SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
United Financial Corporation of South Carolina, Inc.
(Name of Issuer)
Common Stock, $0.10 par value per share
(Title of Class of Securities)
910315100
(CUSIP Number)
Marion A. Cowell, Jr.
One First Union Center
Charlotte, North Carolina 28288-0013
(704) 374-6828
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
February 22, 1995
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with this statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five
percent of the class of securities described in Item 1; and (2) has
filed no amendment subsequent thereto reporting beneficial ownership of
five percent or less of such class. See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
Page 1 of 8
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The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
CUSIP No.: 910315100
1. Name of Reporting Person: First Union Corporation
S.S. or I.R.S. Identification No. of Above Person: I.R.S.
Identification No. 56-0898180
2. Check the Appropriate Box if a Member of a Group (See
Instructions):
a. [ ] b. [ ]
3. SEC Use Only
4. Source of Funds (see Instructions): WC; 00
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: North Carolina
Number of 7. Sole Voting Power: 1,100,000*
Shares Bene-
ficially 8. Shared Voting Power:
Owned by
Each Report- 9. Sole Dispositive Power: 1,100,000*
ing Person
With 10. Shared Dispositive Power:
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,100,000*
12. Check Box if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions): [ ]
Page 2 of 8
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13. Percent of Class Represented by Amount in Row 11: 19.0*
14. Type of Reporting Person (See Instructions): HC; CO
* The shares indicated are purchasable by First Union
Corporation ("FUNC") upon exercise of an option issued to FUNC
on February 22, 1995, and described in Item 4 of this
report. Prior to the exercise of the option, FUNC is
not entitled to any rights as a shareholder of United
Financial Corporation of South Carolina, Inc. ("United") as
to the shares covered by the option. The option may only
be exercised upon the happening of certain events referred
to in Item 4, none of which has occurred as of the date
hereof. FUNC expressly disclaims beneficial ownership of
any of the shares of common stock of United which are
purchasable by FUNC upon exercise of the option. The
percentage indicated represents the percentage of the total
outstanding shares of common stock of United as of February
21, 1995.
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Item 1. Security and Issuer.
This statement relates to the common stock of United Financial
Corporation of South Carolina, Inc. ("United"), $0.10 par value per
share ("United Common Stock"). United is a South Carolina corporation
whose principal executive offices are located at 425 Main Street,
Greenwood, South Carolina 29646. United is a savings and loan holding
company under the Home Owners' Loan Act of 1933.
Item 2. Identity and Background.
This statement is being filed by First Union Corporation
("FUNC"), a North Carolina corporation whose principal executive offices
are located at One First Union Center, Charlotte, North Carolina 28288-
0013. FUNC is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended.
To the best of FUNC's knowledge, during the last five years,
neither FUNC nor any of its directors or executive officers has been
convicted in any criminal proceedings (excluding traffic violations or
similar misdemeanors) nor has FUNC or any of its directors or executive
officers been a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction resulting in a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
Attached hereto is an appendix to Item 2 setting forth certain
additional information concerning the directors and executive officers
of FUNC.
Item 3. Source and Amount of Funds or Other Consideration.
It is presently anticipated that purchases of shares of United
Common Stock as described in Item 4 would be made with funds obtained
from FUNC's working capital and funds available for investment.
Item 4. Purpose of Transaction.
Pursuant to an Agreement and Plan of Mergers (the "Merger
Agreement"), dated as of February 21, 1995, among United, FUNC and
certain of their subsidiaries, and in consideration thereof, United
issued to FUNC an option (the "Option") to purchase, under certain
conditions, up to 1,100,000 shares of United Common Stock at a purchase
price per share of $19.00 (the "Purchase Price"), subject to adjustment
pursuant to anti-dilution provisions.
The Option was issued to FUNC pursuant to a Stock Option
Agreement, dated as of February 22, 1995, between FUNC and United (the
"Option Agreement"), which was an inducement to and a
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condition of
FUNC's willingness to execute the Merger Agreement. The Merger
Agreement provides, among other things, for the merger of United into a
wholly-owned subsidiary of FUNC (the "Merger"). Upon consummation of
the Merger, which is subject to the approval of United stockholders,
regulatory approvals, and the satisfaction or waiver of various other
terms and conditions, United stockholders would receive 0.458 shares of
FUNC common stock, $3.33 1/3 par value per share ("FUNC Common Stock"),
for each share of United Common Stock if the price of FUNC Common Stock
price is between $42.75 and $46.75 per share. If the price of FUNC
Common Stock price is $42.75 or below , United stockholders would
receive $19.58 of FUNC Common Stock for each share of United Common
Stock. If the price of FUNC Common Stock is $46.75 or above, United
stockholders would receive $21.41 of FUNC Common Stock for each share of
United Common Stock. The calculation of the price of FUNC Common Stock
will be based on the average closing price of FUNC Common Stock on the
New York Stock Exchange for the ten trading days prior to the effective
date of the Merger.
If not in material breach of the Option Agreement or the Merger
Agreement, 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:
(a) United taking certain actions (each an "Acquisition
Transaction"), including authorizing, recommending or
entering into an agreement with any third party to effect
(i) a merger, consolidation or similar transaction involving
United or any of its significant subsidiaries, (ii) the
sale, lease, exchange or other disposition of 20% or more of
the consolidated assets of United and its subsidiaries, or
(iii) the issuance, sale or other disposition of 20% or more
of the voting securities of United or any of its significant
subsidiaries (other than as a result of the exercise of
outstanding options or the conversion of outstanding
convertible securities of United); or
(b) any third party acquires or has the right to acquire 20% or
more of the outstanding shares of United Common Stock;
provided, the Option will terminate upon the earliest to occur of
certain events, including:
(a) consummation of the Merger;
(b) termination of the Merger Agreement by United (a "United
Termination") prior to the happening (subject to certain
limitations) of a Purchase Event or certain events (each a
"Preliminary Purchase Event"), including:
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(i) commencement by any third party of a tender or exchange
offer to purchase 20% or more of the outstanding shares
of United Common Stock;
(ii) failure of the stockholders of United to approve the
Merger Agreement after pubic announcement that a third
party:
(x) proposes to engage in an Acquisition Transaction;
(y) commences a tender offer to purchase 20% or more
of the outstanding shares of United 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;
(iii) any third party proposes to United or its
stockholders, publicly or in any writing that
becomes publicly disclosed, to engage in an
Acquisition Transaction;
(iv) after a proposal by a third party to United or its
stockholders to engage in an Acquisition Transaction,
BFL breaches any covenant or obligation in the Merger
Agreement which would entitle FUNC to terminate the
Merger Agreement; or
(v) any third party, other than in connection with a
transaction which FUNC has consented to in writing,
files an application with any federal or state bank
regulatory authority for approval to engage in an
Acquisition Transaction;
(c) 18 months after termination of the Merger Agreement by
United other than pursuant to a United Termination; and
(d) 18 months after termination of the Merger Agreement by FUNC.
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 United (the
"Substitute Option"). In addition, the Option Agreement grants certain
registration rights ("Registration Rights") to FUNC with respect to the
Option Shares. The terms of such Substitute Option and Registration
Rights are set forth in the Option Agreement.
Page 6 of 8
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A copy of the form of the Merger Agreement, including the Option
Agreement, is attached hereto as Exhibit 1, and the foregoing summary,
as well as the other information contained in this report, is qualified
in its entirety by reference thereto.
Item 5. Interest in Securities of the Issuer.
The 1,100,000 shares of United Common Stock which are
purchasable by FUNC upon exercise of the Option are equal to
approximately 19.0% of United Common Stock, based on the 5,792,528
shares of United Common Stock issued and outstanding on February 21,
1995.
FUNC expressly disclaims any beneficial ownership of the
1,100,000 shares of United Common Stock which are purchasable by FUNC
upon exercise of the Option because the Option is exercisable only in
the circumstances referred to in Item 4 above, none of which has
occurred as of this date. If the Option were exercised, FUNC would have
sole right to vote or to dispose of the shares of United Common Stock
issued as a result of such exercise.
The Option contains anti-dilution provisions which provide that
the number of shares of United Common Stock issuable upon exercise of
the Option and the Purchase Price will be adjusted upon the
happening of certain events, including the payment of a stock dividend
or other distribution in United Common Stock or the subdivision or
reclassification of United Common Stock, as set forth in the Option
Agreement.
Other than as set forth in this Item 5, to the best of FUNC's
knowledge (i) neither FUNC nor any subsidiary or affiliate of FUNC
or any of FUNC's executive officers or directors, beneficially owns any
shares of United Common Stock, and (ii) there have been no transactions
in the shares of United Common Stock effected during the past 60 days by
FUNC, nor to the best of FUNC's knowledge, by any subsidiary or
affiliate of FUNC or any of FUNC's executive officers or directors.
No other person is known by FUNC to have the right to receive or
the power to direct the receipt of dividends from, or the proceeds from
the sale of, the United Common Stock obtainable by FUNC upon exercise of
the Option.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities to the Issuer.
Other than the Merger Agreement, including Exhibit A thereto, a
copy of the form of which (excluding the Schedules and certain Exhibits
referred to in the Merger Agreement) is attached hereto as Exhibit 1, to
the best of FUNC's knowledge there are at present no
Page 7 of 8
<PAGE>
contracts,
arrangements, understandings or relationships (legal or otherwise) among
the persons named in Item 2 above and between such persons and any
person with respect to any securities of United. Exhibit A to the
Merger Agreement contains the form of the Option Agreement.
Item 7. Material to be Filed as Exhibits.
A copy of the form of the Merger Agreement, including the Option
Agreement, is attached hereto as Exhibit 1.
Signature.
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
FIRST UNION CORPORATION
Date: March 3, 1995 /s/ Kent S. Hathaway
Senior Vice President and
Deputy General Counsel
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Annex A
Appendix to Item 2
Principal
Position with employment and
Name and residence First Union principal business
or business address* Corporation of employer
G. Alex Bernhardt Director President and Chief
Bernhardt Furniture Executive Officer,
Furniture Company Bernhardt Furniture
P.O. Box 740 Company, furniture
Lenoir, NC 28645 manufacturing
W. Waldo Bradley Director Chairman, Bradley
Bradley Plywood Corp. Plywood Corporation,
P.O. Box 1408 building materials
Savannah, GA 31402-1408
Robert J. Brown Director Chairman, President
B&C Associates, Inc. and Chief Executive
P.O. Box 2636 Officer, B&C
High Point, NC 27261-2636 Associates, Inc., a
public relations and
marketing research
firm
Edward E. Crutchfield, Executive Chairman,
Jr. Officer and and Chief Executive
First Union Corporation Director Officer, First Union
One First Union Center Corporation
Charlotte, NC 28288
Robert D. Davis Director Chairman, DDI, Inc.,
DDI, Inc. investments
P.O. Box 2088
Jacksonville, FL 32203-2088
R. Stuart Dickson Director Chairman of
Ruddick Corporation Executive Committee,
Two First Union Center Ruddick Corporation,
Suite 2000 a diversified
Charlotte, NC 28282 holding company
B.F. Dolan Director Investor
Two First Union Center
Suite 1990
Charlotte, NC 28282
A-1
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Principal
Position with employment and
Name and residence First Union principal business
or business address* Corporation of employer
Roddey Dowd, Sr. Director Chairman, Charlotte
Charlotte Pipe & Pipe & Foundry
Foundry Company Company,
P.O. Box 35430 manufacturer of pipe
Charlotte, NC 28235 and fittings
John R. Georgius Executive President, First
First Union Corporation Officer and Union Corporation
One First Union Center Director
Charlotte, NC 28288-0003
William H. Goodwin, Jr. Director Chairman, AMF
AMF Companies Companies a
901 East Cary Street manufacturer of
Suite 1400 sports and other
Richmond, VA 23219 equipment
Brenton S. Halsey Director Chairman Emeritus,
James River Corporation James River
P.O. Box 2218 Corporation, textile
Richmond, VA 23217 manufacturing
Howard H. Haworth Director President, The
The Haworth Group Haworth Group,
P.O. Box 15369 investments
Charlotte, NC 28211
Torrence E. Hemby, Jr. Director President, Beverly
Beverly Crest Corp. Crest Corporation,
2633 Richardson real estate
Charlotte, NC 28211 development
Leonard G. Herring Director President and Chief
Lowe's Companies, Inc. Executive Officer,
P.O. Box 1111 Lowe's Companies,
North Wilkesboro, NC 28656 Inc., building and
related products retailer
Jack A. Laughery Director Chairman, The Bagel
The Bagel Group, Inc. Group, Inc., a
800 Tiffany Boulevard restaurant developer
Suite 305
Rocky Mount, NC 27804
A-2
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Principal
Position with employment and
Name and residence First Union principal business
or business address* Corporation of employer
Max Lennon Director President and Chief
Eastern Foods, Inc. Executive Officer,
1000 Naturally Fresh Eastern Foods, Inc.,
Blvd. a food manufacturer
Atlanta, Georgia, 30348 and distributor
Radford D. Lovett Director Chairman, Commodores
Commodores Point Terminal Point Terminal
Corporation Corporation, marine
P.O. Box 4069 terminal operator
Jacksonville, FL 32201
Henry D. Perry Director Retired Physician
12240 N.W. 8th Street
Plantation, FL 33325
Randolph N. Reynolds Director Vice Chairman
Reynolds Metals Company Reynolds Metals
P.O. Box 27002 Company, an
Richmond, VA 23261 aluminum
manufacturer
Ruth G. Shaw Director Senior Vice
Duke Power Company President, Corporate 422 S.
Church Street Resources, and Chief
PB04G Administrative Charlotte,
NC 28242-0001 Officer, Duke Power
Company, an
investor-owned
electric utility
Lanty L. Smith Director Chairman and Chief
Precision Fabrics Executive Officer,
Group, Inc. Precision Fabrics
301 North Elm Street Group, Inc.,
Greensboro, NC 27401 textile products
manufacturer
Dewey L. Trogdon Director Chairman, Cone Mills
P.O. Box 1477 Corporation, textile
Banner Elk, NC 28604 manufacturing
John D. Uible Director Investor
225 Water Street
Suite 840
Jacksonville, FL 32202
A-3
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Principal
Position with employment and
Name and residence First Union principal business
or business address* Corporation of employer
B.J. Walker Executive Officer Vice Chairman,
225 Water Street and Director First Union
Jacksonville, Fl 32202 Corporation
Kenneth G. Younger Director Transportation
3639 Country Club Drive Consultant
Gastonia, NC 28054
Marion A. Cowell, Jr. Executive Executive Vice
First Union Corporation Officer President,
One First Union Center Secretary and
Charlotte, NC 28288 General Counsel,
First Union
Corporation
Robert T. Atwood Executive Executive Vice
First Union Corporation Officer President and
One First Union Center Chief Financial
Charlotte, NC 28288 Officer, First
Union Corporation
*All of the directors and executive officers are citizens of the
United States.
A-4
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AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF MERGERS, dated as of the 21st day of February,
1995 (this "Plan"), by and among UNITED FINANCIAL CORPORATION OF SOUTH
CAROLINA, INC. (the "Company"), UNITED SAVINGS BANK, FSB ("United"), HOME
FEDERAL SAVINGS BANK OF SOUTH CAROLINA ("Home Federal" and together with
United, jointly and severally, the "Banks"), FIRST UNION CORPORATION
("First Union"), FIRST UNION CORPORATION OF SOUTH CAROLINA ("FUNC-SC") and
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA ("FUNB-SC").
RECITALS:
(A) The Company. The Company is a corporation duly organized and
existing in good standing under the laws of the State of South Carolina,
with its principal executive offices located in Greenwood, South Carolina.
The Company is a registered savings and loan holding company under the Home
Owners' Loan Act of 1933, as amended ("HOLA"). As of the date hereof, the
Company has 8,000,000 authorized shares of common stock, each of $0.10 par
value ("Company Common Stock"), and 2,000,000 authorized shares of
preferred stock ("Company Preferred Stock") (no other class of capital
stock being authorized), of which 5,792,528 shares of Company Common Stock
(excluding 930,102 treasury shares) and no shares of Company Preferred
Stock, are issued and outstanding.
(B) United. United is a federal stock savings bank duly organized
and existing in good standing under the laws of the United States, with its
principal executive offices located in Greenwood, South Carolina. As of
the date hereof, United has 40,000,000 authorized shares of common stock,
each of $1.00 par value ("United Common Stock"),and 10,000,000 authorized
shares of serial preferred stock ("United Preferred Stock")(no other class
of capital stock being authorized), of which 2,034,285 shares of United
Common Stock and no shares of United Preferred Stock are issued and
outstanding. All of the issued and outstanding shares of United Common
Stock are owned by the Company. As of December 31, 1994, United had
capital of $36,154,743, divided into common stock of $2,034,285, surplus of
$14,833,095 and undivided profits, including capital reserves, of
$19,287,363, and net unrealized gain (loss) on investment securities of
$(2,114,304).
(C) Home Federal. Home Federal is a federal stock savings bank duly
organized and existing in good standing under the laws of the United
States, with its principal executive offices located in Rock Hill, South
Carolina. As of the date hereof, Home Federal has 40,000,000 authorized
shares of common stock, each of $1.00 par value ("Home Federal Common
Stock"), and 10,000,000 authorized shares of serial preferred stock ("Home
Federal Preferred Stock") (no other class of capital stock being
<PAGE>
authorized), of which 206,659 shares of Home Federal Common Stock and no
shares of Home Federal Preferred Stock are issued and outstanding. All of
the issued and outstanding shares of Home Federal Common Stock are owned by
the Company. As of December 31, 1994, Home Federal had capital of
$22,909,931, divided into common stock of $206,659, surplus of $8,433,341
and undivided profits, including capital reserves, of $14,269,931 and net
unrealized, gain (loss) on investment securities of $(395,302).
(D) First Union. First Union is a corporation duly organized and
existing in good standing under the laws of the
State of North Carolina, with its principal executive offices located in
Charlotte, North Carolina. First Union is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended. As of the
date hereof, First Union has 750,000,000 authorized shares of common stock,
each of $3.33 1/3 par value (together with the rights ("First Union
Rights") issued pursuant to a Shareholder Protection Rights Agreement,
dated December 18, 1990 (as amended, the "First Union Rights Agreement"))
attached thereto, "First Union Common Stock"), 40,000,000 authorized shares
of Class A Preferred Stock, no-par value ("First Union Class A Preferred
Stock"), and 10,000,000 authorized shares of Preferred Stock, no-par value
("First Union Preferred Stock") (no other class of capital stock being
authorized), of which 173,902,909 shares of First Union Common Stock, no
shares of First Union Class A Preferred Stock and 6,318,350 shares of
Series 1990 Cumulative Perpetual Adjustable Rate Preferred Stock,
constituting a single series of First Union Preferred Stock which has been
called for redemption on March 31, 1995, were issued and outstanding as of
January 31, 1995.
(E) FUNC-SC. FUNC-SC is a corporation duly organized and existing in
good standing under the laws of the State of South Carolina, with its
principal executive offices located in Greenville, South Carolina. As of
the date hereof, FUNC-SC has 100,000 authorized shares of common stock,
each of $1.00 par value ("FUNC-SC Common Stock") (no other class of capital
stock being authorized), of which 100 shares of FUNC-SC Common Stock are
issued and outstanding and owned by First Union.
(F) FUNB-SC. FUNB-SC is a national banking association duly
organized and existing under the laws of the United States, with its
principal executive offices located in Greenville, South Carolina. As of
the date hereof, FUNB-SC has 2,500,000 authorized shares of common stock,
each of $5.00 par value ("FUNB-SC Common Stock") (no other class of capital
stock being authorized), of which 915,000 shares are issued and outstanding
and owned by FUNC-SC (other than directors' qualifying shares). As of
December 31, 1994, FUNB-SC had capital of $127,990,000, divided into common
stock of $4,575,000, surplus of $73,795,000, undivided profits, including
capital reserves, of $54,674,000,
2
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and net unrealized holding gains (losses)
on available for sale securities of ($5,054,000).
(G) Stock Option Agreement. The Company agrees, prior to 8:00 a.m.
on the day following the execution and delivery of this Plan, as a
condition and inducement to First Union's, FUNC-SC's and FUNB-SC's
willingness to enter into this Plan, to enter
into a Stock Option Agreement (the "Stock Option Agreement") with First
Union in the form attached hereto as Exhibit A, pursuant to which the
Company will grant to First Union an option to purchase, under certain
circumstances, shares of Company Common Stock.
(H) Rights, Etc. Except as Previously Disclosed (as hereinafter
defined)in Schedule 4.01(C), there are no shares of capital stock of the
Company or the Banks authorized and reserved for issuance, neither the
Company nor either Bank has any Rights (as defined below) issued or
outstanding and neither the Company nor either Bank has any commitment to
authorize, issue or sell any such shares or any Rights, except (i) pursuant
to this Plan, or (ii) the Stock Option Agreement. The terms "Rights" means
securities or obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire, or any options, calls or
commitments relating to, shares of capital stock (and shall include stock
appreciation rights). There are no preemptive rights in respect of the
Company Common Stock.
(I) Approvals. The Board of Directors of each of the Company,
United, Home Federal, First Union, FUNC-SC and FUNB-SC has approved, at
meetings of each of such Boards of Directors, this Plan and (in the case of
the Company and First Union) the Stock Option Agreement and has authorized
the execution hereof and thereof in counterparts.
(J) Other. It is the intention of the parties to this Plan that the
Mergers (as hereinafter defined) shall include the right of FUNC-SC to
acquire the assets and assume the liabilities of the Company Subsidiaries
(as hereinafter defined) and to assign such right to any corporation which
FUNC-SC controls. Pursuant to the foregoing and under the authority of
Revenue Rulings 64-73 and 70-224, FUNC-SC may assign its right to acquire
the assets and assume the liabilities of the Company Subsidiaries to FUNB-
SC, and may also direct each such Company Subsidiary to transfer all of its
assets and liabilities to FUNB-SC on the day following the Effective Date
(as hereinafter defined), or at any time thereafter, including by means of
a statutory merger.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Plan and prescribe the terms and conditions
thereof and the manner and basis of carrying it into effect, which shall be
as follows:
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I. THE MERGERS.
1.01. The Corporate Merger. On the Effective Date:
(A) The Continuing Corporation. The Company shall merge
with and into FUNC-SC (the "Corporate Merger"), the separate existence
of the Company shall cease and FUNC-SC (the "Continuing Corporation")
shall survive and the name of the Continuing Corporation shall be
"First Union Corporation of South Carolina."
(B) Rights, Etc. The Continuing Corporation shall
thereupon and thereafter possess all of the rights, privileges,
immunities and franchises, of a public as well as of a private nature,
of each of the merging corporations; and all property, real, personal
and mixed, and all debts due on whatever account, and all other choses
in action, and all and every other interest, of or belonging to or due
to each of the corporations so merged, shall be deemed to be vested in
the Continuing Corporation without further act or deed; and the title
to any real estate or any interest therein, vested in each of such
corporations, shall not revert or be in any way impaired by reason of
the Corporate Merger.
(C) Liabilities. The Continuing Corporation shall
thenceforth be responsible and liable for all the liabilities,
obligations and penalties of each of the corporations so merged, in
accordance with applicable law.
(D) Articles of Incorporation; By-laws; Directors;
Officers. The Articles of Incorporation and By-laws of the
Continuing Corporation shall be those of FUNC-SC, as in effect
immediately prior to the Corporate Merger becoming effective. The
directors and officers of FUNC-SC in office immediately prior to the
Corporate Merger becoming effective shall be the directors and
officers of the Continuing Corporation, together with such additional
directors and officers as may thereafter be elected, who shall hold
office until such time as their successors are elected and qualified.
1.02. The Bank Mergers. On the day following the Effective Date
or as soon thereafter as FUNB-SC may deem appropriate:
(A) The Continuing Bank. The Banks shall be merged with
and into FUNB-SC (the "Bank Mergers" and together with the Corporate
Merger, the "Mergers"), the separate existence of the Banks shall
cease and FUNB-SC (the "Continuing Bank") shall survive; the name of
the Continuing Bank shall be "First Union National Bank of South
Carolina";
4
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and the Continuing Bank shall continue to conduct the
business of a national banking association at Home Federal's main
office in Rock Hill, South Carolina and at the legally established
branches of the Banks and FUNB-SC.
(B) Rights, Etc. The Continuing Bank shall thereupon and
thereafter possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each of the
banks so merged; and all property, real personal and mixed, and all
debts due on whatever account, and all other choses in action, and all
and every other interest, of or belonging to or due to each of the
banks so merged, shall be taken and deemed to be transferred to and
vested in the Continuing Bank without further act or deed, including
appointments, designations and nominations and all other rights and
interests in any fiduciary capacity; and the title to any real estate
or any interest therein, vested in each of such banks, shall not
revert or be in any way impaired by reason of the Bank Mergers.
(C) Liabilities, Etc. The Continuing Bank shall
thenceforth be responsible and liable for all the liabilities,
obligations and penalties of the banks so merged (including
liabilities arising out of the operation of any trust departments).
All rights of creditors and obligors and all liens on the property of
each of the Banks and FUNB-SC shall be preserved unimpaired.
(D) Charter; By-Laws; Directors; Officers. The Charter and
By-Laws of the Continuing Bank shall be those of FUNB-SC, as in effect
immediately prior to the Bank Mergers becoming effective. The
directors and officers of FUNB-SC in office immediately prior to the
Bank Mergers becoming effective shall be the directors and officers of
the Continuing Bank, together with 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
directors of the Company Previously Disclosed on Schedule 8.10 and the
officers of the Banks who shall be elected as directors and officers
of the Continuing Bank shall be elected as such, effective as of the
Effective Date.
(E) Outstanding Stock of the Continuing Bank. The amount
of the capital stock of the Continuing Bank shall be not less than
$4,575,000 and shall consist of not less than 915,000 issued and
outstanding shares of common stock, each of $5.00 par value, and the
issued and outstanding shares shall remain issued and outstanding as
shares of FUNB-SC, each of $5.00 par value, and the holders thereof
shall retain their rights therein.
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(F) Outstanding Stock of the Banks. Promptly after the
Bank Mergers becoming effective, the Continuing Corporation shall
deliver all of the issued and outstanding shares of the capital stock
of the Banks to the Continuing Bank for cancellation.
1.03. Effective Date. Subject to the conditions to the
obligations of the parties to effect the Mergers as set forth in Article
VI, the effective date (the "Effective Date") shall be such date as First
Union shall notify the Company in writing not less than five days prior
thereto, which date shall not be more than 30 days after such conditions
have been satisfied or waived in writing. Prior to the Effective Date,
FUNC-SC and the Company shall execute and deliver to the Secretary of State
of the State of South Carolina, Articles of Merger in accordance with
applicable law. The time on the Effective Date at which the Corporate
Merger becomes effective is referred to as the "Effective Time."
II. CONSIDERATION.
2.01. Corporate Merger Consideration. Subject to the provisions
of this Plan, on the Effective Date:
(A) Outstanding FUNC-SC Common Stock. The shares of FUNC-
SC Common Stock issued and outstanding immediately prior to the
Effective Date shall, on and after the Effective Date, remain as
issued and outstanding shares of FUNC-SC Common Stock.
(B) Outstanding Company Common Stock. Each share
(excluding (i) shares ("Dissenters' Shares") that have not been voted
in favor of approval of this Plan and with respect to which
dissenters' rights have been perfected in accordance with Chapter 13
of the South Carolina Business Corporation Act (the "SCBCA") or (ii)
shares held by the Company or any of its subsidiaries or by First
Union or any of its subsidiaries, in each case other than in a
fiduciary capacity or as a result of debts previously contracted
("Excluded Shares")) of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the
Corporate Merger, automatically and without any action on the part of
the holder thereof, become and be converted into the right to receive
the number of shares of First Union Common Stock equal to the Exchange
Ratio (as hereinafter defined). The "Exchange Ratio" shall be equal
(rounded to the nearest one one-thousandth) to: (i) 0.458 if the
First Union Price (as defined below) is greater than $42.75 and less
than $46.75, (ii) the result obtained by dividing $19.58 by the First
Union Price if the First Union Price is $42.75 or less; or (iii) the
result obtained by dividing $21.41 by the First Union Price if the
First Union
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Price is $46.75 or greater. The First Union Price shall
be equal to the average of the last reported sale prices per share of
First Union Common Stock on the New York Stock Exchange ("NYSE")
Composite Transactions reporting system for the ten trading days
ending with the trading day immediately prior to the Effective Date
(as reported in The Wall Street Journal), subject to possible
adjustment as set forth in Section 2.05, and upon any such adjustment
any reference in this Plan to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to such
Section.
2.02. Stockholder Rights; Stock Transfers. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall have no rights
as, stockholders of the Company, other than to receive the consideration
provided under this Article II, without interest. After the Effective
Time, there shall be no transfers on the stock transfer books of the
Company or the Continuing Corporation of the shares of Company Common Stock
which were issued and outstanding immediately prior to the Effective Time.
2.03. Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of First Union Common Stock and no
certificates or scrip therefor, or other evidence of ownership thereof,
will be issued in the Corporate Merger; instead, First Union shall pay to
each holder of Company Common Stock who would otherwise be entitled to a
fractional share an amount in cash determined by multiplying such fraction
by the last sale price of First Union Common Stock on the last trading day
prior to the Effective Date, as reported by the NYSE Composite Transactions
reporting system (as reported in The Wall Street Journal).
2.04. Exchange Procedures. First Union will use its best efforts
to send or cause to be sent within ten days after the Effective Time, to
each former stockholder of the Company of record immediately prior to the
Effective Time transmittal materials for use in exchanging such
stockholder's certificates for Company Common Stock for the consideration
set forth in this Article II. The certificates representing the shares of
First Union Common Stock into which shares of such stockholder's Company
Common Stock are converted on the Effective Date, any fractional share
check which such stockholder shall be entitled to receive, and any
dividends paid on such shares of First Union Common Stock for which the
record date for determination of stockholders entitled to such dividends is
on or after the Effective Date, will be delivered to such stockholder only
upon delivery to First Union National Bank of North Carolina (the "Exchange
Agent") of the certificates representing all of such shares of Company
Common Stock (or indemnity satisfactory to First Union and the Exchange
Agent, in their judgment, if any of
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such certificates are lost, stolen or
destroyed). No interest will be paid on any such fractional share checks
or dividends to which the holder of such shares shall be entitled to
receive upon such delivery. Certificates surrendered for exchange by any
person constituting an Affiliate of the Company (as hereinafter defined),
shall not be exchanged for certificates representing First Union Common
Stock until First Union has received a written agreement from such person
as specified in Section 5.10.
2.05. Anti-Dilution Provisions. In the event First Union changes
the number of shares of First Union Common Stock issued and outstanding
prior to the Effective Date as a result of a stock split, stock dividend,
recapitalization or similar transaction with respect to the outstanding
First Union Common Stock and the record date therefor shall be prior to the
Effective Time, the Exchange Ratio shall be proportionately adjusted.
2.06. Excluded Shares; Dissenters' Shares. Each of the Excluded
Shares shall be canceled and retired at the Effective Time, and no
consideration shall be issued in exchange therefor.
Dissenters' Shares shall be purchased and paid for in accordance with
Chapter 13 of the SCBCA. If requested by FUNC-SC, to the Effective Time the
Company will establish and fund an escrow sufficient to pay for such
Dissenters' Shares.
2.07. Reservation of Right to Revise Transaction. First Union may
at any time change the method of effecting the acquisition of the Company
and the Banks (including without limitation the provisions of this Article
II) if and to the extent it deems such change to be desirable; provided,
however, that no such change shall (i) alter or change the amount or kind
of consideration to be issued to holders of Company Common Stock as
provided for in this Plan, (ii) adversely affect the intended tax-free
treatment to the Company's stockholders as a result of receiving such
consideration, or (iii) materially impede or delay receipt of any approval
referred to in Section 6.02 or the consummation of the transactions
contemplated by this Plan.
2.08. Options. (A) From and after the Effective Time, but subject
to Section 2.08 (B), all employee and director stock options to purchase
shares of Company Common Stock ("Options"), which are then outstanding and
unexercised, shall be converted into and become options with respect to
First Union Common Stock, and First Union shall assume each such Option in
accordance with the terms of the plan and agreement by which it is
evidenced; provided, however, that from and after the Effective Time, (i)
each such Option assumed by First Union may be exercised solely for shares
of First Union Common Stock, (ii) the number of shares of First Union
Common Stock subject to such Option shall be equal to the number of shares
of Company Common Stock subject to such Option immediately prior to the
Effective Time multiplied by the
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Exchange Ratio and rounding down to the
nearest whole share, with cash being paid for any fractional share
interest, and (iii) the per share exercise price under each such Option
shall be adjusted by dividing the per share exercise price of each such
Option by the Exchange Ratio, and rounding up to the nearest cent. The
Company represents and warrants that the number of shares of Company Common
Stock which are issuable upon exercise of Options as of the date hereof are
Previously Disclosed in Schedule 2.08. The terms of each Option shall, in
accordance with its terms, be subject to further adjustment as appropriate
to reflect any stock split, stock dividend, recapitalization or other
similar transaction with respect to First Union Common Stock subsequent to
the Effective Time. It is intended that the foregoing assumption shall be
effected in a manner which is consistent with the requirements of Section
424 of the Code (as hereinafter defined), as to any Option that is an
"incentive stock option" (as defined in Section 422 of the Code).
(B) The holders of any Options with an exercise price per
share immediately prior to the Effective Time that is less than the First
Union Price, may, in lieu of having such Options converted pursuant to
Section 2.08(A) elect (by giving written notice of such election to the
Company on or prior to the Effective Date) to receive, in settlement
thereof, solely a cash payment in an amount equal to the excess of the
First Union Price over the exercise price per share of Company Common Stock
covered by the Option, multiplied by the total number of shares of Company
Common Stock covered by the Option, without interest. Each Option the
holder of which has made such election shall at the Effective Time
represent solely the nontransferable right to receive the foregoing cash
payment.
III. ACTIONS PENDING CONSUMMATION.
Without the prior written consent of First Union, each of the Company
and the Banks shall conduct its and each of the Company Subsidiaries'
business in the ordinary and usual course consistent with past practice and
shall use its best efforts to maintain and preserve its and each of the
Company Subsidiaries' business organization, employees and advantageous
business relationships and retain the services of its and each of the
Company Subsidiaries' officers and key employees, and each of the Company
and the Banks will not, and will cause each of the Company Subsidiaries not
to, agree to:
3.01. Capital Stock. Except for or as otherwise expressly
permitted in or contemplated by this Plan or the Stock Option Agreement or
as Previously Disclosed in Schedule 4.01(C), issue, sell or otherwise
permit to become outstanding any additional shares of capital stock of the
Company or the Company Subsidiaries, or any Rights with respect thereto, or
enter into any agreement with respect to the foregoing, or permit any
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<PAGE>
additional shares of Company Common Stock to become subject to grants of
employee stock options, stock appreciation rights or similar stock based
employee compensation rights.
3.02. Dividends, Etc. Make, declare or pay any dividend on or in
respect of (other than dividends payable on Company Common Stock at a
quarterly rate not to exceed $0.05 per share, and dividends from Company
Subsidiaries to the Company or the Banks, as applicable), or declare or
make any distribution on, or directly or indirectly combine, split, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock
or, other than as permitted in or contemplated by this Plan or the Stock
Option Agreement, authorize the creation or issuance of, or issue, any
additional shares of its capital stock or any Rights with respect thereto.
3.03. Indebtedness; Liabilities; Etc. Other than in the ordinary
course of business consistent with past practice, incur any indebtedness
for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become liable for the obligations of any other individual,
corporation or other entity.
3.04. Line of Business; Operating Procedures; Etc. Except as may
be directed by any regulatory agency, (i) change its lending, investment,
liability management or other material banking policies in any material
respect, except such changes as are in accordance and in an effort to
comply with Section 5.11, or (ii) commit to incur any further capital
expenditures beyond those Previously Disclosed in Schedule 3.04 other than
in the ordinary course of business and not exceeding $100,000 individually
or $500,000 in the aggregate.
3.05. Liens. Impose, or suffer the imposition, on any shares of
capital stock of any of the Company Subsidiaries, or on any of its or the
Company Subsidiaries' other assets, any Liens (as hereinafter defined),
other than Liens on such other assets that, individually or in the
aggregate, do not and are not reasonably likely to have a Material Adverse
Effect (as hereinafter defined) on the Company, or permit any such Lien to
exist.
3.06. Compensation; Employment Agreements; Etc. Except as
Previously Disclosed in Schedule 3.06 or Schedule 8.10, enter into or amend
(except as required by law or applicable regulations and after notice to
First Union) any employment, severance or similar agreement or arrangement
with any of its directors, officers or employees, or grant any salary or
wage increase, amend the terms of any Option or increase any employee
benefit (including incentive or bonus payments), except normal individual
increases in regular compensation to employees in the ordinary course of
business consistent with past practice.
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3.07. Benefit Plans. Except as Previously Disclosed in Schedule
3.07, enter into or modify (except as may be required by applicable law)
any pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or other employees, including without limitation taking any action
that accelerates the vesting or exercise of any benefits payable
thereunder.
3.08. Continuance of Business. Dispose of or discontinue any
portion of its assets, business or properties, which is material to the
Company and the Company Subsidiaries taken as a whole, or merge or
consolidate with, or acquire all or any portion of, the business or
property of any other entity which is material to the Company and the
Company Subsidiaries taken as a whole (except foreclosures or acquisitions
by the Bank in a fiduciary capacity, in each case in the ordinary course of
business consistent with past practice).
3.09. Amendments. Except as required by law or applicable
regulations with respect to the Banks and after notice to First Union,
amend its Articles of Incorporation, Charter or By-laws.
3.10. Claims. Settle any claim, action or proceeding involving
any liability for material money damages or restrictions upon the
operations of the Company or any Company Subsidiary.
3.11. Contracts. Except as Previously Disclosed on Schedule 3.11,
enter into, terminate or make any material 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 on not more than 60 days prior written
notice.
IV. REPRESENTATIONS AND WARRANTIES.
4.01. Representations and Warranties of the Company and the Banks.
Each of the Company and the Banks hereby represents and warrants to First
Union, FUNC-SC and FUNB-SC as follows:
(A) Recitals. The facts set forth in the Recitals (A), (B),
(C), (G), (H) and (I) of this Plan with respect to it are true and correct.
(B) Organization, Standing and Authority. It is duly qualified
to do business and is in good standing in the States of the United States
and foreign jurisdictions where the failure to
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be duly qualified,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on the Company. Each of the Company and the Company
Subsidiaries has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties
and assets and to carry on its business as it is now conducted, the absence
of which, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on the Company.
(C) Shares. The outstanding shares of it are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights. Except as described in Recitals (A), (B) and (C) of this Plan and
as Previously Disclosed in Schedule 4.01(C) and except as provided under
the Stock Option Agreement, there are no shares of capital stock or other
equity securities of the Company or the Banks outstanding and no
outstanding Rights with respect thereto.
(D) Company Subsidiaries. The Company has Previously Disclosed
in Schedule 4.01(D) a list of all the Company Subsidiaries. Each of the
Company Subsidiaries that is a savings bank is an "insured depository
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder. No equity securities of any of the Company
Subsidiaries are or may become required to be issued (other than to the
Company or a wholly-owned Company Subsidiary) by reason of any Rights with
respect thereto. There are no contracts, commitments, understandings or
arrangements by which any of the Company Subsidiaries is or may be bound to
sell or otherwise issue any shares of its capital stock, and there are no
contracts, commitments, understandings or arrangements relating to the
rights of the Company or the Banks, as applicable, to vote or to dispose of
such shares. All of the shares of capital stock of each Company Subsidiary
held by the Company or a Company Subsidiary are fully paid and
nonassessable and are owned by the Company or a Company Subsidiary free and
clear of any Liens. Each Company Subsidiary is in good standing under the
laws of the jurisdiction in which it is incorporated or organized, and is
duly qualified to do business and in good standing in the jurisdictions
where the failure to be duly qualified is reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Company.
Except as Previously Disclosed in Schedule 4.01(D), the Company does not
own beneficially, directly or indirectly, any shares of any equity
securities or similar interests of any corporation, bank, partnership,
joint venture, business trust, association or other organization (a
"Business Entity"). The deposits of the Banks are insured by the Savings
Association Insurance Fund (the "SAIF") of the Federal Deposit Insurance
Corporation (the "FDIC"). The Banks are members of the Federal Home Loan
Bank of Atlanta (the "FHL Bank"). The term "Company Subsidiary" means
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any
Business Entity (including the Banks), five percent or more of the equity
interests of which are owned directly or indirectly by the Company.
(E) Corporate Power. It and each of the Company Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all its material properties and assets.
(F) Corporate Authority. Subject to any necessary receipt of
approval by its stockholders referred to in Section 6.01, each of this Plan
and, as to the Company, the Stock Option Agreement, has been authorized by
all necessary corporate action of it and is a valid and binding agreement
of it enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(G) No Defaults. Subject to the approval by its stockholders
referred to in Section 6.01, the required regulatory approvals referred to
in Section 6.02 , and the required filings under federal and state
securities laws, and except as Previously Disclosed in Schedule 4.01(G),
the execution, delivery and performance of this Plan and, as to the
Company, the Stock Option Agreement, and the consummation by it of the
transactions contemplated hereby and thereby, does not and will not (i)
constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license,
or agreement, indenture or instrument of it or of any of the Company
Subsidiaries or to which it or any of the Company Subsidiaries or its or
their properties is subject or bound, which breach, violation or default is
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company, (ii) constitute a breach or violation of, or
a default under, its Articles of Incorporation, Charter or By-laws, or
(iii) require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the consent or
approval of any other party to any such agreement, indenture or instrument,
other than any such consent or approval, which if not obtained, would not
be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company.
(H) Financial Reports. Except as Previously Disclosed in
Schedule 4.01(H), (i) as to the Company, its Annual Report on Form 10-K for
the fiscal year ended March 31, 1994, and all other documents filed or to
be filed subsequent to March 31, 1994 under Section 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"), in the form filed
with the Securities and Exchange Commission (the "SEC") (in each such
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case,
the "Company Financial Reports"), and (ii) as to each of the Banks, its
Thrift Financial Report for the fiscal year ended March 31, 1994, and all
other Thrift Financial Reports filed or to be filed subsequent to March 31,
1994, in the form filed with the Office of Thrift Supervision (the "OTS")
(in each case as to each of the Banks, the "Bank Financial Reports" and
together with the Company Financial Reports, the "Company/Bank Financial
Reports") did not and will not as of their respective dates contain any
untrue statement of a material fact or, as to the Company Financial
Reports, omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into the Company/Bank
Financial Reports (including the related notes and schedules thereto)
fairly presents and will fairly present the financial position of the
entity or entities to which it relates as of its date and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in the Company/Bank Financial Reports (including any
related notes and schedules thereto) fairly presents and will fairly
present the results of operations, changes in stockholders' equity and cash
flows, as the case may be, of the entity or entities to which it relates
for the periods set forth therein, in each case in accordance with
generally accepted accounting principles consistently applied during the
periods involved, except in each case as may be noted therein, subject to
normal and recurring year-end audit adjustments in the case of unaudited
statements.
(I) Absence of Undisclosed Liabilities. None of the Company or
the Company Subsidiaries has any obligation or liability (contingent or
otherwise) that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company, except as reflected in the
Company Financial Reports prior to the date of this Plan.
(J) No Events. Except as Previously Disclosed on Schedule
4.01(J), no events have occurred, or circumstances have arisen, since
September 30, 1994, which, individually or in the aggregate, have had or
are reasonably likely to have a Material Adverse Effect on the Company.
(K) Properties. Except as reserved against in the Company
Financial Reports and except for those properties and assets that have been
sold or otherwise disposed of in the ordinary course of business, the
Company and the Company Subsidiaries have good and marketable title, free
and clear of all liens, encumbrances, charges, security interests,
restrictions (including restrictions on voting rights or rights of
disposition), defaults or equities of any character or claims or third
party rights of whatever nature (collectively "Liens"), to all of the
properties and assets, tangible and intangible,
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reflected in the Company
Financial Reports as being owned by the Company or the Company Subsidiaries
as of the dates thereof, other than those Liens that, individually or in
the aggregate, are not reasonably likely to have a Material Adverse Effect
on the Company. All buildings and all material fixtures, equipment, and
other property and assets which are held under leases or subleases by any
of the Company or the Company Subsidiaries are held under valid leases or
subleases enforceable in accordance with their respective terms, other than
any such exceptions to validity or enforceability that, individually or in
the aggregate, are not reasonably likely to have a Material Adverse Effect
on the Company.
(L) Litigation; Regulatory Action. Except as Previously
Disclosed in Schedule 4.01(L), no litigation, proceeding or controversy
before any court or governmental agency is pending which, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on
the Company or which alleges claims under any fair lending law or other law
relating to discrimination, including, without limitation, the Truth in
Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting
Act, the Fair Housing Act, the Community Reinvestment Act and the Home
Mortgage Disclosure Act, and, to the best of its knowledge, no such
litigation, proceeding or controversy has been threatened; and except as
Previously Disclosed in Schedule 4.01(L), neither it nor any of the Company
Subsidiaries or any of its or their material properties or their officers,
directors or controlling persons 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
(together with any and all agencies or departments of federal, state or
local government (including, without limitation, the OTS, the FHL Bank, the
Federal Reserve Board, the FDIC and any other federal or state bank, thrift
or other financial institution, insurance or securities regulatory
authorities (including the SEC), the "Regulatory Authorities")) and neither
it nor any of the Company Subsidiaries has been advised by any of the
Regulatory Authorities that any such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting)
any such order, decree, agreement, memorandum or understanding, commitment
letter or similar submission.
(M) Compliance with Laws. Except as Previously Disclosed in
Schedule 4.01(M), each of the Company and the Company Subsidiaries:
(1) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory Authorities that are
15
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required in order to permit
it to conduct its business as presently conducted and that are
material to the business of the Company and the Company Subsidiaries
taken as a whole; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
the best of its knowledge, no suspension or cancellation of any of
them is threatened; and all such filings, applications and
registrations are current;
(2) has received no notification or communication from any
Regulatory Authority or the staff thereof (i) asserting that any of
the Company or the Company Subsidiaries is not in compliance with any
of the statutes, regulations or ordinances which such Regulatory
Authority enforces, which, as a result of such noncompliance in any
such instance, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect on the Company, (ii) threatening to
revoke any license, franchise, permit or governmental authorization,
which revocation, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company, or (iii)
requiring any of the Company or the Company Subsidiaries (or any of
their officers, directors or controlling persons) to enter into a
cease and desist order, agreement or memorandum of understanding (or
requiring the board of directors thereof to adopt any material
resolution or policy);
(3) is "well capitalized" as defined in 12 CFR (section mark)564.4
and is not in "troubled condition" as defined in 12 CFR
(section mark)574.9; and
(4) is in compliance in all material respects with the Truth in
Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Housing Act, the Community Reinvestment Act
and the Home Mortgage Disclosure Act and similar federal and state
laws and regulations.
(N) Material Contracts. Except as Previously Disclosed in Schedule
4.01(N), none of the Company or the Company Subsidiaries, nor any of its
respective assets, businesses or operations, is a party to, or is bound or
affected by, or receives benefits under, any contract or agreement or
amendment thereto that in each case is required to be filed as an exhibit
to a Form 10-K filed by the Company that has not been filed as an exhibit
to the Company's Form 10-K filed for the fiscal year ended March 31, 1994,
or which provides for annual payments of $75,000 or more. True and correct
copies of such contracts or agreements or amendments thereto have been
supplied to First Union. None of the Company or the Company Subsidiaries
is in default under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it is a party, by
which its respective assets, business or operations may
16
<PAGE>
be bound or
affected, or under which it or any of its respective assets, business or
operations receives benefits, which default, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company, and there has not occurred any event that, with the lapse of time
or the giving of notice or both, would constitute such a default. Except as
Previously Disclosed in Schedule 4.01(N), neither the Company nor any
Company Subsidiary is subject to or bound by any contract containing
covenants which limit the ability of the Company or any Company Subsidiary
to compete in any line of business or with any person or which involve any
restriction of geographical area in which, or method by which, the Company
or any Company Subsidiary may carry on its business (other than as may be
required by law or any applicable Regulatory Authority).
(O) Reports. Since January 1, 1992, each of the Company and the
Company Subsidiaries has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was
required to file with (i) the SEC, (ii) the FDIC, the OTS, the FHL Bank and
the FHL 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 Plan with respect to reports
and documents filed before the date of this Plan), 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, as to reports and statements filed with the SEC, 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.
(P) No Brokers. All negotiations relative to this Plan and the
transactions contemplated hereby have been carried on by it directly with
the other parties hereto and no action has been taken by it that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment, excluding a fee previously
disclosed to First Union to be paid to Wheat First Securities.
(Q) Employee Benefit Plans.
(1) Schedule 4.01(Q) contains 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
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
17
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plan,
contract or arrangement maintained or contributed to by it or any of
the Company 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 supplied to First Union.
(2) All "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA ("Multiemployer Plans"), covering
employees or former employees of it and the Company Subsidiaries (the
"ERISA Plans"), to the extent subject to ERISA, are in substantial
compliance with ERISA. Except as Previously Disclosed in Schedule
4.01(Q) 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 Internal
Revenue Code of 1986, as amended (the "Code"), has received a
favorable determination letter from the Internal Revenue Service, and
it is not aware of any circumstances reasonably likely to result in
the revocation or denial of any such favorable determination letter or
the inability to receive such a favorable determination letter. There
is no material pending or, to its knowledge, threatened litigation
relating to the ERISA Plans. Neither it nor any of the Company
Subsidiaries has engaged in a transaction with respect to any ERISA
Plan that would subject it or any of the Company 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.
(3) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by it or any of the Company
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the single-
employer plan of any entity which is considered one employer with it
under Section 4001(a)(15) of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). Neither it nor any of the Company 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
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Plan or by any ERISA
Affiliate within the past 12-month period.
(4) 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 it nor any
of the Company 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.
(5) 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.
(6) Neither it nor any of the Company Subsidiaries has any
obligations for retiree health and life benefits under any plan,
except as set forth in Schedule 4.01(Q). There are no restrictions on
the rights of it or any of the Company Subsidiaries to amend or
terminate any such plan without incurring any liability thereunder.
(7) Except as Previously Disclosed in Schedule 4.01(Q),
neither the execution and delivery of this Plan nor the consummation
of the transactions contemplated hereby will (i) result in any payment
(including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any
employee of it or any of the Company Subsidiaries under any
Compensation and Benefit Plan or otherwise from it or any of the
Company 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.
(R) No Knowledge. It knows of no reason why the regulatory
approvals referred to in Section 6.02 should not be obtained.
(S) Labor Agreements. Neither it nor any of the Company
Subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract or other agreement or
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understanding with a labor union
or labor organization, nor is it or any of the Company Subsidiaries the
subject of a proceeding asserting that it or any such subsidiary has
committed an unfair labor practice (within the meaning of the National
Labor Relations Act) or seeking to compel it or such subsidiary to bargain
with any labor organization as to wages and conditions of employment, nor
is there any strike or other labor dispute involving it or any of the
Company Subsidiaries, pending or, to the best of its knowledge, threatened,
nor is it aware of any activity involving its or any of the Company
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
(T) Asset Classification. It has Previously Disclosed in
Schedule 4.01(T) a list, accurate and complete in all material respects, of
the aggregate amounts of loans, extensions of credit or other assets of the
Company and the Company Subsidiaries that have been classified by it as of
January 31, 1995 (the "Asset Classification"); and no amounts of loans,
extensions of credit or other assets that have been classified as of
January 31, 1995 by any regulatory examiner as "Other Loans Specially
Mentioned", "Substandard", "Doubtful", "Loss", or words of similar import
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 the Company or a Company Subsidiary prior to January 31,
1995.
(U) Allowance for Possible Loan Losses. The allowance for
possible loan losses shown on the consolidated balance sheets of the
Company included in the December 31, 1994 Company Financial Reports was,
and the allowance for possible loan losses to be shown on subsequent
Company Financial Reports, will be, adequate, in the opinion of the Board
of Directors and management of the Company, determined in accordance with
generally accepted accounting principles, to provide for possible losses,
net of recoveries relating to loans previously charged off, on loans
outstanding (including accrued interest receivable) as of the date thereof.
(V) Insurance. Each of Company and the Company 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 Plan and the transactions contemplated hereby) that
are known to it, except for such matters which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
the Company. Set forth in Schedule 4.01(V) is a list of all insurance
policies maintained by or for the benefit of the Company or the Company
Subsidiaries or their directors, officers, employees or agents.
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(W) Affiliates. Except as Previously Disclosed in Schedule
4.01(W), there is no person who, as of the date of this Plan, may be deemed
to be an "affiliate" of the Company 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").
(X) State Takeover Laws; Articles of Incorporation. It has
taken all necessary action (including the adoption of an amendment to the
Bylaws)
to exempt this Plan and, as to the Company, the Stock Option Agreement,
and the transactions contemplated hereby and thereby from, and this Plan,
the Stock Option Agreement and the transactions contemplated hereby and
thereby are exempt from, (i) any applicable state takeover laws, including,
without limitation, the South Carolina Business Control Share Acquisitions
Law (South Carolina Code (section mark) 35-2-104 et seq) and the South Carolina
Business. Combination Law (South Carolina Code
(section mark)(section mark) 35-2-201 et seq.) and
(ii) any supermajority provisions, or other provisions imposing special
conditions on business combinations contained in the Company's Articles of
Incorporation and Bylaws.
(Y) No Further Action. It has taken all action so that the
entering into of this Plan and, as to the Company, the Stock Option
Agreement, and the consummation of the transactions contemplated hereby and
thereby (including without limitation the Mergers and the exercise of the
Option (as defined in the Stock Option Agreement)) 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
a vote of the holders of two-thirds of the outstanding shares of Company
Common Stock and the approval of the Company in its capacity as sole
stockholder of each of the Banks, which approval has been given), or (ii)
result in the grant of any rights to any person under the Articles of
Incorporation, Charter or By-laws of the Company or any Company Subsidiary
or under any agreement to which the Company or any of the Company
Subsidiaries is a party, or (iii) restrict or impair in any way the ability
of First Union, FUNC-SC or FUNB-SC to exercise the rights granted hereunder
or, as to First Union, under the Stock Option Agreement.
(Z) Environmental Matters.
(1) To its knowledge, it and each of the Company
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 are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on the Company.
21
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(2) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency or board or other
forum in which it or any of the Company 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 Company
Subsidiaries or any Participation Facility, except for such
proceedings pending or threatened that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on
the Company or have been Previously Disclosed in Schedule 4.01(Z).
(3) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency or board or other
forum in which any Loan/Fiduciary Property (or it or any of the
Company 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, except for such
proceedings pending or threatened that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on
the Company or have been Previously Disclosed in Schedule 4.01(Z).
(4) To its knowledge, during the period of (i) its or any
of the Company Subsidiaries' ownership or operation of any of their
respective current properties, (ii) its or any of the Company
Subsidiaries' participation in the management of any Participation
Facility, or (iii) its or any of the Company 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 are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Company
or have been Previously Disclosed in Schedule 4.01(Z).
(5) To its knowledge, prior to the period of (i) its or any
of the Company Subsidiaries' ownership or operation of any of their
respective current properties, (ii) its or any of the Company
Subsidiaries' participation
22
<PAGE>
in the management of any Participation
Facility, or (iii) its or any of the Company 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 are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on the Company or
have been Previously Disclosed in Schedule 4.01(Z).
(6) The following definitions apply for purposes of this
Section 4.01(Z): "Loan/Fiduciary Property" means any property owned
or controlled by it or any of the Company Subsidiaries or in which it
or any of the Company Subsidiaries holds a security or other interest,
and, where required by the context, includes any such property where
Company or any of the Company 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
Company Subsidiaries participates in the management and, where
required by the context, includes the owner or operator or 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, approval, order, judgment, decree,
injunction, or agreement with any governmental entity, relating to (a)
the protection, preservation or restoration of the environment,
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource), or to human
health or safety, or (b) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous
Material, in each case as amended and as now in effect and includes,
without limitation, the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972,
the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the federal Solid Waste
Disposal 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 relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or
23
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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, lead and polychlorinated biphenyl.
(7) For purposes of this Section 4.01(Z), the
term "knowledge" means that of the directors and officers
of the Company and the Company Subsidiaries and includes
their actual knowledge as well as that which could have been
obtained by a reasonable person in the exercise of reasonable
inquiry; provided, however, this shall not be construed
to require a Phase I environmental study.
(AA) Option Shares. As to the Company, the Option Shares (as
defined in the Stock Option Agreement), when issued upon exercise of the
Option in accordance with the terms thereof, will be validly issued, fully
paid and nonassessable and subject to no preemptive rights.
(BB) Taxes. Except as Previously Disclosed in Schedule 4.01(BB),
(i) 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 it or the Company Subsidiaries, including
without limitation consolidated federal income tax returns of it and the
Company Subsidiaries (collectively, the "Company 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,
are not reasonably likely to have a Material Adverse Effect on the Company,
and such Company Tax Returns were true, complete and accurate in all
material respects, (ii) all taxes (which shall mean 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
imposed on the income, properties or operations of it or the Company
Subsidiaries, together with any interest in respect of such additions or
penalties, collectively the "Taxes") shown to be due on the Company Tax
Returns or otherwise imposed on the income, properties or operations of the
Company or Company Subsidiaries have been paid in full, (iii) the Company
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
24
<PAGE>
Company Tax Returns were
required to be filed has expired, (iv) all Taxes due with respect to
completed and settled examinations have been paid in full, (v) no issues
have been raised by the relevant taxing authority in connection with the
examination of any of the Company Tax Returns which are reasonably likely,
individually or in the aggregate, to result in a determination that would
have a Material Adverse Effect on the Company, except as reserved against
in the Company Financial Reports filed prior to the date of this Plan, and
(vi) no waivers of statutes of limitations (excluding such statutes that
relate to years under examination by the Internal Revenue Service) have
been given by or requested with respect to any Taxes of it or the Company
Subsidiaries.
(CC) Accuracy of Information. The statements with respect to the
Company and the Company Subsidiaries contained in this Plan, the Stock
Option Agreement, the Schedules and any other written documents executed
and delivered by or on behalf of it pursuant to the terms of this Plan 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.
(DD) Derivatives Contracts; Structural Notes; Etc. None of the
Company or the Company 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 the balance sheet which is a derivative contract (including various
combinations thereof) (each a "Derivatives Contract") or owns securities
that are referred to as "structured notes", "high risk mortgage
derivatives", "capped floating rate notes," or "capped floating rate
mortgage derivatives," except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
business and Previously Disclosed in Schedule 4.01(DD), including a list,
as applicable, of any Company or Company Subsidiary assets pledged as
security for each such instrument.
(EE) Accounting Controls. Each of the Company and the Company
Subsidiaries has devised and maintained systems of internal accounting
controls sufficient to provide reasonable assurances, in the judgment of
the Board of Directors of the Company, 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 thrift
or any other criteria applicable to such statements, (iii) access to the
material property and assets of the Company and the Company Subsidiaries is
permitted only in
25
<PAGE>
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.
(FF) Commitments and Contracts. Neither the Company nor any
Company Subsidiary is a party or subject to any of the following (whether
written or oral, express or implied):
(1) except as Previously Disclosed in Schedule 4.01(FF),
any employment contract or understanding (including any understandings
or obligations with respect to severance or termination pay
liabilities or fringe benefits) with any present or former officer,
director or employee (other than those which are terminable at will by
the Company or such Company Subsidiary without any obligation on the
part of the Company or such Company Subsidiary to make any payment in
connection with such termination);
(2) except as Previously Disclosed in Schedule 4.01(FF),
any real property lease with annual rental payments aggregating
$50,000 or more; or
(3) except as Previously Disclosed in Schedule 4.01(FF),
any material contract with any Affiliate.
4.02. First Union, FUNC-SC and FUNB-SC Representations and
Warranties. Each of First Union, FUNC-SC and FUNB-SC hereby represents and
warrants to the Company and the Banks, as follows:
(A) Recitals. The facts set forth in the Recitals (D), (E),
(F), (G) and (I) of this Plan with respect to it are true and correct.
(B) Corporate Authority. Subject to the required regulatory
approvals referred to in Section 6.02, each of this Plan and, in the case
of First Union, the Stock Option Agreement, has been authorized by all
necessary corporate action of it and is a valid and binding agreement of it
enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(C) No Defaults. Subject to the required regulatory approvals
referred to in Section 6.02, and, in the case of First Union, Section 3 of
the Stock Option Agreement, and the required filings under federal and
state securities' laws, the execution, delivery and performance of this
Plan and (in the case of First Union) the Stock Option Agreement, and the
consummation of the transactions contemplated hereby and thereby by it, do
not and
26
<PAGE>
will not (i) constitute a breach or violation of, or a default
under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of it
or of any of its subsidiaries or to which it or any of its subsidiaries or
properties is subject or bound, which breach, violation or default is
reasonably likely to have a Material Adverse Effect on First Union, (ii)
constitute a breach or violation of, or a default under, its Articles of
Incorporation, Charter or Bylaws, or (iii) require any consent or approval
under any such law, rule, regulation, judgment, decree, order, governmental
permit or license, or the consent or approval of any other party to any
such agreement, indenture or instrument other than such consent or
approval, which if not obtained, would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
(D) Financial Reports. In the case of First Union, its Annual
Report on Form 10-K for the fiscal year ended December 31, 1993, and all
other documents filed or to be filed subsequent to December 31, 1993 under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed
with the SEC (in each such case, the "First Union Financial Reports"), did
not and will not as of their respective dates contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into the First Union
Financial Reports (including the related notes and schedules thereto)
fairly presents and will fairly present the financial position of the
entity or entities to which it relates as of its date and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in the First Union Financial Reports (including any
related notes and schedules thereto) fairly presents and will fairly
present the results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of the entity or entities to
which it relates for the periods set forth therein, in each case in
accordance with generally accepted accounting principles consistently
applied to banks and bank holding companies during the periods involved,
except as may be noted therein, subject to normal and recurring year-end
audit adjustments in the case of unaudited statements.
(E) No Events. No events have occurred, or circumstances have
arisen, since September 30, 1994, which, individually or in the aggregate,
have had or are reasonably likely to have a Material Adverse Effect on
First Union.
(F) No Brokers. All negotiations relative to this Plan and the
transactions contemplated hereby have been carried on by it directly with
the other parties hereto and no action has been taken by it that would give
rise to any valid claim against
27
<PAGE>
any party hereto for a brokerage
commission, finder's fee or other like payment.
(G) No Knowledge. It knows of no reason why the regulatory
approvals referred to in Section 6.02 should not be obtained without the
imposition of any condition of the type referred to in the proviso
following such Section 6.02.
(H) Shares Authorized. In the case of First Union, the shares
of First Union Common Stock to be issued (i) in exchange for shares of
Company Common Stock upon consummation of the Corporate Merger in
accordance with Article II of this Plan, and (ii) upon exercise of
outstanding Options pursuant to Section 2.08, have been duly authorized
and, when issued in accordance with the terms of this Plan, will be validly
issued, fully paid and nonassessable and subject to no preemptive rights.
(I) Organization, Standing and Authority. It is duly qualified
to do business and is in good standing in the States of the United States
and foreign jurisdictions where the failure to be duly qualified,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on First Union. Each of First Union and its subsidiaries
has in effect all federal, state, local and foreign governmental
authorizations necessary for it to own or lease its properties and assets
and to carry on its business as it is now conducted, the absence of which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on First Union.
(J) Corporate Power. First Union, FUNC-SC and FUNB-SC each has
the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all its material properties and assets.
(K) Accuracy of Information. The statements with respect to
First Union, FUNC-SC and FUNB-SC contained in this Plan, the Stock Option
Agreement, the Schedules and any other written documents executed and
delivered by or on behalf of First Union, FUNC-SC or FUNB-SC pursuant to
the terms of this Plan 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.
(L) Litigation; Regulatory Action. Neither First Union nor any
of its subsidiaries as a party to any litigation, proceeding or controversy
before any court or governmental agency is pending which, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on
First Union and, to the best of its knowledge, no such litigation,
proceeding or controversy has been threatened; and neither it nor any of
its subsidiaries or any of its or their material properties or their
29
<PAGE>
officers, directors or controlling persons is a party to or is the subject
of any order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, any
Regulatory Authorities, which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on First Union and neither it
nor any of its subsidiaries has been advised by any Regulatory Authorities
that any such authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum or understanding, commitment letter or
similar submission.
V. COVENANTS.
Each of the Company and the Banks hereby covenants to First Union,
FUNC-SC and FUNB-SC, and each of First Union, FUNC-SC and FUNB-SC hereby
covenants to the Company and the Banks, that:
5.01. Best Efforts. Subject to the terms and conditions of this
Plan and to the exercise by its Board of Directors, as applicable, of such
Board's fiduciary duties established under applicable law, it shall use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation
of the Mergers on the Effective Date and to otherwise enable consummation
of the transactions contemplated hereby and (in the case of the Company and
First Union) by the Stock Option Agreement and shall cooperate fully with
the other parties hereto to that end (it being understood that any
amendments to the Registration Statement (as hereinafter defined) or a
resolicitation of proxies as a consequence of an acquisition agreement by
First Union or any of its subsidiaries shall not violate this covenant).
5.02. Company Proxy. In the case of the Company, it shall
promptly prepare a proxy statement (the "Proxy Statement") to be mailed to
the holders of Company Common Stock in connection with the transactions
contemplated hereby and to be filed by First Union in a registration
statement (the "Registration Statement") with the SEC as provided in
Section 5.08, which shall conform to all applicable legal requirements and
it shall call a special meeting (the "Meeting") of the holders of Company
Common Stock to be held as soon as practicable for purposes of voting upon
the approval of this Plan and the Company shall use its best efforts to
solicit and obtain votes of the holders of Company Common Stock in favor of
the approval of this Plan, and, subject to the exercise of its fiduciary
duties under applicable law (based upon the written advice of outside
counsel), the Board of Directors of the Company shall recommend approval of
this Plan by such holders.
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5.03. Registration Statement Compliance with Securities Laws.
When 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, such
Registration Statement and all amendments or supplements thereto, with
respect to all information set forth therein furnished or to be furnished
by or on behalf of the Company relating to the Company or the Company
Subsidiaries and by or on behalf of First Union relating to First Union or
its subsidiaries, (i) will comply in all material respects with the
provisions of the Securities Act and 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 not
misleading; provided, however, in no event shall any party hereto be liable
for any untrue statement of a material fact or omission to state a material
fact in the Registration Statement made in reliance upon, and in conformity
with, written information concerning another party furnished by or on
behalf of such other party specifically for use in the Registration
Statement.
5.04. Registration Statement Effectiveness. First Union will
advise the Company, promptly after First Union 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 First Union 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.
5.05. Press Releases. Neither the Company nor the Banks will,
without the prior approval of First Union (which approval shall not be
unreasonably withheld or delayed), and neither First Union, FUNC-SC nor
FUNB-SC will, without the prior approval of the Company (which approval
shall not be unreasonably withheld or delayed), issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by law, in the opinion of
its Board of Directors based upon advice of outside counsel.
5.06. Access; Information. (1) Upon reasonable notice, the
Company and the Banks shall afford First Union and its officers, employees,
counsel, accountants and other authorized representatives, access, during
normal business hours throughout the period prior to the Effective Date, to
all of its and the Company Subsidiaries' properties, books, contracts, data
processing system files, commitments and records and, during such period,
the Company and the Banks shall furnish promptly to First
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Union (i) a copy
of each material report, schedule and other document filed by the Company
and the Company Subsidiaries with any Regulatory Authority, and (ii) all
other information concerning the business, properties and personnel of the
Company and the Company Subsidiaries as First Union may reasonably request,
provided that no investigation pursuant to this Section 5.06 shall affect
or be deemed to modify or waive any representation or warranty made by the
Company or the Banks or the conditions to the obligations of the Company
and the Banks to consummate the transactions contemplated by this Plan; and
(2) First Union will not use any information obtained pursuant to this
Section 5.06 for any purpose unrelated to the consummation of the
transactions contemplated by this Plan and, if this Plan is terminated,
will hold all information and documents obtained pursuant to this paragraph
in confidence (as provided in Section 8.06) unless and until such time as
such information or documents become publicly available other than by
reason of any action or failure to act by First Union or as it is advised
by counsel in writing that any such information or document is required by
law or applicable published stock exchange rule to be disclosed, and in the
event of the termination of this Plan, First Union will, upon request by
the Company, deliver to the Company all documents so obtained by First
Union or destroy such documents and, in the case of destruction, will
certify such fact to the Company.
5.07. Acquisition Proposals. In the case of the Company, without
the prior written consent of First Union, it shall not, and it shall cause
the Company Subsidiaries not to, solicit or encourage inquiries or
proposals with respect to, or, except as required by the fiduciary duties
of the Board of Directors of the Company under applicable law (as advised
in writing by its outside counsel), furnish any nonpublic information
relating to or participate in any negotiations or discussions concerning,
any acquisition or purchase of all or a substantial portion of the assets
of, or a substantial equity interest in, the Company or any of the Company
Subsidiaries or any merger or other business combination with the Company
or any of the Company Subsidiaries other than as contemplated by this Plan;
it shall instruct its and the Company Subsidiaries' officers, directors,
agents, advisors and affiliates to refrain from doing any of the foregoing;
and it shall notify First Union immediately if any such inquiries or
proposals are received by, or any such negotiations or discussions are
sought to be initiated with, the Company or any of the Company
Subsidiaries.
5.08. Registration Statement Preparation. In the case of First
Union, it shall, as promptly as practicable following the date of this
Plan, prepare and file the Registration Statement with the SEC, and First
Union shall use its best efforts to cause the Registration Statement to be
declared effective as soon as practicable after the filing thereof.
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5.09. Blue-Sky Filings. In the case of First Union, it shall use
its best efforts to obtain all necessary state securities laws or "blue
sky" permits and approvals, provided that First Union shall not be required
by virtue thereof to submit to general jurisdiction in any state.
5.10. Affiliate Agreements. In the case of the Company, it will
cause each person who is an "affiliate" of the Company for purposes of Rule
145 under the Securities Act (each an "Affiliate") to execute and deliver
to First Union on or before the mailing of the Proxy Statement for the
Meeting an agreement in the form attached hereto as Exhibit B restricting
the disposition of the shares of First Union Common Stock to be received by
such person in exchange for such person's shares of Company Common Stock.
Previosly Disclosed on Schedule 5.10 is a list of Affiliates as of the date
hereof.
5.11. Certain Policies of the Company and the Banks. In the case
of each of the Company and the Banks, it shall use its best efforts to (i)
modify and change its loan, litigation and other reserve and real estate
valuation policies and practices (including loan classifications and levels
of reserves), and (ii) generally conform its operating, lending and
compliance policies and procedures, prior to the Effective Date, so as to
be consistent on a mutually satisfactory basis with those of First Union
and generally accepted accounting principles and applicable law; provided,
however, the Company and the Banks shall not be required to take any such
action set forth in (i) above until all required regulatory approvals set
forth in Section 6.02 shall have been obtained and the Company and the
Banks shall be reasonably satisfied that the Mergers will be promptly
consummated in accordance with this Plan. The Company's and the Banks'
representations, warranties and covenants contained in this Plan shall not
be deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on account of
this Section 5.11.
5.12. State Takeover Law. In the case of the Company, it shall
not take any action that would cause the transactions contemplated by this
Plan or the Stock Option Agreement to be subject to any applicable state
takeover statute and the Company shall take all necessary steps to exempt
(or ensure the continued exemption of) the transactions contemplated by
this Plan and the Stock Option Agreement from any applicable state takeover
law, as now or hereafter in effect. In the case of First Union, it shall
not intentionally take any action that could cause the transactions
contemplated by this Plan or the Stock Option Agreement to be subject to
any applicable state takeover statutes.
5.13. No Rights Triggered. In the case of the Company, it shall
take all necessary steps to ensure that the entering
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into of this Plan and
the Stock Option Agreement and the consummation of the transactions
contemplated hereby and thereby (including without limitation the Mergers
and the exercise of the Option) and any other action or combination of
actions, or any other transactions contemplated hereby or thereby do not
and will not, except as Previously Disclosed on Schedule 5.13, (i) result
in the grant of any rights to any person under the Articles of
Incorporation or Bylaws of the Company or under any agreement to which the
Company or any of the Company Subsidiaries is a party, or (ii) restrict or
impair in any way the ability of First Union, FUNC-SC or FUNB-SC to
exercise the rights granted hereunder or, as to First Union, under the
Stock Option Agreement.
5.14. Shares Listed. In the case of First Union, it shall use its
best efforts to list, prior to the Effective Date, on the NYSE, upon
official notice of issuance, the shares of First Union Common Stock to be
issued to the holders of Company Common Stock and the outstanding Options
referred to in Section 2.08, pursuant to this Plan.
5.15. Regulatory Applications. In the case of First Union, FUNC-
SC and FUNB-SC, (i) it shall promptly prepare, and will use its best
efforts to submit within 15 days after receipt of all necessary information
from the Company and the Banks, applications to the OCC and the Federal
Reserve Board and all other appropriate Regulatory Authorities for approval
of the Mergers, (after having submitted drafts of such applications to
counsel for the Company) and (ii) promptly make all other appropriate
filings to secure all other approvals, consents and rulings which are
necessary for the consummation of the Mergers by First Union, FUNC-SC and
FUNB-SC.(after having advised counsel to the Company as to the nature of
such filings).
5.16 Regulatory Divestitures. In the case of the Company,
effective on or before the Effective Date (to the extent required by any
Regulatory Authority), the Company and the Company Subsidiaries shall cease
engaging in such activities as First Union shall advise the Company in
writing are not permitted to be engaged in by First Union under applicable
law following the Effective Date and, to the extent required by any
Regulatory Authority as a conditional approval of the transactions
contemplated by this Plan, the Company shall divest any Company Subsidiary
engaged in activities or holding assets that are impermissible for a bank
holding company, on terms and conditions agreed to by First Union.
5.17 Indemnification.
(A) For six years after the Effective Date, First Union shall, and
shall cause the Continuing Corporation to, indemnify, defend and hold
harmless the present and former directors, officers and employees of the
Company and the Company
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Subsidiaries (each, an "Indemnified Party") against
all liabilities arising out of actions or omissions occurring at or prior
to the Effective Date (including, without limitation, the transactions
contemplated by this Plan and the Stock Option Agreement) to the extent
such persons are indemnified under the SCBCA and the Company's Articles of
Incorporation and Bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
litigation.
(B) First Union shall use its reasonable best efforts to maintain the
Company's existing directors' and officers' liability insurance policy (or
a policy, including First Union's existing policy, providing comparable
coverage amount on terms no less favorable) covering persons who are
currently covered by such insurance for a period of three years after the
Effective Date; provided, that First Union shall not be obligated to make a
premium payment in respect of such policy (or replacement policy) which
exceeds, for the portion related to the Company's directors and officers,
150% of the annual premium payment on the Company's current policy in
effect as of the date of this Plan; provided, further, that if such
coverage can only be obtained upon the payment of a premium in excess of
150% of the annual premium payment of the Company's current policy, First
Union shall obtain such coverage as can reasonably be obtained by paying a
premium of 150% of the annual premium payment of the Company's current
policy in effect as of the date of this Plan.
(C) Any Indemnified Party wishing to claim indemnification under
subsection (A) of this Section 5.17, upon learning of such claim, action,
suit, proceeding or investigation, shall promptly notify First Union
thereof; provided, that the failure so to notify shall not affect the
obligations of First Union and the Continuing Corporation under subsection
(A) of this Section 5.17 (unless such failure materially increases First
Union's liability under such subsection (A)). In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Date), (i) First Union or the Continuing Corporation
shall have the right to assume the defense thereof, if it so elects, and
First Union or the Continuing Corporation shall pay all reasonable fees and
expenses of counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that First Union shall be
obligated pursuant to this subsection (C) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction for any single
action, suit or proceeding or any group of actions, suits or proceedings
arising out of or related to a common body of facts, (ii) the Indemnified
Parties will cooperate in the defense of any such matter, and (iii) First
Union shall not be liable for any settlement effected without its prior
written consent.
(D) If First Union or the Continuing Corporation or any of its
successors or assigns shall consolidate with or merge into
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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 First Union or the Continuing Corporation shall
assume the obligations set forth in this Section 5.17.
(E) First Union shall pay, or cause the Continuing Corporation to
pay, all reasonable expenses, including attorneys' fees, that may be
incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 5.17. The rights of each
Indemnified Party hereunder shall be in addition to any other rights such
Indemnified Party may have under the Articles of Incorporation or By-laws
of the Company, under the South Carolina Business Corporation Act or
otherwise.
5.18 Current Information.
(A) During the period from the date of this Plan to the Effective
Date, each of the Company, the Banks and First Union shall, and shall cause
its representatives to, confer on a regular and frequent basis with
representatives of the other.
(B) The Company and the Banks shall promptly notify First Union of
(i) any material change in the business or operations of the Company or any
Company Subsidiary, (ii) any material complaints, investigations or
hearings (or communications indicating that the same may be contemplated)
of any Regulatory Authority relating to the Company or any Company
Subsidiary, (iii) the institution or the threat of material litigation
involving or relating to the Company or any Company Subsidiary, or (iv) any
event or condition that might be reasonably expected to cause any of the
Company's or the Banks' representations or warranties set forth herein not
to be true and correct in all as of the Effective Time (except to the
extent contemplated by Section 6.08) or prevent the Company or the Banks
from fulfilling its or their obligations hereunder; and in each case shall
keep FUNB-SC informed with respect thereto.
(C) First Union shall (i) promptly notify the Company of any event or
condition that might reasonably be expected to cause any of First Union's,
FUNC-SC's or FUNB-SC's representations or warranties set forth herein not
to be true and correct as of the Effective Date (except to the extent
contemplated by Section 6.07), and (ii) notify the Company immediately of
any denial of any application filed by First Union, FUNC-SC or FUNB-SC with
any Regulatory Authority with respect to this Plan, and in each case shall
keep the Company and the Banks informed with respect thereto.
VI. CONDITIONS TO CONSUMMATION OF THE MERGERS.
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Consummation of the Mergers is conditioned upon:
6.01. Shareholder Vote. Approval of this Plan by the requisite
vote of the stockholders of the Company.
6.02. Regulatory Approvals. Procurement by First Union, FUNC-SC
and FUNB-SC, as applicable, of all required regulatory consents and
approvals by the appropriate Regulatory Authorities and the expiration of
the statutory waiting period relating thereto; provided, however, that no
such approval or consent shall have imposed any condition or requirement
which, in the reasonable opinion of First Union, would so materially and
adversely impact the economic or business benefits to First Union of the
transactions contemplated by this Plan so as to render inadvisable the
consummation of the Mergers; and provided, further, that no condition or
requirement which does no more than subject FUNB-SC or First Union to legal
requirements generally applicable to a bank holding company under the BHC
Act or savings and loan holding company under HOLA as a matter of law shall
be deemed to affect materially and adversely the economic or business
benefits of the transactions contemplated by this Plan;
6.03. No Injunction. There shall not be in effect any order,
decree or injunction of any court or agency of competent jurisdiction that
enjoins or prohibits consummation of any of the transactions contemplated
hereby.
6.04. Accountants' Letters. The Company shall cause KPMG Peat
Marwick, LLP to deliver to First Union, FUNC-SC and FUNB-SC letters, dated
the date of or shortly prior to (i) the mailing of the Proxy Statement, and
(ii) the Effective Date, in form and substance satisfactory to First Union,
with respect to the Company's consolidated financial position and results
of operations, which letters shall be based upon "agreed upon procedures"
undertaken by such firm in accordance with the Statement on Financial
Accounting Standards No. 72.
6.05. Legal Opinion. The Company and the Banks shall have
received an opinion, dated the Effective Date, of Marion A. Cowell, Jr.,
counsel for First Union, FUNC-SC and FUNB-SC in form reasonably
satisfactory to the Company and the Banks, which shall cover the matters
contained in Exhibit C hereto.
6.06. Legal Opinion. First Union, FUNC-SC and FUNB-SC shall have
received an opinion, dated the Effective Date, of Breyer & Aguggia, special
counsel for the Company and the Banks, and South Carolina counsel for the
Company and the Banks reasonably acceptable to First Union, each in form
reasonably satisfactory to First Union, FUNC-SC and FUNB-SC which together
shall cover the matters contained in Exhibit D hereto.
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<PAGE>
6.07. Officers' Certificate. (i) Each of the representations and
warranties contained herein of First Union, FUNC-SC and FUNB-SC shall be
true and correct as of the date of this Plan and upon the Effective Date
with the same effect as though all such representations and warranties had
been made on the Effective Date, except for any such representations and
warranties made as of a specified date, which shall be true and correct as
of such date, and (ii) each and all of the agreements and covenants of
First Union, FUNC-SC and FUNB-SC to be performed and complied with pursuant
to this Plan on or prior to the Effective Date shall have been duly
performed and complied with in all material respects, and the Company and
the Banks shall have received a certificate signed by an executive officer
of each of First Union, FUNC-SC and FUNB-SC, dated the Effective Date, to
such effect.
6.08. Officers' Certificate. (i) Each of the representations and
warranties contained herein of the Company and the Banks shall be true and
correct as of the date of this Plan and upon the Effective Date with the
same effect as though all such representations and warranties had been made
on the Effective Date, except for any such representations and warranties
made as of a specified date, which shall be true and correct as of such
date and except as otherwise provided in Section 5.11, and (ii) each and
all of the agreements and covenants of the Company and the Banks to be
performed and complied with pursuant to this Plan on or prior to the
Effective Date shall have been duly performed and complied with in all
material respects, and First Union, FUNC-SC and FUNB-SC shall have received
a certificate signed by the Chief Executive Officers and the Chief
Financial Officers of the Company and each of the Banks, dated the
Effective Date, to such effect.
6.09. Effective Registration Statement. The Registration
Statement shall have become effective and no stop or other order suspending
the effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by
the SEC or any other Regulatory Authority.
6.10. Blue-Sky Permits. First Union shall have received all state
securities laws and "blue sky" permits necessary to consummate the
Corporate Merger.
6.11. Tax Opinion. First Union and the Company shall have
received an opinion from Sullivan & Cromwell to the effect that (i) the
Corporate Merger constitutes a reorganization under Section 368 of the
Code, and (ii) no gain or loss will be recognized by stockholders of the
Company who receive shares of First Union Common Stock in exchange for
their shares of Company Common Stock, except that gain or loss may be
recognized as to cash received in lieu of fractional share interests, and, in
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rendering their opinion, Sullivan & Cromwell may require and rely upon
representations and agreements contained in documents executed by officers
of First Union, the Company and others.
6.12. NYSE Listing. The shares of First Union Common Stock
issuable pursuant to this Plan shall have been approved for listing on the
NYSE, subject to official notice of issuance.
6.13. Receipt of Affiliate Agreements. First Union shall have
received from each affiliate of the Company the agreement referred to in
Section 5.10;
provided, however, that a failure to satisfy any of the
conditions set forth in the proviso following Section 6.02 or in Sections
6.04, 6.06, 6.08 or 6.13 shall only constitute conditions if asserted by
First Union, and a failure to satisfy any of the conditions set forth in
Section 6.05 or 6.07 shall only constitute conditions if asserted by the
Company.
VII. TERMINATION.
This Plan may be terminated prior to the Effective Date, either before
or after receipt of required stockholder approvals:
7.01. Mutual Consent. By the mutual consent of First Union and
the Company.
7.02. Breach. By First Union or the Company, if its Board of
Directors so determines by vote of a majority of the members of its entire
Board, in the event of (i) a material breach by the other party 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, or (ii) a breach by the other party
of any of the material 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.
7.03. Delay. By First Union or the Company, if its Board of
Directors so determines by vote of a majority of the members of its entire
Board, in the event that the Corporate Merger is not consummated by
December 31, 1995.
7.04. No Stockholder or Regulatory Approval. By the Company or
First Union, if its Board of Directors so determines by a vote of a
majority of the members of its entire Board, in the event that any
stockholder approval contemplated by Section 6.01 is not obtained at the
Meeting, including any adjournment or adjournments thereof, or in the event
that written notice is received which states that any required regulatory
approval
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contemplated by Section 6.02 has not been approved or has been
denied.
7.05. Stock Option Agreement. By First Union, if the Stock Option
Agreement is not executed by the Company and delivered to First Union at or
before 8:00 a.m. on the day following the execution and delivery of this
Plan.
7.06. Termination Fee. In the event that First Union wilfully
breaches a representation, warranty or covenant contained herein and, as a
result thereof (i) the Company exercises its right to terminate this Plan
under Section 7.02 at a time when First Union was not entitled to terminate
this Plan under Section 7.02, 7.03 or 7.04 and (ii) the Mergers are not
consummated, then First Union agrees to pay to the Company a fee of $2.5
million within five business days of First Union's receipt of written
demand therefor.
VIII. OTHER MATTERS.
8.01. Survival. If the Effective Date occurs, all
representations, warranties, agreements and covenants contained in this
Plan, except for Section 5.17, shall not survive the Effective Date. If
this Plan is terminated prior to the Effective Date, the agreements and
representations of the parties in Sections 4.01(P), 4.01(AA) and 4.02(F),
Sections 5.03, 5.06(2), 5.12 and 5.13, and Sections 8.01, 8.03, 8.04, 8.05,
8.06, 8.07, 8.09 and 8.11 shall survive such termination.
8.02. Waiver; Amendment. Prior to the Effective Date, any
provision of this Plan may be (i) waived in writing by the party
benefitting by the provision, or (ii) amended or modified at any time
(including the structure of the transactions contemplated hereby) by an
agreement in writing among the parties hereto approved by their respective
Boards of Directors and executed in the same manner as this Plan, except
that, after the vote by the stockholders of the Company, the consideration
to be received by the stockholders of the Company for each share of Company
Common Stock shall not thereby be decreased.
8.03. Counterparts. This Plan may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
This Plan shall become effective when one counterpart has been signed by
each party hereto.
8.04. Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of North Carolina,
except as federal law may be applicable.
8.05. Expenses. Each party hereto will bear all expenses incurred
by it in connection with this Plan and the
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transactions contemplated
hereby, except printing expenses which shall be shared equally between the
Company and First Union.
8.06. Confidentiality. Except as otherwise provided in Section
5.06(2), each of the parties hereto and their respective agents, attorneys
and accountants will maintain the confidentiality of all information
provided in connection herewith which has not been publicly disclosed.
8.07. 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):
If to First Union,
FUNC-SC or FUNB-SC, to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704)374-3425.
Attention: Edward E. Crutchfield, Jr.
Chairman and Chief Executive Officer
Copy to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704)374-3425
Attention: Marion A. Cowell, Jr.
General Counsel
If to the Company
or the Banks, to: United Financial Corporation of South
Carolina, Inc.
425 Main Street
P.O. Box 3029
Greenwood, South Carolina 29648
Telecopy Number: (803)942-8247
Attention: Lynn W. Hodge
President
Copy to: Breyer & Aguggia
601 13th Street, N.W.
Suite 1120 South
Washington, D.C. 20005
Telecopy Number: (202)737-7979
Attention: John F. Breyer,Jr., Esquire
Paul M. Aguggia, Esquire
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8.08. Definitions. Any term defined anywhere in this Plan shall
have the meaning ascribed to it for all purposes of this Plan (unless
expressly noted to the contrary). In addition:
(1) the term "Material Adverse Effect", when applied to a party,
shall mean an event, occurrence or circumstance (including without
limitation, any breach of a representation or warranty contained
herein by such party) which (a) has a material adverse effect on the
financial condition, results of operations, business or prospects of
such party and its subsidiaries, taken as a whole, or (b) would
materially impair such party's, or any affiliated party's (which
includes, as to the Company, the Banks and as to First Union, FUNC-SC
and FUNB-SC), ability to timely perform its obligations under this
Plan or the Stock Option Agreement or the consummation of any of the
transactions contemplated hereby or thereby; provided, that a Material
Adverse Effect shall not include effects resulting from general
economic conditions, or changes in the Company's or Banks' financial
condition as a result of changes in accounting practices or changes to
statutes, regulations or regulatory policies that have not resulted in
materially more severe adverse changes than that experienced by
similarly situated financial institutions;
(2) the term "individually or in the aggregate" as used in
Article IV of this Plan includes all events, occurrences and
circumstances described in any paragraph of Article IV, and is not
linked to any specific paragraph; and
(3) the term "Previously Disclosed" by a party shall mean
information set forth in a Schedule that is delivered by such party to
the other party contemporaneously with the execution of this Plan and
specifically designated as information "Previously Disclosed" pursuant
to this Plan.
8.09. Entire Understanding; No Third Party Beneficiaries. This
Plan and the Stock Option Agreement together represent the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and supersede any and all other oral or
written agreements heretofore made. Except for Section 5.17, nothing in
this Plan or the Stock Option 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 Plan or the Stock Option Agreement.
8.10. Benefit Plans. As soon as administratively practicable
after the Effective Time, except as Previously Disclosed in Schedule 8.10,
employees of the Company and the Company Subsidiaries shall be generally
entitled to participate in the pension, benefit and similar plans on
substantially the same terms and conditions as employees of First Union and
its subsidiaries. For the purpose of determining
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eligibility to
participate in such plans and the vesting of benefits under such plans (but
not for the accrual of benefits under such plans), First Union shall give
effect to years of service with the Company or the Company Subsidiaries, as
the case may be, as if such service had been with First Union or its
subsidiaries.
8.11. Headings. The headings contained in this Plan are for
reference purposes only and are not part of this Plan.
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of
the day and year first above written.
FIRST UNION CORPORATION
By: /s/ KENNETH R. STANCLIFF
Name: Kenneth R. Stancliff
Title: Senior Vice President
FIRST UNION CORPORATION OF SOUTH CAROLINA
By: /s/ KENNETH R. STANCLIFF
Name: Kenneth R. Stancliff
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA
By: /s/ KENNETH R. STANCLIFF
Name: Kenneth R. Stancliff
Title: Senior Vice President
UNITED FINANCIAL CORPORATION OF SOUTH CAROLINA, INC.
By: /s/ LYNN W. HODGE
Name: Lynn W. Hodge
Title: President
UNITED SAVINGS BANK, FSB
By: /s/ CLIFFORD W. STUMBO
Name: Clifford W. Stumbo
Title: Executive Vice President
HOME FEDERAL SAVINGS BANK OF SOUTH CAROLINA
By: /s/ HERMAN E. HONEYCUTT
Name: Herman E. Honeycutt
Title: President
BOARD OF DIRECTORS
UNITED SAVINGS BANK, FSB
43
<PAGE>
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
44
<PAGE>
BOARD OF DIRECTORS
HOME FEDERAL SAVINGS BANK OF SOUTH CAROLINA
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
45
<PAGE>
BOARD OF DIRECTORS*
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
___________________________ _________________________
_________________
* To be executed at the Board meeting to be held on February 27, 1995.
46
<PAGE>
Exhibit A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 22, 1995 (the
"Agreement"), by and between United Financial Corporation of South
Carolina, Inc., a South Carolina corporation ("Issuer"), and First Union
Corporation, a North Carolina corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Mergers dated as of February 21, 1995 (the "Plan"), providing for,
among other things, the merger of Issuer with and into First Union
Corporation of South Carolina ("FUNC-SC"), a wholly-owned subsidiary of
Grantee, with FUNC-SC 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 1,100,000 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
$0.10 per share ("Issuer Common Stock"), of Issuer at a purchase price per
Option Share (the "Purchase Price") equal to the greater of (i) the greater
of the closing prices per share of Issuer common stock on February 22nd and
23rd, 1995, as reported on the NASDAQ Stock Market, and (ii) $18.25.
3. Exercise of Option.
(a) Provided that (i) Grantee 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
A-1
<PAGE>
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
Effective Date, (B) termination of the Plan by Issuer in accordance with
the terms thereof prior to the occurrence of a Purchase Event (as
hereinafter defined) or a Preliminary Purchase Event unless the Issuer has,
prior to such termination, engaged in discussions with any third party
regarding an Acquisition Transaction (as hereinafter defined) (an "Issuer
Termination"), (C) 18 months after termination of the Plan by Issuer in
accordance with the terms thereof other than pursuant to an Issuer
Termination, and (D) 18 months after termination of the Plan by Grantee 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 Home Owners' Loan Act,
as amended (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 recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect 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, (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
(ii) any person (other than Grantee or any subsidiary
of Grantee) shall have acquired
A-2
<PAGE>
beneficial ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of or the right to acquire beneficial ownership
of, or any "group" (as such term is defined under the Exchange Act)
shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 20% or more of the voting power of
Issuer or any of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means
any of the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act, with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 20% or
more of the then outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(ii) the 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
subsidiary 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 HOLA, the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), the Bank Merger Act,
as amended (the "BMA") or the Change in Bank Control Act of 1978, as
amended (the "CBCA"), for approval to engage in an Acquisition
Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its
stockholders by public announcement, or written communication that is
or becomes the subject of public disclosure, to engage in an
Acquisition Transaction; or
A-3<PAGE>
(iv) after a 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
7.02 of Article VII thereof (without regard to the cure period
provided for therein unless such cure is promptly effected without
jeopardizing consummation of the Mergers pursuant to the terms of the
Plan); or
(v) any person (other than Grantee or any subsidiary of
Grantee) other than in connection with a transaction to which Grantee
has given its prior written consent, shall have filed an application
or notice with the Office of Thrift Supervision, or other 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"), 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 the Office
of Thrift Supervision or any other Regulatory Authority is required in
connection with such purchase, Issuer shall cooperate with the Holder in
the filing of the required notice of application for approval and the
obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods).
Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
4. Payment and Delivery of Certificates.
A-4
<PAGE>
(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 11(f) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all Liens and
subject to no preemptive rights, and (B) if the Option is exercised in part
only, an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer Common
Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of
such Option Shares in violation of applicable federal and state law or of
the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 22,
1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the 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 SEC, or
an opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the written
notice of exercise of the Option provided for under Section 3(e), the
tender of the applicable purchase price in immediately available funds and
the tender of this Agreement to Issuer, Holder shall be deemed to be the
holder of record of the shares of Issuer Common Stock issuable upon
A-5
<PAGE>
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 HOLA, or the CBCA, or a
state banking law, prior approval of or notice to the Office of Thrift
Supervision or to any Regulatory Authority is necessary before the Option
may be exercised, cooperating fully with Holder in preparing such
applications or notices and providing such information to the Office of
Thrift Supervision or such Regulatory Authority 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
A-6
<PAGE>
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 upon exercise of the
Option. The shares of Issuer Common Stock to be issued upon due exercise
of the Option, including all additional shares of Issuer Common Stock or
other securities which may be issuable pursuant to Section 7, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all Liens,
including, but not limited to, 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 registered or exempt from registration under the
Securities Act.
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
A-7
<PAGE>
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 subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Issuer Common Stock shall
be changed into or exchanged for stock or other securities of Issuer or any
other person or cash or any other property or the outstanding shares of
Issuer Common Stock immediately prior to such merger shall after such
merger represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that
the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged
for, an option (the "Substitute Option"), at the election of Holder, of
either (x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the case of a
merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
A-8
<PAGE>
(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
Option Price multiplied by a fraction in which the numerator is the number
of shares of Issuer Common Stock for which the Option was theretofore
exercisable and the denominator is the number of shares of the Substitute
Common Stock for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii) the transferee of all or
substantially all of Issuer's assets (or a substantial part of the
assets of its subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute
Option Issuer.
(3) "Assigned Value" shall mean the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer or an Exchange
Offer therefor has been made, (x) the price per share of Issuer Common
Stock to be paid by any third party pursuant to an agreement with
Issuer, (y) the highest closing price for shares of Issuer Common
Stock within the six-month period immediately preceding the
consolidation, merger, or sale in question and (z) in the event of a
sale of all
A-9
<PAGE>
or substantially all of Issuer's assets or deposits an
amount equal to (i) the sum of the price paid in such sale for such
assets (and/or deposits) and the current market value of the remaining
assets of Issuer, as determined by a nationally recognized investment
banking firm selected by Holder or Owner, as the case may be, divided
by (ii) the number of shares of Issuer Common Stock outstanding at
such time. In the event that a Tender Offer or an Exchange Offer is
made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a nationally
recognized investment banking firm selected by Holder or Owner, as the
case may be (and if there are both a Holder and an Owner, the Holder).
(4) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one year immediately
preceding the consolidation, merger, or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than 19.9%
of the aggregate of the shares of Substitute Common Stock outstanding prior
to exercise of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock but for the limitation in the first
sentence of this 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.
(g) Issuer shall not enter into any transaction described
in Section 7(b) unless the Acquiring Corporation and any person that
controls the Acquiring
A-10
<PAGE>
Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that
the provisions of this Section 7 are given full force and effect
(including, without limitation, any action that may be necessary so that
the holders of the other shares of common stock issued by Substitute Option
Issuer are not entitled to exercise any rights by reason of the issuance or
exercise of the Substitute Option and the shares of Substitute Common Stock
are otherwise in no way distinguishable from or have lesser economic value
(other than any diminution in value resulting from the fact that the
Substitute Common Stock are restricted securities, as defined in Rule 144
under the Securities Act or any successor provision) than other shares of
common stock issued by Substitute Option Issuer).
8. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to
the conditions of Section 8(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 a registration
statement under the Securities Act if such registration is necessary in
order to permit the sale or other disposition of any or all shares of
Issuer Common Stock or other securities that have been acquired by or are
issuable to the Selling Shareholder upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
the Selling Shareholder in such request, including without limitation a
"shelf" registration statement under Rule 415 under the Securities Act or
any successor provision, and Issuer shall use its best efforts to qualify
such shares or other securities for sale under any applicable state
securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common Stock under the Securities Act in connection with an underwritten
public offering of such Issuer Common Stock, Issuer will promptly give
written notice to the Selling Shareholders of its intention to do so and,
upon the written request of any Selling Shareholder given within 30 days
after receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by the Selling Shareholder), Issuer will cause all such
shares for which a Selling Shareholder requests participation in such
registration, to be so registered and included in such underwritten public
offering; provided, however, that Issuer may elect to not cause any such
shares to be so registered
A-11
<PAGE>
(i) if the underwriters in good faith object for
valid business reasons, or (ii) in the case of a registration solely to
implement an employee benefit plan or a registration filed on Form S-4 of
the Securities Act or any successor Form; provided, further, however, that
such election pursuant to (i) may only be made two times. If some but not
all the shares of Issuer Common Stock, with respect to which Issuer shall
have received requests for registration pursuant to this subsection (b),
shall be excluded from such registration, Issuer shall make appropriate
allocation of shares to be registered among the Selling Shareholders
desiring to register their shares pro rata in the proportion that the
number of shares requested to be registered by each such Selling
Shareholder bears to the total number of shares requested to be registered
by all such Selling Shareholders then desiring to have Issuer Common Stock
registered for sale.
(c) Conditions to Required Registration. Issuer shall use
all reasonable efforts to cause each registration statement referred to in
Section 8(a) above to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective, provided, however, that Issuer may delay
any registration of Option Shares required pursuant to Section 8(a) above
for a period not exceeding 90 days provided Issuer shall in good faith
determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not
be required to register Option Shares under the Securities Act pursuant to
Section 8(a) above:
(i) prior to the earliest of (a) termination of the
Plan pursuant to Article VII thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 6.01 of Article VI of the Plan,
and (c) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any calendar
year;
(iii) within 90 days after the effective date of a
registration referred to in Section 8(b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded the
opportunity to register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate number
of Option Shares (including
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<PAGE>
shares of Issuer Common Stock issuable upon exercise of the Option) then
outstanding.
In addition to the foregoing, Issuer shall not be required
to maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities laws to the
extent necessary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of distribution
for such shares, provided, however, that Issuer shall not be required to
consent to general jurisdiction or qualify to do business in any state
where it is not otherwise required to so consent to such jurisdiction or to
so qualify to do business.
(d) Expenses. Except where applicable state law prohibits
such payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses
(including the fees and expenses of counsel), legal expenses, including the
reasonable fees and expenses of one counsel to the holders whose Option
Shares are being registered, printing expenses and the costs of special
audits or "cold comfort" letters, expenses of underwriters, excluding
discounts and commissions but including liability insurance if Issuer so
desires or the underwriters so require, and the reasonable fees and
expenses of any necessary special experts) in connection with each
registration pursuant to Section 8(a) or 8(b) above (including the related
offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 8(a) or
8(b) above.
(e) Indemnification. In connection with any registration
under Section 8(a) or 8(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
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such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon and in
conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder
or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
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 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). In case notice of
commencement of any such action shall be given to the indemnifying party as
above provided, the indemnifying party shall be entitled to participate in
and, to the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such indemnified
party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying
party fails to assume the defense of such action with counsel satisfactory
to the indemnified party, or (iii) the indemnified party has been advised
by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligation to bear fees and
expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
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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 Section 8(a)
or 8(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 SEC from time to
time, including, without limitation, Rule 144A. Issuer shall at its
expense provide the Selling Shareholders with any information necessary in
connection with the completion and filing of any reports or forms required
to be filed by them under the Securities Act or the Exchange Act, or
required pursuant to any state securities laws or the rules of any stock
exchange.
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(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in
connection with the exercise of the Option, and will save the Selling
Shareholders harmless, without limitation as to time, against any and all
liabilities, with respect to all such taxes.
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 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. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall
at any time be enforceable by anyone.
11. 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
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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 Section 11(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or 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, or does not require Issuer to
repurchase, the full number of shares of Issuer Common Stock as provided in
Section 3 (as may be adjusted herein), it is the express intention of
Issuer to allow Holder or Owner to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of North Carolina
without regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation) or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
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If to Issuer to: United Financial Corporation of South Carolina, Inc.
425 Main Street
P.O. Box 3029
Greenwood, South Carolina 29648
Telecopy Number: (803)942-8247
Attention: Lynn W. Hodge
President
with a copy to: Breyer & Aguggia
601 13th Street, N.W.
Washington, D.C. 20005
Telecopy Number: (202)737-7979
Attention: John F. Breyer, Jr., Esquire
Paul M. Aguggia, Esquire
If to Grantee to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704) 374-3425
Attention: Edward E. Crutchfield, Jr.
Chairman and Chief Executive Officer
with a copy to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704) 374-3425
Attention: Marion A. Cowell, Jr.
General Counsel
(g) Counterparts. This Agreement and any amendments hereto
may be executed in two counterparts, each of which shall be considered one
and the same agreement and shall become effective when both counterparts
have been signed, it being understood that both parties need not sign the
same counterpart.
(h) Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except
that Holder may assign this Agreement to a wholly-owned subsidiary of
Holder and Holder may assign its rights hereunder in whole or in part after
the occurrence of a Purchase Event. Subject to the preceding sentence,
this
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Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of
the Option by the Holder, Issuer and the Holder shall execute and deliver
all other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(j) Specific Performance. The parties hereto agree that
this Agreement may be enforced by either party through specific
performance, injunctive relief and other equitable relief. Both parties
further agree to waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
UNITED FINANCIAL CORPORATION OF SOUTH
CAROLINA, INC.
By: /s/ LYNN W. HODGE
Name: Lynn W. Hodge
Title: President
FIRST UNION CORPORATION
By: /s/ KENNETH R. STANCLIFF
Name: Kenneth R. Stancliff
Title: Senior Vice President
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