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): July 18, 1997
First Union Corporation
(Exact name of registrant as specified in its charter)
North Carolina 1-10000 56-0898180
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First Union Center
Charlotte, North Carolina 28288-0013
(Address of principal executive offices) (Zip Code)
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.
On July 18, 1997, First Union Corporation (the "Corporation") entered
into an Agreement and Plan of Mergers (the "Acquisition Agreement") , which
provides, among other things, for the acquisition (the "Acquisition") of Signet
Banking Corporation ("Signet") by the Corporation.
In connection with the Acquisition, the Board of Directors of the
Corporation rescinded its prior authority granted in January 1997 for the
Corporation to repurchase up to 25 million shares of its common stock (adjusted
to 50 million shares effective as of the payment of the Corporation's
two-for-one common stock split on July 31, 1997), effective immediately prior to
consummation of the Acquisition. In the event that the Acquisition is not
consummated, the authority to repurchase such shares will remain in full force
and effect.
A copy of a news release (the "News Release") relating to the
Acquisition is being filed as Exhibit (99)(a) to this report. A copy of the form
of the Acquisition Agreement, including the exhibits thereto, is being filed as
Exhibit (2) to this report. The News Release and the Acquisition Agreement,
including the exhibits thereto, are incorporated herein by reference.
On July 21, 1997, the Corporation held a meeting (the "Meeting") with
analysts and others with respect to the Acquisition. At the Meeting, certain
financial and other information was presented (the "Presentation Materials").
The News Release and certain of the Presentation Materials contain, among other
things, certain forward-looking statements regarding each of the Corporation,
Signet and the combined company following the Acquisition, including statements
relating to cost savings, enhanced revenues and accretion to reported earnings
that may be realized from the Acquisition, and certain restructuring charges
expected to be incurred in connection with the Acquisition. Such forward-looking
statements involve certain risks and uncertainties, including a variety of
factors that may cause the Corporation's actual results to differ materially
from the anticipated results or other expectations expressed in such
forward-looking statements. Factors that might cause such a difference include,
but are not limited to: (1) expected cost savings from the Acquisition may not
be fully realized or realized within the expected time frame; (2) revenues
following the Acquisition may be lower than expected; (3) competitive pressure
among banking and non-banking organizations may increase and adversely affect
the businesses engaged in by the combined company; (4) costs, difficulties or
delays related to the integration of the businesses or systems of the
Corporation and Signet may be greater or longer than expected; (5) changes in
the interest rate environment may reduce interest margins; (6) general economic
conditions, either nationally or in the states or regions in which the combined
company will be doing business, may be less favorable than expected; or (7)
legislation or regulatory changes may adversely affect the businesses in which
the combined company would be engaged. Additional information with respect to
factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements is included in the
Corporation's 1997 First Quarter Report on Form 10-Q and may be included in
subsequent reports filed by the Corporation with the Securities and Exchange
Commission.
A copy of the Presentation Materials is being filed as Exhibit (99)(b)
to this report, and such materials are incorporated herein by reference.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
(2) The Acquisition Agreement, including the exhibits thereto.
(99)(a) The News Release.
(99)(b) The Presentation Materials.
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: July 21, 1997 By: /s/ Kent S. Hathaway
--------------------
Name: Kent S. Hathaway
Title: Senior Vice President
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EXHIBIT INDEX
Exhibit No. Description
(2) The Acquisition Agreement, including the
exhibits thereto.
(99)(a) The News Release.
(99)(b) The Presentation Materials.
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AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF MERGERS, dated as of the 18th day of July, 1997
(this "Plan"), by and among SIGNET BANKING CORPORATION ("Signet"), SIGNET BANK
(the "Bank"), FIRST UNION CORPORATION ("First Union"), and FIRST UNION NATIONAL
BANK ("FUNB").
RECITALS
A. Signet. Signet is a Virginia corporation, having its principal place
of business in Richmond, Virginia.
B. First Union. First Union is a North Carolina corporation, having its
principal place of business in Charlotte, North Carolina.
C. The Bank. The Bank is a Virginia commercial bank, having its
principal place of business in Richmond, Virginia. As of March 31, 1997, the
Bank had capital of $925,905,000 divided into common stock of $301,132,000,
surplus of $211,369,000, and undivided profits, including capital reserves, of
$419,673,000, and net unrealized holding gains (losses) on available for sale
securities of ($6,269,000).
D. FUNB. FUNB is a national banking association having its principal
place of business in Charlotte, North Carolina. As of March 31, 1997, FUNB had
capital of $2,304,325,000, divided into common stock of $82,795,000, surplus of
$763,989,000, undivided profits, including capital reserves, of $1,468,980,000,
and net unrealized holding gains (losses) on available for sale securities of
($11,439,000).
E. Stock Option Agreement. As an inducement to the willingness of First
Union to continue to pursue the transactions contemplated by this Plan, Signet
expects (but is not obligated) to grant to First Union an option pursuant to a
stock option agreement, in substantially the form of Exhibit A (the "Stock
Option Agreement").
F. Intentions of the Parties. It is the intention of the parties to
this Plan that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "Code").
G. Board Action. The respective Boards of Directors of each of First
Union, FUNB, Signet and the Bank have determined that it is in the best
interests of their respective companies and their stockholders to consummate the
strategic business combination transaction provided for herein.
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01. Certain Definitions. The following terms are used in this Plan
with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer,
proposal for a merger, consolidation or other business combination
involving Signet or any of its Subsidiaries or any proposal or offer to
acquire in any manner a substantial equity interest in, or a
substantial portion of the assets or deposits of, Signet or any of its
Subsidiaries, other than the transactions contemplated by this Plan.
"Asset Classification" has the meaning set forth in Section
5.03(w).
"Bank" has the meaning set forth in the preamble to this Plan.
"Bank Merger" has the meaning set forth in Section 2.02.
"Code" has the meaning set forth in Recital F.
"Compensation and Benefit Plans" has the meaning set forth in
Section 5.03(m).
"Consultants" has the meaning set forth in Section 5.03(m)(i).
"Continuing Bank" has the meaning set forth in Section
2.02(a).
"Corporate Merger" has the meaning set forth in Section 2.01.
"Corporation Commission" has the meaning set forth in Section
2.01(b).
"Costs" has the meaning set forth in Section 6.12(a).
"Covered Transactions" has the meaning set forth in Section
5.03(o).
"Directors" has the meaning set forth in Section 5.03(m)(i).
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"Disclosure Schedule" has the meaning set forth in Section
5.01.
"DRP" has the meaning set forth in Section 4.01(b).
"Effective Date" has the meaning set forth in Section 2.03.
"Effective Time" has the meaning set forth in Section 2.03.
"Employees" has the meaning set forth in Section 5.03(m)(i).
"Environmental Laws" means all applicable local, state and
federal environmental, health and safety laws and regulations,
including, without limitation, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Clean Water Act, the Federal Clean Air Act, and the
Occupational Safety and Health Act, each as amended, regulations
promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
5.03(m).
"ERISA Affiliate Plan" has the meaning set forth in Section
5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"First Union" has the meaning set forth in the preamble to
this Plan.
"First Union Board" means the Board of Directors of
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First Union.
"First Union Class A Preferred Stock" means the Class A
preferred stock, no par value per share, of First Union.
"First Union Common Stock" means the common stock, par value
$3.33 1/3 per share, of First Union.
"First Union Preferred Stock" means the preferred stock, no
par value per share, of First Union.
"First Union Rights" has the meaning set forth in Section
3.01(b).
"First Union Rights Agreement" means the Shareholder
Protection Rights Agreement, dated as of December 18, 1990 (as
amended), between First Union and FUNB.
"First Union Stock" means, collectively, First Union Common
Stock, First Union Class A Preferred Stock and First Union Preferred
Stock.
"FUNB" has the meaning set forth in the preamble to this Plan.
"Governmental Authority" means any court, administrative
agency or commission or other federal, state or local governmental
authority or instrumentality.
"Indemnified Party" has the meaning set forth in Section
6.12(a).
"Insurance Amount" has the meaning set forth in Section
6.12(b).
"Insurance Policy" has the meaning set forth in Section
5.03(t).
"IRS" means the Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to First Union
or Signet, any effect that (i) is material and adverse to the financial
position, results of operations or business of First Union and its
Subsidiaries taken as a whole or Signet and its Subsidiaries taken as a
whole, respectively, or (ii) would materially impair the ability of
either First Union or Signet to perform its obligations under this Plan
or otherwise materially threaten or materially impede the consummation
of the Mergers and the other transactions
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contemplated by this Plan; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in
banking and similar laws of general applicability or interpretations
thereof by courts or governmental authorities, (b) changes in generally
accepted accounting principles or regulatory accounting requirements
applicable to banks and their holding companies generally and (c) any
modifications or changes to valuation policies and practices in
connection with the Mergers or restructuring charges taken in
connection with the Mergers, in each case in accordance with generally
accepted accounting principles.
"Mergers" has the meaning set forth in Section 2.02.
"Merger Consideration" has the meaning set forth in Section
2.01.
"Multiemployer Plans" has the meaning set forth in Section
5.03(m).
"NCBCA" means the North Carolina Business Corporation Act.
"New Certificate" has the meaning set forth in Section 3.04.
"North Carolina Secretary" has the meaning set forth in
Section 2.01(b).
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificates" has the meaning set forth in Section 3.04.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plan" has the meaning set forth in the preamble to this Plan,
as amended or modified from time to time in accordance with Section
9.02.
"Previously Disclosed" by a party shall mean information set
forth in its Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section
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6.03.
"Registration Statement" has the meaning set forth in Section
6.03.
"Regulatory Authority" has the meaning set forth in Section
5.03(i).
"Replacement Option" has the meaning set forth in Section
3.06.
"Representatives" means, with respect to any Person, such
Person's directors, officers, employees, legal or financial advisors or
any representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or
obligations convertible into or exercisable or exchangeable for, or
giving any person any right to subscribe for or acquire, or any
options, calls or commitments relating to, or any stock appreciation
right or other instrument the value of which is determined in whole or
in part by reference to the market price or value of, shares of capital
stock of such person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Signet" has the meaning set forth in the preamble to this
Plan.
"Signet Affiliate" has the meaning set forth in Section
6.07(a).
"Signet Board" means the Board of Directors of Signet.
"Signet By-Laws" means the By-laws of Signet.
"Signet Certificate" means the Articles of Incorporation of
Signet.
"Signet Common Stock" means the common stock, par value $5.00
per share, of Signet.
"Signet Meeting" has the meaning set forth in Section 6.02.
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"Signet Preferred Stock" means the preferred stock, par value
$20.00 per share, of Signet.
"Signet Rights" means the preferred share purchase rights
issued under the Signet Rights Agreement.
"Signet Rights Agreement" means the Rights Agreement, dated as
of May 23, 1989, between Signet and Mellon Bank, N.A.
"Signet Stock" means, collectively, Signet Common Stock
and Signet Preferred Stock.
"Signet Stock Options" has the meaning set forth in
Section 3.06.
"Signet Stock Plans" means all employee and director stock
options to purchase shares of Signet Common Stock.
"Stock Option Agreement" has the meaning set forth in
Recital E.
"Subsidiary" and "Significant Subsidiary" have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in
Section 2.01.
"Takeover Laws" has the meaning set forth in Section
5.03 (o).
"Tax" and "Taxes" means all federal, state, local or foreign
taxes, charges, fees, levies or other assessments, however denominated,
including, without limitation, all net income, gross income, gains,
gross receipts, sales, use, ad valorem, goods and services, capital,
production, transfer, franchise, windfall profits, license,
withholding, payroll, employment, disability, employer health, excise,
estimated, severance, stamp, occupation, property, environmental,
unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority whether arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates
and information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Signet Stock held
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by Signet or any of its Subsidiaries or by First Union or any of its
Subsidiaries, in each case other than in a fiduciary (including
custodial or agency) capacity or as a result of debts previously
contracted in good faith.
"VSCA" means the Virginia Stock Corporation Act.
ARTICLE II
THE MERGERS
2.01. The Corporate Merger.
(A) The Corporate Merger. At the Effective Time, Signet shall
merge with and into First Union (the "Corporate Merger"), the separate corporate
existence of Signet shall cease and First Union shall survive and continue to
exist as a North Carolina corporation (First Union, as the surviving corporation
in the Corporate Merger, sometimes being referred to herein as the "Surviving
Corporation"). First Union may at any time prior to the Effective Time change
the method of effecting the combination with Signet (including, without
limitation, the provisions of this Article II) if and to the extent it deems
such change to be necessary, appropriate or desirable; provided, however, that
no such change shall (i) alter or change the amount or kind of consideration to
be issued to holders of Signet Common Stock as provided for in this Plan (the
"Merger Consideration"), (ii) adversely affect the tax treatment of Signet's
stockholders as a result of receiving the Merger Consideration or (iii)
materially impede or delay consummation of the transactions contemplated by this
Plan.
(B) Effectiveness of the Corporate Merger. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, the Corporate
Merger shall become effective upon the occurrence of the filing in the office of
the Virginia State Corporation Commission (the "Corporation Commission") of
articles of merger in accordance with Section 13.1-720 of the VSCA and the
filing in the Office of the Secretary of State of the State of North Carolina
(the "North Carolina Secretary") of articles of merger in accordance with
Section 55-11-05 of the NCBCA or such later date and time as may be set forth in
such articles and the issuance of certificates of merger by the Corporation
Commission and the North Carolina Secretary under the VSCA and the NCBCA,
respectively. The Corporate Merger shall have the effects prescribed in the
NCBCA and the VSCA.
(C) Articles of Incorporation and By-Laws. The articles of
incorporation and by-laws of First Union immediately after the Corporate Merger
shall be those of First Union as in effect immediately prior to the Effective
Time.
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(D) Directors and Officers of the Surviving Corporation. The
directors and officers of First Union immediately after the Corporate Merger
shall be the directors and officers of First Union (except as provided in
Section 6.16) immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified.
2.02. The Bank Merger. No sooner than the day following the Corporate
Merger on the Effective Date or as soon thereafter as First Union may deem
appropriate:
(A) The Continuing Bank. The Bank shall be merged with and
into FUNB (the "Bank Merger" and together with the Corporate Merger, the
"Mergers"), the separate existence of the Bank shall cease and FUNB (the
"Continuing Bank") shall survive; the name of the Continuing Bank shall be
"First Union National Bank"; and the Continuing Bank shall continue to conduct
the business of a national banking association at FUNB's main office in
Charlotte, North Carolina and at the legally established branches of the Bank
and FUNB.
(B) Rights, Etc. The Continuing Bank shall thereupon and
thereafter possess all the rights, privileges, immunities and franchises, of a
public as well as of a private nature, of each of the banks so merged; and all
property, real personal and mixed, and all debts due on whatever account, and
all other choses in action, and all and every other interest, of or belonging to
or due to each of the banks so merged, shall be taken and deemed to be
transferred to and vested in the Continuing Bank without further act or deed,
including appointments, designations and nominations and all other rights and
interests in any fiduciary capacity; and the title to any real estate or any
interest therein, vested in each of such banks, shall not revert or be in any
way impaired by reason of the Bank Merger.
(C) Liabilities, Etc. The Continuing Bank shall thenceforth be
responsible and liable for all the liabilities, obligations and penalties of the
banks so merged (including liabilities arising out of the operation of any trust
departments). All rights of creditors and obligors and all liens on the property
of each of the Bank and FUNB shall be preserved unimpaired.
(D) Charter; Bylaws; Directors; Officers. The charter and
bylaws of the Continuing Bank shall be those of FUNB, as in effect immediately
prior to the Bank Merger becoming effective. The directors and officers of FUNB
in office immediately prior to the Bank Merger becoming effective shall be the
directors and officers of the Continuing Bank, together with such additional
directors and officers as may thereafter be elected, who shall hold office until
such time as their successors are elected and
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qualified.
(E) Outstanding Stock of the Continuing Bank. The amount of
the capital stock of the Continuing Bank shall be not less than $82,794,510 and
shall consist of not less than 5,519,634 issued and outstanding shares of common
stock, each of $15.00 par value, and the issued and outstanding shares shall
remain issued and outstanding as shares of FUNB, each of $15.00 par value, and
the holders thereof shall retain their rights therein.
(F) Outstanding Stock of the Bank. Promptly after the Bank
Merger becomes effective, the Surviving Corporation shall deliver all of the
issued and outstanding shares of the capital stock of the Bank to the Continuing
Bank for cancellation.
2.03. Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Corporate Merger (the "Effective Date") to occur on (i)
the fifth business day to occur after the last of the conditions set forth in
Article VII shall have been satisfied or waived in accordance with the terms of
this Plan (or, at the election of First Union, on the last business day of the
month in which such day occurs or, if such last business day occurs on one of
the last five business days of such month, on the last business day of the
succeeding month) or (ii) such other date to which the parties may agree in
writing. The time on the Effective Date when the Corporate Merger shall become
effective is referred to as the "Effective Time."
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Merger Consideration. Subject to the provisions of this Plan, at
the Effective Time, automatically by virtue of the Corporate Merger and without
any action on the part of any Person:
(A) Outstanding Signet Common Stock and Signet Rights. Each
share, excluding Treasury Stock, of Signet Common Stock issued and outstanding
immediately prior to the Effective Time, shall, by virtue of the Corporate
Merger, automatically and without any action on the part of the holder thereof,
become and be converted into 1.10 (the "Exchange Ratio") shares of First Union
Common Stock (together with the attached First Union Rights), as adjusted for
the two-for-one First Union Common Stock split payable on July 31, 1997. The
Exchange Ratio shall be subject to adjustment as set forth in Section 3.05.
(B) Outstanding First Union Common Stock. Each share
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of First Union Common Stock (together with the rights ("First Union Rights")
issued pursuant to the First Union Rights Agreement attached thereto), issued
and outstanding immediately prior to the Effective Time shall remain issued and
outstanding and unaffected by the Corporate Merger.
(C) Treasury Shares. Each share of Signet Common Stock held as
Treasury Stock immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.02. Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Signet Common Stock shall cease to be, and shall have no rights as,
stockholders of Signet, other than to receive any dividend or other distribution
with respect to such Signet Common Stock with a record date occurring prior to
the Effective Time and the consideration provided under this Article III. After
the Effective Time, there shall be no transfers on the stock transfer books of
Signet or the Surviving Corporation of shares of Signet Common Stock.
3.03. Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of First Union Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the
Corporate Merger; instead, First Union shall pay to each holder of Signet Common
Stock who would otherwise be entitled to a fractional share of First Union
Common Stock (after taking into account all Old Certificates delivered by such
holder) an amount in cash (without interest) determined by multiplying such
fraction by the average of the last sale prices of First Union Common Stock, as
reported by the NYSE Composite Transactions Reporting System (as reported in The
Wall Street Journal or, if not reported therein, in another authoritative
source), for the five NYSE trading days immediately preceding the Effective
Date.
3.04. Exchange Procedures.
(A) As promptly as practicable after the Effective Date, First
Union shall send or cause to be sent to each former holder of record of shares
of Signet Common Stock immediately prior to the Effective Time transmittal
materials for use in exchanging such stockholder's certificates formerly
representing shares of Signet Common Stock and the associated Signet Rights (the
"Old Certificates") for the consideration set forth in this Article III. First
Union shall cause the certificates representing the shares of First Union Common
Stock (the "New Certificates") and/or any check in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such stockholder upon delivery to First
Union National Bank, as exchange agent (the "Exchange Agent"), of Old
Certificates representing such
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shares of Signet Common Stock (or indemnity reasonably satisfactory to First
Union 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 in respect of dividends or
distributions which any such person shall be entitled to receive pursuant to
this Article III upon such delivery.
(B) Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to any former holder of Signet Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(C) At the election of First Union, no dividends or other
distributions with respect to First Union Common Stock with a record date
occurring after the Effective Time shall be paid to the holder of any
unsurrendered Old Certificate representing shares of Signet Common Stock
converted in the Corporate Merger into the right to receive shares of such First
Union Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.04. After becoming so entitled in accordance with this Section
3.04, the record holder thereof also shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of First Union Common
Stock such holder had the right to receive upon surrender of the Old
Certificate.
3.05. Anti-Dilution Provisions. In the event First Union changes (or
establishes a record date for changing) the number of shares of First Union
Common Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding First Union Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted; provided, however, the Exchange Ratio shall not be
adjusted to reflect the two-for-one First Union Common Stock split payable on
July 31, 1997.
3.06. Options. At the Effective Time, each outstanding option to
purchase shares of Signet Common Stock under the Signet Stock Plans (each, a
"Signet Stock Option"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such Signet Stock Option, the number of shares of First Union Common Stock equal
to (a) the number of shares of Signet Common Stock subject to the Signet Stock
Option, multiplied by (b) the Exchange Ratio (such product rounded down to the
nearest whole number) (a "Replacement Option"), at an exercise price per share
(rounded up
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to the nearest whole cent) equal to (y) the aggregate exercise price for the
shares of Signet Common Stock which were purchasable pursuant to such Signet
Stock Option divided by (z) the number of full shares of First Union Common
Stock subject to such Replacement Option in accordance with the foregoing.
Notwithstanding the foregoing, each Signet Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code. At or
prior to the Effective Time, Signet shall take all action, if any, necessary
with respect to the Signet Stock Plans to permit the replacement of the
outstanding Signet Stock Options by First Union pursuant to this Section. At the
Effective Time, First Union shall assume the Signet Stock Plans; provided, that
such assumption shall be only in respect of the Replacement Options and that
First Union shall have no obligation with respect to any awards under the Signet
Stock Plans other than the Replacement Options and shall have no obligation to
make any additional grants or awards under such assumed Signet Stock Plans.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Forebearances of Signet. From the date hereof until the Effective
Time, except as expressly contemplated by this Plan or as Previously Disclosed,
without the prior written consent of First Union, Signet will not, and will
cause each of its Subsidiaries not to:
(A) Ordinary Course. Conduct the business of Signet and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and assets
and maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action reasonably
likely to have an adverse affect upon Signet's ability to perform any of its
material obligations under this Plan.
(B) Capital Stock. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or otherwise
permit to become outstanding (including pursuant to Signet's Dividend
Reinvestment Plan (the "DRP") and any Compensation and Benefit Plan qualified
under Section 401(k) of the Code to the extent such Compensation and Benefit
Plan offers Signet Common Stock as an investment option), or authorize the
creation of, any additional shares of Signet Stock or any Rights, (ii) enter
into any agreement with respect to the foregoing, or (iii) permit any additional
shares of Signet Stock to become subject to new grants of employee or director
stock options, other Rights or similar stock-based employee rights.
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(C) Dividends, Etc. (a) Make, declare, pay or set aside for
payment any dividend (other than (A) subject to Section 6.17, quarterly cash
dividends on Signet Common Stock in an amount not to exceed $0.21 per share with
record and payment dates consistent with past practice and (B) dividends from
wholly owned Subsidiaries to Signet or another wholly owned Subsidiary of
Signet) on or in respect of, or declare or make any distribution on, any shares
of Signet Common Stock or (b) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock.
(D) Compensation; Employment Agreements; Etc. Enter into or
amend or renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Signet or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are required
by applicable law, (iii) to satisfy Previously Disclosed contractual obligations
existing as of the date hereof, or (iv) for employment arrangement for, or
grants of awards to newly hired employees consistent with past practice.
(E) Benefit Plans. Enter into, establish, adopt or amend
(except (i) as may be required by applicable law or (ii) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) 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 (or
similar arrangement) related thereto, in respect of any director, officer or
employee of Signet or its Subsidiaries, or take any action to accelerate the
vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder.
(F) Dispositions. Except as Previously Disclosed, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its Subsidiaries
taken as a whole.
(G) Acquisitions. Except as Previously Disclosed, acquire
(other than by way of foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously contracted in good
faith, in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business and in
a transaction that is not material to it and
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its Subsidiaries taken as a whole.
(H) Governing Documents. Amend the Signet Certificate, Signet
By-laws or the certificate of incorporation or by-laws (or similar governing
documents) of any of Signet's Subsidiaries.
(I) 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.
(J) Contracts. Amend, or take any action adverse to First
Union with respect to, the Signet Rights Agreement or, except in the ordinary
course of business consistent with past practice, enter into or terminate any
material contract (as defined in Section 5.03(k)) or amend or modify in any
material respect any of its existing material contracts.
(K) Claims. Settle any claim, action or proceeding, except for
any claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not material
to Signet and its Subsidiaries, taken as a whole.
(L) Adverse Actions. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the Corporate
Merger from qualifying (i) for "pooling of interests" accounting treatment or
(ii) as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in this Plan being or
becoming untrue in any material respect at any time at or prior to the Effective
Time, (ii) any of the conditions to the Corporate Merger set forth in Article
VII not being satisfied or (iii) a material violation of any provision of this
Plan except, in each case, as may be required by applicable law or regulation.
(M) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate and
other risk management policies, procedures or practices; (ii) fail to follow its
existing policies or practices with respect to managing its exposure to interest
rate and other risk; or (iii) fail to use commercially reasonable means to avoid
any material increase in its aggregate exposure to interest rate risk.
(N) Indebtedness. Incur any indebtedness for borrowed money
other than in the ordinary course of business.
(O) Commitments. Agree or commit to do any of the foregoing.
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4.02. Forebearances of First Union. From the date hereof until the
Effective Time, except as expressly contemplated by this Plan, without the prior
written consent of Signet, First Union will not, and will cause each of its
Subsidiaries not to:
(A) Extraordinary Dividends. Make, declare, pay or set aside
for payment any extraordinary dividend; provided, however, the foregoing shall
not apply to the two-for-one First Union Common Stock split payable on July 31,
1997 and increases in the quarterly dividend rate payable on First Union Common
Stock in the ordinary course of business consistent with past practices.
(B) Adverse Actions. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the Corporate
Merger from qualifying (i) for "pooling of interests" accounting treatment or
(ii) as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in this Plan being or
becoming untrue in any material respect at any time at or prior to the Effective
Time, (ii) any of the conditions to the Corporate Merger set forth in Article
VII not being satisfied or (iii) a material violation of any provision of this
Plan except, in each case, as may be required by applicable law or regulation;
provided, however, that nothing contained herein shall limit the ability of
First Union to exercise its rights under the Stock Option Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof, First Union
has delivered to Signet a schedule and Signet has delivered to First Union a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either (i) in
response to an express disclosure requirement contained in a provision hereof or
(ii) as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV
or VI; provided, that (a) no such item is required to be set forth in a
Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02, and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty 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.
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5.02. Standard. No representation or warranty of Signet or First Union
contained in Section 5.03 or 5.04 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, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect on the party making such representation or warranty.
5.03. Representations and Warranties of Signet. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Signet hereby
represents and warrants to First Union:
(A) Organization, Standing and Authority. Signet is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Virginia. Signet is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(B) Signet Stock. As of the date hereof, the authorized
capital stock of Signet consists solely of (i) 100,000,000 shares of Signet
Common Stock, of which no more than 60,382,648 shares were outstanding as of
June 30, 1997, and (ii) 5,000,000 shares of Signet Preferred Stock, of which no
shares are outstanding. As of the date hereof, no shares of Signet Common Stock
and no shares of Signet Preferred Stock were held in treasury by Signet or
otherwise owned by Signet or its Subsidiaries. The outstanding shares of Signet
Common Stock have been duly authorized and 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). As of the date hereof, there are
no shares of Signet Stock authorized and reserved for issuance, Signet does not
have any Rights issued or outstanding with respect to Signet Stock, and Signet
does not have any commitment to authorize, issue or sell any Signet Stock or
Rights, except pursuant to this Plan and the Stock Option Agreement. The number
of shares of Signet Common Stock which are issuable and reserved for issuance
upon exercise of Signet Stock Options as of the date hereof are Previously
Disclosed.
(C) Subsidiaries.
(i)(A) Signet has Previously Disclosed a list of all of its
Subsidiaries together with the jurisdiction of organization and principal
business of each such Subsidiary, (B)
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except as Previously Disclosed, it owns, directly or indirectly, all the issued
and outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be issued
(other than to it or its wholly-owned Subsidiaries) by reason of any Right or
otherwise, (D) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell or
otherwise transfer any equity securities of any such Subsidiaries (other than to
it or its wholly-owned Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to dispose of
such securities and (F) all the equity securities of each Subsidiary held by
Signet or its Subsidiaries are fully paid and nonassessable and are owned by
Signet or its Subsidiaries free and clear of any Liens.
(ii) Signet does not own beneficially, directly or
indirectly, any equity securities or similar interests of any Person, or any
interest in a partnership or joint venture of any kind, other than its
Subsidiaries.
(iii) Each of Signet's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, 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. Each of Signet's
Subsidiaries that is a bank is an "insured depository institution" as defined in
the Federal Deposit Insurance Act and applicable regulations thereunder. The
deposits of the Bank are insured by the Bank Insurance Fund of the FDIC.
(D) Corporate Power. Signet and each of its 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 each of Signet and the
Bank has the corporate power and authority to execute, deliver and perform its
obligations under this Plan and as to Signet, the Stock Option Agreement, and to
consummate the transactions contemplated hereby and thereby.
(E) Corporate Authority. Subject in the case of this Plan to
receipt of the requisite approval of the agreement of merger set forth in this
Plan by the holders of more than two-thirds of the outstanding shares of Signet
Common Stock entitled to vote thereon (which is the only shareholder vote
required thereon), this Plan, the Stock Option Agreement and the transactions
contemplated hereby and thereby have been authorized by all necessary corporate
action of Signet and the Bank. This Plan is a valid and legally binding
obligation of each of Signet and the Bank, enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
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insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors' rights or by general
equity principles). The Signet Board has received the written opinion of J.P.
Morgan & Co., Inc. to the effect that as of the date hereof the consideration to
be received by the holders of Signet Common Stock in the Corporate Merger is
fair to the holders of Signet Common Stock from a financial point of view.
(F) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Signet or any of its Subsidiaries in
connection with the execution, delivery or performance by Signet of this Plan or
the Stock Option Agreement or to consummate the Mergers except for (A) filings
of applications or notices with federal and Virginia banking authorities, (B)
filings with the SEC and state securities authorities and the approval of this
Plan by the stockholders of Signet, and (C) the filing of articles of merger
with the Corporation Commission pursuant to the VSCA and the North Carolina
Secretary pursuant to the NCBA and the issuance of related certificates of
merger. As of the date hereof, Signet is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals
referred to in the preceding paragraph, and expiration of related waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Plan and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby do not
and will not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of Signet or of any of
its Subsidiaries or to which Signet or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default under,
the Signet Certificate or the Signet By-Laws, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(G) Financial Reports and SEC Documents.
(i) Signet's Annual Reports on Form 10-K for the
fiscal years ended December 31, 1994, 1995 and 1996, and all
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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, or under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or to be filed
(collectively, "SEC Documents") with the SEC, as of the date filed, (A) complied
or will comply as to form with the applicable requirements under the Securities
Act or the Exchange Act, as the case may be, and (B) 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 therein, in
the light of the circumstances under which they were made, not misleading; and
each of the balance sheets contained in or incorporated by reference into any
such Signet SEC Document (including the related notes and schedules thereto)
fairly presents, or will fairly present, the financial position of Signet and
its Subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent statements in such
Signet SEC Documents (including any related notes and schedules thereto) fairly
presents, or will fairly present, the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of Signet
and its Subsidiaries for the periods to which they relate, 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 year-end audit adjustments in the case of unaudited
statements.
(ii) Since December 31, 1996, Signet and its
Subsidiaries have not incurred any liability other than in the ordinary course
of business consistent with past practice.
(iii) Since December 31, 1996, (A) Signet and its
Subsidiaries have conducted their respective businesses in the ordinary and
usual course consistent with past practice (excluding the incurrence of expenses
related to this Plan and the transactions contemplated hereby) and (B) no event
has occurred or fact or circumstance arisen that, individually or taken together
with all other facts, circumstances and events (described in any paragraph of
Section 5.03 or otherwise), is reasonably likely to have a Material Adverse
Effect with respect to Signet.
(H) Litigation. No litigation, claim or other proceeding
before any court or governmental agency is pending against Signet or any of its
Subsidiaries and, to Signet's knowledge, no such litigation, claim or other
proceeding has been threatened.
(I) Regulatory Matters.
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(i) Neither Signet 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, or extraordinary supervisory letter from, any federal
or state Governmental 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 Federal Reserve Board, the FDIC and
the Virginia Bureau of Financial Institutions) or the supervision or regulation
of it or any of its Subsidiaries (collectively, the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been
advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(J) Compliance with Laws. Signet and each of its Subsidiaries:
(i) is in compliance 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;
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in order to
permit them to own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to Signet's knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1995, no
notification or communication from any Governmental Authority (A) asserting that
Signet or any of its Subsidiaries is not in compliance with any statutes,
regulations, or ordinances or (B) threatening to revoke any license, franchise,
permit, or governmental authorization (nor, to Signet's knowledge, do any
grounds for any of the foregoing exist).
(K) Material Contracts; Defaults. Except for those agreements
and other documents filed as exhibits to its SEC
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Documents, neither it nor any of its Subsidiaries is a party to, bound by or
subject to any agreement, contract, arrangement, commitment or understanding
(whether written or oral) (i) that is a "material contract" within the meaning
of Item 601(b)(10) of the SEC's Regulation S-K (without giving effect to the
"ordinary course" exception set forth therein) or (ii) that materially restricts
the conduct of business by it or any of its Subsidiaries. Neither it nor any of
its Subsidiaries is in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party,
by which its respective assets, business, or operations may be bound or
affected, or under which it or its respective assets, business, or operations
receives benefits, and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default. Neither
it nor any of its Subsidiaries is subject to, or bound by, any contract
containing covenants which (i) limit the ability of it or any Subsidiary to
compete in any line of business or with any person, or (ii) involve any
restriction of geographical area in which, or method by which, it or any
Subsidiary may carry on its business (other than as may be required by law or
any applicable Regulatory Authority).
(L) No Brokers. No action has been taken by Signet that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Plan, excluding a Previously Disclosed fee to be paid to
J.P. Morgan & Co., Inc.
(M) Employee Benefit Plans.
(i) Section 5.03(m)(i) of Signet's Disclosure
Schedule contains a complete and accurate list of all existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, severance, welfare and fringe benefit plans, employment or severance
agreements and all similar practices, policies and arrangements maintained or
contributed to by Signet or any of its Subsidiaries in which any employee or
former employee (the "Employees"), consultant or former consultant (the
"Consultants") or director or former director (the "Directors") of Signet or any
of its Subsidiaries participates or to which any such Employees, Consultants or
Directors are a party (the "Compensation and Benefit Plans"). Neither Signet nor
any of its Subsidiaries has any commitment to create any additional Compensation
and Benefit Plan or to modify or change any existing Compensation and Benefit
Plan.
(ii) Each Compensation and Benefit Plan has been
operated and administered in all material respects in accordance
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with its terms and with applicable law, including, but not limited to, ERISA,
the Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act, or any regulations or rules promulgated thereunder, and all
filings, disclosures and notices required by ERISA, the Code, the Securities
Act, the Exchange Act, the Age Discrimination in Employment Act and any other
applicable law have been timely made. Each Compensation and Benefit Plan which
is an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter (including a
determination that the related trust under such Compensation and Benefit Plan is
exempt from tax under Section 501(a) of the Code) from the IRS for "TRA" (as
defined in Rev. Proc. 93-39), or will file for such determination letter prior
to the expiration of the remedial amendment period for such Compensation and
Benefit Plan, and Signet is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no material
pending or, to the knowledge of Signet, threatened legal action, suit or claim
relating to the Compensation and Benefit Plans. Neither Signet nor any of its
Subsidiaries has engaged in a transaction, or omitted to take any action, with
respect to any Compensation and Benefit Plan that would reasonably be expected
to subject Signet or any of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA, assuming for purposes
of Section 4975 of the Code that the taxable period of any such transaction
expired as of the date hereof.
(iii) No liability (other than for payment of
premiums to the PBGC which have been made or will be made on a timely basis)
under Title IV of ERISA has been or is expected to be incurred by Signet 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 any single-employer plan of
any entity (an "ERISA Affiliate") which is considered one employer with Signet
under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an
"ERISA Affiliate Plan"). None of Signet, any of its Subsidiaries or any ERISA
Affiliate has contributed, or has been obligated to contribute, to a
multiemployer plan under Subtitle E of Title IV of ERISA at any time since
September 26, 1980. 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 Compensation and Benefit Plan or
by any ERISA Affiliate Plan within the 12-month period ending on the date
hereof, and no such notice will be required to be filed as a result of the
transactions contemplated by this Plan. The PBGC has not instituted proceedings
to terminate any Pension Plan or ERISA Affiliate Plan and, to Signet's
knowledge, no condition exists that presents a material risk that such
proceedings will
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be instituted. To the knowledge of Signet, there is no pending investigation or
enforcement action by the PBGC, the Department of Labor (the "DOL") or IRS or
any other governmental agency with respect to any Compensation and Benefit Plan.
Under each Pension Plan and ERISA Affiliate Plan, as of the date of the most
recent actuarial valuation performed prior to the date of this Plan, 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 such actuarial valuation of such Pension Plan
or ERISA Affiliate Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date there has been
neither an adverse change in the financial condition of such Pension Plan or
ERISA Affiliate Plan nor any amendment or other change to such Pension Plan or
ERISA Affiliate Plan that would increase the amount of benefits thereunder which
in either case reasonably could be expected to change such result.
(iv) All contributions required to be made under the
terms of any Compensation and Benefit Plan or ERISA Affiliate Plan or any
employee benefit arrangements under any collective bargaining agreement to which
Signet or any of its Subsidiaries is a party have been timely made or have been
reflected on Signet's financial statements to the extent required by generally
accepted accounting principles. Neither any Pension Plan nor any ERISA Affiliate
Plan has an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and all required
payments to the PBGC with respect to each Pension Plan or ERISA Affiliate Plan
have been made on or before their due dates. None of Signet, any of its
Subsidiaries or any ERISA Affiliate (x) has provided, or would reasonably be
expected to be required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, and (y) has taken any
action, or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a lien under Section 412(n) of the Code
or pursuant to ERISA.
(v) Neither Signet nor any of its Subsidiaries has
any obligations to provide retiree health and life insurance or other retiree
death benefits under any Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code, and each such Compensation and Benefit
Plan may be amended or terminated without incurring liability thereunder. There
has been no communication to Employees by Signet or any of its Subsidiaries that
would reasonably be expected to promise or guarantee such Employees retiree
health or life insurance or other retiree death benefits on a permanent basis.
(vi) Signet and its Subsidiaries do not maintain any
Compensation and Benefit Plans covering foreign Employees.
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(vii) With respect to each Compensation and
Benefit Plan, if applicable, Signet has provided or made available to First
Union, true and complete copies of its existing (A) Compensation and Benefit
Plan documents and amendments thereto and (B) trust instruments and insurance
contracts.
(viii) The consummation of the transactions
contemplated by this Plan would not, directly or indirectly (including, without
limitation, as a result of any termination of employment prior to or following
the Effective Time) reasonably be expected to (A) entitle any Employee,
Consultant or Director to any payment (including severance pay or similar
compensation) or any increase in compensation, (B) result in the vesting or
acceleration of any benefits under any Compensation and Benefit Plan or (C)
result in any material increase in benefits payable under any Compensation and
Benefit Plan.
(ix) Neither Signet nor any of its Subsidiaries
maintains any compensation plans, programs or arrangements the payments under
which would not reasonably be expected to be deductible as a result of the
limitations under Section 162(m) of the Code and the regulations issued
thereunder.
(x) As a result, directly or indirectly, of the
transactions contemplated by this Plan (including, without limitation, as a
result of any termination of employment prior to or following the Effective
Time), none of First Union, Signet or the Surviving Corporation, or any of their
respective Subsidiaries will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of the
Code), without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(N) Labor Matters. Neither Signet nor any of its Subsidiaries
is a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is Signet 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 Signet or any
such Subsidiary to bargain with any labor organization as to wages or conditions
of employment, nor is there any strike or other labor dispute involving it or
any of its Subsidiaries pending or, to Signet's knowledge, threatened, nor is
Signet aware of any activity involving its or any of its Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
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(O) Takeover Laws; Dissenters Rights. Signet has taken all
action required to be taken by it in order to exempt this Plan, the Stock Option
Agreement and the transactions contemplated hereby and thereby from, and this
Plan, the Stock Option Agreement and the transactions contemplated hereby and
thereby (the "Covered Transactions") are exempt from, the requirements of any
"moratorium", "control share", "fair price", "affiliate transaction", "business
combination" or other antitakeover laws and regulations of any state
(collectively, "Takeover Laws"), including, without limitation, the Commonwealth
of Virginia, and including, without limitation, Sections 13.1-725 through
13.1-728 of the VSCA (because a majority of Signet's disinterested directors
approved such transactions for such purposes prior to any "determination date"
with respect to First Union) and Sections 13.1-728.1 through 13.1-728.9 of the
VSCA. The provisions of Article VIII of the Signet Certificate do not apply to
the Covered Transactions as they have been approved by a majority of the
Disinterested Directors (as defined in Article VIII). Holders of Signet Common
Stock do not have dissenters' or appraisal rights in connection with the
execution of this Plan or the consummation of any of the transactions
contemplated hereby.
(P) Environmental Matters. Neither the conduct nor operation
of Signet or its Subsidiaries nor any condition of any property presently or
previously owned, leased or operated by any of them (including, without
limitation, in a fiduciary or agency capacity), or on which any of them holds a
Lien, violates or violated Environmental Laws and no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. Neither Signet nor any of its Subsidiaries
has received any notice from any person or entity that Signet or its
Subsidiaries or the operation or condition of any property ever owned, leased,
operated, or held as collateral or in a fiduciary capacity by any of them are or
were in violation of or otherwise are alleged to have liability under any
Environmental Law, including, but not limited to, responsibility (or potential
responsibility) for the cleanup or other remediation of any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at, on,
beneath, or originating from any such property.
(Q) Tax Matters.
(i)(A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to Signet and its Subsidiaries have been duly filed and the information
therein reported is substantially correct, (B) all Taxes shown to be due on the
Tax Returns referred to in clause (A) have been paid in full, (C) the federal
income Tax Returns referred to in clause (A) have been examined by the Internal
Revenue Service or the period for assessment of
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the Taxes in respect of which such Tax Returns were required to be filed has
expired, (D) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (E) no issues that have been raised by the
relevant taxing authority in connection with the examination of any of the Tax
Returns referred to in clause (A) are currently pending, and (F) no waivers of
statutes of limitation have been given by or requested with respect to any Taxes
of Signet or its Subsidiaries. Signet has made available to First Union true and
correct copies of the United States federal income Tax Returns filed by Signet
and its Subsidiaries for each of the three most recent fiscal years ended on or
before December 31, 1996. Neither Signet nor any of its Subsidiaries has any
liability with respect to Taxes that accrued on or before the end of the most
recent period covered by Signet's SEC Documents filed prior to the date hereof
in excess of the amounts accrued with respect thereto that are reflected in the
financial statements included in Signet's SEC Documents filed on or prior to the
date hereof. As of the date hereof, neither Signet nor any of its Subsidiaries
has any reason to believe that any conditions exist that might prevent or impede
the Corporate Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transfer contemplated by this Plan.
(R) Risk Management Instruments. All interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for Signet's own account, or
for the account of one or more of Signet's Subsidiaries or their customers (all
of which are listed on Signet's Disclosure Schedule), were entered into (i) in
accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (ii) with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of Signet or one of its Subsidiaries, enforceable in
accordance with its terms (except as enforceability 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), and are in full force and effect. Neither
Signet nor its Subsidiaries, nor to Signet's knowledge, any other party thereto,
is in breach of any of its obligations under any such agreement or arrangement.
(S) Books and Records. The books and records of Signet and its
Subsidiaries have been fully, properly and accurately maintained, and there are
no material inaccuracies or discrepancies of any kind contained or reflected
therein, and they fairly present the financial position of Signet and its
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Subsidiaries.
(T) Insurance. Signet's Disclosure Schedule sets forth all of
the insurance policies, binders, or bonds maintained by Signet or its
Subsidiaries ("Insurance Policies"). Signet and its Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the management
of Signet reasonably has determined to be prudent in accordance with industry
practices. All the Insurance Policies are in full force and effect; Signet and
its Subsidiaries are not in default thereunder; and all claims thereunder have
been filed in due and timely fashion.
(U) Accounting Treatment. As of the date hereof, Signet is
aware of no reason why the Corporate Merger will fail to qualify for "pooling of
interests" accounting treatment.
(V) Rights Agreement. Signet has duly adopted an amendment to
the Signet Rights Agreement in the form of Exhibit B, as a result of which
neither First Union nor any affiliate or associate will become an "Acquiring
Person" and no "Distribution Date" (as such terms are defined in the Signet
Rights Agreement) will occur, and the rights issued under the Rights Agreement
will not become separable, distributable, unredeemable or exercisable as a
result of the approval, execution or delivery of this Plan or the Stock Option
Agreement or the consummation of the transactions contemplated hereby or thereby
and the Signet Rights will expire upon the Effective Time.
(W) Asset Classification. Signet has Previously Disclosed a
list, accurate and complete in all material respects, of the aggregate amounts
of loans, extensions of credit or other assets of it and its Subsidiaries that
have been classified by it as of June 30, 1997 (the "Asset Classification"); and
no amounts of loans, extensions of credit or other assets that have been
classified as of June 30, 1997 by any Regulatory Authority as "Other Loans
Specially Mentioned", "Substandard", "Doubtful", "Loss", or words of similar
import are excluded from the amounts disclosed in the Asset Classification,
other than amounts of loans, extensions of credit or other assets that were
charged off by it or a Subsidiary prior to June 30, 1997.
(X) Disclosure. The representations and warranties contained
in this Section 5.03 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
5.04. Representations and Warranties of First Union. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, First Union
hereby represents
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and warrants to Signet as follows:
(A) Organization, Standing and Authority. First Union is duly
organized, validly existing and in good standing under the laws of the State of
North Carolina. First Union 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 assets or the conduct of its business
requires it to be so qualified. First Union 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.
(B) First Union Stock.
(i) As of the date hereof, the authorized capital
stock of First Union consists solely of 750,000,000 shares of First Union Common
Stock, of which no more than 285,000,000 shares are outstanding as of the date
hereof (without giving effect to the two-for-one First Union Common Stock split
payable on July 31, 1997 to holders of record of First Union Common Stock on
July 1, 1997), 40,000,000 shares of First Union Class A Preferred Stock, of
which no shares were outstanding as of the date hereof, and 10,000,000 shares of
First Union Preferred Stock, of which no shares were outstanding as of the date
hereof.
(ii) The shares of First Union Common Stock to be
issued in exchange for shares of Signet Common Stock in the Corporate Merger,
when issued in accordance with the terms of this Plan, will be duly authorized,
validly issued, fully paid and nonassessable.
(C) Subsidiaries. Each of First Union's Significant
Subsidiaries has been duly organized and is validly existing in good standing
under the laws of the jurisdiction of its organization, 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 and it owns, directly or indirectly, all the issued and outstanding
equity securities of each of its Significant Subsidiaries.
(D) Corporate Power. First Union 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 each of
First Union and FUNB has the corporate power and authority to execute, deliver
and perform its obligations under this Plan and to consummate the transactions
contemplated hereby.
(E) Corporate Authority. This Plan and the transactions
contemplated hereby have been authorized by all
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necessary corporate action of each of First Union and FUNB. This Plan is a valid
and legally binding agreement of each of First Union and FUNB enforceable in
accordance with its terms (except as enforceability 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).
(F) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or filings or
registrations with, any court, administrative agency or commission or other
governmental authority or instrumentality or with any third party are required
to be made or obtained by First Union or any of its Subsidiaries in connection
with the execution, delivery or performance by First Union of this Plan or to
consummate the Mergers except for (A) the filing of applications and notices, as
applicable, with federal and state banking authorities, receipt of approval
thereof and expiration of related waiting periods; (B) approval of the listing
on the NYSE of First Union Common Stock to be issued in the Corporate Merger;
(C) the filing and declaration of effectiveness of the Registration Statement;
(D) the filing of articles of merger with the Corporation Commission pursuant to
the VSCA and the North Carolina Secretary pursuant to the NCBCA and the issuance
of related certificates of merger; (E) such filings as are required to be made
or approvals as are required to be obtained under the securities or "Blue Sky"
laws of various states in connection with the issuance of First Union Stock in
the Corporate Merger; and (F) receipt of the approvals set forth in Section
7.01(b). As of the date hereof, First Union is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals
referred to in the preceding paragraph and expiration of the related waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Plan and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any acceleration of
remedies or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental
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permit or license, or agreement, indenture or instrument of First Union or of
any of its Subsidiaries or to which First Union or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation of, or a
default under, the articles of incorporation or by-laws (or similar governing
documents) of First Union or any of its Subsidiaries, or (C) require any consent
or approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(G) Financial Reports and SEC Documents; Material Adverse
Effect.
(i) First Union's SEC Documents, as of the date
filed, (A) complied or will comply as to form with the applicable requirements
under the Securities Act or the Exchange Act, as the case may be, and (B) 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 therein, in the light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly present, the
financial position of First Union and its Subsidiaries as of its date, and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such SEC Documents (including any related notes and
schedules thereto) fairly presents, or will fairly present, the results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of First Union and its Subsidiaries for the periods to which they
relate, 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 year-end audit adjustments in the case of
unaudited statements.
(ii) Since December 31, 1996, no event has occurred
or fact or circumstance arisen that, individually or taken together with all
other facts, circumstances and events (described in any paragraph of Section
5.04 or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(H) Litigation; Regulatory Action.
(i) Other than as set forth in its SEC Documents
filed on or before the date hereof, no litigation, claim or other proceeding
before any Governmental Authority is pending against First Union or any of its
Subsidiaries and, to the best of First Union's knowledge, no such litigation,
claim or other proceeding has been threatened.
(ii) Neither First Union 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, or extraordinary supervisory letter from a Regulatory
Authority, nor has First Union or any of its Subsidiaries been advised by a
Regulatory Authority that such agency is
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contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(I) Compliance with Laws. First Union and each of its
Subsidiaries:
(i) in the conduct of its business, is in compliance
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; and
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental 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.
(J) No Brokers. No action has been taken by First Union that
would give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Plan, excluding a fee to be paid to Credit Suisse First
Boston Corporation.
(K) Tax Matters. (A) All Tax Returns that are required to be
filed (taking into account any extensions of time within which to file) by or
with respect to First Union and its Subsidiaries have been duly filed and the
information therein reported is substantially correct, (B) all Taxes shown to be
due on the Tax Returns referred to in clause (A) have been paid in full, (C) the
federal income Tax Returns referred to in clause (A) have been examined by the
Internal Revenue Service or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired, (D) all
deficiencies asserted or assessments made as a result of such examinations have
been paid in full, (E) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns referred
to in clause (A) are currently pending, and (F) no waivers of statutes of
limitation have been given by or requested with respect to any Taxes of First
Union or its Subsidiaries. Neither First Union nor any of its Subsidiaries has
any liability with respect to
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Taxes that accrued on or before the end of the most recent period covered by
First Union's SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in First Union's SEC Documents filed on or prior to the date
hereof. As of the date hereof, neither First Union nor any of its Subsidiaries
has any reason to believe that any conditions exist that might prevent or impede
the Corporate Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code.
(L) Accounting Treatment. As of the date hereof, First Union
is aware of no reason why the Corporate Merger will fail to qualify for "pooling
of interests" accounting treatment.
(M) Disclosure. The representations and warranties contained
in this Section 5.04 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts. Subject to the terms and conditions of
this Plan, each of Signet and First Union agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Mergers as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
6.02. Stockholder Approval. Signet agrees to take, in accordance with
applicable law, NYSE rules and its articles of incorporation and by-laws, all
action necessary to convene an appropriate meeting of its stockholders to
consider and vote upon the approval and adoption of this Plan and any other
matters required to be approved by Signet's stockholders for consummation of the
Mergers (including any adjournment or postponement, the "Signet Meeting"), as
promptly as practicable after the Registration Statement is declared effective.
The Signet Board shall recommend such approval, and Signet shall take all
reasonable, lawful action to solicit such approval by its stockholders.
6.03. Registration Statement.
(A) First Union agrees to prepare a registration statement on
Form S-4 or other applicable form (the "Registration
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Statement") to be filed by First Union with the SEC in connection with the
issuance of First Union Common Stock in the Corporate Merger (including the
proxy statement and prospectus and other proxy solicitation materials of First
Union and Signet constituting a part thereof (the "Proxy Statement") and all
related documents). Signet agrees to cooperate, and to cause its Subsidiaries to
cooperate, with First Union, its counsel and its accountants, in preparation of
the Registration Statement and the Proxy Statement; and provided that Signet and
its Subsidiaries have cooperated as required above, First Union agrees to file
the Proxy Statement in preliminary form with the SEC as promptly as reasonably
practicable, and to file the Registration Statement with the SEC as soon as
reasonably practicable after any SEC comments with respect to the preliminary
Proxy Statement are resolved. Each of Signet and First Union 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. First Union 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 Plan. Signet agrees to furnish
to First Union all information concerning Signet, its Subsidiaries, officers,
directors and stockholders as may be reasonably requested in connection with the
foregoing.
(B) Each of Signet and First Union 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 Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to stockholders and at the time of the Signet Meeting, 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 or 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 Proxy Statement or any amendment or
supplement thereto. Each of Signet and First Union further agrees that if it
shall become aware prior to the Effective Date of any information furnished by
it that would cause any of the statements in the Proxy Statement to be false or
misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading,to
promptly inform the other party thereof and to take
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the necessary steps to correct the Proxy Statement.
(C) First Union agrees to advise Signet, promptly after First
Union receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of First Union Common
Stock for offering or sale in any jurisdiction, of the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information.
6.04. Press Releases. Each of Signet and First Union agrees that it
will not, without the prior approval of the other party, issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NYSE rules.
6.05. Access; Information.
(A) Each of Signet and First Union agrees that upon reasonable
notice and subject to applicable laws relating to the exchange of information,
it shall afford the other party and the other party's officers, employees,
counsel, accountants and other authorized representatives, such access during
normal business hours throughout the period prior to the Effective Time to the
books, records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
any party may reasonably request and, during such period, it shall furnish
promptly to such other party (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.
(B) Each agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Plan) for any purpose unrelated to the
consummation of the transactions contemplated by this Plan. Subject to the
requirements of law, each party will keep confidential, and will cause its
representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.05 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Plan) unless
such information (i) was already known to such party, (ii) becomes available to
such party from other sources not known by such party to be bound by a
confidentiality obligation, (iii) is disclosed with the prior written approval
of the party to which
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such information pertains or (iv) is or becomes readily ascertainable from
published information or trade sources. In the event that this Plan is
terminated or the transactions contemplated by this Plan shall otherwise fail to
be consummated, each party shall promptly cause all copies of documents or
extracts thereof containing information and data as to another party hereto to
be returned to the party which furnished the same.
(C) No investigation by either party of the business and
affairs of the other 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.
6.06. Acquisition Proposals. Signet agrees that it shall not, and shall
cause its Subsidiaries and its Subsidiaries' officers, directors, agents,
advisors and affiliates 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 person relating
to, any Acquisition Proposal. It shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Plan with any parties other than First Union with respect to any of
the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. Signet
shall promptly (within 24 hours) advise First Union following the receipt by
Signet of any Acquisition Proposal and the substance thereof (including the
identity of the person making such Acquisition Proposal), and advise First Union
of any developments with respect to such Acquisition Proposal immediately upon
the occurrence thereof.
6.07. Affiliate Agreements.
(A) Not later than the 15th day prior to the mailing of the
Proxy Statement, (i) Signet shall deliver to First Union 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 Signet Meeting, deemed to be an "affiliate" of Signet (each,
a "Signet Affiliate") as that term is used in Rule 145 under the Securities Act
or SEC Accounting Series Releases 130 and 135.
(B) Each of Signet and First Union shall use its reasonable
best efforts to cause each person who may be deemed to be a Signet Affiliate or
an "affiliate" of First Union (as that term is used in the preceding section),
as the case may be, to execute and deliver to First Union and Signet,
respectively, on or before the date of mailing of the Proxy Statement an
agreement in the form attached hereto as Exhibit C or Exhibit D, respectively.
Such Signet Affiliates will not receive New
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Certificates until such agreement is delivered to First Union.
6.08. Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Plan or the Stock Option Agreement
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 from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect.
6.09. Certain Modifications; Restructuring Charges.
(A) Signet and First Union shall consult with respect to their
loan, litigation and real estate valuation policies and practices (including
loan classifications and levels of reserves) and Signet 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. Signet and First
Union 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 6.09.
(B) Each of Signet and First Union agrees to cooperate with
the other in effecting, prior to the Effective Time, repurchases of shares of
First Union Common Stock and/or Signet Common Stock; provided, however, that no
such redemption or repurchase shall be effected by either party (1) if KPMG Peat
Marwick LLP or Ernst & Young, LLP concludes that, as a result thereof, such firm
may be unable to deliver the respective letters referred to in Sections 7.02(e)
and 7.03(e), (2) if Sullivan & Cromwell, counsel to First Union, or Wachtell,
Lipton, Rosen & Katz, special tax counsel to Signet, concludes that, as a result
thereof, such firms may be unable to deliver the respective opinions referred to
in Sections 7.02(c) and 7.03(c), or (3) except in accordance with the Exchange
Act and other applicable law.
(C) In the case of Signet, it agrees to use its reasonable
best efforts to amend its DRP and any Compensation and Benefit Plan qualified
under Section 401(k) of the Code which offers Signet Common Stock as an
investment option, as soon as reasonably practicable after the execution of this
Plan, so that no original issue shares of Signet Common Stock will be issued
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under the DRP or such Compensation and Benefit Plan thereafter.
6.10. NYSE Listing. First Union agrees to use its reasonable best
efforts to list, prior to the Effective Date, on the NYSE, subject to official
notice of issuance, the shares of First Union Common Stock to be issued to the
holders of Signet Common Stock in the Corporate Merger.
6.11. Regulatory Applications.
(A) First Union and Signet and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the transactions contemplated by this Plan. Each of
First Union and Signet 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 Governmental
Authority 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 Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Plan and each party will keep the other party
appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(B) Each party agrees, upon request, to furnish the other
party 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 third party or
Governmental Authority.
6.12. Indemnification.
(A) Following the Effective Date and for a period of six years
thereafter, First Union shall indemnify, defend and hold harmless the present
directors and officers of Signet 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,
38
<PAGE>
without limitation, the transactions contemplated by this Plan) to the fullest
extent that Signet is permitted to indemnify (and advance expenses to) its
directors and officers under the laws of the Commonwealth of Virginia, the
Signet Certificate and the Signet By-Laws as in effect on the date hereof;
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
Virginia law, the Signet Certificate and the Signet By-Laws shall be made by
independent counsel (which shall not be counsel that provides material services
to First Union) selected by First Union and reasonably acceptable to such
officer or director; and provided, further, that in the absence of applicable
Virginia 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 First Union shall have the burden to demonstrate that such
officer's or director's conduct failed to comply with such standard.
(B) For a period of five years from the Effective Time, First
Union shall use its reasonable best efforts to provide that portion of
director's and officer's liability insurance that serves to reimburse the
present and former officers and directors of Signet or any of its Subsidiaries
(determined as of the Effective Time) (as opposed to Signet) with respect to
claims against such directors and officers arising from facts or events which
occurred before the Effective Time, which insurance shall contain at least the
same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by Signet; provided, however,
that in no event shall First Union be required to expend more than 200 percent
of the current amount expended by Signet (the "Insurance Amount") to maintain or
procure such directors and officers insurance coverage for a comparable
five-year period; provided, further, that if First Union is unable to maintain
or obtain the insurance called for by this Section 6.12(b), First Union shall
use its reasonable best efforts to obtain as much comparable insurance as is
available for the Insurance Amount; provided, further, that officers and
directors of Signet or any Subsidiary may be required to make application and
provide customary representations and warranties to First Union's insurance
carrier for the purpose of obtaining such insurance.
(C) Any Indemnified Party wishing to claim indemnification
under Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify First Union thereof;
provided that the
39
failure so to notify shall not affect the obligations of First Union under
Section 6.12(a) unless and to the extent that First Union is actually prejudiced
as a result of such failure.
(D) If First Union or any of its successors or assigns
<PAGE>
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 other entity, then and in each
case, proper provision shall be made so that the successors and assigns of First
Union shall assume the obligations set forth in this Section 6.12.
6.13. Benefit Plans.
(A) As soon as administratively practicable after the
Effective Time, employees of Signet and its Subsidiaries shall be entitled to
participate in the pension, benefit, welfare, incentive compensation, vacation,
sick pay, fringe benefit, and similar plans of First Union (other than the
severance policy of First Union during such period that the Signet Severance Pay
Plan (as rewritten to conform eligibility criteria as written for the Advance
project in the Severence Pay Plan amendment dated January 28, 1997, to define
the new eligibility event as the merger between First Union and Signet with such
benefits being in place for any employee terminated on or before 12 months from
the Effective Date)) on substantially the same terms and conditions as employees
of First Union and its Subsidiaries and until such time as administratively
practicable the plans of Signet shall remain in effect without any adverse
amendments except as required by law. No employee of Signet who elects to be
covered under a First Union medical insurance plan shall be excluded from
coverage under such plan (for such employee or any other coverage person) on the
basis of a pre-existing condition that was not also excluded under Signet's
medical insurance plans. For the purpose of determining eligibility to
participate in such plans, the vesting of benefits under such plans (but not for
the accrual of benefits under such defined benefit plans), First Union shall
give effect to years of service with Signet or its Subsidiaries, as the case may
be, as if such service had been with First Union or its Subsidiaries. Retirees
on or before to October 1, 1998, shall have their retiree welfare benefits
grandfathered at a substantially similar level as those in effect at Signet on
the date hereof.
(B) First Union shall honor and continue in accordance with
their terms all Compensation and Benefit Plans, including, without limitation,
employment, severance, split-dollar insurance and other compensation contracts
Previously Disclosed, the employment agreements entered into by First Union with
Messrs. McDonald, Millner and Layfield and all provisions for vested benefits or
other vested amounts earned or accrued through the Effective Time of the Merger
under any of the Compensation and Benefit Plans. First Union agrees that all
Signet Stock Options shall vest in accordance with their terms
(C) In the event the Effective Time shall occur prior
40
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to December 31, 1997, First Union or Signet shall take all necessary action to
provide full payouts under Signet's annual short-term incentive plans for the
full 1997 plan year and under Signet's Executive Long-Term Incentive Plan for
the full performance cycle ending December 31, 1997, in amounts equal to the
greater of target payout or performance-based payout under such plans for the
relevant period. The provisions of this Section 6.13 relating to existing
employment contracts are intended to be for the benefit of, and shall be
enforceable by the employees who executed such employment contracts.
6.14. Accountants' Letters. Each of Signet and First
Union shall use its reasonable best efforts to cause to be
delivered to the other party, and to First Union's directors and
officers who sign the Registration Statement, a letter of KPMG
Peat Marwick LLP and Ernst & Young, LLP, respectively,
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.
6.15. Notification of Certain Matters. Each of Signet
and First Union 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.
6.16. Directors. First Union agrees to cause two members of the Signet
Board on the date hereof (selected by First Union after consultation with
Signet), who are still members of the Signet Board immediately prior to the
Effective Time and
41
<PAGE>
willing and eligible to serve, to be elected or appointed as directors of First
Union as promptly as practicable after the Effective Time.
6.17. Dividend Coordination. The Board of Directors of Signet shall
cause its regular quarterly dividend record dates and payment dates for Signet
Common Stock to be the same as First Union's regular quarterly dividend record
dates and payment dates for First Union Common Stock (e.g., Signet shall move
its next dividend record and payment dates from September and October to August
and September, respectively), and Signet shall not thereafter change its regular
dividend payment dates and record dates.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGERS
7.01. Conditions to Each Party's Obligation to Effect the Mergers. The
respective obligation of each of First Union and Signet to consummate the
Mergers is subject to the fulfillment or written waiver by First Union and
Signet prior to the Effective Time of each of the following conditions:
(A) Stockholder Approvals. This Plan and the
Corporate Merger shall have been duly adopted by the requisite
vote of the stockholders of Signet.
(B) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the First Union Board reasonably
determines would (i) following the Effective Time, have a Material Adverse
Effect on the Surviving Corporation and its Subsidiaries taken as a whole or
(ii) reduce the benefits of the transactions contemplated hereby to such a
degree that First Union would not have entered into this Plan had such
conditions, restrictions or requirements been known at the date hereof.
(C) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Plan.
(D) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings
42
<PAGE>
for that purpose shall have been initiated or threatened by the SEC.
(E) Blue Sky Approvals. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of First Union Common Stock to be
issued in the Corporate Merger shall have been received and be in full force and
effect.
(F) Listing. The shares of First Union Common Stock
to be issued in the Corporate Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance.
7.02. Conditions to Obligation of Signet and the Bank. The obligation
of Signet and the Bank to consummate the Mergers is also subject to the
fulfillment or written waiver by Signet prior to the Effective Time of each of
the following conditions:
(A) Representations and Warranties. The representations and
warranties of First Union set forth in this Plan shall be true and correct as of
the date of this Plan and as of the Effective Date as though made on and as of
the Effective Date (except that representations and warranties that by their
terms speak as of the date of this Plan or some other date shall be true and
correct as of such date), and Signet shall have received a certificate, dated
the Effective Date, signed on behalf of First Union by the Chief Financial
Officer of First Union to such effect.
(B) Performance of Obligations of First Union. First Union
shall have performed in all material respects all obligations required to be
performed by it under this Plan at or prior to the Effective Time, and Signet
shall have received a certificate, dated the Effective Date, signed on behalf of
First Union by the Chief Financial Officer of First Union to such effect.
(C) Opinion of Signet's Counsel. Signet shall have received an
opinion of Wachtell, Lipton, Rosen & Katz, special counsel to Signet, dated the
Effective Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, (i) the Corporate Merger constitutes a
"reorganization" within the meaning of Section 368 of the Code and (ii) no gain
or loss will be recognized by stockholders of Signet who receive shares of First
Union Common Stock in exchange for shares of Signet Common Stock, except with
respect to cash received in lieu of fractional share interests. In rendering its
opinion, Wachtell, Lipton, Rosen & Katz, may require and rely upon
representations contained in letters from Signet, First Union and stockholders
of Signet.
(D) Accountants' Letters. Signet shall have received
the letters referred to in Section 6.14 from KPMG Peat Marwick
LLP, First Union's independent auditors.
43
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(E) Accounting Treatment. Signet shall have received from
Ernst & Young, LLP, Signet's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Corporate Merger, including the
transactions contemplated by this Plan and other agreements between the parties
to this Plan related thereto, shall qualify for pooling-of-interests accounting
treatment.
7.03. Conditions to Obligation of First Union and FUNB. The obligation
of First Union and FUNB to consummate the Mergers is also subject to the
fulfillment or written waiver by First Union prior to the Effective Time of each
of the following conditions:
(A) Representations and Warranties. The representations and
warranties of Signet set forth in this Plan shall be true and correct as of the
date of this Plan and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their terms
speak as of the date of this Plan or some other date shall be true and correct
as of such date) and First Union shall have received a certificate, dated the
Effective Date, signed on behalf of Signet by the Chief Executive Officer and
the Chief Financial Officer of Signet to such effect.
(B) Performance of Obligations of Signet. Signet shall have
performed in all material respects all obligations required to be performed by
it under this Plan at or prior to the Effective Time, and First Union shall have
received a certificate, dated the Effective Date, signed on behalf of Signet by
the Chief Executive Officer and the Chief Financial Officer of Signet to such
effect.
(C) Opinion of First Union's Counsel. First Union shall have
received an opinion of Sullivan & Cromwell, counsel to First Union, dated the
Effective Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Corporate Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion, Sullivan
& Cromwell may require and rely upon representations contained in letters from
Signet, First Union and stockholders of Signet.
(D) Accountants' Letters. First Union and its
directors and officers who sign the Registration Statement shall
have received the letters referred to in Section 6.14 from Ernst
& Young, LLP, Signet's independent auditors.
(E) Accounting Treatment. First Union shall have
<PAGE>
44
received from KPMG Peat Marwick LLP, First Union's independent auditors,
letters, dated the date of or shortly prior to each of the mailing date of the
Proxy Statement and the Effective Date, stating its opinion that the Corporate
Merger, including transactions contemplated by this Plan and other agreements
between the parties to this Plan related thereto, shall qualify for
pooling-of-interests accounting treatment.
(F) Signet Rights. No person shall have become an "Acquiring
Person" and no "Distribution Date" (as such terms are defined in the Signet
Rights Agreement) shall have occurred, and the Signet Rights shall not have
become separable, distributable, redeemable or exercisable.
ARTICLE VIII
TERMINATION
8.01. Termination. This Plan may be terminated, and the
Corporate Merger may be abandoned:
(A) Mutual Consent. At any time prior to the
Effective Time, by the mutual consent of First Union and Signet,
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 First
Union or Signet, 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 set forth in Section 5.02), 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 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, provided that such breach (whether under (i) or (ii)) would be
reasonably likely, individually or in the aggregate with other breaches, to
result in a Material Adverse Effect.
(C) Delay. At any time prior to the Effective Time, by First
Union or Signet, if its Board of Directors so determines by vote of a majority
of the members of its entire Board, in the event that the Corporate Merger is
not consummated by July 31, 1998, except to the extent that the failure of the
Corporate 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 8.01(c).
(D) No Approval. By Signet or First Union, if its
45
<PAGE>
Board of Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental Authority
required for consummation of the Corporate Merger and the other transactions
contemplated by this Plan shall have been denied by final nonappealable action
of such Governmental Authority or (ii) any stockholder approval required by
Section 7.01(a) herein is not obtained at the Signet Meeting.
(E) Failure to Recommend, Etc. At any time prior to the Signet
Meeting, by First Union if the Signet Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any respect to
the interests of First Union.
(F) Failure to Execute and Deliver Stock Option Agreement. At
any time prior to July 21, 1997, by First Union if Signet shall not have
executed and delivered the Stock Option Agreement to First Union.
8.02. Effect of Termination and Abandonment. In the event of
termination of this Plan and the abandonment of the Corporate Merger
pursuant to this Article VIII, no party to this Plan shall have any liability
or further obligation to any other party hereunder except (i) as set forth in
Section 9.01 and (ii) that termination will not relieve a breaching party from
liability for any willful breach of this Plan giving rise to such
termination.
ARTICLE IX
MISCELLANEOUS
9.01. Survival. No representations, warranties, agreements and
covenants contained in this Plan shall survive the Effective Time (other than
Section 6.12 and this Article IX which shall survive the Effective Time) or the
termination of this Plan if this Plan is terminated prior to the Effective Time
(other than Sections 6.03(b), 6.05, 8.02, and this Article IX which shall
survive such termination).
9.02. 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 between the parties
hereto executed in the same manner as this Plan, except that after the Signet
Meeting, this Plan may not be amended if it would violate the VSCA or reduce the
consideration to be received by Signet stockholders in the Corporate Merger.
9.03. Counterparts. This Plan may be executed in one or
more counterparts, each of which shall be deemed to constitute an
original.
46
<PAGE>
9.04. Governing Law. This Plan shall be governed by, and interpreted in
accordance with, the laws of the State of North Carolina applicable to contracts
made and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law or of the NCBCA or VSCA are applicable).
9.05. Expenses. Each party hereto will bear all
expenses incurred by it in connection with this Plan and the
transactions contemplated hereby, except that printing expenses
and SEC fees shall be shared equally between Signet and First
Union.
9.06. 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 Signet, to:
Signet Banking Corporation
7 North Eighth Street
Richmond, Virginia 23219
Attention: Malcolm S. McDonald
Chairman and Chief Executive Officer
Facsimile: (804) 747-2000
With a copy to:
Signet Banking Corporation
7 North Eighth Street
Richmond, Virginia 23219
Attention: Sara R. Wilson, Esq.
General Counsel
Facsimile: (804) 747-2000
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq.
Facsimile: (212) 403-2000
If to First Union, to:
First Union Corporation
47
<PAGE>
One First Union Center
Charlotte, North Carolina 28288-0013
Attention: Edward E. Crutchfield
Chairman and Chief Executive Officer
Facsimile: (704) 374-3425
With a copy to:
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Attention: Marion A. Cowell, Jr., Esq.
General Counsel
Facsimile: (704) 374-3425
9.07. Entire Understanding; No Third Party Beneficiaries. This Plan and
any Stock Option Agreement entered into represent the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
thereby and this Plan supersedes any and all other oral or written agreements
heretofore made (other than any such Stock Option Agreement). Except for Section
6.12, 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.
9.08. Interpretation; Effect. When a reference is made in this Plan to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Plan unless otherwise indicated. The headings
contained in this Plan are for reference purposes only and are not part of this
Plan. Whenever the words "include," "includes" or "including" are used in this
Plan, they shall be deemed to be followed by the words "without limitation". No
provision of this Plan shall be construed to require Signet, First Union or any
of their respective Subsidiaries, affiliates or directors to take any action
which would violate applicable law (whether statutory or common law), rule or
regulation.
48
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
SIGNET BANKING CORPORATION
By:
Name:
Title:
SIGNET BANK
By:
Name:
Title:
FIRST UNION CORPORATION
By:
Name:
Title:
FIRST UNION NATIONAL BANK
By:
Name:
Title:
49
<PAGE>
BOARD OF DIRECTORS
SIGNET BANK
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50
<PAGE>
BOARD OF DIRECTORS
FIRST UNION NATIONAL BANK
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51
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 19, 1997, between First Union
Corporation, a North Carolina corporation ("Grantee"), and Signet Banking
Corporation, a Virginia
corporation ("Issuer").
RECITALS
A. Grantee and Issuer have entered into an Agreement and
Plan of Mergers (the "Merger Agreement").
B. As an inducement to the willingness of Grantee to
continue to pursue the transactions contemplated by the Merger
Agreement, Issuer has agreed to grant Grantee the Option (as
hereinafter defined).
C. The Board of Directors of Issuer has approved the grant
of the Option and the Merger Agreement prior to the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 12,000,000 fully paid and nonassessable shares of the common stock,
par value $5.00 per share, of Issuer ("Common Stock") at a price per share equal
to the average of last reported sale prices per share of Common Stock as
reported on the NYSE Composite Transactions reporting system (as reported in The
Wall Street Journal or, if not reported therein, another authoritative source)
on July 17 and 18, 1997; provided, however, that in the event Issuer issues or
agrees to issue any shares of Common Stock (other than shares of Common Stock
issued pursuant to stock options granted pursuant to any employee benefit plan
prior to the date hereof and other than shares of Common Stock that Issuer is
obligated to issue under any stock or benefit plan thereof in effect as of the
date hereof) at a price less than such average price per share (as adjusted
pursuant to Section 5(b)), such price shall be equal to such lesser price (such
price, as adjusted if applicable, the "Option Price"); provided, further, that
in no event shall the number of shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Common Stock. The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common
A-1
<PAGE>
Stock are issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement and other than pursuant to an
event described in Section 5(a) hereof), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance, such
number together with any shares of Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section l(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer to issue shares in breach of any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Corporate Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e)
of the Merger Agreement or by Grantee or Issuer pursuant to Section 8.01(d)(ii)
of the Merger Agreement (each, a "Listed Termination"); or (iii) the passage of
eighteen (18) months (or such longer period as provided in Section 10) after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a Listed Termination. The term "Holder"
shall mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, (i) the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof and (ii) this
Agreement shall automatically terminate upon the proper termination of the
Merger Agreement by Issuer pursuant to Section 8.01(b) thereof as a result of
the material breach by Grantee of its covenants or agreements contained in the
Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) Issuer or its Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by the
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<PAGE>
Securities and Exchange Commission (the "SEC")) (the "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the shareholders of Issuer approve or accept any Acquisition
Transaction other than as contemplated by the Merger Agreement. For purposes of
this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or the Issuer
Subsidiary (other than mergers, consolidations or similar transactions involving
solely Issuer and/or one or more wholly-owned Subsidiaries of the Issuer,
provided, any such transaction is not entered into in violation of the terms of
the Merger Agreement), (y) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or the Issuer Subsidiary,
or (z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of Issuer or the Issuer Subsidiary and (b) "Subsidiary"
shall have the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any
Grantee Subsidiary shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iii) The shareholders of Issuer shall have voted
and failed to approve the Merger Agreement and the Corporate Merger at a meeting
which has been held for that purpose or any adjournment or postponement thereof,
or such meeting shall not have been held in violation of the Merger Agreement or
shall have been cancelled prior to termination of the Merger Agreement if, prior
to such meeting (or if such meeting shall not have been held or shall have been
cancelled, prior to such termination), it shall have been publicly announced
that any person (other than Grantee or any of its Subsidiaries) shall have made,
or disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board shall have withdrawn or
modified (or publicly announced its intention to withdraw or modify) in any
manner adverse in any respect to Grantee its recommendation that the
shareholders of Issuer approve the
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transactions contemplated by the Merger Agreement, or Issuer or the Issuer
Subsidiary shall have authorized, recommended, proposed (or publicly announced
its intention to authorize, recommend or propose) an agreement to engage in an
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary;
(v) Any person other than Grantee or any Grantee
Subsidiary shall have made a proposal to Issuer or its shareholders to engage in
an Acquisition Transaction and such proposal shall have been publicly announced;
(vi) Any person other than Grantee or any Grantee
Subsidiary shall have filed with the SEC a registration statement or tender
offer materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy statement
with the SEC with respect to a potential vote by its shareholders to approve the
issuance of shares to be offered in such an exchange offer);
(vii) Issuer shall have willfully breached any
covenant or obligation contained in the Merger Agreement in anticipation of
engaging in an Acquisition Transaction, and following such breach Grantee would
be entitled to terminate the Merger Agreement (whether immediately or after the
giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any
Grantee Subsidiary shall have filed an application or notice with the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") or other
federal or state bank regulatory or antitrust authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of 20%
or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in clause (i) of subsection (b) of this Section 2, except that
the percentage referred to in clause (z) of the second sentence thereof shall be
20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be
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a condition to the right of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), 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 shares it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided, that if prior notification to or
approval of the Federal Reserve Board or any other regulatory or antitrust
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval, shall promptly notify
Issuer of such filing, and shall expeditiously process the same and the period
of time that otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall (i) pay to Issuer the aggregate purchase price for
the shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer and (ii) present and surrender this Agreement to Issuer at its principal
executive offices, provided that the failure or refusal of the Issuer to
designate such a bank account or accept surrender of this Agreement shall not
preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of July 19,
1997, between the registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as amended. A
copy of such agreement is on file at the principal office of Issuer
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and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the 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, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of Counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of 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 Common Stock shall not then be actually delivered to
the 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, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee, transferee or
designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase 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 (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder
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and (y) in the event, under the Bank Holding Company Act of 1956, as amended
(the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or any
state or other federal banking law, prior approval of or notice to the Federal
Reserve Board or to any state or other federal regulatory authority is
necessary before the Option may be exercised, cooperating fully with the Holder
in preparing such applications or notices and providing such information to the
Federal Reserve Board or such state or other federal regulatory authority as
they may require) in order to permit the Holder to exercise the Option and
Issuer duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) promptly to take all action provided herein to protect the rights of
the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the 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,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any 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.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5.
(a) In the event of any change in, or distributions in respect
of, the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
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Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required A-8 <PAGE>
reduction the number of Option Shares to be included in such offering for
the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and
provided further, however, that if such reduction occurs, then Issuer shall file
a registration statement for the balance as promptly as practicable thereafter
as to which no reduction pursuant to this Section 6 shall be permitted or occur
and the Holder shall thereafter be entitled to one additional registration and
the twelve (12) month period referred to in the first sentence of this section
shall be increased to twenty-four (24) months. Each such Holder shall provide
all information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be
entitled to registration rights under this Section 6, in each case by promptly
mailing the same, postage prepaid, to the address of record of the persons
entitled to receive such copies. Notwithstanding anything to the contrary
contained herein, in no event shall the number of registrations that Issuer is
obligated to effect be increased by reason of the fact that there shall be more
than one Holder as a result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. Anything to the
contrary notwithstanding, the Option Share Repurchase Price shall not be less
than $60.0 million. The term "market/offer price" shall mean the highest of (i)
the price per share of Common Stock at which a tender or exchange offer therefor
has been made, (ii) the price per share of Common Stock to be paid by any third
party pursuant to an agreement with Issuer, (iii) the highest closing price for
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shares of Common Stock within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of this Option or the
Owner gives notice of the required repurchase of Option Shares, as the case may
be, or (iv) in the event of a sale of all or any substantial part of Issuer's
assets or deposits, the sum of the net price paid in such sale for such assets
or deposits and the current market value of the remaining net assets of Issuer
as determined by a nationally recognized investment banking firm selected by
the Holder or the Owner, as the case may be, and reasonably acceptable to
Issuer, divided by the number of shares of Common Stock of Issuer outstanding
at the time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be,
and reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
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full (and Issuer hereby undertakes to use its reasonable best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option and/or the Option Shares
whether in whole or to the extent of the prohibition, whereupon, in the latter
case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price and/or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option Repurchase Price, and/or (B) to the Owner, a certificate
for the Option Shares it is then so prohibited from repurchasing. If an Exercise
Termination Event shall have occurred prior to the date of the notice by Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Holder shall nonetheless have the right to exercise the
Option until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall
be deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of 50%
or more of the then outstanding Common Stock; or
(ii) the consummation of any Acquisition
Transaction described in Section 2(b)(i) hereof, except that the percentage
referred to in clause (z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate
with or merge into any person, other than Grantee or a Grantee
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Subsidiary, or engage in a plan of exchange with any person, other than Grantee
or a Grantee Subsidiary and Issuer shall not be the continuing or surviving
corporation of such consolidation or merger or the acquirer in such plan of
exchange, (ii) to permit any person, other than Grantee or a Grantee Subsidiary,
to merge into Issuer or be acquired by Issuer in a plan of exchange and Issuer
shall be the continuing or surviving or acquiring corporation, but, in
connection with such merger or plan of exchange, the then outstanding shares of
Common Stock shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property or the then outstanding shares of
Common Stock shall after such merger or plan of exchange represent less than 50%
of the outstanding shares and share equivalents of the merged or acquiring
company, or (iii) to sell or otherwise transfer all or a substantial part of its
or the Issuer Subsidiary's assets or deposits to any person, other than Grantee
or a Grantee Subsidiary, then, and in each such case, the agreement governing
such transaction shall make proper provision 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 the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving person of a consolidation or merger with Issuer (if
other than Issuer), (ii) the acquiring person in a plan of exchange in which
Issuer is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or the
assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the market/offer
price, as defined in Section 7.
(iv) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for 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 the person merging into Issuer or
by any company which controls or is controlled by such person, as the Holder may
elect.
(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 the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this
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Agreement (after giving effect for such purpose to the provisions of Section 9),
which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option was exercisable immediately prior to
the event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% 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 shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "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 this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price
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multiplied by the number of Substitute Shares so designated. The term
"Highest Closing Price" shall mean the highest closing price for shares
of Substitute Common Stock within the six-month period immediately preceding
the date the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective rights to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and/or certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option
Issuer to repurchase the Substitute Option and/or the Substitute Shares in
accordance with the provisions of this Section 9. As promptly as practicable
and in any event within five business days after the surrender of the
Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating thereto, the
Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Option Repurchase Price and/or the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five (5) business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that if the
Substitute Option Issuer is at any time after delivery of a notice of repurchase
pursuant to subsection (b) of this Section 9 prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
Substitute Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in
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full (and the Substitute Option Issuer shall use its reasonable best efforts
to receive all required regulatory and legal approvals as promptly as
practicable in order to accomplish such repurchase), the Substitute Option
Holder and/or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute
Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that number of
shares of the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price less
the portion thereof theretofore delivered to the Substitute Option Holder and
the denominator of which is the Substitute Option Repurchase Price, and/or (B)
to the Substitute Share Owner, a certificate for the Substitute Option Shares it
is then so prohibited from repurchasing. If an Exercise Termination Event shall
have occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Substitute Option Holder shall nevertheless have the right
to exercise the Substitute Option until the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration
of all statutory waiting periods; (ii) during the pendency of any temporary
restraining order, injunction or other legal bar to exercise of such rights; and
(iii) to the extent necessary to avoid liability under Section 16(b) of the 1934
Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the
A-15
<PAGE>
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 Issuer Board prior to the date hereof 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) Issuer has taken all necessary corporate action to
authorize and reserve and to 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 Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; provided, however,
that until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best
efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation
of the transactions contemplated by this Agreement, including,
without limitation, applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to acquire the
shares of Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior
to the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10),
A-16
<PAGE>
relinquish the Option (together with any Option Shares issued to and then owned
by Grantee) to Issuer in exchange for a cash fee equal to the Surrender Price
(as hereinafter defined); provided, however, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or
any portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $60.0 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) the net cash amounts, if any, received by Grantee pursuant
to the arms' length sale of Option Shares (or any other securities into which
such Option Shares were converted or exchanged) to any unaffiliated party,
over (B) Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option
and any Option Shares pursuant to this Section 14 by surrendering to Issuer, at
its principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice stating (i) that Grantee
elects to relinquish the Option and Option Shares, if any, in accordance with
the provisions of this Section 14 and (ii) the Surrender Price. The Surrender
Price shall be payable in immediately available funds on or before the second
business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of
a notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall
(A) use its reasonable best efforts to obtain all required regulatory and
legal approvals and to file any required notices as promptly as
practicable in order to make such payments, (B) within five days of the
submission or receipt of any documents relating to any such regulatory and legal
approvals, provide Grantee with copies of the same, and (c) keep Grantee advised
of both the status of any such request for regulatory and legal approvals, as
well as any discussions with any relevant regulatory or other third party
reasonably related to the same and (ii) Grantee may revoke such notice of
surrender by delivery of a notice of revocation to Issuer and, upon delivery of
such notice of revocation, the Exercise Termination Date shall be extended to a
date six months from the date on which the Exercise Termination Date would have
occurred if not for the provisions of this Section 14(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 14).
A-17
<PAGE>
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed 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
Federal law or of the VSCA are applicable).
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, 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.
21. Except as otherwise expressly provided herein or in the Merger
A-18
<PAGE>
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the
Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
SIGNET BANKING CORPORATION
By:
Name:
Title:
FIRST UNION CORPORATION
By:
Name:
Title:
A-19
<PAGE>
Exhibit B
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of July 18, 1997 (this "Amendment"), to
the Rights Agreement, dated as of May 23, 1989 (the "Rights Agreement"), between
SIGNET BANKING CORPORATION, a Virginia corporation ("Central"), and MELLON BANK,
N.A., as Rights Agent (the "Rights Agent").
RECITALS
A. The Company and the Rights Agent have heretofore
executed and entered into the Rights Agreement.
B. First Union Corporation, a North Carolina corporation
("Acquiror") and the Company contemplate entering into an Agreement and Plan of
Mergers (the "Merger Agreement"), pursuant to which the Company will merge with
and into Acquiror. The Board of Directors of the Company has approved the Merger
Agreement.
C. In connection with the Merger Agreement, Acquiror and the
Company contemplate entering into a stock option agreement (the "Stock Option
Agreement") pursuant to which the Company will grant to Acquiror an option to
purchase shares of the Company's common stock, par value $5.00 per share, on the
terms and subject to the conditions set forth in the Stock Option Agreement. The
Board of Directors of the Company has approved the Stock Option Agreement.
D. Pursuant to Section 27 of the Rights Agreement,
the Company and the Rights Agent may from time to time supplement
and amend the Rights Agreement.
E. The Board of Directors of the Company has determined that
an amendment to the Rights Agreement as set forth herein is necessary and
desirable in connection with the foregoing and the Company and the Rights Agent
desire to evidence such amendment in writing.
F. All acts and things necessary to make this
B-1
<PAGE>
Amendment a valid agreement, enforceable according to its terms have been done
and performed, and the execution and delivery of this Amendment by the Company
and the Rights Agent have been in all respects duly authorized by the Company
and the Rights Agent.
NOW, THEREFORE, the parties agree as follows:
1. Amendment of Section 1. Section 1 of the Rights
Agreement is supplemented to add the following definitions in the
appropriate locations:
"Merger" mean the merger or consolidation of the Company and
First Union (or one of his Affiliates) pursuant to the Merger
Agreement.
"Merger Agreement" shall mean the Agreement and Plan of
Mergers, dated as of the 18th day of July, 1997, by and between First
Union Corporation and Signet Banking Corporation, as it may be amended
from time to time."
"Stock Option Agreement" shall have the meaning set
forth in the Merger Agreement.
2. Amendment of the definition of "Acquiring Person". The
definition of "Acquiring Person" in Section 1 of the Rights Agreement is amended
by adding the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
neither First Union Corporation nor any of its Affiliates or Associates
shall be deemed to be an Acquiring Person by virtue of (i) the
execution of the Merger Agreement or the Stock Option Agreement, (ii)
the consummation of the Merger or (iii) the consummation of any other
transaction contemplated in the Merger Agreement or the Stock Option
Agreement."
3. Amendment of the definition of "Distribution Date". The
definition of "Distribution Date" in Section 1 of the Rights Agreement is
amended by adding the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the
B-2
<PAGE>
contrary, a Distribution Date shall not be deemed to have occurred
solely as the result of (i) the execution of the Merger Agreement or
the Stock Option Agreement, (ii) the consummation of the Merger, or
(iii) the consummation of any other transaction contemplated in the
Merger Agreement or the Stock Option Agreement."
4. Amendment of the definition of "Shares Acquisition". The
definition of "Shares Acquisition Date" in Section 1 of the Rights Agreement is
amended by adding the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, a
Shares Acquisition Date shall not be deemed to have occurred solely as
the result of (i) the execution of the Merger Agreement or the Stock
Option Agreement, (ii) the consummation of the Merger, or (iii) the
consummation of any other transaction contemplated in the Merger
Agreement or the Stock Option Agreement."
5. Amendment of Section 7. Section 7(a) of the Rights
Agreement is amended and restated to read in its entirety 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 earlier of (i) the
tenth business date after the Shares Acquisition Date and (ii) the
Offer 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-hudredth of a Preferred
Share as to which the Rights are exercised, at or prior to the earliest
of (i) the close of business on June 7, 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)
imediately prior to the consummation of the Merger, whereupon this
Agreement shall-terminate and the Rights shall expire.
B-3
<PAGE>
6. Amendment of Section 11(a)(ii) Section 11(a)(ii) of
the Rights Agreement is amended by adding the following sentence
at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
none of (i) the execution of the Merger Agreement and the Stock Option
Agreement, (ii) the consummation of the Merger or (iii) the
consummation of any other transaction contemplated in the Merger
Agreement or the Stock Option Agreement shall cause the Rights to be
adjusted or become exercisable in accordance with this Section
11(a)(ii)."
7. Amendment of Section 29. Section 29 of the Rights
Agreement is amended to add the following sentence at the end
thereof:
"Nothing in this Agreement shall be construed to give any
holder of Rights or any other Person any legal or equitable rights,
remedies, claims or benefits under this Agreement by virtue of the
execution of the Merger Agreement or the Stock Option Agreement or by
virtue of any of the transactions contemplated by the Merger Agreement
or the Stock Option Agreement."
8. Effectiveness. This Amendment shall be deemed
effective as of the date first above written, as if executed on
such date. Except as amended hereby, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected
hereby.
9. Miscellaneous. This Amendment shall be deemed to be a
contract made under the laws of the State of Virginia 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.
This Amendment may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. If any
provision, covenant or restriction of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, illegal or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no
B-4
<PAGE>
way be effected, impaired or invalidated.
B-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested, all as of the date and year first
above written.
Attest: SIGNET BANKING CORPORATION
By: _______________________ By:
Name: Name:
Title: Title:
Attest: MELLON BANK, N.A.
By: ______________________ By:
Name: Name:
Title: Title:
B-6
<PAGE>
Exhibit C
FORM OF SBC AFFILIATE'S LETTER
_____________, 1997
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Mergers, dated as of
the 18th day of July, 1997 (the "Plan"), by and among Signet Banking Corporation
("Signet"), Signet Bank, First Union Corporation ("FUNC"), and First Union
National Bank, Signet plans to merge with and into FUNC (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 Stock"), in exchange for shares of Signet
common stock, par value $5.00 per share ("Signet 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 hereafter from time to time be amended), or (iii) in the
opinion of counsel in form and substance satisfactory to FUNC, or under
a "no-action" letter obtained by the undersigned from the staff of the
Securities and Exchange Commission (the "SEC"), such sale, transfer or
other disposition will not violate or is otherwise exempt from
registration under the Act.
(B) The undersigned understands that 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
C-1
<PAGE>
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 certificate may
only be transferred in accordance with the terms of a letter
agreement between the registered holder hereof and FUNC, a
copy of which agreement is on file at the principal offices of
FUNC."
(D) The undersigned also understands that, unless the transfer
by the undersigned of the FUNC Stock issued to the undersigned as a
result of the Merger have been registered under the Act or a sale made
in conformity with the provisions of Rule 145(d) under the Act, FUNC
reserves the right, in its sole discretion, to place the following
legend on the certificates issued to any transferee of such FUNC Stock
from the undersigned:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired
from a person who received such shares in a transaction to
which Rule 145 under the Securities Act of 1933 applies. The
shares have been acquired by the holder not with a view to, or
for resale in connection with, any distribution thereof within
the meaning of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise transferred except in
accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in
paragraphs (C) and (D) above shall be removed by delivery of substitute
certificates without such legend if the undersigned shall have
delivered to FUNC (i) a copy of a "no action" letter from the staff of
the SEC, or an opinion of counsel in form and substance 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 Signet Stock or FUNC Stock beneficially
owned by the undersigned during the period commencing 30 days prior to
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<PAGE>
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
Signet 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 Signet 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 Signet or FUNC, to the extent the undersigned felt
necessary, with the undersigned's counsel or counsel for Signet.
Very truly yours,
------------------------
Name:
[add below the signatures
of all registered owners
of shares deemed
beneficially owned by the
affiliate]
-------------------------
Name:
-------------------------
Name:
-------------------------
Name:
C-3
<PAGE>
Acknowledged this ______ day of ______________, 1997.
FIRST UNION CORPORATION
By:___________________________
Name:
Title:
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<PAGE>
Exhibit D
FORM OF FUNC AFFILIATE'S LETTER
_____________, 1997
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Mergers, dated as of
the 18th day of July, 1997 (the "Plan"), by and among Signet Banking Corporation
("Signet"), Signet Bank, First Union Corporation ("FUNC"), and First Union
National Bank, Signet plans to merge with and into FUNC (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 of either FUNC or Signet 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.
(B) The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of FUNC and
Signet that are deemed to be beneficially owned by the undersigned
pursuant to applicable federal securities laws.
D-1
<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 ______________, 1997.
FIRST UNION CORPORATION
By:___________________________
Name:
Title:
D-2
<PAGE>
Monday
July 21, 1997
FIRST UNION AND SIGNET ANNOUNCE MERGER AGREEMENT;
COMBINED COMPANY TO BE VIRGINIA'S LEADING FINANCIAL SERVICES PROVIDER
CHARLOTTE - First Union Corporation (NYSE: FTU) and Signet Banking
Corporation (NYSE:SBK) have signed a definitive merger agreement that
would create the leading banking company in Virginia, based on combined
deposits on June 30, 1997, of approximately $20 billion.
The combined organization -- operating under the First Union name --
would become a premier financial services provider serving 2.2 million
customers in Virginia, Maryland and Washington, D.C. As of June 30,
1997, Signet had assets of $12 billion and First Union had assets of
$143 billion. First Union is the nation's sixth largest bank holding
company with offices in 12 states from Connecticut to Florida.
First Union has agreed to exchange 0.55 shares of its common stock for
each share of Signet common stock. Reflecting First Union's previously
announced two-for-one stock split payable on July 31, 1997, the
exchange ratio would be 1.10 shares. Based on First Union's closing
stock price of $97.44 on July 18, 1997 (or $48.72 if adjusted for the
pending stock split), the transaction would be valued at $3.25 billion
and represent an exchange value of $53.59 for each share of Signet
common stock.
The merger, which will be accounted for as a pooling of interests, is
expected to be consummated by Dec. 31, 1997, pending Signet shareholder
approval, regulatory approval and other customary conditions of
closing.
"This is a financially driven combination that will give First Union a
leading position in some very attractive markets," said Edward E.
Crutchfield, chairman and chief executive officer of First Union
Corporation.
"The strong presence Signet has established in Richmond, Baltimore and
Hampton Roads is a perfect fit for First Union's leading presence in
Roanoke and our strong market position in Washington, D.C.,"
Crutchfield said.
"This merger creates a regional powerhouse with a shared strategic
direction," said Malcolm S. McDonald, chairman and chief executive
officer of Signet.
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<PAGE>
FIRST UNION AND SIGNET ANNOUNCE MERGER AGREEMENT--PAGE 2
"We have similar philosophies in many business areas. Both banks are committed
to information strategies, the aggressive expansion of alternative delivery
channels, and commercial and capital markets businesses. We anticipate that the
combined organization will play a significant role in leveraging our expertise
in information strategies across a much larger market area than Signet can reach
alone," McDonald said.
First Union expects the merger will have a positive impact on earnings per share
in 1998, and an increasingly positive impact on earnings per share in 1999 and
beyond. These expectations are based on estimated savings of 50 percent of
Signet's annual expenses, or $242 million, as well as incremental revenue growth
of $37 million as First Union brings its broader array of financial products and
services to Signet customers. The conversion of Signet's operating systems is
expected to take only four months.
First Union expects to take an after-tax merger restructuring charge of $135
million in 1997. As with any earnings estimates, there are factors that could
cause the actual results to differ materially, such as changes in economic
conditions and other factors referenced in First Union's 8-K filing with the
Securities and Exchange Commission. The filing includes more detailed
information regarding the merger's estimated impact on First Union's earnings.
Following the merger, McDonald will become chief executive officer of First
Union's Virginia, Maryland and Washington, D.C., region. Benjamin P. Jenkins
III, the current president of First Union's operations in the region, will
become chief operating officer.
"Our two companies have developed a number of complementary strategies that
drive our focus on the customer, including our emphasis on middle market and
small business lending, as well as very strong consumer banking operations,"
said John R. Georgius, vice chairman of First Union Corporation. "Together, we
can leverage the investments First Union has already made in the development and
delivery of new products, and share the benefits of First Union's future
investments in its brand name."
The merger will allow First Union to deliver its retail and corporate investment
products to Signet's dynamic and affluent customer base. First Union's leading
products include the Evergreen Keystone Funds, which have become the largest
bank-affiliated mutual fund family with 70 funds and $31 billion in assets under
management. For corporate clients, First Union's Capital Markets Group offers a
broad range of financing products and services including private placements,
loan syndications, asset securitizations, risk management, and merger and
acquisition advisory services. The company is also one of a select group of
banking companies that has received federal approval to underwrite corporate
debt and equities.
--MORE--
<PAGE>
FIRST UNION AND SIGNET ANNOUNCE MERGER AGREEMENT--PAGE 3
In addition to ranking first in market share in Virginia, the combined company
will rank second in market share in the Virginia, Maryland and Washington, D.C.
region. First Union is currently the fourth-largest banking company in the
region, based on deposits of $11.7 billion on June 30, 1997. First Union had
assets of $16.8 billion in the region as of June 30, 1997, with 3,795 employees,
210 branches and 299 ATMs.
As of June 30, 1997, Signet had approximately 4,000 employees, 230 branches, and
248 ATMs. In addition to its Mid-Atlantic operations, Signet also markets
several of its key products nationally through direct mail, the Internet and
other innovative delivery channels.
In connection with the execution of the merger agreement, Signet granted First
Union an option to purchase, under certain circumstances, up to 19.9 percent of
Signet's outstanding shares of common stock.
At consummation of the merger, First Union will rescind its existing
authorization to buy back stock, which authorized the repurchase of up to 25
million shares (or 50 million shares when adjusted for the stock split). During
1997, First Union has repurchased approximately 11 million shares under the
authorization (or approximately 22 million on a post-split basis).
First Union expects to nominate two of Signet's directors to serve as directors
of First Union after the merger is consummated.
Based on June 30, 1997 data, First Union Corporation will have assets of
approximately $155 billion upon completion of the merger.
A news conference will be held today at 1:30 p.m. in the ballroom of the
Jefferson Hotel at Franklin and Adams Streets in Richmond.
Media contacts are Marianna Sheridan at First Union at 704-383-3715 (office) or
704-333-6447 (home) and Kitty Griffith at Signet at 804-771-7251 or 804-649-1090
(home).
Investor contacts are Alice Lehman at First Union at 704-374-4139 and Teresa
Jones at Signet at 804-771-7767.
--END--
FIRST UNION
SIGNET
(Map of Virginia, Maryland and Washington, D.C. appears here)
<PAGE>
CAUTIONARY STATEMENT
This presentation contains certain estimates regarding each of First Union
Corporation, Signet Banking Corporation and the combined company following the
merger, including statements relating to cost savings, enhanced revenues and
accretion to reported earnings that may be realized from the merger, and certain
restructuring charges expected to be incurred in connection with the merger.
These estimates constitute forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995), which involve significant
risks and uncertainties. Actual results may differ materially from the results
discussed in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in First Union
Corporation's Current Report of Form 8-K, dated July 21, 1997, as filed with the
Securities and Exchange Commission, to which report reference is hereby made.
(First Union Logo appears here) SIGNET
<PAGE>
THE POWER OF THE COMBINED FRANCHISE
o Establishes leading deposit share in attractive Virginia market
o Creates no. 2 deposit share in VA, MD, DC region
December 31, 1997 (pro forma; estimates)
Assets: $29 billion
Loans: $16 billion
Deposits: $20 billion
Equity: $2.6 billion
Customer Base: 2.2 million
No. 1 in Richmond (25%), Roanoke (40%)
No. 3 in D.C. MSA (13%)
No. 3 in Baltimore (12%)
(Map of Virginia, Maryland and Washington, D.C. appears here)
o Virginia, Maryland and Washington D.C. Headquarters: Richmond
(First Union Logo appears here)
SIGNET EXHIBIT 2 POWERFUL COMBINATION
<PAGE>
CONSISTENT WITH ACQUISITION STRATEGY BURDEN OF PROOF
1. Accretive within 18 months on a cumulative basis
2. Saves time
3. Supports achievement of growing and diversifying revenue production
(First Union Logo appears here)
SIGNET EXHIBIT 3 TRANSACTION OVERVIEW
<PAGE>
FINANCIAL BENEFITS:
OPPORTUNITY FOR HIGHER PERFORMANCE
Financial Performance Guidelines Signet Pro Forma(1)
- --------------------------------------------------------------------------------
ROE 18-20% 31%
EPS Growth 10-13% 13% +
ROA 1.30-1.50% 2.64%
Overhead Efficiency Ratio 53-57% 33%
Fee Income/Revenue 40% 40%(2)
Tier 1 Leverage 6.00-7.00% [check mark]
NCO/Average Loans 50-65bp [check mark]
Dividend Payout 30-35% [check mark]
Assumes Average Annual Asset Growth 4-6%
(1) Based on $2.62 1998 consensus EPS estimate, adjusted for synergies.
(2) Represents 1Q1997 (annualized) adjusted for projected revenue enhancements.
(First Union Logo appears here)
SIGNET EXHIBIT 4 FINANCIAL OBJECTIVES
<PAGE>
TERMS OF TRANSACTION
Fixed Exchange Ratio .55 First Union shares for each Signet share
Indicated Purchase Price
Per Share $53.59
Indicated Total Price $3.25 Billion
Accounting Method Pooling of interests
First Union Shares Issued (1) 33.3 million, representing 10.5% pro forma
Signet ownership
Stock Buybacks Authorization rescinded by First Union and
Signet Boards
Management Structure Malcolm S. McDonald, Chief Executive Officer
Benjamin P. Jenkins III, Chief Operating Officer
Expected Closing By Year-End 1997
Expected Conversion April 30, 1998
(1) Excludes re-issuance of up to 2.6 million shares, net, required to qualify
transaction for pooling-of-interest accounting treatment.
Based on closing prices as of July 18, 1997.
(First Union Logo appears here)
SIGNET EXHIBIT 5 TRANSACTION TERMS
<PAGE>
TRANSACTION OVERVIEW
Premium to Market 46%
Price to Book Value 3.46x
Pricing Multiples Adjusted for Synergies:(1)
1997 Estimated Earnings(2) 10.3x
1998 Estimated Earnings 9.8x
(1) First Call consensus estimates prior to June 3, 1997 redesign announcement,
adjusted to reflect full merger synergies.
(2) Excludes pre-tax and post-tax restructuring charges of $181 million and $135
million, respectively or $0.42 per share to be taken in 4th quarter of 1997,
and net of Signet pre-tax and post-tax restructuring charges of $58 million
and $38 million, respectively taken in 2nd quarter of 1997.
Note: Closing prices as of July 18, 1997.
(First Union Logo appears here)
SIGNET EXHIBIT 6 TRANSACTION OVERVIEW
<PAGE>
FAVORABLE TRANSACTION FOR FIRST UNION
First Signet Comparable
Union Transaction Acquisitions(1)
----- ----------- ---------------
Multiples Adjusted for Synergies:
Last 12 Months Earnings 14.6x 10.7x 13.4x
1997 Estimated Earnings 13.9x 10.3x 12.8x
1998 Estimated Earnings 12.5x 9.8x 11.9x
Note: Closing prices as of July 18, 1997.
(1) Represents mean multiples, adjusted for synergies on all comparable bank
transactions between $350 million and $5 billion announced since January 1,
1996.
(First Union Logo appears here)
SIGNET EXHIBIT 7 FINANCIAL BENEFITS
<PAGE>
FINANCIAL BENEFITS:
EARNINGS PER SHARE
1998 est. 1999 est.
- --------------------------------------------------------------------------
$mm EPS $mm EPS
------ ----- ------ -----
1 First Union(1) $2,222 $7.81 $2,465 $8.59
2 Signet(1) 159 2.62 176 2.88
After-tax Adjustments
3 Expense Efficiencies $108 $ .34 $155 $ .48
4 Revenue Enhancements 15 .05 19 .06
------ ----- ------ -----
5 Total Adjustments $123 $ .39 $174 $ .54
------ ----- ------ -----
6 Total Reported Earnings
on Combined Shares(2) $2,504 $7.82 $2,815 $8.72
------ ------
7 Accretion to Earnings .01 .13
8 Total Cash Earnings on Combined Shares $2,717 $8.48 $3,029 $9.38
------ ------
9 Leverage Ratio 8.21% 9.28%
(1) 1998 First Union earnings per share based on First Call Consensus estimate.
1998 Signet earnings per share based on First Call Consensus estimate prior
to 6/3/97 corporate redesign announcement. 1999 earnings per share are not
First Call estimates. Such earnings are presented for illustrative purposes
only and are based upon each company's 1998 earnings per share plus 10%.
(2) Assumes 320.4 million shares outstanding in 1998, and 322.9 million shares
outstanding in 1999.
(First Union Logo appears here)
SIGNET EXHIBIT 8 FINANCIAL BENEFITS
<PAGE>
THE POWER OF THE COMBINATION:
EXPENSE EFFICIENCIES
o Expense Efficiencies of $242 Million (pre-tax)
- Represents less than 5% of First Union pro forma combined
expense base
- Synergies fully phased in by 1999
o Represents approximately 50% of 1996 expenses
- Improves Signet's efficiency ratio to 33%
(First Union Logo appears here)
SIGNET EXHIBIT 9 FINANCIAL BENEFITS
<PAGE>
THE POWER OF THE COMBINATION:
ESTIMATED EXPENSE EFFICIENCIES
($ Millions) 1998 1999
- ----------------------------------------------------
Banking Units $81 $115
Staff and Other 45 61
Automation & Operations 43 66
---- ----
Total Pre-Tax Expense Efficiencies $169 $242
Total After-Tax Expense Efficiencies $108 $155
(First Union Logo appears here)
SIGNET EXHIBIT 10 FINANCIAL BENEFITS
<PAGE>
THE POWER OF THE COMBINATION:
ESTIMATED INCREMENTAL REVENUE ENHANCEMENTS
($ Millions) 1998 1999
- ------------------------------------------------------------
Capital Markets $13 $16
Capital Management 12 14
Other 5 7
----- ----
Total Incremental Revenue $30 $37
Incremental Revenue After Tax and Expenses $15 $19
(First Union Logo appears here)
SIGNET EXHIBIT 11 FINANCIAL BENEFITS
<PAGE>
SCOPE OF THE OPPORTUNITY:
SIGNIFICANT UPSIDE POTENTIAL EXISTS
o Expected to be similar to First Fidelity experience:
- Small business banking Outstandings up 50%
Commitments up 60%
- Commercial banking Loan production up 27%
Cash management sales up 37%
- Consumer loan production Production up 36%
Monthly branch volume up 150%
Loan yields up 70 bps
- Investment products Opened 21,000 new CAP accounts
Brokerage commissions up 56%
(First Union Logo appears here)
SIGNET EXHIBIT 12 FINANCIAL BENEFITS
<PAGE>
FIRST UNION AND SIGNET:
THE LOGIC OF THE MERGER
o Financially and strategically attractive transaction
- Accretive in 1998
- Low-risk in-market transaction
- Provides substantial increase in market share in key growth markets
o Synergies in key businesses
- Direct banking
- Middle-market/small business lending
- Capital Management and Capital Markets
- Cross-sell opportunities to approximately 1 million new customers
o Enhances platform for leveraging technological capability
- National direct marketing
- Powerful data-mining systems
- Year 2000 cost savings
(First Union Logo appears here)
SIGNET EXHIBIT 13 STRATEGIC RATIONALE
<PAGE>
A POWERFUL COMBINATION:
SYNERGIES
Signet
o Attractive market position in Richmond, Baltimore, Hampton Roads
o National Direct Marketing of Consumer, Home Equity and Second Mortgage Loans
o Powerful data-mining systems
o Dynamic, affluent customer base
o Middle-market commercial banking strength
First Union
o Attractive market position in Roanoke, Washington, D.C., Baltimore
o Nationwide network of Home Equity and Mortgage Origination Offices
o 8 million customer households
o Powerful capital management products and services
o Full range of capital markets products and services targeted at middle-market
companies
(First Union Logo appears here)
SIGNET EXHIBIT 14 POWERFUL COMBINATION
<PAGE>
MERGER EXPERTISE: SIMILAR IN-MARKET
BANK ACQUISITIONS IN VIRGINIA
Columbia All In-Market
Ameribanc First Acquisitions since 1993
- -----------------------------------------------------------------------------
Assets ($ Millions) $1,100 $2,600 $27,000
Cost Savings 50.7% 52.3% 47%
Closing Apr-95 Nov-95 NA
Fully Integrated May-95 Dec-95 NA
Months to Integration 2 1 1.9
(First Union Logo appears here)
SIGNET EXHIBIT 15 MERGER EXECUTION
<PAGE>
DECISION FRAMEWORK
o Meets Burden of Proof [check mark]
o Supports Financial Performance Guidelines [check mark]
o Complementary Customer Base [check mark]
o Geographic Fit [check mark]
o Saves Time [check mark]
o First Union's Capacity to Execute [check mark]
(First Union Logo appears here)
SIGNET EXHIBIT 16 LOGIC OF THE MERGER
<PAGE>
FIRST UNION AND SIGNET:
THE POWER OF THE COMBINED FRANCHISE
December 31, 1997 (pro forma; estimates)
Assets: $157 billion [Map of Eastern
Loans: $106 billion United States
Deposits: $101 billion appears here]
Equity: $11.4 billion
Branches: 2,200
Rankings:
6th in assets
3rd largest branch network
4th largest ATM network
No. 1 in deposits in regional footprint
Among Top 5 middle-market commercial lenders
Leadership position in media lending, mortgage
banking, commercial leasing,
direct banking, technology,
small business banking, home
equity lending
25th largest provider of mutual funds
(First Union Logo appears here)
SIGNET EXHIBIT 17 POWERFUL COMBINATION
<PAGE>
SUPPLEMENTAL INFORMATION
(First Union and Signet Logos appear here)
<PAGE>
First Union Today:
Long-Term Shareholder Value Creation
(Graph appears below with the following information:)
Dividend Growth
Current Dividend Annualized
In Dollars
-------------
1978 .29
1979 .31
1980 .33
1981 .36
1982 .40
1983 .45
1984 .49
1985 .58
1986 .65
1987 .77
1988 .86
1989 1.00
1990 1.08
1991 1.12
1992 1.28
1993 1.50
1994 1.72
1995 1.96
1996 2.20
Current 2.44*
* Reflects dividend increase announced June 17, 1997. Not restated for
two-for-one stock split to be paid July 31, 1997.
(First Union Logo appears here)
SIGNET 1
<PAGE>
REVENUE STARS
GROWTH IN FEE INCOME 1996 VS. 1995
1996 vs. 1995 1Q97 vs. 1Q96
- ---------------------------- ----------------------------
Wells Fargo 84.34% * Wells Fargo 79.66% *
Norwest 37.97% First Union 46.86%
Bankers Trust 36.60% + Republic New York 29.20%
J.P. Morgan 31.74% + PNC Bank 28.27%
First Union 25.65% Norwest 26.11%
Bank of New York 20.84% NationsBank 25.76% *
Banc One 19.99% * Bank of New York 17.28%
NationsBank 18.45% * Bankers Trust 16.19%
Fleet Financial 18.38% * Banc One 14.79%
Mellon Bank Corp 16.71% Suntrust 14.26%
First Bank System 15.66% Citicorp 11.91%
Wachovia 13.86% Fleet Financial 11.52% *
Data from SNL Securities and corporate earnings releases.
Excludes securities gains and losses and unusual or nonrecurring gains and
losses.
* Growth rate substantially affected by accounting treatment of acquisitions.
+ Significant growth in trading income.
(First Union Logo appears here)
SIGNET 2
<PAGE>
ASSET QUALITY: AVERAGE CHARGE-OFFS 1987-1996
COMPARED WITH PEERS
1. 0.54 Suntrust
2. 0.56 First Union
3. 0.56 Wachovia
4. 0.63 KeyCorp
5. 0.67 Barnett Banks
6. 0.68 Republic New York
7. 0.73 National City Corp.
8. 0.81 Nationsbank
9. 0.83 J.P. Morgan
10. 0.84 PNC Bank
11. 0.98 BankAmerica
12. 1.00 Corestates
13. 1.01 Banc One
14. 1.16 Fleet Financial
15. 1.16 Wells Fargo
16. 1.17 Bank of Boston
17. 1.00 First Bank System
18. 1.20 Norwest
19. 1.45 First Chicago
20. 1.46 Bank of New York
21. 1.46 Chase Manhattan
22. 1.49 Mellon Bank Corp
23. 1.55 Citicorp
24. 1.78 Bankers Trust
Originally reported data. 1995 data reflects 1/1/96 merger with First Fidelity.
(First Union Logo appears here)
SIGNET 3
<PAGE>
PRODUCTIVITY: FTU PERFORMANCE*
1990 1991 1992 1993 1994 1995 1996
- ---------------------------------------------------------------------------
Overhead
Efficiency 60.8% 58.6 57.6 57.8 59.0 57.0 54.1
ROA 0.79% 0.77 1.07 1.20 1.27 1.21 1.31
ROE 12.5% 11.9 15.3 17.4 17.0 16.7 18.9
* Overhead efficiency excluding OREO and intangibles amortization. Overhead
efficiency, ROA and ROE before SAIF and merger-related charges.
(First Union Logo appears here)
SIGNET 4
<PAGE>
CONCENTRATION OF COMPANIES WITH
ANNUAL SALES $20 MM - 250 MM +
Together, the VA, MD, D.C. region accounts for 29% of the total Southeast
middle-market companies.
(Bar Graph appears below with the following information:)
Virginia 15%
Maryland 11%
Washington, D.C. 3%
Florida 28%
Georgia 18%
North Carolina 15%
South Carolina 7%
Delaware 3%
Source: U.S. Statistical Abstract 1996.
(First Union Logo appears here)
SIGNET 5
<PAGE>
NEW CORPORATE FACILITIES AND EXPANSIONS
1994-1996
(Bar Graph appears below with the following information:)
South Atlantic 5,123
Middle Atlantic 1,528
East North Central 5,626
West North Central 2,787
East South Central 2,165
Pacific 1,064
West South Central 920
Mountain 889
New England 290
South Atlantic: DC, DE, FL, GA, MD, NC, SC, VA, W.VA
Middle Atlantic: NJ, NY, PA
Source: Site Selection Magazine February 1997
(First Union Logo appears here)
SIGNET 6
<PAGE>
OVER 32% OF SOUTHEAST'S GROSS STATE PRODUCT: COMBINED VA, MD, D.C. REGION
(Bar Graph appears below with the following information:)
Virginia 16
Maryland 12
Washington, D.C. 4
Florida 27
Georgia 16
North Carolina 16
South Carolina 7
Delaware 2
% of Total Southeast Gross State Product
Source: U.S. Statistical Abstract 1996.
(First Union Logo appears here)
SIGNET 7
<PAGE>
SIGNET REGION:
HIGH, FAST-GROWING INCOMES PER CAPITA
Personal Income Per Capita and Growth
(Bar Graph appears below with the following information:)
1980 1995
------ ------
U.S. Average 9,940 12,848 (+129%) 22,788
FTU "South" 8,351 12,441 (+149%) 20,792
FTU "North" 11,001 15,668 (+142%) 26,669
Signet States 11,063 16,203 (+146%) 27,266
Source: U.S. Statistical Abstract 1996.
(First Union Logo appears here)
SIGNET 8
