U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the Quarterly period ended June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ________________________ to ____________________
Commission File Number: O-20254
1ST UNITED BANCORP
- -------------------------------------------------------------------------------
(Exact name of Registrant)
FLORIDA 65-0178023
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
or incorporation of organization) Identification No.)
980 N. FEDERAL HIGHWAY, BOCA RATON, FL 33432
- --------------------------------------------
(Address of principal executive offices)
(561) 392-4000
------------------------------
Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the Preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of July 31, 1997.
10,152,770
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1st UNITED BANCORP
Index
PAGE
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996 1
Condensed Consolidated Statements of Income -
six months ended June 30, 1997 and 1996 2
Condensed Consolidated Statements of Income -
three months ended June 30, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows -
six months ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Shareholders' Equity -
six months ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
PART II OTHER INFORMATION 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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This Form 10-Q contains forward-looking statements that involve risks and
uncertainties, and there are certain important factors that could cause actual
results to differ materially from those anticipated. These important factors
include, but are not limited to, economic conditions both generally and more
specifically in the markets in which 1st United Bancorp ("Bancorp") and 1st
United Bank ("1st United") operate, competition for Bancorp's and 1st United's
customers from other providers of financial services, government legislation and
regulation (which changes from time to time and over which Bancorp and 1st
United have no control), changes in interest rates, the impact of Bancorp's
rapid growth, and other risks detailed in the Annual Report on Form 10-K and in
Bancorp's other filings with the Securities and Exchange Commission, all of
which are difficult to predict and many of which are beyond the control of
Bancorp.
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1st UNITED BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
1997 1996
(UNAUDITED) (NOTE)
---------------- ----------------
(In thousands, except share data)
<S> <C> <C>
ASSETS
Cash and due from banks $ 42,161 $ 35,779
Interest bearing deposits 88,636 42,480
Federal funds sold 23,510 47,262
---------------- ----------------
Cash and cash equivalents 154,307 125,521
Investment securities available for sale 17,048 24,903
Investment securities held to maturity, market value of
$47,998 in 1997 and $42,778 in 1996 47,983 42,917
Loans, net of allowance for loan losses of $9,511 in 1997
and $9,826 in 1996 490,259 458,765
Premises and equipment, net 15,818 16,295
Accrued interest receivable 3,576 3,093
Other real estate owned 3,195 3,929
Intangible assets, net 7,992 8,272
Other assets 7,104 8,471
---------------- ----------------
$747,282 $692,166
================ ================
LIABILITIES
Deposits:
Demand deposits, non interest bearing $164,093 $168,715
NOW and money market accounts 302,466 257,639
Savings deposits 60,506 57,173
Time deposits of $100,000 or more 38,010 32,371
Time deposits of less than $100,000 104,882 107,227
---------------- ----------------
Total deposits 669,957 623,125
Federal funds purchased and securities sold under
agreements to repurchase 4,412 0
Other liabilities 7,448 6,976
---------------- ----------------
Total Liabilities 681,817 630,101
SHAREHOLDERS' EQUITY
Common Stock, par value $.01 per share -
authorized 20,000,000 shares, issued and outstanding
9,890,164 shares in 1997 and 9,801,189 shares in 1996 99 98
Additional paid-in capital 46,336 45,677
Retained earnings 19,126 16,400
Net unrealized losses on securities available for sale,
net of taxes (96) (110)
---------------- ----------------
Total Shareholders' Equity 65,465 62,065
---------------- ----------------
$747,282 $692,166
================ ================
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from the
audited financial statements, as restated for the acquisition of Island
National Bank and Trust Company on April 1, 1997, which was accounted
for as a pooling-of-interests.
See accompanying Notes.
1
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1st UNITED BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
--------------------------------------
1997 1996
---------------- ----------------
(In thousands, except per share data)
<S> <C> <C>
Interest income:
Loans, including fees $22,381 $19,499
Investment securities 2,085 2,783
Federal funds sold 813 1,110
Interest bearing deposits 1,906 379
---------------- ----------------
27,185 23,771
Interest expense:
Deposits 7,868 6,694
Federal funds purchased and securities sold under agreements
to repurchase 49 114
Other 11 0
---------------- ----------------
7,928 6,808
---------------- ----------------
Net interest income 19,257 16,963
Provision for loan losses 80 151
---------------- ----------------
Net interest income after provision for loan losses 19,177 16,812
Non interest income:
Service charges on deposit accounts 2,006 2,214
Investment securities brokerage fees 550 440
Estate and fiduciary fees 517 383
Gain on sale of loans 747 344
Gain on sale of other real estate owned 54 17
Gain on sale of assets 356 385
Other 819 1,447
---------------- ----------------
5,049 5,230
Non interest expense:
Salaries and employee benefits 7,124 7,460
Occupancy and furniture and equipment expense 3,191 3,232
Merger expense 1,383 0
Professional fees 776 581
Advertising and public relations 388 436
Other real estate owned 372 294
Goodwill amortization 368 367
Stationery, printing and supplies 364 374
Telephone 307 340
Postage 225 270
Other 2,251 2,309
---------------- ----------------
16,749 15,663
---------------- ----------------
Income before income taxes 7,477 6,379
Income taxes 2,817 2,285
---------------- ----------------
Net income $ 4,660 $ 4,094
================ ================
Income per common and common equivalent shares $ 0.46 $ 0.41
================ ================
Dividends per share $ 0.21 $ 0.07
================ ================
</TABLE>
See accompanying Notes.
2
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1st UNITED BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED
JUNE 30,
--------------------------------------
1997 1996
----------------- ----------------
(In thousands, except per share data)
<S> <C> <C>
Interest income:
Loans, including fees $11,353 $ 9,647
Investment securities 1,053 1,314
Federal funds sold 435 409
Interest bearing deposits 1,071 372
----------------- ----------------
13,912 11,742
Interest expense:
Deposits 4,074 3,284
Federal funds purchased and securities sold under agreements
to repurchase 39 40
Other 6 0
----------------- ----------------
4,119 3,324
----------------- ----------------
Net interest income 9,793 8,418
Provision for loan losses 40 40
----------------- ----------------
Net interest income after provision for loan losses 9,753 8,378
Non interest income:
Service charges on deposit accounts 1,003 1,048
Investment securities brokerage fees 309 223
Estate and fiduciary fees 266 182
Gain on sale of loans 326 157
Gain on sale of other real estate owned 50 7
Gain on sale of assets 356 385
Other 414 755
----------------- ----------------
2,724 2,757
Non interest expense:
Salaries and employee benefits 3,437 3,760
Occupancy and furniture and equipment expense 1,595 1,656
Merger expense 1,383 0
Professional fees 504 253
Advertising and public relations 205 200
Other real estate owned 174 204
Goodwill amortization 184 183
Stationery, printing and supplies 188 197
Telephone 144 204
Postage 96 135
Other 1,170 888
----------------- ----------------
9,080 7,680
----------------- ----------------
Income before income taxes 3,397 3,455
Income taxes 1,271 1,222
----------------- ----------------
Net income $ 2,126 $ 2,233
================= ================
Income per common and common equivalent shares $ 0.21 $ 0.22
================= ================
Dividends per share $ 0.11 $ 0.04
================= ================
</TABLE>
See accompanying Notes.
3
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1st UNITED BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
--------------------------------------
1997 1996
---------------- ----------------
(In thousands)
<S> <C> <C>
Operating Activities:
Net income $ 4,660 $ 4,094
Adjustments to reconcile net income to net cash provided by
operating activities, net of effects of American acquisition 926 1,680
---------------- ----------------
Net cash provided by operating activities 5,586 5,774
Investing Activities:
Net cash received in acquisition 0 26,298
Purchase of investment securities held to maturity (5,996) (2,241)
Maturities of investment securities held to maturity 3,423 5,025
Purchase of investment securities available for sale (1,445) (9,678)
Maturities and sales of investment securities available for sale 6,808 37,110
Increase in loans, net (32,650) (20,606)
Proceeds from sale of other real estate 1,937 0
Purchase of bank premises and equipment (553) 0
Other 1,227 489
---------------- ----------------
Net cash (used in) provided by investing activities (27,249) 36,397
Financing Activities:
Increase (decrease) in deposits 46,832 (30,907)
Increase (decrease) in federal funds purchased and securities sold
under agreements to repurchase 4,412 (700)
Payments on long term debt 0 (2,782)
Issuance of notes payable, related parties 0 2,168
Repayment of notes payable, related parties 0 (2,168)
Proceeds from exercise of stock options 660 0
Purchase of treasury stock by pooled company 0 (267)
Payment of dividends (1,934) (520)
Payment of dividends by pooled company 0 (69)
Other 479 663
---------------- ----------------
Net cash provided by (used in) financing activities 50,449 (34,582)
---------------- ----------------
Increase in cash and cash equivalents 28,786 7,589
Cash and cash equivalents at beginning of period 125,521 51,318
---------------- ----------------
Cash and cash equivalents at end of period $154,307 $58,907
================ ================
</TABLE>
See accompanying Notes.
4
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1st UNITED BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Six months ended June 30, 1997 and 1996
(Unaudited)
NET
UNREALIZED
GAINS
(LOSSES) ON
SECURITIES
ADDITIONAL AVAILABLE TOTAL
COMMON STOCK PAID-IN RETAINED FOR SALE, SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS NET OF TAXES EQUITY
------------- ----------- ------------- ------------- ------------- -----------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 8,811,189 $ 88 $ 38,608 $ 9,904 $ 102 $ 48,702
Stock issued for
acquisition of American 820,000 8 6,364 6,372
Retirement of stock by
pooled company (267) (267)
Change in net unrealized
gains (losses) on
securities available for
sale, net of taxes (286) (286)
Cash dividends -
$0.07 per share (520) (520)
Cash dividends of pooled
company (69) (69)
Net income 4,094 4,094
------------- ----------- ------------- ------------- ------------- -----------------
Balance, June 30, 1996 9,631,189 $ 96 $ 44,705 $ 13,409 ($ 184) $ 58,026
============= =========== ============= ============= ============= =================
Balance, January 1, 1997 9,801,189 $ 98 $ 45,677 $ 16,400 ($ 110) $ 62,065
Proceeds from exercise of
stock options 88,975 1 659 660
Change in net unrealized
gains (losses) on
securities available for
sale, net of taxes 14 14
Cash dividends -
$0.21 per share (1,934) (1,934)
Net income 4,660 4,660
------------- ----------- ------------- ------------- ------------- -----------------
Balance, June 30, 1997 9,890,164 $ 99 $ 46,336 $ 19,126 ($ 96) $ 65,465
============= =========== ============= ============= ============= =================
</TABLE>
See accompanying Notes.
5
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1st UNITED BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information, the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, except for
expenses associated with the acquisition of Island National Bank and Trust
Company as discussed in Note C, (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. For further information, refer to the consolidated financial
statements and footnotes thereto included in 1st United Bancorp's ("Bancorp")
annual report on Form 10-K for the year ended December 31, 1996.
NOTE B - INCOME PER COMMON SHARE
Income per common share is calculated by dividing net income by the weighted
average number of shares of common stock and common stock equivalents
outstanding during each period. Common stock equivalents represent the
potentially dilutive effect of the assumed exercise of certain outstanding stock
options. Average shares outstanding after the dilutive effect of common stock
equivalents for the six months ended June 30, 1997 and 1996 were 10,067,000 and
9,919,000, respectively, and for the three months ended June 30, 1997 and 1996
were 10,081,000 and 9,951,000, respectively.
In February 1997 the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share, which changes the way earnings per share are calculated
and disclosed. Under Statement No. 128, companies are required to disclose BASIC
and DILUTED earnings per share as compared to the present requirement to
disclose PRIMARY and FULLY DILUTED earnings per share. Basic earnings per share
differ from primary earnings per share in that common stock equivalents,
currently included in the calculation of primary earnings per share, are not
included in the determination of basic earnings per share. Diluted earnings per
share differ from fully diluted earnings per share in that common stock
equivalents are currently included in calculating fully diluted earnings per
share, based on the average market price or period ending market price,
whichever is higher, however, they are only based on average market price in
calculating diluted earnings per share. The Statement is effective for financial
statements for both interim and annual periods ending after December 15, 1997.
Early adoption is prohibited. Adoption of the statement is not expected to have
a material impact upon Bancorp's reported earnings per share.
NOTE C - MERGERS AND ACQUISITIONS
On January 5, 1996, Bancorp acquired The American Bancorporation of the South
("American") and merged its wholly owned subsidiary, The American Bank of the
South, into 1st United. Consideration paid by Bancorp to the shareholders of
American was $10,017,000 and was paid in the form of 30% cash and 70% stock.
Approximately 820,000 shares (value per share of $7.78 net of issuance costs) of
Bancorp common stock were issued in this acquisition. This acquisition was
accounted for using the purchase method of accounting and approximately $3.6
million in goodwill was recorded and is being amortized over 15 years under the
straight-line method.
Approximately $163.7 million in total assets were acquired. Included in this
total was approximately $25.6 million, $48 million, $73 million, $8 million and
$5 million in federal funds, investments, net loans, bank premises and equipment
and other real estate, respectively. Included in loans were approximately $11
million in nonaccrual loans. Approximately $152.3 million in deposits, which
includes approximately 30% in non interest bearing demand deposits, were assumed
and sixteen (16) bank owned branch locations throughout Brevard County, Florida
were acquired.
6
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NOTE C - MERGERS AND ACQUISITIONS - CONTINUED
To facilitate the acquisition of American, certain of the directors of Bancorp
and senior management of 1st United committed to loan Bancorp $2.5 million. On
January 4, 1996, Bancorp borrowed approximately $2.2 million from these
individuals at a 10% annual interest rate, payable quarterly, with the entire
outstanding principal balance due in one year. Bancorp paid a 1% commitment fee
and 1% funding fee to these individuals and also had the option of extending the
maturity of these notes for five one-year terms. Bancorp repaid these borrowings
in full on May 1, 1996.
The following summarizes (in thousands) the fair value of the assets acquired
and the liabilities assumed in connection with the American acquisition:
Cash and federal funds sold $ 25,645
Investment securities 47,761
Net loans 72,809
Other assets 17,483
Total deposits (152,268)
Borrowings ( 2,743)
Accrued interest and other liabilities ( 1,320)
-----------------
Net assets $7,367
=================
On November 1, 1996, Bancorp completed its merger with Park Bankshares, Inc.
("Park") and its wholly owned subsidiary, First National Bank of Lake Park. Park
had total assets and deposits of approximately $60.1 million and $54.9 million,
respectively. The transaction was accounted for under the pooling-of-interests
method of accounting for business combinations and accordingly, the consolidated
financial statements have been restated for the periods prior to the merger to
include Park. In connection with the transaction, Bancorp issued approximately
816,000 of its common shares to Park shareholders.
On April 1, 1997, Bancorp completed its merger with Island National Bank and
Trust Company ("Island"). At the date of acquisition Island had total assets and
deposits of approximately $145 million and $132 million, respectively. In
connection with the transaction, Bancorp and Island incurred one time expenses
of $1,383,000 which were recorded in the three months ended June 30, 1997. The
transaction was accounted for under the pooling-of-interests method of
accounting for business combinations and accordingly, the consolidated financial
statements have been restated for the periods prior to the merger to include
Island. In connection with the transaction, Bancorp issued approximately
1,365,000 of its common shares to Island shareholders.
Separate results of operations of the combined entities for the three and six
month periods ended June 30, 1996, were as follows:
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1996 JUNE 30, 1996
---------------- ---------------
Net interest income:
Bancorp $6,368 $12,886
Park 746 1,471
Island 1,304 2,606
---------------- ---------------
$8,418 $16,963
================ ===============
Non interest income:
Bancorp $2,052 $3,798
Park 135 327
Island 570 1,105
---------------- ---------------
$2,757 $5,230
================ ===============
7
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NOTE C - MERGERS AND ACQUISITIONS - CONTINUED
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1996 JUNE 30, 1996
--------------- ---------------
Net income:
Bancorp $1,917 $3,497
Park 163 328
Island 153 269
--------------- ---------------
$2,233 $4,094
=============== ===============
On July 1, 1997, Bancorp acquired Seaboard Savings Bank, F.S.B. ("Seaboard") and
merged it into 1st United. Consideration paid by Bancorp to the shareholders of
Seaboard was $8,250,000 and was paid in the form of 50% cash and 50% stock.
Approximately 260,000 shares (value per share of $15.06 net of issuance costs)
of Bancorp common stock were issued in this acquisition. This acquisition was
accounted for using the purchase method of accounting and approximately $3
million in goodwill was recorded and is being amortized over 15 years under the
straight-line method.
Approximately $75 million in total assets were acquired in the Seaboard
acquisition. Included in this total was approximately $8 million, $12 million
and $53 million in interest bearing deposits, investments and net loans,
respectively. Approximately $69 million in deposits were assumed and one branch
located in Stuart, Florida was acquired.
NOTE D - SUBSEQUENT EVENT
On August 7, 1997, Bancorp announced that it had reached a definitive agreement
to be acquired by Wachovia Corporation ("Wachovia"). Wachovia has dual
headquarters in Winston-Salem, North Carolina and Atlanta, Georgia, and is the
20th largest banking company in the United States with $48.5 billion in assets.
The agreement has been approved by the Boards of Directors of both companies and
is subject to the approval of Bancorp's shareholders and appropriate regulatory
agencies. The merger is expected to close by year end. The agreement with
Wachovia provides for a tax-free exchange of Wachovia common shares for Bancorp
common shares at a value of $20.875 per share of Bancorp, or a purchase price of
$222 million. The exchange ratio will be a minimum of 0.3 and a maximum of 0.366
of a share of Wachovia common stock. Bancorp has granted Wachovia a stock option
representing approximately 19.9 percent of Bancorp's outstanding shares.
Directors of Bancorp collectively holding more than 20 percent of Bancorp's
common stock have agreed to vote in favor of the transaction.
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Bancorp's net income increased from $4,094,000 during the six months ended June
30, 1996, to $4,660,000 during the same period in 1997, an increase of 13.83%.
Bancorp's net income decreased from $2,233,000 during the three months ended
June 30, 1996, to $2,126,000 during the same period in 1997, a decrease of
4.79%. Net income for both the six and three month periods ended June 30, 1997,
was affected by merger costs incurred in connection with the acquisition of
Island National Bank and Trust Company, which was consummated on April 1, 1997.
These costs amounted to $885,000 on an after tax basis. The following summarizes
Bancorp's profitability ratios for the six and three month periods ended June
30, 1997 and 1996, both including and excluding the merger costs referred to
above:
<TABLE>
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THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net interest income as a % of average earning assets 5.89% 5.97% 5.93% 6.03%
Efficiency ratio (Non interest expenses as a % of net
interest income plus non interest income):
Including merger expenses 61.49% 68.72% 63.22% 70.58%
Excluding merger expenses 72.54% 68.72% 68.91% 70.58%
Return on average assets:
Including merger expenses 1.16% 1.42% 1.31% 1.31%
Excluding merger expenses 1.65% 1.42% 1.55% 1.31%
Return on average equity:
Including merger expenses 13.16% 15.56% 14.61% 14.47%
Excluding merger expenses 18.64% 15.56% 17.39% 14.47%
</TABLE>
NET INTEREST INCOME
Bancorp's results of operations depend, to a large extent, on the level of its
net interest income, which is the difference between the interest income it
receives on its interest-earning assets and the interest expense it pays on its
interest-bearing liabilities.
Net interest income increased from $16,963,000 during the six months ended June
30, 1996, to $19,257,000 during the same period in 1997, an increase of 13.52%.
Net interest income increased from $8,418,000 during the three months ended June
30, 1996, to $9,793,000 during the same period in 1997, an increase of 16.33%.
The increase in net interest income for both periods was primarily due to an
increase in average earning assets. Average earning assets increased from
$562,482,000 during the six months ended June 30, 1996, to $649,078,000 during
the same period in 1997, an increase of 15.40%. Average earning assets increased
from $564,252,000 during the three months ended June 30, 1996, to $665,613,000
during the same period in 1997, an increase of 17.96%. Of the $101,361,000
increase in average earning assets during the three months ended June 30, 1997
as compared to the three months ended June 30, 1996, $32,596,000 was due to a
temporary deposit which was invested in interest bearing deposits. Similarly, of
the $86,596,000 increase in average earning assets for the six months ended June
30, 1997 as compared to the six months ended June 30, 1996, $16,388,000 was due
to the same temporary deposit. The remainder of the increase in average earning
assets in both periods was primarily due to normal asset growth. Although loans,
as a percentage of average earning assets, did not change significantly in
either period from 1996 to 1997, investment securities, as a percentage of
average earning assets decreased considerably with a commensurate increase in
interest bearing deposits and federal funds sold. As a result of this change in
mix of assets, the Company's yield on average earning assets decreased slightly
in 1997 as compared to 1996. Inasmuch as the increase in average earning assets
was funded to a significant extent by higher cost NOW and money market accounts,
the Company's cost of funds, as a percentage of average earning assets,
increased slightly in 1997 as compared to 1996. The combination of the decrease
in the yield on earning assets and the increase in the cost of funds resulted in
the decrease in net interest income as a percentage of average earning assets.
9
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NON INTEREST INCOME
Non interest income decreased from $5,230,000 during the six months ended June
30, 1996, to $5,049,000 during the same period in 1997, a decrease of 3.46%. Non
interest income decreased from $2,757,000 during the three months ended June 30,
1996, to $2,724,000 during the same period in 1997, a decrease of 1.20%. The
decrease in non interest income in both periods was due to decreases in both
service charges on deposit accounts and other non interest income which were
partially offset by increases in gains on the sale of loans, investment
securities brokerage fees and estate and fiduciary fees. The decrease in service
charges on deposit accounts was due to decreases in both customer overdraft
charges and account maintenance charges. The decrease in customer overdraft
charges was due to fewer customers being overdrawn whereas the decrease in
account maintenance charges was due to customers maintaining higher balances in
their accounts. The decrease in other non interest income was due to a high
level of non recurring items included in results of operations for the six and
three month periods ended June 30, 1996. The increase in gains on the sale of
loans was due to a higher level of loans sold during the six and three month
periods ended June 30, 1997. The increase in investment securities brokerage
fees was related to the performance of the stock market in general, whereas the
increase in estate and fiduciary fees was related to both the performance of the
stock market and the expansion of the number of customers served by 1st United's
Trust Division.
NON INTEREST EXPENSE
Included in non interest expense for the six and three month periods ended June
30, 1997, were merger costs incurred in connection with the acquisition of
Island National Bank and Trust Company of $1,383,000. Excluding these costs, non
interest expense decreased from $15,663,000 during the six months ended June 30,
1996, to $15,366,000 during the same period in 1997, a decrease of 1.90%.
Excluding these costs, non interest expense was virtually unchanged during the
three months ended June 30, 1997, as compared to the same period in 1996. The
decrease in non interest expense during the six months ended June 30, 1997, was
primarily related to decreases in salaries and employee benefits, occupancy
expenses and advertising and public relations expenses which were partially
offset by increases in professional fees. Although salaries and employee
benefits and occupancy expenses also decreased during the three months ended
June 30, 1997, these decreases were entirely offset by increases in professional
fees and other expenses. The reductions in salaries and employee benefits in
both periods were related to the operating efficiencies that were obtained as a
result of the Park and Island acquisitions, whereas the reductions in occupancy
expenses in both periods were primarily related to the closure of two branches
formerly owned by Park that were closed upon the acquisition of Park. The
increase in professional fees in both periods was primarily related to legal
fees incurred in the collection of problem loans.
10
<PAGE>
FINANCIAL CONDITION
The following table presents, in thousands, the growth of Bancorp's major
categories of assets, liabilities and shareholders' equity:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, INCREASE (DECREASE)
1997 1996 AMOUNT %
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $154,307 $125,521 $28,786 23%
Investment securities 65,031 67,820 (2,789) (4%)
Loans 490,259 458,765 31,494 7%
Total assets 747,282 692,166 55,116 8%
Deposits 669,957 623,125 46,832 8%
Shareholders' equity 65,465 62,065 3,400 5%
</TABLE>
At June 30, 1997, Bancorp had approximately $68 million in temporary deposits.
These funds were invested in interest bearing deposits which are included in
cash and cash equivalents. Excluding these deposits, deposits decreased from
December 31, 1996, to June 30, 1997, by approximately $21 million, primarily due
to seasonal factors. The increase in loans, which is largely unaffected by
seasonal factors, was due to normal growth. The increase in loans was funded by
decreases in investment securities and cash and cash equivalents.
LIQUIDITY
The total of cash and due from banks, interest bearing deposits and federal
funds sold, Bancorp's primary source of liquidity, increased from $125,521,000
at December 31, 1996, to $154,307,000 at June 30, 1997, primarily as a result of
the increase in deposits referred to above. Bancorp's second source of
liquidity, its investment securities, decreased from $67,820,000 at December 31,
1996, to $65,031,000 at June 30, 1997, primarily due to maturities and paydowns
on available for sale securities being reinvested in loans as indicated above.
An additional external source of liquidity is two unsecured federal fund lines
of credit that 1st United has established with two of its correspondent banks
totaling $12 million. In addition, 1st United has entered into master repurchase
agreements with two financial institutions. 1st United is also a member of the
Federal Home Loan Bank of Atlanta and has a borrowing capability of
approximately $53 million under a blanket security agreement.
At June 30, 1997, net cash and due from banks, interest bearing deposits,
federal funds sold, investments available for sale and investments held to
maturity which are due within one year totaled $190 million versus potentially
volatile liabilities (temporary deposits, certificates of deposit of $100,000 or
more, Federal funds purchased and securities sold under repurchase agreements
and public funds) of $109 million.
CAPITAL RESOURCES
The Federal Reserve Board has adopted supervisory risk based capital ratios of
capital to risk weighted assets which require Bancorp and its subsidiaries to
maintain a minimum 8.00% total risk based capital ratio, at least half of which
must be Tier 1 capital. Bancorp's total risk based capital ratio was 11.81% at
June 30, 1997.
At June 30, 1997, Bancorp had total shareholders' equity, of $65,465,000, an
increase of $3,400,000 over that at December 31, 1996. The increase was
primarily the result of net income for the six months ended June 30, 1997, of
$4,660,000 plus the proceeds from the exercise of stock options of $660,000,
less dividends declared of $1,934,000.
11
<PAGE>
The components of capital resources, in thousands, and Bancorp's capital ratios,
are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------------- ----------------
<S> <C> <C>
Risk adjusted assets $542,018 $504,353
Total assets 747,282 692,166
Tier 1 Capital:
Common shareholders' equity $65,465 $62,065
Unrealized losses on investment securities available for sale 96 110
Goodwill and other excludable intangibles (8,332) (8,289)
----------------- ----------------
57,229 53,886
Tier 2 Capital:
Includable portion of allowance for loan losses 6,775 6,304
----------------- ----------------
Total regulatory capital $64,004 $60,190
================= ================
Tier 1 risk adjusted capital ratio 10.56% 10.68%
================= ================
Total risk adjusted capital ratio 11.81% 11.93%
================= ================
Leverage ratio 7.81% 8.03%
================= ================
</TABLE>
ALLOWANCE FOR LOAN LOSSES AND NON-PERFORMING ASSETS
At June 30, 1997, Bancorp's allowance for loan losses was approximately $9.5
million. Although management believes the allowance for loan losses is adequate,
their evaluation of possible losses is a continuing process which may
necessitate adjustments to the allowance in future periods.
The following summarizes the activity in the allowance for loan losses, in
thousands, and the related ratios for the six month periods ended June 30, 1997
and 1996:
SIX MONTHS ENDED
JUNE 30,
-------------------------------
1997 1996
------------- ------------
Balance at beginning of period $9,826 $8,014
Charge-offs (576) (248)
Recoveries 181 241
------------- ------------
Net charge-offs (395) (7)
Provision for loan losses 80 151
Allowance of purchased bank at date acquired 0 2,568
------------- ------------
Balance at end of period $9,511 $10,726
============= ============
Charge-off ratio 0.16% 0.01%
============= ============
Although Bancorp's charge-off ratio for the six months ended June 30, 1996, of
0.01% was considerably below that experienced for all of 1996 of 0.29%, a
significant portion of the 1996 charge-offs were attributable to a few loans
which were incurred in the fourth quarter. The charge-off ratio experienced for
the six months ended June 30, 1997, may not be indicative of that which will be
experienced for all of 1997.
12
<PAGE>
Bancorp's non-performing assets, in thousands, and related ratios are as
follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
================= ================
<S> <C> <C>
Restructured loans $ 1,021 $ 900
================= ================
Loans 90 days or more past due and still accruing interest $ 0 $ 347
Non-accrual loans 10,498 12,116
----------------- ----------------
10,498 12,463
Other real estate owned 3,195 3,929
----------------- ----------------
Total non-performing assets $13,693 $16,392
================= ================
Ratio of non-performing loans to total loans 2.10% 2.65%
================= ================
Ratio of non-performing assets to total loans plus
other real estate owned 2.73% 3.47%
================= ================
Ratio of allowance for loan losses to total loans 1.90% 2.10%
================= ================
Ratio of allowance for loan losses to non performing loans 91% 79%
================= ================
</TABLE>
Management has developed an internal system for evaluating and grading loans on
a quarterly basis. Watch list assets are those loans that have been graded
substandard or worse by management, regulators, or the independent loan review
consultant, due to potential weaknesses in the borrowers' ability to repay the
loans, weakness in collateral, the borrowers' financial condition or other
factors. Loans included in the watch list are reviewed and evaluated bi-weekly
by senior management. At June 30, 1997, $23.5 million in loans were included on
1st United's internal watch list of which $13.0 million are performing loans.
Watch list loans totaled approximately $24.3 million at December 31, 1996, of
which $11.8 million were performing loans.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to General Instruction 1 of Item 305 of Regulation S/K, the response to
this item has been omitted.
13
<PAGE>
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders on April 29, 1997, shareholders elected 25
directors to serve until the 1998 annual meeting and until their successors are
elected and qualified and approved the Company's 1997 Key Employees' Stock
Option Plan.
Following is a summary of the voting regarding the election of directors:
DIRECTOR VOTES FOR VOTES AGAINST
------------------------ ---------------- ------------------
A. L. Andreozzi 6,651,412 87,742
James B. Baer 6,650,412 88,742
James D. Beaty 6,651,412 87,742
Roger G. Bond 6,651,412 87.742
Anthony Comparato 6,650,412 88,742
Robert Comparato 6,650,412 88,742
J. Herman Dance 6,650,412 88,742
Ronald A. David, Esq. 6,647,522 91,632
Thomas L. Delaney 6,651,412 87,742
David B. Dickenson, Esq. 6,650,722 88,432
Mario A. DiFederico 6,643,782 95,372
Thomas J. Hanford 6,647,612 91,542
Herman M. Jeffer 6,650,232 88,922
Maxwell C. King 6,651,412 87,742
Harvey S. Klein 6,651,312 87,842
Billie H. McCutchen 6,651,412 87,742
Warren S. Orlando 6,651,412 87,742
Lindsey R. Perry 6,650,412 88,742
Edward A. Sasso 6,648,112 91,042
Harold Toppel 6,651,412 87,742
Dean Vegosen, Esq. 6,643,780 95,374
Donald Vinik 6,649,722 89,432
Edward L. Bronstien, Jr. 6,643,372 95,782
Paul L. Maddock 6,651,412 87,742
G. Robert Sheetz 6,651,412 87,742
Following a summary of the voting regarding the 1997 Key Employees' Stock
Option Plan:
Votes for 4,089,592
Votes against 202,998
Votes abstained 117,868
Unvoted 2,328,696
------------------
6,739,154
==================
14
<PAGE>
Item 5 Other Information
On August 7, 1997, Bancorp announced that it had reached a definitive agreement
to be acquired by Wachovia Corporation ("Wachovia"). Wachovia has dual
headquarters in Winston-Salem, North Carolina and Atlanta, Georgia, and is the
20th largest banking company in the United States with $48.5 billion in assets.
The agreement has been approved by the Boards of Directors of both companies and
is subject to the approval of Bancorp's shareholders and appropriate regulatory
agencies. The merger is expected to close by year end. The agreement with
Wachovia provides for a tax-free exchange of Wachovia Corporation common shares
for Bancorp common shares at a value of $20.875 per share of Bancorp, or a
purchase price of $222 million. The exchange ratio will be a minimum of 0.3 and
a maximum of 0.366 of a share of Wachovia common stock. Bancorp has granted
Wachovia a stock option representing approximately 19.9 percent of Bancorp's
outstanding shares. Directors of Bancorp collectively holding more than 20
percent of Bancorp's common stock have agreed to vote in favor of the
transaction. Wachovia has provided corporate financial services and residential
and commercial mortgage loans in Florida for many years. This merger represents
the first acquisition of a Florida bank holding company by Wachovia.
Item 6 Exhibits and Reports on Form 8-K
a. 1. Exhibit 10 Agreement and Plan of Merger dated as of August 6,
1997, by and between Wachovia Corporation and 1st
United Bancorp*
2. Exhibit 11 Computation of per share earnings*
2. Exhibit 27 Financial Data Schedules*
b. 1. On April 1, 1997, Bancorp filed a Form 8-K reporting the closing
of the acquisition of Island National Bank and Trust Company.
2. On April 22, 1997, Bancorp filed a Form 8-K to report the
Acquisition Agreement dated April 22, 1997, between itself, 1st
United Bank and Seaboard Savings Bank F.S.B.
* Filed herewith
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
1st United Bancorp
Date: August 11, 1997 /s/ WARREN S. ORLANDO
---------------------- ---------------------------------
Warren S. Orlando, President
and Chief Executive Officer
Date: August 11, 1997 /s/ JOHN MARINO
---------------------- ---------------------------------
John Marino, Treasurer
(Principal Financial Officer)
16
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10 Agreement and Plan of Merger dated as of August 6, 1997, by and
between Wachovia Corporation and 1st United Bancorp
11 Computation of per share earnings
27 Financial Data Schedules
EXHIBIT 10
===============================================================================
AGREEMENT AND PLAN OF MERGER
dated as of August 6, 1997
by and between
Wachovia Corporation
and
1st United Bancorp
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
RECITALS............................................................................ 1
ARTICLE I
Certain Definitions................................................................. 1
1.01 CERTAIN DEFINITIONS .................................................. 1
ARTICLE II
The Merger.......................................................................... 6
2.01 THE MERGER ........................................................... 6
2.02 EFFECTIVE DATE AND EFFECTIVE TIME..................................... 7
2.03 PLAN OF MERGER........................................................ 7
ARTICLE III
Consideration; Exchange Procedures.................................................. 7
3.01 MERGER CONSIDERATION ................................................. 7
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS .............................. 8
3.03 FRACTIONAL SHARES..................................................... 8
3.04 EXCHANGE PROCEDURES................................................... 9
3.05 ANTI-DILUTION PROVISIONS.............................................. 9
3.06 OPTIONS...............................................................10
ARTICLE IV
Actions Pending Acquisition.........................................................11
4.01 FOREBEARANCES OF 1ST UNITED...........................................11
4.02 FOREBEARANCES OF WACHOVIA.............................................13
ARTICLE V
Representations and Warranties.....................................................14
5.01 DISCLOSURE SCHEDULES.................................................14
5.02 STANDARD.............................................................14
5.03 REPRESENTATIONS AND WARRANTIES OF 1ST UNITED.........................14
5.04 REPRESENTATIONS AND WARRANTIES OF WACHOVIA ..........................24
-i-
<PAGE>
ARTICLE VI
PAGE
----
Covenants..........................................................................27
6.01 REASONABLE BEST EFFORTS..............................................27
6.02 STOCKHOLDER APPROVALS ...............................................28
6.03 REGISTRATION STATEMENT...............................................28
6.04 PRESS RELEASES.......................................................29
6.05 ACCESS; INFORMATION..................................................29
6.06 ACQUISITION PROPOSALS................................................30
6.07 AFFILIATE AGREEMENTS ................................................30
6.08 SHAREHOLDER AGREEMENT................................................31
6.09 TAKEOVER LAWS........................................................31
6.10 CERTAIN POLICIES.....................................................31
6.11 NYSE LISTING.........................................................31
6.12 REGULATORY APPLICATIONS..............................................31
6.13 INDEMNIFICATION......................................................32
6.14 BENEFIT PLANS........................................................33
6.15 ACCOUNTANTS ' LETTERS................................................33
6.16 NOTIFICATION OF CERTAIN MATTERS......................................34
6.17 STOCK PLANS..........................................................34
6.18 DIVIDEND COORDINATION................................................34
ARTICLE VII
Conditions to Consummation of the Merger...........................................34
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...........34
7.02 CONDITIONS TO OBLIGATION OF 1ST UNITED...............................35
7.03 CONDITIONS TO OBLIGATION OF WACHOVIA.................................36
ARTICLE VIII
Termination........................................................................37
8.01 TERMINATION..........................................................37
8.02 EFFECT OF TERMINATION AND ABANDONMENT................................38
ARTICLE IX
Miscellaneous......................................................................38
9.01 SURVIVAL.............................................................38
9.02 WAIVER; AMENDMENT....................................................38
-ii-
<PAGE>
PAGE
----
9.03 COUNTERPARTS.........................................................38
9.04 GOVERNING LAW........................................................38
9.05 EXPENSES.............................................................38
9.06 NOTICES..............................................................38
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES ..................40
9.08 INTERPRETATION; EFFECT...............................................40
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Shareholder Agreement
EXHIBIT C Form of Plan of Merger
</TABLE>
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of August 6, 1997 (this
"AGREEMENT") by and between 1st United Bancorp ("1ST UNITED") and Wachovia
Corporation ("WACHOVIA").
RECITALS
A. 1ST UNITED BANCORP. 1st United is a Florida corporation, having its
principal place of business in Boca Raton, Florida.
B. WACHOVIA CORPORATION. Wachovia is a North Carolina corporation,
having its principal place of business in both Winston-Salem, North Carolina and
Atlanta, Georgia.
C. STOCK OPTION AGREEMENT. As a condition and an inducement to
Wachovia's entering into this Agreement, 1st United has granted to Wachovia an
option pursuant to a stock option agreement, in substantially the form of
EXHIBIT A (the "STOCK OPTION AGREEMENT").
D. SHAREHOLDER AGREEMENT. As a further condition and inducement to the
willingness of Wachovia to enter into this Agreement, shareholders of 1st United
who are also directors of 1st United and who hold, in the aggregate in excess of
20% of the outstanding shares of 1st United Common Stock have entered into an
agreement with Wachovia, in the form of EXHIBIT B hereto (the "SHAREHOLDER
AGREEMENT"), under which each such shareholders have agreed to vote in favor of
this Agreement.
E. INTENTIONS OF THE PARTIES. It is the intention of the parties to
this Agreement that the business combination contemplated hereby be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 (the
"CODE").
F. BOARD ACTION. The respective Boards of Directors of each of Wachovia
and 1st United have determined that it is in the best interests of their
respective companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE:, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUISITION PROPOSAL" has the meaning set forth in Section 6.06.
<PAGE>
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"CODE" means the Internal Revenue Code of 1986, as amended,
"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in Section
5.03(m).
"COSTS" has the meaning set forth in Section 6.13(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"EFFECTIVE TIME" means the effective time of the Merger, as provided
for in Section 2.02.
"ENVIRONMENTAL LAWS" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"ERISA AFFILIATE PLAN" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01.
"FBCA" means the Florida 1989 Business Corporation Act.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.
-2-
<PAGE>
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.1 3(a).
"INSURANCE AMOUNT" has the meaning set forth in Section 6.13(b).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(t).
"IRS" has the meaning set forth in Section 5.03(m).
"LIEN" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"MATERIAL ADVERSE EFFECT" means, with respect to Wachovia, 1st United
or the Surviving Corporation, any effect that (i) is material and adverse to the
financial position, results of operations or business of Wachovia and its
Subsidiaries taken as a whole, 1st United and its Subsidiaries taken as a whole,
or the Surviving Corporation and its Subsidiaries taken as a whole,
respectively, or (ii) would materially impair the ability of either Wachovia or
1st United to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Merger and the
other transactions contemplated by this Agreement; PROVIDED, HOWEVER, that
Material Adverse Effect shall not be deemed to include the impact of (a) changes
in banking and similar laws of general applicability or interpretations thereof
by courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and their holding companies generally, (c) any modifications or changes to
valuation policies and practices in connection with the Merger or restructuring
charges taken in connection with the Merger, in each case in accordance with
generally accepted accounting principles, (d) effects of any action taken by 1st
United with the prior written consent of Wachovia and (e) changes in conditions
or circumstances that affect the banking industry generally.
"MERGER" has the meaning set for in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.01.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means the Nasdaq Stock Market, Inc.'s National Market System.
"NCBCA" means the North Carolina Business Corporation Act.
"NEW CERTIFICATE" has the meaning set forth in Section 3.04.
-3-
<PAGE>
"NORTH CAROLINA SECRETARY" has the meaning set forth in Section
2.01(b).
"NYSE" means the New York Stock Exchange, Inc.
"OLD CERTIFICATE" has the meaning set forth in Section 3.04.
"PBGC " means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated organization.
"PLANS" has the meaning, set forth in Section 5.03(m).
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in
its Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section 6.03.
"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.
"REGULATORY AUTHORITIES" has the meaning set forth in Section 5.03(i).
"REPLACEMENT OPTION" has the meaning set forth in Section 3.06.
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in Section 5.03(g).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
-4-
<PAGE>
"STOCK OPTION AGREEMENT" has the meaning set forth in Recital C.
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings ascribed
to them in Rule 1-02 of Regulation S-X of the SEC.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"TAKEOVER LAWS" has the meaning set forth in Section 5.03(o).
"TAX" and "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gross receipts, gains, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of 1st United Common Stock held by
1st United or any of its Subsidiaries or by Wachovia or any of its Subsidiaries,
in each case other than in a fiduciary capacity or as a result of debts
previously contracted in good faith.
"WACHOVIA" has the meaning set forth in the preamble to this Agreement.
"WACHOVIA AVERAGE STOCK PRICE" has the meaning see forth in Section
3.01.
"WACHOVIA BOARD" means the Board of Directors of Wachovia.
"WACHOVIA COMMON STOCK" means the common stock, par value $5.00 per
share, of Wachovia
"WACHOVIA PREFERRED STOCK" means the preferred stock, pat value $5.00
pet share, of Wachovia.
"WACHOVIA STOCK" means, collectively, Wachovia Common Stock and
Wachovia Preferred Stock.
-5-
<PAGE>
"X" has the meaning set forth in the preamble to this Agreement.
"1ST UNITED AFFILIATE" has the meaning set forth in Section 6.07(a).
"1ST UNITED BOARD" means the Board of Directors of 1st United.
"1ST UNITED BY-LAWS" means the Amended and Restated By-laws of 1st
United.
"1ST UNITED CERTIFICATE" means the Amended and Restated Articles of
Incorporation of 1st United.
"1ST UNITED COMMON STOCK" means the common stock, par value $0.01 per
share, of 1st United.
"1ST UNITED MEETING" has the meaning set forth in Section 6.02.
"1ST UNITED PREFERRED STOCK" means the preferred stock, no par value,
of 1st United.
"1ST UNITED STOCK OPTION" has the meaning set forth in Section 3.06.
"1ST UNITED STOCK" means, collectively, 1st United Common Stock and
1st United Preferred Stock.
"1st United Stock Plan" has the meaning set forth in Section 3.06.
ARTICLE II
THE MERGER
2.01 THE MERGER. (a) At the Effective Time, 1st United shall merge with
and into Wachovia (the "MERGER"), the separate corporate existence of 1st United
shall cease and Wachovia shall survive and continue to exist as a North Carolina
corporation (Wachovia, as the surviving corporation in the Merger, sometimes
being referred to herein as the "SURVIVING CORPORATION"). Wachovia may at any
time prior to the Effective Time change the method of effecting the combination
with 1st United (including, without limitation, the provisions of this Article
II) if and to the extent it deems such change to be necessary or appropriate
after notification to and consultation with 1st United; PROVIDED, HOWEVER, that
no such change shall (i) alter or change the amount or kind of consideration to
be issued to holders of 1st United Common Stock as provided for in this
Agreement (the "MERGER CONSIDERATION"), (ii) adversely affect the tax treatment
of 1st United's stockholders as a result of receiving the Merger Consid-
-6-
<PAGE>
eration or (ii) materially impede or delay consummation of the transactions
contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth
in Article VII, the Merger shall become effective upon the occurrence of the
filing in the office of the Florida Department of State of articles of merger in
accordance with Section 607.1105 of the FBCA and the filing in the Office of the
Secretary of State of the State of North Carolina (the "NORTH CAROLINA
SECRETARY") of articles of merger in accordance with Section 55-11-05 of the
NCBCA or such later date and time as may be set forth in such articles. The
Merger shall have the effects prescribed in the NCBCA and the FBCA.
(c) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of
incorporation and by-laws of Wachovia immediately after the Merger shall be
those of Wachovia as in effect immediately prior to the Effective Time.
(d) DIRECTORS AND OFFICERS OF WACHOVIA. The directors and officers of
Wachovia immediately after the Merger shall be the directors and officers of
Wachovia immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Merger (the "EFFECTIVE DATE") to occur on (i) the fifth
business day to occur after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (or, at the election of Wachovia, a day within five business days of
such fifth business day) or (ii) such other date to which the parties may agree
in writing. The time on the Effective Date when the Merger shall become
effective is referred to as the "EFFECTIVE TIME."
2.03 PLAN OF MERGER. Wachovia and 1st United shall enter into a
separate plan of merger, in substantially the form of Exhibit C, for purposes of
any filing requirement.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) OUTSTANDING 1ST UNITED COMMON STOCK. Each share, excluding Treasury
Stock, of 1st United Common Stock, issued and outstanding immediately
prior to the Effective Time shall become and be converted into the number
of shares of Wachovia Common Stock equal to the
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Exchange Ratio (as defined in the following sentence). The "EXCHANGE
RATIO" shall mean a number equal to $20,875 divided by the Wachovia
Average Stock Price (as defined below) (rounded to the nearest
one-thousandth) provided that:
(i) if the Wachovia Average Stock Price exceeds $69.64375, the
Exchange Ratio shall be 0.3; and
(ii) if the Wachovia Average Stock Price is less than $56.98125, the
Exchange Ratio shall be 0.366.
The "WACHOVIA AVERAGE STOCK PRICE" shall mean the average of the last
sale prices of Wachovia Common Stock, as reported by the NYSE Composite
Transactions Reporting System (as reported in THE WALL STREET JOURNAL or,
if not reported therein, in another authoritative source), for the ten
NYSE trading days immediately preceding the Effective Date. The Exchange
Ratio and the determination thereof shall be subject to adjustment as set
forth in Section 3.05.
(b) OUTSTANDING WACHOVIA STOCK. Each share of Wachovia Stock issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of 1st United Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in
exchange therefor
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of 1st United Stock shall cease to be, and shall have no rights as,
stockholders of 1st United, other than to receive any dividend or other
distribution with respect to such 1st United Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of 1st United or the Surviving Corporation of shares of 1st United Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Wachovia Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Wachovia shall pay to each holder of 1st United Common Stock who would
otherwise be entitled to a fractional share of Wachovia Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the Wachovia
Average Stock Price.
3.04 EXCHANGE PROCEDURES. (a) As promptly as practicable after the
Effective Date and in any event within 10 business days thereof, Wachovia or
Wachovia Bank, N.A. (in such
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capacity, the "EXCHANGE AGENT"), shall send or cause to be sent to each former
holder of record of shares of 1st United Common Stock immediately prior to the
Effective Time transmittal materials for use in exchanging such, stockholder's
certificates formerly representing shares of 1st United Common Stock ("Old
Certificates") for the consideration set forth in this Article III. Wachovia
shall cause the certificates representing the shares of Wachovia Common Stock
("New Certificates") into which shares of a stockholder's 1st United Common
Stock are converted on the Effective Date and/or any check in respect of any
fractional share interests or dividends or distributions which such person
shall be entitled to receive to be delivered to such stockholder upon delivery
to the Exchange Agent of Old Certificates representing such shares of 1st United
Common Stock (or indemnity reasonably satisfactory to Wachovia and the Exchange
Agent, if any of such certificates are lost, stolen or destroyed) owned by such
stockholder. No interest until be paid on any cash to be paid in lieu of
fractional share interests or in respect of dividends or distributions which
any such person shall be entitled to receive pursuant to this Article III upon
such delivery. 1st United shall have the right to review and comment on the
transmittal materials before the Effective Date.
(b) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of 1st United Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(c) At the election of Wachovia, no dividends or other distributions
with respect to Wachovia Common Stock with a record date occurring after the
Effective Time shall be paid to the holder of any unsurrendered Old Certificate
representing shares of 1st United Common Stock converted in the Merger into
the right to receive shares of such Wachovia Common Stock until the holder
thereof shall be entitled to receive New Certificates in exchange therefor in
accordance with the procedures set forth in this Section 3.04, and no such
shares of 1st United Common Stock shall be eligible to vote until the holder of
Old Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Wachovia Common Stock such holder had the right to receive upon surrender of the
Old Certificate.
3.05 ANTI-DILUTION PROVISIONS. In the event Wachovia changes (or
establishes a record date for changing) the number of shares of Wachovia Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization reorganization, reclassification,
reverse stock split or similar transaction (collectively the "RECAPITALIZATION")
with respect to the outstanding Wachovia Common Stock and the record date
therefor shall be prior to the Effective Date, the Exchange Ratio and the
calculation thereof shall be proportionately adjusted so that each holder of 1st
United Common Stock shall receive the number of shares of Wachovia Common Stock
that such holder would have received if the Recapitalization had occurred
immediately after the Effective Time.
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3.06 OPTIONS. (a) Unless an Optionee shall provide 1st United with the
notice contemplated by Section 3.06(b) below, then, at the Effective Time, each
outstanding option to purchase shares of 1st United Common Stock (each, a "1ST
UNITED STOCK OPTION"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such 1st United Stock Option, the number of shares of Wachovia Common Stock
equal to (i) the number of shares of 1st United Common Stock subject to the 1st
United Stock Option, multiplied by (ii) the Exchange Ratio (such product rounded
down to the nearest whole number) (a "REPLACEMENT OPTION"), at an exercise
price per share (rounded up to the nearest whole cent) equal to (A) the
aggregate exercise price for the shares of 1st United Common Stock which were
purchasable pursuant to such 1st United Stock Option divided by (B) the number
of full shares of Wachovia Common Stock subject to such Replacement Option in
accordance with the foregoing. Notwithstanding the foregoing, each 1st United
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424 of the Code. At or prior to the Effective Time, 1st United shall
take all action necessary, including obtaining any necessary consents from
holders of 1st United Stock Options, to permit the replacement of the
outstanding 1st United Stock Options by Wachovia pursuant to this Section.
Wachovia shall cause any shares to be issued pursuant to the Replacement Options
to be subject to a registration statement under the Securities Act.
(b) If an Optionee shall provide written notice to 1st United within at
least 10 business days prior to the Effective Time of its election to treat 1st
United Stock Options in accordance with the provisions of this Section 3.06(b),
then, at the Effective Time, each then outstanding 1st United Stock Option,
whether or not vested, shall be canceled and the Optionee shall be entitled to
receive an amount of cash equal to the product of (i) the amount, if any, by
which the Merger Consideration Value (as defined below) exceeds the exercise
price per share subject to such 1st United Stock Option (whether or not vested)
and (ii) the number of shares issuable pursuant to the unexercised portion of
such 1st United Stock Option, less any required withholding taxes (the "OPTION
CONSIDERATION"). "MERGER CONSIDERATION VALUE" shall be equal to the Exchange
Ratio multiplied by the Wachovia Average Stock Price. The Option Consideration
shall be paid promptly following the Effective Time. Prior to the Effective
Time, 1st United shall take such actions as may be necessary to effectuate the
foregoing, including obtaining all applicable consents from the Optionees.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF 1ST UNITED. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Wachovia, 1st United will not, and will cause each of
its Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of 1st United and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any
action reasonably likely to have an adverse affect upon 1st United's
ability to perform any of its maternal obligations under this Agreement.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (A) issue, sell or otherwise permit
to become outstanding, or authorize the creation of, any additional shares
of 1st United Common Stock or any Rights, (B) enter into any agreement
with respect to the foregoing, or (C) permit any additional shares of 1st
United Common Stock to become subject to new grants of employee or
director stock options, other Rights or similar stock-based employee
rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for payment any
dividend (other than (A) quarterly cash dividends on 1st United Common
Stock in an amount not to exceed $0.11 per share (the "Permitted Dividend
Amount") with record and payment dates consistent with past practice and
(B) dividends from wholly owned Subsidiaries to 1st United or another
wholly owned Subsidiary of 1st United) on or in respect of, or declare or
make any distribution on any shares of, 1st United Common Stock or (b)
directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital stock; PROVIDED,
HOWEVER, if Wachovia shall increase its regular quarterly dividend to an
amount in excess of $0.40 per share, then the Permitted Dividend Amount
may be increased by 1st United at its option for all simultaneous and
future dividends in an amount proportionate to the increase in the
Wachovia dividend.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employees of 1st United or its
Subsidiaries, or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments), except (i) for
normal individual increases in compensation to employees in the ordinary
course of business consistent with past practice, (ii) for other changes
that are required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
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(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except (i) as
may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement (or similar arrangement) related thereto, in respect
of any director, officer or employee of 1st United or its Subsidiaries, or
take any action to accelerate the vesting or exercisability of stock
options, restricted stock or other compensation or benefits payable
thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
and in a transaction that is not material to it and its Subsidiaries taken
as a whole and in which no capital stock or Rights are issued.
(h) GOVERNING DOCUMENTS. Amend the 1st United Certificate, 1st United
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of 1st United's Subsidiaries.
(i) ACCOUNTING METHODS. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by
generally accepted accounting principles.
(j) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(k) CLAIMS. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not
material to 1st United and its Subsidiaries taken as a whole.
(1) ADVERSE ACTIONS. (a) Knowingly take any action reasonably likely to
prevent or impede the Merger from qualifying as a reorganization within
the meaning of Section 368 of the Code, or (b) knowingly take any action
that is intended or is reasonably likely to result in
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(i) any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time at or prior
to the Effective Time, (ii) any of the conditions to the Merger set forth
in Article VII not being satisfied or (iii) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(m) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate and
other risk management policies, procedures or practices; (ii) fail to follow its
existing policies or practices with respect to managing its exposure to
interest rate and other risk; or (iii) fail to use commercially reasonable
means to avoid any material increase in its aggregate exposure to interest rate
risk.
(n) INDEBTEDNESS. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) COMMITMENTS. Agree or commit to do any of the foregoing.
4.02 FOREBEARANCES OF WACHOVIA. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of 1st United, Wachovia will not, and will cause each of
its Subsidiaries not to:
(a) EXTRAORDINARY DIVIDENDS. Make, declare, pay or set aside for
payment any extraordinary dividend.
(b) ADVERSE ACTIONS. (i) Take any action which would materially
adversely affect its ability to consummate the Merger; (ii) take any
action reasonably likely to prevent or impede the Merger from qualifying
as a reorganization within the meaning of Section 368 of the Code; or
(iii) knowingly take any action that is intended or is reasonably likely
to result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (B) any of the conditions to the
Merger set forth in Article VII not being satisfied; or (C) a material
violation of any provision of this Agreement except, in each case, as may
be required by applicable law.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, Wachovia has
delivered to 1st United a schedule and 1st United has delivered to Wachovia
schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV;
PROVIDED, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not be reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section 5.02,
and (b) the mere inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or fact, event or circumstance or that
such item is reasonably likely to result in a Material Adverse Effect.
5.02 STANDARD. No representation or warranty of 1st United or Wachovia
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as
a consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04, has had or is reasonably likely to have a
Material Adverse Effect.
5.03 REPRESENTATIONS AND WARRANTIES OF 1ST UNITED. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule referring to the relevant paragraph below, 1st United hereby
represents and warrants to Wachovia:
(a) ORGANIZATION, STANDING AND AUTHORITY. 1st United is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Florida. 1st United is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) 1ST UNITED STOCK. As of the date hereof, the authorized capital
stock of 1st United consists solely of 20,000,000 shares of 1st United
Common Stock, of which not more than 10,160,000 shares were outstanding as
of the date hereof and 5,000,000 shares of 1st United Preferred Stock, of
which no shares were outstanding as of the date hereof. As of the date
hereof, no shares of 1st United Common Stock were held in treasury by 1st
United or otherwise owned by 1st United or its Subsidiaries ("TREASURY
STOCK"). The outstanding
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shares of 1st United Common Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable, and subject
to no preemptive rights (and were not issued in violation of any
preemptive rights). As of the date hereof, there are no shares of 1st
United Common Stock authorized and reserved for issuance, 1st United does
not have any Rights issued or outstanding with respect to 1st United
Stock, and 1st United does not have any commitment to authorize, issue or
sell any 1st United Common Stock or Rights, except pursuant to this
Agreement and the Stock Option Agreement. The number of shares of 1st
United Common Stock which are issuable and reserved for issuance upon
exercise of 1st United Stock Options as of the date hereof, and the
exercise prices and other terms thereof, are Previously Disclosed in 1st
United's Disclosure Schedule.
(c) SUBSIDIARIES. (i)(A) 1st United has Previously Disclosed a list of
all of its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) it owns, directly or indirectly, all the issued
and outstanding equity securities of each of its Subsidiaries, (C) no
equity securities of any of its Subsidiaries are or may become required to
be issued (other than to it or its wholly-owned Subsidiaries) by reason of
any Right or otherwise, (D) there are no contracts, commitments,
understandings or arrangements by which any of such Subsidiaries is or may
be bound to sell or otherwise transfer any equity securities of any such
Subsidiaries (other than to it or its wholly-owned Subsidiaries), (E)
there are no contracts, commitments, understandings, or arrangements
relating to its rights to vote or to dispose of such securities and (F)
all the equity securities of each Subsidiary held by 1st United or its
Subsidiaries are fully paid and nonassessable and are owned by 1st United
or its Subsidiaries free and clear of any Liens.
(ii) 1st United does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of 1st United's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and in good
standing in the jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so qualified.
(d) CORPORATE POWER. 1st United and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets, and 1st United has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval of the agreement of merger set forth in
this Agreement by the holders of a majority of the outstanding shares of
1st United Common Stock entitled to vote thereon (which is the
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only shareholder vote required thereon), this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of 1st United and the 1st
United Board prior to the date hereof. This Agreement is a valid and
legally bending obligation of 1st United, enforceable in accordance with
its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles). The 1st United Board
of Directors has received the opinion of Hoeffer & Arnett, Inc. to the
effect that as of the date hereof the Merger Consideration is fair to the
holders of 1st United Common Stock from a financial point of view.
(f) REGULATORY FILINGS; NO DEFAULTS. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by 1st United or any of
its Subsidiaries in connection with the execution, delivery or performance
by 1st United of this Agreement or the Stock Option Agreement or to
consummate the Merger except for (A) the filing of a notice under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), (B)
filings of applications or notices with federal and Florida banking
authorities, (C) filings with the SEC and state securities authorities,
and (D) the filing of articles of merger with the North Carolina Secretary
pursuant to the NCBCA and the Florida Department of State pursuant to the
FBCA. As of the date hereof, 1st United is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby
do not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any right
of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of 1st United or of any of its Subsidiaries or to which 1st
United or any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the 1st United
Certificate or the 1st United By-Laws, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS, NO MATERIAL ADVERSE EFFECT.
(i) 1st United's Annual Reports on Form 10-K or 10-KSB for the fiscal
years ended December 31, 1994, 1995 and 1996, and all other reports,
registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its Subsidiaries
subsequent to December 31, 1994 under the Securities Act, or under Section
13(a), 13(c), 14 or 15(d) of the
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Exchange Act, in the form filed or to be filed (collectively, 1st United's
"SEC DOCUMENTS") with the SEC, as of the date filed or to be filed, (A)
complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as
the case may be, and (B) did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of 1st United and
its Subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent statements in
such SEC Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of operations,
changes in stockholders' equity and changes in cash flows, as the case may
be, of 1st United and its Subsidiaries for the periods to which they
relate, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in
each case as may be noted therein, subject to normal year-end audit
adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, 1st United and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(iii) Since December 31, 1996, (A) 1st United and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses
related to this Agreement and the transactions contemplated hereby) and
(B) no event has occurred or circumstance arisen that, individually or
taken together with all other facts, circumstances and events (described
in any paragraph of Section 5.03 or otherwise), is reasonably likely to
have a Material Adverse Effect with respect to 1st United.
(h) LITIGATION. No litigation, claim or other proceeding before any
court or governmental agency is pending against 1st United or any of its
Subsidiaries and, to 1st United's knowledge, no such litigation, claim or
other proceeding has been threatened.
(i) REGULATORY MATTERS. (i) Neither 1st United nor any of its
Subsidiaries or properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the Federal Reserve Board and the
FDIC) or the supervision or regulation of it or any of its Subsidiaries
(collectively, the "REGULATORY AUTHORITIES").
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(ii) Neither 1st United nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar
arrangement or submission.
(j) COMPLIANCE WITH LAWS. 1st United and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to
own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
1st United's knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received no notification or communication from any
Governmental Authority (A) asserting that 1st United or any of its
Subsidiaries is not in compliance with any statute, regulation, or
ordinance or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to 1st United's knowledge, do any
grounds for any of the foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and other
documents filed as exhibits to its SEC Documents, neither 1st United nor
any of its Subsidiaries is a party to, bound by or subject to any
agreement, contract, arrangement, commitment or understanding (whether
written or oral) (i) that is a "material contract" within the meaning of
Item 601(b)(10) of the SEC's Regulation S-K or (ii) that restricts the
conduct of business by it or any of its Subsidiaries. Neither it nor any
of its Subsidiaries is in default under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to
which it is a party, by which its respective assets, business, or
operations may be bound or affected, or under which it or its respective
assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
(l) NO BROKERS. No action has been taken by 1st United that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment
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with respect to the transactions contemplated by this Agreement,
excluding a Previously Disclosed fee to be paid to Hoeffer & Arnett, Inc.
(m) EMPLOYEE BENEFIT PLANS. (i) Section 5.03(m)(i) of 1st United's
Disclosure Schedule contains a complete and accurate list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, severance, welfare and
fringe benefit plans, employment or severance agreements and all similar
practices, policies and arrangements in which any employee or former
employee (the "Employees"), consultant or former consultant (the
"Consultants") or director or former director (the "DIRECTORS") of 1st
United or any of its Subsidiaries participates or to which any such
Employees, Consultants or Directors are a party (the "COMPENSATION AND
BENEFIT PLANS"). Neither 1st United nor any of its Subsidiaries has any
commitment to create any additional Compensation and Benefit Plan or to
modify or change any existing Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and
with applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment
Act, and any regulations or rules promulgated thereunder, and all filings,
disclosures and notices required by ERISA, the Code, the Securities Act,
the Exchange Act, the Age Discrimination in Employment Act or any other
applicable law have been timely made. Each Compensation and Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "PENSION PLAN") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter (including a determination that the related trust under such
Compensation and Benefit Plan is exempt from tax under Section 501(a) of
the Code) from the Internal Revenue Service ("IRS") for "TRA" (as defined
in Rev. Ploc. 93-39), or will file for such determination letter prior to
the expiration of the remedial amendment period for such Compensation and
Benefit Plan, and 1st United is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. There is
no material pending or, to the knowledge of 1st United, threatened legal
action, suit or claim relating to the Compensation and Benefit Plans,
other than routine claims for benefits. Neither 1st United nor any of its
Subsidiaries has engaged in a transaction, or omitted to take any action,
with respect to any Compensation and Benefit Plan that would reasonably be
expected to subject 1st United or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502 of
ER1SA, assume for purposes of Section 4975 of the Code that the taxable
period of any such transaction expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of
ERISA has been or is expected to be incurred by 1st United or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA,
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currently or formerly maintained by any of them, or any single-employer
plan of any entity (an "ERISA AFFILIATE") which is considered one employer
with 1st United under Section 4001(a)(14) of ERISA or Section 414(b) or
(c) of the Code (an "ERISA AFFILIATE PLAN"). None of 1st United, any of
its Subsidiaries or any ERISA Affiliate has contributed, or has been
obligated to contribute, to a multiemployer plan under Subtitle E of Title
IV of ERISA at any time since September 26, 1980. No notice of a
"reportable event", within the meaning of Section 4043 of ERISA, for which
the 30-day reporting requirement has not been waived, has been required to
be filed for any Compensation and Benefit Plan or by any ERISA Affiliate
Plan with the 12-month period ending on the date hereof, any to the
knowledge of 1st United no such notice will be required to be filed as a
result of the transactions contemplated by this Agreement. The PBGC has
not instituted proceedings to terminate any Pension Plan or ERISA
Affiliate Plan and, to 1st United's knowledge, no condition exists that
presents a material risk that such proceedings will be instituted. To the
knowledge of 1st United, there is no pending investigation or enforcement
action by the PBGC, the Department of Labor (the "DOL") or IRS or any
other government agency with respect to any Compensation and Benefit Plan.
Under each Pension Plan and ERISA Affiliate Plan, as of the date of the
most recent actuarial valuation performed prior to the date of this
Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did not
exceed the then current value of the assets of such Pension Plan or ERISA
Affiliate Plan and since such date there has been neither an adverse
change in the financial condition of such Pension Plan or ERISA Affiliate
Plan nor any amendment or other change to such Pension Plan or ERISA
Affiliate Plan that would increase the amount of benefits thereunder
which reasonably could be expected to change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which
1st United or any of its Subsidiaries is a party have been timely made or
have been reflected on 1st United's financial statements. Neither any
Pension Plan nor any ERISA Affiliate Plan has an "accumulated funding
deficiency" (whether or not waived) with the meaning of Section 412 of the
Code or Section 302 of ERISA and all required payments to the PBGC with
respect to each Pension Plan or ERISA Affiliate Plan have been made on or
before their due dates. None of 1st United, any of its Subsidiaries or any
ERISA Affiliate (x) has provided, or would reasonably be expected to be
required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, and (y) has
taken any action, or omitted to take any action, that has resulted, or
would reasonably be expected to result, in the imposition of a lien under
Section 412(n) of the Code or pursuant to ERISA.
(v) Neither 1st United nor any of its Subsidiaries has any obligations
to provide retiree health and life insurance or other retiree death
benefits under any Compensation and Benefit
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Plan, other than benefits mandated by Section 4980B of the Code, and each
such Compensation and Benefit Plan may be amended or terminated without
incurring liability thereunder. There has been no communication to
Employees by 1st United or any of its Subsidiaries that would reasonably
be expected to promise or guarantee such Employees retiree health or life
insurance or other retiree death benefits on a permanent basis.
(vi) With respect to each Compensation and Benefit Plan, if applicable,
1st United has provided, or made available to Wachovia, true and complete
copies of existing: (A) Compensation and Benefit Plan documents and
amendments thereto; (B) test instruments and insurance contracts; (C) two
most recent Forms 5500 filed with the IRS; (D) most recent actuarial
report and financial statement; (E) the most recent summary plan
description; (F) forms filed with the PBGC (other than for premium
payments); (G) most recent determination letter issued by the IRS, (H) any
Form 5310 or Form 5330 filed with the IRS; and (I) most recent
nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(vii) The consummation of the transactions contemplated by this
Agreement would not, directly or indirectly (including, without
limitation, as a result of any termination of employment prior to or
following the Effective Time) reasonably be expected to (A) entitle any
Employee, Consultant or Director to any payment (including severance pay
or similar compensation) or any increase in compensation, (B) result in
the vesting or acceleration of any benefits under any Compensation and
Benefit Plan or (C) result in any material increase in benefits payable
under any Compensation and Benefit Plan.
(viii) Neither 1st United nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which
would not reasonably be expected to be deductible as a result of the
limitations under Section 162(m) of the Code and the regulations issued
thereunder.
(ix) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result
of any termination of employment prior to or following the Effective
Time), none of Wachovia, 1st United or the Surviving Corporation, or any
of their respective Subsidiaries will be obligated to make a payment that
would be characterized as an "excess parachute payment" to an individual
who is a "disqualified individual" (as such terms are defined in Section
280G of the Code), without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the
future.
(n) LABOR MATTERS. Neither 1st United nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is 1st United or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an unfair labor
practice
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(within the meaning of the National Labor Relations Act) or seeking to
compel 1st United or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to 1st United's knowledge, threatened, nor is 1st United
aware of any activity involving its or any of its Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(o) TAKEOVER LAWS; DISSENTERS RIGHTS. 1st United has taken all action
required to be taken by it in order to exempt this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby
from, and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
"moratorium", "control share", "fair price" "affiliate transaction",
"business combination" or other antitakeover laws and regulations of any
state (collectively, "TAKEOVER LAWS"), including, without limitation, the
State of Florida, and including, without limitation, Sections 607.0901 and
607.0902 of the FBCA. Holders of 1st United Common Stock do not have
dissenters rights in connection with the Merger.
(p) ENVIRONMENTAL MATTERS. To the knowledge of 1st United and its
Subsidiaries, neither the conduct nor operation of 1st United or its
Subsidiaries nor any condition of any property presently or previously
owned, leased or operated by any of them (including, without limitation,
in a fiduciary or agency capacity), or on which any of them holds a Lien,
violates or violated Environmental Laws and no condition has existed or
event has occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely to
result in liability under Environmental Laws. Neither 1st United nor any
of its Subsidiaries has received any notice from any person or entity that
1st United or its Subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a
fiduciary or agency capacity by any of them are or were in violation of or
otherwise are alleged to have liability under any Environmental Law,
including, but not limited to, responsibility (or potential
responsibility) for the cleanup or other remediation of any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at,
on, beneath, or originating from any such property.
(q) TAX MATTERS. (i) All Tax Returns that are required to be filed by
or with respect to 1st United and its Subsidiaries have been duly filed,
(ii) all Taxes shown to be due on the Tax Returns referred to in clause
(i) have been paid in fu11 or are being disputed in good faith, (iii) the
Tax Returns referred to in clause (i) have been examined by the Internal
Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (iv) all
deficiencies asserted or assessments made as a result of such examinations
have been paid in full or are being disputed in good faith, (v) no issues
that have been raised by the relevant taxing authority in connection with
the examination of any of the Tax Returns referred to in clause (i) are
currently pending, and (vi) no waivers of statutes of limitation have been
given
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by or requested with respect to any Taxes of 1st United or its
Subsidiaries. 1st United has made available to Wachovia true and correct
copies of the United States federal income Tax Returns filed by 1st United
and its Subsidiaries for each of the three most recent fiscal years ended
on or before December 31, 1993. Neither 1st United nor any of its
Subsidiaries has any liability with respect to income, franchise or
similar Taxes that accrued on or before the end of the most recent period
covered by 1st United's SEC Documents filed on or prior to the date hereof
in excess of the amounts accrued with respect thereto that are reflected
in the financial statements included in 1st United's SEC Documents filed
prior to the date hereof. As of the date hereof, neither 1st United nor
any of its Subsidiaries has any reason to believe that any conditions
exist that might prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(r) DERIVATIVES AND SIMILAR INSTRUMENTS. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other
similar arrangements, whether entered into for 1st United's own account,
or for the account of one or more of 1st United's Subsidiaries or their
customers (all of which are listed on 1st United's Disclosure Schedule),
were entered into (i) in accordance with prudent business practices and
all applicable laws, rules, regulations and regulatory policies and (ii)
with counterparties believed to be financially responsible at the time;
and each of them constitutes the valid and legally binding obligation of
1st United or one of its Subsidiaries, enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect.
Neither 1st United nor its Subsidiaries, nor to 1st United's knowledge any
other party thereto, is in breach of any of its obligations under any such
agreement or arrangement.
(s) BOOKS AND RECORDS. The books and records of 1st United and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of 1st United and its Subsidiaries.
(t) INSURANCE. 1st United's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by 1st United or its
Subsidiaries or under which 1st United pays the premiums ("INSURANCE
POLICIES"). 1st United and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of 1st
United reasonably has determined to be prudent in accordance with industry
practices. All the Insurance Policies are full force and effect; 1st
United and its Subsidiaries are not in maternal default thereunder; and
all claims thereunder have been filed in due and timely fashion.
(u) ASSET CLASSIFICATION. 1st United has Previously Disclosed a list,
accurate and complete in all material respects, of the aggregate amounts
of loans, extensions of credit or
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other assets of it and its Subsidiaries that have been classified by it as
of June 30, 1997 (the "Asset Classification"); and no amounts of loans,
extensions of credit or other assets that have been classified as of June
30, 1997 by any Regulatory Authority as "Other Loans Specially Mentioned",
"Substandard", "Doubtful", "Loss", or words of similar import are excluded
from the amounts disclosed in the Asset Classification, other than amounts
of loans, extensions of credit or other assets that were charged off by it
or a Subsidiary prior to June 30, 1997.
(v) DISCLOSURE. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
and information contained in this Section 5.03 not misleading.
5.04 REPRESENTATIONS AND WARRANTIES OF WACHOVIA. Subject to Sections
501 and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule referring to the relevant paragraph below, Wachovia hereby represents
and warrants to 1st United as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. Wachovia is duly organized,
validly existing and in good standing under the laws of the State of North
Carolina. Wachovia is duly qualified to do business and is in good
standing in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified. Wachovia has in effect all
federal, state, local, and foreign governmental authorizations necessary
for it to own or lease its properties and assets and to carry on its
business as it is now conducted.
(b) WACHOVIA STOCK. (i) As of the date hereof, the authorized capital
stock of Wachovia consists solely of 500,000,000 shares of Wachovia Common
Stock, of which _________ shares were outstanding as of the date hereof
and 50,000,000 shares of Wachovia Preferred Stock, of which no shares were
outstanding as of the date hereof. As of the date hereof, except in
connection with its publicly disclosed acquisitions, or as previously
disclosed, Wachovia does not have any Rights issued or outstanding with
respect to Wachovia Stock, and Wachovia does not have any commitment to
authorize, issue or sell any Wachovia Stock or Rights, except pursuant to
this Agreement.
(ii) The shares of Wachovia Common Stock to be issued in exchange for
shares of 1st United Common Stock in the Merger, when issued in accordance
with the terms of this Agreement, will be duly authorized, validly issued,
filly paid and nonassessable.
(c) SUBSIDIARIES. Each of Wachovia's Significant Subsidiaries has been
duly organized and is validly existing in good standing under the laws of
the jurisdiction of its organization, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or leasing
of property or the conduct of its business requires it to be so qualified
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<PAGE>
and it owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Significant Subsidiaries.
(d) CORPORATE POWER. Wachovia and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as it is
now being conducted and to own all its properties and assets; and Wachovia
has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of Wachovia and its Board of Directors and does not require any vote of
stockholders. This Agreement is a valid and legally binding agreement of
Wachovia enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors' rights or by
general equity principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. No consents or approvals of, or
filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Wachovia or any of its
Subsidiaries in connection with the execution, delivery or performance
by Wachovia of this Agreement or to consummate the Merger except for (A)
the filing of a notice under the Hart-Scott-Rodino Antitrust Improvement
Act of 1976 (the "HSR ACT"); (B) the filing of applications and notices,
as applicable, with federa1 and Florida banking authorities; (C) approval
of the listing on the NYSE of Wachovia Common Stock to be issued in the
Merger; (D) the filing and declaration of effectiveness of the
Registration Statement; (E) the filing of articles of merger with the
North Carolina Secretary pursuant to the NCBCA and the Florida Department
of State pursuant to the FBCA; (F) such filings as are required to be made
or approvals as are required to be obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of Wachovia
Stock in the Merger; and (G) receipt of the approvals set forth in Section
7.01(b). As of the date hereof, Wachovia is not aware of any reason why
the approvals set forth in Section 7.01(b) will not be received without
the imposition of a condition, restriction or requirement of the type
described in Section 7.01(b)
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmenta1 permit or
license, or agreement, indenture or instrument of
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Wachovia or of any of its Subsidiaries or to which Wachovia or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the certificate of incorporation or
by-laws (or similar governing documents) of Wachovia or any of its
Subsidiaries, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT. (i)
Wachovia's SEC Documents, as of the date filed, (A) complied or will
comply in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may
be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of Wachovia and
its Subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity audit cash flows or equivalent statements
in such SEC Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of operations,
changes in stockholders' equity and changes in cash flows, as the case may
be, of Wachovia and its Subsidiaries for the periods to which they relate,
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(ii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Wachovia.
(h) LITIGATION; REGULATORY ACTION. (i) Other than as set forth in its
SEC Document filed on or before the date hereof, no litigation, claim or
other proceeding before any Governmental Authority is pending against
Wachovia or any of its Subsidiaries and, to the best of Wachovia's
knowledge, no such litigation, claim or other proceeding has been
threatened.
(ii) Neither Wachovia nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has Wachovia or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission
or arrangement.
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<PAGE>
(i) COMPLIANCE WITH LAWS. Wachovia and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to
conduct their businesses substantially as presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to the best of its knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) as of the date hereof, has received no notification or
communication from any Governmental Authority (A) asserting that
Wachovia or any of its Subsidiaries is not in compliance with any
statute, regulation, or ordinance or (B) threatening to revoke any
license, franchise, permit, or governmental authorization (nor, to
Wachovia's knowledge, do any grounds for any of the foregoing exist).
(j) NO BROKERS. No action has been taken by Wachovia that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement.
(k) TAX MATTERS. As of the date hereof, neither Wachovia nor any of its
Subsidiaries has any reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(l) DISCLOSURE. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
and information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of 1st United and Wachovia agrees to use its reasonable
best efforts in good faith to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper
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or desirable, or advisable under applicable laws, so as to permit consummation
of the Merger as promptly as practicable and otherwise to enable consummation
of the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 STOCKHOLDER APPROVALS. 1st United agrees to take, in accordance
with applicable law or NASDAQ rules and its articles of incorporation and
by-laws, all action necessary to convene an appropriate meeting of stockholders
of 1st United to consider and vote upon the approval and adoption of this
Agreement and any other matters required to be approved by 1st United's
stockholders for consummation of the Merger (including any adjournment or
postponement, the "1ST UNITED MEETING") as promptly as practicable after the
Registration Statement is declared effective. Except to the extent legally
required for the discharge by the 1st United Board of its fiduciary duties as
advised in writing by its counsel, the 1st United Board shall recommend such
approval, and 1st United shall take all reasonable, lawful action to solicit
such approval by its stockholders. At the request of Wachovia, 1st United will
utilize a professional proxy solicitation firm to assist it in procuring the
necessary stockholder vote. The 1st United Board in discharging its fiduciary
duties connection with the foregoing, may request and take into consideration a
letter from Hoeffer & Arnett, Inc., regarding whether or not the Merger
Consideration to be received by 1st United's shareholders in connection with the
Merger is fair to such shareholders from a financial point of view.
6.03 REGISTRATION STATEMENT. (a) Wachovia agrees to prepare a
registration statement on Form S-4 (the "REGISTRATION STATEMENT") to be filed by
Wachovia with the SEC in connection with the issuance of Wachovia Stock in the
Merger (including the proxy statement and prospectus and other proxy
solicitation materials of 1st United constituting a part thereof (the "PROXY
STATEMENT") and all related documents). Each of the parties hereto agrees to
cooperate, and to cause its Subsidiaries to cooperate, with the other, its
counsel and its accountants, in preparation of the Registration Statement and
the Proxy Statement; and PROVIDED that 1st United and its Subsidiaries have
cooperated as required above, Wachovia agrees to file the Proxy Statement in
preliminary form with the SEC as promptly as reasonably practicable, and to file
the Registration Statement with the SEC as soon as reasonably practicable after
any SEC comments with respect to the preliminary Proxy Statement are resolved.
Each of 1st United and Wachovia agrees to use all reasonable efforts to cause
the Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. Wachovia also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. 1st United agrees to furnish to Wachovia all information
concerning 1st United, its Subsidiaries, officers, directors and stockholders as
may be reasonably requested in connection with the foregoing.
(b) Each of 1st United and Wachovia agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it
for inclusion or incorporation by reference in (i) the Registration Statement
will, at the time the Registration Statement and each amendment or
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supplement thereto, if any, becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Proxy Statement and any amendment or supplement thereto
will, at the date of mailing to stockholders and at the time of the 1st United
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or any statement which, in the light of the circumstances
under which such statement is made, will be false or misleading with respect to
any material fact, or which will omit to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier statement in the Proxy Statement or any
amendment or supplement thereto. Each of 1st United and Wachovia further agrees
that if it shall become aware prior to the Effective Date of any information
furnished by it that would cause any of the statements in the Proxy Statement to
be false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, to promptly inform the other party thereof and to take the necessary
steps to correct the Proxy Statement.
(c) Wachovia agrees to advise 1st United, promptly after Wachovia
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Wachovia Stock for offering
or sale in any jurisdiction, of the initiation or threat of any proceeding for
any such purpose, or of any request by the SEC for the amendment or supplement
of the Registration Statement or for additional information.
6.04 PRESS RELEASES. Each of 1st United and Wachovia agrees that it
will not, without the prior approval of the other party (which will not
unreasonably be withheld), issue any press release or written statement for
general circulation relating to the transactions contemplated hereby, except as
otherwise required by applicable law or regulation or NYSE rules.
6.05 ACCESS; INFORMATION. (a) Each of 1st United and Wachovia agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, it shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as any party may reasonably request and, during such period,
it shall furnish promptly to such other party (i) a copy of each material
report, schedule and other document filed by it pursuant to the requirements of
federal or state securities or banking laws, and (ii) all other information
concerning the business, properties and personnel of it as the other may
reasonably request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the
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date hereof in connection with the entering into of this Agreement) for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of law, each party will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was already known
to such party, (ii) becomes available to such party from other sources not known
by such party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the party to which such information pertains
or (iv) is or becomes readily ascertainable from published information or trade
sources. In the event that this Agreement is terminated or the transactions
contemplated by this Agreement shall otherwise fail to be consummated, each
party shall promptly cause all copies of documents or extracts thereof
containing information and data as to another party hereto to be returned to the
party which furnished the same. No investigation by either party of the business
and affairs of the other shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
6.06 ACQUISITION PROPOSALS. 1st United agrees that neither it nor any
of its Subsidiaries nor any of the respective officers and directors of 1st
United or its Subsidiaries shall, and 1st United shall direct and use its
reasonable best efforts to cause its employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, initiate, solicit or
encourage, directly or indirectly, any enquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to stockholders
of 1st United) with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, 1st United or its Significant Subsidiary (any such
proposal or offer being hereinafter referred to as an "ACQUISITION PROPOSAL")
or, except to the extent legally required for the discharge by the 1st United
Board of its fiduciary duties as advised in wrong by its counsel, engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal. 1st United shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Wachovia with respect to any of the
foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. 1st
United shall promptly (within 24 hours) advise Wachovia following the receipt by
1st United of any Acquisition Proposal and the substance thereof (including the
identity of the person making such Acquisition Proposal), and advise Wachovia of
any developments of significance with respect to such Acquisition Proposal
immediately upon the occurrence thereof
6.07 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, 1st United shall deliver to Wachovia, a schedule
of each person that, to its
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knowledge, is or is reasonably likely to be, as of the date of the 1st United
Meeting, deemed to be an "affiliate" of it (each, a "1ST UNITED AFFILIATE") as
that term is used in Rule 145 under the Securities Act.
(b) 1st United shall use its reasonable best efforts to cause each
person who may be deemed to be a 1st United Affiliate to execute and deliver to
Wachovia on or before the date of mailing of the Proxy Statement an "affiliates
agreement" in form and substance reasonably satisfactory to Wachovia.
6.08 SHAREHOLDER AGREEMENT. 1st United shall use its best efforts to
cause any shareholder of 1st United who is also a director of 1st United and who
has not entered into an agreement with Wachovia, in the form of EXHIBIT B
hereto, prior to the date hereof, to enter into such an agreement within five
business days of the date hereof.
6.09 TAKEOVER LAWS. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.10 CERTAIN POLICIES. Prior to the Effective Date, 1st United shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it aud Wachovia, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with those
of Wachovia; PROVIDED, HOWEVER, that 1st United shal1 not be obligated to take
any such action pursuant to this Section 6.09 unless and until Wachovia
acknowledges that all conditions to its obligation to consummate the Merger have
been satisfied.
6.11 NYSE LISTING. Wachovia agrees to use its reasonable best efforts
to list, prior to the Effective Date, on the NYSE, subject to official notice of
issuance, the shares of Wachovia Common Stock to be issued to the holders of 1st
United Common Stock in the Merger.
6.12 REGULATORY APPLICATIONS. (a) Wachovia and 1st United and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of Wachovia and 1st United shall have the right to
review in advance, and to the extent practicable each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to, all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of
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the parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and
each party will keep the other party appraised of the status of material matters
relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.13 INDEMNIFICATION. (a) Following the Effective Date and for a period
of six years thereafter, Wachovia shall indemnify, defend and hold harmless the
past and present directors and officers of 1st United and its Subsidiaries
(each, an "INDEMNIFIED PARTY") against all costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "COSTS") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that 1st
United is permitted to indemnify (and advance expenses to) its directors and
officers under the laws of the State of Florida, the 1st United Certificate and
the 1st United By-Laws as in effect on the date hereof; PROVIDED that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Florida law, the
1st United Certificate and the 1st United By-Laws shall be made by independent
counsel (which shall not be counsel that provides material services to Wachovia)
selected by Wachovia and reasonably acceptable to such officer or director; and
PROVIDED, FURTHER, that in the absence of applicable judicial precedent to the
contrary, such counsel, in making such determination, shall presume such
officer's or director's conduct complied with such standard and Wachovia shall
have the burden to demonstrate that such officer's or director's conduct failed
to comply with such standard.
(b) For a period of three years from the Effective Time, Wachovia shall
use its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of 1st United or any of its Subsidiaries (determined as
of the Effective Time) (as opposed to 1st United) with respect to claims
against such directors and officers arising from facts or events which occurred
before the Effective Time, which insurance shall contain at least the same
coverage and amounts, and contain terms and conditions no less advantageous, as
that coverage currently provided by 1st United; PROVIDED, HOWEVER, that in no
event shall Wachovia be required to expend more than 200 percent of the current
amount expended by 1st United (the "INSURANCE AMOUNT") to maintain or procure
such
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directors and officers insurance coverage; PROVIDED, FURTHER, that if Wachovia
is unable to maintain or obtain the insurance called for by this Section
6.12(b), Wachovia shall use its reasonable best efforts to obtain as much
comparable insurance as is available for the Insurance Amount; PROVIDED,
FURTHER, that officers and directors of 1st United or any Subsidiary may be
required to make application and provide customary representations and
warranties to Wachovia's insurance carrier for the purpose of obtaining such
insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Wachovia thereof; PROVIDED
that the failure so to notify shall not affect the obligations of Wachovia under
Section 6.12(a) unless and to the extent that Wachovia is actually prejudiced as
a result of such failure.
(d) If Wachovia or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of Wachovia shall assume the
obligations set forth in this Section 6.12.
6.14 BENEFIT PLANS. As soon as practicable following the Effective Time
(but in no event later than April 1, 1998 if the Effective Time occurs prior to
April 1, 1998) (i) Wachovia will provide employees of 1st United who become
employees of Wachovia with employee benefit plans no less favorable in the
aggregate than those provided to similarly situated employees of Wachovia; (ii)
any such employees will receive credit for service with 1st United or any of its
Subsidiaries or predecessors prior to the Effective Time for the purpose of
determining eligibility and vesting; (iii) Wachovia shall cause any and all
pre-existing condition limitations (to the extent such limitations did not apply
to a pre-existing condition under the 1st United Compensation and Benefit Plans)
and eligibility waiting periods under group health plans to be waived with
respect to such participants and their eligible dependents; and (iv) Wachovia
shall extend its Retirement Medical Plan to employees of 1st United who become
employees of Wachovia and retire following December 31, 1997 or the Effective
Date, if later; and would qualify for retirement under the Wachovia Retirement
Income Plan and; PROVIDED, FURTHER, that a maximum or of 20 years of service
with 1st United shall be recognized for benefit accrual purposes under the
Retirement Medical Plan. All discretionary awards and benefits under any
employee benefit plans of Wachovia shall be subject to the discretion of the
persons or committee administering such plans. Wachovia shall honor, pursuant to
the terms of the 1st United Compensation and Benefit Plans Previously Disclosed,
all employee benefit obligations to current and former employees of 1st United
under such Plans.
6.15 ACCOUNTANTS' LETTERS. Each of 1st United and Wachovia shall use
its reasonable best efforts to cause to be delivered to the other party, and to
Wachovia's directors and officers who sign the Registration Statement, letters
of Ernst Young, LLP, independent auditors, dated
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(i) the date on which the Registration Statement shall become effective and (ii)
a date shortly prior to the Effective Date, and addressed to such other party,
and such directors and officers, in form and substance customary for "comfort"
letters delivered by independent accountants in accordance with Statement of
Accounting Standards No. 72.
6.16 NOTIFICATION OF CERTAIN MATTERS. Each of 1st United and Wachovia
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.17 STOCK PLANS. 1st United shall at or prior to the Effective Time
cause to be terminated any obligation to issue shares of 1st United Common
Stock under any dividend reinvestment plan and any other plan or arrangement
pursuant to which it issues 1st United Common Stock or rights thereto, except
for its stock option plans with respect to issued options Previously Disclosed.
6.18 DIVIDEND COORDINATION. The Board of Directors of 1st United shall
cause its regular quarterly dividend record dates and payment dates for 1st
United Common Stock to be the same as Wachovia's regular quarterly dividend
record dates and payment dates for Wachovia Common Stock, and 1st United shall
not thereafter change its regular dividend payment dates and record dates.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Wachovia and 1st United to consummate the
Merger is subject to the fulfillment or written waiver by Wachovia and 1st
United prior to the Effective Time of each of the following conditions;
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly adopted
by the affirmative vote of the holders of a majority of the outstanding
shares of 1st United Common Stock entitled to vote thereon in accordance
with Section 607.1103 of the FBCA, other applicable law and the 1st
United Certificate and the 1st United By-Laws.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained
and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired and no such approvals shall
contain any conditions, restrictions or requirements which the Wachovia
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Board reasonably determines in good faith would (i) following the
Effective Time, have a Material Adverse Effect on the Surviving
Corporation and its Subsidiaries taken as a whole or (ii) reduce the
benefits of the transactions contemplated hereby to such a degree that
Wachovia would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date
hereof.
(c) NO INJUNCTION. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) BLUE SKY APPROVALS. All permits and other authorizations under
state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Wachovia Common Stock to be
issued in the Merger shall have been received and be in full force and
effect.
(f) LISTING. The shares of Wachovia Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
7.02 CONDITIONS TO OBLIGATION OF 1ST UNITED. The obligation of 1st
United to consummate the Merger is also subject to the fulfillment or written
waiver by 1st United prior to the Effective Time of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Wachovia set forth in this Agreement, after giving effect to Sections
5.01 and 5.02, shall be true and correct as of the date of this Agreement
and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date), and 1st United shall have received a
certificate, dated the Effective Date, signed on behalf of Wachovia by the
Chief Executive Officer and the Chief Financial Officer of Wachovia to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF WACHOVIA. Wachovia shall have
performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Effective Time,
and 1st United shall have received a certificate, dated the Effective
Date, signed on behalf of Wachovia by the Chief Executive Officer ard the
Chief Financial Officer of Wachovia to such effect.
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(c) OPINION OF 1ST UNITED'S COUNSEL. 1st United shall have received an
opinion of Akerman, Senterfitt & Eidson, P.A., counsel to 1st United, to
the effect that, on the basis of facts, representations and assumptions
set forth in such opinion, (i) the Merger constitutes a "reorganization"
within the meaning of Section 368 of the Code and (ii) no gain or loss
will be recognized by stockholders of 1st United who receive shares of
Wachovia Common Stock in exchange for shares of 1st United Common Stock,
except that gain or loss may be recognized as to cash received in lieu of
fractional share interests. In rendering its opinion, Akerman, Senterfitt
& Eidson, P.A. may require and rely upon representations contained in
letters from 1st United and others.
(d) ACCOUNTANTS' LETTERS. 1st United shall have received the letters
referred to in Section 6.14 from Ernst & Young, LLP, Wachovia's
independent auditors.
7.03 CONDITIONS TO OBLIGATION OF WACHOVIA. The obligation of Wachovia
to consummate the Merger is also subject to the fulfillment or written waiver by
Wachovia prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of 1st United set forth in this Agreement, after giving effect to Sections
5.01 and 5.02, shall be true and correct as of the date of this Agreement
and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Wachovia shall have received a certificate,
dated the Effective Date, signed on behalf of 1st United by the Chief
Executive Officer and the Chief Financial Officer of 1st United to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF 1ST UNITED. 1st United shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time,
and Wachovia shall have received a certificate, dated the Effective Date,
signed on behalf of 1st United by the Chief Executive Officer and the
Chief Financial Officer of 1st United to such effect.
(c) OPINION OF WACHOVIA'S COUNSEL. Wachovia shall have received an
opinion of Sullivan Cromwell, special counsel to Wachovia, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from Wachovia and others.
(d) ACCOUNTANTS' LETTERS. Wachovia and its directors and officers who
sign the Registration Statement shall have received the letters referred
to in Section 6.14 from Ernst & Young, LLP, 1st United's independent
auditors
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ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of Wachovia and 1st United, if the Board of Directors of
each so determines by vote of a majority of the members of its entire
Board.
(b) BREACH. At any time prior to the Effective Time, by Wachovia or 1st
United, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained herein
(subject to the standard set forth in Section 5.02), which breach cannot
be or has not been cured within 30 days after the giving of written notice
to the breaching party of such breach; or (ii) a breach by the other party
of any of the covenants or agreements contained herein, which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach, provided that such breach
(whether under (i) or (ii)) would be reasonably likely, individually or in
the aggregate with other breaches, to result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by Wachovia or 1st
United, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Acquisition is not
consummated by March 31, 1998, except to the extent that the failure of
the Acquisition then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate pursuant to
this Section 8.01(c).
(d) NO APPROVAL. By 1st United or Wachovia, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board,
in the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (u) the stockholder approval required by Section
7.01(a) herein is not obtained at the 1st United Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the 1st United
Meeting, by Wachovia if 1st United Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Wachovia.
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8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and the abandonment of the Acquisition pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set forth in Section 9.01
and (ii) that termination will not relieve a breaching party from liability for
any willful breach of this Agreement giving rise to such termination. In the
event of the termination of this Agreement, Wachovia agrees that, until March
31, 1998, it will not, directly or indirectly, solicit to employ any person
known by it to be a current senior officer of 1st United, so long as they are
employed by 1st United, or directly or indirectly solicit or encourage any such
officers or employees to leave 1st United's employ (other than pursuant to
general advertisements of employment in publications not specifically targeted
at 1st United's employees), in either case, without obtaining the prior written
consent of 1st United.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than Section
6.13 and this Article IX - which shall survive the Effective Time) or the
termination of this Agreement if this Agreement is terminated prior to the
Effective Time (other than Sections 6.03(b), 6.04, 6.05, 8.02 and this Article
IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that, after
the 1st United Meeting, this Agreement may not be amended if it would violate
the FBCA.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of North Carolina
applicable to contracts made and to be performed entirely within such State
(except to the extent that mandatory provisions of Federal law or of the FBCA
are applicable).
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing expenses and SEC fees shall be shared equally between 1st
United and Wachovia.
9.06 NOTICES. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirma
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tion) or mailed by registered or certified mail (return receipt requested) to
such party at its address set for below or such other address as such party may
specify by notice to the parties hereto.
If to 1st United, to
1st United Bancorp
980 N. Federal Highway
Boca Raton, Florida 33432
Attention:
Telephone:
Facsimile:
With a copy to:
1st United Bancorp
980 N. Federal Highway
Boca Raton, Florida 33432
Attention:
Telephone:
Facsimile:
With a copy to:
Akerman, Senterfitt & Eidson, P.A.
Phillips Point - East Tower
Suite 900
777 South Flagler Drive
West Palm Beach, FL 33401
Attention:
Telephone:
Facsimile:
If to Wachovia, to
Wachovia Corporation
301 North Main Street
Winston-Salem, North Carolina 27101
Attention: Chairman of the Board
Telephone: (910)770-5000
Facsimile: (910)770-5959
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With a copy to:
Wachovia Corporation
301 North Main Street
Winston-Salem, North Carolina 27101
Attention Kenneth W. McAllister
Telephone: (910) 732-5141
Facsimile: (910)732-5959
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: H. Rodgin Cohen, Esq.
Mark J. Meting, Esq.
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Stock Option Agreement entered into represent the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made (other than the Stock Option
Agreement). Except for Section 6.13, nothing in this Agreement expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation "
* * *
-40-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
1ST UNITED BANCORP
By:/s/ WARREN S. ORLANDO
-----------------------------
Name: Warren S. Orlando
Title: President & CEO
WACHOVIA CORPORATION
By:/s/ L. M. BAKER, JR
-----------------------------
Name: L. M. Baker, Jr.
Title: President & CEO
-41-
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
WACHOVIA CORPORATION/1ST UNITED BANCORP
SCHEDULES
- ---------
5.03(b) List of Bancorp Stock Options
5.03(c)(i) List of 1st United Bancorp Subsidiaries
5.03(c)(ii) Equity Securities
5.03(f)(ii) Consents Required
5.03(g)(ii) and 5.03 (g)(iii)
5.03(h) Bancorp Litigation
5.03(i) Bancorp Regulatory Matters
5.03(m) Employee Benefit Plans
5.03(q) Tax Matters
5.03(t) Insurance Schedule
5.03(u) Asset Classifications
5.04(b) Wachovia Disclosure Schedule
EXHIBITS
- --------
A - Form of Stock Option Agreement
B - Form of Shareholder Agreement
C - Form of Plan of Merger
The Company hereby agrees to furnish supplemently a copy of any of the foregoing
Exhibits or Schedules to the Securities and Exchange Commission upon request.
<TABLE>
<CAPTION>
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
------------ ------------- ------------ ------------
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 9,845 9,631 9,823 9,608
Net effect of the assumed exercise of stock
options, based on the treasury stock method 236 320 244 311
using average market price
------------ ------------- ------------ ------------
10,081 9,951 10,067 9,919
============ ============= ============ ============
Net income $ 2,126 $ 2,233 $ 4,660 $ 4,094
============ ============= ============ ============
Income per common share $ 0.21 $ 0.22 $ 0.46 $ 0.41
============ ============= ============ ============
Fully Diluted:
Average shares outstanding 9,845 9,631 9,823 9,608
Net effect of the assumed exercise of stock
options, based on the treasury stock method
using average market price or period 257 323 256 323
ending market price, whichever is higher
------------ ------------- ------------ ------------
10,102 9,954 10,079 9,931
============ ============= ============ ============
Net income $ 2,126 $ 2,233 $ 4,660 $ 4,094
============ ============= ============ ============
Income per common share $ 0.21 $ 0.22 $ 0.46 $ 0.41
============ ============= ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 42,161
<INT-BEARING-DEPOSITS> 88,636
<FED-FUNDS-SOLD> 23,510
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 17,048
<INVESTMENTS-CARRYING> 47,983
<INVESTMENTS-MARKET> 47,998
<LOANS> 499,770
<ALLOWANCE> 9,511
<TOTAL-ASSETS> 747,282
<DEPOSITS> 669,957
<SHORT-TERM> 4,412
<LIABILITIES-OTHER> 7,448
<LONG-TERM> 0
0
0
<COMMON> 99
<OTHER-SE> 65,366
<TOTAL-LIABILITIES-AND-EQUITY> 747,282
<INTEREST-LOAN> 22,381
<INTEREST-INVEST> 2,085
<INTEREST-OTHER> 2,719
<INTEREST-TOTAL> 27,185
<INTEREST-DEPOSIT> 7,868
<INTEREST-EXPENSE> 7,928
<INTEREST-INCOME-NET> 19,257
<LOAN-LOSSES> 80
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 16,749
<INCOME-PRETAX> 7,477
<INCOME-PRE-EXTRAORDINARY> 7,477
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,660
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<YIELD-ACTUAL> 5.93
<LOANS-NON> 10,498
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,021
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,826
<CHARGE-OFFS> 576
<RECOVERIES> 181
<ALLOWANCE-CLOSE> 9,511
<ALLOWANCE-DOMESTIC> 9,511
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
