney has the same inspection and copying
rights as the stockholder he represents.
In addition, after fixing a record date for a stockholders' meeting, FUNC
is required to prepare a stockholder list with respect to such stockholders'
meeting and to make such list available at FUNC's principal office or at a place
identified in the meeting notice to any stockholder beginning two business days
after notice or such meeting is given and continuing through such meeting and
any adjournment thereof. Subject to the applicable provisions of the NCBCA, a
stockholder or his agent or attorney upon written demand at his own expense
during regular business hours is entitled to copy such list.
REQUIRED STOCKHOLDER VOTE FOR CERTAIN ACTIONS
ASF. Under OTS regulations, a combination of two depository institutions
that includes a federal stock association, such as ASF, requires approval by a
two-thirds vote of the entire board of each federal savings association entering
into the combination. A combination is defined by OTS regulations to include a
merger, a consolidation, and an acquisition of the assets or an assumption of
the liabilities of one institution by another. In general, the agreement in
which the combination is set forth must be approved by an affirmative vote of
two-thirds of the outstanding voting stock of the federal savings institutions
participating in the combination and by a majority of the shares of each voting
class entitled to vote as a class. Under certain circumstances in which ASF
would be the resulting institution, no approval would be required by ASF
stockholders. See "GENERAL INFORMATION -- Record Date; Votes Required".
FUNC. Under North Carolina law, except as otherwise provided below or in
the NCBCA, any plan of merger or share exchange involving FUNC would require
adoption by the Board of Directors, who would generally be required to recommend
its approval to the stockholder, who in turn would be required to approve the
plan by a vote of a simple majority of the outstanding shares. Except as
otherwise provided below or in the NCBCA, any sale, lease, exchange or other
disposition of all or substantially all of FUNC's assets not made in the usual
and regular course of business would generally require that the Board of
Directors recommend the proposed transaction to the stockholders who would be
required to approve the transaction by a vote of a simple majority of the
outstanding shares. In accordance with North Carolina law, the submission by the
Board of Directors of any such action may be conditioned on any basis,
including, without limitation, conditions regarding a supermajority voting
requirement or that no more than a certain number of shares indicate that they
will seek dissenters' rights.
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With respect to a plan of merger, no vote of the stockholders of FUNC is
required if FUNC is the surviving corporation and: (i) FUNC's Articles would
remain unchanged after the merger, subject to certain exceptions; (ii) each
stockholder of FUNC immediately before the merger would hold an identical number
of shares, with identical designations, limitations, preferences and relative
rights, after the merger; (iii) the number of shares of FUNC stock entitled to
vote unconditionally in the election of directors to be issued in the merger
(either by the conversion of securities issued in the merger or by the exercise
of rights and warrants issued in the merger) would not exceed 20 percent of the
shares of FUNC stock entitled to vote unconditionally in the election of
directors outstanding immediately before the merger; and (iv) the number of
shares of FUNC stock entitling holders to participate without limitation in
distributions to be issued in the merger (either by the conversion of securities
issued in the merger or by the exercise of rights and warrants issued in the
merger) would not exceed 20 percent of the shares of FUNC stock entitling
holders to participate without limitation in distributions outstanding
immediately before the merger.
With respect to a sale, lease, exchange or other disposition of all or
substantially all the assets of FUNC made upon the authority of the Board of
Directors, no vote of the stockholders of FUNC would be required if such
disposition is made in the usual and regular course of business or if such
disposition is made to a wholly-owned subsidiary of FUNC.
ANTI-TAKEOVER PROVISIONS
ASF. Under the ASF Charter stockholders of ASF are entitled to the voting
rights contained in the anti-takeover statutes under the FBCA to which holders
of the same class and series of capital stock of ASF were entitled immediately
prior to the Conversion. Under the "affiliated transactions" statute (which has
not changed in any material respect since the Conversion) certain business
transactions, including mergers, consolidations, certain sales, leases and other
dispositions of assets, stock issuances and other similar transactions between a
Florida corporation and an "interested" stockholder (defined generally as the
beneficial owner of more than ten percent of the outstanding voting stock of the
corporation) or a related party, require approval by two-thirds of the voting
stock not beneficially owned by the interested stockholder. This provision does
not apply (i) if the affiliated transaction is approved by a majority of the
disinterested directors (defined generally to be, or to have been elected by,
members of the board of directors who were members prior to the date on which
the interested stockholder became an interested stockholder); (ii) the
corporation has not had more than 300 stockholders of record at any time during
the three years prior to announcement of the transaction; (iii) the interested
stockholder has beneficially owned at least 80 percent of the corporation's
outstanding voting stock for at least five years preceding the date of
announcement of the transaction; (iv) the interested stockholder beneficially
owns at least 90 percent of the outstanding voting stock (other than shares
acquired directly from the corporation in a transaction not approved by a
majority of the disinterested directors); (v) the corporation is a registered
investment company; or (vi) in connection with the affiliated transaction,
certain price and procedural requirements are met. The Merger was approved by a
majority of the disinterested directors (as defined) of ASF and therefore is not
subject to the voting requirements of the affiliated transactions statute of the
FBCA.
The "control-share acquisitions" statute under the FBCA prevents an
acquiror who acquires voting stock in a Florida corporation within certain
specified ranges of voting power, from obtaining certain voting rights unless a
majority of disinterested stockholders approves a resolution granting the
rights. ASF elected not to be governed by the restrictions imposed by the
control-share acquisitions statute, in accordance with the provisions of such
statute.
In addition, the Change in Bank Control Act provides that no person, acting
directly or indirectly or through or in concert with one or more persons, may
acquire control of a savings association unless the OTS has been given 60 days'
prior written notice. Further, HOLA provides that no company may acquire control
of a savings association without the prior approval of the OTS. Any company that
acquires such control becomes a "savings and loan holding company" subject to
registration, examination and regulation by OTS. For these purposes, control of
a savings association is conclusively deemed to have been acquired by, among
other things, the acquisition of more than 25 percent of any class of voting
stock of a savings association or the ability to control the election of a
majority of the directors of a savings association. Moreover, control is
presumed to have been acquired, subject to rebuttal, upon the acquisition of
more than ten percent of any savings association, where certain enumerated
"control factors" are also present in the acquisition. The OTS may prohibit an
acquisition of control if it finds, among other things, that the acquisition
would result in a monopoly or substantially lessen competition.
FUNC. North Carolina has two anti-takeover statutes in force, The North
Carolina Shareholder Protection Act and The North Carolina Control Share
Acquisition Act. These statutes restrict business combinations with, and the
accumulation of shares of voting stock of, certain North Carolina corporations.
In accordance with the provisions of these statutes, FUNC elected not to be
covered by the restrictions imposed by these statutes. As a result, such
statutes do not apply to FUNC.
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DISSENTERS' OR APPRAISAL RIGHTS
ASF. OTS regulations provide generally for dissenters' appraisal rights
under certain circumstances. A stockholder of a federally-chartered savings
institution does not possess dissenters' appraisal rights if: (i) the
institution's stock was listed on the NYSE or the American Stock Exchange or
quoted on the Nasdaq National Market system (now known as The Nasdaq Stock
Market) on the date of the meeting of stockholders at which the combination was
acted upon, and the stockholder will receive "qualified consideration" in
exchange for his stock; or (ii) action by the institution's stockholders was not
required under OTS regulations in order to approve the combination. "Qualified
consideration" for this purpose means cash, shares of stock of any savings
institution or corporation that, on the effective date of the transaction, will
be listed on the NYSE or the American Stock Exchange or quoted on The Nasdaq
Stock Market, or any combination of such stock and cash. See "THE MERGER -- No
Appraisal Rights".
FUNC. North Carolina law generally provides dissenters' rights for mergers
and certain share exchanges that would require stockholder approval, sales of
all or substantially all of the assets (other than sales that are in the usual
and regular course of business and certain liquidations and court-ordered
sales), certain amendments to the articles of incorporation and any corporate
action taken pursuant to a stockholder vote to the extent the articles of
incorporation, bylaws or a resolution of the board of directors entitles
stockholders to dissent.
DIVIDENDS AND OTHER DISTRIBUTIONS
ASF. Under OTS regulations limitations are imposed upon "capital
distributions" by savings institutions, including cash dividends, payments to
repurchase or otherwise acquire the institution's shares, payments to
stockholders of another institution in a cash-out merger, and other
distributions charged against capital, including direct and indirect
distributions to affiliates. The limitations vary depending upon the capital
levels of the institution. In addition, OTS may prohibit a proposed capital
distribution by an institution, which would otherwise be permitted by the
regulation, if the OTS determines that the distribution would constitute an
unsafe and unsound practice. Under HOLA, ASF, as a savings institution
subsidiary of a holding company, must notify the Regional Director of OTS not
less than 30 days prior to each proposed declaration of a dividend.
As a condition to regulatory approval of Enstar's acquisition of ASF, ASF
entered into, and continues to operate under, the Regulatory Capital
Maintenance/Dividend Agreement (the "Capital Maintenance Agreement") among
Enstar, a subsidiary of Enstar and the Federal Savings and Loan Insurance
Corporation (a predecessor of OTS) which prohibits ASF from making distributions
unless specified net worth requirements are met. Under the Capital Maintenance
Agreement (and OTS regulations generally), ASF may not pay dividends or
repurchase stock unless such action would not reduce ASF's regulatory capital
below its regulatory capital requirement. If that condition is met, the Capital
Maintenance Agreement provides that ASF may pay dividends in an aggregate amount
of not more than (i) 50 percent of ASF's net income for its fiscal year, (ii) 75
percent of net income, if ASF's regulatory capital is equal to or greater than
its fully phased-in requirement, and (iii) 90 percent of net income, if ASF's
regulatory capital is equal to or greater than (a) its fully phased-in
regulatory capital requirements plus (b) two percent of ASF's liabilities. The
Capital Maintenance Agreement is more restrictive with respect to capital
distributions than OTS regulations generally.
FUNC. Under North Carolina law, FUNC generally may make dividends or other
distributions to its stockholders unless after the distribution either: (i) FUNC
would not be able to pay its debts as they become due in the usual course of
business; or (ii) FUNC's assets would be less than the sum of its liabilities
plus the amount that would be needed to satisfy the preferential dissolution
rights of stockholders whose preferential rights are superior to those receiving
the distribution. See "CERTAIN REGULATORY CONSIDERATIONS RELATING TO
FUNC -- Payment of Dividends" and "DESCRIPTION OF FUNC CAPITAL STOCK".
VOLUNTARY DISSOLUTION
ASF. The ASF Board may, under OTS regulations, propose a plan for
dissolution of ASF. The plan may provide for either: (i) appointment of the FDIC
or the RTC as receiver for the purpose of liquidation; (ii) transfer of all of
ASF's assets to another association and home-financing institution under federal
or state charter either for cash sufficient to pay all obligations of the bank
and retire all outstanding accounts or in exchange for that association's
payment of all of ASF's outstanding obligations and issuance of share accounts
or other evidence of interest to ASF's stockholders on a pro rata basis; or
(iii) dissolution in a manner proposed by the directors which they consider best
for all concerned. In order to take effect, the plan must be approved by the OTS
and by ASF's stockholders at a duly called meeting. ASF is not required to
obtain
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approval for voluntary dissolution where ASF transfers all of its assets and
liabilities to a bank in a transaction that is subject to the OTS' separate
rules governing merger, consolidation, purchase or sale of assets, or assumption
of liabilities.
FUNC. North Carolina law provides that FUNC may be dissolved if the Board
of Directors of FUNC proposes dissolution and a majority of the shares of FUNC
entitled to vote thereon approves. In accordance with North Carolina law, the
Board of Directors of FUNC may condition its submission of a proposal for
dissolution on any basis.
RESALE OF FUNC COMMON SHARES
The FUNC Shares have been registered under the Securities Act, thereby
allowing such shares to be traded freely and without restriction by those
holders of ASF Common Stock who receive such shares following consummation of
the Merger and who are not deemed to be "affiliates" (as defined under the
Securities Act, but generally including directors, certain executive officers
and ten percent or more stockholders) of ASF or FUNC. The Merger Agreement
provides that ASF will use its reasonable best efforts to cause each holder of
ASF Common Stock who is deemed by ASF to be an affiliate to enter into an
agreement with FUNC on or before the Effective Date providing, among other
things, that such affiliate will not transfer any FUNC Shares received by such
holder in the Merger except in compliance with the Securities Act. The Merger
Agreement further provides that shares of ASF Common Stock held by such
affiliates of ASF shall not be exchanged for FUNC Shares until FUNC receives
such an agreement. See "THE MERGER -- Exchange of ASF Stock Certificates". This
Proxy Statement/Prospectus does not cover any resales of FUNC Shares received by
affiliates of ASF. In addition, certain shares of FUNC Common Stock will be held
in escrow pursuant to the Escrow Agreement. See "THE MERGER -- Voting Agreement;
Escrow Agreement".
ADDITIONAL MATTERS
From time to time FUNB-FL and its affiliates have entered into transactions
with certain of the directors of ASF or their affiliates in the ordinary course
of business, including, without limitation, certain members of the ASF Board or
their affiliates maintaining deposit accounts and loans with FUNB-FL or its
affiliates. Additionally, from time to time, Goldman Sachs has maintained
business relationships with FUNC or its affiliates. See "THE MERGER -- Opinions
of Financial Advisors; GOLDMAN SACHS".
LEGAL OPINIONS
Certain legal matters associated with the Merger, including the validity of
the FUNC Shares being offered hereby will be passed upon for FUNC by Marion A.
Cowell, Jr., Esq., Executive Vice President, Secretary and General Counsel of
FUNC. Mr. Cowell is also a stockholder of FUNC and holds options to purchase
additional shares of FUNC Common Stock.
Sullivan & Cromwell, special counsel for FUNC, has delivered an opinion
concerning certain federal income tax consequences of the Merger. See "THE
MERGER -- Certain Federal Income Tax Consequences". Sullivan & Cromwell
regularly performs legal services for FUNC and its subsidiaries. Members of
Sullivan & Cromwell performing these legal services own shares of FUNC's Common
Stock.
Certain legal matters associated with the Merger will be passed upon for
ASF by Steel Hector & Davis, special counsel for ASF. From time to time, Steel
Hector & Davis performs legal services for FUNB-FL which are unrelated to the
Merger.
EXPERTS
The statements of consolidated financial condition of ASF as of December
31, 1994 and 1993, and the related statements of consolidated earnings,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1994, included in ASF's 1994 Form 10-K which is
incorporated by reference herein, have been incorporated by reference herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The aforementioned report of KPMG
Peat Marwick LLP covering ASF's consolidated financial statements refers to
changes in the methods of accounting for investments and income taxes in 1993.
The consolidated balance sheets of FUNC as of December 31, 1994 and 1993,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1994, included in FUNC's 1994 Annual Report to Stockholders which
is incorporated by reference in FUNC's 1994 Annual
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<PAGE>
Report on Form 10-K and incorporated by reference herein, have been incorporated
by reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
aforementioned report of KPMG Peat Marwick LLP covering FUNC's consolidated
financial statements refers to a change in the method of accounting for
investments in 1994.
OTHER PROPOSALS
At the Meeting, holders of ASF Common Stock as of the Record Date will be
asked to consider several matters (including annual meeting matters) in addition
to approval of the Merger and the Merger Agreement. These matters are discussed
under the captions "ADJOURNMENT OF MEETING," "ELECTION OF DIRECTORS," and
"RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS".
PROPOSAL 2
ADJOURNMENT OF MEETING
GENERAL
Stockholders of ASF are being asked to approve a separate proposal
authorizing the individuals named in the Proxy to vote to adjourn the Meeting
(if the Merger Agreement has not been terminated as of the time of the Meeting)
to another time and/or place in the event that there are not sufficient votes at
the time of the Meeting to approve the Merger and the Merger Agreement for the
purpose of soliciting additional votes in favor of the Merger and the Merger
Agreement, the election of each of the nine nominees for director and the
ratification of KPMG Peat Marwick LLP as independent auditors. While such an
adjournment would not invalidate any proxies previously submitted, including
those submitted by holders of ASF Common Stock voting against Proposal 1, it
would give ASF the opportunity to solicit additional proxies in favor of
Proposals 1, 3 and 4. In addition, any holder of ASF Common Stock could revoke a
proxy after an adjournment. See "GENERAL INFORMATION -- General".
As discussed in Proposal 1, approval of the Merger and the Merger Agreement
requires the affirmative votes of at least (i) two-thirds of the shares of ASF
Common Stock issued and outstanding on the Record Date, and (ii) a majority of
the Non-interested Shares represented and voted at the Meeting. ASF is
presenting this proposal to the ASF stockholders as a precautionary measure
because of the importance of the Merger Proposal to ASF stockholders and because
of the added burden of having to meet two separate voting requirements for
approval of the Merger Proposal.
If it is necessary to adjourn the Meeting and the adjournment is for a
period of less than 30 days, no notice of the time and place of the adjourned
meeting need be given the ASF stockholders, other than an announcement made at
the Meeting. If the Meeting is adjourned, Proposals 1, 3 and 4 will be
determined at the reconvened Meeting.
VOTE REQUIRED AND RECOMMENDATION
If a quorum is present at the Meeting, the affirmative vote of a majority
of the votes cast in person or by proxy, by persons entitled to vote at the
Meeting is required to adjourn the Meeting in order to solicit additional
proxies in favor of the Merger and the Merger Agreement. If a quorum is not
present, the affirmative vote of the holders of a majority of the shares of ASF
Common Stock represented in person or by proxy and entitled to vote at the
Meeting may adjourn the Meeting for solicitation of additional proxies.
THE ASF BOARD RECOMMENDS THAT HOLDERS OF ASF COMMON STOCK VOTE "FOR" PROPOSAL 2.
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PROPOSAL 3
ELECTION OF DIRECTORS
The persons named below have been nominated by the ASF Board to serve as
directors of ASF for a term of one year and until their successors are duly
elected and qualified, or until their earlier resignation, removal from office
or death. In addition, at the Effective Date the terms of the directors will
terminate as ASF will cease to exist as an independent entity and the directors
listed in this Proposal 3 will not become directors of FUNC or the Subsidiary.
All of the nominees named below currently serve as directors on the ASF Board.
ASF is not aware of any arrangement or understanding between Enstar or any other
person and any nominee pursuant to which such nominee has been nominated as a
director. Further, there are no such arrangements or understandings between ASF
and any nominee.
NOMINEES FOR DIRECTOR
Erwin Allen, age 73, director since July 1993. Retired. President and Vice
Chairman of the Board of Peninsula Federal, Miami, Florida, from 1978 to 1983.
Director, from 1983 until 1992, of Atico Financial, Miami, Florida. From 1972
until 1978, Senior Vice President of the Federal Home Loan Bank of Atlanta and
Supervisory Agent of the Federal Home Loan Bank Board (Fourth District).
T. Wayne Davis, age 48, director since July 1993. President and Chairman of
the Board of Tine W. Davis Family -- WD Charities, Inc. since 1980, President of
Redwing Properties, Inc. since 1987, and of counsel to the Florida law firm of
Greenberg, Traurig et al. since April 1990. Director of Accustaff, Inc., a
temporary staffing agency, since February 1994, director of Enstar since June
1990, director of Winn-Dixie Stores, Inc. since 1981, director of Enterprise
National Bank since March 1989, director of Associated Industries of Florida
Property and Casualty Trust since 1986, Vice Chairman of the Board of Riverside
Golf Investments since September 1990 and Chairman of the Board of General
Parcel Service, Inc. since February 1989.
William H. Dukelow, age 52, director since March 1991. Financial advisor
with Prudential Securities Incorporated since December 1993. Investment
executive with PaineWebber Inc. from August 1991 until December 1993. Previously
associated with Prudential Securities Incorporated or its predecessor from 1987
until August 1991. Previously, Executive Vice President of Alliance Mortgage Co.
(formerly named Charter Mortgage Co.).
Nimrod T. Frazer, age 65, director since May 1993 and from May 1992 until
December 1992. Chairman of the Board, Acting President and Chief Executive
Officer, since October 1990, President, since May 1992, and director, since
August 1990, of Enstar. Chairman of the Board, since 1976, and Co-Founder of The
Frazer Lanier Company, a regional investment banking firm. Director of Rockdale
Industries, a Pattillo Company, Stone Mountain, Georgia. An executive officer of
Enstar Financial Services, Inc. ("Enstar Financial") and Christa Oil Company,
subsidiaries of Enstar, both of which, as well as Enstar, filed for protection
under Chapter 11 of the United States Bankruptcy Code in 1991. See "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Potential Change in
Control".
Barbara W. Gothard, age 57, director since July 1993. Since 1989, President
of The Gothard Group, Inc., Miami, Florida, a full-service communications agency
serving private and non-profit organizations regarding advertising, marketing
and public/community relations programs. Previously, Director of Corporate
Affairs of Burger King Corporation, which operates, develops and franchises a
system of quick-service restaurants.
Charles Daniel Kimbrel, age 45, director and Chairman of the Board since
March 1991. President and Chief Executive Officer, since 1985, of Thomson Oak
Flooring Company, a wood flooring products manufacturer. Previously, President
of several units of Ellis Banking Corporation, Sarasota, Florida, and Vice
President and regional executive for its successor, NCNB of Florida. Director of
Rockdale Industries, a Pattillo Company, Stone Mountain, Georgia. Director of
Palmetto Companies and Manatee Fruit Company, both of Bradenton, Florida.
Deirdre Y. Russell, age 32, director since March 1993. Assistant Director
of Fixed Income-Private Placements, The Retirement Systems of Alabama, since
March 1991. Vice President Finance and Treasurer of Enstar from November 1990
until February 1991. Assistant Treasurer of Enstar from June 1988 until November
1990.
Donald T. Senterfitt, age 75, director since November 1994. President and
Chief Executive Officer of The Pilot Group, L.C., consultants to financial
institutions, since July 1990. Vice Chairman and a member of the board of
directors of SunTrust Banks, Inc. or its affiliates from 1964 to 1989. Engaged
in the practice of law from 1948 to 1980. A trustee of Colonial Properties Trust
since September 1993. Director of Colonial Properties Holding Co., Inc.
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Stephen D. Taylor, age 49, director, President and Chief Executive Officer
of ASF since September 1991. Chief Credit Officer for U.S. non-credit-card
consumer portfolios at Citicorp, parent of Citibank, N.A., New York from October
1988 until September 1991.
The ASF Bylaws provide that the ASF Board shall consist of nine members.
The ASF Board has nominated nine persons for election as directors of ASF.
Therefore, proxies may not be voted for more than nine nominees.
The persons named in the enclosed form of proxy intend to vote all proxies
in favor of all nine nominees, unless a proxy is marked to indicate that such
authorization is expressly withheld. The ASF Board has no reason to believe that
any of these nominees will not serve if elected. If any of these nominees is
unable to stand for election at the time of the Meeting, the persons named in
the enclosed form of proxy intend to nominate and vote for the replacement
nominee or nominees recommended by a majority of the ASF Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ASF has not received any Schedules 13D or 13G notifying it of beneficial
ownership by any person of more than five percent of ASF Common Stock as of
April 26, 1995, other than a Schedule 13D, dated December 4, 1994 from FUNC, and
a Schedule 13G, dated May 3, 1991, as amended through December 12, 1994, from
Enstar. The information in the following table and related notes is based upon
statements in the Schedule 13D and the Schedule 13G, as amended:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS (1)
<S> <C> <C>
The Enstar Group, Inc. (2) 5,689,391 48.4
172 Commerce Street
Montgomery, Alabama
First Union Corporation (3) 2,288,786 19.5
One First Union Center
Charlotte, North Carolina
</TABLE>
(1) Based upon 11,755,943 shares of ASF Common Stock outstanding as of the close
of business on April 26, 1995.
(2) Enstar has sole voting and investment power with respect to the shares
stated. As directors of Enstar, Messrs. T. Wayne Davis and Nimrod T. Frazer,
directors of ASF, each states that he shares voting and investment power.
Messrs. Davis and Frazer disclaim beneficial ownership of those shares. See
" -- Security Ownership of Management". For a discussion of the ownership of
Old Enstar Common Stock, see " -- Potential Change in Control", "BOARD OF
DIRECTORS AND COMMITTEES -- Compensation Committee Interlocks and Insider
Participation", and "THE MERGER -- Interests of Certain Persons".
(3) 2,288,700 of the shares of ASF Common Stock deemed beneficially owned by
FUNC are purchasable by FUNC upon exercise of the Option, and 86 of such
shares are held by a subsidiary bank of FUNC in a fiduciary capacity with
sole voting power. The Option may be exercised only upon the happening of
certain events, none of which has occurred as of the date of this Proxy
Statement/Prospectus. Prior to the exercise of the Option, FUNC is not
entitled to any rights as a stockholder of ASF as to the shares covered by
the Option. See "THE MERGER -- Stock Option Agreement".
POTENTIAL CHANGE IN CONTROL
For a discussion of the change in control which would result from the
consummation of the Merger, see "THE MERGER". For a discussion of the potential
change in control which may result under the Voting Agreement and the Escrow
Agreement, see "THE MERGER -- Voting Agreement; Escrow Agreement". The Capital
Maintenance Agreement provides that Enstar and Enstar Financial (collectively
with Enstar, "Enstar Group") are obligated to maintain ASF's regulatory capital
at required levels. It also provides that if ASF does not meet a capital ratio
test stated in the agreement and Enstar Group fails to infuse sufficient
additional equity to restore ASF's capital ratio to the required level, OTS has
the right, among other things, to vote the ASF Common Stock held by Enstar, to
remove the ASF Board or to dispose of any or all of the ASF Common Stock held by
Enstar. For a discussion of certain restrictions under the Capital Maintenance
Agreement, see "CERTAIN DIFFERENCES IN THE RIGHTS OF ASF AND FUNC
STOCKHOLDERS -- Dividends and Other Distributions". Although ASF has
continuously met its current capital requirements since March 31, 1992 and its
fully phased-in capital requirements since September 30, 1992, at December 31,
1990, ASF did not meet the regulatory capital requirements of OTS. On May 30,
1991, OTS delivered to Enstar formal notice of default under the Capital
Maintenance Agreement and demanded that Enstar immediately infuse into
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ASF sufficient equity capital to cause ASF to comply with its regulatory capital
requirements. Enstar Group did not infuse the requisite additional capital. The
OTS confirmed, on December 2, 1994, that, to the extent that any transactions
contemplated under the Voting Agreement and the Escrow Agreement would require
that a conveyance of Escrowed Shares be recorded on ASF's transfer records, the
OTS waives the prohibition under the Capital Maintenance Agreement with respect
to that recording.
As described above, on May 31, 1991, Enstar filed for protection under
Chapter 11 of the United States Bankruptcy Code. See "THE MERGER -- Background
and Reasons; ASF" and "BOARD OF DIRECTORS AND COMMITTEES -- Compensation
Committee Interlocks and Insider Participation". Under the Bankruptcy Plan, all
of the Old Enstar Common Stock was cancelled, and new common stock of Enstar was
issued to a trustee. In addition, under the modified Bankruptcy Plan, Enstar is
obligated to sell or distribute the ASF Common Stock it owns before June 1,
1995, unless otherwise agreed by certain classes of creditors whose claims have
not been satisfied. See "THE MERGER -- Background and Reasons" for a discussion
of the events leading to the execution of the Merger Agreement. The Bankruptcy
Plan, as modified, also provides that prior to the date of any sale, Enstar has
the right to vote its ASF Common Stock.
On December 2, 1994, and again on January 26, 1995, in response to requests
for confirmation that Enstar is able to vote its shares of ASF Common Stock at
the Meeting, OTS notified ASF that OTS would continue to waive the limitations
applicable to Enstar's exercise of its voting rights under the Capital
Maintenance Agreement. Therefore, Enstar will be permitted to vote its shares of
ASF Common Stock at the Meeting. As is discussed above, Enstar has entered into
the Voting Agreement pursuant to which it has agreed to vote its shares of ASF
Common Stock in favor of approval of the Merger and the Merger Agreement. See
"THE MERGER -- Voting Agreement; Escrow Agreement". In the event that the Merger
Agreement is terminated or the Merger is not otherwise consummated, a change in
control of ASF could occur if OTS exercised its rights under the Capital
Maintenance Agreement, upon a sale or other disposition by Enstar of its ASF
Common Stock under the modified Bankruptcy Plan or if FUNC exercised the Option.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 26, 1995, information regarding
beneficial ownership of ASF Common Stock by each director and nominee for
election as a director of ASF, ASF's Chief Executive Officer, its four other
most highly compensated (for services during 1994) executive officers (all of
whom were serving as executive officers on December 31, 1994), and all current
directors and executive officers as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
NAMES OF DIRECTORS, NOMINEES, (1)
EXECUTIVE OFFICERS AND GROUP OF NUMBER OF PERCENT
DIRECTORS AND EXECUTIVE OFFICERS SHARES OF CLASS
<S> <C> <C>
Erwin Allen............................................................................................. 100 *
T. Wayne Davis (2)...................................................................................... 5,744,872 48.9
William H. Dukelow (3).................................................................................. 17,500 *
Nimrod T. Frazer (2).................................................................................... 5,747,022 48.9
Barbara W. Gothard...................................................................................... 1,000 *
Charles Daniel Kimbrel (4).............................................................................. 52,000 *
Deirdre Y. Russell...................................................................................... 100 *
Donald T. Senterfitt.................................................................................... 100 *
Stephen D. Taylor (5)................................................................................... 230,000 1.9
Alan B. Goldstein (6)................................................................................... 66,000 *
Linda M. Haskins (7).................................................................................... 47,500 *
Charles H. Holland, Jr.................................................................................. 46,920 *
Barbara E. Mahoney...................................................................................... 50,000 *
All current directors and executive officers as a group (35 persons) (8)................................ 6,617,801 54.5
</TABLE>
(1) Unless otherwise stated, has sole voting and investment power. The number of
shares beneficially owned by each director or executive officer is
determined under rules of the Commission applied by OTS, and is not
necessarily indicative of beneficial ownership for any other purpose. Under
those rules, beneficial ownership includes shares of ASF Common Stock
issuable upon exercise of options within 60 days after April 26, 1995.
According to the transfer agent for ASF Common Stock, The First National
Bank of Boston, 11,755,943 shares of ASF Common Stock were outstanding as of
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the close of business on April 26, 1995. All numbers of shares reflect
adjustment for the one-for-five reverse common stock split effective at the
close of business on April 27, 1993.
(2) The shares stated in the above table include 5,689,391 shares of ASF Common
Stock beneficially owned by Enstar. As directors of Enstar, Messrs. Davis
and Frazer each states that he shares voting and investment power with
respect to those shares. Messrs. Davis and Frazer disclaim beneficial
ownership of those shares.
(3) Includes options to acquire 12,500 shares of ASF Common Stock.
(4) Includes options to acquire 50,000 shares of ASF Common Stock.
(5) Both the number of shares beneficially owned and, for purposes of
calculating the percent of class, the total number of shares of the class
include options to acquire 199,800 shares of ASF Common Stock.
(6) Includes options to acquire 33,500 shares of ASF Common Stock.
(7) Includes options to acquire 25,000 shares of ASF Common Stock.
(8) Both the number of shares beneficially owned and, for purposes of
calculating the percent of class, the total number of shares of the class
include options to acquire 387,050 shares of ASF Common Stock.
* Less than one percent.
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BOARD OF DIRECTORS AND COMMITTEES
GENERAL INFORMATION
Of the nine directors of ASF currently serving, all but Mr. Senterfitt were
directors throughout 1994. The ASF Board, as then constituted, held 14 meetings
during the fiscal year ended December 31, 1994. All current directors attended
more than 80 percent of the meetings of the ASF Board and committees of the ASF
Board on which he or she served during the period they served.
Under the ASF Bylaws, the ASF Board constitutes the nominating committee
for the election of directors. It has not actively solicited recommendations
from holders of ASF Common Stock for nominees for director nor has it
established any procedures for this purpose, but has in the past accepted
proposed nominees from Enstar. The ASF Board generally must nominate proposed
directors in writing at least 20 days before the stockholders' meeting, and
under ASF's bylaws shareholders may submit in writing to the Secretary of ASF
additional nominees for director, if any, at least five days before that
meeting.
COMMITTEES
The ASF Board has standing Executive, Audit, Special Advisory,
Compensation, Stock Option and Senior Executive Employee Severance Pay Plan
Committees.
EXECUTIVE COMMITTEE
The Executive Committee currently consists of William H. Dukelow, Nimrod T.
Frazer, Charles Daniel Kimbrel and Stephen D. Taylor. The Executive Committee
meets on call and has authority to act on most matters during the intervals
between ASF Board meetings. The Executive Committee did not meet during 1994.
AUDIT COMMITTEE
The Audit Committee currently consists of Erwin Allen, William H. Dukelow,
Charles Daniel Kimbrel and Deirdre Y. Russell, all of whom are non-employee
directors. The Audit Committee meets on call and reviews the internal controls
of ASF and the objectivity of its financial reporting. It meets with appropriate
ASF financial personnel, internal auditors and independent certified public
accountants in connection with these reviews. The Audit Committee recommends to
the ASF Board the appointment of the independent certified public accountants to
serve as ASF's auditors. Both the internal auditors and the independent
certified public accountants meet alone with, and have free access to, the Audit
Committee at any time. The Audit Committee met eight times during 1994.
INDEPENDENT COMMITTEE
The Independent Committee currently consists of Erwin Allen, William H.
Dukelow and Barbara W. Gothard, all of whom are non-employee directors who are
believed to be independent of any relationships with Enstar, Nimrod T. Frazer
and any other party interested in any acquisition of ASF or ASF Common Stock.
Stephen D. Taylor is an ex officio non-voting member of the Independent
Committee. The Independent Committee meets on call and was established by the
ASF Board to make recommendations to the ASF Board with respect to strategic
alternatives for enhancing stockholder value, including a potential sale or
other transaction involving a change in control of ASF. The Independent
Committee investigated, analyzed, conferred and generally dealt with all issues
and parties arising out of the Merger and the Merger Agreement. The Independent
Committee reported its findings and made recommendations to the ASF Board in
connection with these matters. See "THE MERGER -- Background and Reasons; ASF".
The Independent Committee met 18 times during 1994.
COMPENSATION COMMITTEE
The Compensation Committee currently consists of T. Wayne Davis, William H.
Dukelow, Nimrod T. Frazer, Barbara W. Gothard, Charles Daniel Kimbrel and
Deirdre Y. Russell, all of whom are non-employee directors. The Compensation
Committee meets on call and administers the compensation of the officers of ASF.
Its activities include setting compensation levels and performance objectives
for the Chief Executive Officer, establishing the compensation policy and the
amounts of performance bonus and salary increase pools for other officers and
employees, assessing executive performance and reviewing and approving
management's recommendations for salaries and bonuses to executive officers
within established parameters. The Compensation Committee also oversees the
operations of the employee benefit and retirement plans (other than the
Severance Plan) and has the authority to act on matters of individual retirement
and, subject to a quarterly or, at the direction of the ASF Board, a more
frequent review, also has the authority to assume each of the ASF Board's
administrative and
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<PAGE>
operational powers and responsibilities under the employee benefit plans. The
Compensation Committee met three times during 1994. See "EXECUTIVE
COMPENSATION -- Report of the Compensation and Stock Option Committees on
Executive Compensation", "THE MERGER -- Interests of Certain Persons" and
" -- Effect on ASF Employee Benefit Programs".
STOCK OPTION COMMITTEE
The Stock Option Committee currently consists of T. Wayne Davis, William H.
Dukelow, Nimrod T. Frazer, Charles Daniel Kimbrel and Deirdre Y. Russell. The
Stock Option Committee, which meets on call, administers the 1990 Employee Stock
Incentive Plan and the 1992 Employee Stock Incentive Plan. The Stock Option
Committee did not meet during 1994. See "EXECUTIVE COMPENSATION -- Report of the
Compensation and Stock Option Committees on Executive Compensation," and "THE
MERGER -- Interests of Certain Persons".
SENIOR EXECUTIVE EMPLOYEE SEVERANCE PAY PLAN COMMITTEE
The Senior Executive Employee Severance Pay Plan Committee currently
consists of Erwin Allen, William H. Dukelow, Barbara W. Gothard and Donald T.
Senterfitt, all of whom are non-employee directors. This Committee administers
the Severance Plan, and is authorized to construe and interpret the provisions
of the Severance Plan. Charles H. Holland, Jr., Executive Vice President and
Chief Operating Officer, is an ex officio non-voting member of this Committee,
which did not meet during 1994. See "EXECUTIVE COMPENSATION -- Termination of
Employment, Change-in-Control Arrangements and Employment Contracts; SEVERANCE
PLAN", and "THE MERGER -- Interests of Certain Persons".
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of T. Wayne Davis, William H.
Dukelow, Nimrod T. Frazer, Barbara W. Gothard, Charles Daniel Kimbrel and
Deirdre Y. Russell, all of whom are non-employee directors. ASF is not aware of
any interlocking relationships among the executive officers, members of the
Compensation Committee or the ASF Board and those of any other entity, except
that certain directors of ASF are also executive officers or directors of other
entities, as described under "ELECTION OF DIRECTORS -- Nominees for Director".
As described above, Messrs. T. Wayne Davis and Nimrod T. Frazer are
directors of Enstar. Mr. Frazer is also Chairman of the Board, President and
Chief Executive Officer of Enstar. As such, Messrs. Davis and Frazer may be
deemed to have an interest in the transactions and relationships described
below.
ENSTAR CHAPTER 11 PROCEEDINGS
As described above, on May 31, 1991, Enstar filed for protection under
Chapter 11 of the United States Bankruptcy Code. See "THE MERGER -- Background
and Reasons; ASF", for a general discussion of the Enstar bankruptcy, including,
among other matters, ASF's claim against Enstar's estate, the modified
Bankruptcy Plan, and Enstar's obligation under the modified Bankruptcy Plan to
sell or distribute its shares of ASF Common Stock by June 1, 1995, and the
potential conflict of interest between the interests of Enstar and the interests
of ASF's other stockholders.
Generally, under the modified Bankruptcy Plan, ASF is entitled to receive
66.66 percent of all distributions from the bankruptcy estate until ASF's
allowed claim is paid in full, but may not participate in the proceeds from the
sale of Enstar's ASF Common Stock, until certain other classes of creditors have
been paid in full. Thereafter, ASF would be entitled to receive all
distributions of remaining property, if any, from the estate, including proceeds
from the sale of ASF Common Stock, until its allowed claim is paid in full.
ASF's allowed claim at March 31, 1995 was approximately $27,500,000.
The modified Bankruptcy Plan, among other things, also provides for (i) the
payment of interest at the annual rate of 4.26 percent on unpaid claims of
certain classes of creditors, including ASF, from June 1, 1992, but only after
ASF's allowed claim is paid in full, (ii) a class of creditors consisting of
foreign bearer bond holders who surrendered their bonds after applicable
deadlines under Enstar's original Bankruptcy Plan, which class will be entitled
to distributions only after ASF's Bankruptcy Claim is paid in full with
interest, (iii) the establishment of a tax reserve to be funded from property of
Enstar to provide for any state or federal tax obligations, and (iv) a
restriction, generally, on the transfer of claims after August 25, 1993.
The modified Bankruptcy Plan provides that if all other creditors are paid
in full, with interest, the former Enstar stockholders would be entitled to
receive a distribution of the remaining property of the bankruptcy estate, if
any, pro rata, or, at the option of Enstar, shares of new common stock of
Enstar. The new common stock of Enstar continues to be held for the benefit of
certain unsecured creditors of Enstar, including ASF, but only until their
claims are paid in full. See "THE MERGER -- Interests of Certain Persons"
regarding the interests of Messrs. Frazer and Davis in shares of the Old Enstar
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Common Stock, Mr. Davis' interest, if any, in the Enstar Incentive Bonus Pool,
Enstar's engagement of Mr. Frazer on an exclusive basis to market and sell
Enstar's shares of ASF Common Stock and the corresponding effects of the
consummation of the Merger on such interests. For a discussion of ASF's interest
in the proceeds of any sale of ASF Common Stock owned by Enstar and the effect
of the consummation of the Merger on such interest, See "THE
MERGER -- Background and Reasons; ASF" and "THE MERGER -- Voting Agreement;
Escrow Agreement".
TRANSACTION WITH ENSTAR
In 1992, in connection with OTS' settlement of its enforcement action and
ASF's lawsuit against Richard J. Grassgreen, a former director of ASF, and
others, OTS directed Grassgreen to deliver to ASF a $1,500,000 promissory note
payable in annual installments of $300,000 each, commencing November 1992. In
1993, Grassgreen filed for protection under Chapter 11 of the United States
Bankruptcy Code and objected to ASF's status in that proceeding as a secured
creditor. As part of a settlement agreement among ASF, Grassgreen, Enstar and
certain other parties involved as defendants in an adversary proceeding in the
Grassgreen Chapter 11 proceedings and Grassgreen's proposed plan of
reorganization, ASF has received, from Grassgreen's bankruptcy estate, in
satisfaction of the $1,200,000 balance of the note, $576,000 in cash and an
assignment of Grassgreen's rights represented by his ownership of 772,131 shares
of Old Enstar Common Stock. Pursuant to the settlement agreement, Enstar agreed
to acquire these rights for $300,000 plus interest on or before June 1, 1995.
Payment of $305,958.90 to acquire these rights was made to ASF in February 1995,
pursuant to the settlement agreement. In December 1994, Enstar acquired from
another party 175,000 additional shares of ASF Common Stock in settlement of
claims that Enstar had or may have had against that party.
OTHER TRANSACTIONS WITH ENSTAR AFFILIATES
Certain of the claims asserted as part of a suit by ASF against Michael R.
Milken, Lowell Milken ET AL. (which were included in a global settlement of
claims previously pending in the United States District Court for the Southern
District of New York) were assigned to ASF by Enstar as part of the ongoing
restructuring of the commercial relationships between Enstar and ASF begun in
1990. The assignment agreement provides that any amounts payable by the
defendants as a result of a final judgment or settlement of the action, after
deduction and reimbursement of costs and expenses paid by ASF and Enstar, and
after deduction of contingent fees (including attorneys' fees), will be
allocated 20 percent to ASF and 80 percent to Enstar. Enstar's share of any
proceeds from the suit is to be distributed to its creditors, including ASF,
pursuant to the modified Bankruptcy Plan; however, Enstar may provide a tax
reserve and an expense reserve prior to distribution. The assignment of Enstar's
claims to ASF was approved by OTS, subject to certain conditions, and by the
United States Bankruptcy Court in Enstar's Chapter 11 proceedings. Mr. Frazer
represented ASF on the steering committee that formulated a plan to allocate the
proceeds of the global settlement.
In February 1995, ASF recorded a pre-tax recovery of $3,400,000, net of
certain estimated fees and expenses (including attorneys' fees), from amounts
received from the fund established to pay certain claims against the Milken
parties. This amount represents payment of a substantial portion of the
settlement of ASF's direct claims against the Milken parties. ASF's receipt in
the future of any additional monies from the fund is wholly dependent upon the
fund's receipt of anticipated payments from third parties, which payments cannot
be assured. In March 1995, the Enstar estate distributed to ASF $4,500,000,
under the Bankruptcy Plan, as modified, in satisfaction of a portion of the
Bankruptcy Claim, which was reduced at that time from $32,000,000 to
$27,500,000. Enstar provided a tax reserve and an expense reserve prior to
distribution.
DIRECTOR COMPENSATION
Non-employee directors of ASF receive a fee of $600 for each month of
service and an additional $800 for each ASF Board meeting attended plus
reimbursement of travel and other expenses attributed to each meeting attended.
Each non-employee director serving on ASF's Audit, Independent, Compensation or
Stock Option Committee receives an additional fee of $400 for each committee
meeting attended that was not held on the same day as an ASF Board meeting. Fees
are not paid in connection with attendance at Executive Committee meetings or at
meetings conducted telephonically. Directors who are full-time employees of ASF
or any of its subsidiaries are not eligible to receive additional compensation
for service on the ASF Board or committees of the ASF Board, other than
reimbursement of travel and other expenses, if any, attributed to each meeting
attended.
The ASF 1991 Non-Employee Directors' Stock Option Plan, as amended (the
"1991 Directors' Plan"), provides for a grant to each director elected by
holders of ASF Common Stock, who is not then, and has not been at any time
during the previous year, an employee of ASF or any subsidiary of ASF, of an
option to purchase 50,000 shares of ASF Common Stock, having an exercise price
equal to 100 percent of the fair market value of ASF Common Stock on the date of
grant. All options
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are immediately exercisable but shares acquired upon exercise of an option may
not be transferred within six months after the grant of the option. Options
expire at the earlier of ten years after the date of grant or three months after
the optionee ceases to serve as a director of ASF, unless he or she continues as
an employee of ASF or any subsidiary, which employment would be deemed to be
continued service as a director. Options are not transferable by the optionee
except by will or by the laws of descent and distribution. A maximum of 250,000
shares of ASF Common Stock may be issued under the 1991 Directors' Plan. As of
January 31, 1995, no shares are available for issuance under the 1991 Directors'
Plan. Subject to limitations contained in the 1991 Directors' Plan and Rule
16b-3 ("Rule 16b-3") promulgated under the Exchange Act if any optioned shares
cease to be subject to an option prior to issuance of those shares, they will
again become available for issuance under the 1991 Directors' Plan.
During 1991, each of the four non-employee directors then serving,
including Messrs. Dukelow and Kimbrel, was granted options to purchase 50,000
shares under the 1991 Directors' Plan, with an exercise price per share of
approximately $1.00. Upon his election as a director at the Annual Meeting of
Stockholders held on May 27, 1992, Nimrod T. Frazer was granted an option to
purchase 50,000 shares under the 1991 Directors' Plan, with an exercise price
per share of $3.75. No options have been granted under the 1991 Directors' Plan
since that date. For a discussion of the effects of the consummation of the
Merger on options granted to directors under the 1991 Directors' Plan, see "THE
MERGER -- Interests of Certain Persons; TREATMENT OF STOCK OPTIONS AND SENIOR
EXECUTIVE SEVERANCE PLAN".
All numbers of shares and exercise prices stated above under "Director
Compensation" reflect adjustment for the one-for-five reverse common stock split
effective at the close of business on April 27, 1993.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows information concerning the compensation paid or
awarded through January 31, 1995 to ASF's Chief Executive Officer and four other
most highly compensated (for services during 1994) executive officers, for their
services rendered in all capacities during 1992, 1993 and 1994 to ASF and its
subsidiaries, for each year during any portion of which each of them was an
executive officer of ASF:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SECURITIES
UNDERLYING
ANNUAL COMPENSATION OPTIONS
OTHER ANNUAL (#
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(3) COMPENSATION ($) SHARES)(9)
<S> <C> <C> <C> <C> <C>
Stephen D. Taylor 1994 340,000 135,000(4) -- --
President, Chief Executive 1993 315,000 157,500(4) 26,681(6) --
Officer, director since 1992 292,231 145,000(4) 95,658(7) --
September 1991
Alan B. Goldstein 1994 182,125 65,000 -- --
Executive Vice President -- 1993 166,990 65,000 -- --
General Counsel and 1992 165,241 41,000 -- 36,500
Secretary; Treasurer from
July 1991 until May 1992
Charles H. Holland, Jr. 1994 180,000 65,000 -- --
Executive Vice President and 1993 166,000 65,000 -- --
Chief Operating Officer since February 1992 160,219(2) 48,000(5) 1,750(8) 60,000
1995; Executive Vice
President -- Corporate Support Group
from March 1992 to February 1995;
previously a consultant to ASF
Barbara E. Mahoney 1994 176,125 65,000 -- --
Executive Vice President -- 1993 170,000 50,000 -- --
Retail Banking Group 1992 165,241 50,000 -- 25,000
since December 1991;
previously, Executive Vice
President, Administration and
Operations
Linda M. Haskins 1994 176,000 65,000 -- --
Executive Vice President -- 1993 166,000 50,000 -- --
Chief Financial Officer since 1992 139,456 50,000 -- 25,000
August 1994; Executive Vice
President -- Finance Group from
April 1993 until August 1994;
Executive Vice President,
Finance and Controller from
February 1992
until April 1993;
previously, Senior Vice
President and Controller
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(10)(11)
<S> <C>
Stephen D. Taylor 19,299
President, Chief Executive 17,484
Officer, director since 9,262
September 1991
Alan B. Goldstein 15,111
Executive Vice President -- 10,056
General Counsel and 5,949
Secretary; Treasurer from
July 1991 until May 1992
Charles H. Holland, Jr. 15,927
Executive Vice President and 12,806
Chief Operating Officer since February 705
1995; Executive Vice
President -- Corporate Support Group
from March 1992 to February 1995;
previously a consultant to ASF
Barbara E. Mahoney 17,802
Executive Vice President -- 11,436
Retail Banking Group 6,934
since December 1991;
previously, Executive Vice
President, Administration and
Operations
Linda M. Haskins 13,567
Executive Vice President -- 9,751
Chief Financial Officer since 4,789
August 1994; Executive Vice
President -- Finance Group from
April 1993 until August 1994;
Executive Vice President,
Finance and Controller from
February 1992
until April 1993;
previously, Senior Vice
President and Controller
</TABLE>
(1) Includes amounts deferred at the election of the named executive officer
under a 401(k) Plan, a tax qualified defined contribution plan (the "401(k)
Plan"). Upon consummation of the Merger, all accounts in the 401(k) Plan
become fully vested.
(2) Includes fee in the amount of $25,450 for services as a consultant to ASF
during 1992 before Mr. Holland became an executive officer.
(3) Because no recurring arrangement exists for the payment of bonuses after
1992, no bonuses were considered in determining the most highly compensated
executive officers. See " -- Report of the Compensation and Stock Option
Committees on Executive Compensation" and " -- Termination of Employment,
Change-in-Control Arrangements and Employment Contracts".
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<PAGE>
(4) Bonuses awarded during 1994, 1993 and 1992 pursuant to a letter agreement
with Mr. Taylor, dated September 18, 1991, and the attainment of
performance goals established by the Compensation Committee. See
" -- Termination of Employment, Change-in-Control Arrangements and
Employment Contracts".
(5) A portion of the bonus awarded during 1992, in the amount of $33,846, was
pursuant to a letter agreement with Mr. Holland, dated February 25, 1992.
See " -- Termination of Employment, Change-in-Control Arrangements and
Employment Contracts".
(6) Consists of $26,681 reimbursed for the payment of taxes on reimbursement
for relocation expenses.
(7) Includes reimbursement for relocation expenses in the amount of $88,479
plus $7,179 reimbursed for the payment of taxes on that amount.
(8) Consists of $1,750 reimbursed for the payment of taxes on reimbursement for
relocation expenses. Perquisites and other personal benefits, securities or
property are in an aggregate amount less than 10 percent of the total
annual salary and bonus reported for the named executive officer.
(9) ASF has granted no restricted stock awards or stock appreciation rights
("SARs"). Indicates number of shares of ASF Common Stock issuable upon
exercise of stock options granted to the named officers under the 1990
Employee Stock Incentive Plan and the 1992 Employee Stock Incentive Plan.
All numbers of shares reflect adjustment for the one-for-five reverse
common stock split effective at the close of business on April 27, 1993.
(10) Amounts stated include:
(a) Amounts paid for 1994 as premiums for group term life insurance
coverage over $50,000, as follows: Mr. Taylor, $7,617; Mr. Goldstein,
$3,429; Mr. Holland, $4,245; Ms. Mahoney, $6,120; and Ms. Haskins,
$1,885.
(b) Amounts contributed by ASF for 1994 as a Discretionary Contribution
under the 401(k) Plan, as follows: Mr. Taylor, $7,182; Mr.
Goldstein, $7,182; Mr. Holland, $7,182; Ms. Mahoney, $7,182; and
Ms. Haskins, $7,182. Mr. Goldstein and Mmes. Mahoney and Haskins
are fully vested in the 401(k) Plan. In the event the Merger is
consummated, Messrs. Taylor and Holland will also become fully
vested in the 401(k) Plan.
(c) Amounts contributed by ASF for 1994 as a "matching"
contribution for each of the named persons for 1994 under the
401(k) Plan, as follows: Mr. Taylor, $4,500; Mr. Goldstein,
$4,500; Mr. Holland, $4,500; Ms. Mahoney, $4,500; and Ms.
Haskins, $4,500. Mr. Goldstein and Mmes. Mahoney and Haskins
are fully vested in the 401(k) Plan. In the event the Merger is
consummated, Messrs. Taylor and Holland will also become fully
vested in the 401(k) Plan.
(11) Mr. Holland's employment as an executive officer of ASF commenced in March
1992. See " -- Termination of Employment, Change-in-Control Arrangements
and Employment Contracts".
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table shows information concerning exercises of stock options
during 1994 by each of the executive officers named in the Summary Compensation
Table and the value of their unexercised options at December 31, 1994:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL
SHARES ACQUIRED ON YEAR-END (#)
NAME EXERCISE (#) VALUE REALIZED ($)(1) EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C>
Stephen D. Taylor............... 40,000 688,750 139,800/60,000(3)
Alan B. Goldstein............... 26,500 388,782 33,500/--
Charles H. Holland, Jr.......... 43,980 706,037 --/--
Barbara E. Mahoney.............. -- -- 50,000/--
Linda M. Haskins................ -- -- 43,500/--
<CAPTION>
VALUE OF UNEXERCISED
IN-THE- MONEY OPTIONS AT
FISCAL YEAR-END
EXERCISABLE/
NAME UNEXERCISABLE ($)(2)
<S> <C>
Stephen D. Taylor............... $2,590,669/1,111,875(3)
Alan B. Goldstein............... 448,063/--
Charles H. Holland, Jr.......... --/--
Barbara E. Mahoney.............. 773,438/--
Linda M. Haskins................ 651,970/--
</TABLE>
(1) Amount stated represents the sum, for all option exercises during 1994, of
the following for each such option exercise: the difference between (a) the
aggregate of the average of the high and low sales price per share of ASF
Common Stock on The Nasdaq Stock Market for the date of exercise and (b) the
aggregate exercise prices of the respective options.
(2) Amounts stated represent the difference between the aggregate of the closing
sales price per share of ASF Common Stock on The Nasdaq Stock Market for
December 31, 1994 ($19.625) and the aggregate exercise prices of the
respective options.
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<PAGE>
(3) All stock options granted under the 1992 Employee Stock Incentive Plan,
including those of Mr. Taylor, which were not otherwise exercisable as of
January 31, 1995, were accelerated by the Stock Option Committee and became
fully exercisable as of that date.
For a discussion of the effects of the consummation of the Merger on
unexercised options granted to officers under the 1990 Employee Stock Incentive
Plan and the 1992 Employee Stock Incentive Plan, see "THE MERGER -- Interests of
Certain Persons; TREATMENT OF STOCK OPTIONS AND SENIOR EXECUTIVE SEVERANCE
PLAN".
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
The report of the Compensation and Stock Option Committees shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement/Prospectus into any filing under the Securities
Act or under the Exchange Act, except to the extent ASF specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
ASF links executive compensation to performance. Key components are the
following:
(Bullet) The members of the Compensation and Stock Option Committees of the
ASF Board are non-employee directors of ASF. In matters of
individual compensation levels and option grants, the decisions of
these committees are final, and are not reviewed by the ASF Board.
COMPENSATION COMMITTEE -- POLICY AND PROCEDURAL FRAMEWORK
(Bullet) ASF uses an independent executive compensation consulting firm to
advise ASF regarding the relationships between compensation paid
to its executives and compensation paid to executives for
comparable services to comparable financial institutions according
to commercially conducted surveys.
(Bullet) Increases in the base salary of all officers and supervisors of
ASF are reviewed annually and are based upon the following
criteria ("Criteria"):
a. demonstrated performance based upon internally published
company objectives and written job description objectives, and
more specifically upon a written annual business plan agreement
between each officer and his or her superior officer (or, in
the case of the Chief Executive Officer ("CEO"), the ASF
Board), and the degree to which the benchmarks of that business
plan were met by the officer under a program of Management by
Objectives ("MBO"); and
b. an assessment of the officer's current salary against
salaries paid for similar jobs performed at other similar
sized financial institutions, as compiled by ASF's
independent consulting firm; the objective being to keep the
officer's compensation within approximately 20 percent of
the median compensation of similar competing jobs.
(Bullet) In addition to base salary, each officer in ASF has had and will
continue to have an opportunity to earn an annual performance
bonus based upon (i) ASF's overall financial performance, and (ii)
the demonstrated performance of that officer against his or her
MBO plan. The quantum of that opportunity increases with the level
and scope of the officer's responsibility and authority, generally
in the range of approximately 5-15 percent of base salary for
superior-performance junior officers, 10-40 percent of base salary
for executive officers other than the CEO, and a maximum of 50
percent of base salary for the CEO.
(Bullet) Because of the substantial increase in market value of ASF's
shares during the three years preceding this report, and the
"recovery" nature of ASF's financial status during that period,
there has been no attempt to link base salary or bonus
compensation decisions to the market value performance of ASF's
stock.
COMPENSATION COMMITTEE -- CEO COMPENSATION
(Bullet) The contractual base salary and bonus of ASF's CEO, as contained
in the letter agreement, dated September 18, 1991, relating to his
employment, were established by the ASF Board's CEO search
committee based upon consideration of compensation levels at other
financial institutions of similar size and complexity. A
validation of that compensation level was performed by the
Compensation Committee in November 1993 and, based on the report
of ASF's independent executive compensation consulting firm and an
analysis by ASF's staff of compensation as reported in proxy
material of public institutions, the CEO's total cash compensation
was found to be within 10 percent of the median compensation paid
to chief executive officers by other banks and thrifts generally
with assets greater than $1.0 billion as reported by an aggregate
of ten commercially conducted surveys and ten other corporations'
proxy statements.
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<PAGE>
Based upon this information, and the successful completion of the
1993 ASF business plan, including such areas (on an unranked
basis) as earnings growth, capital growth, and loan portfolio
performance improvement, the Compensation Committee increased the
CEO's 1993 base salary by $25,000 (7.9 percent) for 1994, the same
dollar amount increase granted the prior year.
(Bullet) The amount of bonus awarded to the CEO for 1994 was based upon the
CEO Performance Bonus Compensation Plan for 1994 previously
adopted by the Compensation Committee. Based upon successfully
meeting individual factors in that plan, he was awarded (a) a 9.7
percent bonus according to a formula involving the level of growth
in corporate core earnings over the level earned in 1993, (b) a 10
percent bonus for completing two of three goals relating to (i)
achieving specified levels of core and tangible capital ratios,
(ii) reducing non-performing assets below a specified level, and
(iii) achieving a regulatory status improvement, and (c) a 20
percent bonus pursuant to the Committee's overall assessment of
ASF's continued growth and product innovation. The total bonus of
39.7 percent produced a total salary plus bonus in 1994 that
substantially matched the total of salary plus bonus in 1993, a
result consistent with ASF continuing to meet long-term growth
plans previously established by the ASF Board.
COMPENSATION COMMITTEE -- OTHER EXECUTIVE OFFICER COMPENSATION
(Bullet) In November 1993 and in November 1994, the Compensation Committee
reviewed the compensation of all executive officers then employed,
including the four named executive officers other than the CEO
(detailed above):
a. In each instance, the Committee authorized: (i) a salary
increase pool for executive officers for the following calendar
year, stated as a percentage of aggregate base salaries of the
group of executive officers, that percentage being the
mid-range of percentage salary increases available to all
above-average-performance employees of ASF; and (ii) a
performance bonus pool for all officers for the year being
completed, stated in dollars as approximately five percent of
total ASF base salaries.
b. In each year the CEO assessed the performance of each
executive officer using the Criteria listed above, both
directly and in consultation with that executive officer's
superior officer (where applicable), and, based upon those
assessments, recommended a performance-linked equitable
allocation of the salary increase pool among the executive
officers, and the performance bonus pool among both the
superior-performance junior officers and the executive
officers.
c. The CEO's recommendations were reviewed by the
Compensation Committee of the ASF Board and confirmed.
STOCK OPTION COMMITTEE
(Bullet) Incentive stock options link the compensation of executives to the
financial interests of ASF's stockholders. Options serve as an
incentive to attract and retain executive talent and to build
loyalty to the institution in times of uncertainty as well as in
times of success. The number of shares granted to any executive on
an initial grant is determined by the scope of responsibility of
that individual, and for additional grants is determined by
relative responsibility level, by demonstrated performance, and by
the quantity of options already held by that individual. Every
grant is made with an exercise price equal to the fair market
value on the date of grant, as defined in the plan under which the
grant is made.
ASF did not grant any stock options during 1994.
ASF BOARD'S REVIEW
(Bullet) The goals, objectives, and financial impact of all compensation
and benefit plans are reviewed and confirmed by the ASF Board
annually in conjunction with its approval of ASF's strategic goals
and operating business plan. No actions of the Compensation
Committee or the Stock Option Committee were challenged or revised
by the ASF Board.
<TABLE>
<S> <C>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Charles Daniel Kimbrel, Chairman William H. Dukelow, Chairman
T. Wayne Davis T. Wayne Davis
William H. Dukelow Nimrod T. Frazer
Nimrod T. Frazer Charles Daniel Kimbrel
Barbara W. Gothard Deirdre Y. Russell
Deirdre Y. Russell
</TABLE>
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STOCK PRICE PERFORMANCE GRAPH
The graph below shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement/Prospectus
into any filing under the Securities Act, or under the Exchange Act, except to
the extent ASF specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
The graph compares the cumulative total stockholder return1 on ASF Common
Stock with the CRSP Total Return Index for the Nasdaq Stock Market (US
Companies) (the "NASDAQ Index"), and the CRSP Total Return Index for the Nasdaq
Bank Stocks (the "NASDAQ Bank Index") as of the last trading day of each fiscal
quarter from July 3, 1990 (the date on which ASF Common Stock was first publicly
traded after ASF's acquisition by Enstar in 1988) through December 31, 1994.2
(Stock Price Performance Graph appears here)
Plotting points are as follows:
CUMULATIVE TOTAL RETURN AMONG ASF
COMMON STOCK, NASDAQ INDEX AND NASDAQ BANK INDEX
<TABLE>
<CAPTION>
7/3 9/28 12/31 3/28 6/28 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/30
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASF 100 50 25 38 25 44 50 175 188 288 413 488 460 735 765 850 870 735 785
NASDAQ INDEX 100 75 83 107 106 118 133 137 127 133 154 157 160 174 176 169 161 174 172
NASDAQ BANK INDEX 100 77 83 102 112 126 136 152 166 171 198 219 211 231 225 222 240 243 225
</TABLE>
1 Assumes the investment of $100 on July 3, 1990 in each of ASF Common Stock,
the NASDAQ Index and the NASDAQ Bank Index, and reinvestment of dividends,
although dividends were not declared on ASF Common Stock during the period.
Prices stated reflect adjustment for the one-for-five reverse common stock
split effective at the close of business on April 27, 1993.
2 Both indices were compiled by the Center for Research in Security Prices of
The University of Chicago Graduate School of Business. The NASDAQ Index
comprises all domestic common shares traded on The Nasdaq Stock Market and the
Nasdaq SmallCap Market, including ASF Common Stock. The NASDAQ Bank Index
comprises all domestic common shares of commercial or stock banks, thrift
institutions and their holding companies included in the NASDAQ Index,
including ASF Common Stock.
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TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS AND EMPLOYMENT
CONTRACTS
STEPHEN D. TAYLOR
A letter agreement, dated September 18, 1991, between ASF and Mr. Taylor
provides for his employment as President and Chief Executive Officer of ASF, and
sets forth the terms and conditions of his employment as follows: (a) an annual
base salary of not less than $290,000, (b) a bonus of approximately $34,000
during 1991 (which Mr. Taylor waived), a fixed bonus in the amount of 25 percent
of his base salary actually earned during 1992, and an additional bonus in the
amount of up to 25 percent of his base salary during 1992, and up to 50 percent
of his base salary during subsequent years, based upon his accomplishment of
goals and objectives to be agreed upon with the ASF Board, (c) a grant of ISOs
to purchase 240,000 shares of ASF Common Stock (granted in 1991 under the 1990
Employee Stock Incentive Plan but modified in 1992 without a change in exercise
price, number of shares or term to provide that the options would be treated as
options granted under the 1992 Employee Stock Incentive Plan reflecting
adjustment for the one-for-five reverse common stock split effective at the
close of business on April 27, 1993), (d) reimbursement of relocation and other
expenses, and (e) a severance benefit of 12 months' salary upon involuntary
termination of his employment. Amounts paid to Mr. Taylor under his agreement
after 1991 contemplated by that agreement are included in the Summary
Compensation Table.
CHARLES H. HOLLAND, JR.
A letter agreement, dated February 25, 1992, between ASF and Mr. Holland
provides for his employment as Executive Vice President -- Corporate Strategy
and Support of ASF, sets forth the terms and conditions of his employment as
follows: (a) an annual base salary of not less than $160,000, (b) a fixed bonus
in the amount of 25 percent of his base salary actually earned during 1992, (c)
a $10,000 relocation allowance, (d) reimbursement of expenses, and (e) a
severance benefit of six months' salary upon involuntary termination of his
employment. Amounts paid to Mr. Holland under his agreement, and options granted
to him during 1992 under the 1992 Employee Plan, are included in the Summary
Compensation Table.
SEVERANCE PLAN
ASF adopted a plan, effective as of the close of business on May 16, 1994,
for certain management employees, including the officers named in the Summary
Compensation Table. The plan, which replaced ASF's previous termination and
severance pay policy, provides benefits, payable in a lump sum out of the
general funds of ASF, if the officer's employment is terminated either (i) by
ASF, for reasons other than just cause (as defined in the plan), death or
disability, whether or not in connection with a change in control, or (ii) by
the officer after an adverse change in position, responsibilities or status, a
reduction in compensation or benefits, a relocation or a burdensome change in
business travel, in connection with a change in control. Benefits will be paid
in connection with a change in control if the termination occurs within two
years after, or (if in anticipation of the change in control) one year before, a
change in control. For this purpose, a "change in control" means any of the
following not resulting from actions by regulatory authorities: (a) acquisition
of 40 percent of ASF's voting securities, other than by ASF or any of its
subsidiaries or employee benefit plans, and other than in a "non-control
transaction" (involving continuity of share ownership and ASF Board membership);
(b) failure of three or more individuals recommended by the ASF Board to be
elected as directors; or (c) approval by ASF's stockholders of its merger,
consolidation or reorganization (except in a non-control transaction), its
complete liquidation or dissolution, or an agreement for the sale or other
disposition of all or substantially all of its assets. Severance benefits for
involuntary termination not in connection with a change in control consist of 52
weeks' salary for the CEO and 26 weeks' salary for the other named officers.
Severance benefits for termination in connection with a change in control
consist of 52 weeks' salary for the CEO and 40 weeks' salary for the other named
officers, plus the greater of (a) the officer's bonus for the year prior to the
year of termination, or (b) the anticipated bonus for the year of termination
multiplied by a fraction, the numerator of which is the sum of the number of
complete months worked in that year plus a factor (12 for the CEO and 9 for the
other named officers), and the denominator of which is 12. For this purpose, a
number of "weeks' salary" means the product of the number times 1/52nd of the
officer's highest annual gross salary rate during the two-year period preceding
the termination. Insurance benefits will continue during the severance period
and additional benefits may be awarded by the CEO, in his discretion. In the
case of termination in connection with a change in control, benefits under the
401(k) Plan will vest and ASF's "matching" contributions will continue during
the severance period. Severance benefits will not constitute "excess parachute
payments" for federal income tax purposes.
As described above, FUNC has agreed in the Merger Agreement that it and the
Subsidiary will honor the Severance Plan unless the affected executive employee
would receive better benefits under FUNC's severance plan and such employee
accepts FUNC's severance plan in lieu of the Severance Plan. See "THE
MERGER -- Interests of Certain Persons; TREATMENT OF STOCK OPTIONS AND SENIOR
EXECUTIVE SEVERANCE PLAN".
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For a discussion of certain transactions and matters relating to Enstar,
see "BOARD OF DIRECTORS AND COMMITTEES -- Compensation Committee Interlocks and
Insider Participation", and "THE MERGER -- Interests of Certain Persons".
ASF makes loans in the ordinary course of business to its directors,
executive officers, members of their respective immediate families, and related
entities, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons. ASF's management believes that none of these loans involve more
than the normal risk of collectibility or repayment or present other unfavorable
features.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Federal securities laws require ASF's directors, certain of its officers,
and persons owning beneficially more than 10 percent of ASF Common Stock to file
reports of initial ownership and reports of subsequent changes in ownership with
OTS. ASF is required to disclose in this Proxy Statement/Prospectus any failure
of persons who, at any time during 1994, were directors, officers required to
report, or more than 10 percent beneficial owners, to file timely those reports
during 1994 or prior years. To the best of ASF's knowledge, based solely upon a
review of copies of reports furnished to it, written representations that no
Form 5 was required for 1994 and other written representations maintained in
ASF's records, except as previously disclosed, all of ASF's directors, officers
required to report, and greater than 10 percent beneficial owners made all such
filings timely, except that Thomas A. Dorsey, an officer of ASF, in one timely
report, incorrectly stated the amount of securities beneficially owned at the
end of ASF's fiscal year, which was subsequently corrected by amendment filed
after the deadline for the original report; and Nimrod T. Frazer, a director of
ASF, filed one late report of an indirect transaction. See "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Security Ownership of Certain
Beneficial Owners".
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast, in person or by
proxy, by persons entitled to vote at the Meeting is required to elect
directors.
THE ASF BOARD RECOMMENDS THAT HOLDERS OF ASF COMMON STOCK VOTE "FOR" THE
ELECTION OF ALL NOMINEES AS DIRECTORS UNDER PROPOSAL 3.
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PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The ASF Board, upon the recommendation of the Audit Committee, has
appointed the firm of KPMG Peat Marwick LLP to continue as independent auditors
to audit the books and records of ASF for the year ending December 31, 1995,
subject to ratification by the stockholders of ASF at the Meeting. As of the
Effective Date, KPMG Peat Marwick LLP's term as independent auditors of ASF will
terminate as ASF will cease to exist as an independent entity. KPMG Peat Marwick
LLP has been acting as independent auditors of ASF since 1985. No determination
has been made as to what action the ASF Board would take if the stockholders of
ASF did not ratify the appointment.
Representatives of KPMG Peat Marwick LLP, independent auditors of the
consolidated financial statements of ASF, are expected to be present at the
Annual Meeting, will be given an opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions
from stockholders.
THE ASF BOARD RECOMMENDS THAT HOLDERS OF ASF COMMON STOCK VOTE "FOR"
PROPOSAL 4.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the ASF Board knows of
no matters which will be presented for consideration at the Meeting other than
as set forth in the Notice of Annual Meeting accompanying this Proxy
Statement/Prospectus. However, if any other matters are properly presented, the
persons named in the proxies solicited by the ASF Board will vote as determined
by the ASF Board and, in the absence of Board action, have discretion to vote in
accordance with their own judgment on such matters.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT
1996 ANNUAL MEETING OF ASF STOCKHOLDERS
In the event that the Merger is not approved or has not been consummated,
any proposal intended to be presented by a stockholder at the 1996 Annual
Meeting of ASF stockholders must be received by ASF not later than December 8,
1995, to be considered for inclusion in the proxy statement for that meeting.
Any such proposal should be mailed to the Secretary of ASF, 17801 N.W. 2nd
Avenue, Miami, Florida 33169-5089 by certified mail, return receipt requested.
Inclusion of a stockholder's proposal in that proxy statement is subject to the
stockholder's eligibility and compliance with other requirements under the
Commission's proxy rules applied by OTS.
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ANNEX A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 4th day of December, 1994 and
amended as of the 27th day of March, 1995 (this "Agreement"), by and between
American Savings of Florida, F.S.B., a federally chartered stock savings bank
("Bank"), and First Union Corporation, a North Carolina corporation
("Acquiror").
PRELIMINARY STATEMENT
WHEREAS, the respective Boards of Directors of Bank and Acquiror deem it to
be in the best interests of Bank and Acquiror and in the best interests of their
respective shareholders that Bank merge (the "Merger"), pursuant and subject to
the terms and conditions of this Agreement (including Section 1.8), and in
accordance with all applicable laws, rules and regulations, with and into a
national banking association to be formed as a direct subsidiary of Acquiror on
or prior to the Merger Effective Date (as defined herein) ("Subsidiary");
WHEREAS, the respective Boards of Directors of Bank and Acquiror have
approved this Agreement and the Stock Option Agreement at meetings of each of
such Boards of Directors, and have authorized the execution hereof;
WHEREAS, the parties hereto desire to enter into this Agreement for the
purpose of setting forth certain representations, warranties and covenants made
by each to the other as an inducement to the execution and delivery of this
Agreement and the conditions precedent to the consummation of the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
United States Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the representations and warranties and
mutual promises and obligations contained herein, the parties hereto adopt and
make this Agreement and prescribe the terms and conditions thereof and the
manner and basis of carrying it into effect, which shall be as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER; THE SURVIVING ENTITY. Subject to the terms and conditions
of this Agreement, on the Merger Effective Date, Bank shall merge with and into
Subsidiary in accordance with the applicable provisions of the Home Owners' Loan
Act, as amended, the National Bank Act, as amended, and the rules and
regulations thereunder, the separate existence of Bank shall cease, and
Subsidiary (the "Surviving Entity" wherever reference is made to it as of the
Merger Effective Date upon the consummation of the Merger, or thereafter) shall
survive.
1.2 ASSETS. Upon consummation of the Merger, the Surviving Entity shall
thereupon and thereafter be deemed to be a continuation of each merging entity
and possess all of the rights, privileges, immunities and franchises, of a
public as well as of a private nature, of each of the merging entities; and all
assets and property, real, personal and mixed, tangible and intangible, and all
debts due on whatever account, and all other choses in action, and all and every
other interest, including, without limitation, appointments, designations,
nominations, and all other rights and interests as trustee, executor,
administrator, transfer agent, registrar, guardian of estates, assignee,
receiver, custodian and any other fiduciary position or agency capacity, of or
belonging to or due to each of the entities so merged, shall be deemed to be
vested in the Surviving Entity immediately by operation of law and without
further action; and the title to any personalty or real estate, or any interest
therein, vested in any of such entities, shall not revert or be in any way
impaired by reason of the Merger.
1.3 LIABILITIES. Upon consummation of the Merger, the Surviving Entity
shall thenceforth be responsible and liable for all the liabilities, obligations
and penalties of each of the entities so merged; all deposits, debts,
liabilities, obligations and contracts of each of Bank and Subsidiary, matured
or unmatured, including all liabilities of each of Bank and Subsidiary for
taxes, whether existing immediately before the Merger Effective Date or arising
as a result of or pursuant to the Merger, shall be those of the Surviving Entity
and shall not be released or impaired by the Merger; and all rights of creditors
and other obligees and all liens on property of each of Bank and Subsidiary
shall be preserved unimpaired.
1.4 CHARTER; BYLAWS; DIRECTORS; OFFICERS; OFFICES. The charter and bylaws
of the Surviving Entity shall be those of Subsidiary, as in effect immediately
prior to the Merger becoming effective. The directors and officers of Subsidiary
in office immediately prior to the Merger becoming effective shall be the
directors and officers of the Surviving Entity, together with
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such additional directors and officers as may thereafter be elected, who shall
hold office until such time as their successors are elected and qualified. The
home office of Bank and the branch offices of Bank existing immediately prior to
the Merger Effective Date shall become branch offices of the Surviving Entity on
the Merger Effective Date.
1.5 MERGER CLOSING; MERGER EFFECTIVE DATE. Subject to the terms and
conditions of this Agreement, on the first business day of the month following
the month in which the last of the conditions set forth in Article VII (other
than the delivery of certificates, opinions, comfort letters and the like) is
satisfied or waived, or such other date as shall be mutually agreed between
Acquiror and Bank, the parties hereto shall exchange all documents and
instruments required by the terms of this Agreement to be delivered at or prior
to consummation of the Merger at such location as may be mutually agreed upon by
the parties (the "Merger Closing"). The Merger shall become effective at the
close of business on the date of the Merger Closing (the "Merger Effective
Date").
1.6 HOLDING COMPANY VOTING AGREEMENT. Immediately following the execution
and delivery of this Agreement, as an inducement to and condition of Acquiror's
willingness to enter into this Agreement, The Enstar Group, Inc., a unitary
savings and loan holding company ("Holding Company"), the holder of
approximately 48% of the outstanding common stock of Bank, $.01 par value per
share ("Bank Common Stock"), shall enter into a Shareholder Voting Agreement,
pursuant to which Holding Company shall agree, among other things, to vote such
Bank Common Stock in favor of the Merger (the "Holding Company Voting
Agreement").
1.7 STOCK OPTION AGREEMENT. Immediately following the execution and
delivery of this Agreement, as an inducement to and condition of Acquiror's
willingness to enter into this Agreement, Bank agrees to enter into a Stock
Option Agreement (the "Stock Option Agreement") in the form attached hereto as
EXHIBIT C, pursuant to which Bank will grant to Acquiror an option to purchase,
under certain circumstances, shares of Bank Common Stock.
1.8 RESERVATION OF RIGHT TO REVISE TRANSACTION. Acquiror may substitute for
Subsidiary any bank as the entity into which Bank shall merge, PROVIDED that, at
the time of the Merger, Acquiror shall be in control of such bank within the
meaning of Section 368(c) of the Code. If such substitution is made, for
purposes of this Agreement, each reference to Subsidiary herein shall be deemed
to refer to such bank. In addition to the foregoing substitution, Acquiror may
also at any time change the method of effecting the acquisition of Bank,
PROVIDED that no such change or substitution shall (i) alter or change the
amount or kind of consideration to be issued to holders of Bank Common Stock,
(ii) adversely affect the tax treatment of holders of Bank Common Stock as a
result of such change or substitution, or (iii) impede or delay receipt of any
approval referred to in Section 7.1(b) or the consummation of the transactions
contemplated by this Agreement.
1.9 SUBSIDIARY. Subject to Section 1.8 and subject to receipt of the
regulatory approvals referred to in Section 7.1(b), Acquiror (a) will cause
Subsidiary to be organized and to execute a supplement to this Agreement, in
substantially the form of EXHIBIT D (the "Supplement"), pursuant to which
Subsidiary shall become a party hereto and (b) will cause Subsidiary to take any
action necessary to effect the Merger in accordance with the terms of this
Agreement.
ARTICLE II
CONVERSION OF SECURITIES; MERGER CONSIDERATION
2.1 OUTSTANDING STOCK OF ACQUIROR. On and after the Merger Effective Date,
all of the shares of Acquiror Common Stock (as hereinafter defined), issued and
outstanding immediately prior to the Merger Effective Date, shall remain issued
and outstanding shares of Acquiror Common Stock.
2.2 OUTSTANDING BANK COMMON STOCK.
(a) On the Merger Effective Date, by virtue of the Merger and without any
further action on the part of Subsidiary, Bank or Surviving Entity, each share
of Bank Common Stock issued and outstanding immediately prior to the Merger
Effective Date (other than any shares of Bank Common Stock to be cancelled
pursuant to Section 2.8), shall become and be converted into the right to
receive the Merger Consideration (as defined below) in accordance with Section
2.3.
(b) For purposes of this Agreement:
(i) "Average Market Price" shall mean the average of the closing prices of
Acquiror Common Stock as reported on the Composite Transactions Tape of the New
York Stock Exchange, Inc. ("NYSE") for each of the ten (10) consecutive trading
days ending on and including the trading day immediately preceding the Merger
Effective Date (such period being referred to as the "Price Measurement
Period").
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(ii) "Merger Consideration" shall mean the number of shares of Acquiror
Common Stock (together with the rights ("Acquiror Rights"), issued pursuant to a
Shareholder Protection Rights Agreement, dated December 18, 1990, as amended
(the "Acquiror Rights Agreement")), equal to the quotient of $21.00 and the
Average Market Price.
2.3 EXCHANGE PROCEDURE.
(a) First Union National Bank of North Carolina shall act as exchange agent
(the "Exchange Agent") for purposes of conducting the exchange procedure as
described in this Section 2.3. As soon as practicable after the Merger Effective
Date, Acquiror shall cause the Exchange Agent (with the reasonable assistance of
Bank and Bank's transfer agent) to mail to each holder of record of Bank Common
Stock as of the Merger Effective Date a letter of transmittal ("L/T") (which
shall specify that delivery shall be effected and risk of loss and title to the
certificates theretofore representing shares of Bank Common Stock ("Old
Certificates") shall pass only upon proper delivery of such Old Certificates to
the Exchange Agent) advising such holder of the effectiveness of the Merger and
the procedure for surrendering to the Exchange Agent such Old Certificates in
exchange for the certificates representing the Merger Consideration deliverable
in respect thereof pursuant to this Article II.
(b) Each holder of shares of Bank Common Stock that have been converted
into a right to receive the Merger Consideration set forth in Section 2.2 shall
be entitled to receive certificates representing the Merger Consideration in
respect of such shares of Bank Common Stock, as provided in this Section 2.3.
(c) Until so surrendered, each Old Certificate shall, after the Merger
Effective Date, represent for all purposes only the right to receive the Merger
Consideration, without any interest thereon, as provided in this Section 2.3.
(d) If any Merger Consideration is to be issued to a person other than the
registered holder of the Bank Common Stock represented by the Old Certificates
surrendered with respect thereto, it shall be a condition to such issuance that
the Old Certificates so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the person requesting such issuance shall
pay to the Exchange Agent any transfer or other taxes required as a result of
such issuance to a person other than the registered holder of such Bank Common
Stock or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(e) As of the Merger Effective Date, there shall be no further registration
of transfers of shares of Bank Common Stock that were outstanding prior to the
Merger, and the stock ledger of the Bank with respect to the issuance of Bank
Common Stock shall be closed. After the Merger Effective Date, all Old
Certificates presented to the Surviving Entity for transfer shall be converted
into and cancelled in exchange for the right to receive the Merger Consideration
provided for, and in accordance with the procedures set forth, in this Article
II.
(f) None of Acquiror, Holding Company or the Surviving Entity shall be
liable to any holder of Bank Common Stock formerly outstanding for any
securities delivered or any amount paid to a public official pursuant to
applicable abandoned property laws. Any cash and/or shares of Acquiror Common
Stock remaining unclaimed by holders of shares of Bank Common Stock prior to
such time as such cash or securities are escheated to any governmental agency or
authority shall to the extent provided by applicable law be free and clear of
any claims or interest of any person previously entitled thereto.
(g) No Merger Consideration, or any dividends or other distributions with
respect to Merger Consideration, shall be paid to the holder of any
unsurrendered Old Certificates until all of the Old Certificates owned by such
holder are surrendered as provided in this Section 2.3. Upon such surrender,
there shall be paid to such holder the Merger Consideration to which such holder
is entitled, including any dividend or other distribution payable in respect of
such Merger Consideration which was paid on a date subsequent to, and in respect
of a record date after, the Merger Effective Date, in each case without any
interest thereon.
(h) Old Certificates surrendered in exchange for Merger Consideration by
any person constituting an "affiliate" of Bank for purposes of Rule 145 of the
Securities Act (as hereinafter defined) shall not be exchanged for such Merger
Consideration until Acquiror has received a written agreement from such person
as contemplated by Section 5.10.
2.4 [RESERVED]
2.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of Acquiror
Common Stock shall be issued in the Merger. Each holder who otherwise would have
been entitled to a fraction of a share of Acquiror Common Stock shall receive in
lieu thereof cash (without any interest thereon) in an amount determined by
multiplying the fractional interest to which such holder would otherwise be
entitled by the Average
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Market Price. No such holder shall be entitled to dividends, voting rights or
any other rights in respect of any fractional share of Acquiror Common Stock.
2.6 ADJUSTMENTS. If, between the date of this Agreement and the Merger
Effective Date, the outstanding shares of Acquiror Common Stock shall have been
changed into a different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record date
within said period, the Merger Consideration shall be correspondingly adjusted.
2.7 TREATMENT OF STOCK OPTIONS. The Bank agrees that, at the Merger
Effective Date, all options (other than the Option (as defined in the Stock
Option Agreement) granted to Acquiror pursuant to the Stock Option Agreement) to
purchase shares of Bank Common Stock which are outstanding immediately prior to
the Merger Effective Date, whether or not vested or exercisable (each, a "Stock
Option"), shall be cancelled and of no force or effect. With respect to those
Stock Options with an exercise price per share that is less than $21.00, each
holder thereof will be entitled to receive immediately prior to the Merger
Effective Date, in settlement thereof, solely a cash payment from the Bank in an
amount equal to the excess of $21.00 over the exercise price per share of Bank
Common Stock covered by the Stock Option, multiplied by the total number of
shares of Bank Common Stock covered by the Stock Option. The number of
outstanding Stock Options as of the date hereof and the exercise prices therefor
are Previously Disclosed (as hereinafter defined) by Bank on SCHEDULE 3.2.
2.8 SHARES HELD BY BANK OR ACQUIROR. Each of the shares of Bank Common
Stock held by Bank or by Acquiror or by any direct or indirect wholly-owned
subsidiary of Bank or of Acquiror in each case other than in a fiduciary
capacity or as a result of debts previously contracted, shall be canceled and
retired on the Merger Effective Date and no consideration shall be issued in
exchange therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANK
Bank hereby represents and warrants to Acquiror and Subsidiary as follows:
3.1 CORPORATE STANDING. Bank is a federal stock savings bank chartered and
duly organized and validly existing under the laws of the United States of
America, with its principal executive offices located in Miami, Florida, except
as Previously Disclosed in SCHEDULE 3.1 is duly qualified to do business in each
jurisdiction in which the nature of its business or the properties or assets
owned or leased by it makes such qualification necessary, and no governmental
authority or agency of any other jurisdiction has advised Bank in writing that
Bank is required to be authorized to transact business as a foreign corporation
in such jurisdiction. Bank has the corporate power to carry on its business as
and where conducted, to own, lease and operate its properties, to execute and
deliver this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject (as to this Agreement
only) to having obtained all requisite shareholder and regulatory approvals
contemplated by this Agreement. The deposits of Bank are insured by the Savings
Association Insurance Fund ("SAIF") administered by the Federal Deposit
Insurance Corporation ("FDIC"). Bank is a member in good standing of the Federal
Home Loan Bank of Atlanta, and has purchased all stock and paid all membership
and other fees required in connection therewith.
3.2 CAPITAL. The authorized capital stock of Bank consists of (i)
24,000,000 shares of Bank Common Stock, of which, as of the date of this
Agreement 11,530,576 shares of Bank Common Stock are issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights, and (ii)
10,000,000 shares of Preferred Stock, $.01 par value, of which no shares are
issued or outstanding (no other class of capital stock being authorized). Except
as Previously Disclosed in SCHEDULE 3.2 hereto, there are no treasury shares and
no outstanding subscriptions, conversion privileges, options, warrants,
agreements, understandings or arrangements to which Bank is a party or by which
it is bound pursuant to which Bank may be obligated to issue shares of capital
stock and Bank is not a party to, or otherwise has knowledge of, any contracts,
commitments, understandings or arrangements relating to the voting or
disposition of Bank Common Stock. As of September 30, 1994, Bank had capital of
$212,605,570, divided into common stock of $115,016, surplus of $288,522,202,
retained earnings (deficit) of $(72,584,418), and net unrealized holding gains
(losses) on available-for-sale securities of $(3,447,230).
3.3 SUBSIDIARIES. A true and correct list of all entities (including,
without limitation, corporations, partnerships, joint ventures, limited
liability companies, firms or other entities) in which Bank has greater than a
5% direct or indirect equity or other ownership interest (each such entity in
which Bank has a 25% or greater direct or indirect equity or other ownership
interest is referred to herein individually as a "Bank Subsidiary" and
collectively as the "Bank Subsidiaries"), other than stock in the Federal Home
Loan Bank of Atlanta, is Previously Disclosed in SCHEDULE 3.3. SCHEDULE 3.3
shows for each of the
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Bank Subsidiaries the following: its date and jurisdiction of organization; each
other jurisdiction in which it is authorized to transact business; its
authorized, issued and outstanding capital stock, other equity securities and
other ownership interests; and the percentage ownership interest of Bank or any
Bank Subsidiary therein. Each of the Bank Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all necessary corporate or other power to own its
properties and assets and to carry on its business as now conducted. Each of the
Bank Subsidiaries is duly authorized to conduct its business and is in good
standing in each jurisdiction Previously Disclosed in SCHEDULE 3.3 and no
governmental authority or agency of any other jurisdiction has advised Bank or
any Bank Subsidiary in writing that such Bank Subsidiary is required to be
authorized to transact business as a foreign corporation in such jurisdiction.
Except as Previously Disclosed in SCHEDULE 3.3 the shares of capital stock and
other equity securities of the Bank Subsidiaries are duly authorized, validly
issued and outstanding, fully paid and nonassessable, and subject to no
preemptive rights and are owned directly or indirectly by Bank, free and clear
of all liens, claims, agreements or encumbrances. Except as Previously Disclosed
in SCHEDULE 3.3, there are no shares of any other class of capital stock, other
equity securities or other ownership interests of any of the Bank Subsidiaries
outstanding and there are no treasury shares and no outstanding subscriptions,
conversion privileges, options, warrants, agreements, understandings or
arrangements to which Bank or any of the Bank Subsidiaries is a party or by
which Bank or any Bank Subsidiary is bound relating to its authorized or issued
capital stock, or pursuant to which such Bank Subsidiary may be obligated to
issue shares of capital stock, and there are no contracts, commitments,
understandings or arrangements relating to the rights of Bank to vote or to
dispose of such shares.
3.4 AUTHORIZATION. Each of this Agreement and the Stock Option Agreement,
subject (as to this Agreement only) to receipt of the necessary stockholder
approvals referred to in Section 7.1(a), has been duly authorized by all
necessary corporate action of Bank and, assuming the due authorization,
execution and delivery hereof and thereof by Acquiror, this Agreement and the
Stock Option Agreement each is a valid and binding agreement of Bank enforceable
against Bank in accordance with its terms, subject to the conservatorship and
receivership provisions of the Federal Deposit Insurance Act and the Federal
Home Loan Bank Act and to bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting creditors' rights
generally and to general equity principles and except that the availability of
equitable remedies, including specific performance and injunctive relief, is
subject to the discretion of the court before which any proceedings may be
brought. The execution and delivery of this Agreement by Bank do not, and the
consummation of the transactions contemplated hereby by Bank will not,
constitute (a) except as Previously Disclosed in SCHEDULE 3.4(A) a breach or
violation of, or a default under, any judgment, decree, order, governmental
permit or license applicable to Bank or any of the Bank Subsidiaries or to which
Bank or any of the Bank Subsidiaries is subject or bound, which breach,
violation or default would have a Material Adverse Effect (as hereinafter
defined) on Bank, or (b) a breach or violation of, or a default under, its
charter or bylaws, or, except as Previously Disclosed in SCHEDULE 3.4(A) under
any agreement, indenture or instrument of Bank or any of the Bank Subsidiaries
or to which Bank or any of the Bank Subsidiaries is subject or bound, which
breach, violation or default under any such agreement, indenture, or instrument
would have a Material Adverse Effect on Bank. The consummation of the
transactions contemplated by this Agreement will not require any consent,
waiver, non-objection or approval under any such judgment, decree, order,
governmental permit or license, or the consent, waiver, non-objection or
approval of any other party to any such agreement, indenture or instrument,
other than (i) as Previously Disclosed in SCHEDULE 3.4(B), (ii) the approvals of
Bank shareholders and applicable regulatory authorities referred to in Section
7.1(b) and (iii) any other consents, waivers, non-objections or approvals the
absence of which would not have a Material Adverse Effect on Bank. The execution
and delivery of the Stock Option Agreement by Bank do not, and the consummation
of the transactions contemplated thereby by Bank will not, constitute (a) a
breach or violation of, or a default under, any judgment, decree, order,
governmental permit or license applicable to Bank or any of the Bank
Subsidiaries or to which Bank or any of the Bank Subsidiaries is subject or
bound, or (b) a breach or violation of, or a default under, its charter or
bylaws, or under any agreement, indenture or instrument of Bank or any of the
Bank Subsidiaries or to which Bank or any of the Bank Subsidiaries is subject or
bound. The consummation of the transactions contemplated by the Stock Option
Agreement will not require any consent, waiver, non-objection or approval under
any such judgment, decree, order, governmental permit or license, or the
consent, waiver, non-objection or approval of any other party to any such
agreement, indenture or instrument. Previously Disclosed in SCHEDULE 3.4(B) is a
full and complete list of all consents, waivers, non-objections or approvals
from third parties other than regulatory approvals contemplated in Section
7.1(b) that are required to be obtained by Bank in connection with the execution
and delivery of this Agreement by Bank and the performance of Bank's obligations
hereunder, other than those consents, waivers, non-objections or approvals the
failure of which to be obtained would not have a Material Adverse Effect on Bank
(such consents, waivers, nonobjections and approvals, other than those the
failure of which to obtain would not have a Material Adverse Effect on Bank,
being referred to as the "Bank Consents").
3.5 FILINGS; FINANCIAL STATEMENTS. Bank has delivered and will promptly
deliver, as applicable, to Acquiror, Bank's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and all other documents filed or to be
filed by
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Bank subsequent to December 31, 1993 under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act"), and 12 C.F.R. (section mark)
563d.1, in the form filed with the OTS, (such reports being referred to herein
as the "Bank Financial Reports") and which Bank Financial Reports conformed and
will conform in all material respects to applicable legal requirements. As of
their respective dates, the Bank Financial Reports 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 consolidated balance sheets contained in or incorporated by
reference into the Bank Financial Reports (including the related notes and
schedules thereto) presents and will present fairly the consolidated financial
position of Bank and its consolidated Bank Subsidiaries as of its date, and each
of the statements of consolidated earnings, consolidated shareholders' equity
and consolidated cash flows or equivalent statements in the Bank Financial
Reports (including any related notes and schedules thereto) presents and will
present fairly the results of operations, shareholders' equity and cash flows,
as the case may be, of Bank and its consolidated Bank Subsidiaries for the
periods set forth therein, in each case in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as may be noted therein, subject to normal year-end audit adjustments in
the case of unaudited statements. Except as Previously Disclosed in SCHEDULE
3.5, as of June 30, 1994, Bank had no material liabilities or obligations,
contingent or otherwise, other than as and to the extent disclosed or reserved
against in the Bank Financial Reports as of June 30, 1994, and those which would
not have a Material Adverse Effect on Bank.
3.6 ABSENCE OF MATERIAL ADVERSE EFFECT. Except as Previously Disclosed in
Schedule 3.6, since June 30, 1994, there has not occurred a Material Adverse
Effect on Bank.
3.7 CONDUCT OF BUSINESS; COMPLIANCE WITH LAWS.
(a) Except as Previously Disclosed in SCHEDULE 3.7(A), to the knowledge of
Bank, Bank and the Bank Subsidiaries have conducted their business in compliance
with all applicable federal, state, and local laws, ordinances and regulations,
including applicable banking laws, federal and state securities laws, and laws
and regulations concerning discrimination, truth-in-lending, usury, fair credit
reporting, fair lending, consumer protection, occupational safety, fair
employment practices and fair labor standards, including, without limitation,
the Equal Credit Opportunity Act, the Fair Housing Act, and the Community
Reinvestment Act, except where the failure to so comply would not have a
Material Adverse Effect on Bank. Except as Previously Disclosed in SCHEDULE
3.7(A), neither Bank nor any of the Bank Subsidiaries has received any
notification or communication from any agency or department of any federal,
state or local government or regulatory authority or the staffs thereof,
asserting that either Bank or any of the Bank Subsidiaries is not in compliance
with any of the statutes, regulations or ordinances that such agency, department
or regulatory authority enforces, which noncompliance would have a Material
Adverse Effect on the Bank, or threatening to revoke any license, franchise,
permit or governmental authorization the revocation of which would have a
Material Adverse Effect on Bank.
(b) Except as Previously Disclosed in SCHEDULE 3.7(B), each of Bank and the
Bank Subsidiaries:
(i) has all permits, licenses, authorizations, orders and approvals of, and
has made all filings, applications and registrations with, all regulatory
authorities that are required in order to permit it to own its businesses as
presently conducted and that are material to the business of Bank and the Bank
Subsidiaries, taken as a whole; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
knowledge of Bank, no suspension or cancellation of any of them is threatened;
and all such filings, applications and registrations are current;
(ii) has received no notification or communication from any regulatory
authority or the staff thereof (A) threatening to revoke any license, franchise,
permit or governmental authorization, which revocation would have a Material
Adverse Effect on the Bank, or (B) requiring or suggesting that any of Bank or
the Bank Subsidiaries (or any of its officers, directors, trustees or
controlling persons) enter into a cease and desist order, agreement or
memorandum of understanding (or requiring the board of directors or board of
trustees thereof to adopt any resolution or policy) which has not been
terminated);
(iii) is not required to give prior notice to any federal banking or thrift
agency of the proposed addition of an individual to its board of directors or
the employment of an individual as a senior executive; and
(iv) does not accept brokered deposits.
3.8 LITIGATION; REGULATORY MATTERS. Except as Previously Disclosed in
SCHEDULE 3.8, and except for matters which would not have a Material Adverse
Effect on Bank, neither Bank nor any of the Bank Subsidiaries is a party to any,
and there are no pending or, to Bank's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Bank or any of the Bank
Subsidiaries (including without limitation
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any such proceeding, claim, action or investigation which alleges claims under
fair lending laws or other laws relating to discrimination, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, and the Home Mortgage Disclosure Act or under any
similar disclosure law or regulation), or challenging the validity or propriety
of the transactions contemplated by this Agreement; neither Bank nor any of the
Bank Subsidiaries 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 depository institutions or engaged
in the insurance of deposits which restricts or purports to restrict the conduct
of the business of Bank or any of the Bank Subsidiaries, or the capital,
liquidity, credit policies or management of Bank or any of the Bank
Subsidiaries, which restrictions would have a Material Adverse Effect on Bank;
and, to Bank's knowledge, neither Bank nor any of the Bank Subsidiaries has been
advised by any such regulatory authority that such authority is contemplating
issuing or requesting any such order, decree, agreement, memorandum of
understanding, commitment letter or similar arrangement or submission, or
requiring Bank or any Bank Subsidiary to adopt any resolution or similar board
action with respect thereto.
3.9 MATERIAL CONTRACTS; EMPLOYMENT OBLIGATIONS.
(a) Except as Previously Disclosed in SCHEDULE 3.9 and except for this
Agreement, the Stock Option Agreement, and arrangements made in the ordinary
course of business consistent with prior practice, neither Bank nor any of the
Bank Subsidiaries is bound by any contracts, understandings or arrangements to
be performed after the date hereof involving payments by Bank or any of the Bank
Subsidiaries in excess of $100,000 for any 12 month period or pursuant to which
Bank or any of the Bank Subsidiaries may incur liability in excess of $100,000
for termination or breach thereof. True and complete copies of such contracts,
understandings or arrangements have been provided to Acquiror or will be
provided to Acquiror upon request. Except as Previously Disclosed in SCHEDULE
3.9, 3.10(A), 5.9(B) or 5.9(C), (i) there are no contracts, understandings or
arrangements between Bank or any of the Bank Subsidiaries and the Holding
Company, or between Bank or any Bank Subsidiary and any director, officer or
employee of Bank, any Bank Subsidiary or the Holding Company and (ii) neither
Bank nor any of the Bank Subsidiaries has any written or oral bonus, pension,
profit sharing, retirement, deferred compensation, savings, stock purchase,
stock option, severance, hospitalization, insurance or other plan providing
employee benefits or any employment, agency, consulting or similar contract.
(b) Each of the contracts, understandings and arrangements Previously
Disclosed in SCHEDULE 3.9 is in full force and effect and, except as Previously
Disclosed in SCHEDULE 3.9, neither Bank or any Bank Subsidiary nor to Bank's
knowledge any other party to such a contract, understanding or arrangement is in
default thereunder or has breached any terms or provisions thereof which default
or breach would have a Material Adverse Effect on Bank.
(c) Except for those matters which would not have a Material Adverse Effect
on Bank, no third party has raised with Bank or any Bank Subsidiary any claim,
dispute or controversy with respect to any of the contracts, understandings and
arrangements Previously Disclosed in SCHEDULE 3.9, nor has Bank or any Bank
Subsidiary received notice or warning of alleged nonperformance, delay in
delivery or noncompliance by Bank or any Bank Subsidiary with respect to its
obligations under any of such contracts, understandings or arrangements.
3.10 EMPLOYEE BENEFIT PLANS.
(a) Previously Disclosed in SCHEDULE 3.10(A) is a complete list of all
bonus, 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 plans and contracts, all
medical, dental, health and life insurance plans, all other employee 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 Bank or any of the Bank Subsidiaries for the benefit of
employees, former employees, directors, former directors or their beneficiaries
(the "Compensation and Benefit Plans"). True and complete copies of all
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, or will be upon request, supplied to Acquiror.
(b) 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 Bank and the
Bank Subsidiaries (the "ERISA Plans"), to the extent subject to ERISA, are in
substantial compliance with ERISA. Except as Previously Disclosed in SCHEDULE
3.10(B), each ERISA Plan 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 Bank is not aware of
any circumstances reasonably likely to result in the revocation
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or denial of any such favorable determination letter or the inability to receive
such a favorable determination letter. There is no material pending or, to
Bank's knowledge, threatened litigation relating to the ERISA Plans. Neither
Bank nor any of the Bank Subsidiaries has engaged in a transaction with respect
to any ERISA Plan that could subject it or any of the Bank Subsidiaries to a tax
or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA
in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by Bank or any of the Bank 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 Bank nor any of the Bank 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 or by any ERISA
Affiliate within the past 12-month period.
(d) All contributions required to be made under the terms of any ERISA Plan
have been timely made. Neither any Pension Plan nor any single-employer plan of
an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of ERISA.
Neither Bank nor any of the Bank 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.
(e) Under each Pension Plan which is a single-employer plan, as of the last
day of the most recent plan year, 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 material change in the financial
condition of such plan since the last day of the most recent plan year.
(f) Neither Bank nor any of the Bank Subsidiaries has any obligations for
retiree health and life benefits under any plan, except as Previously Disclosed
in SCHEDULE 3.10(F). There are no restrictions on the rights of Bank or any of
the Bank Subsidiaries to amend or terminate any such plan without incurring any
liability thereunder.
(g) Except as Previously Disclosed in SCHEDULE 3.10(G), 5.9(B), or 5.9(C),
neither the execution and delivery of this Agreement or the Stock Option
Agreement nor the consummation of the transactions contemplated hereby or
thereby 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 Bank or any of the Bank Subsidiaries
under any Compensation and Benefit Plan or otherwise from Bank or any of the
Bank 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.
3.11 LABOR MATTERS. Neither Bank nor any of the Bank 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 Bank
or any of the Bank Subsidiaries the subject of a proceeding asserting that it or
any such Bank Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel it or such
Bank Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving Bank or any of the Bank Subsidiaries pending or, to Bank's knowledge,
threatened, nor is Bank aware of any activity involving Bank or any of the Bank
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other labor organization activity.
3.12 CLASSIFIED ASSETS. Bank has Previously Disclosed in SCHEDULE 3.12 a
list of the aggregate amounts of loans, extensions of credit or other assets of
Bank and the Bank Subsidiaries that have been classified as of June 30, 1994 by
Bank (the "Asset Classification") as "Other Loans Specially Mentioned",
"Substandard", "Doubtful" or "Loss"; and except as Previously Disclosed in
SCHEDULE 3.12 no amounts of loans, extensions of credit or other assets that
have been classified as of June 30, 1994 by any regulatory examiner as "Other
Loans Specially Mentioned", "Substandard", "Doubtful", or "Loss" are excluded
from the amounts disclosed in the Asset Classification, other than amounts of
loans, extensions of credit or other assets that were charged off by Bank or a
Bank Subsidiary prior to June 30, 1994.
3.13 TITLE TO PROPERTIES. To Bank's knowledge, except as Previously
Disclosed in SCHEDULE 3.13(A), Bank and the Bank Subsidiaries have good, and in
the case of real property, marketable, title to all their properties and assets
and interests therein, real and personal, reflected in the latest audited
balance sheet included in the Bank Financial Reports prior to the date of this
Agreement or acquired after the date thereof (except as since sold or otherwise
disposed of in the ordinary course of
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business), free and clear of all liens and encumbrances, except for liens for
current taxes not yet due and payable, and liens which are not, in the
aggregate, material in relation to the assets of Bank and except also for such
imperfections of title, easements and encumbrances, if any, as do not materially
interfere with the present use of the properties subject thereto or affected
thereby, or otherwise materially impair business operations or the marketability
or value of the properties subject thereto. Except as Previously Disclosed in
SCHEDULE 3.13(B), all material leases pursuant to which Bank or the Bank
Subsidiaries, as lessee, leases real or personal property are in full force and
effect, and there is not, under any of such leases, any material existing
default by Bank or any of the Bank Subsidiaries or any event which with notice
or lapse of time or both would constitute such a default, and except as
Previously Disclosed in SCHEDULE 3.4(B), none of such leases contains a
prohibition against assignment by Bank or the Bank Subsidiaries or any other
provision which would preclude the Surviving Entity or any of its subsidiaries
from occupying and using the leased premises for the same purposes and upon the
same rental and other terms as are applicable to the occupation and use by Bank
or the Bank Subsidiaries.
3.14 TAXES. Except as Previously Disclosed in SCHEDULE 3.14, (a) all
reports and returns with respect to Taxes (as defined below) and tax related
information reporting requirements that are required to be filed by or with
respect to Bank or the Bank Subsidiaries, including, without limitation,
consolidated federal income tax returns of Bank and the Bank Subsidiaries,
(collectively, the "Bank Tax Returns") have been duly filed, or requests for
extensions have been timely filed and have not expired, except to the extent all
such failures to file, taken together, would not have a Material Adverse Effect
on Bank, and such Bank Tax Returns were true, complete and accurate in all
material respects; (b) all Taxes shown to be due on the Bank Tax Returns have
been paid in full; (c) the Bank Tax Returns have been examined by the Internal
Revenue Service or the appropriate state, local or foreign taxing authority or
the period for assessment of the Taxes in respect of which such Bank Tax Returns
were required to be filed has expired, (d) all Taxes due with respect to
completed and settled examinations have been paid in full, (e) no issues have
been raised by the relevant taxing authority in connection with the examination
of any of the Bank Tax Returns which would have a Material Adverse Effect on
Bank, except as specifically reserved against in the Bank Financial Reports for
periods ended prior to the date of this Agreement, and (f) no waivers of
statutes of limitations have been given by or requested with respect to any
Taxes of Bank or the Bank Subsidiaries.
For purposes of this Agreement, the term "Tax" shall mean all federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, employment,
premium, recording, documentary, transfer, back-up withholding or similar taxes,
together with any interest, additions, or penalties with respect thereto and any
interest in respect of such additions or penalties (collectively, "Taxes").
3.15 [RESERVED]
3.16 RULE 145 AFFILIATES. Except as Previously Disclosed in SCHEDULE 3.16,
to Bank's knowledge, there is no person who, as of the date of this Agreement,
may be deemed to be an "affiliate" of Bank as that term is used in Rule 145
under the Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the "Securities Act").
3.17 BROKERS' AND FINDERS' FEES. Neither Bank nor any of the Bank
Subsidiaries has taken any action that would give rise to any valid claim
against any party hereto for a brokerage commission, finder's fee or other like
payment, other than fees to be paid by Bank to Goldman, Sachs & Co., who have
acted as financial advisors to Bank, and to Bear Stearns & Co. Inc., who have
acted as financial advisors to the Special Advisory Committee of Bank's Board of
Directors, which fees have been Previously Disclosed to Acquiror.
3.18 REPORTS. Since January 1, 1991, each of Bank and the Bank Subsidiaries
has filed all reports and statements, together with any amendments required to
be made with respect thereto, required to be filed with (i) the FDIC, (ii) the
OTS, the Federal Home Loan Bank and the Federal Home Loan Bank System, and (iii)
any other applicable regulatory authorities. As of their respective dates (and
without giving effect to any amendments or modifications filed after the date of
this Agreement with respect to reports and documents filed before the date of
this Agreement), each of such reports and documents, including the financial
statements, exhibits and schedules thereto, complied in all material respects
with all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
3.19 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses shown on the
consolidated balance sheets of Bank included in the June 30, 1994 Bank Financial
Reports was, and the allowance for loan losses to be shown on subsequent Bank
Financial Reports, will be, adequate, as determined in accordance with generally
accepted accounting principles, to provide for losses, net of recoveries
relating to loans previously charged off, on loans outstanding as of the date
thereof.
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3.20 INSURANCE. Each of Bank and the Bank Subsidiaries has 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 Agreement and
the transactions contemplated hereby) that are known to Bank, except for such
matters which would not have a Material Adverse Effect on Bank. Previously
Disclosed in SCHEDULE 3.20 is a list of all insurance policies maintained by or
for the benefit of Bank or the Bank Subsidiaries or their directors, officers,
employees or agents.
3.21 STATE TAKEOVER LAWS; CHARTER. Bank has taken all action so that the
shareholder voting requirements of Fla. Stat. (section mark) 607.0901 and
Section 5 of Bank's Federal Stock Charter (the "Charter") will not apply to the
Agreement, the Stock Option Agreement or to the transactions contemplated hereby
or thereby, and no other state takeover law imposes requirements on such
agreements or transactions which have not been satisfied.
3.22 NO FURTHER ACTION. Bank has taken all action so that the entry into
this Agreement or the Stock Option Agreement and the consummation of the
transactions contemplated hereby or thereby (including, without limitation the
Merger), or any other action or combination of actions, or any other
transactions contemplated hereby or thereby do not and will not (i) require a
vote of stockholders (other than as set forth in Section 7.1(a) in the case of
this Agreement only) or (ii) except (as to this Agreement only) as Previously
Disclosed in SCHEDULES 3.9, 3.10(A), 3.10(G) or 5.9(C), result in the grant of
any rights to any person (other than Acquiror and Subsidiary) under the Charter
or Bylaws of Bank or any Bank Subsidiary or under any agreement to which Bank or
any of the Bank Subsidiaries is a party.
3.23 ENVIRONMENTAL MATTERS.
(a) To Bank's knowledge, Bank and each of the Bank 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), except for instances of noncompliance which would not have a Material
Adverse Effect on Bank.
(b) Except as Previously Disclosed in SCHEDULE 3.23(B), and except for
matters that would not have a Material Adverse Effect on Bank, there is no
proceeding pending or, to Bank's knowledge, threatened before any court,
governmental agency or board or the forum in which it or any of the Bank
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 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 the Bank Subsidiaries or any Participation Facility.
(c) Except as Previously Disclosed in SCHEDULE 3.23(C), and except for
matters that would not have a Material Adverse Effect on Bank, there is no
proceeding pending, or to Bank's knowledge, threatened before any court,
governmental agency or board or other forum in which any Loan/Fiduciary Property
(or Bank or any of the Bank 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.
(d) To Bank's knowledge, there is no reasonable basis for any proceeding of
a type described in subparagraphs (b) or (c) above, except as has been
Previously Disclosed in SCHEDULE 3.23(D).
(e) To Bank's knowledge, during the period of (i) its or any of the Bank
Subsidiaries' ownership or operation of any of their respective current
properties, (ii) its or any of the Bank Subsidiaries' participation in the
management of any Participation Facility, or (iii) its or any of the Bank
Subsidiaries' holding of a security or other interest in a Loan/Fiduciary
Property, there have been no releases of Hazardous Material in, on, under or
affecting any such property, Participation Facility or Loan/Fiduciary Property,
except for such releases that would not have a Material Adverse Effect on Bank
or have been Previously Disclosed in SCHEDULE 3.23(E).
(f) To Bank's knowledge, prior to the period of (i) its or any of the Bank
Subsidiaries' ownership or operation of any of their respective current
properties, (ii) its or any of the Bank Subsidiaries' participation in the
management of any Participation Facility, or (iii) its or any of the Bank
Subsidiaries' holding of a security or other interest in a Loan/Fiduciary
Property, there were no releases of Hazardous Material in, on, under or
affecting any such property, Participation Facility or Loan/Fiduciary Property,
except for such releases that would not have a Material Adverse Effect on it or
have been Previously Disclosed in SCHEDULE 3.23(F).
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(g) The following definitions apply for purposes of this Section 3.23:
"Loan/Fiduciary Property" means any non-residential property owned or controlled
by it or any of the Bank Subsidiaries or in which it or any of the Bank
Subsidiaries holds a security, fiduciary, or other interest, and, where required
by the context, includes any such property where Bank or any of the Bank
Subsidiaries constitutes the owner or operator of such property, but only with
respect to such property; "Participation Facility" means any facility in which
it or any of the Bank Subsidiaries participates in the management of such
property, but only with respect to 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, Agreement 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
Disposal and the federal Toxic Substances Control Act, and the Federal
Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and
Health Act of 1970, each as amended and as now in effect, and (ii) any common
law or equitable doctrine (including, without limitation, injunctive relieve 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 or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos, asbestos containing material, urea
formaldehyde foam insulation, leas and polyclorinated biphenyl.
3.24 OPTION SHARES. The Option Shares (as defined in the Stock Option
Agreement), if and when issued upon exercise of the Option, will be duly
authorized, validly issued, fully paid and nonassessable and subject to no
preemptive rights.
3.25 DERIVATIVES CONTRACTS. None of Bank or the Bank Subsidiaries is a
party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contract, or any
other contract not included on its balance sheet which is a financial derivative
contract (including various combinations thereof) (each a "Derivatives
Contract") except for those Derivatives Contracts Previously Disclosed in
SCHEDULE 3.25, which includes a complete list, as applicable, of Bank assets
pledged as security for each Derivatives Contract.
3.26 CAPITAL MAINTENANCE AGREEMENT. To Bank's knowledge, except for the
declaration by the OTS that the Holding Company was in default on May 30, 1991,
the OTS has not taken any steps or expressed any intentions to Bank to exercise
its rights under the Regulatory Capital Maintenance/Dividend Agreement, dated as
of April 29, 1988 (as such may be amended or modified), among Holding Company,
one of its subsidiaries and a predecessor of OTS, to vote the Bank Common Stock
held by Holding Company, or to prevent Holding Company from exercising its right
to vote such shares.
3.27 ACCOUNTING CONTROLS. Each of Bank and the Bank Subsidiaries has
devised and maintained systems of internal accounting controls sufficient to
provide reasonable assurances that (i) all material transactions are executed in
accordance with management's general or specific authorization; (ii) all
material transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting principles
consistently applied with respect to savings associations or any other criteria
applicable to such statements, and to maintain proper accountability for items;
(iii) access to the material property and assets of Bank and the Bank
Subsidiaries is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for items is
compared with the actual levels at reasonable intervals and appropriate action
is taken with respect to any differences.
3.28 NO KNOWLEDGE. As of the date of this Agreement, Bank knows of no
reason why the regulatory approvals referred to in Section 7.1(b) should not be
obtained.
3.29 ACCURACY OF INFORMATION. The statements with respect to Bank and the
Bank Subsidiaries contained in this Agreement, the Schedules, the Stock Option
Agreement and any other written documents executed and delivered by or on behalf
of Bank or the Bank Subsidiaries in connection with this Agreement are true and
correct in all material respects, and such statements and documents do not omit
any material fact necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
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3.30 NO DISSENTERS' RIGHTS. Assuming that the Acquiror Common Stock is
listed on the NYSE on the Merger Effective Date and that the Bank Common Stock
is quoted on the National Association of Securities Dealers Automated Quotation
System on the date of the Meeting, holders of shares of Bank Common Stock have,
and will have, no dissenters' or appraisal rights with respect to their shares
as a result of or relating to the Merger in accordance with the regulations of
the Office of Thrift Supervision of the Department of the Treasury ("OTS") set
forth in 12 CFR (section mark) 552.14.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ACQUIROR
Acquiror hereby represents and warrants to Bank as follows:
4.1 CORPORATE STANDING OF ACQUIROR. Acquiror is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina, is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or the properties or assets
owned or leased by it makes such qualification necessary, and has the corporate
power to carry on its business as and where conducted, to own, lease and operate
its properties, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to having obtained all requisite
regulatory approvals contemplated by this Agreement.
4.2 CAPITAL STOCK OF ACQUIROR. As of the date hereof, the authorized
capital stock of Acquiror consists of (i) 750,000,000 authorized shares of
common stock, each of $3.33 1/3 par value ("Acquiror Common Stock"), (ii)
40,000,000 authorized shares of Class A Preferred Stock, no-par value ("Acquiror
Class A Preferred Stock"), and (iii) 10,000,000 authorized shares of Preferred
Stock, no-par value ("Acquiror Preferred Stock") (no other class of capital
stock being authorized), of which 175,784,527 shares of Acquiror Common Stock,
no shares of Acquiror Class A Preferred Stock and 6,318,350 shares of Series
1990 Cumulative Perpetual Adjustable Rate Preferred Stock, constituting a single
series of Acquiror Preferred Stock, were issued and outstanding as of September
30, 1994.
4.3 AUTHORIZATION. This Agreement has been duly authorized by all necessary
corporate action of Acquiror and, assuming the due authorization, execution and
delivery hereof by Bank, is a valid and binding agreement of Acquiror
enforceable against Acquiror in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights generally and to
general equity principles and except that the availability of equitable
remedies, including specific performance and injunctive relief, is subject to
the discretion of the court before which any proceedings may be brought. Except
as Previously Disclosed in SCHEDULE 4.3(A), the execution and delivery of this
Agreement by Acquiror and Subsidiary do not and the consummation of the
transactions contemplated hereby by Acquiror and Subsidiary will not, constitute
(a) except as Previously Disclosed in SCHEDULE 4.3(A), a breach or violation of,
or a default under any judgment, decree, order, governmental permit or license
applicable to Acquiror or Subsidiary or any of the entities (including, without
limitation, corporations, partnerships, joint ventures, limited liability
companies, firms or other entities) in which Acquiror has a 25% or greater
direct or indirect equity or other ownership interest and specifically including
Subsidiary (an "Acquiror Sub" and collectively, the "Acquiror Subs") or to which
Acquiror or any of the Acquiror Subs is subject or bound, which breach,
violation or default under any such agreement, indenture or instrument would
have a Material Adverse Effect on Acquiror or (b) a breach or violation of, or a
default under, Acquiror's or Subsidiary's organizational documents or bylaws,
or, except as Previously Disclosed in SCHEDULE 4.3(A) under any agreement,
indenture or instrument of Acquiror or any of the Acquiror Subs or to which
Acquiror or any of the Acquiror Subs is subject or bound, which breach,
violation or default under any such agreement, indenture or instrument would
have a Material Adverse Effect on Acquiror. The consummation of the transactions
contemplated by this Agreement will not require any consent, waiver, non-
objection or approval under any such judgment, decree, order, governmental
permit or license, or the consent, waiver, non-objection or approval of any
other party to any such agreement, indenture or instrument, other than (i) as
Previously Disclosed in SCHEDULE 4.3(B), (ii) the approvals of Bank shareholders
and applicable regulatory authorities referred to in Article VII and (iii) any
other consents, waivers, non-objections or approvals the absence of which would
not have a Material Adverse Effect on Acquiror. Previously Disclosed in SCHEDULE
4.3(B) is a full and complete list of all consents, waivers, non-objections and
approvals from third parties other than regulatory approvals contemplated in
Section 7.1(b) (the "Acquiror Consents") that are required to be obtained by
Acquiror or Subsidiary in connection with the execution and delivery of this
Agreement by Acquiror or Subsidiary and the performance of Acquiror or
Subsidiary's obligations hereunder or thereunder, other than those consents,
waivers, non-objections and approvals the failure of which to be obtained would
not have a Material Adverse Effect on Acquiror.
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4.4 FILINGS; FINANCIAL STATEMENTS. Acquiror has delivered and will promptly
deliver, as applicable, to Bank, Acquiror's Annual Report on Form 10-K, for the
fiscal year ended December 31, 1993, and all other documents filed or to be
filed by Acquiror subsequent to December 31, 1993 under Section 13(a), 13(c), 14
or 15(d) of the Exchange Act, in the form filed with the Securities and Exchange
Commission ("SEC") (the "Acquiror Financial Reports"), which Acquiror Financial
Reports conformed in all material respects to applicable legal requirements. As
of their respective dates, the Acquiror Financial Reports did 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
consolidated balance sheets contained in or incorporated by reference into the
Acquiror Financial Reports (including the related notes and schedules thereto)
presents and will present fairly the consolidated financial position of Acquiror
and its consolidated Acquiror Subs as of its date, and each of the statements of
consolidated earnings, consolidated shareholders' equity and consolidated cash
flows or equivalent statements in the Acquiror Financial Reports (including any
related notes and schedules thereto) presents and will present fairly the
consolidated results of operations, shareholders' equity and cash flows, as the
case may be, of Acquiror and the consolidated Acquiror Subs for the periods set
forth therein, in each case in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as may
be noted therein, subject to normal year-end audit adjustments in the case of
unaudited statements. Except as Previously Disclosed in SCHEDULE 4.4, as of June
30, 1994, Acquiror and the consolidated Acquiror Subs had no consolidated
liabilities or obligations, contingent or otherwise, other than as disclosed or
reserved against in the Acquiror Financial Reports as of June 30, 1994, and
those which would not have a Material Adverse Effect on Acquiror.
4.5 ABSENCE OF MATERIAL ADVERSE EFFECT. Except as Previously Disclosed in
SCHEDULE 4.5, since June 30, 1994, there has occurred no Material Adverse Effect
on Acquiror.
4.6 CONDUCT OF BUSINESS; COMPLIANCE WITH LAWS. Except as Previously
Disclosed in SCHEDULE 4.6, to the knowledge of Acquiror, Acquiror and the
Acquiror Subs have conducted their business in compliance with all federal,
state, and local laws, ordinances and regulations, including applicable banking
laws, federal and state securities laws, and laws and regulations concerning
truth-in-lending, usury, fair credit reporting, fair lending, the Community
Reinvestment Act, consumer protection, occupational safety, fair employment
practices and fair labor standards, except where the failure to so comply would
not have a Material Adverse Effect on Acquiror. Neither Acquiror nor any of the
Acquiror Subs has received any notification or communication from any agency or
department of any federal, state or local government or regulatory authority or
the staffs thereof, asserting that either Acquiror or any of the Acquiror Subs
are not currently in compliance with any of the statutes, regulations or
ordinances that such agency, department or regulatory authority enforces, which
noncompliance would have a Material Adverse Effect on Acquiror, or threatening
to revoke any license, franchise, permit or governmental authorization the
revocation of which would have a Material Adverse Effect on Acquiror.
4.7 LITIGATION; REGULATORY MATTERS. Except as Previously Disclosed in
SCHEDULE 4.7 and except for matters which would not have a Material Adverse
Effect on Acquiror, neither Acquiror nor any of the Acquiror Subs is a party to
any, and there are no pending or, to Acquiror's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Acquiror or any of the
Acquiror Subs (including without limitation any such proceeding, claim, action
or investigation which alleges claims under fair lending laws or other laws
relating to discrimination, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, and the
Home Mortgage Disclosure Act or under any similar disclosure law or regulation),
or challenging the validity or propriety of the transactions contemplated by
this Agreement; neither Acquiror nor any of the Acquiror Subs 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 depository institutions or engaged in the insurance of deposits
which restricts or purports to restrict the conduct of the business of Acquiror
or any of the Acquiror Subs, or the capital, liquidity, credit policies or
management of Acquiror or any of the Acquiror Subs, which restrictions would
have a Material Adverse Effect on Acquiror; and, to Acquiror's knowledge,
neither Acquiror nor any of the Acquiror Subs has been advised by any such
regulatory authority that such authority is contemplating issuing or requesting
any such order, decree, agreement, memorandum of understanding, commitment
letter or similar arrangement or submission, or requiring Acquiror or any
Acquiror Sub to adopt any resolution or take similar board action with respect
thereto.
4.8 EMPLOYEE BENEFIT PLANS. All employee benefit plans (within the meaning
of Section 3(3) of ERISA) established by Acquiror are in substantial compliance
with all federal and state laws and regulations thereunder in effect at the date
hereof covering employee benefit plans and there are no unfunded liabilities
relating to any of such plans.
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4.9 FINANCIAL CAPACITY. Acquiror has sufficient financial resources to
consummate the Merger and fulfill its obligations under this Agreement.
4.10 [RESERVED]
4.11 BROKERS' AND FINDER'S FEES. Neither Acquiror nor any of the Acquiror
Subs has taken any action that would give rise to any valid claim against any
party hereto for a brokerage commission, finder's fee or other like payment.
4.12. HOLDING COMPANY AFFILIATE. None of Acquiror or the Acquiror Subs is
an "affiliate" or "associate" of Holding Company as these terms are defined in
Fla. Stat. (section mark) 607.0901.
4.13 NO KNOWLEDGE. As of the date of this Agreement, Acquiror knows of no
reason why the regulatory approvals referred to in Section 7.1(b) should not be
obtained.
4.14 ACCURACY OF INFORMATION. The statements with respect to Acquiror and
the Acquiror Subs contained in this Agreement, the Stock Option Agreement, the
Schedules and any other written documents executed and delivered by or on behalf
of Acquiror or the Acquiror Subs in connection with this Agreement are true and
correct in all material respects, and such statements and documents do not omit
any material fact necessary to make the statements contained therein, in light
of the circumstances under which they made, not misleading.
4.15 REPRESENTATIONS REGARDING SUBSIDIARY. At the time of execution by
Subsidiary of the Supplement, Acquiror shall be deemed to make the following
additional representations and warranties:
(A) CORPORATE STANDING OF SUBSIDIARY. Subsidiary is a national banking
association duly organized, validly existing and chartered under the laws of the
United States of America, is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
properties or assets owned or leased by it makes such qualification necessary,
and no governmental authority or agency of any other jurisdiction has advised
Subsidiary in writing that Subsidiary is required to be authorized to transact
business as a foreign corporation in such jurisdiction. Subsidiary has the
corporate power to carry on its business as and where conducted, to own, lease
and operate its properties, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, subject to having obtained all
requisite shareholder and regulatory approvals contemplated by this Agreement.
The deposits of Subsidiary are insured by the Bank Insurance Fund, administered
by the FDIC.
(B) AUTHORIZATION. This Agreement has been duly authorized by all necessary
corporate action of Subsidiary and, assuming the due authorization, execution
and delivery hereof by Bank, is a valid and binding agreement of Subsidiary
enforceable against Subsidiary in accordance with its terms, subject to the
conservatorship and receivership provisions of the Federal Deposit Insurance Act
and the National Bank Act, bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting creditors' rights
generally and to general equity principles and except that the availability of
equitable remedies, including specific performance and injunctive relief, is
subject to the discretion of the court before which any proceedings may be
brought.
4.16 ACQUIROR COMMON STOCK. The Acquiror Common Stock to be issued in the
Merger shall have been duly authorized and when issued in accordance with this
Agreement shall be validly issued, fully paid and nonassessable, and not subject
to preemptive rights.
ARTICLE V
COVENANTS OF BANK
Bank hereby covenants to Acquiror and Subsidiary that:
5.1 CONDITIONS TO THE MERGER. Subject to the terms and conditions of this
Agreement, Bank 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, as promptly
as practicable so as to permit consummation of the Merger at the earliest
reasonably practicable date and to otherwise enable consummation of the
transactions contemplated hereby and shall cooperate fully with the other
parties hereto to that end, including using its reasonable best efforts to lift
or rescind any order, decree or injunction adversely affecting its ability to
consummate the transactions contemplated herein or as described in Section
7.1(c) and to cause to be satisfied the conditions referred to in Article VII,
and Bank shall use, and shall cause each of the Bank Subsidiaries to use, its
reasonable best efforts to obtain the Bank Consents and all other consents
(governmental or otherwise) necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
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5.2 BANK SHAREHOLDERS' APPROVAL. Bank shall, as promptly as reasonably
practicable following the date of this Agreement, prepare a proxy statement (the
"Proxy Statement") to be mailed to the holders of Bank Common Stock in
connection with the Merger and to be filed by Acquiror in the Registration
Statement (as defined in Section 6.2) with the SEC, which shall conform in all
material respects to applicable legal requirements, and Bank shall call a
special meeting (the "Meeting") of the holders of Bank Common Stock to be held
as soon as reasonably practicable for purposes of voting upon this Agreement and
the Merger contemplated hereby. Bank shall provide Acquiror and its counsel a
reasonable opportunity to comment on the Proxy Statement and any amendments or
supplements thereto), and shall give due consideration to any comments of
Acquiror and its counsel. Subject to the fiduciary duties of Bank's Board of
Directors to stockholders under applicable law, as determined by the Board in
good faith after considering the advice of outside counsel, Bank's Board of
Directors shall recommend approval of this Agreement and the Merger by the
holders of Bank Common Stock and Bank shall solicit and use reasonable best
efforts to obtain votes of the holders of Bank Common Stock in favor of this
Agreement and the Merger. As a condition to the mailing of the Proxy Statement
to Bank's shareholders, Acquiror shall have received from OTS a letter
confirming Holding Company's right to vote the shares of Bank Common Stock in
connection with this Agreement and the Merger.
5.3 INFORMATION SUPPLIED. When (a) the Registration Statement or any
post-effective amendment or supplement thereto shall become effective, and at
all times subsequent to such effectiveness, up to and including the date of the
Meeting; (b) the Proxy Statement and/or any amendments or supplements thereto
shall be mailed, and at all times subsequent to such mailing and up to and
including the date of the Meeting; and (c) any other document to be filed with
the SEC, OTS or any other regulatory agency in connection with the transactions
contemplated hereby shall be filed, and at all times subsequent to such filings,
such Registration Statement, Proxy Statement, regulatory filings, and all
amendments or supplements thereto, with respect to all information set forth
therein furnished or to be furnished by Bank relating to Bank or the Bank
Subsidiaries: (i) will comply in all material respects with the provisions of
the Securities Act and the Exchange Act and/or any other applicable statutory or
regulatory requirements, and (ii) 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 contained therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER, in
no event shall Bank or any of the Bank Subsidiaries be liable for any untrue
statement of a material fact or omission to state a material fact in the
Registration Statement, Proxy Statement, or regulatory filing, or any amendment
or supplement thereto, made in reliance upon, and in conformity with, written
information concerning another party furnished by such other party specifically
for use in the Registration Statement, Proxy Statement, or regulatory filing,
respectively.
5.4 COMMUNICATIONS. Unless approved by the Acquiror in advance (which
approval shall not be unreasonably withheld), Bank will not issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by law or
regulation or the rules of the NASD.
5.5 ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to the confidentiality
agreement entered into by Bank and Acquiror dated June 27, 1994 concerning
Bank's confidential information (the "Bank Confidentiality Agreement"), upon
reasonable notice Bank shall (and shall cause the Bank Subsidiaries to) afford
to Acquiror and its officers, employees, accountants, consultants, legal counsel
and other representatives reasonable access during normal business hours to all
information concerning the business, properties, contracts, records and
personnel of Bank or the Bank Subsidiaries as Acquiror may reasonably request;
PROVIDED that no investigation pursuant to this Section 5.5 shall affect or be
deemed to modify or waive any representation or warranty made by Bank or the
conditions of the obligation of Acquiror or Subsidiary to consummate the
transactions contemplated by this Agreement. All information disclosed pursuant
to this Section 5.5 shall be deemed to be "Evaluation Material" as defined in
and for the purposes of the Bank Confidentiality Agreement. Bank shall, and
shall cause its officers, employees, accountants, consultants, legal counsel and
other representatives to, comply with all of its obligations under the
confidentiality agreement entered into by Bank and Acquiror on October 11, 1994
concerning Acquiror's confidential information (the "Acquiror Confidentiality
Agreement"; the Acquiror Confidentiality Agreement and the Bank Confidentiality
Agreement are sometimes collectively referred to herein as the "Confidentiality
Agreements").
5.6 NO SOLICITATIONS.
(a) Bank shall not initiate, solicit or encourage (including by way of
furnishing nonpublic information or assistance) any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as such term is defined below), enter into discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize any of the officers or directors of Bank or any of the
Bank Subsidiaries to take any such action, and Bank shall instruct and use its
reasonable best efforts to cause the directors, officers (vice president and
above), agents and representatives of Bank and the
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Bank Subsidiaries (including, without limitation, any investment banker,
financial advisor, attorney or accountant retained by Bank) not to take any such
action.
(b) Nothing contained in this Agreement shall prohibit Bank, subject to
authorization by its Board of Directors, from (I) furnishing information to, or
entering into discussions or negotiations with, any person or entity that, after
the date hereof, makes a bona fide proposal to enter into a Competing
Transaction, that after the date hereof had not been initiated, solicited or
encouraged by Bank or any affiliate of Bank, or (II) recommending or endorsing
any, or entering into any definitive agreement with respect to any, such
Competing Transaction if (i) the Board of Directors of Bank determines in good
faith (after considering the advice of outside counsel) that such action is
required for the Board of Directors of Bank to comply with its fiduciary duties
to Bank's shareholders under applicable law, (ii) the Board of Directors of Bank
reasonably believes that the proposal is made in good faith, (iii) prior to
furnishing such information to such person or entity, Bank receives from such
person or entity an executed confidentiality agreement, with terms reasonably
satisfactory to Bank, and (iv) Bank provides prior notice to Acquiror.
(c) For purposes of this Agreement, "Competing Transaction" shall mean any
of the following involving Bank or any of the Bank Subsidiaries (other than the
transactions contemplated by this Agreement): (i) any merger, consolidation,
share exchange, business combination, or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of twenty
percent (20%) or more of the assets or deposits of Bank and the Bank
Subsidiaries, taken as a whole, in a single transaction or a series of related
transactions; or (iii) any tender offer or exchange offer for twenty percent
(20%) or more of the outstanding shares of Bank Common Stock or the filing of a
registration statement under the Securities Act in connection therewith.
5.7 REGULATORY APPROVALS. As promptly as practicable after the date hereof:
(a) Bank shall cooperate with Acquiror and Subsidiary in the preparation
and submission of applications to the appropriate regulatory agencies for
approval of the Merger, including but not limited to the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), the Office of the
Comptroller of the Currency (the "OCC"), the OTS, the FDIC and such other
agencies, the approval of which may be required for the Merger, and shall
deliver to the other parties hereto copies of all such filings and applications
promptly after they are filed; and provided that no such approval or consent
shall have imposed any condition or requirement which, in the good faith
reasonable opinion of Acquiror, would so materially adversely impact the
economic or business benefits to Acquiror of the transactions contemplated by
this Agreement so as to render inadvisable the consummation of the Merger, Bank
shall use reasonable best efforts to (i) resolve promptly all objections to the
Merger by any agency the consent, approval or non-objection of which is required
by law as a condition to the Merger, the U.S. Department of Justice or any other
governmental entity with jurisdiction and (ii) comply with all applicable
conditions and requirements imposed by any such agency or other governmental
entity in connection with the granting of any such consent, approval or
nonobjection; and
(b) All other appropriate action shall be duly taken by Bank to secure all
other approvals, consents and rulings, governmental or otherwise, which are
necessary to be obtained by Bank for the consummation of the transactions
contemplated hereby.
5.8. QUALIFICATION FOR TAX FREE REORGANIZATION. Bank undertakes and agrees
to use its reasonable best efforts to cause the Merger to qualify and to take no
action which would cause the Merger to fail to qualify as a reorganization
within the meaning of Section 368 of the Code. Bank agrees to notify Acquiror
promptly of any action of which it has knowledge which will cause the Merger to
fail to qualify as a reorganization.
5.9 ORDINARY COURSE. During the period from the date of this Agreement and
continuing until the earlier of the Merger Effective Date or the time that this
Agreement is terminated, except as expressly permitted by this Agreement, or
with the prior written consent of Acquiror:
(a) DIVIDENDS; CHANGES IN STOCK; ISSUANCE OF SECURITIES. Neither Bank nor
any Bank Subsidiary shall make, declare or pay any dividend (other than
dividends from Bank Subsidiaries to Bank) or declare or make any distribution
on, or combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock (other than in a fiduciary capacity in the ordinary course of
its business or in connection with stock received on a debt previously
contracted ("dpc") basis), or authorize the creation or issuance of, or issue,
any additional shares of its capital stock, or any options, calls or commitments
relating to its capital stock or any securities or obligations convertible into
or exchangeable for, or giving any person any right to subscribe for or acquire
from it shares of its capital stock or any securities or obligations convertible
into or exchangeable for shares of its capital stock; PROVIDED, HOWEVER, that
Bank may issue shares of Bank Common Stock in accordance with the agreements,
programs, arrangements, rights and contracts Previously Disclosed in SCHEDULE
3.2.
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(b) COMPENSATION. Neither Bank nor any of the Bank Subsidiaries shall enter
into any employment contracts with, increase the rate of compensation of, or pay
or agree to pay any bonus to any of its directors, officers or employees, except
as Previously Disclosed in SCHEDULE 5.9(B).
(c) BENEFIT PLANS. Except (i) as Previously Disclosed in SCHEDULES 3.2, 3.9
or 5.9(C) or (ii) as required by applicable law, neither Bank nor any of the
Bank Subsidiaries shall enter into or modify any pension, retirement, severance,
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 other benefit agreement or contract, 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 (i) the vesting or exercise of any benefits payable thereunder,
or (ii) the right to exercise any employee stock options or stock appreciation
rights outstanding thereunder.
(d) NO DISPOSITIONS OR ACQUISITIONS. Except as Previously Disclosed in
SCHEDULE 5.9(D) and except as permitted by Section 5.6(b), neither Bank nor any
of the Bank Subsidiaries shall dispose of or discontinue any portion of its
assets, business or properties, which is material to Bank and the Bank
Subsidiaries taken as a whole, or merge or consolidate with, or acquire all or
any substantial portion of, the business or property of any other entity which
is material to Bank and the Bank Subsidiaries taken as a whole (except
foreclosures, acquisitions of control, or securitization transactions, in each
case in the ordinary course of business consistent with past practice), or
pursuant to paragraph (e) of this Section 5.9.
(e) LINE OF BUSINESS; OPERATING PROCEDURES; ETC. Except as may be directed
by any regulatory agency or required by law or regulation or regulatory
pronouncements, neither Bank nor any of the Bank Subsidiaries shall (i) change
its lending, investment, liability management, accounting procedure, or other
material banking policies in any material respect, except as such changes as are
in accordance and in an effort to comply with Section 5.11 or, in the case of
accounting practices, are required under generally accepted accounting
principles or regulatory accounting principles, or (ii) commit to incur any
further capital expenditures beyond those Previously Disclosed in SCHEDULE
5.9(E) other than in the ordinary course of business and not exceeding $100,000
individually or $500,000 in the aggregate, and except for an unexpected business
emergency in order to continue operating Bank in the ordinary course, in which
case Acquiror's consent shall not be unreasonably withheld.
(f) INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary course of
business consistent with past practice, neither Bank nor any of the Bank
Subsidiaries shall incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other entity.
(g) HOLDING COMPANY BANKRUPTCY. Neither Bank nor any of the Bank
Subsidiaries shall take any action that would impair Bank's allowed claim in the
bankruptcy proceedings of Holding Company under Chapter 11 of the Federal
Bankruptcy Code.
(h) LIENS AND ENCUMBRANCES. Bank shall not impose, or suffer the
imposition, on any shares of stock of any of the Bank Subsidiaries, any lien,
charge or encumbrance, or permit any such lien, charge or encumbrance to exist.
(i) GOVERNING DOCUMENTS. Neither Bank nor any of the Bank Subsidiaries
shall amend its charter or bylaws.
(j) CONTRACTS. Except as Previously Disclosed in SCHEDULE 5.9(J), neither
Bank nor any of the Bank Subsidiaries shall enter into, terminate or make any
change in any material contract, agreement or lease, except in the ordinary
course of business consistent with past practice with respect to contracts,
agreements and leases that are terminable by it without penalty in excess of
$100,000 upon prior written notice of not more than 60 days'.
(k) CLAIMS. Neither Bank nor any of the Bank Subsidiaries shall settle any
claim, action or proceeding involving any liability for money damages in excess
of $250,000 or restrictions upon the operations of Bank or any of the Bank
Subsidiaries.
(l) MBS SECURITIES. Bank shall not acquire any private label
mortgage-backed securities other than those Previously Disclosed in SCHEDULE
5.9(L) (the "MBS Securities").
(m) OTHER ACTION. Neither Bank nor any of the Bank Subsidiaries shall agree
or commit to do any of the foregoing or take any other action not in the
ordinary course of business consistent with prior practice.
5.10. AFFILIATE AGREEMENTS. Bank will use its reasonable best efforts to
cause each person who may be deemed to be an "affiliate" of Bank for purposes of
Rule 145 under the Securities Act to execute and deliver to Acquiror on or
before the Merger Effective Date an agreement in the form attached hereto as
EXHIBIT E restricting the disposition of such affiliate's
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shares of Acquiror Common Stock to be received by such person in exchange for
such person's shares of Bank Common Stock.
5.11. CERTAIN POLICIES OF BANK. Bank shall, consistent with generally
accepted accounting principles and regulatory accounting principles, use its
best efforts to record any accounting adjustments required to conform its and
the Bank Subsidiaries' loan, litigation and other reserve and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to reflect consistently on a mutually satisfactory basis the
policies and practices of Acquiror, PROVIDED, HOWEVER, that Bank shall not be
obligated to record any such accounting adjustments pursuant to this Section
5.11 (i) unless and until Bank shall be satisfied that the conditions to the
obligation of the parties to consummate the Merger will be satisfied or waived
on or before the Merger Effective Date, and (ii) in no event, until the day
prior to the Merger Effective Date.
5.12. STATE TAKEOVER LAW. Neither Bank nor any Bank Subsidiary shall take
any action that would cause the transactions contemplated by this Agreement or
the Stock Option Agreement to become subject to any applicable state takeover
statute or Section 5 of Bank's Charter.
5.13. NO RIGHTS TRIGGERED. Bank shall use its best efforts to ensure that
the entry into this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby or thereby (including,
without limitation, the Merger) and any other action or combination of actions,
or any other transactions contemplated hereby or thereby do not and will not,
except (as to this Agreement only) as Previously Disclosed in SCHEDULES 3.9,
3.10(A) or 3.10(G), result in the grant of any rights to any person (other than
Acquiror and Subsidiary) under the Charter or Bylaws of Bank or under any
agreement to which Bank or any of the Bank Subsidiaries is a party.
5.14 DIVESTITURES. Effective on the Merger Effective Date, Bank and any
Bank Subsidiary shall cease engaging in such activities as Acquiror shall advise
Bank in writing are not permitted to be engaged in by Acquiror under applicable
law following the Merger Effective Date and, to the extent required by any
regulatory authority as a condition of approval of the transactions contemplated
by this Agreement, Bank shall divest any Bank Subsidiary engaged in activities
or holding assets that are impermissible for a national bank or a bank holding
company, on terms and conditions agreed to by Acquiror.
5.15 [RESERVED].
5.16 OTS ACTION.
(a) Bank shall promptly deliver to Acquiror copies of all written material
filed or supplementally furnished to the OTS or the OTS staff with, or in
connection with, the Proxy Statement (and any amendments thereto), and copies of
all written material and other information received from the OTS and the OTS
staff in connection with the Proxy Statement (and any amendments thereto)
including any comments (verbal or written) received from the OTS with respect to
the Proxy Statement. Bank shall consult with Acquiror regarding, and provide
Acquiror and its counsel a reasonable opportunity to comment on, any such
material received from the OTS or the OTS staff, and Bank shall give due
consideration to any comments of Acquiror and its counsel before Bank formally
or informally responds to the OTS or the OTS staff.
(b) Bank will advise Acquiror, promptly after Bank receives notice thereof,
of the time when the OTS has completed its review of the Proxy Statement, of the
time when OTS has no further comment thereon, and of the time when the OTS
approves the mailing of the Proxy Statement, or of any request by the OTS for
the amendment or supplement of the Proxy Statement or for additional
information.
5.17 RESTRICTIONS ON PURCHASES OF BANK COMMON STOCK. Bank shall use its
reasonable efforts to cause each of the individuals and entities Previously
Disclosed in SCHEDULE 3.16, as well as each of the officers of Holding Company,
to execute and deliver an agreement prohibiting such parties from purchasing any
Bank Common Stock (specifically excluding any shares of Bank Common Stock
obtained through the exercise of Stock Options) from and after the date hereof
to and including the earlier of (i) the record date for the Meeting or (ii) the
date of termination of this Agreement.
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ARTICLE VI
COVENANTS OF ACQUIROR AND SUBSIDIARY
Each of Acquiror and Subsidiary hereby covenants to Bank that:
6.1 CONDITIONS TO THE MERGER. Subject to the terms and conditions of this
Agreement, each of Acquiror and Subsidiary 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, as promptly as reasonably practicable so as to permit
consummation of the Merger at the earliest reasonably practicable date and to
otherwise enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other parties hereto to that end, including using its
reasonable best efforts to lift or rescind any order, decree or injunction
adversely affecting its ability to consummate the transactions contemplated
herein or as described in Section 7.1(c) and to cause to be satisfied the
conditions referred to in Article VII, and each of Acquiror and Subsidiary shall
use, and shall cause each of the Acquiror Subs to use, its reasonable best
efforts to obtain the Acquiror Consents and all other consents (governmental or
otherwise) necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
6.2 REGISTRATION STATEMENT. Acquiror shall, as promptly as reasonably
practicable following the date of this Agreement, prepare and file a
Registration Statement on Form S-4 with the SEC (the "Registration Statement")
in connection with the issuance of the Acquiror Common Stock pursuant to the
Merger, and Acquiror shall use its reasonable best efforts to cause the
Registration Statement to be declared effective as soon as practicable after the
filing thereof. Acquiror shall provide Bank and its counsel a reasonable
opportunity to comment on the Registration Statement (and any amendments
thereto), and shall give due consideration to any comments of Bank and its
counsel before filing the Registration Statement (and any amendments thereto).
6.3 INFORMATION SUPPLIED. When (a) the Registration Statement or any
post-effective amendment or supplement thereto shall become effective, and at
all times subsequent to such effectiveness, up to and including the date of the
Meeting; (b) the Proxy Statement and/or any amendments or supplements thereto
shall be mailed, and at all times subsequent to such mailing and up to and
including the date of the Meeting; and (c) any other document to be filed with
the SEC, OTS or any other regulatory agency in connection with the transactions
contemplated hereby shall be filed, and at all times subsequent to such filings,
such Registration Statement, Proxy Statement and regulatory filings and all
amendments or supplements thereto, with respect to all information set forth
therein furnished or to be furnished by Acquiror relating to Acquiror or the
Acquiror Subs: (i) will comply in all material respects with the provisions of
the Securities Act, the Exchange Act and/or any other applicable statutory or
regulatory requirements, and (ii) 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 contained therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER, in
no event shall Acquiror or Subsidiary be liable for any untrue statement of a
material fact or omission to state a material fact in the Registration
Statement, Proxy Statement or regulatory filing, or any amendment or supplement
thereto, made in reliance upon, and in conformity with, written information
concerning another party furnished by such other party specifically for use in
the Registration Statement, Proxy Statement, or regulatory filing, respectively.
6.4 SEC ACTION.
(a) Acquiror shall promptly deliver to Bank copies of all written material
filed or supplementally furnished to the SEC or the SEC staff with, or in
connection with, the Registration Statement (and any amendments thereto), and
copies of all written and electronically transcribed material and other
information received from the SEC and the SEC staff in connection with the
Registration Statement (and any amendments thereto) including any comments
(verbal or written) received from the SEC with respect to the Registration
Statement. Acquiror shall consult with Bank regarding, and provide Bank and its
counsel a reasonable opportunity to comment on, any such material received from
the SEC or the SEC staff, and Acquiror shall give due consideration to any
comments of Bank and its counsel before Acquiror formally or informally responds
to the SEC or the SEC staff.
(b) Acquiror will advise Bank, promptly after Acquiror 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 Acquiror Common Stock 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. In the event that a
stop order has been issued or threatened by the SEC that suspends or would
suspend the effectiveness of the Registration Statement, Acquiror shall use its
reasonable best efforts to promptly remove or cause not to be issued any such
stop order.
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6.5 COMMUNICATIONS. Unless approved by Bank in advance (which approval
shall not be unreasonably withheld), neither Acquiror nor Subsidiary will issue
any press release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by law or
regulation or by the NYSE.
6.6 ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to the Acquiror
Confidentiality Agreement, upon reasonable notice Acquiror shall (and shall
cause the Acquiror Subs to) afford to Bank and its officers, employees,
accountants, consultants, legal counsel and other representatives reasonable
access to all information concerning the business, properties, contracts,
records and personnel of Acquiror or the Acquiror Subs as Bank may reasonably
request; PROVIDED that no investigation pursuant to this Section 6.6 shall
affect or be deemed to modify or waive any representation or warranty made by
Acquiror or Subsidiary or the conditions of the obligation of Acquiror or
Subsidiary or Bank to consummate the transactions contemplated by this
Agreement. All information disclosed pursuant to this Section 6.6 shall be
deemed to be "Evaluation Material" as defined in and for the purposes of the
Acquiror Confidentiality Agreement. Acquiror and Subsidiary shall, and shall
cause their respective officers, employees, accountants, consultants, legal
counsel and other representatives to, comply with all of their respective
obligations under the Bank Confidentiality Agreement.
6.7 BLUE SKY LAWS. Acquiror shall use its best efforts to cause the
offering of Acquiror Common Stock hereunder to comply with the securities laws
and "blue sky" laws of all jurisdictions which are applicable in connection with
the Merger, and Acquiror shall use its reasonable best efforts to obtain, prior
to the effective date of the Registration Statement, all state securities laws
or blue sky permits and other authorizations necessary to consummate the Merger;
PROVIDED, HOWEVER, that Acquiror 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.
6.8 LISTING ON NYSE. Acquiror shall use its reasonable best efforts to
list, prior to the Merger Effective Date, on the NYSE, upon official notice of
issuance, the shares of Acquiror Common Stock to be issued to the holders of
Bank Common Stock pursuant to the Merger.
6.9 REGULATORY APPROVALS. As promptly as practicable after the date hereof:
(a) Acquiror and Subsidiary shall cooperate with Bank in the preparation
and submission of applications to the appropriate regulatory agencies for
approval of the Merger, including but not limited to the Federal Reserve Board,
the OCC, the OTS, the FDIC and such other agencies, approval of which may be
required for the Merger and shall deliver to the other parties hereto copies of
all such filings and applications promptly after they are filed; and provided
that no such approval or consent shall have imposed any condition or requirement
which, in the good faith reasonable opinion of Acquiror, would so materially
adversely impact the economic or business benefits to Acquiror of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger, Acquiror shall use its reasonable best efforts to
resolve promptly all objections to the Merger by any agency the consent,
approval or non-objection of which is required by law as a condition to the
Merger, the U.S. Department of Justice or any other governmental entity with
jurisdiction; and
(b) All other appropriate action shall be duly taken by Acquiror to secure
all other approvals, consents and rulings, governmental or otherwise, which are
necessary to be obtained by Acquiror for the consummation of the transactions
contemplated hereby.
6.10 QUALIFICATION FOR TAX FREE REORGANIZATION. Each of Acquiror and
Subsidiary undertakes and agrees to use its reasonable best efforts to cause the
Merger to qualify and to take no action which would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368 of the Code.
Acquiror agrees to notify Bank promptly of any action of which it has knowledge
which will cause the Merger to fail to qualify as a reorganization.
6.11 ADEQUATE CURRENT PUBLIC INFORMATION. For not less than the three year
period immediately following the Merger Effective Date, Acquiror shall use its
best efforts to make available adequate current public information about itself,
as that terminology is used in and as required by Rules 144(c) and 145 of the
SEC under the Securities Act.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 MUTUAL CONDITIONS. The respective obligations of Acquiror and
Subsidiary, on the one hand, and Bank, on the other hand, to effect the Merger
shall be subject to the satisfaction of the following conditions, or waiver
thereof (to the extent permitted by applicable law) by Acquiror and Bank:
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(a) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have been
approved by the affirmative vote of the holders of at least (i) two-thirds of
the issued and outstanding shares of Bank Common Stock and (ii) a majority of
the Public Shares (as hereinafter defined) represented and voted at the Meeting.
For purposes of this Section 7.1(a), "Public Shares" shall mean all of the
outstanding shares of Bank Common Stock, other than those shares beneficially
owned (as such term is defined in Rule 13d-3 of the Exchange Act) by Holding
Company, the officers and directors of Holding Company, the officers of Bank
Previously Disclosed in SCHEDULE 3.16 and the directors of Bank.
(b) REGULATORY APPROVALS. All authorizations, consents, orders or approvals
of, or declarations or filings with, or expiration of waiting periods imposed
by, any governmental authority necessary for the consummation of the
transactions contemplated by this Agreement including, but not limited to,
approval of the OCC, the OTS, the Federal Reserve Board and the FDIC, shall have
been filed, occurred or been obtained; PROVIDED, HOWEVER, that no such approval
or consent shall have imposed any condition or requirement which, in the good
faith reasonable opinion of Acquiror, would so materially adversely impact the
economic or business benefits to Acquiror of the transactions contemplated by
this Agreement so as to render inadvisable the consummation of the Merger.
(c) LEGAL ACTION. There shall not be in effect any temporary restraining
order, preliminary injunction or permanent injunction, or other decree or
injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of the Merger or the transactions contemplated hereby,
and there shall be pending no litigation instituted by any governmental agency
seeking the issuance of such an order, decree or injunction.
(d) 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.
(e) BLUE SKY LAWS. Acquiror shall have received all state securities laws
and blue sky permits and other authorizations necessary to consummate the
Merger.
(f) TAX OPINION. Acquiror and Bank shall have received an opinion from
Sullivan & Cromwell addressed to Bank and its shareholders to the effect that
(i) the Merger constitutes a "reorganization" under Section 368(a) of the Code
and (ii) no gain or loss will be recognized by shareholders of Bank who receive,
in exchange for their shares of Bank Common Stock (other than in respect of
fractional share interests) only shares of Acquiror Common Stock, 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 (i) representations contained in certificates of officers of Bank,
Subsidiary, Acquiror, Holding Company and others and (ii) representations and
agreements contained in the Holding Company Voting Agreement.
(g) LISTING ON NYSE. The shares of Acquiror Common Stock issuable in the
Merger shall have been approved for listing on the NYSE subject to official
notice of issuance.
(h) NO ILLEGALITY. No action shall have been taken, and no statute, rule,
regulation or order shall have been enacted, promulgated, or issued or been
deemed applicable to the Merger by any governmental authority, which would make
the consummation of the Merger illegal.
7.2 CONDITIONS TO ACQUIROR'S AND SUBSIDIARY'S OBLIGATIONS. The obligations
of Acquiror and Subsidiary to effect the Merger shall be subject to the
satisfaction of the following additional conditions, or waiver thereof by
Acquiror:
(a) THIRD PARTY APPROVALS. All Bank Consents Previously Disclosed in
SCHEDULE 3.4(B) shall have been obtained and shall be in effect.
(b) OPINION OF BANK'S COUNSEL. Acquiror shall have received one or more
opinions, dated the Merger Effective Date, from counsel to Bank, in form and
substance reasonably satisfactory to Acquiror, which shall cover the matters
contained in EXHIBIT F hereto.
(c) REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS OF BANK. (i) Each
of the representations and warranties contained herein of Bank shall be true and
correct as of the date of this Agreement and upon the Merger Effective Date with
the same effect as though all such representations and warranties had been made
on the Merger 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,
PROVIDED, HOWEVER, that for purposes of this clause (i), no effect shall be
given to any exception in such representations and warranties relating to
materiality or a Material Adverse Effect, PROVIDED FURTHER, HOWEVER, that
notwithstanding anything to the contrary contained in this clause (i), the
condition contained in this clause (i) shall be deemed to have been satisfied
even if such representations and warranties are not true and correct unless the
failure of any of the representations and warranties to be so
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true and correct, individually or in the aggregate, would represent a Material
Adverse Effect on Bank; (ii) each and all of the agreements and covenants of
Bank to be performed and complied with pursuant to this Agreement and the other
agreements contemplated hereby prior to the Merger Effective Date shall have
been duly performed and complied with in all material respects; and (iii)
Acquiror shall have received a certificate signed by the Chief Executive Officer
and the Chief Financial Officer of Bank, dated the Merger Effective Date, to
such effect.
(d) KPMG PEAT MARWICK LETTERS. Acquiror shall have received from KPMG Peat
Marwick letters, dated the date of or shortly prior to (i) the mailing of the
Proxy Statement, and (ii) the Merger Effective Date, in form and substance
satisfactory to Acquiror, with respect to Bank's consolidated financial position
and results of operations, which letters shall be based upon "agreed upon
procedures" customarily undertaken by such firm.
(e) STOCK OPTIONS. All Stock Options shall have been cancelled and payment
therefor shall have been received by the holders thereof on or prior to the
Merger Effective Date in accordance with Section 2.7 and evidence thereof
reasonably satisfactory to Acquiror shall be delivered by Bank to Acquiror on or
prior to the Merger Effective Date.
7.3 CONDITIONS TO BANK'S OBLIGATIONS. The obligations of Bank to effect the
Merger shall be subject to the satisfaction of the following additional
conditions, or waiver thereof by Bank:
(a) THIRD PARTY APPROVALS. All Acquiror Consents Previously Disclosed in
SCHEDULE 4.5(B) shall have been obtained and be in effect.
(b) OPINION OF ACQUIROR'S AND SUBSIDIARY'S COUNSEL. Bank shall have
received an opinion, dated the Merger Effective Date, of Marion A. Cowell, Jr.,
counsel for Acquiror and the Subsidiary, in form and substance reasonably
satisfactory to Bank, which shall cover the matters contained in EXHIBIT G
hereto.
(c) REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS OF ACQUIROR AND
SUBSIDIARY. (i) Each of the representations and warranties contained herein of
Acquiror and the Subsidiary shall be true and correct as of the date of this
Agreement and upon the Merger Effective Date with the same effect as though all
such representations and warranties had been made on the Merger 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, PROVIDED, HOWEVER, that for
purposes of this clause (i), no effect shall be given to any exception in such
representations and warranties relating to materiality or a Material Adverse
Effect, PROVIDED FURTHER, HOWEVER, that notwithstanding anything to the contrary
contained in this clause (i), the condition contained in this clause (i) shall
be deemed to have been satisfied even if such representations and warranties are
not true and correct unless the failure of any of the representations and
warranties to be so true and correct, individually or in the aggregate, would
represent a Material Adverse Effect on Acquiror; (ii) each and all of the
agreements and covenants of Acquiror and Subsidiary to be performed and complied
with pursuant to this Agreement and the other agreements contemplated hereby
prior to the Merger Effective Date shall have been duly performed and complied
with in all material respects; and (iii) Bank shall have received a certificate
or certificates signed by two executive officers of each of Acquiror and
Subsidiary, dated the Merger Effective Date, to such effect.
ARTICLE VIII
TERMINATION
This Agreement may be terminated as set forth in Sections 8.1 through 8.9
prior to the Merger Effective Date, at any time either before or after receipt
of required shareholder and other approvals:
8.1 MUTUAL CONSENT. By the mutual consent of Acquiror and Bank;
8.2 MATERIAL BREACH. By either Acquiror or Bank, in the event of (a) a
breach by the other party (or in the case of Bank, by either Acquiror or
Subsidiary) of any representation or warranty contained herein, which breach
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach and which breach or
breaches would result in a failure to satisfy any condition set forth in Article
VII hereof or (b) 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 thirty (30) days after the giving of written notice to the breaching
party of such breach; PROVIDED that the non-breaching party provides the
breaching party with a written notice of termination within ten days after the
earlier of the expiration of such 30-day period or the date it receives a
written notice from the breaching party stating that it is unable or unwilling
to cure such breach;
A-22
<PAGE>
8.3 REGULATORY APPROVALS. By either Acquiror or Bank, if any approval or
authorization of any governmental authority, the lack of which would result in
the failure to satisfy the closing condition set forth in Section 7.1(b), (i)
shall have been denied by such governmental authority, (ii) such governmental
authority shall have requested the withdrawal of any application therefor or
(iii) such governmental authority shall have indicated an intention to deny, or
impose a condition or requirement of the type referred to in the proviso to
Section 7.1(b); PROVIDED that in connection with any termination pursuant to
this Section 8.3, the party terminating this Agreement shall have provided
evidence reasonably satisfactory to the other party that such event has
occurred;
8.4 TERMINATION DATE. By either Acquiror or Bank in the event that the
Merger Effective Date is not on or prior to August 25, 1995 (the "Termination
Date"), PROVIDED that the party seeking to terminate this Agreement shall not be
in breach of any of its covenants or agreements contained herein;
8.5 SHAREHOLDER APPROVAL. By either Acquiror or Bank, in the event that any
shareholder approval contemplated by Section 7.1(a) is not obtained at a meeting
or meetings or any adjournment thereof called for the purpose of obtaining such
approval;
8.6 FIDUCIARY DUTIES. By Bank if, in the exercise of its good faith
judgment as to its fiduciary duties to its shareholders under applicable law,
Bank's Board of Directors (after considering the advice of its outside counsel)
determines that such termination is required; PROVIDED, HOWEVER, that the right
of termination by the Bank contemplated by this Section 8.6 may only be
exercised if, prior to or contemporaneously with the determination by the Bank's
Board of Directors to terminate this Agreement, Bank shall have entered into a
binding agreement with respect to a Competing Transaction;
8.7 [RESERVED]
8.8 LEGAL ACTION. By either Acquiror or Bank, if (a) there shall be a final
nonappealable order of federal or state court restraining or prohibiting the
consummation of the Merger, or (b) there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any governmental authority, which would make the
consummation of the Merger illegal;
8.9 LACK OF RECOMMENDATION. By Acquiror, if the Board of Directors of Bank
fails to recommend the Merger to its shareholders or withdraws, modifies or
changes its recommendation of this Agreement or the Merger in a manner adverse
to Acquiror;
8.10 APPROVAL BY BOARD OF DIRECTORS. Any termination of this Agreement as
provided in Sections 8.1 through 8.9 shall be approved by the Board of Directors
of the party seeking termination; and
8.11 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided in Sections 8.1 through 8.9, this Agreement shall forthwith become
null and void and there shall be no liability or obligation on the part of
Acquiror, Subsidiary or Bank or their respective officers or directors, except
that nothing herein shall relieve any party hereto from any liability for
willful breach of this Agreement, and except for (a) the agreements and
representations of the parties contained in this Section 8.11 and Sections 9.3,
9.4, 9.7 and 9.9, (b) the obligations of confidentiality contained in Sections
5.5, 6.6, and 9.6, and (c) the obligations of the parties and liabilities
contained in Section 9.5, all of which agreements, representations, obligations
and liabilities shall survive any such termination.
ARTICLE IX
OTHER MATTERS
9.1 SURVIVAL. If the Merger Effective Date occurs, the agreements of the
parties contained in Sections 9.4 and 9.11 shall survive the Merger Effective
Date; all other representations, warranties, agreements and covenants contained
in this Agreement shall not survive the Merger Effective Date.
9.2 WAIVER; AMENDMENT. Prior to the Merger Effective Date, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time (including the structure of the
transaction), by an agreement in writing among the parties hereto providing for
such amendment or modification approved by their respective Boards of Directors
and executed in the same manner as this Agreement, except that, after the vote
by the shareholders of Bank, the consideration to be received by the
shareholders of Bank for each share of Bank Common Stock shall not thereby be
decreased.
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<PAGE>
9.3 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 has been signed by each
party hereto.
9.4 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Florida, determined without regard to
principles of conflicts of laws, except as federal law may be applicable.
9.5 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby
(including legal, accounting, investment banking, and travel expenses),
PROVIDED, HOWEVER, that (i) the fees and expenses of Sullivan & Cromwell in
rendering the tax opinion required under Section 7.1(f) hereof shall be paid by
Acquiror; and (ii) in the event of termination of this Agreement, which
termination shall be judicially determined to have been caused by willful breach
of this Agreement, then, in addition to other remedies at law or equity for
breach of this Agreement, the party so found to have willfully breached this
Agreement shall indemnify the other parties for their respective costs, fees and
expenses of their counsel.
9.6 CONFIDENTIALITY. Except as permitted in the Confidentiality Agreements,
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.
9.7 NOTICES. All notices, requests and other communications hereunder shall
be in writing and may be made by (i) certified or registered mail, return
receipt requested; (ii) hand delivery; (iii) telefax transmittal; or (iv) by
courier service, and shall be deemed to have been duly given (a) when delivered
by hand, (b) three days after mailing, in the case of certified or registered
mail; (c) when electronic confirmation is received and recorded, in the case of
telefax, and (d) one business day after being forwarded to a nationally
recognized overnight courier service for overnight delivery; in each case
correctly addressed to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto:
<TABLE>
<S> <C>
If to Acquiror or First Union Corporation
Subsidiary, to: One First Union Center
Charlotte, North Carolina 28288-0013
Attn: Chief Executive Officer
Telephone No. (704) 374-6828
Telefax No. (704) 374-3425
Copy to: Marion A. Cowell, Jr., Esq.
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telephone No. (704) 374-6828
Telefax No. (704) 374-3425
If to Bank to: American Savings of Florida, F.S.B.
17801 Northwest 2nd Avenue
Miami, Florida 33169-5089
Telephone No. (305) 653-5353
Telefax No. (305) 770-2155
Copy to: Alan B. Goldstein, Exec. V.P. and General Counsel
American Savings of Florida, F.S.B.
17801 N.W. Second Avenue
Miami, Florida 33169-5089
Telephone No. (305) 770-2093
Telefax No. (305) 770-2155
</TABLE>
9.8 DEFINITIONS. Any term defined anywhere in this Agreement shall have the
meaning ascribed to it for all purposes of this Agreement (unless expressly
noted to the contrary). In addition:
(a) the term "knowledge" when used with respect to a party shall mean the
knowledge, after reasonable inquiry, of any "executive officer" of such party,
as such term is defined in Regulation O of the Federal Reserve Board.
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<PAGE>
(b) the term "Material Adverse Effect", when applied to a party, shall
mean, taken individually or in the aggregate with all other events,
circumstances, occurrences and conditions, an event, occurrence, circumstance or
condition (including without limitation (i) the making of any provisions for
loan and lease losses, write-downs of other real estate owned, and (ii) any
breach of a representation or warranty by such party) which (A) has or is
reasonably likely to have a material adverse effect on the financial condition,
results of operations, business or prospects of the party and its subsidiaries,
taken as a whole, or (B) would materially impair the party's ability to perform
its obligations under this Agreement; PROVIDED, that material adverse effect and
material impairment shall not be deemed to include the impact of (x) changes in
banking and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, or (y) changes in generally accepted
accounting principles, regulatory accounting requirements and market conditions
applicable to stock savings banks, savings and loan holding companies, banks and
bank holding companies generally, and (z) the effects of (i) changes in the
market value of the MBS Securities, (ii) Section 5.11 and (iii) the fees and
expenses of all counsel, accountants and financial advisors relating to the
transactions contemplated by this Agreement and the costs and expenses incurred
in connection with the Meeting.
(c) the term "Previously Disclosed" by a party shall mean information set
forth in a written disclosure schedule that is delivered by that party to the
other party prior to the execution of this Agreement which identify exceptions
to the representations, warranties and covenants delivered by that party;
PROVIDED that any information so disclosed shall apply only to the provisions of
this Agreement pursuant to which such information is identified as being
disclosed.
9.9 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement, the
Stock Option Agreement, the written disclosure Schedules which have been
Previously Disclosed, and the Confidentiality Agreements dated June 27, 1994 and
October 11, 1994, between Bank and Acquiror represent the entire understanding
of the parties hereto and thereto with reference to the transactions
contemplated hereby and thereby and supersede any and all other oral or written
agreements heretofore made. Nothing in this Agreement 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 Agreement, other than as provided in Section 9.11 below.
9.10 BENEFIT PLANS.
(a) As soon as administratively practicable after consummation of the
Merger, employees of Bank and the Bank Subsidiaries shall be generally entitled
to participate in Acquiror's pension, severance, employee benefit health,
welfare and similar plans on substantially the same terms and conditions as
employees of Acquiror and the Acquiror Subs, giving effect (except for the
accrual of benefits under such plans) to years of service with Bank and the Bank
Subsidiaries as if such service were with Acquiror; PROVIDED THAT, no employee
of Bank or the Bank Subsidiaries presently participating in Bank's or Bank's
Subsidiaries' medical plan shall be precluded from participating in medical
plans of Acquiror on account of a pre-existing medical condition, and shall
receive credit toward any deductible and co-payments under any welfare benefit
plans sponsored by Acquiror or the Acquiror Subs to the extent such deductibles
and co-payments have been satisfied under the respective Bank welfare benefit
plans. Acquiror and Surviving Entity shall honor (x) Bank's Senior Executive
Employee Severance Pay Plan and (y) Bank's Termination and Salary Continuation
Program, as applicable (copies of both of which have been delivered to
Acquiror), in accordance with their terms as in effect on the date hereof (or as
amended after the date hereof and prior to the Merger Effective Date with the
prior written consent of Acquiror), unless an affected employee of Bank or a
Bank Subsidiary would receive benefits more advantageous to such employee under
Acquiror's severance plan for its employees than under Bank's plans described in
clauses (x) and (y) above, and unless, in the case of clause (x) above, the
affected employee of Bank or a Bank Subsidiary agrees to accept Acquiror's
severance plan in lieu of Bank's plan. Acquiror and Surviving Entity also shall
honor all understandings Previously Disclosed in SCHEDULE 9.10(A).
(b) Upon consummation of the Merger or as soon thereafter as practicable,
all participants in Bank's 401(k) Plan shall be automatically and fully vested
in all amounts contained in or allocable to their accounts in accordance with
the terms of such Plan, Bank's 401(k) Plan shall be merged into the Acquiror's
401(k) Plan and (i) Bank employees who remain employees of Acquiror or any of
the Acquiror Subs shall have the right to participate therein on the same terms
and conditions as other participating employees, but shall in all events be
fully vested in their accounts transferred from Bank's 401(k) Plan in accordance
with the terms of such Plan; and (ii) all other Bank employees shall be entitled
to roll their respective accounts into an individual retirement account and to
all other rights to which they would have been entitled had they been fully
vested and terminated their employment with Bank immediately preceding the
Merger Effective Date, in accordance with the terms of the Plan and applicable
law.
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<PAGE>
9.11 INDEMNIFICATION.
(a) For six years after the Merger Effective Date, Acquiror shall, and
shall cause the Surviving Entity to, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Merger Effective Date, a director or officer of Bank or any
of the Bank Subsidiaries (for purposes of this Section 9.11 except for paragraph
(b), each an "Indemnified Party"; collectively, the "Indemnified Parties")
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including reasonable attorneys' fees
and expenses (whether suit is instituted or not, and if instituted, at all trial
and appellate levels)), and (subject to paragraph (c) of this Section 9.11)
amounts paid in settlement (collectively, "Liabilities") in connection with any
threatened or actual claim, action, suit, proceeding or investigation, whether
formal or informal, civil, administrative or criminal, and whether asserted
before or after the Merger Effective Date (a "Proceeding"), arising out of
actions or omissions or alleged actions or omissions of the Indemnified Party
occurring at or prior to the Merger Effective Date to the maximum extent that
Bank would be permitted to indemnify such Indemnified Parties under OTS
regulations contained in 12 CFR (section mark) 545.121 (but specifically
excluding any requirement for OTS approval) as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any litigation. Without limiting the foregoing, in any case in which approval by
the Surviving Entity, its Board of Directors or the disinterested members
thereof is required to effectuate any indemnification, Acquiror shall cause the
Surviving Entity to direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent Florida counsel
mutually agreed upon between Acquiror and the Indemnified Party.
(b) In addition to the foregoing, for six (6) years from and after the
Merger Effective Date, Acquiror shall indemnify, defend and hold harmless, as
and to the fullest extent permitted by Florida law (including all
indemnification permitted under Section 607.0850(7) of the Florida Business
Corporation Act) for indemnification by a Florida corporation of its directors
and officers, including provisions relating to advances of expenses incurred in
the defense of any Proceeding, each person who is now, or becomes prior to the
Merger Effective Date, a director or officer of Bank (for purposes of this
Section 9.11, each an "Indemnified Party"; collectively, the "Indemnified
Parties") against all Liabilities in connection with any Proceeding arising out
of actions or omissions or alleged actions or omissions of the Indemnified Party
occurring at or prior to the Merger Effective Date, in whole or in part, in
connection with the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreement.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) or (b) of this Section 9.11, upon learning of such claim, action, suit,
proceeding or investigation, shall promptly notify Acquiror thereof; provided,
that the failure so to notify shall not affect the obligations of Acquiror and
the Surviving Entity under paragraphs (a) and (b) of this Section 9.11 (unless
such failure materially and adversely increases Acquiror's liability under such
paragraphs). In the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether arising before or after the Merger
Effective Date), (i) Acquiror or the Surviving Entity shall have the right to
assume the defense thereof and Acquiror or the Surviving Entity shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that Acquiror
shall be obligated pursuant to this paragraph (c) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction for any single
Proceeding, unless such counsel shall determine that a conflict exists among the
Indemnified Parties, in which case Acquiror shall pay for as many firms of
counsel as are necessary to avoid such a conflict, (ii) the Indemnified Parties
will cooperate in the defense of any such matter, and (iii) Acquiror shall not
be liable for any settlement effected without its prior written consent which
consent shall not be unreasonably withheld. In the event that Acquiror shall
fail to respond within ten (10) days after receipt of notice of the Proceeding,
the Indemnified Party may retain counsel and conduct the defense of such
Proceeding, as it may in its reasonable discretion deem proper, at the sole cost
and expense of Acquiror.
(d) If Acquiror or the Surviving Entity 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 Acquiror or
the Surviving Entity shall assume the obligations set forth in this Section
9.11.
(e) Acquiror shall pay, or cause the Surviving Entity to pay in advance of
the final disposition of any Proceeding to the fullest extent permitted by
applicable law as in effect on the date hereof, all expenses, including
attorneys' fees and expenses (whether suit is instituted or not, and if
instituted, at all trial and appellate levels), that may reasonably be incurred
by any Indemnified Party in enforcing the indemnity and all other obligations
provided for in this Section 9.11.
(f) The rights of each Indemnified Party hereunder shall be in addition to
all other rights such Indemnified Party may have under the Charter of Bank,
resolutions of its Board of Directors, under the OTS regulations or otherwise.
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<PAGE>
(g) The obligations of Acquiror and the Surviving Entity provided under
this Section 9.11 are intended to benefit, and be enforceable against Acquiror
and the Surviving Entity directly by the Indemnified Parties and their
respective heirs and personal representatives, and shall be binding on all
respective successors and permitted assigns of Acquiror and the Surviving
Entity.
(h) Acquiror shall use its reasonable best efforts to maintain Bank's
existing directors' and officers' liability insurance policies as Previously
Disclosed in SCHEDULE 3.20, including excess coverage (and all comparable
replacement and renewal policies obtained prior to the Merger Closing) or a
policy (including Acquiror's existing policy) covering persons who are currently
covered by such insurance on terms and with coverage no less favorable to the
insured directors and officers than those in effect on the date hereof, for a
period of three years after the Merger Effective Date; provided, that Acquiror's
obligation shall be limited to payment of annual premiums in respect of such
policy for the portion related to Bank's directors and officers, of $1,000,000
(the "Maximum Amount"); and provided further, that Acquiror shall also use its
reasonable best efforts to obtain coverage under such policies for (i) claims
brought by any person or entity arising out of, based upon, related to or
attributable to the Merger, this Agreement and the Stock Option Agreement that
otherwise would have been covered by Bank's existing policies except for the
fact that such claims arise out of, are based upon, relate to or are
attributable to the Merger, this Agreement or the Stock Option Agreement and
(ii) claims brought by any 10% or greater shareholder that otherwise would have
been covered by Bank's existing policies except for the fact that such claims
are brought by any 10% or greater shareholder. If the amount of the annual
premiums necessary to procure such insurance coverage exceeds the Maximum
Amount, Acquiror shall procure such coverage as shall be reasonably obtainable
for an annual premium equal to the Maximum Amount.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the date
and year first above written.
AMERICAN SAVINGS OF FLORIDA, F.S.B.
By: /s/ STEPHEN D. TAYLOR
NAME: STEPHEN D. TAYLOR
TITLE: PRESIDENT AND C.E.O.
FIRST UNION CORPORATION
By: /s/ KENNETH R. STANCLIFF
NAME: KENNETH R. STANCLIFF
TITLE: SENIOR VICE PRESIDENT
A-27
<PAGE>
BOARD OF DIRECTORS
AMERICAN SAVINGS OF FLORIDA, F.S.B.
[CAPTION]
<TABLE>
<S>
/s/ ERWIN ALLEN
ERWIN ALLEN
<S>
/s/
<CAPTION>
T. WAYNE DAVIS
<S>
/s/ WILLIAM H. DUKELOW
<CAPTION>
WILLIAM H. DUKELOW
<S>
/s/
<CAPTION>
NIMROD T. FRAZER
<S>
/s/ DR. BARBARA W. GOTHARD
<CAPTION>
DR. BARBARA W. GOTHARD
<S>
/s/ CHARLES D. KIMBREL
<CAPTION>
CHARLES D. KIMBREL
<S>
/s/ DEIRDRE Y. RUSSELL
<CAPTION>
DEIRDRE Y. RUSSELL
<S>
/s/ DONALD T. SENTERFITT
<CAPTION>
DONALD T. SENTERFITT
<S>
/s/
<CAPTION>
STEPHEN D. TAYLOR
</TABLE>
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<PAGE>
EXHIBIT C
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 4, 1994 (the "Agreement"), by
and between AMERICAN SAVINGS OF FLORIDA, F.S.B., a federally chartered stock
savings bank ("Issuer"), and FIRST UNION CORPORATION, a North Carolina
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger dated as of December 4, 1994 (the "Plan"), providing for, among other
things, the merger of Issuer with and into a direct subsidiary of Grantee
("Subsidiary"), with Subsidiary as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the Plan,
Grantee has required that Issuer agree, and Issuer has agreed, to grant Grantee
the Option (as defined below);
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
up to 2,288,700 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) of common stock, par value $0.01 per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (the "Purchase Price")
equal to the greater of (i) the closing price per share of Issuer Common Stock
on December 6, 1994 as reported on the Nasdaq National Market and (ii) $19.00;
PROVIDED, HOWEVER, that in no event shall the number of shares for which the
Option is exercisable exceed 19.9% of the Issuer Common Stock issued and
outstanding at the time of exercise, without giving effect to the shares issued
or issuable under the Option.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee, or any of its subsidiaries who is a party to
the Plan, or Holder (as defined below), 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; PROVIDED that the Option shall terminate and be
of no further force and effect upon the earliest to occur of (A) the Merger
Effective Date, (B) termination of the Plan in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
unless the Issuer has, after the date hereof and before such termination,
engaged in discussions with any third party regarding an Acquisition Transaction
(as hereinafter defined), and (C) 18 months after any other termination of the
Plan in accordance with the terms thereof; PROVIDED, HOWEVER, that any purchase
of shares upon exercise of the Option shall be subject to compliance with
applicable law, including, without limitation, the Bank Holding Company Act of
1956, as amended (the "BHC Act"), and the Home Owners' Loan Act (the "HOLA").
The term "Holder" shall mean the holder or holders of the Option from time to
time, and which initially is Grantee.
(b) As used herein, a "Purchase Event" means any of the following events:
(i) without Grantee's prior written consent, Issuer shall have
authorized, 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 affiliate of Grantee) to effect
an Acquisition Transaction. As used herein, the term "Acquisition
Transaction" shall mean (A) a merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries (other than
transactions solely between Issuer s subsidiaries), (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 20% or more of
the consolidated assets or deposits of Issuer and its subsidiaries, or (C)
the issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 20% or more of the voting power of Issuer or any of its
significant subsidiaries other than the issuance of Issuer Common Stock
upon the exercise of outstanding options or the conversion of outstanding
convertible securities of Issuer; or
(ii) without Grantee s prior written consent, any person (other than
Grantee or any affiliate of Grantee) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) of, or the
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<PAGE>
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, 20% or more (or
if such person or group is the beneficial owner of 20% or more on the date
hereof such person or group acquires an additional 5% 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 affiliate 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 20% or more of the then outstanding shares of Issuer
Common Stock (such an offer being referred to herein as "Tender Offer" or
an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved the
Plan at the Meeting, the 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 affiliate of Grantee) shall have (A) made a
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 BHC Act, the HOLA, the
Bank Merger Act or the Change in Bank Control Act of 1978, for approval to
engage in an Acquisition Transaction; or
(iii) any person, other than Grantee or any affiliate 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) Issuer furnishes information or enters into discussions or
negotiations pursuant to Section 5.6(b) of the Plan with any person or
entity that makes an unsolicited, bona fide expression of interest in
acquiring Issuer; or
(v) after a bona fide proposal is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Plan and such breach
would entitle Grantee to terminate the Plan under Section 8.2 thereof
(unless cured within the cure period specified therein without jeopardizing
consummation of the Merger pursuant to the terms of the Plan); or
(vi) any person, other than Grantee or any affiliate 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 the OCC,
the OTS, the Federal Reserve Board, the FDIC, or other federal or state
regulatory authority (each a "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 (in either case, a "Triggering
Event"), after becoming aware of such Triggering 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"). 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 or 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) hereof.
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(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in subsection (a) of
this Section 4, (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, claims, charges and
encumbrances of any kind whatsoever 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 APPLICABLE FEDERAL LAW AND CERTAIN VOTING AND OTHER
RESTRICTIONS PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
DECEMBER 4, 1994. 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 above legend 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 OTS or other applicable
federal agency, 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 applicable federal law.
(d) Upon the giving by Holder to Issuer of the written notice of exercise
of the Option provided for under Section 3(e) hereof, 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 specified in 15 U.S.C. (section mark)18a and regulations
promulgated thereunder and (B) in the event, under the BHC Act, the HOLA, the
Bank Merger Act, or the Change in Bank Control Act of 1978, as amended, or a
state banking law, prior approval of or notice to a 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 Authorities as they 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) DUE AUTHORIZATION. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly executed
and delivered by Issuer.
(b) AUTHORIZED STOCK. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all times
from the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common Stock necessary
for Holder to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Issuer
Common Stock or other securities which may be issued pursuant to Section 7
hereof upon exercise of the Option. The shares of Issuer Common Stock to be
issued upon due exercise of the Option,
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including all additional shares of Issuer Common Stock or other securities which
may be issuable pursuant to Section 7 hereof, upon issuance pursuant hereto,
shall be duly and validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever, including any preemptive rights of any stockholder of
Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents and
warrants to Issuer that:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) PURCHASE NOT FOR DISTRIBUTION. This Option is not being, and any Option
Shares or other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction complying with or
exempt from applicable federal law.
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 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 subsection (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 in an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its affiliates, 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 affiliates,
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 to any person, other than Grantee or one of its
affiliates, 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.
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(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, or (C) 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).
(ii) "Substitute Common Stock" shall mean the common stock issued by
Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price per
share of Issuer Common Stock at which a tender offer or an exchange offer
or proposal therefor has been made, and (y) the price per share of Issuer
Common Stock to be paid by any third party pursuant to an agreement with
Issuer. 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 or the owner of Option Shares issued upon
exercise of the Option ("Owner"), as the case may be (and, if there are
both a Holder and an Owner, the Holder).
(iv) "Average Price" shall mean the average closing price of a share
of Substitute Common Stock for the 10 consecutive trading days ending on
the trading day immediately preceding the consolidation, merger or sale in
question; 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 subsection (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 subsection (f) over (ii) the value of the Substitute
Option after giving effect to the limitation in the first sentence of this
subsection (f). This difference in value shall be determined by a
nationally-recognized investment banking firm selected by Holder with the
consent of Issuer, which consent shall not be unreasonably withheld.
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 7 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 than other shares of common
stock issued by Substitute Option Issuer.
8. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject to the conditions of
subsection (c) below, if requested by any Holder or Owner, as applicable,
including Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible prepare and file an offering circular, a registration
statement or other document (a "registration statement") under applicable
federal law if such filing 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 to the extent applicable, 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 offer for sale any shares of Issuer Common
Stock under applicable federal law 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
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Selling Shareholder), Issuer will cause all such shares for which a Selling
Shareholder requests participation in such offering, to be so 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 an offering solely to
implement an employee benefit plan or a merger transaction; PROVIDED, FURTHER,
HOWEVER,that such election pursuant to (i) may only be made one time. If some
but not all the shares of Issuer Common Stock, with respect to which Issuer
shall have received requests for inclusion in an offering pursuant to this
subsection (b), shall be excluded from such offering, Issuer shall make
appropriate allocation of shares to be offered among the Selling Shareholders
desiring to include their shares pro rata in the proportion that the number of
shares requested to be included by each such Selling Shareholder bears to the
total number of shares requested to be included by all such Selling Shareholders
then desiring to have Issuer Common Stock included.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall use all reasonable
efforts to cause each registration statement referred to in subparagraph (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 filing of Option Shares required
pursuant to subparagraph (a) above for a period not exceeding 120 days (or 180
days in any calendar year in the aggregate) provided Issuer shall in good faith
determine that any such filing would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not be
required to effect any filing pursuant to subsection (a) above:
(i) prior to the earliest of (a) termination of the Plan pursuant to
Article VIII thereof, (b) failure to obtain the requisite stockholder
approval pursuant to Section 7.1(a) of the Plan, and (c) a Purchase Event
or a Preliminary Purchase Event;
(ii) on more than one occasion;
(iii) within 90 days after the effective date of an offering referred
to in subsection (b) above pursuant to which the Selling Shareholder or
Selling Shareholders concerned were afforded the opportunity to include
such shares in such offering and such shares were included as requested;
and
(iv) unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 50% 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 included in such filing 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 and
except for any underwriting or selling discounts or commissions relating to the
Option Shares, 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 included in
a registration statement, printing expenses and the costs of special audits or
"cold comfort" letters, and the reasonable fees and expenses of any necessary
special experts) in connection with each offering pursuant to subsection (a) or
(b) above (including the related offerings and sales by holders of Option
Shares) and all other qualifications, notifications or exemptions pursuant to
subsection (a) or (b) above.
(e) INDEMNIFICATION. In connection with any offering under subparagraph (a)
or (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
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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 subsection (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 subsection (e), such indemnified party shall
promptly 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
subsection (e) unless, and only to the extent, such failure results in the
indemnifying party s forfeiture of substantive rights or defenses. 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 reasonably 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 reasonably 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 subsection (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 subsection (a) or (b)
above, Issuer and each Selling Shareholder (other than Grantee) shall enter into
an agreement containing the indemnification provisions of this subsection (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 OTS or other applicable federal agency from time to time.
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 applicable federal law, or
required pursuant to any state securities laws or the rules of any stock
exchange.
(g) ISSUER 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.
9. 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 NASDAQ/NMS 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 NASDAQ/NMS or such
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other securities exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
10. 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.
11. [Reserved]
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 BENEFICIARY; 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 any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to subsection (h) of this Section 12) any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a federal or state
regulatory agency 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 agency determines that the Option
does not permit Holder or Owner to acquire the full number of shares of Issuer
Common Stock as provided in Section 3 (as adjusted pursuant to Section 7), it is
the express intention of Issuer to allow Holder or Owner to acquire 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 Florida 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.
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(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 following addresses (or at such other address
for a party as shall be specified by like notice):
<TABLE>
<S> <C>
If to Grantee: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Attn: Chief Executive Officer
Telephone No. (704) 374-6828
Telefax No. (704) 374-3425
Copy to: Marion A. Cowell, Jr., Esq.
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telephone No. (704) 374-6828
Telefax No. (704) 374-3425
If to Issuer: American Savings of Florida, F.S.B.
17801 Northwest 2nd Avenue
Miami, Florida 33169-5089
Telephone No. (305) 653-5353
Telefax No. (305) 770-2155
Copy to: Alan B. Goldstein, Exec. V.P. and
General Counsel
American Savings of Florida, F.S.B.
17801 N.W. Second Avenue
Miami, Florida 33169-5089
Telephone No. (305) 770-2093
Telefax No. (305) 770-2155
</TABLE>
(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 Grantee may assign this
Agreement to a wholly-owned subsidiary of Grantee. Subject to the preceding
sentence, this Agreement (including, without limitation, the voting restrictions
set forth in Section 12(k) hereof) 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.
(k) CERTAIN VOTING OBLIGATIONS. In the event that (x) Issuer shall call an
annual or special meeting of its shareholders at which such shareholders will be
asked to vote upon the approval of an Acquisition Transaction (an "Alternative
Acquisition Transaction") with any person (other than Grantee or any affiliate
of Grantee) and/or any agreement relating thereto, and (y) the average value per
share of Issuer Common Stock of the consideration to be received by Issuer's
shareholders upon consummation of such Alternative Acquisition Transaction shall
be equal to or greater than 105% of the average value per share of Issuer Common
Stock of the consideration which would be received by Issuer's shareholders upon
consummation of any Acquisition Transaction which Grantee shall have proposed in
writing to the Board of Directors of Issuer prior to the time which such Board
shall have approved the Alternative Acquisition Transaction, Grantee will (i) be
present, in person or
A-37
<PAGE>
represented by proxy, at such meeting of shareholders so that all Option Shares
then beneficially owned by Grantee and entitled to vote may be counted for the
purpose of determining the presence of a quorum at such meeting and (ii) with
respect to any proposal to be voted on by shareholders relating to such
Acquisition Transaction and/or agreement, vote all Option Shares which it is
then entitled to vote in accordance with the recommendation of the Board of
Directors of Issuer in the same proportion as all other shares of Issuer Common
Stock present at such meeting and voting thereon shall have voted. For purposes
of this Section 12(k), the value of any consideration to be received in any
Alternative Acquisition Transaction or in any Acquisition Transaction proposed
by Grantee shall be (i) determined as of the date on which the Board of
Directors of Issuer shall have approved the Alternative Acquisition Transaction
and (ii) determined by a nationally recognized investment banking firm mutually
selected by Grantee and Issuer, if any non-cash consideration is to be included
in the consideration to be received in such transaction by Issuer's
shareholders.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
AMERICAN SAVINGS OF FLORIDA, F.S.B.
By: /s/ STEPHEN D. TAYLOR
NAME: STEPHEN D. TAYLOR
TITLE: PRESIDENT AND C.E.O.
FIRST UNION CORPORATION
By: /s/ KENNETH R. STANCLIFF
NAME: KENNETH R. STANCLIFF
TITLE: SENIOR VICE PRESIDENT
A-38
<PAGE>
EXHIBIT D
[FORM OF SUPPLEMENT]
SUPPLEMENT, dated as of the [ ] day of [ ], 199[ ] (this
"Supplement"), to the Agreement and Plan of Merger, dated as of the 4th day of
December, 1994 (the "Merger Agreement"), by and between American Savings of
Florida, F.S.B. ("Bank") and First Union Corporation ("Acquiror").
WHEREAS, pursuant to Section 1.9 of the Merger Agreement, Bank and Acquiror
have agreed to consummate the Merger (as defined in the Merger Agreement) by way
of the merger of Bank and Subsidiary.
NOW, THEREFORE, by its execution of this Supplement, as of the date hereof
the undersigned (i) adopts and becomes a party to the Merger Agreement, (ii)
confirms the representations and warranties in Section 4.15 thereof and (iii)
represents and warrants to Bank that the authorized capital stock of Subsidiary
consists of [ ] shares of Subsidiary Common Stock, all of which are
issued and outstanding, fully paid and nonassessable (except as provided in 12
U.S.C. (section mark) 55), and subject to no preemptive rights, and owned by
Acquiror free and clear of all liens, claims, agreements, or encumbrances. There
are no treasury shares and no outstanding subscriptions, conversion privileges,
options, warrants, agreements, understandings or arrangements to which Acquiror
or Subsidiary is a party or by which either of them is bound relating to
Subsidiary's authorized or issued capital stock, or pursuant to which Subsidiary
may be obligated to issue shares of capital stock. As of , 199 ,
Subsidiary has capital of $ , divided into common stock of
$ , surplus of $ , undivided profits, including capital
reserves, of $ , and net unrealized holding gains (losses) on
available-for-sale securities of $ .
IN WITNESS WHEREOF, this Supplement has been duly executed and delivered by
the undersigned officer duly authorized thereunto as of the date first
hereinabove written.
[INSERT NAME OF SUBSIDIARY]
By:
NAME:
TITLE:
A-39
<PAGE>
BOARD OF DIRECTORS
(Subsidiary)*
*To be completed upon organization of Subsidiary or upon substitution of
another bank therefor pursuant to Section 1.8.
A-40
<PAGE>
ANNEX B
SHAREHOLDER VOTING AGREEMENT
THIS SHAREHOLDER VOTING AGREEMENT (the "Agreement") is made and entered
into as of December 4, 1994 by and between THE ENSTAR GROUP, INC. ("Holding
Company"), a unitary savings and loan holding company of AMERICAN SAVINGS OF
FLORIDA, F.S.B., a federally chartered stock savings bank (including its
successors after consummation of the Merger (as hereinafter defined), the
"Bank"), and FIRST UNION CORPORATION, a North Carolina corporation ("Acquiror").
PRELIMINARY STATEMENT
WHEREAS, Acquiror and Bank are contemporaneously herewith entering into
that certain Agreement and Plan of Merger of even date herewith (the "Merger
Agreement") pursuant to which a subsidiary of Acquiror will merge with Bank in
accordance with the terms and conditions of the Merger Agreement (the "Merger");
WHEREAS, Holding Company is the beneficial and record owner of 5,514,391
shares (the "Shares") of Common Stock, par value $.01 per share, of Bank ("Bank
Common Stock") and desires to enter into this Agreement to induce Acquiror to
enter into the Merger Agreement;
WHEREAS, Holding Company, Acquiror and First Union National Bank of North
Carolina, as escrow agent (the "Escrow Agent"), are contemporaneously herewith
entering into that certain Escrow Agreement of even date herewith in the form
attached hereto as Exhibit A (the "Escrow Agreement"), and Holding Company has
forwarded to The First National Bank of Boston, in its capacity as transfer
agent for the Bank Common Stock (the "Transfer Agent"), a Certificate
representing 5,514,391 Shares together with an irrevocable instructions letter
in the form attached hereto as Exhibit B instructing the Transfer Agent to,
among other things, issue a Certificate for 3,926,422 Shares (the "Escrowed
Shares") and to deliver the Certificate representing the Escrowed Shares to the
Escrow Agent to be held and distributed in accordance with the terms and
conditions of the Escrow Agreement and this Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Acquiror has requested Holding Company to vote all of the Shares in
accordance with the terms and conditions of this Agreement and to take certain
other actions as contemplated by this Agreement and the Escrow Agreement, and
Holding Company hereby agrees to vote such Shares in accordance with the terms
and conditions hereof and to take such other actions.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, intending to be legally bound hereby, the
parties hereto agree as follows:
1. AGREEMENT TO VOTE. At such time as Bank conducts a meeting of, solicits
written consents from or otherwise seeks a vote of, its shareholders for the
purpose of adopting and approving the Merger Agreement, the Merger and the
transactions contemplated thereby, Holding Company agrees to duly vote all of
the Shares in favor of adopting and approving the Merger Agreement, the Merger
and the transactions contemplated thereby.
2. LIMITATION. Notwithstanding Section 1 hereof, Holding Company will have
at all times the right to vote the Shares, in its sole discretion, with respect
to all matters other than those set forth in Section 1 hereof submitted to a
vote of the shareholders of the Bank.
3. TERMINATION OF VOTING AGREEMENT. This Agreement shall terminate if and
when the Merger Agreement is terminated in accordance with its terms. In the
event of termination of this Agreement as provided in this Section 3, this
Agreement shall forthwith become null and void and there shall be no liability
or obligation on the part of Acquiror, Holding Company or their respective
officers or directors, except that nothing in this Section 3 shall relieve any
party hereto from any liability for breach of this Agreement.
4. EXCEPTIONS TO OBLIGATIONS. Except for the agreement of Holding Company
to vote the Shares in accordance with Section 1 hereof, nothing in this
Agreement shall: (a) require Holding Company to acquire additional shares of
Bank Common Stock; (b) require a director of Bank who is an officer, director,
trustee, nominee or other representative of Holding Company, in his or her
capacity as a director of Bank, to vote or take or refrain from taking any
action that would cause such director to violate his or her fiduciary duties to
Bank's shareholders under applicable law; or (c) require Holding Company to take
any action that would prevent or impede Bank's ability to exercise its rights or
fulfill its obligations under Section 5.6 of the Merger Agreement.
B-1
<PAGE>
5. COVENANTS OF HOLDING COMPANY. Except in accordance with the provisions
of this Agreement or the Escrow Agreement, Holding Company agrees, until this
Agreement has been terminated in accordance with Section 3 hereof, not to:
(a) directly or indirectly, sell, transfer, pledge, assign or otherwise
dispose of, or enter into any contract, option, commitment or other arrangement
or understanding with respect to the sale, transfer, pledge, assignment or other
disposition of any of the Shares;
(b) except as may be required to vote the Shares in accordance with Section
1 hereof, grant any proxies, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares;
(c) take any action or omit to take any action which would prohibit,
prevent or preclude Holding Company from performing its obligations under this
Agreement or the Escrow Agreement; or
(d) without the prior written approval of Acquiror, initiate, solicit or
encourage (including by way of furnishing non-public information or assistance)
any inquiries or the making of any proposal that constitutes, or may be
reasonably expected to lead to, any Competing Transaction (as hereinafter
defined), enter into discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to
or endorse any Competing Transaction, or authorize any of the officers or
directors of Holding Company to take any such action, and Holding Company shall
use its reasonable efforts to cause the directors, officers, employees, agents
and representatives of Holding Company (including, without limitation, any
investment bank or financial advisor, attorney or accountant retained by Holding
Company) not to take any such action.
Notwithstanding Section 5(d) and except for the agreement of Holding
Company to vote the Shares in accordance with Section 1 hereof, nothing
contained in this Agreement shall prohibit the Board of Directors of Holding
Company from furnishing information to any person or entity that, after the date
hereof, makes a bona fide proposal to enter into a Competing Transaction, that
after the date hereof had not been initiated, solicited or encouraged by Bank or
Holding Company, if: (A) the Board of Directors of Bank shall have determined to
take certain actions pursuant to Section 5.6(b)(i) of the Merger Agreement; (B)
the Board of Directors of Holding Company shall have determined in good faith
(after considering the advice of outside counsel) that such action is required
for the Board of Directors of Holding Company to comply with its duties to
Holding Company's creditors and former stockholders under applicable law; (C)
the Board of Directors of Holding Company shall have reasonably concluded that
the proposal was made in good faith; (D) prior to furnishing such information to
such person or entity, Holding Company shall have received from such person or
entity an executed confidentiality agreement, with terms reasonably satisfactory
to Holding Company; and (E) Holding Company shall have so notified Acquiror.
For purposes of this Agreement, "Competing Transaction" shall mean any of
the following involving Bank or any of the subsidiaries of Bank (other than the
transactions contemplated by the Merger Agreement): (A) any merger,
consolidation, share exchange, business combination, or other similar
transaction; (B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of twenty percent (20%) or more of the assets or deposits of Bank
and the subsidiaries of the Bank, taken as a whole, in a single transaction or a
series of related transactions; or (C) any tender offer or exchange offer for
twenty percent (20%) or more of the outstanding shares of Bank Common Stock or
the filing of a registration statement under the Securities Act in connection
therewith.
6. REPRESENTATIONS AND WARRANTIES OF HOLDING COMPANY. Except as set forth
in Exhibit C hereto, Holding Company hereby represents and warrants to Acquiror
as follows:
(a) The Shares are the only shares of Bank Common Stock that Holding
Company has the right, power or authority to vote, and Holding Company does not
own or have any right to acquire any other shares of Bank Common Stock.
(b) Holding Company has the corporate power and authority to execute and
deliver this Agreement and the Escrow Agreement and to vote the Shares in
accordance with Section 1 hereof and otherwise perform its obligations hereunder
or thereunder; such execution, delivery, vote and performance have been duly
authorized by all necessary corporate action on the part of Holding Company; and
each of this Agreement and the Escrow Agreement has been duly executed and
delivered by Holding Company and constitutes the valid and binding agreement of
Holding Company, enforceable against Holding Company in accordance with its
terms, subject to general equitable principles and the discretion of courts in
granting equitable remedies.
(c) The execution and delivery of each of this Agreement and the Escrow
Agreement by Holding Company does not, and the consummation of the transactions
contemplated hereby and thereby by Holding Company, including, without
limitation, the agreement of Holding Company to vote the Shares in accordance
with Section 1 hereof, will not, constitute (i) a breach or violation of, or a
default under, the Holding Company Bankruptcy Plan (as hereinafter defined) or
any judgment,
B-2
<PAGE>
decree, order, governmental permit or license applicable to Holding Company or
any subsidiary of Holding Company or any of their respective properties, or to
which Holding Company or any subsidiary of Holding Company or any of their
respective properties is subject or bound, which breach, violation or default
could reasonably be expected to have a material adverse effect on the
transactions contemplated by this Agreement or the Escrow Agreement or any
adverse effect upon Holding Company's ability to perform its obligations
hereunder or thereunder, including, without limitation, the agreement of Holding
Company to vote the Shares in accordance with Section 1 hereof, or (ii) a breach
or violation of, or a default under, Holding Company's Certificate of
Incorporation or Bylaws, or under any material agreement, indenture or
instrument to which Holding Company or any subsidiary of Holding Company is a
party or by which Holding Company or any subsidiary of Holding Company or any of
their respective properties is subject or bound, which breach, violation or
default could reasonably be expected to have a material adverse effect on the
transactions contemplated by this Agreement or any adverse effect on Holding
Company's ability to perform its obligations hereunder or thereunder, including,
without limitation, the agreement of Holding Company to vote the Shares in
accordance with Section 1 hereof.
(d) The consummation of the transactions contemplated by this Agreement and
the Escrow Agreement, including, without limitation, the agreement of Holding
Company to vote the Shares in accordance with Section 1 hereof, will not require
any consent, waiver or approval under any such judgment, decree, order,
governmental permit or license, or material agreement, indenture or instrument
referred to in Section 6(c) hereof, other than any consents, waivers or
approvals contemplated by the Merger Agreement and the schedules thereto or such
consents, waivers or approvals the absence of which would not have a material
adverse effect on the transactions contemplated by this Agreement or the Escrow
Agreement or any adverse effect on Holding Company's ability to perform its
obligations hereunder or thereunder, including, without limitation, the
agreement of Holding Company to vote the Shares in accordance with Section 1
hereof.
(e) The Shares are now and will at all times during the term of this
Agreement be beneficially owned and held of record by Holding Company, free and
clear of all liens, claims, security interests or any other encumbrances
whatsoever, other than restrictions upon resale which may be imposed by Federal
or state securities laws and the obligations imposed on Holding Company under
the Holding Company Bankruptcy Plan (as hereinafter defined) relating to the
Shares ("Encumbrances") with respect to the ownership or voting of the Shares or
otherwise, other than encumbrances and restrictions created pursuant to this
Agreement and/or the Escrow Agreement. No such Encumbrances prevent or
materially impair Holding Company's performance of its obligations under this
Agreement or the Escrow Agreement.
(f) Holding Company has previously delivered to Acquiror a letter from the
Office of Thrift Supervision confirming the ability of Holding Company to vote
the Shares in connection with the Merger.
(g) The aggregate consideration to be received by Holding Company under the
Merger Agreement together with all other assets of Holding Company will be
sufficient to permit Holding Company to satisfy in full the Senior Claims (as
hereinafter defined) and at least THIRTY MILLION DOLLARS ($30,000,000) of the
Obligation (as hereinafter defined) on the Merger Effective Date (as defined in
the Merger Agreement) in accordance with the terms and conditions of this
Agreement and the Escrow Agreement.
(h) Exhibit D hereto sets forth a true and complete list of all Allowed
Claims in Classes 6, 7, 8 and 10 of the Holding Company Bankruptcy Plan (the
"Senior Claims") and the principal amount of such claims.
7. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror hereby represents
and warrants to Holding Company that Acquiror 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 the part of Acquiror; and this Agreement has been duly executed and
delivered by Acquiror and constitutes the valid and binding agreement of
Acquiror, enforceable against Acquiror in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies.
8. ALLOWED CLAIM.
(a) Holding Company hereby represents and warrants to Acquiror that Holding
Company's obligation to Bank in the amount of THIRTY ONE MILLION NINE HUNDRED
NINETY-THREE THOUSAND TWO HUNDRED SIX DOLLARS ($31,993,206) (the "Obligation")
is an "Allowed Claim" pursuant to the terms of the Second Amended Plan of
Reorganization of The Enstar Group, Inc., as modified (the "Holding Company
Bankruptcy Plan") and will remain an Allowed Claim of the Surviving Entity (as
defined in the Merger Agreement) after giving effect to the Merger. Holding
Company further represents and warrants to Acquiror that the Obligation,
together with simple interest accrued thereon from June 1, 1992 at the rate of
4.26 percent per annum (the "Interest Component"), is a valid obligation of
Holding Company payable to Bank
B-3
<PAGE>
pursuant to the terms of the Holding Company Bankruptcy Plan, this Agreement and
the Escrow Agreement after payment of the Senior Claims. Holding Company further
represents and warrants that any principal balance of the Obligation which is
not paid on the Merger Effective Date in accordance with the terms of the Escrow
Agreement shall remain an Allowed Claim under the Holding Company Bankruptcy
Plan and shall be paid in full prior to any other payment to any other creditor
of Holding Company under the Holding Company Bankruptcy Plan other than the
holders of Senior Claims. Holding Company further represents and warrants that
the Interest Component shall be paid to Bank under the Holding Company
Bankruptcy Plan on a pro-rata basis at the same time that any interest payments
are made on the Senior Claims.
(b) Holding Company hereby represents and warrants to Acquiror that the
Merger will not constitute a transfer or trade of the Obligation within the
meaning of Section 11.8 of the Holding Company Bankruptcy Plan. Notwithstanding
the foregoing, Holding Company hereby authorizes any transfer or trade of the
Obligation that may be deemed to occur as a consequence of the Merger.
9. ESCROW AGREEMENT; ACQUIROR SHARES; HOLDING COMPANY BANKRUPTCY PLAN.
(a) Unless there shall exist a breach by Holding Company of any material
representation, warranty or covenant contained herein which has not been waived
in writing by Acquiror, on the Merger Effective Date, Acquiror shall instruct
the Escrow Agent to exchange the Escrowed Shares for shares of Acquiror Common
Stock in accordance with the terms of the Merger Agreement, and Acquiror shall
immediately thereafter purchase from Holding Company and Holding Company shall
sell to Acquiror such shares of Acquiror Common Stock for an aggregate purchase
price of EIGHTY TWO MILLION FOUR HUNDRED FIFTY FOUR THOUSAND EIGHT HUNDRED SIXTY
FIVE DOLLARS AND EIGHTY CENTS ($82,454,865.80) (the "Purchase Price"). Such
purchase and sale shall be effected in accordance with the terms of the Escrow
Agreement through the delivery by Acquiror to the Escrow Agent of immediately
available funds in an amount equal to the Purchase Price and the release by the
Escrow Agent of the shares of Acquiror Common Stock to Acquiror in accordance
with the terms of this Agreement and the Escrow Agreement.
(b) No later than ten (10) days prior to the Merger Effective Date, Holding
Company shall provide Acquiror with written notification (the "Principal Pay-Off
Notification") of:
(i) The names and addresses of the holders of the Senior Claims under
the Holding Company Bankruptcy Plan, the outstanding principal amount of
such Senior Claims as of the Merger Effective Date (the "Senior Claims
Amount"), which amount Holding Company represents and warrants shall not be
greater than $52,454,865.80 in the aggregate, and the method or manner of
payment to be used by the Escrow Agent to pay such Senior Claims on the
Merger Effective Date; and
(ii) The outstanding principal amount of the Obligation.
(c) Unless there shall exist a breach by Holding Company of any material
representation, warranty or covenant contained herein which has not been waived
in writing by Acquiror, upon receipt of the Principal Pay-Off Notification,
Acquiror shall promptly forward to the Escrow Agent a copy of such Principal
Pay-Off Notification together with written instructions for the Escrow Agent to
pay on behalf of Holding Company the Senior Claims Amount to the holders of the
Senior Claims on the Merger Effective Date and to pay on behalf of Holding
Company the lesser of $30,000,000 or the then outstanding principal amount of
the Obligation to the Bank on the Merger Effective Date, all in accordance with
the terms and conditions of such instructions letter and Principal Pay-Off
Notification. Holding Company agrees that the Principal Pay-Off Notification
shall contain appropriate instructions with respect to compliance with
applicable federal withholding tax obligations, if any, arising in connection
with such payments. Unless there shall exist a breach by Holding Company of any
material representation, warranty or covenant contained herein which has not
been waived in writing by Acquiror, if the Principal Pay-Off Notification is not
received by Acquiror on or before the date provided in Section 9(b) above,
Acquiror shall instruct the Escrow Agent to pay on the Merger Effective Date:
(i) the Senior Claims Amount by issuing and delivering to the holders of such
Senior Claims identified on Exhibit D hereto certified checks in the amounts set
forth opposite their names on such Exhibit D, which Exhibit D may be hereinafter
amended by Holding Company from time-to-time, but not later than ten (10) days
prior to the Merger Effective Date; and (ii) the lesser of $30,000,000 or the
then outstanding principal amount of the Obligation (the "Bank Obligation") to
Bank by issuing and delivering to Bank a certified check made payable to Bank in
the amount of the Bank Obligation.
(d) Holding Company and Acquiror agree that Holding Company shall exchange
all Shares held by it on the Merger Effective Date into Shares of Acquiror
Common Stock on the Merger Effective Date in accordance with the terms and
provisions of the Merger Agreement. Upon receipt of such shares of Acquiror
Common Stock on the Merger Effective Date
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<PAGE>
under the Merger Agreement, Holding Company shall deliver to the Escrow Agent
such number of shares of Acquiror Common Stock as is equal to the quotient
obtained by dividing: (A) the sum of (x) the outstanding principal amount of the
Obligation following the payment actually being made to Bank pursuant to Section
9(c) hereof (the "Remaining Balance"), (y) an amount equal to the interest that
would accrue on the Remaining Balance for a period of twenty-four (24) months
following the Merger Effective Date at a 4.26% annualized simple interest rate,
and (z) an amount equal to the interest due Bank on the Obligation under the
Holding Company Bankruptcy Plan as of the Merger Effective Date, less the amount
of any cash remaining under the Escrow Agreement following the payment of the
Senior Claims Amount and the payment on the Obligation pursuant to Section 9(c)
hereof; by (B) the Average Market Price (as defined in the Merger Agreement).
Notwithstanding anything to the contrary set forth in this Agreement, Acquiror
shall not be required to make the payments contemplated by Section 9(a) or to
instruct the Escrow Agent to make any payments required by Section 9(c) unless
and until the Escrow Agent shall have certified to Acquiror that it has
contemporaneously received the Shares to be delivered to the Escrow Agent
pursuant to this Section 9(d).
(e) Notwithstanding anything to the contrary set forth in this Agreement,
Holding Company agrees that if the Acquiror Common Stock, cash and/or other
securities held under the Escrow Agreement are not sufficient to satisfy in full
the Obligation and the Interest Component (together, the "Bank Obligations"),
then any unpaid balance of the Bank Obligations shall remain a valid obligation
of Holding Company payable in accordance with the terms of the Holding Company
Bankruptcy Plan.
(f) Acquiror and Holding Company agree that Holding Company, at its option,
shall be permitted to pay and satisfy any portion of the Obligation to be paid
after the Merger Effective Date and any portion of the Interest Component to be
paid after the Merger Effective Date through the transfer to Bank or, if
authorized by Bank, to Acquiror of Acquiror Common Stock or by delivery of cash,
or a combination of both, with any such Acquiror Common Stock being valued for
such purposes at the average of the closing prices of Acquiror Common Stock on
the New York Stock Exchange for the ten (10) consecutive trading days ending on
the last trading day immediately prior to the date of delivery of such Acquiror
Common Stock.
(g) Holding Company and Acquiror agree that the shares of Acquiror Common
Stock and any cash or other securities held by the Escrow Agent following the
Merger Effective Date shall be held under the Escrow Agreement and shall be paid
to the Bank or distributed to Holding Company or others in accordance with the
terms of the Holding Company Bankruptcy Plan, this Agreement and the Escrow
Agreement. At such time or times as Holding Company shall be permitted under the
Holding Company Bankruptcy Plan and this Agreement to pay all or part of the
Interest Component and/or the Remaining Balance, Holding Company shall promptly
provide written notification (the "Interest Pay-Off Notification") to Acquiror
of the amount of such Interest Component and/or Remaining Balance which may then
be paid to Bank on behalf of Holding Company. Upon receipt of an Interest
Pay-Off Notification, Acquiror shall forward to the Escrow Agent a copy of such
Interest Pay-Off Notification together with written instructions for the Escrow
Agent to pay on behalf of Holding Company to Bank the obligation(s) reflected on
such Interest Pay-Off Notification. Holding Company and Acquiror agree that the
Interest Component shall be payable pro-rata with the interest due on the Senior
Claims in accordance with the terms and provisions of the Holding Company
Bankruptcy Plan and this Agreement.
(h) Notwithstanding anything to the contrary set forth herein or in the
Escrow Agreement, Holding Company and Acquiror agree that in the event that
Holding Company shall not have sufficient assets available to pay in full the
interest payable with respect to the Senior Claims under the Holding Company
Bankruptcy Plan, or to pay in full any principal and interest with respect to
any "Disputed Claim" under the Holding Company Bankruptcy Plan which hereinafter
is determined to be an "Allowed Claim" in Classes 6, 7, 8 or 10 of the Holding
Company Bankruptcy Plan and/or to satisfy in full any tax obligations of Holding
Company (collectively, the "Enstar Bankruptcy Obligations"), then, unless there
shall exist a breach by Holding Company of any material representation, warranty
or covenant contained herein which has not been waived in writing by Acquiror,
Holding Company shall have the right to receive any shares of Acquiror Common
Stock, cash or other securities then held under the Escrow Agreement and shall
be obligated to use such shares, cash or other securities to pay or satisfy such
Enstar Bankruptcy Obligations in accordance with the terms and conditions of the
Holding Company Bankruptcy Plan and this Agreement; PROVIDED, HOWEVER, that only
such cash, shares or other securities held under the Escrow Agreement in respect
of any portion of the Remaining Balance following payment of the amounts
required to be paid under Section 9(c) and the Interest Component may be so
returned to Holding Company pursuant to this Section 9(h). At such time or times
as Holding Company shall conclude in good faith that the conditions to the
release from escrow of such shares of Acquiror Common Stock, cash or other
securities specified in this Section 9(h) have been satisfied, Holding Company
shall provide written notification (the "Deficiency Notification") to Acquiror
of such deficiency and the amount thereof and an explanation therefor and the
party or parties entitled to such funds or securities under the Holding Company
Bankruptcy Plan and this
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Agreement. Upon receipt of a Deficiency Notification, Acquiror shall promptly
forward to the Escrow Agent a copy of such Deficiency Notification together with
written instructions for the Escrow Agent to distribute such securities or funds
pursuant to such Deficiency Notification. Holding Company and Acquiror agree
that any such securities or funds released from escrow pursuant to the
provisions of this Section 9(h) shall be paid to the parties identified in the
Deficiency Notification in accordance with the terms and conditions of the
Holding Company Bankruptcy Plan and this Agreement.
(i) Holding Company and Acquiror agree to promptly notify the Escrow Agent
in the event the Merger Agreement shall be terminated prior to the Merger
Effective Date.
(j) Holding Company and Acquiror agree that in the event the fair market
value of the shares of Acquiror Common Stock held under the Escrow Agreement,
together with any cash or other securities held thereunder, shall exceed the
unpaid balance of the Obligation and the Interest Component for a period of
ninety (90) consecutive days, then Holding Company and Acquiror shall jointly
instruct the Escrow Agent to release to Holding Company such excess securities
or cash. For purposes of this Section 9(j), the "fair market value" of Acquiror
Common Stock shall be determined by reference to the average closing prices of
Acquiror Common Stock on the New York Stock Exchange for the ten (10)
consecutive trading days ending with the first day of the ninety (90) day period
referred to above in this Section 9(j). Holding Company and Acquiror further
agree to instruct the Escrow Agent to distribute to Holding Company any Shares
of Acquiror Common Stock, cash or other securities remaining in escrow promptly
following payment in full of the Obligation and the Interest Component.
10. INDEMNIFICATION BY ACQUIROR. For a period to commence upon consummation
of the Merger and to terminate upon the sixth anniversary thereof, Acquiror
shall indemnify, defend and hold harmless, as and to the fullest extent
permitted by Delaware law as of the date hereof for indemnification by a
Delaware corporation of its directors, the directors of Holding Company, acting
solely in their capacity as directors of Holding Company, against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including reasonable attorneys' fees and expenses) arising in
connection with or relating to the transactions contemplated by this Agreement
and the Merger Agreement.
11. INDEMNIFICATION BY HOLDING COMPANY. For a period to commence upon
consummation of the Merger and to terminate upon the third anniversary thereof,
Holding Company shall indemnify, defend and hold harmless Acquiror and the
Surviving Entity against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, expenses (including reasonable attorneys'
fees and expenses) and costs (collectively, "Indemnifiable Losses") arising out
of or relating to: (a) any breach by Holding Company of any of its
representations, warranties, covenants or agreements set forth herein or in the
Escrow Agreement; (b) the Holding Company Bankruptcy Plan; or (c) the
satisfaction of, or the failure to satisfy, the various claims thereunder in
accordance with the terms and conditions of this Agreement and the Escrow
Agreement; PROVIDED, HOWEVER, that Holding Company shall have no obligations
whatsoever under this Section 11 with respect to any Indemnifiable Loss which
arises out of or relates to: (a) any willful and intentional breach by Acquiror
or Escrow Agent of their respective representations, warranties, covenants or
agreements set forth herein or in the Escrow Agreement; or (b) the gross
negligence or willful misconduct of Acquiror or Escrow Agent.
12. LITIGATION MATTERS. Acquiror and Holding Company agree that following
consummation of the Merger, Nimrod T. Frazer, the designated representative of
Holding Company and Bank as a member of the Steering Committee relating to the
Schedule 8 Claims established in connection with the case styled IN RE MICHAEL
MILKEN AND ASSOCIATES SECURITIES LITIGATION, MDL 924 (MP) (S.D.N.Y.) (the
"Milken Litigation"), may continue as such representative unless Holding Company
or Acquiror shall have determined in good faith, after consultation with counsel
representing Holding Company and Acquiror in the Milken Litigation, that such
representation is no longer in the best interests of Holding Company and
Acquiror. Acquiror and Holding Company also agree that if all claims of Bank and
Holding Company in the Milken Litigation have not been resolved, settled or
otherwise compromised prior to the Merger Effective Date, such claims shall not
thereafter be resolved, settled or compromised without the prior written consent
of Holding Company, which consent shall not be unreasonably withheld. Acquiror
and Holding Company agree to enter into a mutually acceptable indemnification
agreement, apportioned according to their respective shares of any recovery in
the Milken Litigation, with such representative covering actions taken or
omitted to be taken by such representative in representing the interests of Bank
and Acquiror in connection with the Milken Litigation, which indemnification
agreement shall have a term which shall run until the third anniversary of the
date such representative shall cease to serve as such representative and shall
contain indemnification provisions comparable to those currently in effect for
directors of Bank; PROVIDED, HOWEVER, that Acquiror's indemnification
obligations under such agreement shall not exceed in the aggregate the gross
amount received by Acquiror and/or Bank in connection with the Milken
Litigation.
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<PAGE>
13. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement or the
Escrow Agreement, including, without limitation, the agreement of Holding
Company to vote the Shares in accordance with Section 1 hereof, were not
performed by the applicable party hereto or thereto in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that each of
the parties hereto or thereto shall be entitled to an injunction or injunctions
to prevent breaches of this Agreement and the Escrow 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.
14. FURTHER ASSURANCES. Holding Company and Acquiror agree to execute and
deliver all such further documents and instruments and take all such further
action as may be necessary or appropriate, including cooperation in obtaining
any and all required regulatory approvals, in order to consummate the
transactions contemplated hereby, including, without limitation, the agreement
of Holding Company to vote the Shares in accordance with Section 1 hereof.
Holding Company further agrees to use its best efforts to obtain any and all
required regulatory approvals in order to consummate the transactions
contemplated hereby.
15. 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.
16. 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 other than
the rights accorded the directors of Holding Company pursuant to Section 10
hereof or the Surviving Entity pursuant to Section 11 hereof.
17. 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.
18. 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 follows:
(a) if to Acquiror:
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Attention: Chief Executive Officer
with a copy to:
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Attention: General Counsel
(b) if to Holding Company:
The Enstar Group, Inc.
172 Commerce Street, Third Floor
Montgomery, Alabama 36104
Attention: Nimrod T. Frazer
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with copies to:
Parker, Hudson, Rainer & Dobbs
1500 Marquis Two Tower
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
Attention: J. Marbury Rainer, Esq.
and
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: William R. Spalding, Esq.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together, shall constitute but one agreement.
21. EFFECT OF HEADINGS. The descriptive headings contained herein are for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
22. 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 broadly as is enforceable.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first written above.
ACQUIROR:
FIRST UNION CORPORATION
By: /s/ KENNETH R. STANCLIFF
NAME: KENNETH R. STANCLIFF
TITLE: SENIOR VICE PRESIDENT
HOLDING COMPANY:
THE ENSTAR GROUP, INC.
By: /s/ CHERYL D. DAVIS
NAME: CHERYL D. DAVIS
TITLE: CHIEF FINANCIAL OFFICER
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EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement"), dated as of December 4, 1994, is
made by and among The Enstar Group, Inc. ("Enstar"), First Union Corporation
("First Union") and First Union National Bank of North Carolina, as Escrow Agent
hereunder (the "Escrow Agent").
BACKGROUND
A. Enstar and First Union have entered into that certain Shareholder Voting
Agreement (the "Voting Agreement"), a copy of which is attached hereto as Annex
A, pursuant to which Enstar has agreed to vote all shares of Common Stock, par
value $.01 per share ("Bank Common Stock"), of American Savings of Florida,
F.S.B. (the "Bank") in favor of adopting and approving that certain Agreement
and Plan of Merger (the "Merger Agreement"), dated as of December 4, 1994, by
and between Bank and First Union, a copy of which is attached hereto as Annex B.
The Voting Agreement provides that Enstar will cause to be delivered to the
Escrow Agent a stock certificate in definitive form evidencing an aggregate of
3,926,422 shares of Bank Common Stock (together with any additions,
substitutions or other property for which the same may be exchanged as provided
herein, the "Escrowed Shares") to be held by the Escrow Agent in accordance with
the terms and conditions hereof. Enstar has further caused to be delivered to
the Escrow Agent hereunder stock powers duly endorsed in blank relating to the
Escrowed Shares.
B. The Escrow Agent has agreed to accept, hold and disburse the Escrowed
Shares and any additional cash, securities or other property deposited with it
and the earnings thereon in accordance with the terms of this Escrow Agreement.
C. Enstar has appointed Nimrod T. Frazer (the "Enstar Representative") and
First Union has appointed Kent Hathaway (the "First Union Representative") (the
Enstar Representative and the First Union Representative are herein referred to
collectively as the "Representatives") to represent them for all purposes in
connection with the Escrowed Shares and any other property or funds to be
deposited with the Escrow Agent under this Agreement.
D. In order to establish the escrow of the Escrowed Shares and any other
funds or property to be deposited with the Escrow Agent pursuant to this
Agreement or the Voting Agreement and to effect the provisions of the Voting
Agreement, the parties hereto have entered into this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. Enstar, First Union and the Representatives hereby appoint Escrow Agent
to serve as Escrow Agent hereunder. Escrow Agent hereby accepts such appointment
and, upon receipt of the Escrowed Shares and shares of Common Stock, par value
$3.33 1/3 per share, of First Union ("First Union Common Stock") delivered to
Escrow Agent in accordance with Section 2 below, agrees to hold, invest and
disburse the Escrowed Shares, the First Union Shares (as defined below) and any
other cash or securities held hereunder in accordance with this Escrow
Agreement. Any and all notices or instructions of either First Union or Enstar
shall not be effective unless delivered in writing and signed by the First Union
Representative or the Enstar Representative, respectively.
2. On the date hereof, Enstar has delivered to The First National Bank of
Boston (the "Transfer Agent") an Irrevocable Letter of Instructions dated
December 4, 1994, a copy of which is attached hereto as Annex C, instructing the
Transfer Agent to deliver to the First Union Representative a stock certificate
evidencing the Escrowed Shares (the "Escrowed Shares Certificate"). Upon receipt
of said Escrowed Shares Certificate, the First Union Representative shall
deliver the Escrowed Shares Certificate to the Escrow Agent, to be held in
escrow pursuant to the terms of this Agreement. On the Merger Effective Date (as
defined in the Merger Agreement), Enstar shall deliver to the Escrow Agent, to
be held in escrow pursuant to the terms of this Agreement, a stock certificate
or certificates in definitive form evidencing shares of First Union Common Stock
required to be delivered by Enstar under Section 9(d) of the Voting Agreement
(the "First Union Shares").
3. On the Merger Effective Date and upon receipt by the Escrow Agent of
instructions from First Union pursuant to Section 9(a) of the Voting Agreement,
the Escrow Agent shall tender for exchange the shares of Bank Common Stock
delivered upon the execution of this Agreement for shares of First Union Common
Stock on the Merger Effective Date in accordance with the terms of the Merger
Agreement. On the Merger Effective Date and upon receipt from First Union of
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immediately available funds in an amount equal to EIGHTY TWO MILLION FOUR
HUNDRED FIFTY FOUR THOUSAND EIGHT HUNDRED SIXTY FIVE DOLLARS AND EIGHTY CENTS
($82,454,865.80) (the "Share Consideration") pursuant to Section 9(a) of the
Voting Agreement, Escrow Agent shall deliver to First Union such shares of First
Union Common Stock in accordance with written instructions provided to the
Escrow Agent from First Union at least five (5) days prior to the Merger
Effective Date.
4. On the Merger Effective Date and upon receipt of the letter of
instructions from First Union contemplated by Sections 9(c) of the Voting
Agreement, Escrow Agent shall make the various payments specified in such letter
of instructions in accordance with the directions set forth therein.
5. Upon receipt of an Interest Pay-Off Notification (as defined in the
Voting Agreement) and letter of instructions from First Union contemplated by
Section 9(g) of the Voting Agreement, Escrow Agent shall make the various
payments specified in such Interest Pay-Off Notification and letter of
instructions in accordance with the directions set forth therein.
6. Upon receipt of a Deficiency Notification (as defined in the Voting
Agreement) and letter of instructions from First Union contemplated by Section
9(h) of the Voting Agreement, Escrow Agent shall distribute the shares, cash or
other securities specified in such Deficiency Notification and letter of
instructions in accordance with the directions set forth therein.
7. Upon receipt of a joint instructions certificate duly executed by Enstar
and First Union under Section 9(i) of the Voting Agreement to the effect that
the Merger Agreement has been terminated in accordance with its terms prior to
consummation of the Merger, Escrow Agent shall deliver to Enstar all shares,
cash or other securities held hereunder, which delivery shall be made in
accordance with written instructions to be provided to Escrow Agent by Enstar in
such joint instructions certificate.
8. Upon receipt of a joint instructions certificate duly executed by Enstar
and First Union under Section 9(j) of the Voting Agreement to the effect that
excess shares, cash or securities remain in escrow hereunder and/or to the
effect that the Obligation (as defined in the Voting Agreement) or the Interest
Component (as defined in the Voting Agreement) has been satisfied in full,
Escrow Agent shall deliver such shares, cash or other securities in accordance
with the directions set forth in such joint instructions certificate.
9. Any cash or stock dividends or interest payable with respect to Bank
Common Stock, First Union Common Stock or other securities held hereunder shall
be delivered to Escrow Agent and shall be held and distributed in accordance
with the terms hereof. Subject to the terms of the Voting Agreement, Enstar
shall be entitled to vote all Escrowed Shares, First Union Shares and other
securities held hereunder in all matters submitted to a vote of holders of Bank
Common Stock, First Union Common Stock or otherwise. Enstar shall have the right
to direct the Escrow Agent to sell shares of First Union Common Stock held
hereunder, which may be sold to First Union in the sole discretion of the Escrow
Agent, and the proceeds of any such sale shall be deposited hereunder and shall
be held and distributed in accordance with the terms hereof and the Voting
Agreement.
10. Any cash held hereunder shall be invested by the Escrow Agent in
accordance with written instructions to be provided by the Enstar
Representative.
11. Enstar hereby acknowledges that income, gain or loss incurred with
respect to any property held by the Escrow Agent pursuant to this Agreement
shall be for the account of Enstar, and Enstar hereby agrees to indemnify and
hold harmless each of the Escrow Agent, First Union and Bank for the taxes
payable in respect of such items of income, gain or loss.
12. This Agreement may be changed, waived discharged or terminated only by
a writing signed by the Representatives and the Escrow Agent. No delay or
omission by any parties on exercising any right with respect hereto shall
operate as a waiver. A waiver on any one occasion shall not be construed as a
bar to, or waiver of, any right or remedy on any future occasion.
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<PAGE>
13. Any notice required to be given under this Agreement shall be effective
when delivered by messenger, or dispatched by registered mail, cable or telex,
to the respective party at its address specified below, namely:
<TABLE>
<S> <C>
If to Enstar, to: The Enstar Group, Inc.
172 Commerce Street
Third Floor
Montgomery, Alabama 36104
Attention: Nimrod T. Frazer
with copies to:
Parker, Hudson, Rainer & Dobbs
1500 Marquis Two Tower
285 Peachtree Center Avenue
Atlanta, Georgia 30303
Attention: J. Marbury Rainer, Esq.
and
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: William R. Spalding, Esq.
If to First Union, to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Attention: Chief Executive Officer
with a copy to:
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Attention: Kent Hathaway, Esq.
If to Escrow Agent: First Union National Bank of North Carolina
Bond Administration
230 S. Tryon Street
8th Floor
Charlotte, North Carolina 28288-1179
Attention: Dan Ober
with a copy to:
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Attention: Kent Hathaway, Esq.
</TABLE>
14. Enstar and First Union shall each pay one-half of the fees and expenses
of the Escrow Agent, as set forth on Annex D hereto. Each of Enstar and First
Union shall reimburse the Escrow Agent for one-half of the reasonable expenses
incurred by Escrow Agent in connection with this Agreement, including but not
limited to, the reasonable cost of legal services should the Escrow Agent deem
it necessary to retain counsel.
15. The Escrow Agent shall not be liable for any action taken or omitted to
be taken by it in good faith in accordance with the advice of counsel. In no
event shall the Escrow Agent be liable or responsible except for its own gross
negligence or willful misconduct.
16. Enstar agrees to indemnify the Escrow Agent against all costs,
expenses, damages or losses (including reasonable attorneys' fees) incurred by
it in connection with or as a result of the performance of its duties under this
Agreement, to the extent that such costs, expenses, damages or losses arise out
of or are based on an action involving such performance of its
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<PAGE>
duties under this Agreement and to the extent that such duties are not found to
have been performed (i) with gross negligence or willful misconduct on the part
of the Escrow Agent or (ii) as a result of a breach of this Agreement by First
Union.
17. Each of the parties hereto agrees to take or cause to be taken such
further actions, to execute, deliver and file or cause to be executed, delivered
and filed such further documents and instruments and to obtain such consents as
may be necessary or as may be reasonably required in order to fully effectuate
the purposes, terms and conditions of this Agreement.
18. This Agreement shall be governed by and construed in accordance with
the law of the State of Delaware and shall be binding upon the Escrow Agent,
First Union and Enstar and its and their respective successors and assigns;
PROVIDED that any assignment or transfer by Enstar or First Union of its rights
under this Agreement or with respect to the Escrowed Shares or the First Union
Shares shall be void as against the Escrow Agent unless (i) written notice
thereof shall be given to the Escrow Agent, (ii) the assignee or transferee
shall agree in writing to be bound by the provisions of this Agreement, and
(iii) all of the parties hereto shall have consented in writing to such
assignment or transfer.
19. This Agreement is not intended to, and shall not give rise to any
rights, or be enforceable by, any person other than Enstar, First Union and the
Escrow Agent or their respective successors and assigns.
20. To the extent any provision of this Agreement is prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
21. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matters hereof; PROVIDED that this provision
is not intended to abrogate any other written agreement between the parties
executed contemporaneously herewith or after this Agreement.
22. All of the terms of this Agreement, as amended from time to time, shall
be binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of Enstar, First Union, the Representatives and the
Escrow Agent.
23. The Escrow Agent and any stockholder, director, officer or employee of
the Escrow Agent may buy, sell and deal in any of the securities of Bank, Enstar
or First Union and become pecuniarily interested in any transaction in which
Bank, Enstar or First Union may be interested, and contract and lend money to
Bank, Enstar or First Union and otherwise act as fully and freely as though it
were not Escrow Agent under this Agreement. Nothing herein shall preclude the
Escrow Agent from acting in any other capacity for Bank, Enstar or First Union
or for any other entity.
24. This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which taken together shall constitute a
single instrument.
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<PAGE>
If the foregoing Agreement is satisfactory, please so indicate by signing
at the place provided below.
Very truly yours,
THE ENSTAR GROUP, INC.
By: /s/ CHERYL D. DAVIS
NAME: CHERYL D. DAVIS
TITLE: CHIEF FINANCIAL OFFICER
FIRST UNION CORPORATION
By: /s/ KENNETH R. STANCLIFF
NAME: KENNETH R. STANCLIFF
TITLE: SENIOR VICE PRESIDENT
We accept the appointment as Escrow Agent.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: /s/ DANIEL J. OBER
NAME: DANIEL J. OBER
TITLE: VICE PRESIDENT
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<PAGE>
EXHIBIT C
1. Under that certain Settlement Agreement entered on March 18, 1994, by
and among Richard J. Grassgreen, TPR Investment Associates, Inc., Holding
Company, Bank, and certain other parties, which Settlement Agreement was
approved by order dated April 12, 1994, by the United States Bankruptcy Court
for the Middle District of Florida, Jacksonville Division, in that certain
bankruptcy case styled, IN RE RICHARD J. GRASSGREEN, Chapter 11 Case No.
93-0640-BKC-3P-1, Holding Company will receive, upon the effective date of the
Second Amended Plan of Reorganization of Richard J. Grassgreen, 175,000 shares
of Bank Common Stock from TPR Investment Associates, Inc. To the extent any such
shares are received by Holding Company, such shares will become subject to the
Agreement and shall be deemed "Shares" for purposes thereof; PROVIDED, HOWEVER,
that 55,000 of such shares will be subject to certain escrow arrangements
relating to a settlement agreement with the Grassgreen estate and the agreement
of Holding Company to repurchase rights represented by certain cancelled Holding
Company capital stock from Bank.
2. In connection with the disposition of the Shares, Holding Company will
need to: (a) file a Form DV with the Office of Thrift Supervision (the "OTS");
and (b) obtain the consent of the OTS pursuant to 12 C.F.R. (section mark)
567.13.
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<PAGE>
Goldman, Sachs & Co 85 Broad Street New York, New York 10004
Tel: 212-902-1000
(Goldman Sachs logo appears here)
ANNEX C
May 11, 1995
Board of Directors
American Savings of Florida, F.S.B.
17801 Northwest Second Avenue
Miami, Florida 33169
Gentlemen and Mesdames:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
American Savings of Florida, F.S.B. (the "Company") of the Consideration (as
defined below) to be received for the Shares pursuant to the Agreement and Plan
of Merger dated as of December 4, 1994 as amended as of March 27, 1995, between
First Union Corporation ("First Union") and the Company (the "Agreement").
Pursuant to the Agreement, the Company will be merged with and into a subsidiary
national bank of First Union (the "Merger") and each outstanding share will be
converted into that number of shares (or fraction thereof) of Common Stock, par
value $3.33 1/3 per share, of First Union (the "First Union Shares") equal to
$21.00 based upon the average of the closing price per First Union Share on the
New York Stock Exchange Composite Transactions Tape as more fully set forth in
the Agreement (the "Consideration").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. We also have provided, and may provide in the future, certain
investment banking services to First Union, for which we receive customary
compensation. Recent investment banking services provided to First Union include
a $250,000,000 debt offering and derivative swap in April 1995, a $300,000,000
debt offering and derivative swap in February 1995, a $150,000,000 debt offering
and derivative swap in August 1994 and a stock repurchase program in April 1994.
Goldman, Sachs & Co. has also managed offerings of debt and common stock for
First Union prior to 1994. In the course of the trading activities of Goldman,
Sachs & Co., we have accumulated a net long position of 140,617 shares of First
Union Common Stock and a net short position of $2,000,000 in various debentures
of First Union.
In connection with this opinion, we have reviewed, among other things, a
draft of the Registration Statement (File No. 33-58261) of First Union
Corporation; the Agreement; The Enstar Group, Inc.'s voting agreement with First
Union; Annual Reports to Stockholders and Annual Reports on Form 10-K since
December 31, 1990 for the Company and since December 31, 1989 for First Union;
certain interim reports to stockholders and Quarterly Reports on Form 10-Q;
certain other communications from the Company and First Union to their
stockholders; and certain internal financial analyses and forecasts for the
Company prepared by its management. We also have held discussions with members
of the senior management of the Company and First Union regarding the past and
current business operations, financial condition and future prospects of their
respective companies. In addition, we have reviewed the reported price and
trading activity for the Shares and the First Union Shares, compared certain
financial and stock market information for the Company and First Union with
similar information for certain other companies, the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the commercial banking and savings and loan industries and
performed such other studies and analyses as we considered appropriate.
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<PAGE>
Our opinion is directed solely to the Company's Board of Directors and does
not constitute a recommendation to any shareholder as to how to vote with
respect to the Merger. We have relied, without assuming responsibility for the
independent verification of such information, upon the accuracy and completeness
of all of the financial and other information reviewed by us for purposes of
this opinion. We are not experts in the evaluation of loan and lease portfolios
for purposes of assessing the adequacy of the allowances for losses with respect
thereto and have assumed, with your consent, that such allowances for each of
the Company and First Union are in the aggregate adequate to cover all such
losses. In addition, we have not reviewed individual credit files nor have we
made an independent evaluation or appraisal of the assets and liabilities of the
Company or First Union or any of their respective subsidiaries and we have not
been furnished with any such evaluation or appraisal. We also have assumed that
First Union will receive all necessary regulatory approvals without undue delay.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the
Consideration to be received by the holders of Shares pursuant to the Agreement
is fair to such holders.
Very truly yours,
(Signature of Goldman, Sachs & Co. appears here)
GOLDMAN, SACHS & CO.
C-2
<PAGE>
(Logo of Bear Stearns appears here) BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
(212) 272-2000
ATLANTA (bullet) BOSTON
CHICAGO (bullet) DALLAS (bullet) LOS ANGELES
NEW YORK (bullet) SAN FRANCISCO
FRANKFURT (bullet) GENEVA (bullet) HONG KONG
LONDON (bullet) PARIS (bullet) TOKYO
ANNEX D
May 11, 1995
The Board of Directors
American Savings of Florida, F.S.B.
17801 Northwest 2nd Avenue
Miami, Florida 33169
Gentlemen:
We understand that American Savings of Florida, F.S.B. ("American") has
entered into an Agreement and Plan of Merger dated as of December 4, 1994 as
amended as of March 27, 1995 (the "Agreement") with First Union Corporation
("First Union"), whereby American will be acquired by First Union (the
"Transaction"). Pursuant to the Agreement, upon consummation of the Transaction,
each share of American common stock will be converted into the right to receive
$21.00 of First Union common stock on the terms described in the Agreement,
based on the average of the closing prices of First Union common stock for the
ten trading days ending on the day prior to the closing of the Transaction. You
have provided us with a copy of the proxy statement/prospectus in substantially
the form to be sent to the shareholders of American (the "Proxy
Statement/Prospectus"), which includes the Agreement.
We understand that The Enstar Group, Inc. ("Enstar"), the holder of
approximately 48.4% of American's common stock, has reached a separate agreement
to sell to First Union immediately after closing of the Transaction the shares
of First Union common stock received by Enstar for 3,926,422 shares of American
common stock. The purchase price for such First Union shares shall be $21.00 in
cash for that number of First Union shares received in exchange for each
American common share. The purchase will assure the substantial payment of the
allowed claims of certain creditors of Enstar, including American, under
Enstar's Second Amended Plan of Reorganization, as Modified.
You have asked us to render our opinion as to whether the Transaction is
fair, from a financial point of view, to the shareholders of American.
In the course of our analyses for rendering this opinion, we have:
1. reviewed the Proxy Statement/Prospectus;
2. reviewed American's annual reports to shareholders and its annual
reports on Form 10-K for the fiscal years ended December 31, 1990
through 1994 and its announced results for the quarter ended March 31,
1995;
3. reviewed First Union's annual reports to shareholders and annual
reports on Form 10-K for the fiscal years ended December 31, 1991
through 1994 and its announced results for the quarter ended March 31,
1995;
4. met with certain members of American's senior management and its legal
and financial advisors to review and discuss American's financial and
operating position, competition, management, employees, status with the
Office of Thrift Supervision and the Federal Deposit Insurance
Corporation, lending procedures, loan portfolio, deposits and branch
network;
5. met with certain members of American's senior management and its
financial advisors to review and discuss certain operating and
financial information including management's revised business plan,
provided to us by the management of American relating to its business
and prospects ("Management's Business Plan");
6. met with the Chairman of Enstar and Enstar's financial and legal
advisors to discuss the status of legal proceedings and other matters
related to the bankruptcy administration of Enstar;
D-1
<PAGE>
7. reviewed Management's Business Plan, the likelihood of American
achieving the projected results contained therein, and the possible
trading and acquisition valuations for the common shares of American
which could result;
8. reviewed the process used by American's senior management and its
financial advisors to solicit acquisition proposals for American, and
the proposals which were received;
9. met with certain members of First Union's senior management to review
and discuss First Union's financial and operating position and business
prospects;
10. reviewed the historical stock prices and trading volumes of the common
shares of American and First Union;
11. reviewed publicly available financial data and stock market performance
data of publicly traded financial institutions which we deemed
generally comparable to American;
12. reviewed the terms of recent acquisitions of publicly traded
institutions which we deemed generally comparable to the Transaction;
13. reviewed the terms and structure of the Transaction, including the
anticipated tax treatment of the First Union common stock to be
received by American shareholders; and
14. conducted such other studies, analyses, inquiries and investigations as
we deemed appropriate.
In the course of our review, we have relied upon and assumed the accuracy
and completeness of the financial and other information provided to us by
management, including Management's Business Plan. With respect to Management's
Business Plan, we have assumed the projected financial results contained therein
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of American's management as to American's expected
future performance. We have not assumed any responsibility for independent
verification of the information or projections provided to us and we have
further relied upon the assurances of American's management that it is unaware
of any facts that would make the information or projections provided to us
incomplete or misleading. We have considered a variety of factors that could
affect the achievability of the projections contained in Management's Business
Plan and have considered such alternative scenarios as we deemed appropriate. In
arriving at our opinion, we have not performed or obtained any independent
appraisal of the assets of American or First Union. Our opinion is necessarily
based on economic, market and other conditions, and the information made
available to us, as of the date hereof.
Based on the foregoing, it is our opinion that the Transaction is fair,
from a financial point of view, to the shareholders of American.
Very truly yours,
BEAR, STEARNS & CO. INC.
By:
(Signature of Johm M. Fox appears here)
MANAGING DIRECTOR
D-2
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 55-8-50 through 55-8-58 of the NCBCA contain specific provisions
relating to indemnification of directors and officers of North Carolina
corporations. In general, the statute provides that (i) a corporation must
indemnify a director or officer who is wholly successful in his defense of a
proceeding to which he is a party because of his status as such, unless limited
by the articles of incorporation, and (ii) a corporation may indemnify a
director or officer if he is not wholly successful in such defense, if it is
determined as provided in the statue that the director or officer meets a
certain standard of conduct, provided when a director or officer is liable to
the corporation, the corporation may not indemnify him. The statute also permits
a director or officer of a corporation who is a party to a proceeding to apply
to the courts for indemnification, unless the articles of incorporation provide
otherwise, and the court may order indemnification under certain circumstances
set forth in the statute. The statute further provides that a corporation may in
its articles of incorporation or bylaws or by contract or resolution provide
indemnification in addition to that provided by the statute, subject to certain
conditions set forth in the statute.
FUNC's Bylaws provide for the indemnification of FUNC's directors and executive
officers by FUNC against liabilities arising out of his status as such,
excluding any liability relating to activities which were at the time taken
known or believed by such person to be clearly in conflict with the best
interests of FUNC.
FUNC's Articles provide for the elimination of the personal liability of each
director of FUNC to the fullest extent permitted by the provisions of the NCBCA,
as the same may from time to time be in effect.
FUNC maintains directors and officers liability insurance, which provides
coverage of up to $80,000,000, subject to certain deductible amounts. In
general, the policy insures (i) FUNC's directors and officers against loss by
reason of any of their wrongful acts, and/or (ii) FUNC against loss arising from
claims against the directors and officers by reason of their wrongful acts, all
subject to the terms and conditions contained in the policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
(2) The Merger Agreement, including the related Stock Option Agreement. (Incorporated by reference to ANNEX A to the
Prospectus/Proxy Statement included in this Registration Statement.)*
(3)(i) Articles of Incorporation of FUNC, as amended. (Incorporated by reference to Exhibit (4) to FUNC's 1990 First
Quarter Report on Form 10-Q and to Exhibit (99)(a) to FUNC's 1993 First Quarter Report on Form 10-Q.)
(3)(ii) By-laws of FUNC, as amended. (Incorporated by reference to Exhibit (4)(b) to FUNC's Form 8-K dated September 20,
1991.)
(4)(a) Statement of Classification of Shares creating the FUNC Series 1990 Preferred Stock. (Incorporated by reference
to Exhibit (3)(c) to FUNC's Registration Statement No. 33-42865.)
(4)(b) Shareholder Protection Rights Agreement, as amended. (Incorporated by reference to Exhibits (4)(b) to FUNC's
Forms 8-K dated December 18, 1990 and October 20, 1992.)
(4)(c) All instruments defining the rights of holders of long-term debt of FUNC and its subsidiaries. (Not filed
pursuant to (4)(iii) of Item 601(b) of Regulation S-K; to be furnished upon request of the Commission.)
(5) Opinion of Marion A. Cowell, Jr., Esq.**
(8) Tax opinion of Sullivan & Cromwell.
(12) Computation of Ratio of Earnings to Fixed Charges. (Incorporated by reference to Exhibit (12)(a) to FUNC's 1994
Annual Report on Form 10-K.)
(23)(a) Consent of KPMG Peat Marwick LLP.
(23)(b) Consent of KPMG Peat Marwick LLP.
(23)(c) Consent of Marion A. Cowell, Jr., Esq. (Included in Exhibit (5).)
(23)(d) Consent of Sullivan & Cromwell. (Included in Exhibit (8).)
(23)(e) Consent of Goldman Sachs & Co.
(23)(f) Consent of Bear, Stearns & Co. Inc.
(24) Power of Attorney.**
(27) FUNC's Financial Data Schedule. (Incorporated by reference to Exhibit (27) to FUNC's 1994 Annual Report on Form
10-K.)
(99)(a) Form of proxy for the Special Meeting of Stockholders of ASF.
(99)(b) Certain information from ASF's 1994 Annual Report on Form 10-K.**
</TABLE>
* Omitted exhibits to be furnished upon request of the Commission.
** Previously filed.
II-1
<PAGE>
ITEM 22. UNDERTAKINGS.
(a)(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (as amended and the
rules and regulations thereunder, the "Securities Act"), each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (as amended and the rules and regulations
thereunder, the "Exchange Act") (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c)
promulgated pursuant to the Securities Act, the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
(3) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415 promulgated
pursuant to the Securities Act, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(4) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions of this Item 22, or otherwise
(other than insurance), the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act, and is therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement No. 33-58261 on Form S-4
to be signed on its behalf by the undersigned, thereunto, duly authorized, in
the City of Charlotte, State of North Carolina, on May 11, 1995.
FIRST UNION CORPORATION
By: MARION A. COWELL, JR.
MARION A. COWELL, JR.
EXECUTIVE VICE PRESIDENT,
SECRETARY AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement No. 33-58261 on Form S-4 has been signed by the
following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
<S> <C>
*EDWARD E. CRUTCHFIELD Chairman, and Chief Executive Officer and Director
EDWARD E. CRUTCHFIELD
*ROBERT T. ATWOOD Executive Vice President and Chief Financial Officer
ROBERT T. ATWOOD
*JAMES H. HATCH Senior Vice President and Corporate Controller (Principal
Accounting Officer)
JAMES H. HATCH
*G. ALEX BERNHARDT Director
G. ALEX BERNHARDT
*W. WALDO BRADLEY Director
W. WALDO BRADLEY
*ROBERT J. BROWN Director
ROBERT J. BROWN
*ROBERT D. DAVIS Director
ROBERT D. DAVIS
*R. STUART DICKSON Director
R. STUART DICKSON
*B.F. DOLAN Director
B.F. DOLAN
*RODDEY DOWD, SR. Director
RODDEY DOWD, SR.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
<S> <C>
*JOHN R. GEORGIUS Director
JOHN R. GEORGIUS
*WILLIAM N. GOODWIN, JR. Director
WILLIAM N. GOODWIN, JR.
*BRENTON S. HALSEY Director
BRENTON S. HALSEY
*HOWARD H. HAWORTH Director
HOWARD H. HAWORTH
*TORRENCE E. HEMBY, JR. Director
TORRENCE E. HEMBY, JR.
Director
LEONARD G. HERRING
*JACK A. LAUGHERY Director
JACK A. LAUGHERY
*MAX LENNON Director
MAX LENNON
*RADFORD D. LOVETT Director
RADFORD D. LOVETT
*HENRY D. PERRY, JR. Director
HENRY D. PERRY, JR.
*RANDOLPH N. REYNOLDS Director
RANDOLPH N. REYNOLDS
*RUTH G. SHAW Director
RUTH G. SHAW
*LANTY L. SMITH Director
LANTY L. SMITH
Director
DEWEY L. TROGDON
Director
JOHN D. UIBLE
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
<S> <C>
*B. J. WALKER Director
B. J. WALKER
*KENNETH G. YOUNGER Director
KENNETH G. YOUNGER
*By Marion A. Cowell, Jr., Attorney-in-Fact
MARION A. COWELL, JR.
MARION A. COWELL, JR.
</TABLE>
Date: May 11, 1995
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
<S> <C> <C>
(2) The Merger Agreement, including the related Stock Incorporated by reference to ANNEX A to the
Option Agreement. Prospectus/Proxy Statement included in this
Registration Statement.*
(3)(i) Articles of Incorporation of FUNC, as amended. Incorporated by reference to Exhibit (4) to FUNC's
1990 First Quarter Report on Form 10-Q and to Exhibit
(99)(a) to FUNC's 1993 First Quarter Report on Form
10-Q.
(3)(ii) By-laws of FUNC, as amended. Incorporated by reference to Exhibit (4)(b) to FUNC's
Form 8-K dated September 20, 1991.
(4)(a) Statement of Classification of Shares creating the Incorporated by reference to Exhibit (3)(c) to FUNC's
FUNC Series 1990 Preferred Stock. Registration Statement No. 33-42865.
(4)(b) Shareholder Protection Rights Agreement, as amended. Incorporated by reference to Exhibits (4)(b) to FUNC's
Forms 8-K dated December 18, 1990 and October 20,
1992.
(4)(c) All instruments defining the rights of holders of Not filed pursuant to (4)(iii) of Item 601(b) of
long-term debt of FUNC and its subsidiaries. Regulation S-K; to be furnished upon request of the
Commission.
(5) Opinion of Marion A. Cowell, Jr., Esq. **
(8) Tax opinion of Sullivan & Cromwell. Filed herewith.
(12) Computation of Ratio of Earnings to Fixed Shares. Incorporated by reference to Exhibit (12)(a) to FUNC's
1994 Annual Report on Form 10-K.
(23)(a) Consent of KPMG Peat Marwick LLP. Filed herewith.
(23)(b) Consent of KPMG Peat Marwick LLP. Filed herewith.
(23)(c) Consent of Marion A. Cowell, Jr., Esq. Included in Exhibit (5).
(23)(d) Consent of Sullivan & Cromwell. Included in Exhibit (8).
(23)(e) Consent of Goldman, Sachs & Co. Filed herewith.
(23)(f) Consent of Bears, Stearns & Co. Inc. Filed herewith.
(24) Power of Attorney. **
(27) FUNC's Financial Data Schedule. Incorporated by reference to Exhibit (27) to FUNC's
1994 Annual Report on Form 10-K.
(99)(a) Form of proxy for the Special Meeting of Stockholders Filed herewith.
of ASF.
(99)(b) Certain information from ASF's 1994 Annual Report on **
Form 10-K.
</TABLE>
* Omitted exhibits to be furnished upon request of the Commission.
** Previously filed.
<PAGE>
EXHIBIT (8)
May 11, 1995
FIRST UNION CORPORATION,
One First Union Center,
Charlotte, North Carolina 28288-0013
AMERICAN SAVINGS OF FLORIDA, F.S.B.,
17801 N.W. Second Avenue,
Miami, Florida 33169-5089
Ladies and Gentlemen:
We have acted as special counsel to First Union Corporation, a corporation
organized under the laws of North Carolina ("First Union"), in connection with
the planned merger (the "Merger") of American Savings of Florida, F.S.B., a
stock federal savings bank organized under the laws of the United States ("ASF")
with and into a subsidiary national bank of First Union (the "Subsidiary"),
pursuant to the Agreement and Plan of Merger, dated as of the 4th day of
December, 1994, by and between ASF and First Union (the "Merger Agreement").
Capitalized terms used but not defined herein shall have the meanings specified
in the Proxy Statement-Prospectus pertaining to the Merger.
We have assumed with your consent that:
(a) the Merger will be effected in accordance with the Merger Agreement,
(b) The representations contained in the letters of representation from ASF
and First Union to us dated May 8, 1995 and April 20, 1995, respectively,
will be true on the Effective Date, and
(c) the price of FUNC Shares as of the Effective Date will not be less than
80 percent of the FUNC Average Closing Price.
On the basis of the foregoing, and our consideration of such other matters
of fact and law as we have deemed necessary or appropriate, it is our
opinion, under presently applicable federal income tax law, that the Merger will
constitute a reorganization under Section 368 of the Internal Revenue Code of
1986, as amended, and that
(i) no gain or loss will be recognized for federal income tax purposes
by ASF stockholders upon the exchange in the Merger of shares of ASF Common
Stock solely for FUNC Shares (except with respect to cash received in lieu
of a fractional share interest in FUNC Shares);
(ii) the basis of FUNC Shares received in the Merger by ASF
stockholders (including the basis of any fractional share interest in FUNC
Shares) will be the same as the basis of the shares of ASF Common Stock
surrendered in exchange therefor;
(iii) the holding period of FUNC Shares received in the Merger by an
ASF stockholder (including the holding period of any fractional share
interest in FUNC Shares) will include the holding period during which the
shares of ASF Common Stock surrendered in exchange therefor were held by
the ASF stockholder, provided such shares of ASF Common Stock were held as
capital assets; and
(iv) cash received by a holder of ASF Common Stock in lieu of a
fractional share interest in FUNC Shares will be treated as received in
exchange for such fractional share interest and, provided the fractional
share would have constituted a capital asset in the hands of such holder,
the holder should in general recognize capital gain or loss in an amount
equal to the difference between the amount of cash received and the portion
of the adjusted tax basis in the ASF Common Stock allocable to the
fractional share interest.
The tax consequences described above may not be applicable to an ASF
stockholder who acquired the stock of ASF pursuant to the exercise of an
employee stock option or right or otherwise as compensation, or to an ASF
stockholder that holds its ASF Common Stock as part of a "straddle" or
"conversion transaction" or that is an insurance company, securities dealer,
financial institution or foreign person.
<PAGE>
We hereby consent to the reference to us under the heading "The
Merger -- Certain Federal Income Tax Consequences" in the Proxy
Statement-Prospectus pertaining to the Merger and to the filing of this opinion
as an exhibit to the related Registration Statement on Form S-4 filed with the
Securities and Exchange Commission. In giving this consent, we do not hereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
SULLIVAN & CROMWELL
<PAGE>
EXHIBIT (23)(A)
CONSENT OF KPMG PEAT MARWICK LLP
BOARD OF DIRECTORS
FIRST UNION CORPORATION
We consent to the incorporation by reference in this Registration Statement
on Form S-4 of First Union Corporation of our report on the consolidated
financial statements included in the 1994 Annual Report to Stockholders which is
incorporated by reference in the 1994 Form 10-K of First Union Corporation and
to the reference to our firm under the heading "Experts" in the Proxy
Statement/Prospectus. Our report refers to a change in the method of accounting
for investments in 1994.
KPMG PEAT MARWICK LLP
Charlotte, North Carolina
May 11, 1995
<PAGE>
EXHIBIT (23)(B)
CONSENT OF KPMG PEAT MARWICK LLP
THE BOARD OF DIRECTORS
AMERICAN SAVINGS OF FLORIDA, F.S.B.
We consent to the use or our report included in the Annual Report on Form
10-K of American Savings of Florida, F.S.B., as amended by Form 10-K/A No. 1,
dated April 28, 1995, and incorporated herein by reference and to the reference
to our firm under the heading "Experts" in the Proxy Statement/Prospectus. Our
report refers to changes in the methods of accounting for investments and income
taxes in 1993.
KPMG PEAT MARWICK LLP
Miami, Florida
May 11, 1995
<PAGE>
Goldman, Sachs & Co 85 Broad Street New York, New York 10004
Tel: 212-902-1000
(Goldman Sachs logo appears here)
EXHIBIT (23) (E)
May 11, 1995
BOARD OF DIRECTORS
AMERICAN SAVINGS OF FLORIDA, F.S.B.
17801 Northwest Second Avenue
Miami, Florida 33169
Re: Registration Statement (File No. 33-58261) of
First Union Corporation
Gentlemen and Mesdames:
Reference is made to our opinion letter dated May 11, 1995 with respect to
the fairness to the holders of the outstanding shares of Common Stock, par value
$0.01 per share (the "Shares"), of American Savings of Florida, F.S.B. of the
Consideration to be received for the Shares pursuant to the Agreement and Plan
of Merger dated as of December 4, 1994, as amended as of March 27, 1995, between
First Union Corporation and American Savings of Florida, F.S.B.
The foregoing opinion letter is solely for the information and assistance
of the Board of Directors of American Savings of Florida, F.S.B. in connection
with its consideration of the transaction contemplated therein and is not to be
used, circulated, quoted or otherwise referred to for any other purpose, nor is
it to be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in
accordance with our prior written consent.
In that regard, we hereby consent to the reference to the opinion of our
Firm under the caption "Opinions of Financial Advisors" and to the inclusion of
the foregoing opinion in the Proxy Statement/Prospectus included in the
above-mentioned registration statement, as amended. In giving such consent, we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
(Signature of Goldman, Sachs & Co.)
GOLDMAN, SACHS & CO.
<PAGE>
EXHIBIT (23)(F)
CONSENT OF BEAR, STEARNS & CO. INC.
We hereby consent to the inclusion of our opinion dated May 10, 1995, as
ANNEX D to the Proxy Statement/Prospectus filed as part of the Registration
Statement on Form S-4, as amended (File No. 33-58261) of First Union Corporation
and to the references to our firm as Financial Advisor to the Special Advisory
Committee of American Savings of Florida, F.S.B. and to our opinion contained in
said Proxy Statement/Prospectus. In giving such consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and Regulations of the
Securities and Exchange Commission.
BEAR, STEARNS & CO. INC.
By: JOHN M. FOX
JOHN M. FOX
MANAGING DIRECTOR
May 10, 1995
<PAGE>
EXHIBIT (99)(A)
FORM OF PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS OF ASF
<PAGE>
EXHIBIT 99(A)
FORM OF PROXY
REVOCABLE PROXY
AMERICAN SAVINGS OF FLORIDA, F.S.B.
SPECIAL AND ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 1995
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Stephen D. Taylor and Alan B. Goldstein, or
either of them, as proxies, each with full power of substitution, to act as
attorneys and proxies for the undersigned, to vote all shares of Common Stock of
American Savings of Florida, F.S.B. ("American Savings") which the undersigned
is entitled to vote at the Special and Annual Meeting of Stockholders (the
"Meeting"), to be held at the Hotel Inter-Continental Miami (Theatre Room), 100
Chopin Plaza, Miami, Florida on Wednesday, June 14, 1995, at 10:00 a.m., Miami
time, and at any and all adjournments thereof, as stated on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED "FOR" ITEMS 1, 2 AND 4 AND "FOR" ALL NOMINEES LISTED IN
ITEM 3. PURSUANT TO AMERICAN SAVINGS' BYLAWS, IF ANY OTHER BUSINESS IS PRESENTED
AT THE MEETING OR ANY ADJOURNMENT THEREOF, THIS PROXY WILL BE VOTED BY THE
ABOVE-NAMED PROXIES AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS. IF NO
DETERMINATION IS MADE, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR OWN
JUDGMENT. THE FOUR PROPOSALS SET FORTH ON THE REVERSE SIDE OF THIS PROXY HAVE
BEEN PROPOSED FOR CONSIDERATION BY AMERICAN SAVINGS. THE BOARD OF DIRECTORS
CURRENTLY KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. IF THE
MERGER AGREEMENT BETWEEN AMERICAN SAVINGS AND FIRST UNION CORPORATION IS
TERMINATED PRIOR TO THE MEETING, THIS PROXY WILL BE VOTED "FOR" ALL NOMINEES
LISTED IN ITEM 3 AND "FOR" ITEM 4.
A stockholder may revoke a proxy before it is exercised at the Meeting by
notifying the Secretary of American Savings in writing of the revocation, by
completing, signing and delivering to the Secretary a later-dated proxy or by
attending the Meeting and voting in person, with respect to the same proposal(s)
as referenced in the proxy to be revoked. Attendance at the Meeting without
further action will not automatically revoke a proxy.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example.
1. To approve the Agreement and Plan of Merger between American Savings and
First Union Corporation, dated as of December 4, 1994, as amended as of
March 27, 1995, and the merger of American Savings into a subsidiary
national bank of First Union Corporation. [ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To adjourn the Special and Annual Meeting to another time and/or place in
the event that there are not sufficient votes at the time of the Special and
Annual Meeting to approve the merger and the merger agreement, for the
purpose of soliciting additional votes in favor of the merger and the merger
agreement, the election of each of the nine nominees for director and the
ratification of KPMG Peat Marwick LLP as independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To elect as directors of American Savings each of the following nominees:
Erwin Allen, T. Wayne Davis, William H. Dukelow, Nimrod T. Frazer, Barbara W.
Gothard, Charles Daniel Kimbrel, Deirdre Y. Russell, Donald T. Senterfitt,
and Stephen D. Taylor (except as written contrary below).[ ] FOR [ ] WITHHELD
For, except vote withheld from the following nominee(s):
4. To ratify the appointment of KPMG Peat Marwick LLP as independent auditors
for the fiscal year ending December 31, 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
OTHER BUSINESS
The proxies are authorized to vote, in the manner described on the front of this
proxy, upon such other business as may come before the Special and Annual
Meeting and any adjournment thereof.
Please sign exactly as your name appears on this card. When signing as
attorney-in-fact, personal or legal representative, executor, administrator,
trustee or guardian, please give your full title. If more than one trustee or
joint owner, all should sign. If a corporation, partnership or other entity,
please sign in full company name by an authorized person.
[ ] Mark here for address change and note below.
Signature Date:
Signature Date:
PLEASE COMPLETE, DATE, SIGN, AND MAIL
THIS PROXY PROMPTLY IN THE ENCLOSED
ADDRESSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
