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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 18, 1995
FIRST UNION CORPORATION
(Exact name of registrant as specified in its charter)
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NORTH CAROLINA 1-10000 56-0898180
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<S> <C> <C>
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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ONE FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28288-0013
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (704)374-6565
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
As reported in a previously filed Current Report on Form 8-K, on June 18,
1995, First Union Corporation (the "Corporation") entered into an Agreement and
Plan of Merger (the "Merger Agreement") with First Fidelity Bancorporation
("First Fidelity"), which provides, among other things, for (i) the merger (the
"Merger") of First Fidelity with and into a wholly-owned subsidiary of the
Corporation, (ii) the exchange of each outstanding share of First Fidelity
common stock for 1.35 shares of the Corporation's common stock, subject to
adjustment under certain circumstances, and (iii) the exchange of each share of
the three outstanding series of First Fidelity preferred stock for one share of
a new series of the Corporation's Class A Preferred Stock containing
substantially identical terms to the series being exchanged therefor, all
subject to the terms and conditions contained in the Merger Agreement.
In connection with the execution of the Merger Agreement, First Fidelity
granted an option (the "Fidelity Option Agreement") to the Corporation to
purchase, under certain circumstances, up to 19.9% of the outstanding shares of
First Fidelity common stock at a per share exercise price equal to the last sale
price of First Fidelity common stock on the New York Stock Exchange Composite
Transactions tape on June 19, 1995 (but not less than $48.75), and the
Corporation granted an option (the "Corporation Option") to First Fidelity (the
"Corporation Option Agreement") to purchase, under certain circumstances, up to
19.9% of the outstanding shares of the Corporation's common stock at a per share
exercise price equal to the last sale price of the Corporation's common stock on
the New York Stock Exchange Composite Transactions tape on June 19, 1995.
Also, in connection with the execution of the Merger Agreement, (i) Banco
Santander, S.A., the owner of approximately 30% of the outstanding shares of
First Fidelity common stock, agreed, among other things, to vote the shares held
by it in favor of the Merger Agreement (the "Banco Agreement"), and (ii) the
Corporation entered into the Third Amendment to its Shareholder Protection
Rights Agreement (the "Rights Plan") to exempt the Corporation Option from
triggering the Rights Plan. Consummation of the Merger is subject to receipt of
regulatory and shareholder approvals, as well as other conditions set forth in
the Merger Agreement. No assurance can be given that the Merger will be
consummated.
A copy of the form of the Merger Agreement, including the form of the
Fidelity Option Agreement, Corporation Option Agreement, Banco Agreement and
Third Amendment to the Rights Plan (which are exhibits to the Merger Agreement),
is attached hereto as Exhibit (99).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST UNION CORPORATION
Date: June 21, 1995 By: /s/ Kent S. Hathaway
NAME: KENT S. HATHAWAY
TITLE: SENIOR VICE PRESIDENT
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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(99) Form of Merger Agreement, including as
exhibits thereto, the form of
Fidelity Option Agreement (Exhibit A
thereto), Corporation Option Agreement
(Exhibit C thereto), Banco Agreement
(Exhibit B thereto), and Third Amendment
to the Rights Plan (Exhibit E thereto).
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<PAGE>
EXHIBIT (99)
AGREEMENT AND PLAN OF MERGER
dated as of June 18, 1995
by and among
FIRST FIDELITY BANCORPORATION,
FIRST UNION CORPORATION
and
PKC, INC.
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TABLE OF CONTENTS
Page
I. THE MERGER; EFFECTS OF THE MERGER . . . . . . . . 3
1.01. The Merger . . . . . . . . . . . . . . . 3
1.02. Effective Date and Effective Time . . . 3
1.03. Deposit Agreement . . . . . . . . . . . 4
1.04. Amendment of FUNC Articles . . . . . . . 4
II. CONSIDERATION . . . . . . . . . . . . . . . . . . 4
2.01. Merger Consideration . . . . . . . . . . 4
2.02. Stockholder Rights; Stock Transfers . . 6
2.03. Fractional Shares . . . . . . . . . . . 6
2.04. Exchange Procedures . . . . . . . . . . 6
2.05. Dissenting Stockholders . . . . . . . . 8
2.06. Anti-Dilution Provisions . . . . . . . . 8
2.07. Treasury Shares . . . . . . . . . . . . 8
III. ACTIONS PENDING MERGER . . . . . . . . . . . . . . 9
3.01. Ordinary Course . . . . . . . . . . . . 9
3.02. Capital Stock . . . . . . . . . . . . . 10
3.03. Dividends, Etc. . . . . . . . . . . . . 10
3.04. Compensation; Employment Agreements;
Etc. . . . . . . . . . . . . . . . . . 10
3.05. Benefit Plans . . . . . . . . . . . . . 11
3.06. Acquisitions and Dispositions . . . . . 11
3.07. Amendments . . . . . . . . . . . . . . . 12
3.08. Accounting Methods . . . . . . . . . . . 12
3.09. Adverse Actions . . . . . . . . . . . . 12
3.10. Agreements . . . . . . . . . . . . . . . 12
IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 13
4.01. Disclosure Letters . . . . . . . . . . . 13
4.02. Standard . . . . . . . . . . . . . . . . 13
4.03. Representations and Warranties . . . . . 13
V. COVENANTS . . . . . . . . . . . . . . . . . . . . 26
5.01. Reasonable Best Efforts . . . . . . . . 27
5.02. Stockholder Approvals . . . . . . . . . 27
5.03. Registration Statement . . . . . . . . . 27
5.04. Press Releases . . . . . . . . . . . . . 28
5.05. Access; Information . . . . . . . . . . 28
5.06. Acquisition Proposals . . . . . . . . . 29
5.07. Affiliate Agreements . . . . . . . . . . 29
5.08. Certain Modifications; Restructuring
Charges . . . . . . . . . . . . . . . 30
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Page
5.09. Takeover Laws . . . . . . . . . . . . . 30
5.10. No Rights Triggered . . . . . . . . . . 31
5.11. Shares Listed . . . . . . . . . . . . . 31
5.12. Regulatory Applications . . . . . . . . 31
5.13. Indemnification . . . . . . . . . . . . 32
5.14. Benefit Plans . . . . . . . . . . . . . 33
5.15. Accountants' Letters . . . . . . . . . . 34
5.16. Registration Rights . . . . . . . . . . 34
5.17. Certain Director and Officer Positions . 35
5.18. Notification of Certain Matters . . . . 36
VI. CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . 36
6.01. Shareholder Vote . . . . . . . . . . . . 36
6.02. Regulatory Approvals . . . . . . . . . . 36
6.03. Third Party Consents . . . . . . . . . . 36
6.04. No Injunction, Etc . . . . . . . . . . . 36
6.05. Pooling Letters . . . . . . . . . . . . 36
6.06. Representations, Warranties and
Covenants of FUNC . . . . . . . . . . 36
6.07. Representations, Warranties and
Covenants of FFB . . . . . . . . . . . 37
6.08. Effective Registration Statement . . . . 37
6.09. Blue-Sky Permits . . . . . . . . . . . . 37
6.10. Tax Opinion . . . . . . . . . . . . . . 37
6.11. Articles of Amendment . . . . . . . . . 38
6.12. NYSE Listing . . . . . . . . . . . . . . 38
6.13. Rights Agreements. . . . . . . . . . . . 38
VII. TERMINATION . . . . . . . . . . . . . . . . . . . 38
7.01. Termination. . . . . . . . . . . . . . . 38
7.02. Effect of Termination and Abandonment . 42
VIII. OTHER MATTERS . . . . . . . . . . . . . . . . . . 42
8.01. Survival . . . . . . . . . . . . . . . . 42
8.02. Waiver; Amendment . . . . . . . . . . . 42
8.03. Counterparts . . . . . . . . . . . . . . 43
8.04. Governing Law . . . . . . . . . . . . . 43
8.05. Expenses . . . . . . . . . . . . . . . . 43
8.06. Confidentiality . . . . . . . . . . . . 43
8.07. Notices . . . . . . . . . . . . . . . . 43
8.08. Definitions . . . . . . . . . . . . . . 44
8.09. Entire Understanding; No Third Party
Beneficiaries . . . . . . . . . . . . 45
8.10. Headings . . . . . . . . . . . . . . . . 45
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LIST OF EXHIBITS
EXHIBIT DESCRIPTION
A FORM OF FFB STOCK OPTION AGREEMENT
B FORM OF VOTING AND SUPPORT AGREEMENT
C FORM OF FUNC STOCK OPTION AGREEMENT
D FORM OF THIRD SUPPLEMENT TO FFB RIGHTS
PLAN
E FORM OF THIRD AMENDMENT TO FUNC RIGHTS
PLAN
F FORM OF FFB AFFILIATE LETTER
G FORM OF FUNC AFFILIATE LETTER
H REGISTRATION RIGHTS
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AGREEMENT AND PLAN OF MERGER, dated as of the 18th day
of June, 1995 (this "Plan"), by and among First Fidelity
Bancorporation ("FFB"), First Union Corporation ("FUNC") and
PKC, Inc. ("Merger Sub").
RECITALS:
(A) FFB. FFB is a corporation duly organized and
existing in good standing under the laws of the State of New
Jersey, with its principal executive offices located in
Philadelphia, Pennsylvania and Newark, New Jersey. As of
the date hereof, FFB has 150,000,000 authorized shares of
common stock, each of $1.00 par value ("FFB Common Stock"),
and 10,000,000 authorized shares of preferred stock, each of
$1.00 par value ("FFB Preferred Stock"; and, together with
the FFB Common Stock, "FFB Stock"), being composed of
4,892,837 authorized shares of Series B Convertible
Preferred Stock ("FFB Series B Preferred Stock"), 350,000
authorized shares of Series D Adjustable Rate Cumulative
Preferred Stock ("FFB Series D Preferred Stock"), 1,500,000
authorized shares of Series E Junior Participating Preferred
Stock ("FFB Series E Preferred Stock") and 75,000 authorized
shares of Series F 10.64% Preferred Stock ("FFB Series F
Preferred Stock") (no other class or series of capital stock
being authorized), of which 78,824,512 shares of FFB Common
Stock, 4,662,248 shares of FFB Series B Preferred Stock,
350,000 shares of FFB Series D Preferred Stock, no shares of
FFB Series E Preferred Stock and 75,000 shares of FFB
Series F Preferred Stock (represented by depositary shares,
each representing a one one-fortieth interest in a share of
FFB Series F Preferred Stock ("FFB Depositary Shares")) were
issued and outstanding as of May 31, 1995.
(B) FUNC. FUNC is a corporation duly organized and
existing in good standing under the laws of the State of
North Carolina, with its principal executive offices located
in Charlotte, North Carolina. As of the date hereof, FUNC
has 750,000,000 authorized shares of common stock, each of
$3.33 1/3 par value ("FUNC Common Stock"), 40,000,000
authorized shares of Class A Preferred Stock, no-par value
("FUNC Class A Preferred Stock"), and 10,000,000 authorized
shares of Preferred Stock, no-par value ("FUNC No-Par
Preferred Stock"; and, together with the FUNC Class A
Preferred Stock, "FUNC Preferred Stock"; and, together with
the FUNC Common Stock and FUNC Class A Preferred Stock,
"FUNC Stock") (no other class or series of capital stock
being authorized), of which 171,065,333 shares of FUNC
Common Stock and no shares of FUNC Preferred Stock were
issued and outstanding as of May 31, 1995.
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(C) Merger Sub. Merger Sub is a corporation duly
organized and existing in good standing under the laws of
the State of New Jersey. As of the date hereof, Merger Sub
has 2,500 authorized shares of common stock, without par
value ("Merger Sub Common Stock"), of which 1,000 shares are
issued and outstanding (no other class of capital stock
being authorized).
(D) Stock Option Agreements; Voting and Support
Agreement. As a condition and inducement to FUNC's
willingness to enter into this Plan, following execution and
delivery of this Plan, (i) FFB is entering into a Stock
Option Agreement with FUNC (the "FFB Stock Option
Agreement") in substantially the form attached hereto as
Exhibit A, pursuant to which FFB shall grant to FUNC an
option to purchase, under certain circumstances, shares of
FFB Common Stock, and (ii) Banco Santander, S.A. (together
with certain of its affiliates, the "Investor") is entering
into an agreement with FFB and FUNC (the "Voting and Support
Agreement") in the form attached hereto as Exhibit B,
pursuant to which the Investor, among other things, has
agreed to vote its shares of FFB Stock in favor of the
transactions contemplated hereby. As a condition and
inducement to FFB's willingness to enter into this Plan,
following execution and delivery of this Plan, FUNC is
entering into a Stock Option Agreement with FFB (the "FUNC
Stock Option Agreement"; and, together with the FFB Stock
Option Agreement, the "Stock Option Agreements") in
substantially the form attached hereto as Exhibit C,
pursuant to which FUNC shall grant to FFB an option to
purchase, under certain circumstances, shares of FUNC Common
Stock.
(E) Intention of the Parties. It is the intention of
the parties to this Plan that the Merger (as defined in
Section 1.01) shall (i) be accounted for as a "pooling of
interests" under generally accepted accounting principles
and (ii) qualify as a reorganization under Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
(F) Approvals. The Board of Directors of each of FFB
and FUNC (i) has determined that this Plan and the
transactions contemplated hereby are in the best interests
of FFB and FUNC, respectively, and in the best interests of
their respective stockholders, (ii) has determined that this
Plan and the transactions contemplated hereby are consistent
with, and in furtherance of, its respective business
strategies and (iii) has approved, at meetings of each of
such Boards of Directors, this Plan. The Board of Directors
of Merger Sub and FUNC, as the sole stockholder of Merger
Sub, have approved this Plan.
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NOW, THEREFORE, in consideration of their mutual
promises and obligations, the parties hereto approve, adopt
and make this Plan and prescribe the terms and conditions
hereof and the manner and basis of carrying it into effect,
which shall be as follows:
I. THE MERGER; EFFECTS OF THE MERGER
1.01. The Merger. At the Effective Time (as
defined in Section 1.02):
(A) The Continuing Corporation. FFB shall
merge with and into Merger Sub (the "Merger"), the
separate existence of FFB shall cease and Merger Sub
shall survive and continue to exist as a New Jersey
corporation (Merger Sub sometimes being referred to
herein as the "Continuing Corporation" after the
Effective Time).
(B) Effect of the Merger. Subject to the
satisfaction or waiver of the conditions set forth in
Article VI in accordance with the terms of this Plan,
the Merger shall become effective upon the filing in
the office of the Secretary of State of New Jersey of a
certificate of merger (the "Certificate of Merger"), or
such later date and time as may be set forth in the
Certificate of Merger, in accordance with
Section 14A:10-4.1 of the New Jersey Business
Corporation Act (the "NJBCA"). The Merger shall have
the effects prescribed in Section 14A:10-6 of the
NJBCA.
(C) Certificate of Incorporation and By-
laws. The certificate of incorporation and by-laws of
the Continuing Corporation shall be those of Merger
Sub, as in effect immediately prior to the Effective
Time.
1.02. Effective Date and Effective Time. Subject
to the conditions to the obligations of the parties to
effect the Merger as set forth in Article VI, the parties
shall cause the effective date of the Merger (the "Effective
Date") to occur on (1) the third business day to occur after
the last of the conditions set forth in Sections 6.01, 6.02,
6.03 and 6.12 have been satisfied or waived in accordance
with the terms of this Plan or (2) such other date to which
the parties may agree in writing. The time on the Effective
Date when the Merger shall become effective is referred to
as the "Effective Time."
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1.03. Deposit Agreement. Unless FUNC shall have
entered into a new deposit agreement with respect to the New
FUNC Depositary Shares (as defined below ) at the Effective
Time, FUNC shall assume the obligations of FFB under the
Deposit Agreement, dated as of June 28, 1991 (the "Deposit
Agreement"), between FFB and First Fidelity Bank, N.A., as
Depositary (the "Depositary"), and shall execute an
instrument confirming such assumption in form and substance
mutually acceptable to FUNC and FFB. The Continuing
Corporation shall instruct the Depositary to treat the
shares of New FUNC Series 3 Preferred Stock (as defined in
Section 2.01(F)) received by the Depositary in exchange for
and upon conversion of the shares of FFB Series F Preferred
Stock as new deposited securities under the Deposit
Agreement. In accordance with clause (ii) of the first
sentence of Section 4.06 of the Deposit Agreement, the
Receipts (as defined in the Deposit Agreement) then
outstanding shall thereafter represent the shares of New
FUNC Series 3 Preferred Stock so received upon conversion
and exchange for the shares of FFB Series F Preferred Stock;
and, in accordance with the second sentence of such
Section 4.06, the Continuing Corporation shall, at the
request of FUNC, request that the Depositary call for the
surrender of all outstanding Receipts to be exchanged for
new Receipts ("New FUNC Depositary Shares") specifically
describing the New FUNC Series 3 Preferred Stock.
1.04. Amendment of FUNC Articles. At the Effective
Time, the articles of incorporation of FUNC shall be amended
to fix the preferences, limitations and relative rights of
the series of FUNC Class A Preferred Stock the shares of
which are to be issued in the Merger pursuant to Article II.
On or prior to the Effective Date, FUNC shall deliver to the
Secretary of State of North Carolina for filing, pursuant to
Section 55-10-06 of the Business Corporation Act of North
Carolina (the "NCBCA"), articles of amendment, in form
mutually acceptable to FUNC and FFB, giving effect to the
foregoing and containing any other provisions with respect
to the aforementioned series of FUNC Class A Preferred Stock
necessary to permit consummation of the Merger in accordance
with the terms of this Plan (the "Articles of Amendment").
II. CONSIDERATION
2.01. Merger Consideration. Subject to the provi-
sions of this Plan, at the Effective Time, automatically by
virtue of the Merger and without any action on the part of
any stockholder:
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(A) Outstanding FUNC Common Stock and
Preferred Stock. Each share of FUNC Common Stock (and
each attached right (a "FUNC Right") issued pursuant to
the Shareholder Protection Rights Agreement, dated
December 18, 1990 (as amended, the "FUNC Rights
Agreement"), between FUNC and First Union National Bank
of North Carolina, as Rights Agent) issued and
outstanding immediately prior to the Effective Time
shall be unchanged and shall remain issued and
outstanding.
(B) Outstanding Merger Sub Common Stock.
Each share of Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time
shall be unchanged and shall remain issued and
outstanding.
(C) Outstanding FFB Common Stock. Each
share (excluding shares held by FFB or any of its
subsidiaries (as defined in Section 8.08) or by FUNC or
any of its subsidiaries, in each case other than in a
fiduciary capacity or as a result of debts previously
contracted ("Treasury Shares")) of FFB Common Stock
(including each attached right (a "FFB Right") issued
pursuant to the Rights Agreement, dated as of
August 17, 1989 (as amended, the "FFB Rights Agree-
ment"), between FFB and First Fidelity Bank, N.A., as
Rights Agent) issued and outstanding immediately prior
to the Effective Time shall become and be converted
into the right to receive 1.35 shares (subject to
possible adjustment as set forth in Sections 2.06 and
7.01(E), the "Exchange Ratio") of FUNC Common Stock
(with the appropriate number of FUNC Rights, which
shall be attached thereto or represented by Rights
Certificates in accordance with the FUNC Rights
Agreement).
(D) Outstanding FFB Series B Preferred
Stock. If, immediately prior to the Effective Time,
there shall be issued and outstanding any shares of FFB
Series B Preferred Stock, then each such share
(excluding any Treasury Shares) of FFB Series B
Preferred Stock shall become and be converted into the
right to receive one share of a newly created series of
FUNC Class A Preferred Stock ("New FUNC Series 1
Preferred Stock") having terms (to be set forth in the
Articles of Amendment) substantially identical to those
of the FFB Series B Preferred Stock (but containing a
mutually agreed upon provision limiting FUNC's creation
or issuance of shares of FUNC Preferred Stock to
10,000,000 shares in the aggregate after the Effective
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Time for so long as any shares of New FUNC Series 1
Preferred Stock shall be outstanding).
(E) Outstanding FFB Series D Preferred
Stock. If, immediately prior to the Effective Time,
there shall be issued and outstanding any shares of FFB
Series D Preferred Stock, then each such share
(excluding any Treasury Shares) of FFB Series D
Preferred Stock shall become and be converted into the
right to receive one share of a newly created series of
FUNC Class A Preferred Stock ("New FUNC Series 2
Preferred Stock") having terms (to be set forth in the
Articles of Amendment) substantially identical to those
of the FFB Series D Preferred Stock.
(F) Outstanding FFB Series F Preferred
Stock. If, immediately prior to the Effective Time,
there shall be issued and outstanding any shares of FFB
Series F Preferred Stock, then each such share
(excluding any Treasury Shares and any shares the
recordholder of which properly exercises dissenters'
rights of appraisal to the extent available) of FFB
Series F Preferred Stock shall become and be converted
into the right to receive one share of a newly created
series of FUNC Class A Preferred Stock ("New FUNC
Series 3 Preferred Stock"; and, together with the New
FUNC Series 1 Preferred Stock and New FUNC Series 2
Preferred Stock, "New FUNC Preferred Stock") having
terms (to be set forth in the Articles of Amendment)
substantially identical to those of the FFB Series F
Preferred Stock.
2.02. Stockholder Rights; Stock Transfers. At the
Effective Time, holders of FFB Common Stock and FFB
Preferred Stock shall cease to be, and shall have no rights
as, stockholders of FFB, other than to receive the consid-
eration provided under this Article II. After the Effective
Time, there shall be no transfers on the stock transfer
books of FFB or the Continuing Corporation of shares of FFB
Stock.
2.03. Fractional Shares. Notwithstanding any other
provision hereof, no fractional shares of FUNC Common Stock
and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Merger; instead,
FUNC shall pay to each holder of FFB Common Stock who would
otherwise be entitled to a fractional share an amount in
cash determined by multiplying such fraction by the average
of the last sale prices of FUNC Common Stock, as reported by
the New York Stock Exchange (the "NYSE") Composite
Transactions reporting system (as reported in The Wall
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Street Journal or, if not reported therein, in another
authoritative source), for the five NYSE trading days
immediately preceding the Effective Date.
2.04. Exchange Procedures. (1) As promptly as
practicable after the Effective Date, FUNC shall send or
cause to be sent to each former holder of shares (other than
Treasury Shares) of FFB Stock of record immediately prior to
the Effective Date transmittal materials for use in
exchanging such stockholder's certificates formerly
representing FFB Stock ("Old Certificates") for the
consideration set forth in this Article II. The certifi-
cates representing the shares of FUNC Stock ("New
Certificates") into which shares of such stockholder's FFB
Stock are converted on the Effective Date and any check in
respect of fractional share interests or dividends or
distributions which such person shall be entitled to receive
will be delivered to such stockholder only upon delivery to
First Union National Bank of North Carolina, as Exchange
Agent (the "Exchange Agent") of Old Certificates
representing all of such shares of FFB Stock (or indemnity
satisfactory to FUNC and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such
stockholder. No interest will be paid on any such cash to
be paid in lieu of fractional share interests or dividends
or distributions which any such person shall be entitled to
receive pursuant to this Article II upon such delivery. Old
Certificates surrendered for exchange by any Affiliate (as
defined in Section 5.07) of FFB shall not be exchanged for
New Certificates until FUNC has received a written agreement
from such person as specified in Section 5.07.
(2) Notwithstanding the foregoing, neither the
Exchange Agent nor the Depositary nor any party hereto shall
be liable to any former holder of FFB Stock or FFB
Depositary Shares for any amount properly delivered to a
public official pursuant to applicable abandoned property,
escheat or similar laws.
(3) Notwithstanding any other provisions of this
Plan, no dividends or other distributions with a record date
following the 30th day to occur after the Effective Time
shall be paid to any person holding Old Certificates
representing FFB Common Stock until such Old Certificates
have been surrendered for exchange for New Certificates.
Subject to the effect of applicable laws, (i) until such
30th day, there shall be paid to each former holder of
shares of FFB Common Stock, the amount of dividends or other
distributions with a record date after the Effective Time
but on or before such 30th day payable with respect to the
shares of FUNC Common Stock into which such FFB Common Stock
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has been converted pursuant to Section 2.01 and
(ii) following surrender of any such Old Certificates, there
shall be paid to the holder of the New Certificates issued
in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions
with a record date after such 30th day theretofore payable
with respect to the shares represented thereby.
2.05. Dissenting Stockholders. (1) In accordance
with Section 14A:11-1(1)(a) of the NJBCA, except as set
forth in Section 2.05(2), no dissenters' rights of appraisal
are available to any holder of shares of FFB Stock, or to
any holder of FFB Depositary Shares. To the extent
necessary to avoid the existence of any such rights, FFB
hereby agrees to use its reasonable best efforts to continue
the listing on the NYSE or another national securities
exchange of the shares of FFB Stock (other than the FFB
Series F Preferred Stock), and the FFB Depositary Shares.
(2) If any record holder of shares of FFB Series F
Preferred Stock shall be entitled to be paid the "fair
value" of such shares ("Dissenter's Shares"), as provided in
Chapter 14A:11 of the NJBCA, FFB shall give FUNC notice
thereof and FUNC shall have the right to participate in all
negotiations and proceedings with respect to any such
demands. FFB shall not, except with the prior written
consent of FUNC, voluntarily make any payment with respect
to, or settle or offer to settle, any such demand for
payment. If any dissenting holder of FFB Series F Preferred
Stock shall fail to perfect or shall have effectively
withdrawn or lost any right to dissent that such holder may
have, the shares of FFB Series F Preferred Stock held by
such person shall thereupon be treated as though such shares
of FFB Series F Preferred Stock had been converted into
shares of FUNC Series 3 Preferred Stock pursuant to
Section 2.01(F).
2.06. Anti-Dilution Provisions. In the event FUNC
changes (or establishes a record date for changing) the
number of shares of FUNC Common Stock issued and outstanding
prior to the Effective Date as a result of a stock split,
stock dividend, recapitalization or similar transaction with
respect to the outstanding FUNC Common Stock and the record
date therefor shall be prior to the Effective Date, the
Exchange Ratio shall be proportionately adjusted.
2.07. Treasury Shares. Each of the shares of FFB
Stock held as Treasury Shares immediately prior to the
Effective Time, shall be canceled and retired at the
Effective Time and no consideration shall be issued in
exchange therefor.
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2.08. Options. From and after the Effective Time, all
employee and director stock options to purchase shares of
FFB Common Stock (each, an "FFB Stock Option"), which are
then outstanding and unexercised, shall be converted into
and become options to purchase shares of FUNC Common Stock,
and FUNC shall assume each such FFB Stock Option in accord-
ance with the terms of the plan and agreement by which it is
evidenced; provided, however, that from and after the
Effective Time (i) each such FFB Stock Option assumed by
FUNC may be exercised solely to purchase shares of FUNC
Common Stock, (ii) the number of shares of FUNC Common Stock
purchasable upon exercise of such FFB Stock Option shall be
equal to the number of shares of FFB Common Stock that were
purchasable under such FFB Stock Option immediately prior to
the Effective Time multiplied by the Exchange Ratio and
rounding down to the nearest whole share, with cash being
paid for any fractional share interest that otherwise would
be purchasable, and (iii) the per share exercise price under
each such FFB Stock Option shall be adjusted by dividing the
per share exercise price of each such FFB Stock Option by
the Exchange Ratio, and rounding up to the nearest cent.
The terms of each FFB Stock Option shall, in accordance with
its terms, be subject to further adjustment as appropriate
to reflect any stock split, stock dividend, recapitalization
or other similar transaction with respect to FUNC Common
Stock on or subsequent to the Effective Date. It is
intended that the foregoing assumption shall be effected in
a manner which is consistent with the requirements of
Section 424 of the Code, as to any FFB Stock Option that is
an "incentive stock option" (as defined in Section 422 of
the Code).
III. ACTIONS PENDING MERGER
From the date hereof until the Effective Time, except
as expressly contemplated in this Plan, (i) without the
prior written consent of FUNC (which consent shall not be
unreasonably withheld or delayed) FFB will not, and (except
with respect to Section 3.07) will cause each of its
subsidiaries not to, and (ii) without the prior written
consent of FFB (which consent shall not be unreasonably
withheld or delayed) FUNC will not, and (except with respect
to Section 3.07) will cause each of its subsidiaries not to:
3.01. Ordinary Course. Conduct the business of it
and its subsidiaries other than in the ordinary and usual
course or, to the extent consistent therewith, fail to use
reasonable efforts to preserve intact their business organi-
zations and assets and maintain their rights, franchises and
existing relations with customers, suppliers, employees and
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business associates, or take any action that would
(i) adversely affect the ability of any party to obtain any
necessary approvals of any Regulatory Authorities (as
defined in Section 4.03(I)) required for the transactions
contemplated hereby without the imposition of a condition or
restriction of the type referred to in the proviso to
Section 6.02 or (ii) adversely affect its ability to perform
any of its material obligations under this Plan.
3.02. Capital Stock. Other than (i) as Previously
Disclosed in Section 4.03(C) of its Disclosure Letter (as
defined in Section 4.01), (ii) in connection with
acquisitions of businesses permitted in Section 3.06 or
(iii) under the Deposit Agreement or the relevant Stock
Option Agreement, (x) issue, sell or otherwise permit to
become outstanding any additional shares of capital stock,
any stock appreciation rights, or any Rights (as defined in
Section 8.08), (y) enter into any agreement with respect to
the foregoing, or (z) permit any additional shares of
capital stock to become subject to new grants of employee
stock options, stock appreciation rights, or similar stock-
based employee rights.
3.03. Dividends, Etc. (1) Make, declare or pay any
dividend (other than (i) in the case of FFB, quarterly cash
dividends on FFB Common Stock payable at a rate not to
exceed $0.50 per share (or, beginning with the first
dividend payable during 1996, at a rate not to exceed $.55
per share) dividends payable on FFB Preferred Stock at a
rate not exceeding the rate provided for in the terms
thereof, and dividends from subsidiaries to FFB or another
subsidiary of FFB, as applicable, and (ii) in the case of
FUNC quarterly cash dividends on FUNC Common Stock and
dividends from subsidiaries to FUNC or another subsidiary of
FUNC, as applicable) on or in respect of, or declare or make
any distribution on any shares of its capital stock,
(2) except as Previously Disclosed in Section 3.03 of its
Disclosure Letter or as contemplated by Section 5.08(2),
directly or indirectly combine, redeem, reclassify, purchase
or otherwise acquire, any shares of its capital stock or,
(3) other than as Previously Disclosed in Section 4.03(C) of
its Disclosure Letter or as required by the relevant Stock
Option Agreement (or in the case of FUNC, intercorporate
transactions), authorize the creation or issuance of, or
issue, any additional shares of its capital stock or any
Rights with respect thereto. Notwithstanding the foregoing,
in all events FFB and FUNC shall agree to coordinate (on a
mutually agreeable basis that will not materially impair
KPMG Peat Marwick LLP's ability to deliver the letters
referred to in Section 6.05) the declaration of dividends
(and the record and payment dates therefor) payable during
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the period preceding and including the quarter in which the
Effective Date occurs so that FFB and FUNC stockholders will
receive fair dividends and in no event shall FFB and FUNC
stockholders fail to receive a fair dividend during any
quarter up to and including the quarter immediately
following the Effective Date.
3.04. Compensation; Employment Agreements; Etc. In
the case of FFB and its subsidiaries, enter into or amend
any written employment, severance or similar agreements or
arrangements with any of its directors, officers or
employees, or grant any salary or wage increase or increase
any employee benefit (including incentive or bonus
payments), except for (i) normal individual increases in
compensation to employees in the ordinary course of business
consistent with past practice or consistent with individual
increases by FUNC for similarly situated employees of FUNC
(but not exceeding the compensation levels of such FUNC
employees) or (ii) other changes as may be required by law
or to satisfy contractual obligations existing as of the
date hereof or additional grants of awards to newly hired
employees consistent with past practice, which to the extent
practicable have been Previously Disclosed in Section 3.04
of its Disclosure Letter.
3.05. Benefit Plans. In the case of FFB and its
subsidiaries, enter into or modify (except as may be
required by applicable law or to satisfy contractual
obligations existing as of the date hereof, which to the
extent practicable have been Previously Disclosed in
Section 3.05 of its Disclosure Letter) any pension,
retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors,
officers or other employees, including without limitation
taking any action that accelerates the vesting or exercise
of any benefits payable thereunder.
3.06. Acquisitions and Dispositions. Except as
Previously Disclosed in Section 3.06 of its Disclosure
Letter and except for dispositions and acquisitions of
assets in the ordinary and usual course of business
consistent with past practice, dispose of or discontinue any
portion of its assets, business or properties, which is
material to it and its subsidiaries taken as a whole, or
merge or consolidate with, or acquire (other than by way of
foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously
contracted in good faith, in each case in the ordinary and
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<PAGE>
usual course of business consistent with past practice) all
or any portion of, the business or property of any other
entity which is material to it and its subsidiaries taken as
a whole (any of the foregoing, a "Business Combination
Transaction"); it being understood, for purposes of this
Section 3.06, that: (1) in the case of FFB (i) Business
Combination Transactions in which the purchase price to be
paid or received by FFB and/or its subsidiaries consists
solely of cash in an amount not exceeding $150 million in
any one case shall be considered not to be material to FFB
and its subsidiaries taken as a whole and (ii) no Business
Combination Transaction involving the issuance by FFB and/or
its subsidiaries of shares of capital stock would be
permissible without FUNC's prior consent; and (2) in the
case of FUNC, (i) Business Combination Transactions in which
the purchase price to be paid or received by FUNC and/or its
subsidiaries includes cash in an amount not exceeding
$300 million in any one case or (ii) Business Combination
Transactions in which the purchase price paid by FUNC and/or
its subsidiaries includes shares of FUNC Common Stock in a
number not exceeding 4.0% of the number of such shares
outstanding on May 31, 1995 in any one case, shall be
considered not to be material to FUNC and its subsidiaries
taken as a whole.
3.07. Amendments. Except, in the case of FUNC, by
filing the Articles of Amendment, amend its articles or
certificate of incorporation or by-laws (or similar
constitutive documents) or, except as contemplated in
Section 4.03(P)(2), the FUNC Rights Agreement or FFB Rights
Agreement, as the case may be, redeem the FUNC Rights or FFB
Rights, as the case may be, or adopt any plan or arrangement
similar to or as a substitute for the FFB Rights Agreement
or FUNC Rights Agreement, as the case may be.
3.08. Accounting Methods. Implement or adopt any
change in its accounting principles, practices or methods,
other than as may be required by generally accepted
accounting principles.
3.09. Adverse Actions. (1) Knowingly take any
action that would, or is reasonably likely to, prevent or
impede the Merger from qualifying (i) for pooling-of-
interests accounting treatment or (ii) as a reorganization
within the meaning of Section 368(a) of the Code; provided,
however, that nothing contained herein shall limit the
ability of FFB or FUNC to exercise its rights under either
Stock Option Agreement; or (2) knowingly take any action
that is intended or is reasonably likely to result in
(x) any of its representations and warranties set forth in
this Plan being or becoming untrue in any material respect
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<PAGE>
at any time prior to the Effective Time, (y) any of the
conditions to the Merger set forth in Article VI not being
satisfied or (z) a material violation of any provision of
this Plan except, in every case, as may be required by
applicable law.
3.10. Agreements. Agree or commit to do anything
prohibited by Sections 3.01 through 3.09.
IV. REPRESENTATIONS AND WARRANTIES
4.01. Disclosure Letters. On or prior to the date
hereof, FUNC has delivered to FFB and FFB has delivered to
FUNC a letter (as the case may be, its "Disclosure Letter")
setting forth, among other things, items the disclosure of
which is necessary or appropriate in relation to any or all
of its representations and warranties; provided, that (i) no
such item is required to be set forth in a Disclosure Letter
as an exception to a representation or warranty (it being
understood that items to be set forth in response to
Sections 4.03(C), (D)(1) and (2) and (M)(1) are intended as
informational disclosures and not to constitute exceptions
to the applicable representation or warranty) if its absence
is not reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect
under the standards established by Section 4.02, and
(ii) the mere inclusion of an item in a Disclosure Letter
shall not be deemed an admission by a party that such item
represents a material exception or fact, event or
circumstance or that such item is reasonably likely to
result in a Material Adverse Effect (as defined in
Section 8.08).
4.02. Standard. No representation or warranty of
FUNC or FFB contained in Section 4.03 (other than the
representations and warranties contained in
(i) Sections 4.03(A) (with respect to the facts set forth in
Recitals A and B), (C) and (U)(ii), which shall be true and
correct (except for inaccuracies which are de minimis in
amount) and (ii) Sections 4.03(D)(1)(i)-(iv), (F), (P) and
(U)(i), which shall be true and correct in all material
respects) shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact,
circumstance or event if such fact, circumstance or event,
individually or taken together with all other facts,
circumstances or events inconsistent with any paragraph of
Section 4.03 is not reasonably likely to, have a Material
Adverse Effect.
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<PAGE>
4.03. Representations and Warranties. Subject to
Sections 4.01 and 4.02, FFB hereby represents and warrants
to FUNC, and FUNC hereby represents and warrants to FFB, as
follows:
(A) Recitals. In the case of the representations
and warranties of FFB, the facts set forth in Recitals A, E
and F of this Plan with respect to it are true and correct.
In the case of the representations and warranties of FUNC,
the facts set forth in Recitals B, C, E and F of this Plan
with respect to it and Merger Sub are true and correct.
(B) Organization, Standing, and Authority. It is
duly qualified to do business and is in good standing in the
states of the United States and foreign jurisdictions where
its ownership or leasing of property or the conduct of its
business requires it to be so qualified. It has in effect
all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is
now conducted.
(C) Shares. (1) The outstanding shares of its
capital stock are validly issued and outstanding, fully paid
and nonassessable, and subject to no preemptive rights (and
were not issued in violation of any preemptive rights).
Except as Previously Disclosed in Section 4.03(C) of its
Disclosure Letter, there are no shares of its capital stock
authorized and reserved for issuance, it does not have any
Rights issued or outstanding with respect to its capital
stock, and it does not have any commitment to authorize,
issue or sell any such shares or Rights, except pursuant to
this Plan, the relevant Stock Option Agreement and the FUNC
Rights Agreement or FFB Rights Agreement, as the case may
be. Since May 31, 1995, it has issued no shares of its
capital stock except pursuant to plans or commitments
Previously Disclosed in Section 4.03(C) of its Disclosure
Letter.
(2) In the case of the representations and
warranties of FFB, the number of shares of FFB Common Stock
which are issuable upon exercise of FFB Stock Options as of
the date hereof are Previously Disclosed in Section 4.03(C)
of FFB's Disclosure Letter.
(3) In the case of the representations and
warranties of FUNC: (i) the outstanding shares of Merger
Sub Common Stock are validly issued and outstanding, fully
paid and nonassessable, and subject to no preemptive rights;
and (ii) the shares of FUNC Stock to be issued in exchange
for shares of FFB Stock in the Merger, when issued in
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<PAGE>
accordance with the terms of this Plan will be duly autho-
rized, validly issued, fully paid and nonassessable.
(D) Subsidiaries. (1) In the case of the
representations and warranties of FFB, (i) it has Previously
Disclosed in Section 4.03(D) of FFB's Disclosure Letter a
list of all its subsidiaries together with state of
incorporation for each such subsidiary and the states or
jurisdictions in which such subsidiary is qualified to
conduct business, (ii) no equity securities of any of its
significant subsidiaries (as defined in Section 8.08) are or
may become required to be issued (other than to it or a
subsidiary of it) by reason of any Rights, (iii) there are
no contracts, commitments, understandings, or arrangements
by which any of such significant subsidiaries is or may be
bound to sell or otherwise transfer any shares of the
capital stock of any such significant subsidiary (other than
to it or a subsidiary of it), (iv) there are no contracts,
commitments, understandings, or arrangements relating to its
rights to vote or to dispose of such shares (other than to
it or a subsidiary of it), and (v) all of the shares of
capital stock of each such significant subsidiary held by it
or its subsidiaries are fully paid and (except pursuant to
12 U.S.C. (Section Mark) 55 or equivalent state statutes in the
case of banking subsidiaries) nonassessable and are owned by it
or its subsidiaries free and clear of any charge, mortgage,
pledge, security interest, restriction, claim, lien, or
encumbrance ("Liens").
(2) In the case of the representations and
warranties of FFB, except as Previously Disclosed in Section
4.03(D) of FFB's Disclosure Letter, FFB does not own (other
than in a bona fide fiduciary capacity or in satisfaction of
a debt previously contracted) beneficially, directly or
indirectly, any shares of any equity securities or similar
interests of any person, or any interest in a partnership or
joint venture of any kind.
(3) Each of its significant subsidiaries has been
duly organized and is validly existing in good standing
under the laws of the jurisdiction in which it is
incorporated or organized, and is duly qualified to do
business and in good standing in the jurisdictions where its
ownership or leasing of property or the conduct of its
business requires it to be so qualified.
(E) Corporate Power. It and each of its
significant subsidiaries has the corporate power and
authority to carry on its business as it is now being
conducted and to own all its properties and assets; and it
(and, in the case of the representations and warranties of
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FUNC, Merger Sub) has the corporate power and authority to
execute, deliver and perform its obligations under this Plan
and the Stock Option Agreements.
(F) Corporate Authority. Subject to receipt of
the requisite approval of its stockholders referred to in
Section 6.01, this Plan, the Stock Option Agreements and the
Voting and Support Agreement, and the transactions
contemplated hereby and thereby have been, authorized by all
necessary corporate action of it and this Plan is a valid
and binding agreement of it (and, in the case of FUNC,
Merger Sub) enforceable in accordance with its terms,
(except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or
affecting creditors' rights or by general equity
principles).
(G) No Defaults. Except as Previously Disclosed
in Section 4.03(G) of its Disclosure Letter, subject to
receipt of the regulatory approvals, and expiration of the
waiting periods, referred to in Section 6.02 and the
required filings under federal and state securities laws,
the execution, delivery and performance of this Plan and the
consummation of the transactions contemplated hereby by it,
do not and will not (i) constitute a breach or violation of,
or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of it or of any of its
significant subsidiaries or to which it or any of its
significant subsidiaries or properties is subject or bound,
(ii) constitute a breach or violation of, or a default
under, its articles or certificate of incorporation or
by-laws, or (iii) require any consent or approval under any
such law, rule, regulation, judgment, decree, order,
governmental permit or license agreement, indenture or
instrument.
(H) Financial Reports and SEC Documents. Its
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and all other reports, registration
statements, definitive proxy statements or information
statements filed or to be filed by it or any of its
subsidiaries subsequent to December 31, 1994 under the
Securities Act of 1933, as amended (together with the rules
and regulations thereunder, the "Securities Act") or under
Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (together with the rules
and regulations thereunder, the "Exchange Act"), in the form
filed, or to be filed (collectively, its "SEC Documents"),
with the Securities and Exchange Commission (the "SEC")
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<PAGE>
(i) complied or will comply in all material respects as to
form with the applicable requirements under the Exchange Act
and (ii) did not and will not contain any untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they
were made, not misleading; and each of the balance sheets in
or incorporated by reference into any such SEC Document
(including the related notes and schedules thereto) fairly
presents and will fairly present the financial position of
the entity or entities to which it relates as of its date
and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements
in such report and documents (including any related notes
and schedules thereto) fairly presents and will fairly
present the results of operations, changes in stockholders'
equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set
forth therein, in each case in accordance with generally
accepted accounting principles consistently applied during
the periods involved, except in each case as may be noted
therein, subject to normal and recurring year-end audit
adjustments in the case of unaudited statements.
(I) Litigation; Regulatory Action. Except as
Previously Disclosed in Section 4.03(I) of its Disclosure
Letter:
(1) no litigation, proceeding or controversy
before any court or governmental agency is pending
against it or any of its subsidiaries and, to the best
of its knowledge, no such litigation, proceeding or
controversy has been threatened;
(2) neither it nor any of its subsidiaries
or properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or
similar submission to, any federal or state
governmental agency or authority charged with the
supervision or regulation of financial institutions or
issuers of securities or engaged in the insurance of
deposits (including, without limitation, the Office of
the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System and the Federal Deposit
Insurance Corporation) or the supervision or regulation
of it or any of its subsidiaries (collectively, the
"Regulatory Authorities"); and
(3) neither it nor any of its subsidiaries
has been advised by any Regulatory Authority that such
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<PAGE>
Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree,
agreement, memorandum or understanding, commitment
letter or similar submission.
(J) Compliance with Laws. Except as Previously
Disclosed in Section 4.03(J) of its Disclosure Letter, it
and each of its subsidiaries:
(1) is in compliance, in the conduct of its
business, with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to
the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act,
the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to
discriminatory business practices;
(2) has all permits, licenses, authoriza-
tions, orders and approvals of, and have made all
filings, applications and registrations with, all
Regulatory Authorities that are required in order to
permit them to conduct their businesses substantially
as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in
full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them
is threatened; and
(3) has received, since December 31, 1994,
no notification or communication from any Regulatory
Authority (i) asserting that it or any of its
subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such
Regulatory Authority enforces or (ii) threatening to
revoke any license, franchise, permit, or governmental
authorization or (iii) threatening or contemplating
revocation or limitation of, or which would have the
effect of revoking or limiting, federal deposit
insurance (nor, to its knowledge, do any grounds for
any of the foregoing exist).
(K) Defaults; Properties. (1) Except as
Previously Disclosed in Section 4.03(K) of its Disclosure
Letter, neither it nor any of its subsidiaries is in default
under any contract, agreement, commitment, arrangement,
lease, insurance policy, or other instrument to which it is
a party, by which its respective assets, business, or
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<PAGE>
operations may be bound or affected, or under which it or
its respective assets, business, or operations receives
benefits, and there has not occurred any event that, with
the lapse of time or the giving of notice or both, would
constitute such a default.
(2) Except as disclosed or reserved against in
its SEC Documents, it and its subsidiaries have good and
marketable title, free and clear of all Liens (other than
Liens for current taxes not yet delinquent or pledges to
secure deposits) to all of the material properties and
assets, tangible or intangible, reflected in its SEC
Documents as being owned by it or its subsidiaries as of the
dates thereof. To its knowledge, all buildings and all
fixtures, equipment and other property and assets that are
material to its business on a consolidated basis and are
held under leases or subleases by it or its subsidiaries are
held under valid leases or subleases enforceable in
accordance with their respective terms (except as may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar
laws of general applicability affecting creditors' rights or
by general equity principles).
(L) No Brokers. All negotiations relative to
this Plan and the transactions contemplated hereby have been
carried on by it directly with the other parties hereto and
no action has been taken by it that would give rise to any
valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment, excluding,
in the case of FFB, a fee to be paid to Goldman, Sachs &
Co., and, in the case of FUNC, a fee to be paid to Lazard
Freres & Co. LLC, which, in each case, has been heretofore
disclosed to the other party.
(M) Employee Benefit Plans. (1) In the case of
the representations and warranties of FFB, Section 4.03(M)
of FFB's Disclosure Letter contains a complete list of all
bonus, vacation, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock
option plans, all employment or severance contracts, all
medical, dental, disability, health and life insurance
plans, all other employee benefit and fringe benefit plans,
contracts or arrangements and any applicable "change of
control" or similar provisions in any plan, contract or
arrangement maintained or contributed to by it or any of its
subsidiaries for the benefit of officers, former officers,
employees, former employees, directors, former directors, or
the beneficiaries of any of the foregoing ("Compensation and
Benefit Plans").
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(2) True and complete copies of its Compensation
and Benefit Plans, including, but not limited to, any trust
instruments and/or insurance contracts, if any, forming a
part thereof, and all amendments thereto have been supplied
to the other party.
(3) Each of its Compensation and Benefit Plans
has been administered in compliance with the terms thereof.
All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA ("Multiemployer
Plans"), covering employees or former employees of it and
its subsidiaries (its "Plans"), to the extent subject to
ERISA, are in compliance with ERISA, the Code, the Age
Discrimination in Employment Act and other applicable laws.
Each Plan of it or its subsidiaries which is an "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA ("Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and
it is not aware of any circumstances reasonably likely to
result in the revocation or denial of any such favorable
determination letter. Except as Previously Disclosed in
Section 4.03(M) of its Disclosure Letter, there is no
pending or, to its knowledge, threatened litigation or
governmental audit, examination or investigation relating to
the Plans. Neither it nor any of its subsidiaries has
engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as
of the date hereof, could subject it or any of its subsid-
iaries to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA.
(4) No liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by it or any
of its subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of
any entity which is considered one employer with it under
Section 4001(a)(15) of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). Neither it nor any of its subsidiaries
presently contributes to a Multiemployer Plan, nor have they
contributed to such a plan within the past five calendar
years. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required
to be filed for any Pension Plan of it or any of its
subsidiaries or by any ERISA Affiliate within the past 12
months.
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(5) All contributions, premiums and payments
required to be made under the terms of any Plan of it or any
of its subsidiaries have been made. Neither any Pension
Plan of it or any of its subsidiaries nor any single-
employer plan of an ERISA Affiliate of it or any of its
subsidiaries has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. Neither it nor any of its
subsidiaries has provided, or is required to provide,
security to any Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
(6) Under each Pension Plan of it or any of its
subsidiaries which is a single-employer plan, as of the last
day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent
actuarial valuation) did not exceed the then current value
of the assets of such Plan, and there has been no adverse
change in the financial condition of such Plan (with respect
to either assets or benefits) since the last day of the most
recent Plan year.
(7) In the case of the representations and
warranties of FFB, neither FFB nor any of its subsidiaries
has any obligations for retiree health and life benefits
under any plan, except as Previously Disclosed in Section
4.03(M) of FFB's Disclosure Letter.
(8) In the case of the representations and
warranties of FFB, except as Previously Disclosed in Section
4.03(M) of FFB's Disclosure Letter, neither the execution
and delivery of this Plan nor the consummation of the
transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise)
becoming due to any director or any employee of FFB or any
of its subsidiaries under any Compensation and Benefit Plan
or otherwise from FFB or any of its subsidiaries,
(ii) increase any benefits otherwise payable under any
Compensation and Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such
benefit.
(N) Labor Matters. Neither it nor any of its
subsidiaries is a party to, or is bound by any collective
bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor
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is it or any of its subsidiaries the subject of a proceeding
asserting that it or any such subsidiary has committed an
unfair labor practice (within the meaning of the National
Labor Relations Act) or seeking to compel it or such
subsidiary to bargain with any labor organization as to
wages and conditions of employment, nor is there any strike
or other labor dispute involving it or any of its
subsidiaries, pending or, to the best of its knowledge,
threatened, nor is it aware of any activity involving it or
any of its subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in any other
organization activity.
(O) Insurance. It and its subsidiaries have
taken all requisite action (including without limitation the
making of claims and the giving of notices) pursuant to its
directors' and officers' liability insurance policy or
policies in order to preserve all rights thereunder with
respect to all matters (other than matters arising in
connection with this Plan and the transactions contemplated
hereby) that are known to it.
(P) Takeover Laws; Rights Plans (1) It has taken
all action required to be taken by it in order to exempt
this Plan, the relevant Stock Option Agreement and the
Voting and Support Agreement, and the transactions contem-
plated hereby and thereby, from, and this Plan, the Voting
and Support Agreement and the relevant Stock Option Agree-
ment and the transactions contemplated hereby and thereby
are exempt from, the requirements of any "moratorium",
"control share", "fair price" or other antitakeover laws and
regulations (collectively, "Takeover Laws") of the States
(i) of North Carolina in the case of the representations and
warranties of FUNC, including Articles 9 and 9A of the
NCBCA, and (ii) of New Jersey in the case of the
representations and warranties of FFB, including
Article 14A:10A of the NJBCA.
(2) It has (i) in the case of the representations
and warranties of FFB, duly entered into an amendment to the
FFB Rights Agreement in substantially the form of Exhibit D,
(ii) in the case of the representations and warranties of
FUNC, duly entered into an amendment to the FUNC Rights
Agreement in substantially the form of Exhibit E and
(iii) taken all other action necessary or appropriate so
that, the entering into of this Plan and the Stock Option
Agreements (and, in the case of the representations and
warranties of FFB, the Voting and Support Agreement), and
the consummation of the transactions contemplated hereby and
thereby (including without limitation the Merger and the
exercise of the Option (as defined in the relevant Stock
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Option Agreement)) do not and will not result in the ability
of any person to exercise any Rights under, in the case of
FFB, the FFB Rights Agreement, and in the case of FUNC, the
FUNC Rights Agreement, or enable or require in the case of
FFB, the FFB Rights and in the case of FUNC, the FUNC
Rights, to separate from the shares of common stock to which
they are attached or to be triggered or become exercisable.
(3) In the case of the representations and
warranties of FFB, no "Distribution Date", "Shares
Acquisition Date" or "Trigger Event" (as such terms are
defined in the FFB Rights Plan) has occurred; and, in the
case of the representations and warranties of FUNC, no
"Separation Time", "Stock Acquisition Date" or "Flip-in
Date" (as such terms are defined in the FUNC Rights
Agreement) has occurred.
(Q) Environmental Matters. Except as Previously
Disclosed in Section 4.03(Q) of its Disclosure Letter:
(1) To its knowledge, it and each of its
subsidiaries, the Participation Facilities and the
Loan/Fiduciary Properties (each as defined below) are,
and have been, in compliance with all Environmental
Laws (as defined below) and it has no knowledge of any
circumstances that with the passage of time or the
giving of notice would be reasonably likely to result
in noncompliance.
(2) There is no proceeding pending or, to
its knowledge, threatened before any court,
governmental agency or board or other forum in which it
or any of its subsidiaries or any Participation
Facility has been, or with respect to threatened
proceedings, reasonably would be expected to be, named
as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor)
with any Environmental Law, or (ii) relating to the
presence, release or threatened release into the
environment of any Hazardous Material (as defined
below), whether or not occurring at or on a site owned,
leased or operated by it or any of its subsidiaries or
any Participation Facility.
(3) There is no proceeding pending or, to
its knowledge, threatened before any court,
governmental agency or board or other forum in which
any Loan/Fiduciary Property (or it or any of its
subsidiaries in respect of any Loan/Fiduciary
Property) has been, or with respect to threatened
proceedings, reasonably would be expected to be, named
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as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor)
with any Environmental Law, or (ii) relating to the
release or threatened release into the environment of
any Hazardous Material, whether or not occurring at or
on a Loan/Fiduciary Property.
(4) To its knowledge, there is no reasonable
basis for any proceeding of a type described in
Section 4.03(Q) (2) or (3).
(5) To its knowledge, during the period of
(i) its or any of its subsidiaries' ownership or
operation of any of their respective current
properties, (ii) its or any of its subsidiaries'
participation in the management of any Participation
Facility, or (iii) its or any of its subsidiaries'
holding of a security or other interest in a
Loan/Fiduciary Property, there have been no releases or
threatened releases of Hazardous Material in, on, from,
under or affecting any such property, Participation
Facility or Loan/Fiduciary Property.
(6) To its knowledge, prior to the period of
(i) its or any of its subsidiaries' ownership or
operation of any of their respective current
properties, (ii) its or any of its subsidiaries'
participation in the management of any Participation
Facility, or (iii) its or any of its subsidiaries'
holding of a security or other interest in a
Loan/Fiduciary Property, there were no releases or
threatened releases of Hazardous Material in, on, under
or affecting any such property, Participation Facility
or Loan/Fiduciary Property.
(7) With respect to either FFB or FUNC, the
following definitions apply for purposes of this
Section 4.03(Q): "Loan/Fiduciary Property" means any
property owned or operated by it or any of its
subsidiaries or in which it or any of its subsidiaries
holds a security or other interest (including, without
limitation, a fiduciary interest), and, where required
by the context, includes any such property where it or
any of its subsidiaries constitutes the owner or
operator of such property; "Participation Facility"
means any facility in which it or any of its
subsidiaries participates in the management and, where
required by the context, includes the owner or operator
of such property; "Environmental Law" means (i) any
federal, state and local law, statute, ordinance, rule,
regulation, code, license, permit, authorization,
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approval, consent, legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any
governmental entity, relating to (a) the protection,
preservation or restoration of the environment,
(including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or
safety, or (b) the exposure to, or the use, storage,
recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or
disposal of Hazardous Material, in each case as amended
and as now in effect and includes, without limitation,
the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water
Pollution Control Act of 1972, the federal Clean Air
Act, the federal Clean Water Act, the federal Resource
Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the
federal Solid Waste Disposal Act, the federal Toxic
Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970, and any similar state or
local laws each as amended and as now in effect, and
(ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or
obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure
to any Hazardous Material; "Hazardous Material" means
any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any
Environmental Law, whether by type or quantity, and
includes, without limitation, any oil or other
petroleum product, toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste,
special waste, solid waste or petroleum or any
derivative or by-product thereof, radon, radioactive
material, asbestos, asbestos containing material, urea
formaldehyde foam insulation, lead and polychlorinated
biphenyl.
(R) Tax Reports. Except as Previously Disclosed
in Section 4.03(R) of its Disclosure Letter: (i) all
reports and returns with respect to Taxes (as defined below)
that are required to be filed by or with respect to it or
its subsidiaries, including without limitation consolidated
federal income tax returns of it and its subsidiaries
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(collectively, the "Tax Returns"), have been timely filed,
or requests for extensions have been timely filed and have
not expired, and such Tax Returns were true, complete and
accurate; (ii) all taxes (which shall include federal,
state, local or foreign income, gross receipts, windfall
profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or
similar taxes imposed on the income, properties or
operations of it or its subsidiaries, together with any
interest, additions, or penalties with respect thereto and
any interest in respect of such additions or penalties,
collectively the "Taxes") shown to be due on such Tax
Returns have been paid in full; (iii) all Taxes due with
respect to completed and settled examinations have been paid
in full; (iv) no issues have been raised by the relevant
taxing authority in connection with the examination of any
of such Tax Returns; and (v) no waivers of statutes of
limitations (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service)
have been given by or requested with respect to any Taxes of
it or any of its subsidiaries.
(S) Pooling; Reorganization. As of the date
hereof, it is aware of no reason why the Merger will fail to
qualify (i) for pooling-of-interests accounting treatment or
(ii) as a reorganization under Section 368(a) of the Code.
(T) Regulatory Approvals. As of the date
hereof, it is aware of no reason why the regulatory
approvals and consents referred to in Section 6.02 will not
be received without the imposition of a condition or
requirement described in the proviso thereto.
(U) No Material Adverse Effect. Since
December 31, 1994, except as Previously Disclosed in its SEC
Documents filed with the SEC on or before the date hereof or
in any Section of its Disclosure Letter, (i) it and its
subsidiaries have conducted their respective businesses in
the ordinary and usual course (excluding the incurrence of
expenses related to this Plan and the transactions
contemplated hereby) and (ii) no event has occurred or
circumstance arisen that, individually or taken together
with all other facts, circumstances and events (described in
any paragraph of Section 4.03 or otherwise), is reasonably
likely to have a Material Adverse Effect with respect to it.
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V. COVENANTS
FFB hereby covenants to and agrees with FUNC, and FUNC
hereby covenants to and agrees with FFB, that:
5.01. Reasonable Best Efforts. Subject to the
terms and conditions of this Plan, it shall use its
reasonable best efforts in good faith to take, or cause to
be taken, all actions, and to do, or cause to be done, all
things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger
as promptly as reasonably practicable and to otherwise
enable consummation of the transactions contemplated hereby
and shall cooperate fully with the other parties hereto to
that end.
5.02. Stockholder Approvals. Each of them shall
take, in accordance with applicable law, NYSE rules and its
respective articles or certificate of incorporation and by-
laws, all action necessary to convene, respectively, an
appropriate meeting of stockholders of FUNC to consider and
vote upon the issuance of the shares of FUNC Stock to be
issued in the Merger pursuant to this Plan and to vote on
any other stockholder approval matters required for
consummation of the Merger (the "FUNC Meeting"), and an
appropriate meeting of stockholders of FFB to consider and
vote upon the approval of this Plan and to vote on any other
stockholder approval matters required for consummation of
the Merger (the "FFB Meeting"; each of the FUNC Meeting and
the FFB Meeting, a "Meeting"), respectively, as promptly as
practicable after the Registration Statement (as defined in
Section 5.03) is declared effective. Subject to the next
succeeding sentence, the Board of Directors of each of FUNC
and FFB will recommend such approval, and each of FUNC and
FFB will take all reasonable lawful action to solicit such
approval by its respective stockholders. The Board of
Directors of FUNC or FFB, acting on behalf of FUNC or FFB,
respectively, may fail to make such recommendation, or
withdraw, modify or change any such recommendation if and
only if such Board of Directors, after having consulted with
and considered the advice of outside counsel, has determined
that the making of such recommendation, or the failure so to
withdraw, modify or change its recommendation, would
constitute a breach of the fiduciary duties of such
directors under applicable law.
5.03. Registration Statement. (1) Each of FUNC
and FFB agrees to cooperate in the preparation of a
registration statement on Form S-4 (the "Registration
Statement") to be filed by FUNC with the SEC in connection
with the issuance of FUNC Common Stock (and, to the extent
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necessary, New FUNC Preferred Stock and New FUNC Depositary
Shares) in the Merger (including the joint proxy statement
and prospectus and other proxy solicitation materials of
FUNC and FFB constituting a part thereof (the "Joint Proxy
Statement"). Each of FFB and FUNC agrees to use all
reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as
reasonably practicable after filing thereof. FUNC also
agrees to use all reasonable efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this
Agreement. FFB agrees to furnish to FUNC all information
concerning FFB, its subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection
with the foregoing.
(2) Each of FFB and FUNC agrees, as to itself and
its subsidiaries, that none of the information supplied or
to be supplied by it for inclusion or incorporation by
reference in (i) the Registration Statement will, at the
time the Registration Statement and each amendment or
supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein
not misleading, and (ii) the Joint Proxy Statement and any
amendment or supplement thereto will, at the date of mailing
to stockholders and at the times of the FUNC Meeting and the
FFB Meeting, contain any statement which, in the light of
the circumstances under which such statement is made, will
be false or misleading with respect to any material fact, or
which will omit to state any material fact necessary in
order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier
statement in the Joint Proxy Statement or any amendment or
supplement thereto.
(3) In the case of FUNC, FUNC will advise FFB,
promptly after FUNC receives notice thereof, of the time
when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of
any stop order or the suspension of the qualification of the
FUNC Stock or New FUNC Depositary Shares for offering or
sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the
SEC for the amendment or supplement of the Registration
Statement or for additional information.
5.04. Press Releases. It will not, without the
prior approval of the other, issue any press release or
written statement for general circulation relating to the
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transactions contemplated hereby, except as otherwise
required by applicable law.
5.05. Access; Information. (1) Upon reasonable
notice, it shall afford the other parties and their
officers, employees, counsel, accountants and other
authorized representatives, access, during normal business
hours throughout the period prior to the Effective Date, to
all of its properties, books, contracts, commitments and
records and, during such period, it shall furnish promptly
to it (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other
information concerning the business, properties and
personnel of it as the other may reasonably request; and (2)
it will not use any information obtained pursuant to this
Section 5.05 for any purpose unrelated to the consummation
of the transactions contemplated by this Plan and, if this
Plan is terminated, will hold all information and documents
obtained pursuant to this paragraph in confidence (as
provided in Section 8.06) unless and until such time as such
information or documents become publicly available other
than by reason of any action or failure to act by it or as
it is advised by counsel that any such information or
document is required by law or applicable stock exchange
rule to be disclosed. No investigation by either party of
the business and affairs of another shall affect or be
deemed to modify or waive any representation, warranty,
covenant or agreement in this Plan, or the conditions to
either party's obligation to consummate the transactions
contemplated by this Plan.
5.06. Acquisition Proposals. Without the prior
written consent of the other, neither FFB nor FUNC shall,
and each of them shall cause its respective subsidiaries not
to, solicit or encourage inquiries or proposals with respect
to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with,
any such person relating to, any tender offer or exchange
offer for, or any proposal for the acquisition of a
substantial equity interest in, or a substantial portion of
the assets of, such party or any of its significant
subsidiaries; provided, however, that the Board of Directors
of FFB or FUNC, on behalf of FFB or FUNC, respectively, may
furnish or cause to be furnished information and may
participate in such discussions and negotiations directly or
through its representatives if such Board of Directors,
after having consulted with and considered the advice of
outside counsel, has determined that the failure to provide
such information or participate in such negotiations and
discussions would cause the members of such Board of
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Directors to breach their fiduciary duties under applicable
laws. It shall instruct its and its subsidiaries' officers,
directors, agents, advisors and affiliates to refrain from
doing any of the foregoing.
5.07. Affiliate Agreements. (1) Not later than the
15th day prior to the mailing of the Joint Proxy Statement,
FUNC shall deliver to FFB, and FFB shall deliver to FUNC, a
schedule of each person that, to the best of its knowledge,
is or is reasonably likely to be, as of the date of the
relevant Meeting, deemed to be an "affiliate" of it (each,
an "Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and
135.
(2) Each of FFB and FUNC shall use its respective
reasonable best efforts to cause each person who may be
deemed to be an Affiliate of FFB or FUNC, as the case may
be, to execute and deliver to FFB and FUNC on or before the
date of mailing of the Joint Proxy Statement an agreement in
the form attached hereto as Exhibit F or Exhibit G,
respectively.
5.08. Certain Modifications; Restructuring Charges.
(1) FFB and FUNC shall consult with respect to their loan,
litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) and
FFB shall make such modifications or changes to its policies
and practices, if any, and at such date prior to the
Effective Time, as may be mutually agreed upon. FFB and
FUNC shall also consult with respect to the character,
amount and timing of restructuring charges to be taken by
each of them in connection with the transactions
contemplated hereby and shall take such charges in
accordance with generally accepted accounting principles, as
may be mutually agreed upon. No party's representations,
warranties and covenants contained in this Plan shall be
deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes to
such policies and practices which may be undertaken on
account of this Section 5.08.
(2) Each of FFB and FUNC agrees to cooperate with
the other in effecting, prior to the Effective Time,
repurchases of shares of FUNC Common Stock and/or FFB Common
Stock; provided, however, that no such redemption or
repurchase shall be effected by either party (i) if KPMG
Peat Marwick LLP concludes that, as a result thereof, such
firm may be unable to deliver the letters referred to in
Section 6.05, (ii) if Sullivan & Cromwell, special tax
counsel to FUNC and FFB, concludes that, as a result
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thereof, such firm may be unable to deliver the opinion
referred to in Section 6.10, (iii) except in accordance with
the Exchange Act and other applicable law or (iv) on any day
which FFB and FUNC reasonably conclude may fall within the
period for determining the Average Closing Price (as defined
in Section 7.01(E).
(3) In the case of FFB, FFB agrees to amend its
Dividend Reinvestment Plan ("DRP") so that after the
execution of this Plan, no original issue shares of FFB
Common Stock will be issued under the DRP.
5.09. Takeover Laws. No party shall take any
action that would cause the transactions contemplated by
this Plan, the Voting and Support Agreement and/or the Stock
Option Agreements to be subject to requirements imposed by
any Takeover Law and each of them shall take all necessary
steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Plan,
the Voting and Support Agreement and the Stock Option
Agreement from, or if necessary challenge the validity or
applicability of, any applicable Takeover Law, as now or
hereafter in effect, including, without limitation, Articles
9 and 9A of the NCBCA, Article 14A:10A of the NJBCA, other
Takeover Laws of the States of North Carolina or New Jersey
or Takeover Laws of any other State that purport to apply to
this Plan or the transactions contemplated hereby or
thereby.
5.10. No Rights Triggered. Each of FFB and FUNC
shall take all necessary steps to ensure that the entering
into of this Plan, the Voting and Support Agreement and the
Stock Option Agreements and the consummation of the
transactions contemplated hereby and thereby and any other
action or combination of actions, or any other transactions
contemplated hereby or thereby, do not and will not result
in the grant of any rights to any person (1) under its
articles or certificate of incorporation or by-laws,
(2) under any material agreement to which it or any of its
subsidiaries is a party (including without limitation, in
the case of FFB, the FFB Rights Agreement, and in the case
of FUNC, the FUNC Rights Agreement) or (3) to exercise or
receive certificates for Rights, or acquire any property in
respect of Rights, under the FFB Rights Agreement or FUNC
Rights Agreement, as the case may be.
5.11. Shares Listed. In the case of FUNC, FUNC
shall use its reasonable best efforts to list, prior to the
Effective Date, on the NYSE, upon official notice of
issuance, the shares of FUNC Stock and New FUNC Depositary
Shares to be issued to the holders of FFB Stock and FFB
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Depositary Shares in the Merger (but only to the extent that
the corresponding class or series of FFB Stock and/or the
FFB Depositary Shares were so listed immediately prior to
the Effective Time).
5.12. Regulatory Applications. (1) Each party
shall promptly (i) prepare and submit applications to the
appropriate Regulatory Authorities and (ii) make all other
appropriate filings to secure all other approvals, consents
and rulings, which are necessary for it to consummate the
Merger.
(2) Each of FUNC and FFB agrees to cooperate with
the other and, subject to the terms and conditions set forth
in this Agreement, use its reasonable best efforts to
prepare and file all necessary documentation, to effect all
necessary applications, notices, petitions, filings and
other documents, and to obtain all necessary permits,
consents, orders, approvals and authorizations of, or any
exemption by, all third parties and Regulatory Authorities
necessary or advisable to consummate the transactions
contemplated by this Plan, including without limitation the
regulatory approvals referred to in Section 6.02. Each of
FUNC and FFB shall have the right to review in advance, and
to the extent practicable each will consult with the other,
in each case subject to applicable laws relating to the
exchange of information, with respect to all material
written information submitted to, any third party or any
Regulatory Authorities in connection with the transactions
contemplated by this Plan. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably
and as promptly as practicable. Each party hereto agrees
that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and
Regulatory Authorities necessary or advisable to consummate
the transactions contemplated by this Plan and each party
will keep the other parties apprised of the status of
material matters relating to completion of the transactions
contemplated hereby.
(3) Each party agrees, upon request, to furnish
the other parties with all information concerning itself,
its subsidiaries, directors, officers and stockholders and
such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or
application made by or on behalf of such other party or any
of its subsidiaries to any Regulatory Authority.
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5.13. Indemnification. (A) For six years after
the Effective Date, FUNC shall indemnify, defend and hold
harmless the present and former directors, officers and
employees of FFB and its subsidiaries (each, an "Indemnified
Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages
or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring
at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Plan, the
Voting and Support Agreement and the FFB Stock Option
Agreement) to the fullest extent that such persons are
indemnified under the laws of the State of New Jersey and
FFB's certificate of incorporation and by-laws as in effect
on the date hereof (and during such period FUNC shall also
advance expenses (including expenses constituting Costs
described in Section 5.13(E)) as incurred to the fullest
extent permitted under applicable law, provided that the
person to whom expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that
such person is not entitled to indemnification with no bond
or security to be required); provided that any determination
required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth
under New Jersey law and such certificate of incorporation
and by-laws shall be made by independent counsel (which
shall not be counsel that provides material services to
FUNC) selected by FUNC and reasonably acceptable to such
officer or director; and provided, further, that in the
absence of applicable New Jersey judicial precedent to the
contrary, such counsel, in making such determination, shall
presume such officer's or director's conduct complied with
such standard and FUNC shall have the burden to demonstrate
that such officer's or director's conduct failed to comply
with such standard.
(B) FUNC shall maintain FFB's existing directors'
and officers' liability insurance policy (or a policy
providing comparable coverage amount on terms no less
favorable, including FUNC's existing policy if it meets the
foregoing standard) covering persons who are currently
covered by such insurance for a period of three years after
the Effective Date.
(C) Any Indemnified Party wishing to claim
indemnification under Section 5.13(A), upon learning of any
claim, action, suit, proceeding or investigation described
above, shall promptly notify FUNC thereof; provided that the
failure so to notify shall not affect the obligations of
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FUNC under Section 5.13(A) unless and to the extent such
failure materially increases FUNC's liability under such
subsection (A).
(D) If FUNC or any of its successors or assigns
shall consolidate with or merge into any other entity and
shall not be the continuing or surviving entity of such
consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in
each case, proper provision shall be made so that the
successors and assigns of FUNC shall assume the obligations
set forth in this Section 5.13.
(E) FUNC shall pay all reasonable Costs,
including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 5.13. The rights
of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party may have under
applicable law.
5.14. Benefit Plans. As soon as administratively
practicable after the Effective Date (and unless
administratively impracticable, no earlier than January 1,
1997), FUNC shall take all reasonable action so that
employees of FFB and its subsidiaries shall be generally
entitled to participate in the pension, severance, benefit,
vacation, sick pay and similar plans on substantially the
same terms and conditions as employees of FUNC and its
subsidiaries, and until such time, the plans of FFB shall
remain in effect; provided, that no employee of FFB who
becomes an employee of FUNC and who elects coverage by
FUNC's medical insurance plans shall be excluded coverage
thereunder (for such employee or any other covered person)
on the basis of a preexisting condition that was not also
excluded under FFB's medical insurance plans, but to the
extent such preexisting condition was excluded from coverage
under FFB's medical insurance plans, this proviso shall not
require coverage for such preexisting condition. For the
purpose of determining eligibility to participate in such
plans, eligibility for benefit forms and subsidies, the
vesting of benefits under such plans and the accrual of
benefits under such plans (including, but not limited to,
any pension, severance, 401(K), vacation and sick pay), FUNC
shall give effect to years of service (and for purposes of
qualified and nonqualified pension plans, prior earnings)
with FFB or its subsidiaries, as the case may be, as if they
were with FUNC or its subsidiaries. Retirees prior to
January 1, 1998, shall have their retiree welfare benefits
grandfathered at the level in effect at FFB on December 31,
1996. FUNC also shall cause the Continuing Corporation and
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its subsidiaries to honor in accordance with their terms all
employment, severance, consulting and other compensation
contracts, disclosed in Section 4.03(M) of the FFB
Disclosure Letter, between FFB or any of its subsidiaries
and any current or former director, officer or employee
thereof.
5.15. Accountants' Letters. Each of FFB and FUNC
shall use its reasonable best efforts to cause to be
delivered to the other party, and such other party's
directors and officers who sign the Registration Statement,
a letter of KPMG Peat Marwick LLP, independent auditors,
dated (i) the date on which the Registration Statement shall
become effective and (ii) a date shortly prior to the
Effective Date, and addressed to such other party, and such
directors and officers, in form and substance customary for
"comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
5.16. Registration Rights. Each person (including
its "affiliates" and "associates", as defined under the
Securities Act) who is precluded by Rule 145 under the
Securities Act from selling or disposing of all of the
shares of FUNC Common Stock received by such person in the
Merger within one calendar quarter in the absence of an
effective registration statement therefor, or another
exemption from registration, under the Securities Act (each,
together with such affiliates and associates, a "Large
Shareholder") shall be entitled to registration rights for
such shares as set forth in Exhibit H.
5.17. Certain Director and Officer Positions.
(1) FUNC agrees to cause six members of FFB's Board of
Directors, which members shall be nominated by FFB and
willing so to serve (subject to any applicable legal
restrictions) ("Former FFB Directors") and shall include Mr.
Anthony P. Terracciano and Mr. Juan Rodriguez Inciarte, to
be elected or appointed as directors of FUNC at, or as
promptly as practicable after, the Effective Time. At the
first annual meeting of stockholders of FUNC subsequent to
the Effective Time, FUNC shall take all corporate action
necessary to, and shall, renominate Mr. Terracciano and Mr.
Inciarte for election as directors of FUNC for in each case
three-year terms and shall recommend that the FUNC
stockholders vote for the election of such individuals as
directors.
(2) FUNC agrees to cause three Former FFB
Directors to be elected or appointed as members of the
Executive Committee of the Board of Directors of FUNC at, or
as promptly as practicable after, the Effective Time (which
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Executive Committee shall at such time consist of not more
than ten members) and shall include Mr. Terracciano and two
other Former FFB Directors agreed upon by the Chief
Executive Officers of FFB and FUNC prior to the Effective
Time.
(3) At the Effective Time, FUNC's Board of
Directors shall elect or appoint Mr. Terracciano as
President of FUNC.
5.18. Notification of Certain Matters. Each of FFB
and FUNC shall give prompt notice to the other of any fact,
event or circumstance known to it that (i) is reasonably
likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any
Material Adverse Effect with respect to it or (ii) would
cause or constitute a material breach of any of its
representations, warranties, covenants or agreements
contained herein.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the parties to consummate
the Merger is conditioned upon the satisfaction at or prior
to the Effective Time of each of the following:
6.01. Shareholder Vote. Approval of this Plan by
the requisite votes of the stockholders of FFB and FUNC;
6.02. Regulatory Approvals. Procurement by FUNC,
FFB and the Investor of all requisite approvals and consents
of Regulatory Authorities and the expiration of the
statutory waiting period or periods relating thereto;
provided, however, that no such approval or consent shall
have imposed any condition or requirement which would so
materially and adversely impact the economic or business
benefits to FUNC or FFB of the transactions contemplated by
this Plan that, had such condition or requirement been
known, such party would not, in its reasonable judgment,
have entered into this Plan;
6.03. Third Party Consents. All consents or
approvals of all persons (other than Regulatory Authorities)
required for the consummation of the Merger shall have been
obtained and shall be in full force and effect, unless the
failure to obtain any such consent or approval is not rea-
sonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FFB or FUNC.
6.04. No Injunction, Etc. No order, decree or
injunction of any court or agency of competent jurisdiction
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shall be in effect, and no law, statute or regulation shall
have been enacted or adopted, that enjoins, prohibits or
makes illegal consummation of any of the transactions
contemplated hereby;
6.05. Pooling Letters. FUNC and FFB shall have
received from KPMG Peat Marwick LLP, independent auditors
for both FFB and FUNC, letters, dated the date of or shortly
prior to each of the mailing date of the Joint Proxy
Statement and the Effective Date, to the effect that such
auditors are not aware of any facts or circumstances which
might cause the Merger not to qualify for pooling of
interests accounting treatment;
6.06. Representations, Warranties and Covenants of
FUNC. (i) Each of the representations and warranties
contained herein of FUNC shall be true and correct as of the
date of this Plan and upon the Effective Date with the same
effect as though all such representations and warranties had
been made on the Effective Date, except for any such
representations and warranties made as of a specified date,
which shall be true and correct as of such date, in any case
subject to the standards established by Section 4.02,
(ii) each and all of the agreements and covenants of FUNC to
be performed and complied with pursuant to this Plan on or
prior to the Effective Date shall have been duly performed
and complied with in all material respects, and (iii) FFB
shall have received a certificate signed by the Chief
Financial Officer of FUNC, dated the Effective Date, to the
effect set forth in clauses (i) and (ii);
6.07. Representations, Warranties and Covenants of
FFB. (i) Each of the representations and warranties
contained herein of FFB shall be true and correct as of the
date of this Plan and upon the Effective Date with the same
effect as though all such representations and warranties had
been made on the Effective Date, except for any such
representations and warranties made as of a specified date,
which shall be true and correct as of such date, in any case
subject to the standards established by Section 4.02,
(ii) each and all of the agreements and covenants of FFB to
be performed and complied with pursuant to this Plan on or
prior to the Effective Date shall have been duly performed
and complied with in all material respects, and (iii) FUNC
shall have received a certificate signed by the Chief
Financial Officer of FFB, dated the Effective Date, to the
effect set forth in clauses (i) and (ii);
6.08. Effective Registration Statement. The
Registration Statement shall have become effective and no
stop order suspending the effectiveness of the Registration
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Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC
or any other Regulatory Authority;
6.09. Blue-Sky Permits. FUNC shall have received
all state securities laws and "blue sky" permits necessary
to consummate the Merger;
6.10. Tax Opinion. FUNC and FFB shall have
received an opinion from Sullivan & Cromwell, special tax
counsel to FUNC and FFB, to the effect that (i) the Merger
constitutes a reorganization under Section 368 of the Code,
and (ii) no gain or loss will be recognized by stockholders
of FFB who receive shares of FUNC Stock, or New FUNC
Depositary Shares, in exchange for their shares of FFB
Stock, and FFB Depositary Shares, except that gain or loss
may be recognized as to cash received in lieu of fractional
share interests; in rendering their opinion, Sullivan &
Cromwell may require and rely upon representations and
agreements contained in certificates of officers of FUNC,
FFB, the Investor and others;
6.11. Articles of Amendment. The Articles of
Amendment shall have become effective in accordance with the
NCBCA;
6.12. NYSE Listing. The shares of FUNC Stock and
the New FUNC Depositary Shares, issuable pursuant to this
Plan shall have been approved for listing on the NYSE (but
only to the extent that the corresponding class or series of
FFB Stock and/or the FFB Depositary Shares were so listed
immediately prior to the Effective Time), subject to
official notice of issuance; and
6.13. Rights Agreements. There shall exist no
"Acquiring Person" and no "Shares Acquisition Date" or
"Trigger Event" (as each of such terms are defined in the
FFB Rights Plan) shall have occurred; and there shall exist
no "Acquiring Person" and no "Stock Acquisition Date" or
"Flip-in Date" (as each of such terms are defined in the
FUNC Rights Agreement) shall have occurred;
provided, however, that a failure to satisfy any of the
conditions set forth in Section 6.07 shall only constitute
conditions if asserted by FUNC, and a failure to satisfy any
of the conditions set forth in Section 6.06 shall only
constitute conditions if asserted by FFB.
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VII. TERMINATION
7.01. Termination. This Plan may be terminated,
and the Merger may be abandoned:
(A) Mutual Consent. At any time prior to the
Effective Time, by the mutual consent of FUNC and FFB, if
the Board of Directors of each so determines by vote of a
majority of the members of its entire Board.
(B) Breach. At any time prior to the Effective
Time, by FUNC or FFB, if its Board of Directors so
determines by vote of a majority of the members of its
entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained
herein (subject to the standard established by
Section 4.02), which breach cannot be or has not been cured
within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a material breach by
the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been
cured within 30 days after the giving of written notice to
the breaching party of such breach.
(C) Delay. At any time prior to the Effective
Time, by FUNC or FFB, if its Board of Directors so
determines by vote of a majority of the members of its
entire Board, in the event that the Merger is not
consummated by June 30, 1996, except to the extent that the
failure of the Merger then to be consummated arises out of
or results from the knowing action or inaction of the party
seeking to terminate pursuant to this Section 7.01(C).
(D) No Approval. By FFB or FUNC, if its Board of
Directors so determines by a vote of a majority of the
members of its entire Board, in the event (i) the consent of
the Board of Governors of the Federal Reserve System for
consummation of the Merger and the other transactions
contemplated by the Merger shall have been denied by final
nonappealable action of such Regulatory Authority or (ii)
any stockholder approval required by Section 6.01 herein is
not obtained at the FFB Meeting or the FUNC Meeting.
(E) Possible Adjustment. By FFB, if its Board of
Directors so determines by a vote of a majority of the
members of its entire Board, at any time during the ten-day
period commencing two days after the Determination Date, if
either (x) both of the following conditions are satisfied:
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(1) the Average Closing Price on the
Determination Date of shares of FUNC Common Stock shall
be less than $40.48; and
(2) (i) the number obtained by dividing the
Average Closing Price on such Determination Date by
$47.625 (such number being referred to herein as the
"FUNC Ratio") shall be less than (ii) the number
obtained by dividing the Index Price on the
Determination Date by the Index Price on the Starting
Date and subtracting 0.15 from the quotient in this
clause (x) (2) (ii) (such number being referred to
herein as the "Index Ratio");
or (y) the Average Closing Price on the Determination Date
of shares of FUNC Common Stock shall be less than the
product of 0.75 and the Starting Price;
subject, however, to the following four sentences. If FFB
elects to exercise its termination right pursuant to the
immediately preceding sentence, it shall give prompt written
notice to FUNC which notice shall specify which of clauses
(x) or (y) is applicable (or if both would be applicable,
which clause is being invoked); provided that such notice of
election to terminate may be withdrawn at any time within
the aforementioned ten-day period. During the five-day
period commencing with its receipt of such notice, FUNC
shall have the option in the case of a failure to satisfy
the condition in clause (x), of adjusting the Exchange Ratio
to equal the lesser of (i) a number equal to a quotient
(rounded to the nearest one-thousandth), the numerator of
which is the product of $40.48 and the Exchange Ratio (as
then in effect) and the denominator of which is the Average
Closing Price, and (ii) a number equal to a quotient
(rounded to the nearest one-thousandth), the numerator of
which is the Index Ratio multiplied by the Exchange Ratio
(as then in effect) and the denominator of which is the FUNC
Ratio. During such five-day period, FUNC shall have the
option, in the case of a failure to satisfy the condition in
clause (y), to elect to increase the Exchange Ratio to equal
a number equal to a quotient (rounded to the nearest one-
thousandth), the numerator of which is the product of 0.75,
the Starting Price and the Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing
Price. If FUNC makes an election contemplated by either of
the two preceding sentences, within such five-day period, it
shall give prompt written notice to FFB of such election and
the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 7.01(E) and this Plan
shall remain in effect in accordance with its terms (except
as the Exchange Ratio shall have been so modified), and any
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references in this Agreement to "Exchange Ratio" shall
thereafter be deemed to refer to the Exchange Ratio as
adjusted pursuant to this Section 7.01(E).
For purposes of this Section 7.01(E), the following
terms shall have the meanings indicated:
"Average Closing Price" means the average of the
daily last sale prices of FUNC Common Stock as reported
on the NYSE Composite Transactions reporting system (as
reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative
source) for the ten consecutive full trading days in
which such shares are traded on the NYSE ending at the
close of trading on the Determination Date.
"Determination Date" means the date on which the
approval of the Federal Reserve Board required for
consummation of the Merger shall be received.
"Index Group" means the group of each of the 13
bank holding companies listed below, the common stock
of all of which shall be publicly traded and as to
which there shall not have been, since the Starting
Date and before the Determination Date, an announcement
of a proposal for the acquisition or sale of such
company. In the event that the common stock of any
such company ceases to be publicly traded or any such
announcement is made with respect to any such company,
such company will be removed from the Index Group, and
the weights (which have been determined based on the
number of outstanding shares of common stock)
redistributed proportionately for purposes of
determining the Index Price. The 13 bank holding
companies and the weights attributed to them are as
follows:
Bank Holding Company Weighting
Banc One Corp. (ONE) 15.17%
Norwest Corporation (NOB) 10.91
SunTrust Banks, Inc. (STI) 7.87
KeyCorp (KEY) 8.63
Fleet Financial Group, Inc. (FLT) 6.19
NBD Bancorp, Inc. (NBD) 5.91
PNC Financial Corp (PNC) 7.34
Wachovia Corporation (WB) 7.38
First Bank System, Inc. (FBS) 6.70
Barnett Banks, Inc. (BBI) 6.10
National City Corporation (NCC) 5.22
Mellon Bank Corporation (MEL) 7.43
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Boatmen's Bancshares, Inc. (BOAT) 5.15
100.00%
"Index Price" on a given date means the weighted
average (weighted in accordance with the factors listed
above) of the closing prices of the companies composing
the Index Group.
"Starting Date" means June 16, 1995.
"Starting Price" shall mean the last sale price
per share of FUNC Common Stock on June 19, 1995, as
reported by the NYSE Composite Transactions reporting
system (as reported in The Wall Street Journal or, if
not reported therein, in another mutually agreed upon
authoritative source).
If any company belonging to the Index Group or
FUNC declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares
or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such
company or FUNC shall be appropriately adjusted for the
purposes of applying this Section 7.01(E).
(F) Stock Option Agreements; Voting and Support
Agreement. By FFB, if the FUNC Stock Option Agreement shall
not have been executed and delivered by FUNC by the close of
business on the day following the date of execution of this
Plan; or by FUNC, (i) if the FFB Stock Option Agreement or
the Voting and Support Agreement shall not have been
executed and delivered by FFB or, in the case of the Voting
and Support Agreement, by the Investor, by the close of
business on the day following the date of execution of this
Plan or (ii) at any time prior to the Effective Time, if the
Investor materially breaches any of its representations,
warranties, covenants and agreements, which breach has not
and cannot reasonably be cured within 30 days after the
giving of written notice to the Investor of such breach,
under the Voting and Support Agreement.
(G) Failure to Recommend, Etc. At any time prior
to the FFB Meeting, by FUNC if the Board of Directors of FFB
shall have failed to make its recommendation referred to in
Section 5.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse to the
interests of FUNC; or at any time prior to the FUNC Meeting,
by FFB if the Board of Directors of FUNC shall have failed
to make its recommendation referred to in Section 5.02,
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withdrawn such recommendation or modified or changed such
recommendation in a manner adverse to the interests of FFB.
7.02. Effect of Termination and Abandonment. In
the event of termination of this Plan and the abandonment of
the Merger pursuant to this Article VII, no party to this
Plan shall have any liability or further obligation to any
other party hereunder except (i) as set forth in
Section 8.01, (ii) that each of the Stock Option Agreements
shall be governed by its own terms as to termination and
(iii) that termination will not relieve a breaching party
from liability for any willful breach of this Plan giving
rise to such termination.
VIII. OTHER MATTERS
8.01. Survival. All representations, warranties,
agreements and covenants contained in this Plan shall not
survive the Effective Time or termination of this Plan if
this Plan is terminated prior to the Effective Time;
provided, however, if the Effective Time occurs, the
agreements of the parties in Sections 5.13, 5.16, 5.17,
8.01, 8.04 and 8.09 shall survive the Effective Time, and if
this Plan is terminated prior to the Effective Time, the
agreements of the parties in Sections 5.05(2), 7.02, 8.01,
8.02, 8.04, 8.05, 8.06, 8.07 and 8.09, shall survive such
termination.
8.02. Waiver; Amendment. Prior to the Effective
Time, any provision of this Plan may be (i) waived by the
party benefitted by the provision, or (ii) amended or
modified at any time, by an agreement in writing among the
parties hereto approved by their respective Boards of
Directors and executed in the same manner as this Plan,
except that, after the FFB Meeting the consideration to be
received by the stockholders of FFB for each share of FFB
Stock, or FFB Depository Shares, shall not thereby be
decreased.
8.03. Counterparts. This Plan may be executed in
one or more counterparts, each of which shall be deemed to
constitute an original.
8.04. Governing Law. This Plan shall be governed
by, and interpreted in accordance with, the laws of the
State of North Carolina, without regard to the conflict of
law principles thereof (except to the extent that mandatory
provisions of New Jersey law govern).
8.05. Expenses. Each party hereto will bear all
expenses incurred by it in connection with this Plan and the
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transactions contemplated hereby, except that printing
expenses and SEC registration fees shall be shared equally
between FFB and FUNC.
8.06. Confidentiality. Except as otherwise
provided in Section 5.05(2), each of the parties hereto and
their respective agents, attorneys and accountants will
maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed or
as it is advised by counsel that any such information or
document is required by law or applicable stock exchange
rule to be disclosed.
8.07. Notices. All notices, requests and other
communications hereunder to a party shall be in writing and
shall be deemed given if personally delivered, telecopied
(with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address
set forth below or such other address as such party may
specify by notice to the parties hereto.
If to FUNC, to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
Attention: Edward E. Crutchfield
Chairman and Chief
Executive Officer
With a copy to: Marion A. Cowell, Jr.
General Counsel
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
If to FFB, to: First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Attention: Anthony P. Terracciano
Chairman, President and
Chief Executive Officer
With copies to: James L. Mitchell
General Counsel
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
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and: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Victor I. Lewkow
8.08. Definitions. Any term defined anywhere in
this Plan shall have the meaning ascribed to it for all
purposes of this Plan (unless expressly noted to the
contrary). In addition:
(1) the term "Material Adverse Effect" shall
mean, with respect to FFB or FUNC, respectively, any
effect that (i) is material and adverse to the
financial position, results of operations or business
of FFB and its subsidiaries taken as a whole, or FUNC
and its subsidiaries taken as a whole, respectively, or
(ii) materially impairs the ability of FFB or FUNC,
respectively, to perform its obligations under this
Plan or the consummation of the Merger and the other
transactions contemplated by this Plan; provided,
however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking
and similar laws of general applicability or
interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted account-
ing principles or regulatory accounting requirements
applicable to banks and bank holding companies general-
ly, (c) actions or omissions of FFB, FUNC or Merger Sub
taken with the prior informed consent of FFB or FUNC,
as applicable, in contemplation of the transactions
contemplated hereby, (d) circumstances affecting
regional bank holding companies generally, and (e) the
effects of the Merger and of the actions contemplated
by Section 5.08;
(2) the term "person" shall mean any individual,
bank savings association, corporation, partnership,
association, joint-stock company, business trust or
unincorporated organization;
(3) the term "Previously Disclosed" by a party
shall mean information set forth in its Disclosure
Letter or a schedule that is delivered by that party to
the other parties prior to the execution of this Plan
and specifically designated as information "Previously
Disclosed" pursuant to this Plan;
(4) the term "Rights" means, with respect to any
person, securities or obligations convertible into or
exchangeable for, or giving any person any right to
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subscribe for or acquire, or any options, calls or
commitments relating to, shares of capital stock of
such person; and
(5) the terms "subsidiary" and "significant
subsidiary" shall have the meanings set forth in
Rule 1-02 of Regulation S-X of the SEC; provided that
for purposes of Article IV, Merger Sub shall be deemed
a significant subsidiary of FUNC.
8.09. Entire Understanding; No Third Party
Beneficiaries. This Plan, the Stock Option Agreements and
the Voting and Support Agreement together represent the
entire understanding of the parties hereto with reference to
the transactions contemplated hereby and thereby and
supersede any and all other oral or written agreements
heretofore made. Except for Sections 5.13, 5.16 and 5.17,
nothing in this Plan expressed or implied, is intended to
confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Plan.
8.10. Headings. The headings contained in this
Plan are for reference purposes only and are not part of
this Plan.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly
authorized officers, all as of the day and year first above
written.
FIRST FIDELITY BANCORPORATION
By:______________________________
Anthony P. Terracciano
Chairman, President and Chief
Executive Officer
FIRST UNION CORPORATION
By:_____________________________
Edward E. Crutchfield
Chairman and Chief Executive Officer
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PKC, INC.
By:_____________________________
Edward E. Crutchfield
President
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Exhibit A
FORM OF FFB STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 19, 1995 (the
"Agreement"), by and between First Fidelity Bancorporation, a
New Jersey corporation ("Issuer"), and First Union Corporation, a
North Carolina corporation ("Grantee").
RECITALS
(A) The Plan. Grantee and Issuer have on a date prior
to the date hereof, entered into an Agreement and Plan of Merger,
dated as of June 18, 1995 (the "Plan"), providing for, among
other things, the merger of Issuer with and into a wholly owned
subsidiary of Grantee, with such subsidiary being the surviving
corporation.
(B) Condition to Plan. As a condition and inducement
to Grantee's execution of the Plan and Grantee's agreement
referred to in the next sentence, Grantee has required that
Issuer agree, and Issuer has agreed, to grant Grantee the Option
(as hereinafter defined). As a condition and inducement to
Issuer's execution of the Plan and this Agreement, Grantee has
agreed to grant an option to Issuer on terms and conditions
substantially identical to those of the Option and this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein and in the Plan, and intending to be
legally bound hereby, Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used
but not defined herein shall have the meanings ascribed to such
terms in the Plan.
2. Grant of Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an
irrevocable option (the "Option") to purchase a number of shares
of common stock, par value $1.00 per share ("Issuer Common
Stock"), of Issuer up to 15,686,077 of such shares (as adjusted
as set forth herein, the "Option Shares", which shall include the
Option Shares before and after any transfer of such Option
Shares, but in no event shall the number of Option Shares for
which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock) at a purchase price
per Option Share (as adjusted as set forth herein, the "Purchase
Price") equal to the closing price per share of Issuer Common
Stock on June 19, 1995, as reported by the NYSE Composite
Transactions reporting system (as reported in The Wall Street
Journal or, if not reported therein, another authoritative
source) but in no event may the Purchase Price, prior to any
adjustment, be less than $48.75. Each Option Share issued upon
<PAGE>
exercise of the Option shall be accompanied by FFB Rights as
provided in the FFB Rights Agreement.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as
hereinafter defined), as applicable, shall not be in material
breach of the agreements or covenants contained in this Agreement
or the Plan, and (ii) no preliminary or permanent injunction or
other order against the delivery of shares covered by the Option
issued by any court of competent jurisdiction in the United
States shall be in effect, the Holder may exercise the Option, in
whole or in part, at any time and from time to time following the
occurrence of a Purchase Event (as hereinafter defined); provided
that the Option shall terminate and be of no further force or
effect upon the earliest to occur of (A) the Effective Time,
(B) termination of the Plan in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event other than a termination thereof by Grantee
pursuant to Section 7.01(B) or 7.01(F)(ii) of the Plan (but only
if the breach of Issuer or the Investor, respectively, giving
rise to such termination was willful) (a termination of the Plan
by Grantee pursuant to Section 7.01(B) or 7.01(F)(ii) thereof as
a result of a willful breach by Issuer or the Investor,
respectively, being referred to herein as a "Default
Termination"), (C) 15 months after a Default Termination, or
(D) 15 months after termination of the Plan (other than a Default
Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event; provided, however, that any purchase
of shares upon exercise of the Option shall be subject to
compliance with applicable law. The term "Holder" shall mean the
holder or holders of the Option from time to time, and which
initially is Grantee. The rights set forth in Section 8 hereof
shall terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as
set forth herein.
(b) As used herein, a "Purchase Event" means any
of the following events:
(i) Without Grantee's prior written consent,
Issuer shall have recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose,
or entered into an agreement with any person (other than
Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving
Issuer or any of its significant subsidiaries (other than
transactions solely between Issuer's subsidiaries that are
not violative of the Plan), (B) the disposition, by sale,
lease, exchange or otherwise, of assets or deposits of
Issuer or any of its significant subsidiaries representing
in either case 25% or more of the consolidated assets or
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deposits of Issuer and its subsidiaries or (C) the issuance,
sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the
voting power of Issuer or any of its significant
subsidiaries, other than, in each case of (A), (B), or (C);
(x) any merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries in
which the voting securities of Issuer outstanding
immediately prior thereto continue to represent (by either
remaining outstanding or being converted into the voting
securities of the surviving entity of any such transaction)
at least 65% of the combined voting power of the voting
securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger,
consolidation, or similar transaction (provided any such
transaction is not violative of the Plan), or (y) any
acquisition of additional shares of Issuer Common Stock by
the Investor so long as the Investor is not in breach of any
representation, warranty or agreement contained in the
Voting and Support Agreement or the Investment Agreement,
dated as of March 18, 1991 (as amended, the "Investment
Agreement"), by and between Issuer and the Investor (each of
(A), (B), or (C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee, any
subsidiary of Grantee or the Investor (so long as the
Investor is not in breach of any representation, warranty or
agreement in the Voting and Support Agreement or the
Investment Agreement)) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act), other than
a group of which Grantee, any subsidiary of Grantee, or the
Investor (so long as the Investor is not in breach of any
representation, warranty or agreement in the Voting and
Support Agreement or the Investment Agreement), is a member,
shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 25% or more of the
voting power of Issuer or any of its significant
subsidiaries.
(c) As used herein, a "Preliminary Purchase
Event" means any of the following events:
(i) any person (other than Grantee or any
subsidiary of Grantee) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act) or shall have
filed a registration statement under the Securities Act,
with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
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<PAGE>
consummation of such offer, such person would own or control
15% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); or
(ii) the stockholders shall not have approved
the Plan by the requisite vote at the FFB Meeting, the FFB
Meeting shall not have been held or shall have been canceled
prior to termination of the Plan, or Issuer's Board of
Directors shall have withdrawn or modified in a manner
adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan, in each case after it
shall have been publicly announced that any person (other
than Grantee or any subsidiary of Grantee) shall have
(A) made, or disclosed an intention to make, a bona fide
proposal to engage in an Acquisition Transaction,
(B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an
Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under the Home
Owners' Loan Act, as amended ("HOLA"), the BHC Act, the Bank
Merger Act, as amended (the "BMA") or the Change in Bank
Control Act of 1978, as amended (the "CBCA"), for approval
to engage in an Acquisition Transaction; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) shall have made a bona fide proposal
to Issuer or its stockholders by public announcement, or
written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction;
or
(iv) after a proposal is made by a third party to
Issuer or its stockholders to engage in an Acquisition
Transaction, or such third party states its intention to the
Issuer to make such a proposal if the Plan terminates,
Issuer shall have breached any representation, warranty,
covenant or agreement contained in the Plan and such breach
would entitle Grantee to terminate the Plan under Section
7.01 thereof (without regard to the cure period provided for
therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the
terms of the Plan); or
(v) any person (other than Grantee or any
subsidiary of Grantee) other than in connection with a
transaction to which Grantee has given its prior written
consent, shall have filed an application or notice with any
Regulatory Authority for approval to engage in an
Acquisition Transaction.
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<PAGE>
As used in this Agreement, (i) "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act
and (ii) "Investor" shall include any affiliate of the Investor.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Preliminary Purchase Event or
Purchase Event, it being understood that the giving of such
notice by Issuer shall not be a condition to the right of Holder
to exercise the Option.
(e) In the event Holder wishes to exercise the
Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying
(i) the total number of Option Shares it intends to purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"); provided that the first notice of exercise shall
be sent to Issuer within 180 days after the first Purchase Event
of which Grantee has been notified. If prior notification to or
approval of any Regulatory Authority is required in connection
with such purchase, Issuer shall cooperate with the Holder in the
filing of the required notice of application for approval and the
obtaining of such approval and the Closing shall occur
immediately following such regulatory approvals (and any
mandatory waiting periods). Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a bank
account designated by Issuer, an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased
on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in
Section 12(f).
(b) At each Closing, simultaneously with the
delivery of immediately available funds and surrender of this
Agreement as provided in Section 4(a), (i) Issuer shall deliver
to Holder (A) a certificate or certificates representing the
Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all Liens and subject to no
preemptive rights, and (B) if the Option is exercised in part
only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and
(ii) Holder shall deliver to Issuer a letter agreeing that Holder
shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
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<PAGE>
(c) In addition to any other legend that is
required by applicable law, certificates for the Option Shares
delivered at each Closing shall be endorsed with a restrictive
legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT TO
THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF JUNE
19, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE
ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend
relating to the Securities Act shall be removed by delivery of
substitute certificate(s) without such legend if Holder shall
have delivered to Issuer a copy of a letter from the staff of the
SEC, or an opinion of counsel in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect that such
legend is not required for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the
written notice of exercise of the Option provided for under
Section 3(e), the tender of the applicable purchase price in
immediately available funds and the tender of this Agreement to
Issuer, Holder shall be deemed to be the holder of record of the
shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of
Issuer Common Stock shall not then be actually delivered to
Holder. Issuer shall pay all expenses, and any and all United
States federal, state, and local taxes and other charges that may
be payable in connection with the preparation, issuance and
delivery of stock certificates under this Section in the name of
Holder or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Issuer Common Stock so that the
Option may be exercised without additional authorization of
Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase
Issuer Common Stock, (ii) that it will not, by charter amendment
or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder
by Issuer, (iii) promptly to take all action as may from time to
time be required (including (A) complying with all premerger
notification, reporting and waiting period requirements and
(B) in the event prior approval of or notice to any Regulatory
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<PAGE>
Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or
notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to
exercise the Option and Issuer duly and effectively to issue
shares of the Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee (and Holder, if
different than Grantee) as follows:
(a) Corporate Authority. Issuer has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors
of Issuer, and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated; this Agreement
has been duly and validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge
of Issuer, as of the date of this Agreement, no person or
group other than the Investor has beneficial ownership of
more than 15% of the issued and outstanding shares of Issuer
Common Stock.
(c) Shares Reserved for Issuance; Capital Stock.
Issuer has taken all necessary corporate action to authorize
and reserve and permit it to issue, and at all times from
the date hereof through the termination of this Agreement in
accordance with its terms, will have reserved for issuance
upon the exercise of the Option, that number of shares of
Issuer Common Stock equal to the maximum number of shares of
Issuer Common Stock at any time and from time to time
purchasable upon exercise of the Option, and all such
shares, upon issuance pursuant to the Option, will be duly
authorized, validly issued, fully paid and nonassessable, and
will be delivered free and clear of all claims, liens,
encumbrances, and security interests (other than those
created by this Agreement) and not subject to any preemptive
rights.
(d) No Violations. The execution, delivery and
performance of this Agreement does not or will not, and the
consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, its certificate
of incorporation or by-laws, or the comparable governing
-7-
<PAGE>
instruments of any of its subsidiaries, or (B) a breach or
violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without
the giving of notice, the lapse of time or both) or under
any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or
license to which it or any of its subsidiaries is subject,
that would, in any case give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement
in any material respect.
6. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer that Grantee has
full corporate power and authority to enter into this Agreement
and, subject to obtaining the approvals referred to in this
Agreement, to consummate the transactions contemplated by this
Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
Grantee; and this Agreement has been duly executed and delivered
by Grantee.
7. Adjustment upon Changes in Issuer Capitalization,
etc. (a) In the event of any change in Issuer Common Stock by
reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares, exercise of
the FFB Rights or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such
transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior
to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described
in the first sentence of this Section 7(a), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date
hereof or upon conversion into Issuer Common Stock of any
convertible security of Issuer outstanding on the date hereof),
the number of shares of Issuer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together with
any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common
Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option. No
provision of this Section 7 shall be deemed to affect or change,
or constitute authorization for any violation of, any of the
covenants or representations in the Plan.
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<PAGE>
(b) In the event that Issuer shall enter into an
agreement (i) to consolidate with or merge into any person, other
than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Issuer Common Stock shall
be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the
outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of
the outstanding shares and share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper
provisions so that the Option shall, upon the consummation of any
such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Holder, of either
(x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the
case of a merger described in clause (ii), Issuer (such person
being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same
terms as the Option, provided, that, if the terms of the
Substitute Option cannot, for legal reasons, be the same as the
Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer
shall also enter into an agreement with Holder in substantially
the same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable
for such number of shares of Substitute Common Stock (as
hereinafter defined) as is equal to the Assigned Value (as
hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The
exercise price of Substitute Option per share of Substitute
Common Stock (the "Substitute Option Price") shall then be equal
to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common Stock for
which the Option was theretofore exercisable and the denominator
is the number of shares of the Substitute Common Stock for which
the Substitute Option is exercisable.
(e) The following terms have the meanings
indicated:
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<PAGE>
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving
person, or (iii) the transferee of all or substantially all
of Issuer's assets (or a substantial part of the assets of
its subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the shares of
capital stock (or similar equity interest) with the greatest
voting power in respect of the election of directors (or
persons similarly responsible for the direction of the
business and affairs) of the Substitute Option Issuer.
(3) "Assigned Value" shall mean the highest of (w) the
price per share of Issuer Common Stock at which a Tender
Offer or an Exchange Offer therefor has been made, (x) the
price per share of Issuer Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common Stock
within the six-month period immediately preceding the
consolidation, merger, or sale in question and (z) in the
event of a sale of all or substantially all of Issuer's
assets or deposits an amount equal to (i) the sum of the
price paid in such sale for such assets (and/or deposits)
and the current market value of the remaining assets of
Issuer, as determined by a nationally recognized investment
banking firm selected by Holder divided by (ii) the number
of shares of Issuer Common Stock outstanding at such time.
In the event that a Tender Offer or an Exchange Offer is
made for Issuer Common Stock or an agreement is entered into
for a merger or consolidation involving consideration other
than cash, the value of the securities or other property
issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment
banking firm selected by Holder.
(4) "Average Price" shall mean the average closing
price of a share of Substitute Common Stock for the one year
immediately preceding the consolidation, merger, or sale in
question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer
is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock
issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the aggregate of the shares of Substitute Common
Stock outstanding prior to exercise of the Substitute Option. In
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the event that the Substitute Option would be exercisable for
more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for the limitation in the first sentence of this
Section 7(f), Substitute Option Issuer shall make a cash payment
to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the
Substitute Option after giving effect to the limitation in the
first sentence of this Section 7(f). This difference in value
shall be determined by a nationally-recognized investment banking
firm selected by Holder.
(g) Issuer shall not enter into any transaction
described in Section 7(b) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder and take all
other actions that may be necessary so that the provisions of
this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the
holders of the other shares of common stock issued by Substitute
Option Issuer are not entitled to exercise any rights by reason
of the issuance or exercise of the Substitute Option and the
shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than
any diminution in value resulting from the fact that the
Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision)
than other shares of common stock issued by Substitute Option
Issuer).
8. Repurchase at the Option of Holder. (a) Subject
to the last sentence of Section 3(a), at the request of Holder at
any time commencing upon the first occurrence of a Repurchase
Event (as defined in Section 8(d)) and ending 12 months
immediately thereafter, Issuer shall repurchase from Holder
(i) the Option and (ii) all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder
then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the
"Request Date". Such repurchase shall be at an aggregate price
(the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder
for any shares of Issuer Common Stock acquired pursuant to
the Option with respect to which Holder then has beneficial
ownership;
(ii) the excess, if any, of (x) the Applicable
Price (as defined below) for each share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment
pursuant to Section 7), multiplied by the number of shares
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of Issuer Common Stock with respect to which the Option has
not been exercised; and
(iii) the excess, if any, of the Applicable Price
over the Purchase Price (subject to adjustment pursuant to
Section 7) paid (or, in the case of Option Shares with
respect to which the Option has been exercised but the
Closing Date has not occurred, payable) by Holder for each
share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of
such shares.
(b) If Holder exercises its rights under this
Section 8, Issuer shall, within 10 business days after the
Request Date, pay the Section 8 Repurchase Consideration to
Holder in immediately available funds, and contemporaneously with
such payment, Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has
beneficial ownership, and Holder shall warrant that it has sole
record and beneficial ownership of such shares and that the same
are then free and clear of all Liens. Notwithstanding the
foregoing, to the extent that prior notification to or approval
of any Regulatory Authority is required in connection with the
payment of all or any portion of the Section 8 Repurchase
Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in
part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not
then so prohibited from paying and promptly file the required
notice or application for approval and expeditiously process the
same (and each party shall cooperate with the other in the filing
of any such notice or application and the obtaining of any such
approval). If any Regulatory Authority disapproves of any part
of Issuer's proposed repurchase pursuant to this Section 8,
Issuer shall promptly give notice of such fact to Holder. If any
Regulatory Authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such
Regulatory Authority, determine whether the repurchase should
apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the sum of the number of
shares covered by the Option in respect of which payment has been
made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been
repurchased. Holder shall notify Issuer of its determination
under the preceding sentence within five (5) business days of
receipt of notice of disapproval of the repurchase.
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Notwithstanding anything herein to the
contrary, all of Holder's rights under this Section 8 shall
terminate on the date of termination of this Option pursuant to
Section 3(a).
(c) For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest price per
share of Issuer Common Stock paid for any such share by the
person or groups described in Section 8(d)(i), (ii) the price per
share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii),
or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE (or if Issuer Common Stock is not
quoted on the NYSE, the highest bid price per share as quoted on
the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by
Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all
of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Holder,
divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be
offered, paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, "Repurchase Event" shall
occur if (i) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of (as such
term is defined in Rule 13d-3 promulgated under the Exchange
Act), or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 50% or more of the then
outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
shall be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall,
subject to the conditions of Section 9(c) below, if requested by
any Holder, including Grantee and any permitted transferee
("Selling Shareholder"), as expeditiously as possible prepare and
file a registration statement under the Securities Act if such
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<PAGE>
registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to the
Selling Shareholder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by
the Selling Shareholder in such request, including without
limitation a "shelf" registration statement under Rule 415 under
the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at
any time after the exercise of the Option proposes to register
any shares of Issuer Common Stock under the Securities Act in
connection with an underwritten public offering of such Issuer
Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days
after receipt of any such notice (which request shall specify the
number of shares of Issuer Common Stock intended to be included
in such underwritten public offering by the Selling Shareholder),
Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered
and included in such underwritten public offering; provided,
however, that Issuer may elect to not cause any such shares to be
so registered (i) if the underwriters in good faith object for
valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration
filed on Form S-4 of the Securities Act or any successor Form;
provided, further, however, that such election pursuant to
(i) may only be made two times. If some but not all the shares
of Issuer Common Stock, with respect to which Issuer shall have
received requests for registration pursuant to this Section 9(b),
shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among the
Selling Shareholders desiring to register their shares pro rata
in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total
number of shares requested to be registered by all such Selling
Shareholders then desiring to have Issuer Common Stock registered
for sale.
(c) Conditions to Required Registration. Issuer
shall use all reasonable efforts to cause each registration
statement referred to in Section 9(a) above to become effective
and to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement
effective, provided, however, that Issuer may delay any
registration of Option Shares required pursuant to Section 9(a)
above for a period not exceeding 90 days provided Issuer shall in
good faith determine that any such registration would adversely
affect an offering or contemplated offering of other securities
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<PAGE>
by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination
of the Plan pursuant to Article VII thereof, (b) failure to
obtain the requisite stockholder approval pursuant to
Section 6.01 of Article VI of the Plan, and (c) a Purchase
Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any
calendar year;
(iii) within 90 days after the effective date
of a registration referred to in Section 9(b) above pursuant
to which the Selling Shareholder or Selling Shareholders
concerned were afforded the opportunity to register such
shares under the Securities Act and such shares were
registered as requested; and
(iv) unless a request therefor is made to
Issuer by Selling Shareholders that hold at least 25% or
more of the aggregate number of Option Shares (including
shares of Issuer Common Stock issuable upon exercise of the
Option) then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration
statement after the expiration of nine months from the effective
date of such registration statement. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under
all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so
registered in accordance with the intended method of distribution
for such shares; provided, however, that Issuer shall not be
required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law
prohibits such payments, Issuer will pay all expenses (including
without limitation registration fees, qualification fees, blue
sky fees and expenses (including the fees and expenses of
counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are
being registered, printing expenses and the costs of special
audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary special
experts) in connection with each registration pursuant to
Section 9(a) or 9(b) above (including the related offerings and
sales by holders of Option Shares) and all other qualifications,
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<PAGE>
notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any
registration under Section 9(a) or 9(b) above Issuer hereby
indemnifies the Selling Shareholders, and each underwriter
thereof, including each person, if any, who controls such holder
or underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged
untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in
reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling
person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by
Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or
supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such
underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under
this Section 9(e) of notice of the commencement of any action
against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this Section 9(e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any
indemnified party under this Section 9(e). In case notice of
commencement of any such action shall be given to the
indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
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<PAGE>
than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees
to pay the same, (ii) the indemnifying party fails to assume the
defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying
party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such
counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may
not be unreasonably withheld.
If the indemnification provided for in this
Section 9(e) is unavailable to a party otherwise entitled to be
indemnified in respect of any expenses, losses, claims, damages
or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by
such party to be indemnified as a result of such expenses,
losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by Issuer,
the Selling Shareholders and the underwriters from the offering
of the securities and also the relative fault of Issuer, the
Selling Shareholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party
as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or
claim; provided, however, that in no case shall any Selling
Shareholder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not
joint with other holders.
In connection with any registration pursuant to
Section 9(a) or 9(b) above, Issuer and each Selling Shareholder
(other than Grantee) shall enter into an agreement containing the
indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply
with all reporting requirements and will do all such other things
as may be necessary to permit the expeditious sale at any time of
any Option Shares by the Selling Shareholders thereof in
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<PAGE>
accordance with and to the extent permitted by any rule or
regulation promulgated by the SEC from time to time, including,
without limitation, Rule 144A. Issuer shall at its expense
provide the Selling Shareholders with any information necessary
in connection with the completion and filing of any reports or
forms required to be filed by them under the Securities Act or
the Exchange Act, or required pursuant to any state securities
laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes
in connection with the issuance and the sale of the Option Shares
and in connection with the exercise of the Option, and will save
the Selling Shareholders harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any
other securities to be acquired in connection with the exercise
of the Option are then authorized for quotation or trading or
listing on the NYSE or any securities exchange, Issuer, upon the
request of Holder, will promptly file an application, if
required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the NYSE or such other securities
exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the
Option granted hereby) are exchangeable, without expense, at the
option of Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer for other Agreements
providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of
shares of Issuer Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any other
Agreements and related Options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer
of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of
loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Each of the parties hereto shall
bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated
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<PAGE>
hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is entitled
to the benefits of such provision. This Agreement may not be
modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: No Third-Party
Beneficiaries; Severability. This Agreement, together with the
Plan and the other documents and instruments referred to herein
and therein, between Grantee and Issuer (i) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto (other than
the indemnified parties under Section 9(e) and any transferees of
the Option Shares or any permitted transferee of this Agreement
pursuant to Section 12(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or Regulatory Authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated. If for any reason such court or
Regulatory Authority determines that the Option does not permit
Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in
Section 3 (as may be adjusted herein), it is the express
intention of Issuer to allow Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of New Jersey without regard to any applicable conflicts of law
rules.
(e) Descriptive Headings. The descriptive
headings contained herein are for convenience of reference only
and shall not affect in any way the meaning or interpretation of
this Agreement.
(f) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, telecopied (with confirmation) or
mailed by registered or certified mail (return receipt requested)
to the parties at the addresses set forth in the Plan (or at such
other address for a party as shall be specified by like notice).
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<PAGE>
(g) Counterparts. This Agreement and any
amendments hereto may be executed in two counterparts, each of
which shall be considered one and the same agreement and shall
become effective when both counterparts have been signed, it
being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder or under the
Option shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent
of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its
rights hereunder in whole or in part after the occurrence of a
Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any
exercise of the Option by the Holder, Issuer and the Holder shall
execute and deliver all other documents and instruments and take
all other action that may be reasonably necessary in order to
consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto
agree that this Agreement may be enforced by either party through
specific performance, injunctive relief and other equitable
relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this
Stock Option Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first
written above.
FIRST FIDELITY BANCORPORATION
By:
Anthony P. Terracciano
Chairman, President, and
Chief Executive Officer
FIRST UNION CORPORATION
By:
Edward E. Crutchfield
Chairman and Chief Executive Officer
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<PAGE>
Exhibit B
AGREEMENT, dated June 19, 1995 (this "Agreement"),
among Banco Santander, S.A., a Spanish banking corporation
(the "Investor"), FFB Participacoes e Servieos, S.A., a
Portuguese corporation ("Investor Sub"), First Fidelity
Bancorporation, a New Jersey corporation ("FFB"), and First
Union Corporation, a North Carolina corporation ("FUNC").
RECITALS:
(A) The Merger. FFB, FUNC and PKC, Inc, a New
Jersey corporation and wholly owned subsidiary of FUNC
("Merger Sub"), have entered into an Agreement and Plan of
Merger (the "Plan") pursuant to which FUNC will acquire FFB
by means of a merger of FFB with and into Merger Sub,
subject to the terms and conditions of the Plan (the
"Merger"), a copy, as executed, has been received by
Investor and Investor Sub.
(B) The Shares and the Investment Agreement. As
of the date hereof, Investor Sub is the beneficial and
registered owner of 25,519,943 shares (including any shares
of FFB capital stock acquired after the date hereof, the
"Shares") of Common Stock, par value $1.00 per share ("FFB
Common Stock"), of FFB, constituting approximately 29.8% of
the currently outstanding shares of FFB Common Stock and, as
a result of Investor's 100% ownership and control of
Investor Sub, the Investor is the beneficial owner of the
Shares. Investor is a party to an Investment Agreement,
dated as of March 18, 1991 (the "Investment Agreement"),
between Investor and FFB and Investor Sub is subject to the
provisions of the Investment Agreement as a result of the
transfer of the Shares by Investor to Investor Sub as if it
were the Investor.
(C) Condition to Plan. As a condition and
inducement to FUNC's willingness to enter into the Plan, the
Investor and the Investor Sub are entering into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants
and agreements set forth herein, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Agreement to Vote. At such time as FFB
conducts a meeting of its shareholders for the purpose of
adopting and approving the Plan, the Merger and the
transactions contemplated thereby, Investor agrees to cause
Investor Sub to, and Investor Sub itself agrees to, duly and
validly vote all of the Shares in favor of adopting and
approving the Plan, the Merger and the transactions con-
<PAGE>
templated thereby, provided, that Investor and Investor Sub
may vote the Shares in their discretion with respect to the
Merger in the event the Board of Directors of FFB determines
to withdraw their recommendation in support of the Merger
and so advises the shareholders of FFB.
2. Agreement to Cooperate. In addition to the
specific matters provided for elsewhere herein, Investor and
Investor Sub shall take all action reasonably requested by
FUNC and FFB to facilitate the consummation of the Merger
and the transactions contemplated by the Plan.
3. Regulatory Approvals. Investor and Investor
Sub shall each use its reasonable best efforts to obtain
all permits, consents, orders, approvals and authorizations
of, and to make or provide all filings with or notices to,
all third parties and Regulatory Authorities necessary or
advisable on its part to permit the consummation of the
Merger and the transactions contemplated by the Plan,
including without limitation the Regulatory Approvals
referred to in Section 6.02 of the Plan (the "Approvals").
4. Investment Agreement. Investor and Investor
Sub hereby waive any and all rights, and all lapses of, or
changes in, rights or obligations, under the Investment
Agreement, and agree that they shall not exercise any such
rights, that arise out of, or result from, the entry into,
and matters preliminary to the entering into, the Plan, the
Stock Option Agreements and this Agreement and the consum-
mation of the Merger and the transactions contemplated
thereby and hereby including, without limitation, Sections
2.03, 5.03, 5.04, 8.04, 8.06 and 11.01(b)(iii) of the
Investment Agreement. FFB hereby consents to Investor and
Investor Sub entering into this Agreement under Section
8.04(a)(ii) and (iii) of the Investment Agreement. FFB and
Investor and Investor Sub hereby agree that to the extent
that this Agreement effects or relates to the Investment
Agreement that the Investment Agreement is hereby amended to
such effect. Unless otherwise terminated in accordance with
its terms as amended hereby, the Investment Agreement shall
terminate in its entirety immediately prior to the
consummation of the Merger except that Sections 6.01, 12.03
and 12.5 shall survive. Except as otherwise provided for
herein, the Investment Agreement shall remain in full force
and effect in accordance with its terms.
5. Securities Act of 1933; Accounting Matters.
Simultaneously with the execution and delivery of this
Agreement, Investor and Investor Sub are executing and
delivering to FFB and FUNC an "affiliates letter"
substantially in the form provided by the Plan for
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<PAGE>
affiliates of FFB covering the Securities Act of 1933 and
accounting matters set forth therein.
6. Termination of Agreement. This Agreement
shall terminate upon termination of the Plan in accordance
with its terms. In the event of the termination of this
Agreement, this Agreement shall forthwith become null and
void and there shall be no liability or obligation on the
part of FFB, Investor, Investor Sub or FUNC or their
respective officers or directors, except that nothing in
this Section 7 shall relieve any party hereto from any
liability for breach of this Agreement prior to such
termination.
7. Representations and Warranties of Investor and
Investor Sub. Investor and Investor Sub hereby represent
and warrant to FFB and FUNC as follows:
(a) Investor and Investor Sub each has all
requisite power and authority to execute and deliver
this Agreement and to cause the voting, or to vote, as
the case may be, the Shares in accordance with Section
1 hereof and otherwise perform its obligations here-
under; such execution, delivery, vote and performance
have been duly authorized by all necessary action on
the part of each of the Investor and Investor Sub; and
this Agreement has been duly executed and delivered by
each of Investor and Investor Sub and constitutes the
valid and binding agreement of each of Investor and
Investor Sub enforceable against each of Investor and
Investor Sub in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(b) As of the date hereof, Investor and Investor
Sub are aware of no reason relating exclusively to
Investor or Investor Sub or any of their affiliates why
the Approvals will not be received without the
imposition of a condition or requirement described in
the proviso to Section 6.02 of the Plan.
(c) As of the date hereof, neither Investor nor
Investor Sub or any affiliate thereof has any
exercisable right or option to acquire any additional
shares of FFB capital stock.
8. Representations and Warranties of FFB and
FUNC. Each of FFB and FUNC hereby represents and warrants
to the other parties hereto that it has the corporate power
and authority to execute, deliver and perform this
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<PAGE>
Agreement; such execution, delivery and performance have
been duly authorized by all necessary corporate action on
its part; and this Agreement has been duly executed and
delivered by it and constitutes the valid and binding agree-
ment of it, enforceable against it in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity
principles.
9. Specific Performance. The parties hereto
agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed
by the applicable party hereto in accordance with their
specific terms or were otherwise breached. It is accord-
ingly agreed that each of the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches
of this Agreement by the other and to enforce specifically
the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in
addition to any other remedy to which it is entitled at law
or in equity and that each party waives the posting of any
bond or security in connection with any proceeding related
thereto.
10. Expenses. Except as may otherwise be
provided herein, no party hereto shall be responsible for
the payment of any other parties' expenses incurred in
connection with this Agreement.
11. Third Party Beneficiaries. The terms and
provisions of this Agreement are intended solely for the
benefit of each party hereto and its respective successors
and permitted assigns, and it is not the intention of the
parties to confer third party beneficiary rights upon any
other person or entity.
12. Amendments. This Agreement may not be
modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by
all of the parties hereto.
13. Notices. All notices, requests, consents and
other communications hereunder shall be in writing and
delivered personally or by telecopy transmission or sent by
registered or certified mail or by any express mail service,
postage or fees prepaid, addressed as provided for in the
Plan or the Investment Agreement.
14. Governing Law. This Agreement shall be
governed by, and interpreted in accordance with, the laws of
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<PAGE>
the State of New York, without regard to the conflict of law
principles thereof, except to the extent that the [N-BCA]
shall expressly govern the matters set forth herein.
15. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed
to constitute an original. This Agreement shall become
effective when one counterpart signature page has been
signed by each party hereto and delivered to the other
parties.
16. Effect of Heading. The descriptive headings
contained herein are for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
17. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is
enforceable.
18. Further Assurances. Each of the parties
hereto agree to execute and deliver all such further
documents, certificates and instruments and take all such
further reasonable action as may be necessary or
appropriate, in order to consummate the transactions
contemplated hereby.
19. Defined Terms. Terms used herein that are
not otherwise defined herein shall have the meanings
assigned to such terms in the Plan.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered as of the date
first written above.
BANCO SANTANDER, S.A.
By:
Name:
Title:
FFB PARTICIPACOES E
SERVIEOS, S.A.
By:
Name:
Title:
FIRST FIDELITY BANCORPORATION
By:
Name:
Title:
FIRST UNION CORPORATION
By:
Name:
Title:
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<PAGE>
Exhibit C
FORM OF FUNC STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 19, 1995 (the
"Agreement"), by and between First Union Corporation, a
North Carolina corporation ("Issuer"), and First Fidelity
Bancorporation, a New Jersey corporation ("Grantee").
RECITALS
(A) The Plan. Grantee and Issuer have on a date prior
to the date hereof, entered into an Agreement and Plan of Merger,
dated as of June 18, 1995 (the "Plan"), providing for, among
other things, the merger of Grantee with and into a wholly owned
subsidiary of Issuer, with such subsidiary being the surviving
corporation.
(B) Condition to Plan. As a condition and inducement
to Grantee's execution of the Plan and Grantee's agreement
referred to in the next sentence, Grantee has required that
Issuer agree, and Issuer has agreed, to grant Grantee the Option
(as hereinafter defined). As a condition and inducement to
Issuer's execution of the Plan and this Agreement, Grantee has
agreed to grant an option to Issuer on terms and conditions
substantially identical to those of the Option and this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein and in the Plan, and intending to be
legally bound hereby, Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used
but not defined herein shall have the meanings ascribed to such
terms in the Plan.
2. Grant of Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an
irrevocable option (the "Option") to purchase a number of shares
of common stock, par value $3.33 per share ("Issuer Common
Stock"), of Issuer up to 34,042,001 of such shares (as adjusted
as set forth herein, the "Option Shares", which shall include the
Option Shares before and after any transfer of such Option
Shares, but in no event shall the number of Option Shares for
which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock) at a purchase price
per Option Share (as adjusted as set forth herein, the "Purchase
Price") equal to the closing price per share of Issuer Common
Stock on June 19, 1995, as reported by the NYSE Composite
Transactions reporting system (as reported in The Wall Street
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Journal or, if not reported therein, another authoritative
source) but in no event may the Purchase Price, prior to any
adjustment, be less than the par value of Issuer Common Stock.
Each Option Share issued upon exercise of the Option shall be
accompanied by FUNC Rights as provided in the FUNC Rights
Agreement.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as
hereinafter defined), as applicable, shall not be in material
breach of the agreements or covenants contained in this Agreement
or the Plan, and (ii) no preliminary or permanent injunction or
other order against the delivery of shares covered by the Option
issued by any court of competent jurisdiction in the United
States shall be in effect, the Holder may exercise the Option, in
whole or in part, at any time and from time to time following the
occurrence of a Purchase Event (as hereinafter defined); provided
that the Option shall terminate and be of no further force or
effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Plan in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event other than a termination thereof by Grantee
pursuant to Section 7.01(B) of the Plan (but only if the breach
of Issuer giving rise to such termination was willful) (a
termination of the Plan by Grantee pursuant to Section 7.01(B)
thereof as a result of a willful breach by Issuer being referred
to herein as a "Default Termination"), (C) 15 months after a
Default Termination, or (D) 15 months after termination of the
Plan (other than a Default Termination) following the occurrence
of a Purchase Event or a Preliminary Purchase Event; provided,
however, that any purchase of shares upon exercise of the Option
shall be subject to compliance with applicable law. The term
"Holder" shall mean the holder or holders of the Option from time
to time, and which initially is Grantee. The rights set forth in
Section 8 hereof shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise
of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any
of the following events:
(i) Without Grantee's prior written consent,
Issuer shall have recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose,
or entered into an agreement with any person (other than
Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving
Issuer or any of its significant subsidiaries (other than
transactions solely between Issuer's subsidiaries that are
not violative of the Plan), (B) the disposition, by sale,
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lease, exchange or otherwise, of assets or deposits of
Issuer or any of its significant subsidiaries representing
in either case 25% or more of the consolidated assets or
deposits of Issuer and its subsidiaries or (C) the issuance,
sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the
voting power of Issuer or any of its significant
subsidiaries, other than, in each case of (A), (B), or (C),
any merger, consolidation or similar transaction involving
Issuer or any of its significant subsidiaries in which the
voting securities of Issuer outstanding immediately prior
thereto continue to represent (by either remaining
outstanding or being converted into the voting securities of
the surviving entity of any such transaction) at least 65%
of the combined voting power of the voting securities of the
Issuer or the surviving entity outstanding immediately after
the consummation of such merger, consolidation, or similar
transaction (provided any such transaction is not violative
of the Plan) (each of (A), (B), or (C), an "Acquisition
Transaction"); or
(ii) any person (other than Grantee or any
subsidiary of Grantee) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act), other than
a group of which Grantee or any subsidiary of Grantee is a
member, shall have been formed which beneficially owns or
has the right to acquire beneficial ownership of, 25% or
more of the voting power of Issuer or any of its significant
subsidiaries.
(c) As used herein, a "Preliminary Purchase
Event" means any of the following events:
(i) any person (other than Grantee or any
subsidiary of Grantee) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act) or shall have
filed a registration statement under the Securities Act,
with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control
25% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); or
(ii) the stockholders shall not have approved
the matters relating to the Plan requiring approval by the
requisite vote at the FUNC Meeting, the FUNC Meeting shall
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not have been held or shall have been canceled prior to
termination of the Plan, or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors
with respect to the matters relating to the Plan requiring
approval, in each case after it shall have been publicly
announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (A) made, or disclosed an
intention to make, a bona fide proposal to engage in an
Acquisition Transaction, (B)commenced a Tender Offer or
filed a registration statement under the Securities Act with
respect to an Exchange Offer or (C) filed an application (or
given a notice), whether in draft or final form, under the
Home Owners' Loan Act, as amended ("HOLA"), the BHC Act, the
Bank Merger Act, as amended (the "BMA") or the Change in
Bank Control Act of 1978, as amended (the "CBCA"), for
approval to engage in an Acquisition Transaction; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) shall have made a bona fide proposal
to Issuer or its stockholders by public announcement, or
written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction;
or
(iv) after a proposal is made by a third party to
Issuer or its stockholders to engage in an Acquisition
Transaction, or such third party states its intention to the
Issuer to make such a proposal if the Plan terminates,
Issuer shall have breached any representation, warranty,
covenant or agreement contained in the Plan and such breach
would entitle Grantee to terminate the Plan under Section
7.01 (without regard to the cure period provided for therein
unless such cure is promptly effected without jeopardizing
consummation of the Merger pursuant to the terms of the
Plan); or
(v) any person (other than Grantee or any
subsidiary of Grantee) other than in connection with a
transaction to which Grantee has given its prior written
consent, shall have filed an application or notice with any
Regulatory Authority for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Preliminary Purchase Event or
Purchase Event, it being understood that the giving of such
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notice by Issuer shall not be a condition to the right of Holder
to exercise the Option.
(e) In the event Holder wishes to exercise the
Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying
(i) the total number of Option Shares it intends to purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"); provided that the first notice of exercise shall
be sent to Issuer within 180 days after the first Purchase Event
of which Grantee has been notified. If prior notification to or
approval of any Regulatory Authority is required in connection
with such purchase, Issuer shall cooperate with the Holder in the
filing of the required notice of application for approval and the
obtaining of such approval and the Closing shall occur
immediately following such regulatory approvals (and any
mandatory waiting periods). Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a bank
account designated by Issuer, an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased
on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in
Section 12(f).
(b) At each Closing, simultaneously with the
delivery of immediately available funds and surrender of this
Agreement as provided in Section 4(a), (i) Issuer shall deliver
to Holder (A) a certificate or certificates representing the
Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all Liens and subject to no
preemptive rights, and (B) if the Option is exercised in part
only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and
(ii) Holder shall deliver to Issuer a letter agreeing that Holder
shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is
required by applicable law, certificates for the Option Shares
delivered at each Closing shall be endorsed with a restrictive
legend which shall read substantially as follows:
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THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT TO
THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF JUNE
19, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE
ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend
relating to the Securities Act shall be removed by delivery of
substitute certificate(s) without such legend if Holder shall
have delivered to Issuer a copy of a letter from the staff of the
SEC, or an opinion of counsel in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect that such
legend is not required for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the
written notice of exercise of the Option provided for under
Section 3(e), the tender of the applicable purchase price in
immediately available funds and the tender of this Agreement to
Issuer, Holder shall be deemed to be the holder of record of the
shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of
Issuer Common Stock shall not then be actually delivered to
Holder. Issuer shall pay all expenses, and any and all United
States federal, state, and local taxes and other charges that may
be payable in connection with the preparation, issuance and
delivery of stock certificates under this Section in the name of
Holder or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Issuer Common Stock so that the
Option may be exercised without additional authorization of
Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase
Issuer Common Stock, (ii) that it will not, by charter amendment
or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder
by Issuer, (iii) promptly to take all action as may from time to
time be required (including (A) complying with all premerger
notification, reporting and waiting period requirements and
(B) in the event prior approval of or notice to any Regulatory
Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or
notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to
exercise the Option and Issuer duly and effectively to issue
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shares of the Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee (and Holder, if
different than Grantee) as follows:
(a) Corporate Authority. Issuer has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors
of Issuer, and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated; this Agreement
has been duly and validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge
of Issuer, as of the date of this Agreement, no person or
group has beneficial ownership of more than 5% of the issued
and outstanding shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock.
Issuer has taken all necessary corporate action to authorize
and reserve and permit it to issue, and at all times from
the date hereof through the termination of this Agreement in
accordance with its terms, will have reserved for issuance
upon the exercise of the Option, that number of shares of
Issuer Common Stock equal to the maximum number of shares of
Issuer Common Stock at any time and from time to time
purchasable upon exercise of the Option, and all such
shares, upon issuance pursuant to the Option, will be duly
authorized, validly issued, fully paid and nonassessable, and
will be delivered free and clear of all claims, liens,
encumbrances, and security interests (other than those
created by this Agreement) and not subject to any preemptive
rights.
(d) No Violations. The execution, delivery and
performance of this Agreement does not or will not, and the
consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, its certificate
of incorporation or by-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) a breach or
violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without
the giving of notice, the lapse of time or both) or under
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any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or
license to which it or any of its subsidiaries is subject,
that would, in any case give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement
in any material respect.
6. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer that Grantee has
full corporate power and authority to enter into this Agreement
and, subject to obtaining the approvals referred to in this
Agreement, to consummate the transactions contemplated by this
Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
Grantee; and this Agreement has been duly executed and delivered
by Grantee.
7. Adjustment upon Changes in Issuer Capitalization,
etc. (a) In the event of any change in Issuer Common Stock by
reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares, exercise of
the FUNC Rights or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such
transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior
to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described
in the first sentence of this Section 7(a), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date
hereof or upon conversion into Issuer Common Stock of any
convertible security of Issuer outstanding on the date hereof),
the number of shares of Issuer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together with
any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common
Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option. No
provision of this Section 7 shall be deemed to affect or change,
or constitute authorization for any violation of, any of the
covenants or representations in the Plan.
(b) In the event that Issuer shall enter into an
agreement (i) to consolidate with or merge into any person, other
than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
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merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Issuer Common Stock shall
be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the
outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of
the outstanding shares and share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper
provisions so that the Option shall, upon the consummation of any
such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Holder, of either
(x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the
case of a merger described in clause (ii), Issuer (such person
being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same
terms as the Option, provided, that, if the terms of the
Substitute Option cannot, for legal reasons, be the same as the
Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer
shall also enter into an agreement with Holder in substantially
the same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable
for such number of shares of Substitute Common Stock (as
hereinafter defined) as is equal to the Assigned Value (as
hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The
exercise price of Substitute Option per share of Substitute
Common Stock (the "Substitute Option Price") shall then be equal
to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common Stock for
which the Option was theretofore exercisable and the denominator
is the number of shares of the Substitute Common Stock for which
the Substitute Option is exercisable.
(e) The following terms have the meanings
indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
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merger in which Issuer is the continuing or surviving
person, or (iii) the transferee of all or substantially all
of Issuer's assets (or a substantial part of the assets of
its subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the shares of
capital stock (or similar equity interest) with the greatest
voting power in respect of the election of directors (or
persons similarly responsible for the direction of the
business and affairs) of the Substitute Option Issuer.
(3) "Assigned Value" shall mean the highest of (w) the
price per share of Issuer Common Stock at which a Tender
Offer or an Exchange Offer therefor has been made, (x) the
price per share of Issuer Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common Stock
within the six-month period immediately preceding the
consolidation, merger, or sale in question and (z) in the
event of a sale of all or substantially all of Issuer's
assets or deposits an amount equal to (i) the sum of the
price paid in such sale for such assets (and/or deposits)
and the current market value of the remaining assets of
Issuer, as determined by a nationally recognized investment
banking firm selected by Holder divided by (ii) the number
of shares of Issuer Common Stock outstanding at such time.
In the event that a Tender Offer or an Exchange Offer is
made for Issuer Common Stock or an agreement is entered into
for a merger or consolidation involving consideration other
than cash, the value of the securities or other property
issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment
banking firm selected by Holder.
(4) "Average Price" shall mean the average closing
price of a share of Substitute Common Stock for the one year
immediately preceding the consolidation, merger, or sale in
question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer
is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock
issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the aggregate of the shares of Substitute Common
Stock outstanding prior to exercise of the Substitute Option. In
the event that the Substitute Option would be exercisable for
more than 19.9% of the aggregate of the shares of Substitute
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Common Stock but for the limitation in the first sentence of this
Section 7(f), Substitute Option Issuer shall make a cash payment
to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the
Substitute Option after giving effect to the limitation in the
first sentence of this Section 7(f). This difference in value
shall be determined by a nationally-recognized investment banking
firm selected by Holder.
(g) Issuer shall not enter into any transaction
described in Section 7(b) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder and take all
other actions that may be necessary so that the provisions of
this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the
holders of the other shares of common stock issued by Substitute
Option Issuer are not entitled to exercise any rights by reason
of the issuance or exercise of the Substitute Option and the
shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than
any diminution in value resulting from the fact that the
Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision)
than other shares of common stock issued by Substitute Option
Issuer).
8. Repurchase at the Option of Holder. (a) Subject
to the last sentence of Section 3(a), at the request of Holder at
any time commencing upon the first occurrence of a Repurchase
Event (as defined in Section 8(d)) and ending 12 months
immediately thereafter, Issuer shall repurchase from Holder
(i) the Option and (ii) all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder
then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the
"Request Date". Such repurchase shall be at an aggregate price
(the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder
for any shares of Issuer Common Stock acquired pursuant to
the Option with respect to which Holder then has beneficial
ownership;
(ii) the excess, if any, of (x) the Applicable
Price (as defined below) for each share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment
pursuant to Section 7), multiplied by the number of shares
of Issuer Common Stock with respect to which the Option has
not been exercised; and
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(iii) the excess, if any, of the Applicable Price
over the Purchase Price (subject to adjustment pursuant to
Section 7) paid (or, in the case of Option Shares with
respect to which the Option has been exercised but the
Closing Date has not occurred, payable) by Holder for each
share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of
such shares.
(b) If Holder exercises its rights under this
Section 8, Issuer shall, within 10 business days after the
Request Date, pay the Section 8 Repurchase Consideration to
Holder in immediately available funds, and contemporaneously with
such payment, Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has
beneficial ownership, and Holder shall warrant that it has sole
record and beneficial ownership of such shares and that the same
are then free and clear of all Liens. Notwithstanding the
foregoing, to the extent that prior notification to or approval
of any Regulatory Authority is required in connection with the
payment of all or any portion of the Section 8 Repurchase
Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in
part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not
then so prohibited from paying and promptly file the required
notice or application for approval and expeditiously process the
same (and each party shall cooperate with the other in the filing
of any such notice or application and the obtaining of any such
approval). If any Regulatory Authority disapproves of any part
of Issuer's proposed repurchase pursuant to this Section 8,
Issuer shall promptly give notice of such fact to Holder. If any
Regulatory Authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such
Regulatory Authority, determine whether the repurchase should
apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the sum of the number of
shares covered by the Option in respect of which payment has been
made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been
repurchased. Holder shall notify Issuer of its determination
under the preceding sentence within five (5) business days of
receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the
contrary, all of Holder's rights under this Section 8 shall
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terminate on the date of termination of this Option pursuant to
Section 3(a).
(c) For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest price per
share of Issuer Common Stock paid for any such share by the
person or groups described in Section 8(d)(i), (ii) the price per
share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii),
or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE (or if Issuer Common Stock is not
quoted on the NYSE, the highest bid price per share as quoted on
the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by
Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all
of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Holder,
divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be
offered, paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, "Repurchase Event" shall
occur if (i) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of (as such
term is defined in Rule 13d-3 promulgated under the Exchange
Act), or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 50% or more of the then
outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
shall be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall,
subject to the conditions of Section 9(c) below, if requested by
any Holder, including Grantee and any permitted transferee
("Selling Shareholder"), as expeditiously as possible prepare and
file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other
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<PAGE>
disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to the
Selling Shareholder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by
the Selling Shareholder in such request, including without
limitation a "shelf" registration statement under Rule 415 under
the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at
any time after the exercise of the Option proposes to register
any shares of Issuer Common Stock under the Securities Act in
connection with an underwritten public offering of such Issuer
Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days
after receipt of any such notice (which request shall specify the
number of shares of Issuer Common Stock intended to be included
in such underwritten public offering by the Selling Shareholder),
Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered
and included in such underwritten public offering; provided,
however, that Issuer may elect to not cause any such shares to be
so registered (i) if the underwriters in good faith object for
valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration
filed on Form S-4 of the Securities Act or any successor Form;
provided, further, however, that such election pursuant to
(i) may only be made two times. If some but not all the shares
of Issuer Common Stock, with respect to which Issuer shall have
received requests for registration pursuant to this Section 9(b),
shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among the
Selling Shareholders desiring to register their shares pro rata
in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total
number of shares requested to be registered by all such Selling
Shareholders then desiring to have Issuer Common Stock registered
for sale.
(c) Conditions to Required Registration. Issuer
shall use all reasonable efforts to cause each registration
statement referred to in Section 9(a) above to become effective
and to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement
effective, provided, however, that Issuer may delay any
registration of Option Shares required pursuant to Section 9(a)
above for a period not exceeding 90 days provided Issuer shall in
good faith determine that any such registration would adversely
affect an offering or contemplated offering of other securities
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<PAGE>
by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination
of the Plan pursuant to Article VII thereof, (b)
failure to obtain the requisite stockholder approval
pursuant to Section 6.01 of Article VI of the Plan, and
(c) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any
calendar year;
(iii) within 90 days after the effective date
of a registration referred to in Section 9(b) above
pursuant to which the Selling Shareholder or Selling
Shareholders concerned were afforded the opportunity to
register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to
Issuer by Selling Shareholders that hold at least 25%
or more of the aggregate number of Option Shares
(including shares of Issuer Common Stock issuable upon
exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration
statement after the expiration of nine months from the effective
date of such registration statement. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under
all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so
registered in accordance with the intended method of distribution
for such shares; provided, however, that Issuer shall not be
required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law
prohibits such payments, Issuer will pay all expenses (including
without limitation registration fees, qualification fees, blue
sky fees and expenses (including the fees and expenses of
counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are
being registered, printing expenses and the costs of special
audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary special
experts) in connection with each registration pursuant to
Section 9(a) or 9(b) above (including the related offerings and
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sales by holders of Option Shares) and all other qualifications,
notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any
registration under Section 9(a) or 9(b) above Issuer hereby
indemnifies the Selling Shareholders, and each underwriter
thereof, including each person, if any, who controls such holder
or underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged
untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in
reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling
person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by
Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or
supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such
underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under
this Section 9(e) of notice of the commencement of any action
against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this Section 9(e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any
indemnified party under this Section 9(e). In case notice of
commencement of any such action shall be given to the
indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
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<PAGE>
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees
to pay the same, (ii) the indemnifying party fails to assume the
defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying
party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such
counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may
not be unreasonably withheld.
If the indemnification provided for in this
Section 9(e) is unavailable to a party otherwise entitled to be
indemnified in respect of any expenses, losses, claims, damages
or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by
such party to be indemnified as a result of such expenses,
losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by Issuer,
the Selling Shareholders and the underwriters from the offering
of the securities and also the relative fault of Issuer, the
Selling Shareholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party
as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or
claim; provided, however, that in no case shall any Selling
Shareholder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not
joint with other holders.
In connection with any registration pursuant to
Section 9(a) or 9(b) above, Issuer and each Selling Shareholder
(other than Grantee) shall enter into an agreement containing the
indemnification provisions of this Section 9(e).
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<PAGE>
(f) Miscellaneous Reporting. Issuer shall comply
with all reporting requirements and will do all such other things
as may be necessary to permit the expeditious sale at any time of
any Option Shares by the Selling Shareholders thereof in
accordance with and to the extent permitted by any rule or
regulation promulgated by the SEC from time to time, including,
without limitation, Rule 144A. Issuer shall at its expense
provide the Selling Shareholders with any information necessary
in connection with the completion and filing of any reports or
forms required to be filed by them under the Securities Act or
the Exchange Act, or required pursuant to any state securities
laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes
in connection with the issuance and the sale of the Option Shares
and in connection with the exercise of the Option, and will save
the Selling Shareholders harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any
other securities to be acquired in connection with the exercise
of the Option are then authorized for quotation or trading or
listing on the NYSE or any securities exchange, Issuer, upon the
request of Holder, will promptly file an application, if
required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the NYSE or such other securities
exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the
Option granted hereby) are exchangeable, without expense, at the
option of Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer for other Agreements
providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of
shares of Issuer Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any other
Agreements and related Options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer
of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of
loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
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<PAGE>
12. Miscellaneous.
(a) Expenses. Each of the parties hereto shall
bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is entitled
to the benefits of such provision. This Agreement may not be
modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: No Third-Party
Beneficiaries; Severability. This Agreement, together with the
Plan and the other documents and instruments referred to herein
and therein, between Grantee and Issuer (i) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto (other than
the indemnified parties under Section 9(e) and any transferees of
the Option Shares or any permitted transferee of this Agreement
pursuant to Section 12(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or Regulatory Authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated. If for any reason such court or
Regulatory Authority determines that the Option does not permit
Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in
Section 3 (as may be adjusted herein), it is the express
intention of Issuer to allow Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of North Carolina without regard to any applicable conflicts of
law rules.
(e) Descriptive Headings. The descriptive
headings contained herein are for convenience of reference only
and shall not affect in any way the meaning or interpretation of
this Agreement.
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<PAGE>
(f) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, telecopied (with confirmation) or
mailed by registered or certified mail (return receipt requested)
to the parties at the addresses set forth in the Plan (or at such
other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any
amendments hereto may be executed in two counterparts, each of
which shall be considered one and the same agreement and shall
become effective when both counterparts have been signed, it
being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder or under the
Option shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent
of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its
rights hereunder in whole or in part after the occurrence of a
Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any
exercise of the Option by the Holder, Issuer and the Holder shall
execute and deliver all other documents and instruments and take
all other action that may be reasonably necessary in order to
consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto
agree that this Agreement may be enforced by either party through
specific performance, injunctive relief and other equitable
relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this
Stock Option Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first
written above.
FIRST UNION CORPORATION
By:
Edward E. Crutchfield
Chairman and Chief Executive Officer
FIRST FIDELITY BANCORPORATION
By:
Anthony P. Terracciano
Chairman, President, and
Chief Executive Officer
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<PAGE>
Exhibit D
FORM OF SUPPLEMENT TO FFB RIGHTS AGREEMENT
FOURTH SUPPLEMENT, dated as of June 18, 1995 (the
"Amendment"), to the Rights Agreement, dated as of August
17, 1989 (as heretofore supplemented and amended, the
"Rights Agreement"), between First Fidelity Bancorporation,
a New Jersey corporation (the "Company"), and First Fidelity
Bank, N.A., a national banking association (the "Rights
Agent").
WITNESSETH
WHEREAS, on August 17, 1989, the Board of
Directors of the Company authorized and declared a dividend
of one Right with respect to each Common Share held as of
the Record Date, each Right representing the right to
purchase one one-hundredth of a Preferred Share upon the
terms and conditions set forth in the Rights Agreement; and
WHEREAS, the Rights remain issued and outstanding
and the Rights Agreement remains in effect with respect
thereto; and
WHEREAS, no Trigger Event has occurred; and
WHEREAS, the Company, FUNC, a North Carolina
corporation ("FUNC"), and a subsidiary of FUNC propose to
enter into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which the Company would merge with
and into such subsidiary of FUNC; and
WHEREAS, after entry into the Merger Agreement,
(i) the Company and FUNC may enter into a Stock Option
Agreement referred to therein (the "Stock Option Agreement")
pursuant to which the Company would grant to FUNC an option
to acquire up to 19.9% of the outstanding shares of Common
Stock of the Company under certain circumstances and (ii)
Investor, Investor Sub, FUNC and the Company may enter into
an Agreement referred to therein (the "Voting Agreement")
pursuant to which the Investor and Investor Sub, among other
things, have agreed to vote their shares of Common Stock in
favor of the Merger; and
WHEREAS, in connection with the anticipated
approval, execution, and delivery of the Merger Agreement,
the Board of Directors of the Company has approved, in
accordance with Section 27 of the Rights Agreement, this
Amendment and has directed the appropriate officers of the
<PAGE>
Company to take all appropriate steps to execute and deliver
this Amendment.
NOW, THEREFORE, in consideration of the premises
and mutual agreements herein set forth, the parties hereby
agree as follows:
(1) Amendment to Section 1(a)
Section 1(a) of the Rights Agreement is hereby
amended in its entirety to read as follows:
"(a) `Acquiring Person' shall mean any
Person (as such term is hereinafter defined) who
or which, together with all Affiliates and
Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 10% or more
of the Common Shares of the Company then
outstanding, but shall not include any of the
following:
(i) the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, any
employee benefit plan of the Company or any
Subsidiary of the Company, or an entity holding
Common Shares for or pursuant to the terms of any
such plan,
(ii) until the termination of the Stock
Option Agreement in accordance with its terms
prior to any exercise thereunder, FUNC or any
Affiliate or Associate of FUNC, or Banco
Santander, S.A. (the `Investor') or any Affiliate
of the Investor, as a result of their acquisition
of Beneficial Ownership of Common Shares of the
Company by reason of the approval, execution, or
delivery of the Stock Option Agreement, the Merger
Agreement or the Voting Agreement or by reason of
the consummation of any transaction or the
exercise of any option contemplated by the Stock
Option Agreement, the Merger Agreement or the
Voting Agreement, so long as (A) FUNC is in
compliance with the material terms, conditions,
and obligations imposed upon it in the Stock
Option Agreement and the Merger Agreement, and
(B) FUNC and any Affiliate or Associate of FUNC is
not the Beneficial Owner of any Common Shares of
the Company other than (w) Common Shares of the
Company of which FUNC or any Affiliate or Asso-
ciate of FUNC is or becomes the Beneficial Owner
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<PAGE>
by reason of the approval, execution, or delivery
of the Stock Option Agreement, the Merger Agree-
ment, or the Voting Agreement or by reason of the
consummation of any transaction or the exercising
of the option, contemplated by the Stock Option
Agreement, the Merger Agreement, or both, (x)
Common Shares of the Company Beneficially Owned by
FUNC or any Affiliate or Associate of FUNC on the
date hereof, (y) Common Shares of the Company of
which FUNC or any Affiliate or Associate of FUNC
inadvertently becomes the Beneficial Owner after
the date hereof, provided that the number of such
shares of Common Shares does not exceed 1% of the
shares of Common Shares of the Company outstanding
on the date hereof and that FUNC or any such
Affiliate or Associate, as the case may be,
divests such Common Shares as soon as practicable
after it becomes aware of such acquisition of
Beneficial Ownership, and (z) Common Shares of the
Company Beneficially Owned or otherwise held by
FUNC or any Affiliate or Associate of FUNC in a
bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in
either case in the ordinary course of its banking
business;"
(iii) the Investor and its Affiliates (A) so
long as none of the Investor and its Affiliates is
in violation of the provisions of Section 8.01 of
the Investment Agreement, dated as of March 18,
1991, between the Company and the Investor (the
`Investment Agreement') as the same may be amended
from time to time and (B) if the Investment
Agreement shall have terminated, if and for so
long as (and only if and for so long as) the
Investor and its Affiliates have Beneficial
Ownership of 25% or less (or, if on the date of
termination of the Investment Agreement, the
Investor and its Affiliates were permitted by
Section 8.01 of the Investment Agreement to own up
to 30%, 30% or less), of the Common Shares of the
Company, or
(iv) with respect to Beneficial Ownership of
up to 25% or less (or, if at the date of the bona
fide pledge discussed below the Investor was
permitted by Section 8.01 of the Investment
Agreement to own up to 30%, 30% or less) of the
Common Shares of the Company, a financial
institution which is granted a bona fide pledge by
the Investor of any securities of the Company
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<PAGE>
entitled, in the ordinary course, to vote in the
election of directors of the Company and any other
securities or rights convertible into or
exercisable (whether immediately or otherwise) for
such securities (the `Restricted Securities'),
provided that the agreement relating to the pledge
shall provide that if such financial institution
forecloses on such pledge of such Restricted
Securities, such financial institution shall be
bound by the obligations of the Investor under the
Investment Agreement but shall not have any of the
rights of the Investor thereunder other than those
contained in Sections 5.03 and 8.02 of the
Investment Agreement, provided that for purposes
of this subsection (iv) the provisions of the
Investment Agreement shall apply during the period
commencing on the date of the bona fide pledge and
ending on the four year anniversary of the
foreclosure of such pledge whether or not such
provision are otherwise then in effect.
Upon termination of the Investment Agreement,
if and for so long as the Investor is the
Beneficial Owner of more than 25% (or, if on the
date of the termination of the Investment
Agreement, the Investor and its Affiliates were
permitted by Section 8.01 to own up to 30%, more
than 30%) of the Common Shares then outstanding
and all of such shares were acquired in compliance
with Section 8.01 of the Investment Agreement, the
Investor shall become an Acquiring Person if it
becomes the Beneficial Owner of any additional
Common Shares. If the Investment Agreement was
terminated as a result of a violation of such
Agreement by the Investor, the Investor shall be
required to reduce its Beneficial Ownership to
less than the relevant percentage set forth above
of the Common Shares outstanding, within 90 days
after termination of the Investment Agreement.
Failure to make such reduction shall result in the
Investor becoming an `Acquiring Person.'
Notwithstanding the foregoing, no Person shall
become an `Acquiring Person' solely as the result
of any acquisition of Common Shares by the Company
which, by reducing the number of shares
outstanding, increases the proportionate number of
shares beneficially owned by such Person to 10% or
more of the Common Shares of the Company then
outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 10% (or 25%
(or, if on the date of termination of the
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<PAGE>
Investment Agreement, the Investor and its
Affiliates were permitted by Section 8.01 of the
Investment Agreement to own up to 30%, 30% or
less) in the case of the Investor) or more of the
Common Shares of the Company then outstanding by
reason of share purchases by the Company and
shall, after such share purchases by the Company,
become the Beneficial Owner of any additional
Common Shares of the Company, then such Person
shall be deemed to be an `Acquiring Person.'"
(2) Addition of Section 1(o).
A new Section 1(o) is added to the Rights
Agreement, to read as follows:
"(o) `FUNC' shall mean First Union
Corporation, a corporation duly organized and
existing under the laws of the State of North
Carolina, and its successors."
(3) Addition of Section 1(p).
A new Section 1(p) is added to the Rights
Agreement, to read as follows:
"(p) `Merger Agreement' shall mean the
Agreement and Plan of Merger, dated as of June 18,
1995, by and between FUNC, the Company and a
subsidiary of FUNC, as the same may be amended
from time to time.
(4) Addition of Section 1(q).
A new Section 1(q) is added to the Rights
Agreement, to read as follows:
"(q) `Stock Option Agreement' shall mean the
Stock Option Agreement, to be dated as of June 19,
1995, by and between the Company, as issuer, and
FUNC, as grantee, as the same may be amended from
time to time.
(5) Addition of Section 1(r).
A new Section 1(r) is added to the Rights
Agreement, to read as follows:
"(r) `Voting Agreement' shall mean the
Agreement, to be dated as of June 19, 1995, among
Investor, a subsidiary of Investor, the Company
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<PAGE>
and FUNC, as the same may be amended from time to
time.
(6) Addition of Section 1(s).
A new Section 1(s) is added to the Rights
Agreement, to read as follows:
"(s) `Termination Time' shall be immediately
prior to the Effective Time, as defined in the
Merger Agreement."
(7) Amendment to Section 7(a).
Section 7(a) of the Rights Agreement is amended to
read as follows:
"(a) The registered holder of any Right
Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in
whole or in part at any time after the
Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights
Agent, together with payment of the Purchase Price
for each one one-hundredth of a Preferred Share as
to which the Rights are exercised, at or prior to
the earliest of (i) the close of business on
September 1, 1999 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption
Date"), (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof, or
(iv) the Termination Time."
(8) Amendment to Section 13.
The language of Section 13 of the Rights Agreement
prior to Section 13, Clause (i) is amended to read as
follows:
"Section 13. Consolidation, Merger or Sale
or Transfer of Assets of Earning Power. In the
event, directly or indirectly, (a) the Company
shall consolidate with, or merge with and into,
any other Person, (b) any Person shall consolidate
with the Company, or merge with and into the
Company and the Company shall be the continuing or
surviving corporation of such merger and, in
connection with such merger, all or part of the
-6-
<PAGE>
Common Shares shall be changed into or exchanged
for stock or other securities of any other Person
(or the Company) or cash or any other property,
(c) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other
Person other than the Company or one or more of
its wholly-owned Subsidiaries, or (d) the Company
shall acquire all or any part of its Common Shares
pursuant to a binding share exchange, provided,
however that as long as the Merger Agreement shall
not have been terminated, the references to `other
Person' and `any Person' in the above transactions
(a) through (d) shall not include FUNC or any of
its Affiliates, then, and in each such case,
proper provision shall be made so that"
(9) Amendment to Section 25.
Clause (iv) of Section 25(a) of the Rights
Agreement is amended to read as follows:
"(iv) to effect any consolidation or merger
into or with, or to effect any sale or other
transfer (or to permit one or more of its
Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or
more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any
other Person, provided, however, that as long as
the Merger Agreement shall not have been
terminated, such other Person shall not, in any
such consolidation, merger, or sale or transfer of
assets or earning power, include FUNC or any of
its Affiliates or Associates,"
(10) Addition of Section 35.
A new Section 35 is added to the Rights Agreement,
to read as follows:
"Section 35. Termination. This Agreement
shall terminate at the Termination Time and all
rights, benefits, obligations, duties and
agenciescreated by this Agreement shall be terminated
at such Termination Time. All Rights issued and
outstanding shall, at the Termination Time, cease
-7-
<PAGE>
to exist and shall be terminated without any
payment to any holder thereof."
(11) Effectiveness. This Amendment shall be
deemed to be in force and effective immediately prior to the
execution and delivery of the Merger Agreement. Except as
amended hereby, the Rights Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby,
until the Termination Time.
(12) Defined Terms. Unless otherwise defined
herein, all defined terms used herein shall have the same
meanings given to them in the Rights Agreement.
(13) Governing Law. This Amendment shall be
deemed to be a contract made under the laws of the State of
New Jersey and for all purposes shall be governed by and
construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely
within such State.
(14) Counterparts. This Amendment may be
executed in any number of counterparts, each of which shall
for all purposes be deemed an original and all of which
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the day and year
first above written.
FIRST FIDELITY BANCOPORATION
By:_________________________
Name:
Title:
FIRST FIDELITY BANK, N.A.
By:_________________________
Name:
Title:
-8-
<PAGE>
Exhibit E
FORM OF AMENDMENT TO FUNC RIGHTS AGREEMENT
THIRD AMENDMENT, dated as of June 18, 1995 (this
"Amendment"), to the SHAREHOLDER PROTECTION RIGHTS
AGREEMENT, dated December 18, 1990 (as heretofore amended,
the "Rights Agreement"), between First Union Corporation, a
North Carolina corporation (the "Company"), and First Union
National Bank of North Carolina, a national banking
association (the "Rights Agent").
WITNESSETH
WHEREAS, on December 18, 1990, the Board of Direc-
tors of the Company (i) authorized and declared a dividend
of one Right with respect to each share of Common Stock held
of record as of the Record Time and (ii) authorized the
issuance of one Right with respect to each share of Common
Stock issued after the Record Time and prior to any
Separation Time, each Right representing the right to pur-
chase securities of the Company pursuant to the terms and
conditions of the Rights Agreement; and
WHEREAS, the Rights remain issued and outstanding
and the Rights Agreement remains in effect with respect
thereto; and
WHEREAS, no Separation Time or Stock Acquisition
Date has occurred; and
WHEREAS, the Company and First Fidelity
Bancorporation, a New Jersey corporation ("FFB"), propose to
enter into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which FFB would merge with and into
a subsidiary of the Company; and
WHEREAS, after entry into the Merger Agreement,
the Company and FFB may enter into a Stock Option Agreement
(the "Stock Option Agreement") pursuant to which the Company
would grant to FFB an option to acquire up to 19.9% of the
outstanding shares of Common Stock of the Company under
certain circumstances; and
WHEREAS, in connection with the anticipated
approval, execution, and delivery of the Merger Agreement,
the Board of Directors of the Company has approved, in
accordance with Section 5.4 of the Rights Agreement, this
Amendment and has directed the appropriate officers of the
<PAGE>
Company to take all appropriate steps to execute and deliver
this Amendment.
NOW, THEREFORE, in consideration of the premises
and the respective agreements set forth herein, the parties
hereby agree as follows:
(1) Amendment to Section 1.1
(a) Paragraph (i) of the definition of "Acquiring
Person" appearing in Section 1.1. of the Rights Agreement is
amended to read in its entirety as follows:
"(i) any Person that is a Beneficial Owner of
15% or more of the outstanding shares of Common
Stock; provided, however, that, for the purposes
of this paragraph (i), the term "Acquiring Person"
shall not include (a) any Person that shall become
the Beneficial Owner of 15% or more of the out-
standing shares of Common Stock solely as a result
of an acquisition by the Company of shares of
Common Stock, until such time thereafter as such
Person shall become the Beneficial Owner (other
than by means of a stock dividend or stock split)
of any additional shares of Common Stock; (b) any
Person that acquired Beneficial Ownership of
shares of Common Stock without any plan or inten-
tion to seek or affect control of the Company and
without knowledge that such acquisition would make
such Person an Acquiring Person, if such Person,
upon notice by the Company, promptly enters into
an irrevocable commitment promptly to divest, and
thereafter promptly divests (without exercising or
retaining any power, including voting, with
respect to such shares), sufficient shares of
Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock)
so that such Person ceases to be the Beneficial
Owner of 15% or more of the outstanding shares of
Common Stock; or (c) until the later of the
Effective Time or termination of the Stock Option
Agreement in accordance with its terms prior to
any exercise thereunder, FFB or any Affiliate or
Associate of FFB that shall acquire Beneficial
Ownership of Common Stock of the Company by reason
of the approval, execution, or delivery of the
Stock Option Agreement, the Merger Agreement, or
both, or by reason of the consummation of any
transaction or the exercise of the option contem-
plated by the Stock Option Agreement, the Merger
Agreement, or both, so long as (A) FFB is in
-2-
<PAGE>
compliance with the material terms, conditions,
and obligations imposed upon it in the Stock
Option Agreement and, until the Effective Time,
the Merger Agreement, and (B) FFB and any Affili-
ate or Associate of FFB is not the Beneficial
Owner of any Common Stock of the Company other
than (w) Common Stock of the Company of which FFB
or any Affiliate or Associate of FFB is or becomes
the Beneficial Owner by reason of the approval,
execution, or delivery of the Stock Option
Agreement, the Merger Agreement, or both, or by
reason of the consummation of any transaction or
the exercising of the option, contemplated by the
Stock Option Agreement, the Merger Agreement, or
both, (x) Common Stock of the Company Beneficially
Owned by FFB or any Affiliate or Associate of FFB
on the date hereof, (y) Common Stock of the
Company of which FFB or any Affiliate or Associate
of FFB inadvertently becomes the Beneficial Owner
after the date hereof, provided that the number of
such shares of Common Stock does not exceed 1% of
the shares of Common Stock of the Company
outstanding on the date hereof and that FFB or any
such Affiliate or Associate, as the case may be,
divests such Common Stock as soon as practicable
after it becomes aware of such acquisition of
Beneficial Ownership, and (z) Common Stock of the
Company Beneficially Owned or otherwise held by
FFB or any Affiliate or Associate of FFB in a bona
fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in
either case in the ordinary course of its banking
business;"
(b) The following new definitions shall be added
to Section 1.1 of the Rights Agreement, inserted in
conformity with the alphabetical order of Section 1.1 and
shall read as follows:
"`Effective Date' and `Effective Time' shall
have the respective meanings ascribed to such
terms in Section 1.02 of the Merger Agreement.
"`Merger Agreement' shall mean the Agreement
and Plan of Merger, dated as of June 18, 1995, by
and among FFB, the Company and PKC, Inc., as the
same may be from time to time amended.
"`FFB' shall mean First Fidelity
Bancorporation, a corporation duly organized and
-3-
<PAGE>
existing under the laws of the State of New
Jersey, and its successors.
"`Stock Option Agreement' shall mean the
Stock Option Agreement, to be dated as of June 19,
1995, by and between Company, as issuer, and FFB,
as grantee, as the same may be from time to time
amended."
(2) Effectiveness. This Amendment shall be
deemed to be in force and effective immediately prior to the
execution and delivery of the Merger Agreement. Except as
amended hereby, the Rights Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby.
(3) Defined Terms. Unless otherwise defined
herein, all defined terms used herein shall have the same
meanings given to them in the Rights Agreement.
(4) Governing Law. This Amendment shall be
deemed to be a contract made under the laws of the State of
North Carolina and for all purposes shall be governed by and
construed in accordance with the laws of such State applica-
ble to contracts to be made and performed entirely within
such State.
(5) Counterparts. This Amendment may be executed
in any number of counterparts, each of which shall for all
purposes be deemed an original and all of which shall
together constitute but one and the same instrument.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the day and year
first above written.
FIRST UNION CORPORATION
By:____________________________________
Edward E. Crutchfield
Chairman and Chief Executive Officer
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:_____________________________________
Name:
Title:
-5-
<PAGE>
Exhibit F
FORM OF FFB AFFILIATE'S LETTER
_____________, 1995
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger,
dated as of June 18, 1995 (the "Plan"), by and among First Union
Corporation ("FUNC"), First Fidelity Bancorporation ("FFB") and
PKC, Inc. ("Merger Sub"), FFB plans to merge with and into Merger
Sub (the "Merger"). As a result of the Merger, the undersigned
may receive shares of FUNC common stock, par value $3.33 1/3 per
share, FUNC Class A Preferred Stock, no-par value, and/or
depositary receipts representing shares of FUNC Preferred Stock
(collectively, "FUNC Stock") in exchange for shares (or options
on shares) of FFB common stock, par value $1.00 per share, shares
of FFB preferred stock, par value $1.00 per share, and/or
depositary receipts representing FFB preferred stock
(collectively, "FFB Stock").
The undersigned hereby represents, warrants and covenants
with and to FUNC that in the event the undersigned receives any
FUNC Stock as a result of the Merger:
(A) The undersigned will not sell, transfer or
otherwise dispose of such FUNC Stock unless (i) such sale,
transfer or other disposition has been registered under the
Securities Act of 1933, as amended (the "Act"), (ii) such
sale, transfer or other disposition is made in conformity
with the provisions of Rule 145 under the Act (as such rule
may be hereafter from time to time be amended), or (iii) in
the opinion of counsel in form and substance reasonably
satisfactory to FUNC, or under a "no-action" letter obtained
by the undersigned from the staff of the Securities and
Exchange Commission (the "SEC"), such sale, transfer or
other disposition will not violate or is otherwise exempt
from registration under the Act.
<PAGE>
(B) The undersigned understands that, except as
expressly provided in the Plan, FUNC is under no obligation
to register the sale, transfer or other disposition of
shares of FUNC Stock by the undersigned or on the
undersigned's behalf under the Act or to take any other
action necessary in order to make compliance with an
exemption from such registration available.
(C) The undersigned also understands that stop
transfer instructions will be given to FUNC's transfer agent
with respect to the shares of FUNC Stock issued to the
undersigned as a result of the Merger and that there will be
placed on the certificates for such shares, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate
were issued in a transaction to which
Rule 145(d) under the Securities Act of 1933
applies. The shares represented by this cer-
tificate may only be transferred in
accordance with the terms of a letter
agreement between the registered holder
hereof and FUNC, a copy of which agreement is
on file at the principal offices of FUNC."
(D) The undersigned also understands that, unless the
transfer by the undersigned of the FUNC Stock issued to the
undersigned as a result of the Merger have been registered
under the Act or a sale made in conformity with the
provisions of Rule 145(d) under the Act, FUNC reserves the
right, in its sole discretion, to place the following legend
on the certificates issued to any transferee of such FUNC
Stock from the undersigned:
"The shares represented by this certificate
have not been registered under the Securities
Act of 1933 and were acquired from a person
who received such shares in a transaction to
which Rule 145 under the Securities Act of
1933 applies. The shares have been acquired
by the holder not with a view to, or for
resale in connection with, any distribution
thereof within the meaning of the Securities
Act of 1933 and may not be offered, sold,
pledged or otherwise transferred except in
accordance with an exemption from the regis-
tration requirements of the Securities Act of
1933."
-2-
<PAGE>
It is understood and agreed that the legends set forth
in paragraphs (C) and (D) above shall be removed by delivery
of substitute certificates without such legend if the
undersigned shall have delivered to FUNC (i) a copy of a "no
action" letter from the staff of the SEC, or an opinion of
counsel in form and substance reasonably satisfactory to
FUNC, to the effect that such legend is not required for
purposes of the Act, or (ii) evidence or representations
satisfactory to FUNC that the FUNC Stock represented by such
certificates is being or has been sold in a transaction made
in conformity with the provisions of Rule 145(d).
(E) The undersigned further represents, warrants and
covenants with and to, FUNC that the undersigned will not
sell, transfer or otherwise dispose of his or her interests
in, or reduce his or her risk relative to, any shares of
FUNC Stock or FFB Stock beneficially owned by the
undersigned during the period commencing 30 days prior to
the effective date of the Merger and ending at such time as
FUNC notifies the undersigned that results covering at least
30 days of combined operations of FUNC after the Merger have
been published by FUNC, which FUNC agrees to publish
consistent with its normal financial reporting practice.
(F) The undersigned further represents, warrants and
covenants with and to FUNC that the undersigned will, and
will cause each of the other parties whose shares are deemed
to be beneficially owned by the undersigned pursuant to
paragraph (G) below to, have all shares of FFB Stock owned
by the undersigned or such parties registered in the name of
the undersigned or such parties, as applicable, prior to the
effective date of the Merger and not in the name of any
bank, broker-dealer, nominee or clearing house.
(G) The undersigned understands and agrees that this
letter agreement shall apply to all shares of the capital
stock of FFB and FUNC that are deemed to be beneficially
owned by the undersigned pursuant to applicable federal
securities laws.
(H) The undersigned has carefully read this letter and
discussed its requirements and other applicable limitations
upon the undersigned's ability to sell, transfer or
otherwise dispose of the capital stock of FFB or FUNC, to
the extent the undersigned felt necessary, with the
undersigned's counsel or counsel for FFB.
-3-
<PAGE>
Very truly yours,
________________________
Name:
[add below the signatures
of all registered owners
of shares deemed
beneficially
owned by the affiliate]
_________________________
Name:
_________________________
Name:
_________________________
Name:
Acknowledged this ______ day of
______________, 1995.
FIRST UNION CORPORATION
By:___________________________
Name:
Title:
FIRST FIDELITY BANCORPORATION
By:___________________________
Name:
Title:
-4-
<PAGE>
Exhibit G
FORM OF FUNC AFFILIATE'S LETTER
_____________, 1995
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger,
dated as of June 18, 1995 (the "Plan"), by and among First Union
Corporation ("FUNC"), First Fidelity Bancorporation ("FFB") and
PKC, Inc. ("Merger Sub"), FFB plans to merge with and into Merger
Sub (the "Merger").
The undersigned hereby represents, warrants and covenants
with and to FUNC that:
(A) The undersigned will not sell, transfer or otherwise
dispose of his or her interests in, or reduce his or her risk
relative to, any shares of common stock, preferred stock or
depositary receipts of either FUNC or FFB beneficially owned by
the undersigned, during the period commencing 30 days prior to
the effective date of the Merger and ending at such time as FUNC
notifies the undersigned that results covering at least 30 days
of combined operations of FUNC after the Merger have been
published by FUNC.
(B) The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of FFB
and FUNC that are deemed to be beneficially owned by the
undersigned under applicable federal securities law.
<PAGE>
Very truly yours,
________________________
Name:
[add below the signatures
of all registered owners
of shares deemed
beneficially
owned by the affiliate]
_________________________
Name:
_________________________
Name:
_________________________
Name:
Acknowledged this ______ day of
______________, 1995.
FIRST UNION CORPORATION
By:___________________________
Name:
Title:
-2-
<PAGE>
Exhibit H
REGISTRATION RIGHTS
I. DEFINITIONS
1.1. Definitions. Terms defined in the Agreement and
Plan of Merger, dated as of June 18, 1995 (the "Plan"), by
and among First Fidelity Bancoporation ("FFB"), First Union
Corporation ("FUNC") and PKC, Inc. ("Merger Sub"), are used
herein as therein defined. In addition, the following
terms, as used herein, have the following meanings:
"Demand Registration" means a Demand Registration as
defined in Section 2.1.
"Piggyback Registration" means a Piggyback Registration
as defined in Section 2.2.
"Registrable Securities" means shares of FUNC Common
Stock owned from time to time by the Large Shareholder and
its Affiliates.
"Underwriter" means a securities dealer who purchases
any Registrable Securities as principal and not as part of
such dealer's market-making activities.
II. REGISTRATION RIGHTS
2.1. Demand Registration. (a) A Large Shareholder
may make a written request for registration under the
Securities Act of all or part of its Registrable Securities
(a "Demand Registration"); provided that FUNC shall not be
obligated (i) to effect more than one Demand Registration in
any 12-month period, (ii) to effect a Demand Registration
for less than two million shares of FUNC Common Stock or
(iii) to effect a Demand Registration within 6 months of
Large Shareholder selling any Registrable Securities
pursuant to a Piggyback Registration under Section 2.2.
Such request will specify the number of shares of
Registrable Securities proposed to be sold and will also
specify the intended method of disposition thereof. A
registration will not count as a Demand Registration until
it has become effective.
(b) If such Large Shareholder so elects, the
offering of such Registrable Securities pursuant to such
Demand Registration shall be in the form of an underwritten
<PAGE>
offering. Such Large Shareholder shall select the
book-running and other managing Underwriters in connection
with such offering and any additional investment bankers and
managers to be used in connection with the offering. Such
book-running and other managing Underwriters shall be
reasonably satisfactory to FUNC.
2.2. Piggyback Registration. If FUNC proposes to
file a registration statement under the Securities Act with
respect to an offering of FUNC Common Stock (i) for FUNC's
own account (other than a registration statement on Form S-4
or S-8 or relating solely to securities issued pursuant to
any benefit plan (or any substitute form that may be adopted
by the Commission) or (ii) for the account of any of the
holders of FUNC Common Stock, then FUNC shall give written
notice of such proposed filing to the Large Shareholder as
soon as practicable (but in no event less than 10 days
before the anticipated filing date), and such notice shall
offer subject to the terms and conditions hereof, Large
Shareholder the opportunity to register such Registrable
Securities as such Large Shareholder may request on the same
terms and conditions as FUNC's or such holders' FUNC Common
Stock (a "Piggyback Registration").
2.3. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter or Under-
writers of an offering described in Section 2.1 or 2.2 shall
advise FUNC that (i) the size of the offering that Large
Shareholder, FUNC and any other persons intend to make or
(ii) the kind of securities that Large Shareholder, FUNC and
such other persons intend to include in such offering are
such that the success of the offering would be materially
and adversely affected, then (A) if the size of the offering
is the basis of such Underwriter's advice, the amount of
Registrable Securities to be offered for the account of such
Large Shareholder shall be reduced to the extent necessary
to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing
Underwriter or Underwriters; provided that (x) in the case
of a Demand Registration, the amount of Registrable
Securities to be offered for the account of such Large
Shareholder shall be reduced only after the amount of
securities to be offered for the account of FUNC and such
other persons has been reduced to zero, and (y) in the case
of a Piggyback Registration, if securities are being offered
for the account of persons other than FUNC, then the pro-
portion by which the amount of such Registrable Securities
intended to be offered for the account of such Large Share-
holder is reduced shall not exceed the proportion by which
the amount of such securities intended to be offered for the
account of such other persons is reduced; and (B) if the
-2-
<PAGE>
combination of securities to be offered is the basis of such
Underwriter's advice, (x) the Registrable Securities to be
included in such offering shall be reduced as described in
clause (A) above (subject to the proviso in clause (A)), or
(y) in the case of a Piggyback Registration, if the actions
described in sub-clause (x) of this clause (B) would, in the
judgment of the managing Underwriter, be insufficient to
eliminate the adverse effect that inclusion of the Regis-
trable Securities requested to be included would have on
such offering, such Registrable Securities will be excluded
from such offering.
III. REGISTRATION PROCEDURES
3.1. Filings; Information. Whenever a Large
Shareholder requests that any Registrable Securities be
registered pursuant to Section 2.1 hereof, FUNC will use its
reasonable efforts to effect the registration of such
Registrable Securities as soon as reasonably practicable,
and in connection with any such request:
(a) FUNC will as soon as reasonably practicable
prepare and file with the SEC a registration statement
on any form for which FUNC then qualifies and which
counsel for FUNC shall deem appropriate and available
for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended
method of distribution thereof, and use reasonable
efforts to cause such filed registration statement to
become and remain effective for a period of not less
than 90 days; provided that if FUNC shall furnish to
such Large Shareholder a certificate signed by its
Chairman, Chief Executive Officer, Chief Financial
Officer or any Executive Vice President stating that in
his or her good faith judgment it would be detrimental
or otherwise disadvantageous to FUNC or its
shareholders for such a registration statement to be
filed, or, in the case of an effective registration
statement, for sales to be effected thereunder, FUNC
shall have a period of not more than 120 days within
which to file such registration statement measured from
the date of receipt of the request in accordance with
Section 2.1 or, in the case of an effective
registration statement, FUNC shall be entitled to
require such Large Shareholder to refrain from selling
Registrable Securities under such registration
statement for a period of up to 120 days. If FUNC
furnishes a notice under this paragraph at a time when
a registration statement filed pursuant to this
Agreement is effective, FUNC shall extend the period
-3-
<PAGE>
during which such registration statement shall be
maintained effective as provided in this Section 3.1
(a) hereof by the number of days during the period from
and including the date of the giving of notice under
this paragraph to the date when sales under the
registration statement may recommence.
(b) FUNC will, if requested, prior to filing
such registration statement or any amendment or
supplement thereto, furnish to the Large Shareholder
requesting registration and each managing Underwriter,
if any, copies thereof, and thereafter furnish to such
Large Shareholder and each such Underwriter, if any,
such number of copies of such registration statement,
each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorpo-
rated by reference therein) and the prospectus included
in such registration statement (including each pre-
liminary prospectus) as such Large Shareholder or such
Underwriter may reasonably request in order to facil-
itate the sale of the Registrable Securities.
(c) After the filing of the registration state-
ment, FUNC will promptly notify such Large Shareholder
of any stop order issued or, to the knowledge of FUNC,
threatened to be issued by the SEC and take all neces-
sary actions required to prevent the entry of such stop
order or to remove it if entered.
(d) FUNC will use its reasonable efforts to
qualify the Registrable Securities for offer and sale
under such other securities or blue sky laws of such
jurisdictions in the United States as such Large
Shareholder reasonably (in light of such Large
Shareholder's intended plan of distribution) requests;
provided that FUNC will not be required to (i) qualify
generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this
paragraph (d), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to service of
process in any such jurisdiction.
(e) FUNC shall, as promptly as reasonably
practicable, notify each Large Shareholder that has
sold, or is selling, Registrable Securities hereunder,
at any time when a prospectus relating to the sale of
the Registrable Securities is required by law to be
delivered in connection with sales by an Underwriter or
dealer, of the occurrence of an event requiring the
preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the
-4-
<PAGE>
purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading, and as
promptly as practicable make available to each such
Large Shareholder and to the Underwriters any such
supplement or amendment. Each Large Shareholder, by
requesting a registration or selling Registrable
Securities hereunder, shall be deemed to agree with
FUNC that, upon receipt of any notice from FUNC of the
happening of any event of the kind described in the
preceding sentence, such Large Shareholder will
forthwith discontinue the offer and sale of Registrable
Securities pursuant to the registration statement
covering such Registrable Securities until receipt of
the copies of such supplemented or amended prospectus
and, if so directed by FUNC, such Large Shareholder
will deliver to FUNC all copies, other than permanent
file copies then in Large Shareholder's possession, of
the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In
the event FUNC shall give such notice, FUNC shall
extend the period during which any registration
statement shall be maintained effective as provided in
Section 3.1 (a) hereof by the number of days during the
period from and including the date of the giving of
such notice to the date when FUNC shall make available
such supplemented or amended prospectus.
(f) FUNC will enter into customary agreements
(including an underwriting agreement in customary form
and satisfactory in form and substance to FUNC in its
reasonable judgment) and take such other actions as are
reasonably required in order to expedite or facilitate
the sale of such Registrable Securities.
(g) FUNC will furnish to each Large Shareholder
that sells Registrable Securities hereunder and to each
managing Underwriter, if any, a signed counterpart,
addressed to such Large Shareholder and each
Underwriter, of (i) an opinion or opinions of counsel
to FUNC and (ii) a comfort letter or comfort letters
from FUNC's independent auditors pursuant to SAS 72,
each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters
delivered to such parties.
(h) FUNC will make generally available to its
securityholders, as soon as reasonably practicable, an
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earnings statement covering a period of 12 months,
beginning within three months after the effective date
of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the SEC
thereunder.
(i) FUNC will use reasonable efforts to cause
all such Registrable Securities to be listed on each
securities exchange on which similar securities issued
by FUNC are then listed.
FUNC may require each Large Shareholder that requests a
registration or is selling Registrable Securities hereunder
promptly to furnish in writing to FUNC such information
regarding such Large Shareholder, the plan of distribution
of the Registrable Securities and other information as FUNC
may from time to time reasonably request or as may be
legally required in connection with such registration.
3.2. Registration Expenses. In connection with any
Demand Registration or Piggyback Registration by or for a
Large Shareholder, FUNC shall pay the following expenses
incurred in connection with such registration (the
"Registration Expenses"): (i) all filing fees with the SEC,
(ii) fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses, (iv) the
fees and expenses incurred in connection with the listing of
the Registrable Securities, (v) fees and expenses of counsel
and independent certified public accountants for FUNC
(including the expenses of any comfort letters pursuant to
Section 3.1(g) hereof) and (vi) the reasonable fees and
expenses of any additional experts retained by FUNC in
connection with such registration. Such Large Shareholder
shall pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities, and any
out-of-pocket expenses of Large Shareholder, including such
Large Shareholder's counsel's fees and expenses. FUNC shall
pay internal FUNC expenses (including, without limitation,
all salaries and expenses of its officers and employees
performing legal or accounting duties).
IV. INDEMNIFICATION AND CONTRIBUTION
4.1. Indemnification by FUNC. FUNC agrees to
indemnify and hold harmless each Large Shareholder, its
officers and directors, and each person, if any, who
controls Large Shareholder within the meaning of either
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Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the
Registrable Securities (as amended or supplemented if FUNC
shall have furnished any amendments or supplements thereto)
or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or
omission based upon information furnished in writing to FUNC
by or on behalf of any Large Shareholder or Underwriter for
any Large Shareholder expressly for use therein; provided
that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any
Large Shareholder if a copy of the current prospectus was
not provided to purchaser and such current prospectus would
have cured the defect giving rise to such loss, claim,
damage or liability or for any sales occurring after FUNC
has informed such Large Shareholder under Section 3.1(e) and
prior to the delivery by FUNC of any supplement or amendment
to such prospectus. FUNC also agrees to indemnify any
Underwriters of the Registrable Securities, their officers
and directors and each person who controls such underwriters
on substantially the same basis as that of the indemnifica-
tion of such Large Shareholder provided in this Section 4.1.
4.2. Indemnification by Large Shareholders. Each
Large Shareholder, by requesting any registration or making
any Sale of Registrable Securities hereunder, shall be
deemed to agree to indemnify and hold harmless FUNC, its
officers and directors, and each person, if any, who
controls FUNC within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from FUNC to Large Share-
holder, but only with reference to information furnished in
writing by or on behalf of Large Shareholder expressly for
use in any registration statement or prospectus relating to
such Registrable Securities, or any amendment or supplement
thereto, or any preliminary prospectus. Each such Large
Shareholder also shall be deemed to agree to indemnify and
hold harmless Underwriters of the Registrable Securities,
their officers and directors and each person who controls
such Underwriters on substantially the same basis as that of
the indemnification of FUNC provided in this Section 4.2.
4.3. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation)
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shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 4.1 or 4.2, such
Person (the "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party,
upon the request of the Indemnified Party, shall retain
counsel reasonably satisfactory to such Indemnified Party to
represent such Indemnified Party and any others the Indem-
nifying Party may designate in such proceeding and shall pay
the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party
shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of
any such separate firm for the Indemnified Parties, such
firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written
consent, but if settled with such consent, or if there be a
final judgment for the plaintiff, the Indemnifying Party
shall indemnify and hold harmless such Indemnified Parties
from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
4.4. Contribution. If the indemnification provided
for in this Article IV is unavailable to the Indemnified
Parties in respect of any losses, claims, damages or
liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by FUNC, any Large
Shareholder and the Underwriters from the offering of the
securities, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of
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<PAGE>
FUNC, such Large Shareholder and the Underwriters in
connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative
benefits received by FUNC, such Large Shareholder and the
Underwriters shall be deemed to be in the same proportion as
the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses)
received by each of FUNC and such Large Shareholder and the
total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the
cover page of the prospectus, bear to the aggregate public
offering price of the securities. The relative fault of
FUNC, a Large Shareholder and the Underwriters shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact
relates to information supplied by or on behalf of such
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement or omission.
FUNC and each Large Shareholder shall be deemed to
agree that it would not be just and equitable if contribu-
tion pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or lia-
bilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no Underwriter shall be
required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten
by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Under-
writer has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission, and Large Shareholder shall not be required to
contribute any amount in excess of the amount by which the
net proceeds of the offering (before deducting expenses)
received by Large Shareholder exceeds the amount of any
damages which Large Shareholder has otherwise been required
to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraud-
ulent misrepresentation (within the meaning of Section 11(f)
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of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
V. MISCELLANEOUS
5.1. Participation in Underwritten Registrations. No
person may participate in any underwritten registered
offering contemplated hereunder unless such person
(a) agrees to sell its securities on the basis provided in
any underwriting arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, under-
writing arrangements and other documents reasonably required
under the terms of such underwriting arrangements and these
Registration Rights.
5.2. Rule 144. FUNC covenants that it will use
reasonable efforts to file any reports required to be filed
by it under the Securities Act and the Exchange Act and that
it will take such further action as any Large Shareholder
may reasonably request, all to the extent required from time
to time to enable such Large Shareholder to sell Registrable
Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Large
Shareholder, FUNC will deliver to such Large Shareholder a
written statement as to whether it has complied with such
requirements.
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