As filed with the Securities and Exchange Commission on March 15, 2000
Registration No. 333 -
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAROLINA FIRST CORPORATION
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(Exact name of registrant as specified in its charter)
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SOUTH CAROLINA 6711 57-0824914
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(State or other jurisdiction Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number Identification No.)
102 SOUTH MAIN STREET
GREENVILLE, SOUTH CAROLINA 29601
(864) 255-7900
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
WILLIAM S. HUMMERS III, EXECUTIVE VICE PRESIDENT
CAROLINA FIRST CORPORATION
102 SOUTH MAIN STREET
GREENVILLE, SOUTH CAROLINA 29601
(864) 255-7913
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
WILLIAM P. CRAWFORD, JR., ESQ.
WYCHE, BURGESS, FREEMAN & PARHAM, P.A.
POST OFFICE BOX 728
GREENVILLE, SC 29602-0728
(864) 242-8200 (TELEPHONE)
(864) 235-8900 (FACSIMILE)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount
Title of Each Class Amount to Offering Price Aggregate of Registration
of Securities to be Registered be Registered (1) Per Unit (2) Offering Price (3) Fee (3)
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Common Stock 18,501,162 $14.47 $267,711,814 $70,676
(par value $1.00 per share)
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(1) The number of shares of Carolina First common stock to be registered
pursuant to this registration statement is based upon an estimate of the maximum
number of shares of Anchor common stock presently outstanding or reserved for
issuance under various plans or otherwise expected to be issued or to become
issuable upon the consummation of the proposed transaction to which this
registration statement relates, multiplied by the exchange ratio of 2.175 shares
of Carolina First common stock per share of Anchor stock.
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(2) Calculated in accordance with Rules 457(f) and 457(c) under the Securities
Act of 1933, as amended, the proposed maximum offering price per share is
computed by dividing (i) the product of (A) the average of the high and low
sales prices of Anchor common stock as reported on the Nasdaq National Market on
March 13, 2000 ($31.47) and (B) 8,506,281, representing the maximum number of
shares of Anchor expected to be exchanged for the Carolina First common stock
being registered, by (ii) 18,501,162, representing the maximum number of
shares of Carolina First common stock to be issued in connection with this
registration statement.
(3) Calculated pursuant to Rules 457(f) and 457(b) under the Securities Act of
1933, as amended
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 THAT 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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[LOGO OF ANCHOR FINANCIAL [LOGO OF CAROLINA FIRST CORPORATION]
CORPORATION]
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ANCHOR FINANCIAL CORPORATION CAROLINA FIRST CORPORATION
PROXY STATEMENT PROXY STATEMENT-PROSPECTUS
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Anchor has entered into a merger agreement with Carolina First. The merger will
provide Carolina First and Anchor shareholders with the opportunity to own a
premier Southeast financial services franchise that will result from the
combination of the two companies. Immediately after the merger, Anchor
shareholders will own approximately [___]%, of Carolina First common stock.
In the merger, each share of Anchor common stock will be converted into 2.175
shares of Carolina First common stock. This represents a value of $[___] per
share based on the March [___], 2000 price of Carolina First common stock. The
market price of Carolina First common stock will fluctuate prior to the merger.
The issuance of the Carolina First shares to the Anchor shareholders generally
will not be taxable.
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Anchor Shareholders Carolina First Shareholders
This document is being furnished to Anchor shareholders in This document is being furnished to Carolina First
connection with the solicitation of proxies by Anchor's board shareholders in connection with the solicitation of proxies by
of directors for use at the special meeting of shareholders of Carolina First's board of directors for use at the special
Anchor to be held at the Myrtle Beach Convention Center, meeting of shareholders of Carolina First to be held at the
Myrtle Beach, South Carolina at 2:30 p.m., local time, on third-floor conference room of the Poinsett Plaza, 104 South
May 1, 2000, where Anchor shareholders will be asked to vote Main Street, Greenville, South Carolina at 2:00 p.m., local
on the merger agreement. time, on May 1, 2000. Carolina First shareholders will be asked
to approve the issuance of Carolina First common stock called
Anchor's board of directors has unanimously approved the for by the merger agreement.
merger agreement. Anchor's board of directors believes that
the merger is fair and in the best interests of Anchor and its Carolina First's board of directors has unanimously approved
shareholders and strongly encourages Anchor shareholders to these proposed actions and believes they are in the best
vote "FOR" the proposal. The Robinson-Humphrey Company and The interests of Carolina First and its shareholders and strongly
Orr Group, investment banking firms, have issued opinions to encourages Carolina First shareholders to vote "FOR" the
Anchor's board of directors that the consideration to be paid Merger and the increase in Carolina First's board of
by Carolina First pursuant to the merger agreement is fair, directors. Salomon Smith Barney, an investment banking firm,
from a financial point of view, to Anchor and its has issued its opinion to Carolina First's board of directors
shareholders. that the exchange ratio of 2.175 shares of Carolina First
common stock for each share of Anchor common stock is fair,
from a financial point of view, to Carolina First.
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Carolina First common stock is listed on The Nasdaq National Market under the
symbol "CAFC." If Carolina First's shareholders approve the name change from
Carolina First to The South Financial Group, Inc. then its common stock will be
listed under the symbol "TSFG." Anchor common stock is listed on The Nasdaq
National Market under the symbol "AFSC."
1
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE CAROLINA FIRST COMMON STOCK TO BE
ISSUED UNDER THIS PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE. THE SHARES OF CAROLINA FIRST COMMON STOCK ARE NOT SAVINGS
OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION, AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
The date of this proxy statement/prospectus is March 28, 2000, and it is being
mailed or otherwise delivered to Carolina First shareholders and Anchor
shareholders on or about March 29, 2000.
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CAROLINA FIRST CORPORATION
102 South Main Street
Greenville, South Carolina 29601
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF CAROLINA FIRST CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Carolina First
Corporation ("Carolina First") will be held at the third floor conference room
of the Poinsett Plaza, 104 South Main Street, Greenville, South Carolina at 2:00
p.m., local time, on May 1, 2000, for the purpose of voting upon the issuance of
Carolina First common stock pursuant to a Reorganization Agreement, dated as of
January 10, 2000, among Anchor Financial Corporation ("Anchor"), Carolina First,
Carolina First Bank and The Anchor Bank. The merger agreement provides that
Anchor will merge into a merger subsidiary of Carolina First, after which the
merger subsidiary will liquidate.
In the merger, each share of Anchor common stock will be converted into the
right to receive 2.175 shares of Carolina First common stock. A copy of the
merger agreement is set forth in Annex A to the accompanying proxy
statement/prospectus. In addition, Carolina First will add five directors of
Anchor to its own board of directors, which necessitates increasing Carolina
First's board from twelve to seventeen members.
Only shareholders of record at the close of business on March 20, 2000 are
entitled to receive notice of and to vote at the special meeting or any
adjournments or postponements thereof. Approval of the issuance of Carolina
First common stock pursuant to the terms of the merger agreement and of the
increase of the Carolina First board of directors from twelve to seventeen
members requires that a majority of the shares of Carolina First common stock
voted at the meeting be voted in favor of these actions.
All shareholders are cordially invited to attend the special meeting. To ensure
your representation at the special meeting, please complete and promptly mail
your proxy in the return envelope enclosed. This will not prevent you from
voting in person, but will help to secure a quorum and avoid added solicitation
costs. Your proxy may be revoked at any time before it is voted. Your attention
is directed to the proxy statement/prospectus accompanying this notice for a
more complete statement regarding the matters proposed to be acted upon at the
special meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
March 28, 2000 /s/ William S. Hummers III
--------------------------------------------
William S. Hummers III, Secretary
Carolina First's board of directors unanimously recommends that shareholders
vote "FOR" approval of the issuance of Carolina First common stock and the
increase of Carolina First's board from twelve to seventeen members pursuant to
the terms of the merger agreement.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING.
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ANCHOR FINANCIAL CORPORATION
2002 Oak Street
Myrtle Beach, South Carolina 29577
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ANCHOR FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Anchor
Financial Corporation ("Anchor") will be held at the Myrtle Beach Convention
Center, 2100 North Oak Street, Myrtle Beach, South Carolina, at 2:30 p.m., local
time, on May 1, 2000, to consider and act upon approval of a Reorganization
Agreement, dated as of January 10, 2000, among Anchor Financial Corporation
("Anchor"), Carolina First, Carolina First Bank and The Anchor Bank. The merger
agreement provides that Anchor will merge into a merger subsidiary of Carolina
First, after which the merger subsidiary will liquidate.
In the merger, each share of Anchor common stock will be converted into the
right to receive 2.175 shares of Carolina First common stock. A copy of the
merger agreement is set forth in Annex A to the accompanying proxy
statement/prospectus.
Only shareholders of record at the close of business on March 20, 2000, are
entitled to notice of and to vote at the special meeting or any adjournments or
postponements thereof.
All shareholders are cordially invited to attend the special meeting. To ensure
your representation at the special meeting, please complete and promptly mail
your proxy in the return envelope enclosed. This will not prevent you from
voting in person, but will help to secure a quorum and avoid added solicitation
costs. Your proxy may be revoked at any time before it is voted. Please direct
your attention to the proxy statement/prospectus accompanying this notice for a
more complete statement regarding the matters proposed to be acted upon at the
special meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Tommy E. Looper
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Tommy E. Looper, Secretary
March 28, 2000
Anchor's board of directors unanimously recommends that shareholders vote "FOR"
approval of the merger agreement.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING.
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TABLE OF CONTENTS
[To be included in printed proxy statement/prospectus]
5
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QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS
Q: WHAT SHOULD I DO?
A: After you have carefully read this document, mail your signed proxy
card in the enclosed envelope. The instructions on the accompanying
proxy card will give you more information on how to vote by mail. This
will enable your shares to be represented at the Carolina First special
meeting or the Anchor special meeting, as applicable.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares,
following the directions your broker provides. Your failure to instruct
your broker to vote your shares will result in your shares not being
voted. If you fail to return a proxy card or abstain from voting, the
effect will be a vote against the merger.
Q: CAN I CHANGE MY VOTE AFTER I HAVE SUBMITTED MY PROXY WITH VOTING
INSTRUCTIONS?
A: Yes. There are three ways you can change your vote. First, you may send
a written notice to the person to whom you submitted your proxy stating
that you would like to revoke your proxy. Second, you may complete and
submit a new proxy card by mail or submit your proxy with new voting
instructions. The latest vote actually received by Anchor or Carolina
First prior to the shareholders' meeting will be your vote. Any earlier
votes will be revoked. Third, you may attend the Carolina First special
meeting or the Anchor special meeting, as applicable, and vote in
person. Any earlier votes will be revoked. Simply attending the meeting
without voting, however, will not revoke your proxy. If you have
instructed a broker to vote your shares, you must follow directions you
will receive from your broker to change or revoke your proxy.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES?
A: No. You should not send in your stock certificates at this time.
Carolina First shareholders will not exchange their certificates in the
merger. The certificates currently representing the shares of Carolina
First common stock will represent an equal number of shares of Carolina
First common stock after the merger.
Anchor shareholders will exchange their Anchor common stock
certificates for Carolina First common stock certificates after we
complete the merger. Instructions for exchanging Anchor common stock
certificates will be sent to you promptly after the merger is
completed.
Q: WHOM SHOULD SHAREHOLDERS CALL WITH QUESTIONS?
A: Carolina First shareholders should call Mary M. Gentry, Treasurer of
Carolina First, at (864) 255-4919 with any questions about the merger
and the related transactions.
Anchor shareholders should call Christie Truette, Director of Investor
Relations for Anchor, at (843) 946-3105 or (800) 262-4678.
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SUMMARY
This brief summary highlights selected information from this document. It does
not contain all of the information that is important to you. We urge you to read
the entire document carefully and the other documents to which we refer to fully
understand the merger and the related proposals. See "Where You Can Find More
Information" on page 85. Each item in this summary refers to the page where that
subject is discussed in more detail.
THE MERGER CONSIDERATION WILL BE 2.175 SHARES OF CAROLINA FIRST COMMON STOCK
(SEE PAGE 26)
When the merger is complete, each share of Anchor common stock will be converted
into 2.175 shares of Carolina First common stock. For example, if you hold 1,000
shares of Anchor common stock, you will receive 2.175 shares of Carolina First
common stock.
SHARE INFORMATION AND MARKET PRICES (SEE PAGES 26 AND 48)
Carolina First common stock is traded on The Nasdaq National Market under the
symbol "CAFC." If Carolina First's shareholders approve the name change from
Carolina First to The South Financial Group, then its common stock will be
listed under the symbol "TSFG." Anchor common stock is traded on The Nasdaq
National Market under the symbol "AFSC." The following table sets forth the
end-of-day sale prices of Carolina First and Anchor common stock and the
equivalent merger consideration per share of Anchor common stock on January 7,
2000, the last trading day before we announced the merger, and on March [___],
2000, the latest practicable date prior to the mailing of this document.
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Value of Merger
Consideration
Carolina First Anchor Per Share of
Common Stock Common Stock Anchor Common Stock
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January 7, 2000 $16.50 $26.125 $35.89
March [___], 2000 $[___] $[___] $[___]
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The market prices of both Carolina First and Anchor common stock will fluctuate
prior to the merger. You should obtain current market quotations for Carolina
First common stock and Anchor common stock.
GENERALLY, THE MERGER WILL BE TAX-FREE FOR ANCHOR SHAREHOLDERS (SEE PAGE 55).
Neither of us is required to complete the merger unless we receive a legal
opinion that the merger will be treated as a "reorganization" for federal income
tax purposes. However, we expect that for United States federal income tax
purposes, Anchor shareholders generally will not recognize any gain or loss on
the conversion of shares of Anchor common stock into shares of Carolina First
common stock.
This tax treatment may not apply to some Anchor shareholders. Determining the
actual tax consequences of the merger to you may be complex. They will depend on
your specific situation and on factors not within our control. You should
consult your own tax advisor for a full understanding of the merger's tax
consequences to you.
ANCHOR'S BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL (SEE PAGE 25).
Anchor's board of directors believes that the merger is fair to Anchor and its
shareholders and in their best interests and has unanimously approved the merger
agreement. Anchor's board of directors recommends that Anchor shareholders vote
"FOR" approval of the merger agreement.
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CAROLINA FIRST'S BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL (SEE PAGE
22).
Carolina First's board of directors believes that the issuance of Carolina First
common stock pursuant to the merger agreement is fair to Carolina First and its
shareholders and in their best interests. Carolina First's board of directors
has unanimously approved the merger agreement and issuance of Carolina First
common stock. Carolina First's board of directors recommends that Carolina First
shareholders vote "FOR" approval of the issuance of Carolina First common stock
and "FOR" the increase of the Carolina First board of directors from twelve to
seventeen members.
INVESTMENT BANKS SAY THE MERGER CONSIDERATION IS FAIR TO ANCHOR SHAREHOLDERS
(SEE PAGE 39).
The Robinson-Humphrey Company ("Robinson-Humphrey") and The Orr Group have
served as financial advisors to Anchor in connection with the merger and have
given opinions to Anchor's board of directors that, as of January 10, 2000 (the
date Anchor's board of directors voted on the merger) and updated as of the
date of this document, the consideration Carolina First will pay for the Anchor
common stock is fair to Anchor shareholders from a financial point of view. A
copy of the opinion delivered by Robinson Humphrey is attached to this document
as Annex C, and a copy of the opinion delivered by The Orr Group is attached
to this document as Annex D. Anchor shareholders should read the opinions
completely to understand the assumptions made, matters considered and
limitations of the review undertaken by Robinson-Humphrey and The Orr Group in
providing these opinions. Anchor has agreed to pay to Robinson-Humphrey 0.45% of
the fair market value of the merger to Anchor and its shareholders computed as
of the announcement date (January 10, 2000) or the completion date, whichever is
higher. Anchor has agreed to pay to The Orr Group 1% of the fair market value of
the consideration to Anchor and its shareholders as of January 10, 2000, or
about $2.9 million.
INVESTMENT BANK SAYS THE MERGER CONSIDERATION IS FAIR TO CAROLINA FIRST (SEE
PAGE 28).
Salomon Smith Barney has served as financial advisor to Carolina First in the
merger and has given an opinion to Carolina First's board of directors that, as
of January 10, 2000 (the date Carolina First's board of directors voted on
the merger), the exchange ratio of 2.175 shares of Carolina First common stock
for each share of Anchor common stock is fair to Carolina First from a financial
point of view. A copy of the opinion delivered by Salomon Smith Barney is
attached to this document as Annex E. Carolina First shareholders should read
the opinion completely to understand the assumptions made, matters considered
and limitations of the review undertaken by Salomon Smith Barney in providing
this opinion.
Salomon Smith Barney will receive total fees of approximately $2.5 million plus
expenses for its services as financial advisor to Carolina First in connection
with the merger, of which $2.0 million is payable upon the closing of the
merger.
ANCHOR TO HOLD MEETING ON MAY 1, 2000 (SEE PAGE 23).
The special meeting of Anchor shareholders will be held at 2:30 p.m., local
time, on May 1, 2000, at the Myrtle Beach Convention Center, 2100 North Oak
Street, Myrtle Beach, South Carolina. Anchor shareholders will be asked to vote
to approve the merger agreement that provides for the merger of Anchor into
Carolina First.
You can vote at the special meeting if you owned Anchor common stock at the
close of business on March 20, 2000. As of that date, there were [___] shares of
Anchor common stock entitled to be voted at the special meeting. Approval of the
merger agreement requires that at least two-thirds of the outstanding shares of
Anchor common stock be voted in favor of the merger.
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CAROLINA FIRST TO HOLD MEETING ON MAY 1, 2000 (SEE PAGE 20).
The special meeting of Carolina First shareholders will be held at 2:00 p.m.,
local time, on May 1, 2000, at the third floor conference room of the Poinsett
Plaza, 104 South Main Street, Greenville, South Carolina. Carolina First
shareholders will be asked to vote to approve the issuance of Carolina First
common stock and the increase in the size of the board of directors pursuant to
the merger agreement.
You can vote at the special meeting if you owned Carolina First common stock at
the close of business on March 20, 2000. As of that date, there were [___]
shares of Carolina First common stock entitled to be voted at the special
meeting. Approval of the issuance of Carolina First common stock and of the
increase in the size of the Carolina First board of directors requires the
approval of a majority of the votes cast at the meeting.
NO APPRAISAL RIGHTS (SEE PAGE 48).
Neither Carolina First shareholders nor Anchor shareholders have dissenters'
appraisal rights in connection with the merger.
GENERAL INFORMATION REGARDING CAROLINA FIRST.
Carolina First Corporation
102 S. Main Street
Greenville, South Carolina 29601
Carolina First is a bank holding company headquartered in Greenville, South
Carolina which engages in a general banking business through its four principal
operating subsidiaries:
o Carolina First Bank, a South Carolina-chartered bank headquartered in
Greenville, South Carolina,
o Citrus Bank, a Florida-chartered bank headquartered in Orlando, Florida,
o Carolina First Mortgage Company, a mortgage loan origination and servicing
company headquartered in Columbia, South Carolina, and
o Carolina First Bank, F.S.B., a federal savings bank that offers Bank CaroLine,
an Internet banking service.
Through its subsidiaries, Carolina First provides a full range of banking
services, including mortgage, trust and investment services, designed to meet
substantially all of the financial needs of its customers. Carolina First also
has bank technology investments which include two public companies: a 16%%
ownership interest in Affinity Technology Group, Inc. and an 8.4% ownership
interest in Net.B@nk, Inc. Carolina First commenced operations in December 1986,
and currently conducts business in 62 locations in South Carolina and 13
locations in Florida. Carolina First is one of the largest independent South
Carolina-headquartered financial institutions. At December 31, 1999, it had
total assets of approximately $3.6 billion, total loans of approximately $2.4
billion, total deposits of approximately $2.5 billion and approximately $409.8
million in shareholders' equity.
Carolina First Bank is a South Carolina-chartered, non-member bank and a
wholly-owned subsidiary of Carolina First. It currently engages in a general
banking business through 60 locations, which are located throughout South
Carolina. It began its operations in December 1986 and at December 31, 1999 had
total assets of approximately $2.9 billion, total loans of approximately $2.0
billion and total deposits of approximately $2.0 billion. Its deposits are
insured by the Federal Deposit Insurance Corporation ("FDIC").
Carolina First has proposed to its shareholders that they approve changing
Carolina First's name to The South Financial Group at their annual meeting on
April 19, 2000. See "The Merger -- Proposed Name Change from Carolina First to
The South Financial Group" on page 49.
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GENERAL INFORMATION REGARDING ANCHOR.
Anchor Financial Corporation
2002 Oak Street
Myrtle Beach, South Carolina 29577
Anchor is a bank holding company for The Anchor Bank. Through The Anchor Bank,
Anchor provides a full range of banking services, including mortgage, trust and
investment services, to businesses and to individuals in North Carolina and
South Carolina.
At December 31, 1999, it had total assets of approximately $1.2 billion, total
loans of approximately $863 million, total deposits of approximately $967
million and approximately $91 million in shareholders' equity.
The Anchor Bank is a state banking corporation organized and existing under the
laws of the state of South Carolina and a wholly-owned subsidiary of Anchor. It
currently engages in a general banking business through 33 locations, which
are located throughout South Carolina and in coastal southern North Carolina.
It began its operations in 1974 and at December 31, 1999 had total assets of
approximately $1.2 billion, total loans of approximately $862 million and total
deposits of approximately $967 million. Its deposits are insured by the FDIC.
THE MERGER
The merger agreement is attached as Annex A to this document. You should read
the merger agreement because it is the legal document that governs the merger.
We propose a merger through which Carolina First will acquire Anchor. As a
result of this merger, Anchor will become a subsidiary of Carolina First and
Anchor's shareholders will become shareholders of Carolina First. At some point
in the future, The Anchor Bank will be merged into Carolina First Bank. The 12
directors of Carolina First before the merger will continue to serve as the
directors of Carolina First after the merger, together with five new directors
from the Anchor Board, including Stephen L. Chryst, Anchor's Chairman, President
and Chief Executive Officer. As a result, Carolina First's board of directors
must be increased from twelve to seventeen members.
Carolina First and Anchor believe that both companies' shareholders will benefit
from the merger because of the synergies and growth opportunities we believe
will result from combining the two companies. For a more detailed discussion of
the reasons for the merger, see pages 25 through 30.
POOLING OF INTERESTS ACCOUNTING TREATMENT (SEE PAGE 53).
Carolina First will account for the merger as a pooling of interests for
financial reporting purposes. This means that, for accounting and financial
reporting purposes, we will treat Anchor as if it had always been combined with
Carolina First. Our companies' obligations to complete the merger depend on
receiving a letter from each of our independent accountants that the merger
qualifies as a pooling of interests for financial reporting purposes.
FINANCIAL INTERESTS OF OUR MANAGEMENTS AND BOARDS OF DIRECTORS IN THE MERGER
(SEE PAGE 45).
In addition to their interests as shareholders, the directors and executive
officers of Anchor and Carolina First each have interests in the merger that are
different from your interests, including:
o Carolina First has entered into employment agreements with two executive
officers of Anchor that will become effective when we complete the merger.
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o Following the merger, Carolina First will indemnify and will not
prematurely terminate Anchor's current liability insurance to the officers
and directors of Anchor.
Carolina First's and Anchor's board of directors each was aware of these
interests and took them into account in their decision to approve the merger
agreement.
MERGER EXPECTED TO OCCUR IN SECOND QUARTER OF 2000 (SEE PAGE 25).
The merger will occur shortly after all of the conditions to its completion have
been satisfied or waived. Currently, we anticipate that the merger will occur in
the second quarter of 2000.
CONDITIONS THAT MUST BE SATISFIED FOR THE MERGER TO OCCUR (SEE PAGE 50).
Completion of the merger is subject to various conditions, including:
o approval of the merger agreement by Anchor's shareholders;
o approval of the issuance of Carolina First common stock in the merger and
increase in the size of Carolina First's board of directors by Carolina
First's shareholders; and
o receipt of governmental and other consents and approvals that are necessary
to permit completion of the merger.
Some of the other conditions to the merger may be waived by Carolina First or
Anchor, as applicable.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 58)
Carolina First and Anchor can mutually agree to abandon the merger (and
terminate the merger agreement) at any time prior to the time the merger is
completed, even after shareholder approval. Also, either Anchor or Carolina
First can decide, without the consent of the other, to abandon the merger if any
of the following occurs:
o The other party breaches a provision contained in the merger agreement that
would cause a "material adverse event" and does not (or cannot) correct the
breach within 30 days.
o The merger has not been completed by October 31, 2000.
o Anchor solicits or encourages acquisition proposals from third parties.
o Any regulatory authority denies an approval we need to complete the merger
or issues an order preventing the merger.
REGULATORY APPROVALS WE MUST OBTAIN FOR THE MERGER (SEE PAGE 56)
We cannot complete the merger unless the Board of Governors of the Federal
Reserve System approves it. We have filed applications with the Federal Reserve
Board seeking its approval. In addition, the merger is subject to the approval
of or notice to various state and other regulatory authorities. We have made the
necessary filings with these other regulatory authorities.
Although we do not know of any reason why we cannot obtain these regulatory
approvals in a timely manner, we cannot be certain that we will obtain them, or
when we will obtain them.
ANCHOR WILL BE REQUIRED TO PAY CAROLINA FIRST UP TO $15 MILLION UNDER SOME
CIRCUMSTANCES IF THE MERGER IS NOT COMPLETED (SEE PAGE 60).
11
<PAGE>
In connection with the merger agreement, Anchor agreed to pay a $10.5 million
termination fee if the merger agreement is terminated under various
circumstances that can be generally described as failures of the Anchor board to
recommend the merger or to recommend the rejection of other acquisition
proposals, failures to get Anchor shareholder approval following announcement of
a third-party acquisition proposal, and willful breaches of the merger agreement
by Anchor while a third-party acquisition proposal is outstanding. In addition,
under a stock option agreement Anchor granted to Carolina First an option to
purchase shares of Anchor common stock. Under this option, Carolina First may
purchase up to 19.9% of the outstanding shares of Anchor common stock at a price
per share of $26.125. Anchor may in some cases be required to repurchase this
option (and/or any shares purchased under this option) at a predetermined price.
Instead of purchasing the shares, Carolina First may choose to surrender this
option to Anchor for a cash payment. Carolina First's total profit in connection
with the termination fee and the option cannot exceed $15 million.
Carolina First cannot exercise this option unless various events occur within a
specified time period. These events can generally be described as business
combinations or acquisition transactions relating to Anchor and related events
(other than the merger we are proposing in this document). We do not know of any
event that has occurred as of the date of this document that would allow
Carolina First to exercise this option.
Anchor agreed to grant this option to Carolina First in order to induce Carolina
First to enter into the merger agreement. This option could have the effect of
discouraging other companies from trying to acquire Anchor. Based on
consultation with our respective independent accountants, we believe that the
exercise or repurchase of the stock option is likely to prohibit another
acquiror from accounting for any acquisition of Anchor using the "pooling of
interests" accounting method for a period of up to two years.
This option agreement is attached to this document as Annex B. The provisions
detailing the cash termination fee are set forth in Section 9.2(b) of the merger
agreement.
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present unaudited selected financial information of
Carolina First and Anchor. Some of the financial information is historical and
some of it gives effect to the merger on a pro forma basis. The historical
information is derived from the historical financial statements of Carolina
First and Anchor. The pro forma information is presented using the
pooling-of-interests method of accounting. The pro forma information showing the
combined results of Carolina First and Anchor is provided for informational
purposes only. It is not necessarily indicative of actual results that would
have been achieved had the merger agreement been consummated on the dates or at
the beginning of the periods presented, nor is it necessarily indicative of
future results. In all cases, the financial information for each of Carolina
First and Anchor is presented on a consolidated basis.
The information in the following tables should be read together with the
historical financial information that Carolina First and Anchor have presented
in their prior filings with the Securities and Exchange Commission (the "SEC").
Carolina First and Anchor have incorporated this material into this document by
reference to those other filings. See "Where You Can Find More Information" on
page 83. For additional pro forma information, see "Pro Forma Combined Financial
Information" on page 61.
13
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
CAROLINA FIRST CORPORATION
(Dollars in thousands, except per share data)
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
STATEMENT OF INCOME DATA
<S> <C> <C> <C> <C> <C>
Net interest income................................ $ 52,102 $ 60,091 $ 72,231 $ 99,155 $ 121,744
Provision for loan losses.......................... 7,166 10,723 12,108 12,724 15,846
Noninterest income, excluding securities
transactions................................... 16,838 20,806 17,389 23,809 47,987
Securities transactions............................ 769 973 3,011 580 399
Noninterest income................................. 17,607 21,779 20,400 24,389 48,386
Noninterest expenses .............................. 48,340 53,816 58,587 71,978 113,821
Net income ........................................ 9,310 11,015 14,040 24,445 27,151
Dividends on preferred stock....................... 2,752 63 -- -- --
Net income applicable to common
Shareholders................................... 6,558 10,952 14,040 24,445 27,151
BALANCE SHEET DATA (PERIOD END)
Total assets....................................... $ 1,461,094 $ 1,651,085 $ 2,302,169 $ 2,953,292 $ 3,561,888
Securities and temporary
investments.................................... 202,952 289,765 368,701 543,786 731,316
Loans, net of unearned income...................... 1,085,483 1,176,634 1,696,555 2,030,186 2,429,225
Allowance for loan losses.......................... 8,987 12,039 17,369 20,266 23,832
Nonperforming assets............................... 4,882 5,880 3,767 5,321 10,904
Total earning assets............................... 1,287,875 1,464,907 2,058,251 2,572,714 3,128,706
Total deposits..................................... 1,134,192 1,349,942 1,878,627 2,334,183 2,514,994
Borrowed funds..................................... 186,789 145,189 139,739 155,823 373,925
Long-term debt..................................... 26,347 26,442 39,119 63,081 218,154
Preferred stock.................................... 32,909 943 -- -- --
Shareholders' equity............................... 102,315 112,855 215,213 361,987 409,817
PER SHARE DATA
Net income per common share:
Basic.............................................. $ 0.75 $ 0.89 $ 1.00 $ 1.15 $ 1.08
Diluted............................................ 0.75 0.85 0.99 1.13 1.06
Cash dividends declared............................ 0.21 0.25 0.29 0.33 0.37
Book value per common
share (period end)............................. 7.07 8.69 11.83 14.60 15.93
Common shares outstanding:
Weighted average - basic....................... 8,766,240 12,347,407 14,046,599 21,284,266 25,248,900
Weighted average - diluted..................... 12,433,346 13,021,309 14,232,643 21,684,732 25,597,573
Period end..................................... 9,463,139 12,867,883 18,197,453 24,785,621 25,723,444
FINANCIAL RATIOS
Return on average assets........................... 0.72% 0.71% 0.78% 0.96% 0.89%
Return on average equity........................... 9.79 10.34 10.65 8.64 7.13
Net interest margin................................ 4.55 4.40 4.47 4.36 4.56
</TABLE>
- ----------------------------
Total assets and shareholders' equity include the net unrealized securities
gain. However, earning assets and the financial ratios exclude this gain because
it is not included in net income.
14
<PAGE>
<TABLE>
<CAPTION>
ANCHOR FINANCIAL CORPORATION
(Dollars in thousands, except share data)
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
STATEMENT OF INCOME DATA
<S> <C> <C> <C> <C> <C>
Net interest income................................ $ 32,878 $ 38,320 $ 45,602 $ 50,186 $ 52,870
Provision for loan losses.......................... 1,117 1,370 2,534 2,922 2,427
Noninterest income, excluding
securities transactions........................ 6,799 8,100 9,170 11,120 12,176
Securities transactions............................ 227 (13) (9) 275 83
Noninterest income................................. 7,026 8,087 9,161 11,395 12,259
Noninterest expenses............................... 28,791 31,582 35,627 42,507 42,060
Equity in net income (loss)
of unconsolidated subsidiary................... -- (269) 15 242 56
Net income......................................... 6,633 8,623 10,682 10,211 13,299
BALANCE SHEET DATA (PERIOD END)
Total assets....................................... $ 808,395 $ 941,223 $ 1,118,755 $ 1,183,458 $ 1,206,843
Securities and temporary
investments.................................... 178,624 203,638 239,106 269,236 262,575
Loans, net of unearned income...................... 535,450 644,858 777,567 810,891 862,495
Allowance for loan losses.......................... 6,882 7,949 8,367 9,546 9,924
Nonperforming assets............................... 2,164 3,126 2,009 3,832 3,068
Total earning assets............................... 732,390 854,353 1,028,634 1,093,859 1,127,922
Total deposits..................................... 698,402 801,329 932,512 968,340 966,657
Borrowed funds..................................... 40,069 62,652 97,808 117,008 140,903
Long-term debt..................................... 21,200 38,700 55,676 53,187 96,200
Shareholders' equity............................... 63,370 70,540 80,685 89,002 90,773
PER SHARE DATA
Net income per common share:
Basic.......................................... $ 0.85 $ 1.10 $ 1.36 $ 1.28 $ 1.66
Diluted........................................ 0.84 1.07 1.29 1.23 1.61
Cash dividends declared(1)......................... 0.24 0.28 0.375 0.48 0.72
Book value per common
share (period end)............................. 8.05 8.93 10.06 10.97 11.84
Common shares outstanding:
Weighted average - basic....................... 7,771,400 7,824,004 7,869,812 7,959,766 8,016,908
Weighted Average - diluted..................... 7,902,297 8,092,215 8,255,862 8,285,260 8,285,446
Period end..................................... 7,895,359 7,932,482 7,983,365 8,085,779 8,093,476
FINANCIAL RATIOS
Return on average assets........................... 0.88% 0.98% 1.04% 0.87% 1.11%
Return on average equity........................... 11.11 12.94 14.27 11.86 14.44
Net interest margin................................ 4.76 4.78 4.83 4.64 4.74
</TABLE>
- ----------------------------------
Total assets and shareholders' equity include the net unrealized securities
gain. However, earning assets and the financial ratios exclude this gain because
it is not included in net income.
(1) Anchor paid cash dividends of $0.56 per share in 1999. In December 1999,
Anchor declared a dividend of $0.16 per share payable on January 28, 2000.
15
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED
SELECTED FINANCIAL DATA
OF CAROLINA FIRST CORPORATION AND ANCHOR FINANCIAL CORPORATION
(Dollars in thousands, except share data)
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
STATEMENT OF INCOME DATA
<S> <C> <C> <C> <C> <C>
Net interest income................................ $ 84,980 $ 98,411 $ 117,833 $ 149,341 $ 174,614
Provision for loan losses.......................... 8,283 12,093 14,642 15,646 18,273
Noninterest income, excluding
securities transactions........................ 23,637 28,906 26,559 34,929 60,163
Securities transactions............................ 996 960 3,002 855 482
Noninterest income................................. 24,633 29,866 29,561 35,784 60,645
Noninterest expenses............................... 77,131 85,398 94,214 114,485 155,881
Equity in net income (loss) of
unconsolidated sub............................. -- (269) 15 242 56
Net income......................................... 15,943 19,638 24,722 34,656 40,450
Dividends on preferred stock....................... 2,752 63 -- -- --
Net income applicable
to common shareholders......................... 13,191 19,575 24,722 34,656 40,450
BALANCE SHEET DATA (PERIOD END)
Total assets....................................... $ 2,269,489 $ 2,592,308 $ 3,420,924 $ 4,136,750 $ 4,768,731
Securities and temporary
investments.................................... 381,576 493,403 607,807 813,022 993,891
Loans, net of unearned income...................... 1,620,933 1,821,492 2,474,122 2,841,077 3,291,720
Allowance for loan losses.......................... 15,869 19,988 25,736 29,812 33,756
Nonperforming assets............................... 7,046 9,006 5,776 9,153 13,972
Total earning assets............................... 2,019,305 2,318,800 3,085,473 3,664,391 4,262,990
Total deposits..................................... 1,832,594 2,151,271 2,811,139 3,302,523 3,481,651
Borrowed funds..................................... 226,858 207,841 237,547 272,831 514,828
Long-term debt..................................... 47,547 65,142 94,795 116,268 314,354
Preferred stock.................................... 32,909 943 -- -- --
Shareholders' equity............................... 165,685 183,395 295,898 450,989 500,590
PER SHARE DATA
Net income per common share:
Basic.......................................... $ 0.51 $ 0.67 $ 0.79 $ 0.90 $0.95
Diluted........................................ 0.45 0.64 0.77 0.87 0.93
Cash dividends declared............................ 0.21 0.25 0.29 0.33 0.37
Book value per common
share (period end)............................. 4.98 6.06 8.32 10.64 11.55
Common shares outstanding:
Weighted average - basic....................... 25,669,035 29,364,616 31,163,440 38,596,757 42,685,675
Weighted Average - diluted..................... 29,620,842 30,621,877 32,189,143 39,705,173 43,618,418
Period end..................................... 26,635,545 30,121,031 35,561,272 42,372,190 43,326,754
FINANCIAL RATIOS
Return on average assets........................... 0.78% 0.81% 0.87% 0.93% 0.94%
Return on average equity........................... 10.37 11.35 11.85 9.35 8.35
Net interest margin................................ 4.63 4.54 4.60 4.45 4.61
</TABLE>
- ---------------
Total assets and shareholders' equity include the net unrealized securities
gain. However, earning assets and the financial ratios exclude this gain because
it is not included in net income.
16
<PAGE>
COMPARATIVE PER SHARE DATA
The following tables show information about Carolina First's and Anchor's common
stock, both historically and giving effect to the merger on a pro forma basis.
In presenting the pro forma information for the dates and time periods
presented, we have assumed that the merger occurred at the beginning of those
periods and that the merger is accounted for using the pooling-of-interests
method of accounting. We have also used the exchange ratio of 2.175 share of
Carolina First common stock for each share of Anchor common stock.
The pro forma information, while helpful in illustrating the financial
characteristics of the combined company under one set of assumptions, does not
attempt to predict or suggest future results. It also does not necessarily
reflect what the historical results of the combined company would have been had
our companies been combined.
The information in the following tables should be read together with the
historical financial information that we have presented in our prior filings
with the SEC. We have incorporated this material into this document by reference
to those other filings. See "Where You Can Find More Information" on page 85.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
Pro Forma Anchor
Carolina First Anchor Combined Equivalent (1)
-------------- ------ -------- --------------
<S> <C> <C> <C> <C>
Diluted earnings per common share $ 1.06 $ 1.61 $ 0.93 $ 2.02
Cash dividends declared per
common share 0.37 0.72 0.37 0.80
Book value per common
shares (period end) 15.93 11.84 11.55 25.12
- --------------------------
(1) Calculated by multiplying the Pro Forma Combined by the assumed exchange
ratio of 2.175.
YEAR ENDED DECEMBER 31, 1998
<CAPTION>
Pro Forma Anchor
Carolina First Anchor Combined Equivalent (1)
-------------- ------ -------- --------------
<S> <C> <C> <C> <C>
Diluted earnings per common share $ 1.13 $ 1.23 $ 0.87 $ 1.89
Cash dividends declared per
common share 0.33 0.48 0.33 0.72
Book value per common
shares (period end) 14.60 10.97 10.64 23.14
- ----------------------------
(1) Calculated by multiplying the Pro Forma Combined by the assumed exchange
ratio of 2.175.
YEAR ENDED DECEMBER 31, 1997
<CAPTION>
Pro Forma Anchor
Carolina First Anchor Combined Equivalent (1)
-------------- ------ -------- --------------
<S> <C> <C> <C> <C>
Diluted earnings per common share $ 0.99 $ 1.29 $ 0.77 $ 1.67
Cash dividends declared per
common share 0.29 0.375 0.29 0.63
Book value per common
shares (period end) 11.83 10.06 8.32 18.10
- ------------------------------
(1) Calculated by multiplying the Pro Forma Combined by the assumed exchange
ratio of 2.175.
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
This document incorporates important business and financial information about
Carolina First and Anchor from documents that are not included in or delivered
with this document. You can obtain
17
<PAGE>
documents incorporated by reference in this document (other than some of the
exhibits to those documents) by requesting them in writing or by telephone from
the appropriate company at the following addresses:
Carolina First Corporation Anchor Financial Corporation
- -------------------------- ----------------------------
Mary M. Gentry Christie Truette
Treasurer Director of Investor Relations
102 S. Main Street 2002 Oak Street
Greenville, South Carolina 29601 Myrtle Beach, South Carolina 29577
Phone: (864) 255-4919 Phone: (843) 946-3105
You will not be charged for any of these documents that you request. If you
would like to request documents, please do so by April 15, 2000 in order to
receive them before the special meeting.
SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 85.
18
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS, THE FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY WHEN
EVALUATING THIS TRANSACTION AND THE VALUE OF CAROLINA FIRST COMMON STOCK TO BE
RECEIVED IN THIS TRANSACTION.
CAROLINA FIRST HAS EXPERIENCED SIGNIFICANT GROWTH THROUGH ACQUISITIONS,
WHICH COULD, IN SOME CIRCUMSTANCES, ADVERSELY AFFECT NET INCOME. Carolina First
has experienced significant growth in assets as a result of acquisitions.
Moreover, Carolina First anticipates engaging in selected acquisitions of
financial institutions and assets in the future. There are risks associated with
Carolina First's acquisition strategy that could adversely impact net income.
These risks include, among others, incorrectly assessing the asset quality of a
particular institution being acquired, encountering greater than anticipated
costs of incorporating acquired businesses into Carolina First and being unable
to profitably deploy funds acquired in an acquisition. Furthermore, we can give
you no assurance about the extent that Carolina First can continue to grow
through acquisitions.
In the past, Carolina First has engaged in acquisitions accounted for
by the purchase method of accounting. Acquisitions accounted for by the purchase
method of accounting may lower the capital ratios of the entities involved.
Consequently, in the event that Carolina First engages in significant
acquisitions accounted for by the purchase method of accounting in the future,
Carolina First may be required to raise additional capital in order to maintain
capital levels required by the Federal Reserve Board.
In the future, Carolina First may issue capital stock in connection
with additional acquisitions. These acquisitions and related issuances of stock
may have a dilutive effect on earnings per share and ownership. Carolina First
does not currently have any definitive understandings or agreements for any
acquisitions material to Carolina First other than the merger agreement with
Anchor. However, as noted above, Carolina First anticipates that it will
continue to expand by acquisition in the future.
CAROLINA FIRST HAS VARIOUS ANTITAKEOVER MEASURES WHICH COULD IMPEDE THE
TAKEOVER OF CAROLINA FIRST. Carolina First has various antitakeover measures in
place, some of which are listed below. Any one or more of these measures may
impede the takeover of Carolina First without the approval of Carolina First's
Board of Directors and may prevent you from taking part in a transaction in
which you could realize a premium over the current market price of Carolina
First common stock. See "Carolina First Capital Stock" on page 79.
The antitakeover measures include:
o a Shareholders' Rights Plan which, among other things, provides
for the dilution of the Carolina First common stock holdings of
shareholders who acquire 20% or more of the Carolina First common
stock and attempt to acquire Carolina First without the consent of
management;
o management contracts which provide for additional management
compensation in the event that executive officers who are a party
thereto are terminated after a change in control of Carolina
First, and
o various charter provisions providing for, among other things, a
"staggered" board of directors and supermajority voting
requirements in connection with the removal of directors without
cause and some business combinations involving Carolina First.
CAROLINA FIRST HAS EXPERIENCED SIGNIFICANT GROWTH IN COMMERCIAL LENDING
ACTIVITIES, WHICH ENTAILS SPECIAL RISKS NOT ASSOCIATED WITH OTHER TYPES OF
LOANS. Over the past several years, Carolina First has experienced significant
growth in commercial and commercial mortgage loans. These loans are generally
more risky than one-to-four family or consumer loans because they are unique in
character, generally larger in amount and dependent upon the borrower's ability
to generate cash to service the loan. There are risks inherent in making all
loans, including risks with respect to the period of time over which loans may
be repaid, risks resulting from uncertainties as to the future value of
collateral, risks resulting
19
<PAGE>
from changes in economic and industry conditions and risks inherent in dealing
with individual borrowers. While Carolina First's nonperforming loans as a
percentage of total loans is comparable to its peer group average, there is a
risk that the quality of Carolina First's loan portfolio could decline,
particularly in connection with the rapid growth in loans Carolina First has
experienced over the past several years.
CAROLINA FIRST SPECIAL MEETING
This section contains information from Carolina First for Carolina First
shareholders about the special shareholders meeting Carolina First has called to
consider and approve actions related to the merger.
We are mailing this document to you as a Carolina First shareholder on or about
March 29, 2000. Together with this document, we are also sending to you a notice
of the Carolina First special meeting and a form of proxy that is solicited by
the board of directors of Carolina First for use at the Carolina First special
meeting. The special meeting will be held on May 1, 2000, at 2:00 p.m., local
time, at the third floor conference room of the Poinsett Plaza, 104 South Main
Street, Greenville, South Carolina 29601.
MATTERS TO BE CONSIDERED
The purpose of the Carolina First special meeting is to approve the issuance of
shares of Carolina First common stock according to the terms of the merger
agreement and the increase of the board of directors of Carolina First from 12
to 17 members. You may also be asked to vote on a proposal to adjourn or
postpone the special meeting. We could use any adjournment or postponement for
the purpose, among others, of allowing additional time to solicit additional
votes.
PROXIES
You should use the proxy form accompanying this document if you are unable or do
not wish to attend the special meeting in person. You can revoke your proxy at
any time before the vote is taken at the special meeting by submitting written
notice of revocation or a properly submitted proxy of a later date, or by
attending the special meeting and voting in person. Written notices of
revocation and other communications about revoking your proxy should be
addressed to:
Mary M. Gentry
Carolina First Corporation
102 S. Main Street
Greenville, South Carolina 29601
Phone: (864) 255-4919
All shares represented by valid proxies we receive through this solicitation,
and not revoked before they are exercised, will be voted in the manner specified
in this paragraph. If you make no specification on your returned proxy card,
your proxy will be voted in favor of the matters to be voted upon at the
Carolina First special meeting, including approval of the issuance of Carolina
First common shares pursuant to the merger agreement and of the increase in the
Carolina First board of directors. The Carolina First board of directors is
unaware of any other matters that may be presented for action at the Carolina
First special meeting. If other matters do properly come before the special
meeting, we intend that shares represented by properly submitted proxies will be
voted, or not voted, by and at the discretion of the persons named as proxies on
the proxy card. However, proxies that indicate a vote against approval of the
issuance of Carolina First common shares and the increase in Carolina First
board size will not be voted in favor of adjourning or postponing the special
meeting to solicit additional proxies.
20
<PAGE>
SOLICITATION OF PROXIES
Carolina First will bear the entire cost of soliciting proxies, except that
Anchor has agreed to pay the expenses associated with mailing this document to
its shareholders. In addition to solicitation of proxies by mail, Carolina First
will request banks, brokers and other record holders to send proxies and proxy
material to the beneficial owners of Carolina First common stock and secure
their voting instructions, if necessary. Carolina First will reimburse the
record holders for their reasonable expenses in taking those actions. Carolina
First has also made arrangements with Georgeson Shareholder Communications, Inc.
to assist it in soliciting proxies from banks, brokers and nominees, and has
agreed to pay $[7,500] plus expenses for these services. If necessary, Carolina
First may also use several of its regular employees, who will not be specially
compensated, to solicit proxies from shareholders, either personally or by
telephone, telegram, facsimile, letter or special delivery letter.
RECORD DATE AND VOTING RIGHTS
In accordance with South Carolina law, Carolina First's by-laws and the rules of
the National Association of Securities Dealers (the "NASD"), March 20, 2000 has
been fixed as the record date for determining the Carolina First shareholders
entitled to notice of and to vote at the special meeting. Accordingly, you are
only entitled to notice of, and to vote at, the special meeting if you were a
record holder of Carolina First common stock at the close of business on the
record date. At that time, [___] shares of Carolina First common stock were
outstanding, held by approximately [___] holders of record. To have a quorum
that permits us to conduct business at the special meeting, we require the
presence, whether in person or through the prior submission of a proxy, of the
holders of Carolina First common stock representing a majority of the shares
outstanding and entitled to vote on the record date. You are entitled to one
vote for each outstanding share of Carolina First common stock you held as of
the close of business on the record date.
Shares of Carolina First common stock present in person at the special meeting
but not voting, and shares of Carolina First common stock for which Carolina
First has received proxies indicating that their holders have abstained, will be
counted as present at the special meeting for purposes of determining the
presence or absence of a quorum for the transaction of business. Shares held in
street name that have been designated by brokers on proxy cards as not voted
will not be counted as votes cast for or against any proposal. These broker
non-votes will, however, be counted for purposes of determining whether a quorum
exists.
Under the rules of the NASD and Carolina First's articles of incorporation,
approval of the issuance of Carolina First common stock in the merger requires
the affirmative vote of a majority of the votes cast at the Carolina First
special meeting, provided that at least 50% of the shares entitled to vote are
represented at the Carolina First special meeting in person or by proxy.
Approval of the increase in the size of the board of directors requires the
affirmative vote of a majority of the votes cast at the Carolina First special
meeting, provided that at least 50% of the shares entitled to vote are
represented at the Carolina First special meeting in person or by proxy. Because
the affirmative vote of the holders of a majority of the outstanding shares of
Carolina First common stock entitled to vote at the Carolina First special
meeting is needed for us to proceed with the merger, abstentions and broker
non-votes will have the same effect as votes against the merger. Accordingly,
the Carolina First board of directors urges Carolina First shareholders to
complete, date and sign the accompanying proxy and return it promptly in the
enclosed, postage-paid envelope.
As of the record date:
o Directors and executive officers of Carolina First beneficially owned
approximately [___] shares of Carolina First common stock, entitling them
to exercise approximately [___]% of the voting power of the Carolina First
common stock entitled to vote at the special meeting. We currently expect
that each of our directors and executive officers will vote the shares of
Carolina First common stock he or she beneficially owns "FOR" approval of
the actions related to the merger.
21
<PAGE>
o Directors and executive officers of Anchor beneficially owned approximately
[___] shares of Carolina First common stock, or [___]% of the voting power
of the Carolina First common stock entitled to vote at the special meeting.
o Anchor beneficially owned [___] shares of Carolina First common stock, or
[___]% of the voting power of the Carolina First common stock entitled to
vote at the special meeting.
o The banking, trust and investment management subsidiaries of Carolina
First, as fiduciaries, custodians or agents, held a total of approximately
[___] shares of Carolina First common stock, representing approximately
[___]% of the shares entitled to vote at the special meeting, and
maintained sole or shared voting power with respect to [___] of these
shares.
o The banking, trust and investment management subsidiaries of Anchor, as
fiduciaries, custodians or agents, held a total of [___] shares of Carolina
First common stock, representing [___]% of the shares entitled to vote at
the special meeting, and maintained sole or shared voting power over [___]
of these shares.
You can find additional information about the beneficial ownership of Carolina
First common stock by persons and entities owning more than 5% of the stock, and
more detailed information about the beneficial ownership of Carolina First
common stock by our directors and executive officers, in the definitive proxy
statement we filed with the SEC and sent to our shareholders in connection with
our 2000 Annual Meeting of Shareholders. See "Where You Can Find More
Information" on page 85 for instructions on how you can obtain this document.
RECOMMENDATION OF THE CAROLINA FIRST BOARD OF DIRECTORS
The Carolina First board of directors has unanimously approved the merger
agreement and related transactions, including the issuance of additional
Carolina First common stock and the increase of the size of the Carolina First
board of directors. The Carolina First board of directors believes that the
merger agreement and related transactions are advisable and are in the best
interests of Carolina First and the Carolina First shareholders and recommends
that the Carolina First shareholders vote "FOR" the approval of the actions
related to the merger and the increase of the size of the Carolina First board
of directors.
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ANCHOR SPECIAL MEETING
This section contains information from Anchor for Anchor shareholders about the
shareholders meeting Anchor has called to consider and approve the merger
agreement.
We are mailing this document to you, as an Anchor shareholder, on or about March
29, 2000. Together with this document, we are also sending to you a notice of
the Anchor special meeting and a form of proxy that our board is soliciting for
use at the special meeting. The special meeting will be held on Monday, May 1,
2000 at 2:30 p.m., local time at 2002 Oak Street, Myrtle Beach, South Carolina
29577.
MATTERS TO BE CONSIDERED
The purpose of the special meeting is to vote on the approval of the merger
agreement, dated January 10, 2000, by and among Anchor, Carolina First, Carolina
First Bank and The Anchor Bank and the transactions contemplated in that
agreement. These include the merger of Anchor with a subsidiary of Carolina
First, and any other matters that may properly be submitted to a vote at the
special meeting. You may also be asked to vote upon a proposal to adjourn or
postpone the special meeting. We could use any adjournment or postponement for
the purpose, among others, of allowing more time to solicit votes to approve the
merger agreement.
PROXIES
You should use the proxy form accompanying this document if you are unable or do
not wish to attend the special meeting in person. You can revoke your proxy at
any time before the vote is taken at the special meeting by submitting written
notice of revocation or a properly submitted proxy of a later date, or by
attending the special meeting and voting in person. Written notices of
revocation and other communications about revoking your proxy should be
addressed to:
Christie Truette
Director of Investor Relations
2002 Oak Street
Myrtle Beach, South Carolina 29577
Phone: (843) 946-3105 or (800) 262-4678
All shares represented by valid proxies we receive through this solicitation,
and not revoked before they are exercised, will be voted in the manner specified
in this paragraph. If you make no specification on your returned proxy card,
your proxy will be voted in favor of approval of the merger agreement. The
Anchor board of directors is presently unaware of any other matters that may be
presented for action at the special meeting. If other matters do properly come
before the special meeting, however, we intend that shares represented by
properly submitted proxies will be voted by, and at the discretion of, the
persons named as proxies on the proxy card. However, proxies that indicate a
vote against approval of the merger agreement will not be voted in favor of
adjourning or postponing the special meeting to solicit additional proxies to
approve the merger agreement.
SOLICITATION OF PROXIES
Anchor will bear the entire cost of soliciting proxies from you, except that
Anchor and Carolina First have agreed to each pay one-half of the costs and
expenses of printing and mailing this document and all filing and other fees
relating to the merger paid to the SEC. In addition to solicitation of proxies
by mail, Anchor will request banks, brokers and other record holders to send
proxies and proxy material to the beneficial owners of Anchor common stock and
secure their voting instructions, if necessary. Anchor will reimburse these
record holders for their reasonable expenses in taking those actions. Anchor has
also made arrangements with Georgeson Shareholder Communications, Inc. to assist
it in soliciting proxies from banks, brokers and nominees, and has agreed to pay
$7,500 plus expenses for these services.] If necessary, Anchor may also use
several of its regular employees, who will not be specially compensated,
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to solicit proxies from shareholders, either personally or by telephone,
telegram, facsimile, letter or special delivery letter.
RECORD DATE AND VOTING RIGHTS
In accordance with South Carolina law, the Anchor by-laws and the rules of the
NASD, March 20, 2000 has been fixed as the record date for determining the
Anchor shareholders entitled to notice of and to vote at the special meeting.
Accordingly, you are only entitled to notice of, and to vote at, the special
meeting if you were a record holder of Anchor common stock at the close of
business on the record date. At that time, [___] shares of Anchor common stock
were outstanding, held by approximately [___] holders of record. To have a
quorum that permits us to conduct business at the special meeting, we require
the presence, whether in person or through the prior submission of a proxy, of
the holders of Anchor common stock representing at least two-thirds of the
shares outstanding and entitled to vote on the record date. You are entitled to
one vote for each outstanding share of Anchor common stock you held as of the
close of business on the record date.
Shares of Anchor common stock present in person at the special meeting but not
voting, and shares of Anchor common stock for which Anchor has received proxies
indicating that their holders have abstained, will be counted as present at the
special meeting for purposes of determining the presence or absence of a quorum
for transacting business. Shares held in street name that have been designated
by brokers on proxy cards as not voted will not be counted as votes cast for or
against any proposal. These broker non-votes will, however, be counted for
purposes of determining whether a quorum exists.
Under South Carolina law, approval of the merger agreement requires the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Anchor common stock entitled to vote at the special meeting.
Because approval of the merger agreement requires the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Anchor common stock
entitled to vote at the special meeting, abstentions and broker non-votes will
have the same effect as votes against approval of the merger agreement.
Accordingly, the Anchor board of directors urges you to complete, date and sign
the accompanying proxy and return it promptly in the enclosed, postage-paid
envelope.
As of the record date:
o Directors and executive officers of Anchor beneficially owned
approximately [___] shares of Anchor common stock, entitling them to
exercise approximately [___]% of the voting power of the Anchor common
stock entitled to vote at the special meeting. We currently expect that
each of our directors and executive officers will vote the shares of
Anchor common stock he or she beneficially owns "FOR" approval of the
merger agreement.
o Directors and executive officers of Carolina First beneficially owned
[___] shares of Anchor common stock, or ___% of the voting power of the
Anchor common stock entitled to vote at the special meeting.
o Carolina First beneficially owned [___] shares of Anchor common stock,
or [___]% of the voting power of the Anchor common stock entitled to
vote at the special meeting.
o The banking, trust and investment management subsidiaries of Anchor, as
fiduciaries, custodians or agents, held a total of approximately [___]
shares of Anchor common stock, representing approximately [___]% of the
shares entitled to vote at the special meeting, and maintained sole or
shared voting power with respect to [___] of these shares.
o The banking, trust and investment management subsidiaries of Carolina
First, as fiduciaries, custodians or agents, held a total of [___]
shares of Anchor common stock, representing [___]%
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of the shares entitled to vote at the special meeting, and maintained
sole or shared voting power over [___] of these shares.
You can find additional information about beneficial ownership of Anchor common
stock by persons and entities owning more than 5% of the stock, and more
detailed information about beneficial ownership of Anchor common stock by our
directors and executive officers, in the Annual Report on Form 10-K we filed
with the SEC in connection with our 1999 fiscal year. See "Where You Can Find
More Information" on page 83 for instructions on how you can obtain this
document.
RECOMMENDATION OF THE ANCHOR BOARD OF DIRECTORS
The Anchor board of directors has unanimously approved the merger agreement and
the transactions it contemplates, including the merger. The Anchor board of
directors believes that the merger agreement and the transactions it
contemplates, including the merger, are fair to, and are in the best interests
of, Anchor and its shareholders and recommends that Anchor shareholders vote
"FOR" the approval of the merger agreement.
See "The Merger--Anchor's Reasons for the Merger; Recommendation of the Anchor
Board of Directors" on page 27 for a more detailed discussion of the Anchor
board of director's recommendation.
THE MERGER
The discussion in this document describes the acquisition of Anchor by Carolina
First. The discussion in this document includes a description of:
o the Reorganization Agreement, dated as of January 10, 2000, among Carolina
First, Carolina First Bank, Anchor and The Anchor Bank, and
o the Stock Option Agreement, dated as of January 10, 2000, between Anchor,
as Issuer, and Carolina First, as Grantee (the "stock option agreement").
Copies of the merger agreement and the stock option agreement can be found
in Appendices A and B to this document.
From a technical legal perspective, the acquisition of Anchor will be effected
through the merger of Anchor into a newly-formed and wholly-owned subsidiary of
Carolina First ("Merger Sub"), formed solely to facilitate the merger. The
Merger Sub will be the surviving corporation. However, immediate following such
merger, the Merger Sub will be liquidated, which will leave The Anchor Bank as a
wholly-owned subsidiary of Carolina First. At some point in the future, The
Anchor Bank will be merged into Carolina First Bank.
GENERAL
The merger agreement provides for the acquisition of Anchor by Carolina First.
At the effective time of the merger (as defined below), each outstanding share
of Anchor common stock will be canceled and will be converted into 2.175 (the
"exchange ratio") shares of Carolina First common stock. In addition, at some
time following this merger (as determined by Carolina First Bank), The Anchor
Bank will be merged into Carolina First Bank, and Carolina First Bank will be
the surviving corporation.
If, prior to the effective time of the merger, the number of, or kind of, issued
and outstanding shares of Carolina First common stock is changed as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, or other similar transaction concerning the outstanding Carolina First
common stock and the record date for the purpose of the transaction is prior to
the effective time of the merger, then a proportionate adjustment will be made
to the exchange ratio.
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<PAGE>
The merger will become effective when articles of merger have been duly filed
with the Secretary of State of South Carolina, or at any different date or time
that Carolina First and Anchor agree to and specify in those documents.
The transaction is intended to qualify as both (1) a "pooling of interests" for
accounting and financial reporting purposes and, (2) a tax-free "reorganization"
for federal income tax purposes.
Based on the closing price per share of Carolina First common stock on the
Nasdaq National Market on January 7, 2000, the last trading day prior to public
announcement of the merger, of $16.50, and giving effect to the exchange ratio,
the implied per share value of Anchor common stock in the merger was $35.89 as
of that date. The closing price per share of Carolina First common stock on the
Nasdaq National Market on March [___], 2000, the last practicable trading day
prior to the date of this document, was $[___] and the implied per share value
of Anchor common stock in the merger was $[___] as of that date. The prices of
the common stock of both our companies will fluctuate prior to the special
meetings and thereafter, and you should obtain current quotations of these
prices.
Immediately after the merger, Anchor shareholders will own approximately [___]%,
of Carolina First common stock, based on the number of shares of Carolina First
common stock and Anchor common stock outstanding as of March [___], 2000, and on
the exchange ratio.
THE ISSUANCE OF CAROLINA FIRST COMMON STOCK
In connection with the merger, Carolina First's board of directors has
recommended that Carolina First's shareholders vote in favor of the issuance of
shares of Carolina First common stock to Anchor shareholders pursuant to the
terms of the merger agreement.
To authorize the issuance of Carolina First common stock, the holders of the
majority of the votes cast at the Carolina First special meeting must vote in
favor of the issuance, provided that at least half of the shares entitled to
vote are represented at the Carolina First special meeting in person or by
proxy.
BACKGROUND OF THE MERGER
Management of each company, has, over time, regularly considered the possibility
of acquisitions and strategic combinations with a variety of financial
institutions, and the potential strategic fit with institutions based on their
lines of businesses, their management and employee cultures and their geographic
locations. As part of their operations, Carolina First and Anchor also regularly
scrutinize the financial services industry environment, including the recent
wave of consolidation in the industry, and from time to time have informal
discussions with the management of various financial institutions. Carolina
First and Anchor have each had a goal of creating a premier Southeast banking
franchise, as well as a goal of increasing their proportions of noninterest
revenues, primarily from investment-related activities. Each organization has in
recent years viewed the other as a potential partner with whom it might work to
achieve these goals.
In November 1999, Anchor and Carolina First began to consider the possibility of
a combination between the two. On November 24, 1999, Mack Whittle of Carolina
First and Stephen Chryst of Anchor met to discuss the common ground between the
two companies.
In early December 1999, The Orr Group began to prepare an analysis of the merger
of Anchor with Carolina First. Following the elaboration of potential concerns
relating to the merger, discussions continued.
In early January, principals of Anchor and Carolina First met with investment
bankers and attorneys to negotiate the transaction. Due diligence continued and
the parties began to draft and to negotiate the transaction documents.
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<PAGE>
On January 10, 2000, the boards of directors of Carolina First and Anchor met
and unanimously approved the merger agreement and the merger transaction.
RECOMMENDATION OF THE CAROLINA FIRST BOARD OF DIRECTORS
Carolina First's board of directors believes that the transactions contemplated
by the merger agreement are fair to, and in the best interest of, Carolina First
and its shareholders. Accordingly, the board of directors decided to authorize
and approve the merger agreement and to recommend that Carolina First
shareholders vote "FOR" the issuance of Carolina First common stock in
connection with the merger. In reaching this decision, Carolina First's board of
directors concluded that the merger was likely to further the strategic plans of
Carolina First and to increase the value of shares of Carolina First common
stock over what that value would have been had Carolina First not agreed to the
merger.
CAROLINA FIRST'S REASONS FOR THE ISSUANCE OF CAROLINA FIRST COMMON STOCK TO
ANCHOR SHAREHOLDERS
Carolina First's board of directors believes that the opportunities created by
the merger to increase the value of the Carolina First common stock more than
offset any risks inherent in the merger. In reaching this decision, Carolina
First's board of directors evaluated the information at its disposal, consulted
with Carolina First's management and outside advisors, and considered the
following factors:
o The combination of Carolina First and Anchor provides for an enhanced
presence in rapidly growing markets;
o The merger will raise Carolina First's market share from 6th to 4th in
South Carolina;
o Carolina First board's belief that the increased scale of the combined
companies will leverage the existing management/technology infrastructure;
o Carolina First and Anchor have similar markets, customers and management
team, as well as similar "super community bank" strategies;
o Carolina First board's belief that the merger provides identifiable and
achievable cost savings of up to 35% of Anchor overhead expenses; and
o The opinion of its financial advisor, Salomon Smith Barney that, as of
January 10, 2000, the exchange ratio of 2.175 was fair from a financial
point of view to Carolina First.
This discussion of the information and factors considered by the Carolina First
board of directors is not intended to be exhaustive but includes all material
factors we considered. In reaching its determination to approve the merger
agreement and to recommend the issuance of Carolina First common stock to Anchor
shareholders, the Carolina First board of directors did not assign any relative
or specific weight to different factors. Individual directors may have given
different weight to different factors. The Carolina First board of directors is
unanimous in its recommendation that Carolina First shareholders vote for the
issuance of Carolina First common stock in connection with the merger.
RECOMMENDATION OF THE ANCHOR BOARD OF DIRECTORS
Anchor's board of directors believes that the merger is fair to, and in the best
interests of, Anchor and its shareholders. Accordingly, the board of directors
has unanimously approved the merger agreement and unanimously recommends that
Anchor shareholders vote "FOR" the approval of the merger agreement.
ANCHOR'S REASONS FOR THE MERGER
The Anchor board of directors believes that the consummation of the merger
presents a unique opportunity to combine two of the leading banking franchises
in the Carolinas and create a premier banking and financial services company
that can, through a powerful distribution network, offer a full range of
financial products and services in many of the region's most attractive markets.
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<PAGE>
In reaching its decision to approve the merger agreement and the option
agreements, Anchor's board of directors consulted with Anchor management, as
well as with its financial and legal advisors, and considered a number of
factors, including the following:
o The Anchor Board's familiarity with and review of Carolina First's
business, operations, earnings and financial condition and future capital
requirements;
o The Anchor Board's analysis of the banking industry environment, including
the rapid consolidation and increasing regional competition in the banking
and financial services industries and the need to respond proactively to
industry trends;
o The Anchor Board's belief that the terms of the merger agreement are
attractive and allows Anchor's shareholders to become shareholders in
Carolina First, whose stock is publicly traded on the Nasdaq National
Market System;
o The Anchor Board's belief, based on analysis of the anticipated financial
effects of the merger, the Carolina First and its financial institution
subsidiaries would be well-capitalized institutions, the financial
positions of which would be in excess of all applicable regulatory capital
requirements;
o The Anchor Board's belief that Carolina First is the most attractive choice
as a long-term affiliation partner of Anchor and for Anchor's communities,
depositors, borrowers and employees;
o The expectation that the merger will generally be a tax-free merger to
Anchor and its shareholders;
o The opinions of Robinson-Humphrey and The Orr Group, Anchor's financial
advisors.
This discussion of the information and factors considered by the Anchor board of
directors is not intended to be exhaustive but includes all material factors we
considered. In reaching its determination to approve and recommend the merger,
the Anchor board of directors did not assign any relative or specific weights to
these factors. Individual directors may have given different weight to different
factors. The Anchor board of directors is unanimous in its recommendation that
Anchor shareholders vote for approval of the merger agreement.
INTERESTS OF MANAGEMENT AND DIRECTORS IN THE MERGER.
Some members of Anchor's and Carolina First's management, and the members of the
Anchor and Carolina First boards of directors, have interests in the merger that
are in addition to their interests as shareholders of Anchor or Carolina First.
The Anchor and Carolina First boards of directors were aware of these additional
interests and considered them in their decision to approve the merger agreement.
OPINION OF CAROLINA FIRST'S FINANCIAL ADVISOR
Carolina First retained Salomon Smith Barney to act as financial advisor in
connection with the merger. Pursuant to Salomon Smith Barney's engagement
letter, Salomon Smith Barney rendered a written opinion to the Carolina First
board of directors on January 10, 2000 to the effect that, based upon and
subject to the considerations set forth in its opinion, Salomon Smith Barney's
experience as investment bankers, its work described below and other factors it
deemed relevant, as of that date, the exchange ratio set forth in the merger
agreement was fair from a financial point of view to Carolina First.
The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Annex E to this document. The summary
of Salomon Smith Barney's opinion set forth below is qualified in its entirety
by reference to the full text of the opinion. SHAREHOLDERS ARE URGED TO READ
SALOMON SMITH BARNEY'S OPINION CAREFULLY AND IN ITS ENTIRETY.
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In arriving at its opinion, Salomon Smith Barney:
o reviewed a draft of the merger agreement;
o held discussions with senior officers, directors and other representatives
and advisors of Carolina First and senior officers and other
representatives and advisors of Anchor concerning the businesses,
operations and prospects of Carolina First and Anchor;
o examined publicly available business and financial information relating to
Carolina First and Anchor;
o examined financial forecasts and other information and data for Carolina
First and Anchor which were provided to or otherwise discussed with Salomon
Smith Barney by the managements of Carolina First and Anchor, including
information relating to strategic implications and operational benefits
anticipated to result from the merger;
o reviewed the financial terms of the merger as set forth in the draft merger
agreement in relation to, among other things, current and historical market
prices and trading volumes of the common stock of each of Carolina First
and Anchor, the historical and projected earnings and other operating data
of Carolina First and Anchor and the capitalization and financial condition
of Carolina First and Anchor;
o considered, to the extent publicly available, the financial terms of other
similar transactions recently effected that Salomon Smith Barney considered
relevant in evaluating the merger;
o analyzed financial, stock market and other publicly available information
relating to the businesses of other companies whose operations Salomon
Smith Barney considered relevant in evaluating those of Carolina First and
Anchor;
o evaluated the pro forma financial impact of the merger on Carolina First;
and
o conducted other analyses and examinations and considered other information
and financial, economic and market criteria as it deemed appropriate in
arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied upon, without
independent verification, the accuracy and completeness of all financial and
other information and data publicly available or furnished to or otherwise
reviewed by or discussed with Salomon Smith Barney and further relied on the
assurances of management of Carolina First and Anchor that they were not aware
of any facts that would make any of that information inaccurate or misleading.
With respect to financial forecasts and other information and data provided to
or otherwise reviewed by or discussed with it (including forecasts of cost
savings and operating synergies projected by management of Carolina First to
result from the merger), Salomon Smith Barney was advised by the managements of
Carolina First and Anchor that the forecasts and other information and data had
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of Carolina First and
Anchor as to the future financial performance of Carolina First and Anchor and
the strategic implications and operational benefits anticipated to result from
the merger. Salomon Smith Barney expressed no view with respect to the forecasts
and other information and data or the assumptions on which they were based.
Salomon Smith Barney assumed, with the consent of Carolina First's board, that
the merger will be treated as tax-free for federal income tax purposes and as a
pooling of interests in accordance with generally accepted accounting
principles. Salomon Smith Barney has not made or been provided with an
independent evaluation or appraisal of the assets or liabilities, contingent or
otherwise, of Carolina First or Anchor nor has Salomon Smith Barney made any
physical inspection of the properties or assets of Carolina First or Anchor.
Salomon Smith Barney is not an expert in the evaluation of loan or lease
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto and Salomon Smith Barney has neither made an independent
evaluation of the adequacy of such allowances of Carolina First or Anchor, nor
has Salomon Smith Barney reviewed any individual credit or lease files, and, as
a result, Salomon Smith Barney has assumed that the aggregate allowances for
such losses for each of Carolina First and Anchor are in the aggregate adequate
to cover such losses. Representatives of Carolina First advised Salomon Smith
Barney, and it assumed that the final terms of
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the merger agreement would not vary materially from those set forth in the draft
reviewed by Salomon Smith Barney. Salomon Smith Barney further assumed that the
merger will be consummated in accordance with the terms of the merger agreement,
without waiver of any of the conditions to the merger contained in the merger
agreement.
Salomon Smith Barney's opinion relates to the relative values of Carolina First
and Anchor. Salomon Smith Barney did not express any opinion as to what the
value of the Carolina First common stock actually will be when issued pursuant
to the merger or the price at which the Carolina First common stock will trade
subsequent to the announcement or consummation of the merger. Salomon Smith
Barney was not asked to consider, and Salomon Smith Barney's opinion does not
address, the relative merits of the merger as compared to any alternative
business strategies that might exist for Carolina First or the effect of any
other transaction in which Carolina First might engage. Salomon Smith Barney's
opinion necessarily was based on information available to it, and financial,
stock market and other conditions and circumstances existing and disclosed to
Salomon Smith Barney as of the date of the opinion. Although subsequent
developments may affect Salomon Smith Barney's opinion, Salomon Smith Barney
does not have any obligation to update, revise or reaffirm its opinion.
SALOMON SMITH BARNEY'S ADVISORY SERVICES AND ITS OPINION WERE PROVIDED FOR THE
INFORMATION OF CAROLINA FIRST'S BOARD OF DIRECTORS IN ITS EVALUATION OF THE
PROPOSED MERGER, AND SALOMON SMITH BARNEY'S OPINION IS NOT INTENDED TO BE AND
DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW THAT
SHAREHOLDER SHOULD VOTE ON ANY MATTERS RELATING TO THE PROPOSED MERGER.
In connection with rendering its opinion, Salomon Smith Barney made a
presentation to the Carolina First board of directors on January 10, 2000, with
respect to the material analyses performed by Salomon Smith Barney in evaluating
the fairness to Carolina First from a financial point of view of the exchange
ratio in the merger. The following is a summary of this presentation. The
summary includes information presented in tabular format. IN ORDER TO UNDERSTAND
FULLY THE FINANCIAL ANALYSES USED BY SALOMON SMITH BARNEY, THESE TABLES MUST BE
READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE
A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. The following quantitative
information, to the extent it is based on market data, is, except as otherwise
indicated, based on market data as it existed at or prior to January 10, 2000
and is not necessarily indicative of current or future market conditions.
CALCULATION OF IMPLIED VALUE OF EXCHANGE RATIO. Salomon Smith Barney noted that
the exchange ratio of 2.1750 shares of Carolina First common stock for each
share of Anchor common stock had an implied value of $35.89 per share of Anchor
common stock based upon the closing price of Carolina First common stock on
January 7, 2000 (the trading day prior to the presentation by Salomon Smith
Barney to the board of directors of Carolina First), with the aggregate implied
value of the consideration being approximately $300 million.
TRANSACTION PRICING MULTIPLES. Based on the exchange ratio of 2.1750 and the
closing price of Carolina First common stock on January 7, 2000 of $16.50,
Salomon Smith Barney analyzed the implied per share transaction value of $35.89
as a multiple of Anchor's diluted book value per share, diluted tangible book
value per share, diluted earnings per share for the last twelve-month period for
which results were available, estimated earnings per share for the years 1999
and 2000, and estimated earnings per share for 2000 including the full amount of
synergies for the merger estimated by Carolina First management. Salomon Smith
Barney also analyzed the percent premium to deposits and the per share
transaction value as a premium to the closing price of Anchor common stock at
different intervals prior to January 10, 2000. These analyses indicated the
following:
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<TABLE>
<CAPTION>
TRANSACTION
ANCHOR REFERENCE VALUATION
---------------- ---------
<S> <C> <C>
Price/Diluted book value................................................ $11.14 3.22x
Price/Diluted tangible book value...................................... $11.07 3.24x
Price/LTM earnings...................................................... $1.83 19.6x
Price/1999E earnings.................................................... $1.76 20.4x
Price/2000E earnings.................................................... $1.90 18.9x
Price/2000E earnings + 100% synergies................................... $2.98 12.1x
Premium to deposits..................................................... $954.10 22.2%
Premium to market - one day............................................. $26.13 37.4%
Premium to market - thirty days......................................... $27.75 29.3%
</TABLE>
Salomon Smith Barney based its analyses on the financial data for the period
ending September 30, 1999, with diluted shares, including options accounted for
under the treasury stock method. The estimates of earnings per share for 1999
and 2000 were based on median estimates as reported by the Institutional Brokers
Estimate Service (commonly referred to as "IBES") on January 3, 2000.
PRO FORMA MERGER ANALYSIS. Salomon Smith Barney reviewed selected balance sheet
information, income statement information, performance ratios and capital and
asset quality levels for each of Carolina First, Anchor and the combined company
as of or for the twelve month period ended September 30, 1999. Selected items
were normalized to exclude non-recurring items. Salomon Smith Barney also
reviewed the non-interest income and non-interest expense contributions of each
of Carolina First, Anchor and the combined company for the twelve month period
ended September 30, 1999 and the loan and deposit portfolios of each of Carolina
First, Anchor and the combined company at September 30, 1999.
Salomon Smith Barney reviewed the respective market share, in terms of deposits,
of each of Carolina First, Anchor and the combined company for markets in South
Carolina, North Carolina and Florida. Salomon Smith Barney also compared
Carolina First's, Anchor's and the combined company's market share and rankings
in South Carolina and concluded that Carolina First and Anchor ranked sixth and
ninth, respectively, in market share for South Carolina and that the combined
company would rank fourth for market share for South Carolina.
COMPARATIVE CREDIT AND OPERATING ANALYSIS. Salomon Smith Barney reviewed
comparative profitability ratios, per share operating statistics, capital ratios
and credit quality ratios for the years 1995 through 1998 and for the twelve
month period ended or as at September 30, 1999 for Carolina First, Anchor and
the combined company. Estimated returns on average assets, returns on average
common equity and diluted earnings per share growth rates were reviewed for the
years 2000 and 2001 for Carolina First, Anchor and the combined company. In each
case, these statistics were compared to the comparable median statistics of the
peer group set out below.
COMPARABLE COMPANY ANALYSIS. Salomon Smith Barney determined a range of imputed
values per share of Anchor common stock by analyzing the multiples of the market
prices of the common stock of a number of peer institutions, including in that
price an assumed 30% change of control premium, to the institutions' estimated
1999 EPS and estimated 2000 EPS (based on median estimates reported by IBES),
diluted book value per share and diluted tangible book value per share. The peer
group consisted of:
o BancorpSouth, Inc. o CCB Financial Corp.
o Centura Banks, Inc. o F&M National Corp.
o First Citizens Bancshares o First Virginia Banks, Inc.
o Hancock Holding Company o Trustmark Corporation
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The analysis indicated the following:
<TABLE>
<CAPTION>
MEDIAN VALUE
RANGE OF VALUES PER SHARE OF ANCHOR
SHARE OF ANCHOR COMMON
COMMON STOCK STOCK
IMPLIED BY IMPLIED BY
COMPARABLE COMPARABLE
RANGE FOR MEDIAN FOR COMPANIES RANGES COMPANIES MEDIAN
COMPARABLE COMPARABLE WITH AN ASSUMED WITH AN ASSUMED
COMPANIES COMPANIES 30% PREMIUM 30% PREMIUM
--------- --------- --------------- ------------------
Multiple of market price to:
<S> <C> <C> <C> <C>
1999 EPS............................... 9.5-15.4x 13.1x $21.72-35.31 $30.03
2000 EPS............................... 9.0-14.4x 12.2x $22.11-35.54 $30.04
Diluted book value per share........... 1.08-2.32x 1.88x $15.65-33.57 $27.20
Diluted tangible book value per
share.................................. 1.29-2.48x 2.14x $18.53-35.64 $30.79
</TABLE>
COMPARABLE TRANSACTIONS ANALYSIS. Salomon Smith Barney analyzed publicly
available financial, operating and stock market information for the merger and
for selected comparable domestic merger transactions in the banking industry.
Salomon Smith Barney divided these transactions into the following three groups
(in each case the first named company is the acquirer and the second named
company is the acquired company in the transaction):
o NC, SC, GA TRANSACTIONS. These are 8 transactions since 1998 with acquired
banks operating primarily in North Carolina, South Carolina and Georgia and
with transaction values above $100 million. The transactions in this group
were BB&T Corporation/First Banking Company of SE GA, BB&T
Corporation/Hardwick Holding Co., First Charter Corporation/Carolina First
BancShares, Centura Banks, Inc./Triangle Bancorp, BB&T Corporation/Premier
Bancshares, Inc., Synovus Financial Corp./Merit Holding Corporation,
Premier Bancshares Inc./ Button Gwinnette Financial Corp., Regions
Financial Corporation/Etowah Bank.
o SOUTHEAST TRANSACTIONS. These are 8 transactions since 1997 with acquired
banks operating in the southeast United States and with transaction values
between $250 and $750 million. The transactions in this group were First
Charter Corporation/Carolina First BancShares, Centura Banks, Inc./Triangle
Bancorp, BB&T Corporation/Premier BancShares Inc., BB&T
Corporation/MainStreet Financial Corporation, First American
Corporation/Pioneer Bancshares, Inc., Mercantile Bancorporation/CBT Corp.,
Union Planters Corporation/Capital Bancorp, CNB Bancshares, Inc./Pinnacle
Financial Services.
o U.S. TRANSACTIONS. These are 26 transactions since 1998 between banks
operating in the United States and with transaction values between $250 and
$750 million. The transactions in this group were First Charter
Corporation/Carolina First BancShares, Centura Banks, Inc./Triangle
Bancorp, Old Kent Financial Corporation/Grand Premier Financial, Inc./ BB&T
Corporation/Premier Bancshares, Inc., Hudson United Bancorp/JeffBanks,
Inc., Sky Financial Group/Mahoning National Bancorp, Inc., Zions
Bancorporation/Pioneer Bancorporation, Citizens Banking Corporation/F&M
Bancorporation, Inc., U.S. Bancorp/Bank of Commerce, Summit Bancorp/Prime
Bancorp, Inc., Chittenden Corp./Vermont Financial, Sky Financial Group,
Inc./First Western Bancorp, Inc., BB&T Corporation/MainStreet Financial
Corporation, FirstMerit Corporation/Signal Corporation, City Holding
Company/Horizon Bancorp Inc., Banknorth Group Inc./Evergreen Bancorp, Inc.,
Santa Barbara Bancorp/Pacific Capital Bancorp, First Commonwealth
Financial/Southwest National Corporation, First American
Corporation/Pioneer Bancshares, Inc., Old Kent Financial Corporation/First
Evergreen Corporation, Star Banc Corp/Trans Financial Inc., First Security
Corp/California State Bank, Cullen-Frost Bankers Inc./Overton Bancshares,
Inc., Mercantile
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Bancorporation/FirstBank of Illinois Co., First Midwest Bancorp/Heritage
Financial Services, Inc., Mercantile Bancorporation/CBT Corp.
Based on an implied transaction value of $300 million and Anchor's financial
data as of, and for the twelve month period ended, September 30, 1999, Salomon
Smith Barney calculated the following information in its comparability analysis:
<TABLE>
<CAPTION>
SELECTED TRANSACTION
---------------------------------------------
RANGE MEDIAN THE MERGER
<S> <C> <C> <C>
NC, SC, GA TRANSACTIONS
Implied premium of offer price to market price on last trading day prior
to announcement................................................... (7.3)-63.5% 25.9% 37.4%
Implied premium of offer price to market price 30 days prior to
announcement...................................................... (1.0)-60.4% 32.3% 29.3%
Ratio of implied offer price to acquired company's:
Diluted book value per share................................ 2.22-5.55x 3.68x 3.22x
Diluted tangible book value per share....................... 2.22-5.55x 4.03x 3.24x
Latest 12 months earnings per share......................... 20.0-28.3x 25.3x 19.6x
Give get ratio (LTM)................................................. 0.69-1.63x 1.34x 1.25x
Premium to deposits.................................................. 19.8-55.8% 28.6% 22.2%
SOUTHEAST TRANSACTIONS
Implied premium of offer price to market price on last trading day prior
to announcement................................................... (7.3)-63.5% 28.5% 37.4%
Implied premium of offer price to market price 30 days
prior to announcement............................................. (1.0)-60.4% 33.4% 29.3%
Ratio of implied offer price to acquired company's:
Diluted book value per share................................ 2.26-3.95x 3.21x 3.22x
Diluted tangible book value per share....................... 2.31-4.17x 3.50x 3.24x
Latest 12 months earnings per share......................... 15.9-29.5x 25.9x 19.6x
Give get ratio (LTM)................................................. 0.96-2.13x 1.47x 1.25x
Premium to deposits.................................................. 17.9-40.5% 27.4% 22.2%
U.S. TRANSACTIONS
Implied premium of offer price to market price on last trading day prior
to announcement................................................... (7.3)-180.3% 21.5% 37.4%
Implied premium of offer price to market price 30 days
prior to announcement............................................. (1.0)-180.3% 35.5% 29.3%
Ratio of implied offer price to acquired company's:
Diluted book value per share................................ 2.07-5.05x 3.24x 3.22x
Diluted tangible book value per share....................... 2.25-5.05x 3.56x 3.24x
Latest 12 months earnings per share......................... 12.5-35.2x 25.7x 19.6x
Give get ratio (LTM)................................................. 0.54-2.13x 1.26x 1.25x
Premium to deposits.................................................. 16.5-42.0% 28.8% 22.2%
</TABLE>
Salomon Smith Barney applied the median percentage or ratio from each
methodology listed above to the applicable statistics for Anchor to determine
implied per share values for Anchor and then took the median of those results.
From this information, Salomon Smith Barney imputed per share values of Anchor
common stock of $40.52 based on the NC, SC, GA Transaction, $38.74 based on the
Southeast Transactions and $38.62 based on the U.S. Transactions.
DISCOUNTED CASH FLOW ANALYSIS. Salomon Smith Barney performed a discounted cash
flow analysis to estimate a range of implied values per share of Anchor common
stock assuming Anchor continued to operate as a stand-alone entity. This range
was determined by adding (1) the present value of the estimated future cash flow
stream that Anchor could generate based on earnings per share projected over a
five-year period and (2) the present value of the "terminal value" of a share of
Anchor common stock at the end of the five-year period, December 31, 2004.
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<PAGE>
In calculating a terminal value of Anchor common stock at the end of the
five-year period, Salomon Smith Barney applied a range of multiples of 10.0x to
14.0x to forecasted earnings for 2005. The dividend stream and terminal values
were then discounted back to December 31, 1999 using a discount rate of 12.1%,
which rate Salomon Smith Barney viewed as the appropriate discount rate for a
company with Anchor's risk characteristics.
In performing this analysis, Salomon Smith Barney based the projected earnings
per share of Anchor common stock on IBES earnings per share estimates and on
assumed long-term growth rates for Anchor's earnings per share ranging from 10%
to 15%. Earnings were adjusted to reflect the overhead savings based on
management's assumption of synergies, the assumed restructuring charge and the
opportunity cost of incremental dividends. Salomon Smith Barney assumed an asset
growth rate of 4.0%. Salomon Smith Barney further assumed that earnings in
excess of those necessary to maintain Anchor's Tier 1 Leverage ratio at 6.0%
could be paid out to Anchor's shareholders as dividends. Based on these
assumptions, the implied present value of Anchor common stock derived by Salomon
Smith Barney for the median terminal multiple of 12.0x ranged from $36.98 to
$42.68 per share.
PROJECTED PRO FORMA FINANCIAL ANALYSIS. Salomon Smith Barney analyzed the pro
forma financial impact of the merger on both Carolina First's and Anchor's
diluted earnings per share on both a GAAP basis and a cash basis, on the book
value per share and the tangible book value per share. For purposes of these
analyses, Salomon Smith Barney assumed that the merger would close in the second
quarter of 2000, utilized IBES earnings per share estimates for Carolina First
and Anchor for 2000 and 2001, and IBES estimated growth rates of 11.3% and 11.0%
for Carolina First and Anchor, respectively. Salomon Smith Barney performed this
analysis using Carolina First management's assumptions with respect to operating
synergies. Salomon Smith Barney's analysis of the merger showed that the merger,
compared to the continued operation of Carolina First and Anchor on a stand
alone basis, would be accretive to Carolina First's GAAP estimated earnings per
share starting in 2001 and dilutive to Carolina First's estimated cash earnings,
book value per share and tangible book value per share through that period.
CONTRIBUTION ANALYSIS. Salomon Smith Barney analyzed the relative contribution
to selected pro forma financial measures that Anchor and Carolina First would be
making to the combined company and compared this to the pro forma ownership of
the outstanding common stock of the combined company of Anchor shareholders and
Carolina First shareholders. Salomon Smith Barney noted that, based on the
exchange ratio of 2.1750 and the number of shares of Anchor common stock and
Carolina First common stock outstanding at December 31, 1999, Anchor
shareholders would own approximately 41%, and Carolina First shareholders would
own approximately 59%, of the outstanding common stock of the combined
companies. Salomon Smith Barney based its analyses on financial data at or for
the twelve months ended September 30, 1999. Estimated earnings were based upon
median IBES estimates, core deposits were calculated pro rata based on December
31, 1998 numbers and full credit for synergies were attributed to Anchor.
The following table compares the pro forma ownership of Carolina First and
Anchor shareholders in the combined company based upon the information mentioned
in the preceding paragraph:
34
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
PRO FORMA PRO FORMA
OWNERSHIP OF OWNERSHIP OF
CAROLINA FIRST ANCHOR
SHAREHOLDERS IN SHAREHOLDERS IN
THE COMBINED THE COMBINED
COMPANY COMPANY
---------------- ----------------
IMPLIED PRO FORMA OWNERSHIP............................................. 59.0% 41.0%
CAROLINA FIRST ANCHOR'S
CONTRIBUTION TO CONTRIBUTION TO
THE COMBINED THE COMBINED
COMPANY COMPANY
---------------- ----------------
<S> <C> <C>
INCOME STATEMENT
Net interest income............................................ 69.3% 30.7%
Net interest income after loan losses provision................ 66.6% 33.4%
Total non-interest income...................................... 70.2% 29.8%
Net income..................................................... 62.9% 37.1%
Estimated 2001 net income...................................... 67.1% 32.9%
Net Income contribution including impact of
synergies.................................................... 51.5% 48.5%
BALANCE SHEET AS OF 9/30/99
Net loans...................................................... 72.6% 27.4%
Total assets................................................... 72.1% 27.9%
Core deposits.................................................. 58.4% 41.6%
Total shareholders' equity..................................... 82.3% 17.7%
Tangible common equity......................................... 77.0% 23.0%
</TABLE>
HISTORICAL EXCHANGE RATIO ANALYSIS. Salomon Smith Barney calculated the ratio of
the closing price per share of Anchor common stock to the closing price per
share of Carolina First common stock for each trading day in the period from
January 1, 1998 to January 7, 2000 and compared those ratios with the exchange
ratio. The results of this calculation showed over this period a high stock
price ratio of 1.8484, a low stock price ratio of 0.8664 and a median stock
price ratio of 1.4618, compared to the exchange ratio, 2.1750. Based on this
data, the 2.175 exchange ratio represents a 17.7% premium over the high stock
price ratio, a 151.0% premium over the low stock price ratio and a 48.8% premium
over the median stock price ratio.
* * * * * * *
The preceding discussion is a summary of the material financial analyses
furnished by Salomon Smith Barney to the Carolina First board of directors but
it does not purport to be a complete description of the analyses performed by
Salomon Smith Barney or of its presentations to the Carolina First board of
directors. The preparation of financial analyses and fairness opinions is a
complex process involving subjective judgments and is not necessarily
susceptible to partial analysis or summary description. Salomon Smith Barney
made no attempt to assign specific weights to particular analyses or factors
considered, but rather made qualitative judgments as to the significance and
relevance of all the analyses and factors considered and determined to give its
fairness opinion as described above. Accordingly, Salomon Smith Barney believes
that its analyses, and the summary set forth above, must be considered as a
whole, and that selecting portions of the analyses and of the factors considered
by Salomon Smith Barney, without considering all of the analyses and factors,
could create a misleading or incomplete view of the processes underlying the
analyses conducted by Salomon Smith Barney and its opinion. With regard to the
comparable company or transaction analyses summarized above, Salomon Smith
Barney selected comparable companies and transactions on the basis of various
factors, including the size and location of the company; however, no company
utilized as a comparison in these analysis, and no
35
<PAGE>
transaction utilized as a comparison in the comparable transaction analysis
summarized above, is identical to Carolina First, Anchor or the merger. As a
result, these analyses are not purely mathematical, but also take into account
differences in financial and operating characteristics of the comparable
companies and other factors that could affect the transaction or public trading
value of the comparable companies and transactions to which Carolina First and
Anchor and the merger are being compared. In its analyses, Salomon Smith Barney
made numerous assumptions with respect to Carolina First, Anchor, industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Carolina First and
Anchor. Any estimates contained in Salomon Smith Barney's analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by these analyses. Estimates of values of companies do not purport to be
appraisals or necessarily to reflect the prices at which companies may actually
be sold. Because these estimates are inherently subject to uncertainty, none of
Carolina First, Anchor, the Carolina First board of directors, Salomon Smith
Barney or any other person assumes responsibility if future results or actual
values differ materially from the estimates.
Salomon Smith Barney's analyses were prepared solely as part of Salomon Smith
Barney's analysis of the fairness of the exchange ratio in the merger and were
provided to the Carolina First board of directors in that connection. The
opinion of Salomon Smith Barney was only one of the many factors taken into
consideration by the Carolina First board of directors in making its
determination to approve the merger agreement and the merger. See "The
Merger--Carolina First's Reasons for the Issuance of Carolina First Common Stock
to Anchor Shareholders" on page 27.
Salomon Smith Barney is an internationally recognized investment banking firm
engaged, among other things, in the valuation of businesses and their securities
in connection with mergers and acquisitions, restructurings, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. Carolina First selected Salomon Smith Barney to
act as its financial advisor on the basis of Salomon Smith Barney's
international reputation. Salomon Smith Barney's affiliates had previously
rendered investment banking services to Carolina First unrelated to the merger,
for which Salomon Smith Barney's affiliates had received customary compensation.
In the ordinary course of its business, Salomon Smith Barney and its affiliates
may actively trade or hold the securities of both Carolina First and Anchor for
its own account and for the account of customers and, accordingly, may at any
time hold a long or short position in these securities. Salomon Smith Barney and
its affiliates, including Citigroup Inc. and its affiliates, may maintain other
business relationships with Carolina First and Anchor and their respective
affiliates. Salomon Smith Barney informed the Carolina First board of directors
that it understands that Robinson-Humphrey, a wholly owned subsidiary of Salomon
Smith Barney, acted as a financial advisor to Anchor and was requested to
provide a fairness opinion to Anchor with regard to this transaction. Although
they are commonly owned, Salomon Smith Barney and Robinson-Humphrey generally
operate independently of one another. The two maintain separate approval
committees for the approval of the issuance of fairness opinions, each staffed
with their own personnel with no overlap in membership. In the case of the
merger, Salomon Smith Barney and Robinson-Humphrey also established formal
information barriers that strictly prohibited the cross-flow of information
without adherence to strict procedures, including legal compliance review.
Pursuant to Salomon Smith Barney's engagement letter, Carolina First agreed to
pay Salomon Smith Barney customary fees for its services rendered in connection
with the merger, including the delivery of its opinion, substantially all of
which fees are contingent on execution of the merger agreement or consummation
of the merger or the receipt of a termination fee under the terms of the merger
agreement. Carolina First has also agreed to reimburse Salomon Smith Barney for
its reasonable travel and other out-of-pocket expenses incurred in connection
with its engagement, including the reasonable fees and disbursements of its
counsel, and to indemnify Salomon Smith Barney against specific liabilities and
expenses relating to or arising out of its engagement, including liabilities
under the federal securities laws.
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<PAGE>
OPINIONS OF ANCHOR'S FINANCIAL ADVISORS
THE ORR GROUP
Anchor retained The Orr Group on January 4, 2000 to render to the Board of
Directors of Anchor a written opinion as to the fairness, from a financial point
of view, to the shareholders of Anchor of the terms of the proposed Anchor
merger. On January 9, 2000, The Orr Group presented its written opinion to the
Anchor board.
The full text of The Orr Group's opinion, dated as of January 9, 2000, is
attached as Annex D hereto and should be read in its entirety with respect to
the procedures followed, assumptions made, matters considered and qualification
and limitation on the review undertaken by The Orr Group in connection with its
opinion. Anchor's shareholders are urged to read the opinion in its entirety.
The Orr Group's opinion to Anchor's Board of Directors on the Anchor merger is
directed only to the Anchor exchange ratio and does not address the fairness,
from a financial point of view, of any exchange ratio that may be agreed upon by
Anchor and Carolina First pursuant to the provisions of the merger agreement
that provides for possible adjustment of the exchange ratio. The Orr Group's
opinion does not constitute a recommendation to any shareholder of Anchor as to
how such shareholder should vote at the Anchor Special Meeting.
Anchor selected The Orr Group as its investment banker on the basis of its
expertise in merger and acquisition advisory services. The Orr Group is an
investment banking firm whose principals have over 75 years of combined banking
experience and have been involved with over 40 bank related mergers and
acquisitions.
No limitations were imposed by Anchor upon The Orr Group with respect to
rendering its opinion.
In arriving at its opinion, The Orr Group reviewed, among other things:
o the merger agreement;
o publicly available information concerning Anchor and Carolina First,
including the respective Annual Reports on Form 10-K of Anchor and Carolina
First for each of the years in the three year period ended December 31,
1998, the respective Quarterly Reports on Form 10-Q for Anchor and Carolina
First for the quarter ended September 30, 1999;
o available financial forecasts concerning the business and operations of
Anchor and Carolina First, respectively; and
o publicly available information with respect to other companies that The Orr
Group believes to be comparable in some respects to Anchor and Carolina
First and the trading markets for such other companies' securities.
In The Orr Group's review and analysis, The Orr Group assumed and relied upon
the accuracy and completeness of all of the financial and other information
provided The Orr Group, or that was publicly available, and has not attempted
independently to verify nor assumed responsibility for verifying any such
information. With respect to the financial projections, The Orr Group assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of Anchor or Carolina First, as the case may
be, and The Orr Group expresses no opinion with respect to such forecasts or the
assumptions on which they are based. The Orr Group has not made or obtained or
assumed any responsibility for making or obtaining any independent evaluations
or appraisals of any of the assets (including properties and facilities) or
liabilities of Anchor or Carolina First.
The following summary does not purport to be a complete description of the
analyses performed or the matters considered by The Orr Group in arriving at its
opinion.
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<PAGE>
In addressing the fairness, from a financial point of view, of the consideration
to be issued by Carolina First to the shareholders of Anchor, The Orr Group
addressed various issues relating to the financial fairness of the proposed
Anchor merger, including how the Anchor merger compares to similar bank
transactions; the financial impact of the Anchor merger to the current
shareholders of Anchor; and whether Carolina First's operations and currency are
of similar value to other acquirors in similar transactions. To address the
impact of the proposed Anchor merger transaction, The Orr Group reviewed
analyses of recently announced bank acquisitions, Anchor's contribution to the
new combined entity, its analysis of shareholders' claims on the new entity, a
present value analysis of Anchor's Common Stock on a stand-alone basis, and
Carolina First's operations and stock compared to its peers. In summary, The Orr
Group reached the conclusions that the proposed Anchor merger transaction is
comparable to similar bank transactions, the financial impact to the current
shareholders of Anchor is positive and fair, and Carolina First's operations and
stock are well within the range of comparable acquirors in the industry.
The Orr Group employed a variety of methodologies in its analyses, including
analyses of the financial impact of the transaction based on a pro forma
contribution analysis, a shareholder's claims analysis, and a discounted
dividend analysis. The pro forma contribution analysis looked at the financial
impact of the Anchor merger on various balance sheet and income statement items.
This analysis included calculations, among others, that showed the percentage
contributions of Anchor and Carolina First to the total equity capital of the
combined entities would be 17.7% and 82.3%%, respectively; and the percent of
contribution to market capitalization at January 1, 2000 would be 33.2% by
Anchor and 66.8% by Carolina First.
SHAREHOLDER'S CLAIMS ANALYSIS. In its shareholder's claims analysis, The Orr
Group calculated an earnings per share claims analysis, and The Orr Group
concluded that the Anchor merger would result in an increase of 38.2% in the
earnings per share (assuming cost savings of 30%). In The Orr Group's dividend
claims analysis as part of its shareholder's claims analysis, based on Carolina
First's third quarter 1999 dividend of $0.10 per share of Carolina First's
Common Stock, the new equivalent dividend per share for Anchor would increase by
36%.
DISCOUNTED DIVIDENDS ANALYSIS. The Orr Group's discounted dividend analysis
compared the value of Anchor's current stock value to the value it will receive
in the exchange for shares of Carolina First Common Stock. The three-year
financial projections were supplied by Anchor. The Orr Group discounted the
dividends at rates of 12%, 14%, and 16% and assumed a take out value at the end
of year five based on price-to-earnings multiples of 12, 14, and 16. The
discounted values ranged from a low of $18.95 per share to a high of $29.05 per
share. The analysis revealed that the current offer from Carolina First, $35.89
per share, is higher than the stock price of holding the share of Anchor Common
Stock.
COMPARABLE BANK TRANSACTIONS ANALYSIS. The Orr Group reviewed 18 comparable bank
transactions involving sellers with assets between $250-$750 million announced
between February, 1997 and November, 1999. The Orr Group noted the prices paid
in these mergers as a multiple of book values and earnings, and The Orr Group
reviewed other data in connection with these mergers, including the amount of
total assets, the return on average assets and the return on average earnings of
the acquired institutions. The Orr Group then compared this data to that of
Anchor and the value to be received by Anchor shareholders in the Anchor merger.
The comparable bank transactions showed a range of transaction values as
multiples of book value per share of a low of 2.1 times to a high of 4.0 times
and an average of 2.5 times. The range of transaction values as multiples of
earnings per share revealed a low of 16.6 times a high of 33.0 times and an
average of 25.3 times. The Anchor acquisition multiple of book value was 3.3
times and the multiple of earnings per share was 20.3 times.
No company or transaction used in the above analyses as a comparison is
identical to Anchor, Carolina First or the Anchor merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial growth and
operating
38
<PAGE>
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis in and of itself does not necessarily provide meaningful intercompany
comparisons.
The Orr Group will be paid a fee in connection with the proposed Anchor merger.
The payment of that fee is contingent upon consummation of the Anchor merger.
Further, Anchor has agreed to reimburse legal and other reasonable expenses and
to indemnify The Orr Group and its affiliates, directors, agents, employees and
controlling persons in connection with some matters related to rendering its
opinion, including liabilities under securities laws.
The written opinion of The Orr Group to Anchor is attached as Annex D to this
proxy statement/prospectus and is incorporated herein by reference. The
description of the Anchor fairness opinion is qualified in its entirety by
reference to Annex D. Anchor shareholders are urged to read the opinion in
its entirety for a description of the procedures followed, assumptions made,
matters considered, and qualifications and limitations on the review undertaken
by The Orr Group in connection with rendering its opinion.
ROBINSON-HUMPHREY
GENERAL. Anchor retained Robinson-Humphrey to act as Anchor's financial advisor
in connection with considering a possible merger with Carolina First, based upon
its qualifications, expertise and reputation, as well as Robinson-Humphrey's
prior investment banking relationship and familiarity with Anchor.
Robinson-Humphrey analyzed the financial terms of the merger agreement at the
January 9 and 10, 2000 special meetings of Anchor's board of directors. At those
meetings, Robinson-Humphrey opined verbally, and subsequently confirmed in
writing, that, as of that date, and subject to the considerations set forth in
the opinion, the exchange ratio in the merger agreement is fair, from a
financial point of view, to Anchor's shareholders. The Anchor board did not
impose any limitations with respect to the investigations made or procedures
followed by Robinson-Humphrey in preparing its analysis or rendering its
opinion.
The full text of the Robinson-Humphrey opinion, which sets forth the assumptions
made, matters considered and the limitations on the reviews undertaken, is
attached to this document as Annex C and is incorporated by reference. The
description of the Robinson-Humphrey opinion set forth below is qualified in its
entirety by reference to the full text of the Robinson-Humphrey opinion. You are
urged to read the opinion in its entirety.
The opinion of Robinson-Humphrey relates only to the fairness of the
consideration to be received by Anchor shareholders in the merger from a
financial point of view. The opinion does not address any other aspect of the
merger and does not constitute a recommendation to any shareholder as to how you
should vote at the Anchor special meeting. The consideration to be received by
Anchor shareholders in the merger was determined on the basis of arm's-length
negotiations between Anchor and Carolina First, and was approved unanimously by
the Anchor board.
In connection with rendering its opinion, Robinson-Humphrey, among other things:
o reviewed publicly available financial statements and other information
relating to Anchor and Carolina First that Robinson-Humphrey believed to be
relevant, respectively;
o reviewed internal financial statements and other financial and operating
data concerning Anchor and Carolina First prepared by the managements of
Anchor and Carolina First, respectively;
o analyzed financial projections prepared by the management of Anchor and
Carolina First, respectively;
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<PAGE>
o discussed the historical and current operations and financial condition and
the prospects of Anchor and Carolina First with senior executives of Anchor
and Carolina First, respectively;
o reviewed the reported market prices and trading activity for Anchor common
stock and Carolina First common stock, respectively;
o compared the financial performance of Anchor and Carolina First and the
prices and trading activity of Anchor common stock and Carolina First
common stock with that of other publicly-traded companies believed to be
comparable and their securities;
o discussed with senior managements of Anchor and Carolina First the
strategic objectives of the merger and their estimates of the synergies and
other benefits of the merger for the combined company;
o analyzed the pro forma effects of the merger on the combined company's
earnings per share, consolidated capitalization and financial ratios;
o reviewed the publicly available financial terms of various merger
transactions believed to be comparable;
o participated in discussions and negotiations among representatives of
Anchor and Carolina First and their financial and legal advisors;
o reviewed the merger agreement and related exhibits thereto; and
o performed other analyses and considered other factors that it deemed
appropriate.
In rendering its opinion, Robinson-Humphrey assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed for the purposes of its opinion. With respect to the financial
projections, including the synergies and other benefits expected to result from
the merger, Robinson-Humphrey has assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of Anchor and Carolina First.
Robinson-Humphrey has not made any independent valuation or appraisal of the
assets or liabilities of Anchor or Carolina First, nor has Robinson-Humphrey
been furnished with any appraisals. Robinson-Humphrey has not examined any
individual loan credit files of Anchor or Carolina First nor has it evaluated
the adequacy of their respective reserves. In addition, Robinson-Humphrey has
assumed the merger will be completed substantially in accordance with the terms
set forth in the merger agreement. Robinson-Humphrey's opinion was necessarily
based on financial, economic, market and other conditions as in effect on, and
the information made available to Robinson-Humphrey as of, the date of its
opinion.
The following is a summary of the financial analyses performed by
Robinson-Humphrey and reviewed with the Anchor board on January 9 and 10, 2000,
in connection with Robinson-Humphrey delivering its opinion.
VALUATION METHODOLOGIES. As part of its financial analysis, Robinson-Humphrey
performed valuation analyses of Anchor using various methodologies.
Robinson-Humphrey evaluated the positions and strengths of Anchor on a
stand-alone basis, considered estimates by Anchor and Carolina First managements
of the synergies that could be expected from the merger with Carolina First and
determined a range of acquisition values based upon specified assumptions. The
following is a summary of the various methodologies underlying the valuation
analyses conducted by Robinson-Humphrey.
COMPARABLE COMPANY ANALYSIS. Robinson-Humphrey compared financial information of
Anchor with publicly-available information of a peer group of twelve
publicly-traded Southeastern bank holding
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companies that Robinson-Humphrey considered reasonably comparable with Anchor.
The peer group institutions were:
Alabama National BanCorporation
Area Bancshares Corporation
Capital City Bank Group, Inc.
Century South Banks, Inc.
F&M National Corporation
First Charter Corporation
First National Corporation
Hancock Holding Company
Peoples Holding Company
Seacoast Banking Corporation of Florida
Simmons First National Corporation
WesBanco, Inc.
Robinson-Humphrey analyzed the relative performance and value of Anchor by
comparing market trading statistics for Anchor with those of the peer group.
Market information used in the ratios provided below is as of January 6, 2000,
and financial information is as of September 30, 1999. The market trading
information used in the valuation analysis was as follows:
<TABLE>
<CAPTION>
SELECTED PEER GROUP
-------------------------------------------------------
ANCHOR
FINANCIAL AVG. HIGH LOW
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Price/LTM EPS...................................... 15.12x 13.28x 18.18x 9.91x
Price/LTM EPS- Adjusted (1)........................ 14.29 N/A N/A N/A
Price/1999 Estimated EPS........................... 14.73 13.23 18.93 9.84
Price/2000 Estimated EPS........................... 13.87 12.11 17.58 8.96
Price/Book Value................................... 2.37 1.61 2.14 1.07
Price/Tangible Book Value.......................... 2.39 1.79 2.22 1.09
Dividend Yield..................................... 2.46% 3.02% 4.87% 0.92%
Dividend Payout.................................... 37.21 39.69 69.43 14.19
- -------------------
(1) Adjusted to reflect one-time restructuring charges.
Earnings per share estimates for Anchor were provided by Anchor's management.
The earnings per share estimates for the peer group were based on First Call
(First Call is a data service that monitors and publishes compilations of
earnings estimates by selected analysts) estimates as of January 6, 2000.
Robinson-Humphrey analyzed the relative performance and value of Anchor by
comparing operating performance ratios with those of the peer group. A summary
comparison of these results used in the valuation analysis was as follows:
<CAPTION>
SELECTED PEER GROUP
-------------------------------------------------------
ANCHOR
FINANCIAL AVG. HIGH LOW
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Return on Average Assets........................... 1.30% 1.19% 1.59% 0.72%
Return on Average Equity........................... 17.04 11.96 16.58 7.81
Net Interest Margin................................ 4.81 4.78 6.73 4.20
Efficiency Ratio................................... 60.4 61.67 69.02 54.26
Equity/Assets...................................... 7.23 9.97 12.55 7.29
Reserves/Loans..................................... 1.19 1.34 1.65 0.89
Nonperforming Assets/Loans + OREO.................. 0.41 0.83 1.41 0.29
</TABLE>
- --------------------
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<PAGE>
The implied range of values for Anchor common stock derived from the analysis of
the peer group's market price to latest l2 months earnings as of September 30,
1999, estimated 1999 and 2000 earnings per share, as well as market price to
book value and tangible book value was approximately $18 to $24 per share.
DIVIDEND DISCOUNT ANALYSIS. Robinson-Humphrey performed a dividend discount
analysis to determine a range of present values per share of Anchor common stock
assuming Anchor continued to operate as a stand-alone entity. This range was
determined by adding (a) the present value of the estimated future dividend
stream that Anchor could generate over the five-year period from 1999 through
2003, and (b) the present value of the "terminal value" of Anchor's common stock
at the end of the year 2003. To determine a projected dividend stream,
Robinson-Humphrey assumed a constant tangible common equity/tangible assets
ratio of 6.0%. The earnings projections which formed the basis for the dividends
and the terminal value were obtained from Anchor management. The "terminal
value" of Anchor common stock at the end of the period was determined by
applying three price-to-earnings multiples (12x, 14x and 16x) to year 2003
projected earnings. The dividend stream and terminal values were discounted to
present values using discount rates of 10%, 11% and 12%, respectively, which
Robinson-Humphrey viewed as the appropriate discount rate range for a company
with Anchor's risk characteristics. Based on these assumptions, the fully
diluted stand-alone value of Anchor common stock ranged from approximately $28
to $34 per share.
PRECEDENT TRANSACTION ANALYSIS. Robinson-Humphrey performed an analysis of
precedent transactions by selected commercial bank holding companies that
Robinson-Humphrey deemed comparable to the merger in order to compare the
multiples of price to book value, tangible book value, and latest 12 months
earnings per share, and as a percentage of total assets, indicated by the
exchange ratio in the merger, to those multiples indicated for the precedent
transactions.
The precedent transactions were sub-divided as follows:
o 50 publicly-announced transactions nationwide since January 1, 1997 where
the seller had reported assets of $750 million to $2.5 billion, the results
of which are summarized as follows:
<TABLE>
<CAPTION>
National Transactions
PRICE/ PRICE/ PRICE/ PRICE/
BOOK TANGIBLE BOOK LTM EPS ASSETS
-------- ------------- ------- ------
<S> <C> <C> <C> <C>
Average........................................... 2.88x 3.19x 24.24x 26.22x
Median............................................ 2.77 3.01 24.36 25.95
High.............................................. 5.13 5.13 47.74 39.62
Low............................................... 1.70 1.73 10.63 10.79
o 11 publicly-announced transactions since January 1, 1997 where the seller
was located in the Southeast United States and had reported assets of $750
million to $2.5 billion, the results of which are summarized as follows:
<CAPTION>
Southeastern Transactions
PRICE/ PRICE/ PRICE/ PRICE/
BOOK TANGIBLE BOOK LTM EPS ASSETS
-------- ------------- ------- ------
<S> <C> <C> <C> <C>
Average........................................... 3.09x 3.28x 25.39x 28.07%
Median............................................ 3.06 3.21 25.66 26.88
High.............................................. 4.01 4.40 32.95 39.62
Low............................................... 2.33 2.36 16.60 20.60
</TABLE>
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These multiples compare to the following summary of Anchor's implied multiples
based on the proposed merger:
<TABLE>
<CAPTION>
M & A MULTIPLES
---------------------------------------------------------------
ANCHOR
FINANCIAL(2) NATIONAL SOUTHEASTERN
------------ -------- ------------
<S> <C> <C> <C> <C>
Book Value ($10.97)................................ 3.27x 2.77x 3.06x
Tangible Book Value ($10.89)....................... 3.30 3.01 3.21
LTM EPS ($1.66).................................... 21.62x 24.36x 25.66x
LTM EPS - Adjusted ($1.82) (1)..................... 19.72 -- --
Price/Assets ($1,223.8)............................ 24.74% 25.95% 26.88%
Price/Current Market ($26.13)...................... 37.37 -- --
- ------------------
(1) Adjusted to reflect one-time restructuring charges.
(2) Based on proposed merger terms.
No company or transaction used in the comparable company and comparable
transaction analyses is identical to Anchor or the merger, respectively.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning financial and operating
characteristics of Anchor and Carolina First, and other factors that could
affect the public trading value of the companies to which they are being
compared. Mathematical analysis (such as determining the average or median) is
not in itself a meaningful method of using comparable transaction data or
comparable company data.
CONTRIBUTION ANALYSIS. Robinson-Humphrey reviewed the pro forma effects of the
merger and computed the contribution to the combined company's pro forma
financial results attributable to each of Anchor and Carolina First. This
computation is summarized as follows:
BALANCE SHEET CONTRIBUTION(1)
<CAPTION>
CAROLINA FIRST ANCHOR FINANCIAL PRO FORMA
--------------------- --------------------- -------------------
AMOUNT % AMOUNT % AMOUNT %
------ ----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Total Assets.................. $3,169.1 72.1% $1,223.8 27.9% $4,392.8 100.0%
Net Loans..................... 2,257.9 72.6 851.9 27.4 3,109.8 100.0
Total Deposits................ 2,398.0 71.5 954.1 28.5 3,352.2 100.0
Total Equity.................. 411.8 82.3 88.5 17.7 500.2 100.0
Pro Forma Ownership (2)....... 58.3% 41.7% 100.0%
- ------------------
(1) Dollar amounts in millions. Financial information as of September 30, 1999.
(2) Based on proposed merger terms
INCOME STATEMENT CONTRIBUTION(1)
<CAPTION>
CAROLINA FIRST ANCHOR FINANCIAL PRO FORMA
------------------- ------------------ -------------------
AMOUNT % AMOUNT % AMOUNT %
------ ----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Interest Income.................. $109.2 68.3% $50.7 31.7% $160.0 100.0%
Loss Provision....................... (13.2) 90.9 (1.3) 9.14 (14.6) 100.0
Other Income......................... 24.7 69.0 11.1 31.0 35.7 100.0
Other Expense........................ 85.9 69.2 38.3 30.8 124.2 100.0
Net Income........................... 22.7 61.5 14.2 38.5 36.8
Pro Forma Ownership (2).............. 58.3% 41.7% 100.0%
</TABLE>
- ------------------
(1) Dollar amounts in millions. Financial information as of September 30, 1999.
(2) Based on proposed merger terms.
PRO FORMA MERGER ANALYSIS. Robinson-Humphrey analyzed the financial effect of
the merger on Carolina First's earnings per share and the estimates of cost
savings, revenue enhancements and other synergies that Anchor and Carolina First
expected to result from the merger. Earnings estimates were
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<PAGE>
based on management estimates as of January 6, 2000 for 2000, 2001 and 2002.
This analysis showed that, after giving effect to the merger, the projected
timing of the realization of the merger synergies and excluding the one-time
merger-related charges, Carolina First's fully diluted earnings per share would
increase in 2001 and 2002, in each case compared to Carolina First on a
stand-alone basis.
In connection with its written opinion included with this document,
Robinson-Humphrey confirmed the appropriateness of its reliance on the analyses
used to render its January 9, 2000 opinion by performing procedures to update
the analyses and by reviewing the assumptions upon which the analyses were based
and the factors considered, and determined that no change in its analyses or
conclusions was necessary.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Robinson-Humphrey considered the results of all its
analyses as a whole and did not attribute any particular weight to any one
analysis or factor. Robinson-Humphrey believes that selecting any portion of its
analyses, without considering all analyses, would create an incomplete view of
the process underlying its opinion. In addition, Robinson-Humphrey may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to be Robinson-Humphrey's view of the actual value of
Anchor.
In performing its analyses, Robinson-Humphrey made numerous assumptions with
respect to the performance of the financial services industry, general business
and economic conditions and other matters, including the changes in competition
and regulation of financial services competitors, many of which are beyond the
control of Anchor or Carolina First. The analyses performed by Robinson-Humphrey
are not necessarily indicative of actual values, which may be significantly more
or less favorable than suggested by the analyses. The analyses were prepared
solely as part of Robinson-Humphrey's analysis of the fairness, from a financial
point of view, of the exchange ratio to Anchor's shareholders and were conducted
in connection with the delivery of Robinson-Humphrey's opinion. The analyses do
not purport to be appraisals or to reflect the prices at which Anchor might
actually be sold in another transaction.
As described above, Robinson-Humphrey's opinion and the information provided by
Robinson-Humphrey to the Anchor board were among a number of factors taken into
consideration by the Anchor board in making its determination to recommend
approval and adoption of the merger agreement to Anchor's shareholders.
Consequently, the analyses described above should not be viewed as determinative
of the opinion of the entire Anchor board or the view of management with respect
to the value of Anchor.
The Anchor board retained Robinson-Humphrey based upon its experience, expertise
and relationship with Anchor. Robinson-Humphrey is a nationally recognized
investment banking and advisory firm. As part of its investment banking
business, Robinson-Humphrey is regularly engaged in the valuation of businesses
and securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuation for estate, corporate and
other purposes. In the course of its business, Robinson-Humphrey and its
affiliates may actively trade the equity securities of Anchor and Carolina First
for their own accounts and for the accounts of customers and, accordingly, may
at any time hold a long or short position in those securities. In the past,
Robinson-Humphrey has provided financial advisory and investment banking
services to Anchor and Carolina First for which services Robinson-Humphrey
received customary fees for the financial advisory services provided.
Anchor has agreed to pay Robinson-Humphrey a fee for its services. Anchor has
also agreed to reimburse Robinson-Humphrey for its reasonable expenses,
including reasonable legal and other professional fees and expenses and to
indemnify Robinson-Humphrey against certain liabilities, including liabilities
under the federal securities laws.
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INDEMNIFICATION AND DIRECTORS' AND OFFICERS' INSURANCE
The merger agreement provides that Carolina First will indemnify, defend and
hold harmless each present director and officer of Anchor and its subsidiaries
against all costs or expenses, including reasonable attorneys' fees, judgments,
fines, losses, claims, damages or liabilities as incurred, in connection with
any claim, action, suit, proceeding or investigation, arising out of actions or
omissions occurring at or prior to the effective time, to the fullest extent
that Carolina First is permitted to indemnify, and advance expenses to, their
directors and officers under its articles of incorporation and bylaws as in
effect on January 10, 2000.
The merger agreement further provides that Carolina First will take no action to
terminate prematurely Anchor's directors' and officers' liability insurance
policy.
NEW EMPLOYMENT ARRANGEMENTS BETWEEN CAROLINA FIRST AND OFFICERS OF ANCHOR.
In connection with entering into the merger agreement, Carolina First Bank
entered into employment agreements with Stephen L. Chryst and Tommy E. Looper.
STEPHEN L. CHRYST. The term of employment starts at the completion of the merger
and ends seven years thereafter. Under the employment agreement, Mr. Chryst will
serve as Chairman of the board of directors and as Chief Operating Officer of
Carolina First Bank. In addition, Carolina First will nominate Mr. Chryst to
serve on the board of directors of Carolina First and Carolina First Bank each
year until he reaches age 65 and, if he is not elected to the board and is not
an active employee, Carolina First will pay his board fees as if he were an
active board member.
During the term of the employment agreement, Mr. Chryst will be entitled to
receive a base salary of $520,000 plus an annual bonus of one-half his base
salary. The base salary will be increased by 5% on the January 1 following the
merger of Anchor into Carolina First's subsidiary and on each January 1 during
the term of the agreement. In addition, the Carolina First Bank board of
directors may pay an additional cash bonus to Mr. Chryst to the extent that the
average incentive compensation for other members of Carolina First Bank's
Management Operating Committee exceeds his annual bonus. Mr. Chryst may also
receive long term incentive compensation, and he will receive options and
restricted stock under Carolina First Bank's long-term incentive compensation
plan, as well as any other employee benefits generally provided by Carolina
First Bank to its highest ranking executives, including the use of an
automobile, certain club membership dues, education benefits, personal tax
advisory services, a $5,000,000 life insurance policy and certain disability
insurance. Beginning four years from the effective date (or, if earlier, a
"change of control" or an "involuntary termination" (each as defined in the
agreement)), Mr. Chryst or his estate will be entitled to an annual supplemental
retirement payment of $150,000, which payments will begin on the earlier of Mr.
Chryst's 65th birthday or his death and will continue for 15 years. The
employment agreement provides that Carolina First Bank will provide Mr. Chryst,
his spouse and dependent children with Carolina First Bank medical and dental
benefits without cost; once Mr. Chryst becomes eligible for Medicare, Carolina
First Bank will provide without cost to him and to his spouse, for the remainder
of their lives, an insurance supplement for medical and dental insurance to
provide total coverage comparable to that provided by Carolina First Bank at
such time. In addition, at the effective time, Carolina First Bank will
establish an irrevocable trust in the amount of approximately $4,008,000 in
connection with the termination of Mr. Chryst's employment at Anchor that will
fund the obligation expected to be payable under the employment agreement.
The employment agreement further provides that, on a termination of Mr. Chryst's
employment by Carolina First Bank, other than for cause, disability, or death,
he will be entitled to receive immediately as severance the aggregate
compensation and benefits set forth in the agreement, including those outlined
above, all of Mr. Chryst's Carolina First stock and options will immediately
vest, and Mr. Chryst will be
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<PAGE>
deemed to be credited with service with Carolina First Bank for the remaining
term of the agreement for purposes of Carolina First Bank's benefit plans.
If Carolina First Bank terminates Mr. Chryst for cause after a change in
control, or if Mr. Chryst terminates his employment because Carolina First Bank
fails to cure a material breach of the agreement, there is a voluntary
termination or an involuntary termination, he will be entitled to receive as
severance the compensation and benefits set forth in the agreement, including
those outlined above, for the remainder of the agreement term, all of Mr.
Chryst's Carolina stock and options will immediately vest, and Mr. Chryst will
be deemed to be credited with service with Carolina First Bank for the remaining
term of the agreement for purposes of Carolina First Bank's benefit plans.
If, after the fourth anniversary of the effective time, Carolina First Bank
terminates Mr. Chryst for cause or if Mr. Chryst terminates his employment for
reasons other than because Carolina First Bank fails to cure a material breach
of the agreement, there is a voluntary termination or an involuntary
termination, he will be entitled to receive as severance the compensation and
benefits set forth in the agreement, including those outlined above, for the
remainder of the agreement term.
To the extent that payment and benefits provided under this agreement are deemed
"excess parachute payments," the compensation payable shall be increased, on a
tax gross-up basis, so as to reimburse Mr. Chryst for the taxes payable pursuant
to Section 4999 of the Internal Revenue Code of 1986, as amended, and any
related interest and penalties on such "excess parachute payments."
If, following a change of control (as defined in the agreement), Carolina First
attempts to avoid its obligations under the agreement (for example, by
terminating the employment agreement contrary to its terms or instituting
litigation to declare it unenforceable), and if Mr. Chryst has acted in good
faith to meet his obligations under the agreement, then Carolina First will pay
the reasonable fees and expenses of counsel for Mr. Chryst.
The agreement also provides that Mr. Chryst may not enter into employment or
consulting arrangements with Carolina First's competitors (as defined in the
agreement) in South Carolina or North Carolina, or hire Carolina First employees
or interfere with Carolina First's business relationships, for a period of 10
years following termination of the agreement.
TOMMY E. LOOPER. The term of employment starts at the completion of the merger
and ends four years thereafter. Under the employment agreement, Mr. Looper will
serve as the Senior Vice President Finance of Carolina First Bank.
During the term of the employment agreement, Mr. Looper will be entitled to
receive a base salary of $265,000 plus an annual bonus of one-half of his base
salary. The base salary will be increased by 5% on the January 1 following the
merger of Anchor into Carolina First's subsidiary and on each January 1 during
the term of the agreement. In addition, the Carolina First Bank board of
directors may pay an additional cash bonus to Mr. Looper to the extent that the
average incentive compensation for other senior managers exceeds his annual
bonus. Mr. Looper may also receive long term incentive compensation, and he will
receive options and restricted stock under Carolina First Bank's long-term
incentive compensation plan, as well as any other employee benefits generally
provided by Carolina First Bank to its highest ranking executives, including the
use of an automobile, certain club membership dues, education benefits, personal
tax advisory services, a $2,000,000 life insurance policy and certain disability
insurance. Beginning two years from the effective date (or, if earlier, a
"change of control" or an "involuntary termination" (each as defined in the
agreement)), Mr. Looper or his estate will be entitled to an annual supplemental
retirement payment of $150,000, which payments will begin on the earlier of Mr.
Looper's 65th birthday or his death and will continue for 15 years. The
employment agreement provides that Carolina First Bank will provide Mr. Looper,
his spouse and dependent children with Carolina First Bank medical and dental
benefits without cost; once Mr. Looper becomes eligible for Medicare, Carolina
First Bank will provide without cost to him and to his spouse, for the remainder
of their lives, an insurance supplement for medical and dental insurance to
provide total coverage
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<PAGE>
comparable to that provided by Carolina First Bank at such time. In addition, at
the effective time, Carolina First Bank will establish an irrevocable trust in
the amount of approximately $1,045,000 in connection with the termination of Mr.
Looper's employment at Anchor that will fund the obligation expected to be
payable under the employment agreement.
The employment agreement further provides that, on a termination of Mr. Looper's
employment by Carolina First Bank, other than for cause, disability, or death,
he will be entitled to receive immediately as severance the aggregate
compensation and benefits set forth in the agreement, including those outlined
above, all of Mr. Looper's Carolina First stock and options will immediately
vest, and Mr. Looper will be deemed to be credited with service with Carolina
First Bank for the remaining term of the agreement for purposes of Carolina
First Bank's benefit plans.
If Carolina First Bank terminates Mr. Looper for cause after a change in
control, or if Mr. Looper terminates his employment because Carolina First Bank
fails to cure a material breach of the agreement, there is a voluntary
termination or an involuntary termination, he will be entitled to receive as
severance the compensation and benefits set forth in the agreement, including
those outlined above, for the remainder of the agreement term, all of Mr.
Looper's Carolina stock and options will immediately vest, and Mr. Looper will
be deemed to be credited with service with Carolina First Bank for the remaining
term of the agreement for purposes of Carolina First Bank's benefit plans.
If, after the second anniversary of the effective time, Carolina First Bank
terminates Mr. Looper for cause or if Mr. Looper terminates his employment for
reasons other than because Carolina First Bank fails to cure a material breach
of the agreement, there is a voluntary termination or an involuntary
termination, he will be entitled to receive as severance the compensation and
benefits set forth in the agreement, including those outlined above, for the
remainder of the agreement term.
To the extent that payment and benefits provided under this agreement are deemed
"excess parachute payments," the compensation payable shall be increased, on a
tax gross-up basis, so as to reimburse Mr. Looper for the taxes payable pursuant
to Section 4999 of the Internal Revenue Code of 1986, as amended, and any
related interest and penalties on such "excess parachute payments."
If, following a change of control (as defined in the agreement), Carolina First
attempts to avoid its obligations under the agreement (for example, by
terminating the employment agreement contrary to its terms or instituting
litigation to declare it unenforceable), and if Mr. Looper has acted in good
faith to meet his obligations under the agreement, then Carolina First will pay
the reasonable fees and expenses of counsel for Mr. Looper.
The agreement also provides that Mr. Looper may not enter into employment or
consulting arrangements with Carolina First's competitors (as defined in the
agreement) in South Carolina or North Carolina, or hire Carolina First employees
or interfere with Carolina First's business relationships, for a period of eight
years following termination of the agreement.
EFFECT OF THE MERGER ON EXISTING ANCHOR SEVERANCE/EMPLOYMENT AGREEMENTS
Any current Anchor employee who is not covered by an employment agreement and is
terminated within 18 months of the effective date will be entitled to the
greater of
o Carolina First's severance benefits (as in effect on January 10, 2000) or
o two weeks pay per year of service up to 26 weeks total pay with COBRA benefits
paid by Carolina First for the length of such period.
EFFECT OF THE MERGER ON EXISTING ANCHOR STOCK-BASED RIGHTS
The merger agreement provides that, on completion of the merger, each
outstanding and unexercised stock option to purchase shares of Anchor common
stock granted under Anchor's stock-based plans will
47
<PAGE>
cease to represent the right to acquire shares of Anchor common stock and will
become a right to acquire Carolina First common stock.
MANAGEMENT AND OPERATIONS OF CAROLINA FIRST AFTER THE MERGER
The Merger Sub will be the surviving corporation resulting from the merger with
Anchor. Immediately following this merger, Merger Sub will be liquidated.
Consequently, The Anchor Bank will be a wholly-owned subsidiary of Carolina
First. At some time in the future The Anchor Bank will be merged into Carolina
First Bank.
All shareholders of Anchor will become Carolina First shareholders as a result
of the merger, and their rights will be governed by Carolina First's articles of
incorporation and by-laws and by South Carolina law.
The twelve directors of Carolina First before the merger will continue to be the
directors of Carolina First after the merger, except that five additional
directors from the Anchor Board, including Mr. Chryst, will also become members
of the Carolina First board of directors. Mr. Chryst will also serve as chairman
of the board of directors of Carolina First Bank.
In the merger agreement, Carolina First and Anchor agreed to cooperate to
develop staffing plans which will result in retention of as many Anchor managers
and employees as is practical (as determined by Carolina First). Carolina First
agreed that Anchor employees will also be eligible for consideration for any
other available positions for which they are qualified at Carolina First and its
subsidiaries. Carolina First agreed that those former Anchor employees who are
employed by Carolina First or its subsidiaries immediately following the Closing
Date: will be eligible, on the same basis as current Carolina First employees,
for all Carolina First Benefit Plans (as defined in the merger agreement); and
will receive past service credit for eligibility and vesting (but not benefit
accrual) purposes under Carolina First Benefit Plans for years of service with
Anchor as if such service had been with Carolina First or its subsidiaries.
Carolina First agreed that Anchor may elect to fully vest its employees under
some or all Anchor Benefit Plans prior to consummation of the merger. Any Anchor
Benefit Plans that are intended to be qualified under Section 401(a) of the Code
and exempt from tax under Section 501(a) of the Code will be terminated by
proper action of the Board of Directors of Anchor prior to the effective time.
Carolina First further agreed that those former Anchor employees who are
employed by Carolina First or its subsidiaries immediately following the Closing
Date will not be subject to any pre-existing condition exclusion under Carolina
First's medical Benefit Plans.
PUBLIC TRADING MARKETS
Carolina First common stock is currently listed on the Nasdaq National Market
under the symbol "CAFC." If Carolina First's shareholders approve the name
change from Carolina First to The South Financial Group, then its common stock
will be listed under the symbol "TSFG." Anchor common stock is currently listed
on the Nasdaq National Market under the symbol "AFSC." Upon completion of the
merger, Anchor common stock will be delisted from the Nasdaq National Market and
deregistered under the Securities Exchange Act of 1934. The authorization for
listing on the Nasdaq National Market of the newly issued Carolina First common
stock issuable to Anchor shareholders pursuant to the merger agreement is a
condition to the completion of the merger.
ABSENCE OF APPRAISAL RIGHTS
Appraisal rights are statutory rights that enable shareholders who object to
extraordinary transactions, such as mergers, to demand that the corporation pay
the fair value for their shares as determined by a court in a judicial
proceeding instead of receiving the consideration offered to shareholders in
connection with the extraordinary transaction. Appraisal rights are not
available in all circumstances.
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Carolina First shareholders are not entitled to appraisal rights under South
Carolina law in connection with the merger because South Carolina law does not
require that Carolina First shareholders approve the merger agreement.
Anchor shareholders are not entitled to appraisal rights under South Carolina
law in connection with the merger because Anchor common stock is listed on the
Nasdaq National Market as of the record date of the Anchor special meeting.
PROPOSED NAME CHANGE FROM CAROLINA FIRST TO THE SOUTH FINANCIAL GROUP
Although not required to do so by the merger agreement, the board of directors
of Carolina First has proposed to its shareholders that they approve amending
its articles of incorporation to change Carolina First's name to reflect its
broader geographic base and broader range of services. If this proposal is
approved by at least two-thirds of Carolina First's shareholders at their annual
meeting on April 19, 2000, then Carolina First's name will change to "The South
Financial Group, Inc."
THE MERGER AGREEMENT
The following describes the proposed merger, including material provisions of
the merger agreement. The following description of the merger agreement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the merger agreement, which is attached as Annex A and is
incorporated by reference in this document. All Carolina First shareholders and
Anchor shareholders are urged to read the merger agreement carefully and in its
entirety.
INTRODUCTION
The merger agreement provides for the acquisition of Anchor by Carolina First in
a transaction in which Anchor will merge with and into Merger Sub, a
newly-formed subsidiary of Carolina First. Merger Sub will be the surviving
corporation of the merger and, immediately following the merger, Merger Sub will
liquidate. Consequently, The Anchor Bank will be a wholly-owned subsidiary of
Carolina First. At some time in the future The Anchor Bank will be merged into
Carolina First Bank.
TERMS OF THE MERGER
At the time the merger becomes effective, each share of issued and outstanding
Anchor common stock will be canceled and cease to be outstanding and will be
converted into the right to receive 2.175 shares of Carolina First common stock.
The merger agreement provides that, subject to shareholder approval, Carolina
First will issue shares of Carolina First common stock to Anchor shareholders.
The transaction is intended to qualify as a "pooling of interests" for
accounting and financial reporting purposes and as a tax-free "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, for
federal income tax purposes.
Immediately after the merger, Anchor shareholders will own approximately [___]%,
of Carolina First common stock., based on the number of shares of Carolina First
common stock and Anchor common stock outstanding as of March [___], 2000, and on
the exchange ratio.
CLOSING AND EFFECTIVE TIME OF THE MERGER
The merger will be consummated if all of the following occur:
o the merger agreement is approved by the Anchor shareholders,
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o the issuance of Carolina First common stock to Anchor shareholders and the
increase of the size of the Carolina First board of directors pursuant to
the merger agreement is approved by the Carolina First shareholders, and
o Carolina First and Anchor obtain all required consents and approvals and
all other conditions to the merger are either satisfied or waived.
The merger will become effective when the articles of merger are duly filed with
the Secretary of State of the State of South Carolina, or at a later time as may
be indicated in the articles. Carolina First and Anchor each has the right to
terminate the merger agreement if the merger is not completed by October 31,
2000.
CONDITIONS TO COMPLETION OF THE MERGER
The obligations of Carolina First and Anchor to consummate the merger are
subject to the satisfaction or written waiver prior to the effective time of the
following conditions:
o the compliance by the parties with its covenants set forth in the merger
agreement and the material accuracy, on the effective date, of each of the
representations and warranties of the parties set forth in the merger
agreement (subject to some limited exceptions);
o Anchor receives the opinion of Carolina First's counsel, in form and
substance satisfactory to Anchor;
o Carolina First receives the opinion of Anchor's counsel, in form and
substance satisfactory to Carolina First;
o the merger agreement is approved by the shareholders of Anchor;
o the shareholders of Carolina First approve the issuance of shares of
Carolina First common stock to Anchor shareholders pursuant to the merger
agreement;
o there has been no "material adverse event" with respect to Carolina First
or Carolina First Bank;
o any required regulatory approvals that are necessary to permit consummation
of the merger, including those described below under "-- Regulatory
Approvals Required for the Merger," are received and remain in effect, and
all applicable waiting periods have expired, without any conditions that
would, in Anchor's reasonable judgment, render the consummation of the
merger unduly burdensome;
o no court or regulatory authority has taken any action prohibiting the
consummation of the merger;
o the registration statement of which this document constitutes a part is
declared effective by the SEC and is not subject to a stop order or any
threatened stop order;
o Anchor receives a tax opinion from Wyche, Burgess, Freeman & Parham, P.A.
opining, subject to reasonable qualifications, that the merger will be
treated as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code;
o the employment agreements with Stephen L. Chryst and Tommy E. Looper shall
have been executed;
o the merger will be treated as a tax-free reorganization within the meaning
of Section 368(a) of the Internal Revenue Code; and
o Carolina First and Anchor receive letters from independent public
accountants in form and substance satisfactory to Carolina First and Anchor
stating that the merger will qualify for pooling-of-interests accounting
treatment.
No assurances can be provided as to when or if all of the conditions to the
merger can or will be satisfied or waived by the appropriate party. As of the
date of this document, the parties have no reason to believe that any of these
conditions will not be satisfied.
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BANK MERGER
The merger agreement provides that, after the effective time for the merger
described above and at such time as Carolina First Bank deems appropriate, The
Anchor Bank will be merged into Carolina First Bank, with Carolina First Bank
the surviving corporation.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and warranties made by
Carolina First and Anchor, some of which are qualified as to materiality,
regarding the following matters, among others:
o corporate existence, organization, standing, authority and capitalization;
o ownership of the shares of capital stock of its material subsidiaries, and
the corporate existence, organization, standing and authority of its
material subsidiaries;
o corporate power and authority to execute, deliver and perform its
obligations under the transaction documents, and to consummate the merger,
subject only to shareholder approval;
o that the merger agreement and the related transactions will not result in a
violation of Carolina First's or Anchor's organizational documents or
contracts to which Carolina First or Anchor, or any of their subsidiaries,
is a party, or violate any law, rule or regulation;
o absence of regulatory disqualifications;
o consents and regulatory approvals necessary to complete the merger;
o SEC filings, reports and financial statements, and the accuracy of
information contained in them;
o tax matters;
o absence of various material adverse events, changes or effects or
undisclosed material liabilities;
o title to properties;
o pending or threatened suits, actions or other proceedings;
o no claims for brokerage commissions, except to the financial advisors of
Carolina First and Anchor in connection with the merger;
o insurance matters;
o material contracts;
o employee benefit plans;
o allowance for loan losses;
o environmental matters;
o asset classification;
o derivative instruments;
o labor matters;
o compliance with laws and required licenses and permits; and
o qualification of the merger as "tax-free reorganizations" and a "pooling of
interests" transaction;
CONDUCT OF BUSINESS PENDING THE MERGER
The following is a general summary of the agreements Carolina First and Anchor
have regarding their actions prior to the merger. We urge you to read the merger
agreement, which is attached to this document as Annex A, for a more complete
description of these agreements.
Each of Anchor and The Anchor Bank has agreed, from the date of the merger
agreement to the completion of the merger, unless Carolina First otherwise
approves in writing, and except as otherwise expressly contemplated by the
merger agreement or disclosed to Carolina First, that, among other things:
o it will carry on its business only in the ordinary course and use all
reasonable efforts to preserve intact its business organization and
goodwill, maintain the services of its present officers
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and employees and preserve its relationships with customers, suppliers and
others having business dealings;
o it will not amend its charter or bylaws;
o it will not issue (except pursuant to the exercise of outstanding options
for its common stock) or acquire any shares of its capital stock of any
class or any securities convertible into its capital stock or declare or
pay any dividends or distributions, or make any change in its capital
structure, except that Anchor may pay its customary $0.16 per share
quarterly cash dividend prior to the merger closing (and further provision
may be made for any necessary changes in the quarterly dividend schedule to
the extent necessary to prevent Anchor's shareholders from missing a
quarterly dividend due to the timing of the closing);
o it will promptly advise Carolina First of any material adverse change in
its business;
o it will not breach the merger agreement or cause any of its representations
contained in the merger agreement to become untrue;
o it will not incur any indebtedness other than in the ordinary course of
business;
o except for merger-related expenses and current contractual obligations, it
will not incur any expense in excess of $100,000;
o it will not grant any executive officers any increase in compensation
(except in the ordinary course of business) or enter into any employment
agreement;
o it will not engage in acquisitions, mergers or other reorganizations;
o except as may be directed by any regulatory authority or in other limited
instances, it will not change its lending, investment, liability management
or other material banking or other policies in any material respect, or
implement or adopt any change in accounting principles, practices or
methods; and
o except in limited instances, it will not impose, or permit or suffer the
imposition of any liens on any of its assets.
Under the terms of the merger agreement, Carolina First has agreed, with respect
to the conduct of its business pending closing, among other things:
o to carry on its business in substantially the same manner as heretofore
conducted;
o not to amend its Articles of Incorporation or Bylaws in any manner that
will adversely affect the Anchor shareholders in any material respect;
o to promptly advise Anchor of any material adverse change in its business;
and
o not to take any action that would be contrary to or breach any of the terms
or provisions of the merger agreement, or which would cause Carolina
First's representations in the merger agreement to become untrue in any
material respect.
AGREEMENT NOT TO SOLICIT OTHER OFFERS
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Anchor has also agreed that it will not, and will cause The Anchor Bank not to,
initiate or solicit any inquiries or any offer relating to any acquisition or
purchase of all or a substantial portion of the assets or deposits of, or a
substantial equity interest in, Anchor or The Anchor Bank or any merger or other
business combination with Anchor or The Anchor Bank (this type of proposal is
referred to in this document as an "acquisition proposal"). Anchor will promptly
advise Carolina First following the receipt of any acquisition proposal and will
keep Carolina First apprised of any developments on a current basis.
EXPENSES AND FEES
Each party will be responsible for all expenses incurred by it in connection
with the negotiation and consummation of the transactions contemplated by the
merger agreement. Carolina First will bear the cost of any SEC fees and printing
expenses.
ACCOUNTING TREATMENT
Carolina First and Anchor intend for the merger to be accounted for as a
"pooling of interests," as that term is used under generally accepted accounting
principles, for accounting and financial reporting purposes. Based on the advice
of their respective independent public accountants to date, Carolina First and
Anchor believe that the merger will qualify for this treatment. Under the
"pooling of interests" method of accounting, Carolina First will restate its
consolidated financial statements for prior periods at the effective time of the
merger to include the assets, liabilities, shareholders' equity and results of
operations of Anchor as if Anchor had always been a wholly owned subsidiary of
Carolina First. Completion of the merger is conditioned on receipt by Carolina
First and Anchor of letters from their respective independent public accounting
firms to the effect that the merger will qualify as a "pooling of interests" for
accounting purposes.
TREATMENT OF OUTSTANDING OPTIONS
At the effective time, each Anchor stock option, whether vested or unvested, is
to be converted into an option to purchase shares of Carolina First common stock
and shall no longer represent a right to acquire shares of Anchor common stock.
These options shall be adjusted so that:
o the number of shares of Carolina First common stock purchasable upon
exercise of the Anchor stock option shall be equal to the number of shares
of Anchor common stock that were purchasable under the Anchor stock option
immediately prior to the effective time multiplied by the exchange ratio,
and rounded to the nearest whole share, and
o the per share exercise price under each Anchor stock option shall be
adjusted by dividing the per share exercise price of the Anchor stock
option by the exchange ratio, and rounding down to the nearest cent.
However, each Anchor stock option which is intended to be an "incentive stock
option" shall be adjusted in accordance with the requirements of the Internal
Revenue Code. Accordingly, with respect to any incentive stock options,
fractional shares shall be rounded down to the nearest whole number of shares
and where necessary the per share exercise price shall be rounded down to the
nearest cent. At or prior to the effective time, Carolina First must take all
corporate action necessary to reserve for issuance from its authorized stock a
sufficient number of shares of Carolina First common stock for delivery upon
exercise of the Anchor stock options assumed by it in accordance with the merger
agreement.
DIVIDEND REINVESTMENT PLAN PARTICIPANTS
If you participate in Anchor's dividend reinvestment plan, when the merger is
completed you will become a participant in Carolina First's Common Stock
Dividend Reinvestment Plan. All shares held in your account under the Anchor
plan will be converted to shares of Carolina First Stock at the exchange
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ratio of 2.175. If you do not want to become a participant in Carolina First's
plan, you should terminate your participation in Anchor's plan prior to the
effective date of the merger.
EXCHANGE OF ANCHOR STOCK CERTIFICATES
Promptly after the completion of the merger, Carolina First or its transfer
agent will send and make available to each Anchor shareholder a form of the
letter of transmittal and instructions for use in exchanging shares of Anchor
common stock for Carolina First common stock. ANCHOR SHAREHOLDERS SHOULD NOT
SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL AND
INSTRUCTIONS.
If you are an Anchor shareholder, when you receive this letter of transmittal
and instructions, you should send all certificates for your Anchor stock to
Carolina First's transfer agent. When the agent receives your certificates, it
will issue and send to you the Carolina First common stock to which you are
entitled. If part of the payment to be made when the Anchor stock certificate is
surrendered should be paid to anyone other than the person in whose name the
certificate is registered, the payment will only be made if:
o the certificate is properly endorsed for transfer and
o the person requesting the payment either pays all required transfer taxes
or establishes (to Carolina First's satisfaction) that no transfer tax
applies.
If your stock certificates are lost or destroyed, Carolina First and Anchor may
require you to prepare and send an affidavit of loss and indemnity agreement
and/or a bond. Unless you send Carolina First either your stock certificates or
this affidavit of loss or bond, Carolina First will not exchange your Anchor
stock for Carolina First stock and will not send you any Carolina First stock
certificates.
Carolina First will not pay any dividends or other distributions with respect to
Carolina First common stock with a record date occurring after the effective
date to any former Anchor shareholder who has not exchanged his or her Anchor
stock. After the stock is exchanged, all paid dividends and other distributions
and, if applicable, a check for the amount to be paid for any fractional shares
will be delivered to that shareholder, in each case without interest.
After the effective time, there will be no transfers of shares of Anchor stock
on Anchor's stock transfer books. If certificates representing shares of Anchor
stock are presented for transfer after the effective time, the exchange agent or
Carolina First will cancel and exchange them for certificates representing
shares of Carolina First stock and a check for the amount to be paid for
fractional shares of Carolina First stock, if any.
FRACTIONAL SHARES
Carolina First will not issue any fractional shares of Carolina First common
stock. Instead, an Anchor shareholder who would otherwise have received a
fraction of a share of Carolina First common stock will receive cash (without
interest). The amount of cash received will be determined by multiplying the
fraction of Carolina First common stock the shareholder would have been entitled
to receive by the average of the last reported sale prices of Carolina First
common stock, as reported by the NASD Composite Transactions Reporting System
(as reported in The Wall Street Journal or other reliable source), for the five
trading days immediately preceding the effective date. Holders will not be
entitled to dividends, voting rights or any other rights as a shareholder with
respect to any fractional shares.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax consequences of
the merger, including some of the consequences to Anchor shareholders who are
citizens or residents of the United States and who hold their shares as capital
assets. It does not discuss all tax consequences that may be relevant to Anchor
shareholders subject to special federal income tax treatment (such as insurance
companies, dealers in securities, retirement plans, financial institutions, tax
exempt organizations or foreign persons), or to Anchor shareholders who acquired
their shares of Anchor common stock pursuant to the exercise of employee stock
options or rights or otherwise as compensation. Shareholders are urged to
consult their own tax advisors as to the specific tax consequences to them of
the merger, including the applicability and effect of state, local and other tax
laws. The following summary does not address the state, local or foreign tax
consequences of the merger, if any.
Under the terms of the merger agreement, Anchor will receive the opinion of
Wyche, Burgess, Freeman & Parham, P.A., at the time the merger is completed, to
the effect that based upon the Internal Revenue Code and regulations thereunder
and rulings issued by the IRS in transactions similar to those contemplated by
the merger agreement and assuming the merger occurs in accordance with the
merger agreement and conditioned on the accuracy of some of the representations
made by Anchor and Carolina First, for federal income tax purposes:
o The merger will qualify as a reorganization under the provisions of Section
368(a)(1)(A) and Section 368(a)(2)(E) of the Internal Revenue Code,
provided that Carolina First acquires substantially all of the assets of
Anchor in the merger.
o No gain or loss will be recognized either to Carolina First or Anchor as a
result of the merger.
o No gain or loss will be recognized to the Anchor shareholders upon their
receipt of shares of Carolina First common stock in the merger
(disregarding for this purpose any cash received for fractional shares).
o The receipt of cash by Anchor shareholders in the merger in exchange for
fractional shares will be treated for federal income tax purposes as a
redemption of those shares.
o The tax basis of the Carolina First common stock received by Anchor
shareholders in connection with the merger will be the same as the basis in
the Anchor common stock surrendered in exchange for Carolina First common
stock as set forth above.
o The holding period of the Carolina First common stock received by an Anchor
shareholder will include the holding period of the shares of Anchor
surrendered therefor provided that the Anchor shares are capital assets in
the hands of the shareholder at the time of the merger.
FRACTIONAL SHARE INTERESTS. An Anchor shareholder who receives cash in lieu of a
fractional share interest in Carolina First common stock will be treated as
having received the cash in redemption of the fractional share interest. The
receipt of cash in lieu of a fractional share interest should generally result
in capital gain or loss to the holder equal to the difference between the amount
of cash received and the portion of the holder's federal income tax basis in the
Anchor common stock allocable to the fractional share interest. This capital
gain or loss will be long-term capital gain or loss if the holder's holding
period for the Carolina First common stock received, determined as set forth
above, is longer than one year.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED ON THE INTERNAL REVENUE CODE (AND AUTHORITIES
THEREUNDER) AS IN EFFECT ON THE DATE OF THIS PROXY STATEMENT/PROSPECTUS, WITHOUT
CONSIDERATION OF THE PARTICULAR FACTS OR CIRCUMSTANCES OF ANY SHAREHOLDER.
SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO
THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR
SITUATIONS, AS WELL AS CONSEQUENCES UNDER ANY APPLICABLE STATE, LOCAL OR FOREIGN
TAX LAWS.
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REGULATORY APPROVALS REQUIRED FOR THE MERGER
Carolina First and Anchor have agreed to use their reasonable best efforts to
obtain all regulatory approvals required to consummate the transactions
contemplated by the merger agreement, which include approval from the Board of
Governors of the Federal Reserve System and various state and other regulatory
authorities, and have completed the filing of these applications and
notifications prior to the date of this document. The merger cannot proceed in
the absence of these regulatory approvals. There can be no assurance that these
regulatory approvals will be obtained, and, if obtained, there can be no
assurance as to the date of any such approvals or the absence of any litigation
challenging such approvals. There can likewise be no assurance that the United
States Department of Justice or any state attorney general will not attempt to
challenge the merger on antitrust grounds, or, if such a challenge is made,
there can be no assurance as to its result.
Carolina First and Anchor are not aware of any other material governmental
approvals or actions that are required prior to the parties' consummation of the
merger other than those described below. It is presently contemplated that if
any such additional governmental approvals or actions are required, such
approvals or actions will be sought. There can be no assurance, however, that
any such additional approvals or actions will be obtained.
FEDERAL RESERVE BOARD. The merger is subject to approval by the Federal Reserve
Board pursuant to Section 3 of the Bank Holding Company Act of 1956 and Section
25(a) of the Federal Reserve Act. Carolina First has filed the required
application and notifications with the Federal Reserve Board for approval of the
merger. Assuming Federal Reserve Board approval, the merger may not be
consummated until 30 days after such approval, during which time the DOJ may
challenge the Merger on antitrust grounds. With the approval of the Federal
Reserve Board and the DOJ, the waiting period may be reduced to no less than 15
days.
The Federal Reserve Board is prohibited from approving any transaction under the
applicable statutes that would result in a monopoly, or that would 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 that may
have the effect in any section of the United States of substantially reducing
competition, or tending to create a monopoly, or resulting in a restraint of
trade, unless the Federal Reserve Board finds that the anti-competitive effects
of the transaction are clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of the
communities to be served.
In addition, in reviewing a transaction under the Bank Holding Company Act, the
Federal Reserve Board will consider the financial and managerial resources of
the companies and their subsidiary banks. It will also consider the convenience
and needs of the communities to be served. As part of its consideration of these
factors, we expect that the Federal Reserve Board will consider the regulatory
status of Carolina First and Anchor, our respective progress in achieving
resolution of Year 2000 computer problems and the overall capital and safety and
soundness standards established by and under the Federal Deposit Insurance
Corporation Improvement Act of 1991.
Under the Community Reinvestment Act of 1977 the Federal Reserve Board will take
into account the performance record of each of Carolina First and Anchor in
meeting the credit needs of the entire community, including low- and
moderate-income neighborhoods, served by each company. Both Carolina First Bank
and The Anchor Bank have sponsored a variety of programs and services which are
designed to meet the credit needs of low-to-moderate income persons and
communities they serve. For example, Carolina First Bank has provided leadership
and financial support for the South Carolina Multifamily Loan Consortium, a
nonprofit organization whose mission is to provide affordable housing financing
particularly in rural parts of South Carolina. Similarly, The Anchor Bank has
successfully sponsored and serviced affordable housing grants through the
Federal Home Loan Bank, in all of its service areas. Each of Carolina First Bank
and The Anchor Bank has received a satisfactory Community Reinvestment Act
rating from its federal regulator.
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The Federal Reserve Board will furnish notice and a copy of the application for
approval of the merger to the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the
appropriate state regulatory authorities. These agencies have 30 days to submit
their views and recommendations to the Federal Reserve Board. The Federal
Reserve Board must hold a public hearing if it receives a written recommendation
of disapproval of the application from any of these agencies within the 30-day
period. Furthermore, the Bank Holding Company Act and Federal Reserve Board
regulations require publication of notice of, and the opportunity for public
comment on, the application submitted by Carolina First for approval of the
merger, and authorize the Federal Reserve Board to hold a public hearing or
meeting in connection therewith if the Federal Reserve Board determines that
such a hearing or meeting would be appropriate. Any hearing, meeting or comments
from third parties could prolong the review of our application.
If the DOJ were to commence an antitrust action, it would stay the effectiveness
of Federal Reserve Board approval of the merger unless a court specifically
orders otherwise. In reviewing the merger, the DOJ could analyze the merger's
effect on competition differently than the Federal Reserve Board. It is possible
that the DOJ could reach a different conclusion than the Federal Reserve Board
regarding the merger's competitive effects. In particular, the DOJ may focus on
the impact of the merger on competition for loans and other financial services
to small- and middle-market businesses. Failure of the DOJ to object to the
merger may not prevent private persons or state attorneys general from filing
antitrust actions.
Carolina First's rights to exercise its options under the option agreement also
require the prior approval of the Federal Reserve Board, to the extent that the
exercise of its options under the option agreement would cause Carolina First to
own more than 5% of the outstanding shares of Anchor. Carolina First has filed
or intends to file the required application and notifications with the Federal
Reserve Board for approval of the exercise of its option under the Option
Agreement. In considering whether to approve Carolina First's right to exercise
its option, the Federal Reserve Board would generally apply the same statutory
criteria it would apply to its consideration of approval of the merger.
STATE REGULATORY AUTHORITIES. Applications or notifications have been filed with
the South Carolina State Board of Financial Institutions. In addition, the
merger may be reviewed by the attorneys general in the states where Carolina
First and Anchor own banking subsidiaries. Such authorities may be empowered
under the applicable state laws and regulations to investigate and/or disapprove
the merger under the circumstances and based upon the review set forth in
applicable state laws and regulations.
RESTRICTIONS ON RESALES BY AFFILIATES
The issuance of the Carolina First shares has been registered under the
Securities Act. Accordingly, resales of the Carolina First shares by
non-affiliates of Anchor will not require registration. However, under existing
law, any person who is an "affiliate" of Anchor (as defined below) on the date
of the special meeting who wishes to sell Carolina First shares will be required
either to (a) register the sale of the Carolina First shares under the
Securities Act, (b) sell in compliance with Rule 145 promulgated under the
Securities Act (permitting limited sales under certain circumstances), or (c)
utilize an exemption (if any) from registration. Rule 145(d) requires that
persons deemed to be Anchor affiliates resell their Carolina First shares
pursuant to some of the requirements of Rule 144 under the Securities Act if
such Carolina First shares are sold within one year after receipt thereof. After
one year, if such person is not an affiliate of Carolina First and Carolina
First is current in the filing of its periodic securities law filings, a former
Anchor affiliate may freely sell the Carolina First shares without limitation.
After two years from the issuance of the Carolina First shares, if such person
is not a Carolina First affiliate at the time of sale or for at least three
months prior to such sale, such person may freely sell such Carolina First
shares without limitation, regardless of the status of Carolina First's periodic
securities law filings. Anchor has agreed that it will use its best efforts to
cause affiliates of Anchor to agree in writing that they will not sell the
Carolina First common stock to be received by them except as provided above.
Stop transfer instructions will be given by Carolina First to the Exchange Agent
with
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respect to the Carolina First common stock to be received by persons subject to
the restrictions described above, and the certificates for such stock may be
appropriately legended. An "affiliate" of Anchor, as defined by the rules
promulgated pursuant to the Securities Act, is a person who directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, Anchor at the time of consummation of the merger. In
this context, an "affiliate" will generally include the following persons:
directors or executive officers, and the holders of 10% or more of Anchor common
stock (and any relative or spouse of any such person having the same home as
such person and any trusts, estates, corporations, or other entities in which
such persons have a 10% or greater beneficial or equity interest).
AMENDMENT
The merger agreement may be amended or supplemented in writing by mutual
agreement of Carolina First and Anchor. The merger agreement also provides that
Carolina First may restructure the transactions contemplated therein, provided
that any such restructuring does not:
o alter the type of consideration to be issued to the holders of Anchor
common stock as provided for in the merger agreement,
o reduce the value of such consideration,
o adversely affect the intended tax-free treatment to Anchor shareholders as
a result of receiving such consideration or prevent the parties from
obtaining the tax opinion of Wyche, Burgess, Freeman & Parham, P.A.
referred to herein,
o materially impair the ability to receive the required regulatory approvals,
or
o materially delay the closing.
TERMINATION
The merger agreement may be terminated at any time prior to the Closing Date:
o by mutual consent of the parties;
o by either Carolina First or Anchor, at that party's option, if a permanent
injunction or other order (including any order denying any required
regulatory consent or approval) shall have been issued by any Federal or
state court of competent jurisdiction in the United States or by any United
States Federal or state governmental or regulatory body, which order
prevents the consummation of the transactions contemplated herein, or if
the requisite Anchor shareholder approval is not received at the special
meeting;
o by either Carolina First or Anchor if the other party (or its subsidiaries)
has failed to comply with the agreements or fulfill the conditions
contained in the merger agreement except that any such failure of
compliance or fulfillment must result in a "material adverse event" (as
defined in the merger agreement) and the breaching party must be given
notice of the failure to comply and a reasonable period of time to cure;
o by either Carolina First or Anchor in the event that closing has not
occurred by October 31, 2000; or
o by the board of directors of Anchor, if it determines by a vote of a
majority of the members of the entire board at any time during the 10-day
period commencing two days after the date on which the last consent of the
Board of Governors of the Federal Reserve System shall be received (this
date is the "determination date"), if both of the following are true:
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o the "average closing price" (a 20-day average price of Carolina First
stock, ending on the determination date) is 20% less than $16.50 (the
closing price of Carolina First common stock on January 10, 2000); and
o the "Carolina First Ratio" (the "average closing price" divided by
$15.5625) is less than 0.85 times an equivalent ratio for a group of 25
banking organizations, weighted by size as provided in the merger
agreement.
If the merger agreement is terminated under the following circumstances:
o by Carolina First if Anchor's directors have failed to recommend the merger
(or have retracted such recommendation) prior to the special meeting of
Anchor's shareholders, or if a tender offer or exchange offer for 20% or
more of Anchor's stock is commenced and Anchor's board has not recommended
rejection of such offer;
o by Anchor or Carolina First due to a failure to obtain the required
approval of Anchor shareholders for the merger after a third-party
acquisition proposal is publicly disclosed; or
o by Carolina First, if Anchor has willfully breached its agreements and a
third-party acquisition proposal has been made known to Anchor or publicly
disclosed;
then in each such case, Anchor must pay to Carolina First a termination fee of
$10.5 million.
STOCK OPTION AGREEMENT
The following describes the material provisions of the stock option agreement,
but does not purport to be complete and is subject to the full texts of, and
qualified in its entirety by reference to, this agreement, which is attached as
Annex B to this document and is incorporated herein by reference. All
Carolina First shareholders and Anchor shareholders are urged to read the stock
option agreement carefully and in its entirety.
GENERAL
As an inducement for Carolina First to enter into the merger agreement, Anchor
and Carolina First entered into the stock option agreement pursuant to which
Anchor granted Carolina First an option to purchase shares of Anchor common
stock.
EXERCISE; EXPIRATION
Anchor granted Carolina First an option to purchase up to 1,610,959 shares of
Anchor common stock. Although these numbers are subject to adjustment in certain
cases, as described below, they will never exceed 19.9% of the number of shares
of Anchor common stock outstanding immediately before exercise of the option.
The exercise price of the option is $26.125 per share of Anchor, but this per
share option price is subject to adjustment in certain cases (this exercise
price, as adjusted, is referred to below as the "option price").
Carolina First can exercise its option if a "purchase event" has occurred. The
option agreement generally defines the term "purchase event" to mean any
circumstance which would or could entitle Carolina First to receive the
termination fee described above under "--Termination", together with Anchor's
consummation of an acquisition proposal with a third party or Anchor's entering
into a definitive agreement with a third party with respect to an acquisition
proposal, in each case within 12 months following the termination of the merger
agreement.
The option expires on the earliest to occur of:
59
<PAGE>
o the effective time of the merger;
o 15 months following the first occurrence of the "purchase event" (subject
to extension due outstanding judgments or regulations);
o termination of the merger agreement in circumstances that preclude Carolina
First's ever being entitled to the termination fee thereunder; or
o 12 months from the termination of the merger agreement, if no "purchase
event" has occurred.
If the option becomes exercisable, it may be exercised in whole or in part
following the purchase event. The times during which the grantee has the right
to exercise the option and other rights under the stock option agreement are
subject to an extension in order to obtain required regulatory approvals and
comply with applicable regulatory waiting periods and to avoid liability under
Section 16(b) of the Exchange Act. The option price and the number of shares
issuable under the option are subject to adjustment in the event of specified
changes in Anchor's capital stock.
RIGHTS OF CAROLINA FIRST
At any time after a "repurchase event" (as defined below), upon request within
12 months of the repurchase event, Anchor may be required to repurchase the
option and all or any part of the shares issued under the option. The repurchase
of the option shall be at a price per share equal to the amount by which the
option repurchase price (as defined in the stock option agreement) exceeds the
option price. A "repurchase event" occurs when the termination fee under the
merger agreement is paid or becomes due and payable under the merger agreement.
In no event, however, will Carolina First's profit with respect to the
termination fee and the option repurchase price exceed $15 million.
PURPOSE OF THE OPTION AGREEMENT
Arrangements such as the stock option agreement are customarily entered into in
connection with announced mergers involving publicly traded companies to
increase the likelihood that the transactions will be consummated in accordance
with their terms, and to compensate the person granted the option for the
efforts undertaken and the expenses and losses incurred by the person if the
transaction is not completed. The stock option agreement may have the effect of
discouraging offers by third parties to acquire Anchor, even if those persons
were prepared to offer to pay consideration to Anchor's shareholders that has a
higher current market price than the shares of Carolina First common stock to be
received by the holders pursuant to the merger agreement. Also, following
consultation with our respective independent accountants, we believe that the
exercise or repurchase of the stock option is likely to prohibit another
acquiror from accounting for any acquisition of Anchor using the "pooling of
interests" accounting method for a period of up to two years.
To our best knowledge no event giving rise to the right to exercise the option
has occurred as of the date of this document.
60
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma capitalization is based on combining the historical
consolidated capitalization of Carolina First at December 31, 1999 with the
historical capitalization of Anchor at December 31, 1999, adjusting for the
issuance of additional shares expected to be issued in the merger.
The unaudited pro forma condensed consolidated balance sheet is based on
combining the historical consolidated balance sheet for Carolina First at
December 31, 1999 with the historical consolidated balance sheet of Anchor at
December 31, 1999, adjusting for the issuance of additional shares expected to
be issued in the merger.
For 1999, 1998 and 1997, the unaudited pro forma condensed consolidated
statements of income are presented combining the historical consolidated
statements of income of Carolina First for the years ended December 31 with the
historical consolidated statements of income of Anchor for the years ended
December 31.
The pro forma information has been presented using the pooling-of-interests
method of accounting. This pro forma information, while helpful in illustrating
the financial characteristics of the combined company under one set of
assumptions, does not attempt to predict or suggest future results. It also does
not necessarily reflect what the historical results of the combined company
would have been had our companies been combined. In addition, the pro forma
information does not reflect any potential benefits from potential cost savings
or synergies expected to be achieved following the merger, given the operational
overlap between Carolina First and Anchor.
The information in the following tables should be read together with the
historical financial information that we have presented in our prior filings
with the SEC. We have incorporated this material into this document by reference
to those other filings. See "Where You Can Find More Information" on page 83.
61
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CAPITALIZATION
At December 31,1999
(Dollars in thousands, except share data)
Pro Forma
Carolina First Anchor Adjustments Combined
-------------- ------ ----------- --------
<S> <C> <C> <C> <C>
LONG-TERM DEBT $ 25,747 $ 11,000 $ -- $ 36,747
Subordinated notes................
FHLB advances..................... 189,420 85,200 -- 274,620
ESOP debt......................... 1,975 -- -- 1,975
Mortgage debt..................... 1,012 -- -- 1,012
----- --- --- -----
Total long-term debt........... 218,154 96,200 -- 314,354
------- ------- --- -------
SHAREHOLDERS' EQUITY
Common stock...................... 25,723 54,148 (36,545) 43,326
Surplus........................... 308,765 -- 36,545 345,310
Retained earnings................. 58,625 41,673 (17,000) 83,298
Nonvested restricted stock and
guarantee of ESOP debt......... (3,532) (913) -- (4,445)
Accumulated other
comprehensive income........... 20,236 (4,135) -- 16,101
------ ------- --- ------
Total shareholders' equity..... 409,817 90,773 (17,000) 483,590
------- ------ -------- -------
Total capitalization........... $ 627,971 $ 186,973 $ (17,000) $ 797,944
======= ======= ======== =======
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
information.
62
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
At December 31, 1999
(Dollars in thousands)
Pro Forma
Carolina First Anchor Adjustments Combined
-------------- ------ ----------- --------
ASSETS
<S> <C> <C> <C> <C>
Cash and due from banks......................... $ 102,986 $ 35,843 $ -- $ 138,829
Interest-bearing bank balances.................. 28,820 152 -- 28,972
Fed funds sold and resale agreements............ 925 2,700 -- 3,625
Investment securities........................... 701,571 262,575 -- 964,146
Loans held for sale............................. 45,316 275 -- 45,591
Loans held for investment....................... 2,389,436 862,379 -- 3,251,815
Less unearned income........................ (5,527) (159) -- (5,686)
Less allowance for loan losses.............. (23,832) (9,924) -- (33,756)
-------- ------- --- --------
Net loans................................. 2,405,393 852,571 -- 3,257,964
Premises and equipment.......................... 57,751 27,112 -- 84,863
Intangible assets............................... 113,431 529 -- 113,960
Other assets.................................... 151,011 25,361 3,000 179,372
------- ------ ------ -------
Total assets............................ $ 3,561,888 $ 1,206,843 $ 3,000 $ 4,771,731
========= ========= ====== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing......................... $ 331,865 $ 164,563 $ -- $ 496,428
Interest-bearing............................ 2,183,129 802,094 -- 2,985,223
--------- ------- --- ---------
Total deposits........................... 2,514,994 966,657 -- 3,481,651
Borrowed funds.................................. 592,079 140,903 -- 732,982
Other liabilities............................... 44,998 8,510 20,000 73,508
------ ----- ------ ------
Total liabilities........................ 3,152,071 1,116,070 20,000 4,288,141
--------- --------- ------ -----------
Total shareholders' equity...................... 409,817 90,773 (17,000) 483,590
------- ------ -------- --------
Total liabilities and shareholders' equity...... $ 3,561,888 $ 1,206,843 $ 3,000 $ 4,771,731
========= ========= ======= =========
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
information.
63
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1999
(Dollars in thousands, except share data)
Pro Forma
Carolina First Anchor Adjustments Combined
-------------- ------ ----------- --------
<S> <C> <C> <C> <C>
Interest income.................................... $ 228,868 $ 92,224 $ -- $ 321,092
Interest expense................................... 107,124 39,354 -- 146,478
------- ------ ------------ -------
Net interest income............................. 121,744 52,870 -- 174,614
Provision for loan losses.......................... 15,846 2,427 -- 18,273
------ ----- ------------ ------
Net interest income after
provision for loan losses................... 105,898 50,443 -- 156,341
Noninterest income.............................. 48,386 12,259 -- 60,645
Noninterest expenses............................ 113,821 42,060 -- 155,881
Equity in net income of unconsolidated
subsidiary.................................. -- 56 -- 56
-------------- ------------- ------------- ------------
Income before income taxes.................. 40,463 20,698 -- 61,161
Income taxes.................................... 13,312 7,399 -- 20,711
------ ----- ---------- ------
Net income.................................. $ 27,151 $ 13,299 $ -- $ 40,450
====== ====== =========== ======
Net income per common share:
Basic....................................... $ 1.08 $ 1.66 $ -- $ 0.95
Diluted..................................... 1.06 1.61 -- 0.93
Average shares outstanding:
Basic....................................... 25,248,900 8,016,908 -- 42,685,675
Diluted..................................... 25,597,573 8,285,446 -- 43,618,418
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
information.
64
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1998
(Dollars in thousands, except share data)
Pro Forma
Carolina First Anchor Adjustments Combined
-------------- ------ ----------- --------
<S> <C> <C> <C> <C>
Interest income.................................... $ 197,060 $ 92,487 $ -- $ 289,547
Interest expense................................... 97,905 42,302 -- 140,207
------ ------ ------------ -------
Net interest income............................. 99,155 50,185 -- 149,340
Provision for loan losses.......................... 12,724 2,922 -- 15,646
------ ----- ------------ ------
Net interest income after
provision for loan losses................... 86,431 47,263 -- 133,694
Noninterest income.............................. 24,389 11,395 -- 35,784
Noninterest expenses............................ 71,978 42,506 -- 114,484
Equity in net income of unconsolidated
subsidiary.................................. -- 242 -- 242
------------ ---- ----------- ----
Income before income taxes.................. 38,842 16,394 -- 55,236
Income taxes.................................... 14,397 6,183 -- 20,580
------ ----- ---------- ------
Net income.................................. $ 24,445 $ 10,211 $ -- $ 34,656
====== ====== ========== ======
Net income per common share:
Basic....................................... $ 1.15 $ 1.28 $ -- $ 0.90
Diluted..................................... 1.13 1.23 -- 0.87
Average shares outstanding:
Basic....................................... 21,284,266 7,959,766 -- 38,596,757
Diluted..................................... 21,684,732 8,285,260 -- 39,705,173
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
information.
65
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1997
(Dollars in thousands, except share data)
Pro Forma
Carolina First Anchor Adjustments Combined
-------------- ------ ----------- --------
<S> <C> <C> <C> <C>
Interest income.................................... $ 144,237 $ 83,137 $ -- $ 227,374
Interest expense................................... 72,006 37,535 -- 109,541
------ ------ ------------ -------
Net interest income............................. 72,231 45,602 -- 117,833
Provision for loan losses.......................... 12,108 2,534 -- 14,642
------ ----- ------------ -------------
Net interest income after
provision for loan losses................... 60,123 43,068 -- 103,191
Noninterest income.............................. 20,400 9,161 -- 29,561
Noninterest expenses............................ 58,587 35,627 -- 94,214
Equity in net income of unconsolidated
subsidiary.................................. -- 15 -- 15
----------- --- ------------ ---
Income before income taxes.................. 21,936 16,617 -- 38,553
Income taxes.................................... 7,896 5,935 -- 13,831
----- ----- ---------- ------
Net income.................................. $ 14,040 $ 10,682 $ -- $ 24,722
====== ====== ========== ======
Net income per common share:
Basic....................................... $ 1.00 $ 1.36 $ -- $ 0.79
Diluted..................................... 0.99 1.29 -- 0.77
Average shares outstanding:
Basic....................................... 14,046,599 7,869,812 -- 31,163,440
Diluted..................................... 14,232,643 8,255,862 -- 32,189,143
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
information.
66
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited Carolina First and Anchor pro forma condensed consolidated
financial information is based upon the following adjustments, reflecting the
consummation of the merger using the pooling interests method of accounting.
Actual amounts may differ from those reflected in the unaudited pro forma
condensed consolidated financial information.
NOTE 1
Carolina First will exchange 2.175 shares of Carolina First common stock for
each share of Anchor common stock outstanding immediately prior to the effective
time of the merger. Shares expected to be issued in connection with the merger
are as follows:
Shares of Anchor stock ....................................... 8,093,476
Exchange ratio ............................................... 2.175
Shares of Carolina First common stock to be issued ...........17,603,310
The following entry was made to the unaudited pro forma condensed consolidated
balance sheet to reflect this transaction:
Common stock - Anchor ....................................... 54,148,000
Common stock - Carolina First ......................... 17,603,000
Additional paid in capital - Carolina First ........... 36,545,000
NOTE 2
Carolina First anticipates one time merger-related charges of approximately $20
million ($17 million, net of tax effects in connection with the merger.
Employee-related and professional fees associated with the transaction
(including fixed financial advisory fees as well as attorneys' and accountants'
fees) are expected to represent the largest portion of the expenses and charges.
The impact of these adjustments, net of tax effects, has been reflected in the
unaudited pro forma condensed consolidated balance sheet as of December 31,
1999, but has not been reflected in the unaudited pro forma condensed
consolidated statements of income. The following adjusting entry was made to the
unaudited pro forma condensed consolidated balance sheet to reflect this
transaction.
Retained earnings ....................................... $ 17,000,000
Other assets (deferred taxes) ........................... 3,000,000
Other liabilities .................................. 20,000,000
67
<PAGE>
CAPITAL ADEQUACY
CAROLINA FIRST. The Federal Reserve has adopted risk-based capital
guidelines for bank holding companies. Under these guidelines, the minimum ratio
of total capital to risk-weighted assets (including some off-balance sheet
activities, such as standby letters of credit) is 8%. At least half of the total
capital is required to be "Tier 1 capital," principally consisting of common
shareholders' equity, noncumulative preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests in the equity
accounts of consolidated subsidiaries, less certain goodwill items. The
remainder (Tier 2 capital) may consist of a limited amount of subordinated debt
and intermediate-term preferred stock, certain hybrid capital instruments and
other debt securities, perpetual preferred stock, and a limited amount of the
general loan loss allowance. In addition to the risk-based capital guidelines,
the Federal Reserve has adopted a minimum Tier 1 (leverage) capital ratio under
which a bank holding company must maintain a minimum level of Tier 1 capital (as
determined under applicable rules) to average total consolidated assets of at
least 3% in the case of bank holding companies which have the highest regulatory
examination ratios and are not contemplating significant growth or expansion.
All other bank holding companies are required to maintain a ratio of at least
100 to 200 basis points above the stated minimum. At December 31, 1998, Carolina
First was in compliance with both the risk-based capital guidelines and the
minimum leverage capital ratio.
PRO FORMA REGULATORY CAPITAL. The following tables set forth, for
Carolina First Bank and for Carolina First Corporation, the regulatory capital
position at December 31, 1999, on a historical basis as well as a pro forma
basis assuming consummation of the acquisition. See "Pro Forma Combined
Condensed Financial Information" on page 66.
CAROLINA FIRST BANK
<TABLE>
<CAPTION>
At December 31, 1999
---------------------------------- ----------------------------------
Historical Pro Forma
---------------------------------- ----------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Shareholders' equity............................... $ 309,224 10.50% $ 397,728 9.59%
======= ===== ======= ====
Regulatory capital
Tier 1 risk-based:
Actual......................................... $ 218,758 9.47% $ 312,755 9.69%
Required*...................................... 92,434 4.00 129,063 4.00
------ ---- ------- ----
Excess......................................... $ 126,324 5.47% $ 183,692 5.69%
======= ==== ======== ====
Total risk-based:
Actual......................................... $ 237,460 10.28% $ 345,881 10.72%
Required*...................................... 184,869 8.00 258,125 8.00
------- ---- ------- ----
Excess......................................... $ 52,591 2.28% $ 87,756 2.72%
====== ==== ======= ====
Leverage:
Actual......................................... $ 218,758 8.33% $ 312,755 8.13%
Required*...................................... 105,108 4.00 153,961 4.00
------- ---- -------- ----
Excess......................................... $ 113,650 4.33% $ 158,794 4.13%
======= ==== ======== ====
Total risk-based assets............................ $ 2,310,861 $3,226,563
========= =========
Total assets................................... $ 2,944,653 $ 4,145,396
========= =========
</TABLE>
*For capital adequacy purposes
68
<PAGE>
<TABLE>
<CAPTION>
CAROLINA FIRST CORPORATION
At December 31, 1999
---------------------------------- ----------------------------------
Historical Pro Forma
---------------------------------- ----------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Shareholders' equity............................... $ 409,817 11.51% $ 483,590 10.13%
======= ===== ======== =====
Regulatory capital
Tier 1 risk-based:
Actual......................................... $ 275,776 10.00% $ 370,966 10.09%
Required*...................................... 110,313 4.00 147,077 4.00
------- ---- ------- ----
Excess......................................... $ 165,463 6.00% $ 223,889 6.09%
======= ==== ======== ====
Total risk-based:
Actual......................................... $ 325,355 11.80% $ 440,469 11.98%
Required*...................................... 220,628 8.00 294,153 8.00
------- ---- -------- ----
Excess......................................... $ 104,727 3.80% $ 146,316 3.98%
----======= ==== ======== =====
Leverage:
Actual......................................... $ 275,776 7.98% $ 370,966 7.92%
Required*...................................... 138,170 4.00 187,237 4.00
------- ---- -------- ----
Excess......................................... $ 137,606 3.98% $ 183,729 3.92%
======= ==== ======== ====
Total risk-based assets............................ $ 2,757,822 $3,676,914
========= =========
Total assets................................... $ 3,561,888 $ 4,771,731
========= =========
</TABLE>
*For capital adequacy purposes
69
<PAGE>
COMPARATIVE RIGHTS OF SHAREHOLDERS
At the effective time, the shares of Anchor common stock will be converted into
shares of Carolina First common stock with the exception of fractional shares,
which will be exchanged for cash. Accordingly, shareholders of Anchor will
become shareholders of Carolina First, and their rights as Carolina First
shareholders will be determined by Carolina First's Articles of Incorporation
and Bylaws. The rights of Carolina First shareholders differ from the rights of
Anchor's shareholders with respect to various matters, including the required
shareholder votes as to mergers, consolidations, exchanges, sales of assets or
dissolution, removal of directors and amendments to the articles of
incorporation, nomination of directors, and statutory and other restrictions on
business combinations and control share acquisitions.
A comparison of the respective rights of Anchor's shareholders and Carolina
First's shareholders with respect to these matters is set forth immediately
below. A description of the Carolina First common stock is set forth below under
"CAROLINA FIRST CORPORATION CAPITAL STOCK."
GENERAL
Both Carolina First and Anchor are South Carolina corporations subject to the
provisions of the South Carolina Business Corporation Act of 1988, as amended
("SCBCA"). As a result, provisions relating to matters like action by
shareholders without a meeting, dissenters' or appraisal rights, related party
transactions and director conflict of interest transactions, shareholder
inspection rights, dividends and dissolution are similar for both companies.
Shareholders of Anchor will, upon consummation of the Merger become shareholders
of Carolina First. The rights of such shareholders will thus be governed by the
Articles of Incorporation and Bylaws of Carolina First.
Set forth below are the material differences between the rights of an Anchor
shareholder under the Anchor Articles of Incorporation and Bylaws, on the one
hand, and the rights of a Carolina First shareholder under the Carolina First
Articles of Incorporation and Bylaws, on the other hand.
The following summary does not reflect any rules of Nasdaq that may apply to
Anchor or Carolina First in connection with the matters discussed. This summary
does not purport to be a complete discussion of, and is qualified in its
entirety by reference to the SCBCA and the constituent documents of each
corporation.
AUTHORIZED CAPITAL
ANCHOR. The authorized capital stock of Anchor consists of 50,000,000 shares of
Anchor common stock (no par value per share). As of March [___], 2000, Anchor
had [___] shares of common stock outstanding.
CAROLINA FIRST. The authorized capital stock of Carolina First consists of
100,000,000 shares of Carolina First common stock (par value $1 per share) and
10,000,000 shares of Carolina First preferred stock. As of March [___], 2000,
Carolina First had [___] shares of common stock outstanding and no shares of
preferred stock outstanding.
AMENDMENT OF ARTICLES/ARTICLES OF INCORPORATION OR BYLAWS
ANCHOR. The SCBCA permits a corporation's board of directors acting by majority
vote at a meeting in which a quorum is present to amend the corporation's
articles of incorporation unless the SCBCA or the corporation's articles of
incorporation or bylaws specify otherwise. The SCBCA also permits a
corporation's shareholders to amend its articles if shareholders holding 10% of
the voting shares propose an amendment to the board of directors and two-thirds
of the shareholders vote to approve the amendment. Pursuant to Anchor's Articles
of Incorporation, the approval of 80% of Anchor's shareholders entitled to vote
thereon is required to amend certain provisions of the Articles of
Incorporation. The approval of a majority of Anchor's shareholders entitled to
vote thereon is required to
70
<PAGE>
amend, add to or repeal in whole or in part its Bylaws, except that Anchor's
Bylaws may also be amended, added to or repealed by a majority vote of the
Anchor Board of Directors.
CAROLINA FIRST. Carolina First's Articles of Incorporation require an 80%
affirmative vote of shareholders entitled to vote thereon to amend provisions of
its Articles of Incorporation relating to the following issues unless 80% of the
directors approve the amendment:
o supermajority voting requirements to approve certain mergers, sales or
exchanges of assets or stock exchanges (See "-- Shareholder Voting in
Certain Business Combinations" on page 77);
o provisions regarding the Board of Directors' powers to evaluate proposals
for business combinations;
o provision of notice requirements for shareholder nominations of directors;
o supermajority voting requirements for removal of directors without cause;
o provision of staggered terms for three classes of directors; and
o supermajority voting provisions for dissolution of Carolina First.
If 80% of the directors approve amendments pertaining to the Articles of
Incorporation listed above, then only a 2/3 affirmative vote of shareholders is
needed to approve the amendments.
Carolina First's Board of Directors may amend or repeal its Bylaws unless:
o the articles of incorporation or the SCBCA reserve this power exclusively
to shareholders;
o Carolina First shareholders in adopting, amending or repealing any bylaw
provide expressly that the board of directors may not amend that bylaw; or
o the bylaw either established, amends or deletes a supermajority shareholder
quorum or voting requirement.
Amendments to the Bylaws by the Board of Directors must be proposed at a meeting
of the Board of Directors prior to the meeting at which such amendments are
adopted. Carolina First's Bylaws may also be amended by a majority vote of
Carolina First shareholders.
SIZE AND CLASSIFICATION OF BOARD OF DIRECTORS
ANCHOR. The SCBCA permits the number of directors to be set in the articles of
incorporation or bylaws. If there are nine or more directors, the SCBCA permits
division of the directors into two or three classes, each as nearly as possible
equal in number, with one class being elected annually. The SCBCA requires a
shareholder vote to change the number of directors by more than 30% of the
existing number of directors. If a corporation's articles or bylaws permit, the
current board may vote to increase or decrease the number of directors by 30% or
less. Anchor's articles of incorporation permit a board of directors of up to 20
persons, and the bylaws permit the majority of the full board to increase the
board up to the maximum of 20 members. The articles of incorporation and the
bylaws provide for division of the directors into three classes with staggered
terms of three years each. In addition, Anchor's bylaws provide that directors
must be shareholders who are at least 30 years old but not more than 70 years
old. The board of directors may nominate former directors over the age of 70 for
election by the shareholders as "advisory directors"; advisory directors may
attend board meetings but have no voting powers and none of the responsibilities
or liabilities of active directors.
CAROLINA FIRST. Carolina First's Bylaws permit the Board of Directors to add to
or reduce the number of directors. Carolina First's Articles of Incorporation
divide the Carolina First Board into three classes. The Bylaws provide that
either the Board of Directors or the shareholders may change the number of
directors on the Board. There are currently 12 directors, but this proxy
statement/prospectus proposes to
71
<PAGE>
increase that number to 17. The SCBCA permits cumulative voting for directors;
however, the Carolina First Articles of Incorporation provide that there will be
no cumulative voting for directors.
SHAREHOLDER NOMINATION OF DIRECTORS
ANCHOR. Under the SCBCA, directors are elected at the annual shareholders'
meeting (except for directors with staggered terms whose terms have not
expired), and either shareholders or the board of directors may fill vacancies
on the board of directors.
CAROLINA FIRST. Under Carolina First's Bylaws, shareholders entitled to vote to
elect directors may nominate directors for election. Nominations must be
received at the principal executive offices of Carolina First no later than 30
days and no earlier than 60 days before the annual meeting at which directors
are elected. Nominations must conform to informational requirements stated in
the Bylaws. Holders of Carolina First preferred stock may elect directors under
specified circumstances.
REMOVAL OF DIRECTORS BY SHAREHOLDERS
ANCHOR. In accordance with the Anchor Bylaws, any or all of the directors may be
removed with or without cause (as defined in Anchor's Articles of Incorporation)
by a majority vote of the shareholders or with cause by a majority vote of the
entire board of directors.
CAROLINA FIRST. In accordance with the Carolina First Articles of Incorporation,
except for directors elected under specified circumstances by holders of
Carolina First preferred stock, any director or the entire board of directors of
Carolina First may be removed without cause by an affirmative vote of at least
80% of the outstanding shares of capital stock. A majority of a quorum of
shareholders present at a meeting may remove a director or the entire board of
directors for cause.
DIRECTOR EXCULPATION
ANCHOR. In accordance with the SCBCA, the Anchor Articles of Incorporation
provide for the elimination of personal liability of each director of Anchor
except:
o for any breach of the director's duty of loyalty to Anchor or its
shareholders,
o for acts or omissions not made in good faith or which involve gross
negligence, intentional misconduct or a knowing violation of law,
o for improper distributions, or
o for any transaction from which a director derived an improper personal
benefit.
CAROLINA FIRST. As noted above, the SCBCA permits corporations to eliminate or
limit the personal liability of directors except for the four circumstances
listed above. Neither the Carolina First Articles of Incorporation nor the
Carolina First Bylaws have any provisions providing for the elimination of
personal liability of directors.
DIRECTOR AND OFFICER INDEMNIFICATION
ANCHOR AND CAROLINA FIRST. Under the SCBCA, generally a corporation may
indemnify a past or present director against liability incurred in a proceeding
if:
o the director conducted himself in good faith,
o the director reasonably believed (a) in the case of conduct in his or her
official capacity with the corporation, that his or her conduct was in its
best interest, and (b) in all other cases, that his or her conduct was at
least not opposed to its best interest, and
o in the case of any criminal proceedings, the director had no reasonable
cause to believe his or her conduct was unlawful.
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However, a corporation may not indemnify a director:
o in connection with a proceeding by or in the right of the corporation in
which the director is adjudged liable to the corporation, or
o in connection with any other proceeding charging improper personal benefit
to him or her in which he or she is adjudged liable on the basis that
personal benefit was improperly received by him or her.
Under the SCBCA, unless limited by the articles of incorporation, a corporation
shall indemnify a director who is wholly successful, on the merits or otherwise,
in the defense of any proceeding to which he or she is party because he or she
is or was a director against reasonable expenses incurred by him or her in
connection with the proceeding. A corporation may pay in advance for the
reasonable litigation expenses of a director if:
o the director furnishes the corporation a written affirmation of his good
faith belief that he or she has met the applicable standard of conduct,
o the director furnishes the corporation a written undertaking to repay the
advance if it is ultimately determined that he or she did not meet the
standard of conduct, and
o a determination is made that the facts then known to those making the
determination would not preclude indemnification.
Such determination, as well as any determination that indemnification shall be
paid, must be made in one of the following ways:
o by a majority vote of a quorum of the board of directors consisting of
directors not at the time parties to the proceeding,
o if a quorum cannot be obtained, by majority vote of a committee designated
by the board of directors, consisting solely of two or more directors not
at the time parties to the proceeding,
o by special legal counsel selected by the board of directors or its
committee in the manner prescribed above, or if a quorum of the board of
directors cannot be obtained and a committee cannot be designated, selected
by majority vote of the full board of directors, or
o by the shareholders, but shares owned by or voted under the control of
directors who are at the time parties to the proceeding may not be voted on
the determination.
Under the SCBCA, an officer is entitled to the benefit of the same
indemnification provisions as apply to directors, but in addition a corporation
may indemnify and advance expenses to an officer who is not a director to the
extent, consistent with public policy, provided by the corporation's articles of
incorporation, the corporation's bylaws, general or specific action of the board
of directors, or contract. Unless the corporation's articles of incorporation
provide otherwise, the SCBCA permits a court in certain circumstances to order
the payment of indemnification to a director, whether or not he met the
applicable standard of conduct, if the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances.
The SCBCA permits a corporation to purchase and maintain insurance on behalf of
any officer or director against any liability, whether or not the corporation
would have the power to indemnify such officer or director against such
liability.
Anchor's Bylaws provide that any person may be indemnified for reasonable
expenses actually incurred in connection with proceedings in which he or she is
made party by reason of being a director of Anchor, except that there will be no
indemnification if the director is adjudged guilty or liable for gross
negligence, willful misconduct or criminal acts. In addition, there will be no
indemnification if there is a compromise settlement without the approval of a
court of competent jurisdiction, a majority of shareholders or a majority of
disinterested directors.
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Carolina First's Articles of Incorporation provide that a director of the
corporation is not ersonally liable to the corporation or any of its
shareholders for monetary damages for breach of fiduciary duty as a director,
provided that this provision shall not be deemed to eliminate or limit the
liability of a director:
o for any breach of the director's duty of loyalty to the corporation or its
shareholders,
o for acts or omissions not in good faith or which involved gross negligence,
intentional misconduct, or a knowing violation of law,
o imposed under Section 33-8-330 of the SCBCA (improper distribution to
shareholder), or
o for any transaction from which the director derived an improper personal
benefit.
The Carolina First Bylaws provide for indemnification of officers and directors
for expenses and for the advancement of expenses to the maximum extent permitted
by applicable law.
SHAREHOLDER MEETINGS
ANCHOR. Anchor has annual meetings , and pursuant to Anchor's Bylaws, it may
have special meetings called by the president, the chairman of the Board of
Directors, a majority of the Board of Directors or by the holders of not less
than 1/10 of the shares entitled to vote at such meeting. The Board of Directors
chooses the place of meetings. Anchor must mail written notice of meetings to
shareholders of record no less than 10 days and no more than 50 days before the
meeting. Pursuant to the SCBCA, the record date must be no more than 70 days
before the date on which shareholders are to take action.
CAROLINA FIRST. Carolina First has annual meetings, and pursuant to Carolina
First's Bylaws, it may have special meetings called by the President, the board
of directors, or by request of holders of one-tenth of all outstanding votes of
the corporation entitled to be cast on any issue at the meeting. The board of
directors chooses the place of meetings. Except as described below for
shareholder-requested special meetings, the board of directors must send
Carolina First shareholders written notice of meetings not more than 60 and not
less than 10 days before the date of the meeting. The board of directors may set
the record date for shareholders entitled to vote at a meeting 70 days in
advance of the meeting. If the board of directors does not set a record date,
the Bylaws list default record dates for various types of meetings and business.
If shareholders wish to request a special meeting, they must first give written
notice to the secretary of the corporation requesting that a record date be
fixed. The board of directors must fix the record date within 10 days of receipt
of the request. Carolina First must receive, within 60 days of the record date,
written requests from the requisite 10% of shareholders requesting the special
meeting for the shareholder request to be valid. If an adequate number of valid
written requests are received, the board of directors must set a new record date
for the special meeting and give notice of the meeting to shareholders within 30
days of the date on which the 10% written request requirement was satisfied.
Shareholders may propose business for shareholder meetings. Shareholders must
deliver notice of their proposals to the principal place of business of Carolina
First no more than 90 days and no less than 60 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that if
the annual meeting is more than 30 days before or 60 days after the anniversary
of the previous annual meeting, notice of shareholder proposals must be
delivered no more than 90 and no less than 60 days prior to the meeting or no
later than the 10th day following the announcement of the meeting. The notice
must meet certain requirements specified in the Bylaws.
SHAREHOLDER VOTING IN GENERAL
Shareholder action requires a quorum of shares entitled to vote. Unless the
SCBCA, a corporation's articles of incorporation or its bylaws require
otherwise, the SCBCA states that a majority of shares entitled to vote
constitutes a quorum and an affirmative vote of a majority of shares present
suffices to approve any proposed action. If a separate vote by class or classes
is required, a majority of the
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outstanding shares of that class or classes constitutes a quorum and a majority
of shares of that class or classes present suffices to approve any proposed
action.
Anchor's Articles of Incorporation require the approval of 80% of Anchor's
shareholders entitled to vote thereon to amend some of the provisions of the
Articles of Incorporation.
Carolina First's Bylaws provide that a bylaw adding, changing or deleting a
supermajority quorum or voting requirement must be approved by the same vote and
voting groups required to take action under the bylaws as then in effect or as
in the proposed amendment, whichever requires a greater quorum and/or vote for
approval.
SHAREHOLDER VOTING IN CERTAIN BUSINESS COMBINATIONS
Under the SCBCA, a plan of merger must generally be approved by the affirmative
vote of the holders of at least two-thirds of the votes entitled to be cast on
the plan regardless of the class or voting group to which the shares belong, and
two-thirds of the votes entitled to be cast on the plan within each voting group
entitled to vote as a separate voting group on the plan. A corporation's
articles of incorporation may require a lower or higher vote for approval, but
the required vote must be at least a majority of the votes entitled to be cast
on the plan by each voting group entitled to vote separately on the plan.
Under the SCBCA, to authorize the sale, lease, exchange or other disposition of
all or substantially all of the property of a corporation, other than in the
usual and regular course of business, or to voluntarily dissolve the
corporation, South Carolina law requires the affirmative vote of at least
two-thirds of all the votes entitled to be cast on the transaction. A
corporation's articles of incorporation may require a lower or higher vote for
approval, but the required vote must be least a majority of all the votes
entitled to be cast on the transaction.
Anchor's Articles of Incorporation provide that an affirmative vote of at least
80% of shareholders is required in the event that the Board of Directors does
not recommend to the shareholders a vote in favor of:
o a merger or consolidation of Anchor with any entity, or
o a sale, exchange or lease of all or substantially all of the assets of
Anchor to any entity.
The Carolina First Articles of Incorporation alter the default rules of the
SCBCA to require the affirmative vote of 80% of the outstanding stock of
Carolina First entitled to vote for approval of the following actions unless 80%
of the directors of Carolina First have approved the action:
o a merger of Carolina First or any of its subsidiaries with any other
corporation;
o the sale or exchange of all or a substantial part of Carolina First's
assets to or with any other corporation; or
o the issue or delivery of Carolina First stock or other Carolina First
securities in exchange or payment for properties or assets of or securities
issued by any other corporation.
Transactions solely between Carolina First and another corporation are excluded
from this 80% approval requirement if Carolina First owns 50% or more of the
other corporation's voting stock.
CHANGE IN CONTROL, BUSINESS COMBINATIONS AND ANTI-TAKEOVER PROVISIONS
South Carolina's legislation respecting Control Share Acquisitions (as defined
in the SCBCA) and Business Combinations (as defined herein) was enacted in 1988.
The South Carolina Control Share Acquisition law applies to several categories
of South Carolina corporations, including any South Carolina corporation, such
as Carolina First and Anchor, that has a class of voting shares registered with
the SEC under Section 12 of the Exchange Act, has a principal place of business,
its principal office or
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substantial assets in South Carolina and has a specified shareholder presence in
South Carolina. The South Carolina Business Combination Law applies to certain
South Carolina corporations, such as Carolina First and Anchor, and certain
non-South Carolina corporations that have a significant presence in South
Carolina.
SOUTH CAROLINA CONTROL SHARE ACQUISITIONS LAW. Unless a corporation has opted
out of the provisions of the South Carolina statute before the "control share
acquisition" in question through an amendment to its articles of incorporation
or bylaws, "control shares" of the corporation acquired in a "control share
acquisition" have no voting rights unless and until granted by resolution
approved by a majority of the shares of each voting group, excluding all
"interested shares." "Interested shares" are shares of the corporation voted by
an acquiring person or a member of a group with respect to a "control share
acquisition," any officer of the corporation or any employee of the corporation
who is also a director of the corporation.
If authorized by such a corporation's articles of incorporation or bylaws before
a "control share acquisition" has occurred, "control shares" acquired in a
"control share acquisition" may under certain circumstances be subject to
redemption by the corporation at the fair value thereof.
Unless otherwise provided in such a corporation's articles of incorporation or
bylaws before a "control share acquisition" has occurred, if "control shares"
acquired in a "control share acquisition" are accorded full voting rights which
will constitute a majority or more of all voting power, all shareholders of the
corporation have dissenters' rights to receive fair value for their shares.
For purposes of the Control Share Acquisition law, "control shares" are shares,
the acquisition of which would give a person, acting alone or with a group, the
power to exercise one of the following amounts of voting power in an election of
directors:
o one-fifth or more but less than one-third of all voting power,
o one-third or more but less than a majority of all voting power or
o a majority or more of all voting power.
For purposes of the law, a "control share acquisition" means the acquisition,
directly or indirectly, by any person of ownership of, or the power to direct
the exercise of voting power with respect to, issued and outstanding "control
shares". Among certain other circumstances, a "control share acquisition" is
deemed not to occur when the share acquisition is pursuant to a merger or plan
of share exchange where the corporation is a party to the agreement of merger or
plan of share exchange. Accordingly, the statute would not, by its terms, apply
to the merger agreement.
SOUTH CAROLINA BUSINESS COMBINATION LAW. The law prohibits specified "business
combinations" with "interested shareholders" unless certain conditions are
satisfied. The act defines an "interested shareholder" as any person (other than
the corporation or any of its subsidiaries) that:
o beneficially owns 10% or more of the corporation's outstanding voting
shares or
o at any time within the preceding two-year period beneficially owned 10% of
the voting power of the corporation's outstanding shares and is an
affiliate or associate of the corporation.
Excluded from the statute's coverage is any "business combination" with any
person that beneficially owned in excess of 10% of the corporation's voting
shares prior to April 23, 1988.
Covered business combinations with interested shareholders or an affiliate or
associate of an interested shareholder include, among other transactions:
o merger of the corporation;
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o sale, lease, exchange, mortgage, pledge, transfer or other disposition of
assets having a value equal to 10% or more of the value of all assets of
the corporation, the value of all outstanding shares of the corporation, or
the earning power or net income of the corporation;
o transfer of shares of the corporation equaling 5% or more of the market
value of all outstanding shares of the corporation; and
o dissolution or liquidation of the corporation proposed by or under an
arrangement with an interested shareholder or its affiliate or associate.
Covered business combinations are prohibited unless:
o the board of directors of the corporation approved of the business
combination before the interested shareholder became an interested
shareholder;
o a majority of shares not beneficially owned by the interested shareholder
approved the combination; and
o certain transactional requirements are met.
Covered business combinations are prohibited for two years after an interested
shareholder becomes interested unless the board of directors of the corporation
approved of the business combination before the interested party became
interested.
Neither Anchor nor Carolina First has opted out of coverage of either the South
Carolina Control Shares Acquisition law or the South Carolina Business
Combination law.
RIGHTS PLAN. Carolina First has adopted a Shareholders' Rights Plan, discussed
below, which may serve to impede certain takeovers not favored by the Carolina
First board of directors.
CAROLINA FIRST CAPITAL STOCK
COMMON STOCK
Carolina First has 100,000,000 shares of common stock authorized, of which [___]
shares were outstanding as of March [___], 2000. The holders of the Carolina
First common stock are entitled to dividends when, as and if declared by the
Board of Directors in their discretion out of funds legally available therefor.
The principal source of funds for Carolina First is dividends from its
subsidiaries. Carolina First's subsidiaries are subject to certain legal
restrictions on the amount of dividends they are permitted to pay. All
outstanding shares of Carolina First common stock are fully paid and
nonassessable. No holder of Carolina First common stock has any redemption or
sinking fund privileges, any preemptive or other rights to subscribe for any
other shares or securities, or any conversion rights. In the event of
liquidation, the holders of Carolina First common stock are entitled to receive
pro rata any assets distributable to shareholders in respect of shares held by
them, subject to the rights of any senior stock which may be issued in the
future. Holders of the Carolina First common stock are entitled to one vote per
share.
PREFERRED STOCK
Carolina First has 10,000,000 shares of "blank check" preferred stock authorized
("Preferred Stock"), none of which is outstanding. Carolina First's Board of
Directors has the sole authority, without shareholder vote, to issue shares of
authorized but unissued Preferred Stock to whomever and for whatever purposes
it, in its sole discretion, deems appropriate. The relative rights, preferences
and limitations of the Preferred Stock are determined by Carolina First's Board
of Directors in its sole discretion. Among other things, the Board may designate
with respect to the Preferred Stock, without further action of the shareholders
of Carolina First, the dividend rate and whether dividends shall be cumulative
or participating or possess other special rights, the voting rights, Carolina
First's rights and terms of redemption, the liquidation preferences, any rights
of conversion and any terms related thereto,
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and the price or other consideration for which the Preferred Stock shall be
issued. The Preferred Stock could be utilized by Carolina First to impede the
ability of third parties who attempt to acquire control of Carolina First
without the cooperation of Carolina First's Board of Directors.
CERTAIN MATTERS
SHAREHOLDERS' RIGHTS AGREEMENT. In 1993, the Carolina First Board of Directors
adopted a Shareholders' Rights Agreement, which was subsequently amended and
restated in December 1996 ("Rights Agreement"). Under the Rights Agreement, the
Board of Directors declared a distribution of one common stock purchase right (a
"Right") for each outstanding share of Carolina First common stock outstanding
on November 23, 1993 and each share to be issued by Carolina First thereafter.
Each Right entitles the registered holder to purchase from Carolina First
one-half share of Carolina First common stock at a cash exercise price of
$30.00, subject to adjustment.
Initially, the Rights are not exercisable and no separate right certificates are
distributed. However, the Rights will separate from the Carolina First common
stock and a "Distribution Date" will occur upon the earlier of:
o the close of business on the 10th calendar day after the Share Acquisition
Date (as defined below), or
o the close of business on the 10th business day after the date of:
o the commencement, by any person, other than an "exempt person", of, or
o the first public announcement of the intention of any person (other than an
exempt person) to commence, a tender or exchange offer if, upon consummation
thereof, such person would be an Acquiring Person (defined as a person or
group which has acquired beneficial ownership of 20% or more of the
outstanding shares of the Carolina First common stock) (the date of said
announcement being referred to as the "Share Acquisition Date").
Until the Distribution Date, the Rights will be evidenced by the Carolina First
common stock certificates and will be transferred with and only with such
certificates, and the surrender for transfer of any certificates for Carolina
First common stock will also constitute the transfer of the Rights associated
with the Carolina First common stock represented by such certificate. The Rights
are not exercisable until the Distribution Date and will expire at the close of
business on December 18, 2006, unless previously redeemed by Carolina First as
described below. As soon as practicable after the Distribution Date, rights
certificates will be mailed to holders of record of Carolina First common stock
as of the close of business on the Distribution Date and, thereafter, the
separate rights certificates alone will represent the Rights. Except as
otherwise determined by the Board of Directors, only shares of Carolina First
common stock issued prior to the Distribution Date will be issued with Rights.
ln the event that:
o a person acquires beneficial ownership of 20% or more of the Carolina First
common stock,
o Carolina First is the surviving corporation in a merger with an Acquiring
Person or any Affiliate or Associate (as defined in the Rights Agreement) and
the Carolina First common stock is not changed or exchanged,
o an Acquiring Person engages in one of a number of self-dealing transactions
specified in the Rights Agreement, or
o an event occurs which results in an Acquiring Person's ownership interest
being increased by more than 1% (e.g., a reverse stock split),
proper provision will be made so that each holder of a Right will thereafter
have the right to receive upon exercise thereof at the then current exercise
price, that number of shares of Carolina First common stock (or in certain
circumstances, cash, property, or other securities of Carolina First) having a
market value of two times such exercise price. However, the Rights are not
exercisable following the occurrence of any of
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the events set forth above until such time as the Rights are no longer
redeemable as set forth below. Notwithstanding any of the foregoing, Rights that
are or were beneficially owned by an Acquiring Person shall become null and
void.
In the event that following the Share Acquisition Date:
o Carolina First is acquired in a merger or other business combination
transaction, or
o 50% or more of Carolina First's assets or earning power is sold,
each holder of a Right shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a market value equal to
two times the exercise price of the Right. At any time after any person becomes
an Acquiring Person and prior to such time such Acquiring Person, together with
its Affiliates and Associates, becomes the Beneficial Owner of 50% or more of
the outstanding Carolina First common stock, the Board of Directors may exchange
the Rights (other than Rights which have become void), in whole or in part, at
the exchange rate of one share of Carolina First common stock per Right, subject
to adjustment as provided in the Rights Agreement.
The exercise price payable, and the number of shares of Carolina First common
stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution:
o in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Carolina First common stock,
o if holders of the Carolina First common stock are granted certain rights or
warrants to subscribe for Carolina First common stock or securities
convertible into Carolina First common stock at less than the current market
price of the Carolina First common stock, or
o upon the distribution to holders of the Carolina First common stock of
evidence of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
The Rights may be redeemed in whole, but not in part, at a price of $.001 per
Right (payable in cash, Carolina First common stock or other consideration
deemed appropriate by the Board of Directors) by the Board of Directors at any
time prior to a Share Acquisition Date or the final expiration Date of the
Rights (whichever is earlier); provided that under certain circumstances, the
Rights may not be redeemed unless there are Disinterested Directors (as defined
in the Rights Agreement) in office and such redemption is approved by a majority
of such Disinterested Directors. After the redemption period has expired,
Carolina First's right of redemption may be reinstated upon the approval of the
Board of Directors if an Acquiring Person reduces his beneficial ownership to
15% or less of the outstanding shares of Carolina First common stock in a
transaction or series of transactions not involving Carolina First and there are
no other Acquiring Persons. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and
thereafter the only right of the holders of Rights will be to receive the
redemption price.
Any of the provisions of the Rights Agreement may be amended by the Board of
Directors of Carolina First prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement, other than those
relating to the principal economic terms of the Rights, may be amended by the
Board to cure any ambiguity, defect or inconsistency, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement. Amendments adjusting time periods may, under certain
circumstances, require the approval of a majority of Disinterested Directors, or
otherwise be limited. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Shareholder
Rights Agreement, a copy of which has been included in Carolina First's public
filings with the SEC.
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MANAGEMENT CONTRACTS. Carolina First has entered into Noncompetition, Severance
and Employment Agreements with all of its senior executive officers. These
agreements set forth general provisions regarding compensation, confidentiality,
termination and noncompetition. However, they also provide that in the event
that the named executive's employment with Carolina First is voluntarily or
involuntarily terminated after a "change in control" (as defined in such
agreement), then, except in very limited instances, the named executive becomes
entitled to receive immediately amounts substantially equal to three years'
compensation (including bonus compensation).
BOARD OF DIRECTORS.
CLASSIFICATION OF BOARD OF DIRECTORS. Carolina First's Board of Directors
currently consists of twelve persons. Pursuant to this proxy
statement/prospectus, Carolina First is requesting that its shareholders approve
an increase in the board to 17 members. In accordance with its Articles of
Incorporation, whenever the Board consists of nine or more persons, the Board
shall be divided into three classes of directors (with each class having as
close to an equal number as possible). The members of each class are elected for
staggered three-year terms. The staggering of Board terms has the effect of
making it more difficult to replace current Directors than would otherwise be
the case. Accordingly, unless the shareholders vote to remove one or more
Directors as described below, it would take three annual meetings for
shareholders to change the members of the entire Board of Directors. Carolina
First's Articles of Incorporation also provide that any shareholder entitled to
vote for the election of directors may make nominations for the election of
directors only by giving written notice to the Secretary of Carolina First at
least 30 days but not more than 60 days prior to the annual meeting of
shareholders at which directors are to be elected, unless such requirement is
waived in advance of the meeting by the Board of Directors.
REMOVAL OF DIRECTORS. Carolina First's Articles of Incorporation require the
affirmative vote of the holders of not less than 80% of the outstanding voting
securities of Carolina First to remove any Director or the entire Board of
Directors without cause. Directors may be removed for cause as provided under
South Carolina law.
LIMITATION OF DIRECTOR LIABILITY. The members of the Board of Directors of
Carolina First are exempt under Carolina First's Articles of Incorporation from
personal monetary liability to the extent permitted by Section 33-2-102(e) of
the SCBCA. This statutory provision provides that a director of the corporation
shall not be personally liable to the corporation or any of its shareholders for
monetary damages for breach of fiduciary duty as a director, provided that this
provision shall not be deemed to eliminate or limit the liability of a director:
o for any breach of the director's duty of loyalty to the corporation or its
shareholders,
o for acts or omissions not in good faith or which involved gross negligence,
intentional misconduct, or a knowing violation of law,
o imposed under Section 33-8-330 of the SCBCA (improper distribution to
shareholder), or
o for any transaction from which the director derived an improper personal
benefit.
EVALUATION OF PROPOSED BUSINESS COMBINATIONS. Carolina First's Articles of
Incorporation provide that the Board of Directors, when evaluating any proposed
business combination with Carolina First, shall give due consideration to all
relevant factors, including without limitation, the social, legal, environmental
and economic effects on the employees, customers, suppliers and other
constituencies of Carolina First, and on its subsidiaries, the communities and
geographical areas in which Carolina First and its subsidiaries operate or are
located, and on any of the businesses and properties of Carolina First or any of
its subsidiaries, as well as such other factors as the directors deem relevant,
and not only the consideration being offered in relation to the then current
market price for Carolina First's outstanding shares, but also in relation to
the then current value of Carolina First in a freely-negotiated transaction and
in relation to the Board of Directors' estimate of the future value of Carolina
First (including the unrealized value of its properties and assets) as an
independent going concern.
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VOTING.
VOTING FOR DIRECTORS. Carolina First's Articles of Incorporation provide that
shareholders may not cumulate votes for the election of directors. Accordingly,
holders of more than 50% of the shares voting at the election of directors can
elect all of the directors if they choose to do so and, in such event, the
holders of the remaining shares (less than 50%) voting are not able to elect any
board members. In cases where there are more nominees for Directors than
positions available, the nominees receiving the largest number of votes are
elected.
SUPERMAJORITY VOTING REQUIREMENTS. Carolina First's Articles of Incorporation
require the affirmative vote of holders of at least 80% of the outstanding stock
of Carolina First entitled to vote for approval before Carolina First may:
o merge or consolidate with any other corporation,
o sell or exchange all or a substantial part of its assets to or with any other
corporation, or
o issue or deliver any stock or other securities of its issue in exchange or
payment for any properties or assets of any other corporation, or securities
issued by any other corporation, or in a merger of any subsidiary of Carolina
First with or into any other corporation (the foregoing being hereinafter
referred to as a "business combination").
This 80% supermajority is reduced to the percentage required by applicable law
if such business combination was approved (or adopted) and recommended without
condition by the affirmative vote of at least 80% of the directors. The Articles
of Incorporation expressly permit the Board of Directors to condition its
approval (or adoption) of any business combination upon the approval of holders
of 80% of the outstanding stock of Carolina First entitled to vote on such
business combination. The 80% supermajority provision is not applicable to any
transaction solely between Carolina First and another corporation, 50% or more
of the voting stock of which is owned by Carolina First. Under present South
Carolina law, a merger or the sale of substantially all the assets requires the
approval of holders of at least two-thirds of the outstanding shares entitled to
vote. The amendment of the foregoing business combination provisions requires
the approval of holders of 80% of the outstanding shares entitled to vote. The
foregoing supermajority voting provision could impede the ability of third
parties who attempt to acquire control of Carolina First without the cooperation
of Carolina First's Board of Directors.
CONTROL SHARE ACQUISITION/BUSINESS COMBINATION STATUTES. The SCBCA has business
combination and control share acquisition statutes which may serve to impede
takeovers not favored by management. See "Comparative Rights of Shareholders --
Change in Control, Business Combinations and Anti-Takeover Provisions" on page
78.
TRANSFER AGENT. The transfer agent for the Carolina First common stock is
Reliance Trust Company, Atlanta, Georgia.
DIVIDEND REINVESTMENT PLAN. Carolina First has in place a dividend reinvestment
plan with respect to the Carolina First common stock. As set forth in the plan,
holders of such shares may elect to receive Carolina First common stock in lieu
of receiving the cash dividends to which such holder may otherwise be entitled.
The plan also provides for purchases of Carolina First common stock through
optional cash payments.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements with respect to the
financial condition, results of operations and business of Carolina First. These
statements may be made directly in this document or may be incorporated in this
document by reference to other documents and may include statements for the
period following the consummation of the merger. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"estimates" or similar expressions. These forward-looking statements involve
substantial risks and uncertainties. Some of the factors that may cause actual
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results to differ materially from those contemplated by the forward-looking
statements include the following possibilities:
o combining the businesses of Carolina First and Anchor may cost more than we
expect;
o integrating the businesses of Carolina First and Anchor and retaining key
personnel may be more difficult than we expect;
o our revenues after the merger may be lower than we expect, or our operating
costs may be higher than we expect;
o expected cost savings from the merger may not be fully realized or may not
be realized within the expected time frame;
o we may lose more business or customers after the merger than we expect;
o there may be increases in competitive pressure among financial
institutions;
o changes in the interest rate environment may reduce interest margins;
o general economic conditions, either nationally or in some or all of the
states in which the combined company will be doing business, or conditions
in securities markets, may be less favorable than we currently anticipate;
or
o legislation or regulatory changes may adversely affect our business.
EXPERTS
The consolidated financial statements of Carolina First and subsidiaries as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, have been incorporated by reference herein and in the
proxy statement/prospectus in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Anchor as of December 31, 1999 and for
the year then ended, incorporated by reference herein and in the registration
statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, incorporated by
reference herein, in reliance upon the authority of said firm as experts in
accounting and auditing.
Carolina First expects representatives of KPMG LLP to attend Carolina First's
special meeting, and Anchor expects representatives of Arthur Andersen LLP to
attend Anchor's special meeting. These representatives will have an opportunity
to make a statement if they desire to do so, and we expect that they will be
available to respond to any appropriate questions you may have.
VALIDITY OF CAROLINA FIRST COMMON STOCK
The validity of the shares of Carolina First common stock to be issued in the
merger will be passed upon for Carolina First by Wyche, Burgess, Freeman &
Parham, P.A., Greenville, South Carolina.
OTHER MATTERS
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As of the date of this document, the Carolina First board of directors and the
Anchor board of directors know of no matters that will be presented for
consideration at the special meeting other than as described in this document.
However, if any other matter shall come before the special meeting or any
adjournments or postponements thereof and shall be voted upon, the proposed
proxy will be deemed to confer authority to the individuals named as authorized
therein to vote the shares represented by the proxy as to any matters that may
properly come before the special meeting; provided, however, that no proxy that
is voted against the proposal to approve the merger agreement or the increase
in, and issuance of, Carolina First authorized common stock will be voted in
favor of any adjournment or postponement.
WHERE YOU CAN FIND MORE INFORMATION
Carolina First has filed with the SEC a registration statement under the
Securities Act that registers the distribution to Anchor shareholders of the
shares of Carolina First common stock to be issued in connection with the
merger. The registration statement, including the attached exhibits and
schedules, contains additional relevant information about Carolina First and
Carolina First common stock. The rules and regulations of the SEC allow us to
omit certain information included in the registration statement from this
document.
In addition, Carolina First and Anchor file reports, proxy statements and other
information with the SEC under the Securities Exchange Act. You may read and
copy this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison St.
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
You may also obtain copies of this information by mail from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
at prescribed rates. The SEC also maintains an Internet World Wide Web site that
contains reports, proxy statements and other information about issuers, like
Carolina First and Anchor, who file electronically with the SEC. The address of
the site is http://www.sec.gov.
You should also be able to inspect reports, proxy statements and other
information about Carolina First and Anchor at the offices of the NASD, 20 Broad
Street, New York, New York 10005. Also, Carolina First maintains a website at
www.carolinafirst.com and Anchor maintains a website at
www.anchorfinancialcorp.com.
The SEC allows Carolina First and Anchor to "incorporate by reference"
information into this proxy statement/prospectus. This means that Carolina First
and Anchor can disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is considered to be a part of this proxy statement/prospectus, except
for any information that is superseded by information that is included directly
in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents listed
below that Carolina First and Anchor previously filed with the SEC. They contain
important information about the companies and their financial condition.
Carolina First SEC Filings Period/Filing Date
- -------------------------- ------------------
Annual Report on Form 10-K Year ended December 31, 1999
Current Report on Form 8-K January 18, 2000
The descriptions of Carolina First common stock and rights set forth in Carolina
First's registration statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act, including any amendment or report filed with the SEC for the
purpose of updating such descriptions.
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Anchor SEC Filings Period/Filing Date
- ------------------ ------------------
Annual Report on Form 10-K Year ended December 31, 1999
Current Report on Form 8-K January 18, 2000
The descriptions of Anchor common stock and rights set forth in Anchor's
registration statement on Form S-3 filed pursuant to Section 12 of the
Exchange Act, including any amendment or report filed with the SEC for the
purpose of updating such descriptions.
Carolina First incorporates by reference additional documents that it may file
with the SEC between the date of this proxy statement/prospectus and the date of
the Carolina First special meeting. Anchor incorporates by reference additional
documents that it may file with the SEC between the date of this proxy
statement/ prospectus and the date of the Anchor special meeting. These
documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
Carolina First has supplied all information contained or incorporated by
reference in this document relating to Carolina First, as well as all pro forma
financial information, and Anchor has supplied all information relating to
Anchor.
Documents incorporated by reference are available from Carolina First and Anchor
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this document. You can
obtain documents incorporated by reference in this document by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
<TABLE>
<CAPTION>
<S> <C>
Carolina First Corporation Anchor Financial Corporation
Mary M. Gentry Investor Relations Department - Christie Truette
Treasurer 2002 Oak Street
Greenville, South Carolina 29601 Myrtle Beach, South Carolina 29577
Phone: (864) 255-4919 Phone: (843) 946-3105
</TABLE>
If you would like to request documents, please do so by April 15, 2000 to
receive them before the special meeting. If you request any incorporated
documents from Carolina First or Anchor, Carolina First or Anchor will mail them
to you by first class mail, or another equally prompt means, within one business
day after it receives your request.
Neither Carolina First nor Anchor has authorized anyone to give any information
or make any representation about the merger or our companies that is different
from, or in addition to, that contained in this document or in any of the
materials that have been incorporated into this document. Therefore, if anyone
does give you information of this sort, you should not rely on it. If you are in
a jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
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APPENDICES
Annex A Agreement and Plan of Reorganization entered into as of
January 10, 2000 by and among Carolina First, Carolina First
Bank, Anchor and The Anchor Bank
Annex B Stock Option Agreement, dated as of January 10, 2000 between
Carolina First and Anchor
Annex C Opinion of The Robinson-Humphrey Company, LLC
Annex D Opinion of The Orr Group
Annex E Opinion of Salomon Smith Barney
Annex F CFC Interim, Inc. Anticipated Balance Sheet
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ANNEX A TO PROXY STATEMENT PROSPECTUS
REORGANIZATION AGREEMENT
BY AND AMONG
CAROLINA FIRST CORPORATION,
CAROLINA FIRST BANK,
ANCHOR FINANCIAL CORPORATION,
AND
THE ANCHOR BANK
DATED AS OF JANUARY 10, 2000
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This REORGANIZATION AGREEMENT is entered into as of this 10th day of
January, 2000 among Carolina First Corporation ("CFC"), a corporation organized
and existing under the laws of the State of South Carolina, Carolina First Bank
("CFB"), a state banking corporation organized and existing under the laws of
the State of South Carolina, Anchor Financial Corporation ("AFC"), a corporation
organized and existing under the laws of the state of South Carolina, and The
Anchor Bank ("AB"), a state banking corporation organized and existing under the
laws of the state of South Carolina.
RECITALS
A. AFC is a South Carolina corporation headquartered in Myrtle Beach,
South Carolina, and a registered bank holding company under the Bank Holding
Company Act of 1956, as amended ("BHCA").
B. AB is a state bank headquartered in Myrtle Beach, South Carolina,
and a wholly-owned subsidiary of AFC.
C. CFC is a South Carolina corporation headquartered in Greenville,
South Carolina, and a registered bank holding company under the BHCA.
D. CFB is a South Carolina-chartered, non-member banking corporation
headquartered in Greenville, South Carolina.
E. The parties hereto desire that AFC be merged with and into a
to-be-formed subsidiary of CFC (the "Corporate Merger"), all as more
particularly set forth herein.
F. The Boards of Directors of CFC and AFC have approved and in
connection with the execution of this Reorganization Agreement, CFC and AFC will
execute an agreement in the form attached hereto as Appendix E (the "Stock
Option Agreement") whereby AFC will grant CFC an option to purchase shares of
AFC Common Stock upon the terms and conditions provided in such agreement;
G. Subsequent to the Corporate Merger, the parties desire that AB be
merged with and into CFB (the "Bank Merger"), all as more particularly set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, CFC, CFB, AFC and
AB hereby agree as follows:
SECTION I. DEFINITIONS
1.1 ACQUISITION PROPOSAL. Acquisition Proposal shall have the meaning
assigned to such term in Section 6.10 hereof.
1.2 AB. The Anchor Bank, a state bank organized and existing under the
laws of the state of South Carolina. Where the context permits, AB shall be
deemed to include its subsidiaries.
1.3 AFC. Anchor Financial Corporation, a corporation organized and
existing under the laws of the state of South Carolina. In Section III hereof,
where the context permits, AFC shall include its subsidiaries.
1.4 AFC BENEFIT PLANS. All Benefit Plans, and all other material fringe
benefit plans or programs, sponsored or maintained by AFC or AB or under which
AFC or AB may be obligated.
1.5 AFC COMMON STOCK. The common stock, no par value per share, of AFC.
1.6 AFC SHAREHOLDER APPROVALS. This term shall mean, as the context may
require, the duly authorized written consent of AFC to the Bank Merger and the
approval by the requisite vote of the shareholders of AFC at the AFC
Shareholders' Meeting of the Corporate Merger, all in accordance with this
Reorganization Agreement and the Plan of Merger.
1.7 AFC SHAREHOLDERS' MEETING. The meeting of AFC shareholders at which
the Corporate Merger will be voted upon.
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1.8 ARTICLES OF MERGER. The Articles of Merger to be executed by (i)
CFC and AFC and (ii) CFB and AB and in a form appropriate for filing with the
Secretary of State of South Carolina, and relating to the effective consummation
of the Mergers as contemplated by the Plan of Merger.
1.9 BHCA. The Bank Holding Company Act of 1956, as amended.
1.10 BANK MERGER. The merger described in Section 2.2.
1.11 BENEFIT PLANS. All employee benefit plans within the meaning of
Section 3(3) of ERISA and any related or separate contracts, plans, trusts,
annuities, programs, policies, arrangements, practices, customs and
understandings that provide benefits of economic value to any present or former
employee, or current or former beneficiary, dependent or assignee of any such
employee or former employee.
1.12 CERCLA. The Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. 9601 et seq.
1.13 CFB. Carolina First Bank, a South Carolina corporation and a
wholly-owned subsidiary of CFC. Where the context permits, CFB shall be deemed
to include its subsidiaries.
1.14 CFC. Carolina First Corporation, a bank holding company
headquartered in Greenville, South Carolina. Where the context permits, CFC
shall be deemed to include its subsidiaries.
1.15 CFC BENEFIT PLANS. All Benefit Plans, and all other material
fringe benefit plans or programs, sponsored or maintained by CFC or CFB or under
which CFC or CFB may be obligated.
1.16 CFC COMMON STOCK. The common stock, par value $1.00 per share, of
CFC.
1.17 CFC SHAREHOLDER APPROVALS. This term shall mean, as the context
may require, the duly authorized written consent of CFC to the Bank Merger and
the approval by the requisite vote of the shareholders of CFC at the CFC
Shareholders' Meeting of the Corporate Merger, all in accordance with this
Reorganization Agreement and the Plan of Merger and the Subsidiary Plan of
Merger.
1.18 CFC SHAREHOLDERS' MEETING. The meeting of CFC shareholders at
which the Corporate Merger will be voted upon.
1.19 CLOSING; CLOSING DATE. The terms "Closing" and "Closing Date"
shall have the meanings ascribed to them in Section 2.3 hereof.
1.20 CODE. The Internal Revenue Code of 1986, as amended, including, if
the context permits, the applicable regulations promulgated pursuant thereto.
1.21 CONFIDENTIAL INFORMATION. The term "Confidential Information"
shall mean all information of any kind concerning a party hereto that is
furnished by such party or on its behalf pursuant to Section 6.1 hereof as a
result of the transactions contemplated herein, except information (i)
ascertainable or obtained from public or published information, (ii) received
from a third party not known to the recipient of Confidential Information to be
under an obligation to keep such information confidential, (iii) which is or
becomes known to the public (other than through a breach of this Reorganization
Agreement), (iv) of which the recipient was in possession prior to disclosure
thereof in connection with the Mergers, or (v) which was independently developed
by the recipient without the benefit of Confidential Information.
1.22 CORPORATE MERGER. The merger described in Section 2.1 hereof.
1.23 DERIVATIVE CONTRACT. Any exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract or any other
contract not included on a balance sheet which is a derivative contract
(including various combinations thereof).
1.24 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
1.25 EFFECTIVE TIME. The date and time which the Mergers become
effective as set forth in the Articles of Merger. Subject to the terms and
conditions hereof, the Effective Time shall be such time on such date as CFC
shall notify AFC in writing not less than five days prior thereto, which date
shall not be more than 30 days after all conditions have been satisfied or
waived in writing.
1.26 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
1.27 FDIC. The Federal Deposit Insurance Corporation.
1.28 FEDERAL RESERVE BOARD. The Board of Governors of the Federal
Reserve System, or any
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successor thereto.
1.29 FEDERAL RESERVE. The Federal Reserve Bank of Richmond acting under
delegated authority from the Federal Reserve Board, or any successor thereto.
1.30 GAAP. Generally accepted accounting principles consistently
applied.
1.31 INTERIM. CFC Interim, Inc. an interim subsidiary formed to effect
the Corporate Merger.
1.32 IRS. The Internal Revenue Service.
1.33 KNOWLEDGE. When used in the phrase "to the knowledge" or a similar
phrase, shall mean the actual knowledge of the executive officers of the
referenced party or parties, as applicable, after reasonable inquiry of the
other executive officers and the directors of the parties and the Persons
responsible for the day-to-day operations of the parties or their subsidiaries
(although this definition shall not give rise to any duty of any independent
verification or confirmation by members of senior management or board of
directors of the entity making the representation or warranty from other
Persons).
1.34 LIEN. Any lien, claim, encumbrance, security interest, assessment,
charge, restriction (including restriction on voting rights or rights of
disposition), mortgage, deed of trust, equity of any character, third party
right of whatever nature or other similar or like charge.
1.35 MATERIAL ADVERSE EVENT; MATERIAL ADVERSE EFFECT. This shall mean
an event, effect, occurrence or circumstance which, alone or when taken with
other breaches, events, effects, occurrences or circumstances existing
concurrently therewith (including without limitation, any breach of a
representation or warranty contained herein by such party) (i) has or is
reasonably expected to have a material adverse effect on the properties,
financial condition, results of operations, or business of such party and its
subsidiaries, taken as a whole, or (ii) would materially prevent such party's,
or any affiliated party's, ability to perform its obligations under this
Reorganization Agreement or the consummation of any of the transactions
contemplated hereby; provided, however, that in determining whether a Material
Adverse Effect or Material Adverse Event has occurred, there shall be excluded
any effect the cause of which is (A) any change in banking, tax and similar laws
of general applicability or interpretations thereof by courts or governmental
authorities, (B) any change in GAAP or regulatory accounting requirements
applicable to the parties hereto, (C) any action or omission of AFC or CFC or a
subsidiary thereof taken with the prior written consent of CFC or AFC, as
applicable, in contemplation of the transaction contemplated herein, (D) the
actions contemplated by Section 6.13, and (E) any changes in general economic
conditions affecting financial institutions generally, including but not limited
to changes in interest rates. Without limiting the foregoing, a decline in AFC's
or CFC's common stock price shall not, in and of itself, constitute a Material
Adverse Event.
1.36 MERGERS. The Bank Merger and the Corporate Merger.
1.37 PBGC. The Pension Benefit Guaranty Corporation.
1.38 PERSON. An individual, a partnership, a corporation, a commercial
bank, an industrial bank, a savings association, a savings bank, a limited
liability company, an association, a joint stock company, a trust, a business
trust, a joint venture, an unincorporated organization, a governmental entity
(or any department, agency, or political subdivision thereof) or other entity.
1.39 PLAN OF MERGER. The Plan of Merger attached to this Reorganization
Agreement as Appendix A.
1.40 PROXY STATEMENT. The joint proxy statement/prospectus included in
the Registration Statement which shall be furnished to the AFC shareholders and
the CFC shareholders in connection with the Shareholders' Meetings and the
matters contemplated hereby.
1.41 REGISTRATION STATEMENT. The Registration Statement on Form S-4 to
be filed with the SEC registering the issuance of the CFC Common Stock to be
issued to the AFC shareholders in connection with the Corporate Merger.
1.42 REGULATIONS. The regulations issued by the IRS under the Code.
1.43 REGULATORY APPROVALS. The order of the Federal Reserve Board (or,
if applicable, of the
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Federal Reserve acting under delegated authority) approving the Mergers and the
required order, approval, or exemption of the FDIC, the State Board, or any
other Regulatory Authority approving the Corporate Merger and/or the Bank
Merger.
1.44 REGULATORY AUTHORITY. Any federal or state governmental agency or
authority charged with the supervision or regulation of depository institutions
or engaged in the insurance of deposits (including, without limitation, the
FDIC, and the Federal Reserve Board) and any other federal or state bank, thrift
or other financial institution, insurance or securities regulatory authorities,
and any and all other agencies or departments of federal, state or local
government, including without limitation the SEC.
1.45 REORGANIZATION AGREEMENT. This Reorganization Agreement, including
all schedules, appendices and exhibits attached hereto.
1.46 RIGHTS. Rights shall mean warrants, calls, commitments, options,
rights (whether stock appreciation rights, conversion rights, exchange rights,
profit participation rights, or otherwise), securities or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, and other arrangements or commitments which obligate a
Person to issue, otherwise cause to become outstanding, sell, transfer, pledge,
or otherwise dispose of any of its capital stock or other ownership interests,
or any voting rights thereof or therein, or to pay monetary sums by reference to
the existence or market valuation, or in lieu and place, of any of its capital
stock or ownership interests therein.
1.47 THE SECURITIES AND EXCHANGE COMMISSION.
1.48 SECURITIES ACT. The Securities Act of 1933, as amended.
1.49 STATE BOARD. The South Carolina State Board of Financial
Institutions.
1.50 SHAREHOLDER APPROVALS. The AFC Shareholders' Approval and the CFC
Shareholders' Approval.
1.51 SHAREHOLDERS' MEETINGS. The respective meetings of the
shareholders of AFC and CFC at which the Corporate Merger shall be voted upon.
1.52 SUBSIDIARY PLAN OF MERGER. The Subsidiary Plan of Merger attached
to this Reorganization Agreement as Appendix B.
1.53 TRANSACTION DOCUMENTS. This Reorganization Agreement, together
with all other documents executed in connection with AFC or AB in connection
herewith, including the Stock Option Agreement attached hereto as Exhibit E.
SECTION II. THE MERGERS
2.1 CORPORATE MERGER. Subject to the terms and conditions of this
Reorganization Agreement, including the Plan of Merger, AFC shall merge with and
into Interim (the "Corporate Merger"), the separate existence of AFC shall
cease, and Interim shall survive and the name of the surviving Corporation shall
be "CFC Interim, Inc". The parties agree that the Corporate Merger will be
effected pursuant to the terms set forth in the Plan of Merger.
2.2 BANK MERGER. After the Corporate Merger and liquidation referenced
in Section 2.8 below, and at such time as CFB may deem appropriate, AB shall be
merged with and into CFB (the "Bank Merger"), the separate existence of AB shall
cease and CFB shall survive and the name of the surviving bank shall be
"Carolina First Bank." The parties agree that the Bank Merger will be effected
pursuant to the terms set forth in the Subsidiary Plan of Merger.
2.3 THE CLOSING. The Closing of the transaction contemplated herein
shall be held as soon as reasonably practicable after fulfillment of all
conditions set forth in Section VII and Section VIII hereof (the "Closing
Date"), at the offices of Wyche, Burgess, Freeman & Parham, P.A. or at such
other place and time as the parties hereto may mutually agree.
2.4 CONSIDERATION FOR THE MERGERS. The manner of converting the shares
of AFC into shares of
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CFC shall be as set forth in the Plan of Merger. The manner of converting the
shares of AB into shares of CFB shall be as set forth in the Subsidiary Plan of
Merger.
2.5 SHAREHOLDER APPROVALS; REGISTRATION STATEMENT. Each of CFC and AFC
shall call their respective Shareholders' Meetings in accordance with the
applicable provisions of South Carolina law, the regulations of the Nasdaq Stock
Market and federal securities laws (as applicable) for the purpose of
considering and voting on this Reorganization Agreement and the transactions
contemplated hereby. The Shareholders' Meetings shall be held as soon as
practicable. The board of directors of each of CFC and AFC shall recommend
(subject to compliance with their legal and fiduciary duties, as advised by
counsel) to their respective shareholders and use their best efforts to obtain
the approval of this Reorganization Agreement and the Mergers, and shall not
withdraw such recommendation without providing five days prior notice to the
other party. CFC shall file the Registration Statement with the SEC and shall
pay the required filing fees. The parties will use their respective best efforts
and cooperate with each other to obtain promptly the effectiveness of the
Registration Statement. CFC shall also take any reasonable action required to be
taken under the blue sky laws in connection with the issuance of CFC Common
Stock in the Corporate Merger. CFC and AFC shall jointly prepare the Proxy
Statement, which shall be reasonably acceptable to all parties. The Proxy
Statement shall be mailed to the AFC and CFC shareholders as soon as reasonably
practicable after the SEC's declaration of effectiveness of the Registration
Statement. AFC shall mail, at its expense, the Proxy Statement to its
shareholders. CFC shall mail, at its expense, the Proxy Statement to its
shareholders.
2.6 COOPERATION; REGULATORY FILINGS. Subject to the terms and
conditions of this Reorganization Agreement, CFC and AFC shall cooperate, and
shall cause each of their subsidiaries to cooperate, in the preparation and
submission by CFC and AFC, as promptly as reasonably practicable, of such
applications, petitions, and other documents and materials as any of them may
reasonably deem necessary or desirable to the SEC, the Federal Reserve, the
appropriate Regulatory Authorities of South Carolina, the shareholders of AFC
and CFC, and any other Persons for the purpose of obtaining any approvals or
consents necessary to consummate the transactions contemplated by this
Reorganization Agreement. Prior to the making of any such filings with any
Regulatory Authority or the making of any written disclosures with respect to
the transactions contemplated hereby to shareholders or to any third person
(such as mailings to shareholders or press releases), the parties shall submit
to each other the material to be filed, mailed, or released. Any such materials
shall be reasonably acceptable to all parties prior to the filings with any
Regulatory Authorities or the disclosures to shareholders or to any third
person, except to the extent that any person is legally required to proceed
prior to obtaining the approvals of the other parties. CFC shall be responsible
for all filings fees associated with the Regulatory Approvals.
2.7 TAX TREATMENT. CFC and AFC intend that the Mergers shall qualify as
tax-free reorganizations under Section 368(a) of the Code.
2.8 LIQUIDATION. Immediately following the Effective Time of the
Corporate Merger, Interim shall be liquidated (such that AB shall become a
direct subsidiary of CFC).
2.9 FORMATION OF INTERIM. CFC agrees to form Interim in a timely manner
and to take such other steps as may be required to cause Interim to effect the
Corporate Merger as contemplated herein.
2.10 RESERVATION OF RIGHT TO REVISE TRANSACTION. CFC may at any time
change the method of effecting the acquisition of AFC and AB (including without
limitation the provisions of this Section II) if and to the extent it deems such
change to be desirable; provided, however, that no such change shall (i) alter
the type of consideration to be issued to the holders of AFC Common Stock as
provided for in this Reorganization Agreement, (ii) reduce the value of such
consideration, (iii) adversely affect the intended tax-free treatment to AFC's
stockholders as a result of receiving such consideration or prevent the parties
from obtaining the tax opinion of Wyche, Burgess, Freeman & Parham, P.A.
referred to herein, (iv) materially impair the ability to receive the Regulatory
Approvals, or (v) materially delay the Closing.
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SECTION III. REPRESENTATIONS AND WARRANTIES OF AFC AND AB
Each of AFC and AB hereby represent and warrant to CFC and CFB the
following matters on and as of the date of this Reorganization Agreement and at
the Effective Time; provided, however, that before any breach of or inaccuracy
in the representation and warranty given in Section 3.5 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Reorganization Agreement by CFC or CFB, such breach or inaccuracy
must be material, and before any breach of or inaccuracy of any of the other
representations or warranties given in this Section III shall be so actionable
or shall constitute such grounds, such breach or inaccuracy, together with all
other breaches and inaccuracies by AFC and AB, must have a Material Adverse
Effect.
3.1 ORGANIZATION, GOOD STANDING AND CONDUCT OF BUSINESS. AFC is a
corporation, duly organized, validly existing and in good standing under the
laws of South Carolina, is duly registered as a bank holding company under the
BHCA, and has full power and authority and all governmental and regulatory
authorizations ("Authorizations") necessary to own all of its properties and
assets and to carry on its business as it is presently being conducted, and is
properly licensed, qualified and in good standing as a foreign corporation in
all jurisdictions wherein the character of the properties or the nature of the
business transacted by AFC makes such license or qualification necessary. AB is
the sole direct subsidiary of AFC. AB is a state bank, duly organized, validly
existing and in good standing under the laws of the state of South Carolina, and
has full power and authority and all Authorizations necessary to own all of its
properties and assets and to carry on its business as it is presently being
conducted, and is properly licensed, qualified and in good standing as a foreign
corporation in all jurisdictions wherein the character of the properties or the
nature of the business transacted by AB makes such license or qualification
necessary. AB is a state bank and is an "insured depository institution" as
defined in the Federal Deposit Insurance Act and the applicable regulations
thereunder. The deposits of AB are insured by the Bank Insurance Fund of the
FDIC.
3.2 SUBSIDIARIES.
(A) Except for the entities set forth on Schedule 3.2
(collectively, the "AFC Subsidiaries"), AFC neither owns nor controls, directly
or indirectly five percent (5%) or more of the outstanding equity securities,
either directly or indirectly, of any Person. Except as set forth on Schedule
3.2, AFC or an AFC Subsidiary is the direct, record and beneficial owner of 100%
of the outstanding shares of capital stock of the AFC Subsidiaries. There are no
contracts, commitments, understandings or arrangements by which AFC is or may be
bound to sell or otherwise issue any shares of the AFC Subsidiaries' capital
stock, and there are no contracts, commitments, understandings or arrangements
relating to the rights of AFC to vote or to dispose of such shares. All of the
shares of capital stock of the AFC Subsidiaries owned by AFC or an AFC
Subsidiary are fully paid and nonassessable and are owned free and clear of any
Liens. Except as set forth on Schedule 3.2, none of the AFC Subsidiaries either
owns nor controls five percent (5%) or more of the outstanding equity
securities, either directly or indirectly, of any Person.
(B) Except for the entities set forth and identified as such on
Schedule 3.2 (collectively, the "AB Subsidiaries"), AB neither owns nor controls
five percent (5%) or more of the outstanding equity securities, either directly
or indirectly, of any Person. Except as set forth on Schedule 3.2, AB is the
direct, record and beneficial owner of 100% of the outstanding shares of the AB
Subsidiaries. There are no contracts, commitments, understandings or
arrangements by which AB is or may be bound to sell or otherwise issue any
shares of the AB Subsidiaries' capital stock, and there are no contracts,
commitments, understandings or arrangements relating to the rights of AB to vote
or to dispose of such shares. All of the shares of capital stock of the AB
Subsidiaries are fully paid and nonassessable and are owned by AB free and clear
of any Liens.
3.3 CORPORATE AUTHORITY. The execution, delivery and performance of the
Transaction Documents have been duly authorized by the respective Boards of
Directors of AFC and AB. Other than the AFC Shareholder Approvals, no further
corporate acts or proceedings on the part of AFC or AB are required
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or necessary to authorize the Transaction Documents or the Mergers.
3.4 BINDING EFFECT. Subject to receipt of the AFC Shareholder Approvals
and the Regulatory Approvals, when executed, the Transaction Documents will
constitute valid and legally binding obligations of AFC and AB, enforceable
against AFC and AB in accordance with their terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (ii) laws relating to the safety and
soundness of depository institutions, and (iii) general principles of equity.
Each document and instrument contemplated by this Reorganization Agreement, when
executed and delivered by AFC and/or AB in accordance with the provisions
hereof, shall be duly authorized, executed and delivered by AFC and/or AB (as
applicable) and enforceable against AFC and/or AB (as applicable) in accordance
with its terms, subject to the exceptions in the previous sentence.
3.5 CAPITALIZATION OF AFC. The authorized capital stock of AFC consists
solely of (i) 50,000,000 authorized shares of common stock (no par value), of
which 8,095,271 shares are issued and outstanding as of the date hereof. All of
the issued and outstanding shares of AFC are validly issued and fully paid and
nonassessable. Except as otherwise set forth on Schedule 3.5, there are no
outstanding Rights to purchase or otherwise acquire shares of any class of
capital stock of AFC, nor any outstanding agreements pursuant to which AFC is or
may become obligated to issue any shares of its capital stock. None of the
shares of the AFC Common Stock is subject to any restrictions as to the transfer
thereof, except as set forth in AFC's Articles of Incorporation or Bylaws and
except for restrictions on account of applicable federal or state securities
laws.
3.6 COMPLIANCE WITH LAWS; ABSENCE OF DEFAULTS.
(A) Neither AFC nor AB is in default under, or in violation of, any
provision of its Articles of Incorporation or Bylaws. Neither AFC nor AB is in
default under, or in violation of, any agreement to which either AFC or AB is a
party.
(B) Except as disclosed in Schedule 3.6, neither AFC nor AB is in
violation of any applicable law, rule or regulation. Neither AFC nor AB has
received any notification or communication from, or consented to or entered into
any memorandum, agreement or order with, any Regulatory Authority (i) asserting
that AFC or AB is not in compliance with any of the statutes, regulations, rules
or ordinances which such Regulatory Authority has promulgated or enforces, or
the internal policies and procedures of AFC or AB, as applicable, (ii)
threatening to revoke any Authorization, (iii) requiring or threatening to
require AFC or AB, or indicating that AFC or AB may be required, to enter into a
cease and desist order, agreement or memorandum of understanding or any other
agreement restricting or limiting or purporting to restrict or limit in any
manner the operations of AFC or AB, or (iv) directing, restricting or limiting,
or threatening to direct, restrict or limit in any manner the operations of AFC
or AB (any such notification, communication, memorandum, agreement or order
described in this sentence herein referred to as a "Regulatory Agreement").
(C) Each of AFC and AB: (i) is not required to give prior notice to
any federal banking agency regulating financial institutions of the proposed
addition of an individual to its Board of Directors or the employment of an
individual as a senior executive; (ii) is "well capitalized" as defined in
applicable FDIC and Federal Reserve regulations; and (iii) is in compliance in
all material respects with all fair lending laws or other laws relating to
discrimination, including, without limitation, the Equal Credit Opportunity Act,
the Fair Credit Reporting Act, the Fair Housing Act, the Community Reinvestment
Act and the Home Mortgage Disclosure Act and similar federal and state laws and
regulations.
3.7 NON-CONTRAVENTION AND DEFAULTS; NO LIENS. Except as provided on
Schedule 3.7, neither the execution or delivery of the Transaction Documents,
nor the fulfillment of, or compliance with, the terms and provisions thereof,
will (i) result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in a violation of, termination of or
acceleration of the performance provided by the terms of, any material agreement
to which either AFC or AB is a party or by which either of them may be
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bound, (ii) violate any provision of any law, rule or regulation, (iii) result
in the creation or imposition of any Lien on any asset of AFC or AB, or (iv)
violate any provisions of AFC's or AB's Articles of Incorporation, or Bylaws. To
the best of AFC's and AB's knowledge, no other party to any material agreement
to which either AFC or AB is a party is in default thereunder or in breach of
any provision thereof. To the best of AFC's and AB's knowledge, there exists no
condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such agreement.
3.8 NECESSARY APPROVALS. Each of AFC and AB has obtained all
certificates of authority, licenses, permits, franchises, registrations of
foreign ownership or other regulatory approvals in every jurisdiction necessary
for the continuing conduct of its business and ownership of its assets. Except
for those which may be renewed or extended in the ordinary course of business,
no such certificate, license, permit, franchise, registration or other approval
is about to expire or lapse, has been threatened to be revoked or has otherwise
become restricted by its terms which would, upon such expiration, lapse,
revocation or restriction, have a Material Adverse Effect. Further, there is no
reasonable basis for any such expiration, lapse, revocation, threat of
revocation or restriction. Except for any necessary Regulatory Approvals, no
consent, approval, Authorization, registration, or filing with or by any
governmental authority, foreign or domestic, is required on the part of either
AFC or AB in connection with the execution and delivery of the Transaction
Documents or the consummation by AFC and AB of the transactions contemplated
thereby. Except for the Regulatory Approvals, neither AFC nor AB is required to
procure the approval of any Person in order to prevent the termination of any
right, privilege, license or contract of AFC or AB as a result of this
Reorganization Agreement.
3.9 FINANCIAL STATEMENTS. The audited financial statements of AFC at
and for each of the fiscal years ended December 31, 1996, 1997 and 1998, and the
unaudited quarterly statements subsequent to December 31, 1998 (the "AFC
Financial Statements") all of which have been provided to CFC, are true, correct
and complete in all material respects and present fairly, in conformity with
GAAP, the financial position of AFC at the dates indicated and the results of
its operations for each of the periods indicated, except with respect to the
unaudited statements, normal year end adjustments. The books and records of AFC
have been kept, and will be kept to the Closing Date, in reasonable detail, and
will fairly and accurately reflect in all material respects to the Closing Date,
the transactions of AFC.
3.10 TAX RETURNS. AFC files its income tax returns and maintains its
tax books and records on the basis of a taxable year ending December 31. AFC has
duly filed all tax reports and returns required to be filed by any federal,
state or local taxing authorities (including, without limitation, those due in
respect of its properties, income, franchises, licenses, sales, payrolls, and
trusts established by AFC) through the date hereof, and AFC has duly paid all
taxes with respect to the periods covered thereby and has established adequate
reserves in accordance with GAAP for the payment of all income, franchises,
property, sales, employment or other taxes anticipated to be payable after the
date hereof. AFC is not delinquent in the payment of any taxes, assessments or
governmental charges and no deficiencies have been asserted or assessed, which
have not been paid or for which adequate reserves have not been established. AFC
does not have in effect any waiver relating to any statute of limitations for
assessment of taxes with respect to any federal, state or local income,
property, franchise, sales, license or payroll tax. AFC does not know, or have
reason to know, of any questions which have been raised or which may be raised
by any taxing authority relating to taxes or assessments of AFC which, if
determined adversely, would result in the assertion of any deficiency.
3.11 UNDISCLOSED LIABILITIES. Except for the liabilities which are
disclosed in the AFC Financial Statements or as set forth on Schedule 3.11, AFC
has no material liabilities or material obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Since December 31, 1998, there has been no (i) Material Adverse Event with
respect to AFC or AB, or (ii) any incurrence by or subjection of AFC or AB to
any obligation or liability (whether fixed, accrued or contingent) or commitment
material to AFC or AB not referred to in this Reorganization Agreement, except
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such obligations or liabilities as were or may be incurred in the ordinary
course of business and which are reflected on the AFC Financial Statements at
and for the periods subsequent to December 31, 1998.
3.12 PROPERTIES, Encumbrances. Each of AFC and AB has good and
marketable title to all of the real property and depreciable tangible personal
property owned by it, free and clear of any Lien, except for any Lien for (i)
current taxes not yet due and payable, (ii) pledges to secure deposits and other
Liens incurred in the ordinary course of the banking business, (iii) such
imperfections of title, easements and other encumbrances, if any, as are not
material in character, amount or extent, or (iv) such items as are set forth on
Schedule 3.12. Set forth on Schedule 3.12 are all business locations of AFC and
AB, including whether such locations are owned or leased and a statement of when
such locations were first occupied by AFC or AB. All buildings and all fixtures,
equipment, and other property and assets which are material to their business
and are held under leases or subleases by either of AFC or AB are held under
valid leases or subleases enforceable in accordance with their respective terms.
3.13 LITIGATION. Except as shown on Schedule 3.13, there are no claims,
actions, suits or proceedings pending or threatened against AFC or AB, or to its
knowledge affecting AFC or AB, at law or in equity, before or by any Federal,
state, municipal, administrative or other court, governmental department,
commission, board, or agency, an adverse determination of which could have a
Material Adverse Effect, and AFC knows of no basis for any of the foregoing.
There is no order, writ, memorandum, agreement, injunction, or decree of any
court, domestic or foreign, or any Federal or state agency affecting AFC
specifically or to which AFC is subject.
3.14 REPORTS. AFC and AB have duly made all reports and filings
required to be made pursuant to applicable law.
3.15 BROKERS. Except as provided in its contracts with The Orr Group
and with The Robinson-Humphrey Company, LLC (copies of which have been provided
to CFC), AFC has not incurred any liability for any commission or fee in the
nature of a finder's, originator's or broker's fee in connection with the
transaction contemplated herein.
3.16 EXPENDITURES. Schedule 3.16 sets forth any single expenditure of
$100,000 or more proposed to be made by AFC or AB after the date hereof and a
summary of the terms and conditions pertaining thereto. At least 20 business
days prior to the Closing Date, AFC will advise CFC of any changes to Schedule
3.16 reflecting additions or deletions thereto since the date hereof.
3.17 INSURANCE. Attached hereto as Schedule 3.17 are the policies of
fire, liability, life and other types of insurance held by AFC and AB, setting
forth with respect to each such policy, the policy number, name of the insured
party, type of insurance, insurance company, annual premium, expiration date,
deductible amount, if any, and amount of coverage. AFC management believes that
each such policy is in an amount reasonably sufficient for the protection of the
assets and business covered thereby, and, in the aggregate, all such policies
are reasonably adequate for the protection of all the assets and business of AFC
taking into account the availability and cost of such coverage. To the extent
permissible pursuant to such policies, all such policies shall remain in full
force and effect for a period of at least 90 days following the Closing Date.
There is no reason known to AFC that any such policy will not be renewable on
terms and conditions as favorable as those set forth in such policy.
3.18 CONTRACTS AND COMMITMENTS.
(A) Schedule 3.18 attached hereto sets forth each contract or other
commitment of AFC or AB which requires an aggregate payment by AFC or AB after
the date hereof of more than $100,000, and any other contract or commitment that
in the opinion of the AFC management materially adversely affects the business
of AFC or AB. Except for the contracts and commitments described in this
Reorganization Agreement or as set forth in Schedule 3.18, neither AFC nor AB is
party to or subject to:
1. Any contracts or commitments which are material to its business,
operations or financial condition other than loans or agreements with respect
thereto entered into in the ordinary course of business;
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2. Any employment contract or arrangement, whether oral or written,
with any officer, consultant, director or employee which is not terminable on 30
days' notice without penalty or liability to make any payment thereunder for
more than 30 days after such termination;
3. Any plan or contract or other arrangement, oral or written,
providing for insurance for any officer or employee or members of their
families;
4. Any plan or contract or other arrangement, oral or written,
providing for bonuses, pensions, options, deferred compensation, retirement
payments, profit-sharing or other benefits for employees;
5. Any contract or agreement with any labor union;
6. Any contract or agreement with customers for the sale of
products or the furnishing of services, or any sales agency, broker,
distribution or similar contract, except contracts made in the ordinary course
of business;
7. Any instrument or arrangement evidencing or related to
indebtedness for money borrowed or to be borrowed, whether directly or
indirectly, by way of purchase money obligation, guaranty, conditional sale,
lease-purchase, or otherwise;
8. Any joint venture contract or arrangement or any other agreement
involving a sharing of profits;
9. Any license agreement in which AFC is the licensor or licensee;
10. Any material contract or agreement, not of the type covered by
any of the other items of this Section 3.18, which by its terms is either (i)
not to be performed prior to 30 days from the date hereof, or (ii) does not
terminate, or is not terminable without penalty to AFC or AB, or any successors
or assigns prior to 30 days from the date hereof.
3.19 EMPLOYEE BENEFIT PLANS AND CONTRACTS.
(A) Schedule 3.19 contains a complete list of all AFC Benefit
Plans. AFC and AB have delivered to CFC (i) accurate and complete copies of all
AFC Benefit Plan documents and all other material documents relating thereto,
including all summary plan descriptions, summary annual reports and insurance
contracts, (ii) accurate and complete detailed summaries of all unwritten AFC
Benefit Plans, (iii) accurate and complete copies of the most recent financial
statements and actuarial reports with respect to all AFC Benefit Plans for which
financial statements or actuarial reports are required or have been prepared,
(iv) accurate and complete copies of all annual reports for all AFC Benefit
Plans (for which annual reports are required) prepared within the last two
years, and (v) accurate and complete copies of determination letters from the
IRS for any AFC Benefit Plan maintained or intended to be maintained under
Section 401(a) of the Code. Any AFC Benefit Plan providing benefits that are
funded through a policy of insurance is indicated by the word "insured" placed
by the listing of the AFC Benefit Plan on Schedule 3.19.
(B) All AFC Benefit Plans conform in all material respects to, and
are being administered and operated in material compliance with, all applicable
requirements of ERISA and the Code. All returns, reports and disclosure
statements required to be filed or delivered under ERISA and the Code with
respect to all AFC Benefit Plans have been filed or delivered. There have not
been any "prohibited transactions," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, involving any of the AFC Benefit Plans that
could subject AFC to any material penalty or tax imposed under the Code or
ERISA.
(C) Except as set forth in Schedule 3.19, any AFC Benefit Plan that
is intended to be qualified under Section 401(a) of the Code and exempt from tax
under Section 501(a) of the Code has been determined by the IRS to be so
qualified, and such determination is current, remains in effect and has not been
revoked. To the best knowledge of AFC and AB, nothing has occurred since the
date of any such determination that is reasonably likely to affect adversely
such qualification or exemption, or result in the imposition of excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any AFC Benefit Plan.
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(D) AFC and AB have adequately reserved for all liabilities accrued
prior to the Effective Time under AFC's and AB nonqualified retirement or
deferred compensation plans.
(E) Except as set forth in Schedule 3.19, neither AFC nor AB has
any current or contingent obligation to contribute to any multiemployer plan (as
defined in Section 3(37) of ERISA). Neither AFC nor AB has any liability with
respect to any employee benefit plan (as defined in Section 3(3) of ERISA) other
than with respect to the AFC Benefit Plans.
(F) There are no pending or threatened claims by or on behalf of
any AFC Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any AFC Benefit Plans, alleging any breach of fiduciary duty on
the part of AFC or AB or any of such party's officers, directors or employees
under ERISA, the Code or any applicable regulations, or claiming benefit
payments other than those made in the ordinary operation of such plans. The AFC
Benefit Plans are not the subject of any investigation, audit or action by the
IRS, the Department of Labor or the PBGC. AFC and AB have made all required
contributions under the AFC Benefit Plans, including the payment of any premiums
payable to the PBGC and other insurance premiums. There is no underfunding
liability for any AFC Benefit Plan that is subject to the funding requirements
of Section 412 of the Code.
(G) Neither AFC nor AB maintains any defined benefit plan, and
neither has incurred, or has any reason to expect that it will incur, any
liability to the PBGC or otherwise under Title IV or ERISA (including early
withdrawal liability) or under the Code with respect to any such plan. No AFC
Benefit Plan has been subject to a reportable event for which notice would be
required to be filed with the PBGC, and no proceeding by the PBGC to terminate
any AFC Benefit Plan has been instituted or threatened.
(H) With respect to any AFC Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (in this
subsection, a "Welfare Plan"), (i) each such Welfare Plan for which
contributions are claimed as deductions under any provision of the Code is in
material compliance with all applicable requirements pertaining to such
deduction, (ii) with respect to any welfare benefit fund (within the meaning of
Section 419 of the Code) related to such a Welfare Plan, there is no
disqualified benefit (within the meaning of Section 4976(b) of the Code) that
would result in the imposition of a tax under Section 4976(a) of the Code, (iii)
any AFC Benefit Plan that is a group health plan (within the meaning of Section
4980B(g)(2) of the Code) complies, and in each and every case has complied, with
all of the material requirements of Section 4980B of the Code, ERISA, Title XXII
of the Public Health Service Act and the applicable provisions of the Social
Security Act, (iv) such Welfare Plan may be amended or terminated at any time on
or after the Closing Date, and (v) there are no benefits to be provided to
retirees under a group health plan that are subject to disclosure under
Financial Accounting Board Standard 106.
(I) Except as set forth on Schedule 3.19, as of the Closing Date,
there will be no contract, agreement, plan or arrangement covering any person
that provides for the payment of an amount that would not be deductible to CFC
by reason of Section 280G or any other provision of the Code.
3.20 ALLOWaNCE FOR LOAN LOSSES. The allowance for loan losses (the "AFC
Allowance") shown on the consolidated statements of financial condition of AFC
as of September 30, 1999, included in the AFC Quarterly Report on Form 10-Q as
of such date has been determined, in the opinion of management of AFC in
accordance with GAAP, to be adequate to provide for losses relating to or
inherent in the loan portfolios of AFC and AB.
3.21 ENVIRONMENTAL MATTERS. Each of AFC and AB is in material
compliance with all local, state and federal environmental statutes, laws,
rules, regulations and permits, including but not limited to CERCLA and the
Toxic Substances Control Act, 15 U.S.C. 2601 et seq. Neither AFC nor AB has, nor
to the best of AFC's knowledge have other parties, used, stored, disposed of or
permitted any "hazardous substance" (as defined in CERCLA), petroleum
hydrocarbon, polychlorinated biphenyl, asbestos or radioactive material
(collectively, "Hazardous Substances") to remain at, on, in or under any of the
real property owned or leased by AFC or AB (including, without limitation, the
buildings or structures thereon) (the "Real Property"). Neither AFC nor AB has,
nor to the best of AFC's knowledge have other parties,
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installed, used, or disposed of any asbestos or asbestos-containing material on,
in or under any of the Real Property. Neither AFC nor AB has, nor to the best of
AFC's knowledge have other parties, installed or used underground storage tanks
in or under any of the Real Property. AFC has provided CFC with copies of all
complaints, citations, orders, reports, written data, notices or other
communications sent or received by it with respect to any local, state or
federal environmental law, ordinance, rule or regulation as any of them relate
to AFC or AB.
3.22 AFC INFORMATION. The written information with respect to AFC and
its officers, directors, and affiliates which shall have been supplied by AFC
(or any of its accountants, counsel or other authorized representatives)
specifically for use in soliciting the Shareholder Approvals, or which shall be
contained in the Registration Statement, will not, on the date the Proxy
Statement is first mailed to shareholders of AFC and CFC or on the date of the
Shareholders' Meetings, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
3.23 ASSET CLASSIFICATION. Set forth in Schedule 3.23 is a list,
accurate and complete in all material respects, of the aggregate amounts of
loans, extensions of credit or other assets of AFC and AB that have been
classified by it as of December 31, 1999 (the "Asset Classification"); and no
amounts of loans, extensions of credit or other assets that have been classified
as of December 31, 1999 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
AFC or AB prior to December 31, 1999.
3.24 DERIVATIVES CONTRACTS, ETC. Neither AFC nor AB is a party to or
has agreed to enter into an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor or collar financial contract or any other contract
not included on the balance sheet which is a derivative contract (including
various combinations thereof) (each a "Derivatives Contract") or owns securities
that (i) are referred to as "structured notes", "high risk mortgage
derivatives", "capped floating rate notes" or "capped floating rate mortgage
derivatives", or (ii) are likely to have changes in value as a result of
interest rate changes that significantly exceed normal changes in value
attributable to interest rate changes, except for those Derivatives Contracts
and other instruments legally purchased or entered into in the ordinary course
of business and set forth in Schedule 3.24, including a list, as applicable, of
any AFC or AB assets pledged as security for each such instrument.
3.25 LABOR MATTERS. No material work stoppage involving AFC or AB is
pending or, to the best knowledge of AFC, threatened. Neither AFC nor AB is
involved in, or, to the best knowledge of AFC's management, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which might reasonably be expected to have a Material Adverse Effect.
Employees of AFC and AB are not represented by any labor union, and, to the best
knowledge of AFC's management, no labor union is attempting to organize
employees of AFC or AB.
3.26 SECURITIES REPORTS. Within the last two (2) years, AFC has filed
on a timely basis all reports, registrations, and statements, together with any
amendments, required under the Securities Act and the Exchange Act, all of
which, as of their respective dates, were in compliance in all material respects
with the rules and regulations of the SEC.
3.27 OWNERSHIP OF CFC COMMON STOCK. No shares of CFC Common Stock are
beneficially owned (as defined in Rule 13d-3 under the Exchange Act) by AFC or
AB.
3.28 RESALE OF CFC COMMON STOCK. AFC knows of no present plan or
intention on the part of its shareholders to sell, assign, transfer or otherwise
dispose of shares of CFC Common Stock to be received by such shareholders in
connection with the Corporate Merger which would reduce said shareholders'
holdings of CFC common stock to a number of shares having, in the aggregate, a
value of less than 50% of the value of AFC Common Stock outstanding as of the
Effective Time. For purposes of this representation, shares of AFC Common Stock
sold, redeemed or otherwise disposed of prior or subsequent to and as part of
the
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Corporate Merger, will be considered as shares received by shareholders of
AFC and then disposed of by shareholders of AFC.
3.29 All information provided by AFC in connection with the due
diligence investigation by CFC was, at the time that such information was
provided, fair, accurate and complete in all material respects. Since the date
of such provision of information, there have been no changes in such
information, which taken in the aggregate, represent a Material Adverse Event.
AFC has not failed to provide or make available to CFC all material information
regarding AFC.
3.30 AFC knows of no reason why the Mergers would not qualify (i) as
tax-free reorganizations under Section 368(a) of the Code or (ii) for
pooling-of-interests accounting treatment under generally accepted accounting
practices.
SECTION IV. REPRESENTATIONS AND WARRANTIES BY CFC AND CFB
Each of CFC and CFB hereby represents and warrants to AFC and AB the
following matters on and as of the date of this Reorganization Agreement and at
the Effective Time; provided, however, that before any breach of or inaccuracy
in the representation and warranty given in Section 4.5 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Reorganization Agreement by AFC or AB, such breach or inaccuracy
must be material, and before any breach of or inaccuracy of any of the other
representations or warranties given in this Section IV shall be so actionable or
shall constitute such grounds, such breach or inaccuracy, together with all
other breaches and inaccuracies by CFC and CFB, must have a Material Adverse
Effect.
4.1 ORGANIZATION, GOOD STANDING AND CONDUCT OF BUSINESS. CFC is a
corporation, duly organized, validly existing and in good standing under the
laws of South Carolina, is duly registered as a bank holding company under the
BHCA, and has full power and authority and all governmental and regulatory
authorizations ("Authorizations") necessary to own all of its properties and
assets and to carry on its business as it is presently being conducted, and is
properly licensed, qualified and in good standing as a foreign corporation in
all jurisdictions wherein the character of the properties or the nature of the
business transacted by CFC makes such license or qualification necessary. CFB is
a direct subsidiary of CFC. CFB is a state banking corporation, duly organized,
validly existing and in good standing under the laws of the state of South
Carolina, and has full power and authority and all Authorizations necessary to
own all of its properties and assets and to carry on its business as it is
presently being conducted, and is properly licensed, qualified and in good
standing as a foreign corporation in all jurisdictions wherein the character of
the properties or the nature of the business transacted by CFB makes such
license or qualification necessary. CFB is a state, non-member bank and is an
"insured depository institution" as defined in the Federal Deposit Insurance Act
and the applicable regulations thereunder. The deposits of CFB are insured by
the Bank Insurance Fund of the FDIC.
4.2 SUBSIDIARIES.
(A) Except for the entities set forth on Schedule 4.2
(collectively, the "Subsidiaries"), CFC neither owns nor controls, directly or
indirectly five percent (5%) or more of the outstanding equity securities,
either directly or indirectly, of any Person. Except as set forth on Schedule
4.2, CFC or a Subsidiary is the direct, record and beneficial owner of 100% of
the outstanding shares of capital stock of the Subsidiaries. There are no
contracts, commitments, understandings or arrangements by which CFC is or may be
bound to sell or otherwise issue any shares of the Subsidiaries' capital stock,
and there are no contracts, commitments, understandings or arrangements relating
to the rights of CFC to vote or to dispose of such shares. All of the shares of
capital stock of the Subsidiaries owned by CFC or a Subsidiary are fully paid
and nonassessable and are owned free and clear of any Liens. Except as set forth
on Schedule 4.2, none of the Subsidiaries wholly-owned by CFC (directly or
indirectly) either owns nor controls five percent (5%)
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or more of the outstanding equity securities, either directly or indirectly, of
any Person.
4.3 CORPORATE AUTHORITY. The execution, delivery and performance of the
Transaction Documents have been duly authorized by the respective Boards of
Directors of CFC and CFB. Other than the CFC Shareholder Approvals, no further
corporate acts or proceedings on the part of CFC or CFB are required or
necessary to authorize the Transaction Documents or the Mergers.
4.4 BINDING EFFECT. Subject to receipt of the CFC Shareholder Approvals
and the Regulatory Approvals, when executed, the Transaction Documents will
constitute valid and legally binding obligations of CFC and CFB, enforceable
against CFC and CFB in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (ii) laws relating to the safety and
soundness of depository institutions, and (iii) general principles of equity.
Each document and instrument contemplated by this Reorganization Agreement, when
executed and delivered by CFC and/or CFB in accordance with the provisions
hereof, shall be duly authorized, executed and delivered by CFC and/or CFB (as
applicable) and enforceable against CFC and/or CFB (as applicable) in accordance
with its terms, subject to the exceptions in the previous sentence.
4.5 CAPITALIZATION OF CFC. The authorized capital stock of CFC consists
solely of (i) 100,000,000 authorized shares of common stock ($1.00 par value),
of which 25,726,055 shares were issued and outstanding as of the date hereof and
(ii) 10,000,000 shares of preferred stock, none of which is outstanding. All of
the issued and outstanding shares of CFC are validly issued and fully paid and
nonassessable. Except as otherwise set forth on Schedule 4.5, there are no
outstanding Rights or any outstanding securities or other instruments
convertible into shares of any class of capital stock of CFC, or pursuant to
which CFC is or may become obligated to issue any shares of its capital stock.
None of the shares of the CFC Common Stock is subject to any restrictions as to
the transfer thereof, except as set forth in CFC's Articles of Incorporation or
Bylaws or its Shareholders' Rights Plan and except for restrictions on account
of applicable federal or state securities laws. The Common Stock to be issued in
connection with this Reorganization Agreement and the Corporate Merger will,
when issued, (i) be validly issued, fully paid and nonassessable, (ii) have been
issued pursuant to an effective registration statement and (iii) have been
properly registered for trading on the Nasdaq National Market.
4.6 COMPLIANCE WITH LAWS; ABSENCE OF DEFAULTS.
(A) Neither CFC nor CFB is in default under, or in violation of,
any provision of its Articles of Incorporation or Bylaws. Neither CFC nor CFB is
in default under, or in violation of, any agreement to which either CFC or CFB
is a party.
(B) Except as disclosed in Schedule 4.6, neither CFC nor CFB is in
violation of any applicable law, rule or regulation. Neither CFC nor CFB has
received any notification or communication from, or consented to or entered into
any memorandum, agreement or order with, any Regulatory Authority (i) asserting
that CFC or CFB is not in compliance with any of the statutes, regulations,
rules or ordinances which such Regulatory Authority has promulgated or enforces,
or the internal policies and procedures of CFC or CFB, as applicable, (ii)
threatening to revoke any Authorization, (iii) requiring or threatening to
require CFC or CFB, or indicating that CFC or CFB may be required, to enter into
a cease and desist order, agreement or memorandum of understanding or any other
agreement restricting or limiting or purporting to restrict or limit in any
manner the operations of CFC or CFB, or (iv) directing, restricting or limiting,
or threatening to direct, restrict or limit in any manner the operations of CFC
or CFB (any such notification, communication, memorandum, agreement or order
described in this sentence herein referred to as a "Regulatory Agreement").
(C) Each of CFC and CFB: (i) 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; (ii) at September 30, 1999, was capitalized as set forth in
its Quarterly Report on Form 10-Q for the quarter ended September 30, 1999; and
(iii) is in compliance in
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all material respects with all fair lending laws or other laws relating to
discrimination, including, without limitation, the Equal Credit Opportunity Act,
the Fair Credit Reporting Act, the Fair Housing Act, the Community Reinvestment
Act and the Home Mortgage Disclosure Act and similar federal and state laws and
regulations.
4.7 NON-CONTRAVENTION AND DEFAULTS; NO LIENS. Neither the execution or
delivery of the Transaction Documents, nor the fulfillment of, or compliance
with, the terms and provisions thereof, will (i) result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
a violation of, termination of or acceleration of the performance provided by
the terms of, any material agreement to which CFC or CFB is a party or by which
they may be bound, (ii) violate any provision of any law, rule or regulation,
(iii) result in the creation or imposition of any Lien on any asset of CFC or
CFB, or (iv) violate any provisions of CFC's or CFB's Articles of Incorporation
or Bylaws. To the best of CFC's and CFB's knowledge, no other party to any
material agreement to which CFC or CFB is a party is in default thereunder or in
breach of any provision thereof. To the best of CFC's and CFB's knowledge, there
exists no condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such agreement.
4.8 NECESSARY APPROVALS. Each of CFC and CFB have obtained all
certificates of authority, licenses, permits, franchises, registrations of
foreign ownership or other regulatory approvals in every jurisdiction necessary
for the continuing conduct of its business and ownership of its assets. Except
for those which may be renewed or extended in the ordinary course of business,
no such certificate, license, permit, franchise, registration or other approval
is about to expire or lapse, has been threatened to be revoked or has otherwise
become restricted by its terms which would, upon such expiration, lapse,
revocation or restriction, have a Material Adverse Effect. Further, there is no
basis for any such expiration, lapse, revocation, threat of revocation or
restriction. Except for any necessary Regulatory Approvals (including the filing
with the SEC of the Registration Statement and filings with blue sky
authorities), no consent, approval, Authorization, registration, or filing with
or by any governmental authority, foreign or domestic, is required on the part
of CFC or CFB in connection with the execution and delivery of the Transaction
Documents or the consummation by CFC and CFB of the transactions contemplated
thereby. Except for the Regulatory Approvals, neither CFC nor CFB is required to
procure the approval of any Person in order to prevent the termination of any
right, privilege, license or contract of CFC or CFB as a result of this
Reorganization Agreement.
4.9 FINANCIAL STATEMENTS. The audited financial statements of CFC at
and for each of the fiscal years ended December 31, 1996, 1997 and 1998, and the
unaudited quarterly statements subsequent to December 31, 1998 (the "CFC
Financial Statements") all of which have been provided to AFC, are true, correct
and complete in all material respects and present fairly, in conformity with
GAAP, the financial position of CFC at the dates indicated and the results of
its operations for each of the periods indicated. The books and records of CFC
have been kept, and will be kept to the Closing Date, in reasonable detail, and
will fairly and accurately reflect in all material respects to the Closing Date,
the transactions of CFC.
4.10 TAX RETURNS. CFC files its income tax returns and maintains its
tax books and records on the basis of a taxable year ending December 31. CFC has
duly filed all tax reports and returns required to be filed by any federal,
state or local taxing authorities (including, without limitation, those due in
respect of its properties, income, franchises, licenses, sales, payrolls, and
trusts established by CFC) through the date hereof, and CFC has duly paid all
taxes with respect to the periods covered thereby and has established adequate
reserves in accordance with GAAP for the payment of all income, franchises,
property, sales, employment or other taxes anticipated to be payable in respect
of the period subsequent to the period ending after the date hereof. CFC is not
delinquent in the payment of any taxes, assessments or governmental charges and
no deficiencies have been asserted or assessed, which have not been paid or for
which adequate reserves have not been established and which are not being
contested in good faith. CFC does not have in effect any waiver relating to any
statute of limitations for assessment of taxes with respect to any federal,
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state or local income, property, franchise, sales, license or payroll tax.
Except as set forth on Schedule 4.10, CFC does not know, or have reason to know,
of any questions which have been raised or which may be raised by any taxing
authority relating to taxes or assessments of CFC which, if determined
adversely, would result in the assertion of any deficiency. (ii) To the best of
CFC's knowledge, all tax information reported by CFC to Federal and state
authorities and other Persons has been accurately and timely reported.
4.11 UNDISCLOSED LIABILITIES. Except for the liabilities which are
disclosed in the CFC Financial Statements or as set forth on Schedule 4.11, CFC
has no material liabilities or material obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Since December 31, 1998, there has been no Material Adverse Event with respect
to either CFC or CFB.
4.12 LITIGATION. Except as set forth on Schedule 4.12, there are no
claims, actions, suits or proceedings pending or threatened against or, to its
knowledge, affecting CFC or CFB at law or in equity, before or by any Federal,
state, municipal, administrative or other court, governmental department,
commission, board, or agency, an adverse determination of which could have a
Material Adverse Effect, and neither CFC nor CFB knows of no basis for any of
the foregoing. There is no order, writ, injunction, or decree of any court,
domestic or foreign, or any Federal or state agency affecting CFC or CFB or to
which CFC or CFB is subject, except for (i) agreements between CFC and the
Federal Reserve regarding CFC's ownership interest in Affinity Technology Group,
Inc. and (ii) an agreement between CFC and the Federal Reserve regarding CFC's
ownership interest in Net.B@nk, Inc.
4.13 REPORTS. CFC has duly made all reports and filings required to be
made pursuant to applicable law.
4.14 EMPLOYEE BENEFIT PLANS AND CONTRACTS.
(A) Schedule 4.14 contains a complete list of all CFC Benefit
Plans. CFC and CFB have made available to AFC (i) accurate and complete copies
of all CFC Benefit Plan documents and all other material documents relating
thereto, including all summary plan descriptions, summary annual reports and
insurance contracts, (ii) accurate and complete detailed summaries of all
unwritten CFC Benefit Plans, (iii) accurate and complete copies of the most
recent financial statements and actuarial reports with respect to all CFC
Benefit Plans for which financial statements or actuarial reports are required
or have been prepared, (iv) accurate and complete copies of all annual reports
for all CFC Benefit Plans (for which annual reports are required) prepared
within the last two years, and (v) accurate and complete copies of determination
letters from the IRS for any CFC Benefit Plan maintained or intended to be
maintained under Section 401(a) of the Code. Any CFC Benefit Plan providing
benefits that are funded through a policy of insurance is indicated by the word
"insured" placed by the listing of the CFC Benefit Plan on Schedule 4.14.
(B) Except as set forth in Schedule 4.14, all CFC Benefit Plans
conform in all material respects to, and are being administered and operated in
material compliance with, all applicable requirements of ERISA and the Code. All
returns, reports and disclosure statements required to be filed or delivered
under ERISA and the Code with respect to all CFC Benefit Plans have been filed
or delivered. There have not been any "prohibited transactions," as such term is
defined in Section 4975 of the Code or Section 406 of ERISA, involving any of
the CFC Benefit Plans that could subject CFC to any material penalty or tax
imposed under the Code or ERISA.
(C) Except as set forth in Schedule 4.14, any CFC Benefit Plan that
is intended to be qualified under Section 401(a) of the Code and exempt from tax
under Section 501(a) of the Code has been determined by the IRS to be so
qualified, and such determination is current, remains in effect and has not been
revoked. To the best knowledge of CFC and CFB, nothing has occurred since the
date of any such determination that is reasonably likely to affect adversely
such qualification or exemption, or result in the imposition of excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any CFC Benefit Plan.
(D) CFC and CFB have adequately reserved for all liabilities
accrued prior to the Effective Time under CFC's and CFB nonqualified retirement
or deferred compensation plans.
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(E) Except as set forth in Schedule 4.14, neither CFC nor CFB has
any current or contingent obligation to contribute to any multiemployer plan (as
defined in Section 3(37) of ERISA). Neither CFC nor CFB has any liability with
respect to any employee benefit plan (as defined in Section 3(3) of ERISA) other
than with respect to the CFC Benefit Plans.
(F) There are no pending or threatened claims by or on behalf of
any CFC Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any CFC Benefit Plans, alleging any breach of fiduciary duty on
the part of CFC or CFB or any of such party's officers, directors or employees
under ERISA, the Code or any applicable regulations, or claiming benefit
payments other than those made in the ordinary operation of such plans. The CFC
Benefit Plans are not the subject of any investigation, audit or action by the
IRS, the Department of Labor or the PBGC. CFC and CFB have made all required
contributions under the CFC Benefit Plans, including the payment of any premiums
payable to the PBGC and other insurance premiums. There is no underfunding
liability for any CFC Benefit Plan that is subject to the funding requirements
of Section 312 of the Code.
(G) Neither CFC nor CFB maintains any defined benefit plan, and
neither has incurred, or has any reason to expect that it will incur, any
liability to the PBGC or otherwise under Title IV or ERISA (including early
withdrawal liability) or under the Code with respect to any such plan. No CFC
Benefit Plan has been subject to a reportable event for which notice would be
required to be filed with the PBGC, and no proceeding by the PBGC to terminate
any CFC Benefit Plan has been instituted or threatened.
(H) With respect to any CFC Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (in this
subsection, a "Welfare Plan"), (i) each such Welfare Plan for which
contributions are claimed as deductions under any provision of the Code is in
material compliance with all applicable requirements pertaining to such
deduction, (ii) with respect to any welfare benefit fund (within the meaning of
Section 419 of the Code) related to such a Welfare Plan, there is no
disqualified benefit (within the meaning of Section 4976(b) of the Code) that
would result in the imposition of a tax under Section 4976(a) of the Code, (iii)
any CFC Benefit Plan that is a group health plan (within the meaning of Section
4980B(g)(2) of the Code) complies, and in each and every case has complied, with
all of the material requirements of Section 4980B of the Code, ERISA, Title XXII
of the Public Health Service Act and the applicable provisions of the Social
Security Act, (iv) such Welfare Plan may be amended or terminated at any time on
or after the Closing Date, and (v) there are no benefits to be provided to
retirees under a group health plan that are subject to disclosure under
Financial Accounting Board Standard 106.
4.15 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses shown on
the consolidated statements of financial condition of CFC as of September 30,
1999, included in the CFC Quarterly Report on Form 10-Q as of such date has been
determined, in the opinion of management of CFC in accordance with GAAP, to be
adequate to provide for losses relating to or inherent in the loan portfolios of
CFC and CFB.
4.16 ENVIRONMENTAL MATTERS. Each of CFC and CFB is in material
compliance with all local, state and federal environmental statutes, laws,
rules, regulations and permits, including but not limited to CERCLA and the
Toxic Substances Control Act, 15 U.S.C. 2601 et seq. Neither CFC nor CFB has,
nor to the best of CFC's knowledge have other parties, used, stored, disposed of
or permitted any "hazardous substance" (as defined in CERCLA), petroleum
hydrocarbon, polychlorinated biphenyl, asbestos or radioactive material
(collectively, "Hazardous Substances") to remain at, on, in or under any of the
real property owned or leased by CFC or CFB (including, without limitation, the
buildings or structures thereon) (the "CFC Real Property"). Neither CFC nor CFB
has, nor to the best of CFC's knowledge have other parties, installed, used, or
disposed of any asbestos or asbestos-containing material on, in or under any of
the CFC Real Property. Neither CFC nor CFB has, nor to the best of CFC's
knowledge have other parties, installed or used underground storage tanks in or
under any of the CFC Real Property. CFC has delivered to AFC copies of all
complaints, citations, orders, reports, written data, notices or other
communications sent or received by it with respect to any local, state or
federal environmental law, ordinance, rule or regulation as
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any of them relate to CFC or CFB.
4.17 ASSET CLASSIFICATION. Set forth in Schedule 4.17 is a list,
accurate and complete in all material respects, of the aggregate amounts of
loans, extensions of credit or other assets of CFC and CFB that have been
classified by it as of November 30, 1999 (the "Asset Classification"); and no
amounts of loans, extensions of credit or other assets that have been classified
as of November 30, 1999 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
CFC or CFB prior to November 30, 1999.
4.18 LABOR MATTERS. No material work stoppage involving CFC or CFB is
pending or, to the best knowledge of CFC, threatened. Neither CFC nor CFB is
involved in, or, to the best knowledge of CFC's management, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which might reasonably be expected to have a Material Adverse Effect.
Employees of CFC and CFB are not represented by any labor union, and, to the
best knowledge of CFC's management, no labor union is attempting to organize
employees of CFC or CFB.
4.19 CFC INFORMATION. The written information with respect to CFC and
its officers, directors, and affiliates which shall have been supplied by CFC
(or any of its accountants, counsel or other authorized representatives)
specifically for use in soliciting the Shareholder Approvals, or which shall be
contained in the Registration Statement, will not, on the date the Proxy
Statement is first mailed to shareholders of AFC or CFC or on the date of the
Shareholders' Meeting, or in the case of the Registration Statement, at the time
it becomes effective, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.20 SECURITIES REPORTS. Within the last two (2) years, CFC has filed
on a timely basis all reports, registrations, and statements, together with any
amendments, required under the Securities Act and the Exchange Act, all of
which, as of their respective dates, were in compliance in all material respects
with the rules and regulations of the SEC.
4.21 OWNERSHIP OF AFC COMMON STOCK. Except for an immaterial number of
shares, over which the CFB trust department exercises control, no shares of AFC
Common Stock are beneficially owned (as defined in Rule 13d-3 under the Exchange
Act) by CFC or CFB.
4.22 All information provided by CFC in connection with the due
diligence investigation by AFC was, at the time that such information was
provided, fair, accurate and complete in all material respects. Since the date
of such provision of information, there have been no changes in such
information, which taken in the aggregate, represent a Material Adverse Event.
CFC has not failed to provide or make available to AFC all material information
regarding CFC.
4.23 CFC knows of no reason why the Mergers would not qualify (i) as
tax-free reorganizations under Section 368(a) of the Code or (ii) for
pooling-of-interests accounting treatment under generally accepted accounting
practices.
SECTION V. CONDUCT OF BUSINESS PENDING CLOSING
5.1 CONDUCT OF AFC PENDING CLOSING. During the period commencing on the
date hereof and continuing until the Closing Date, each of AFC and AB covenants
and agrees to the following (except to the extent that CFC shall otherwise
expressly consent in writing, which consent shall not be unreasonably delayed or
withheld); provided, however, that any breach of or inaccuracy in any of the
covenants given in this Section 5.1 (other than any willful breach or
inaccuracy, as to which this proviso does not apply), taken in the aggregate
with all other such breaches and inaccuracies, must have a Material Adverse
Effect before such breach shall be actionable or shall constitute grounds for
termination or failure to perform under this Reorganization Agreement.
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(A) Each of AFC and AB will carry on its business only in the
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent with such business, use all reasonable efforts to preserve
intact its business organization and goodwill, maintain the services of its
present officers and employees and preserve its relationships with customers,
suppliers and others having business dealings. Neither AFC nor AB shall purchase
or otherwise acquire or enter into a contract to acquire servicing or
subservicing rights with respect to loans not originated by AFC or AB without
the written consent of CFC, which consent shall not be unreasonably withheld.
(B) Neither AFC nor AB will amend its Articles of Incorporation or
Bylaws as in effect on the date hereof, except as may be required by applicable
law or regulation.
(C) AFC will not issue, grant, pledge or sell, or authorize the
issuance of, reclassify or redeem, purchase or otherwise acquire, any shares of
its capital stock of any class or Rights to acquire any such shares or any
shares or Rights to acquire shares of AB; nor will it enter into any arrangement
or contract with respect to the issuance of any such shares or other Rights to
acquire shares; nor will it declare, set aside or pay any dividends (of any
type) or make any other change in its equity capital structure; provided,
however, that it may pay its customary $0.16 per share quarterly cash dividend
prior to closing (and further provision may be made for any necessary changes in
the quarterly dividend schedule to the extent necessary to avoid AFC's
shareholders missing a quarterly dividend because of the time of Closing).
(D) AFC will promptly advise CFC in writing of any change in the
businesses of AFC or AB which is or may reasonably be expected to have a
Material Adverse Effect.
(E) AFC will not take, agree to take, or knowingly permit to be
taken (except as may be required by applicable law or regulation) any action or
do or knowingly permit to be done anything in the conduct of the business of AFC
or AB, or otherwise, which would be contrary to or in breach of any of the terms
or provisions of the Transaction Documents, or which would cause any of the
representations of AFC or AB contained herein to be or become untrue in any
material respect.
(F) Neither AFC nor AB will incur any indebtedness for borrowed
money, issue or sell any debt securities, or assume or otherwise become liable,
whether directly, contingently or otherwise, for the obligation of any other
party, other than in the ordinary course of business.
(G) Except for expenses attendant to the Mergers and current
contractual obligations, neither AFC nor AB will incur any expense in an amount
in excess of $100,000 after the execution of this Reorganization Agreement
without the prior written consent of CFC.
(H) Neither AFC nor AB will grant any executive officers any
increase in compensation (except in the ordinary course of business in
accordance with past practice and only upon prior notice to CFC), or enter into
any employment agreement with any executive officer without the consent of CFC
except as may be required under employment or termination agreements in effect
on the date hereof which have been previously disclosed to CFC in writing.
(I) Neither AFC nor AB will acquire or agree to acquire by merging
or consolidating with, purchasing substantially all of the assets of or
otherwise, any business or any corporation, partnership, association or other
business organization or division thereof.
(J) Except as may be directed by any Regulatory Authority, as may
be undertaken in the ordinary course of business in accordance with past
practices, or as may be reasonably appropriate in view of changes in economic
circumstances, neither AFC nor AB shall (1) change its lending, investment,
liability management or other material banking or other policies in any material
respect, or (2) implement or adopt any change in accounting principles,
practices or methods, other than as may be required by GAAP.
(K) AFC shall not impose, or permit or suffer the imposition of any
Liens on any shares of capital stock of AB, or (except in the ordinary course of
business) on any of its or AB's assets, other than Liens on such other assets
that, individually or in the aggregate, are not material to the business,
properties or operations of AFC or AB.
5.2 CONDUCT OF CFC PENDING CLOSING. During the period commencing on the
date hereof and
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continuing until the Closing Date, CFC covenants and agrees to the following
(except to the extent that AFC shall otherwise expressly consent in writing,
which consent shall not be unreasonably delayed or withheld); provided, however,
that any breach of or inaccuracy in any of the covenants given in this Section
5.2 (other than any willful breach or inaccuracy, as to which this proviso does
not apply), taken in the aggregate with all other such breaches and
inaccuracies, must have a Material Adverse Effect before such breach shall be
actionable or shall constitute grounds for termination or failure to perform
under this Reorganization Agreement.
(A) CFC shall carry on its business in substantially the same
manner as heretofore conducted; provided that, without limiting the foregoing,
this Section 5.2(a) shall not be construed to restrict CFC's ability to engage
in acquisitions.
(B) CFC will not amend its Articles of Incorporation or Bylaws as
in effect on the date hereof in any manner that will adversely affect the AFC
shareholders in any material respect.
(C) CFC will promptly advise AFC in writing of any change in the
businesses of CFC or CFB which is or may reasonably be expected to have a
Material Adverse Effect.
(D) CFC will not take, agree to take, or knowingly permit to be
taken any action or do or knowingly permit to be done anything in the conduct of
its business or otherwise, which would be contrary to or in breach of any of the
terms or provisions of the Transaction Documents, or which would cause any of
the representations of CFC contained herein to be or become untrue in any
material respect.
SECTION VI. COVENANTS OF THE PARTIES
6.1 ACCESS TO PROPERTIES AND RECORDS. Between the date of this
Reorganization Agreement and the Closing Date, the parties will provide to each
other and to their respective accountants, counsel and other authorized
representatives reasonable access, during reasonable business hours and upon
reasonable notice, to their respective premises, properties, contracts,
commitments, books, records and other information and will cause their
respective officers to furnish to the other party and its authorized
representatives such financial, technical and operating data and other
information pertaining to their respective businesses, as the parties shall from
time to time reasonably request.
6.2 CONFIDENTIALITY. Each party will and will cause its employees and
agents to hold in strict confidence, unless disclosure is compelled by judicial
or administrative process, or in the opinion of its counsel, by other
requirements of law, all Confidential Information and will not disclose the same
to any Person. The party gaining access to such Confidential Information shall
exercise the same degree of care with respect thereto that any such party uses
to preserve and safeguard its own confidential proprietary information.
Confidential Information shall be used only for the purpose of and in connection
with consummating the transaction contemplated herein. If this Reorganization
Agreement is terminated, each party hereto will promptly return all documents
received by it from each other party containing Confidential Information. Each
party will and will cause its employees and agents to hold in strict confidence,
unless disclosure is compelled by judicial or administrative process, or in the
opinion of its counsel, by other requirements of law, the status of the Mergers.
Each party shall coordinate with the other parties, any public statements
regarding the Mergers.
6.3 COOPERATION. Each party shall use its respective, reasonable best
efforts to take any and all necessary or appropriate actions, and to use its
reasonable best efforts to cause its officers, directors, employees, agents, and
representatives to use their reasonable best efforts and to take all steps in
good faith within their power, to cause to be fulfilled those of the conditions
precedent to its obligations to consummate the Mergers which are dependent upon
its or their actions, including but not limited to (i) requesting the delivery
of appropriate opinions and letters from its counsel and (ii) obtaining any
consents, approvals, or waivers required to be obtained from other parties.
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6.4 AFFILIATES' LETTERS. AFC shall deliver to CFC a letter identifying
all Persons who are, at the time the Corporate Merger is submitted to a vote of
the shareholders of AFC, "affiliates" of AFC for purposes of Rule 145 of the
General Rules and Regulations under the Securities Act and as required for
pooling-of-interests accounting treatment. AFC shall use its reasonable best
efforts to cause each Person who is identified as an "affiliate" in the letter
referred to above to deliver to CFC on or prior to the Effective Time a written
agreement, in form reasonably satisfactory to CFC that such Person shall not
sell, pledge, transfer or otherwise dispose of any capital stock of AFC or any
CFC Common Stock owned by such person or to be received by such person as part
of the consideration except in compliance with the applicable provisions of the
Securities Act.
6.5 Listing of CFC Common Stock. CFC shall cause the shares of CFC
Common Stock to be issued in the transactions contemplated by this
Reorganization Agreement to be approved for quotation on the Nasdaq National
Market, subject to official notice of issuance, prior to the Effective Time. CFC
shall give such notice to the Nasdaq Stock Market as may be required to permit
the listing of the CFC Common Stock issued in connection with the Corporate
Merger.
6.6 LETTERS FROM ACCOUNTANTS. Prior to the date the Registration
Statement is declared effective and prior to the Effective Time, AFC will
deliver to CFC letters from Arthur Andersen LLP addressed to CFC and dated not
more than two business days before the date on which such Registration Statement
shall have become effective and not more than two business days prior to the
Effective Time, respectively, in form and substance satisfactory to CFC, and CFC
will deliver to AFC letters from KPMG LLP, addressed to AFC and dated not more
than two business days before the Registration Statement shall have become
effective and not more than two business days prior to the Effective Time,
respectively, in form and substance satisfactory to AFC, in each case with
respect to the financial condition of the other party and such other matters as
are customary in accountants' comfort letters.
6.7 TAX TREATMENT; POOLING OF INTERESTS. AFC and CFC shall each take
such acts within their power as may be reasonably necessary to cause the Mergers
to qualify as "reorganizations" within the meaning of Section 368(a) of the Code
and to qualify for pooling-of-interests accounting treatment, except to the
extent such performance or failure would be prohibited by law or regulation.
6.8 EXPENSES. Except to the extent expressly provided otherwise herein,
the parties shall pay their own fees and expenses (including legal and
accounting fees) incurred in connection with the Mergers.
6.9 MATERIAL EVENTS. At all times prior to the Closing Date, each party
shall promptly notify the other parties in writing of the occurrence of any
event which will or may result in a breach of any covenant, representation or
warranty in this Reorganization Agreement, or the failure to satisfy the
conditions specified in Section VI or Section VII of this Reorganization
Agreement or other material developments relevant to the consummation of the
Mergers, and shall use its reasonable best efforts to prevent or promptly to
remedy the same.
6.10 ACQUISITION PROPOSALS. In the case of AFC, without the prior
written consent of CFC, it shall not, and it shall cause AB not to, solicit or
encourage inquiries or proposals with respect to, or 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 or deposits of, or a substantial equity interest in, AFC or AB or any
merger or other business combination with AFC or AB (an "Acquisition Proposal");
provided, however, that if AFC is not otherwise in violation of this Section
6.10 and if AFC or AB has received a bona fide, unsolicited third-party offer,
the Board of Directors of AFC may furnish or cause to be furnished information
and may participate in such discussions and negotiations in response to such
offer if such Board of Directors, after having consulted with and considered the
written advice of outside counsel, has determined that the failure to provide
such information or participate in such negotiations and discussions would cause
the members of such Board of Directors to breach their fiduciary duties under
applicable law. AFC shall instruct its and AB's officers, directors, agents,
advisors and affiliates to refrain from taking any action that would violate or
conflict with the foregoing. AFC shall notify CFC
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immediately if any such inquiries or proposals are received by, or any such
negotiations or discussions are sought to be initiated with, AFC or AB, shall
furnish CFC details of any such inquiries or offers and shall advise CFC
promptly of all developments relating to such inquiries or proposals..
6.11 PUBLIC ANNOUNCEMENTS. At all times until after the Closing Date,
neither AFC nor CFC shall issue or permit any of its respective subsidiaries,
affiliates, officers, directors or employees to issue any press release or other
information to the press with respect to this Reorganization Agreement, without
the express prior consent of the other party, except as may be required by law
or the policies of the Nasdaq Stock Market. The parties shall cooperate to
prepare a joint press release with respect to the transactions contemplated
herein.
6.12 UPDATING OF SCHEDULES. AFC and CFC shall, at the Effective Time,
prepare and deliver to each other such supplements to the schedules attached
hereto as may be necessary or appropriate to ensure the accuracy and
completeness of the information required to be disclosed in such schedules at
all times prior to the Effective Time, provided that the furnishing of any such
supplement to such Schedules shall not modify, limit, or otherwise affect any
representations or warranties of AFC or CFC contained herein or any right of AFC
or CFC to terminate this Reorganization Agreement. AFC and CFC shall provide to
each other drafts of such supplemental Schedules at least three (3) business
days prior to the Closing Date.
6.13 CERTAIN POLICIES OF AFC. AFC shall, consistent with GAAP and
regulatory accounting principles, use its best efforts to record any accounting
adjustments required to conform its and AB's loan, litigation and other reserve
and real estate valuation policies and practices (including loan classifications
and levels of reserves) so as to reflect consistently on a mutually satisfactory
basis the policies and practices of CFC; provided, however, that AFC and AB
shall not be obligated to record any such accounting adjustments pursuant to
this Section unless and until AFC and AB shall be reasonably satisfied that all
the conditions to the obligation of the parties to consummate the Mergers will
be satisfied or waived on or before the Effective Time, and in no event until
the day prior to the Closing Date. Notwithstanding any other provision hereof,
until the Effective Time, the management of AFC and the authority to establish
and implement its business policies shall continue to reside solely in AFC
officers and board of directors, and the election of AFC directors shall be
solely the prerogative of AFC shareholders.
6.14 EMPLOYEE MATTERS.
(A) CFC, AFC and AB agree to cooperate to develop staffing plans
which will result in retention of as many AFC and AB managers and employees as
is practical (as determined by CFC). CFC agrees that AFC and AB employees shall
also be eligible for consideration for any other available positions for which
they are qualified at CFC and its subsidiaries. CFC agrees that those former AFC
or AB employees who are employed by CFC or its subsidiaries immediately
following the Closing Date: (i) will be eligible, on the same basis as current
CFC employees, for all CFC Benefit Plans; and (ii) will receive past service
credit for eligibility and vesting (but not benefit accrual) purposes under CFC
Benefit Plans for years of service with AFC and AB as if such service had been
with CFC or its subsidiaries. CFC agrees that AFC may elect to fully vest its
employees under some or all AFC Benefit Plans prior to consummation of the
Mergers. Prior to the Closing Date, AFC shall, in accordance with the
requirements of the Code and ERISA and all regulations thereunder, take steps to
terminate its Employee Stock Ownership Plan ("ESOP") and its Defined
Contribution Pension Plan ("DC Plan"), and, upon receipt of a favorable
determination letter from the IRS with respect to each such plan, distribute the
assets of such Plan to its participants. Any AFC Benefit Plans that are intended
to be qualified under Section 401(a) of the Code and exempt from tax under
Section 501(a) of the Code will be terminated by proper action of the Board of
Directors of AFC or AB prior to the Effective Time. CFC agrees to assume all of
AFC's obligations under its Post-Retirement Health Benefit Plan with respect to
AB employees eligible to receive benefits under such Plan at the Effective Time
based on their age and years of service with AB. CFC further agrees that those
former AFC or AB employees who are employed by CFC or its subsidiaries
immediately following the Closing Date will not be subject to any pre-existing
condition exclusion under CFC's medical Benefit Plans.
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(B) At Closing, CFC shall cause CFB to enter into the employment
agreements attached hereto as Appendix C and D (the "Employment Agreements").
(C) At Closing, CFC (or its subsidiaries) shall pay at least
$650,000 in "pay-to-stay" bonuses to such persons as shall be reasonably
designated by AFC in writing.
(D) Any former AFC employee or any former AFC Subsidiary employee
who is terminated within 18 months after Closing shall be entitled to the
greater of (i) CFC's currently-applicable severance benefits, (ii) two weeks pay
per year of service up to 26 weeks total pay with COBRA benefits paid by CFC for
the length of the period over which the severance is paid.
3. DIRECTORS, COMMITTEES. (a) At the Special Meeting, CFC will
nominate five existing AFC directors (designated by the AFC Board of Directors,
reasonably acceptable to CFC and allocated among the various classes of
directors as evenly as possible) and recommend their election to the CFC
shareholders for election. CFC will nominate each one for at least one
additional three-year term when they stand for re-election.
(b) Each of CFC's board committees shall include a former member of the
AFC board.
6.15 CHARITABLE CONTRIBUTIONS. CFC shall honor AFC's obligations to
make the charitable contributions set forth on Schedule 6.16 (which
contributions shall not exceed ______ annually). In addition, CFC shall make a
$500,000 contribution (as soon as practicable after Closing in the name AB or
AFC) to such charitable organizations as shall be reasonably designated by the
former AFC Board of Directors.
6.16 PROHIBITED ACTIONS.
(A) Except as expressly provided in this Reorganization Agreement,
as agreed to by CFC or as required by applicable law, rules or regulations
(including the fiduciary duties of the AFC and AB directors under applicable
law), during the period from the date of this Reorganization Agreement to the
Effective Time, AFC shall, and shall cause its subsidiaries to, (i) take no
action which would adversely affect or delay the ability of the parties hereto
to obtain any necessary Regulatory Approvals or Authorizations required for the
transactions contemplated hereby or to perform its covenants and agreements on a
timely basis under this Reorganization Agreement and (ii) take no action that
could reasonably be expected to have a Material Adverse Effect on AFC or AB.
(B) Except as expressly provided in this Reorganization Agreement,
as agreed to by AFC or as required by applicable law, rules or regulations,
during the period from the date of this Reorganization Agreement to the
Effective Time, CFC shall, and shall cause its subsidiaries to, (i) take no
action which would adversely affect or delay the ability of the parties hereto
to obtain any necessary Regulatory Approvals or Authorizations required for the
transactions contemplated hereby or to perform its covenants and agreements on a
timely basis under this Reorganization Agreement and (ii) take no action that
could reasonably be expected to have a Material Adverse Effect on CFC.
6.17 EXEMPTION FROM LIABILITY UNDER SECTION 16(B). Assuming that AFC
delivers to CFC any necessary information in a timely fashion prior to the
Effective Time, the CFC Board of Directors, or a committee of Non-Employee
Directors thereof (as such term is defined for purposes of Rule 16b-3(d) under
the Exchange Act), shall reasonably promptly thereafter and in any event prior
to the Effective Time adopt a resolution providing that the receipt by any
officer or director of AFC or AB (who, pursuant to the Mergers, becomes a
"reporting person" of CFC under Section 16 of the Exchange Act), of CFC Common
Stock in exchange for shares of AFC Common Stock, and of options to purchase
shares of CFC Common Stock upon conversion of options to purchase shares of AFC
Common Stock, in each case pursuant to the transactions contemplated hereby and
to the extent such securities are listed in the information provided to CFC (as
contemplated above), are approved by such Board or Directors or by such
committee thereof, and are intended to be exempt from liability pursuant to
Section 16(b) under the Exchange Act, such that any such receipt shall be so
exempt.
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SECTION VII. CONDITIONS TO CFC'S OBLIGATION TO CLOSE
The obligation of CFC and CFB to consummate the transactions
contemplated in this Reorganization Agreement is subject to the satisfaction of
the following conditions at or before the Closing Date:
7.1 PERFORMANCE OF ACTS AND REPRESENTATIONS BY AFC. Each of the acts
and undertakings of AFC and AB to be performed on or before the Closing Date
pursuant to the terms of this Reorganization Agreement shall have been duly
authorized and duly performed, and each of the representations and warranties of
AFC and AB set forth in this Reorganization Agreement shall be true in all
respects on the Closing Date, subject to the standard set forth in Section III,
except as to transactions contemplated by this Reorganization Agreement or
representations which are as of a specific date.
7.2 OPINION OF COUNSEL FOR AFC. AFC shall have furnished CFC with an
opinion of its counsel, dated as of the Closing Date, and in form and substance
reasonably satisfactory to CFC and its counsel, to the effect that, except as
disclosed herein: (i) Each of AFC and AB is duly organized, validly existing and
in good standing under the laws of their respective jurisdictions of
incorporation; (ii) the consummation of the transactions contemplated by this
Reorganization Agreement will not (A) violate any provision of AFC's or AB's
Articles of Incorporation or Bylaws, as applicable, (B) violate any provision
of, result in the termination of, or result in the acceleration of any
obligation under, any agreement listed on Schedule 3.18 or any order,
arbitration award, judgment or decree known to counsel to which AFC or AB is a
party, or by which either is bound, except as such would not, in the aggregate,
have a Material Adverse Effect, except as disclosed on schedules to the
Reorganization Agreement, or (C) violate or conflict with any other restriction
of any kind or character of which such counsel has knowledge and to which AFC or
AB is subject; (iii) all of the shares of AFC Common Stock and AB common stock
are validly authorized and issued, fully paid and non-assessable; (iv) each of
AFC and AB has the legal right and power, and all authorizations and approvals
required by law, to enter into the Transaction Documents, and to consummate the
transactions contemplated therein and all applicable regulatory waiting periods
have passed; (v) other than filings and registrations required under applicable
law to be made by CFC or CFB, all filings and registrations with, and
notifications to, all federal and state authorities required on the part of AFC
or AB for the consummation of the Mergers have been made; (vi) each of AFC and
AB has full corporate power and authority to enter into the Transaction
Documents, and the Transaction Documents have been duly authorized, executed and
delivered by each of AFC and AB and constitutes a valid and legally binding
obligation of AFC and AB enforceable against each of AFC and AB in accordance
with their terms, except as such enforceability may be limited by (x) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (y) laws relating to the safety and
soundness of depository institutions, and (z) general principles of equity; and
(vii) to the best knowledge of such counsel, no material suit or proceeding is
pending or threatened against AFC, AB or other parties which would have a
Material Adverse Effect on AFC's or AB's business or properties or their
abilities to make the representations and warranties and perform the obligations
set forth herein.
7.3 CONDUCT OF BUSINESS. There shall have been no Material Adverse
Event with respect to AFC or AB from the date hereof through the Closing Date.
7.4 CONSENTS. All Regulatory Approvals and other authorizations
necessary, in the reasonable opinion of counsel for CFC, to the consummation of
the transactions contemplated hereby shall have been obtained, and no
governmental agency or department or judicial authority shall have issued any
order, writ, injunction or decree prohibiting the consummation of the
transactions contemplated hereby. Regulatory Approvals shall have been obtained
without the imposition of any condition or requirements that, in the reasonable
judgment of CFC, renders the consummation of this transaction unduly burdensome
(excluding conditions or requirements that are typically imposed in transactions
of the type contemplated herein).
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7.5 CERTIFICATE. CFC shall have been furnished with such certificates
of officers of AFC and AB, in form and substance reasonably satisfactory to CFC,
dated as of the Closing Date, certifying to such matters as CFC may reasonably
request, including but not limited to the fulfillment of the conditions
specified in this Section VII.
7.6 SHAREHOLDER APPROVALS. The Shareholder Approvals shall have been
obtained.
7.7 SECURITIES LAWS. The Registration Statement shall have been
declared effective. No order suspending the sale of the shares of CFC Common
Stock in any jurisdiction shall have been issued, and no proceedings for that
purpose shall have been instituted.
7.8 The Employment Agreements shall have been executed.
7.9 POOLING-OF-INTERESTS CFC shall have received reasonable assurance
from KPMG LLP that the Mergers will qualify for pooling-of-interests accounting
treatment under GAAP. CFC shall have received reasonable assurance from Arthur
Andersen LLP that AFC will qualify for pooling-of-interests accounting treatment
under GAAP.
SECTION VIII. CONDITIONS TO THE OBLIGATION OF AFC TO CLOSE
The obligation of AFC to consummate the transactions contemplated in
this Reorganization Agreement is subject to the satisfaction of the following
conditions at or before the Closing Date:
8.1 PERFORMANCE OF ACTS AND REPRESENTATIONS BY CFC AND CFB. Each of the
acts and undertakings of CFC and CFB to be performed on or before the Closing
Date pursuant to the terms of this Reorganization Agreement shall have been duly
authorized and duly performed, and each of the representations and warranties of
CFC and CFB set forth in this Reorganization Agreement shall be true in all
material respects on the Closing Date, except as to transactions contemplated by
this Reorganization Agreement or representations which are as of a specific
date.
8.2 OPINION OF COUNSEL FOR CFC. CFC shall have furnished AFC with an
opinion of its counsel, dated as of the Closing Date, and in form and substance
reasonably satisfactory to AFC and its counsel, to the effect that, except as
disclosed herein: (i) CFC and CFB are duly organized, validly existing and in
good standing under the laws of the State of South Carolina; (ii) the
consummation of the transactions contemplated by this Reorganization Agreement
will not (A) violate any provision of CFC's or CFB's Articles of Incorporation
or Bylaws, (B) violate any provision of, result in the termination of, or result
in the acceleration of any obligation under, any mortgage, lien, lease,
franchise, license, permit, agreement, instrument, order, arbitration award,
judgment or decree known to counsel to which CFC or CFB is a party, or by which
it is bound, except as such would not, in the aggregate, have a material adverse
effect on the business or financial condition of CFC, or (C) violate or conflict
with any other restriction of any kind or character of which such counsel has
knowledge and to which CFC or CFB is subject; (iii) all of the shares of CFC
Common Stock to be issued in connection with the Corporate Merger will be, when
issued, validly authorized and issued, fully paid and non-assessable; (iv) CFC
and CFB have the legal right and power, and all authorizations and approvals
required by law, to enter into the Transaction Documents, and to consummate the
transactions contemplated herein and all applicable regulatory waiting periods
have passed; (v) all filings and registrations with, and notifications to, all
federal and state authorities required on the part of AFC or AB for the
consummation of the Mergers have been made; (vi) CFC and CFB have full corporate
power and authority to enter into the Transaction Documents, and the Transaction
Documents have been duly authorized, executed and delivered by CFC and CFB and
constitutes a valid and legally binding obligation of CFC and CFB enforceable
against CFC and CFB in accordance with their terms, except as such
enforceability may be limited by (x) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors of FDIC-insured institutions or the relief of
debtors generally, (y) laws relating to the safety and soundness of depository
institutions, and (z)
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general principles of equity; (vii) to the best knowledge of such counsel, no
material suit or proceeding is pending or threatened against CFC or other
parties which would have a material adverse effect on CFC's business or
properties or its abilities to make the representations and warranties and
perform the obligations set forth herein, and (viii) the Registration Statement
became effective on [date] and no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no proceedings
for that purpose have been instituted or are pending under the Securities Act.
8.3 CONDUCT OF BUSINESS. There shall have been no Material Adverse
Event with respect to CFC or CFB from the date hereof through the Closing Date.
8.4 CONSENTS. All Regulatory Approvals or other authorizations
necessary, in the reasonable opinion of counsel for AFC, to the consummation of
the transactions contemplated hereby shall have been obtained, and no
governmental agency or department or judicial authority shall have issued any
order, writ, injunction or decree prohibiting the consummation of the
transactions contemplated hereby. Approvals of all applicable regulatory
agencies shall have been obtained without the imposition of any condition or
requirements that, in the reasonable judgment of AFC, renders the consummation
of this transaction unduly burdensome (excluding conditions or requirements that
are typically imposed in transactions of the type contemplated herein).
8.5 CERTIFICATE. AFC shall have been furnished with such certificates
of officers of CFC and CFB, in form and substance reasonably satisfactory to
AFC, dated as of the Closing Date, certifying to such matters as AFC may
reasonably request, including but not limited to the fulfillment of the
conditions specified in this Section VIII.
8.6 TAX OPINION. AFC shall have received from Wyche, Burgess, Freeman &
Parham, P.A. a tax opinion, reasonably satisfactory to AFC, opining, subject to
reasonable qualifications, that the Corporate Merger shall, upon compliance with
reasonable conditions, qualify as a tax-free reorganization under Section 368(a)
of the Code.
8.7 SHAREHOLDER APPROVALS. The Shareholder Approvals shall have been
obtained.
8.8 SECURITIES LAWS. The Registration Statement shall have been
declared effective. No order suspending the sale of the shares of CFC Common
Stock in any jurisdiction shall have been issued, and no proceedings for that
purpose shall have been instituted.
8.9 POOLING-OF-INTERESTS. AFC shall have received reasonable assurance
from KPMG LLP that the Mergers will qualify for pooling-of-interests accounting
treatment under GAAP. AFC shall have received reasonable assurance from Arthur
Andersen LLP that AFC will qualify for pooling-of-interests accounting treatment
under GAAP.
SECTION IX. TERMINATION
9.1 TERMINATION. This Reorganization Agreement may be terminated at any
time prior to the Closing Date:
(A) by mutual consent of the parties;
(B) by either CFC or AFC, at that party's option, (A) if a
permanent injunction or other order (including any order denying any required
regulatory consent or approval) shall have been issued by any Federal or state
court of competent jurisdiction in the United States or by any United States
Federal or state governmental or regulatory body, which order prevents the
consummation of the transactions contemplated herein, or (B) if the Shareholder
Approvals are not received at the Shareholder Meetings;
(C) by either CFC or AFC if the other party (or its subsidiaries)
has failed to comply with the agreements or fulfill the conditions contained
herein, provided, however, that any such failure of compliance or fulfillment
(other than with respect to Section 6.10, as to which this proviso does not
apply) must result in a Material Adverse Event and, if curable, the breaching
party must be given notice
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of the failure to comply and a reasonable period of time (not to exceed 30 days)
to cure;
(D) by either CFC or AFC in the event that Closing has not occurred
by October 31, 2000, provided that no Party that is in material breach of any of
the provisions of this Reorganization Agreement will be entitled to terminate
this Reorganization Agreement pursuant to this provision;
(E) by either CFC or AFC as contemplated in Section 9.2(b);
(F) by the Board of Directors of AFC, if it determines by a vote of
a majority of the members of its entire Board at any time during the ten-day
period commencing two days after the Determination Date, if both of the
following conditions are satisfied:
(1) the Average Closing Price shall be twenty percent (20%)
less than the Starting Price; and
(2) the CFC Ratio shall be less than .85 times the Index Ratio;
subject, however, to the following: If AFC refuses to consummate the Merger
pursuant to this Section 9.1(f), it shall give prompt written notice thereof to
CFC; provided, that such notice of election to terminate may be withdrawn at any
time within the aforementioned ten-day period. During the five-day period
commencing with its receipt of such notice, CFC shall have the option to elect
to increase the Exchange Ratio (as defined in the Plan of Merger) to equal the
lesser of (i) the quotient obtained by dividing (1) the product of 0.80, the
Starting Price and the Exchange Ratio (as then in effect) by (2) the Average
Closing Price, and (ii) the quotient obtained by dividing (1) the product of the
Index Ratio and the Exchange Ratio (as then in effect) by (2) the CFC Ratio. If
CFC makes an election contemplated by the preceding sentence, within such
five-day period, it shall give prompt written notice to AFC of such election
pursuant to this Section 9.1(f) and this Reorganization Agreement shall remain
in effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified), and any references in this Reorganization Agreement or the
Plan of Merger to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 9.1(f).
For purposes of this Section 9.1(f), the following terms shall have the
meanings indicated:
"AVERAGE CLOSING PRICE" shall mean the average of the daily last sales
prices of CFC Common Stock as reported on The Nasdaq Stock Market (as reported
by The Wall Street Journal or, if not reported thereby, another authoritative
source as chosen by CFC) for the 20 consecutive full trading days in which such
shares are traded ending at the closing of trading on the Determination Date.
"AVERAGE INDEX PRICE" shall mean the average of the daily Index Price
for the 20 consecutive full trading days ending at the closing of trading on the
Determination Date.
"CFC RATIO" shall mean the quotient of the Average Closing Price
divided by the Starting Price.
"DETERMINATION DATE" shall mean the date on which the last consent of
the Board of Governors of the Federal Reserve System shall be received.
"INDEX GROUP" shall mean the bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 75% of the acquiror's market capitalization. In the event that
any such company or companies are removed from the Index Group, the weights
(which shall be determined based upon the number of outstanding shares of common
stock) shall be redistributed proportionately for purposes of determining the
Index Price. The bank holding companies and the weights attributed to them are
as follows:
Bank Holding Companies Weighting (%)
---------------------- -------------
AmSouth Bancorporation 13.05
BancorpSouth, Inc. 1.64
CCB Financial Corporation 3.02
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Bank Holding Companies Weighting (%)
---------------------- -------------
Centura Banks, Inc. 2.88
Colonial BancGroup, Inc. 1.96
Compass Bancshares, Inc. 4.05
F&M National Corporation 1.08
F.N.B. Corporation 0.81
First Citizens BancShares, Inc. 1.32
First Tennessee National Corporation 6.58
First Virginia Banks, Inc. 3.54
Hancock Holding Company 0.74
Hibernia Corporation 3.00
Keystone Financial, Inc. 1.70
Mercantile Bankshares Corporation 3.92
National Commerce Bancorporation 4.34
One Valley Bancorp, Inc. 1.76
Provident Bankshares Corporation 0.78
Regions Financial Corporation 8.97
SouthTrust Corporation 10.04
Synovus Financial Corp. 9.79
Trustmark Corporation 2.66
Union Planters Corporation 9.19
United Bankshares, Inc. 1.78
Whitney Holding Corporation 1.45
===========
TOTAL 100.0
"INDEX PRICE" on a given date shall mean the current market price of
the Index Group for that day.
"INDEX RATIO" shall mean the quotient of the Average Index Price
divided by the Index Price on the Starting Date.
"STARTING PRICE" shall the closing price of CFC Common Stock on the
Starting Date. The Starting Price shall be equitably adjusted to take into
effect any stock dividend, reclassification, recapitalization, split up,
combination, exchange of shares, or similar transaction between the date of this
Agreement and the Determination Date.
"STARTING DATE" shall mean January 10, 2000.
9.2 CONSEQUENCES OF TERMINATION.
(A) Except as expressly provided herein, in the event of the
termination or abandonment of this Reorganization Agreement pursuant to the
provisions of Section 9.1, this Reorganization Agreement will become void and
have no force or effect, without any liability on the part of the parties or any
of their respective directors or officers or shareholders with respect to this
Reorganization Agreement. Notwithstanding the preceding sentence, no termination
of this Reorganization Agreement will relieve any party of any liability for any
breach of this Reorganization Agreement or for any misrepresentation under this
Reorganization Agreement or be deemed to constitute a waiver of any remedy
available for such breach or misrepresentation. Without limiting the foregoing,
termination under this Reorganization Agreement shall not affect each party's
rights and obligations under the Stock Option Agreement.
(B) Termination Fee. If this Reorganization Agreement is
terminated:
1. by CFC (i) if at any time prior to the AFC Shareholders
Meeting, the
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Board of Directors of AFC shall have failed to recommend the Merger to the
holders of AFC Common Stock, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the interests
of CFC, or (ii) because a tender offer or exchange offer for 20% or more of the
outstanding shares of AFC Common Stock is commenced (other than by CFC) and the
Board of AFC recommends that the stockholders of AFC tender their shares in such
tender or exchange offer or otherwise fails to recommend that such stockholders
reject such tender offer or exchange offer within ten business days after the
commencement thereof;
2. by AFC or CFC because of a failure to obtain the required
approval of the stockholders of AFC after an Acquisition Proposal for AFC shall
have been publicly disclosed, or any Person shall have publicly disclosed an
intention (whether or not conditional) to make an Acquisition Proposal; or
3. by CFC pursuant to Section 9.1(c) if the breach by AFC
giving rise to such termination was willful and, at or prior to such
termination, an Acquisition Proposal shall have been made known to AFC or any of
its subsidiaries or shall have been publicly disclosed to AFC's stockholders or
any Person shall have made known to AFC or any of its subsidiaries or otherwise
publicly disclosed an intention (whether or not conditional) to make an
Acquisition Proposal and regardless of whether such Acquisition Proposal shall
have been rejected by AFC or withdrawn prior to the time of such termination,
then, in such case, AFC shall pay to CFC a termination fee of $10.5 million (the
"Termination Fee"). Any Termination Fee that becomes payable pursuant to this
Section shall be paid promptly following the receipt of a written request for
Termination Fee to AFC from CFC. Notwithstanding the foregoing, in no event
shall AFC be obligated to pay any Termination Fee if AFC shall be entitled to
terminate this Reorganization Agreement pursuant to Section 9.1(c) due to a
breach by CFC prior to the receipt by AFC of an Acquisition Proposal.
(c) REIMBURSEMENT OF FEE. In the event that this Reorganization is
terminated by AFC (or wrongfully terminated by CFC) and no Termination Fee
becomes payable under Section 9.2(b), then (after the point in time when such
Termination Fee could no longer reasonably become payable) CFC shall reimburse
AFC for its fees payable under its currently-existing investment banking
arrangement with The Robinson-Humphrey Company, up to a maximum of $250,000.
SECTION X. INDEMNIFICATION
10.1 INFORMATION FOR APPLICATION AND STATEMENTS. Each of CFC and AFC
represents and warrants that all information concerning it which is or will be
included in any statement and application made to any governmental agency
(including the Registration Statement) in connection with the transactions
contemplated by the Agreement shall be true and correct in all material respects
and shall not omit any material fact required to be stated therein or necessary
to make the statements made, in light of the circumstances under which they were
made, not misleading. Each of CFC and AFC so representing and warranting will
indemnify and hold harmless the other, each of its directors and officers, who
controls the other within the meaning of the Securities Act, from and against
any and all losses, claims, damages, expenses or liabilities to which any of
them may become subject under applicable laws and rules and regulations
thereunder and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any actions
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any such
application or statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the representing and
warranting party expressly for use therein. Each of CFC and AFC agrees, at any
time upon
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<PAGE>
the request of the other, to furnish to the other a written letter or statement
confirming the accuracy of the information contained in any proxy statement,
registration statement, report or other application or statement, or in any
draft of any such document, and confirming that the information contained in
such document or draft was furnished expressly for use therein or, if such is
not the case, indicating the inaccuracies contained in such document or draft or
indicating the information not furnished expressly for use therein. The
indemnity agreement contained in this Section X shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the other party.
10.2 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(A) CFC covenants and agrees that it will cause each person who is
an officer or director of AFC or a director of AB (an "Indemnitee") on the
Closing Date to be indemnified for any costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") arising out of such person's service as an officer or
director of AFC or director of AB to the fullest extent to which such Indemnitee
is entitled under the Articles of Incorporation and Bylaws of CFC in effect on
the date hereof (except that this provision shall not be construed so as to
cause CFC to violate applicable law). Without limiting the foregoing obligation,
CFC agrees that all limitations of liability existing in favor of an Indemnitee
in the Articles of Incorporation and Bylaws of AFC as in effect on the date
hereof and the laws of the State of South Carolina arising out of matters
existing or occurring at or prior to the Effective Time shall survive the
Mergers and shall continue in full force. CFC, upon request of such Indemnitee,
shall advance expenses in connection with such indemnification. The provisions
of this Section X shall survive the closing and shall be enforceable directly by
each officer and director of AFC benefited by this Section X.
(B) Any Indemnity wishing to claim indemnification under this
Section X, upon learning of such claims or liabilities, shall promptly notify
CFC thereof; provided, that the failure so to notify shall not affect the
obligations of CFC hereunder unless such failure materially increases CFC's
liability hereunder. In the event of any litigation giving rise to a claim
hereunder, (i) CFC shall have the right to assume the defense thereof, if it so
elects, and CFC shall pay all reasonable fees and expenses of counsel for the
Indemnities promptly as statements therefor are received; provided, however,
that CFC shall be obligated pursuant to this Section to pay for only one firm of
counsel for all Indemnities in any jurisdiction for any single action, suit or
proceeding or any group of actions, suits or proceedings arising out of or
related to a common body of facts, (ii) the Indemnities shall cooperate in the
defense of any such matter, (iii) CFC shall not be liable for any settlement
effected without its prior written consent and (iv) CFC shall have no obligation
hereunder in the event a federal banking agency or a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that indemnification of an Indemnity in the
manner contemplated hereby is prohibited by applicable law.
10.3 INSURANCE. Prior to Closing, AFC shall use its best efforts to
extend its existing directors' and officers' liability insurance policy past the
Closing Date (spending up to approximately $100,000) and after Closing, CFC
shall take no action to terminate prematurely such policy.
SECTION XI. MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
provided in this Reorganization Agreement, the representations, warranties and
covenants contained in this Reorganization Agreement or in any other documents
delivered pursuant hereto, shall not survive the Closing of the transactions.
Notwithstanding any investigation made by or on behalf of the parties, whether
before or after Closing Date, the parties shall be entitled to rely upon the
representations and warranties given or made by the other party(ies) herein.
Each of the covenants set forth in Sections 6.2, 6.14, 6.15, 6.16, 10.2 and 10.3
shall survive the Closing Date forever (except that this sentence shall not be
construed to extend any
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applicable statutes of limitations).
11.2 ENTIRE AGREEMENT. This Reorganization Agreement, including any
schedules, exhibits, lists and other documents referred to herein which form a
part hereof, contains the entire agreement of the parties with respect to the
subject matter contained herein and there are no agreements, warranties,
covenants or undertakings other than those expressly set forth herein.
11.3 BINDING AGREEMENT. This Reorganization Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Agreement shall not be
assigned by either of the parties hereto without the prior written consent of
the other party hereto.
11.4 NOTICES. Any notice given hereunder shall be in writing and shall
be deemed delivered and received upon reasonable proof of receipt. Unless
written designation of a different address is filed with each of the other
parties hereto, notice shall be transmitted to the following addresses:
For CFC: William S. Hummers III
Carolina First Corporation
102 South Main Street
Greenville, South Carolina 29601
Fax: 864-239-4605
Copy to: William P. Crawford, Jr.
Wyche, Burgess, Freeman & Parham, P.A.
Post Office Box 728
Greenville, South Carolina 29602
Fax: 864-235-8900
For AFC: Stephen L. Chryst
Anchor Financial Corporation
2002 Oak Street
Myrtle Beach, South Carolina 29578
Fax: 843-946-3173
Copies to: Tom Parrish
Gerrish & McCreary, P.C.
700 Colonial Road - Suite 200
Memphis, TN 38117
Fax: 901-684-2339
11.5 COUNTERPARTS. This Reorganization Agreement may be executed in one
or more Counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
11.6 HEADINGS. The section and paragraph headings contained in this
Reorganization Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretations of this Reorganization Agreement.
11.7 LAW GOVERNING. This Reorganization Agreement shall be governed by
and construed in accordance with the laws of the State of South Carolina.
11.8 AMENDMENT. This Reorganization Agreement may not be amended except
by an instrument in writing signed on behalf of all of the parties.
11.9 WAIVER. Any term, provision or condition of this Reorganization
Agreement (other than that
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required by law) may be waived in writing at any time by the party which is
entitled to the benefits thereof.
END OF PAGE
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<PAGE>
IN WITNESS WHEREOF, this Reorganization Agreement has been duly entered
as of the date first written above.
<TABLE>
<CAPTION>
WITNESS:
CAROLINA FIRST CORPORATION
<S> <C>
/s/ By: /s/
- ------------------------------------ ---------------------------------------
/s/ William S. Hummers III
- ------------------------------------ Executive Vice President
CAROLINA FIRST BANK
/s/ By: /s/
- ------------------------------------ --------------------------------------
/s/ William S. Hummers III
- ------------------------------------ Executive Vice President and Cashier
ANCHOR FINANCIAL CORPORATION
/s/ By: /s/
- ------------------------------------ --------------------------------------
/s/ Stephen L. Chryst
- ------------------------------------ President and Chief Executive Officer
THE ANCHOR BANK
/s/ By: /s/
- ------------------------------------ --------------------------------------
/s/ Stephen L. Chryst
- ------------------------------------ President and Chief Executive Officer
Appendices (omitted)
</TABLE>
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<PAGE>
APPENDIX A
PLAN OF MERGER OF
ANCHOR FINANCIAL CORPORATION
WITH AND INTO
CFC INTERIM, INC.
Pursuant to this Plan of Merger (the "Plan of Merger"), Anchor
Financial Corporation ("AFC"), a South Carolina corporation headquartered in
Myrtle Beach, South Carolina, shall be merged with and into CFC Interim, Inc.
("Interim"), a South Carolina corporation headquartered in Greenville, South
Carolina.
ARTICLE I. DEFINITIONS
The capitalized terms set forth below shall have the following
meanings:
1.1. "AB" shall mean Anchor Bank, a South Carolina state bank.
1.2. "Articles of Merger" shall mean the Articles of Merger to be
executed by Interim and AFC in a form appropriate for filing with the Secretary
of State of South Carolina, relating to the effective consummation of the
Corporate Merger as contemplated by the Plan of Merger.
1.3. "BCA" shall mean the South Carolina Business Corporation Act of
1988, as amended.
1.4 "CFB" shall mean Carolina First Bank, a South Carolina corporation
and a wholly-owned subsidiary of CFC.
1.2. "CFC Common Stock" shall mean the common stock, par value $1.00
per share, of CFC.
1.3. "Change of Control Transaction" shall mean, with respect to CFC, a
transaction in which a majority of the surviving entity of such transaction (or
a majority of the entity holding substantially all of the assets of CFC) is not
owned by persons holding CFC Common Stock immediately prior to such transaction.
1.6. "Corporate Merger" shall mean the merger of AFC with and into
Interim as more particularly set forth herein and in the Reorganization
Agreement.
1.7. "Effective Time" shall mean the date and time which the Corporate
Merger becomes effective as more particularly set forth in Section 2.2 hereof.
Subject to the terms and conditions hereof, the Effective Time shall be such
time on such date as CFC shall notify AFC in writing not less than five days
prior thereto, which date shall not be more than 30 days after all conditions
have been satisfied or waived in writing.
1.8. "Exchange Ratio" shall mean the number of shares of CFC Common
Stock issuable in exchange for one share of AFC Common Stock, as calculated
pursuant to Section 3.1 hereof.
1.9. "Person" shall mean an individual, a partnership, a corporation, a
commercial bank, an industrial bank, a savings association, a savings bank, a
limited liability company, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
1.10. "Reorganization Agreement" shall mean the Reorganization
Agreement among CFC, CFB, AB and AFC dated the date hereof, to which this Plan
of Merger is attached as Appendix A.
1.11. "Rights" shall mean warrants, calls, commitments, options, rights
(whether stock appreciation rights, conversion rights, exchange rights, profit
participation rights, or otherwise), securities or obligations convertible into
or exchangeable for, or giving any Person any right to subscribe for or acquire,
and other arrangements or commitments which obligate a Person to issue,
otherwise cause to become outstanding, sell, transfer, pledge, or otherwise
dispose of any of its capital stock or other ownership interests, or any voting
rights thereof or therein, or to pay monetary sums by reference to the existence
or market valuation, or in lieu and place, of any of its capital stock or
ownership interests therein.
1.16. "Shareholder Approvals" shall mean, as the context may require,
the duly authorized written consent of CFC to the merger of AB with and into
CFB; the approval by the requisite vote of the shareholders of AFC at the AFC
Shareholders' Meeting of the merger of AFC with and into Interim; and the
approval by the requisite vote of the shareholders of CFC at the CFC
Shareholders' Meeting of the merger of AFC with and into Interim, all in
accordance with the Reorganization Agreement and this Plan of Merger.
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<PAGE>
1.17. "Shareholders' Meeting" shall mean, as applicable, the meetings
of the shareholders of AFC and CFC at which the Corporate Merger shall be voted
upon.
1.18. "Surviving Corporation" shall mean Interim after consummation of
the Corporate Merger.
ARTICLE II. THE CORPORATE MERGER
2.1. CORPORATE MERGER. At the Effective Time, subject to the terms and
conditions of the Reorganization Agreement and this Plan of Merger, AFC shall
merge with and into Interim, the separate existence of AFC shall cease, and
Interim (the "Surviving Corporation") shall survive and the name of the
Surviving Corporation shall be "Carolina First Corporation". By virtue of the
Corporate Merger and without any action on the part of the holders thereof, each
of the shares of AFC Common Stock issued and outstanding immediately prior to
the Effective Time (excluding shares held by AFC, CFC, Interim any AFC
Subsidiary or any CFC Subsidiary, in each case other than in a fiduciary
capacity or as a result of debts previously contracted (the "Excluded Shares"))
shall be converted into the right to receive the Merger Consideration referenced
in Article III below. Each of the shares of CFC Common Stock (including the
rights ("CFC Rights") issued pursuant to a Shareholder Rights Agreement, dated
November 9, 1993 (as amended, the "CFC Rights Agreement")), and any shares of
any CFC Subsidiary or AFC Subsidiary outstanding immediately prior to the
Effective Time shall continue to be issued and outstanding, and shall not be
converted, exchanged or altered in any manner as a result of the Corporate
Merger.
2.2. EFFECTIVE TIME. The Corporate Merger shall become effective on the
date and at the time specified in the Articles of Merger, and in the form to be
filed with the Secretary of State of the State of South Carolina.
2.3. CAPITALIZATION. The number of authorized shares of capital stock
of the Surviving Corporation shall be the same as immediately prior to the
Corporate Merger.
2.4. ARTICLES OF INCORPORATION. The articles of incorporation of
Interim as in effect at the Effective Time shall be and remain the articles of
incorporation of the Surviving Corporation.
2.5. BYLAWS. The Bylaws of Interim, as in effect at the Effective Time,
shall continue in full force and effect as the bylaws of the Surviving
Corporation until otherwise amended as provided by law or by such bylaws.
2.6. PROPERTIES AND LIABILITIES OF AFC AND CFC; MANAGEMENT. At the
Effective Time, the separate existence and corporate organization of AFC shall
cease, and Interim shall thereupon and thereafter, to the extent consistent with
applicable law and with its articles of incorporation and the changes, if any,
provided by the Corporate Merger, possess all the rights, privileges,
immunities, liabilities and franchises, of a public as well as a private nature,
of AFC without further act or deed. The directors and officers of Interim in
office immediately prior to the Corporate Merger becoming effective shall be the
directors and officers of the Surviving 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.
ARTICLE III. MERGER CONSIDERATION
3.1. MERGER CONSIDERATION. In connection with the Corporate Merger,
each share of AFC Common Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Corporate Merger and without any action
on the part of the holder thereof, be exchanged for and converted into 2.175
shares of CFC Common Stock (the "Exchange Ratio"). All of the stock prices set
forth in this Section 3.1 shall also be subject to equitable adjustment for
stock splits, stock dividends, reverse stock splits and similar items.
3.2. CFC COMMON STOCK; INTERIM COMMON STOCK. None of the shares of CFC
shall be converted in the Corporate Merger and the capitalization of CFC after
the Corporate Merger shall remain unchanged (except to reflect the issuance of
shares in Section 3.1 above). None of the shares of Interim shall be converted
in the Corporate Merger and the capitalization of Interim after the Corporate
Merger shall remain unchanged.
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<PAGE>
3.3. AUTHORIZED OR TREASURY SHARES. Any and all shares of AFC Common
Stock held as treasury shares by AFC or authorized but unissued shares shall be
canceled and retired at the Effective Time, and no consideration shall be issued
or given in exchange therefor.
3.4. FRACTIONAL SHARES. No fractional shares of CFC Common Stock will
be issued as a result of the Merger. In lieu of the issuance of fractional
shares pursuant to Section 3.1 hereof, cash will be paid to the holders of the
AFC Common Stock in respect of any fractional share that would otherwise be
issuable based on the Ending Price.
3.5. EXCLUDED SHARES. Each of the Excluded Shares shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.6. EQUITABLE ADJUSTMENTS. In the event of any change in the
outstanding CFC Common Stock by reason of a stock dividend, stock split, stock
consolidation, recapitalization, reorganization, merger, split up or the like,
the Conversation Ratio and all stock prices set forth in this Article III shall
be appropriately adjusted so as to preserve, but not increase, the benefits of
this Plan of Merger to the holders of AFC Common Stock.
3.7. TRANSFERS. At the Effective Time, the stock transfer books of AFC
shall be closed and no transfer of AFC Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Merger notwithstanding, none of
the parties to the Reorganization Agreement or any affiliate of the foregoing
shall be liable to a holder of AFC Common Stock for any amount paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
ARTICLE IV. EXCHANGE OF COMMON STOCK CERTIFICATES
4.1. ISSUANCE OF CFC CERTIFICATES; CASH FOR FRACTIONAL SHARES. (a) As
soon as practicable after the Effective Time (but in no event more than five
days after the Effective Time), CFC or its transfer agent (in such capacity, the
"Exchange Agent") shall mail, or cause to be mailed, and otherwise make
available to each record holder of Shares, a form of the letter of transmittal
and instructions for use in effecting surrender and exchange of certificates
which immediately before the Effective Time represented shares of AFC Common
Stock ("Certificates") for payment therefor. Upon receipt of such notice and
transmittal form, each holder of Certificates at the Effective Time shall
surrender the Certificate or Certificates to the Exchange Agent, and shall
promptly upon surrender receive in exchange therefor the Merger Consideration
provided in Section 3 of this Plan of Merger. If any portion of the payment to
be made upon surrender and exchange of a Certificate is to be paid to a person
other than the person in whose name the Certificate is registered, it shall be a
condition of such payment that the Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay in advance any transfer or other taxes or establish to the
satisfaction of CFC that no such tax is applicable. Upon surrender, each
Certificate shall be canceled. In addition, Certificates surrendered for
exchange by any person constituting an affiliate of AFC for purposes of Rule
145(c) under the Securities Act of 1933, as amended (the "Securities Act"),
shall not be exchanged for certificates representing shares of CFC Common Stock
until CFC has received the written agreement from such person as provided for in
Section 6.4 of the Reorganization Agreement.
(b) Adequate provisions shall be made to permit Certificates to be
surrendered and exchanged in person not later than the business day following
the Effective Time.
4.2. AUTHORIZED WITHHOLDINGS. CFC shall not be obligated to deliver the
consideration to which any former holder of AFC Common Stock is entitled as a
result of the Merger until such holder surrenders his or her certificate or
certificates representing the shares of AFC Common Stock for exchange as
provided in this Article IV, or, in default thereof, an appropriate affidavit of
loss and indemnity agreement and/or a bond as may be reasonably required in each
case by CFC or AFC. In addition, no dividend or other distribution payable to
the holders of record of CFC Common Stock as of any time subsequent to the
Effective Time shall be paid to the holder of any certificate representing
shares of AFC Common Stock issued and outstanding at the Effective Time until
such holder surrenders such certificate for exchange as provided in Section 4.1
above. However, upon surrender of the AFC Common Stock certificate both the CFC
Common Stock certificate, together with all such withheld dividends or other
distributions and any withheld
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<PAGE>
cash payments in respect of fractional share interest, but without any
obligation for payment of interest by such withholding, shall be delivered and
paid with respect to each share represented by such certificate.
4.3. LIMITED RIGHTS OF FORMER AFC SHAREHOLDERS. After the Effective
Time, each outstanding certificate representing shares of AFC Common Stock prior
to the Effective Time shall be deemed for all corporate purposes (other than
voting and the payment of dividends and other distributions to which the former
shareholder of AFC Common Stock may be entitled) to evidence only the right of
the holder thereof to surrender such certificate and receive the requisite
number of shares of CFC Common Stock in exchange therefor (and cash in lieu of
fractional shares) as provided in this Plan of Merger.
ARTICLE V. STOCK OPTIONS AND OTHER RIGHTS
5.1. OPTIONS. All options set forth in Schedule 3.5 to the
Reorganization Agreement shall be converted into the right to receive shares of
CFC Common Stock based on the Exchange Ratio.
ARTICLE VI. MISCELLANEOUS
6.1. CONDITIONS PRECEDENT. Consummation of the Merger is conditioned
upon receipt of the Shareholder Approvals. In addition, consummation of the
Merger is conditioned upon the fulfillment of the conditions precedent set forth
in Article VII and Article VIII of the Reorganization Agreement, subject to
waiver of any such conditions, if appropriate, as provided thereunder.
6.2. TERMINATION. This Plan of Merger may be terminated at any time
prior to the Effective Time as provided in Article IX of the Reorganization
Agreement.
6.3. AMENDMENTS. To the extent permitted by law, this Plan of Merger
may be amended by a subsequent writing signed by all of the parties hereto upon
the approval of the board of directors of each of the parties hereto; provided,
however, that this Plan of Merger may not be amended after the Shareholders'
Meetings except in accordance with applicable law.
Dated as of this _____ day of _______________, 2000.
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<PAGE>
APPENDIX B
PLAN OF MERGER
OF
ANCHOR BANK
WITH AND INTO
CAROLINA FIRST BANK
Pursuant to this Plan of Merger (the "Plan of Merger"), Anchor Bank
("AB"), a state banking corporation existing under the laws of South Carolina,
shall be merged with and into Carolina First Bank ("CFB"), a state banking
corporation existing under the laws of South Carolina.
ARTICLE I. DEFINITIONS
The capitalized terms set forth below shall have the following
meanings.
1.1. "AB Common Stock" shall mean the common stock, par value $__ per
share, of AB.
1.1. "Articles of Merger" shall mean the Articles of Merger to be
executed by CFB and AB in a form appropriate for filing with the Secretary of
State of South Carolina, relating to the effective consummation of the Bank
Merger as contemplated by the Plan of Merger.
1.2. "BCA" shall mean the South Carolina Business Corporation Act of
1988, as amended.
1.3. "Bank Merger" shall mean the merger of AB with and into CFB as
more particularly set forth in the Reorganization Agreement.
1.4. "CFB Common Stock" shall mean the common stock, par value $1.00
per share, of CFB.
1.5. "CFC" shall mean Carolina First Corporation, a bank holding
company headquartered in Greenville, South Carolina.
1.6. "Effective Time" shall mean the date and time which the Bank
Merger becomes effective as more particularly set forth in Section 2.2 hereof.
Subject to the terms and conditions hereof, the Effective Time shall be such
time on such date as CFB shall notify AB in writing not less than five days
prior thereto, which date shall not be more than 30 days after all conditions
have been satisfied or waived in writing.
1.7. AFC. Anchor Financial Corporation, a corporation organized and
existing under the laws of the state of South Carolina.
1.8. "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.9. "Person" shall mean an individual, a partnership, a corporation, a
commercial bank, an industrial bank, a savings association, a savings bank, a
limited liability company, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
1.10. "Reorganization Agreement" shall mean the Reorganization
Agreement among CFC, CFB and AFC dated the date hereof, to which this Plan of
Merger is attached as Appendix A.
1.11. "Shareholder Approvals" shall mean, as the context may require,
the duly authorized written consent of CFC to the merger of AB with and into
CFB; the approval by the requisite vote of the shareholders of AFC at the AFC
Shareholders' Meeting of the merger of AFC with and into CFC; and the approval
by the requisite vote of the shareholders of CFC at the CFC Shareholders'
Meeting of the acquisition of AFC.
1.12. "Surviving Corporation" shall mean CFB after consummation of the
Bank Merger.
ARTICLE II. THE BANK MERGER
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2.1. BANK MERGER. At the Effective Time, subject to the terms and
conditions of the Reorganization Agreement and this Plan of Merger, AB shall
merge with and into CFB, the separate existence of AB shall cease, and CFB (the
"Surviving Corporation") shall survive and the name of the Surviving shall be
"Carolina First Bank". By virtue of the Bank Merger and without any action on
the part of the holders thereof, each of the shares of AB Common Stock issued
and outstanding immediately prior to the Effective Time, shall be converted into
the right to receive the Merger Consideration referenced in Article III below.
Each of the shares of CFB Common Stock, and any shares of any CFB subsidiary or
AB subsidiary outstanding immediately prior to the Effective Time shall continue
to be issued and outstanding, and shall not be converted, exchanged or altered
in any manner as a result of the Bank Merger.
2.2. EFFECTIVE TIME. The Bank Merger shall become effective on the date
and at the time specified in the Articles of Merger, and in the form to be filed
with the Secretary of State of the State of South Carolina and the FDIC.
2.3. CAPITALIZATION. The number of authorized shares of capital stock
of the Surviving Corporation shall be the same as immediately prior to the Bank
Merger.
2.4. ARTICLES OF INCORPORATION. The articles of incorporation of CFB as
in effect at the Effective Time shall be and remain the articles of
incorporation of the Surviving Corporation.
2.5. BYLAWS. The Bylaws of CFB, as in effect at the Effective Time,
shall continue in full force and effect as the bylaws of the Surviving
Corporation until otherwise amended as provided by law or by such bylaws.
2.6. PROPERTIES AND LIABILITIES OF AB AND CFB; MANAGEMENT. At the
Effective Time, the separate existence and corporate organization of AB shall
cease, and CFB shall thereupon and thereafter, to the extent consistent with
applicable law and with its articles of incorporation and the changes, if any,
provided by the Bank Merger, possess all the rights, privileges, immunities,
liabilities and franchises, of a public as well as a private nature, of AB
without further act or deed. The directors and officers of CFB in office
immediately prior to the Bank 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.
ARTICLE III. MERGER CONSIDERATION
3.1. MERGER CONSIDERATION. In connection with the Bank Merger, all
shares of AB Common Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Bank Merger and without any action on the
part of the holder thereof, be exchanged for and converted into 100 shares of
CFB Common Stock (the "Merger Consideration").
3.2. CFB COMMON STOCK. None of the shares of CFB shall be converted in
the Bank Merger and the capitalization of CFB after the Bank Merger shall remain
unchanged.
3.3. AUTHORIZED OR TREASURY SHARES. Any and all shares of AB Common
Stock held as treasury shares by AB or authorized but unissued shares shall be
canceled and retired at the Effective Time, and no consideration shall be issued
or given in exchange therefor.
3.4. TRANSFERS. At the Effective Time, the stock transfer books of AB
shall be closed and no transfer of AB Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Merger notwithstanding, none of
the parties to the Reorganization Agreement or any affiliate of the foregoing
shall be liable to a holder of AB Common Stock for any amount paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
ARTICLE IV. EXCHANGE OF COMMON STOCK CERTIFICATES
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4.1. ISSUANCE OF CFB CERTIFICATES; CASH FOR FRACTIONAL SHARES. After
the Effective Time, each holder of shares of AB Common Stock issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to CFB or its transfer agent, and shall
promptly upon surrender receive in exchange therefor the Merger Consideration
provided in Section 3.1 of this Plan of Merger.
4.2. AUTHORIZED WITHHOLDINGS. CFB shall not be obligated to deliver the
consideration to which any former holder of AB Common Stock is entitled as a
result of the Bank Merger until such holder surrenders his or her certificate or
certificates representing the shares of AB Common Stock for exchange as provided
in this Article IV, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond as may be reasonably required in each case by
CFB or AB. In addition, no dividend or other distribution payable to the holders
of record of CFB Common Stock as of any time subsequent to the Effective Time
shall be paid to the holder of any certificate representing shares of AB Common
Stock issued and outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 above. However, upon
surrender of the AB Common Stock certificate both the CFB Common Stock
certificate, together with all such withheld dividends or other distributions
and any withheld cash payments in respect of fractional share interest, but
without any obligation for payment of interest by such withholding, shall be
delivered and paid with respect to each share represented by such certificate.
4.3. LIMITED RIGHTS OF FORMER AB SHAREHOLDERS. After the Effective
Time, each outstanding certificate representing shares of AB Common Stock prior
to the Effective Time shall be deemed for all Bank purposes (other than voting
and the payment of dividends and other distributions to which the former
shareholder of AB Common Stock may be entitled) to evidence only the right of
the holder thereof to surrender such certificate and receive the requisite
number of shares of CFB Common Stock in exchange therefor as provided in this
Plan of Merger.
ARTICLE V. MISCELLANEOUS
5.1. CONDITIONS PRECEDENT. Consummation of the Bank Merger is
conditioned upon receipt of the Shareholder Approvals. In addition, consummation
of the Bank Merger is conditioned upon the fulfillment of the conditions
precedent set forth in Section VII and Section VIII of the Reorganization
Agreement, subject to waiver of any such conditions, if appropriate, as provided
thereunder.
5.2. TERMINATION. This Plan of Merger may be terminated at any time
prior to the Effective Time as provided in Section IX of the Reorganization
Agreement.
5.3. AMENDMENTS. To the extent permitted by law, this Plan of Merger
may be amended by a subsequent writing signed by all of the parties hereto upon
the approval of the board of directors of each of the parties hereto.
Dated as of this _____ day of _______________, 2000.
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APPENDIX C
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION, SEVERANCE
AND EMPLOYMENT AGREEMENT
BETWEEN
CAROLINA FIRST BANK, CAROLINA FIRST CORPORATION
AND
STEPHEN L. CHRYST
This Noncompetition, Severance and Employment Agreement (this
"Agreement") is made and entered into as of this 10th day of January 2000, to be
effective at the effective time of the acquisition of Anchor Financial
Corporation by Carolina First Corporation ("Effective Time") by and between
Stephen L. Chryst, an individual (the "Executive"), Carolina First Corporation
and Carolina First Bank, a South Carolina banking corporation headquartered in
Greenville, South Carolina (the "Company"). As used herein, the term "Company"
shall include the Company and any and all of its affiliates where the context so
applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that
the Executive will be instrumental in the success of the Company;
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WHEREAS the Company desires to employ the Executive as Chairman of the
Board and Chief Operating Officer of Carolina First Bank and in such other
capacities as set forth herein;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions hereof, Carolina First
Bank hereby employs the Executive and Executive hereby accepts such
employment as the Chairman of the Board and Chief Operating Officer of
the Company having such duties and responsibilities as are set forth in
Section 3 below.
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings specified below.
"CHANGE IN CONTROL" shall mean
(i) The acquisition, directly or indirectly, by any Person
(other than (A) any employee plan established by the Company, (B) the
Company or any of its affiliates (as defined in Rule 12b-2 promulgated
under the Exchange Act), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) a
corporation owned, directly or indirectly, by stockholders of the
Company in
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substantially the same proportions as their ownership of the Company),
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company) representing an aggregate of 20% or more of the combined
voting power of the Company's then outstanding voting securities;
(ii) During any period of up to two consecutive years
individuals who, at the beginning of such period, constitute the Board
cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than a
director (A) whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of
the directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, or (B) who was designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) hereof) shall be
deemed a director as of the beginning of such period;
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A)
a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of any Company, at
least 51% of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no
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Person is or becomes the beneficial owner (as defined in clause (i)
above), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company) representing 25% or more
of the combined voting power of the Company's then outstanding voting
securities; or (C) a plan of complete liquidation of the Company or an
agreement for the sale or disposition of the Company of all or
substantially all of the Company's assets; or
(iv) The occurrence of any other event or circumstance which
is not covered by (i) through (iii) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution that such
event or circumstance constitutes a Change in Control for the purposes
of this Agreement.
"CAUSE" shall mean:
(i) In the absence of a Change in Control, (a) fraud; (b)
embezzlement; (c) conviction of the Executive of any felony; (d) a
material breach of, or the wilful failure or refusal by the Executive
to perform and discharge the Executive's duties, responsibilities and
obligations under this Agreement and pursuant to a mutually acceptable
job description; (e) any act of moral turpitude or wilful misconduct by
the Executive intended to result in personal enrichment of the
Executive at the expense of the Company, or any of its affiliates or
which has a material adverse impact on the Business or reputation of
the Company or any of its affiliates (such determination to be made by
the Board in its reasonable judgment); (f) intentional material damage
to the property or Business of the Company; (g) gross negligence; or
(h) the ineligibility of the Executive to perform his duties because of
a ruling, directive or other action by any agency of the United States
or any state of the United States having regulatory authority over the
Company.
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(ii) After a Change in Control (a) material criminal fraud,
(b) gross negligence, (c) intentional material damage to the property
or business of the Company, or (d) the commission of a material felony,
but only if (1) the Executive has been provided with written notice of
any assertion that there is a basis for termination for cause which
notice shall specify in reasonable detail specific facts regarding any
such assertion, (2) Executive is given thirty (30) days to cure any
alleged violation of this Agreement, (3) such written notice is
provided to the Executive a reasonable time before the Board meets to
consider any possible termination for cause, (4) at or prior to the
meeting of the Board to consider the matters described in the written
notice, an opportunity is provided to the Executive and his counsel to
be heard before the Board with respect to the matters described in the
written notice, (5) any resolution or other Board action held with
respect to any deliberation regarding or decision to terminate the
Executive for cause is duly adopted by a vote of a majority of the
entire Board of the Company at a meeting of the Board called and held
and (6) the Executive is promptly provided with a copy of the
resolution or other corporate action taken with respect to such
termination. No act or failure to act by the Executive shall be
considered wilful unless done or omitted to be done by him not in good
faith and without reasonable belief that his action or omission was in
the best interests of the Company. The unwillingness of the Executive
to accept any or all of a change in the nature or scope of his
position, authorities or duties, a reduction in his total compensation
or benefits, a relocation that he deems unreasonable in light of his
personal circumstances, or other action by or request of the Company in
respect of his position, authority, or responsibility that he
reasonably deems to be contrary to this Agreement, may not be
considered by the Board to be a failure to perform or misconduct by the
Executive.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"CONFIDENTIAL INFORMATION" shall mean all business and other
information relating to the business of the Company, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other Persons, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
"DISABILITY" or "DISABLED" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform his duties for
the Company on a full-time basis, with or without accommodation, for a period of
six (6) months.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"INVOLUNTARY TERMINATION" shall mean the termination of Executive's
employment by the Executive which, is due to (i) a change of the Executive's
responsibilities, position (including status as Chief Operating Officer of the
Company, its successor or ultimate parent entity, office, title, reporting
relationships or working conditions) authority or duties (including changes
resulting from the assignment to the Executive of any duties inconsistent with
his positions, duties or responsibilities; or (ii) a change in the terms or
status (including the seven (7)year
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Term) of this Agreement; or (iii) a reduction in the Executive's compensation or
benefits; or (iv) a forced relocation of the Executive from the Myrtle Beach
metropolitan area; or (v) a significant increase in the Executive's travel
requirements.
"PERSON" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
"VOLUNTARY TERMINATION" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (v) set forth in the definition of Involuntary
Termination above.
3. DUTIES.
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3.1 During the term hereof, the Executive shall be provided such
office, and administrative, office automation, voice and network data support
commensurate with Executive's position and requirements and consistent with
those provided other high-ranking officers of the Company and shall have such
mutually agreeable duties and authority as are typical of the Chairman of the
Board and Chief Operating Officer of a company such as the Company. Executive
shall be a member of the Management Operating Committee (MOC) and shall be a
non-voting attendee of the Company's Compensation Committee. Executive shall
report to the Chief Executive Officer of Carolina First Corporation. Executive
agrees that during the Term hereof, he will devote his full working time,
attention and energies to his mutually agreed upon job duties. Executive shall
not, without the prior written consent of the Company, at any time during the
Term hereof (i) accept employment with, or render services of a business,
professional or commercial nature to, any Person other than the Company, (ii)
engage in any venture or activity which the Company may in good faith consider
to be competitive with or adverse to the business of the Company or of any
affiliate of the Company, whether alone, as a partner, or as an officer,
director, employee or shareholder or otherwise, except that the ownership of not
more than 5% of the stock or other equity interest of any publicly traded
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corporation or other entity shall not be deemed a violation of this Section, or
(iii) engage in any venture or activity which the Board may in good faith
consider to interfere with Executive's performance of his duties hereunder.
Executive may continue to serve on the boards of directors for which he is
currently a member. The Company shall incur no obligations as a result of
Executive's service.
3.2 Provided Executive is not terminated for cause and has not been
convicted of fraud, embezzlement, or any other felonly, Executive will be
nominated to serve on the Board of the Company and the Board of Directors of
Carolina First Corporation for each year until Executive reaches age sixty-five
(65). Provided, however, if Executive is not elected to the Board of the Company
or the Board of Directors of Carolina First Corporation or their successors and
not an active employee, Executive will receive Board fees as if Executive were
an outside board member until Executive reaches the age of sixty-five (65).
4. TERM. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a term of seven (7) years (the "Term")
commencing at the Effective Time.
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Except for the obligations under Sections 6.9 and 6.10, this Agreement shall
terminate upon the expiration of such Term.
5. TERMINATION. This Agreement may be terminated as follows:
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5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive's death,
or (iv) without Cause.
5.1.1 If the Company terminates Executive's
employment under this Agreement prior to the fourth anniversary of the
Effective Time, pursuant to clauses (i), (ii) or (iii) of Section 5.1
the Company's obligations hereunder shall cease as of the date of
termination except as provided in Section 6.11; provided, however, if
Executive is terminated for Cause after a Change in Control, then such
termination shall be treated as a Voluntary Termination as contemplated
in Section 5.2.2 below. If the Company terminates Executive's
employment under this Agreement pursuant to clause (i) of Section 5.1
after the fourth anniversary of the Effective Time, Executive shall be
entitled to receive as severance the compensation and benefits provided
in Section 6 for the remainder of the Term. If the Company terminates
Executive's employment under this Agreement pursuant to clauses (ii)
and (iii) of Section 5.1 after the fourth anniversary of the Effective
Time, the Company's obligations hereunder shall cease as of the date of
termination, except for the obligations under Sections 6.9, 6.10, and
6.11.
5.1.2 If the Company terminates Executive pursuant to
clause (iv) of Section 5.1, Executive shall be entitled to receive
immediately as severance upon such termination, aggregate compensation
and benefits provided in Section 6 for the remainder of the Term.
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5.1.3 In the event of such termination, pursuant to
clause (iv) of Section 5.1, (A) all rights of Executive pursuant to
awards of share grants or options granted by the Company shall be
deemed to have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended, and (B) the Executive shall be
deemed to be credited with service with the Company for such remaining
Term for the purposes of the Company's benefit plans; (C) the Executive
shall be deemed to have retired from the Company and shall be entitled
as of the termination date, or at such later time as he may elect to
commence receiving the total combined qualified and non-qualified
retirement benefit to which he is entitled hereunder, or his total
non-qualified retirement benefit hereunder if under the terms of the
Company's qualified retirement plan for salaried employees he is not
entitled to a qualified benefit, and (D) if any provision of this
Section 5.1.3 cannot, in whole or in part, be implemented and carried
out under the terms of the applicable compensation, benefit, or other
plan, or arrangement of the Company because the Executive has ceased to
be an actual employee of the Company, because the Executive has
insufficient or reduced credited service based upon his actual
employment by the Company, because the plan or arrangement has been
terminated or amended after the effective date of this Agreement, or
because of any other reason, the Company itself shall pay or otherwise
provide the equivalent of such rights, benefits and credits for such
benefits to Executive, his dependents, beneficiaries and estate.
5.2 By Executive. Executive shall have the right to terminate his
employment hereunder if (i) the Company materially breaches this Agreement and
such breach is not cured within 30 days after written notice of such breach is
given by Executive to the Company; (ii) there is a Voluntary Termination; or
(iii) there is an Involuntary Termination.
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5.2.1 If Executive terminates his employment other
than pursuant to clauses (i), (ii) or (iii) of Section 5.2 prior to the
fourth anniversary of the Effective Time, the Company's obligations
under this Agreement shall cease as of the date of such termination and
Executive shall be subject to the confidentiality provisions set forth
in Section 8 hereof and the noncompetition provisions set forth in
Section 9 hereof.
5.2.2 If during the Term, Executive terminates his
employment hereunder pursuant to clauses (i), (ii) or (iii) of Section
5.2 or at any time after the fourth anniversary of the Effective Time,
Executive shall be entitled to receive and the compensation and
benefits provided in Section 6 for the remainder of the Term and for
the period specified in Sections 6.9 and 6.10.
5.2.3 In addition, in the event of such termination
pursuant to any of clauses (i) through (iii) of this Section 5.2, (A)
all rights of Executive pursuant to awards of share grants or options
granted by the Company shall be deemed to have vested and shall be
released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended, and (B)
the Executive shall be deemed to be credited with service with the
Company for such remaining Term for the purposes of the Company's
benefit plans, and (C) the Executive shall be deemed to have retired
from the Company and shall be entitled as of the termination date, or
at such later time as he may elect to commence receiving the total
combined qualified and non-qualified retirement benefit to which he is
entitled hereunder, or his total non-qualified retirement benefit
hereunder if under the terms of the Company's qualified retirement plan
for salaried employees he is not entitled to a qualified benefit, and
(D) if any provision of this Section 5.2.3 cannot, in whole or in part,
be implemented and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the Company
because the Executive has ceased to be an actual employee of the
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Company, because the Executive has insufficient or reduced credited
service based upon his actual employment by the Company, because the
plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any other reason, the Company
itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents,
beneficiaries and estate.
6. COMPENSATION. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall
pay to Executive an annual base salary established by the Board which for the
first year of the Term shall be not less than Five Hundred Twenty Thousand
Dollars ($520,000.00). Executive's salary will be reviewed by the Board at the
beginning of each of its fiscal years and, in the sole discretion of the Board,
may be increased for such year; provided, however, that on January 1 of the year
following the acquisition of Anchor Financial Corporation by Carolina First
Corporation and each January 1 during the term hereof, Executive's annual base
salary shall be increased by five percent (5%) and provided further that
Executive's annual base salary can only be increased and cannot be reduced.
Following a Change in Control, Executive's annual base salary shall be increased
annually by a percentage at least equal to the average annual increase over the
past three years, but in no event shall the increase be less than five percent
(5%) and during the Term hereof cannot be reduced.
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6.2 Annual Bonus. During the Term hereof, Executive will
receive an annual bonus equaling fifty percent (50%) of Executive's annual base
salary. The annual bonus will be paid on or before March 31 of each calendar
year.
6.3 Annual Incentive Bonus. During the Term hereof, the Board
may pay to Executive an annual incentive cash bonus in accordance with the terms
of the Short Term Incentive Compensation Plan provided the average incentive
compensation for other members of the MOC exceeds the Executive's annual bonus
set forth in Section 6.2 and provided further that any annual incentive bonus
paid pursuant to this Section 6.3 when combined with the annual bonus paid
pursuant to Section 6.3 shall not exceed the average incentive compensation for
other members of the MOC.
6.4 Long Term Incentive Compensation Plan. During the Term
hereof, the Board may pay to Executive long term incentive compensation in
accordance with the Long Term Incentive Compensation Plan
6.5 Stock Options and Restricted Stock. During the Term
hereof and while Executive is actively employed, the Board shall grant Executive
options to purchase Company Common Stock and restricted stock in accordance with
the terms of the Company's Long Term Incentive Compensation Plan.
6.6 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits.
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6.7 Automobile. During the Term, the Company also agrees to
provide Executive with a Company-paid automobile, consistent with the model of
automobile provided to other senior managers and allow Executive to trade
automobiles every three (3) years.
6.8 Clubs. During the Term, the Company agrees to provide
Executive with reasonable club dues for one country club and two business
club(s), which shall include full membership at The Dunes Golf and Beach Club in
Myrtle Beach, South Carolina.
6.9 Supplemental Retirement Payment. In the event of a Change
in Control; a termination by Executive pursuant to Section 5.2(iii); or the
Executive completes four (4) years of active employment under this Agreement,
the Company will make an annual supplemental retirement payment of One Hundred
Fifty Thousand Dollars ($150,000.00) beginning on Executive's sixty-fifth (65th)
birthday or Executive's death, whichever first occurs, and continuing for
fifteen (15) years to Executive; provided, however, in the event of Executive's
death prior to the end of such fifteen (15) year period, the supplemental
retirement payment will be paid or continue to be paid to Executive's estate or
designated beneficiary, if any, for the remainder of such fifteen (15) year
period.
6.10 Medical and Dental Insurance Benefits. Executive,
Executive's spouse and dependent children will be eligible for coverage by
Carolina First's medical and dental benefits, without cost, until Executive
becomes eligible for Medicare. When Executive becomes eligible for Medicare, the
Company will provide, at its expense for Executive and Executive's spouse for
the remainder of their lives, an insurance supplement for medical and dental
insurance coverage comparable (when combined with Medicare) to the coverage
provided by the Company at the time the supplemental insurance is purchased.
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6.11 During the Term while Executive is actively employed,
Executive shall be entitled to education benefits similar to those provided
other Company executives, personal tax advisory services, and a $5,000,000 life
insurance policy and such disability insurance as may be purchased by $_____ per
year in premiums. If Executive becomes disabled and if the proceeds of the
disability policy purchased by the Company are insufficient to fund the
Company's obligation hereunder as if the Executive were not disabled, the
Company will fund the difference.
6.12 The payments hereunder are not subject to mitigation in
the event Executive receives compensation and is no longer actively employed.
7. EXCESS PARACHUTE PAYMENTS.
7.1 It is the intention of the parties hereto that the
severance payments and other compensation provided for herein are reasonable
compensation for Executive's services to the Company and shall not constitute
"excess parachute payments" within the meaning of Section 280G of the Code and
any regulations thereunder. To the extent the provisions herein for Executive's
automobile, club membership, or other non-cash or non-supplemental retirement
compensation result in an "excess parachute payment" as defined by Section
280(G)(b)(2) of the Code, Executive agrees to work in good faith with the
Company to ensure that the non-cash or non-supplemental retirement compensation
does not qualify as an "excess parachute payment."
7.2 To the extent that payments hereunder cause a "parachute
payment," as defined in Section 280G(b)2) of the Code, the Company shall
indemnify Executive and hold him harmless against all claims, losses, damages,
penalties, expenses, and excise taxes relating thereto. To effect this
indemnification, the Company shall pay Executive an additional amount that is
sufficient to pay any excise tax imposed by Section 4999 of the Code on the
payments and
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benefits to which Executive is entitled without the additional amount plus any
penalties or interest imposed by the Internal Revenue Service in regard to such
amounts, plus another additional amount sufficient to pay all the excise and
income taxes on the additional amounts. The determination of any additional
amount that must be paid under this section at any time shall be made in good
faith by the independent auditors then employed by the Company.
8. CONFIDENTIALITY. Executive shall hold in a fiduciary capacity for
the benefit of the Company all Confidential Information relating to the Company
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. Upon the termination or expiration
of his employment hereunder, Executive agrees to deliver promptly to the Company
all Company files, customer lists, management reports, memoranda, research,
Company forms, financial data and reports and other documents supplied to or
created by him in connection with his employment hereunder (including all copies
of the foregoing) in his possession or control and all of the Company's
equipment and other materials in his possession or control. In no event shall an
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
9. NONCOMPETITION AND NONSOLICITATION AGREEMENT. If this Agreement is
terminated by the Company pursuant to Section 5.1 or by Executive pursuant to
Section 5.2, Executive shall not enter into an employment relationship or a
consulting arrangement with any other federally insured depository institution
headquartered or having a physical presence in the states of South Carolina or
North Carolina (hereinafter a "competitor") for a period of ten (10) years from
the
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Effective Time (the "Noncompete Period"). The obligations contained in this
Section 9 shall not prohibit Executive from being an owner of not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of Company to leave the employ of Company, including but not limited to
a competitor, or in any way interfere with the relationship between Company and
any employee thereof, (ii) hire any person who was an employee of Company or any
subsidiary at any time during the time that Executive was employed by Company,
or (iii) induce or attempt to induce any customer, supplier, or other entity in
a business relation of Company to cease doing business with Company, or in any
way interfere with the relationship between any such customer, supplier, or
business relation and Company or do business with a competitor.
9.2 If, at the time of enforcement of this Section 9, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this Section 9 are reasonable.
9.3 In the event of the breach or a threatened breach by
Executive of any of the provisions of this Section 9, Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any
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violations of the provisions hereof (without posting a bond or other security).
In addition, in the event of an alleged breach or violation by Executive of this
Section 9, the Noncompete Period shall be tolled until such breach or violation
has been duly cured.
10. TRUST. At the Effective Time, the Company shall establish and fund
an irrevocable trust in the amount of Four Million Seven Thousand Seven Hundred
Thirty-Three Dollars ($4,007,733) in connection with the termination of
Executive's employment with The Anchor Bank and fund the maximum amount of
obligations which could reasonably be expected to become payable hereunder under
any circumstances (which shall be a "rabbi trust" if so requested by Executive
in his discretion), which trust (i) shall have as trustee an individual
acceptable to Executive, (ii) shall be fully funded upon the earlier of a Change
in Control or the approval of any regulatory application filed by a potential
acquirer of the Company seeking to acquire control of the Company, and (iii)
shall contain such other terms and conditions as are reasonably necessary in
Executive's determination to ensure the Company's compliance with its
obligations hereunder. The Company will pay all management and other fees
associated with the administration of the trust established pursuant to this
Section 10.
11. ASSIGNMENT. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. NOTICES. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
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To the Company: Carolina First Corporation
102 South Main Street
Greenville, South Carolina 29601
Attn: Chairman of the Board
To Executive: Stephen L. Chryst
303 Club Circle
Myrtle Beach, South Carolina 29572
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. PROVISIONS SEVERABLE. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
14. REMEDIES IN THE ABSENCE OF A CHANGE IN CONTROL. The terms of this
Section will apply in the absence of a Change in Control.
14.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive
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breaches or threatens to breach this Agreement, the Company shall be entitled to
injunctive relief, in addition to any other rights or remedies of the Company.
14.2 All claims, disputes and other matters in question
between the Executive and the Company arising out of or related to the
interpretation of this Agreement or the breach of this Agreement, except as
specifically governed by the foregoing provisions where there may be irreparable
harm and damage to the Company which could not be compensated in damages, shall
be decided by arbitration in accordance with the rules of the American
Arbitration Association. This agreement to arbitrate shall be specifically
enforceable under applicable law in any court having jurisdiction. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in
accordance with the applicable law of any court having jurisdiction thereof.
14.3 In the event that the Executive is reasonably required to
engage legal counsel to enforce his rights hereunder against the Company,
Executive shall be entitled to receive from the Company his reasonable
attorneys' fees and costs; provided that Executive shall not be entitled to
receive those fees and costs related to matters, if any, which were the subject
of litigation and with respect to which a judgment is rendered against
Executive.
15. REMEDIES IN THE EVENT OF A CHANGE IN CONTROL. The terms of this
Section shall apply in the event of a Change of Control.
15.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company. All claims, disputes
and other matters in question between the Executive and the Company arising out
of or related to the
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interpretation of this Agreement or the breach of this Agreement shall be
decided under and governed by the laws of the State of South Carolina.
15.2 The Company is aware that upon the occurrence of a Change
in Control, the Board or a stockholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny the Executive the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the parties that the
Executive not be required to incur the legal fees and expenses associated with
the protection or enforcement of his rights under this Agreement by litigation
or other legal action because such costs would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
costs. Accordingly, if at any time after a Change of Control, it should appear
to the Executive that the Company is or has acted contrary to or is failing or
has failed to comply with any of its obligations under this Agreement for the
reason that it regards this Agreement to be void or unenforceable or for any
other reason, or that the Company has purported to terminate his employment for
cause or is in the course of doing so in either case contrary to this Agreement,
or in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from the Executive the
benefits provided or intended to be provided to him hereunder, and the Executive
has acted in good faith to perform his obligations under this Agreement, the
Company irrevocably authorizes the Executive from time to time to retain counsel
of his choice at the expense of the Company to represent him in connection with
the protection and enforcement of his rights hereunder, including without
limitation representation in connection with termination of his employment
contrary to this Agreement or with the initiation or defense of any litigation
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or other legal action, whether by or against the Executive or the Company or any
director, officer, stockholder or other person affiliated with the Company, in
any jurisdiction. The reasonable fees and expenses of counsel selected from time
to time by the Executive as hereinabove provided shall be paid or reimbursed to
the Executive by the Company on a regular, periodic basis upon presentation by
the Executive of a statement or statements prepared by such counsel representing
other officers or key executives of the Company in connection with the
protection and enforcement of their rights under similar agreements between them
and the Company, and, unless in his sole judgment use of common counsel could be
prejudicial to him or would not be likely to reduce the fees and expenses
chargeable hereunder to the Company, the Executive agrees to use his best
efforts to agree with such other officers or executives to retain common
counsel.
16. WAIVER. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
17. MERGER. This Agreement is the only employment agreement between the
parties and supersedes and replaces any and all other agreements, specifically
inlcuding the letter from Mack I. Whittle, Jr, to Executive dated January 5,
2000.
18. AMENDMENTS AND MODIFICATIONS. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
19. GOVERNING LAW. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
---------------------------
Stephen L. Chryst
CAROLINA FIRST BANK
By:
-----------------------
Mack I. Whittle, Jr.
Chief Executive Officer
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APPENDIX D
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION, SEVERANCE
AND EMPLOYMENT AGREEMENT
BETWEEN
CAROLINA FIRST BANK, CAROLINA FIRST CORPORATION
AND
TOMMY E. LOOPER
This Noncompetition, Severance and Employment Agreement (this
"Agreement") is made and entered into as of this 10th day of January 2000, to be
effective at the effective time of the acquisition of Anchor Financial
Corporation by Carolina First Corporation ("Effective Time") by and between
Tommy E. Looper, an individual (the "Executive"), Carolina First Corporation and
Carolina First Bank, a South Carolina banking corporation headquartered in
Greenville, South Carolina (the "Company"). As used herein, the term "Company"
shall include the Company and any and all of its affiliates where the context so
applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that
the Executive will be instrumental in the success of the Company;
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WHEREAS the Company desires to employ the Executive as Senior Vice
President Finance of Carolina First Bank and in such other capacities as set
forth herein;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions hereof, Carolina First
Bank hereby employs the Executive and Executive hereby accepts such
employment as the Senior Vice President Finance of the Company having
such duties and responsibilities as are set forth in Section 3 below.
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings specified below.
"CHANGE IN CONTROL" shall mean
(i) The acquisition, directly or indirectly, by any Person
(other than (A) any employee plan established by the Company, (B) the
Company or any of its affiliates (as defined in Rule 12b-2 promulgated
under the Exchange Act), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) a
corporation owned, directly or indirectly, by stockholders of the
Company in
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substantially the same proportions as their ownership of the Company),
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company) representing an aggregate of 20% or more of the combined
voting power of the Company's then outstanding voting securities;
(ii) During any period of up to two consecutive years
individuals who, at the beginning of such period, constitute the Board
cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than a
director (A) whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of
the directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, or (B) who was designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) hereof) shall be
deemed a director as of the beginning of such period;
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A)
a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of any Company, at
least 51% of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no
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Person is or becomes the beneficial owner (as defined in clause (i)
above), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company) representing 25% or more
of the combined voting power of the Company's then outstanding voting
securities; or (C) a plan of complete liquidation of the Company or an
agreement for the sale or disposition of the Company of all or
substantially all of the Company's assets; or
(iv) The occurrence of any other event or circumstance which
is not covered by (i) through (iii) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution that such
event or circumstance constitutes a Change in Control for the purposes
of this Agreement.
"CAUSE" shall mean:
(i) In the absence of a Change in Control, (a) fraud; (b)
embezzlement; (c) conviction of the Executive of any felony; (d) a
material breach of, or the wilful failure or refusal by the Executive
to perform and discharge the Executive's duties, responsibilities and
obligations under this Agreement and pursuant to a mutually acceptable
job description; (e) any act of moral turpitude or wilful misconduct by
the Executive intended to result in personal enrichment of the
Executive at the expense of the Company, or any of its affiliates or
which has a material adverse impact on the Business or reputation of
the Company or any of its affiliates (such determination to be made by
the Board in its reasonable judgment); (f) intentional material damage
to the property or Business of the Company; (g) gross negligence; or
(h) the ineligibility of the Executive to perform his duties because of
a ruling, directive or other action by any agency of the United States
or any state of the United States having regulatory authority over the
Company.
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(ii) After a Change in Control (a) material criminal fraud,
(b) gross negligence,(c) intentional material damage to the property or
business of the Company, or (d) the commission of a material felony,
but only if (1) the Executive has been provided with written notice of
any assertion that there is a basis for termination for cause which
notice shall specify in reasonable detail specific facts regarding any
such assertion, (2) Executive is given thirty (30) days to cure any
alleged violation of his Agreement, (3) such written notice is provided
to the Executive a reasonable time before the Board meets to consider
any possible termination for cause, (4) at or prior to the meeting of
the Board to consider the matters described in the written notice, an
opportunity is provided to the Executive and his counsel to be heard
before the Board with respect to the matters described in the written
notice, (5) any resolution or other Board action held with respect to
any deliberation regarding or decision to terminate the Executive for
cause is duly adopted by a vote of a majority of the entire Board of
the Company at a meeting of the Board called and held and (6) the
Executive is promptly provided with a copy of the resolution or other
corporate action taken with respect to such termination. No act or
failure to act by the Executive shall be considered wilful unless done
or omitted to be done by him not in good faith and without reasonable
belief that his action or omission was in the best interests of the
Company. The unwillingness of the Executive to accept any or all of a
change in the nature or scope of his position, authorities or duties, a
reduction in his total compensation or benefits, a relocation that he
deems unreasonable in light of his personal circumstances, or other
action by or request of the Company in respect of his position,
authority, or responsibility that he reasonably deems to be contrary to
this Agreement, may not be considered by the Board to be a failure to
perform or misconduct by the Executive.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"CONFIDENTIAL INFORMATION" shall mean all business and other
information relating to the business of the Company, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other Persons, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
"DISABILITY" or "DISABLED" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform his duties for
the Company on a full-time basis, with or without accommodation, for a period of
six (6) months.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"INVOLUNTARY TERMINATION" shall mean the termination of Executive's
employment by the Executive which, is due to (i) a change of the Executive's
responsibilities, position (including status as Chief Operating Officer of the
Company, its successor or ultimate parent entity, office, title, reporting
relationships or working conditions) authority or duties (including changes
resulting from the assignment to the Executive of any duties inconsistent with
his positions, duties or responsibilities; or (ii) a change in the terms or
status (including the seven (7) year
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Term) of this Agreement; or (iii) a reduction in the Executive's compensation or
benefits; or (iv) a forced relocation of the Executive from the Myrtle Beach
metropolitan area; or (v) a significant increase in the Executive's travel
requirements.
"PERSON" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
"VOLUNTARY TERMINATION" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (v) set forth in the definition of Involuntary
Termination above.
3. DUTIES.
------
3.1 During the term hereof, the Executive shall be provided such
office, and administrative, office automation, voice and network data support
commensurate with Executive's position and requirements and consistent with
those provided other high-ranking officers of the Company and shall have such
mutually agreeable duties and authority as are typical of the Senior Vice
President Finance of a company such as the Company. Executive shall report to
William S. Hummers, Executive Vice President of Carolina First Corporation.
Executive agrees that during the Term hereof, he will devote his full working
time, attention and energies to the diligent performance of his mutually agreed
upon duties. Executive shall not, without the prior written consent of the
Company, at any time during the Term hereof (i) accept employment with, or
render services of a business, professional or commercial nature to, any Person
other than the Company, (ii) engage in any venture or activity which the Company
may in good faith consider to be competitive with or adverse to the business of
the Company or of any affiliate of the Company, whether alone, as a partner, or
as an officer, director, employee or shareholder or otherwise, except that the
ownership of not more than 5% of the stock or other equity interest of any
publicly traded corporation or other entity shall not be deemed a violation
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of this Section, or (iii) engage in any venture or activity which the Board may
in good faith consider to interfere with Executive's performance of his duties
hereunder. Executive may continue to serve on the boards of directors for which
he is currently a member. the Company shall incur no obligations as a result of
Executive's service.
4. TERM. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a term of four (4) years (the "Term")
commencing at the Effective Time. Except for the obligations under Sections 6.9
and 6.10, this Agreement shall terminate upon the expiration of such Term.
5. TERMINATION. This Agreement may be terminated as follows:
-----------
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive's death,
or (iv) without Cause.
5.1.1 If the Company terminates Executive's
employment under this Agreement prior to the second anniversary of the
Effective Time, pursuant to clauses (i), (ii) or (iii) of Section 5.1
the Company's obligations hereunder shall cease as of the date of
termination, except as provided in Section 6.11; provided, however, if
Executive is terminated for Cause after a Change in Control, then such
termination shall be treated as a Voluntary Termination as contemplated
in Section 5.2.2 below. If the Company terminates Executive's
employment under this Agreement pursuant to clause (i) of Section 5.1
after the second anniversary of the Effective Time, Executive shall be
entitled to receive as severance the compensation and benefits provided
in Section 6 for the remainder of the Term. If the Company terminates
Executive's employment under this
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Agreement pursuant to clauses (ii) and (iii) of Section 5.1 after the
second anniversary of the Effective Time, the Company's obligations
hereunder shall cease as of the date of termination, except for the
obligations under Sections 6.9, 6.10, and 6.11.
5.1.2 If the Company terminates Executive pursuant to
clause (iv) of Section 5.1, Executive shall be entitled to receive
immediately as severance upon such termination, aggregate compensation
and benefits provided in Section 6 for the remainder of the Term.
5.1.3 In the event of such termination, pursuant to
clause (iv) of Section 5.1, (A) all rights of Executive pursuant to
awards of share grants or options granted by the Company shall be
deemed to have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended, and (B) the Executive shall be
deemed to be credited with service with the Company for such remaining
Term for the purposes of the Company's benefit plans; (C) the Executive
shall be deemed to have retired from the Company and shall be entitled
as of the termination date, or at such later time as he may elect to
commence receiving the total combined qualified and non-qualified
retirement benefit to which he is entitled hereunder, or his total
non-qualified retirement benefit hereunder if under the terms of the
Company's qualified retirement plan for salaried employees he is not
entitled to a qualified benefit, and (D) if any provision of this
Section 5.1.3 cannot, in whole or in part, be implemented and carried
out under the terms of the applicable compensation, benefit, or other
plan, or arrangement of the Company because the Executive has ceased to
be an actual employee of the Company, because the Executive has
insufficient or reduced credited service based upon his actual
employment by the Company, because the plan or arrangement has been
terminated or amended after the effective date of this
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Agreement, or because of any other reason, the Company itself shall pay
or otherwise provide the equivalent of such rights, benefits and
credits for such benefits to Executive, his dependents, beneficiaries
and estate.
5.2 By Executive. Executive shall have the right to terminate his
employment hereunder if (i) the Company materially breaches this Agreement and
such breach is not cured within 30 days after written notice of such breach is
given by Executive to the Company; (ii) there is a Voluntary Termination; or
(iii) there is an Involuntary Termination.
5.2.1 If Executive terminates his employment other
than pursuant to clauses (i), (ii) or (iii) of Section 5.2 prior to the
second anniversary of the Effective Time, the Company's obligations
under this Agreement shall cease as of the date of such termination and
Executive shall be subject to the confidentiality provisions set forth
in Section 8 hereof and the noncompetition provisions set forth in
Section 9 hereof.
5.2.2 If during the Term, Executive terminates his
employment hereunder pursuant to clauses (i), (ii) or (iii) of Section
5.2 or at any time after the second anniversary of the Effective Time,
Executive shall be entitled to receive and the compensation and
benefits provided in Section 6 for the remainder of the Term and for
the period specified in Sections 6.9 and 6.10.
5.2.3 In addition, in the event of such termination
pursuant to any of clauses (i) through (iii) of this Section 5.2, (A)
all rights of Executive pursuant to awards of share grants or options
granted by the Company shall be deemed to have vested and shall be
released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended, and (B)
the Executive shall be deemed to be credited with service with the
Company for such remaining Term for the purposes of the Company's
benefit plans, and (C) the Executive shall be deemed to have
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retired from the Company and shall be entitled as of the termination
date, or at such later time as he may elect to commence receiving the
total combined qualified and non-qualified retirement benefit to which
he is entitled hereunder, or his total non-qualified retirement benefit
hereunder if under the terms of the Company's qualified retirement plan
for salaried employees he is not entitled to a qualified benefit, and
(D) if any provision of this Section 5.2.3 cannot, in whole or in part,
be implemented and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the Company
because the Executive has ceased to be an actual employee of the
Company, because the Executive has insufficient or reduced credited
service based upon his actual employment by the Company, because the
plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any other reason, the Company
itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents,
beneficiaries and estate.
6. COMPENSATION. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall
pay to Executive an annual base salary established by the Board which for the
first year of the Term shall be not less than Two Hundred Sixty-Five Thousand
Dollars ($265,000.00). Executive's salary will be reviewed by the Board at the
beginning of each of its fiscal years and, in the sole discretion of the Board,
may be increased for such year; provided, however, that on January 1 of the year
following the acquisition of Anchor Financial Corporation by Carolina First
Corporation
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and each January 1 during the term hereof, Executive's annual base salary shall
be increased by five percent (5%) and provided further that Executive's annual
base salary can only be increased and cannot be reduced. Following a Change in
Control, Executive's annual base salary shall be increased annually by at least
five percent (5%) and during the Term hereof cannot be reduced.
6.2 Annual Bonus. During the Term hereof, Executive will
receive an annual bonus equaling fifty percent (50%) of Executive's annual base
salary. The annual bonus will be paid on or before March 31 of each calendar
year.
6.3 Annual Incentive Bonus. During the Term hereof, the Board
may pay to Executive an annual incentive cash bonus in accordance with the terms
of the Short Term Incentive Compensation Plan provided the average incentive
compensation for other senior managers exceeds the Executive's annual bonus set
forth in Section 6.2 and provided further that any annual incentive bonus paid
pursuant to this Section 6.3 when combined with the annual bonus paid pursuant
to Section 6.3 shall not exceed the average incentive compensation for other
senior managers.
6.4 Long Term Incentive Compensation Plan. During the Term
hereof, the Board may pay to Executive long term incentive compensation in
accordance with the Long Term Incentive Compensation Plan
6.5 Stock Options and Restricted Stock. During the Term hereof
and while Executive is actively employed, the Board shall grant Executive
options to purchase Company Common Stock and restricted stock in accordance with
the terms of the Company's Long Term Incentive Compensation Plan.
6.6 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits.
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6.7 Automobile. During the Term, the Company also agrees to
provide Executive with a Company-paid automobile, consistent with the model of
automobile provided to other senior managers and allow Executive to trade
automobiles every three (3) years.
6.8 Clubs. During the Term, the Company agrees to provide
Executive with reasonable club dues for one country club and two business
club(s), which shall include full membership at The Dunes Golf and Beach Club in
Myrtle Beach, South Carolina.
6.9 Supplemental Retirement Payment. In the event of a Change
in Control; a termination by Executive pursuant to Section 5.2.(iii); or the
Executive completes two (2) years of active employment under this Agreement, the
Company will make an annual supplemental retirement payment of One Hundred Fifty
Thousand Dollars ($150,000.00) beginning on Executive's sixty-fifth (65th)
birthday or Executive's death, whichever first occurs, and continuing for
fifteen (15) years to Executive; provided, however, in the event of Executive's
death prior to the end of such fifteen (15) year period, the supplemental
retirement payment will be paid or continue to be paid to Executive's estate or
designated beneficiary, if any, for the remainder of such fifteen (15) year
period.
6.10 Medical and Dental Insurance Benefits. Executive,
Executive's spouse and dependent children will be eligible for coverage by
Carolina First's medical and dental benefits, without cost, until Executive
becomes eligible for Medicare. When Executive becomes eligible for Medicare, the
Company will provide, at its expense for Executive and Executive's spouse for
the remainder of their lives, an insurance supplement for medical and dental
insurance coverage comparable (when combined with Medicare) to the coverage
provided by the Company at the time the supplemental insurance is purchased.
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6.11 During the Term while Executive is actively employed,
Executive shall be entitled to education benefits similar to those provided
other Company executives, personal tax advisory services, and a $2,000,000 life
insurance policy and such disability insurance as may be purchased by $_____ per
year in premiums. If Executive becomes disabled and if the proceeds of the
disability policy purchased by the Company are insufficient to fund the
Company's obligations hereunder as if the Executive were not disabled, the
Company will fund the difference.
6.12 The payments hereunder are not subject to mitigation in
the event Executive receives compensation and is no longer actively employed.
7. EXCESS PARACHUTE PAYMENTS.
7.1 It is the intention of the parties hereto that the severance
payments and other compensation provided for herein are reasonable compensation
for Executive's services to the Company and shall not constitute "excess
parachute payments" within the meaning of Section 280G of the Code and any
regulations thereunder. To the extent the provisions herein for Executive's
automobile, club membership, or other non-cash or non-supplemental retirement
compensation result in an "excess parachute payment" as defined by Section
280(G)(b)(2) of the Code, Executive agrees to work in good faith with the
Company to ensure that the non-cash or non-supplemental retirement compensation
does not qualify as an "excess parachute payment."
7.2 To the extent that payments hereunder cause a "parachute
payment," as defined in Section 280G(b)2) of the Code, the Company shall
indemnify Executive and hold him harmless against all claims, losses, damages,
penalties, expenses, and excise taxes relating thereto. To effect this
indemnification, the Company shall pay Executive an additional amount that is
sufficient to pay any excise tax imposed by Section 4999 of the Code on the
payments and benefits to which Executive is entitled without the additional
amount plus any penalties or
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interest imposed by the Internal Revenue Service in regard to such amounts, plus
another additional amount sufficient to pay all the excise and income taxes on
the additional amounts. The determination of any additional amount that must be
paid under this section at any time shall be made in good faith by the
independent auditors then employed by the Company.
8. CONFIDENTIALITY. Executive shall hold in a fiduciary capacity for
the benefit of the Company all Confidential Information relating to the Company
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. Upon the termination or expiration
of his employment hereunder, Executive agrees to deliver promptly to the Company
all Company files, customer lists, management reports, memoranda, research,
Company forms, financial data and reports and other documents supplied to or
created by him in connection with his employment hereunder (including all copies
of the foregoing) in his possession or control and all of the Company's
equipment and other materials in his possession or control. In no event shall an
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
9. NONCOMPETITION AND NONSOLICITATION AGREEMENT. If this Agreement is
terminated by the Company pursuant to Section 5.1 or by Executive pursuant to
Section 5.2, Executive shall not enter into an employment relationship or a
consulting arrangement with any other federally insured depository institution
headquartered or having a physical presence in the states of South Carolina or
North Carolina (hereinafter a "competitor") for a period of eight (8) years from
the
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Effective Time (the "Noncompete Period"). The obligations contained in this
Section 9 shall not prohibit Executive from being an owner of not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of Company to leave the employ of Company, including but not limited to
a competitor, or in any way interfere with the relationship between Company and
any employee thereof, (ii) hire any person who was an employee of Company or any
subsidiary at any time during the time that Executive was employed by Company,
or (iii) induce or attempt to induce any customer, supplier, or other entity in
a business relation of Company to cease doing business with Company, or in any
way interfere with the relationship between any such customer, supplier, or
business relation and Company or do business with a competitor.
9.2 If, at the time of enforcement of this Section 9, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this Section 9 are reasonable.
9.3 In the event of the breach or a threatened breach by
Executive of any of the provisions of this Section 9, Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any
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violations of the provisions hereof (without posting a bond or other security).
In addition, in the event of an alleged breach or violation by Executive of this
Section 9, the Noncompete Period shall be tolled until such breach or violation
has been duly cured.
10. TRUST. At the Effective Time, the Company shall establish and fund
an irrevocable trust in the amount of One Million Forty-Four Thousand Five
Hundred Twenty-Nine Dollars ($1,044,529) in connection with the termination of
Executive's employment agreement with The Anchor Bank and to fund the maximum
amount of obligations which could reasonably be expected to become payable
hereunder under any circumstances (which shall be a "rabbi trust" if so
requested by Executive in his discretion), which trust (i) shall have as trustee
an individual acceptable to Executive, (ii) shall be fully funded upon the
earlier of a Change in Control or the approval of any regulatory application
filed by a potential acquirer of the Company seeking to acquire control of the
Company, and (iii) shall contain such other terms and conditions as are
reasonably necessary in Executive's determination to ensure the Company's
compliance with its obligations hereunder. The Company will pay all management
and other fees associated with the administration of the trust established
pursuant to Section 10.
11. ASSIGNMENT. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. NOTICES. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Company: Carolina First Corporation
102 South Main Street
Greenville, South Carolina 29601
Attn: Chairman of the Board
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To Executive: Tommy E. Looper
5805 Canterbury Lane
Myrtle Beach, South Carolina 29577
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. PROVISIONS SEVERABLE. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
14. REMEDIES IN THE ABSENCE OF A CHANGE IN CONTROL. The terms of this
Section will apply in the absence of a Change in Control.
14.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company.
14.2 All claims, disputes and other matters in question
between the Executive and the Company arising out of or related to the
interpretation of this Agreement or the breach of this Agreement, except as
specifically governed by the foregoing provisions where there may be irreparable
harm and damage to the Company which could not be compensated in damages, shall
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be decided by arbitration in accordance with the rules of the American
Arbitration Association. This agreement to arbitrate shall be specifically
enforceable under applicable law in any court having jurisdiction. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in
accordance with the applicable law of any court having jurisdiction thereof.
14.3 In the event that the Executive is reasonably required to
engage legal counsel to enforce his rights hereunder against the Company,
Executive shall be entitled to receive from the Company his reasonable
attorneys' fees and costs; provided that Executive shall not be entitled to
receive those fees and costs related to matters, if any, which were the subject
of litigation and with respect to which a judgment is rendered against
Executive.
15. REMEDIES IN THE EVENT OF A CHANGE IN CONTROL. The terms of this
Section shall apply in the event of a Change of Control.
15.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company. All claims, disputes
and other matters in question between the Executive and the Company arising out
of or related to the interpretation of this Agreement or the breach of this
Agreement shall be decided under and governed by the laws of the State of South
Carolina.
15.2 The Company is aware that upon the occurrence of a Change
in Control, the Board or a stockholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny the Executive the
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benefits intended under this Agreement. In these circumstances, the purpose of
this Agreement could be frustrated. It is the intent of the parties that the
Executive not be required to incur the legal fees and expenses associated with
the protection or enforcement of his rights under this Agreement by litigation
or other legal action because such costs would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
costs. Accordingly, if at any time after a Change of Control, it should appear
to the Executive that the Company is or has acted contrary to or is failing or
has failed to comply with any of its obligations under this Agreement for the
reason that it regards this Agreement to be void or unenforceable or for any
other reason, or that the Company has purported to terminate his employment for
cause or is in the course of doing so in either case contrary to this Agreement,
or in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from the Executive the
benefits provided or intended to be provided to him hereunder, and the Executive
has acted in good faith to perform his obligations under this Agreement, the
Company irrevocably authorizes the Executive from time to time to retain counsel
of his choice at the expense of the Company to represent him in connection with
the protection and enforcement of his rights hereunder, including without
limitation representation in connection with termination of his employment
contrary to this Agreement or with the initiation or defense of any litigation
or other legal action, whether by or against the Executive or the Company or any
director, officer, stockholder or other person affiliated with the Company, in
any jurisdiction. The reasonable fees and expenses of counsel selected from time
to time by the Executive as hereinabove provided shall be paid or reimbursed to
the Executive by the Company on a regular, periodic basis upon presentation by
the Executive of a statement or statements prepared by such counsel representing
other officers or key executives of the Company in connection with the
protection and enforcement of their rights under similar agreements between them
and the
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Company, and, unless in his sole judgment use of common counsel could be
prejudicial to him or would not be likely to reduce the fees and expenses
chargeable hereunder to the Company, the Executive agrees to use his best
efforts to agree with such other officers or executives to retain common
counsel.
16. WAIVER. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
17. MERGER. This Agreement is the only employment agreement between the
parties and supersedes and replaces any and all other agreements, specifically
inlcuding the letter from Mack I. Whittle, Jr, to Executive dated January 5,
2000.
18. AMENDMENTS AND MODIFICATIONS. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
19. GOVERNING LAW. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
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--------------------------------
Tommy E. Looper
CAROLINA FIRST BANK
By:
--------------------------------
Mack I. Whittle, Jr.
Chief Executive Officer
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APPENDIX E
STOCK OPTION AGREEMENT, dated as of January ____, 2000 (this
"Agreement") by and between Anchor Financial Corporation, a South Carolina
corporation ("Issuer") and Carolina First Corporation, a S outh Carolina
corporation ("Grantee").
WHEREAS, Issuer, Grantee, Issuer's subsidiary Anchor Bank, and CFC's
subsidiary Carolina First Bank, propose to enter into a Reorganization Agreement
dated as of the date hereof (the "Reorganization Agreement"; capitalized terms
used but not defined herein shall have the meanings set forth in the
Reorganization Agreement), providing for, among other things, a merger (the
"Merger") of AFC into CFC.
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Reorganization Agreement, Grantee has requested 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 Reorganization Agreement, Issuer and Grantee agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 1,610,959 shares (the "Option Shares") of common stock, no par
value, of Issuer (the "Shares") (being 19.9% of the number of Shares outstanding
on the date hereof before such issuance) at a purchase price of $26.125 per
Option Share (such price, as adjusted if applicable, the "Purchase Price"). The
number of Option Shares that may be received upon the exercise of the Option and
the Purchase Price are subject to adjustment as set forth herein.
2. EXERCISE OF OPTION. (a) If not in material breach of the
Reorganization Agreement, Grantee may exercise the Option, in whole or in part,
at any time or from time to time following the occurrence of a Purchase Event
(as defined below); provided that, except as otherwise provided herein, the
Option shall terminate and be of no further force and effect upon the earliest
to occur of (i) the Effective Time, (ii) 15 months after the first occurrence of
a Purchase Event (or if, at the expiration of such 15 months after the first
occurrence of a Purchase Event, the Option cannot be exercised by reason of any
applicable judgment, decree, order, law or regulation, 10 business days after
such impediment to exercise shall have been removed, but in no event under this
clause (ii) later than the second anniversary of the date hereof), (iii)
termination of the Reorganization Agreement under circumstances which do not and
cannot result in Grantee's becoming entitled to receive the Termination Fee from
Issuer pursuant to Section 9.2(b) of the Reorganization Agreement; or (iv) 12
months after the termination of the Reorganization Agreement under circumstances
which could result in Grantee's becoming entitled to receive the Termination Fee
from Issuer pursuant to Section 9.2(b), unless during such 12-month period, a
Purchase Event shall occur. The termination of the Option shall not affect any
rights hereunder which by their terms extend beyond the date of such
termination.
(b) As used herein, a "Purchase Event" means the termination of the
Reorganization Agreement under any circumstance which would or could entitle
Grantee to receive the Termination Fee from Issuer pursuant to Section 9.2(b) of
the Reorganization Agreement; provided, that a Purchase Event shall not occur
unless and until Issuer shall have entered into a definitive agreement with a
third party with respect to an Acquisition Proposal or an Acquisition
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Proposal shall have been consummated during the 12 months following such
termination of the Reorganization Agreement.
(c) In the event Grantee 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 20 business days from such Notice Date for
the closing of such purchase (a "Closing"; and the date of such Closing, a
"Closing Date"); provided that such closing shall be held only if (A) such
purchase would not otherwise violate or cause the violation of applicable law
(including the HSR Act), (B) no law, rule or regulation shall have been adopted
or promulgated, and no temporary restraining order, preliminary or permanent
injunction or other order, decree or ruling issued by a court or other
governmental authority of competent jurisdiction shall be in effect, which
prohibits delivery of such Option Shares (and the parties hereto shall use their
reasonable best efforts to have any such order, injunction, decree or ruling
vacated or reversed) and (C) any prior notification to or approval of any other
regulatory authority in the United States or elsewhere required in connection
with such purchase shall have been made or obtained. If the Closing cannot be
consummated by reason of a restriction set forth in clause (A), (B) or (C)
above, notwithstanding the provisions of Section 2(a), the Closing shall be held
within 10 business days following the elimination of such restriction.
3. PAYMENT AND DELIVERY OF CERTIFICATES. On each Closing Date, Grantee
shall 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 Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee 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, charges
or encumbrances ("Liens"), and Grantee shall deliver to Issuer a letter agreeing
that Grantee shall not offer to sell or otherwise dispose of such Option Shares
in violation of applicable law or the provisions of this Agreement.
(c) 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
___, 2000. 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 (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee 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 and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s)
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containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. AUTHORIZED STOCK. Issuer hereby represents and warrants to Grantee
that Issuer has taken all necessary corporate and other action to authorize and
reserve and to permit it to issue, and will have reserved for issuance at all
times from the date hereof until the obligation to deliver Shares upon the
exercise of the Option terminates, upon exercise of the Option, Shares necessary
for Grantee to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional Shares or other
securities which may be issued pursuant to Section 6 upon exercise of the
Option. The Shares to be issued upon due exercise of the Option, including all
additional Shares or other securities which may be issuable upon exercise of the
Option pursuant to Section 6, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all Liens, including any preemptive rights of any shareholder of
Issuer.
5. PURCHASE NOT FOR DISTRIBUTION. Grantee hereby represents and
warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option will not be taken 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.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the event of any
change in Shares by reason of reclassification, recapitalization, stock split,
split-up, combination, exchange of shares, stock dividend, dividend, dividend
payable in any other securities, or any similar event, the type and number of
Shares or securities subject to the Option, and the Purchase Price therefor
(including for purposes of repurchase thereof pursuant to Section 7), shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon exercise of the
Option the number and class of shares or other securities or property that
Grantee would have received in respect of Shares if the Option had been
exercised immediately prior to such event or the record date therefor, as
applicable. If any additional Shares are issued after the date of this Agreement
(other than pursuant to an event described in the immediately preceding
sentence), the number of Option Shares shall be adjusted so that immediately
prior to such issuance, it equals 19.9% of the number of Shares then issued and
outstanding.
7. REPURCHASE OF OPTION AND OPTION SHARES. (a) Notwithstanding the
provisions of Section 2(a), at any time commencing upon the first occurrence of
a Repurchase Event (as defined below) and ending 12 months thereafter, Issuer
(or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the
Option (if and to the extent not previously exercised or terminated) at
a price equal to the excess, if any, of (x) the Applicable Price (as
defined below) as of the Section 7 Request Date (as defined below) for
a Share over (y) the Purchase Price (subject to adjustment pursuant to
Section 6), multiplied by the number of Shares with respect to which
the Option has not been exercised (the "Option Repurchase Price"); and
(ii) at the request of an owner of Option Shares from time to
time, repurchase all but not less than all of the Option Shares owned
directly or indirectly by such owner at a price equal to the Applicable
Price as of the Section 7 Request Date multiplied by the number of
Option Shares owned directly or indirectly by such owner (the "Option
Share Repurchase Price").
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(b) Notwithstanding the provisions of Section 2(a), at any time
following the occurrence of a Purchase Event, Issuer (or any successor entity
thereof) may, at its election, repurchase the Option (if and to the extent not
previously exercised or terminated) or all but not less than all of the Option
Shares at the Option Repurchase Price or the Option Share Repurchase Price, as
the case may be.
(c) In connection with any exercise of rights under this Section 7,
Issuer shall, within 10 business days after the Section 7 Request Date, pay the
Option Repurchase Price or Option Share Repurchase Price, as he case may be, in
immediately available funds, and Grantee or such owner, as the case may be,
shall surrender to Issuer the Option or the Option Shares, as the case may be.
(d) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Applicable Price", as of any date, means the highest of
(A) the highest price per Share paid pursuant to a tender offer or
exchange offer for Shares after the date hereof and on or prior to such
date, (B) the highest price per Share to be paid by any third party for
Shares or the consideration per Share to be received by holders of
Shares, in each case pursuant to an agreement for an Acquisition
Proposal with Issuer entered into on or prior to such date or (C) the
highest closing price per Share as reported on the New York Stock
Exchange Inc. ("NYSE") Composite Tape or if the Shares are not listed
on the NYSE, the highest bid price per Share as quoted on the National
Association of Securities Dealers Automated Quotations System or, if
the Shares are not quoted thereon, on the principal trading market on
which such Shares are traded as reported by a recognized source during
the 60 business days preceding such date. If the consideration to be
offered, paid or received pursuant to either of the foregoing clauses
(A) or (B) shall be other than in cash, the value of such consideration
shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Grantee and reasonably
acceptable to Issuer.
(ii) A "Repurchase Event" occurs when the Termination Fee is
paid or becomes due and payable to Grantee from Issuer pursuant to
Section 9(b) of the Reorganization Agreement.
(iii) "Section 7 Request Date" means the date on which Issuer,
Grantee or an owner of Option Shares, as the case may be, exercises its
rights under this Section.
(e) The repurchase contemplated in this Section 7 shall be subject to
receipt of any necessary regulatory approvals. AFC shall use its best efforts to
obtain promptly any such necessary approvals.
8. REGISTRATION RIGHTS. Issuer shall, if requested by Grantee or any
owner of Option Shares (collectively with Grantee, the "Owners") at any time and
from time to time within two years of the first exercise of the Option, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to such Owners upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by such
owners, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use all reasonable
efforts to qualify such shares or other securities under any applicable state
securities laws. Issuer shall use all reasonable efforts to cause each such
registration statement to become effective, to
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obtain all consents or waivers of other parties which are required therefor and
to keep such registration statement effective for such period not in excess of
180 days from the day such registration statement first becomes effective as may
be reasonably necessary to effect such sale or other disposition. The
obligations of Issuer hereunder to file a registration statement and to maintain
its effectiveness may be suspended for one or more periods of time not exceeding
30 days in the aggregate if the Board of Directors of Issuer shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Issuer. Any registration statement prepared and
filed under this Section 8, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
reasonable fees and disbursements of Owners' counsel related thereto. The Owners
shall provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder. If during the time period
referred to in the first sentence of this Section 8 Issuer effects a
registration under the Securities Act of Shares for its own account or for any
other stockholders of Issuer (other than on Form S-4 or Form S-8, or any
successor form), it shall allow the Owners the right to participate in such
registration, and such participation shall not affect the obligation of Issuer
to effect two registration statements for the Owners under this Section 8;
provided that, if the managing underwriters of such offering advise Issuer in
writing that in their opinion the number of Shares requested to be included in
such registration exceeds the number which can be sold in such offering without
adversely affecting the offering price, Issuer and the Owners shall each reduce
on a pro rata basis the Shares to be included therein on their respective
behalf. In connection with any registration pursuant to this Section 8, Issuer
and the Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration.
9. LISTING; REASONABLE BEST EFFORTS. (a) If Shares or any other
securities to be acquired upon exercise of the Option are then listed on the
NYSE or any other securities exchange or market, Issuer, upon the request of any
Owner, will promptly file an application to list the Shares or other securities
to be acquired upon exercise of the Options on the NYSE or such other securities
exchange or market and will use its reasonable best efforts to obtain approval
of such listing as soon as practicable.
(b) Issuer will use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to permit the exercise of the
Option in accordance with the terms and conditions hereof, as soon as
practicable after the date hereof, including making any appropriate filing
pursuant to the HSR Act and any other applicable law, supplying as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and any other applicable law, and taking all
other actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.
10. LIMITATION OF GRANTEE PROFIT. (a) Notwithstanding any other
provision herein, in no event shall Grantee's Total Profit (as defined below)
exceed $15 million (the "Maximum Profit") and, if it otherwise would exceed such
amount, Grantee, at its sole discretion, shall either (i) reduce the number of
Shares subject to the Option, (ii) deliver to Issuer for cancellation Shares (or
other securities into which such Option Shares are converted or exchanged),
(iii) pay cash to Issuer, or (iv) any combination of the foregoing, so that
Grantee's actually realized Total Profit shall not exceed the Maximum Profit
after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean: (i) the
aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option
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Shares (or securities into which such shares are converted or exchanged)
(including amounts paid to Grantee in respect of Option Shares repurchased by
Issuer pursuant to Section 7) over (y) the Grantee's aggregate purchase price
for such Option Shares (or other securities), plus (B) any amounts received by
Grantee on the repurchase of the Option by Issuer pursuant to Section 7, plus
(C) any Termination Fee received by Grantee pursuant to Section 9.2(b) of the
Reorganization Agreement, minus (ii) the sum of the amounts of any cash
previously paid by Grantee to Issuer pursuant to this Section 10 and the value
of the Option Shares (or other securities) previously delivered by Grantee to
Issuer for cancellation pursuant to this Section 10.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, the Termination Fee provided for in Section 9.2(b)
of the Reorganization Agreement; provided that if and to the extent the Total
Profit received by Grantee would exceed the Maximum Profit following receipt of
such payment, Grantee shall be obligated to comply with the terms of Section
10(a) within 20 days of the latest of (i) the date of receipt of such payment,
(ii) the date of receipt of cash by Grantee pursuant to the sale of Option
Shares (or securities into which such Option Shares are converted or exchanged)
(including amounts paid to Grantee in respect of Option Shares repurchased by
Issuer pursuant to Section 7) and (iii) the date of receipt of cash from the
repurchase of the Option by Issuer pursuant to Section 7.
(d) For purposes of Section 10(a) and clause (ii) of Section 10(b), the
value of any Option Shares delivered by Grantee to Issuer shall be the
Applicable Value.
11. LOSS, THEFT, ETC. OF AGREEMENT. This Agreement (and the Option
granted hereby) is exchangeable, without expense, at the option of Grantee, 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
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any other Agreements and related Options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. MISCELLANEOUS. (a) Expenses. Except as otherwise provided in
Section 9 hereof or in the Reorganization Agreement, each of the parties hereto
shall bear and pay all 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. Except
as otherwise set forth in the Reorganization Agreement, this Agreement, together
with the Reorganization Agreement (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
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hereof and (b) is not intended to confer upon any person other than the parties
hereto 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 Grantee to acquire, or does not require Issuer
to repurchase, the full number of Shares as provided in Sections 2 and 7, as
adjusted pursuant to Section 6, it is the express intention of Issuer to allow
Grantee 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 South Carolina applicable to contracts
made and to be performed therein.
(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 as set forth in Section 8.2 of the
Reorganization Agreement.
(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 by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Grantee may not, without the prior written consent of
Issuer (which shall not be unreasonably withheld), assign this Agreement to any
other person. This Agreement shall not be assignable by Issuer except by
operation of law. 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) Representations and Warranties. The representations and warranties
contained in Sections 3.1, 3.3, 3.4, 3.5, 3.6 and 3.7 of the Reorganization
Agreement, to the extent they relate to or affect this Stock Option Agreement,
are incorporated herein by reference.
(j) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee 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.
(k) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
Both parties further agree to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such equitable relief and
that this provision is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
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(l) Captions. The Article, Section and paragraph captions herein are
for convenience only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
(m) Confidentiality Agreement. Issuer hereby waives the restrictions on
Grantee's acquisition of Shares contained in the Confidentiality Agreement to
the extent necessary to permit Grantee to exercise the Option and purchase the
Option Shares as herein provided.
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 January ___, 2000.
Anchor Financial Corporation
By: _________________________________
Name: Stephen L. Chryst
Carolina First Corporation
By: _________________________________
Name: Mack I. Whittle, Jr., Chairman
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ANNEX B TO PROXY STATEMENT/PROSPECTUS
STOCK OPTION AGREEMENT, dated as of January 11, 2000 (this
"Agreement") by and between Anchor Financial Corporation, a South Carolina
corporation ("Issuer") and Carolina First Corporation, a South Carolina
corporation ("Grantee").
WHEREAS, Issuer, Grantee, Issuer's subsidiary Anchor Bank, and CFC's
subsidiary Carolina First Bank, propose to enter into a Reorganization Agreement
dated as of the date hereof (the "Reorganization Agreement"; capitalized terms
used but not defined herein shall have the meanings set forth in the
Reorganization Agreement), providing for, among other things, a merger (the
"Merger") of AFC into CFC.
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Reorganization Agreement, Grantee has requested 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 Reorganization Agreement, Issuer and Grantee agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 1,610,959 shares (the "Option Shares") of common stock, no par
value, of Issuer (the "Shares") (being 19.9% of the number of Shares outstanding
on the date hereof before such issuance) at a purchase price of $26.125 per
Option Share (such price, as adjusted if applicable, the "Purchase Price"). The
number of Option Shares that may be received upon the exercise of the Option and
the Purchase Price are subject to adjustment as set forth herein.
2. EXERCISE OF OPTION. (a) If not in material breach of the
Reorganization Agreement, Grantee may exercise the Option, in whole or in part,
at any time or from time to time following the occurrence of a Purchase Event
(as defined below); provided that, except as otherwise provided herein, the
Option shall terminate and be of no further force and effect upon the earliest
to occur of (i) the Effective Time, (ii) 15 months after the first occurrence of
a Purchase Event (or if, at the expiration of such 15 months after the first
occurrence of a Purchase Event, the Option cannot be exercised by reason of any
applicable judgment, decree, order, law or regulation, 10 business days after
such impediment to exercise shall have been removed, but in no event under this
clause (ii) later than the second anniversary of the date hereof), (iii)
termination of the Reorganization Agreement under circumstances which do not and
cannot result in Grantee's becoming entitled to receive the Termination Fee from
Issuer pursuant to Section 9.2(b) of the Reorganization Agreement; or (iv) 12
months after the termination of the Reorganization Agreement under circumstances
which could result in Grantee's becoming entitled to receive the Termination Fee
from Issuer pursuant to Section 9.2(b), unless during such 12-month period, a
Purchase Event shall occur. The termination of the Option shall not affect any
rights hereunder which by their terms extend beyond the date of such
termination.
(b) As used herein, a "Purchase Event" means the termination of the
Reorganization Agreement under any circumstance which would or could entitle
Grantee to receive the Termination Fee from Issuer pursuant to Section 9.2(b) of
the Reorganization Agreement; provided, that a Purchase Event shall not occur
unless and until Issuer shall have entered into a definitive agreement with a
third party with respect to an Acquisition Proposal or an Acquisition
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Proposal shall have been consummated during the 12 months following such
termination of the Reorganization Agreement.
(c) In the event Grantee 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 20 business days from such Notice Date for
the closing of such purchase (a "Closing"; and the date of such Closing, a
"Closing Date"); provided that such closing shall be held only if (A) such
purchase would not otherwise violate or cause the violation of applicable law
(including the HSR Act), (B) no law, rule or regulation shall have been adopted
or promulgated, and no temporary restraining order, preliminary or permanent
injunction or other order, decree or ruling issued by a court or other
governmental authority of competent jurisdiction shall be in effect, which
prohibits delivery of such Option Shares (and the parties hereto shall use their
reasonable best efforts to have any such order, injunction, decree or ruling
vacated or reversed) and (C) any prior notification to or approval of any other
regulatory authority in the United States or elsewhere required in connection
with such purchase shall have been made or obtained. If the Closing cannot be
consummated by reason of a restriction set forth in clause (A), (B) or (C)
above, notwithstanding the provisions of Section 2(a), the Closing shall be held
within 10 business days following the elimination of such restriction.
3. PAYMENT AND DELIVERY OF CERTIFICATES. On each Closing Date, Grantee
shall 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 Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee 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, charges
or encumbrances ("Liens"), and Grantee shall deliver to Issuer a letter agreeing
that Grantee shall not offer to sell or otherwise dispose of such Option Shares
in violation of applicable law or the provisions of this Agreement.
(c) 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 11, 2000. 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 (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee 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 and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s)
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containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. AUTHORIZED STOCK. Issuer hereby represents and warrants to Grantee
that Issuer has taken all necessary corporate and other action to authorize and
reserve and to permit it to issue, and will have reserved for issuance at all
times from the date hereof until the obligation to deliver Shares upon the
exercise of the Option terminates, upon exercise of the Option, Shares necessary
for Grantee to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional Shares or other
securities which may be issued pursuant to Section 6 upon exercise of the
Option. The Shares to be issued upon due exercise of the Option, including all
additional Shares or other securities which may be issuable upon exercise of the
Option pursuant to Section 6, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all Liens, including any preemptive rights of any shareholder of
Issuer.
5. PURCHASE NOT FOR DISTRIBUTION. Grantee hereby represents and
warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option will not be taken 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.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the event of any
change in Shares by reason of reclassification, recapitalization, stock split,
split-up, combination, exchange of shares, stock dividend, dividend, dividend
payable in any other securities, or any similar event, the type and number of
Shares or securities subject to the Option, and the Purchase Price therefor
(including for purposes of repurchase thereof pursuant to Section 7), shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon exercise of the
Option the number and class of shares or other securities or property that
Grantee would have received in respect of Shares if the Option had been
exercised immediately prior to such event or the record date therefor, as
applicable. If any additional Shares are issued after the date of this Agreement
(other than pursuant to an event described in the immediately preceding
sentence), the number of Option Shares shall be adjusted so that immediately
prior to such issuance, it equals 19.9% of the number of Shares then issued and
outstanding.
7. REPURCHASE OF OPTION AND OPTION SHARES. (a) Notwithstanding the
provisions of Section 2(a), at any time commencing upon the first occurrence of
a Repurchase Event (as defined below) and ending 12 months thereafter, Issuer
(or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the
Option (if and to the extent not previously exercised or terminated) at
a price equal to the excess, if any, of (x) the Applicable Price (as
defined below) as of the Section 7 Request Date (as defined below) for
a Share over (y) the Purchase Price (subject to adjustment pursuant to
Section 6), multiplied by the number of Shares with respect to which
the Option has not been exercised (the "Option Repurchase Price"); and
(ii) at the request of an owner of Option Shares from time to
time, repurchase all but not less than all of the Option Shares owned
directly or indirectly by such owner at a price equal to the Applicable
Price as of the Section 7 Request Date multiplied by the number of
Option Shares owned directly or indirectly by such owner (the "Option
Share Repurchase Price").
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(b) Notwithstanding the provisions of Section 2(a), at any time
following the occurrence of a Purchase Event, Issuer (or any successor entity
thereof) may, at its election, repurchase the Option (if and to the extent not
previously exercised or terminated) or all but not less than all of the Option
Shares at the Option Repurchase Price or the Option Share Repurchase Price, as
the case may be.
(c) In connection with any exercise of rights under this Section 7,
Issuer shall, within 10 business days after the Section 7 Request Date, pay the
Option Repurchase Price or Option Share Repurchase Price, as he case may be, in
immediately available funds, and Grantee or such owner, as the case may be,
shall surrender to Issuer the Option or the Option Shares, as the case may be.
(d) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Applicable Price", as of any date, means the highest of
(A) the highest price per Share paid pursuant to a tender offer or
exchange offer for Shares after the date hereof and on or prior to such
date, (B) the highest price per Share to be paid by any third party for
Shares or the consideration per Share to be received by holders of
Shares, in each case pursuant to an agreement for an Acquisition
Proposal with Issuer entered into on or prior to such date or (C) the
highest closing price per Share as reported on the New York Stock
Exchange Inc. ("NYSE") Composite Tape or if the Shares are not listed
on the NYSE, the highest bid price per Share as quoted on the National
Association of Securities Dealers Automated Quotations System or, if
the Shares are not quoted thereon, on the principal trading market on
which such Shares are traded as reported by a recognized source during
the 60 business days preceding such date. If the consideration to be
offered, paid or received pursuant to either of the foregoing clauses
(A) or (B) shall be other than in cash, the value of such consideration
shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Grantee and reasonably
acceptable to Issuer.
(ii) A "Repurchase Event" occurs when the Termination Fee is
paid or becomes due and payable to Grantee from Issuer pursuant to
Section 9(b) of the Reorganization Agreement.
(iii) "Section 7 Request Date" means the date on which Issuer,
Grantee or an owner of Option Shares, as the case may be, exercises its
rights under this Section.
(e) The repurchase contemplated in this Section 7 shall be subject to
receipt of any necessary regulatory approvals. AFC shall use its best efforts to
obtain promptly any such necessary approvals.
8. REGISTRATION RIGHTS. Issuer shall, if requested by Grantee or any
owner of Option Shares (collectively with Grantee, the "Owners") at any time and
from time to time within two years of the first exercise of the Option, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to such Owners upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by such
owners, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use all reasonable
efforts to qualify such shares or other securities under any applicable state
securities laws. Issuer shall use all reasonable efforts to cause each such
registration statement to become effective, to
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obtain all consents or waivers of other parties which are required therefor and
to keep such registration statement effective for such period not in excess of
180 days from the day such registration statement first becomes effective as may
be reasonably necessary to effect such sale or other disposition. The
obligations of Issuer hereunder to file a registration statement and to maintain
its effectiveness may be suspended for one or more periods of time not exceeding
30 days in the aggregate if the Board of Directors of Issuer shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Issuer. Any registration statement prepared and
filed under this Section 8, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
reasonable fees and disbursements of Owners' counsel related thereto. The Owners
shall provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder. If during the time period
referred to in the first sentence of this Section 8 Issuer effects a
registration under the Securities Act of Shares for its own account or for any
other stockholders of Issuer (other than on Form S-4 or Form S-8, or any
successor form), it shall allow the Owners the right to participate in such
registration, and such participation shall not affect the obligation of Issuer
to effect two registration statements for the Owners under this Section 8;
provided that, if the managing underwriters of such offering advise Issuer in
writing that in their opinion the number of Shares requested to be included in
such registration exceeds the number which can be sold in such offering without
adversely affecting the offering price, Issuer and the Owners shall each reduce
on a pro rata basis the Shares to be included therein on their respective
behalf. In connection with any registration pursuant to this Section 8, Issuer
and the Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration.
9. LISTING; REASONABLE BEST EFFORTS. (a) If Shares or any other
securities to be acquired upon exercise of the Option are then listed on the
NYSE or any other securities exchange or market, Issuer, upon the request of any
Owner, will promptly file an application to list the Shares or other securities
to be acquired upon exercise of the Options on the NYSE or such other securities
exchange or market and will use its reasonable best efforts to obtain approval
of such listing as soon as practicable.
(b) Issuer will use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to permit the exercise of the
Option in accordance with the terms and conditions hereof, as soon as
practicable after the date hereof, including making any appropriate filing
pursuant to the HSR Act and any other applicable law, supplying as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and any other applicable law, and taking all
other actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.
10. LIMITATION OF GRANTEE PROFIT. (a) Notwithstanding any other
provision herein, in no event shall Grantee's Total Profit (as defined below)
exceed $15 million (the "Maximum Profit") and, if it otherwise would exceed such
amount, Grantee, at its sole discretion, shall either (i) reduce the number of
Shares subject to the Option, (ii) deliver to Issuer for cancellation Shares (or
other securities into which such Option Shares are converted or exchanged),
(iii) pay cash to Issuer, or (iv) any combination of the foregoing, so that
Grantee's actually realized Total Profit shall not exceed the Maximum Profit
after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean: (i) the
aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option
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Shares (or securities into which such shares are converted or exchanged)
(including amounts paid to Grantee in respect of Option Shares repurchased by
Issuer pursuant to Section 7) over (y) the Grantee's aggregate purchase price
for such Option Shares (or other securities), plus (B) any amounts received by
Grantee on the repurchase of the Option by Issuer pursuant to Section 7, plus
(C) any Termination Fee received by Grantee pursuant to Section 9.2(b) of the
Reorganization Agreement, minus (ii) the sum of the amounts of any cash
previously paid by Grantee to Issuer pursuant to this Section 10 and the value
of the Option Shares (or other securities) previously delivered by Grantee to
Issuer for cancellation pursuant to this Section 10.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, the Termination Fee provided for in Section 9.2(b)
of the Reorganization Agreement; provided that if and to the extent the Total
Profit received by Grantee would exceed the Maximum Profit following receipt of
such payment, Grantee shall be obligated to comply with the terms of Section
10(a) within 20 days of the latest of (i) the date of receipt of such payment,
(ii) the date of receipt of cash by Grantee pursuant to the sale of Option
Shares (or securities into which such Option Shares are converted or exchanged)
(including amounts paid to Grantee in respect of Option Shares repurchased by
Issuer pursuant to Section 7) and (iii) the date of receipt of cash from the
repurchase of the Option by Issuer pursuant to Section 7.
(d) For purposes of Section 10(a) and clause (ii) of Section 10(b), the
value of any Option Shares delivered by Grantee to Issuer shall be the
Applicable Value.
11. LOSS, THEFT, ETC. OF AGREEMENT. This Agreement (and the Option
granted hereby) is exchangeable, without expense, at the option of Grantee, 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
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any other Agreements and related Options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. MISCELLANEOUS. (a) Expenses. Except as otherwise provided in
Section 9 hereof or in the Reorganization Agreement, each of the parties hereto
shall bear and pay all 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. Except
as otherwise set forth in the Reorganization Agreement, this Agreement, together
with the Reorganization Agreement (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
6
<PAGE>
hereof and (b) is not intended to confer upon any person other than the parties
hereto 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 Grantee to acquire, or does not require Issuer
to repurchase, the full number of Shares as provided in Sections 2 and 7, as
adjusted pursuant to Section 6, it is the express intention of Issuer to allow
Grantee 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 South Carolina applicable to contracts
made and to be performed therein.
(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 as set forth in Section 8.2 of the
Reorganization Agreement.
(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 by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Grantee may not, without the prior written consent of
Issuer (which shall not be unreasonably withheld), assign this Agreement to any
other person. This Agreement shall not be assignable by Issuer except by
operation of law. 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) Representations and Warranties. The representations and warranties
contained in Sections 3.1, 3.3, 3.4, 3.5, 3.6 and 3.7 of the Reorganization
Agreement, to the extent they relate to or affect this Stock Option Agreement,
are incorporated herein by reference.
(j) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee 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.
(k) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
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.
7
<PAGE>
(l) Captions. The Article, Section and paragraph captions herein are
for convenience only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
(m) Confidentiality Agreement. Issuer hereby waives the restrictions on
Grantee's acquisition of Shares contained in the Confidentiality Agreement to
the extent necessary to permit Grantee to exercise the Option and purchase the
Option Shares as herein provided.
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 January 11, 2000.
Anchor Financial Corporation
By: /s/
-------------------------------------
Name: Stephen L. Chryst
Carolina First Corporation
By: /s/
------------------------------------
Name: Mack I. Whittle, Jr., Chairman
8
<PAGE>
ROBINSON-HUMPHREY
CORPORATE FINANCE INVESTMENT BANKERS
DEPARTMENT SINCE 1894
ANNEX C TO PROXY STATEMENT/PROSPECTUS
January 10, 2000
Board of Directors
Anchor Financial Corporation
2002 Oak Street
Myrtle Beach, SC 29577
Members of the Board of Directors:
We understand that Anchor Financial Corporation (the "Company") is
considering a proposed merger of the Company with Carolina First Corporation
("Carolina First"). We understand that under this merger (the "Proposed
Transaction") the Company's shareholders will receive 2.175 shares (the
"Exchange Ratio") of Carolina First common stock in exchange for each share of
Company common stock. We further understand that the merger will be accounted
for as a pooling of interests and will be treated as a tax-free exchange to the
Company's shareholders. The terms and conditions of the Proposed Transaction are
set forth in more detail in the Agreement and Plan of Merger, dated as of
January 10, 2000 between the Company and Carolina First (the "Agreement").
We have been requested by the Company to render our opinion with
respect to the fairness, from a financial point of view, to the Company's
shareholders of the Exchange Ratio pursuant to the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement
and exhibits thereto, (2) certain publicly available information concerning the
Company and Carolina First that we believe relevant to our inquiry, (3)
financial and operating information with respect to the business, operations and
prospects of the Company and Carolina First furnished to us by the Company and
Carolina First, (4) certain internal financial analyses and forecasts of the
Company and Carolina First prepared by and reviewed with management of the
Company and Carolina First, respectively, (5) trading histories of the Company's
common stock and Carolina First's common stock for the latest twelve months
ended January 6, 2000, (6) a comparison of the historical financial results and
present financial condition of the Company and Carolina First with those of
other companies that we deemed relevant, (7) a comparison of the financial terms
of the Proposed Transaction with the terms of certain other recent transactions
that we deemed
<PAGE>
Board of Directors
Anchor Financial Corporation
January 10, 2000
Page 2
____________________________
relevant, and (8) certain historical data relating to percentage premiums paid
in acquisitions of publicly traded bank holding companies that we deemed
relevant. In addition, we have had discussions with the managements of the
Company and Carolina First concerning their respective businesses, operations,
assets, present condition and future prospects, and undertook such other
studies, analyses and investigations, as we deemed appropriate.
We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our opinion without
independent verification. With respect to the financial projections, including
the synergies and other benefits expected to result from the Proposed
Transaction, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgements of the
managements of the Company and Carolina First regarding the future financial
performance of the Company and Carolina First and that such performances will be
achieved, and we express no opinion as to such financial projections or the
assumptions on which they are based. We have also assumed that there has been no
material change in the Company's or Carolina First's assets, financial
condition, results of operations, business or prospects since the date of the
most recent financial statements made available to us. We have assumed in all
respects material to our analysis that the Company and Carolina First will
remain as going concerns for all periods relevant to our analysis, that all of
the representations and warranties contained in the Agreement and all related
agreements are true and correct, that each party to such agreements will perform
all of the covenants required to be performed by such party under such
agreements, that the conditions precedent in the Agreement are not waived and
that the regulatory authorities having jurisdiction over approving the Proposed
Transaction will not impose any conditions which will materially undermine the
economic benefits of the Proposed Transaction to Carolina First. In arriving at
our opinion, we have not conducted a physical inspection of the properties and
facilities of the Company or Carolina First and have not made nor obtained any
evaluations or appraisals of the assets or liabilities of the Company or
Carolina First. We did not make an independent evaluation of the adequacy of the
allowance for loan losses of the Company or Carolina First, nor have we reviewed
any individual credit files relating to the Company and Carolina First and, with
your permission, we have assumed that the respective allowances for loan losses
for both the Company and Carolina First are adequate to cover such losses and
will be adequate on a pro forma basis for the combined entity.
Our opinion is necessarily based upon market, economic and other
conditions as they exist on, and can only be evaluated as of, the date of this
letter. Events occurring after the date hereof could materially affect this
opinion. We have not undertaken to update, revise, or reaffirm this opinion or
otherwise comment upon events occurring after
<PAGE>
Board of Directors
Anchor Financial Corporation
January 10, 2000
Page 3
____________________________
the date hereof. We are expressing no opinion herein as to the prices at which
the Company's or Carolina First's common stock will trade at any time.
In arriving at our opinion, we were not authorized to solicit and did
not solicit, interest from any party with respect to the acquisition or merger
involving the Company or any of its assets.
We have acted as financial advisor to the Board of Directors of the
Company in connection with the Proposed Transaction and will receive a fee for
our services. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of the rendering of this opinion. We have also provided
financial advisory services for the Company and Carolina First in the past and
have received customary fees for such services. In the ordinary course of our
business, we actively trade in the equity securities of the Company and Carolina
First for our own account and for the accounts of our customers and,
accordingly, may at any time hold a long or short position in such securities.
The Robinson-Humphrey Company, LLC is a wholly owned subsidiary of Salomon Smith
Barney Inc., which is acting as financial advisor to Carolina First. In engaging
us to serve as your financial advisor, you consented to Salomon Smith Barney
Inc. serving concurrently as the financial advisor to Carolina First in the
Proposed Transaction.
Based upon and subject to the foregoing, we are of the opinion as of
the date hereof that the Exchange Ratio pursuant to the Proposed Transaction is
fair, from a financial point of view, to the shareholders of the Company.
This opinion is for the use and benefit of the Board of Directors of
the Company and is rendered in connection with its consideration of the Proposed
Transaction. This opinion is not intended to be and does not constitute a
recommendation to any shareholder of the Company as to how such shareholder
should vote with respect to the Proposed Transaction.
Very truly yours,
/s/ THE ROBINSON-HUMPHREY COMPANY, LLC
<PAGE>
ANNEX - D
January 9, 2000
Anchor Financial Corporation
P.O. Box 2428
Myrtle Beach, SC 29578
Members of the Board:
You have requested our opinion as investment bankers as to the fairness, from a
financial point of view, to the stockholders, ("Stockholders"), of Anchor
Financial Corporation (the "Company") of the consideration to be received by
such stockholders in the proposed merger (the "Merger") of the Company with
Carolina First Corporation ("Acquiror") pursuant to the Plan of Merger of Anchor
Financial Corporation with and into Carolina First Corporation (the "Merger
Agreement"), between the Company and Acquiror. Upon the effectiveness of the
Merger, each issued and outstanding share of the Company's Common Stock will be
converted into 2.175 shares of the Acquiror's common stock.
In connection with rendering our opinion, we have reviewed and analyzed, among
other things, the following: (i) the Merger Agreement; (ii) certain publicly
available information concerning the Company and Acquiror, including the Annual
Reports on Form 10-K of the Company for each of the years in the three year
period ended December 31, 1996-1998 and of the Acquiror for each of the years in
the three year period ended December 31, 1996-1998, the Quarterly Reports on
Form 10-Q of the Company and Acquiror for the quarter ended September 30, 1999,
(iii) certain available financial forecasts concerning the business and
operations of the Company and Acquiror that were prepared by management of the
Company and Acquiror, respectively, and (iv) certain publicly available
information with respect to other companies that we believe to be comparable in
certain respects to the Company and Acquiror and the trading markets for such
other companies' securities. We have held discussions with certain officers and
employees of the Company and Acquiror to discuss the past and current business
operations, financial condition and prospects of the Company and Acquiror, as
well as matters we believe relevant to our inquiry. We have also considered
other information, financial studies, analyses, investigations and financial,
economic and market criteria that we deemed relevant.
<PAGE>
Board of Directors
Page 2
January 9, 2000
In our review and analysis, we have assumed and relied upon the accuracy and
completeness of all of the financial and other information provided us, or that
is publicly available, and have not attempted independently to verify nor
assumed responsibility for verifying any such information. With respect to the
financial projections, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
Company or Acquiror, as the case may be, and we express no opinion with respect
to such forecasts or the assumptions on which they are based. We have not made
or obtained or assumed any responsibility for making or obtaining any
independent evaluations or appraisals of any of the assets (including properties
and facilities) or liabilities of the Company or Acquiror.
In conducting our analysis and arriving at our opinion as expressed herein, we
have considered such financial and other factors that we have deemed appropriate
under the circumstances, including the following: (i) the historical and current
financial position and results of operations of the Company and Acquiror; (ii)
the historical and current market for the equity securities of the Company,
Acquiror and other companies that we believe to be comparable in certain
respects to the Company or Acquiror; (iii) the nature and terms of certain other
acquisition transactions that we believe to be relevant; and (iv) the current
and historical relationships between the trading levels of the Company's common
stock and Acquiror's common stock. We have taken into account our assessment of
general economic, market and financial conditions and our knowledge of the
banking industry, as well as our experience in connection with similar
transactions and securities valuation generally.
Our opinion is based upon conditions as they exist and can be evaluated on the
date hereof. Our opinion expressed below does not imply any conclusion as to the
likely trading range for Acquiror Common Stock following the consummation of the
Merger, which may vary depending upon, among other factors, changes in interest
rates, dividend rates, market conditions, general economic conditions and
factors that generally influence the price of securities. Our opinion does not
address the Company's underlying business decision to effect the Merger. Our
opinion is directed only to the fairness, from a financial point of view, of the
Merger Consideration and does not constitute a recommendation concerning how
holders of the Company's common stock should vote with respect to the Merger
Agreement. The Orr Group was not requested to solicit third-party offers to
acquire all of the Company immediately preceding or in connection with the
process resulting in the proposed Merger. The Orr Group did participate in the
discussions and negotiations with respect to the proposed Merger. The Orr Group
will receive a fee from the Company for delivery of this fairness opinion.
<PAGE>
Board of Directors
Page 3
January 9, 2000
In rendering our opinion we have assumed that in the course of obtaining the
necessary regulatory approvals for the Merger no restrictions will be imposed
that would have a material adverse affect on the contemplated benefits of the
Merger to the Company following the Merger. We understand that the Merger will
qualify as a tax-free reorganization under the Internal Revenue Code and that,
for accounting purposes, the Merger will be accounted for as a pooling of
interest.
Subject to the foregoing, it is our opinion that, as of the date hereof, the
Merger consideration to be received by the Company's Stockholders is fair to
such Stockholders from a financial point of view.
Very truly yours,
/s/ L. Glenn Orr, Jr.
Senior Managing Director
<PAGE>
ANNEX E TO PROXY STATEMENT/PROSPECTUS
January 10, 2000
The Board of Directors
Carolina First Corporation
102 South Main Street
Greenville, SC 29601
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to Carolina First Corporation (the "Company") of the Exchange Ratio
(defined below) set forth in the Reorganization Agreement (the "Agreement") to
be entered into by and among the Company, Carolina First Bank, Anchor Financial
Corporation ("Anchor") and Anchor Bank. As more fully described in the
Agreement, (i) Anchor will be merged with and into the Company (the "Merger")
and (ii) each outstanding share of the common stock, no par value, of Anchor
(the "Anchor Common Stock") will be converted into the right to receive 2.1750
shares (the "Exchange Ratio") of common stock, par value $1.00 per share, of the
Company (the "Company Common Stock").
In arriving at our opinion, we reviewed a draft of the Agreement dated January
6, 2000 and held discussions with certain senior officers, directors and other
representatives and advisors of the Company and certain senior officers and
other representatives and advisors of Anchor concerning the businesses,
operations and prospects of the Company and Anchor. We examined certain publicly
available business and financial information relating to the Company and Anchor
as well as certain financial forecasts and other information and data for the
Company and Anchor which were provided to or otherwise discussed with us by the
managements of the Company and Anchor, including information relating to certain
strategic implications and operational benefits anticipated to result from the
Merger. We reviewed the financial terms of the Merger as set forth in the
Agreement in relation to, among other things: current and historical market
prices and trading volumes of the Company Common Stock and Anchor Common Stock;
the historical and projected earnings and other operating data of the Company
and Anchor; and the capitalization and financial condition of the Company and
Anchor. We considered, to the extent publicly available, the financial terms of
certain other similar transactions which we considered relevant in evaluation of
the Merger and analyzed certain financial, stock market and other publicly
available information relating to the businesses of other companies whose
operations we considered relevant in evaluating those of the Company and Anchor.
We also evaluated the pro forma financial impact of the Merger on the Company.
In addition to the foregoing, we conducted such other analyses and examinations
and considered such other information and financial, economic and market
criteria as we deemed appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us and have further relied upon the
<PAGE>
Carolina First Corporation
January 10, 2000
Page 2
assurances of management of the Company and Anchor that they are not aware of
any facts that would make any of such information inaccurate or misleading. With
respect to financial forecasts and other information and data provided to or
otherwise reviewed by or discussed with us (including forecasts of cost savings
and operating synergies projected by management of the Company to result from
the Merger), we have been advised by the managements of the Company and Anchor
that such forecasts and other information and data were reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
managements of the Company and Anchor as to the future financial performance of
the Company and Anchor and the strategic implications and operational benefits
anticipated to result from the Merger. We express no view with respect to such
forecasts and other information and data or the assumptions on which they were
based. We have assumed, with your consent, that the Merger will be treated as a
tax-free reorganization for federal income tax purposes and as a pooling of
interests in accordance with generally accepted accounting principles. We have
not made or been provided with an independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company or Anchor nor
have we made any physical inspection of the properties or assets of the Company
or Anchor. We are not experts in the evaluation of loan or lease portfolios for
purposes of assessing the adequacy of the allowances for losses with respect
thereto and we have neither made an independent evaluation of the adequacy of
such allowances of the Company or Anchor, nor have we reviewed any individual
credit or lease files, and, as a result, we have assumed that the aggregate
allowances for such losses for each of the Company and Anchor are in the
aggregate adequate to cover such losses. Representatives of the Company have
advised us, and we have assumed, that the final terms of the Agreement will not
vary materially from those set forth in the draft reviewed by us. We have
further assumed that the Merger will be consummated in accordance with the terms
of the Agreement, without waiver of any of the conditions to the Merger
contained in the Agreement.
Our opinion, as set forth herein, relates to the relative values of the Company
and Anchor. We are not expressing any opinion as to what the value of the
Company Common Stock actually will be when issued pursuant to the Merger or the
price at which the Company Common Stock will trade subsequent to the
announcement or consummation of the Merger. We were not requested to consider,
and our opinion does not address, the relative merits of the Merger as compared
to any alternative business strategies that might exist for the Company or the
effect of any other transaction in which the Company might engage. Our opinion
is necessarily based upon information available to us, and financial, stock
market and other conditions and circumstances existing and disclosed to us, as
of the date hereof.
Salomon Smith Barney Inc. has acted as financial advisor to the Company in
connection with the proposed Merger and will receive a fee for such services, a
significant portion of which is contingent upon the consummation of the Merger.
We also will receive a fee upon the signing of the Agreement. In the ordinary
course of our business, we and our affiliates may actively trade or hold the
securities of the Company and Anchor for our own account or for the accounts of
our customers and, accordingly, may at any time hold a long or short position in
such securities. In addition, we and our affiliates (including Citigroup Inc.
and its affiliates) may maintain relationships with the Company, Anchor and
their respective affiliates. We understand that the Robinson-Humphrey Company
LLC, a wholly owned subsidiary of Salomon Smith Barney Inc., is acting as a
financial advisor to Anchor and has been requested to provide a fairness opinion
to Anchor with regard to this transaction.
<PAGE>
Carolina First Corporation
January 10, 2000
Page 3
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the
proposed Merger, and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder should vote on any
matters relating to the proposed Merger.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the Exchange Ratio is fair, from a
financial point of view, to the Company.
Very truly yours,
/s/ SALOMON SMITH BARNEY
<PAGE>
ANNEX F TO PROXY STATEMENT/PROSPECTUS
CFC INTERIM, INC.
ANTICIPATED BALANCE SHEET
DECEMBER 31, 1999
------------------
(UNAUDITED)
ASSETS
Cash.............................................................$ 100
-----
$ 100
-----
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities......................................................$ --
Shareholders' Equity:
Common stock................................................. 100
Retained Earnings............................................ --
-----
Total shareholders' equity............................... 100
-----
$ 100
-----
<PAGE>
PART-II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Chapter 8, Article 5 of Title 33 of the 1976 Code of Laws
of South Carolina, as amended, which provides for indemnification of officers
and directors of South Carolina corporations in certain instances in connection
with legal proceedings involving any such persons because of being or having
been an officer or director. Carolina First's Bylaws provide that the
Corporation shall indemnify any individual made a party to a proceeding because
he is or was a Director of the Corporation against liability incurred in the
proceeding to the fullest extent permitted by law, and that the Corporation
shall pay for or reimburse the reasonable expenses incurred by a Director who is
a party to a proceeding in advance of final disposition of the proceeding to the
fullest extent permitted by law. Carolina First has entered into indemnification
agreements with each of its Directors, which make the above-referenced Bylaws
provisions the basis of a contract between Carolina First and each director.
Chapter 8, Article 5 of Title 33 of the 1976 Code of Laws of South Carolina, as
amended, also permits a corporation to purchase and maintain insurance on behalf
of a person who is or was an officer or director. Carolina First maintains
directors' and officers' liability insurance.
Reference is made to Chapter 2 of Title 33 of the 1976 Code of Laws of South
Carolina, as amended, respecting the limitation in a corporation's articles of
incorporation of the personal liability of a director for breach of the
director's fiduciary duty. Reference is made to Carolina First's Articles of
Amendment filed with the South Carolina Secretary of State on April 18, 1989
which state: "A director of the corporation shall not be personally liable to
the corporation or any of its shareholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision shall not be deemed
to eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its shareholders, (ii) for acts
or omissions not in good faith or which involved gross negligence, intentional
misconduct, or a knowing violation of law, (iii) imposed under Section 33-8-330
of the South Carolina Business Corporation Act of 1988 (improper distribution to
shareholder), or (iv) for any transaction from which the director derived an
improper personal benefit."
ITEM 21: EXHIBITS
(a) Listing of Exhibits
Exhibit
2.1 Agreement and Plan of Reorganization entered into as of
January 10, 2000 by and among Carolina First, Carolina First
Bank, Anchor and The Anchor Bank: Included as Annex A to
the proxy statement/prospectus.
3.1 Articles of Incorporation: Incorporated by reference to
Exhibit 3.1 of Carolina First's Registration Statement on Form
S-4, Commission File No. 33-57389.
3.2 Articles of Amendment dated June 1, 1997. Incorporated by
reference to Exhibit 3.2 of Carolina First's Registration
Statement on Form S-4 filed on July 30, 1997, Commission File
No. 333-32459.
3.3 Amended and Restated Bylaws of Carolina First, as amended and
restated as of December 18, 1996: Incorporated by reference to
Exhibit 3.1 of Carolina First's Current Report on Form 8-K
dated December 18, 1996, Commission File No. 0-15083.
4.1 Specimen Carolina First Common Stock certificate: Incorporated
by reference to Exhibit 4.1 of Carolina First's Registration
Statement on Form S-1, Commission File No. 33-7470.
4.2 Articles of Incorporation: Included as Exhibits 3.1 and 3.2.
4.3 Bylaws: Included as Exhibit 3.3.
II-1
<PAGE>
4.4 Carolina First Amended Common Stock Dividend Reinvestment
Plan: Incorporated by reference to the Prospectus in Carolina
First's Registration Statement on Form S-3, Commission File
No. 333-06975.
4.4.1* Amendment 1 to Carolina First Amended Common Stock Dividend
Reinvestment Plan.
4.5 Amended and Restated Shareholder Rights Agreement:
Incorporated by reference to Exhibit 4.1 of Carolina First's
Current Report on Form 8-K dated December 18, 1996, Commission
File No. 0-15083.
4.6 Form of Indenture between Carolina First and First American
Trust Company, N.A., as trustee: Incorporated by reference to
Exhibit 4.11 of Carolina First's Registration Statement on
Form S-3, Commission File No. 22-58879.
5.1* Opinion of Wyche, Burgess, Freeman & Parham, P.A. regarding
legality of shares of Carolina First.
5.2* Opinion of Wyche, Burgess, Freeman & Parham, P.A. regarding
tax matters.
8.1 See "The Proposed Transaction--Federal Income Tax
Consequences" for discussion regarding tax matters.
10.1 Carolina First Corporation Carolina First Corporation and
First American Trust Company, N.A., as Trustee: Incorporated
by reference to Exhibit 4.11 of the Company's Registration
Statement on Form S-3, Commission File No. 22-58879.
10.2 Carolina First Corporation Employee Stock Ownership Plan:
Incorporated by reference to Exhibit of Carolina First
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1991, Commission File No. 0-15083.
10.3 Carolina First Corporation Amended and Restated Stock Option
Plan Incorporated by reference to Exhibit 99.1 from the
Company's Registration Statement on Form S-8, Commission File
No. 33-80822.
10.3.1 Amendment 1 to Amended and Restated Stock Option Plan.
Incorporated by reference to Exhibit 10.2 to Carolina First's
Quarterly Report on Form 10-Q for the quarter ended March 30,
1998, Commission File No. 0-15083.
10.3.2* Amendment 2 to Amended and Restated Stock Option Plan.
10.4 Carolina First Corporation Salary Reduction Plan: Incorporated
by reference to Exhibit 28.1 of Carolina First Corporation's
Registration Statement on Form S-8, Commission File No.
33-25424.
10.5 Amended and Restated Noncompetition, Severance and Employment
Agreement dated as of May 21, 1999, by and between Carolina
First Corporation and Mack I. Whittle, Jr.: Incorporated by
reference to Exhibit 10.1 of Carolina First Corporation's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1999, Commission File No. 0-15083 (the "September 1999
10-Q").
10.6 Amended and Restated Noncompetition, Severance and Employment
Agreement dated May 21, 1999, by and between Carolina First
Corporation and William S. Hummers III: Incorporated by
reference to Exhibit 10.2 of the September 1999 10-Q.
10.7 Amended and Restated Noncompetition, Severance Agreement dated
February 21, 1996, between Carolina First Corporation and
James W. Terry, Jr.: Incorporated by reference to Exhibit 10.7
of Carolina First Corporation's Annual Report on Form 10-K for
the year ended December 31, 1995, Commission File No. 0-15083.
10.8 Amended and Restated Noncompetition, Severance and Employment
Agreement dated as of October 5, 1999, by and between Carolina
First Corporation and John DuBose. Incorporated by reference
to Exhibit 10.3 of the September 1999 10-Q.
10.9 Amended and Restated Noncompetition, Severance and Employment
Agreement dated as of November 2, 1998, by and between
Carolina First Corporation and Michael W. Sperry. Incorporated
by reference to Exhibit 10.4 of the September 1999 10-Q.
II-2
<PAGE>
10.10 Employment Agreement dated as of October 7, 1998, by and among
William J. Moore, Carolina First Bank and Carolina First
Corporation.
10.11 Short-Term Performance Plan: Incorporated by reference to
Exhibit 10.3 of Carolina First Corporation's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993,
Commission File No. 0-15083.
10.12 Carolina First Corporation Long-Term Management Performance
Plan: Incorporated by reference to Exhibit 10.11 of Carolina
First Corporation's Annual Report on Form 10-K for the year
ended December 31, 1994, Commission File No. 0-15083.
10.13 Carolina First Corporation Employee Stock Purchase Plan:
Incorporated by reference to Exhibit 99.1 from the Company's
Registration Statement on Form S-8, Commission File No.
33-79668.
10.14 Carolina First Corporation Directors Stock Option Plan:
Incorporated by reference to Exhibit 99.1 from the Company's
Registration Statement on Form S-8, Commission File No.
33-82668/82670.
10.15 Warrant to Purchase Common Stock of Affinity Financial Group,
Inc. and Amendment No. 1 with respect to Warrant to Purchase
Common Stock of Affinity Financial Group, Inc. Incorporated by
reference to Exhibit 10.16 of Carolina First Corporation's
Annual Report on Form 10-K for the year ended December 31,
1995, Commission File No. 0-15083.
10.16 Letter Agreement between Carolina First Corporation and the
Board of Governors of the Federal Reserve Board regarding
warrant to purchase shares of Affinity Technology Group, Inc.
common stock. Incorporated by reference to Exhibit 10.1 of
Carolina First Corporation's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, Commission File No. 0-15083.
10.17 Office of Thrift Supervision Modification of Approval of
Holding Company Acquisition and Purchase of Assets and
Assumption of Liabilities dated July 25, 1997 between
NetB@nk, Inc. and the Office of Thrift Supervision Regarding
Restrictions on NetB@nk, Inc. Stock Incorporated by reference
to Exhibit 10.2 of Carolina First Corporation's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997,
Commission File No. 0-15083.
10.18 Office of Thrift Supervision Letter granting Carolina First
Corporation permission to reduce its NetB@nk, Inc. stock
holdings. Incorporated by reference to Exhibit 10.19 of
Carolina First Corporation's Annual Report on Form 10-K for
the year ended December 31, 1998, Commission File No. 0-15083.
10.19 Carolina First Corporation Amended and Restated Fortune 50
Plan: Incorporated by reference to the Prospectus in Carolina
First Corporation's Registration Statement on Form S-8,
Commission File No. 333-31948.
11.1 Computation of Per Share Earnings: Incorporated by reference
to Exhibit 11.1 of Carolina First's Annual Report on Form 10-K
for the year ended December 31, 1999, Commission File No.
0-15083 (the "1999 10-K").
12.1 Ratio of Earnings to Fixed Charges: Incorporated by reference
to Exhibit 12.1 to the 1999 10-K.
13.1 1998 Annual Report to Shareholders of Carolina First.
Incorporated by reference to Exhibit 13.1 of Carolina First's
Annual Report on Form 10-K for the year ended December 31,
1998, Commission File No. 0-15083.
21.1 Subsidiaries of the Registrant: Incorporated by reference to
Exhibit 21.1 to the 1999 10-K.
23.1* Consent of KPMG LLP.
23.2* Consent of PricewaterhouseCoopers LLP.
23.3* Consent of Arthur Andersen LLP.
II-3
<PAGE>
23.4* Consent of Salomon Smith Barney.
23.5* Consent of The Robinson-Humphrey Company.
23.6* Consent of The Orr Group.
23.7* Consent of J.W. Hunt and Company, LLP.
23.8* Consent of Tourville, Simpson & Henderson, L.L.P.
23.9* Consent of Wyche, Burgess, Freeman & Parham, P.A.: Contained
in Exhibit 5.1.
24.1* The Power of Attorney: Contained on the signature page of the
initial filing of this Registration Statement.
27.1 Financial Data Schedule: Incorporated by reference to Exhibit
27.1 to the 1999 10-K.
99.1 Form of Proxy for Anchor Financial Corporation.
99.2 Form of Proxy for Carolina First Corporation.
* Filed with this registration statement
(b) Certain additional financial statements. Not applicable.
(c) The information required by this paragraph is included as an Annex to the
proxy statement/prospectus.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, 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 the 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 the registration statement.
Notwithstanding the foregoing, any increase or decrease in the
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent not more
than a 20 percent change in the maximum offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
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 here, 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.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
II-4
<PAGE>
The registrant undertakes that every prospectus: (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 145, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act 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.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the proxy statement pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Greenville, State of
South Carolina, on March 10, 2000.
Carolina First Corporation
By: /s/ William S. Hummers III
---------------------------
William S. Hummers III,
Executive Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Mack I. Whittle, Jr. and William S. Hummers III,
and each of them, as true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with all annexes 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 to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all which said
attorneys-in-fact and agents or any of them, or their or his or her 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 registration
statement has been signed by the following persons in the capacities and as of
the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/ Chairman of the Board March 10, 2000
- ------------------------------------
William R. Timmons, Jr.
/s/ President, Chief Executive Officer March 10, 2000
- ------------------------------------ and Director (Principal Executive Officer)
Mack I. Whittle, Jr.
/s/ Executive Vice President, Director March 10, 2000
- ------------------------------------ (Principal Accounting and Financial Officer)
William S. Hummers III
/s/ Director March 10, 2000
- ------------------------------------
M. Dexter Hagy
/s/ Director March 10, 2000
- ------------------------------------
Eugene E. Stone IV
/s/ Director March 10, 2000
- ------------------------------------
H. Earle Russell, Jr.
/s/ Director March 10, 2000
- ------------------------------------
Judd B. Farr
/s/ Director March 10, 2000
- ------------------------------------
Charles B. Schooler
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Director March 10, 2000
- ------------------------------------
Elizabeth P. Stall
/s/ Director March 10, 2000
- ------------------------------------
David C. Wakefield III
/s/ Director March 10, 2000
- ------------------------------------
Vernon E. Merchant, Jr.
/s/ Director March 10, 2000
- ------------------------------------
C. Claymon Grimes, Jr.
/s/ Director March 10, 2000
- ------------------------------------
Samuel H. Vickers
</TABLE>
II-7
Exhibit 4.4.1
AMENDMENT 1 TO
CAROLINA FIRST CORPORATION
AMENDED COMMON STOCK DIVIDEND REINVESTMENT PLAN
This Amendment 1 (this "Amendment") to Carolina First Corporation's
Amended Common Stock Dividend Reinvestment Plan, amended as of June 27, 1996
(the "Plan") is made by Carolina First Corporation, to be effective as of June
30, 2000.
The Plan is hereby amended to increase the shares of common stock of
Carolina First Corporation issuable thereunder from 300,000 to 450,000.
Except as amended by this Amendment, the Plan is ratified and affirmed
in its entirety.
IN WITNESS WHEREOF, this Amendment is entered into as of March 2, 2000.
CAROLINA FIRST CORPORATION
By: /s/ William S. Hummers III
--------------------------
Name: William S. Hummers, III
Title: Executive Vice President
[WYCHE, BURGESS, FREEMAN & PARHAM, P.A. LETTERHEAD]
864-242-8200
March 15, 2000
Carolina First Corporation
102 South Main Street
Greenville, South Carolina 29601
Anchor Financial Corporation
2002 Oak Street
Myrtle Beach, South Carolina 29577
RE: Registration Statement on Form S-4 with respect to 18,501,162
shares of Carolina First Common Stock
Gentlemen/Ladies:
The opinions set forth herein are rendered with respect to the
18,501,162 shares, $1.00 par value per share, of the Common Stock (the "Common
Stock") of Carolina First Corporation, a South Carolina corporation (the
"Company"), which may be issued by the Company in connection with its
acquisition of Anchor Financial Corporation ("Anchor"), all as set forth in that
certain Reorganization Agreement entered into as of January 10, 2000 by and
between the Company, Anchor, Carolina First Bank and The Anchor Bank. The Common
Stock is being registered with the Securities and Exchange Commission by the
Company's Registration Statement on Form S-4 (the "Registration Statement")
filed on or about March 15, 2000, pursuant to the Securities Act of 1933, as
amended.
We have examined the Company's Articles of Incorporation, as amended,
and the Company's Bylaws, as amended, and reviewed the records of the Company's
corporate proceedings. We have made such investigation of law as we have deemed
necessary in order to enable us to render this opinion. With respect to matters
of fact, we have relied upon information provided to us by the Company and no
further investigation. With respect to all examined documents, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to authentic originals of all documents
submitted to us as certified, conformed or photostatic copies and the accuracy
and completeness of the information contained therein.
Based on and subject to the foregoing and subject to the comments,
limitations and qualifications set forth below, we are of the opinion that the
shares of Common Stock to be sold pursuant to the Registration Statement will,
when issued to the Anchor shareholders in accordance with the Reorganization
Agreement, be legally and validly issued and fully paid and non-assessable.
The foregoing opinion is limited to matters governed by the laws of the
State of South Carolina in force on the date of this letter. We express no
opinion with regard to any matter which may be (or
<PAGE>
Carolina First Corporation
Anchor Financial Corporation
March 15, 2000
Page 2
purports to be) governed by the laws of any other state or jurisdiction. In
addition, we express no opinion with respect to any matter arising under or
governed by the South Carolina Uniform Securities Act, as amended, any law
respecting disclosure, or any law respecting any environmental matter.
This opinion is rendered as of the date of this letter and applies only
to the matters specifically covered by this opinion, and we disclaim any
continuing responsibility for matters occurring after the date of this letter.
Except as noted below, this opinion is rendered solely for your benefit
in connection with the Registration Statement and may not be relied upon, quoted
or used by any other person or entity or for any other purpose without our prior
written consent.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ WYCHE, BURGESS, FREEMAN & PARHAM, P.A.
Anchor Financial Corporation
March 15, 2000
Page 1
[WYCHE, BURGESS, FREEMAN & PARHAM, P.A. LETTERHEAD]
864-242-8200
March 15, 2000
Anchor Financial Corporation
2002 Oak Street
Myrtle Beach, South Carolina 29577
RE: Tax Consequences of Acquisition of Anchor Financial
Corporation by Carolina First Corporation
Ladies and Gentlemen:
You have requested our opinion as to the federal income tax
consequences of the proposed acquisition of Anchor Financial Corporation
("Anchor"), a South Carolina-chartered bank holding company headquartered in
Myrtle Beach, South Carolina, by Carolina First Corporation ("Carolina First"),
a South Carolina-chartered bank holding company headquartered in Greenville,
South Carolina, such acquisition being effected pursuant to the terms and
provisions of that certain Reorganization Agreement (the "Reorganization
Agreement"), dated as of January 10, 2000, entered into by Anchor, Carolina
First, Carolina First Bank ("Carolina First Bank"), which is a wholly-owned
subsidiary of Carolina First, and The Anchor Bank ("Anchor Bank"), which is a
wholly-owned subsidiary of Anchor.
This opinion is delivered to you pursuant to section 8.6 of the
Reorganization Agreement. Capitalized terms used herein which are defined in the
Reorganization Agreement have the same meaning as in the Reorganization
Agreement.
The Reorganization Agreement provides that at the Effective Time,
Anchor shall be merged with and into CFC Interim, Inc., a subsidiary of Carolina
First formed solely for the purpose of effecting the Merger. The Mergers will be
consummated in accordance with applicable corporate laws of South Carolina and
the federal regulations applicable to banking institutions. In the Mergers, all
outstanding shares of Anchor stock will be converted into and exchanged for
Carolina First common stock according to the Conversion Ratio in the
Reorganization Agreement. Cash will be paid in lieu of any fractional shares
which result. Consummation of the Mergers is subject to certain conditions set
forth in the Reorganization Agreement.
We are general counsel to Carolina First. We have acted as counsel to
Carolina First in connection with the transactions contemplated by the
Reorganization Agreement and, as such, we have
<PAGE>
Anchor Financial Corporation
March 15, 2000
Page 2
participated in the negotiation and drafting of the Reorganization Agreement.
As to matters of fact material to this opinion, we have made the following
factual assumptions in rendering the opinion hereinafter set forth:
(a) That the Mergers will be consummated in strict
compliance with the terms and conditions described in the
Reorganization Agreement;
(b) That all representations and warranties contained in the
Reorganization Agreement are true and will be true as of the Effective
Time and that each party to the Reorganization Agreement will perform
all obligations, duties or other responsibilities agreed upon by such
party therein;
(c) That shareholders of Anchor collectively will exchange,
for Carolina First common stock, an amount of Anchor stock which
possesses 100% of the total combined voting power of all classes of
Anchor stock and which is 100% of the total number of shares of all
classes of Anchor stock; and that such shareholders will have no plan
or intention to sell or dispose of the Carolina First common stock
received in the Mergers and will not have or exercise dissenters'
rights with respect to their Anchor shares;
(d) That Carolina First will acquire and hold substantially
all of the properties and assets of Anchor in and after the Mergers,
and that no material properties or assets of Anchor were transferred or
otherwise disposed of prior to the Mergers other than in the ordinary
course of business;
(e) That all of the shares of Carolina First common stock to
be received by shareholder/employees of Anchor will be received solely
in exchange for Anchor common stock not acquired pursuant to the
exercise of an employee stock option or otherwise as compensation.
(f) That shareholders of Anchor will receive no shares of
CFC Interim, Inc. stock in the Merger.
Based upon the foregoing, we are of the opinion that:
(1) The Mergers will constitute a tax-free reorganization
under Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended.
(2) No gain or loss will be recognized by Carolina First or
Anchor in the Mergers. The basis of the assets of the surviving
corporation, Carolina First, will be unchanged.
(3) No gain or loss for federal income tax purposes will be
recognized by the shareholders of Anchor upon the exchange of their
Anchor common stock for Carolina First common stock (disregarding any
cash received for whole or fractional share interests or otherwise).
(4) When cash is received by an Anchor shareholder in lieu of
fractional shares, such cash will be treated for federal income tax
purposes as having been received by such
<PAGE>
Anchor Financial Corporation
March 15, 2000
Page 3
shareholder in redemption of such fractional share and therefore
taxable to the extent that such distribution exceeds the shareholder's
basis in such fractional share.
(5) The tax basis of the Carolina First common stock so
received by an Anchor shareholder in connection with the Mergers who
exchanged his Anchor common stock for Carolina First common stock will
be the same as the basis in the Anchor common stock surrendered in
exchange for such Carolina First common stock as set forth above.
(6) The holding period of the Carolina First common stock
received by an Anchor shareholder will include the holding period of
the shares of Anchor surrendered therefor provided that the Anchor
shares are capital assets in the hand of the shareholder at the time of
the Mergers.
We express no opinion other than that expressly stated immediately
above. This opinion is based on the current state of federal tax law as
evidenced by applicable statutes, regulations, rulings and judicial decisions.
Any of these statutes, regulations, rulings and judicial decisions can change at
any time on a prospective or retroactive basis, in which event some or all of
the previous opinion may become inapplicable.
This opinion does not cover all tax consequences that may be relevant
to Anchor shareholders subject to special federal income tax treatment (such as
insurance companies, dealers in securities, certain retirement plans, financial
institutions, tax exempt organizations or foreign persons), nor does it cover
state or local tax consequences.
The opinion expressed above is solely for the benefit of Anchor and its
shareholders and may not be relied on in any manner for any other purpose by any
other person.
Very truly yours,
/s/
-------------------------------------
WYCHE, BURGESS, FREEMAN & PARHAM, P.A.
AMENDMENT 2 TO
CAROLINA FIRST CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
This Amendment 2 (this "Amendment") to Carolina First Corporation's
Amended and Restated Stock Option Plan, amended and restated as of April 20,
1994 and as amended effective November 18, 1997 (the "Plan") is made by Carolina
First Corporation, to be effective as of January 1, 2000. Capitalized terms not
otherwise defined in this Amendment have the meanings assigned to them in the
Plan.
The second sentence of Section 3 of the Plan is hereby deleted and
replaced with the following:
Subject to adjustment in accordance with the provisions of Section 5
hereof, the total amount of the Common Stock of the Company which may
be issued pursuant to grants under the Plan shall not exceed in the
aggregate 2,500,000 shares.
Except as amended by this Amendment, the Plan is ratified and affirmed
in its entirety.
IN WITNESS WHEREOF, this Amendment is entered into as of January 1,
2000.
CAROLINA FIRST CORPORATION
By: /s/ William S. Hummers III
--------------------------
Name: William S. Hummers, III
Title: Executive Vice President
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
-----------------------------
Board of Directors
Carolina First Corporation
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the proxy
statement/prospectus.
/s/ KPMG LLP
Greenville, South Carolina
March 15, 2000
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Carolina First Corporation of our report dated February
19, 1999 except as to the pooling of interests described in Note 2 which date is
April 9, 1999, relating to the financial statements, which appear in Anchor
Financial Corporation's Annual Report on Form 10-K for the year ended December
31, 1999.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbia, South Carolina
March 14, 2000
Exhibit 23.3
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 18, 2000
included in Anchor Financial Corporation's Form 10-K for the year ended December
31, 1999 and to all references to our Firm included in this registration
statement.
Charlotte, North Carolina
March 15, 2000
/s/ ARTHUR ANDERSEN LLP
Exhibit 23.4
CONSENT OF SALOMON SMITH BARNEY INC.
We hereby consent to the use of our name and to the
description of our opinion letter, dated January 10, 2000, under the captions
"Summary--Investment Bank Says the Merger Is Fair to Carolina First," "The
Merger--Carolina First's Reasons for the Issuance of Carolina First Common Stock
to Anchor Stockholders" and "The Merger--Opinion of Carolina First's Financial
Advisor" in, and to the inclusion of such opinion letter as Appendix E to, the
Joint Proxy Statement/Prospectus of Carolina First Corporation and Anchor
Financial Corporation, which Joint Proxy Statement/Prospectus is part of the
Registration Statement on Form S-4 of Carolina First Corporation, dated on or
about March 14, 2000. By giving such consent, we do not thereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "expert" as used in, or that we come within the category of
persons whose consent is required under, the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
/s/ SALOMON SMITH BARNEY INC.
-----------------------------
SALOMON SMITH BARNEY INC.
New York, New York
March 14, 2000
CONSENT OF THE ROBINSON-HUMPHREY COMPANY, LLC
We hereby consent to the inclusion as an annex to this Registration Statement on
Form S-4 (the "Registration Statement") of Anchor Financial Corporation and
Carolina First Corporation of our opinion (the "Opinion"), dated on or about
March 15, 2000, with respect to the merger of Anchor Financial Corporation with
Carolina First Corporation. We also consent to the references to the Opinion and
our firm in the Registration Statement.
In giving such consent, we do not admit that we come 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/ THE ROBINSON-HUMPHREY COMPANY, LLC
Atlanta, Georgia
March 15, 2000
CONSENT OF FINANCIAL ADVISOR
We consent to the references to our firm under the caption "Opinions of Anchor's
Financial Advisors" in the Registration Statement on Form S-4 being filed with
the Securities and Exchange Commission by Carolina First Corporation in
connection with the proposed merger of Anchor Financial Corporation with and
into Carolina First Corporation, pursuant to an Agreement and Plan of Merger
dated January 10, 2000.
THE ORR GROUP
By: /s/
-----------------------------
Laney G. Orr, III
March 15, 2000
J.W. HUNT AND COMPANY, LLP
(LETTERHEAD)
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 31, 1998,
relating to the consolidated financial statements of ComSouth Bankshares, Inc.
for the year ended December 31, 1997 included (or incorporated by reference) in
Anchor Financial Corporation's Form 10-K for the year ended December 31, 1999
and to all references to our Firm included in this registration statement.
/s/ J.W. HUNT AND COMPANY, LLP
Columbia, South Carolina
March 13, 2000
Exhibit 23.9
Anchor Financial Corporation
Myrtle Beach, South Carolina
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 9, 1998 and
January 8, 1999 included (or incorporated by reference) in Anchor Financial
Corporation's Form 10-K for the year ended December 31, 1999 and to all
references to our Firm included in this registration statement.
/s/ TOURVILLE, SIMPSON & HENDERSON, L.L.P.
Tourville, Simpson & Henderson, L.L.P.
Columbia, South Carolina
March 15, 2000
P
R
O Anchor Financial Corporation
X This Proxy is Solicited on Behalf of the Board of Directors
Y
Special Meeting, May 1, 2000
The undersigned shareholder of Anchor Financial Corporation, hereby revoking all
previous proxies, hereby appoints _________________ and ___________________, and
either of them, the attorney or attorneys and proxy or proxies of the
undersigned, with full power of substitution, to attend the Special Meeting of
Shareholders of Anchor Financial Corporation to be held May 1, 2000, at 2:30
p.m., local time, at the Myrtle Beach Convention Center, 2100 North Oak Street,
Myrtle Beach, South Carolina and at any adjournments thereof, and to vote all
shares of Anchor Financial Corporation that the undersigned shall be entitled to
vote at such meeting. Said proxies are instructed to vote on the matters set
forth in the Proxy Statement/Prospectus as specified below.
1. To approve the Reorganization Agreement dated as of January 10, 2000,
providing for the merger of Anchor Financial Corporation with and
into Carolina First Corporation and, in connection therewith, the
conversion of shares of common stock of Anchor Financial Corporation
into shares of common stock of Carolina First Corporation, subject to
the terms and conditions of the Reorganization Agreement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In their discretion, the proxy holders are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL NUMBER 1
AS SPECIFIED ABOVE.
Please sign exactly as name appears on stock certificate. When signing as
attorney, administrator, trustee, guardian or agent, please indicate the
capacity in which you are acting. If stock is held jointly, signature should
appear for both names. If more than one trustee, all should sign. If stock is
held by a corporation, please sign in full corporate name by authorized officer
and give title of office. This Proxy may be revoked any time prior to its
exercise.
Dated: ______________________, 2000
- --------------------------------------------
Print Name (and title if appropriate)
- --------------------------------------------
Signature
- --------------------------------------------
Print Name (and title if appropriate)
- --------------------------------------------
Signature
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
P
R
O Carolina First Corporation
X This Proxy is Solicited on Behalf of the Board of Directors
Y
Special Meeting, May 1, 2000
The undersigned shareholder of Carolina First Corporation, hereby revoking all
previous proxies, hereby appoints _________________ and ___________________, and
either of them, the attorney or attorneys and proxy or proxies of the
undersigned, with full power of substitution, to attend the Special Meeting of
Shareholders of Carolina First Corporation to be held May 1, 2000, at 2:00 p.m.,
local time, at the third floor conference room of the Poinsett Plaza, 104 South
Main Street, Greenville, South Carolina and at any adjournments thereof, and to
vote all shares of Carolina First Corporation that the undersigned shall be
entitled to vote at such meeting. Said proxies are instructed to vote on the
matters set forth in the Proxy Statement/Prospectus as specified below.
1. To approve the Reorganization Agreement dated as of January 10, 2000,
providing for the merger of Anchor Financial Corporation with and
into Carolina First Corporation and, in connection therewith, the
conversion of shares of common stock of Anchor Financial Corporation
into shares of common stock of Carolina First Corporation, subject to
the terms and conditions of the Reorganization Agreement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve the increase of Carolina First Corporation's board of
directors from twelve members to seventeen members.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxy holders are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL NUMBERS 1
AND 2 AS SPECIFIED ABOVE.
Please sign exactly as name appears on stock certificate. When signing as
attorney, administrator, trustee, guardian or agent, please indicate the
capacity in which you are acting. If stock is held jointly, signature should
appear for both names. If more than one trustee, all should sign. If stock is
held by a corporation, please sign in full corporate name by authorized officer
and give title of office. This Proxy may be revoked any time prior to its
exercise.
Dated: ______________________, 2000
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Print Name (and title if appropriate)
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Signature
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Print Name (and title if appropriate)
- --------------------------------------------
Signature
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
