As filed with the Securities and Exchange Commission on May 3, 1994
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
Registration Statement
under
The Securities Act of 1933
BANCFLORIDA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 59-2265850
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
5801 Pelican Bay Boulevard
Naples, Florida 33963
(813) 597-1611
(Address, including zip code and telephone number, including area code of
registrant's principal executive offices)
Rudolf P. Guenzel
President and Chief Executive Officer
BancFlorida Financial Corporation
5801 Pelican Bay Boulevard
Naples, Florida 33963
(813) 597-1611
(Name, address, including zip code and telephone number, including area
code of agent for service)
Copies to:
Paul G. Hughes, Esq.
Cummings & Lockwood
Ten Stamford Forum, P. O. Box 120
Stamford, Connecticut 06904
Marion A. Cowell, Jr., Esq.
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As promptly as practicable after the effective date of this
Registration Statement, as determined by market and other conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Unit3 Price3 Registration Fee
<S> <C> <C> <C> <C>
Common Stock, $.01 Par 1,138,000 shares2 $27.8125 $31,650,625 $10,914.01
Value (including the right to
receive shares of Common
Stock, par value $3.33-1/3 per
share, of First Union
Corporation (with
accompanying rights to
purchase shares of such
Common Stock or Junior
Participating Class A
Preferred Stock of First Union
Corporation pursuant to its
shareholder rights plan)) 1
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to Section 8(a), may determine.
1. The Common Stock (and accompanying rights) of First Union Corporation are
issuable in respect of outstanding securities of BancFlorida
Financial Corporation pursuant to the Agreement and Plan of Mergers
dated January 17, 1994 referred to herein, and have been registered by
First Union Corporation under the Securities Act of 1933 on Form S-4
(No. 33-53103).
2. Plus such indeterminate number of additional shares of Common Stock as
may become issuable due to antidilution provisions on conversion of
outstanding shares of Adjustable Rate Cumulative Convertible Preferred
Stock, Series A, par value $0.01 per share, of BancFlorida Financial
Corporation.
3. Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
amount of the registration fee, based upon the average of the high and
low prices of a share of Common Stock of BancFlorida Financial Corporation
on the New York Stock Exchange composite reporting tape on April 26, 1994.
<PAGE>
PROSPECTUS
1,138,000 Shares
BANCFLORIDA FINANCIAL CORPORATION
5801 Pelican Bay Boulevard
Naples, Florida 33963
COMMON STOCK
Par Value $.01 Per Share
The shares of Common Stock, par value $0.01 per share ("BFL
Common Stock"), offered hereby (the "Shares") are issuable upon conversion
of 1,138,000 shares of Adjustable Rate Cumulative Convertible Preferred
Stock, Series A, par value $0.01 per share ("BFL Preferred Stock"), owned
by the stockholder named herein under "Selling Stockholder." If the
Selling Stockholder converts all or any portion of his BFL Preferred Stock
into Shares, the Selling Stockholder has advised BancFlorida Financial
Corporation ("BFL") that he proposes to offer such Shares for sale, from
time to time, prior to the effective date of the proposed merger described
herein of BFL with and into a wholly owned subsidiary of First Union
Corporation ("FUNC"), through brokers in brokerage transactions on the New
York Stock Exchange ("NYSE"), in negotiated transactions, or in a combination
of such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The closing price per share of BFL Common
Stock as shown on the NYSE composite transactions
tape on May ___, 1994 was $______.
BFL will not receive any part of the proceeds from the sale of
the Shares. The Selling Stockholder will pay all applicable stock transfer
taxes, brokerage commissions and the fees of Selling Stockholder's counsel,
but BFL will bear all other expenses in
connection with the offering made hereunder, including legal and accounting
fees connected therewith, estimated at $42,000. BFL has agreed to
indemnify the Selling Stockholder against certain liabilities, including
certain liabilities under the Securities Act of 1933, in connection with
the registration and the offering and sale of the Shares. The brokerage
commissions paid by the Selling Stockholder in connection with effecting
transactions in the Shares may be deemed to be underwriting commissions.
The Shares have been authorized for listing on the NYSE upon
official notice of issuance.
See "Investment Considerations" for a discussion of certain
factors that should be considered by prospective purchasers of the Shares
offered hereby, including the proposed merger of BFL with and into a wholly
owned subsidiary of FUNC pursuant to which each share of BFL Common Stock
would be converted into the right to receive shares of Common Stock, par
value $3.33-1/3 per share, of FUNC ("FUNC Common Stock"). This Prospectus
also relates to the right of purchasers of the Shares offered hereby to
receive FUNC Common
<PAGE>
2
Stock (and cash in lieu of fractional share interests)
in exchange for such BFL Common Stock upon consummation of such merger.
The FUNC Common Stock (including rights to purchase shares of FUNC Common
Stock or Junior Participating Class A Preferred Stock under FUNC's
shareholder rights plan) has been registered under FUNC's Registration
Statement on Form S-4 (No. 33-53103) ("FUNC's Registration Statement"), of
which the Prospectus/Proxy Statement attached to this Prospectus as
Appendix I is a part.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ___________________, 1994
<PAGE>
3
AVAILABLE INFORMATION
BFL and FUNC are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports,
proxy statements and other information may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at certain of its regional
offices, the current addresses of which are: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York, 10048; and Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60621. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. BFL Common Stock and FUNC
Common Stock are listed on the NYSE. BFL's and FUNC's reports, proxy
statements, information statements and other information concerning BFL and
FUNC may also be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by BFL with the Commission are
incorporated in this Prospectus by reference:
1. BFL's Annual Report on Form 10-K for the year ended
September 30, 1993;
2. BFL's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1993; and
3. BFL's Current Reports on Form 8-K, dated January 17, 1994
and April 22, 1994.
All documents filed by BFL with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of the offering contemplated
hereby shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of such documents.
FUNC's Registration Statement and FUNC's Annual Report on Form 10-K for
the year ended December 31, 1993 have been filed or incorporated by
reference as exhibits to BFL's Registration Statement, of which
this Prospectus is a part ("BFL's Registration Statement").
The Prospectus/Proxy Statement attached as Appendix I to this
Prospectus and constituting a part of both FUNC's Registration Statement
and BFL's Registration Statement incorporates by reference
(i) FUNC's Annual Report on Form 10-K for the year ended December 31, 1993
and (ii) all documents filed by FUNC with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
such Prospectus/Proxy Statement and prior to the earlier of the effective
date of the Corporate Merger (as hereinafter defined) or the termination of
the Merger Agreement (as hereinafter defined). BFL will file Current
Reports on Form 8-K, including as exhibits thereto the FUNC documents
referred to in (ii) when
<PAGE>
4
FUNC files such documents with the Commission,
and, upon such filings, such FUNC documents shall be deemed to be
incorporated herein by reference.
BFL will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person,
a copy of any or all of the documents incorporated by reference herein,
other than exhibits to such documents. Any written requests should be
addressed to: BancFlorida Financial Corporation, Investor Relations, 5801
Pelican Bay Boulevard, Naples, Florida 33963. BFL's telephone number is
(813) 597-1611.
<PAGE>
5
TABLE OF CONTENTS
Page
Available Information 3
Incorporation of Certain Documents by
Reference 3
Prospectus Summary 6
BFL 6
Investment Considerations 7
Description of BFL Capital Stock 12
Description of FUNC Capital Stock 16
Selling Stockholder 17
Plan of Distribution 17
Legal Opinion 18
Experts 18
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY BFL,
BY THE SELLING STOCKHOLDER OR BY ANY OTHER PERSON. NEITHER THE DELIVERY OF
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF BFL
OR FUNC SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES COVERED BY
THIS PROSPECTUS BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
<PAGE>
6
PROSPECTUS SUMMARY
The following material is qualified in its entirety by the
information appearing elsewhere in this Prospectus and in documents
incorporated by reference in this Prospectus.
The Offering
BFL BancFlorida Financial
Corporation
Securities offered 1,138,000 shares of Common
Stock ($.01 par value)
Use of proceeds BFL will receive none of the
proceeds of this offering
BFL Common Stock outstanding at
May 2, 1994 3,718,651 shares
BFL Common Stock to be
outstanding, assuming sale of all of the
Shares offered hereby* 4,856,651 shares
NYSE symbol BFL
* Based on BFL Common Stock outstanding at May 2, 1994.
BFL
BFL was organized in March 1983, for the purpose of becoming the
savings and loan holding company of BancFlorida, a Federal Savings Bank
("BFL Bank").
BFL is currently conducting business as a unitary, non-
diversified savings and loan holding company. BFL's principal asset is all
of the capital stock of BFL Bank. The primary business of BFL Bank is
providing commercial and retail banking services in southwest and south
central Florida.
The principal executive offices of BFL are located at 5801
Pelican Bay Boulevard, Naples, Florida 33963. The telephone number of
BFL's executive offices is (813) 597-1611.
<PAGE>
7
INVESTMENT CONSIDERATIONS
Merger Agreement with FUNC
On January 17, 1994, BFL and BFL Bank entered into an Agreement
and Plan of Mergers (the "Merger Agreement") with FUNC, First Union
Corporation of Florida ("FUNC-FL") and First Union National Bank of Florida
("FUNB-FL") pursuant to which BFL would merge with and into FUNC-FL (the
"Corporate Merger") and BFL Bank would merge with and into FUNB-FL (the
"Bank Merger," and together with the Corporate Merger, the "Mergers").
FUNC-FL is a wholly owned subsidiary of FUNC which at March 31, 1994 was
the ninth largest bank holding company in the nation based on total assets
of $72.2 billion.
Under the terms of the Merger Agreement, each outstanding share
of BFL Common Stock (excluding certain shares held by BFL or FUNC) would be
converted into the right to receive a number of shares
of FUNC Common Stock equal to (i) 0.669 shares if the average closing price
of FUNC Common Stock on the NYSE for the ten trading days immediately
prior to the effective date of the Corporate Merger is greater than $41.874
and less than $44.876, (ii) the result obtained by dividing $28.00 by such
price if such price is $41.874 or less, or (iii) the result obtained by
dividing $30.00 by such price if such price is $44.876 or greater (the
"Exchange Ratio"), and each outstanding share of BFL Preferred Stock would
be converted into the right to receive a number of shares of FUNC Common
Stock equal to the product of (x) the Exchange Ratio, and (y) the number of
shares of BFL Common Stock into which a share of BFL Preferred Stock is
convertible as of the effective date of the Corporate Merger, all on and
subject to the terms and conditions contained in the Merger Agreement.
The description of the Mergers and their terms and conditions are
qualified in their entirety by reference to the Prospectus/Proxy Statement
dated May 6, 1994, attached as Appendix I hereto (the "Prospectus/Proxy
Statement"), furnished to the holders of the BFL Common Stock and the
Selling Stockholder as the holder of the BFL Preferred Stock in connection
with the solicitation of proxies by the Board of Directors of BFL for use
at the special meeting of stockholders of BFL to be held on June 10, 1994
(the "Special Meeting") and at any adjournment or adjournments thereof. A
copy of the Merger Agreement is attached to the Prospectus/Proxy Statement
as Annex A. BFL and FUNC have also entered into a Stock Option Agreement
dated as of January 17, 1994 (the "Stock Option Agreement"), pursuant to
which BFL has granted an option (the "Option") to FUNC to purchase in
certain specified circumstances up to 719,000 shares of BFL Common Stock at
an exercise price of $25.00 per share, subject to certain terms and
conditions. The Stock Option Agreement and the Option are described more
fully in the Prospectus/Proxy Statement, and a copy of the Stock Option
Agreement is attached to the Merger Agreement as Exhibit A.
The record date for the determination of stockholders of BFL
entitled to notice of and to vote at the Special Meeting for the purpose of
considering and voting on a proposal to approve the Merger Agreement is May
2, 1994. Since this date has passed, prospective purchasers of the Shares
offered hereby will not be entitled to vote at the Special Meeting. In
addition, such
<PAGE>
8
purchasers will not have appraisal rights under applicable
provisions of the Delaware General Corporation Law with respect to the
Corporate Merger.
Approval of the Merger Agreement requires the affirmative vote of
a majority of the votes entitled to be cast at the Special Meeting by the
holders of BFL Common Stock and BFL Preferred Stock, voting together as a
class (together, the "Combined Shares"). In addition, the sole holder of
BFL Preferred Stock (who is the Selling Stockholder) has a separate class
vote on approval of the Merger Agreement. In connection with the execution
of the Merger Agreement, the Selling Stockholder, whose BFL Preferred Stock
represents 23.4 percent of the Combined Shares, agreed to vote such shares
in favor of approval of the Merger Agreement pursuant to an Agreement dated
January 17, 1994 by and between the Selling Stockholder, BFL and FUNC (the
"Selling Stockholder Agreement"). Accordingly, assuming the directors and
executive officers of BFL vote their shares of Common Stock of BFL (4.1
percent of the Combined Shares) in favor of approval of the Merger
Agreement, approval of the Merger Agreement will require the affirmative
vote of the holders of an additional 29.3 percent of the outstanding shares
of BFL Common Stock entitled to be voted at the Special Meeting in order
for the Merger Agreement to be approved by the requisite vote of the
holders of the Combined Shares.
Purchasers of the Shares should also be aware that consummation
of the Corporate Merger is subject to the satisfaction of a number of
conditions, including, in addition to approval of the Merger Agreement by
the stockholders of BFL, the receipt of various regulatory approvals,
receipt of an opinion of FUNC's special counsel to the effect that the
Corporate Merger constitutes a tax-free reorganization under Section 368 of
the Internal Revenue Code of 1986, the accuracy of representations and
warranties, the receipt of opinions of counsel, and receipt by FUNC of a
letter from BFL's independent certified public accountants with respect to
BFL's financial position and results of operations. There can be no
assurances that regulatory approvals will be received or that the other
conditions to consummation of the Mergers set forth in the Merger Agreement
will be satisfied or waived.
The Merger Agreement provides that, whether before or after the
Special Meeting and notwithstanding approval of the Merger Agreement by the
stockholders of BFL, the Merger Agreement may be terminated and the Mergers
abandoned at any time prior to the effective date by mutual consent of the
Boards of Directors of BFL and FUNC, or by either Board if the stockholders
of BFL fail to approve the Merger Agreement, or in the event of a material
breach of the Merger Agreement by the other party which is not cured within
30 days of receiving written notice thereof, or if the Corporate Merger is
not consummated on or before December 31, 1994.
Business Pending Consummation
BFL has agreed in the Merger Agreement not to take certain
actions relating to the operation of BFL without the prior approval of
FUNC, except as otherwise permitted in the Merger Agreement. These actions
include, among others: (i) paying any dividends other than dividends on
BFL Preferred Stock, or acquiring any shares of capital stock or issuing
any additional shares of capital stock (other than upon the exercise of
outstanding options or the conversion of outstanding convertible securities)
or combining, redeeming, reclassifying, purchasing or otherwise acquiring
<PAGE>
9
any shares of its capital stock; (ii) increasing the rate of
compensation or paying any bonuses to any directors, officers or employees,
or entering into or modifying any employment agreements or employee benefit
plans; (iii) disposing of any material portion of its assets or acquiring
any substantial portion of the business or property of others;
(iv) changing its lending, investment, liability management or other
material banking policies; (v) settling any litigation at a cost in excess
of $2 million; or (vi) taking any other action not in the ordinary course
of business.
BFL has also agreed that, prior to the Mergers, it will use its
best efforts to modify its loan, litigation and other reserve and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be consistent with those policies and
practices applied by FUNC.
Market Prices
Since the public announcement of the Merger Agreement, the market
price of the BFL Common Stock has reflected, among other things, the
Exchange Ratio and the market prices of FUNC Common Stock. For information
concerning historical market prices of the BFL and FUNC Common Stocks and
the equivalent pro forma market price per share of BFL Common Stock giving
effect to the Corporate Merger, see "The Mergers - Market Prices" in the
Prospectus/Proxy Statement attached as Appendix I hereto.
While the effect of termination of the Merger Agreement on the
market price of the BFL Common Stock cannot be predicted, it should be
assumed that at least the near term effect would be a decrease in the
market price for BFL Common Stock.
BFL Bank Written Agreement
BFL Bank has entered into a Written Agreement, dated April 19,
1991 (the "BFL Bank Written Agreement"), with the Office of Thrift
Supervision (the "OTS") in which BFL Bank undertook to take certain steps
to reduce the level of its classified assets, including limiting its
lending activities until such time as its level of classified assets, as
determined by the OTS, is reduced below 50 percent of its total capital.
The terms of the BFL Bank Written Agreement are anticipated to have a
continuing adverse effect on the operations of BFL Bank by precluding BFL
Bank from engaging in certain types of business which have historically
been more profitable.
Core Operations
For the fiscal year ended September 30, 1993, BFL reported fully
diluted earnings per share of $3.16. Of such amount, $0.62 resulted from
BFL's core operations.
Results of Operations - Period Ended March 31, 1994
BFL. BFL reported net income of $929,000, or earnings per share
of $0.16, for the second quarter of fiscal 1994 as compared to net income
for the same period in fiscal 1993 of $2.7 million, or primary earnings per
share of $0.66 ($0.51 fully diluted). For the six months ended
<PAGE>
10
March 31, 1994, BFL's net income was $2.4 million, or earnings per share
of $0.48. This compared to net income for the same period in fiscal 1993 of
$10.3 million, or primary earnings per share of $2.66 ($1.81 fully diluted),
which included income of $7.3 million representing the cumulative effect of
a change in the method of accounting for income taxes pursuant to BFL's
adoption of Statement of Financial Accounting Standards No. 109. Excluding
this adjustment, net income for the first six months of fiscal 1993 would
have been $3.0 million, or primary earnings per share of $0.68 ($0.58 fully
diluted).
Earnings for the quarter ended March 31, 1994 included losses
from loans and securities transactions of $902,000 compared to gains of
$1.9 million for the same quarter in fiscal 1993. For the six months ended
March 31, 1994, losses from loans and securities transactions totaled
$72,000 compared to gains of $1.8 million for the same period in fiscal
1993.
Provisions for losses relating to loans and investments in real
estate for the quarter ended March 31, 1994 totaled $82,000 compared to
$2.2 million for the same period in fiscal 1993. For the six months ended
March 31, 1994 and 1993, such amounts were $445,000 and $6.9 million,
respectively. The decrease in provisions in fiscal 1994 is attributable to
a reduction in the level of classified assets. At March 31, 1994,
classified assets totaled $112.9 million, or 7.3 percent of total assets,
compared to $165.9 million, or 10.9 percent of total assets, at March 31,
1993. This represents a net decrease of $53.0 million between March 31,
1993 and March 31, 1994. Total non-performing assets declined by $28.0
million during the same one-year time period to $91.4 million.
At March 31, 1994, BFL Bank's risk-based, Tier 1 risk-based, and
core capital ratios were 11.13 percent, 9.71 percent and 5.56 percent,
respectively. The Federal Deposit Insurance Corporation designated BFL
Bank a "well-capitalized" institution in December 1993.
BFL had total assets of $1.5 billion and a book value per share
of BFL Common Stock of $16.35 at March 31, 1994. BFL had total assets of
$1.5 billion and a book value per share of BFL Common Stock of $15.47 at
March 31, 1993.
FUNC. For information concerning FUNC's results of operations
for the three months ended March 31, 1994 and for certain other financial
data regarding FUNC during that period and at March 31, 1994, see "Recent
Developments" in the Prospectus/Proxy Statement attached as Appendix I
hereto.
Pro Forma Combined Selected Financial Data
For certain pro forma combined selected financial data giving
effect to the consummation of the Mergers as of and for the year ended
December 31, 1993, see "Summary - FUNC and BFL Pro Forma Combined Selected
Financial Data" in the Prospectus/Proxy Statement attached as Appendix I
hereto.
Dividends
BFL has not paid dividends on the BFL Common Stock since 1990,
and the Merger Agreement prohibits BFL Common Stock dividends prior to the
earlier of the effective date of the Mergers or termination of the Merger
Agreement. In the event of termination of the Merger
<PAGE>
11
Agreement, resumption of cash dividends on the BFL Common Stock will
depend on evaluation of a variety of factors by the Board of Directors
of BFL, including future results of operations of BFL and the capital
needs of BFL and BFL Bank. There can be no assurance when BFL may resume
payment of cash dividends on BFL Common Stock in the event of termination
of the Merger Agreement.
For information concerning historical dividends on FUNC Common
Stock and the equivalent pro forma dividend per share of BFL Common Stock
giving effect to the Corporate Merger, see "The Mergers - Dividends" in the
Prospectus/Proxy Statement attached as Appendix I hereto.
Resale of FUNC Common Stock
The FUNC Common Stock issuable under the Merger Agreement in
exchange for outstanding BFL Common Stock has been registered under the
Securities Act of 1933, thereby allowing such FUNC shares to be traded
freely and without restriction by those holders of BFL Common Stock
(including purchasers of the Shares offered hereby) who receive such shares
following consummation of the Mergers and who are not deemed to be
"affiliates" (as defined under the Securities Act of 1933) of either BFL or
FUNC.
<PAGE>
12
DESCRIPTION OF BFL CAPITAL STOCK
The descriptive information supplied herein outlines certain
provisions of the Certificate of Incorporation, as amended, and by-laws of
BFL and the Delaware General Corporation Law (the "DGCL"). The information
does not purport to be complete and is qualified in all respects by
reference to the provisions of BFL's Certificate of Incorporation and by-
laws and the DGCL.
Authorized Capital
The authorized capital stock of BFL consists of 16,000,000 shares
of BFL Common Stock and 2,000,000 shares of serial preferred stock, par
value $0.01 (the "BFL Serial Preferred Stock"). Shares of stock may be
issued by the Board of Directors of BFL from time to time to such persons
and for such consideration not less than the stated value as may be
approved by the Board of Directors, without the approval of the
stockholders except as may otherwise be required under the rules of the
NYSE. In connection with any issuance of BFL Serial Preferred Stock, the
series, designations, voting powers, if any, relative, participating,
optional or other special rights of the shares of each series and the
qualifications, limitations and restrictions shall be as determined by the
Board of Directors of BFL. Currently, the only outstanding series of BFL
Serial Preferred Stock is the BFL Preferred Stock. As of May 2, 1994,
there were 3,718,651 shares of BFL Common Stock and 1,138,000 shares of BFL
Preferred Stock issued and outstanding. If all of the shares of BFL Common
Stock offered hereby are sold, there will be 4,856,651 shares of BFL Common
Stock and no shares of BFL Preferred Stock outstanding. In addition, the
Board of Directors has established a series of BFL Serial Preferred Stock
designated "Adjustable Rate Cumulative Preferred Stock, Series B" (the "BFL
Series B Stock"). The 284,495 shares of BFL Series B Stock originally
issued have been converted into BFL Preferred Stock, and no shares of BFL
Series B Stock remain outstanding.
BFL Common Stock
Subject to the prior rights of the holders of any BFL Serial
Preferred Stock then outstanding, holders of BFL Common Stock are entitled
to receive such dividends as may be declared by the Board of Directors of
BFL out of funds legally available therefor and, in the event of
liquidation or dissolution, to receive the net assets of BFL remaining
after payment of all liabilities and after payment to holders of all shares
of BFL Serial Preferred Stock of the full preferential amounts to which
such holders are entitled, in proportion to their respective holdings.
Subject to the rights of the holders of any series of BFL Serial
Preferred Stock then outstanding, all voting rights are vested in the
holders of the shares of BFL Common Stock, each share being entitled to one
vote on all matters requiring stockholder action and in the election of
directors. Holders of BFL Common Stock have no preemptive, subscription or
conversion rights. All outstanding shares of BFL Common Stock are, and
each share of BFL Common Stock offered hereby will upon issuance upon
conversion of BFL Preferred Stock into BFL Common Stock be, fully paid and
nonassessable.
<PAGE>
13
BFL Serial Preferred Stock
Under the Certificate of Incorporation of BFL, the Board of
Directors of BFL is authorized, by resolution from time to time adopted, to
provide for the issuance of BFL Serial Preferred Stock in series and to fix
and state the voting powers, full or limited, or no voting power, and such
designations, preferences and relative, participating, optional or other
special rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. Each share of each series of BFL
Serial Preferred Stock will have the same relative rights as, and be
identical in all respects with, all the other shares of the same series.
Pursuant to this authority, the Board of Directors of BFL has
established the BFL Preferred Stock and the BFL Series B Stock.
BFL Preferred Stock
The following summary of the BFL Preferred Stock is qualified in
its entirety by reference to the Certificate of Designation, Preferences
and Other Rights of the BFL Preferred Stock, a copy of which is an exhibit
to the Registration Statement on Form S-3 of BFL of which this Prospectus
is a part.
The holders of the BFL Preferred Stock are entitled to vote as a
class with the holders of the BFL Common Stock on all matters submitted to
the stockholders of BFL, with each share of BFL Preferred Stock entitled to
one vote. In addition, in certain specific circumstances, the holders of
the BFL Preferred Stock have the right to vote separately as a class.
Shares of BFL Preferred Stock rank superior to shares of BFL
Common Stock in respect of the right to receive dividends and the right to
receive payments out of the assets of BFL upon any liquidation, dissolution
or winding up of BFL. The holders of the BFL Preferred Stock are entitled
to receive cumulative quarterly dividends based on the liquidation
preference of $13.25 multiplied by an annual rate equal to the Prime Rate
(as defined) less 1.125 percent (but in no event less than 7.875 percent or
more than 9.875 percent). Upon liquidation, dissolution or winding up of
BFL, the holders of the BFL Preferred Stock are entitled to receive $13.25
(plus any dividend arrearages) per share before any amounts are distributed
to the holders of the BFL Common Stock. In addition, holders of the BFL
Preferred Stock have the right to convert each share of BFL Preferred Stock
into one share of BFL Common Stock. The conversion ratio for the BFL
Preferred Stock is subject to adjustment under certain circumstances. The
BFL Preferred Stock may be redeemed by BFL at any time at a redemption
price of $13.25 (plus any dividend arrearages).
The Certificate of Incorporation of BFL provides that no shares
of BFL Preferred Stock may be reissued after the redemption or other
acquisition thereof.
Holders of the BFL Preferred Stock have no preemptive rights with
respect to any shares of stock or other securities of BFL which may be
issued.
<PAGE>
14
BFL Series B Stock
The following summary of the BFL Series B Stock is qualified in
its entirety by reference to the Certificate of Designation, Preferences
and Other Rights of the BFL Series B Stock, a copy of which is incorporated
by reference as an exhibit to the Registration Statement.
The 284,495 shares of BFL Series B Stock originally issued was
automatically converted into an equal number of shares of BFL Preferred
Stock upon approval by the stockholders of BFL of the transaction pursuant
to which the BFL Preferred Stock was sold. No shares of BFL Series B Stock
are currently outstanding.
The voting, dividend and liquidation rights of the holders of the
BFL Series B Stock are the same as the voting, dividend and liquidation
rights of the holders of the BFL Preferred Stock. The BFL Series B Stock
is not convertible into any other class of capital stock of BFL nor is it
redeemable by BFL.
Other Provisions
The Certificate of Incorporation and by-laws of BFL contain a
number of provisions which may be deemed to have the effect of discouraging
or delaying attempts to gain control of BFL, including provisions: (i)
classifying the Board of Directors into three classes with each class to
serve for three years with one class being elected annually; (ii)
authorizing the Board of Directors to fix the size of the Board of
Directors between six and 18 directors; (iii) authorizing directors to fill
vacancies on the Board of Directors that occur between annual meetings;
(iv) providing that directors may be removed only for cause and only by the
affirmative vote of 75 percent of the total votes eligible to be cast;
(v) authorizing only the Board of Directors, the Chairman of the Board or
the President to call a special meeting of stockholders; and (vi) requiring
a 75 percent affirmative vote of the holders of the total votes eligible to
be cast for amendment of these provisions by the stockholders of BFL.
The Certificate of Incorporation of BFL also provides that a
"business combination" (including certain mergers, consolidations, sales of
assets and issuance of securities, among others) with an "interested
stockholder" (defined generally to be the beneficial owner of ten percent
or more of BFL's voting stock) requires the affirmative vote of the holders
of at least 75 percent of the voting power of the then outstanding shares
of capital stock of BFL entitled to vote generally in the election of
directors voting together as a single class. This requirement is not
applicable to a business combination if the business combination has been
approved by a majority of "continuing directors" (generally defined to be a
director not affiliated with the interested stockholder) or certain price
and procedural requirements are met with respect to the business
combination. The Mergers are not subject to the foregoing voting
requirements.
Pursuant to the provisions of the Certificate of Incorporation of
BFL, any amendment to the Certificate of Incorporation must be approved by
two-thirds of the members of the Board of Directors then in office at a
meeting called expressly for such purpose and thereafter approved by the
stockholders by a majority of the total votes eligible to be cast at a
meeting called
<PAGE>
15
expressly for such purpose; provided that certain amendments
to the Certificate of Incorporation require the affirmative vote of the
holders of at least 75 percent of the total votes eligible to be cast at
such meeting. An amendment to the Certificate of Incorporation of BFL
would, under certain circumstances, require the affirmative vote of the
holders of at least 66-2/3 percent of the BFL Preferred Stock. In
addition, under the DGCL, holders of the outstanding shares of a class or
series are entitled to vote as a class if an amendment to the Certificate
of Incorporation would adversely affect the rights of the shares of such
class or series. Any amendment to the by-laws of BFL may be adopted by the
holders of at least 75 percent of the outstanding capital stock entitled to
vote thereon or by at least two-thirds of the entire Board of Directors
then in office.
The by-laws of BFL contain provisions setting forth specific
conditions under which: (i) business may be transacted at an annual meeting
of stockholders; and (ii) persons may be nominated for election as
directors of BFL at an annual meeting of stockholders.
For business to be properly brought before an annual meeting of
BFL by a stockholder, the stockholder must have given timely notice of the
business to be brought before the meeting in writing to the secretary of
BFL. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of BFL not less than 30
days nor more than 90 days prior to the meeting; provided, however, that in
the event that less than 45 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business of the fifteenth day following the day on which notice of the date
of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the secretary must set forth as to each matter the
stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting;
(ii) the name and address, as they appear on BFL's books, of the
stockholder proposing such business; (iii) the class and number of shares
of BFL which are beneficially owned by the stockholder; and (iv) any
material interest of the stockholder in such business. The chairman of the
annual meeting will, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in
accordance with the provisions of the by-laws of BFL, and any such business
shall not be transacted.
Only persons who are nominated in accordance with the procedures
set forth in the by-laws of BFL shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors
of BFL may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of BFL entitled to vote for
the election of directors at the meeting who complies with the notice
procedures set forth in the by-laws of BFL. Any nominations for director,
other than those made by or at the direction of the Board of Directors,
must be made pursuant to timely notice in writing to the secretary of BFL.
To be timely, a stockholder's notice shall be delivered to or mailed and
received at the principal executive offices of BFL not less than 30 days
nor more than 90 days prior to the meeting; provided, however, that in the
event that less than 45 days' notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by a stockholder to
be timely must be so received not later than the close of business on the
fifteenth day following the day on which notice of the date of the meeting
was mailed or such public disclosure was made. The stockholder's notice
must contain information
<PAGE>
16
about the person to be nominated and certain
information about the person submitting the notice. The chairman of the
meeting will, if the facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with the procedures prescribed
by the by-laws of BFL and the defective nomination shall be disregarded.
Section 203 of the DGCL would prohibit a "business combination"
(defined generally to include mergers, certain sales and leases of assets,
issuances of securities and similar transactions) by BFL with an
"interested stockholder" (defined generally to be the beneficial owner of
15 percent or more of BFL's voting stock) within three years after the
person or entity becomes an interested stockholder, unless: (i) prior to
the person or entity becoming an interested stockholder, the business
combination or the transaction pursuant to which such person or entity
became an interested stockholder shall have been approved by the Board of
Directors of BFL; (ii) upon the consummation of the transaction in which
the person or entity became an interested stockholder, the interested
stockholder holds at least 85 percent of the voting stock of BFL (excluding
shares held by persons who are both officers and directors of BFL and
shares held by certain employee benefit plans) as of the commencement of
the transaction; or (iii) the business combination is approved by the Board
of Directors of BFL and authorized at a meeting of stockholders by the
holders of at least two-thirds of the outstanding voting stock of BFL,
excluding shares held by the interested stockholder. The Mergers are not
subject to the limitations set forth in Section 203 of the DGCL.
For information regarding certain agreements between BFL and the
Selling Stockholder imposing a limitation on the Selling Stockholder's
acquisition of 25 percent or more of BFL's voting stock and on
the size and make-up of BFL's Board of Directors, see "Selling Stockholder"
below.
The Certificate of Incorporation of BFL provides that no director
of BFL shall be personally liable to BFL or its stockholders for monetary
damages for any breach of fiduciary duty as a director, except for
liability (i) for breaches of the director's duty of loyalty to BFL or its
stockholders; (ii) for acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law; (iii) for negligent
or unlawful payments of dividends or purchases of BFL capital stock; or
(iv) for transactions from which a director derived an improper personal
benefit.
DESCRIPTION OF FUNC CAPITAL STOCK
The capital stock of FUNC, including FUNC Common Stock, and
certain differences between BFL Common Stock and FUNC Common Stock, are
described in the Prospectus/Proxy Statement attached as Appendix I hereto
under the captions "Description of FUNC Capital Stock" and "Certain
Differences in the Rights of BFL and FUNC Stockholders," respectively, to
which reference is hereby made.
<PAGE>
17
SELLING STOCKHOLDER
All of the Shares offered hereby are beneficially owned by
William R. Berkley (the "Selling Stockholder"), a private investor. The
Selling Stockholder has the right to acquire the Shares upon the conversion
of up to 1,138,000 shares of BFL Preferred Stock if he elects to convert.
The 1,138,000 shares of BFL Preferred Stock owned by the Selling
Stockholder constitute all of BFL's Preferred Stock, representing 23.4
percent of the combined voting power of BFL's capital stock. The BFL
Preferred Stock is presently convertible into BFL Common Stock on a one-
for-one basis (subject to antidilution provisions), and assuming conversion
of all shares of BFL Preferred Stock, the Selling Stockholder will acquire
1,138,000 shares of BFL Common Stock, representing 23.4 percent of the
outstanding BFL Common Stock. Assuming full conversion of his BFL
Preferred Stock and the sale of all of the Shares offered hereby, the
Selling Stockholder will own no shares of BFL Preferred Stock or BFL Common
Stock following such conversion and sale. The Selling Stockholder's right
to convert will terminate on the effective date of the Corporate Merger,
and if on such effective date the Selling Stockholder owns BFL Preferred
Stock and/or BFL Common Stock, such shares will be converted on such
effective date pursuant to the Merger Agreement into the right to receive a
number of shares of FUNC Common Stock on the basis summarized above under
"Investment Considerations - Merger Agreement with FUNC."
Mr. Berkley served as a director of BFL from January, 1989 to
July, 1990. Pursuant to an Investor Agreement between BFL and Mr. Berkley,
BFL is required to nominate a representative of Mr. Berkley to the Boards
of Directors of BFL and BFL Bank. Dale A. Myer currently serves as Mr.
Berkley's representative on such boards. In the event that Mr. Berkley
ceases to own beneficially more than five percent of BFL's outstanding
voting stock, Mr. Berkley has agreed, if requested by a majority of the
Board of Directors of BFL or BFL Bank (excluding his representative), to
cause his representative on such boards to resign promptly. In the
Investor Agreement, Mr. Berkley also agreed, among other things, not to
acquire, directly or indirectly or alone or in combination with others, 25
percent or more of BFL's outstanding voting stock (subject to certain
exceptions), and BFL agreed not to expand the size of its Board of
Directors beyond six members unless either Mr. Berkley approved or a second
representative of Mr. Berkley was concurrently added to the Board.
The Registration Statement of which this Prospectus is a part has
been filed by BFL at the request of the Selling Stockholder pursuant to his
rights under a Registration Agreement by and between BFL and Interlaken
Financial Group, Inc. dated as of January 13, 1989, which was thereafter
assigned to the Selling Stockholder (the "Registration Agreement"), and the
Selling Stockholder Agreement.
PLAN OF DISTRIBUTION
The Selling Stockholder has advised BFL that, if he converts all
or any portion of his BFL Preferred Stock into Shares, he proposes to offer
such Shares for sale, from time to time,
<PAGE>
18
prior to the effective date of the Corporate Merger, through brokers
in brokerage transactions on the NYSE, in negotiated transactions or in a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. BFL is not aware of any
arrangements or contracts that the Selling Stockholder has entered
into to effect any such transactions in the Shares, nor is BFL aware of
which brokerage firms the Selling Stockholder may select to effect such
brokerage transactions.
BFL will not receive any part of the proceeds from the sale of
the Shares. The Selling Stockholder will pay all applicable stock transfer
taxes, brokerage commissions and the fees of Selling Stockholder's counsel,
and BFL will bear all other expenses in
connection with the offering and sale of the Shares, including filing fees,
legal and accounting fees and expenses, printing costs, and other expenses
arising out of the preparation and filing of the Registration Statement and
the Prospectus. Brokerage commissions paid by the Selling Stockholder in
connection with effecting transactions in the Shares may be deemed to be
underwriting commissions. BFL has agreed to indemnify the Selling
Stockholder against certain liabilities, including certain liabilities
under the Securities Act of 1933, in connection with the registration and
offering and sale of the Shares.
LEGAL OPINION
The validity of the authorization and issuance of the Shares
offered hereby has been passed upon for BFL by Cummings & Lockwood, Ten
Stamford Forum, Stamford, Connecticut 06904. Members of that firm
beneficially own an aggregate of 17,000 shares of BFL Common Stock.
EXPERTS
The consolidated balance sheets of BFL as of September 30, 1993
and 1992, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended September 30, 1993, included in BFL's 1993 Annual Report to
Stockholders which is incorporated by reference in BFL's 1993 Annual Report
on Form 10-K, have been incorporated herein in reliance on the report of
KPMG Peat Marwick, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
<PAGE>
APPENDIX I
This Prospectus/Proxy Statement, attached to this Prospectus as
Appendix I and forming a part of BFL's Registration Statement, relates to
the FUNC Common Stock (including rights to purchase shares of FUNC Common
Stock or Junior Participating Class A Preferred Stock under FUNC's
shareholder rights plan) issuable upon consummation of the Corporate
Merger. Such FUNC securities have been registered under FUNC's
Registration Statement on Form S-4 (No. 33-53103) (filed as an exhibit to
BFL's Registration Statement), of which this Prospectus/Proxy Statement is
also a part.
<PAGE>
BANCFLORIDA FINANCIAL CORPORATION
5801 PELICAN BAY BOULEVARD
NAPLES, FLORIDA 33963
(813) 597-1611
May , 1994
Dear Stockholder:
On behalf of the Board of Directors, I want to extend to you a cordial
invitation to attend a Special Meeting of Stockholders of BancFlorida Financial
Corporation ("BFL"). The meeting will be held at 9:00 a.m., Naples time, on June
10, 1994, at BFL's headquarters, 5801 Pelican Bay Boulevard, Naples, Florida.
The purpose of the meeting is to vote on a proposal to approve the
Agreement and Plan of Mergers, dated as of January 17, 1994 (the "Merger
Agreement"), among BFL, BancFlorida, a Federal Savings Bank ("BFL Bank"), First
Union Corporation ("FUNC"), First Union Corporation of Florida ("FUNC-FL") and
First Union National Bank of Florida ("FUNB-FL"), pursuant to which BFL would
merge with and into FUNC-FL (the "Corporate Merger"), and BFL Bank would merge
with and into FUNB-FL (the "Bank Merger" and together with the Corporate Merger,
the "Mergers"). FUNC is the ninth largest bank holding company in the nation,
based on total assets of $72.2 billion at March 31, 1994.
Upon consummation of the Corporate Merger (i) each outstanding share of BFL
common stock (excluding certain shares held by BFL or FUNC) would be converted
into the right to receive a number of shares of FUNC common stock equal to (a)
0.669 shares if the average closing price of FUNC common stock on the New York
Stock Exchange (the "NYSE") for the ten trading days immediately prior to the
effective date of the Corporate Merger is greater than $41.874 and less than
$44.876, (b) the result obtained by dividing $28.00 by such price if such price
is $41.874 or less, or (c) the result obtained by dividing $30.00 by such price
if such price is $44.876 or greater (the "Exchange Ratio"), and (ii) each
outstanding share of BFL convertible preferred stock would be converted into the
right to receive a number of shares of FUNC common stock equal to the product of
(x) the Exchange Ratio, and (y) the number of shares of BFL common stock into
which a share of BFL convertible preferred stock is convertible as of the
effective date of the Corporate Merger, in a transaction that is generally
tax-free for federal income tax purposes, all as more fully discussed in the
accompanying Prospectus/Proxy Statement. The common stock of FUNC is actively
traded and is listed on the NYSE. The last reported sale price of FUNC common
stock on the NYSE Composite Transactions Tape on May , 1994 was $ per share.
Consummation of the Mergers is subject to certain conditions, including
approval of the Merger Agreement by BFL stockholders and approval of the Mergers
by various regulatory agencies.
Approval of the Merger Agreement requires the affirmative vote of a
majority of the votes entitled to be cast at the meeting by the holders of BFL
common stock and the holder of BFL convertible preferred stock, voting together
as a class (together, the "Combined Shares"). In addition, the holder of BFL
convertible preferred stock will be afforded a separate class vote on approval
of the Merger Agreement. In connection with the execution of the Merger
Agreement, the holder of all of the outstanding shares of BFL convertible
preferred stock, which represents 23.5 percent of the Combined Shares, has
agreed to vote such shares in favor of approval of the Merger Agreement.
Accordingly, assuming such shares are so voted and that the directors and
executive officers of BFL vote their shares of common stock of BFL (3.9 percent
of the Combined Shares) in favor of approval of the Merger Agreement, approval
of the Merger Agreement will require the affirmative vote of the holders of an
additional 22.6 percent of the outstanding shares of BFL common stock entitled
to be voted at the meeting in order for the Merger Agreement to be approved at
the meeting by the requisite vote of the holders of the Combined Shares.
The accompanying Notice of Special Meeting and Prospectus/Proxy Statement
contain information about the Mergers. I urge you to review carefully such
information, the information in BFL's 1993 Annual Report on Form 10-K, Quarterly
Report on Form 10-Q for the period ended December 31, 1993, and 1994 Annual
Meeting Proxy Statement, and the information in FUNC's 1993 Annual Report on
Form 10-K and 1994 Annual Meeting Proxy Statement, copies of which are available
as indicated in the accompanying Prospectus/Proxy Statement under "AVAILABLE
INFORMATION".
<PAGE>
THE BOARD OF DIRECTORS OF BFL HAS UNANIMOUSLY ADOPTED THE MERGER AGREEMENT
AND RECOMMENDS THAT THE STOCKHOLDERS OF BFL APPROVE THE MERGER AGREEMENT. A
FAILURE TO VOTE, EITHER BY NOT RETURNING THE ENCLOSED PROXY OR BY CHECKING THE
"ABSTAIN" BOX THEREON, WILL HAVE THE SAME EFFECT AS A VOTE AGAINST APPROVAL OF
THE MERGER AGREEMENT. EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
COMPLETE THE ENCLOSED PROXY, SIGN AND DATE IT AND MAIL IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID, RETURN ADDRESSED ENVELOPE.
Yours very truly,
RUDOLF P. GUENZEL
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE>
BANCFLORIDA FINANCIAL CORPORATION
5801 PELICAN BAY BOULEVARD
NAPLES, FLORIDA 33963
(813) 597-1611
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1994
May , 1994
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
BancFlorida Financial Corporation ("BFL") will be held at 9:00 a.m., Naples
time, on June 10, 1994, at BFL's headquarters, 5801 Pelican Bay Boulevard,
Naples, Florida for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Mergers, dated as of January 17, 1994 (the "Merger Agreement"), among
BFL, BancFlorida, a Federal Savings Bank ("BFL Bank"), First Union
Corporation ("FUNC"), First Union Corporation of Florida ("FUNC-FL") and
First Union National Bank of Florida ("FUNB-FL"), pursuant to which (i)
BFL would merge with and into FUNC-FL (the "Corporate Merger"), and BFL
Bank would merge with and into FUNB-FL (the "Bank Merger" and together
with the Corporate Merger, the "Mergers"), (ii) each outstanding share
of BFL common stock (excluding certain shares held by BFL or FUNC) would
be converted into the right to receive a number of shares of FUNC common
stock equal to (a) 0.669 shares if the average closing price of FUNC
common stock on the New York Stock Exchange for the ten trading days
immediately prior to the effective date of the Corporate Merger is
greater than $41.874 and less than $44.876, (b) the result obtained by
dividing $28.00 by such price if such price is $41.874 or less, or (c)
the result obtained by dividing $30.00 by such price if such price is
$44.876 or greater (the "Exchange Ratio"), and (iii) each outstanding
share of BFL convertible preferred stock would be converted into the
right to receive a number of shares of FUNC common stock equal to the
product of (x) the Exchange Ratio, and (y) the number of shares of BFL
common stock into which a share of BFL convertible preferred stock is
convertible as of the effective date of the Corporate Merger, all on and
subject to the terms and conditions contained therein.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
A copy of the Merger Agreement is set forth in ANNEX A to the accompanying
Prospectus/Proxy Statement.
The Board of Directors of BFL has fixed May 2, 1994, as the record date for
the determination of stockholders entitled to notice of and to vote at the
special meeting, and accordingly, only holders of record of BFL common stock and
BFL convertible preferred stock at the close of business on that date will be
entitled to notice of and to vote at the special meeting.
Approval of the Merger Agreement requires the affirmative vote of (i) a
majority of the votes entitled to be cast at the meeting by the holders of BFL
common stock and the holder of BFL convertible preferred stock, voting together
as a class (together, the "Combined Shares"), and (ii) the holder of BFL
convertible preferred stock, voting as a separate class. In connection with the
execution of the Merger Agreement, the holder of all of the outstanding shares
of BFL convertible preferred stock, which represents 23.5 percent of the
Combined Shares, agreed to vote such shares in favor of approval of the Merger
Agreement.
<PAGE>
THE BOARD OF DIRECTORS OF BFL UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
By Order of the Board of Directors of
BANCFLORIDA FINANCIAL CORPORATION
GERARD A. MCHALE, JR.
CHAIRMAN OF THE BOARD
STOCKHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF A STOCKHOLDER RECEIVES MORE THAN ONE PROXY FOR ANY REASON,
EACH PROXY SHOULD BE COMPLETED AND RETURNED. YOUR COOPERATION WILL BE
APPRECIATED. YOUR PROXY WILL BE VOTED WITH RESPECT TO THE MATTERS IDENTIFIED
THEREON IN ACCORDANCE WITH ANY SPECIFICATIONS ON THE PROXY. A FAILURE TO VOTE,
EITHER BY NOT RETURNING THE ENCLOSED PROXY OR BY CHECKING THE "ABSTAIN" BOX
THEREON, WILL HAVE THE SAME EFFECT AS A VOTE AGAINST APPROVAL OF THE MERGER
AGREEMENT.
<PAGE>
<TABLE>
<S> <C>
PROSPECTUS PROXY STATEMENT
FIRST UNION CORPORATION BANCFLORIDA FINANCIAL CORPORATION
COMMON STOCK SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 10, 1994
(PAR VALUE $3.33 1/3 PER SHARE)
</TABLE>
This Prospectus/Proxy Statement is being furnished by BancFlorida Financial
Corporation, a Delaware corporation ("BFL"), to the holders of (i) BFL common
stock, par value $0.01 per share ("BFL Common Stock"), and (ii) BFL Adjustable
Rate Cumulative Convertible Preferred Stock, Series A, par value $0.01 per share
("BFL Preferred Stock"), as a proxy statement in connection with the
solicitation of proxies by the BFL Board of Directors for use at a special
meeting of stockholders of BFL to be held at 9:00 a.m., Naples time, on June 10,
1994, at BFL's headquarters, 5801 Pelican Bay Boulevard, Naples, Florida (the
"Special Meeting"), and at any adjournment or adjournments thereof.
This Prospectus/Proxy Statement, the accompanying Notice of Special Meeting
and form of proxy are first being mailed to the stockholders of BFL on or about
May , 1994.
The purpose of the Special Meeting is to consider and vote upon a proposal
to approve the Agreement and Plan of Mergers, dated as of January 17, 1994 (the
"Merger Agreement"), among BFL, BancFlorida, a Federal Savings Bank, ("BFL
Bank"), First Union Corporation, a North Carolina corporation ("FUNC"), First
Union Corporation of Florida ("FUNC-FL") and First Union National Bank of
Florida ("FUNB-FL"), pursuant to which BFL would merge with and into FUNC-FL
(the "Corporate Merger") and BFL Bank would merge with and into FUNB-FL (the
"Bank Merger" and, together with the Corporate Merger, the "Mergers"), all on
and subject to the terms and conditions contained therein. See "SUMMARY", "THE
MERGERS" and ANNEX A to this Prospectus/Proxy Statement.
Upon consummation of the Corporate Merger (i) each outstanding share of BFL
Common Stock (excluding certain shares held by BFL or FUNC) would be converted
into the right to receive a number of shares of FUNC common stock, par value
$3.33 1/3 per share (together with the FUNC Rights (as hereinafter defined)
attached thereto, "FUNC Common Stock"), equal to (a) 0.669 shares if the average
closing price (the "Average Closing Price") of FUNC Common Stock on the NYSE
Tape (as hereinafter defined) for the ten trading days immediately prior to the
Effective Date (as hereinafter defined) is greater than $41.874 and less than
$44.876, (b) the result obtained by dividing $28.00 by the Average Closing Price
if the Average Closing Price is $41.874 or less, or (c) the result obtained by
dividing $30.00 by the Average Closing Price if the Average Closing Price is
$44.876 or greater (the "Exchange Ratio"), and (ii) each outstanding share of
BFL Preferred Stock would be converted into the right to receive a number of
shares of FUNC Common Stock equal to the product of (x) the Exchange Ratio, and
(y) the number of shares of BFL Common Stock into which a share of BFL Preferred
Stock is convertible as of the Effective Date (the "Preferred Stock Conversion
Rate").
This document also constitutes a prospectus of FUNC relating to the shares
(the "FUNC Common Shares") of FUNC Common Stock that are issuable upon
consummation of the Corporate Merger. See "DESCRIPTION OF FUNC CAPITAL STOCK"
and "CERTAIN DIFFERENCES IN THE RIGHTS OF BFL AND FUNC STOCKHOLDERS".
Based on the (i) 3,709,151 shares of BFL Common Stock outstanding on the
Record Date (as hereinafter defined), (ii) 1,138,000 shares of BFL Common Stock
into which the 1,138,000 outstanding shares of BFL Preferred Stock are
convertible on the date hereof, (iii) 702,301 shares of BFL Common Stock into
which the $16 million outstanding principal amount of BFL's 9% Convertible
Subordinated Debentures due 2003 (the "BFL Debentures") are convertible on the
date hereof, (iv) 469,291 shares of BFL Common Stock issuable upon the exercise
of all outstanding employee and director stock options to purchase such shares
on the date hereof (assuming all such options are so exercisable), and (v) a
0.669 Exchange Ratio, approximately 4,026,539 FUNC Common Shares would be
issuable upon consummation of the Corporate Merger (the "Projected Number of
FUNC Common Shares"). The actual number of FUNC Common Shares to be issued will
depend on the Average Closing Price and the Preferred Stock Conversion Rate.
FUNC Common Stock and BFL Common Stock are listed and traded on the New
York Stock Exchange ("NYSE"). On January 14, 1994, the last business day prior
to public announcement of the execution of the Merger Agreement, the last
reported sale prices per share of FUNC Common Stock and BFL Common Stock on the
NYSE Composite Transactions Tape (the "NYSE Tape") were $41.875 and $23.00,
respectively. On May , 1994, such prices were $ and $ , respectively.
There is no public trading market for BFL Preferred Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE FUNC COMMON SHARES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
THE DATE OF THIS PROSPECTUS/PROXY STATEMENT IS MAY , 1994
<PAGE>
AVAILABLE INFORMATION
FUNC and BFL are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), and, in accordance therewith, file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by FUNC and BFL can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's Regional Offices in New York (7 World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60621) and copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Since the
FUNC Common Stock and the BFL Common Stock are listed on the NYSE, reports,
proxy statements and other information relating to FUNC and BFL can also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Prospectus/Proxy Statement does not contain all of the information set
forth in the Registration Statement on Form S-4, of which this Prospectus/Proxy
Statement is a part, and the exhibits thereto (together with any amendments or
supplements thereto, the "Registration Statement"), which has been filed by FUNC
with the Commission under the Securities Act of 1933, as amended, and the rules
and regulations thereunder (the "Securities Act"), certain portions of which
have been omitted pursuant to the rules and regulations of the Commission and to
which portions reference is hereby made for further information.
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. A COPY OF SUCH DOCUMENTS IS
AVAILABLE WITHOUT CHARGE (OTHER THAN CERTAIN EXHIBITS TO SUCH DOCUMENTS) TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A PROSPECTUS/PROXY STATEMENT IS
DELIVERED, UPON WRITTEN OR ORAL REQUEST TO: FIRST UNION CORPORATION, INVESTOR
RELATIONS, TWO FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28288-0206
(TELEPHONE NUMBER (704) 374-6782) AS TO FUNC DOCUMENTS; AND TO: BANCFLORIDA
FINANCIAL CORPORATION, INVESTOR RELATIONS, 5801 PELICAN BAY BOULEVARD, NAPLES,
FLORIDA 33963 (TELEPHONE NUMBER (813) 597-1611) AS TO BFL DOCUMENTS. IN ORDER TO
ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE BY
JUNE 3, 1994.
All information contained or incorporated by reference in this
Prospectus/Proxy Statement with respect to FUNC was supplied by FUNC, and all
information contained or incorporated by reference in this Prospectus/Proxy
Statement with respect to BFL was supplied by BFL.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus/Proxy Statement
and, if given or made, such information or representations must not be relied
upon as having been authorized by FUNC or BFL. Neither the delivery of this
Prospectus/Proxy Statement nor any distribution of the FUNC Common Shares shall,
under any circumstances, create any implication that there has been no change in
the affairs of FUNC or BFL since the date hereof or that the information
contained herein is correct as of any time subsequent to its date. This
Prospectus/Proxy Statement does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the FUNC Common Shares
or an offer to sell or solicitation of an offer to buy such securities in any
circumstances in which such an offer or solicitation is not lawful.
The Commissioner of Insurance of the State of North Carolina has not
approved or disapproved this offering nor has the Commissioner passed upon the
accuracy or adequacy of this Prospectus/Proxy Statement.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by FUNC and BFL, respectively, with the
Commission (FUNC File No. 1-10000; BFL File No. 1-8515) under Section 13(a) or
15(d) of the Exchange Act are hereby incorporated by reference in this
Prospectus/Proxy Statement:
FUNC documents:
FUNC's Annual Report on Form 10-K for the year ended December 31,
1993.
BFL documents:
(i) BFL's Annual Report on Form 10-K for the year ended September 30,
1993;
(ii) BFL's Quarterly Report on Form 10-Q for the period ended
December 31, 1993; and
(iii) BFL's Current Reports on Form 8-K, dated January 17, 1994 and
April 22, 1994.
All documents filed by FUNC or BFL pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the earlier
of the Effective Date or the termination of the Merger
Agreement are hereby incorporated by reference into this Prospectus/Proxy
Statement and shall be deemed a part hereof from the date of filing of such
documents.
Any statement contained herein, in any supplement hereto or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of the Registration Statement and this
Prospectus/Proxy Statement to the extent that a statement contained herein, in
any supplement hereto or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement, this Prospectus/Proxy Statement or any supplement hereto.
3
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TABLE OF CONTENTS
<TABLE>
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<S> <C>
AVAILABLE INFORMATION.................................................................................................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................................................ 3
SUMMARY................................................................................................................ 6
RECENT DEVELOPMENTS.................................................................................................... 16
March 31, 1994 Period End Results.................................................................................... 16
GENERAL INFORMATION.................................................................................................... 17
General.............................................................................................................. 17
Record Date; Votes Required.......................................................................................... 17
THE MERGERS............................................................................................................ 19
General.............................................................................................................. 19
Effective Date....................................................................................................... 19
Exchange of BFL Certificates......................................................................................... 19
Background and Reasons............................................................................................... 20
Opinion of Financial Advisor......................................................................................... 21
Interests of Certain Persons......................................................................................... 24
Certain Federal Income Tax Consequences.............................................................................. 25
No Appraisal Rights.................................................................................................. 26
Business Pending Consummation........................................................................................ 26
FUNC Common Stock Repurchase......................................................................................... 26
Regulatory Approvals................................................................................................. 26
Conditions to Consummation; Termination.............................................................................. 27
Waiver; Amendment.................................................................................................... 27
Accounting Treatment................................................................................................. 27
Expenses............................................................................................................. 28
Stock Option Agreement............................................................................................... 28
Preferred Stockholder Agreement...................................................................................... 29
Market Prices........................................................................................................ 29
Dividends............................................................................................................ 30
FUNC................................................................................................................... 31
General.............................................................................................................. 31
History and Business................................................................................................. 31
CERTAIN REGULATORY CONSIDERATIONS RELATING TO FUNC..................................................................... 32
General.............................................................................................................. 32
Payment of Dividends................................................................................................. 32
Borrowings........................................................................................................... 33
Capital.............................................................................................................. 33
FIRREA; Support of Subsidiary Banks.................................................................................. 33
FDICIA............................................................................................................... 34
Depositor Preference Statute......................................................................................... 35
DESCRIPTION OF FUNC CAPITAL STOCK...................................................................................... 36
Authorized Capital................................................................................................... 36
FUNC Common Stock.................................................................................................... 36
FUNC Preferred Stock................................................................................................. 36
FUNC Class A Preferred Stock......................................................................................... 37
FUNC Rights Plan..................................................................................................... 37
Other Provisions..................................................................................................... 38
CERTAIN DIFFERENCES IN THE RIGHTS OF BFL AND FUNC STOCKHOLDERS......................................................... 39
General.............................................................................................................. 39
Authorized Capital................................................................................................... 39
Amendment to Articles of Incorporation or Bylaws..................................................................... 39
Size and Classification of Board of Directors........................................................................ 40
Removal of Directors................................................................................................. 40
Director Exculpation................................................................................................. 40
Director Conflict of Interest Transactions........................................................................... 40
Stockholder Meetings................................................................................................. 41
Director Nominations................................................................................................. 41
Stockholder Proposals................................................................................................ 42
Stockholder Protection Rights Plan................................................................................... 42
Stockholder Inspection Rights; Stockholder Lists..................................................................... 42
Required Stockholder Vote for Certain Actions........................................................................ 43
Anti-Takeover Provisions............................................................................................. 43
</TABLE>
4
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<TABLE>
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<S> <C>
</TABLE>
<TABLE>
<S> <C>
Dissenters' or Appraisal Rights...................................................................................... 44
Dividends and Other Distributions.................................................................................... 44
Voluntary Dissolution................................................................................................ 44
RESALE OF FUNC COMMON SHARES........................................................................................... 45
ADDITIONAL MATTERS..................................................................................................... 45
LEGAL OPINIONS......................................................................................................... 45
EXPERTS................................................................................................................ 45
OTHER MATTERS.......................................................................................................... 45
ANNEXES:
ANNEX A -- AGREEMENT AND PLAN OF MERGERS, INCLUDING THE STOCK OPTION AGREEMENT AND THE PREFERRED STOCKHOLDER
AGREEMENT................................................................................................. A-1
ANNEX B -- OPINION OF ALEX. BROWN & SONS INCORPORATED ............................................................... B-1
</TABLE>
5
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION RELATING TO THE
MERGERS CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT. THIS SUMMARY IS
NOT INTENDED TO BE A SUMMARY OF ALL MATERIAL INFORMATION RELATING TO THE MERGERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MORE DETAILED INFORMATION
CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT, INCLUDING THE ANNEXES
HERETO AND IN THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS/PROXY
STATEMENT. A COPY OF THE MERGER AGREEMENT (INCLUDING THE STOCK OPTION AGREEMENT
(AS HEREINAFTER DEFINED) AND THE PREFERRED STOCKHOLDER AGREEMENT (AS HEREINAFTER
DEFINED)) IS SET FORTH IN ANNEX A TO THIS PROSPECTUS/PROXY STATEMENT AND
REFERENCE IS MADE THERETO FOR A COMPLETE DESCRIPTION OF THE TERMS OF THE
MERGERS. STOCKHOLDERS ARE URGED TO READ CAREFULLY THE ENTIRE PROSPECTUS/PROXY
STATEMENT, INCLUDING THE ANNEXES. AS USED IN THIS PROSPECTUS/PROXY STATEMENT,
THE TERMS "FUNC", "FUNC-FL", "FUNB-FL", "BFL" AND "BFL BANK" REFER TO SUCH
ORGANIZATIONS, RESPECTIVELY, AND, UNLESS THE CONTEXT OTHERWISE REQUIRES, SUCH
ORGANIZATIONS AND THEIR RESPECTIVE SUBSIDIARIES.
PARTIES TO THE MERGERS
FUNC
FUNC is a North Carolina-based, multi-bank holding company registered under
the Bank Holding Company Act of 1956, as amended ("BHCA"). FUNC provides a wide
range of commercial and retail banking services and trust services in North
Carolina, Florida, South Carolina, Georgia, Tennessee, Virginia, Maryland and
Washington, D.C. FUNC also provides various other financial services, including
mortgage banking, home equity lending, insurance and discount brokerage
services, through other subsidiaries. As of December 31, 1993, and for the year
then ended, FUNC reported assets of $70.8 billion, net loans of $46.9 billion,
deposits of $53.7 billion, stockholders' equity of $5.2 billion and net income
applicable to common stockholders of $793 million, and as of such date FUNC
operated through 1,525 offices in 39 states and one foreign country. FUNC is the
ninth largest bank holding company in the United States, based on total assets
at December 31, 1993. The principal executive offices of FUNC are located at One
First Union Center, Charlotte, North Carolina 28288-0013, and its telephone
number is (704) 374-6565. See "RECENT DEVELOPMENTS -- March 31, 1994 Period End
Results; FUNC".
Interstate banking legislation has greatly impacted the growth of FUNC, and
it has also greatly impacted the banking industry in general. North Carolina's
interstate banking statute includes the states of Alabama, Arkansas, Florida,
Georgia, Kentucky, Louisiana, Maryland, Mississippi, South Carolina, Tennessee,
Texas, Virginia, West Virginia and Washington, D.C., each of which has passed
interstate banking legislation, either on a regional or national basis. In
addition, various other states not named in the North Carolina legislation have
also adopted interstate banking legislation, which, under certain conditions,
would permit FUNC to acquire banks in such states, and legislation has been
introduced in the U.S. Congress that, if enacted, would generally provide for
nationwide interstate banking, subject to certain limitations, including the
ability of states to opt out of certain coverage.
FUNC is continually evaluating acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of FUNC's book value and net income
per common share may occur in connection with any future transactions. See
"FUNC -- History and Business".
FUNC-FL AND FUNB-FL
FUNC-FL is the parent corporation of FUNB-FL, a national banking
association that provides a wide range of commercial and retail banking services
and trust services in Florida. As of December 31, 1993, and for the year then
ended, FUNB-FL's call report reflected assets of $27.8 billion, net loans of
$17.8 billion, deposits of $22.2 billion, stockholder's equity of $2.1 billion
and net income of $386 million, and as of such date FUNB-FL operated through 488
banking offices in Florida. The principal executive offices of FUNC-FL and
FUNB-FL are located at 225 Water Street, Jacksonville, Florida 32202, and their
telephone number is (904) 361-2265. See "FUNC".
BFL AND BFL BANK
BFL is a savings and loan holding company registered under the Home Owners
Loan Act, as amended ("HOLA"). BFL's principal asset is the stock of BFL Bank,
which provides commercial and retail banking services in southwest and south
central Florida. As of December 31, 1993, and for the three months then ended,
BFL reported assets of $1.5 billion, net loans of $743 million, deposits of $1.2
billion, stockholders' equity of $77 million and net income of $2 million, and
as of such date BFL operated through 37 offices in Florida. For the fiscal year
ended September 30, 1993, BFL reported net income of $18 million. The principal
executive offices of BFL and BFL Bank are located at 5801 Pelican Bay Boulevard,
6
<PAGE>
Naples, Florida 33963, and their telephone number is (813) 597-1611. See "RECENT
DEVELOPMENTS -- March 31, 1994 Period End Results; BFL".
SPECIAL MEETING; RECORD DATE
The Special Meeting will be held on June 10, 1994, at 9:00 a.m., Naples
time, at BFL's headquarters, 5801 Pelican Bay Boulevard, Naples, Florida, for
the purpose of considering and voting upon a proposal to approve the Merger
Agreement.
The Board of Directors of BFL has fixed May 2, 1994, as the record date for
determining stockholders entitled to notice of and to vote at the Special
Meeting (the "Record Date"). As of such date, there were 3,707,611 shares of BFL
Common Stock and 1,138,000 shares of BFL Preferred Stock outstanding and
entitled to be voted at the Special Meeting.
See "GENERAL INFORMATION".
THE MERGERS; EXCHANGE RATIO
Under the terms of the Merger Agreement, BFL would merge with and into
FUNC-FL and BFL Bank would merge with and into FUNB-FL. Upon consummation of the
Corporate Merger (i) each outstanding share of BFL Common Stock (excluding any
shares of stock held by FUNC or BFL, other than in a fiduciary capacity or in
satisfaction of a debt previously contracted ("FUNC/BFL Held Shares")) would be
converted into the right to receive a number of shares of FUNC Common Stock,
equal to (a) 0.669 shares if the Average Closing Price is greater than $41.874
and less than $44.876, (b) the result obtained by dividing $28.00 by the Average
Closing Price if the Average Closing Price is $41.874 or less, or (c) the result
obtained by dividing $30.00 by the Average Closing Price if the Average Closing
Price is $44.876 or greater, and (ii) each outstanding share of BFL Preferred
Stock would be converted into the right to receive a number of shares of FUNC
Common Stock equal to the product of (x) the Exchange Ratio, and (y) the
Preferred Stock Conversion Rate. See "THE MERGERS -- General", "DESCRIPTION OF
FUNC CAPITAL STOCK" and "CERTAIN DIFFERENCES IN THE RIGHTS OF BFL AND FUNC
STOCKHOLDERS".
Immediately following consummation of the Corporate Merger on the Effective
Date or as soon thereafter as FUNB-FL may deem appropriate, the Bank Merger will
be consummated.
VOTES REQUIRED
Approval of the Merger Agreement requires the affirmative vote of a
majority of the votes entitled to be cast at the Special Meeting by the holders
of BFL Common Stock and the holder of BFL Preferred Stock, voting together as a
class (together, the "Combined Shares"). In addition, the holder of BFL
Preferred Stock will be afforded a separate class vote on approval of the Merger
Agreement.
The directors and executive officers of BFL (including certain of their
related interests) beneficially owned, as of the Record Date, and are entitled
to vote at the Special Meeting, 190,143 shares of BFL Common Stock, which
represents 3.9 percent of the Combined Shares. In connection with the execution
of the Merger Agreement, the holder of all of the outstanding shares of BFL
Preferred Stock, which represents 23.5 percent of the Combined Shares, agreed to
vote such shares in favor of approval of the Merger Agreement at the Special
Meeting (the "Preferred Stockholder Agreement", a copy of which is included as
Exhibit B to ANNEX A to this Prospectus/Proxy Statement). Accordingly, assuming
such shares are so voted and that the directors and executive officers of BFL
vote their shares of BFL Common Stock in favor of approval of the Merger
Agreement, approval of the Merger Agreement will require the affirmative vote of
the holders of an additional 22.6 percent of the outstanding shares of BFL
Common Stock entitled to be voted at the Special Meeting in order for the Merger
Agreement to be approved at the Special Meeting by the requisite vote of the
holders of the Combined Shares.
See "GENERAL INFORMATION -- Record Date; Votes Required".
A FAILURE TO VOTE, EITHER BY NOT RETURNING THE ENCLOSED PROXY OR BY
CHECKING THE "ABSTAIN" BOX THEREON, WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
APPROVAL OF THE MERGER AGREEMENT.
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Mergers, the Corporate Merger will become effective (the "Effective Date") on
such date as FUNC notifies BFL in writing not less than five days prior thereto,
provided such date is not more than 30 days after such conditions have been
satisfied or waived. Subject to the foregoing, it is currently anticipated that
the Mergers will be consummated in the third quarter of 1994. If the Corporate
Merger is consummated
7
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in such quarter, or in any other quarter, BFL stockholders should not assume or
expect that the Effective Date will precede the record date for the dividend on
FUNC Common Stock for that quarter, so as to enable such stockholders to receive
such dividend. See "THE MERGERS -- Exchange of BFL Certificates" and
" -- Conditions to Consummation; Termination".
RECOMMENDATION OF BFL'S BOARD OF DIRECTORS
The Board of Directors of BFL has adopted the Merger Agreement by unanimous
vote, believes it is in the best interests of BFL and its stockholders and
recommends its approval by BFL stockholders. See "THE MERGERS -- Background and
Reasons; BFL".
OPINION OF FINANCIAL ADVISOR
Alex. Brown & Sons Incorporated ("Alex. Brown") has advised BFL's Board of
Directors that, in its opinion, the consideration for each share of BFL Common
Stock set forth in the Merger Agreement is fair, from a financial point of view,
to the holders of BFL Common Stock. The full text of the Alex. Brown opinion,
dated as of January 16, 1994, which describes the procedures followed,
assumptions made, limitations on the review undertaken and other matters in
connection with rendering such opinion, is set forth in ANNEX B to this
Prospectus/Proxy Statement and should be read in its entirety by BFL
stockholders. For further information regarding the opinion of Alex. Brown, see
"THE MERGERS -- Opinion of Financial Advisor".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Mergers is conditioned on receipt by FUNC and BFL of an
opinion of Sullivan & Cromwell, special counsel for FUNC, dated as of the
Effective Date, to the effect that no gain or loss will be recognized for
federal income tax purposes by stockholders of BFL who receive FUNC Common
Shares in exchange for their shares of BFL Common Stock or BFL Preferred Stock,
except that gain or loss may be recognized as to cash received in lieu of
fractional share interests. See "THE MERGERS -- Certain Federal Income Tax
Consequences".
BECAUSE CERTAIN TAX CONSEQUENCES MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH BFL STOCKHOLDER, IT IS RECOMMENDED THAT BFL STOCKHOLDERS
CONSULT THEIR TAX ADVISERS CONCERNING THE FEDERAL (AND ANY STATE AND LOCAL) TAX
CONSEQUENCES OF THE CORPORATE MERGER IN THEIR PARTICULAR CIRCUMSTANCES.
NO APPRAISAL RIGHTS
The holders of the BFL Common Stock and, when the holder of the BFL
Preferred Stock votes his shares of BFL Preferred Stock in favor of the Merger
Agreement pursuant to the Preferred Stockholder Agreement, the holder of the BFL
Preferred Stock will not have appraisal rights under applicable provisions of
the Delaware General Corporation Law (the "DGCL"). See "THE MERGERS -- No
Appraisal Rights".
RESALE OF FUNC COMMON SHARES
The FUNC Common Shares will be freely transferable by the holders of such
shares, except for those shares held by those holders who may be deemed to be
"affiliates" (generally including directors, certain executive officers and ten
percent or more stockholders) of BFL or FUNC under applicable federal securities
laws. See "RESALE OF FUNC COMMON SHARES".
BUSINESS PENDING CONSUMMATION
BFL has agreed in the Merger Agreement not to take certain actions relating
to the operation of BFL pending consummation of the Mergers, without the prior
written consent of FUNC, except as otherwise permitted by the Merger Agreement.
These actions include, without limitation: (i) paying any dividends, other than
dividends on BFL Preferred Stock in accordance with its terms, or redeeming or
otherwise acquiring any shares of its capital stock, or issuing any additional
shares of its capital stock (other than upon exercise of outstanding options or
conversion of outstanding convertible securities of BFL) or giving any person
the right to acquire any such shares; (ii) increasing the rate of compensation
or paying any bonus to any of its directors, officers or employees; (iii)
entering into or modifying any employment agreements or employee benefit plans;
(iv) disposing of any material portion of its assets or acquiring any
substantial portion of the business or property of any other entity; (v)
changing its lending, investment, liability management or other material banking
policies; (vi) settling any litigation at a cost in excess of $2 million; or
(vii) taking any other action not in the ordinary course of business.
8
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BFL also has agreed that, prior to the Effective Date, it will use its best
efforts to modify its loan, litigation and other reserve and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be consistent with those policies and practices applied by
FUNC.
See "THE MERGERS -- Business Pending Consummation".
REGULATORY APPROVALS
The Mergers are subject to the prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), the Comptroller of the
Currency (the "OCC") and the Office of Thrift Supervision (the "OTS"), as
applicable. Applications have been filed with each of such regulatory
authorities for such approvals. There can be no assurance that the necessary
regulatory approvals will be obtained or as to the timing or conditions of such
approvals. See "THE MERGERS -- Regulatory Approvals".
CONDITIONS TO CONSUMMATION; TERMINATION
Consummation of the Mergers is subject, among other things, to: (i)
approval of the Merger Agreement by the requisite vote of the stockholders of
BFL; (ii) receipt of the regulatory approvals referred to above without any
restrictions or conditions which would so materially adversely impact the
economic or business benefits to FUNC of the transactions contemplated by the
Merger Agreement so as to render inadvisable the consummation of the Mergers;
(iii) no court or governmental or regulatory authority having taken any action
which prohibits the Mergers; (iv) receipt by FUNC and BFL of the opinion of
Sullivan & Cromwell as to certain federal income tax consequences of the
Corporate Merger; and (v) the FUNC Common Shares having been approved for
listing on the NYSE, subject to official notice of issuance.
The Merger Agreement may be terminated by mutual agreement of the Boards of
Directors of FUNC and BFL. The Merger Agreement may also be terminated by the
Board of Directors of either FUNC or BFL if the Corporate Merger does not occur
on or before December 31, 1994, or if certain conditions set forth in the Merger
Agreement are not met.
See "THE MERGERS -- Conditions to Consummation; Termination".
STOCK OPTION AGREEMENT
As a condition to FUNC's entering into the Merger Agreement and in
consideration thereof, BFL entered into a Stock Option Agreement with FUNC,
dated as of January 17, 1994 (the "Stock Option Agreement"). The Stock Option
Agreement is set forth in Exhibit A to the Merger Agreement, which is set forth
in ANNEX A to this Prospectus/Proxy Statement. Pursuant to the Stock Option
Agreement, BFL granted to FUNC an irrevocable option (the "Option"), exercisable
only under certain limited and specifically defined circumstances, none of
which, to the best of BFL's and FUNC's knowledge, has occurred as of the date
hereof, to purchase up to 719,000 authorized but unissued shares of BFL Common
Stock for a purchase price of $25.00 per share (the "Purchase Price"), subject
to adjustment in certain circumstances. The Purchase Price exceeds the closing
price of $23.00 per share of BFL Common Stock on the NYSE Tape on January 14,
1994, the last business day prior to the date on which execution of the Merger
Agreement was publicly announced. The number of shares of BFL Common Stock
subject to the Option represents approximately 19.4 percent of the outstanding
shares of BFL Common Stock, before giving effect to the issuance of such shares.
FUNC does not have any voting rights with respect to the shares of BFL Common
Stock subject to the Option prior to exercise of the Option.
The Stock Option Agreement and the Option are intended to make it more
difficult for another party to acquire BFL, thereby increasing the likelihood
that the Mergers will occur. See "THE MERGERS -- Stock Option Agreement".
PREFERRED STOCKHOLDER AGREEMENT
In addition to an agreement by the holder of all of the outstanding shares
of BFL Preferred Stock to vote such shares in favor of the Merger Agreement, the
Preferred Stockholder Agreement contains, among other things, an agreement by
BFL to commence all necessary steps to register for sale under the Securities
Act the shares of BFL Common Stock issuable upon conversion of the BFL Preferred
Stock, it being understood that such holder has no affirmative obligation to
convert his shares of BFL Preferred Stock into shares of BFL Common Stock. It is
expected that BFL will file a registration statement with the Commission in the
near future covering such shares of BFL Common Stock. See "THE
MERGERS -- Preferred Stockholder Agreement".
9
<PAGE>
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following unaudited information, adjusted for any stock dividends and
stock splits, reflects, where applicable, certain comparative per share data
related to book value, cash dividends paid, income and market value: (i) on a
historical basis for FUNC and BFL; (ii) on a pro forma combined basis per share
of FUNC Common Stock reflecting consummation of the Corporate Merger with an
Exchange Ratio of 0.669 and a one-for-one Preferred Stock Conversion Rate; and
(iii) on an equivalent pro forma basis per share of BFL Common Stock and BFL
Preferred Stock reflecting consummation of the Corporate Merger with a 0.669
Exchange Ratio and a one-for-one Preferred Stock Conversion Rate. Such
information has been prepared giving effect to the Corporate Merger on a
purchase accounting basis. See "THE MERGERS -- Accounting Treatment". BFL's
fiscal year-end is September 30 of each year; however, all financial information
related to BFL as of and for periods ended December 31 has been adjusted herein
to reflect the results of operations on a calendar year-end basis, as
appropriate. Since purchase accounting does not require restatement of results
for prior periods following consummation of the Corporate Merger, consummation
of the Corporate Merger will not affect FUNC's historical results for the
periods indicated.
The 0.669 Exchange Ratio is based on the closing price per share of FUNC
Common Stock on the NYSE Tape on May , 1994, as if such closing price were the
Average Closing Price. The actual Exchange Ratio will depend on the Average
Closing Price and may be greater or less than 0.669. The one-for-one Preferred
Stock Conversion Rate is based on the number of shares of BFL Common Stock into
which one share of BFL Preferred Stock is convertible as of the date hereof.
Under certain conditions relating to the possible issuance of additional shares
of BFL Common Stock prior to the Effective Date, the Preferred Stock Conversion
Rate may be greater than one-for-one. The pro forma information presented would
be different if (i) the Average Closing Price is $44.876 or greater or $41.874
or less, or (ii) the Preferred Stock Conversion Rate is greater than
one-for-one.
The information shown below should be read in conjunction with the
historical financial statements of FUNC and BFL, including the respective notes
thereto, the unaudited pro forma financial information appearing elsewhere in
this Prospectus/Proxy Statement, and the documents incorporated herein by
reference. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE". The pro forma information set forth below does not reflect the
acquisition of Lieber (as hereinafter defined), which is pending as of the date
of this Prospectus/Proxy Statement. See "FUNC -- History and Business".
<TABLE>
<CAPTION>
DECEMBER 31,
1993
<S> <C>
BOOK VALUE PER COMMON SHARE:
Historical:
FUNC....................................................................................................... $28.90
BFL........................................................................................................ 17.19
Pro forma combined per FUNC common share (1).................................................................. 29.09
Equivalent pro forma per BFL common share (2)................................................................. $19.46
</TABLE>
(1) The pro forma combined book value per FUNC common share amount represents
(i) FUNC's historical common stockholders' equity adjusted for the issuance
of the Projected Number of FUNC Common Shares, assuming a market price per
FUNC common share of $43.00 (the last reported sale price per share on the
NYSE Tape on May , 1994 was $ ), and reflecting the purchase in the
open market of two million shares of FUNC Common Stock at a cost of $83
million and the subsequent cancellation of such shares (the "Repurchased
Shares"), divided by (ii) pro forma combined period-end common shares
outstanding. See "THE MERGERS -- FUNC Common Stock Repurchase".
(2) The equivalent pro forma book value per BFL common share amount represents
the pro forma combined book value per FUNC common share amount, multiplied
by a 0.669 Exchange Ratio.
10
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1993
<S> <C>
CASH DIVIDENDS PAID PER SHARE:
Historical:
FUNC per common share...................................................................................... $ 1.50
BFL per common share....................................................................................... --
BFL per preferred share (3)................................................................................ 3.88
Pro forma combined per FUNC common share (4).................................................................. 1.44
Equivalent pro forma per BFL common share (5)................................................................. .96
Equivalent pro forma per BFL preferred share (5)(6)........................................................... $ .96
</TABLE>
(3) 1993 BFL preferred share cash dividends include payment of dividend
arrearages.
(4) The pro forma combined cash dividends paid per FUNC common share amount
represents pro forma combined cash dividends paid on common stock
outstanding, divided by pro forma combined average common shares
outstanding, rounded to the nearest cent. The difference between the pro
forma combined per FUNC common share amount and the historical FUNC per
common share amount is primarily caused by three pooling of interest
acquisitions consummated by FUNC in 1993 and not by the proposed Mergers.
(5) The equivalent pro forma cash dividends paid per BFL common share amount
represents the pro forma combined per FUNC common share amount multiplied by
a 0.669 Exchange Ratio, rounded to the nearest cent. The current annualized
dividend rate per share for FUNC Common Stock, based upon the most recently
declared quarterly dividend rate of $.40 per share payable on June 15, 1994,
would be $1.60. On an equivalent pro forma basis, such current annualized
FUNC dividend per BFL common share would be $1.07, based on a 0.669 Exchange
Ratio, and $1.07 per BFL preferred share based on a 0.669 Exchange Ratio and
a one-for-one Preferred Stock Conversion Rate. Future FUNC and BFL dividends
are dependent upon their respective earnings and financial conditions,
government regulations and policies and other factors. See "THE
MERGERS -- Exchange of BFL Certificates", " -- Business Pending
Consummation" and " -- Dividends".
(6) The equivalent pro forma cash dividends per share of BFL Preferred Stock
amount represents the pro forma combined per FUNC common share amount
multiplied by a 0.669 Exchange Ratio and a one-for-one Preferred Stock
Conversion Rate, rounded to the nearest cent.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1993
<S> <C>
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS:
Historical:
FUNC....................................................................................................... $ 4.73
BFL........................................................................................................ 2.76
Pro forma combined per FUNC common share (7).................................................................. 4.69
Equivalent pro forma per BFL common share (8)................................................................. $ 3.14
</TABLE>
(7) The pro forma combined income per FUNC common share amount represents the
pro forma combined FUNC net income applicable to common stockholders, BFL
net income and the related purchase accounting adjustments described in
footnote (1) to the table under " -- Selected Financial Data" titled "FUNC
and BFL -- Pro Forma Combined Selected Financial Data" (assuming the
Corporate Merger had been effective January 1, 1993), divided by pro forma
FUNC average common shares outstanding adjusted for the issuance of the
Projected Number of FUNC Common Shares, less the Repurchased Shares.
(8) The equivalent pro forma income per BFL common share amount represents the
pro forma combined income per FUNC common share amount multiplied by a 0.669
Exchange Ratio.
11
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL EQUIVALENT PRO FORMA EQUIVALENT PRO FORMA
FUNC COMMON BFL COMMON PER BFL COMMON SHARE (9) PER BFL PREFERRED SHARE (10)
<S> <C> <C> <C> <C>
MARKET VALUE PER SHARE:
January 14, 1994.............. $41.875 23.00 28.00 28.00
May , 1994.................. $
</TABLE>
(9) Equivalent pro forma market values per BFL common share amounts represent
the historical market values per share of FUNC Common Stock multiplied by a
0.669 Exchange Ratio, rounded down to the nearest one-eighth. The FUNC and
BFL historical market values per share represent the last reported sale
prices per share of FUNC Common Stock and BFL Common Stock on the NYSE Tape:
(i) on January 14, 1994, the last business day preceding public announcement
of the execution of the Merger Agreement; and (ii) on May , 1994. For
additional market prices of FUNC Common Stock and BFL Common Stock, see "THE
MERGERS -- Market Prices". Because the market price of FUNC Common Stock is
subject to fluctuation, the market value of the FUNC Common Shares that
holders of BFL Common Stock and BFL Preferred Stock would receive upon
consummation of the Corporate Merger may increase or decrease prior to and
after the receipt of such shares. BFL stockholders are urged to obtain
current market quotations for FUNC Common Stock.
(10) Equivalent pro forma market values per share of BFL Preferred Stock amounts
represent the historical market values per share of FUNC Common Stock
multiplied by a 0.669 Exchange Ratio and a one-for-one Preferred Stock
Conversion Rate, rounded down to the nearest one-eighth.
SELECTED FINANCIAL DATA
The following tables set forth certain unaudited historical consolidated
selected financial information for FUNC and BFL and certain unaudited pro forma
combined selected financial data, giving effect to the Corporate Merger (with a
0.669 Exchange Ratio and a one-for-one Preferred Stock Conversion Rate) on a
purchase accounting basis effective as of January 1, 1993. See "THE
MERGERS -- Accounting Treatment". This information should be read in conjunction
with the historical financial statements of FUNC and BFL, including the
respective notes thereto, and the other documents incorporated herein by
reference. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE". The pro forma information set forth below does not reflect the
acquisition of Lieber, which is pending as of the date of this Prospectus/Proxy
Statement. See "FUNC -- History and Business". BFL's fiscal year-end is
September 30 of each year; however, all financial information related to BFL as
of and for the periods ended December 31 has been adjusted herein to reflect the
results of operations on a calendar year-end basis, as appropriate.
The 0.669 Exchange Ratio is based on the closing price per share of FUNC
Common Stock on the NYSE Tape on May , 1994, as if such closing price were the
Average Closing Price. The actual Exchange Ratio will depend on the Average
Closing Price and may be greater or less than 0.669. The one-for-one Preferred
Stock Conversion Rate is based on the number of shares of BFL Common Stock into
which one share of BFL Preferred Stock is convertible as of the date hereof.
Under certain conditions relating to the possible issuance of additional shares
of BFL Common Stock prior to the Effective Date, the Preferred Stock Conversion
Rate may be greater than one-for-one. The pro forma information presented would
be different if (i) the Average Closing Price is $44.876 or greater or $41.874
or less, or (ii) the Preferred Stock Conversion Rate is greater than
one-for-one. See "THE MERGERS -- Business Pending Consummation" and " -- FUNC
Common Stock Repurchase".
Since purchase accounting does not require restatement of results for prior
periods following consummation of the Corporate Merger, consummation of the
Corporate Merger will not affect FUNC's historical results for the periods
indicated. See "THE MERGERS -- Accounting Treatment".
12
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990
<S> <C> <C> <C> <C>
FUNC (HISTORICAL)
CONSOLIDATED SUMMARIES OF INCOME
(In thousands)
Interest income................................................... $ 4,556,332 4,479,385 4,647,440 4,829,520
Interest expense.................................................. 1,790,439 2,020,968 2,742,996 3,094,334
Net interest income............................................... 2,765,893 2,458,417 1,904,444 1,735,186
Provision for loan losses......................................... 221,753 414,708 648,284 425,409
Net interest income after provision for loan losses............... 2,544,140 2,043,709 1,256,160 1,309,777
Securities available for sale transactions........................ 25,767 34,402 -- --
Investment security transactions.................................. 7,435 (2,881) 155,048 7,884
Noninterest income................................................ 1,165,086 1,032,651 914,511 690,672
Noninterest expense............................................... 2,521,647 2,526,678 1,905,918 1,680,973
Income before income taxes........................................ 1,220,781 581,203 419,801 327,360
Income taxes...................................................... 403,260 196,152 71,070 64,993
Net income........................................................ 817,521 385,051 348,731 262,367
Dividends on preferred stock...................................... 24,900 31,979 34,570 33,868
Net income applicable to common stockholders...................... $ 792,621 353,072 314,161 228,499
PER COMMON SHARE DATA
Net income........................................................ $ 4.73 2.23 2.24 1.68
Cash dividends.................................................... 1.50 1.28 1.12 1.08
Book value........................................................ 28.90 22.25 23.23 21.81
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands).................................................... 243,845 167,601 126,029 116,696
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets............................................................ 70,786,969 63,828,031 59,273,177 54,588,410
Loans, net of unearned income..................................... 46,876,177 41,923,767 41,383,580 36,050,719
Deposits.......................................................... 53,742,411 49,150,965 47,176,223 38,194,268
Long-term debt.................................................... 3,061,944 3,151,260 2,630,930 1,850,860
Preferred stockholders' equity.................................... 284,041 297,215 397,356 317,011
Common stockholders' equity....................................... 4,923,584 4,161,948 3,463,441 2,983,361
Total stockholders' equity........................................ $ 5,207,625 4,459,163 3,860,797 3,300,372
Preferred shares outstanding...................................... 6,318 6,846 10,851 7,293
Common shares outstanding......................................... 170,338 164,849 149,112 136,777
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets............................................................ $68,101,222 61,145,974 55,095,439 52,124,595
Loans, net of unearned income..................................... 43,631,410 41,270,991 37,314,358 35,877,585
Deposits.......................................................... 50,248,848 47,173,706 40,482,433 36,209,083
Long-term debt.................................................... 3,006,560 2,789,653 2,187,595 1,587,497
Common stockholders' equity....................................... 4,550,048 3,889,256 3,131,716 2,937,441
Total stockholders' equity........................................ $ 4,839,397 4,213,896 3,467,437 3,244,473
Common shares outstanding......................................... 167,692 158,683 140,003 135,622
CONSOLIDATED PERCENTAGES
Net income applicable to common stockholders to average common
stockholders' equity............................................ 17.42% 9.08 10.03 7.78
Net income to:
Average total stockholders' equity.............................. 16.89 9.14 10.06 8.09
Average assets.................................................. 1.20 .63 .63 .50
Average stockholders' equity to average assets.................... 7.11 6.89 6.29 6.22
Allowance for loan losses to:
Net loans....................................................... 2.18 2.24 2.06 1.95
Nonaccrual and restructured loans............................... 147 96 72 77
Nonperforming assets............................................ 111 70 50 56
Net charge-offs to average net loans.............................. .58 .86 1.48 .68
Nonperforming assets to loans, net and foreclosed properties...... 1.95 3.19 4.10 3.42
Capital ratios:*
Tier 1 capital.................................................. 9.14 9.22 7.56 6.53
Total capital................................................... 14.64 14.31 11.76 10.83
Leverage........................................................ 6.13 6.55 5.31 4.90
Net interest margin............................................... 4.78% 4.77 4.08 3.99
<CAPTION>
1989
<S> <C>
FUNC (HISTORICAL)
CONSOLIDATED SUMMARIES OF INCOME
(In thousands)
Interest income................................................... 4,179,100
Interest expense.................................................. 2,703,623
Net interest income............................................... 1,475,477
Provision for loan losses......................................... 139,291
Net interest income after provision for loan losses............... 1,336,186
Securities available for sale transactions........................ --
Investment security transactions.................................. 19,018
Noninterest income................................................ 532,295
Noninterest expense............................................... 1,445,836
Income before income taxes........................................ 441,663
Income taxes...................................................... 87,840
Net income........................................................ 353,823
Dividends on preferred stock...................................... 1,380
Net income applicable to common stockholders...................... 352,443
PER COMMON SHARE DATA
Net income........................................................ 2.62
Cash dividends.................................................... 1.00
Book value........................................................ 20.49
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands).................................................... 106,952
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets............................................................ 45,506,847
Loans, net of unearned income..................................... 31,600,776
Deposits.......................................................... 31,531,770
Long-term debt.................................................... 1,514,834
Preferred stockholders' equity.................................... 13,773
Common stockholders' equity....................................... 2,868,913
Total stockholders' equity........................................ 2,882,686
Preferred shares outstanding...................................... 551
Common shares outstanding......................................... 140,023
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets............................................................ 43,224,474
Loans, net of unearned income..................................... 29,507,834
Deposits.......................................................... 29,804,143
Long-term debt.................................................... 1,554,548
Common stockholders' equity....................................... 2,758,156
Total stockholders' equity........................................ 2,771,982
Common shares outstanding......................................... 134,446
CONSOLIDATED PERCENTAGES
Net income applicable to common stockholders to average common
stockholders' equity............................................ 12.78
Net income to:
Average total stockholders' equity.............................. 12.76
Average assets.................................................. .82
Average stockholders' equity to average assets.................... 6.41
Allowance for loan losses to:
Net loans....................................................... 1.12
Nonaccrual and restructured loans............................... 131
Nonperforming assets............................................ 89
Net charge-offs to average net loans.............................. .39
Nonperforming assets to loans, net and foreclosed properties...... 1.25
Capital ratios:*
Tier 1 capital.................................................. --
Total capital................................................... --
Leverage........................................................ --
Net interest margin............................................... 4.15
</TABLE>
* The 1990-1992 capital ratios are not restated for pooling of interests
acquisitions.
13
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990
<S> <C> <C> <C> <C>
BFL (HISTORICAL)
CONSOLIDATED SUMMARIES OF OPERATIONS
(In thousands)
Interest income........................................................ $ 98,128 110,239 132,099 159,380
Interest expense....................................................... 64,057 73,111 97,666 123,139
Net interest income.................................................... 34,071 37,128 34,433 36,241
Provision for loan losses.............................................. 3,934 9,878 25,950 14,060
Net interest income after provision for loan losses.................... 30,137 27,250 8,483 22,181
Security and loan transactions......................................... 11,242 8,298 9,439 (440)
Noninterest income..................................................... 10,360 7,807 8,933 7,379
Noninterest expense.................................................... 33,151 35,413 37,744 38,131
Income (loss) before income taxes (benefit), extraordinary item and
cumulative effect of accounting change............................... 18,588 7,942 (10,889) (9,011)
Income taxes (benefit)................................................. 7,049 1,664 (1,651) 239
Net income (loss) before extraordinary item and cumulative effect of
accounting change.................................................... 11,539 6,278 (9,238) (9,250)
Extraordinary item..................................................... -- (14) 194 --
Net income (loss) before cumulative effect of accounting change........ 11,539 6,264 (9,044) (9,250)
Cumulative effect of accounting change................................. -- 7,327 -- --
Net income (loss)...................................................... 11,539 13,591 (9,044) (9,250)
Dividends on preferred stock........................................... 1,204 1,207 1,231 1,376
Net income (loss) applicable to common stockholders.................... $ 10,335 12,384 (10,275) (10,626)
PER COMMON SHARE DATA
Net income (loss)...................................................... $ 2.76 3.42 (2.91) (3.09)
Cash dividends......................................................... -- -- -- --
Book value............................................................. 17.19 14.73 11.15 13.89
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands)......................................................... -- -- -- --
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets................................................................. 1,527,075 1,512,436 1,469,192 1,696,036
Loans, net of unearned income.......................................... 743,119 795,239 1,000,380 1,165,527
Deposits............................................................... 1,200,776 1,184,315 1,193,970 1,265,106
Long-term debt......................................................... 103,537 177,550 113,655 112,130
Preferred stockholder's equity......................................... 15,079 18,894 17,687 16,455
Common stockholders' equity............................................ 62,164 52,078 39,391 49,099
Total stockholder's equity............................................. $ 77,243 70,972 57,078 65,554
Preferred shares outstanding........................................... 1,138 1,138 1,138 1,138
Common shares outstanding.............................................. 3,615 3,536 3,534 3,534
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets................................................................. $1,527,150 1,482,621 1,545,146 1,740,740
Loans, net of unearned income.......................................... 770,885 924,138 1,094,761 1,203,478
Deposits............................................................... 1,177,385 1,174,771 1,233,554 1,268,577
Long-term debt......................................................... 149,130 168,030 72,844 88,716
Preferred stockholder's equity......................................... 16,664 18,289 17,077 15,770
Common stockholders' equity............................................ 57,662 43,647 42,478 52,105
Total stockholders' equity............................................. $ 74,326 61,936 59,555 67,875
Preferred shares outstanding........................................... 1,138 1,138 1,138 1,138
Common shares outstanding.............................................. 3,547 3,534 3,534 3,447
CONSOLIDATED PERCENTAGES
Net income (loss) applicable to common stockholders to
average common stockholders' equity.................................. 17.92% 28.37 (24.19) (20.39)
Net income (loss) to:
Average stockholders' equity......................................... 15.52 21.94 (15.19) (13.63)
Average assets....................................................... .76 .92 (.59) (.53)
Average stockholders' equity to average assets......................... 4.87 4.18 3.85 3.90
Allowance for loan losses to:
Net loans............................................................ 3.02 3.71 3.05 1.81
Nonaccrual and restructured loans.................................... 65.58 43.21 26.45 22.17
Nonperforming assets................................................. 24.08 23.91 19.38 14.31
Net charge-offs to average net loans................................... 1.35 1.18 1.51 .29
Nonperforming assets to loans, net and foreclosed properties........... 11.63 14.52 15.11 12.13
Capital ratios:
Tier 1 capital....................................................... 9.84 8.65 4.96 4.37
Total capital........................................................ 11.27 10.20 7.22 6.39
Leverage............................................................. 5.75% 5.11 4.00 3.47
<CAPTION>
1989
<S> <C>
BFL (HISTORICAL)
CONSOLIDATED SUMMARIES OF OPERATIONS
(In thousands)
Interest income........................................................ 177,222
Interest expense....................................................... 140,374
Net interest income.................................................... 36,848
Provision for loan losses.............................................. 9,806
Net interest income after provision for loan losses.................... 27,042
Security and loan transactions......................................... 5,340
Noninterest income..................................................... 5,364
Noninterest expense.................................................... 34,771
Income (loss) before income taxes (benefit), extraordinary item and
cumulative effect of accounting change............................... 2,975
Income taxes (benefit)................................................. 1,427
Net income (loss) before extraordinary item and cumulative effect of
accounting change.................................................... 1,548
Extraordinary item..................................................... --
Net income (loss) before cumulative effect of accounting change........ 1,548
Cumulative effect of accounting change................................. --
Net income (loss)...................................................... 1,548
Dividends on preferred stock........................................... 1,420
Net income (loss) applicable to common stockholders.................... 128
PER COMMON SHARE DATA
Net income (loss)...................................................... .03
Cash dividends......................................................... .44
Book value............................................................. 16.99
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands)......................................................... 1,502
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets................................................................. 1,806,203
Loans, net of unearned income.......................................... 1,229,757
Deposits............................................................... 1,282,380
Long-term debt......................................................... 103,601
Preferred stockholder's equity......................................... 15,079
Common stockholders' equity............................................ 58,004
Total stockholder's equity............................................. 73,083
Preferred shares outstanding........................................... 1,138
Common shares outstanding.............................................. 3,414
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets................................................................. 1,863,245
Loans, net of unearned income.......................................... 1,381,920
Deposits............................................................... 1,304,716
Long-term debt......................................................... 96,966
Preferred stockholder's equity......................................... 15,079
Common stockholders' equity............................................ 58,118
Total stockholders' equity............................................. 73,197
Preferred shares outstanding........................................... 1,097
Common shares outstanding.............................................. 3,414
CONSOLIDATED PERCENTAGES
Net income (loss) applicable to common stockholders to
average common stockholders' equity.................................. .22
Net income (loss) to:
Average stockholders' equity......................................... 2.11
Average assets....................................................... .08
Average stockholders' equity to average assets......................... 3.93
Allowance for loan losses to:
Net loans............................................................ .86
Nonaccrual and restructured loans.................................... 23.37
Nonperforming assets................................................. 13.56
Net charge-offs to average net loans................................... .36
Nonperforming assets to loans, net and foreclosed properties........... 6.18
Capital ratios:
Tier 1 capital....................................................... 4.52
Total capital........................................................ 5.18
Leverage............................................................. 3.80
</TABLE>
14
<PAGE>
FUNC AND BFL
PRO FORMA COMBINED SELECTED FINANCIAL DATA (1)
<TABLE>
<CAPTION>
AS OF AND FOR
THE YEAR ENDED
DECEMBER 31,
1993
<S> <C>
CONSOLIDATED SUMMARIES OF INCOME
(In thousands)
Interest income............................................................................................. $ 4,647,334
Interest expense............................................................................................ 1,853,111
Net interest income......................................................................................... 2,794,223
Provision for loan losses................................................................................... 225,687
Net interest income after provision for loan losses......................................................... 2,568,536
Securities available for sale transactions.................................................................. 25,767
Investment security transactions............................................................................ 18,677
Noninterest income.......................................................................................... 1,175,446
Noninterest expense......................................................................................... 2,561,273
Income before income taxes.................................................................................. 1,227,153
Income taxes................................................................................................ 407,067
Net income.................................................................................................. 820,086
Dividends on preferred stock................................................................................ 24,900
Net income applicable to common stockholders................................................................ $ 795,186
PER COMMON SHARE DATA
Net income applicable to common stockholders................................................................ $ 4.69
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets...................................................................................................... 72,345,649
Loans, net of unearned income............................................................................... 47,639,296
Deposits.................................................................................................... 54,943,187
Long-term debt.............................................................................................. 3,150,090
Preferred stockholders' equity.............................................................................. 284,041
Common stockholders' equity................................................................................. 5,013,630
Total stockholders' equity.................................................................................. $ 5,297,671
CONSOLIDATED PERCENTAGES
Allowance for loan losses to:
Net loans................................................................................................ 2.19%
Nonperforming assets..................................................................................... 1.04
Net charge-offs to average net loans........................................................................ .59
Nonperforming assets to loans, net and foreclosed properties................................................ 2.10%
</TABLE>
(1) Based on the assumptions indicated above and below, on a pro forma basis the
Corporate Merger will increase FUNC's goodwill by $95,334,000, which will be
amortized on a straight-line basis over 25 years, and FUNC's deposit base
premium by $17,447,000, which will be amortized on an accelerated basis over
a ten-year period. The following assumptions were used to arrive at the pro
forma results of operations: cost of funds for the purchase of the
Repurchased Shares of 3.12 percent; applying a straight-line amortization
method over seven years for the excess cost of carrying value over market
value for securities; applying an accelerated seven-year amortization period
for loan premiums; applying straight-line depreciation over ten years for
premises and equipment; merger-related accruals of $34 million for branch
closings, employee and occupancy-related costs, and other merger-related
expenses; and a cost of nine percent related to BFL Debentures converted to
FUNC Common Shares.
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RECENT DEVELOPMENTS
MARCH 31, 1994 PERIOD END RESULTS
FUNC
FUNC's earnings applicable to common stockholders were $217 million in the
first quarter of 1994, a 12 percent increase from $193 million in the first
quarter of 1993 and 14 percent from $190 million in the fourth quarter of 1993.
Net income per common share increased to $1.27 from $1.17 in the first quarter
of 1993 and $1.12 in the fourth quarter of 1993.
FUNC's return on average common equity was 17.54 percent and the return on
average assets was 1.28 percent in the first quarter of 1994, compared with
18.41 percent and 1.28 percent in the first quarter of 1993 and 15.55 percent
and 1.07 percent in the fourth quarter of 1993.
Important factors in FUNC's first quarter 1994 earnings performance
compared with the fourth quarter of 1993 included:
(Bullet) Continued growth in net interest income;
(Bullet) Continued improvement in credit quality, including a $120 million
reduction in nonperforming assets, lower charge-offs and a lower
loan loss provision; and
(Bullet) A $48 million decline in noninterest expense.
Tax-equivalent net interest income increased to $750 million from $696
million in the first quarter of 1993 and $733 million in the fourth quarter of
1993.
Nonperforming assets declined to $796 million, or 1.70 percent of net loans
and foreclosed properties, at March 31, 1994, compared with $1.268 billion, or
3.07 percent, at the end of the first quarter a year ago, and $916 million, or
1.95 percent, at December 31, 1993.
Annualized net charge-offs as a percentage of average net loans were .27
percent in the first quarter of 1994, compared with .61 percent in the first
quarter of 1993 and .51 percent in the fourth quarter of 1993. The loan loss
provision declined to $25 million, from $60 million in the first quarter of 1993
and $50 million in the fourth quarter of 1993.
Net loans at March 31, 1994, were $46.7 billion, compared with $40.9
billion at the end of first quarter of 1993 and $46.9 billion at year-end 1993.
Since year-end, commercial and consumer loan growth has been partially offset by
the planned runoff of acquired loans and lower balances of mortgages held for
sale.
Deposits were $52.1 billion at March 31, 1994, compared with $47.9 billion
at the end of the first quarter a year ago and $53.7 billion at year-end 1993.
Total stockholders' equity was $5.28 billion at March 31, 1994, compared with
$4.66 billion at March 31, 1993 and $5.21 billion at year-end.
Results in the first quarter of 1993 do not include the purchase accounting
acquisitions of Georgia Federal Bank, FSB, and First American Metro Corp., which
were completed in June 1993.
At March 31, 1994, FUNC had assets of $72.2 billion and operated 1,308
banking offices in Florida, North Carolina, Georgia, Virginia, South Carolina,
Tennessee, Maryland and Washington, D.C., and 206 nonbanking offices in 39
states.
BFL
BFL reported net income of $929,000, or earnings per share of $0.16, for
the second quarter of fiscal 1994 as compared to net income for the same period
in fiscal 1993 of $2.7 million, or primary earnings per share of $0.66 ($0.51
fully diluted). For the six months ended March 31, 1994, BFL's net income was
$2.4 million, or earnings per share of $0.48. This compared to net income for
the same period in fiscal 1993 of $10.3 million, or primary earnings per share
of $2.66 ($1.81 fully diluted), which included income of $7.3 million
representing the cumulative effect of a change in the method of accounting for
income taxes pursuant to BFL's adoption of Statement of Financial Accounting
Standards No. 109. Excluding this adjustment, net income for the first six
months of fiscal 1993 would have been $3.0 million, or primary earnings per
share of $0.68 ($0.58 fully diluted).
Earnings for the quarter ended March 31, 1994 included losses from loans
and securities transactions of $902,000 compared to gains of $1.9 million for
the same quarter in fiscal 1993. For the six months ended March 31, 1994, losses
from loans and securities transactions totaled $72,000 compared to gains of $1.8
million for the same period in fiscal 1993.
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Provisions for losses relating to loans and investments in real estate for
the quarter ended March 31, 1994 totaled $82,000 compared to $2.2 million for
the same period in fiscal 1993. For the six month period, such provisions
totaled $445,000 in 1994 compared to $6.9 million in 1993. The decrease in
provisions in fiscal 1994 is attributable to a reduction in the level of
classified assets. At March 31, 1994, classified assets totaled $112.9 million,
or 7.3 percent of total assets, compared to $165.9 million, or 10.9 percent of
total assets, at March 31, 1993. This represents a net decrease of $53.0 million
between March 31, 1993 and March 31, 1994. Total nonperforming assets declined
by $28.0 million during the same one-year time period to $91.4 million.
At March 31, 1994, BFL Bank's risk-based, tier 1 risk-based, and core
capital ratios were 11.13 percent, 9.71 percent and 5.56 percent, respectively.
BFL had total assets of $1.5 billion and a book value per share of BFL
Common Stock of $16.35 at March 31, 1994, compared to $1.5 billion and a book
value per share of $15.47 at March 31, 1993.
GENERAL INFORMATION
GENERAL
This Prospectus/Proxy Statement is being furnished by BFL to its
stockholders as a Proxy Statement in connection with the solicitation of proxies
by the Board of Directors of BFL for use at the Special Meeting to be held on
June 10, 1994, and any adjournment or adjournments thereof, to consider and vote
upon: (i) a proposal to approve the Merger Agreement; and (ii) such other
business as may properly come before the Special Meeting or any adjournment or
adjournments thereof.
This document is also furnished by FUNC to the holders of BFL Common Stock
and the holder of BFL Preferred Stock as a Prospectus in connection with the
issuance by FUNC of the FUNC Common Shares, upon consummation of the Corporate
Merger.
After having been submitted, the enclosed proxy may be revoked by the
person giving it, at any time before it is exercised, by: (i) submitting written
notice of revocation of such proxy to the Secretary of BFL; (ii) submitting a
proxy having a later date; or (iii) such person appearing at the Special Meeting
and requesting a return of the proxy. All shares represented by valid proxies
will be exercised in the manner specified thereon. If no specification is made,
such shares will be voted in favor of approval of the Merger Agreement.
Directors, officers and employees of BFL and FUNC may solicit proxies from
BFL stockholders, either personally or by telephone, telegraph or other form of
communication. Such persons will receive no additional compensation for such
services. BFL has retained Morrow & Co. to assist in solicting proxies and to
send proxy materials to brokerage houses and other custodians, nominees and
fudiciaries for transmittal to their principals, at a cost of $3,000, plus
out-of-pocket expenses. All expenses associated with the solicitation of proxies
in the form enclosed will be borne by the party incurring the same, except for
printing expenses, which will be shared equally between FUNC and BFL.
THE BOARD OF DIRECTORS OF BFL HAS UNANIMOUSLY ADOPTED THE MERGER AGREEMENT,
BELIEVES IT IS IN THE BEST INTERESTS OF BFL AND ITS STOCKHOLDERS AND RECOMMENDS
ITS APPROVAL BY BFL STOCKHOLDERS. SEE "THE MERGERS -- BACKGROUND AND REASONS;
BFL".
RECORD DATE; VOTES REQUIRED
The Board of Directors of BFL has fixed May 2, 1994, as the Record Date for
determining stockholders entitled to notice of and to vote at the Special
Meeting, and accordingly, only holders of BFL Common Stock and BFL Preferred
Stock of record at the close of business on that day will be entitled to notice
of and to vote at the Special Meeting. The number of shares of BFL Common Stock
outstanding on the Record Date was 3,709,151, each of such shares being entitled
to one vote. The number of shares of BFL Preferred Stock outstanding on the
Record Date was 1,138,000, each of such shares being entitled to one vote with
respect to the vote of the Combined Shares and one vote with respect to the
separate class vote of the BFL Preferred Stock.
Approval of the Merger Agreement requires the affirmative vote of a
majority of the votes entitled to be cast at the Special Meeting by the holders
of BFL Common Stock and the holder of the BFL Preferred Stock voting together as
a class. In addition, the holder of the BFL Preferred Stock will be afforded a
separate class vote on approval of the Merger Agreement.
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The directors and executive officers of BFL (including certain of their
related interests) beneficially owned, as of the Record Date, and are entitled
to vote at the Special Meeting 180,143 shares of BFL Common Stock, which
represents 3.9 percent of the Combined Shares. In connection with the execution
of the Merger Agreement, the holder of the BFL Preferred Stock, which represents
23.5 percent of the Combined Shares, entered into the Preferred Stockholder
Agreement (a copy of which is included as Exhibit B to ANNEX A to this
Prospectus/Proxy Statement) whereby such holder has agreed to vote such BFL
Preferred Stock in favor of approval of the Merger Agreement at the Special
Meeting. Accordingly, assuming such shares are so voted and that the directors
and executive officers of BFL vote their shares of BFL Common Stock in favor of
approval of the Merger Agreement, approval of the Merger Agreement will require
the affirmative vote of the holders of an additional 22.6 percent of the
outstanding shares of BFL Common Stock entitled to be voted at the Special
Meeting in order for the Merger Agreement to be approved at the Special Meeting
by the requisite vote of the holders of the Combined Shares.
A FAILURE TO VOTE, EITHER BY NOT RETURNING THE ENCLOSED PROXY OR BY
CHECKING THE "ABSTAIN" BOX THEREON, WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
APPROVAL OF THE MERGER AGREEMENT.
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THE MERGERS
THE FOLLOWING INFORMATION RELATING TO THE MERGERS IS NOT INTENDED TO BE A
COMPLETE DESCRIPTION OF ALL MATERIAL INFORMATION RELATING TO THE MERGERS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT, INCLUDING THE ANNEXES HERETO AND
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. A COPY OF THE MERGER AGREEMENT
(INCLUDING THE STOCK OPTION AGREEMENT AND THE PREFERRED STOCKHOLDER AGREEMENT)
IS SET FORTH IN ANNEX A TO THIS PROSPECTUS/PROXY STATEMENT AND REFERENCE IS MADE
THERETO FOR A COMPLETE DESCRIPTION OF THE TERMS OF THE MERGERS. STOCKHOLDERS OF
BFL ARE URGED TO READ THE MERGER AGREEMENT CAREFULLY.
GENERAL
Under the terms of the Merger Agreement, BFL would merge with and into
FUNC-FL and BFL Bank would merge with and into FUNB-FL. Upon consummation of the
Corporate Merger (i) each outstanding share of BFL Common Stock (excluding any
FUNC/BFL Held Shares) would be converted, by virtue of the Corporate Merger,
automatically and without any action on the part of the holder thereof, into the
right to receive a number of shares of FUNC Common Stock equal to (a) 0.669
shares if the Average Closing Price of FUNC Common Stock on the NYSE Tape for
the ten trading days immediately prior to the Effective Date is greater than
$41.874 and less than $44.876, (b) the result obtained by dividing $28.00 by the
Average Closing Price if the Average Closing Price is $41.874 or less, or (c)
the result obtained by dividing $30.00 by the Average Closing Price if the
Average Closing Price is $44.876 or greater, and (ii) each outstanding share of
BFL Preferred Stock would be converted, by virtue of the Corporate Merger,
automatically and without any action on the part of the holder thereof, into the
right to receive a number of shares of FUNC Common Stock equal to the product of
(x) the Exchange Ratio, and (y) the Preferred Stock Conversion Rate. Each holder
of BFL Common Stock and BFL Preferred Stock who would otherwise be entitled to a
fractional share of FUNC Common Stock will receive cash in lieu thereof in an
amount determined by multiplying (1) the last reported sale price per share of
FUNC Common Stock on the NYSE Tape on the last trading day prior to the
Effective Date by (2) the fraction of a share of FUNC Common Stock to which such
holder would otherwise be entitled.
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Mergers, the Effective Date will occur on such date as FUNC notifies BFL in
writing not less than five days prior thereto, provided such date is not more
than 30 days after such conditions have been satisfied or waived. Subject to the
foregoing, it is currently anticipated that the Mergers will be consummated in
the third quarter of 1994. If the Corporate Merger is consummated in such
quarter, or in any other quarter, BFL stockholders should not assume or expect
that the Effective Date will precede the record date for the dividend on FUNC
Common Stock for that quarter, so as to enable such stockholders to receive such
dividend. The Board of Directors of either FUNC or BFL may terminate the Merger
Agreement if the Effective Date does not occur on or before December 31, 1994.
See " -- Exchange of BFL Certificates" and " -- Conditions to Consummation;
Termination".
EXCHANGE OF BFL CERTIFICATES
As promptly as practicable after the Effective Date, FUNC will send or
cause to be sent to each holder of record of BFL Common Stock and BFL Preferred
Stock, transmittal materials for use in exchanging all of such holder's
certificates representing BFL Common Stock and BFL Preferred Stock for a
certificate or certificates representing the FUNC Common Shares to which such
holder is entitled and a check or checks for such holder's fractional share
interests, as appropriate. The transmittal materials will contain information
and instructions with respect to the surrender and exchange of such
certificates.
BFL STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender of all of the certificates for BFL Common Stock and BFL
Preferred Stock, as applicable, registered in the name of a holder of such
certificates (or indemnity satisfactory to FUNC and the exchange agent selected
by FUNC if any of such certificates are lost, stolen or destroyed), together
with a properly completed letter of transmittal, such exchange agent will mail
to such holder a certificate or certificates representing the number of FUNC
Common Shares to which such holder is entitled, together with all undelivered
dividends or distributions in respect of such shares and, where applicable, a
check or checks for any fractional share interests (in each case, without
interest).
All FUNC Common Shares issued to the holders of BFL Common Stock and BFL
Preferred Stock pursuant to the Corporate Merger will be deemed issued as of the
Effective Date. After the Effective Date, former holders of record of BFL Common
Stock and BFL Preferred Stock will be entitled to vote at any meeting of holders
of FUNC Common Stock the
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number of FUNC Common Shares into which their BFL shares have been converted,
regardless of whether they have surrendered their BFL Common Stock or BFL
Preferred Stock certificates. FUNC dividends having a record date after the
Effective Date will include dividends on all FUNC Common Shares issued in the
Corporate Merger, but no dividend or other distribution payable to the holders
of record of FUNC Common Shares at or as of any time after the Effective Date
will be distributed to the holder of any BFL Common Stock or BFL Preferred Stock
certificates until such holder physically surrenders all such certificates as
hereinabove described. Promptly after such surrender, all undelivered dividends
and other distributions and, where applicable, a check or checks for any
fractional share interests, will be delivered to such holder (in each case,
without interest). FUNC dividends having a record date before the Effective Date
(which record date may, in FUNC's sole discretion, be the day immediately
preceding the Effective Date or any other day prior to the Effective Date) will
not include dividends on the FUNC Common Shares issued in the Corporate Merger.
After the Effective Date, the stock transfer books of BFL will be closed and
there will be no transfers on the transfer books of BFL of the shares of BFL
Common Stock and BFL Preferred Stock that were outstanding immediately prior to
the Effective Date.
BACKGROUND AND REASONS
BFL
At December 7, 1989, BFL Bank exceeded the tangible and core capital
requirements of OTS regulations but did not meet the risk-based capital
requirement. As a result, BFL Bank was required, under OTS regulations, to
submit a capital plan to the OTS. BFL Bank submitted its Capital Plan (the "BFL
Bank Capital Plan") which was approved by the OTS on June 21, 1990. The BFL Bank
Capital Plan outlined BFL Bank's strategies to meet the risk-based requirement
and set risk-based capital requirements for BFL Bank to achieve based on its
operating plans during the period June 30, 1990 through September 30, 1992.
In connection with OTS approval of the BFL Bank Capital Plan, BFL Bank
agreed to limit its investment and lending activities and growth to the levels
specified in the BFL Bank Capital Plan. BFL Bank also agreed not to make any
further dividend payments or distributions to BFL while the BFL Bank Capital
Plan was in effect. In December 1992, the OTS released BFL Bank from the BFL
Bank Capital Plan and the related conditions contained in the letter from OTS
approving the BFL Bank Capital Plan.
BFL Bank entered into a written agreement dated April 19, 1991 (the "BFL
Bank Written Agreement") with the OTS in which BFL Bank undertook to take
certain steps to reduce the level of its classified assets, including limiting
its lending activities until such time as its level of classified assets, as
determined by the OTS, is reduced below 50 percent of its total capital. While
BFL Bank has been released from the BFL Bank Capital Plan, in light of the
restrictions on BFL Bank's business contained in the BFL Bank Written Agreement,
BFL Bank faced business and regulatory pressures to improve its capital
position. With the assistance of its investment bankers, BFL and BFL Bank
continued to explore alternatives for improving its capital position. Such
alternatives included (i) the sale of additional shares of BFL Common Stock in
an underwritten public offering or a rights offering to its existing
stockholders, (ii) the implementation of a dividend reinvestment and stock
purchase plan, (iii) the augmentation of capital through the retention of
earnings, and (iv) a sale of BFL or BFL Bank.
In early August 1993, Rudolf P. Guenzel, Chief Executive Officer and
President of BFL and BFL Bank, met with Byron Hodnett, Chief Executive Officer
of FUNB-FL, for a preliminary and general discussion of whether a merger
involving BFL and FUNC might be feasible. No specific proposal was made by FUNC
or FUNB-FL at that meeting. Following that meeting, a confidentiality agreement
was entered into between BFL and FUNB-FL in September 1993, and BFL provided to
FUNB-FL copies of its public financial reports, a supplemental memorandum and
certain additional non-public information.
At its meeting on October 22, 1993, Mr. Guenzel advised the Board of
Directors of BFL that certain non-public information had been provided to
FUNB-FL and that BFL and FUNB-FL had entered into a confidentiality agreement.
At this meeting, Mr. Guenzel also advised the Board of Directors that
preliminary discussions had been held with a second potential acquiror but that
any further discussions would be postponed until near the end of 1993 because of
other pending transactions to which that potential acquiror was a party.
On January 5, 1994, representatives of BFL, FUNC and FUNB-FL met at the
offices of BFL, and FUNC presented a letter addressed to BFL outlining the terms
on which it might consider a merger transaction with BFL. This non-binding
letter was discussed by the Board of Directors of BFL at a meeting on January 7,
1994, with the assistance of Alex. Brown. The Board authorized management to
continue discussions with FUNC.
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On January 10, 1994, a confidential Offering Memorandum was provided to
FUNC and the other potential acquiror identified to the Board of Directors of
BFL at the October 22, 1993 meeting which provided certain additional
information concerning BFL and BFL Bank and updated certain information
previously furnished. Following review of the Offering Memorandum, FUNC
delivered to BFL a non-binding letter dated January 11, 1994, confirming its
interest in pursuing a proposal substantially on the terms outlined in its
letter dated January 5, 1994. FUNC's January 11, 1994 letter was discussed by
the directors of BFL at a meeting on January 12, 1994, again with the assistance
of Alex. Brown. Thereafter, the Board authorized management of BFL to permit
on-site due diligence by FUNC beginning after the close of business on January
14, 1994.
On January 14 through January 16, 1994, representatives of FUNC performed
due diligence on the books and records of BFL and BFL Bank and conducted
interviews with various personnel of BFL and BFL Bank. Simultaneously with the
conduct of the due diligence review, representatives of BFL (including
representatives of Alex. Brown and Cummings & Lockwood, special counsel to BFL)
and FUNC negotiated the terms of the Merger Agreement.
On behalf of BFL, Alex. Brown contacted the other potential acquiror
referred to above to determine whether it had any interest in pursuing a
proposal to acquire BFL. There was no formal response to this inquiry. The price
initially suggested by such potential acquiror in connection with an acquisition
of BFL was below the price ultimately agreed to in the Merger Agreement.
Meetings of the Boards of Directors of BFL and BFL Bank were held on
January 16, 1994, at which the terms of the Merger Agreement were reviewed in
detail. The Boards of Directors of BFL and BFL Bank unanimously approved the
Merger Agreement, the Stock Option Agreement and the Preferred Stockholder
Agreement. Among the factors considered by the Board were: (i) the Exchange
Ratio when measured against the terms of comparable transactions and in
comparison with the preliminary indications of price suggested by the other
potential acquiror; (ii) the fairness opinion received by BFL from Alex. Brown;
(iii) the continuing limitation on BFL Bank's lending activities under the BFL
Bank Written Agreement because of the level of BFL Bank's problem assets; (iv)
the willingness of FUNC to assume the risk relating to certain litigation
pending against BFL Bank; (v) the relative probability that the Mergers would be
concluded, including the nature of the conditions to FUNC's obligations
contained in the Merger Agreement; (vi) the continuing need for BFL Bank to
improve its capital ratios and the feasibility of alternative capital raising
initiatives; (vii) the requirement of FUNC that BFL grant FUNC the Option,
including the number of shares which would be issuable thereunder on a
fully-diluted basis, the exercise price and the potential impact of the
existence of the Option on the receipt of other offers to acquire BFL; (viii)
the prospects of BFL if it remained independent; and (ix) the anticipated
continuing adverse effect on the operations of BFL Bank of the terms of the BFL
Bank Written Agreement which preclude BFL Bank from engaging in certain types of
business which have historically been more profitable.
BFL'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT BFL STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT.
FUNC
FUNC believes that it is advantageous to build a multi-state banking
organization. The economies of banking favor such an organization as a way of
gaining efficiency and spreading costs over a large base, as well as providing
diversification. To further its objective to build a multi-state banking
organization, FUNC has heretofore concentrated its efforts on what it perceives
to be some of the better banking markets in the southeast and south atlantic
regions of the United States and on advantageous ways of entering or expanding
its presence in those markets. FUNC believes that Florida is among the better,
if not the best, of the banking markets in such regions and that joining with
BFL is an excellent way to significantly expand FUNC's presence in the Florida
market.
FUNC is continually evaluating acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of FUNC's book value and net income
per common share may occur in connection with any future transactions. See
"FUNC -- History and Business".
OPINION OF FINANCIAL ADVISOR
BFL has retained Alex. Brown to act as BFL's financial advisor in
connection with the Corporate Merger and related matters. Alex. Brown has
historically provided, and continues to provide, certain other financial
advisory and agency services to BFL. Alex. Brown was selected to act as BFL's
financial advisor based upon its qualifications, expertise and reputation as
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well as Alex. Brown's prior investment banking relationship and familiarity with
BFL. Alex. Brown regularly publishes research reports regarding the financial
services industry and the business and securities of publicly owned companies in
the industry.
On January 16, 1994, at the meeting at which the Board of Directors of BFL
approved and adopted the Merger Agreement, Alex. Brown delivered a written
opinion (the "Alex. Brown Opinion") to the Board of Directors of BFL that as of
such date the Exchange Ratio, 0.669 shares of FUNC Common Stock for each share
of BFL Common Stock (subject to certain adjustments based upon the price of FUNC
Common Stock as outlined in the Merger Agreement), was fair to the holders of
BFL Common Stock from a financial point of view. No limitations were imposed by
the Board of Directors of BFL upon Alex. Brown with respect to the
investigations made or procedures followed by them in rendering the Alex. Brown
Opinion.
THE FULL TEXT OF THE ALEX. BROWN OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED HERETO
AS ANNEX B AND IS INCORPORATED HEREIN BY REFERENCE. BFL STOCKHOLDERS ARE URGED
TO READ THE ALEX. BROWN OPINION IN ITS ENTIRETY. THE FOLLOWING SUMMARY OF THE
ALEX. BROWN OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF THE ALEX. BROWN OPINION.
In rendering the Alex. Brown Opinion, Alex. Brown: (i) reviewed the Merger
Agreement, certain publicly available business and financial information
concerning BFL and FUNC, and certain internal financial analyses and forecasts
for BFL prepared by its management; (ii) held discussions with members of senior
management regarding the past and current business operations, financial
condition and future prospects of BFL and FUNC; (iii) reviewed the reported
price and trading activity for BFL Common Stock and FUNC Common Stock and
compared certain financial and stock market information for BFL and FUNC with
similar information for certain other companies the securities of which are
publicly traded; (iv) reviewed the financial terms of certain recent business
combinations in the financial services industry which Alex. Brown deemed
comparable in whole or in part; and (v) performed such other studies and
analyses as Alex. Brown considered appropriate.
Alex. Brown relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by and
discussed with it for purposes of the Alex. Brown Opinion. With respect to the
financial forecasts reviewed by Alex. Brown in rendering the Alex. Brown
Opinion, Alex. Brown assumed that such financial forecasts were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the management of BFL as to the future financial performance of
BFL. Alex. Brown did not make independent evaluations or appraisals of the
assets or liabilities of BFL or FUNC, nor was it furnished with any such
appraisals.
The summary set forth below does not purport to be a complete description
of the analyses performed by Alex. Brown in this regard. The preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of these methods to
the particular circumstances, and therefore, such an opinion is not readily
susceptible to summary description. Accordingly, notwithstanding the separate
factors discussed below, Alex. Brown believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the evaluation process underlying the Alex. Brown
Opinion. No one of the analyses performed by Alex. Brown was assigned a greater
significance than any other. In performing its analyses, Alex. Brown made
numerous assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond BFL's or FUNC's control.
The analyses performed by Alex. Brown are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, analyses relating to the value of
businesses do not purport to be appraisals or to reflect the prices at which
businesses may actually be sold.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
In preparing the Alex. Brown Opinion, Alex. Brown, using publicly available
information, compared selected financial information, including book value,
tangible book value, recent earnings, asset quality ratios and loan loss reserve
levels, for BFL and two groups of savings banks.
The first group was comprised of eight thrift institutions located in the
State of Florida that possessed an asset base between $400 million and $4.5
billion (the "Florida Comparable Group"). The Florida Comparable Group included
(in descending order of asset size): CSF Holdings, Inc.; American Savings of
Florida; Coral Gables Fedcorp, Inc.; BankAtlantic, FSB; Home Savings Bank, MHC;
FF Bancorp, Inc.; Bank United Financial Corp.; and F&C Bancshares, Inc. As of
January 13, 1994, the relative multiples of the market price of BFL and the mean
market price of the Florida Comparable Group to selected financial data was: to
stated book value, 115.9 percent for BFL and 116.7 percent for the Florida
Comparable Group;
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to tangible book value, 121.3 percent for BFL and 125.0 percent for the Florida
Comparable Group; to the latest twelve month earnings ("LTM Earnings"), 6.3
times for BFL and 10.5 times for the Florida Comparable Group; and to total
assets, 4.6 percent for BFL and 10.4 percent for the Florida Comparable Group.
In assessing the LTM Earnings multiple for BFL, it is important to note that
only $.62 of fiscal year ended September 30, 1993's fully-diluted earnings per
share level of $3.16 resulted from BFL's core operations ("Core LTM EPS"). Thus,
the Core LTM EPS multiple for BFL was 32.3 times as of January 13, 1994.
The second group was comprised of national thrift institutions that
possessed an asset base between $300 million and $3.0 billion ("National
Comparable Group"). As of January 13, 1994, the relative multiples of the market
price of BFL and the mean market price of the National Comparable Group to
selected financial data was: to stated book value, 115.9 percent for BFL and
108.0 percent for the National Comparable Group; to tangible book value, 121.3
percent for BFL and 112.3 percent for the National Comparable Group; to LTM
Earnings, 6.3 times for BFL and 9.7 times for the National Comparable Group; and
to total assets, 4.6 percent for BFL and 8.3 percent for the National Comparable
Group.
ANALYSIS OF COMPARABLE ACQUISITION TRANSACTIONS
In preparing the Alex. Brown Opinion, Alex. Brown analyzed certain
comparable merger and acquisition transactions for savings banks based upon the
acquisition price relative to book value, LTM Earnings, total assets and the
premiums to core deposits and the market price. The market price premium is
measured against the market price of the common stock one month prior to the
acquisition announcement so as to eliminate any stock price volatility
associated with rumors associated with an organization's takeover. The analysis
included a review and comparison of the mean multiples represented by a sample
of recently effected or pending savings bank acquisitions nationwide having a
transaction value in excess of $50 million which were announced since January 1,
1992 (a total of 58 transactions) ("Nationwide Transactions"), as segmented
into: (i) transactions in Florida -- nine transactions ("Florida Transactions");
(ii) transactions in which the selling thrift institution generated a return on
average assets between 0.70 percent and 1.20 percent in the year of an announced
acquisition -- 21 transactions ("Profitability Segmented Transactions"); and
(iii) transactions in which the selling savings bank possessed asset quality
difficulties, as defined by a nonperforming assets to total assets ratio in
excess of four percent -- 12 transactions ("Asset Quality Segmented
Transactions"). This entire group was then segmented into national acquisitions
announced since January 1, 1993 -- 34 transactions ("1993 Transactions").
Based on the per share closing stock price of FUNC Common Stock on January
14, 1994 ($41.875), the value of the FUNC Common Stock to be issued pursuant to
the Merger Agreement for each share of BFL Common Stock was $28.00 (the
"Comparison Value"). The relative multiples of the related purchase price (using
the Comparison Value for the Corporate Merger) to each of the comparable
acquisition transaction segmentations are provided in the following table:
<TABLE>
<CAPTION>
PURCHASE PRICE AS A MULTIPLE OF PREMIUM TO
BOOK TOTAL CORE
GROUPING VALUE (1) LTM EARNINGS ASSETS (1) DEPOSITS (1)
<S> <C> <C> <C> <C>
Corporate Merger............................................ 162.3% 11.4x(3) 10.6% 8.4%
Nationwide Transactions..................................... 147.8 14.1 12.5 6.8
(a) Florida Transactions.................................... 143.2 15.6 11.6 6.3
(b) Profitability Segmented Transactions.................... 148.2 14.2 12.9 6.6
(c) Asset Quality Segmented Transactions.................... 121.9 14.4 8.5 3.2
(d) 1993 Transactions....................................... 163.3% 15.8x 13.9% 8.4%
<CAPTION>
MARKET
GROUPING PRICE (2)
<S> <C>
Corporate Merger............................................ 36.6%
Nationwide Transactions..................................... 48.6
(a) Florida Transactions.................................... 48.8
(b) Profitability Segmented Transactions.................... 51.2
(c) Asset Quality Segmented Transactions.................... 49.5
(d) 1993 Transactions....................................... 42.5%
</TABLE>
(1) Based on the financial statements of the selling institutions as of the
quarter ended immediately prior to the acquisition announcement, which was
December 31, 1993, in the case of BFL.
(2) Based on stock price one month prior to announcement of the applicable
merger agreement. In the case of BFL such price was $20.50.
(3) Reported earnings per share excluding the impact of accounting change. The
Corporate Merger multiple would increase to 45.2x LTM Earnings if earnings
per share from BFL's core operations only were analyzed.
DISCOUNTED CASH FLOW ANALYSIS
Using discounted cash flow analysis, Alex. Brown estimated the present
value of the future dividend streams that BFL could produce over a three-year
period, under different assumptions as to required equity levels, if BFL
performed in accordance with management's forecasts and certain variants
thereof. Alex. Brown also estimated the terminal value for BFL's
23
<PAGE>
common equity by applying book value (150-175 percent) and LTM Earnings (14-16
times) acquisition multiples currently being received by savings banks with
profitability ratios similar to those BFL is projected to have during the fiscal
year ending September 30, 1996. The range of multiples used reflected a variety
of scenarios regarding the growth and profitability prospects of BFL. No
dividends were assumed to be paid on the BFL Common Stock during the projection
horizon and the terminal values were discounted to present values using discount
rates ranging from 15.0 percent to 17.5 percent, which reflect different
assumptions regarding the required rates of returns of holders or prospective
buyers of BFL Common Stock.
REFERENCE RANGE
Based in part on the several analyses discussed above, Alex. Brown
developed, for purposes of the Alex. Brown Opinion, a reference range for the
value of BFL Common Stock of $24.00 to $28.00 per share. The values reflected in
the foregoing reference range were not intended to represent the price at which
100 percent of the BFL Common Stock could actually be sold. The foregoing values
were based in part on the application of economic and financial models and are
not necessarily indicative of actual values, which may be significantly more or
less than such estimates. The values do not purport to be appraisals.
FEE ARRANGEMENT
Pursuant to the terms of an engagement letter dated November 24, 1993, BFL
has paid Alex. Brown $250,000 for acting as financial advisor in connection with
the Corporate Merger, including rendering its opinion. In addition, BFL has
agreed to pay Alex. Brown a fee of 0.95 percent of the aggregate consideration
received by BFL stockholders in the Corporate Merger (assuming merger
consideration of $28.00 for each share of BFL Common Stock as of January 14,
1994), less the $250,000 in fees already paid to Alex. Brown, resulting in an
aggregate fee of approximately $1.6 million. Whether or not the Corporate Merger
is consummated, BFL has also agreed to indemnify Alex. Brown and certain related
persons against certain liabilities relating to or arising out of its
engagement.
RELATIONSHIPS WITH FUNC
Alex. Brown, in the ordinary course of its business, has engaged, and may
in the future engage, in transactions with, and/or perform services for, FUNC
and its subsidiaries. These services include investment banking and brokerage
activities for which it has received transactional fees in connection therewith.
INTERESTS OF CERTAIN PERSONS
The Merger Agreement provides that for the six-year period following the
Effective Date, FUNC will indemnify the directors, officers and employees of BFL
holding such positions on or prior to the date of the Merger Agreement, against
certain liabilities to the extent such persons were indemnified under the DGCL
and BFL's Certificate of Incorporation and Bylaws as in effect on the date of
the Merger Agreement.
In addition, FUNC agreed in the Merger Agreement to provide coverage under
its existing directors' and officers' liability insurance policy for persons who
were covered by such insurance maintained by BFL on the date of the Merger
Agreement for a period of three years after the Effective Date.
BFL has entered into agreements with Rudolf P. Guenzel, J. Michael Holmes,
John W. Abbott, William W. Flader, Dennis Reed and W. Terrell Upson,
constituting all of the executive officers of BFL Bank, which provide for a lump
sum payment by BFL in the event a "change in control" (as defined in such
agreements) of BFL occurs and the officer submits his resignation from all
positions with BFL, BFL Bank and any of their subsidiaries. The amount of the
payment equals a multiple of the officer's then current annual base salary, the
average annual value of non-cash fringe benefits included in the officer's
compensation for federal income tax purposes for the two calendar years prior to
the change in control and the average amount of any bonus received, credited or
deferred with respect to the two prior calendar years, subject to reduction to
satisfy certain provisions of federal tax law. The multiple is 2.99 in the case
of Mr. Guenzel, 2.00 in the case of Messrs. Holmes and Abbott and 1.00 in the
case of Messrs. Flader, Reed and Upson. In addition, the officer's interests
under any non-qualified benefit plan of BFL or BFL Bank would become 100 percent
vested. Each officer agrees, if requested, to enter into an employment agreement
with the surviving, successor or acquiring entity providing for employment for
up to two years in a position bearing substantially the same responsibilities
and duties as those carried on by the officer immediately prior to the change in
control. For purposes of these agreements, the acquisition of BFL by FUNC would
constitute a "change in control". The estimated amounts which would be payable
under these agreements to Messrs. Guenzel, Holmes, Abbott, Flader, Reed and
Upson are $749,845, $401,808, $279,711, $142,415, $155,942 and $149,057,
respectively.
24
<PAGE>
In the Merger Agreement, FUNC has agreed to assume all options outstanding
under the 1988 Stock Option Plan, as amended, and the 1980 Stock Option Plan of
BFL (the "BFL Option Plans") in accordance with the terms of the BFL Option
Plans except that the shares acquired upon exercise shall be shares of FUNC
Common Stock. The number of shares covered by each option outstanding under the
BFL Option Plans would be equal to the number of shares of BFL Common Stock
covered thereby multiplied by the Exchange Ratio and rounded to the nearest
whole share, and the option exercise price would be appropriately adjusted.
Pursuant to the BFL Option Plans, all options outstanding become immediately
exercisable in full in the event of a "change in control" (as defined in the BFL
Option Plans). Each of the non-employee directors of BFL, other than Dale A.
Myer, has an option to purchase 5,000 shares of BFL Common Stock under BFL's
1988 Stock Option Plan. In addition, Messrs. Guenzel, Holmes, Abbott, Flader,
Reed and Upson have options under the BFL Option Plans to purchase 133,500,
56,315, 44,802, 31,000, 30,000 and 20,000 shares, respectively.
FUNC agreed in the Merger Agreement that as soon as administratively
practicable following the Effective Date, employees of BFL will generally be
entitled to participate in FUNC's pension, benefit and similar plans on
substantially the same terms and conditions as employees of FUNC, giving effect,
for eligibility and vesting of benefits (but not for accrual of benefits), to
years of service with BFL as if such service were with FUNC.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
THE CORPORATE MERGER. THE DISCUSSION IS INCLUDED FOR GENERAL INFORMATION
PURPOSES ONLY AND MAY NOT APPLY TO SPECIAL SITUATIONS, SUCH AS BFL STOCKHOLDERS,
IF ANY, WHO RECEIVED THEIR BFL COMMON STOCK OR BFL PREFERRED STOCK UPON THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, AND BFL
STOCKHOLDERS THAT ARE INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL
INSTITUTIONS OR FOREIGN PERSONS.
Sullivan & Cromwell, special counsel for FUNC, has advised FUNC and BFL
that, in its opinion:
(i) No gain or loss will be recognized for federal income tax
purposes by BFL stockholders upon the exchange in the Corporate Merger of
shares of BFL Common Stock or BFL Preferred Stock solely for FUNC Common
Shares (except with respect to cash received in lieu of a fractional share
interest in FUNC Common Stock).
(ii) The basis of FUNC Common Shares received in the Corporate Merger
by BFL stockholders (including the basis of any fractional share interest
in FUNC Common Stock) will be the same as the basis of the shares of BFL
Common Stock or BFL Preferred Stock surrendered in exchange therefor.
(iii) The holding period of the FUNC Common Shares received in the
Corporate Merger by a BFL stockholder (including the holding period of any
fractional share interest in FUNC Common Stock) will include the holding
period during which the shares of BFL Common Stock or BFL Preferred Stock
surrendered in exchange therefor were held by the BFL stockholder, provided
such shares of BFL Common Stock or BFL Preferred Stock were held as capital
assets.
(iv) Cash received by a holder of BFL Common Stock or BFL Preferred
Stock in lieu of a fractional share interest in FUNC Common Stock will be
treated as received in exchange for such fractional share interest and,
provided the fractional share would have constituted a capital asset in the
hands of such holder, the holder should in general recognize capital gain
or loss in an amount equal to the difference between the amount of cash
received and the portion of the adjusted tax basis in the BFL Common Stock
or BFL Preferred Stock allocable to the fractional share interest.
In addition, consummation of the Mergers is conditioned on receipt by FUNC
and BFL of an opinion of Sullivan & Cromwell, dated as of the Effective Date, to
the effect that (i) the Corporate Merger constitutes a reorganization under
Section 368 of the Internal Revenue Code of 1986, as amended, and (ii) no gain
or loss will be recognized by BFL stockholders who receive FUNC Common Shares in
exchange for their shares of BFL Common Stock or BFL Preferred Stock, except
that gain or loss may be recognized as to cash received in lieu of fractional
share interests. The tax opinions of Sullivan & Cromwell summarized above are or
will be based, among other things, on representations relating to certain facts
and circumstances of, and the intentions of the parties to, the Corporate
Merger.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE CORPORATE MERGER MAY VARY DEPENDING
UPON THE PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER AND OTHER FACTORS, EACH
STOCKHOLDER OF BFL IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISER TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE CORPORATE MERGER
(INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX
LAWS).
25
<PAGE>
NO APPRAISAL RIGHTS
The holders of the BFL Common Stock and, when the holder of the BFL
Preferred Stock votes his shares of BFL Preferred Stock in favor of the Merger
Agreement pursuant to the Preferred Stockholder Agreement, the holder of the BFL
Preferred Stock will not have appraisal rights under applicable provisions of
the DGCL.
BUSINESS PENDING CONSUMMATION
BFL has agreed in the Merger Agreement not to take certain actions relating
to the operation of BFL pending consummation of the Mergers, without the prior
approval of FUNC, except as otherwise permitted in the Merger Agreement. These
actions include, without limitation: (i) paying any dividends, other than
dividends on BFL Preferred Stock in accordance with its terms, or redeeming or
otherwise acquiring any shares of its capital stock, or issuing any additional
shares of its capital stock or giving any person the right to acquire any such
shares (other than upon the exercise of outstanding options or the conversion of
outstanding convertible securities); (ii) increasing the rate of compensation or
paying any bonus to any of its directors, officers or employees; (iii) entering
into or modifying any employment agreements or employee benefit plans; (iv)
disposing of any material portion of its assets or acquiring any substantial
portion of the business or property of any other entity; (v) changing its
lending, investment, liability management or other material banking policies;
(vi) settling any litigation at a cost in excess of $2 million; or (vii) taking
any other action not in the ordinary course of business.
BFL has also agreed that, prior to the Effective Date, it will use its best
efforts to modify its loan, litigation and other reserve and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be consistent with those policies and practices applied by
FUNC. Any modification made by BFL pursuant to this provision will not be deemed
to make untrue, or to constitute a breach of, any of the representations,
warranties or convenants of BFL contained in the Merger Agreement.
FUNC COMMON STOCK REPURCHASE
In connection with the proposed Mergers, FUNC has repurchased two million
shares of FUNC Common Stock in the open market at a cost of $83 million.
The Board of Directors of FUNC has authorized the repurchase from time to
time of up to 15 million additional shares of FUNC Common Stock for various
corporate purposes, including an additional number of
shares which, together with the two million shares previously repurchased, are
estimated to approximately equal the number of shares of FUNC Common Stock
expected to be issued upon consummation of the Corporate Merger. Such
repurchases will not commence until at least after the Special Meeting. The pro
forma information included in this Prospectus/Proxy Statement does not reflect
the repurchase of any of such additional shares.
REGULATORY APPROVALS
The Corporate Merger is subject to the prior approval by the OTS under the
HOLA and by the Federal Reserve Board under the BHCA. The Bank Merger is subject
to the prior approval by the OCC under the federal Bank Merger Act ("BMA"), by
the Federal Reserve Board under the Federal Deposit Insurance Act ("FDI Act")
and by the OTS under various OTS regulations. The HOLA and the BMA each require
that the relevant regulatory agency take into consideration, among other
factors, the financial and managerial resources and future prospects of the
institutions and the convenience and needs of the communities to be served. The
HOLA and the BMA each prohibit the relevant regulatory agency from approving the
Corporate Merger or the Bank Merger, as the case may be, (i) if it would result
in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in any part of
the United States, or (ii) if its effect in any section of the country may be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner be a restraint of trade, unless the relevant
regulatory agency finds that the anti-competitive effects of such merger are
clearly outweighed by the public interest and the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. Under the BHCA, the Federal Reserve Board must conclude, as it has
previously done with respect to savings associations such as BFL Bank, that the
acquisition and operation of a savings association is a proper incident to
banking or managing or controlling banks. In so concluding, the Federal Reserve
Board considers whether such acquisition and operation of a savings bank can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interests, or unsound banking practices. The
relevant regulatory agency has the authority to deny an application if it
concludes that the combined organization would have an inadequate capital
position or if the acquiring organization does not meet the requirements of the
Community Reinvestment Act of 1977. Under the BMA, and the FDI Act, the Bank
Merger may not be consummated until the 30th day following each of the dates of
the requisite approvals of the OCC and the Federal Reserve Board, during which
periods the United States Department of Justice may challenge such merger on
antitrust grounds. The commencement of an
26
<PAGE>
antitrust action would stay the effectiveness of such an approval unless a court
specifically orders otherwise. An application pursuant to the BMA was filed with
the OCC and accepted as complete on April 21, 1994; an application pursuant to
the HOLA and various OTS regulations was filed with the OTS on April 26, 1994;
and applications pursuant to the BHCA and the FDI Act were filed with the
Federal Reserve Board on April 26, 1994, and April 18, 1994, respectively.
The Corporate Merger and the Bank Merger cannot proceed in the absence of
the requisite regulatory approvals. There can be no assurance that such
regulatory approvals will be obtained, and, if the Corporate Merger and the Bank
Merger are approved, there can be no assurance as to the date of any such
approval. There can also be no assurance that any such approvals will not
contain a condition or requirement which causes such approvals to fail to
satisfy the conditions set forth in the Merger Agreement and described below
under " -- Conditions to Consummation; Termination". There can likewise be no
assurance that the U.S. Department of Justice or a state Attorney General will
not challenge the Corporate Merger or the Bank Merger or, if such a challenge is
made, as to the result thereof.
CONDITIONS TO CONSUMMATION; TERMINATION
Consummation of the Mergers is subject, among other things, to: (i)
approval of the Merger Agreement by the requisite vote of the stockholders of
BFL; (ii) receipt of the regulatory approvals referred to above without any
restrictions or conditions which, in the opinion of FUNC, would so materially
adversely impact the economic or business benefits to FUNC of the transactions
contemplated by the Merger Agreement so as to render inadvisable the
consummation of the Mergers; (iii) no court or governmental or regulatory
authority having taken any action which enjoins or prohibits the Mergers; (iv)
receipt by FUNC and BFL of the opinion of Sullivan & Cromwell as to certain
federal income tax consequences of the Corporate Merger; and (v) the FUNC Common
Shares having been approved for listing on the NYSE, subject to official notice
of issuance.
Consummation of the Mergers is also subject to the satisfaction or waiver
of various other conditions specified in the Merger Agreement, including, among
others: (i) the delivery by BFL and FUNC, each to the other, of (a) opinions of
their respective counsel, and (b) certificates executed by certain of their
respective executive officers as to compliance with the Merger Agreement; (ii)
the accuracy of the representations and warranties, and compliance in all
material respects with the agreements and covenants, of the parties to the
Merger Agreement; and (iii) the receipt by FUNC of a letter from BFL's
independent certified public accountants with respect to BFL's financial
position and results of operations.
The Merger Agreement provides that, whether before or after the Special
Meeting and notwithstanding the approval of the Merger Agreement by the
stockholders of BFL, the Merger Agreement may be terminated and the Mergers
abandoned at any time prior to the Effective Date: (i) by mutual consent of the
Boards of Directors of FUNC and BFL; or (ii) by either the Board of Directors of
FUNC or the Board of Directors of BFL (a) if the stockholders of BFL fail to
approve the Merger Agreement, (b) in the event of a material breach by the other
party of any representation, warranty, or covenant contained in the Merger
Agreement, which breach is not cured after 30 days' written notice thereof is
given to the party committing such breach, or (c) if the Corporate Merger is not
consummated on or before December 31, 1994.
WAIVER; AMENDMENT
Prior to the Effective Date, any provision of the Merger Agreement may be:
(i) waived by the party benefitted by the provision; or (ii) amended or modified
at any time (including the structure of the transaction) by an agreement in
writing among the parties thereto approved by their respective Boards of
Directors and executed in the same manner as the Merger Agreement, provided that
after approval by the stockholders of BFL, the consideration to be received by
the stockholders of BFL may not thereby be decreased.
ACCOUNTING TREATMENT
It is expected that the purchase method of accounting will be used to
reflect the Corporate Merger upon consummation. As required by generally
accepted accounting principles, under purchase accounting, the assets and
liabilities of BFL as of the Effective Date will be recorded at their respective
fair market values and added to those of FUNC. Financial statements of FUNC
issued after consummation of the Corporate Merger would reflect such values.
Financial statements of FUNC issued before consummation of the Corporate Merger
would not be restated retroactively to reflect BFL's historical financial
position or results of operations. The unaudited pro forma financial information
contained in this Prospectus/Proxy Statement has been prepared using the
purchase accounting basis to account for the Corporate Merger. See "SUMMARY".
27
<PAGE>
EXPENSES
All expenses incurred by or on behalf of the parties in connection with the
Merger Agreement and the transactions contemplated thereby shall be borne by the
party incurring the same, except that printing expenses will be shared equally
by FUNC and BFL.
STOCK OPTION AGREEMENT
As a condition to FUNC's entering into the Merger Agreement and in
consideration thereof, BFL issued to FUNC the Option to purchase, under certain
conditions, up to 719,000 shares of BFL Common Stock at a Purchase Price of
$25.00 per share, subject to adjustment in certain circumstances. The Option was
granted to FUNC pursuant to the Stock Option Agreement. The Purchase Price
exceeds the closing price of $23.00 per share of BFL Common Stock on the NYSE
Tape on January 14, 1994, the last business day prior to the date on which
execution of the Merger Agreement was publicly announced. The number of shares
of BFL Common Stock subject to the Option represents approximately 19.4 percent
of the outstanding shares of BFL Common Stock, before giving effect to the
issuance of such shares. FUNC does not have any voting rights with respect to
the shares of BFL Common Stock subject to the Option prior to exercise of the
Option.
If FUNC is not in material breach of the Stock Option Agreement or the
Merger Agreement and no injunction against delivery of the shares covered by the
Option is in effect, FUNC may exercise the Option in whole or in part, at any
time and from time to time following the happening of certain events (each a
"Purchase Event"), including, among others:
(i) BFL taking certain actions (each an "Acquisition Transaction"),
including, among others, authorizing, recommending or entering into an
agreement with any third party to effect (a) a merger, consolidation or
similar transaction involving BFL or any of its significant subsidiaries,
(b) the sale, lease, exchange or other disposition of 20 percent or more of
the consolidated assets or deposits of BFL and its subsidiaries, or (c) the
issuance, sale or other disposition of 20 percent or more of the voting
power of BFL or any of its significant subsidiaries (other than the
issuance of BFL Common Stock upon exercise of options outstanding under the
BFL Option Plans or conversion of outstanding convertible securities of
BFL); or
(ii) the acquisition or the right to acquire by any third party of 15
percent or more (or, if such party beneficially owned more than 15 percent
on the date of the Merger Agreement, such party acquires an additional five
percent or more) of the voting power of BFL or any of its significant
subsidiaries.
The Option will terminate upon the earliest of certain events, including:
(i) consummation of the Corporate Merger; (ii) termination of the Merger
Agreement by BFL (a "BFL Termination") prior to the happening (subject to
certain limitations) of a Purchase Event or a Preliminary Purchase Event (as
defined below); (iii) 18 months after termination of the Merger Agreement by BFL
other than pursuant to an BFL Termination; or (iv) 18 months after termination
of the Merger Agreement by FUNC. A "Preliminary Purchase Event" is defined to
include, among others: (a) commencement by any third party of a tender or
exchange offer to purchase 20 percent or more of the outstanding shares of BFL
Common Stock; (b) failure of the holders of BFL Common Stock to approve the
Merger Agreement after public announcement that a third party (x) proposes to
engage in an Acquisition Transaction, (y) commences a tender offer or files a
registration statement under the Securities Act with respect to an exchange
offer, or (z) files an application under certain federal statutes relating to
the regulation of banks or their holding companies, to engage in an Acquisition
Transaction; (c) any third party shall have proposed to BFL or its stockholders,
publicly or in any writing that becomes publicly disclosed, to engage in an
Acquisition Transaction; (d) after a proposal is made by a third party to BFL or
its stockholders to engage in an Acquisition Transaction, BFL breaches any
covenant or obligation in the Merger Agreement (subject to certain limitations
set forth in the Stock Option Agreement); or (e) any third party files an
application with any federal or state bank regulatory authority for approval to
engage in an Acquisition Transaction.
The Stock Option Agreement and the Option are intended to increase the
likelihood that the Mergers will be consummated according to the terms set forth
in the Merger Agreement and may be expected to discourage competing offers to
acquire BFL from potential third party acquirors because the Option could
increase the cost of such an acquisition.
To the best of BFL's and FUNC's knowledge, no event which would permit the
exercise of the Option has occurred as of the date of this Prospectus/Proxy
Statement.
A copy of the Stock Option Agreement is set forth in Exhibit A to the
Merger Agreement, which is set forth in ANNEX A to this Prospectus/Proxy
Statement, and reference is made thereto for the complete terms of the Stock
Option Agreement and the Option. The foregoing discussion is qualified in its
entirety by reference to the Stock Option Agreement.
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<PAGE>
PREFERRED STOCKHOLDER AGREEMENT
In addition to an agreement by the holder of all of the outstanding shares
of BFL Preferred Stock to vote such shares in favor of the Merger Agreement, the
Preferred Stockholder Agreement contains, among other things, an agreement by
BFL to commence all necessary steps to register for sale under the Securities
Act the shares of BFL Common Stock issuable upon conversion of the BFL Preferred
Stock, it being understood that such holder has no affirmative obligation to
convert his shares of BFL Preferred Stock into shares of BFL Common Stock. It is
expected that BFL will file a registration statement with the Commission in the
near future covering such shares of BFL Common Stock.
MARKET PRICES
The following table sets forth (i) the high and low last reported sale
prices per share of FUNC Common Stock and BFL Common Stock on the NYSE Tape,
with respect to each quarterly period since January 1, 1992, and (ii) the
equivalent pro forma market values per share of BFL Common Stock and BFL
Preferred Stock, based on a 0.669 Exchange Ratio and a one-for-one Preferred
Stock Conversion Rate. The 0.669 Exchange Ratio is based on the closing price
per share of FUNC Common Stock on the NYSE Tape on May , 1994, as if such
closing price were the Average Closing Price. The actual Exchange Ratio will
depend on the Average Closing Price and may be greater or less than 0.669. The
pro forma information presented would be different if (i) the Average Closing
Price is $44.876 or greater or $41.874 or less, or (ii) the Preferred Stock
Conversion Rate is greater than one-for-one.
<TABLE>
<CAPTION>
EQUIVALENT
PRO FORMA
PER BFL
FUNC COMMON STOCK BFL COMMON STOCK COMMON
SHARE (1)
HIGH LOW HIGH LOW HIGH
<S> <C> <C> <C> <C> <C>
1992
First quarter........................................ $ 38 1/4 29 1/2 7 3/8 3 25 1/2
Second quarter....................................... 39 3/4 34 3/4 8 1/2 6 1/4 26 1/2
Third quarter........................................ 40 35 9 1/2 7 5/8 26 3/4
Fourth quarter....................................... 44 7/8 35 7/8 13 8 3/8 30
1993
First quarter........................................ 50 7/8 42 1/4 13 1/2 12 34
Second quarter....................................... 51 1/2 40 17 5/8 12 3/4 34 3/8
Third quarter........................................ 49 5/8 43 1/2 22 3/8 17 1/2 33 1/8
Fourth quarter....................................... 48 1/8 37 7/8 23 1/4 18 1/8 32 1/8
1994
First quarter........................................ 43 3/4 39 3/4 27 1/8 19 3/8 29 1/4
Second quarter (through May )...................... $
<CAPTION>
EQUIVALENT PRO FORMA PER
BFL PREFERRED
SHARE (2)
LOW HIGH LOW
<S> <C> <C> <C>
1992
First quarter........................................ 19 5/8 25 1/2 19 5/8
Second quarter....................................... 23 1/8 26 1/2 23 1/8
Third quarter........................................ 23 3/8 26 3/4 23 3/8
Fourth quarter....................................... 24 30 24
1993
First quarter........................................ 28 1/4 34 28 1/4
Second quarter....................................... 26 3/4 34 3/8 26 3/4
Third quarter........................................ 28 7/8 33 1/8 28 7/8
Fourth quarter....................................... 25 1/4 32 1/8 25 1/4
1994
First quarter........................................ 26 1/2 29 1/4 26 1/2
Second quarter (through May )......................
</TABLE>
(1) Equivalent pro forma market values per share of BFL Common Stock amounts
represent the high and low last reported sales prices per share of FUNC
Common Stock multiplied by a 0.669 Exchange Ratio, rounded down to the
nearest one-eighth.
(2) Equivalent pro forma market values per share of BFL Preferred Stock amounts
represent the historical market values per share of FUNC Common Stock
multiplied by a 0.699 Exchange Ratio and a one-for-one Preferred Stock
Conversion Rate, rounded down to the nearest one-eighth.
On January 14, 1994, the last business day prior to public announcement of
the execution of the Merger Agreement, the last reported sale prices per share
of FUNC Common Stock and BFL Common Stock on the NYSE Tape were $41.875 and
$23.00, respectively. On May , 1994, such prices were $ and $ ,
respectively. There is no public trading market for BFL Preferred Stock.
The Merger Agreement provides for the filing of a listing application with
the NYSE covering the FUNC Common Shares. It is a condition to consummation of
the Corporate Merger that the FUNC Common Shares be authorized for listing on
the NYSE effective upon official notice of issuance. See " -- Conditions to
Consummation; Termination".
During the first and second quarters of 1994, FUNC bought the Repurchased
Shares on the open market. These purchases were completed on April 5, 1994. See
" -- FUNC Common Stock Repurchase".
29
<PAGE>
DIVIDENDS
The following table sets forth the cash dividends paid on FUNC Common Stock
and BFL Common Stock with respect to each calendar quarter since January 1,
1992, and the equivalent pro forma cash dividends paid per share of BFL Common
Stock and BFL Preferred Stock, based on a 0.669 Exchange Ratio and a one-for-one
Preferred Stock Conversion Rate. The 0.669 Exchange Ratio is based on the
closing price per share of FUNC Common Stock on the NYSE Tape on May , 1994,
as if such closing price were the Average Closing Price. The actual Exchange
Ratio will depend on the Average Closing Price and may be greater or less than
0.669. The pro forma information presented would be different if (i) the Average
Closing Price is $44.876 or greater or $41.874 or less, or (ii) the Preferred
Stock Conversion Rate is greater than one-for-one.
<TABLE>
<CAPTION>
FUNC BFL EQUIVALENT PRO FORMA EQUIVALENT PRO FORMA
COMMON STOCK COMMON STOCK (1) PER BFL COMMON SHARE (2) PER BFL PREFERRED SHARE (2)(3)
<S> <C> <C> <C> <C>
1992
First quarter............... $.31 -- .21 .21
Second quarter.............. .31 -- .21 .21
Third quarter............... .31 -- .21 .21
Fourth quarter.............. .35 -- .23 .23
1993
First quarter............... .35 -- .23 .23
Second quarter.............. .35 -- .23 .23
Third quarter............... .40 -- .27 .27
Fourth quarter.............. .40 -- .27 .27
1994
First quarter............... $.40 -- .27 .27
</TABLE>
(1) In conjunction with the dividend restrictions imposed on BFL Bank pursuant
to the terms of the BFL Bank Capital Plan, BFL suspended dividend payments
on the BFL Common Stock and the BFL Preferred Stock. Pursuant to the terms
of the BFL Preferred Stock, dividends on the BFL Preferred Stock are
cumulative. In May 1993, following BFL Bank's release from the BFL Bank
Capital Plan, BFL paid dividends of $4,412,000 on the BFL Preferred Stock.
At September 30, 1993, there were no dividends in arrears on the BFL
Preferred Stock. BFL paid quarterly dividends of $304,000, $304,000 and
$297,000 on the BFL Preferred Stock in October 1993, January 1994 and
April 1994, respectively. See "CERTAIN DIFFERENCES IN THE RIGHTS OF BFL
AND FUNC STOCKHOLDERS -- Authorized Capital; BFL".
(2) Equivalent pro forma cash dividends paid per BFL common share amounts
represent FUNC historical dividend rates per share multiplied by a 0.669
Exchange Ratio, rounded to the nearest cent. The current annualized dividend
rate per share for FUNC Common Stock, based upon the most recently declared
quarterly dividend of $.40 per share payable on June 15, 1994, would be
$1.60. On an equivalent pro forma basis, such current annualized FUNC
dividend per BFL common share would be $1.07, based on a 0.669 Exchange
Ratio and $1.07 per BFL preferred share, based on a 0.669 Exchange Ratio and
a one-for-one Preferred Stock Conversion Rate. Future FUNC and BFL dividends
are dependent upon their respective earnings and financial condition,
government regulations and policies and other factors.
(3) Equivalent pro forma cash dividends paid per share of BFL Preferred Stock
amounts represent FUNC historical dividend rates per share multiplied by
0.669 and a one-for-one Preferred Stock Conversion Rate, rounded to the
nearest cent.
See "CERTAIN REGULATORY CONSIDERATIONS RELATING TO FUNC -- Payment of
Dividends" and "DESCRIPTION OF FUNC CAPITAL STOCK".
30
<PAGE>
FUNC
GENERAL
Financial and other information relating to FUNC, including information
relating to FUNC's directors and executive officers, is set forth in FUNC's 1993
Annual Report on Form 10-K and 1994 Annual Meeting Proxy Statement, copies of
which may be obtained from FUNC as indicated under "AVAILABLE INFORMATION".
HISTORY AND BUSINESS
FUNC was incorporated under the laws of North Carolina in 1967 and is
registered as a bank holding company under the BHCA. Pursuant to a corporate
reorganization in 1968, First Union National Bank of North Carolina ("FUNB-NC")
and First Union Mortgage Corporation, a mortgage banking firm acquired by
FUNB-NC in 1964, became subsidiaries of FUNC. FUNB-NC was organized in 1908 as
Union National Bank.
In addition to FUNB-NC, FUNC also operates banks in Florida, South
Carolina, Georgia, Tennessee, Virginia, Maryland and Washington, D.C. In
addition to providing a wide range of commercial and retail banking and trust
services through its banking subsidiaries, FUNC also provides various other
financial services, including mortgage banking, home equity lending, insurance
and securities brokerage services, through other subsidiaries.
Since the 1985 Supreme Court decision upholding regional interstate banking
legislation, FUNC has concentrated its efforts on building a large, regional
banking organization in what it perceives to be some of the better banking
markets in the southeast and south atlantic regions of the United States. Since
November 1985, FUNC has completed 38 banking related acquisitions, including the
more significant completed acquisitions (in addition to the pending acquisition)
set forth in the following table.
<TABLE>
<CAPTION>
ASSETS/ CONSIDERATION/ COMPLETION
NAME HEADQUARTERS DEPOSITS(1) ACCOUNTING TREATMENT DATE
<S> <C> <C> <C> <C>
Atlantic Bancorporation....................... Florida $ 3.8 billion common stock/pooling November 1985
Northwestern Financial Corporation............ North Carolina 3.0 billion common stock/pooling December 1985
Southern Bancorporation, Inc.................. South Carolina 1.1 billion cash and notes/purchase March 1986
First Bankers Corporation of Florida.......... Florida 1.3 billion cash and notes/purchase May 1986
First Railroad & Banking Company of Georgia... Georgia 3.7 billion common stock/pooling November 1986
Florida Commercial Banks, Inc................. Florida 1.0 billion cash/purchase March 1988
Florida National Banks of Florida, Inc........ Florida 7.9 billion cash and preferred January 1990
stock/purchase
Southeast banks............................... Florida 9.9 billion cash, notes and September 1991
preferred stock/purchase
RTC acquisitions.............................. Florida 3.8 billion cash/purchase 1991-1992
PSFS Thrift Holding Company................... Florida 1.2 billion cash/purchase December 1992
South Carolina Federal Corporation............ South Carolina .9 billion common stock/pooling January 1993
DFSoutheastern, Inc........................... Georgia 2.6 billion common stock/pooling January 1993
Dominion Bankshares Corporation............... Virginia 8.9 billion common stock and March 1993
preferred stock/pooling
Georgia Federal Bank, FSB..................... Georgia 4.0 billion cash/purchase June 1993
First American Metro Corp..................... Virginia 4.6 billion cash/purchase June 1993
Lieber & Company ("Lieber")................... New York $ 3.3 billion common stock/pooling (1)
</TABLE>
(1) The dollar amounts indicated represent the assets of the related
organization as of the last reporting period prior to acquisition, except
for (i) the dollar amount relating to acquisitions from the Resolution Trust
Corporation ("RTC"), which represents savings and loan deposits acquired
from the RTC, (ii) the dollar amount relating to Southeast banks, which
represent assets of the two banking subsidiaries of Southeast Banking
Corporation acquired from the Federal Deposit Insurance Corporation (the
"FDIC"), and (iii) the dollar amount relating to the pending acquisition of
Lieber, which represents assets under management by Lieber as of December
31, 1993. Since such assets are not owned by Lieber they will not be
reflected on FUNC's balance sheet upon consummation of the acquisition.
Lieber serves as
31
<PAGE>
investment adviser to the Evergreen family of mutual funds. The acquisition
agreement provides for issuance of approximately 3.1 million shares of FUNC
Common Stock to acquire Lieber.
Interstate banking legislation has greatly impacted the growth of FUNC, and
it has also greatly impacted the banking industry in general. North Carolina's
interstate banking statute includes the states of Alabama, Arkansas, Florida,
Georgia, Kentucky, Louisiana, Maryland, Mississippi, South Carolina, Tennessee,
Texas, Virginia, West Virginia and Washington, D.C., each of which has passed
interstate banking legislation, either on a regional or national basis. In
addition, various other states not named in the North Carolina legislation have
also adopted interstate banking legislation, which, under certain conditions,
would permit FUNC to acquire banks in such states, and legislation has been
introduced in the U.S. Congress that, if enacted, would generally provide for
nationwide interstate banking, subject to certain limitations, including the
ability of states to opt out of certain coverage.
FUNC is continually evaluating acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of FUNC's book value and net income
per common share may occur in connection with any future transactions.
CERTAIN REGULATORY CONSIDERATIONS RELATING TO FUNC
AS A BANK HOLDING COMPANY, FUNC IS SUBJECT TO REGULATION UNDER THE BHCA AND
TO ITS EXAMINATION AND REPORTING REQUIREMENTS. THE FOLLOWING DISCUSSION SETS
FORTH CERTAIN OF THE MATERIAL ELEMENTS OF THE REGULATORY FRAMEWORK APPLICABLE TO
BANK HOLDING COMPANIES AND THEIR SUBSIDIARIES AND PROVIDES CERTAIN SPECIFIC
INFORMATION RELEVANT TO FUNC.
GENERAL
Under the BHCA, bank holding companies may not directly or indirectly
acquire the ownership or control of more than five percent of the voting shares
or substantially all of the assets of any company, including a bank, without the
prior approval of the Federal Reserve Board. In addition, bank holding companies
are generally prohibited under the BHCA from engaging in nonbanking activities,
subject to certain exceptions.
FUNC's earnings are affected by general economic conditions, management
policies and the legislative and governmental actions of various regulatory
authorities, including the Federal Reserve Board and the OCC. In addition, there
are numerous governmental requirements and regulations which affect the
activities of FUNC.
PAYMENT OF DIVIDENDS
FUNC is a legal entity separate and distinct from its banking and other
subsidiaries. A major portion of FUNC's revenues result from amounts paid as
dividends to FUNC by its national bank subsidiaries. The prior approval of the
OCC is required if the total of all dividends declared by a national bank in any
calendar year will exceed the sum of such bank's net profits for that year and
its retained net profits for the preceding two calendar years, less any required
transfers to surplus. Federal law also prohibits any national bank from paying
dividends which would be greater than such bank's undivided profits after
deducting statutory bad debt in excess of such bank's allowance for loan losses.
Under the foregoing dividend restrictions and certain restrictions
applicable to certain of FUNC's nonbanking subsidiaries, as of December 31,
1993, FUNC's subsidiaries, without obtaining affirmative governmental approvals,
could pay aggregate dividends of $510 million to FUNC during 1994. During 1993,
FUNC's subsidiaries paid $407 million in dividends to FUNC.
In addition, both FUNC and its national bank subsidiaries are subject to
various general regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain adequate capital above regulatory
minimums. The appropriate federal regulatory authority is authorized to
determine under certain circumstances relating to the financial condition of a
national bank or bank holding company that the payment of dividends would be an
unsafe or unsound practice and to prohibit payment thereof. The OCC has
indicated that paying dividends that deplete a national bank's capital base to
an inadequate level would be an unsound and unsafe banking practice. The OCC and
the Federal Reserve Board have each indicated that banking organizations should
generally pay dividends only out of current operating earnings.
32
<PAGE>
BORROWINGS
There are also various legal restrictions on the extent to which FUNC and
its nonbank subsidiaries can borrow or otherwise obtain credit from its bank
subsidiaries. In general, these restrictions require that any such extensions of
credit must be secured by designated amounts of specified collateral and are
limited, as to any one of FUNC or such nonbank subsidiaries, to ten percent of
the lending bank's capital stock and surplus, and as to FUNC and all such
nonbank subsidiaries in the aggregate, to 20 percent of such lending bank's
capital stock and surplus.
CAPITAL
The minimum guidelines for the ratio of capital to risk-weighted assets
(including certain off-balance-sheet activities, such as standby letters of
credit) is eight percent. At least half of the total capital is to be composed
of common equity, retained earnings and a limited amount of qualifying perpetual
preferred stock, less certain intangibles ("tier 1 capital" and together with
tier 2 capital "total capital"). The remainder may consist of subordinated debt,
qualifying preferred stock and a limited amount of the loan loss allowance
("tier 2 capital"). At December 31, 1993, FUNC's tier 1 and total capital ratios
were 9.14 percent and 14.64 percent, respectively. On an FUNC and BFL combined
basis, such ratios at December 31, 1993, would have been 8.62 percent and 13.99
percent, respectively.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum leverage ratio of tier 1 capital to adjusted average quarterly assets
("leverage ratio") equal to three percent for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating. All
other bank holding companies will generally be required to maintain a leverage
ratio of from at least four to five percent. FUNC's leverage ratio at December
31, 1993 was 6.13 percent. On an FUNC and BFL combined basis, such ratio at
December 31, 1993, would have been 5.79 percent. The guidelines also provide
that bank holding companies experiencing internal growth or making acquisitions
will be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "tangible tier 1 leverage ratio" (deducting all
intangibles) in evaluating proposals for expansion or new activities. The
Federal Reserve Board has not advised FUNC of any specific minimum leverage
ratio or tangible tier 1 leverage ratio applicable to it.
Each of FUNC's subsidiary national banks is subject to similar capital
requirements adopted by the OCC. Each of FUNC's subsidiary banks had a leverage
ratio in excess of 5.51 percent, as of December 31, 1993. The OCC has not
advised any of the subsidiary national banks of any specific minimum leverage
ratio applicable to it.
As of December 31, 1993, the capital ratios of FUNC's banking subsidiaries,
which consist of FUNB-NC, First Union National Bank of South Carolina
("FUNB-SC"), First Union National Bank of Georgia ("FUNB-GA"), FUNB-FL, First
Union National Bank of Tennessee ("FUNB-TN"), First Union National Bank of
Virginia ("FUNB-VA "), First Union National Bank of Maryland ("FUNB-MD") and
First Union National Bank of Washington, D.C. ( "FUNB-DC") were as follows:
<TABLE>
<CAPTION>
Regulatory
Minimum FUNB-NC FUNB-SC FUNB-GA FUNB-FL FUNB-TN FUNB-VA FUNB-MD FUNB-DC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tier 1 capital ratio... 4% 8.24 7.55 9.58 9.13 12.43 10.77 15.78 14.23
Total capital ratio.... 8 11.35 11.82 12.62 10.83 13.69 13.08 17.07 15.52
Leverage ratio......... 3-5% 5.52 5.56 5.67 5.79 8.05 6.89 9.04 6.06
</TABLE>
Banking regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations, including a proposal to add an
interest rate risk component to risk-based capital guidelines.
FIRREA; SUPPORT OF SUBSIDIARY BANKS
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), among other things, imposes liability on an institution the deposits
of which are insured by the FDIC, such as FUNC's subsidiary national banks, for
certain potential obligations to the FDIC incurred in connection with other
FDIC-insured institutions under common control with such institution.
Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the bank's stockholders, pro rata and, to the
extent necessary, if any such assessment is not paid by any stockholder after
three months notice, to sell the stock of such stockholder to make good the
deficiency. Under Federal Reserve Board policy, FUNC is expected to act as a
source of financial
33
<PAGE>
strength to each of its subsidiary banks and to commit resources to support each
of such subsidiaries. This support may be required at times when, absent such
Federal Reserve Board policy, FUNC may not find itself willing or able to
provide it.
Any capital loans by a bank holding company to any of its subsidiary banks
are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
FDICIA
In December 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") was enacted, which substantially revises the bank regulatory
and funding provisions of the Federal Deposit Insurance Act and makes revisions
to several other federal banking statutes.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized"; "adequately capitalized"; "undercapitalized"; "significantly
undercapitalized"; and "critically undercapitalized". A depository institution's
capital tier will depend upon how its capital levels compare to various relevant
capital measures and certain other factors, as established by regulation.
The OCC has adopted regulations establishing relevant capital measures and
relevant capital levels. The relevant capital measures are the total capital
ratio, tier 1 capital ratio and the leverage ratio. Under the regulations, a
national bank will be (i) well capitalized if it has a total capital ratio of
ten percent or greater, a tier 1 capital ratio of six percent or greater and a
leverage ratio of five percent or greater and is not subject to any order or
written directive by the OCC to meet and maintain a specific capital level for
any capital measure, (ii) adequately capitalized if it has a total capital ratio
of eight percent or greater, a tier 1 capital ratio of four percent or greater
and a leverage ratio of four percent or greater (three percent in certain
circumstances) and is not well capitalized, (iii) undercapitalized if it has a
total capital ratio of less than eight percent, a tier 1 capital ratio of less
than four percent or a leverage ratio of less than four percent (three percent
in certain circumstances), (iv) significantly undercapitalized if it has a total
capital ratio of less than six percent, a tier 1 capital ratio of less than
three percent or a leverage ratio of less than three percent, and (v) critically
undercapitalized if its tangible equity is equal to or less than two percent of
average quarterly tangible assets. As of December 31, 1993, all of FUNC's
subsidiary banks had capital levels that qualify them as being well capitalized
under such regulations.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to growth
limitations and are required to submit a capital restoration plan. The federal
banking agencies may not accept a capital plan without determining, among other
things, that the plan is based on realistic assumptions and is likely to succeed
in restoring the depository institution's capital. In addition, for a capital
restoration plan to be acceptable, the depository institution's parent holding
company must guarantee that the institution will comply with such capital
restoration plan. The aggregate liability of the parent holding company is
limited to the lesser of: (i) an amount equal to five percent of the depository
institution's total assets at the time it became undercapitalized; and (ii) the
amount which is necessary (or would have been necessary) to bring the
institution into compliance with all capital standards applicable with respect
to such institution as of the time it fails to comply with the plan. If a
depository institution fails to submit an acceptable plan, it is treated as if
it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and the cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating to
internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, a maximum ratio of classified assets to capital, minimum earnings
sufficient to absorb losses, a minimum ratio of market value to book value for
publicly traded shares and such other standards as the agency deems appropriate.
The ultimate effect of these standards cannot be ascertained until final
regulations are adopted.
FDICIA also contains a variety of other provisions that may affect the
operations of FUNC, including new reporting requirements, regulatory standards
for real estate lending, "truth in savings" provisions, the requirement that a
depository
34
<PAGE>
institution give 90 days' prior notice to customers and regulatory authorities
before closing any branch and a prohibition on the acceptance or renewal of
brokered deposits by depository institutions that are not well capitalized or
are adequately capitalized and have not received a waiver from the FDIC. Under
regulations relating to the brokered deposit prohibition, all of FUNC's
subsidiary banks are well capitalized and not subject to the prohibition.
DEPOSITOR PREFERENCE STATUTE
Legislation has been enacted providing that deposits and certain claims for
administrative expenses and employee compensation against an insured depository
institution would be afforded a priority over other general unsecured claims
against such an institution, including federal funds and letters of credit, in
the "liquidation or other resolution" of such an institution by any receiver.
35
<PAGE>
DESCRIPTION OF FUNC CAPITAL STOCK
THE DESCRIPTIVE INFORMATION SUPPLIED HEREIN OUTLINES CERTAIN PROVISIONS OF
THE ARTICLES OF INCORPORATION, AS AMENDED (THE "ARTICLES"), AND BYLAWS OF FUNC
AND THE NORTH CAROLINA BUSINESS CORPORATION ACT (THE "NCBCA"). THE INFORMATION
DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ALL RESPECTS BY REFERENCE TO
THE PROVISIONS OF FUNC'S ARTICLES AND BYLAWS AND THE NCBCA.
AUTHORIZED CAPITAL
The authorized capital stock of FUNC consists of 750,000,000 shares of FUNC
Common Stock, 10,000,000 shares of Preferred Stock, no-par value per share
("FUNC Preferred Stock"), and 40,000,000 shares of FUNC Class A Preferred Stock,
no-par value per share ("FUNC Class A Preferred Stock"). As of December 31,
1993, there were 170,337,619 shares of FUNC Common Stock, 6,318,350 shares of
Series 1990 Cumulative Perpetual Adjustable Rate Preferred Stock (the "FUNC
Series 1990 Preferred Stock"), constituting a single series of FUNC Preferred
Stock, and no shares of FUNC Class A Preferred Stock issued and outstanding. The
FUNC Preferred Stock and FUNC Class A Preferred Stock are each issuable in one
or more series and, with respect to any series, the Board of Directors of FUNC,
subject to certain limitations, is authorized to fix the numbers of shares,
dividend rates, liquidation prices, liquidation rights of holders, redemption,
conversion and voting rights and other terms of the series. Shares of FUNC Class
A Preferred Stock and FUNC Preferred Stock that are redeemed, repurchased or
otherwise acquired by FUNC have the status of authorized, unissued and
undesignated shares of FUNC Class A Preferred Stock and FUNC Preferred Stock,
respectively, and may be reissued.
FUNC COMMON STOCK
Subject to the prior rights of the holders of any FUNC Preferred Stock and
any FUNC Class A Preferred Stock then outstanding, holders of FUNC Common Stock
are entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor and, in the event of
liquidation or dissolution, to receive the net assets of FUNC remaining after
payment of all liabilities and after payment to holders of all shares of FUNC
Preferred Stock and FUNC Class A Preferred Stock of the full preferential
amounts to which such holders are respectively entitled, in proportion to their
respective holdings.
See "CERTAIN REGULATORY CONSIDERATIONS RELATING TO FUNC -- Payment of
Dividends" for information relating to certain regulatory restrictions on the
payment of dividends by national banks, including FUNC's subsidiary national
banks.
Subject to the rights of the holders of any FUNC Preferred Stock and any
FUNC Class A Preferred Stock then outstanding, all voting rights are vested in
the holders of the shares of FUNC Common Stock, each share being entitled to one
vote on all matters requiring stockholder action and in the election of
directors. Holders of FUNC Common Stock have no preemptive, subscription or
conversion rights. All of the outstanding shares of FUNC Common Stock are fully
paid and nonassessable, and the shares issuable to the stockholders of BFL upon
consummation of the Corporate Merger will, upon issuance, be fully paid and
nonassessable.
FUNC PREFERRED STOCK
All shares of each series of FUNC Preferred Stock must be of equal rank and
have the same powers, preferences and rights and are subject to the same
qualifications, limitations and restrictions, except with respect to dividend
rates, redemption prices, liquidation amounts, terms of conversion or exchange
and voting rights.
FUNC SERIES 1990 PREFERRED STOCK
The following summary of the FUNC Series 1990 Preferred Stock is qualified
in its entirety by reference to the Statement of Classification of Shares of
FUNC relating thereto, a copy of which is incorporated by reference as an
exhibit to the Registration Statement, and to the applicable provisions of the
NCBCA.
The FUNC Series 1990 Preferred Stock, the only series of FUNC Preferred
Stock currently outstanding, is entitled, in the event of involuntary
liquidation, dissolution or winding up of FUNC, to receive a distribution of
$5.00 per share, plus accrued and unpaid dividends (whether or not declared) to
the date of the final distribution (the "Preferential Amount"), if any, before
any payment or distribution shall be made or set apart for payment on the FUNC
Common Stock or any other class or series of stock ranking junior to the FUNC
Series 1990 Preferred Stock. If FUNC's assets are insufficient to pay the full
Preferential Amount, no distribution may be made to holders of any other series
of FUNC Preferred Stock or any series of stock ranking on a parity with the FUNC
Series 1990 Preferred Stock unless proportionate distributive amounts are paid
36
<PAGE>
ratably in proportion to the preferential sums that would be payable if all sums
payable in respect of all such stock were discharged in full.
The FUNC Series 1990 Preferred Stock is redeemable, at FUNC's option, at
$51.50 per share on any dividend payment date after January 29, 1995, and after
January 29, 2000, at $50.00 per share, in each case plus accrued and unpaid
dividends to the date fixed for redemption. The FUNC Series 1990 Preferred Stock
is not convertible.
The dividend rate on the FUNC Series 1990 Preferred Stock is calculated on
the basis of a price of $50.00 per share, payable quarterly, and is reset
quarterly at a rate of one percent per annum above the highest of: (i) a
three-month U.S. Treasury bill rate; (ii) a U.S. Treasury ten-year constant
maturity rate; and (iii) a U.S. Treasury 30-year constant maturity rate. In no
event will such rate be less than 6.75 percent per annum or more than 13.75
percent per annum. Dividends on the FUNC Series 1990 Preferred Stock are
cumulative.
The FUNC Series 1990 Preferred Stock has no voting rights except as set
forth below.
If the equivalent of six full quarterly dividends payable on the FUNC
Series 1990 Preferred Stock or any other series of FUNC Preferred Stock are in
arrears, holders of the FUNC Series 1990 Preferred Stock will have the right,
voting together as a single class with the holders of all other series of FUNC
Preferred Stock having like voting rights, to elect two additional directors of
FUNC until all dividends in arrears on the FUNC Series 1990 Preferred Stock and
any such other series of FUNC Preferred Stock have been fully paid or set apart
for payment.
The affirmative vote or consent of the holders of 66 2/3 percent, or in
some cases a majority, of the outstanding shares of the FUNC Series 1990
Preferred Stock and all other series of FUNC Preferred Stock then outstanding
having like voting rights, voting together as a single class, will be necessary
for the approval of certain matters affecting the rights of the series,
including the authorization, creation, establishment or increase in the amount
of shares of any series of stock ranking prior to the FUNC Series 1990 Preferred
Stock, or any voluntary liquidation, dissolution or winding up of FUNC; provided
that a consolidation or merger of FUNC with or into any other corporation or
corporations or a sale, lease or other conveyance of all or substantially all of
the assets of FUNC will not be deemed to be a liquidation, dissolution or
winding up of FUNC.
FUNC CLASS A PREFERRED STOCK
Shares of FUNC Class A Preferred Stock rank prior or superior to FUNC
Common Stock and on a parity with or junior to (but not prior or superior to)
FUNC Preferred Stock or any series thereof, in respect of the right to receive
dividends and/or the right to receive payments out of the net assets of FUNC
upon any involuntary or voluntary liquidation, dissolution or winding up of
FUNC. However, shares of FUNC Class A Preferred Stock do not have the right to
vote with shares of FUNC Series 1990 Preferred Stock for purposes of electing
two directors in the event of dividend arrearages, as described under " -- FUNC
Preferred Stock" above. Subject to the foregoing and the terms of any particular
series of FUNC Class A Preferred Stock, series of FUNC Class A Preferred Stock
may vary as to priority.
FUNC RIGHTS PLAN
Each share of FUNC Common Stock has attached to it one right (a "FUNC
Right") issued pursuant to a Shareholder Protection Rights Agreement (as
amended, the "FUNC Rights Agreement"). Each FUNC Right entitles its registered
holder to purchase one one-hundredth of a share of a junior participating series
of FUNC Class A Preferred Stock designed to have economic and voting terms
similar to those of one share of FUNC Common Stock, for $110.00 (the "Rights
Exercise Price"), subject to adjustment, after the earlier of: (i) the tenth
business day (subject to extension) after commencement of a tender or exchange
offer which, if consummated, would result in a person becoming the beneficial
owner of 15 percent or more of the outstanding shares of FUNC Common Stock (an
"Acquiring Person"); and (ii) the tenth business day after the first date (the
"Flip-in Date") of a public announcement that a person has become an Acquiring
Person (in either case, the "Separation Time"). The FUNC Rights do not trade
separately from the shares of FUNC Common Stock unless and until the Separation
Time occurs.
The FUNC Rights are not be exercisable until the business day following the
Separation Time. The FUNC Rights expire on the earliest of: (i) the Exchange
Time (as defined below); (ii) the close of business on December 28, 2000; and
(iii) the date on which the FUNC Rights are redeemed or terminated as described
below (in any such case, the "Expiration Time"). The Rights Exercise Price and
the number of FUNC Rights outstanding, or in certain circumstances the
securities purchasable upon exercise of the FUNC Rights, are subject to
adjustment upon the occurrence of certain events.
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In the event that prior to the Expiration Time a Flip-in Date occurs, FUNC
will take such action as shall be necessary to ensure and provide that each FUNC
Right (other than FUNC Rights beneficially owned by an Acquiring Person or any
affiliate, associate or transferee thereof, which FUNC Rights shall become void)
shall constitute the right to purchase, from FUNC, shares of FUNC Common Stock
having an aggregate market price equal to twice the Rights Exercise Price for an
amount in cash equal to the then current Rights Exercise Price. In addition, the
Board of Directors of FUNC may, at its option, at any time after a Flip-in Date
and prior to the time that an Acquiring Person becomes the beneficial owner of
more than 50 percent of the outstanding shares of FUNC Common Stock, elect to
exchange all of the then outstanding FUNC Rights for shares of FUNC Common
Stock, at an exchange ratio of two shares of FUNC Common Stock per FUNC Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the Separation Time (the "Rights Exchange Rate").
Immediately upon such action by the Board of Directors (the "Exchange Time"),
the right to exercise the FUNC Rights will terminate and each FUNC Right will
thereafter represent only the right to receive a number of shares of FUNC Common
Stock equal to the Rights Exchange Rate. If FUNC becomes obligated to issue
shares of FUNC Common Stock upon exercise of or in exchange for FUNC Rights,
FUNC, at its option, may substitute therefor shares of junior participating FUNC
Class A Preferred Stock upon exercise of each FUNC Right at a rate of two
one-hundredths of a share of junior participating FUNC Class A Preferred Stock
upon the exchange of each FUNC Right.
The FUNC Rights are redeemable by FUNC at $0.01 per right, subject to
adjustment upon the occurrence of certain events, at any date prior to the date
on which they become exercisable and, in certain events, may be canceled and
terminated without any payment to the holders thereof. The FUNC Rights have no
voting rights and are not entitled to dividends.
The FUNC Rights will not prevent a takeover of FUNC. The FUNC Rights,
however, may cause substantial dilution to a person or group that acquires 15
percent or more of FUNC Common Stock unless the FUNC Rights are first redeemed
or terminated by the Board of Directors of FUNC. Nevertheless, the FUNC Rights
should not interfere with a transaction that is in the best interests of FUNC
and its stockholders because the FUNC Rights can be redeemed or terminated, as
hereinabove described, before the consummation of such transaction.
The complete terms of the FUNC Rights are set forth in the FUNC Rights
Agreement. The FUNC Rights Agreement is incorporated by reference as an exhibit
to the Registration Statement. A copy of the FUNC Rights Agreement can be
obtained upon written request to the Rights Agent, First Union National Bank of
North Carolina, Two First Union Center, Charlotte, North Carolina 28288-1154.
OTHER PROVISIONS
The Articles and Bylaws of FUNC contain a number of provisions which may be
deemed to have the effect of discouraging or delaying attempts to gain control
of FUNC, including provisions in the Articles: (i) classifying the Board of
Directors into three classes with each class to serve for three years with one
class being elected annually; (ii) authorizing the Board of Directors to fix the
size of the Board of Directors between nine and 30 directors; (iii) authorizing
directors to fill vacancies on the Board of Directors that occur between annual
meetings, except that vacancies resulting from a removal of a director by a
stockholder vote may only be filled by a stockholder vote; (iv) providing that
directors may be removed only for cause and only by affirmative vote of the
majority of shares entitled to be voted in the election of directors, voting as
a single class; (v) authorizing only the Board of Directors, the Chairman of the
Board or the President to call a special meeting of stockholders (except for
special meetings called under specified circumstances for holders of classes or
series of stock ranking superior to the FUNC Common Stock); and (vi) requiring
an 80 percent vote of stockholders entitled to vote in the election of
directors, voting as a single class, to alter any of the foregoing provisions.
The Bylaws of FUNC include provisions setting forth specific conditions
under which: (i) business may be transacted at an annual meeting of
stockholders; and (ii) persons may be nominated for election as directors of
FUNC at an annual meeting of stockholders.
Two North Carolina "anti-takeover" statutes adopted in 1990, The North
Carolina Shareholder Protection Act and The North Carolina Control Share
Acquisition Act, allowed North Carolina corporations to elect to either be
covered or not be covered by such statutes. FUNC elected not to be covered by
such statutes.
In addition to the foregoing, in certain instances the issuance of
authorized but unissued shares of FUNC Common Stock, FUNC Class A Preferred
Stock or FUNC Preferred Stock may have an anti-takeover effect.
See "CERTAIN DIFFERENCES IN THE RIGHTS OF BFL AND FUNC STOCKHOLDERS".
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CERTAIN DIFFERENCES IN THE RIGHTS OF BFL AND FUNC STOCKHOLDERS
GENERAL
FUNC is a North Carolina corporation subject to the provisions of the
NCBCA. BFL is a Delaware corporation subject to the provisions of the DGCL.
Stockholders of BFL will, upon consummation of the Corporate Merger, become
stockholders of FUNC. The rights of such stockholders as stockholders of FUNC
will then be governed by the Articles and Bylaws of FUNC, in addition to the
NCBCA.
Set forth below are certain differences between the rights of a BFL
stockholder under BFL's Certificate of Incorporation and Bylaws and under the
DGCL, on the one hand, and the rights of an FUNC stockholder under the Articles
and Bylaws of FUNC and under the NCBCA, on the other hand. THIS SUMMARY DOES NOT
PURPORT TO BE A COMPLETE DISCUSSION OF, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO, THE GOVERNING LAW AND THE CERTIFICATE OR ARTICLES OF INCORPORATION
AND BYLAWS OF EACH CORPORATION.
AUTHORIZED CAPITAL
BFL. The authorized capital stock of BFL consists of 16,000,000 shares of
BFL Common Stock and 2,000,000 shares of serial preferred stock, par value $.01
per share (the "BFL Serial Preferred Stock"). Shares of stock may be issued by
the Board of Directors from time to time to such persons and for such
consideration not less than the stated value as may be approved by the Board of
Directors, without the approval of the stockholders except as may otherwise be
required under the rules of the NYSE or the DGCL. In connection with any
issuance of BFL Serial Preferred Stock, the series, designations, voting powers,
if any, relative, participating, optional or other special rights of the shares
of each series and the qualifications, limitations and restrictions shall be as
determined by the Board of Directors of BFL. Currently the only outstanding
series of BFL Serial Preferred Stock is the BFL Preferred Stock. As of December
31, 1993, there were 3,615,370 shares of BFL Common Stock and 1,138,000 shares
of BFL Preferred Stock issued and outstanding. In addition, the Board of
Directors has established a series of BFL Serial Preferred Stock designated
"Adjustable Rate Cumulative Preferred Stock, Series B" (the "BFL Series B
Stock"). The 284,495 shares of BFL Series B Stock originally issued have been
converted into BFL Preferred Stock, and no shares of BFL Series B Stock remain
outstanding.
Each holder of BFL Common Stock is entitled to one vote for each share
held. The holders of the BFL Preferred Stock have the right to vote with shares
of the BFL Common Stock, with each share of BFL Preferred Stock having one vote;
provided that in certain specified circumstances, the holders of BFL Preferred
Stock have the right to vote separately as a class. All of the outstanding
shares of BFL Common Stock and BFL Preferred Stock are fully paid and
nonassessable.
Shares of BFL Preferred Stock rank superior to shares of BFL Common Stock
in respect of the right to receive dividends and the right to receive payments
out of the assets of BFL upon any liquidation, dissolution or winding up of BFL.
The holders of the BFL Preferred Stock are entitled to receive cumulative
quarterly dividends based on the liquidation preference of $13.25 multiplied by
an annual rate equal to the Prime Rate (as defined) less 1.125 percent (but in
no event less than 7.875 percent or more than 9.875 percent). Upon liquidation,
dissolution or winding up of BFL, the holders of the BFL Preferred Stock are
entitled to receive $13.25 (plus any dividend arrearages) per share before any
amounts are distributed to the holders of the BFL Common Stock. In addition,
holders of the BFL Preferred Stock have the right to convert each share of BFL
Preferred Stock into one share of BFL Common Stock. The Preferred Stock
Conversion Rate is subject to adjustment under certain circumstances. The BFL
Preferred Stock may be redeemed by BFL at any time at a redemption price of
$13.25 (plus any dividend arrearages). Holders of neither the BFL Common Stock
nor the BFL Preferred Stock have preemptive rights with respect to any shares of
stock or other securities of BFL which may be issued.
FUNC. FUNC's authorized capital is set forth under "DESCRIPTION OF FUNC
CAPITAL STOCK -- Authorized Capital".
AMENDMENT TO ARTICLES OF INCORPORATION OR BYLAWS
BFL. Pursuant to the provisions of the Certificate of Incorporation of BFL,
any amendment to the Certificate of Incorporation must be approved by two-thirds
of the members of the Board of Directors then in office at a meeting called
expressly for such purpose and thereafter approved by the stockholders by a
majority of the total votes eligible to be cast at a meeting called expressly
for such purpose; provided that certain amendments to the Certificate of
Incorporation require the affirmative vote of the holders of at least 75 percent
of the total votes eligible to be cast at such meeting. An amendment to the
Certificate of Incorporation of BFL would, under certain circumstances, require
the affirmative vote of the holders of at least 66 2/3 percent of the BFL
Preferred Stock. In addition, under the DGCL, holders of the outstanding shares
of a class or series are entitled to vote as a class if an amendment to the
certificate of incorporation would adversely affect the rights of the
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shares of such class or series. Any amendment to the Bylaws of BFL may be
adopted by the holders of at least 75 percent of the outstanding capital stock
entitled to vote thereon or by at least two-thirds of the entire Board of
Directors then in office.
FUNC. Under North Carolina law, an amendment to the Articles of FUNC
generally requires the recommendation of the Board of Directors and the approval
of either a majority of all shares entitled to vote thereon or a majority of the
votes cast thereon, depending on the nature of the amendment. In accordance with
North Carolina law, the Board of Directors of FUNC may condition its submission
of the proposed amendment on any basis. An amendment to the Bylaws of FUNC
generally requires the approval of either the stockholders or the Board of
Directors of FUNC. The Board of Directors of FUNC generally may not amend any
Bylaw approved by the stockholders. Under certain circumstances, the approval of
the holders of at least two-thirds, or in some cases a majority, of the
outstanding shares of any series of FUNC Preferred Stock or FUNC Class A
Preferred Stock may be required to amend the FUNC Articles. In addition, certain
amendments to the Articles or Bylaws of FUNC require the approval of not less
than 80 percent of the outstanding shares of FUNC entitled to vote in the
election of directors, voting together as a single class. See "DESCRIPTION OF
FUNC CAPITAL STOCK".
SIZE AND CLASSIFICATION OF BOARD OF DIRECTORS
BFL. Pursuant to the provisions of the Certificate of Incorporation of BFL,
there may not be less than six nor more than 18 members of the Board of
Directors of BFL. Subject to this limitation, the size of the Board of Directors
at any given time is that number designated in the Bylaws of BFL. Currently, the
Bylaws of BFL fix the number of directors at six. The Board of Directors of BFL
is divided into three classes, as nearly equal in number as possible; provided
that no decrease in the number of directors will affect the term of any director
then in office. Each director serves for a term of three years and until his or
her respective successor is elected and qualified. Vacancies on the BFL Board of
Directors may be filled by a majority of the remaining directors.
FUNC. The size of the Board of Directors of FUNC is determined by the
affirmative vote of a majority of the Board of Directors of FUNC, provided that
the FUNC Board of Directors may not set the number of directors at less than
nine nor more than 30, and provided further that no decrease in the number of
directors may shorten the term of any director then in office. The number of
directors of FUNC is currently set at 25. The FUNC Board of Directors is divided
into three classes, each as nearly as possible equal in number as the others,
with one class being elected annually. See also "DESCRIPTION OF FUNC CAPITAL
STOCK".
REMOVAL OF DIRECTORS
BFL. Directors of BFL may be removed only for cause and then only by the
affirmative vote of at least 75 percent of the total votes eligible to be cast
by the stockholders of BFL at a meeting called expressly for such purpose.
FUNC. Except for directors elected under specified circumstances by holders
of any class or series of stock having a preference over the FUNC Common Stock
as to dividends or upon liquidation, directors of FUNC may be removed only for
cause and only by a vote of the holders of a majority of the shares then
entitled to vote in the election of directors, voting together as a single
class.
DIRECTOR EXCULPATION
BFL. The Certificate of Incorporation of BFL provides that no director of
BFL shall be personally liable to BFL or its stockholders for monetary damages
for any breach of fiduciary duty as a director, except for liability (i) for
breaches of the director's duty of loyalty to BFL or its stockholders, (ii) for
acts or omissions not in good faith or involving intentional misconduct or a
knowing violation of law, (iii) for negligent or unlawful payment of dividends
or purchases of BFL capital stock, or (iv) for transactions from which a
director derived an improper personal benefit.
FUNC. FUNC's Articles provide for the elimination of personal liability of
each director of FUNC to the fullest extent permitted by the provisions of the
NCBCA, as the same may be in effect from time to time. The NCBCA does not permit
the elimination of such liability with respect to (i) acts or omissions the
director believed were clearly in conflict with the best interests of FUNC, (ii)
any liability under the NCBCA for unlawful distributions by FUNC, or (iii) any
transaction from which the director derived an improper personal benefit.
DIRECTOR CONFLICT OF INTEREST TRANSACTIONS
BFL. Delaware law generally permits transactions involving a Delaware
corporation and an interested director of that corporation if: (i) the material
facts are disclosed and a majority of disinterested directors or committee
members consents in
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good faith; (ii) the material facts are disclosed and a majority of shares
entitled to vote thereon consents in good faith; or (iii) the transaction is
fair to the corporation at the time it is authorized by the board of directors,
a committee, or the stockholders.
FUNC. North Carolina law generally permits transactions involving a North
Carolina corporation and an interested director of that corporation if: (i) the
material facts of the transaction and the director's interest are disclosed and
a majority of disinterested shares entitled to vote thereon authorizes, approves
or ratifies the transaction; (ii) the material facts are disclosed and a
majority of disinterested directors or a committee of the board of directors
authorizes, approves or ratifies the transaction; or (iii) the transaction is
fair to the corporation. North Carolina law prohibits loans to directors or the
guaranteeing of their obligations by a North Carolina corporation unless
approved by a majority vote of disinterested stockholders or unless the
corporation's board of directors determines that the loan or guarantee benefits
the corporation and either approves the specific loan or guarantee or a general
plan of loans and guarantees by the corporation.
STOCKHOLDER MEETINGS
BFL. A special meeting of the stockholders of BFL may be called for any
purpose by either the Chairman of the Board of Directors or the President and
shall be called at the written request of a majority of the directors then in
office. The holders of a majority of the capital stock issued and outstanding
and entitled to vote at a meeting constitutes a quorum for the transaction of
business at all meetings of stockholders. Except as otherwise required by law or
by the Certificate of Incorporation or Bylaws of BFL, action may be taken by the
vote of the holders of a majority of the stock duly voted on such action.
FUNC. A special meeting of stockholders may be called for any purpose only
by the Board of Directors of FUNC, by the Chairman of FUNC's Board of Directors
or by FUNC's President (except for special meetings called under specified
circumstances for holders of any class or series of stock having a preference
over the FUNC Common Stock as to dividends or upon liquidation). A quorum for a
meeting of the stockholders of FUNC is a majority of the outstanding shares of
FUNC entitled to vote. Except as provided in FUNC's Articles or the NCBCA, a
majority of the votes cast is generally required for any action by the
stockholders of FUNC. North Carolina law provides that such quorum and voting
requirements may be increased only with the approval of the stockholders of
FUNC.
DIRECTOR NOMINATIONS
BFL. Only persons who are nominated in accordance with the procedures set
forth in the Bylaws of BFL shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of BFL may be made
at a meeting of stockholders by or at the direction of the Board of Directors or
by any stockholder of BFL entitled to vote for the election of directors at the
meeting who complies with the notice procedures set forth in the Bylaws of BFL.
Any nominations for director, other than those made by or at the direction of
the Board of Directors, must be made pursuant to timely notice in writing to the
Secretary of BFL. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of BFL not less than 30
days nor more than 90 days prior to the meeting; provided, however, that in the
event that less than 45 days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by a stockholder to be
timely must be so received not later than the close of business on the 15th day
following the day on which notice of the date of the meeting was mailed or such
public disclosure was made. The stockholder's notice must contain information
about the person to be nominated and certain information about the person
submitting the notice. The Chairman of the meeting will, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the Bylaws of BFL and the defective
nomination shall be disregarded.
FUNC. FUNC's Bylaws establish procedures that must be followed for
stockholders to nominate persons for election to FUNC's Board of Directors. Such
nominations must be made by delivering written notice to the Secretary of FUNC
not less than 60 or more than 90 days prior to the annual meeting at which
directors will be elected; provided, however, that if less than 70 days' notice
of the date of the meeting is given, such written notice by the stockholder must
be so delivered not later than the tenth day after the day on which such notice
of the date of the meeting was given. Notice will be deemed to have been given
more than 70 days prior to the meeting if the meeting is called on the third
Tuesday of April regardless as to when public disclosure is made. The nomination
notice must set forth certain information about the person to be nominated
similar to that required to be disclosed in the solicitation of proxies for
election of directors pursuant to Items 7(a) and 7(b) of Regulation 14A under
the Exchange Act, and such person's written consent to being nominated and to
serving as a director if elected. The nomination notice must also set forth
certain information about the person submitting the notice, including the name
and address of the stockholder and the class and number of shares of FUNC
owned of record or beneficially by such
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stockholder. The Chairman of the meeting will, if the facts
warrant, determine that a nomination was not made in accordance with the
provisions prescribed by the Bylaws and the defective nomination will be
disregarded. The foregoing procedures do not apply to any director who is
nominated under specified circumstances by holders of any class or series of
stock having a preference over FUNC Common Stock as to dividends or upon
liquidation.
STOCKHOLDER PROPOSALS
BFL. For business to be properly brought before an annual meeting of BFL by
a stockholder, the stockholder must have given timely notice of the business to
be brought before the meeting in writing to the secretary of BFL. To be timely,
a stockholder's notice must be delivered to or mailed and received at the
principal executive offices of BFL not less than 30 days nor more than 90 days
prior to the meeting; provided, however, that in the event that less than 45
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the 15th day following the day on which
notice of the date of the annual meeting was mailed or such public disclosure
was made. A stockholder's notice to the Secretary must set forth as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting; (ii) the name
and address, as they appear on BFL's books, of the stockholder proposing such
business; (iii) the class and number of shares of BFL which are beneficially
owned by the stockholder; and (iv) any material interest of the stockholder in
such business. The Chairman of an annual meeting will, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of the Bylaws of BFL, and
any such business shall not be transacted.
FUNC. FUNC's Bylaws establish procedures that must be followed for a
stockholder to submit a proposal to a vote of the stockholders of FUNC at an
annual meeting of stockholders. Such proposal must be made by the stockholder
delivering written notice to the Secretary of FUNC not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that if less than 70
days' notice of the date of the meeting is given, such written notice by the
stockholder must be so delivered not later than the tenth day after the day on
which such notice of the date of the meeting was given. Notice will be deemed to
have been given more than 70 days prior to the meeting if the meeting is called
on the third Tuesday of April. The stockholder proposal notice must set forth:
(i) a brief description of the proposal and the reasons for its submission; (ii)
the name and address of the stockholder, as they appear on FUNC's books; (iii)
the classes and number of shares of FUNC stock owned by the stockholder; and
(iv) any material interest of the stockholder in such proposal other than such
holder's interest as a stockholder of FUNC. The Chairman of the meeting will, if
the facts warrant, determine that any proposal was not properly submitted in
accordance with the provisions prescribed by the Bylaws and the defective
proposal will not be submitted to the meeting for a vote of the stockholders.
STOCKHOLDER PROTECTION RIGHTS PLAN
BFL. BFL does not have a stockholder protection rights plan.
FUNC. FUNC has adopted the FUNC Rights Agreement. See "DESCRIPTION OF FUNC
CAPITAL STOCK -- FUNC Rights Plan".
STOCKHOLDER INSPECTION RIGHTS; STOCKHOLDER LISTS
BFL. Under Delaware law, stockholders of record of BFL have the right to
inspect the books and records of BFL for a purpose reasonably related to their
interests as stockholders. A stockholder of BFL may exercise his right of
inspection upon written demand under oath stating the purpose thereof. In
addition, BFL is required to prepare a stockholder list with respect to any
stockholders' meeting and, pursuant to its Bylaws, to make such list available
to any stockholder for any purpose germane to such meeting beginning 20 days
prior to such meeting and continuing through such meeting.
FUNC. Under the NCBCA, qualified stockholders have the right to inspect and
copy certain records of FUNC if their demand is made in good faith and for a
proper purpose. Such right of inspection requires that the stockholder give FUNC
at least five business days' written notice of the demand, describing with
reasonable particularity his purpose and the requested records. The records must
be directly connected with the stockholder's purpose. The rights of inspection
and copying extend not only to stockholders of record but also to beneficial
owners whose beneficial ownership is certified to FUNC by the stockholder of
record. However, FUNC is under no duty to provide any accounting records or any
records with respect to any matter that FUNC determines in good faith may, if
disclosed, adversely affect FUNC in the conduct of its business or may
constitute material non-public information, and the rights of inspection and
copying are limited to stockholders who either
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have been stockholders for at least six months or who hold at least five percent
of the outstanding shares of any class of stock of FUNC. A stockholder's agent
or attorney has the same inspection and copying rights as the stockholder he
represents.
In addition, after fixing a record date for a stockholders' meeting, FUNC
is required to prepare a stockholder list with respect to such stockholders'
meeting and to make such list available at FUNC's principal office or at a place
identified in the meeting notice to any stockholder beginning two business days
after notice of such meeting is given and continuing through such meeting and
any adjournments thereof. Subject to the applicable provisions of the NCBCA, a
stockholder or his agent or attorney upon written demand at his own expense
during regular business hours is entitled to copy such list.
REQUIRED STOCKHOLDER VOTE FOR CERTAIN ACTIONS
BFL. Under the DGCL, a merger, consolidation, sale of all or substantially
all of a corporation's assets or voluntary dissolution of a corporation requires
the approval of the Board of Directors and of the holders of a majority of the
outstanding stock of the corporation entitled to vote thereon. Under certain
circumstances, the holders of the BFL Preferred Stock may also have a separate
class vote on such transactions.
FUNC. Under North Carolina law, except as otherwise provided below or in
the NCBCA, any plan of merger or share exchange involving FUNC would require
adoption by the Board of Directors, who would generally be required to recommend
its approval to the stockholders, who in turn would be required to approve the
plan by a vote of a simple majority of the outstanding shares. Except as
otherwise provided below or in the NCBCA, any sale, lease, exchange or other
disposition of all or substantially all of FUNC's assets not made in the usual
and regular course of business would generally require that the Board of
Directors recommend the proposed transaction to the stockholders who would be
required to approve the transaction by a vote of a simple majority of the
outstanding shares. In accordance with North Carolina law, the submission by the
Board of Directors of any such action may be conditioned on any basis,
including, without limitation, conditions regarding a supermajority voting
requirement or that no more than a certain number of shares indicate that they
will seek dissenters' rights.
With respect to a plan of merger, no vote of the stockholders of FUNC is
required if FUNC is the surviving corporation and: (i) FUNC's Articles would
remain unchanged after the merger, subject to certain exceptions; (ii) each
stockholder of FUNC immediately before the merger would hold an identical number
of shares, with identical designations, limitations, preferences and relative
rights, after the merger; (iii) the number of shares of FUNC stock entitled to
vote unconditionally in the election of directors to be issued in the merger
(either by the conversion of securities issued in the merger or by the exercise
of rights and warrants issued in the merger) would not exceed 20 percent of the
shares of FUNC stock entitled to vote unconditionally in the election of
directors outstanding immediately before the merger; and (iv) the number of
shares of FUNC stock entitling holders to participate without limitation in
distributions to be issued in the merger (either by the conversion of securities
issued in the merger or by the exercise of rights and warrants issued in the
merger) would not exceed 20 percent of the shares of FUNC stock entitling
holders to participate without limitation in distributions outstanding
immediately before the merger.
With respect to a sale, lease, exchange or other disposition of all or
substantially all the assets of FUNC made upon the authority of the Board of
Directors, no vote of the stockholders of FUNC would be required if such
disposition is made in the usual and regular course of business or if such
disposition is made to a wholly-owned subsidiary of FUNC.
ANTI-TAKEOVER PROVISIONS
BFL. Section 203 of the DGCL would prohibit a "business combination"
(defined generally to include mergers, certain sales and leases of assets,
issuances of securities and similar transactions) by BFL with an "interested
stockholder" (defined generally to be the beneficial owner of 15 percent or more
of BFL's voting stock) within three years after the person or entity becomes an
interested stockholder, unless: (i) prior to the person or entity becoming an
interested stockholder, the business combination or the transaction pursuant to
which such person or entity became an interested stockholder shall have been
approved by the Board of Directors of BFL; (ii) upon the consummation of the
transaction in which the person or entity became an interested stockholder, the
interested stockholder holds at least 85 percent of the voting stock of BFL
(excluding shares held by persons who are both officers and directors of BFL and
shares held by certain employee benefit plans) as of the commencement of the
transaction; or (iii) the business combination is approved by the Board of
Directors of BFL and authorized at a meeting of stockholders by the holders of
at least two-thirds of the outstanding voting stock of BFL, excluding shares
held by the interested stockholder. The Corporate Merger is not subject to the
limitations set forth in Section 203.
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The Certificate of Incorporation of BFL provides that a "business
combination" (including certain mergers, consolidations, sales of assets and
issuance of securities, among others) with an "interested stockholder" (defined
generally to be the beneficial owner of ten percent or more of BFL's voting
stock) requires the affirmative vote of the holders of at least 75 percent of
the voting power of the then outstanding shares of capital stock of BFL entitled
to vote generally in the election of directors voting together as a single
class. This requirement is not applicable to a business combination if the
business combination has been approved by a majority of "continuing directors"
(generally defined to be a director not affiliated with the interested
stockholder) or certain price and procedural requirements are met with respect
to the business combination. The Corporate Merger is not subject to the voting
requirements set forth in this section of BFL's Certificate of Incorporation.
FUNC. North Carolina has two anti-takeover statutes in force, The North
Carolina Shareholder Protection Act and The North Carolina Control Share
Acquisition Act. These statutes restrict business combinations with, and the
accumulation of shares of voting stock of, certain North Carolina corporations.
In accordance with the provisions of these statutes, FUNC elected not to be
covered by the restrictions imposed by these statutes. As a result, such
statutes do not apply to FUNC.
DISSENTERS' OR APPRAISAL RIGHTS
BFL. Delaware law provides appraisal rights for certain mergers and
consolidations. Appraisal rights are not available to holders of (i) shares
listed on a national securities exchange or held of record by more than 2,000
stockholders, or (ii) shares of the surviving corporation of the merger, if the
merger did not require the approval of the stockholders of such corporation,
unless in either case, the holders of such stock are required pursuant to the
merger to accept anything other than (a) shares of stock of the surviving
corporation, (b) shares of stock of another corporation which are also listed on
a national securities exchange or held by more than 2,000 holders, or (c) cash
in lieu of fractional shares of such stock. Appraisal rights are not available
for a sale of assets or an amendment to BFL's Certificate of Incorporation.
FUNC. North Carolina law generally provides dissenters' rights for mergers
and certain share exchanges that would require stockholder approval, sales of
all or substantially all of the assets (other than sales that are in the usual
and regular course of business and certain liquidations and court-ordered
sales), certain amendments to the articles of incorporation and any corporate
action taken pursuant to a stockholder vote to the extent the articles of
incorporation, bylaws or a resolution of the board of directors entitles
stockholders to dissent.
DIVIDENDS AND OTHER DISTRIBUTIONS
BFL. Delaware law generally allows dividends to be paid out of surplus of
the corporation or out of the net profits of the corporation for the current
fiscal year and/or the prior fiscal year. No dividends may be paid if they would
result in the capital of the corporation being less than the capital represented
by the preferred stock of the corporation. In addition, the Certificate of
Incorporation of BFL provides that all accrued dividends on the BFL Preferred
Stock shall be paid prior to, or simultaneously with, any dividends being paid
on the BFL Common Stock or any stock ranking equal with or junior to the BFL
Preferred Stock.
FUNC. Under North Carolina law, FUNC generally may make dividends or other
distributions to its stockholders unless after the distribution either: (i) FUNC
would not be able to pay its debts as they become due in the usual course of
business; or (ii) FUNC's assets would be less than the sum of its liabilities
plus the amount that would be needed to satisfy the preferential dissolution
rights of stockholders whose preferential rights are superior to those receiving
the distribution. See "CERTAIN REGULATORY CONSIDERATIONS RELATING TO
FUNC -- Payment of Dividends" and "DESCRIPTION OF FUNC CAPITAL STOCK".
VOLUNTARY DISSOLUTION
BFL. Delaware law provides that BFL may be dissolved by the approval of a
majority of the entire Board of Directors of BFL and a majority of the shares of
BFL entitled to vote thereon. Delaware law also allows all the stockholders of
BFL acting unanimously in writing to effect a dissolution of BFL without the
approval of the Board of Directors.
FUNC. North Carolina law provides that FUNC may be dissolved if the Board
of Directors of FUNC proposes dissolution and a majority of the shares of FUNC
entitled to vote thereon approves. In accordance with North Carolina law, the
Board of Directors of FUNC may condition its submission of a proposal for
dissolution on any basis.
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RESALE OF FUNC COMMON SHARES
The FUNC Common Shares have been registered under the Securities Act,
thereby allowing such shares to be traded freely and without restriction by
those holders of BFL Common Stock or BFL Preferred Stock who receive such shares
following consummation of the Corporate Merger and who are not deemed to be
"affiliates" (as defined under the Securities Act, but generally including
directors, certain executive officers and ten percent or more stockholders) of
BFL or FUNC. Each holder of BFL Common Stock or BFL Preferred Stock who is
deemed by BFL to be an affiliate will enter into an agreement with FUNC prior to
the Effective Date providing, among other things, that such affiliate will not
transfer any FUNC Common Shares received by such holder in the Corporate Merger
except in compliance with the Securities Act. This Prospectus/Proxy Statement
does not cover any resales of FUNC Common Shares received by affiliates of BFL.
ADDITIONAL MATTERS
From time to time FUNB-FL has entered into transactions with certain of the
directors of BFL and their affiliates in the ordinary course of business,
including, without limitation, maintaining deposit and lending relationships.
LEGAL OPINIONS
The validity of the FUNC Common Shares being offered hereby is being passed
upon for FUNC by Marion A. Cowell, Jr., Esq., Executive Vice President,
Secretary and General Counsel of FUNC. Mr. Cowell is also a stockholder of FUNC
and holds options to purchase additional shares of FUNC Common Stock.
Sullivan & Cromwell, special counsel for FUNC, has delivered an opinion
concerning certain federal income tax consequences of the Corporate Merger. See
"THE MERGERS -- Certain Federal Income Tax Consequences". Sullivan & Cromwell
regularly performs legal services for FUNC and its subsidiaries. Members of
Sullivan & Cromwell performing these legal services own shares of FUNC's Common
Stock.
Certain legal matters associated with the Mergers will be passed upon by
Cummings & Lockwood, counsel for BFL. From time to time Cummings & Lockwood
performs legal services for FUNB-FL which are unrelated to the Mergers.
EXPERTS
The consolidated balance sheets of BFL as of September 30, 1993 and 1992,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended September 30,
1993, included in BFL's 1993 Annual Report to Stockholders which is incorporated
by reference in BFL's 1993 Annual Report on Form 10-K, have been incorporated
herein in reliance on the report of KPMG Peat Marwick, independent certified
public accountants, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated balance sheets of FUNC as of December 31, 1993 and 1992,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1993, included in FUNC's 1993 Annual Report to Stockholders which
is incorporated by reference in FUNC's 1993 Annual Report on Form 10-K, have
been incorporated herein in reliance on the report of KPMG Peat Marwick,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
OTHER MATTERS
As of the date of this Prospectus/Proxy Statement, the Board of Directors
of BFL knows of no matters which will be presented for consideration at the
Special Meeting other than as set forth in the Notice of Special Meeting
accompanying this Prospectus/Proxy Statement. However, if any other matters
shall come before the meeting or any adjournment or adjournments thereof and be
voted upon, the enclosed proxy shall be deemed to confer discretionary authority
to the individuals named as proxies therein to vote the shares represented by
such proxy as to any such matters.
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ANNEX A
AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF MERGERS, dated as of the 17th day of January, 1994
(this "Plan"), by and among BANCFLORIDA FINANCIAL CORPORATION ("BFL"),
BANCFLORIDA, A FEDERAL SAVINGS BANK (the "Bank"), FIRST UNION CORPORATION
("First Union"), FIRST UNION CORPORATION OF FLORIDA ("FUNC-FL") and FIRST UNION
NATIONAL BANK OF FLORIDA ("FUNB-FL").
RECITALS:
(A) BFL. BFL is a corporation duly organized and existing in good standing
under the laws of the State of Delaware, with its principal executive offices
located in Naples, Florida. BFL is a registered savings and loan holding company
under the Home Owners' Loan Act of 1933. As of the date hereof, BFL has
16,000,000 authorized shares of common stock, each of $0.01 par value ("BFL
Common Stock"), and 2,000,000 authorized shares of cumulative convertible
preferred stock, each of $0.01 par value ("BFL Preferred Stock") (no other class
of capital stock being authorized), of which 3,615,370 shares of BFL Common
Stock and 1,138,000 shares of BFL Preferred Stock, are issued and outstanding.
(B) THE BANK. The Bank is a stock federal savings bank duly organized and
existing in good standing under the laws of the United States, with its
principal executive offices located in Naples, Florida. As of the date hereof,
the Bank has 3,000,000 authorized shares of common stock, each of $0.01 par
value ("Bank Common Stock") 2,000,000 authorized shares of preferred stock, each
of $0.01 par value ("Bank Preferred Stock") (no other class of capital stock
being authorized), of which 2,539,000 shares of Bank Common Stock and 929,720
shares of Bank Preferred Stock are issued and outstanding. All of the issued and
outstanding Bank Common Stock and Bank Preferred Stock are owned by BFL. As of
September 30, 1993, the Bank had capital of $88,219,138, divided into common
stock of $25,930, preferred stock of $9,297, surplus of $56,970,698 and
undivided profits, including capital reserves, of $31,202,873, net of ESOP
obligation of $294,883 and net unrealized loss on investment securities of
$431,000.
(C) FIRST UNION. First Union is a corporation duly organized and existing
in good standing under the laws of the State of North Carolina, with its
principal executive offices located in Charlotte, North Carolina. As of the date
hereof, First Union has 750,000,000 authorized shares of common stock, each of
$3.33 1/3 par value (together with the rights ("First Union Rights") issued
pursuant to a Shareholder Protection Rights Agreement, dated December 18, 1990
(as amended, the "First Union Rights Agreement")) attached thereto, "First Union
Common Stock"), 40,000,000 authorized shares of Class A Preferred Stock, no-par
value ("First Union Class A Preferred Stock"), and 10,000,000 authorized shares
of Preferred Stock, no-par value ("First Union Preferred Stock") (no other class
of capital stock being authorized), of which 169,573,982 shares of First Union
Common Stock, no shares of First Union Class A Preferred Stock and 6,318,350
shares of Series 1990 Cumulative Perpetual Adjustable Rate Preferred Stock,
constituting a single series of First Union Preferred Stock, were issued and
outstanding as of September 30, 1993.
(D) FUNC-FL. FUNC-FL is a corporation duly organized and existing in good
standing under the laws of the State of Florida, with its principal executive
offices located in Jacksonville, Florida. As of the date hereof, FUNC-FL has
7,500 authorized shares of common stock each of $1.00 par value ("FUNC-FL Common
Stock") (no other class of capital stock being authorized), of which two shares
of FUNC-FL Common Stock are issued and outstanding and owned by First Union.
(E) FUNB-FL. FUNB-FL is a national banking association duly organized and
existing under the laws of the United States, with its principal executive
offices located in Jacksonville, Florida. As of the date hereof, FUNB-FL has
4,596,079 authorized shares of common stock, each of $10.00 par value ("FUNB-FL
Common Stock") (no other class of capital stock being authorized), of which
4,596,079 shares are issued and outstanding and owned by FUNC-FL (other than
directors' qualifying shares). As of September 30, 1993, FUNB-FL had capital of
$2,161,302,000, divided into common stock of $45,961,000, surplus of
$1,698,872,000 and undivided profits, including capital reserves, of
$416,469,000.
(F) STOCK OPTION AGREEMENT; VOTING AGREEMENT. Immediately after the
execution and delivery of this Plan, as a condition and inducement to First
Union's willingness to enter into this Plan, BFL and First Union are entering
into a Stock Option Agreement (the "Stock Option Agreement") in the form
attached hereto as EXHIBIT A, pursuant to which BFL is granting to First Union
an option to purchase, under certain circumstances, shares of BFL Common Stock.
As a condition and inducement to First Union's, FUNC-FL's and FUNB-FL's
willingness to enter into this Plan, the owner of all of the issued and
outstanding shares of BFL Preferred Stock has entered into an agreement with
First Union, FUNC-FL and FUNB-FL in
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the form attached hereto as EXHIBIT B, pursuant to which, among other things,
such owner has agreed to vote in favor of approval of the transactions
contemplated by this Plan at the Meeting (as hereinafter defined).
(G) RIGHTS, ETC. Except as Previously Disclosed in Schedule 4.01(C), there
are no shares of BFL Common Stock, BFL Preferred Stock, Bank Common Stock or
Bank Preferred Stock authorized and reserved for issuance, neither BFL nor the
Bank has any Rights (as defined below) issued or outstanding and neither BFL nor
the Bank has any commitment to authorize, issue or sell any such shares or any
Rights, except (i) pursuant to this Plan, (ii) the Stock Option Agreement, or
(iii) upon conversion of the BFL Preferred Stock outstanding at the date hereof.
The terms "Rights" means securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire, or
any options, calls or commitments relating to, shares of capital stock. There
are no preemptive rights in respect of the BFL Common Stock or the BFL Preferred
Stock.
(H) APPROVALS. The Board of Directors of each of BFL, the Bank, First
Union, FUNC-FL and FUNB-FL has approved, at meetings of each of such Boards of
Directors, this Plan and (in the case of BFL and First Union) the Stock Option
Agreement and has authorized the execution hereof and thereof in counterparts.
(I) OTHER. It is the intention of the parties to this Plan that the Mergers
(as hereinafter defined) shall include the right of FUNC-FL to acquire the
assets and assume the liabilities of the subsidiaries of BFL and to assign such
right to any corporation which FUNC-FL controls. Pursuant to the foregoing and
under the authority of Revenue Rulings 64-73 and 70-224, FUNC-FL may assign its
right to acquire the assets and assume the liabilities of the subsidiaries of
BFL to FUNB-FL, and may also direct each such subsidiary to transfer all of its
assets and liabilities to FUNB-FL on the Effective Date (as hereinafter
defined), or at any time thereafter, including by means of a statutory merger.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Plan and prescribe the terms and conditions thereof
and the manner and basis of carrying it into effect, which shall be as follows:
I. THE MERGERS.
1.01. THE CORPORATE MERGER. On the Effective Date:
(A) THE CONTINUING CORPORATION. BFL shall merge into FUNC-FL (the
"Corporate Merger"), the separate existence of BFL shall cease and FUNC-FL (the
"Continuing Corporation") shall survive and the name of the Continuing
Corporation shall be "First Union Corporation of Florida".
(B) RIGHTS, ETC. The Continuing Corporation shall thereupon and thereafter
possess all of the rights, privileges, immunities and franchises, of a public as
well as of a private nature, of each of the merging corporations; and all
property, real, personal and mixed, and all debts due on whatever account, and
all other choses in action, and all and every other interest, of or belonging to
or due to each of the corporations so merged, shall be deemed to be vested in
the Continuing Corporation without further act or deed; and the title to any
real estate or any interest therein, vested in each of such corporations, shall
not revert or be in any way impaired by reason of the Corporate Merger.
(C) LIABILITIES. The Continuing Corporation shall thenceforth be
responsible and liable for all the liabilities, obligations and penalties of
each of the corporations so merged.
(D) ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS; OFFICERS. The Articles
of Incorporation and By-laws of the Continuing Corporation shall be those of
FUNC-FL, as in effect immediately prior to the Corporate Merger becoming
effective. The directors and officers of FUNC-FL in office immediately prior to
the Corporate Merger becoming effective shall be the directors and officers of
the Continuing Corporation, together with such additional directors and officers
as may thereafter be elected, who shall hold office until such time as their
successors are elected and qualified.
1.02. THE BANK MERGER. Immediately following consummation of the Corporate
Merger on the Effective Date or as soon thereafter as FUNB-FL may deem
appropriate:
(A) THE CONTINUING BANK. The Bank shall be merged with and into FUNB-FL
(the "Bank Merger" and together with the Corporate Merger, the "Mergers"), the
separate existence of the Bank shall cease and FUNB-FL (the "Continuing Bank")
shall survive, the name of the Continuing Bank shall be "First Union National
Bank of Florida" and the Continuing Bank shall continue to conduct the business
of a national banking association at its main office in Jacksonville, Florida
and at the legally established branches of the Bank and FUNB-FL.
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(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-FL shall be preserved unimpaired.
(D) CHARTER; BY-LAWS; DIRECTORS; OFFICERS. The Charter and By-Laws of the
Continuing Bank shall be those of FUNB-FL, as in effect immediately prior to the
Bank Merger becoming effective. The directors and officers of FUNB-FL 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 qualified.
(E) OUTSTANDING STOCK OF THE CONTINUING BANK. The amount of the capital
stock of the Continuing Bank shall be not less than $45,960,790 and shall
consist of not less than 4,596,079 issued and outstanding shares of common
stock, each of $10.00 par value, and the issued and outstanding shares shall
remain issued and outstanding as shares of FUNB-FL, each of $10.00 par value,
and the holders thereof shall retain their rights therein.
(F) OUTSTANDING STOCK OF THE BANK. The Continuing Corporation shall deliver
all of the issued and outstanding shares of the Bank to the Continuing Bank for
cancellation.
1.03. EFFECTIVE DATE. Subject to the conditions to the obligations of the
parties to effect the Mergers as set forth in Article VI, the effective date
(the "Effective Date") shall be such date as First Union shall notify BFL in
writing not less than five days prior thereto, which date shall not be more than
30 days after such conditions have been satisfied or waived in writing. Prior to
the Effective Date, FUNC-FL and BFL shall execute and deliver to the Secretary
of State of the States of Florida and Delaware, Articles of Merger in accordance
with applicable law.
II. CONSIDERATION.
2.01. CORPORATE MERGER CONSIDERATION. Subject to the provisions of this
Plan, on the Effective Date:
(A) OUTSTANDING FUNC-FL COMMON STOCK. The shares of FUNC-FL Common Stock
issued and outstanding immediately prior to the Effective Date shall, on and
after the Effective Date, remain as issued and outstanding shares of FUNC-FL
Common Stock.
(B) OUTSTANDING BFL COMMON STOCK. Each share (excluding shares ("Treasury
Shares") held by BFL or any of its subsidiaries or by First Union or any of its
subsidiaries, in each case other than in a fiduciary capacity or as a result of
debts previously contracted) of BFL Common Stock issued and outstanding
immediately prior to the Effective Date shall, by virtue of the Corporate
Merger, automatically and without any action on the part of the holder thereof,
become and be converted into the right to receive the number of shares of First
Union Common Stock equal to the Exchange Ratio (as hereinafter defined). The
Exchange Ratio shall be equal to: (i) 0.669 if the First Union Price (as
hereinafter defined) is greater than $41.874 and less than $44.876; (ii) the
result obtained by dividing $28.00 by the First Union Price if the First Union
Price is $41.874 or less; or (iii) the result obtained by dividing $30.00 by the
First Union Price if the First Union Price is $44.876 or greater. The First
Union Price shall be equal to the average of the last reported sale prices per
share of First Union Common Stock on the New York Stock Exchange ("NYSE")
Composite Transactions reporting system for the ten trading days immediately
prior to the Effective Date (as reported in THE WALL STREET JOURNAL), subject to
possible adjustment as set forth in Section 2.05, and upon any such adjustment
any references in this Plan to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to such Section.
(C) OUTSTANDING BFL PREFERRED STOCK. Each share of BFL Preferred Stock
issued and outstanding immediately prior to the Effective Date shall, by virtue
of the Corporate Merger, automatically and without any action on the part of the
holder thereof, become and be converted into the right to receive a number of
shares of First Union Common Stock equal to the product of (i) the Exchange
Ratio, and (ii) the number of shares of BFL Common Stock into which a share of
BFL Preferred Stock is convertible as of the Effective Date.
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2.02. STOCKHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date, holders
of BFL Common Stock and BFL Preferred Stock shall cease to be, and shall have no
rights as, stockholders of BFL, other than to receive the consideration provided
under this Article II. After the Effective Date, there shall be no transfers on
the stock transfer books of BFL or the Continuing Corporation of the shares of
BFL Common Stock and BFL Preferred Stock which were issued and outstanding
immediately prior to the Effective Date.
2.03. FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of First Union Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the
Corporate Merger; instead, First Union shall pay to each holder of BFL Common
Stock or BFL Preferred Stock who would otherwise be entitled to a fractional
share an amount in cash determined by multiplying such fraction by the last sale
price of First Union Common Stock on the last trading day prior to the Effective
Date, as reported by the NYSE Composite Transactions reporting system (as
reported in THE WALL STREET JOURNAL).
2.04. EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Date, First Union shall send or cause to be sent to each former stockholder of
BFL of record immediately prior to the Effective Date transmittal materials for
use in exchanging such stockholder's certificates for BFL Common Stock and BFL
Preferred Stock for the consideration set forth in this Article II. The
certificates representing the shares of First Union Common Stock into which
shares of such stockholder's BFL Common Stock and BFL Preferred Stock are
converted on the Effective Date, any fractional share checks which such
stockholder shall be entitled to receive, and any dividends paid on such shares
of First Union Common Stock for which the record date for determination of
stockholders entitled to such dividends is on or after the Effective Date, will
be delivered to such stockholder only upon delivery to First Union National Bank
of North Carolina (the "Exchange Agent") of the certificates representing all of
such shares of BFL Common Stock and BFL Preferred Stock (or indemnity
satisfactory to First Union and the Exchange Agent, in their judgment, if any of
such certificates are lost, stolen or destroyed). No interest will be paid on
any such fractional share checks or dividends to which the holder of such shares
shall be entitled to receive upon such delivery. Certificates surrendered for
exchange by any person constituting an "affiliate" of BFL for purposes of Rule
145 of the Securities Act (as hereinafter defined), shall not be exchanged for
certificates representing First Union Common Stock until First Union has
received a written agreement from such person as specified in Section 5.10.
2.05. ANTI-DILUTION PROVISIONS. In the event First Union changes the number
of shares of First Union Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization or
similar transaction with respect to the outstanding First Union Common Stock and
the record date therefor shall be prior to the Effective Date, the Exchange
Ratio shall be proportionately adjusted.
2.06. TREASURY SHARES. Each of the Treasury Shares of BFL Common Stock
shall be canceled and retired at the effectiveness of the Corporate Merger and
no consideration shall be issued in exchange therefor.
2.07. RESERVATION OF RIGHT TO REVISE TRANSACTION. First Union may at any
time change the method of effecting the acquisition of BFL and the Bank by First
Union (including without limitation the provisions of this Article II) if and to
the extent it deems such change to be desirable; PROVIDED, HOWEVER, that no such
change shall (i) alter or change the amount or kind of consideration to be
issued to holders of BFL Common Stock or BFL Preferred Stock as provided for in
this Plan, (ii) adversely affect the tax treatment to BFL stockholders as a
result of receiving such consideration, or (iii) materially impede or delay
receipt of any approval referred to in Section 6.02 or the consummation of the
transactions contemplated by this Plan.
2.08. OPTIONS. From and after the Effective Date, all employee stock
options to purchase shares of BFL Common Stock ("Options"), which are then
outstanding and unexercised, shall be converted into and become options with
respect to First Union Common Stock, and First Union shall assume each such
Option, in accordance with the terms of the plan and agreement by which it is
evidenced. From and after the Effective Date, (i) each such Option assumed by
First Union may be exercised solely for shares of First Union Common Stock, (ii)
the number of shares of First Union Common Stock subject to such Option shall be
equal to the number of shares of BFL Common Stock subject to such Option
immediately prior to the Effective Date multiplied by the Exchange Ratio, and
(iii) the per share exercise price under each such Option shall be adjusted by
dividing the per share exercise price of each such Option by the Exchange Ratio,
and rounding up to the nearest cent. The number of shares of BFL Common Stock
which are issuable upon exercise of Options as of the date hereof are Previously
Disclosed in Schedule 2.08.
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III. ACTIONS PENDING CONSUMMATION.
Without the prior written consent of First Union, each of BFL and the Bank
shall conduct its and each of its subsidiaries' business in the ordinary and
usual course consistent with past practice and shall use its best efforts to
maintain and preserve its and each of its subsidiaries' business organization,
employees and advantageous business relationships and retain the services of its
and each of its subsidiaries' officers and key employees identified by FUNB-FL,
and each of BFL and the Bank will not, and will cause each of its subsidiaries
not to, agree to:
3.01. CAPITAL STOCK. Except for or as otherwise permitted in or expressly
contemplated by this Plan or the Stock Option Agreement or as Previously
Disclosed in Schedule 4.01(C), issue, sell or otherwise permit to become
outstanding any additional shares of Bank Common Stock, Bank Preferred Stock,
BFL Common Stock, BFL Preferred Stock, or any other capital stock of BFL, the
Bank or any of their subsidiaries, or any Rights with respect thereto, or enter
into any agreement with respect to the foregoing, or permit any additional
shares of BFL Common Stock to become subject to grants of employee stock
options, stock appreciation rights or similar stock based employee compensation
rights.
3.02. DIVIDENDS, ETC. Make, declare or pay any dividend on or in respect of
(other than dividends payable on BFL Preferred Stock at a rate not exceeding the
rate set forth in BFL's Certificate of Incorporation and dividends from
subsidiaries to BFL or the Bank, as applicable), or declare or make any
distribution on, or directly or indirectly combine, redeem, reclassify, purchase
or otherwise acquire, any shares of its capital stock or, other than as
permitted in or contemplated by this Plan or the Stock Option Agreement,
authorize the creation or issuance of, or issue, any additional shares of its
capital stock or any Rights with respect thereto.
3.03. INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary course of
business consistent with past practice, incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an accommodation become
responsible or liable for the obligations of any other individual, corporation
or other entity.
3.04. LINE OF BUSINESS; OPERATING PROCEDURES; ETC. Except as may be
directed by any regulatory agency, (i) change its lending, investment, liability
management or other material banking policies in any material respect, except
such changes as are in accordance and in an effort to comply with Section 5.11,
or (ii) commit to incur any further capital expenditures beyond those Previously
Disclosed in Schedule 3.04 other than in the ordinary course of business and not
exceeding $100,000 individually or $500,000 in the aggregate.
3.05. LIENS AND ENCUMBRANCES. Impose, or suffer the imposition, on any
shares of stock of any of its subsidiaries, any lien, charge or encumbrance, or
permit any such lien, charge or encumbrance to exist.
3.06. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as Previously
Disclosed in Schedule 3.06, enter into or amend any employment, severance or
similar agreement or arrangement with any of its directors, officers or
employees, or grant any salary or wage increase, amend the terms of any Option
or increase any employee benefit (including incentive or bonus payments), except
normal individual increases in regular compensation to employees in the ordinary
course of business consistent with past practice.
3.07. BENEFIT PLANS. Except as Previously Disclosed in Schedule 3.07, enter
into or modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including without limitation taking any action that accelerates the
vesting or exercise of any benefits payable thereunder.
3.08. CONTINUANCE OF BUSINESS. Dispose of or discontinue any portion of its
assets, business or properties, which is material to BFL and its subsidiaries
taken as a whole, or merge or consolidate with, or acquire all or any portion
of, the business or property of any other entity which is material to BFL and
its subsidiaries taken as a whole (except foreclosures or acquisitions by the
Bank in its fiduciary capacity, in each case in the ordinary course of business
consistent with past practice).
3.09. AMENDMENTS. Amend its Certificate of Incorporation, Charter or
By-laws.
3.10. LITIGATION. Settle any litigation at a cost in excess of $2,000,000.
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IV. REPRESENTATIONS AND WARRANTIES.
4.01. BFL AND THE BANK REPRESENTATIONS AND WARRANTIES. Each of BFL and the
Bank hereby represents and warrants to First Union, FUNC-FL and FUNB-FL as
follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan with respect
to it are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. It is duly qualified to do
business and is in good standing in the States of the United States and foreign
jurisdictions where the failure to be duly qualified, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect (as
hereinafter defined) on it. Each of BFL and the BFL Subsidiaries (as hereinafter
defined) has in effect all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted, the absence of which, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
it.
(C) SHARES. The outstanding shares of it are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive rights.
Except as Previously Disclosed in Schedule 4.01(C) and except as provided under
the Stock Option Agreement, there are no shares of capital stock or other equity
securities of BFL or the Bank outstanding and no outstanding Rights with respect
thereto. There will be no change in the conversion price of the BFL Preferred
Stock and the holder of the BFL Preferred Stock will not have any rights to
acquire any shares of BFL Common Stock as a result of or by reason of the
transactions contemplated hereby and by the Stock Option Agreement.
(D) BFL SUBSIDIARIES. BFL has Previously Disclosed in Schedule 4.01(D) a
list of all the subsidiaries of BFL (each a "BFL Subsidiary" and, collectively,
the "BFL Subsidiaries"). Each of the BFL Subsidiaries that is a savings bank is
an "insured depository institution" as defined in the Federal Deposit Insurance
Act and applicable regulations thereunder. No equity securities of any of the
BFL Subsidiaries are or may become required to be issued (other than to BFL or a
BFL Subsidiary) by reason of any Rights with respect thereto. There are no
contracts, commitments, understandings or arrangements by which any of the BFL
Subsidiaries is or may be bound to sell or otherwise issue any shares of its
capital stock, and there are no contracts, commitments, understandings or
arrangements relating to the rights of BFL or the Bank, as applicable, to vote
or to dispose of such shares. All of the shares of capital stock of each BFL
Subsidiary held by BFL or a BFL Subsidiary are fully paid and nonassessable and
are owned by BFL or a BFL Subsidiary free and clear of any charge, mortgage,
pledge, security interest, restriction, claim, lien or encumbrance. Each BFL
Subsidiary is in good standing under the laws of the jurisdiction in which it is
incorporated or organized, and is duly qualified to do business and in good
standing in the jurisdictions where the failure to be duly qualified is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on it. Except as Previously Disclosed in Schedule 4.01(D), BFL does not
own beneficially, directly or indirectly, any shares of any equity securities or
similar interests of any corporation, bank, partnership, joint venture, business
trust, association or other organization. The deposits of the Bank are insured
by the Savings Insurance Fund (the "SAIF") of the Federal Deposit Insurance
Corporation (the "FDIC"). The Bank is a member in good standing with the Federal
Home Loan Bank of Atlanta (the "FHL Bank").
(E) CORPORATE POWER. It and each of the BFL Subsidiaries has the corporate
power and authority to carry on its business as it is now being conducted and to
own all its material properties and assets.
(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval by
its stockholders referred to in Section 6.01, each of this Plan and, as to BFL,
the Stock Option Agreement, has been authorized by all necessary corporate
action of it and is a valid and binding agreement of it enforceable against it
in accordance with its terms, subject to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
(G) NO DEFAULTS. Subject to the approval by its stockholders referred to in
Section 6.01, the required regulatory approvals referred to in Section 6.02, and
the required filings under federal and state securities laws, and except as
Previously Disclosed in Schedule 4.01(G), the execution, delivery and
performance of this Plan and, as to BFL, the Stock Option Agreement, and the
consummation by it of the transactions contemplated hereby and thereby, does not
and will not (i) constitute a breach or violation of, or a default under, any
law, rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of it or of any of the BFL
Subsidiaries or to which it or any of the BFL Subsidiaries or its or their
properties is subject or bound, which breach, violation or default is reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
it, (ii) constitute a breach or violation of, or a default under, its Articles
of Incorporation, Charter or By-laws, or (iii) require any consent or approval
under any such law, rule, regulation, judgment, decree, order, governmental
permit or license or the consent or approval of any other party to any such
agreement, indenture or instrument, other than any such consent or approval,
which if not obtained, would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on BFL.
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(H) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule 4.01(H),
(i) as to BFL, its Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, and all other documents filed or to be filed subsequent to
September 30, 1993 under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
thereunder, the "Exchange Act"), in the form filed with the Securities and
Exchange Commission (the "SEC") (in each such case, the "BFL Financial
Reports"), and (ii) as to the Bank, its Thrift Financial Report for the fiscal
year ended September 30, 1993, and all other Thrift Financial Reports filed or
to be filed subsequent to September 30, 1993, in the form filed with the Office
of Thrift Supervision (the "OTS") (in each case, the "Bank Financial Reports"
and together with the BFL Financial Reports, the "BFL/Bank Financial Reports")
did not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets in or incorporated by
reference into the BFL/Bank Financial Reports (including the related notes and
schedules thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in the BFL/Bank Financial Reports (including any
related notes and schedules thereto) fairly presents and will fairly present the
results of operations, changes in stockholders' equity and cash flows, as the
case may be, of the entity or entities to which it relates for the periods set
forth therein, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal and recurring year-end audit
adjustments in the case of unaudited statements.
(I) ABSENCE OF UNDISCLOSED LIABILITIES. None of BFL or the BFL Subsidiaries
has any obligation or liability (contingent or otherwise) that, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on it,
except (i) as reflected in the BFL Financial Reports prior to the date of this
Plan, and (ii) for commitments and obligations made, or liabilities incurred, in
the ordinary course of its business consistent with past practice since
September 30, 1993. Since September 30, 1993, none of BFL or the BFL
Subsidiaries has incurred or paid any obligation or liability (including any
obligation or liability incurred in connection with any acquisitions in which
any form of direct financial assistance of the federal government or any agency
thereof has been provided to any BFL Subsidiary) which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it.
(J) NO EVENTS. Except as Previously Disclosed on Schedule 4.01(J), since
September 30, 1993, no event has occurred which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it.
(K) PROPERTIES. Except as reserved against in the BFL Financial Reports,
BFL and the BFL Subsidiaries have good and marketable title, free and clear of
all liens, encumbrances, charges, defaults, or equities of any character, to all
of the properties and assets, tangible and intangible, reflected in the BFL
Financial Reports as being owned by BFL or the BFL Subsidiaries as of the dates
thereof other than those that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on it, except those sold or
otherwise disposed of in the ordinary course of business. All buildings and all
material fixtures, equipment, and other property and assets which are held under
leases or subleases by any of BFL or the BFL Subsidiaries are held under valid
leases or subleases enforceable in accordance with their respective terms, other
than any such exceptions to validity or enforceability that, individually or in
the aggregate, are not reasonably likely to have a Material Adverse Effect on
BFL.
(L) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed in
Schedule 4.01(L), no litigation, proceeding or controversy before any court or
governmental agency is pending which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on BFL or which alleges
claims under any fair lending law or other law relating to discrimination,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act, and, to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened; and except as Previously Disclosed in Schedule
4.01(L), neither it nor any of the BFL Subsidiaries or any of its or their
material properties or their officers, directors or controlling persons is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any federal or state governmental agency or authority charged
with the supervision or regulation of depository institutions or engaged in the
insurance of deposits (together with any and all agencies or departments of
federal, state or local government (including, without limitation, the OTS, the
FHL Bank, the Federal Reserve Board, the FDIC and any other federal or state
bank, thrift or other financial institution, insurance and securities regulatory
authorities, the "Regulatory Authorities")) and neither it nor any of the BFL
Subsidiaries has been advised by any of such Regulatory Authorities that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
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(M) COMPLIANCE WITH LAWS. Except as Previously Disclosed in Schedule
4.01(M), each of BFL and the BFL Subsidiaries:
(1) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit
it to own its businesses as presently conducted and that are material
to the business of BFL and the BFL Subsidiaries taken as a whole; all
such permits, licenses, certificates of authority, orders and approvals
are in full force and effect and, to the best knowledge of BFL, no
suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current;
(2) has received no notification or communication from any
Regulatory Authority or the staff thereof (i) asserting that any of BFL
or the BFL Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Regulatory Authority enforces,
which, as a result of such noncompliance in any such instance,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on BFL, (ii) threatening to revoke any license,
franchise, permit or governmental authorization, which revocation,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on BFL, or (iii) requiring any of BFL or the
BFL Subsidiaries (or any of its officers, directors or controlling
persons) to enter into a cease and desist order, agreement or
memorandum of understanding (or requiring the board of directors
thereof to adopt any resolution or policy);
(3) is not required to give prior notice to any federal banking or
thrift agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive; and
(4) is in substantial compliance with all fair lending laws or
other laws relating to discrimination, including, without limitation,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act and the Home Mortgage Disclosure Act.
(N) MATERIAL CONTRACTS. Except as Previously Disclosed in Schedule 4.01(N),
none of BFL or the BFL Subsidiaries, nor any of its respective assets,
businesses or operations, is a party to, or is bound or affected by, or receives
benefits under, any contract or agreement or amendment thereto that in each case
would be required to be filed as an exhibit to a Form 10-K filed by BFL that has
not been filed as an exhibit to BFL's Form 10-K filed for the fiscal year ended
September 30, 1993. None of BFL or the BFL 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 any of its respective
assets, business or operations receives benefits, which default, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on BFL,
and there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default. Except as Previously
Disclosed in Schedule 4.01(N), neither BFL nor any BFL Subsidiary is subject to
or bound by any contract containing covenants which limit the ability of BFL or
any BFL Subsidiary to compete in any line of business or with any person or
which involve any restriction of geographical area in which, or method by which,
BFL or any BFL Subsidiary may carry on its business (other than as may be
required by law or any applicable Regulatory Authority).
(O) REPORTS. Since October 1, 1990, each of BFL and the BFL Subsidiaries
has filed all reports and statements, together with any amendments required to
be made with respect thereto, that it was required to file with (i) the FDIC,
(ii) the OTS, the FHL Bank and the Federal Home Loan Bank System, and (iii) any
other applicable Regulatory Authorities. As of their respective dates (and
without giving effect to any amendments or modifications filed after the date of
this Plan with respect to reports and documents filed before the date of this
Plan), each of such reports and documents, including the financial statements,
exhibits and schedules thereto, complied in all material respects with all of
the statutes, rules and regulations enforced or promulgated by the Regulatory
Authority with which they were filed and did not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
(P) NO BROKERS. All negotiations relative to this Plan and the transactions
contemplated hereby have been carried on by it directly with the other parties
hereto and no action has been taken by it that would give rise to any valid
claim against any party hereto for a brokerage commission, finder's fee or other
like payment, excluding a fee previously disclosed to First Union to be paid to
Alex. Brown & Sons Incorporated.
(Q) EMPLOYEE BENEFIT PLANS.
(1) Schedule 4.01(Q)(1) contains a complete list of all bonus,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option plans, all employment or severance
contracts, all medical, dental, health and life insurance plans, all
other employee benefit
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plans, contracts or arrangements and any applicable "change of control"
or similar provisions in any plan, contract or arrangement maintained
or contributed to by it or any of the BFL Subsidiaries for the benefit
of employees, former employees, directors, former directors or their
beneficiaries (the "Compensation and Benefit Plans"). True and complete
copies of all Compensation and Benefit Plans, including, but not
limited to, any trust instruments and/or insurance contracts, if any,
forming a part thereof, and all amendments thereto have been supplied
to First Union.
(2) All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of
Section 3(37) of ERISA ("Multiemployer Plans"), covering employees or
former employees of it and the BFL Subsidiaries (the "ERISA Plans"), to
the extent subject to ERISA, are in substantial compliance with ERISA.
Except as Previously Disclosed in Schedule 4.01(Q)(2) each ERISA Plan
which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan") and which is intended to be
qualified under Section 401(a) of the Internal Revenue Code of 1986 (as
amended, the "Code") has received a favorable determination letter from
the Internal Revenue Service, and it is not aware of any circumstances
reasonably likely to result in the revocation or denial of any such
favorable determination letter or the inability to receive such a
favorable determination letter. There is no material pending or, to its
knowledge, threatened litigation relating to the ERISA Plans. Neither
it nor any of the BFL Subsidiaries has engaged in a transaction with
respect to any ERISA Plan that could subject it or any of the BFL
Subsidiaries to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA in an amount which would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by it or any of the BFL Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any
entity which is considered one employer with it under Section
4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA Affiliate").
Neither it nor any of the BFL Subsidiaries presently contributes to a
Multiemployer Plan, nor have they contributed to such a plan within the
past five calendar years. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the past 12-month period.
(4) All contributions required to be made under the terms of any
ERISA Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA. Neither it nor any of the BFL
Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(5) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year, the actuarially determined
present value of all "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the plan's most recent actuarial
valuation) did not exceed the then current value of the assets of such
plan, and there has been no material change in the financial condition
of such plan since the last day of the most recent plan year.
(6) Neither it nor any of the BFL Subsidiaries has any obligations
for retiree health and life benefits under any plan, except as set
forth in Schedule 4.01(Q)(6). There are no restrictions on the rights
of it or any of the BFL Subsidiaries to amend or terminate any such
plan without incurring any liability thereunder.
(7) Except as Previously Disclosed in Schedule 4.01(Q)(7), neither
the execution and delivery of this Plan nor the consummation of the
transactions contemplated hereby will (i) result in any payment
(including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any
employee of it or any of the BFL Subsidiaries under any Compensation
and Benefit Plan or otherwise from it or any of the BFL Subsidiaries,
(ii) increase any benefits otherwise payable under any Compensation and
Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.
(R) NO KNOWLEDGE. It knows of no reason why the regulatory approvals
referred to in Section 6.02 should not be obtained.
(S) LABOR AGREEMENTS. Neither it nor any of the BFL Subsidiaries is a party
to, or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
or any of the BFL Subsidiaries the subject of a proceeding asserting that it or
any such subsidiary has committed an unfair labor practice (within the meaning
of the National Labor Relations Act) or seeking to compel it or such subsidiary
to bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it or any of
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the BFL Subsidiaries, pending or, to the best of its knowledge, threatened, nor
is it aware of any activity involving its or any of the BFL Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
(T) ASSET CLASSIFICATION. It has Previously Disclosed in Schedule 4.01(T) a
list, accurate and complete in all material respects, of the aggregate amounts
of loans, extensions of credit or other assets of BFL and the BFL Subsidiaries
that have been classified by it as of December 31, 1993 (the "Asset
Classification"); and no amounts of loans, extensions of credit or other assets
that have been classified as of December 31, 1993 by any regulatory examiner as
"Other Loans Specially Mentioned", "Substandard", "Doubtful", "Loss", or words
of similar import are excluded from the amounts disclosed in the Asset
Classification, other than amounts of loans, extensions of credit or other
assets that were charged off by BFL or BFL Subsidiary prior to December 31,
1993.
(U) ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible loan
losses shown on the consolidated balance sheets of BFL included in the September
30, 1993 BFL Financial Reports was, and the allowance for possible loan losses
to be shown on subsequent BFL Financial Reports, will be, adequate, determined
in accordance with generally accepted accounting principles, to provide for
possible losses, net of recoveries relating to loans previously charged off, on
loans outstanding (including accrued interest receivable) as of the date
thereof.
(V) INSURANCE. Each of BFL and the BFL Subsidiaries has taken all requisite
action (including without limitation the making of claims and the giving of
notices) pursuant to its directors' and officers' liability insurance policy or
policies in order to preserve all rights thereunder with respect to all matters
(other than matters arising in connection with this Plan and the transactions
contemplated hereby) that are known to BFL, except for such matters which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on it. Set forth in Schedule 4.01(V) is a list of all insurance
policies maintained by or for the benefit of BFL or the BFL Subsidiaries or
their directors, officers, employees or agents.
(W) AFFILIATES. Except as Previously Disclosed in Schedule 4.01(W), to the
best of its knowledge, there is no person who, as of the date of this Plan, may
be deemed to be an "affiliate" of BFL as that term is used in Rule 145 under the
Securities Act of 1933, as amended (together with the rules and regulations
thereunder, the "Securities Act").
(X) STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION. It has taken all
necessary action to exempt this Plan and, as to BFL, the Stock Option Agreement
and the transactions contemplated hereby and thereby from, and this Plan, the
Stock Option Agreement and the transactions contemplated hereby and thereby are
exempt from, (i) any applicable state takeover laws, including, without
limitation, Section 203 of the Delaware General Corporation Law, and (ii)
Section 13 of BFL's Certificate of Incorporation.
(Y) NO FURTHER ACTION. It has taken all action so that the entering into of
this Plan and, as to BFL, the Stock Option Agreement, and the consummation of
the transactions contemplated hereby and thereby (including without limitation
the Mergers and the exercise of the Option (as defined in the Stock Option
Agreement)) or any other action or combination of actions, or any other
transactions, contemplated hereby or thereby do not and will not (i) require a
vote of stockholders (other than as set forth in Section 6.01), or (ii) result
in the grant of any rights to any person under the Certificate of Incorporation,
Charter or By-laws of BFL or any BFL Subsidiary or under any agreement to which
BFL or any of the BFL Subsidiaries is a party, or (iii) restrict or impair in
any way the ability of First Union, FUNC-FL or FUNB-FL to exercise the rights
granted hereunder or, as to First Union, under the Stock Option Agreement.
(Z) ENVIRONMENTAL MATTERS.
(1) To its knowledge, it and each of the BFL Subsidiaries, the
Participation Facilities and the Loan/Fiduciary Properties (each as
defined below) are, and have been, in compliance with all Environmental
Laws (as defined below), except for instances of noncompliance which
are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on BFL.
(2) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency or board or other
forum in which it or any of the BFL Subsidiaries or any Participation
Facility has been, or with respect to threatened proceedings,
reasonably would be expected to be, named as a defendant or potentially
responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law, or (ii) relating to the
release or threatened release into the environment of any Hazardous
Material (as defined below), whether or not occurring at or on a site
owned, leased or operated by it or any of the BFL Subsidiaries or any
Participation Facility, except for such proceedings pending or
threatened that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it or have been
Previously Disclosed in Schedule 4.01(Z)(2).
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(3) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency or board or other
forum in which any Loan/Fiduciary Property (or it or any of the BFL
Subsidiaries in respect of any Loan/Fiduciary Property) has been, or
with respect to threatened proceedings, reasonably would be expected to
be, named as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor) with any
Environmental Law, or (ii) relating to the release or threatened
release into the environment of any Hazardous Material, whether or not
occurring at or on a Loan/Fiduciary Property, except for such
proceedings pending or threatened that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on
it or have been Previously Disclosed in Schedule 4.01(Z)(3).
(4) To its knowledge, there is no reasonable basis for any
proceeding of a type described in subparagraphs (2) or (3) above,
except as has been Previously Disclosed in Schedule 4.01(Z)(4).
(5) To its knowledge, during the period of (i) its or any of the
BFL Subsidiaries' ownership or operation of any of their respective
current properties, (ii) its or any of the BFL Subsidiaries'
participation in the management of any Participation Facility, or (iii)
its or any of the BFL Subsidiaries' holding of a security or other
interest in a Loan/Fiduciary Property, there have been no releases of
Hazardous Material in, on, under or affecting any such property,
Participation Facility or Loan/Fiduciary Property, except for such
releases that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it or have been
Previously Disclosed in Schedule 4.01(Z)(5).
(6) To its knowledge, prior to the period of (i) its or any of the
BFL Subsidiaries' ownership or operation of any of their respective
current properties, (ii) its or any of the BFL Subsidiaries'
participation in the management of any Participation Facility, or (iii)
its or any of the BFL Subsidiaries' holding of a security or other
interest in a Loan/Fiduciary Property, there were no releases of
Hazardous Material in, on, under or affecting any such property,
Participation Facility or Loan/Fiduciary Property, except for such
releases that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it or have been
Previously Disclosed in Schedule 4.01(Z)(6).
(7) The following definitions apply for purposes of this Section
4.01(Z): "Loan/Fiduciary Property" means any property owned or
controlled by it or any of the BFL Subsidiaries or in which it or any
of the BFL Subsidiaries holds a security or other interest, and, where
required by the context, includes any such property where BFL or any of
the BFL Subsidiaries constitutes the owner or operator of such
property, but only with respect to such property; "Participation
Facility" means any facility in which it or any of the BFL Subsidiaries
participates in the management and, where required by the context,
includes the owner or operator of such property, but only with respect
to such property; "Environmental Law" means (i) any federal, state and
local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any governmental
entity, relating to (a) the protection, preservation or restoration of
the environment, (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource),
or to human health or safety, or (b) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous
Material, in each case as amended and as now in effect and includes,
without limitation, the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972,
the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the federal Solid Waste Disposal
and the federal Toxic Substances Control Act, and the Federal
Insecticide, Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970, each as amended and as now in effect,
and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Material; "Hazardous
Material" means any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or quantity,
and includes, without limitation, any oil or other petroleum product,
toxic waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste or petroleum or any
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
(AA) OPTION SHARES. As to BFL, the Option Shares (as defined in the Stock
Option Agreement), when issued upon exercise of the Option, will be validly
issued, fully paid and nonassessable and subject to no preemptive rights.
(BB) TAX REPORTS. Except as Previously Disclosed in Schedule 4.01(BB), (i)
all reports and returns with respect to Taxes (as defined below) that are
required to be filed by or with respect to it or the BFL Subsidiaries, including
without
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limitation consolidated federal income tax returns of it and the BFL
Subsidiaries (collectively, the "BFL Tax Returns"), have been duly filed, or
requests for extensions have been timely filed and have not expired, for periods
ended on or prior to the most recent fiscal year end, except to the extent all
such failures to file, taken together, are not reasonably likely to have a
Material Adverse Effect on it, and such BFL Tax Returns were true, complete and
accurate in all material respects, (ii) all taxes (which shall mean federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, employment,
withholding or similar taxes imposed on the income, properties or operations of
it or the BFL Subsidiaries, together with any interest, additions, or penalties
with respect thereto and any interest in respect of such additions or penalties,
collectively the "Taxes") shown to be due on the BFL Tax Returns have been paid
in full, (iii) the BFL Tax Returns have been examined by the Internal Revenue
Service or the appropriate state, local or foreign taxing authority or the
period for assessment of the Taxes in respect of which such BFL Tax Returns were
required to be filed has expired, (iv) all Taxes due with respect to completed
and settled examinations have been paid in full, (v) no issues have been raised
by the relevant taxing authority in connection with the examination of any of
the BFL Tax Returns which are reasonably likely, individually or in the
aggregate, to result in a determination that would have a Material Adverse
Effect on it, except as reserved against in the BFL Financial Reports, and (vi)
no waivers of statutes of limitations (excluding such statutes that relate to
years under examination by the Internal Revenue Service) have been given by or
requested with respect to any Taxes of it or the BFL Subsidiaries.
(CC) ACCURACY OF INFORMATION. The statements with respect to BFL and the
BFL Subsidiaries contained in this Plan, the Stock Option Agreement, the
Schedules and any other written documents executed and delivered by or on behalf
of BFL or the Bank pursuant to the terms of this Plan are true and correct in
all material respects, and such statements and documents do not omit any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
(DD) NO DISSENTERS' RIGHTS. The holders of BFL Common Stock and, assuming
compliance by the holder of BFL Preferred Stock under the agreement set forth in
Exhibit B hereto, the holder of BFL Preferred Stock have no dissenters' or
appraisal rights in connection with the execution of this Plan, the Stock Option
Agreement or the consummation of any of the transactions contemplated hereby or
thereby.
4.02. FIRST UNION, FUNC-FL AND FUNB-FL REPRESENTATIONS AND WARRANTIES. Each
of First Union, FUNC-FL and FUNB-FL hereby represents and warrants to BFL and
the Bank, as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan with respect
to it are true and correct.
(B) CORPORATE AUTHORITY. Subject to the required regulatory approvals
referred to in Section 6.02, each of this Plan and, in the case of First Union,
the Stock Option Agreement, has been authorized by all necessary corporate
action of it and is a valid and binding agreement of it enforceable against it
in accordance with its terms, subject to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
(C) NO DEFAULTS. Subject to the required regulatory approvals referred to
in Section 6.02 herein, in the case of First Union, Section 3 of the Stock
Option Agreement, and the required filings under federal and state securities'
laws, the execution, delivery and performance of this Plan and (in the case of
First Union) the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby by it, do not and will not (i)
constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of it or of any of its subsidiaries or to
which it or any of its subsidiaries or properties is subject or bound, which
breach, violation or default is reasonably likely to have a Material Adverse
Effect on it, (ii) constitute a breach or violation of, or a default under, its
Articles of Incorporation, Charter or Bylaws, or (iii) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, or the consent or approval of any other party to
any such agreement, indenture or instrument.
(D) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule 4.02(D),
in the case of First Union, its Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and all other documents filed or to be filed subsequent
to December 31, 1992 under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed with the SEC (in each such case, the "First Union
Financial Reports"), did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each of the balance sheets in or
incorporated by reference into the First Union Financial Reports (including the
related notes and schedules thereto) fairly presents and will fairly present the
financial position of the entity or entities to which it relates as of its date
and each of the statements of income and changes in stockholders' equity and
cash flows or equivalent statements in the First Union Financial Reports
(including any related notes
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and schedules thereto) fairly presents and will fairly present the results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of the entity or entities to which it relates for the periods set
forth therein, in each case in accordance with generally accepted accounting
principles consistently applied to banks and bank holding companies during the
periods involved, except as may be noted therein, subject to normal and
recurring year-end audit adjustments in the case of unaudited statements.
(E) NO EVENTS. Except as Previously Disclosed in Schedule 4.02(E), since
September 30, 1993, no event has occurred which is reasonably likely to have a
Material Adverse Effect on it.
(F) NO BROKERS. All negotiations relative to this Plan and the transactions
contemplated hereby have been carried on by it directly with the other parties
hereto and no action has been taken by it that would give rise to any valid
claim against any party hereto for a brokerage commission, finder's fee or other
like payment.
(G) NO KNOWLEDGE. It knows of no reason why the regulatory approvals
referred to in Section 6.02 should not be obtained without the imposition of any
condition of the type referred to in the proviso following such Section 6.02.
(H) SHARES AUTHORIZED. In the case of First Union, the shares of First
Union Common Stock to be issued (i) in exchange for shares of BFL Common Stock
and BFL Preferred Stock upon consummation of the Corporate Merger in accordance
with Article II of this Plan, (ii) upon exercise of outstanding Options pursuant
to Section 2.08, and (iii) upon conversion of BFL's outstanding convertible
subordinated debentures due October 1, 2003, have been duly authorized and, when
issued in accordance with the terms of this Plan, will be validly issued, fully
paid and nonassessable and subject to no preemptive rights.
(I) ORGANIZATION, STANDING AND AUTHORITY. It is duly qualified to do
business and is in good standing in the States of the United States and foreign
jurisdictions where the failure to be duly qualified, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it. Each of
First Union and its subsidiaries has in effect all federal, state, local and
foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted, the
absence of which, individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect on First Union.
(J) CORPORATE POWER. First Union, FUNC-FL and FUNB-FL each has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its material properties and assets.
(K) ACCURACY OF INFORMATION. The statements with respect to First Union and
its subsidiaries contained in this Plan, the Stock Option Agreement, the
Schedules and any other written documents executed and delivered by or on behalf
of First Union, FUNC-FL or FUNB-FL pursuant to the terms of this Plan are true
and correct in all material respects, and such statements and documents do not
omit any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(L) NO DISSENTERS' RIGHTS. The holders of First Union Common Stock have no
dissenters' or appraisal rights in connection with the execution of this Plan,
the Stock Option Agreement or the consummation of any of the transactions
contemplated hereby or thereby.
V. COVENANTS.
Each of BFL and the Bank hereby covenants to First Union, FUNC-FL and
FUNB-FL, and each of First Union, FUNC-FL and FUNB-FL hereby covenants to BFL
and the Bank, that:
5.01. BEST EFFORTS. Subject to the terms and conditions of this Plan and to
the exercise by its Board of Directors of such Board's fiduciary duties, it
shall use its best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Mergers on the Effective Date and to otherwise enable consummation of the
transactions contemplated hereby and (in the case of BFL and First Union) by the
Stock Option Agreement and shall cooperate fully with the other parties hereto
to that end (it being understood that any amendments to the Registration
Statement (as hereinafter defined) or a resolicitation of proxies as a
consequence of an acquisition agreement by First Union or any of its
subsidiaries shall not violate this covenant).
5.02. BFL PROXY. In the case of BFL, it shall promptly prepare a proxy
statement (the "Proxy Statement") to be mailed to the holders of BFL Common
Stock in connection with the transactions contemplated hereby and to be filed by
First Union in a registration statement (the "Registration Statement") with the
SEC as provided in Section 5.08, which shall conform to all applicable legal
requirements and it shall call a special meeting (the "Meeting") of the holders
of BFL Common Stock to
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<PAGE>
be held as soon as practicable for purposes of voting upon the transactions
contemplated hereby and BFL shall use its best efforts to solicit and obtain
votes of the holders of BFL Common Stock in favor of the transactions
contemplated hereby and, subject to the exercise of its fiduciary duties, the
Board of Directors of BFL shall recommend approval of such transactions by such
holders and by the holder of BFL Preferred Stock.
5.03. REGISTRATION STATEMENT COMPLIANCE WITH SECURITIES LAWS. When the
Registration Statement or any post-effective amendment or supplement thereto
shall become effective, and at all times subsequent to such effectiveness, up to
and including the date of the Meeting, such Registration Statement and all
amendments or supplements thereto, with respect to all information set forth
therein furnished or to be furnished by or on behalf of BFL relating to BFL or
the BFL Subsidiaries and by or on behalf of First Union relating to First Union
or its subsidiaries, (i) will comply in all material respects with the
provisions of the Securities Act and any other applicable statutory or
regulatory requirements, and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading; PROVIDED,
HOWEVER, in no event shall any party hereto be liable for any untrue statement
of a material fact or omission to state a material fact in the Registration
Statement made in reliance upon, and in conformity with, written information
concerning another party furnished by or on behalf of such other party
specifically for use in the Registration Statement.
5.04. REGISTRATION STATEMENT EFFECTIVENESS. First Union will advise BFL,
promptly after First Union receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order or the suspension of the
qualification of the First Union Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
5.05. PRESS RELEASES. BFL and the Bank will not, without the prior approval
of First Union, and First Union will not, without the prior approval of BFL,
issue any press release or written statement for general circulation relating to
the transactions contemplated hereby, except as otherwise required by law.
5.06. ACCESS; INFORMATION.
(1) Upon reasonable notice, BFL and the Bank shall afford First
Union and its officers, employees, counsel, accountants and other
authorized representatives, access, during normal business hours
throughout the period prior to the Effective Date, to all of its and
the BFL Subsidiaries' properties, books, contracts, commitments and
records and, during such period, BFL and the Bank shall furnish
promptly to First Union (i) a copy of each material report, schedule
and other document filed by BFL and the BFL Subsidiaries with any
Regulatory Authority, and (ii) all other information concerning the
business, properties and personnel of BFL and the BFL Subsidiaries as
First Union may reasonably request, provided that no investigation
pursuant to this Section 5.06 shall affect or be deemed to modify or
waive any representation or warranty made by BFL or the Bank or the
conditions to the obligations of BFL and the Bank to consummate the
transactions contemplated by this Plan; and
(2) First Union will not use any information obtained pursuant to
this Section 5.06 for any purpose unrelated to the consummation of the
transactions contemplated by this Plan and, if this Plan is terminated,
will hold all information and documents obtained pursuant to this
paragraph in confidence (as provided in Section 8.06) unless and until
such time as such information or documents become publicly available
other than by reason of any action or failure to act by First Union or
as it is advised by counsel that any such information or document is
required by law or applicable stock exchange rule to be disclosed, and
in the event of the termination of this Plan, First Union will, upon
request by BFL, deliver to BFL all documents so obtained by First Union
or destroy such documents and, in the case of destruction, will certify
such fact to BFL.
5.07. ACQUISITION PROPOSALS. In the case of BFL, without the prior written
consent of First Union, it shall not, and it shall cause the BFL Subsidiaries
not to, solicit or encourage inquiries or proposals with respect to, or, except
as required by the fiduciary duties of the Board of Directors of BFL (as advised
in writing by its outside counsel), furnish any nonpublic information relating
to or participate in any negotiations or discussions concerning, any acquisition
or purchase of all or a substantial portion of the assets of, or a substantial
equity interest in, BFL or any of the BFL Subsidiaries or any merger or other
business combination with BFL or any of the BFL Subsidiaries other than as
contemplated by this Plan; it shall instruct its and the BFL Subsidiaries'
officers, directors, agents, advisors and affiliates to refrain from doing any
of the foregoing; and it shall notify First Union immediately if any such
inquiries or proposals are received by, or any such negotiations or discussions
are sought to be initiated with, BFL or any of the BFL Subsidiaries.
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5.08. REGISTRATION STATEMENT PREPARATION. In the case of First Union, it
shall, as promptly as practicable following the date of this Plan, prepare and
file the Registration Statement with the SEC and First Union shall use its best
efforts to cause the Registration Statement to be declared effective as soon as
practicable after the filing thereof.
5.09. BLUE-SKY FILINGS. In the case of First Union, it shall use its best
efforts to obtain, prior to the effective date of the Registration Statement,
all necessary state securities laws or "blue sky" permits and approvals,
provided that First Union shall not be required by virtue thereof to submit to
general jurisdiction in any state.
5.10. AFFILIATE AGREEMENTS. In the case of BFL, it will use its best
efforts to induce each person who may be deemed to be an "affiliate" of BFL for
purposes of Rule 145 under the Securities Act to execute and deliver to First
Union on or before the mailing of the Proxy Statement for the Meeting an
agreement in the form attached hereto as EXHIBIT C restricting the disposition
of such affiliate's shares of BFL Common Stock and BFL Preferred Stock and the
shares of First Union Common Stock to be received by such person in exchange for
such person's shares of BFL Common Stock and BFL Preferred Stock. In the case of
First Union, First Union agrees to use its best efforts to maintain the
availability of Rule 145 for use by such "affiliates".
5.11. CERTAIN POLICIES OF BFL AND THE BANK. In the case of each of BFL and
the Bank, it shall use its best efforts to modify and change its loan,
litigation and other reserve and real estate valuation policies and practices
(including loan classifications and levels of reserves) prior to the Effective
Date so as to be consistent on a mutually satisfactory basis with those of First
Union and generally accepted accounting principles; PROVIDED, HOWEVER, that
prior to any such modification or change, First Union shall certify that the
conditions to the obligation of First Union to consummate the transactions
contemplated hereby, other than those set forth in Sections 6.04, 6.06, 6.08,
6.11 and 6.13, have been satisfied or waived. BFL's and the Bank's
representations, warranties and covenants contained in this Plan shall not be
deemed to be untrue or breached in any respect for any purpose as a consequence
of any modifications or changes undertaken solely on account of this Section
5.11.
5.12. STATE TAKEOVER LAW. In the case of BFL, BFL shall not take any action
that would cause the transactions contemplated by this Plan or the Stock Option
Agreement to be subject to any applicable state takeover statute and BFL shall
take all necessary steps to exempt (or ensure the continued exemption of) the
transactions contemplated by this Plan and the Stock Option Agreement from, or,
if necessary, challenge the validity or applicability of, any applicable state
takeover law, as now or hereafter in effect, including, without limitation,
Section 203 of the Delaware General Corporation Law.
5.13. NO RIGHTS TRIGGERED. In the case of BFL, BFL shall take all necessary
steps to ensure that the entering into of this Plan and the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby (including without limitation the Mergers and the exercise of the
Option) and any other action or combination of actions, or any other
transactions contemplated hereby or thereby do not and will not (i) result in
the grant of any rights to any person under the Articles of Incorporation or
Bylaws of BFL or under any agreement to which BFL or any of the BFL Subsidiaries
is a party, or (ii) restrict or impair in any way the ability of First Union,
FUNC-FL or FUNB-FL to exercise the rights granted hereunder or, as to First
Union, under the Stock Option Agreement.
5.14. SHARES LISTED. In the case of First Union, it shall use its best
efforts to list, prior to the Effective Date, on the NYSE, upon official notice
of issuance, the shares of First Union Common Stock to be issued to the holders
of BFL Common Stock, BFL Preferred Stock, the outstanding Options referred to in
Section 2.08 and the outstanding BFL convertible subordinated debentures due
October 1, 2003, pursuant to this Plan.
5.15. REGULATORY APPLICATIONS. In the case of First Union, FUNC-FL and
FUNB-FL, (i) it shall promptly prepare and submit applications to the
appropriate Regulatory Authorities for approval of the Mergers, and (ii)
promptly make all other appropriate filings to secure all other approvals,
consents and rulings which are necessary for the consummation of the Mergers by
First Union, FUNC-FL and FUNB-FL.
5.16 REGULATORY DIVESTITURES. In the case of BFL, effective on or before
the Effective Date, BFL shall cease engaging in such activities as First Union
shall advise BFL in writing are not permitted to be engaged in by First Union
under applicable law following the Effective Date and, to the extent required by
any Regulatory Authority as a conditional approval of the transactions
contemplated by this Agreement, BFL shall divest any subsidiary engaged in
activities or holding assets that are impermissible for a bank holding company,
on terms and conditions agreed to by First Union.
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5.17 INDEMNIFICATION.
(a) For six years after the Effective Date, First Union shall, and shall
cause the Continuing Corporation to, indemnify, defend and hold harmless the
present and former directors, officers and employees of BFL and the BFL
Subsidiaries (each, an "Indemnified Party") against all liabilities arising out
of actions or omissions occurring at or prior to the Effective Date (including,
without limitation, the transactions contemplated by this Plan and the Stock
Option Agreement) to the extent such persons are indemnified under the Delaware
General Corporation Law and BFL's Certificate of Incorporation and By-laws as in
effect on the date hereof, including provisions relating to advances of expenses
incurred in the defense of any litigation. Without limiting the foregoing, in
any case in which approval by the Continuing Corporation is required to
effectuate any indemnification, First Union shall cause the Continuing
Corporation to direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel mutually
agreed upon between First Union and the Indemnified Party.
(b) First Union shall provide coverage under its existing directors' and
officers' liability insurance policy for persons who are currently covered by
BFL's existing directors' and officers' liability policy insurance for a period
of three years after the Effective Date.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 5.17, upon learning of such claim, action, suit, proceeding
or investigation, shall promptly notify First Union thereof; provided, that the
failure so to notify shall not affect the obligations of First Union and the
Continuing Corporation under paragraph (a) of this Section 5.17 (unless such
failure materially and adversely increases First Union's liability under such
paragraph (a)). In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Date), (i) First
Union or the Continuing Corporation shall have the right to assume the defense
thereof and First Union or the Continuing Corporation shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; provided, however, that First Union shall be
obligated pursuant to this paragraph (c) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction for any single action, suit or
proceeding, (ii) the Indemnified Parties will cooperate in the defense of any
such matter, and (iii) First Union shall not be liable for any settlement
effected without its prior written consent.
(d) If First Union or the Continuing Corporation or any of its successors
or assigns shall consolidate with or merge into any other entity and shall not
be the continuing or surviving entity of such consolidation or merger or shall
transfer all or substantially all of its assets to any entity, then and in each
case, proper provision shall be made so that the successors and assigns of First
Union or the Continuing Corporation shall assume the obligations set forth in
this Section 5.17.
(e) First Union shall pay, or cause the Continuing Corporation to pay, all
expenses, including attorneys' fees, that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided for in this
Section 5.17. The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
Certificate of Incorporation or By-laws of BFL, under the Delaware General
Corporation Law or otherwise.
VI. CONDITIONS TO CONSUMMATION OF THE MERGERS.
Consummation of the Mergers is conditioned upon:
6.01. SHAREHOLDER VOTE. Approval of the transactions contemplated hereby by
the requisite vote of the stockholders of BFL, as may be required.
6.02. REGULATORY APPROVALS. Procurement by First Union, FUNC-FL and FUNB-FL
of regulatory consents and approvals by the appropriate Regulatory Authorities
and the expiration of the statutory waiting period relating thereto; PROVIDED,
HOWEVER, that no such approval or consent shall have imposed any condition or
requirement which, in the opinion of First Union would so materially adversely
impact the economic or business benefits to First Union of the transactions
contemplated by this Plan so as to render inadvisable the consummation of the
Mergers.
6.03. NO INJUNCTION. There shall not be in effect any order, decree or
injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of any of the transactions contemplated hereby.
6.04. KPMG PEAT MARWICK LETTERS. First Union shall have received from KPMG
Peat Marwick letters, dated the date of or shortly prior to (i) the mailing of
the Proxy Statement, and (ii) the Effective Date, in form and substance
satisfactory to First Union, with respect to BFL's consolidated financial
position and results of operations, which letters shall be based upon "agreed
upon procedures" undertaken by such firm.
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6.05. LEGAL OPINION. BFL and the Bank shall have received an opinion, dated
the Effective Date, of Marion A. Cowell, Jr., counsel for First Union, in form
reasonably satisfactory to BFL, which shall cover the matters contained in
EXHIBIT D hereto.
6.06. LEGAL OPINION. First Union shall have received an opinion, dated the
Effective Date, of Cummings & Lockwood, counsel for BFL and the Bank, in form
reasonably satisfactory to First Union, which shall cover the matters contained
in EXHIBIT E hereto.
6.07. OFFICER'S CERTIFICATE. (i) Each of the representations and warranties
contained herein of First Union, FUNC-FL and FUNB-FL shall be true and correct
as of the date of this Plan and upon the Effective Date with the same effect as
though all such representations and warranties had been made on the Effective
Date, except for any such representations and warranties made as of a specified
date, which shall be true and correct as of such date, and (ii) each and all of
the agreements and covenants of First Union, FUNC-FL and FUNB-FL to be performed
and complied with pursuant to this Plan on or prior to the Effective Date shall
have been duly performed and complied with in all material respects, and BFL and
the Bank shall have received a certificate signed by an executive officer of
each of First Union, FUNC-FL and FUNB-FL dated the Effective Date, to such
effect.
6.08. OFFICERS' CERTIFICATE. (i) Each of the representations and warranties
contained herein of BFL and the Bank shall be true and correct as of the date of
this Plan and upon the Effective Date with the same effect as though all such
representations and warranties had been made on the Effective Date, except for
any such representations and warranties made as of a specified date, which shall
be true and correct as of such date and except as otherwise provided in Section
5.11, and (ii) each and all of the agreements and covenants of BFL and the Bank
to be performed and complied with pursuant to this Plan on or prior to the
Effective Date shall have been duly performed and complied with in all material
respects, and First Union, FUNC-FL and FUNB-FL shall have received a certificate
signed by the Chief Executive Officers and the Chief Financial Officers of BFL
and the Bank dated the Effective Date, to such effect.
6.09. EFFECTIVE REGISTRATION STATEMENT. The Registration Statement shall
have become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
6.10. BLUE-SKY PERMITS. First Union shall have received all state
securities laws and "blue sky" permits necessary to consummate the Corporate
Merger.
6.11. TAX OPINION. First Union and BFL shall have received an opinion from
Sullivan & Cromwell to the effect that (i) the Corporate Merger constitutes a
reorganization under Section 368 of the Code, and (ii) no gain or loss will be
recognized by stockholders of BFL who receive shares of First Union Common Stock
in exchange for their shares of BFL Common Stock and BFL Preferred Stock, except
that gain or loss may be recognized as to cash received in lieu of fractional
share interests, and, in rendering their opinion, Sullivan & Cromwell may
require and rely upon representations contained in certificates of officers of
First Union, BFL and others.
6.12. NYSE LISTING. The shares of First Union Common Stock issuable
pursuant to this Plan shall have been approved for listing on the NYSE, subject
to official notice of issuance.
6.13. RECEIPT OF AFFILIATE AGREEMENTS. First Union shall have received from
each affiliate of BFL the agreement referred to in Section 5.10;
PROVIDED, HOWEVER, that a failure to satisfy any of the conditions set
forth in the proviso following Section 6.02 or in Section 6.04, 6.06, 6.08 or
6.13 shall only constitute conditions if asserted by First Union, and a failure
to satisfy any of the conditions set forth in Section 6.05 or 6.07 shall only
constitute conditions if asserted by BFL.
VII. TERMINATION.
This Plan may be terminated prior to the Effective Date, either before or
after receipt of required stockholder approvals:
7.01. MUTUAL CONSENT. By the mutual consent of First Union and BFL, if the
Board of Directors of each so determines by vote of a majority of the members of
its entire Board.
7.02. BREACH. By First Union or BFL, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event of (i) a material breach by the other party of any representation or
warranty contained herein, which breach cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching party of
such
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<PAGE>
breach, or (ii) a breach by the other party of any of the material covenants or
agreements contained herein, which breach cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching party of
such breach.
7.03. DELAY. By First Union or BFL, if its Board of Directors so determines
by vote of a majority of the members of its entire Board, in the event that the
Corporate Merger is not consummated by December 31, 1994.
7.04. NO STOCKHOLDER APPROVAL. By BFL or First Union, if its Board of
Directors so determines by a vote of a majority of the members of its entire
Board, in the event that any stockholder approval contemplated by Section 6.01
is not obtained at the Meeting, including any adjournment or adjournments
thereof.
VIII. OTHER MATTERS.
8.01. SURVIVAL. If the Effective Date occurs, all representations,
warranties, agreements and covenants contained in this Plan shall not survive
the Effective Date. If this Plan is terminated prior to the Effective Date, the
agreements and representations of the parties in Sections 4.01(P), 4.01(AA) and
4.02(F), Sections 5.03, 5.06(2), 5.12 and 5.13, and Sections 8.01, 8.03, 8.04,
8.05, 8.06, 8.07, 8.09 and 8.11 shall survive such termination.
8.02. WAIVER; AMENDMENT. Prior to the Effective Date, any provision of this
Plan may be (i) waived in writing by the party benefitted by the provision, or
(ii) amended or modified at any time (including the structure of the
transactions contemplated hereby) by an agreement in writing among the parties
hereto approved by their respective Boards of Directors and executed in the same
manner as this Plan, except that, after the vote by the stockholders of BFL, the
consideration to be received by the stockholders of BFL for each share of BFL
Common Stock and BFL Preferred Stock shall not thereby be altered in violation
of Section 251 (d) of the Delaware General Corporation Law.
8.03. COUNTERPARTS. This Plan may be executed in one or more counterparts,
each of which shall be deemed to constitute an original. This Plan shall become
effective when one counterpart has been signed by each party hereto.
8.04. GOVERNING LAW. This Plan shall be governed by, and interpreted in
accordance with, the laws of the State of Florida, except as federal law may be
applicable.
8.05. EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Plan and the transactions contemplated hereby, except
printing expenses which shall be shared equally between BFL and First Union.
8.06. CONFIDENTIALITY. Except as otherwise provided in Section 5.06(2),
each of the parties hereto and their respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed.
8.07. NOTICES. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed to have been duly given when
delivered by hand, telegram or telex (confirmed in writing) to such party at its
address set forth below or such other address as such party may specify by
notice to the parties hereto.
<TABLE>
<S> <C> <C>
If to First Union, FUNC-FL or FUNB-FL, to: First Union Corporation
One First Union Center
Charlotte, N.C. 28288-0013
Attn: Chief Executive Officer
Copy to: Marion A. Cowell, Jr., Esq.
First Union Corporation
One First Union Center
Charlotte, N.C. 28288-0013
If to BFL or the Bank, to: BancFlorida Financial Corporation
5801 Pelican Bay Boulevard
Naples, Florida 33963
Attn: Rudolf P. Guenzel
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Copy to: Paul G. Hughes, Esq.
Cummings & Lockwood
Ten Stamford Forum
P.O. Box 120
Stamford, Connecticut 06904
</TABLE>
8.08. DEFINITIONS. Any term defined anywhere in this Plan shall have the
meaning ascribed to it for all purposes of this Plan (unless expressly noted to
the contrary). In addition:
(1) the term "Material Adverse Effect", when applied to a party, shall
mean an event, occurrence or circumstance (including without limitation (i)
the making of any provisions for possible loan and lease losses,
write-downs of other real estate and taxes, and (ii) any breach of a
representation or warranty contained herein by such party) which (a) has or
is reasonably likely to have a material adverse effect on the financial
condition, results of operations, business or prospects of the party and
its subsidiaries, taken as a whole, or (b) would materially impair the
party's ability to perform its obligations under this Plan or the Stock
Option Agreement or the consummation of any of the transactions
contemplated hereby or thereby; and
(2) the term "Previously Disclosed" by a party shall mean information
set forth in a Schedule that is delivered by that party to the other party
contemporaneously with the execution of this Plan and specifically
designated as information "Previously Disclosed" pursuant to this Plan.
8.09. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Plan and the
Stock Option Agreement together represent the entire understanding of the
parties hereto with reference to the transactions contemplated hereby and
thereby and supersede any and all other oral or written agreements heretofore
made. Nothing in this Plan or the Stock Option Agreement, expressed or implied,
is intended to confer upon any person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Plan or the Stock Option Agreement.
8.10. BENEFIT PLANS. Upon consummation of the Corporate Merger, except as
Previously Disclosed in Schedule 8.10, as soon as administratively practicable,
employees of BFL and the BFL Subsidiaries shall be generally entitled to
participate in the pension, benefit and similar plans on substantially the same
terms and conditions as employees of First Union and its subsidiaries. For the
purpose of determining eligibility to participate in such plans and the vesting
of benefits under such plans (but not for the accrual of benefits under such
plans), First Union shall give effect to years of service with BFL or the BFL
Subsidiaries, as the case may be, as if such service were with First Union or
its subsidiaries.
8.11. HEADINGS. The headings contained in this Plan are for reference
purposes only and are not part of this Plan.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FIRST UNION CORPORATION
By: /s/ KEITH D. LEMBO
NAME: KEITH D. LEMBO
TITLE: SENIOR VICE PRESIDENT
FIRST UNION CORPORATION OF FLORIDA
By: /s/ LARRY J. WERTZ
NAME: LARRY J. WERTZ
TITLE: EXECUTIVE VICE PRESIDENT
FIRST UNION NATIONAL BANK OF FLORIDA
By: /s/ LARRY J. WERTZ
NAME: LARRY J. WERTZ
TITLE: EXECUTIVE VICE PRESIDENT
BANCFLORIDA FINANCIAL CORPORATION
By: /s/ RUDOLF P. GUENZEL
NAME: RUDOLF P. GUENZEL
TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
BANCFLORIDA, A FEDERAL SAVINGS BANK
By: /s/ RUDOLF P. GUENZEL
NAME: RUDOLF P. GUENZEL
TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
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<PAGE>
BOARD OF DIRECTORS
BANCFLORIDA, A FEDERAL SAVINGS BANK
<TABLE>
<S> <C>
/s/ GERARD A. MCHALE, JR. /s/ HERBERT D. CONANT
GERARD A. MCHALE, JR. HERBERT D. CONANT
/s/ RONNIE C. MAY /s/ J. MICHAEL HOLMES
RONNIE C. MAY J. MICHAEL HOLMES
/s/ DALE A. MYER /s/ RUDOLF P. GUENZEL
DALE A. MYER RUDOLF P. GUENZEL
/s/ JOHN J. AGNELLI
JOHN J. AGNELLI
</TABLE>
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<PAGE>
BOARD OF DIRECTORS
FIRST UNION NATIONAL BANK OF FLORIDA
<TABLE>
<S> <C>
/s/ BOB D. ALLEN /s/ JOHN A. MITCHELL, III
BOB D. ALLEN JOHN A. MITCHELL, III
/s/ E. BRUCE BOWER /s/ RAY C. OSBORNE
E. BRUCE BOWER RAY C. OSBORNE
/s/ ALEXANDER W. DREYFOOS, JR. /s/ H. H. PEYTON
ALEXANDER W. DREYFOOS, JR. H. H. PEYTON
/s/ BYRON E. HODNETT /s/ WILLIAM J. SCHOEN
BYRON E. HODNETT WILLIAM J. SCHOEN
/s/ EDWARD W. LANE, III /s/ G. KENNEDY THOMPSON
EDWARD W. LANE, III G. KENNEDY THOMPSON
/s/ JOHN F. LOWNDES /s/ B. J. WALKER
JOHN F. LOWNDES B. J. WALKER
/s/ W. A. MCGRIFF, III /s/ CAROL G. WYLLIE
W. A. MCGRIFF, III CAROL G. WYLLIE
</TABLE>
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<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of January 17, 1994 (the "Agreement"), by
and between BancFlorida Financial Corporation, a Delaware corporation
("Issuer"), and First Union Corporation, a North Carolina corporation
("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Mergers dated as of January 17, 1994 (the "Plan"), providing for, among other
things, the merger of Issuer with and into First Union Corporation of Florida
("FUNC-FL"), a wholly-owned subsidiary of Grantee, with FUNC-FL as the surviving
corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the Plan,
Grantee has required that Issuer agree, and Issuer has agreed, to grant Grantee
the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Plan.
2. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 719,000 shares (as adjusted as set forth herein, the "Option Shares",
which shall include the Option Shares before and after any transfer of such
Option Shares) of common stock, par value $0.01 per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (the "Purchase Price")
equal to $25.00.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as defined below), as applicable,
shall not be in material breach of the agreements or covenants contained in this
Agreement or the Plan, and (ii) no preliminary or permanent injunction or other
order against the delivery of shares covered by the Option issued by any court
of competent jurisdiction in the United States shall be in effect, the Holder
may exercise the Option, in whole or in part, at any time and from time to time
following the occurrence of a Purchase Event; PROVIDED that the Option shall
terminate and be of no further force and effect upon the earliest to occur of
(A) the Effective Date, (B) termination of the Plan by Issuer in accordance with
the terms thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event unless the Issuer has, after the date hereof, engaged in
discussions with any third party regarding an Acquisition Transaction (as
hereinafter defined) (an "Issuer Termination"), (C) 18 months after the
termination of the Plan by Issuer in accordance with the terms thereof other
than pursuant to an Issuer Termination, and (D) 18 months after the termination
of the Plan by Grantee in accordance with the terms thereof; PROVIDED, HOWEVER,
that any purchase of shares upon exercise of the Option shall be subject to
compliance with applicable law, including, without limitation, the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). The term "Holder" shall mean
the holder or holders of the Option from time to time, and which initially is
Grantee.
(b) As used herein, a "Purchase Event" means any of the following events:
(i) Without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any subsidiary of Grantee) to effect
an Acquisition Transaction. As used herein, the term "Acquisition
Transaction" shall mean (A) a merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries, (B) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits
of Issuer or any of its significant subsidiaries representing in either
case 20% or more of the consolidated assets or deposits of Issuer and its
subsidiaries or (C) the issuance, sale or other disposition of (including
by way of merger, consolidation, share exchange or any similar transaction)
securities representing 20% or more of the voting power of Issuer or any of
its significant subsidiaries other than the issuance of Issuer Common Stock
upon the exercise of outstanding options or the conversion of outstanding
convertible securities of Issuer; or
(ii) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 15% or more (or if such person or
group is the beneficial owner of 15% or more on the date hereof such person
or group acquires an additional 5% or more) of the voting power of Issuer
or any of its significant subsidiaries.
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<PAGE>
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Exchange
Act) or shall have filed a registration statement under the Securities Act,
with respect to, a tender offer or exchange offer to purchase any shares of
Issuer Common Stock such that, upon consummation of such offer, such person
would own or control 20% or more of the then outstanding shares of Issuer
Common Stock (such an offer being referred to herein as a "Tender Offer" or
an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved the
Plan at the Meeting, the Meeting shall not have been held or shall have
been canceled prior to termination of the Plan, or Issuer's Board of
Directors shall have withdrawn or modified in a manner adverse to Grantee
the recommendation of Issuer's Board of Directors with respect to the Plan,
in each case after it shall have been publicly announced that any person
(other than Grantee or any subsidiary of Grantee) shall have (A) made a
proposal to engage in an Acquisition Transaction, (B) commenced a Tender
Offer or filed a registration statement under the Securities Act with
respect to an Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under the BHC Act, the Bank Merger
Act or the Change in Bank Control Act of 1978, for approval to engage in an
Acquisition Transaction; or
(iii) any person, other than Grantee or any subsidiary of Grantee,
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement, or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction; or
(iv) after a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Plan and such breach
would entitle Grantee to terminate the Plan under Section 7.02 of Article
VII thereof (without regard to the cure period provided for therein unless
such cure is promptly effected without jeopardizing consummation of the
Mergers pursuant to the terms of the Plan); or
(v) any person, other than Grantee or any subsidiary of Grantee, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"),
or other federal or state bank regulatory authority, for approval to engage
in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Preliminary Purchase Event or Purchase Event (in either case, a "Triggering
Event"), it being understood that the giving of such notice by Issuer shall not
be a condition to the right of Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"); provided,
however, if any required application for listing such shares on the New York
Stock Exchange has not been approved by the date so specified such date shall be
extended for a period not to exceed 21 days from the Notice Date. If prior
notification to or approval of the Federal Reserve Board or any other regulatory
authority is required in connection with such purchase, Issuer shall cooperate
with the Holder in the filing of the required notice of application for approval
and the obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods). Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in immediately
available funds by wire transfer to a bank account designated by Issuer, an
amount equal to the Purchase Price multiplied by the number of Option Shares to
be purchased on such Closing Date, and (ii) present and surrender this Agreement
to the Issuer at the address of the Issuer specified in subsection (f) of
Section 11 hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in subsection (a) of
this Section 4, (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
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<PAGE>
encumbrances of any kind whatsoever and subject to no preemptive rights, and (B)
if the Option is exercised in part only, an executed new agreement with the same
terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF JANUARY 17, 1994. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT
BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice of exercise
of the Option provided for under Section 3(e), the tender of the applicable
purchase price in immediately available funds and the tender of this Agreement
to Issuer, Holder shall be deemed to be the holder of record of the shares of
Issuer Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates representing
such shares of Issuer Common Stock shall not then be actually delivered to
Holder. Issuer shall pay all expenses, and any and all United States federal,
state, and local taxes and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
in the name of Holder or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. (section mark) 18a and regulations
promulgated thereunder and (B) in the event, under the BHC Act, or the Change in
Bank Control Act of 1978, as amended, or a state banking law, prior approval of
or notice to the Federal Reserve Board or to any state regulatory authority is
necessary before the Option may be exercised, cooperating fully with Holder in
preparing such applications or notices and providing such information to the
Federal Reserve Board or such state regulatory authority as they may require) in
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto, and (iv) promptly to
take all action provided herein to protect the rights of Holder against
dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents and
warrants to Grantee (and Holder, if different than Grantee) as follows:
(a) DUE AUTHORIZATION. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly executed
and delivered by Issuer.
(b) AUTHORIZED STOCK. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all times
from the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common Stock necessary
for Holder to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Issuer
Common Stock or other securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable pursuant to Section 7, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid and nonassessable,
and shall be delivered free and clear of all
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<PAGE>
liens, claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents and
warrants to Issuer that:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) PURCHASE NOT FOR DISTRIBUTION. This Option is not being, and any Option
Shares or other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this subsection (a), upon exercise of any option to purchase Issuer Common Stock
outstanding on the date hereof or upon conversion into Issuer Common Stock of
any convertible security of Issuer outstanding on the date hereof), the number
of shares of Issuer Common Stock subject to the Option shall be adjusted so
that, after such issuance, it, together with any shares of Issuer Common Stock
previously issued pursuant hereto, equals 19.9% of the number of shares of
Issuer Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option. No provision of this Section
7 shall be deemed to affect or change, or constitute authorization for any
violation of, any of the covenants or representations in the Plan.
(b) In the event that Issuer shall enter in an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its subsidiaries,
and shall not be the continuing or surviving corporation of such consolidation
or merger, (ii) to permit any person, other than Grantee or one of its
subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Holder, of either (x) the Acquiring Corporation (as
hereinafter defined), (y) any person that controls the Acquiring Corporation, or
(z) in the case of a merger described in clause (ii), Issuer (such person being
referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of Substitute Option
per share of Substitute Common Stock (the "Substitute Option Price") shall then
be equal to the Option Price multiplied by a fraction in which the numerator is
the number of shares of Issuer Common Stock for which the Option was theretofore
exercisable and the denominator is the number of shares of the Substitute Common
Stock for which the Substitute Option is exercisable.
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<PAGE>
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii) the transferee of all or
substantially all of Issuer's assets (or a substantial part of the
assets of its subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the common stock issued
by Substitute Option Issuer upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the highest of (x) the price per
share of Issuer Common Stock at which a Tender Offer or an Exchange
Offer therefor has been made, (y) the price per share of Issuer Common
Stock to be paid by any third party pursuant to an agreement with
Issuer, and (z) the highest closing price for shares of Issuer Common
Stock within the six-month period immediately preceding the
consolidation, merger, or sale in question. In the event that a Tender
Offer or an Exchange Offer is made for Issuer Common Stock or an
agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
selected by Holder or Owner, as the case may be (and if there are both
a Holder and an Owner, the Holder).
(4) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one year immediately preceding
the consolidation, merger, or sale in question, but in no event higher
than the closing price of the shares of Substitute Common Stock on the
day preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by Issuer,
the person merging into Issuer or by any company which controls such
person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for the limitation in the first sentence of this subsection (f), Substitute
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in the
first sentence of this subsection (f) over (ii) the value of the Substitute
Option after giving effect to the limitation in the first sentence of this
subsection (f). This difference in value shall be determined by a
nationally-recognized investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 7 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than any dimunition in
value resulting from the fact that the Substitute Common Stock are restricted
securities, as defined in Rule 144 under the Securities Act) than other shares
of common stock issued by Substitute Option Issuer).
8. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject to the conditions of
subparagraph (c) below, if requested by any Holder or Owner, as applicable,
including Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible prepare and file a registration statement under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to the Selling Shareholder
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by the Selling Shareholder in such request, including
without limitation a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best efforts
to qualify such shares or other securities for sale under any applicable state
securities laws.
(b) ADDITIONAL REGISTRATION RIGHTS. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the written request of
any Selling Shareholder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer Common Stock
intended to be included in such underwritten public offering by the Selling
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<PAGE>
Shareholder), Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered and included in
such underwritten public offering; PROVIDED, HOWEVER, that Issuer may elect to
not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration filed on Form
S-4; PROVIDED, FURTHER, HOWEVER, that such election pursuant to (i) may only be
made two times. If some but not all the shares of Issuer Common Stock, with
respect to which Issuer shall have received requests for registration pursuant
to this subsection (b), shall be excluded from such registration, Issuer shall
make appropriate allocation of shares to be registered among the Selling
Shareholders desiring to register their shares pro rata in the proportion that
the number of shares requested to be registered by each such Selling Shareholder
bears to the total number of shares requested to be registered by all such
Selling Shareholders then desiring to have Issuer Common Stock registered for
sale.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall use all reasonable
efforts to cause each registration statement referred to in subparagraph (a)
above to become effective and to obtain all consents or waivers of other parties
which are required therefor and to keep such registration statement effective,
PROVIDED, HOWEVER, that Issuer may delay any registration of Option Shares
required pursuant to subparagraph (a) above for a period not exceeding 90 days
provided Issuer shall in good faith determine that any such registration would
adversely affect an offering or contemplated offering of other securities by
Issuer, and Issuer shall not be required to register Option Shares under the
Securities Act pursuant to subsection (a) above:
(i) prior to the earliest of (a) termination of the Plan pursuant to
Article VII thereof, (b) failure to obtain the requisite stockholder approval
pursuant to Section 6.01 of Article VI of the Plan, and (c) a Purchase Event or
a Preliminary Purchase Event;
(ii) on more than one occasion;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration referred to
in subsection (b) above pursuant to which the Selling Shareholder or Selling
Shareholders concerned were afforded the opportunity to register such shares
under the Securities Act and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling Shareholders
that hold at least 25% or more of the aggregate number of Option Shares
(including shares of Issuer Common Stock issuable upon exercise of the Option)
then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any registration statement after the expiration of nine months
from the effective date of such registration statement. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under all applicable
state securities laws to the extent necessary to permit the sale or other
disposition of the Option Shares so registered in accordance with the intended
method of distribution for such shares, PROVIDED, HOWEVER, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) EXPENSES. Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), legal expenses, including the reasonable fees and expenses of one
counsel to the holders whose Option Shares are being registered, printing
expenses and the costs of special audits or "cold comfort" letters, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subsection (a) or (b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to subsection (a) or (b)
above.
(e) INDEMNIFICATION. In connection with any registration under subparagraph
(a) or (b) above Issuer hereby indemnifies the Selling Shareholders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement of a material fact contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein,
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<PAGE>
and Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Shareholders, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by Issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this subsection (e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this subsection (e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action, but
the failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
subsection (e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party fails to assume the defense
of such action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subsection (e) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received by
Issuer, the Selling Shareholders and the underwriters from the offering of the
securities and also the relative fault of Issuer, the Selling Shareholders and
the underwriters in connection with the statements or omissions which resulted
in such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim; PROVIDED, HOWEVER, that in no case shall any Selling Shareholder be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to subsection (a) or (b)
above, Issuer and each Selling Shareholder (other than Grantee) shall enter into
an agreement containing the indemnification provisions of this subsection (e).
(f) MISCELLANEOUS REPORTING. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Selling Shareholders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
(g) ISSUER TAXES. Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save the Selling Shareholders harmless, without
limitation as to time, against any and all liabilities, with respect to all such
taxes.
9. QUOTATION; LISTING. If Issuer Common Stock or any other securities to be
acquired in connection with the exercise of the Option are then authorized for
quotation or trading or listing on the NASDAQ/NMS or any securities exchange,
Issuer, upon the request of Holder, will promptly file an application, if
required, to authorize for quotation or trading or listing the shares of Issuer
Common Stock or other securities to be acquired upon exercise of the Option on
the NASDAQ/NMS or such other securities exchange and will use its best efforts
to obtain approval, if required, of such quotation or listing as soon as
practicable.
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<PAGE>
10. DIVISION OF OPTION. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
(c) ENTIRE AGREEMENT: NO THIRD-PARTY BENEFICIARY; SEVERABILITY. This
Agreement, together with the Plan and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any person other than the parties hereto
(other than any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to subsection (h) of this Section 14) any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a federal or state
regulatory agency to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that the Option
does not permit Holder or Owner to acquire, or does not require Issuer to
repurchase, the full number of shares of Issuer Common Stock as provided in
Section 3 (as adjusted pursuant to Section 7), it is the express intention of
Issuer to allow Holder or Owner to acquire or to require Issuer to repurchase
such lesser number of shares as may be permissible without any amendment or
modification hereof.
(d) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida without regard to any
applicable conflicts of law rules.
(e) DESCRIPTIVE HEADINGS. The descriptive headings contained herein are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
<TABLE>
<S> <C>
If to Issuer to: BancFlorida Financial Corporation
5801 Pelican Bay Boulevard
Naples, Florida 33963
Telecopy Number: (813) 591-7896
Attention: Rudolf P. Guenzel, President and Chief Executive Officer
with a copy to: Cummings & Lockwood
Ten Stamford Forum
P.O. Box 120
Stamford, Connecticut 06904
Telecopy Number: (203) 351-4359
Attention: Paul G. Hughes
</TABLE>
A-30
<PAGE>
<TABLE>
<S> <C>
If to Grantee to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704) 374-3425
Attention: Edward E. Crutchfield, Jr., Chairman and Chief Executive Officer
with a copy to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704) 374-3425
Attention: Marion A. Cowell, Jr., General Counsel
</TABLE>
(g) COUNTERPARTS. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its rights
hereunder in whole or in part after the occurrence of a Purchase Event. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) FURTHER ASSURANCES. In the event of any exercise of the Option by the
Holder, Issuer and the Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) SPECIFIC PERFORMANCE. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
BANCFLORIDA FINANCIAL CORPORATION
By: /s/ RUDOLF P. GUENZEL
NAME: RUDOLF P. GUENZEL
TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
FIRST UNION CORPORATION
By: /s/ KEITH D. LEMBO
NAME: KEITH D. LEMBO
TITLE: SENIOR VICE PRESIDENT
A-31
<PAGE>
EXHIBIT B
AGREEMENT, dated as of January 17, 1994, by and between William R. Berkley
(the "Holder"), BancFlorida Financial Corporation ("BancFlorida") and First
Union Corporation ("First Union").
WHEREAS, the Holder is the owner of 1,138,000 shares of Cumulative
Convertible Preferred Stock of BancFlorida (the "Preferred Shares"),
representing all the issued and outstanding shares of such preferred stock;
WHEREAS, First Union and BancFlorida are prepared to enter into an
Agreement and Plan of Mergers (the "Plan") dated as of the date hereof;
WHEREAS, in order to induce First Union to enter into the Plan, the Holder
and BancFlorida have agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the parties hereto agree as follows:
1. The Holder shall vote all the Preferred Shares (and any common shares of
BancFlorida into which Preferred Shares have been converted ("Converted Common
Shares")) in favor of the Plan and the transactions contemplated thereby at the
meeting of stockholders of BancFlorida called for that purpose.
2. The Holder agrees that it will accept the consideration provided for in
the Plan in exchange for the Preferred Shares as provided in Section 2.01 of the
Plan.
3. The Holder agrees that the Plan and Stock Option Agreement dated as of
the date hereof between First Union and BancFlorida will not result in any
change in the conversion price for the Preferred Shares. BancFlorida and First
Union agree that no amendment will be made to the Plan or the Stock Option
Agreement referred to below which would result in any change to the conversion
price for the Preferred Shares.
4. Except as set forth below in paragraph 7 of this Agreement, the Holder
agrees that it will not sell or transfer any Preferred Shares to any other party
unless such party enters into an agreement, satisfactory to First Union, to
abide by all the terms of this Agreement as if such party were the Holder.
Nothing provided herein shall prevent the Holder from selling any Converted
Common Shares, except that Holder agrees that Holder will not sell or transfer
any Converted Common Shares to any person or entity who or which has made a
proposal to engage in an Acquisition Transaction (as defined in the Stock Option
Agreement referred to above) or to any person or entity acting in concert with
or on behalf of such first person or entity.
5. During the period that this Agreement is in effect, BancFlorida agrees
that it will not exercise any redemption rights it may have with respect to the
Preferred Shares.
6. The parties hereto agree that this Agreement shall terminate and be of
no further force and effect if the Plan is terminated in accordance with its
terms or if the Board of Directors of BancFlorida withdraws its endorsement of
the transactions contemplated by the Plan.
7. BancFlorida hereby (i) acknowledges and confirms the Holder's demand
under the Registration Agreement dated January 13, 1989 between BancFlorida and
the Holder, to register the Converted Common Shares, and (ii) agrees to commence
all necessary steps to register the same notwithstanding any contrary provisions
which may be contained in such Registration Agreement. Notwithstanding the
foregoing, it is understood and agreed that Holder has no affirmative obligation
to convert the Preferred Shares into Converted Common Shares.
8. During the period that this Agreement is in effect, BancFlorida agrees
to use its best efforts to maintain the required regulatory approvals to pay
dividends on the Preferred Shares in accordance with the applicable provisions
of BancFlorida's Certificate of Incorporation and First Union agrees to
cooperate with BancFlorida in connection with such efforts. If BancFlorida is
not able to maintain such approval and as a result is not able to pay Holder any
of such dividends on the Preferred Shares, First Union agrees to pay such
omitted dividends plus interest from the date of arrearage at the Effective
Federal Funds Rate to Holder on the effective date of the acquisition of
BancFlorida by First Union pursuant to the Plan, in cash, or at the option of
First Union, in shares of First Union common stock with a value (on such
effective date) equal to the amount of such omitted dividends.
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<PAGE>
9. The Holder represents and warrants:
(i) the Holder has good title to the Preferred Shares and owns the
Preferred Shares free and clear of any rights, claims, encumbrances, liens,
interests or restrictions of any nature whatsoever, including, without
limitation, any restrictions on the voting of the Preferred Shares or any rights
of others to vote, or to participate (including by consultation) in the voting
of, the Preferred Shares; and
(ii) this Agreement has been duly authorized by all necessary action on the
part of the Holder and is a valid and legally binding agreement enforceable
against the Holder in accordance with its terms, subject to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
(iii) the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby by the Holder, does not and
will not constitute a breach or violation of, or a default under, any law, rule
or regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of the Holder or to which the Holder is
subject or bound, or require any consent or approval under such law, rule,
regulation, judgment, decree, order, governmental permit or license or the
consent or approval of any other party to any such agreement, indenture or
instrument.
10. BancFlorida represents and warrants that its representations and
warranties in the Plan apply equally to this Agreement.
11. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original. This Agreement shall become
effective when one counterpart has been signed by each party hereto.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed
as of the day and year first above written.
FIRST UNION CORPORATION
By: /s/ KENNETH R. STANCLIFF
NAME: KENNETH R. STANCLIFF
TITLE: SENIOR VICE PRESIDENT
BANCFLORIDA FINANCIAL CORPORATION
By: /s/ RUDOLF P. GUENZEL
NAME: RUDOLF P. GUENZEL
TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
By: /s/ WILLIAM R. BERKLEY
WILLIAM R. BERKLEY
A-33
<PAGE>
ANNEX B
OPINION OF ALEX. BROWN & SONS INCORPORATED
January 16, 1994
The Board of Directors
BancFlorida Financial Corporation
5801 Pelican Bay Boulevard
Naples, Florida 33963
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, having a par
value of $0.01 (the "Shares") of BancFlorida Financial Corporation
("BancFlorida" or the "Company") of the consideration to be received by the
Company's shareholders pursuant to the Agreement and Plan of Mergers dated as of
January 16, 1994 between First Union Corporation ("First Union") and the Company
(the "Agreement"). Pursuant to the Agreement, each of the Shares will receive
shares of First Union Common Stock, par value $3.33 1/3 per share ("First Union
Common Stock") as follows: (i) 0.669 if the First Union Price (as defined in the
Agreement") is greater than $41.874 and less than $44.876; (ii) the result
obtained by dividing $28.00 by the First Union Price if the First Union Price is
$41.874 or less; or (iii) the result obtained by dividing $30.00 by the First
Union Price if the First Union Price is $44.876 or greater (the "Exchange
Ratio").
Alex. Brown & Sons Incorporated, as a customary part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, negotiated underwritings, private
placements and valuations for estate, corporate and other purposes. We have
acted as financial advisor to the Board of Directors of the Company in
connection with the transactions described above and will receive a fee for our
services, a significant portion of which is contingent upon the consummation of
the transaction contemplated by the Agreement. Alex. Brown & Sons Incorporated
regularly publishes research reports regarding the financial services industry
and the businesses and securities of publicly owned companies in that industry.
In connection with this opinion, we have reviewed certain publicly
available financial information concerning the Company and First Union and
certain internal financial analyses and other information furnished to us by the
Company and First Union. We have also held discussions with members of both the
Company's and First Union's senior management regarding the respective business
and prospects of the Company and First Union. In addition, we have (i) reviewed
the reported price and trading activity for the Shares and First Union Common
Stock, (ii) compared certain financial and stock market information for the
Company and First Union, respectively, with similar information for certain
comparable companies whose securities are publicly traded, (iii) reviewed the
Agreement and compared the financial terms of the Agreement with those of
certain recent business combinations in the commercial banking and savings and
loan industries which we deemed comparable in whole or in part and (iv)
performed such other studies and analyses and considered such other factors as
we deemed appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to information relating to the prospects of the Company,
we have assumed that such information reflects the best currently available
estimates and judgments of the management of the Company as to the likely future
financial performance of the Company. In addition, we have not made an
independent evaluation or appraisal of the assets or liabilities of the Company
or First Union, nor have we been furnished with any such evaluation or
appraisal. Our opinion is based on market, economic and other conditions as they
exist and can be evaluated as of the date of this letter.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the Exchange Ratio is fair, from a financial point of view,
to the holders of Shares.
Very truly yours,
ALEX. BROWN & SONS INCORPORATED
By: /s/ DONALD W. DELSON
DONALD W. DELSON
MANAGING DIRECTOR
B-1
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemization of all estimated
expenses in connection with the issuance and distribution of the securities
being registered, none of which are payable by the Selling Stockholder:
Registration Statement Filing Fee $10,914
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 3,000
Printing Costs 2,000
Miscellaneous 1,086
Total $42,000
Item 15. Indemnification of Directors and Officers
Article IX of the By-laws of the Registrant contains the following
provisions relating to indemnification of directors and officers:
Section 1. Power to Indemnify in Actions, Suits or Proceedings
Other Than Those by or in the Right of the Corporation. Subject to Section
3 of this Article IX, the Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding, by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by
or in the Right of the Corporation. Subject to Section 3 of this Article
IX, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
<PAGE>
action or suit by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit, if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application, that, despite the adjudication of liability, but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
under this Article IX (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of conduct
set forth in Section 1 or Section 2 of this Article IX, as the case may be.
Such determination shall be made (i) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director, officer, employee
or agent of the Corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding described above, or in defense
of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith, without the necessity of authorization in the
specific case. No director, officer, employee or agent of the Corporation
shall be entitled to indemnification in connection with any action, suit or
proceeding voluntarily initiated by such person unless the action, suit or
proceeding was authorized by a majority of the entire board of directors.
Section 4. Good Faith Defined. For purposes of any determination
under Section 3 of this Article IX, a person shall be deemed to have acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe
his conduct was unlawful, if his action is based on the records or books of
account of the Corporation or another enterprise, or on information
supplied to him by the officers of the Corporation or another enterprise in
the course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or
reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected
with reasonable care by the Corporation or another enterprise. The term
"another enterprise" as used in this Section 4 shall mean any other
corporation or any partnership, joint venture, trust or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4
shall not be deemed to be exclusive or to limit
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<PAGE>
in any way the circumstances in which a person may be deemed to have met the
applicable standards of conduct set forth in Sections 1 or 2 of this
Article IX, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
IX, and notwithstanding the absence of any determination thereunder, any
director, officer, employee or agent may apply to any court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Sections 1 and 2 of this Article IX. The basis
of such indemnification by a court shall be a determination by such court
that indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standards of conduct
set forth in Sections 1 and 2 of this Article IX, as the case may be.
Notice of any application for indemnification pursuant to this Section 5
shall be given to the Corporation promptly upon the filing of such
application. Notwithstanding any of the foregoing, unless otherwise
required by law, no director, officer, employee or agent of the Corporation
shall be entitled to indemnification in connection with any action, suit or
proceeding voluntarily initiated by such person unless the action, suit or
proceeding was authorized by a majority of the entire board of directors.
Section 6. Expenses Payable in Advance. Expenses incurred in
defending or investigating a threatened or pending action, suit or
proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article
IX.
Section 7. Non-exclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this Article IX shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement,
contract, vote of stockholders or disinterested directors or pursuant to
the direction (howsoever embodied) of any court of competent jurisdiction
or otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, it being the policy of the
Corporation that, subject to the limitation in Section 3 of this Article IX
concerning voluntary initiation of actions, suits or proceedings,
indemnification of the persons specified in Sections 1 and 2 of this
Article IX shall be made to the fullest extent permitted by law. The
provisions of this Article IX shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 or 2 of
this Article IX but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State
of Delaware or otherwise. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article IX shall, unless
otherwise provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
II-3
<PAGE>
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against
such liability under the provisions of this Article IX.
Section 9. Meaning of "Corporation" for Purposes of Article IX.
For purposes of this Article IX, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under the provisions
of this Article IX with respect to the resulting or surviving corporation
as he would have with respect to such constituent corporation if its
separate existence had continued.
The Registrant maintains a liability and indemnification insurance
policy in the amount of $3,000,000 for a period extending from June 23,
1993 through June 23, 1994 issued by Aetna covering all officers and
directors of the Registrant, at an annual expense of approximately
$180,000.
The Registration Agreement provides for indemnification of BFL's
directors and officers, among others, by the Selling Stockholder in certain
circumstances, including indemnification against certain liabilities under
the Securities Act of 1933.
Item 16. Exhibits
Exhibit 1(a) - Stock Purchase Agreement between the Registrant
and Interlaken Financial Group Inc., dated as of
October 24, 1988 (incorporated by reference to
Exhibit 28(a) to the Registrant's Form 8-K
filed on November 2, 1988).
Exhibit 1(b) - Amendment dated as of December 16, 1988 to
Stock Purchase Agreement between the Registrant
and Interlaken Financial Group Inc. dated as of
October 24, 1988 (incorporated by reference to
Exhibit 10(xxvii) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
September 30, 1988).
II-4
<PAGE>
Exhibit 1(c) - Investor Agreement among the Registrant,
Interlaken Financial Group Inc., and William R.
Berkley dated as of October 24, 1988
(incorporated by reference to Exhibit 28(b) to
the Registrant's Form 8-K filed on November 2,
1988).
Exhibit 1(d) - Amendment dated as of December 16, 1988 to
Investor Agreement among the Registrant,
Interlaken Financial Group Inc., and William R.
Berkley dated as of October 24, 1988
(incorporated by reference to Exhibit 10(xxix)
to the Registrant's Form 10-K for the fiscal year
ended September 30, 1988).
Exhibit 1(e) - Agreement of Consent and Assumption by and
among the Registrant, Interlaken Financial Group
Inc. and William R. Berkley (incorporated by
reference to Exhibit 10(xxxiv) to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1991).
Exhibit 1(f) - Amendment No. 2 to Investor Agreement by and
among the Registrant and William R. Berkley
(incorporated by reference to Exhibit 10(xxxv)
to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1991).
Exhibit 2 - The Merger Agreement, including the Stock
Option Agreement and the Preferred Stockholder
Agreement (ANNEX A to the Prospectus/Proxy
Statement attached as Appendix I to the Prospectus
and included in FUNC's Registration Statement on
Form S-4 (No. 33-53103)).
Exhibit 4(a) - Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(i) to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993
(Commission File No. 1-8515)).
Exhibit 4(b) - Bylaws, as amended (incorporated herein by
reference to Exhibit 3(ii) to the Registrant's
Annual Report on Form 10-K for the fiscal year
ended September 30, 1991 (Commission File No.
1-8515)).
II-5
<PAGE>
Exhibit 4(c) - Articles of Incorporation of FUNC, as amended
(incorporated by reference to Exhibit (4) to
FUNC's 1990 First Quarter Report on Form 10-Q
and to Exhibit (99)(a) to FUNC's 1993 First
Quarter Report on Form 10-Q (Commission File
No. 1-10000)).
Exhibit 4(d) - By-laws of FUNC, as amended (incorporated by
reference to Exhibit (4)(b) to FUNC's Form 8-K
dated September 20, 1991 (Commission File No.
1-10000)).
Exhibit 4(e) - Statement of Classification of Shares creating the
FUNC Series 1990 Preferred Stock (incorporated
by reference to Exhibit (3)(c) to FUNC's
Registration Statement No. 33-42865).
Exhibit 4(f) - FUNC Shareholder Protection Rights Agreement,
as amended (incorporated by reference to Exhibits
(4)(b) to FUNC's Forms 8-K dated December 18,
1990 and October 20, 1992 (Commission File No.
1-10000)).
Exhibit 5 - Opinion of Cummings & Lockwood
Exhibit 8 - Tax opinion of Sullivan & Cromwell (set forth in
the Prospectus/Proxy Statement attached as
Appendix I to the Prospectus and included in
FUNC's Registration Statement on Form S-4 (No.
33-53103)).
Exhibit 23(a) - Consent of KPMG Peat Marwick
Exhibit 23(b) - Consent of KPMG Peat Marwick
Exhibit 23(c) - Intentionally omitted
Exhibit 23(d) - Consent of Cummings & Lockwood, included as
part of Exhibit 5
Exhibit 23(e) - Consent of Marion A. Cowell, Jr., Esq.
Exhibit 23(f) - Consent of Sullivan & Cromwell
Exhibit 23(g) - Consent of Alex. Brown & Sons Incorporated
Exhibit 24 - Power of Attorney
Exhibit 99(a) - FUNC's Annual Report on Form 10-K for the year
ended December 31, 1993 (incorporated by
reference to Commission File No. 1-10000).
II-6
<PAGE>
Exhibit 99(b) - FUNC's Registration Statement on Form S-4
relating to the Corporate Merger (incorporated by
reference to File No. 33-53103).
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective amendment
to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement;
(iii) to include any material information
with respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
(iv) to reflect any termination of the Merger Agreement
referred to in this Registration Statement, and to remove from
this Registration Statement and the Prospectus the
Prospectus/Proxy Statement attached as Appendix I to the
Prospectus (and the exhibits and consents relating thereto),
Exhibits 99(a) and 99(b), and all documents filed by First Union
Corporation with the Securities and Exchange Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 prior to the earlier of the Corporate Merger referred
to in this Registration Statement or the termination of the
Merger Agreement, by means of a post-effective amendment to this
Registration Statement so as to comply with the undertakings set
forth in paragraphs (a)(1)(i) and (a)(1)(ii) above;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i)
and (a)(1)(ii) above do not apply (other than in the circumstances and as
provided in paragraph (a)(1)(iv) above) if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-7
<PAGE>
(b) The Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise (other than insurance), the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933 and may therefore, be unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-8
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned
thereto duly authorized, in the City of Naples, State of Florida, on May
3, 1994.
BANCFLORIDA FINANCIAL CORPORATION
By_/S/ RUDOLF P. GUENZEL
Rudolf P. Guenzel
President and Chief Executive Officer
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Rudolf P. Guenzel :
President, Chief Executive Officer and :
Director (Principal Executive Officer) :
:
J. Michael Holmes :
Chief Financial Officer, Secretary and :
Treasurer (Principal Financial Officer :
and Principal Accounting Officer) :
:
Gerard A. McHale, Jr. : By /S/ RUDOLF P. GUENZEL
Chairman of the Board and Director : Rudolf P. Guenzel
:
John J. Agnelli : As Attorney-in-fact
Director :
: Date: May 3, 1994
Herbert D. Conant :
Director :
:
Ronnie C. May :
Director :
:
Dale A. Myer :
Director :
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<PAGE>
EXHIBIT INDEX
Exhibit 1(a) - Stock Purchase Agreement between the Registrant,
Interlaken Financial Group Inc., dated as of
October 24, 1988 (incorporated by reference to
Exhibit 28(a) to the Registrant's Form 8-K
filed on November 2, 1988).
Exhibit 1(b) - Amendment dated as of December 16, 1988 to
Stock Purchase Agreement between the Registrant
and Interlaken Financial Group Inc. dated as of
October 24, 1988 (incorporated by reference to
Exhibit 10(xxvii) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
September 30, 1988).
Exhibit 1(c) - Investor Agreement among the Registrant,
Interlaken Financial Group Inc., and William R.
Berkley dated as of October 24, 1988
(incorporated by reference to Exhibit 28(b) to
the Registrant's Form 8-K filed on November 2,
1988).
Exhibit 1(d) - Amendment dated as of December 16, 1988 to
Investor Agreement among the Registrant,
Interlaken Financial Group Inc., and William R.
Berkley dated as of October 24, 1988
(incorporated by reference to Exhibit 10(xxix)
to the Registrant's Form 10-K for the fiscal year
ended September 30, 1988).
Exhibit 1(e) - Agreement of Consent and Assumption by and
among the Registrant, Interlaken Financial Group
Inc. and William R. Berkley (incorporated by
reference to Exhibit 10(xxxiv) to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1991).
Exhibit 1(f) - Amendment No. 2 to Investor Agreement by and
among the Registrant and William R. Berkley
(incorporated by reference to Exhibit 10(xxxv)
to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1991).
<PAGE>
Exhibit 2 - The Merger Agreement, including the Stock
Option Agreement and the Preferred Stockholder
Agreement (ANNEX A to the Prospectus/Proxy
Statement attached as Appendix I to the Prospectus
and included in FUNC's Registration Statement on
Form S-4 (No. 33-53103)).
Exhibit 4(a) - Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(i) to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993
(Commission File No. 1-8515)).
Exhibit 4(b) - Bylaws, as amended (incorporated herein by
reference to Exhibit 3(ii) to the Registrant's
Annual Report on Form 10-K for the fiscal year
ended September 30, 1991 (Commission File No.
1-8515)).
Exhibit 4(c) - Articles of Incorporation of FUNC, as amended
(incorporated by reference to Exhibit (4) to
FUNC's 1990 First Quarter Report on Form 10-Q
and to Exhibit (99)(a) to FUNC's 1993 First
Quarter Report on Form 10-Q (Commission File
No. 1-10000)).
Exhibit 4(d) - By-laws of FUNC, as amended (incorporated by
reference to Exhibit (4)(b) to FUNC's Form 8-K
dated September 20, 1991 (Commission File No.
1-10000)).
Exhibit 4(e) - Statement of Classification of Shares creating the
FUNC Series 1990 Preferred Stock (incorporated
by reference to Exhibit (3)(c) to FUNC's
Registration Statement No. 33-42865).
Exhibit 4(f) - FUNC Shareholder Protection Rights Agreement,
as amended (incorporated by reference to Exhibits
(4)(b) to FUNC's Forms 8-K dated December 18,
1990 and October 20, 1992 (Commission File No.
1-10000)).
Exhibit 5 - Opinion of Cummings & Lockwood
Exhibit 8 - Tax opinion of Sullivan & Cromwell (set forth in
the Prospectus/Proxy Statement attached as
Appendix I to the Prospectus and included in
FUNC's Registration Statement on Form S-4 (No.
33-53103)).
<PAGE>
Exhibit 23(a) - Consent of KPMG Peat Marwick
Exhibit 23(b) - Consent of KPMG Peat Marwick
Exhibit 23(c) - Intentionally omitted
Exhibit 23(d) - Consent of Cummings & Lockwood, included as
part of Exhibit 5
Exhibit 23(e) - Consent of Marion A. Cowell, Jr., Esq.
Exhibit 23(f) - Consent of Sullivan & Cromwell
Exhibit 23(g) - Consent of Alex. Brown & Sons Incorporated
Exhibit 24 - Power of Attorney
Exhibit 99(a) - FUNC's Annual Report on Form 10-K for the year
ended December 31, 1993 (incorporated by
reference to Commission File No. 1-10000).
Exhibit 99(b) - FUNC's Registration Statement on Form S-4
relating to the Corporate Merger (incorporated by
reference to File No. 33-53103).
Exhibit 5
May 3, 1994
The Board of Directors
BancFlorida Financial Corporation
5801 Pelican Bay Boulevard
Naples, Florida 33963
Re: BancFlorida Financial Corporation
Registration Statement on Form S-3
Gentlemen:
We have acted as counsel for BancFlorida Financial Corporation, a
Delaware corporation (the "Corporation"), in connection with the
registration by the Corporation of 1,138,000 shares (the "Shares") of its
common stock, $.01 par value (the "Common Stock"), that are issuable upon
conversion of the issued and outstanding shares of the Corporation's
Adjustable Rate Cumulative Preferred Stock, Series A, par value $0.01 per
share (the "Preferred Stock"), by William R. Berkley.
In that connection, we have examined originals, or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we have deemed necessary or
appropriate for the purpose of rendering this opinion, including: (a) the
Certificate of Incorporation of the Corporation and all amendments thereto;
(b) the By-Laws of the Corporation; and (c) certain resolutions adopted by
the Board of Directors of the Corporation in connection with the issuance
and sale of the Preferred Stock, certified by the Secretary of the
Corporation.
<PAGE>
On the basis of the foregoing we are of the opinion that:
The Shares are duly authorized and, when issued upon conversion
of the Preferred Stock in accordance with the terms thereof, will be
legally issued, fully paid and nonassessable.
We express no opinion as to any matter involving any laws other
than the General Corporation Law of the State of Delaware. As to matters
of fact, we have relied upon certificates furnished to us by officers of
the Corporation.
We hereby consent to the use of our name under the caption "Legal
Opinion" in the Prospectus included in the Registration Statement on Form
S-3 of the Corporation relating to the Shares and to the filing of this
opinion as Exhibit 5 thereto.
Very truly yours,
CUMMINGS & LOCKWOOD
Exhibit 23(a)
CONSENT OF KPMG PEAT MARWICK
BOARD OF DIRECTORS
BANCFLORIDA FINANCIAL CORPORATION
We consent to the incorporation by reference in the Registration
Statement on Form S-3 of BancFlorida Financial Corporation and in the
Prospectus/Proxy Statement attached to the Prospectus as Appendix I of our
report on the consolidated financial statements included in the 1993 Annual
Report to Stockholders which is incorporated by reference in the 1993 Form
10-K of BancFlorida Financial Corporation and to the reference to our firm
under the heading "Experts" in the Prospectus and in the Prospectus/Proxy
Statement attached to the Prospectus as Appendix I.
KPMG PEAT MARWICK
Tampa, Florida
May 3, 1994
Exhibit 23(b)
CONSENT OF KPMG PEAT MARWICK
BOARD OF DIRECTORS
FIRST UNION CORPORATION
We consent to the incorporation by reference in the Registration
Statement of First Union Corporation on Form S-4 (incorporated by reference
as an exhibit to this Registration Statement on Form S-3 of BancFlorida
Financial Corporation) and in the Prospectus/Proxy Statement attached to
the Prospectus as Appendix I in the Registration Statement on Form S-3 of
BancFlorida Financial Corporation, of our report on the consolidated
financial statements of First Union Corporation included in the 1993 Annual
Report to Stockholders which is incorporated by reference in the 1993 Form
10-K of First Union Corporation, and to the reference to our firm under the
heading "Experts" in the Prospectus/Proxy Statement attached to the
Prospectus as Appendix I.
KPMG PEAT MARWICK
Charlotte, North Carolina
May 2, 1994
Exhibit 23(e)
CONSENT OF MARION A. COWELL, JR., ESQ.
I hereby consent to the use of my name under the heading "Legal
Opinions" in the Prospectus/Proxy Statement filed as a part of the
Registration Statement on Form S-4 (No. 33-53103) of First Union
Corporation and attached as Appendix I to the Prospectus forming a part of
the Registration Statement on Form S-3 of BancFlorida Financial
Corporation. In giving this consent, I do not hereby admit that I am
within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations
of the Securities and Exchange Commission thereunder.
___/S/ MARION A. COWELL, JR._______
Marion A. Cowell, Jr., Esq.
May 3, 1994
Exhibit 23(f)
CONSENT OF SULLIVAN & CROMWELL
We hereby consent to the reference to us under the headings "Summary -
Certain Federal Income Tax Consequences," "The Mergers - Certain Federal
Income Tax Consequences" and "Legal Opinions" in the Prospectus/Proxy
Statement filed as a part of the Registration Statement on Form S-4 (No.
33-53103) of First Union Corporation and attached as Appendix I to the
Prospectus forming a part of the Registration Statement on Form S-3 of
BancFlorida Financial Corporation, and to the reference to our opinion
under Item 16 and the related Exhibit Index in such Registration Statement
on Form S-3 of BancFlorida Financial Corporation. In giving this consent,
we do not hereby admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
SULLIVAN & CROMWELL
May 2, 1994
Exhibit 23(g)
CONSENT OF ALEX. BROWN & SONS INCORPORATED
We hereby consent to the inclusion of our opinion dated January 16,
1994 as an Annex to the Prospectus/Proxy Statement filed as part of the
Registration Statement on Form S-4 (No. 33-53103) of First Union
Corporation and attached as Appendix I to the Prospectus forming a part of
the Registration on Form S-3 of BancFlorida Financial Corporation, and to
the references to our firm as Financial Advisor to BancFlorida Financial
Corporation and to our opinion contained in said Prospectus/Proxy
Statement. In giving such consent, we do not thereby admit that we come
within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities
and Exchange Commission
ALEX. BROWN & SONS INCORPORATED
By /s/ HOWARD J. LOEWENBERG
Name:Howard J. Loewenberg
Title:Vice President
May 3, 1994
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Rudolf P. Guenzel and J. Michael
Holmes, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities (including his
capacity as a director and/or officer of BancFlorida Financial
Corporation), to sign the Registration Statement on Form S-3 registering
the offer by a certain stockholder of up to 1,138,000 shares of Common
Stock of BancFlorida Financial Corporation, and any or all amendments
thereto (including, post-effective amendments), and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and
about the premises, as fully in all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Power of Attorney has been signed below by the following person in the
capacities shown and on the 29th day of April, 1994.
/S/ RUDOLF P. GUENZEL /S/ JOHN J. AGNELLI
Rudolf P. Guenzel John J. Agnelli
President, Chief Executive Officer and Director
Director (Principal Executive Officer)
/S/ HERBERT D. CONANT
/S/ J. MICHAEL HOLMES Herbert D. Conant
J. Michael Holmes Director
Chief Financial Officer, Secretary and
Treasurer (Principal Financial Officer
and Principal Accounting Officer) /S/ DALE A. MYER
Dale A. Myer
Director
/S/ GERARD A. MCHALE, JR.
Gerard A. McHale, Jr.
Chairman of the Board and Director /S/ R. C. MAY
Ronnie C. May
Director
