SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 1997
First Southeast Financial Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-22240 57-0979678
- ---------------------------- ---------------- ----------------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
201 North Main Street, Anderson, South Carolina 29622
- ----------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 224-3401
--------------
Not Applicable
------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
Item 5. Other Events
- ---------------------
On July 1, 1997, First Southeast Financial Corporation ("FSFC") and its
wholly-owned subsidiary, First Federal Savings and Loan Association of
Anderson ("FFA") entered into a definitive merger agreement ("Agreement") with
Carolina First Corporation ("CFC"), and Carolina First Bank ("CFB"), pursuant
to which FSFC will be merged into CFC and, thereafter, FFA will be merged into
CFB. The Agreement provides that each share of FSFC's common stock will be
exchanged for one share of CFC Common Stock subject to adjustment in the event
of a 10% movement in CFC's stock price. The aggregate value of the
consideration is approximately $65 million, subject to certain adjustments.
Consummation of the acquisition is subject to several conditions,
including receipt of applicable regulatory approval and stockholder approval
by FSFC's and CFC's shareholders. For information regarding the terms of the
proposed transaction, reference is made to the Agreement and the press release
dated July 1, 1997, which are attached hereto as Exhibits 2 and 99,
respectively, and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
- --------------------------------------------------------------
(c) Exhibits:
2 Reorganization and Plan of Mergers dated as of July 1,
1997 by and among First Southeast Financial Corporation,
First Federal Savings and Loan Association of Anderson,
Carolina First Corporation and Carolina First Bank.
99 Press Release dated July 1, 1997.
<PAGE>
<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, hereunto duly authorized.
FIRST SOUTHEAST FINANCIAL
CORPORATION
July 3, 1997 By: /s/ David C. Wakefield III
---------------------------------
David C. Wakefield III
President
<PAGE>
<PAGE>
Exhibit 2
Reorganization Agreement
dated as of July 1, 1997 and Related Plans of Merger
<PAGE>
<PAGE>
REORGANIZATION AGREEMENT
BY AND AMONG
CAROLINA FIRST CORPORATION,
CAROLINA FIRST BANK,
FIRST SOUTHEAST FINANCIAL CORPORATION,
AND
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF ANDERSON
DATED AS OF JULY 1, 1997
<PAGE>
<PAGE>
TABLE OF CONTENTS
SECTION I. DEFINITIONS...................................................... 6
1.1. Articles of Merger............................................... 6
1.2. Bank Merger...................................................... 6
1.3. Benefit Plans.................................................... 6
1.4. CERCLA........................................................... 6
1.5. CFB.............................................................. 6
1.6. CFC.............................................................. 6
1.7. CFC Benefit Plans................................................ 6
1.8. CFC Common Stock................................................. 6
1.9. CFC Shareholder Approvals........................................ 6
1.10. CFC Shareholders' Meeting........................................ 6
1.11. Closing; Closing Date ........................................... 6
1.12. Code............................................................. 7
1.13. Confidential Information......................................... 7
1.14. Corporate Merger................................................. 7
1.15. Derivative Contract.............................................. 7
1.16. ERISA............................................................ 7
1.17. Effective Time................................................... 7
1.19. Exchange Act..................................................... 7
1.20. FDIC............................................................. 7
1.21. FFA.............................................................. 7
1.22. FMSC............................................................. 7
1.23. FSFC............................................................. 7
1.24. FSFC Benefit Plans............................................... 7
1.25. FSFC Common Stock................................................ 7
1.26. FSFC Shareholder Approvals....................................... 7
1.27. FSFC Shareholders' Meeting....................................... 7
1.28. Federal Reserve Board............................................ 7
1.29. Federal Reserve.................................................. 7
1.30. GAAP............................................................. 7
1.31. IRS.............................................................. 7
1.32. Knowledge........................................................ 7
1.33. Lien............................................................. 8
1.34. Material Adverse Event; Material Adverse Effect.................. 8
1.35. Mergers.......................................................... 8
1.36. OTS.............................................................. 8
1.37. PBGC............................................................. 8
1.38. Person........................................................... 8
1.39. Plan of Merger................................................... 8
1.40. Proxy Statement.................................................. 8
1.41. Registration Statement........................................... 8
1.42. Regulations...................................................... 8
1.43. Regulatory Approvals............................................. 8
1.44. Regulatory Authority............................................. 8
1.45. Reorganization Agreement......................................... 8
1.46. Rights........................................................... 8
1.47. SEC.............................................................. 9
1.48. Securities Act................................................... 9
1.49. State Board...................................................... 9
1.50. Shareholder Approvals............................................ 9
2
<PAGE>
<PAGE>
1.51. Shareholders' Meetings........................................... 9
1.52. Subsidiary Plan of Merger........................................ 9
SECTION II. THE MERGERS..................................................... 9
2.1. Corporate Merger................................................. 9
2.2. Bank Merger...................................................... 9
2.3. The Closing...................................................... 9
2.4. Consideration for the Mergers.................................... 9
2.5. Shareholder Approvals; Registration Statement.................... 9
2.6. Cooperation; Regulatory Filings.................................. 9
2.7. Tax Treatment................................................... 10
SECTION III. REPRESENTATIONS AND WARRANTIES OF FSFC AND FFA................ 10
3.1. Organization, Good Standing and Conduct of Business............. 10
3.2. Subsidiaries.................................................... 10
3.3. Corporate Authority............................................. 11
3.4. Binding Effect.................................................. 11
3.5. Capitalization of FSFC.......................................... 11
3.6. Compliance with Laws; Absence of Defaults....................... 11
3.7. Non-Contravention and Defaults; No Liens........................ 12
3.8. Necessary Approvals............................................. 12
3.9. Financial Statements............................................ 12
3.10. Tax Returns..................................................... 12
3.11. Undisclosed Liabilities......................................... 13
3.12. Properties, Encumbrances........................................ 13
3.13. Litigation...................................................... 13
3.14. Reports......................................................... 13
3.15. Brokers......................................................... 13
3.16. Expenditures.................................................... 13
3.17. Insurance....................................................... 13
3.18. Contracts and Commitments....................................... 13
3.19. Employee Benefit Plans and Contracts............................ 14
3.20. Allowance for Loan Losses....................................... 15
3.21. Environmental Matters........................................... 15
3.22. FSFC Information................................................ 16
3.23. Asset Classification............................................ 16
3.24. Derivatives Contracts, Etc...................................... 16
3.25. Labor Matters................................................... 16
3.26. Securities Reports.............................................. 16
3.27. Ownership of CFC Common Stock................................... 16
3.28. Resale of CFC Common Stock...................................... 16
SECTION IV. REPRESENTATIONS AND WARRANTIES BY CFC AND CFB.................. 17
4.1. Organization, Good Standing and Conduct of Business............. 17
4.2. Subsidiaries.................................................... 17
4.3. Corporate Authority............................................. 17
4.4. Binding Effect.................................................. 17
4.5. Capitalization of CFC........................................... 17
4.6. Compliance with Laws; Absence of Defaults....................... 18
4.7. Non-Contravention and Defaults; No Liens........................ 18
4.8. Necessary Approvals............................................. 18
4.9. Financial Statements............................................ 19
3
<PAGE>
<PAGE>
4.10. Tax Returns..................................................... 19
4.11. Undisclosed Liabilities......................................... 19
4.12. Litigation...................................................... 19
4.13. Reports......................................................... 20
4.14. Employee Benefit Plans and Contracts............................ 20
4.15. Allowance for Loan Losses....................................... 21
4.16. Environmental Matters........................................... 21
4.17. Asset Classification............................................ 21
4.18. Labor Matters................................................... 21
4.19. CFC Information................................................. 21
4.20. Securities Reports.............................................. 21
4.21. Ownership of FSFC Common Stock.................................. 22
4.22. Due Diligence................................................... 22
SECTION V. CONDUCT OF BUSINESS PENDING CLOSING............................ 22
5.1. Conduct of FSFC Pending Closing................................. 22
5.2. Conduct of CFC Pending Closing.................................. 23
SECTION VI. COVENANTS OF THE PARTIES....................................... 23
6.1. Access to Properties and Records................................ 23
6.2. Confidentiality................................................. 23
6.3. Cooperation..................................................... 24
6.4. Affiliates' Letters............................................. 24
6.5. Listing of CFC Common Stock..................................... 24
6.6. Letters from Accountants........................................ 24
6.7. Tax Treatment................................................... 24
6.8. Expenses........................................................ 24
6.9. Material Events................................................. 24
6.10. Acquisition Proposals........................................... 24
6.11. Public Announcements............................................ 25
6.12. Updating of Schedules........................................... 25
6.13. Certain Policies of FSFC........................................ 25
6.14. Employee Matters................................................ 25
6.15. Directors....................................................... 26
6.16. Charitable Contributions........................................ 26
6.17. Prohibited Actions.............................................. 26
SECTION VII. CONDITIONS TO CFC'S OBLIGATION TO CLOSE...................... 26
7.1. Performance of Acts and Representations by FSFC................. 26
7.2. Opinion of Counsel for FSFC..................................... 27
7.3. Conduct of Business............................................. 27
7.4. Consents........................................................ 27
7.5. Certificate..................................................... 27
7.6. Shareholder Approvals........................................... 27
7.7. IRS Ruling...................................................... 27
7.8. Securities Laws................................................. 28
7.9. FSFC Allowance.................................................. 28
SECTION VIII. CONDITIONS TO THE OBLIGATION OF FSFC TO CLOSE................. 28
8.1. Performance of Acts and Representations by CFC and CFB.......... 28
8.2. Opinion of Counsel for CFC...................................... 28
8.3. Conduct of Business............................................. 28
4
<PAGE>
<PAGE>
8.4. Consents........................................................ 28
8.5. Certificate..................................................... 29
8.6. Tax Opinion..................................................... 29
8.7. Shareholder Approvals........................................... 29
8.8. Securities Laws................................................. 29
SECTION IX. TERMINATION................................................... 29
9.1. Termination..................................................... 29
SECTION X. INDEMNIFICATION................................................ 29
10.1. Information for Application and Statements..................... 29
10.2. Indemnification of Officers and Directors...................... 30
10.3. Insurance...................................................... 30
SECTION XI. MISCELLANEOUS................................................. 31
11.1. Survival of Representations and Warranties..................... 31
11.2. Entire Agreement............................................... 31
11.3. Binding Agreement.............................................. 31
11.4. Notices........................................................ 31
11.5. Counterparts................................................... 31
11.6. Headings....................................................... 32
11.7. Law Governing.................................................. 32
11.8. Amendment...................................................... 32
11.9. Waiver......................................................... 32
APPENDICES
Appendix A Plan of Merger
Appendix B Subsidiary Plan of Merger
SCHEDULES
Schedule 3.6: Violations
Schedule 3.8: Necessary Approvals
Schedule 3.11: Material Liabilities or Obligations Not Disclosed in the FSFC
Financial Statements
Schedule 3.12: Exceptions to No Liens
Schedule 3.13: Litigation
Schedule 3.16: Proposed Expenditures Exceeding $100,000
Schedule 3.17: Insurance
Schedule 3.1 Contracts or Other Commitments of FSFC; Other Material Contracts
or Commitments
Schedule 3.19: FSFC Employee Benefit and Welfare Plans
Schedule 3.23: Classified Assets
Schedule 3.24: Derivatives Contracts, Etc.
Schedule 4.4: Exceptions to CFC Capitalization Representations
Schedule 4.6: Violations
Schedule 4.10: CFC Tax Matters
Schedule 4.11: Material Liabilities or Obligations Not Disclosed in the CFC
Financial Statements
Schedule 4.12: Litigation
Schedule 4.14: CFC Employee Benefit and Welfare Plans
Schedule 4.17: Classified Assets
Schedule 6.16: Charitable Contributions
5
<PAGE>
<PAGE>
This REORGANIZATION AGREEMENT is entered into as of this 1st day of July,
1997 among Carolina First Corporation ("CFC"), a corporation organized and
existing under the laws of the State of South Carolina, Carolina First Bank
("CFB"), a corporation organized and existing under the laws of the State of
South Carolina, First Southeast Financial Corporation ("FSFC"), a corporation
organized and existing under the laws of the state of Delaware, and First
Federal Savings and Loan Association of Anderson ("FFA"), a federal savings and
loan association organized and existing under the laws of the United States of
America.
RECITALS
A. FSFC is a Delaware corporation headquartered in Anderson, South
Carolina, and a registered savings and loan holding company under the Home
Owners' Loan Act of 1933, as amended ("HOLA").
B. FFA is a federal savings and loan association headquartered in
Anderson, South Carolina, and a wholly-owned subsidiary of FSFC.
C. CFC is a South Carolina corporation headquartered in Greenville, South
Carolina, and a registered bank holding company under the Bank Holding Company
Act of 1956, as amended ("BHCA").
D. CFB is a South Carolina-chartered, non-member banking corporation
headquartered in Greenville, South Carolina.
E. The parties hereto desire that FSFC be merged with and into CFC (the
"Corporate Merger"), all as more particularly set forth herein.
F. Subsequent to the Corporate Merger, the parties desire that FFA be
merged with and into CFB (the "Bank Merger"), all as more particularly set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, CFC, CFB, FSFC and
FFA hereby agree as follows:
SECTION I. DEFINITIONS
1.1. Articles of Merger. The Articles of Merger to be executed by (i) CFC
and FSFC and (ii) CFB and FFA and in a form appropriate for filing with the
Secretary of State of South Carolina and the Secretary of State of Delaware, and
relating to the effective consummation of the Mergers as contemplated by the
Plan of Merger.
1.2. Bank Merger. The merger described in Section 2.2.
1.3. Benefit Plans. All employee benefit plans within the meaning of
Section 3(3) of ERISA and any related or separate contracts, plans, trusts,
annuities, programs, policies, arrangements, practices, customs and
understandings that provide benefits of economic value to any present or former
employee, or current or former beneficiary, dependent or assignee of any such
employee or former employee.
1.4. CERCLA. The Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. 9601 et seq.
1.5. CFB. Carolina First Bank, a South Carolina corporation and a
wholly-owned subsidiary of CFC.
1.6. CFC. Carolina First Corporation, a bank holding company
headquartered in Greenville, South Carolina.
1.7. CFC Benefit Plans. All Benefit Plans, and all other material fringe
benefit plans or programs, sponsored or maintained by CFC or CFB or under which
CFC or CFB may be obligated.
1.8. CFC Common Stock. The common stock, par value $1.00 per share, of
CFC.
1.9. CFC Shareholder Approvals. This term shall mean, as the context may
require, the duly authorized written consent of CFC to the Bank Merger and the
approval by the requisite vote of the shareholders of CFC at the CFC
Shareholders' Meeting of the Corporate Merger, all in accordance with this
Reorganization Agreement and the Plan of Merger and the Subsidiary Plan of
Merger.
6
<PAGE>
<PAGE>
1.10. CFC Shareholders' Meeting. The meeting of CFC shareholders at which
the Corporate Merger will be voted upon.
1.11. Closing; Closing Date. The terms "Closing" and "Closing Date" shall
have the meanings ascribed to them in Section 2.3 hereof.
1.12. Code. The Internal Revenue Code of 1986, as amended, including, if
the context permits, the applicable regulations promulgated pursuant thereto.
1.13. Confidential Information. The term "Confidential Information" shall
mean all information of any kind concerning a party hereto that is furnished by
such party or on its behalf pursuant to Section 6.1 hereof as a result of the
transactions contemplated herein, except information (i) ascertainable or
obtained from public or published information, (ii) received from a third party
not known to the recipient of Confidential Information to be under an obligation
to keep such information confidential, (iii) which is or becomes known to the
public (other than through a breach of this Reorganization Agreement), (iv) of
which the recipient was in possession prior to disclosure thereof in connection
with the Mergers, or (v) which was independently developed by the recipient
without the benefit of Confidential Information.
1.14. Corporate Merger. The merger described in Section 2.1 hereof.
1.15. Derivative Contract. Any exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract or any other
contract not included on a balance sheet which is a derivative contract
(including various combinations thereof).
1.16. ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
1.17. Effective Time. The date and time which the Mergers become effective
as set forth in the Articles of Merger. Subject to the terms and conditions
hereof, the Effective Time shall be such time on such date as CFC shall notify
FSFC in writing not less than five days prior thereto, which date shall not be
more than 30 days after all conditions have been satisfied or waived in writing.
1.18. Ending Price. The average of the closing prices as quoted on the
Nasdaq National Market for CFC Common Stock for the ten days in which CFC Common
Stock was traded immediately prior to the Closing Date.
1.19. Exchange Act. The Securities Exchange Act of 1934, as amended.
1.20. FDIC. The Federal Deposit Insurance Corporation.
1.21. FFA. First Federal Savings and Loan Association of Anderson, a
federal savings and loan association organized and existing under the laws of
the United States of America. Where the context permits, FFA shall be deemed to
include FFA and FMSC.
1.22. FMSC. First Master Service Corporation, a South Carolina corporation
and wholly-owned subsidiary of FFA.
1.23. FSFC. First Southeast Financial Corporation, a corporation
organized and existing under the laws of the state of Delaware. In Section III
hereof, where the context permits, FSFC shall include FFA.
1.24. FSFC Benefit Plans. All Benefit Plans, and all other material fringe
benefit plans or programs, sponsored or maintained by FSFC or FFA or under which
FSFC or FFA may be obligated.
1.25. FSFC Common Stock. The common stock, par value $0.01 per share, of
FSFC.
1.26. FSFC Shareholder Approvals. This term shall mean, as the context may
require, the duly authorized written consent of FSFC to the Bank Merger and the
approval by the requisite vote of the shareholders of FSFC at the FSFC
Shareholders' Meeting of the Corporate Merger, all in accordance with this
Reorganization Agreement and the Plan of Merger.
1.27. FSFC Shareholders' Meeting. The meeting of FSFC shareholders at
which the Corporate Merger will be voted upon.
1.28. Federal Reserve Board. The Board of Governors of the Federal Reserve
System, or any successor thereto.
1.29. Federal Reserve. The Federal Reserve Bank of Richmond acting under
delegated authority from the Federal Reserve Board, or any successor thereto.
1.30. GAAP. Generally accepted accounting principles consistently applied.
1.31. IRS. The Internal Revenue Service.
7
<PAGE>
<PAGE>
1.32. Knowledge. When used in the phrase "to the knowledge" or a similar
phrase, shall mean the actual knowledge of the executive officers of the
referenced party or parties, as applicable, after reasonable inquiry of the
other executive officers and the directors of the parties and the Persons
responsible for the day-to-day operations of the parties or their subsidiaries
(although this definition shall not give rise to any duty of any independent
verification or confirmation by members of senior management or board of
directors of the entity making the representation or warranty from other
Persons).
1.33. Lien. Any lien, claim, encumbrance, security interest, assessment,
charge, restriction (including restriction on voting rights or rights of
disposition), mortgage, deed of trust, equity of any character, third party
right of whatever nature or other similar or like charge.
1.34. Material Adverse Event; Material Adverse Effect. This shall mean an
event, effect, occurrence or circumstance which, alone or when taken with other
breaches, events, effects, occurrences or circumstances existing concurrently
therewith (including without limitation, any breach of a representation or
warranty contained herein by such party) (i) has or is reasonably expected to
have a material adverse effect on the properties, financial condition, results
of operations, or business of such party and its subsidiaries, taken as a whole,
or (ii) would materially prevent such party's, or any affiliated party's,
ability to perform its obligations under this Reorganization Agreement or the
consummation of any of the transactions contemplated hereby; provided, however,
that in determining whether a Material Adverse Effect or Material Adverse Event
has occurred, there shall be excluded any effect the cause of which is (A) any
change in banking, tax and similar laws of general applicability or
interpretations thereof by courts or governmental authorities, (B) any change in
GAAP or regulatory accounting requirements applicable to the parties hereto, (C)
any action or omission of FSFC or CFC or a subsidiary thereof taken with the
prior written consent of CFC or FSFC, as applicable, in contemplation of the
transaction contemplated herein, (D) the actions contemplated by Section 6.13,
and (E) any changes in general economic conditions affecting financial
institutions generally, including but not limited to changes in interest rates.
1.35. Mergers. The Bank Merger and the Corporate Merger.
1.36. OTS. The Office of Thrift Supervision.
1.37. PBGC. The Pension Benefit Guaranty Corporation.
1.38. Person. An individual, a partnership, a corporation, a commercial
bank, an industrial bank, a savings association, a savings bank, a limited
liability company, an association, a joint stock company, a trust, a business
trust, a joint venture, an unincorporated organization, a governmental entity
(or any department, agency, or political subdivision thereof) or other entity.
1.39. Plan of Merger. The Plan of Merger attached to this Reorganization
Agreement as Appendix A.
1.40. Proxy Statement. The joint proxy statement/prospectus included in
the Registration Statement which shall be furnished to the FSFC shareholders and
the CFC shareholders in connection with the Shareholders' Meetings and the
matters contemplated hereby.
1.41. Registration Statement. The Registration Statement on Form S-4 to be
filed with the SEC registering the issuance of the CFC Common Stock to be issued
to the FSFC shareholders in connection with the Corporate Merger.
1.42. Regulations. The regulations issued by the IRS under the Code.
1.43. Regulatory Approvals. The order of the Federal Reserve Board (or, if
applicable, of the Federal Reserve acting under delegated authority) approving
the Mergers and the required order, approval, or exemption of the FDIC, the OTS,
the State Board, or any other Regulatory Authority approving the Corporate
Merger and/or the Bank Merger.
1.44. Regulatory Authority. Any federal or state governmental agency or
authority charged with the supervision or regulation of depository institutions
or engaged in the insurance of deposits (including, without limitation, the OTS,
the FDIC, and the Federal Reserve Board) and any other federal or state bank,
thrift or other financial institution, insurance or securities regulatory
authorities, and any and all other agencies or departments of federal, state or
local government, including without limitation the SEC.
8
<PAGE>
<PAGE>
1.45. Reorganization Agreement. This Reorganization Agreement, including
all schedules, appendices and exhibits attached hereto.
1.46. Rights. Rights shall mean warrants, calls, commitments, options,
rights (whether stock appreciation rights, conversion rights, exchange rights,
profit participation rights, or otherwise), securities or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, and other arrangements or commitments which obligate a
Person to issue, otherwise cause to become outstanding, sell, transfer, pledge,
or otherwise dispose of any of its capital stock or other ownership interests,
or any voting rights thereof or therein, or to pay monetary sums by reference to
the existence or market valuation, or in lieu and place, of any of its capital
stock or ownership interests therein.
1.47. SEC. The Securities and Exchange Commission.
1.48. Securities Act. The Securities Act of 1933, as amended.
1.49. State Board. The South Carolina State Board of Financial
Institutions.
1.50. Shareholder Approvals. The FSFC Shareholders' Approval and the CFC
Shareholders' Approval.
1.51. Shareholders' Meetings. The respective meetings of the shareholders
of FSFC and CFC at which the Corporate Merger shall be voted upon.
1.52. Subsidiary Plan of Merger. The Subsidiary Plan of Merger attached to
this Reorganization Agreement as Appendix B.
SECTION II. THE MERGERS
2.1. Corporate Merger. Subject to the terms and conditions of this
Reorganization Agreement, including the Plan of Merger, FSFC shall merge with
and into CFC (the "Corporate Merger"), the separate existence of FSFC shall
cease, and CFC shall survive and the name of the surviving Corporation shall be
"Carolina First Corporation". The parties agree that the Corporate Merger will
be effected pursuant to the terms set forth in the Plan of Merger.
2.2. Bank Merger. On the day following the Closing Date or as soon
thereafter as CFB may deem appropriate: FFA shall be merged with and into CFB
(the "Bank Merger"), the separate existence of FFA shall cease and CFB shall
survive and the name of the surviving bank shall be "Carolina First Bank." The
parties agree that the Bank Merger will be effected pursuant to the terms set
forth in the Subsidiary Plan of Merger.
2.3. The Closing. The Closing of the transaction contemplated herein shall
be held as soon as reasonably practicable after fulfillment of all conditions
set forth in Section VII and Section VIII hereof (the "Closing Date"), at the
offices of Wyche, Burgess, Freeman & Parham, P.A. or at such other place and
time as the parties hereto may mutually agree; provided, however, that in the
event that Closing has not occurred by March 31, 1998, either party hereto shall
have the right to terminate this Reorganization Agreement.
2.4. Consideration for the Mergers. The manner of converting the shares of
FSFC into shares of CFC shall be as set forth in the Plan of Merger. The manner
of converting the shares of FFA into shares of CFB shall be as set forth in the
Subsidiary Plan of Merger.
2.5. Shareholder Approvals; Registration Statement. Each of CFC and FSFC
shall call their respective Shareholders' Meetings in accordance with the
applicable provisions of South Carolina law, Delaware law and federal securities
laws (as applicable) for the purpose of considering and voting on this
Reorganization Agreement and the transactions contemplated hereby. The
Shareholders' Meetings shall be held as soon as practicable. The board of
directors of each of CFC and FSFC shall recommend (subject to compliance with
their legal and fiduciary duties, as advised by counsel) to their respective
shareholders and use their best efforts to obtain the approval of this
Reorganization Agreement and the Mergers. CFC shall file the Registration
Statement with the SEC and shall pay the required filing fees. The parties will
use their respective best efforts and cooperate with each other to obtain
promptly the effectiveness of the
9
<PAGE>
<PAGE>
Registration Statement. CFC shall also take any reasonable action required to be
taken under the blue sky laws in connection with the issuance of CFC Common
Stock in the Corporate Merger. CFC and FSFC shall jointly prepare the Proxy
Statement, which shall be reasonably acceptable to all parties. The Proxy
Statement shall be mailed to the FSFC and CFC shareholders as soon as reasonably
practicable after the SEC's declaration of effectiveness of the Registration
Statement, with due consideration given to the anticipated length of time that
will be required to obtain the Regulatory Approvals. FSFC shall mail, at its
expense, the Proxy Statement to its shareholders. CFC shall mail, at its
expense, the Proxy Statement to its shareholders.
2.6. Cooperation; Regulatory Filings. Subject to the terms and conditions
of this Reorganization Agreement, CFC and FSFC shall cooperate, and shall cause
each of their subsidiaries to cooperate, in the preparation and submission by
CFC and FSFC, as promptly as reasonably practicable, of such applications,
petitions, and other documents and materials as any of them may reasonably deem
necessary or desirable to the SEC, the Federal Reserve, the OTS, the appropriate
Regulatory Authorities of South Carolina and Delaware, the shareholders of FSFC
and CFC, and any other Persons for the purpose of obtaining any approvals or
consents necessary to consummate the transactions contemplated by this
Reorganization Agreement. Prior to the making of any such filings with any
Regulatory Authority or the making of any written disclosures with respect to
the transactions contemplated hereby to shareholders or to any third person
(such as mailings to shareholders or press releases), the parties shall submit
to each other the material to be filed, mailed, or released. Any such materials
shall be reasonably acceptable to all parties prior to the filings with any
Regulatory Authorities or the disclosures to shareholders or to any third
person, except to the extent that any person is legally required to proceed
prior to obtaining the approvals of the other parties. CFC shall be responsible
for all filings fees associated with the Regulatory Approvals.
2.7. Tax Treatment. CFC and FSFC intend that the Mergers shall qualify as
tax-free reorganizations under Section 368(a) of the Code.
2.8. Reservation of Right to Revise Transaction. CFC may at any time
change the method of effecting the acquisition of FSFC and FFA (including
without limitation the provisions of this Section II) if and to the extent it
deems such change to be desirable; provided, however, that no such change shall
(i) alter the type of consideration to be issued to the holders of FSFC Common
Stock as provided for in this Reorganization Agreement, (ii) reduce the value of
such consideration, (iii) adversely affect the intended tax-free treatment to
FSFC's stockholders as a result of receiving such consideration or prevent the
parties from obtaining the tax opinion of Wyche, Burgess, Freeman & Parham, P.A.
referred to herein, (iv) materially impair the ability to receive the Regulatory
Approvals, or (v) materially delay the Closing.
SECTION III. REPRESENTATIONS AND WARRANTIES OF FSFC AND FFA
Each of FSFC and FFA hereby represent and warrant to CFC and CFB the
following matters on and as of the date of this Reorganization Agreement and at
the Effective Time; provided, however, that before any breach of or inaccuracy
in any of the representations or warranties given in this Section III shall be
actionable or shall constitute grounds for termination of or failure to perform
under the terms of this Reorganization Agreement by CFC or CFB, such breach or
inaccuracy must have a Material Adverse Effect.
3.1. Organization, Good Standing and Conduct of Business. FSFC is a
corporation, duly organized, validly existing and in good standing under the
laws of Delaware, is duly registered as a savings and loan holding company under
the HOLA, and has full power and authority and all governmental and regulatory
authorizations ("Authorizations") necessary to own all of its properties and
assets and to carry on its business as it is presently being conducted, and is
properly licensed, qualified and in good standing as a foreign corporation in
all jurisdictions wherein the character of the properties or the nature of the
business transacted by FSFC makes such license or qualification necessary. FFA
is the sole direct subsidiary of FSFC. FFA is a savings and loan association,
duly organized, validly existing and in good standing under the laws of the
United States of America, and has full power and authority
10
<PAGE>
<PAGE>
and all Authorizations necessary to own all of its properties and assets and to
carry on its business as it is presently being conducted, and is properly
licensed, qualified and in good standing as a foreign corporation in all
jurisdictions wherein the character of the properties or the nature of the
business transacted by FFA makes such license or qualification necessary. FFA is
a savings and loan association and is an "insured depository institution" as
defined in the Federal Deposit Insurance Act and the applicable regulations
thereunder. The deposits of FFA are insured by the Savings Association Insurance
Fund of the FDIC. FFA is a member of the Federal Home Loan Bank of Atlanta (the
"FHL Bank").
3.2. Subsidiaries. (a) Other than FFA (and indirectly FMSC), FSFC neither
owns nor controls five percent (5%) or more of the outstanding equity
securities, either directly or indirectly, of any Person. FSFC is the direct,
record and beneficial owner of 100% of the outstanding shares of capital stock
of FFA. There are no contracts, commitments, understandings or arrangements by
which FSFC is or may be bound to sell or otherwise issue any shares of FFA's
capital stock, and there are no contracts, commitments, understandings or
arrangements relating to the rights of FSFC to vote or to dispose of such
shares. All of the shares of capital stock of FFA are fully paid and
nonassessable and are owned by FSFC free and clear of any Liens.
(b) Other than FMSC, FFA neither owns nor controls five percent (5%) or
more of the outstanding equity securities, either directly or indirectly, of any
Person. FFA is the direct, record and beneficial owner of 100% of the
outstanding shares of capital stock of FMSC. There are no contracts,
commitments, understandings or arrangements by which FFA is or may be bound to
sell or otherwise issue any shares of FMSC's capital stock, and there are no
contracts, commitments, understandings or arrangements relating to the rights of
FFA to vote or to dispose of such shares. All of the shares of capital stock of
FMSC are fully paid and nonassessable and are owned by FFA free and clear of any
Liens.
3.3. Corporate Authority. The execution, delivery and performance of this
Reorganization Agreement have been duly authorized by the respective Boards of
Directors of FSFC and FFA. The execution, delivery and performance of this
Reorganization Agreement have been duly authorized by the at least two-thirds of
the "Continuing Directors" as contemplated in FSFC's Certificate of
Incorporation. Other than the FSFC Shareholder Approvals, no further corporate
acts or proceedings on the part of FSFC or FFA are required or necessary to
authorize this Reorganization Agreement or the Mergers.
3.4. Binding Effect. Subject to receipt of the FSFC Shareholder Approvals
and the Regulatory Approvals, when executed, this Reorganization Agreement will
constitute valid and legally binding obligations of FSFC and FFA, enforceable
against FSFC and FFA in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (ii) laws relating to the safety and
soundness of depository institutions, and (iii) general principles of equity.
Each document and instrument contemplated by this Reorganization Agreement, when
executed and delivered by FSFC and/or FFA in accordance with the provisions
hereof, shall be duly authorized, executed and delivered by FSFC and/or FFA (as
applicable) and enforceable against FSFC and/or FFA (as applicable) in
accordance with its terms, subject to the exceptions in the previous sentence.
3.5. Capitalization of FSFC. The authorized capital stock of FSFC consists
solely of (i) 8,000,000 authorized shares of common stock ($0.01 par value), of
which 4,388,231 shares are issued and outstanding as of the date hereof, and
(ii) 2,000,000 shares of preferred stock, none of which is outstanding. All of
the issued and outstanding shares of FSFC are validly issued and fully paid and
nonassessable. There are no outstanding Rights to purchase shares of any class
of capital stock of FSFC, or outstanding agreements pursuant to which FSFC is or
may become obligated to issue any shares of its capital stock. None of the
shares of the FSFC Common Stock is subject to any restrictions as to the
transfer thereof, except as set forth in FSFC's Certificate of Incorporation or
Bylaws and except for restrictions on account of applicable federal or state
securities laws.
3.6. Compliance with Laws; Absence of Defaults. (a) Neither FSFC nor FFA
is in default under, or in violation of, any provision of its Certificate of
Incorporation, Federal Stock Charter or Bylaws.
Neither FSFC nor FFA is in default under, or in violation of, any agreement to
which either FSFC or FFA is a party.
11
<PAGE>
<PAGE>
(b) Except as disclosed in Schedule 3.6, neither FSFC nor FFA is in
violation of any applicable law, rule or regulation. Neither FSFC nor FFA has
received any notification or communication from, or consented to or entered into
any memorandum, agreement or order with, any Regulatory Authority (i) asserting
that FSFC or FFA is not in compliance with any of the statutes, regulations,
rules or ordinances which such Regulatory Authority has promulgated or enforces,
or the internal policies and procedures of FSFC or FFA, as applicable, (ii)
threatening to revoke any Authorization, (iii) requiring or threatening to
require FSFC or FFA, or indicating that FSFC or FFA may be required, to enter
into a cease and desist order, agreement or memorandum of understanding or any
other agreement restricting or limiting or purporting to restrict or limit in
any manner the operations of FSFC or FFA, or (iv) directing, restricting or
limiting, or threatening to direct, restrict or limit in any manner the
operations of FSFC or FFA (any such notification, communication, memorandum,
agreement or order described in this sentence herein referred to as a
"Regulatory Agreement").
(c) Each of FSFC and FFA:
(i) is not required to give prior notice to any federal banking
agency regulating thrift institutions of the proposed addition of an
individual to its Board of Directors or the employment of an individual as
a senior executive;
(ii) is "well capitalized" as defined in 12 CFR 564.4 and is not in
"troubled condition" as defined in 12 CFR 574.9; and
(iii) is in compliance in all material respects with all fair
lending laws or other laws relating to discrimination, including, without
limitation, the Equal Credit Opportunity Act, the Fair Credit Reporting
Act, the Fair Housing Act, the Community Reinvestment Act and the Home
Mortgage Disclosure Act and similar federal and state laws and
regulations.
3.7. Non-Contravention and Defaults; No Liens. Neither the execution or
delivery of this Reorganization Agreement, nor the fulfillment of, or compliance
with, the terms and provisions hereof, will (i) result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, termination of or acceleration of the performance provided by the
terms of, any material agreement to which either FSFC or FFA is a party or by
which either of them may be bound, (ii) violate any provision of any law, rule
or regulation, (iii) result in the creation or imposition of any Lien on any
asset of FSFC or FFA, or (iv) violate any provisions of FSFC's or FFA's
Certificate of Incorporation, Federal Stock Charter or Bylaws. To the best of
FSFC's and FFA's knowledge, no other party to any material agreement to which
either FSFC or FFA is a party is in default thereunder or in breach of any
provision thereof. To the best of FSFC's and FFA's knowledge, there exists no
condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such agreement.
3.8. Necessary Approvals. Each of FSFC and FFA has obtained all
certificates of authority, licenses, permits, franchises, registrations of
foreign ownership or other regulatory approvals in every jurisdiction necessary
for the continuing conduct of its business and ownership of its assets. Except
for those which may be renewed or extended in the ordinary course of business,
no such certificate, license, permit, franchise, registration or other approval
is about to expire or lapse, has been threatened to be revoked or has otherwise
become restricted by its terms which would, upon such expiration, lapse,
revocation or restriction, have a Material Adverse Effect. Further, there is no
reasonable basis for any such expiration, lapse, revocation, threat of
revocation or restriction. Except for any necessary Regulatory Approvals, no
consent, approval, Authorization, registration, or filing with or by any
governmental authority, foreign or domestic, is required on the part of either
FSFC or FFA in connection with the execution and delivery of this Reorganization
Agreement or the consummation by FSFC and FFA of the transactions contemplated
hereby. Except for the Regulatory Approvals, neither FSFC nor FFA is required to
procure the approval of any Person in order to prevent the termination of any
right, privilege, license or contract of FSFC or FFA as a result of this
Reorganization Agreement.
3.9. Financial Statements. The audited financial statements of FSFC at and
for each of the fiscal years ended June 30, 1994, 1995 and 1996, and the
unaudited quarterly statements subsequent to June 30, 1996 (the "FSFC Financial
Statements") all of which have been provided to CFC, are true, correct and
complete in all material respects and present fairly, in conformity with GAAP,
the financial position of
12
<PAGE>
<PAGE>
FSFC at the dates indicated and the results of its operations for each of the
periods indicated, except with respect to the unaudited statements, normal year
end adjustments. The books and records of FSFC have been kept, and will be kept
to the Closing Date, in reasonable detail, and will fairly and accurately
reflect in all material respects to the Closing Date, the transactions of FSFC.
3.10. Tax Returns. (i) FSFC files its income tax returns and maintains its
tax books and records on the basis of a taxable year ending June 30. FSFC has
duly filed all tax reports and returns required to be filed by any federal,
state or local taxing authorities (including, without limitation, those due in
respect of its properties, income, franchises, licenses, sales, payrolls, and
trusts established by FSFC) through the date hereof, and FSFC has duly paid all
taxes with respect to the periods covered thereby and has established adequate
reserves in accordance with GAAP for the payment of all income, franchises,
property, sales, employment or other taxes anticipated to be payable after the
date hereof. FSFC is not delinquent in the payment of any taxes, assessments or
governmental charges and no deficiencies have been asserted or assessed, which
have not been paid or for which adequate reserves have not been established and
which are not being contested in good faith. FSFC does not have in effect any
waiver relating to any statute of limitations for assessment of taxes with
respect to any federal, state or local income, property, franchise, sales,
license or payroll tax. Except as set forth in Schedule 3.10, FSFC does not
know, or have reason to know, of any questions which have been raised or which
may be raised by any taxing authority relating to taxes or assessments of FSFC
which, if determined adversely, would result in the assertion of any deficiency.
(ii) To the best of FSFC's knowledge, all tax information reported
by FSFC to Federal and state authorities and other Persons, including the tax
effect of the special cash dividend of $10 per share paid in 1996, has been
accurately and timely reported.
3.11. Undisclosed Liabilities. Except for the liabilities which are
disclosed in the FSFC Financial Statements or as set forth on Schedule 3.11,
FSFC has no material liabilities or material obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Since June 30, 1996, there has been no (i) Material Adverse Event with respect
to FSFC or FFA, or (ii) any incurrence by or subjection of FSFC or FFA to any
obligation or liability (whether fixed, accrued or contingent) or commitment
material to FSFC or FFA not referred to in this Reorganization Agreement, except
such obligations or liabilities as were or may be incurred in the ordinary
course of business and which are reflected on the FSFC Financial Statements at
and for the periods subsequent to June 30, 1996.
3.12. Properties, Encumbrances. Each of FSFC and FFA has good and
marketable title to all of the real property and depreciable tangible personal
property owned by it, free and clear of any Lien, except for any Lien for (i)
current taxes not yet due and payable, (ii) pledges to secure deposits and other
Liens incurred in the ordinary course of the banking business, (iii) such
imperfections of title, easements and other encumbrances, if any, as are not
material in character, amount or extent, or (iv) such items as are set forth on
Schedule 3.12. Set forth on Schedule 3.12 are all business locations of FSFC and
FFA, including whether such locations are owned or leased and a statement of
when such locations were first occupied by FSFC or FFA. All buildings and all
fixtures, equipment, and other property and assets which are material to their
business and are held under leases or subleases by either of FSFC or FFA are
held under valid leases or subleases enforceable in accordance with their
respective terms.
3.13. Litigation. Except as shown on Schedule 3.13, there are no claims,
actions, suits or proceedings pending or threatened against FSFC or FFA, or to
its knowledge affecting FSFC or FFA, at law or in equity, before or by any
Federal, state, municipal, administrative or other court, governmental
department, commission, board, or agency, an adverse determination of which
could have a Material Adverse Effect, and FSFC knows of no basis for any of the
foregoing. There is no order, writ, memorandum, agreement, injunction, or decree
of any court, domestic or foreign, or any Federal or state agency affecting FSFC
specifically or to which FSFC is subject.
3.14. Reports. FSFC and FFA have duly made all reports and filings
required to be made pursuant to applicable law.
13
<PAGE>
<PAGE>
3.15. Brokers. Except as provided in its contract with Trident Financial
Corporation (a copy of which has been provided to CFC), FSFC has not incurred
any liability for any commission or fee in the nature of a finder's,
originator's or broker's fee in connection with the transaction contemplated
herein.
3.16. Expenditures. Schedule 3.16 sets forth any single expenditure of
$100,000 or more proposed to be made by FSFC or FFA after the date hereof and a
summary of the terms and conditions pertaining thereto. At least 20 business
days prior to the Closing Date, FSFC will advise CFC of any changes to Schedule
3.16 reflecting additions or deletions thereto since the date hereof.
3.17. Insurance. Attached hereto as Schedule 3.17 are the policies of
fire, liability, life and other types of insurance held by FSFC and FFA, setting
forth with respect to each such policy, the policy number, name of the insured
party, type of insurance, insurance company, annual premium, expiration date,
deductible amount, if any, and amount of coverage. FSFC management believes that
each such policy is in an amount reasonably sufficient for the protection of the
assets and business covered thereby, and, in the aggregate, all such policies
are reasonably adequate for the protection of all the assets and business of
FSFC taking into account the availability and cost of such coverage. To the
extent permissible pursuant to such policies, all such policies shall remain in
full force and effect for a period of at least 90 days following the Closing
Date. There is no reason known to FSFC that any such policy will not be
renewable on terms and conditions as favorable as those set forth in such
policy.
3.18. Contracts and Commitments. (a) Schedule 3.18 attached hereto sets
forth each contract or other commitment of FSFC or FFA which requires an
aggregate payment by FSFC or FFA after the date hereof of more than $100,000,
and any other contract or commitment that in the opinion of the FSFC management
materially adversely affects the business of FSFC or FFA. Except for the
contracts and commitments described in this Reorganization Agreement or as set
forth in Schedule 3.18, neither FSFC nor FFA is party to or subject to:
1. Any contracts or commitments which are material to its business,
operations or financial condition other than loans or agreements with respect
thereto entered into in the ordinary course of business;
2. Any employment contract or arrangement, whether oral or written, with
any officer, consultant, director or employee which is not terminable on 30
days' notice without penalty or liability to make any payment thereunder for
more than 30 days after such termination;
3. Any plan or contract or other arrangement, oral or written, providing
for insurance for any officer or employee or members of their families;
4. Any plan or contract or other arrangement, oral or written, providing
for bonuses, pensions, options, deferred compensation, retirement payments,
profit-sharing or other benefits for employees;
5. Any contract or agreement with any labor union;
6. Any contract or agreement with customers for the sale of products or
the furnishing of services, or any sales agency, broker, distribution or similar
contract, except contracts made in the ordinary course of business;
7. Any instrument or arrangement evidencing or related to indebtedness for
money borrowed or to be borrowed, whether directly or indirectly, by way of
purchase money obligation, guaranty, conditional sale, lease-purchase, or
otherwise;
8. Any joint venture contract or arrangement or any other agreement
involving a sharing of profits;
9. Any license agreement in which FSFC is the licensor or licensee;
10. Any material contract or agreement, not of the type covered by any of
the other items of this Section 3.18, which by its terms is either (i) not to be
performed prior to 30 days from the date hereof, or (ii) does not terminate, or
is not terminable without penalty to FSFC or FFA, or any successors or assigns
prior to 30 days from the date hereof.
3.19. Employee Benefit Plans and Contracts.
(a) Schedule 3.19 contains a complete list of all FSFC Benefit Plans. FSFC
and FFA have delivered to CFC (i) accurate and complete copies of all FSFC
Benefit Plan documents and all other
14
<PAGE>
<PAGE>
material documents relating thereto, including all summary plan descriptions,
summary annual reports and insurance contracts, (ii) accurate and complete
detailed summaries of all unwritten FSFC Benefit Plans, (iii) accurate and
complete copies of the most recent financial statements and actuarial reports
with respect to all FSFC Benefit Plans for which financial statements or
actuarial reports are required or have been prepared, (iv) accurate and complete
copies of all annual reports for all FSFC Benefit Plans (for which annual
reports are required) prepared within the last two years, and (v) accurate and
complete copies of determination letters from the IRS for any FSFC Benefit Plan
maintained or intended to be maintained under Section 401(a) of the Code. Any
FSFC Benefit Plan providing benefits that are funded through a policy of
insurance is indicated by the word "insured" placed by the listing of the FSFC
Benefit Plan on Schedule 3.19.
(b) All FSFC Benefit Plans conform in all material respects to, and are
being administered and operated in material compliance with, all applicable
requirements of ERISA and the Code. All returns, reports and disclosure
statements required to be filed or delivered under ERISA and the Code with
respect to all FSFC Benefit Plans have been filed or delivered. There have not
been any "prohibited transactions," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, involving any of the FSFC Benefit Plans that
could subject FSFC to any material penalty or tax imposed under the Code or
ERISA.
(c) Except as set forth in Schedule 3.19, any FSFC Benefit Plan that is
intended to be qualified under Section 401(a) of the Code and exempt from tax
under Section 501(a) of the Code has been determined by the IRS to be so
qualified, and such determination is current, remains in effect and has not been
revoked. To the best knowledge of FSFC and FFA, nothing has occurred since the
date of any such determination that is reasonably likely to affect adversely
such qualification or exemption, or result in the imposition of excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any FSFC Benefit Plan.
(d) FSFC and FFA have adequately reserved for all liabilities accrued
prior to the Effective Time under FSFC's and FFA nonqualified retirement or
deferred compensation plans.
(e) Except as set forth in Schedule 3.19, neither FSFC nor FFA has any
current or contingent obligation to contribute to any multiemployer plan (as
defined in Section 3(37) of ERISA). Neither FSFC nor FFA has any liability with
respect to any employee benefit plan (as defined in Section 3(3) of ERISA) other
than with respect to the FSFC Benefit Plans.
(f) There are no pending or threatened claims by or on behalf of any FSFC
Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any FSFC Benefit Plans, alleging any breach of fiduciary duty
on the part of FSFC or FFA or any of such party's officers, directors or
employees under ERISA, the Code or any applicable regulations, or claiming
benefit payments other than those made in the ordinary operation of such plans.
The FSFC Benefit Plans are not the subject of any investigation, audit or action
by the IRS, the Department of Labor or the PBGC. FSFC and FFA have made all
required contributions under the FSFC Benefit Plans, including the payment of
any premiums payable to the PBGC and other insurance premiums. There is no
underfunding liability for any FSFC Benefit Plan that is subject to the funding
requirements of Section 412 of the Code.
(g) Neither FSFC nor FFA maintains any defined benefit plan, and neither
has incurred, or has any reason to expect that it will incur, any liability to
the PBGC or otherwise under Title IV or ERISA (including early withdrawal
liability) or under the Code with respect to any such plan. No FSFC Benefit Plan
has been subject to a reportable event for which notice would be required to be
filed with the PBGC, and no proceeding by the PBGC to terminate any FSFC Benefit
Plan has been instituted or threatened.
(h) With respect to any FSFC Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (in this subsection,
a "Welfare Plan"), (i) each such Welfare Plan for which contributions are
claimed as deductions under any provision of the Code is in material compliance
with all applicable requirements pertaining to such deduction, (ii) with respect
to any welfare benefit fund (within the meaning of Section 419 of the Code)
related to such a Welfare Plan, there is no disqualified benefit (within the
meaning of Section 4976(b) of the Code) that would result in the imposition of a
tax under Section 4976(a) of the Code, (iii) any FSFC Benefit Plan that is a
group health plan (within the meaning of Section 4980B(g)(2) of the Code)
complies, and in each and every case has complied, with
15
<PAGE>
<PAGE>
all of the material requirements of Section 4980B of the Code, ERISA, Title XXII
of the Public Health Service Act and the applicable provisions of the Social
Security Act, (iv) such Welfare Plan may be amended or terminated at any time on
or after the Closing Date, and (v) there are no benefits to be provided to
retirees under a group health plan that are subject to disclosure under
Financial Accounting Board Standard 106.
(i) Except as set forth on Schedule 3.19, as of the Closing Date, there
will be no contract, agreement, plan or arrangement covering any person that
provides for the payment of an amount that would not be deductible to CFC by
reason of Section 280G or any other provision of the Code.
(j) Each of the employment contracts between FSFC, FFA and David C.
Wakefield, III and FSFC, FFA and John L. Biediger have been extended to
September 30, 1998.
3.20. Allowance for Loan Losses. The allowance for loan losses (the "FSFC
Allowance") shown on the consolidated statements of financial condition of FSFC
as of March 31, 1997, included in the FSFC Quarterly Report on Form 10-Q as of
such date has been determined, in the opinion of management of FSFC in
accordance with GAAP, to be adequate to provide for losses relating to or
inherent in the loan portfolios of FSFC and FFA.
3.21. Environmental Matters. Each of FSFC and FFA is in material
compliance with all local, state and federal environmental statutes, laws,
rules, regulations and permits, including but not limited to CERCLA and the
Toxic Substances Control Act, 15 U.S.C. 2601 et seq. Neither FSFC nor FFA has,
nor to the best of FSFC's knowledge have other parties, used, stored, disposed
of or permitted any "hazardous substance" (as defined in CERCLA), petroleum
hydrocarbon, polychlorinated biphenyl, asbestos or radioactive material
(collectively, "Hazardous Substances") to remain at, on, in or under any of the
real property owned or leased by FSFC or FFA (including, without limitation, the
buildings or structures thereon) (the "Real Property"). Neither FSFC nor FFA
has, nor to the best of FSFC's knowledge have other parties, installed, used, or
disposed of any asbestos or asbestos-containing material on, in or under any of
the Real Property. Neither FSFC nor FFA has, nor to the best of FSFC's knowledge
have other parties, installed or used underground storage tanks in or under any
of the Real Property. FSFC has provided CFC with copies of all complaints,
citations, orders, reports, written data, notices or other communications sent
or received by it with respect to any local, state or federal environmental law,
ordinance, rule or regulation as any of them relate to FSFC or FFA.
3.22. FSFC Information. The written information with respect to FSFC and
its officers, directors, and affiliates which shall have been supplied by FSFC
(or any of its accountants, counsel or other authorized representatives)
specifically for use in soliciting the Shareholder Approvals, or which shall be
contained in the Registration Statement, will not, on the date the Proxy
Statement is first mailed to shareholders of FSFC and CFC or on the date of the
Shareholders' Meetings, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
3.23. Asset Classification. Set forth in Schedule 3.23 is a list, accurate
and complete in all material respects, of the aggregate amounts of loans,
extensions of credit or other assets of FSFC and FFA that have been classified
by it as of March 31, 1997 (the "Asset Classification"); and no amounts of
loans, extensions of credit or other assets that have been classified as of
March 31, 1997 by any regulatory examiner as "Other Loans Specially Mentioned",
"Substandard", "Doubtful", "Loss", or words of similar import are excluded from
the amounts disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off by FSFC or FFA prior
to March 31, 1997.
3.24. Derivatives Contracts, Etc. Neither FSFC nor FFA is a party to or
has agreed to enter into an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor or collar financial contract or any other contract
not included on the balance sheet which is a derivative contract (including
various combinations thereof) (each a "Derivatives Contract") or owns securities
that (i) are referred to as "structured notes", "high risk mortgage
derivatives", "capped floating rate notes" or "capped floating rate mortgage
derivatives", or (ii) are likely to have changes in value as a result of
interest rate changes that significantly exceed normal changes in value
attributable to interest rate changes, except for those Derivatives Contracts
and other instruments legally purchased or entered into in the ordinary course
of
16
<PAGE>
<PAGE>
business and set forth in Schedule 3.24, including a list, as applicable, of any
FSFC or FFA assets pledged as security for each such instrument.
3.25. Labor Matters. No material work stoppage involving FSFC or FFA is
pending or, to the best knowledge of FSFC, threatened. Neither FSFC nor FFA is
involved in, or, to the best knowledge of FSFC's management, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which might reasonably be expected to have a Material Adverse Effect.
Employees of FSFC and FFA are not represented by any labor union, and, to the
best knowledge of FSFC's management, no labor union is attempting to organize
employees of FSFC or FFA.
3.26. Securities Reports. Within the last two (2) years, FSFC has filed on
a timely basis all reports, registrations, and statements, together with any
amendments, required under the Securities Act and the Exchange Act, all of
which, as of their respective dates, were in compliance in all material respects
with the rules and regulations of the SEC.
3.27. Ownership of CFC Common Stock. No shares of CFC Common Stock are
beneficially owned
(as defined in Rule 13d-3 under the Exchange Act) by FSFC or FFA.
3.28. Resale of CFC Common Stock. FSFC knows of no present plan or
intention on the part of its shareholders to sell, assign, transfer or otherwise
dispose of shares of CFC Common Stock to be received by such shareholders in
connection with the Corporate Merger which would reduce said shareholders'
holdings of CFC common stock to a number of shares having, in the aggregate, a
value of less than 50% of the value of FSFC Common Stock outstanding as of the
Effective Time. For purposes of this representation, shares of FSFC Common Stock
sold, redeemed or otherwise disposed of prior or subsequent to and as part of
the Corporate Merger, will be considered as shares received by shareholders of
FSFC and then disposed of by shareholders of FSFC.
SECTION IV. REPRESENTATIONS AND WARRANTIES BY CFC AND CFB
Each of CFC and CFB hereby represents and warrants to FSFC and FFA the
following matters on and as of the date of this Reorganization Agreement and at
the Effective Time; provided, however, that before any breach of or inaccuracy
in any of the representations or warranties given in this Section IV shall be
actionable or shall constitute grounds for termination of or failure to perform
under the terms of this Reorganization Agreement by FSFC or FFA, such breach or
inaccuracy must have a Material Adverse Effect.
4.1. Organization, Good Standing and Conduct of Business. CFC is a
corporation, duly organized, validly existing and in good standing under the
laws of South Carolina, is duly registered as a bank holding company under the
BHCA, and has full power and authority and all governmental and regulatory
authorizations ("Authorizations") necessary to own all of its properties and
assets and to carry on its business as it is presently being conducted, and is
properly licensed, qualified and in good standing as a foreign corporation in
all jurisdictions wherein the character of the properties or the nature of the
business transacted by CFC makes such license or qualification necessary. CFB is
a direct subsidiary of CFC. CFB is a state banking corporation, duly organized,
validly existing and in good standing under the laws of the state of South
Carolina, and has full power and authority and all Authorizations necessary to
own all of its properties and assets and to carry on its business as it is
presently being conducted, and is properly licensed, qualified and in good
standing as a foreign corporation in all jurisdictions wherein the character of
the properties or the nature of the business transacted by CFB makes such
license or qualification necessary. CFB is a state, non-member bank and is an
"insured depository institution" as defined in the Federal Deposit Insurance Act
and the applicable regulations thereunder. The deposits of CFB are insured by
the Bank Insurance Fund of the FDIC.
4.2. Subsidiaries. (a) Other than CFB, Carolina First Mortgage Company
and CF Investment Company (collectively, the "Subsidiaries") or except as
provided below, CFC neither owns nor controls
17
<PAGE>
<PAGE>
five percent (5%) or more of the outstanding equity securities, either directly
or indirectly, of any Person. CFC is the direct, record and beneficial owner of
100% of the outstanding shares of capital stock of the Subsidiaries. There are
no contracts, commitments, understandings or arrangements by which CFC is or may
be bound to sell or otherwise issue any shares of the Subsidiaries' capital
stock, and there are no contracts, commitments, understandings or arrangements
relating to the rights of CFC to vote or to dispose of such shares. All of the
shares of capital stock of the Subsidiaries are fully paid and nonassessable and
are owned by CFC free and clear of any Liens. CFC has the right to acquire in
excess of 15% of the common stock of Affinity Technology Group, Inc., a Delaware
corporation headquartered in Columbia, South Carolina and Net.B@nk, Inc., a
Georgia corporation and savings and loan holding company headquartered in
Atlanta, Georgia. None of the Subsidiaries either owns nor controls five percent
(5%) or more of the outstanding equity securities, either directly or
indirectly, of any Person.
4.3. Corporate Authority. The execution, delivery and performance of this
Reorganization Agreement have been duly authorized by the respective Boards of
Directors of CFC and CFB. Other than the CFC Shareholder Approvals, no further
corporate acts or proceedings on the part of CFC or CFB are required or
necessary to authorize this Reorganization Agreement or the Mergers.
4.4. Binding Effect. Subject to receipt of the CFC Shareholder Approvals
and the Regulatory Approvals, when executed, this Reorganization Agreement will
constitute valid and legally binding obligations of CFC and CFB, enforceable
against CFC and CFB in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (ii) laws relating to the safety and
soundness of depository institutions, and (iii) general principles of equity.
Each document and instrument contemplated by this Reorganization Agreement, when
executed and delivered by CFC and/or CFB in accordance with the provisions
hereof, shall be duly authorized, executed and delivered by CFC and/or CFB (as
applicable) and enforceable against CFC and/or CFB (as applicable) in accordance
with its terms, subject to the exceptions in the previous sentence.
4.5. Capitalization of CFC. The authorized capital stock of CFC consists
solely of (i) 100,000,000 authorized shares of common stock ($1.00 par value),
of which 11,355,415 shares were issued and outstanding as of the date hereof and
(ii) 10,000,000 shares of preferred stock, none of which is outstanding. All of
the issued and outstanding shares of CFC are validly issued and fully paid and
nonassessable. Except for (i) stock or options to purchase shares of CFC Common
Stock granted under director or employee benefit plans, (ii) shares which may be
issued pursuant to CFC's Shareholders' Rights Plan entered into as of November
9, 1993 between CFC and CFB, as amended and restated (the "Rights Plan"), (iii)
existing dividend reinvestment plans, (iv) up to 867,714 shares of CFC Common
Stock which may be issued in connection with CFC's acquisition of Lowcountry
Savings Bank, Inc. or (v) as otherwise set forth on Schedule 4.4, there are no
outstanding Rights or any outstanding securities or other instruments
convertible into shares of any class of capital stock of CFC, or pursuant to
which CFC is or may become obligated to issue any shares of its capital stock.
None of the shares of the CFC Common Stock is subject to any restrictions as to
the transfer thereof, except as set forth in CFC's Articles of Incorporation or
Bylaws or the Rights Plan and except for restrictions on account of applicable
federal or state securities laws. The Common Stock to be issued in connection
with this Reorganization Agreement and the Corporate Merger will, when issued,
(i) be validly issued, fully paid and nonassessable, (ii) have been issued
pursuant to an effective registration statement and (iii) have been properly
registered for trading on the Nasdaq National Market.
4.6. Compliance with Laws; Absence of Defaults. (a) Neither CFC nor CFB
is in default under, or in violation of, any provision of its Articles of
Incorporation or Bylaws. Neither CFC nor CFB is in default under, or in
violation of, any agreement to which either CFC or CFB is a party.
(b) Except as disclosed in Schedule 4.6, neither CFC nor CFB is in
violation of any applicable law, rule or regulation. Neither CFC nor CFB has
received any notification or communication from, or consented to or entered into
any memorandum, agreement or order with, any Regulatory Authority (i) asserting
that CFC or CFB is not in compliance with any of the statutes, regulations,
rules or ordinances which such Regulatory Authority has promulgated or enforces,
or the internal policies and procedures of
18
<PAGE>
<PAGE>
CFC or CFB, as applicable, (ii) threatening to revoke any Authorization, (iii)
requiring or threatening to require CFC or CFB, or indicating that CFC or CFB
may be required, to enter into a cease and desist order, agreement or memorandum
of understanding or any other agreement restricting or limiting or purporting to
restrict or limit in any manner the operations of CFC or CFB, or (iv) directing,
restricting or limiting, or threatening to direct, restrict or limit in any
manner the operations of CFC or CFB (any such notification, communication,
memorandum, agreement or order described in this sentence herein referred to as
a "Regulatory Agreement").
(c) Each of CFC and CFB:
(i) is not required to give prior notice to any federal banking or
thrift agency of the proposed addition of an individual to its Board of
Directors or the employment of an individual as a senior executive;
(ii) at March 31, 1997, was capitalized as set forth in its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; and
(iii) is in compliance in all material respects with all fair
lending laws or other laws relating to discrimination, including, without
limitation, the Equal Credit Opportunity Act, the Fair Credit Reporting
Act, the Fair Housing Act, the Community Reinvestment Act and the Home
Mortgage Disclosure Act and similar federal and state laws and
regulations.
4.7. Non-Contravention and Defaults; No Liens. Neither the execution or
delivery of this Reorganization Agreement, nor the fulfillment of, or compliance
with, the terms and provisions hereof, will (i) result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, termination of or acceleration of the performance provided by the
terms of, any material agreement to which CFC or CFB is a party or by which they
may be bound, (ii) violate any provision of any law, rule or regulation, (iii)
result in the creation or imposition of any Lien on any asset of CFC or CFB, or
(iv) violate any provisions of CFC's or CFB's Articles of Incorporation or
Bylaws. To the best of CFC's and CFB's knowledge, no other party to any material
agreement to which CFC or CFB is a party is in default thereunder or in breach
of any provision thereof. To the best of CFC's and CFB's knowledge, there exists
no condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such agreement.
4.8. Necessary Approvals. Each of CFC and CFB have obtained all
certificates of authority, licenses, permits, franchises, registrations of
foreign ownership or other regulatory approvals in every jurisdiction necessary
for the continuing conduct of its business and ownership of its assets. Except
for those which may be renewed or extended in the ordinary course of business,
no such certificate, license, permit, franchise, registration or other approval
is about to expire or lapse, has been threatened to be revoked or has otherwise
become restricted by its terms which would, upon such expiration, lapse,
revocation or restriction, have a Material Adverse Effect. Further, there is no
basis for any such expiration, lapse, revocation, threat of revocation or
restriction. Except for any necessary Regulatory Approvals (including the filing
with the SEC of the Registration Statement and filings with blue sky
authorities), no consent, approval, Authorization, registration, or filing with
or by any governmental authority, foreign or domestic, is required on the part
of CFC or CFB in connection with the execution and delivery of this
Reorganization Agreement or the consummation by CFC and CFB of the transactions
contemplated hereby. Except for the Regulatory Approvals, neither CFC nor CFB is
required to procure the approval of any Person in order to prevent the
termination of any right, privilege, license or contract of CFC or CFB as a
result of this Reorganization Agreement.
4.9. Financial Statements. The audited financial statements of CFC at and
for each of the fiscal years ended December 31, 1994, 1995 and 1996, and the
unaudited quarterly statements subsequent to December 31, 1996 (the "CFC
Financial Statements") all of which have been provided to FSFC, are true,
correct and complete in all material respects and present fairly, in conformity
with GAAP, the financial position of CFC at the dates indicated and the results
of its operations for each of the periods indicated. The books and records of
CFC have been kept, and will be kept to the Closing Date, in reasonable detail,
and will fairly and accurately reflect in all material respects to the Closing
Date, the transactions of CFC.
19
<PAGE>
<PAGE>
4.10. Tax Returns. CFC files its income tax returns and maintains its tax
books and records on the basis of a taxable year ending December 31. CFC has
duly filed all tax reports and returns required to be filed by any federal,
state or local taxing authorities (including, without limitation, those due in
respect of its properties, income, franchises, licenses, sales, payrolls, and
trusts established by CFC) through the date hereof, and CFC has duly paid all
taxes with respect to the periods covered thereby and has established adequate
reserves in accordance with GAAP for the payment of all income, franchises,
property, sales, employment or other taxes anticipated to be payable in respect
of the period subsequent to the period ending after the date hereof. CFC is not
delinquent in the payment of any taxes, assessments or governmental charges and
no deficiencies have been asserted or assessed, which have not been paid or for
which adequate reserves have not been established and which are not being
contested in good faith. CFC does not have in effect any waiver relating to any
statute of limitations for assessment of taxes with respect to any federal,
state or local income, property, franchise, sales, license or payroll tax.
Except as set forth on Schedule 4.10, CFC does not know, or have reason to know,
of any questions which have been raised or which may be raised by any taxing
authority relating to taxes or assessments of CFC which, if determined
adversely, would result in the assertion of any deficiency.
(ii) To the best of CFC's knowledge, all tax information reported by CFC
to Federal and state authorities and other Persons has been accurately and
timely reported.
4.11. Undisclosed Liabilities. Except for the liabilities which are
disclosed in the CFC Financial Statements or as set forth on Schedule 4.11, CFC
has no material liabilities or material obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Since December 31, 1996, there has been no (i) Material Adverse Event with
respect to either CFC or CFB, or (ii) any incurrence by or subjection of CFC or
CFB to any obligation or liability (whether fixed, accrued or contingent) or
commitment material to CFC or CFB not referred to in this Reorganization
Agreement, except such obligations or liabilities as were or may be incurred in
the ordinary course of business and which are reflected on the CFC Financial
Statements at and for the periods subsequent to December 31, 1996.
4.12. Litigation. Except as set forth on Schedule 4.12, there are no
claims, actions, suits or proceedings pending or threatened against or, to its
knowledge, affecting CFC or CFB at law or in equity, before or by any Federal,
state, municipal, administrative or other court, governmental department,
commission, board, or agency, an adverse determination of which could have a
Material Adverse Effect, and neither CFC nor CFB knows of no basis for any of
the foregoing. There is no order, writ, memorandum or agreement, injunction, or
decree of any court, domestic or foreign, or any Federal or state agency
affecting CFC or CFB or to which CFC or CFB is subject, except for (i)
agreements between CFC and the Federal Reserve regarding CFC's ownership
interest in Affinity Technology Group, Inc. and (ii) an agreement between CFC
and the Federal Reserve regarding CFC's potential ownership interest in
Net.B@nk, Inc.
4.13. Reports. CFC has duly made all reports and filings required to be
made pursuant to applicable law.
4.14. Employee Benefit Plans and Contracts.
(a) Schedule 4.14 contains a complete list of all CFC Benefit Plans. CFC
and CFB have made available to FSFC (i) accurate and complete copies of all CFC
Benefit Plan documents and all other material documents relating thereto,
including all summary plan descriptions, summary annual reports and insurance
contracts, (ii) accurate and complete detailed summaries of all unwritten CFC
Benefit Plans, (iii) accurate and complete copies of the most recent financial
statements and actuarial reports with respect to all CFC Benefit Plans for which
financial statements or actuarial reports are required or have been prepared,
(iv) accurate and complete copies of all annual reports for all CFC Benefit
Plans (for which annual reports are required) prepared within the last two
years, and (v) accurate and complete copies of determination letters from the
IRS for any CFC Benefit Plan maintained or intended to be maintained under
Section 401(a) of the Code. Any CFC Benefit Plan providing benefits that are
funded through a policy of insurance is indicated by the word "insured" placed
by the listing of the CFC Benefit Plan on Schedule 4.14.
20
<PAGE>
<PAGE>
(b) Except as set forth in Schedule 4.14, all CFC Benefit Plans conform in
all material respects to, and are being administered and operated in material
compliance with, all applicable requirements of ERISA and the Code. All returns,
reports and disclosure statements required to be filed or delivered under ERISA
and the Code with respect to all CFC Benefit Plans have been filed or delivered.
There have not been any "prohibited transactions," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, involving any of the CFC
Benefit Plans that could subject CFC to any material penalty or tax imposed
under the Code or ERISA.
(c) Except as set forth in Schedule 4.14, any CFC Benefit Plan that is
intended to be qualified under Section 401(a) of the Code and exempt from tax
under Section 501(a) of the Code has been determined by the IRS to be so
qualified, and such determination is current, remains in effect and has not been
revoked. To the best knowledge of CFC and CFB, nothing has occurred since the
date of any such determination that is reasonably likely to affect adversely
such qualification or exemption, or result in the imposition of excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any CFC Benefit Plan.
(d) CFC and CFB have adequately reserved for all liabilities accrued prior
to the Effective Time under CFC's and CFB nonqualified retirement or deferred
compensation plans.
(e) Except as set forth in Schedule 4.14, neither CFC nor CFB has any
current or contingent obligation to contribute to any multiemployer plan (as
defined in Section 3(37) of ERISA). Neither CFC nor CFB has any liability with
respect to any employee benefit plan (as defined in Section 3(3) of ERISA) other
than with respect to the CFC Benefit Plans.
(f) There are no pending or threatened claims by or on behalf of any CFC
Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any CFC Benefit Plans, alleging any breach of fiduciary duty on
the part of CFC or CFB or any of such party's officers, directors or employees
under ERISA, the Code or any applicable regulations, or claiming benefit
payments other than those made in the ordinary operation of such plans. The CFC
Benefit Plans are not the subject of any investigation, audit or action by the
IRS, the Department of Labor or the PBGC. CFC and CFB have made all required
contributions under the CFC Benefit Plans, including the payment of any premiums
payable to the PBGC and other insurance premiums. There is no underfunding
liability for any CFC Benefit Plan that is subject to the funding requirements
of Section 312 of the Code.
(g) Neither CFC nor CFB maintains any defined benefit plan, and neither
has incurred, or has any reason to expect that it will incur, any liability to
the PBGC or otherwise under Title IV or ERISA (including early withdrawal
liability) or under the Code with respect to any such plan. No CFC Benefit Plan
has been subject to a reportable event for which notice would be required to be
filed with the PBGC, and no proceeding by the PBGC to terminate any CFC Benefit
Plan has been instituted or threatened.
(h) With respect to any CFC Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (in this subsection,
a "Welfare Plan"), (i) each such Welfare Plan for which contributions are
claimed as deductions under any provision of the Code is in material compliance
with all applicable requirements pertaining to such deduction, (ii) with respect
to any welfare benefit fund (within the meaning of Section 419 of the Code)
related to such a Welfare Plan, there is no disqualified benefit (within the
meaning of Section 4976(b) of the Code) that would result in the imposition of a
tax under Section 4976(a) of the Code, (iii) any CFC Benefit Plan that is a
group health plan (within the meaning of Section 4980B(g)(2) of the Code)
complies, and in each and every case has complied, with all of the material
requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act and the applicable provisions of the Social Security Act,
(iv) such Welfare Plan may be amended or terminated at any time on or after the
Closing Date, and (v) there are no benefits to be provided to retirees under a
group health plan that are subject to disclosure under Financial Accounting
Board Standard 106.
4.15. Allowance for Loan Losses. The allowance for loan losses shown on
the consolidated statements of financial condition of CFC as of March 31, 1997,
included in the CFC Quarterly Report on Form 10-Q as of such date has been
determined, in the opinion of management of CFC in accordance with GAAP, to be
adequate to provide for losses relating to or inherent in the loan portfolios of
CFC and CFB.
21
<PAGE>
<PAGE>
4.16. Environmental Matters. Each of CFC and CFB is in material compliance
with all local, state and federal environmental statutes, laws, rules,
regulations and permits, including but not limited to CERCLA and the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq. Neither CFC nor CFB has, nor to
the best of CFC's knowledge have other parties, used, stored, disposed of or
permitted any "hazardous substance" (as defined in CERCLA), petroleum
hydrocarbon, polychlorinated biphenyl, asbestos or radioactive material
(collectively, "Hazardous Substances") to remain at, on, in or under any of the
real property owned or leased by CFC or CFB (including, without limitation, the
buildings or structures thereon) (the "CFC Real Property"). Neither CFC nor CFB
has, nor to the best of CFC's knowledge have other parties, installed, used, or
disposed of any asbestos or asbestos-containing material on, in or under any of
the CFC Real Property. Neither CFC nor CFB has, nor to the best of CFC's
knowledge have other parties, installed or used underground storage tanks in or
under any of the CFC Real Property. CFC has delivered to FSFC copies of all
complaints, citations, orders, reports, written data, notices or other
communications sent or received by it with respect to any local, state or
federal environmental law, ordinance, rule or regulation as any of them relate
to CFC or CFB.
4.17. Asset Classification. Set forth in Schedule 4.17 is a list, accurate
and complete in all material respects, of the aggregate amounts of loans,
extensions of credit or other assets of CFC and CFB that have been classified by
it as of March 31, 1997 (the "Asset Classification"); and no amounts of loans,
extensions of credit or other assets that have been classified as of March 31,
1997 by any regulatory examiner as "Other Loans Specially Mentioned",
"Substandard", "Doubtful", "Loss", or words of similar import are excluded from
the amounts disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off by CFC or CFB prior
to March 31, 1997.
4.18. Labor Matters. No material work stoppage involving CFC or CFB is
pending or, to the best knowledge of CFC, threatened. Neither CFC nor CFB is
involved in, or, to the best knowledge of CFC's management, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which might reasonably be expected to have a Material Adverse Effect.
Employees of CFC and CFB are not represented by any labor union, and, to the
best knowledge of CFC's management, no labor union is attempting to organize
employees of CFC or CFB.
4.19. CFC Information. The written information with respect to CFC and its
officers, directors, and affiliates which shall have been supplied by CFC (or
any of its accountants, counsel or other authorized representatives)
specifically for use in soliciting the Shareholder Approvals, or which shall be
contained in the Registration Statement, will not, on the date the Proxy
Statement is first mailed to shareholders of FSFC or CFC or on the date of the
Shareholders' Meeting, or in the case of the Registration Statement, at the time
it becomes effective, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.20. Securities Reports. Within the last two (2) years, CFC has filed on
a timely basis all reports, registrations, and statements, together with any
amendments, required under the Securities Act and the Exchange Act, all of
which, as of their respective dates, were in compliance in all material respects
with the rules and regulations of the SEC.
4.21. Ownership of FSFC Common Stock. No shares of FSFC Common Stock are
beneficially owned (as defined in Rule 13d-3 under the Exchange Act) by CFC or
CFB.
4.22. Due Diligence. All information provided by CFC in connection with
the due diligence investigation by FSFC was, at the time that such information
was provided, fair, accurate and complete in all material respects. Since the
date of such provision of information, there have been no changes in such
information, which taken in the aggregate, represent a Material Adverse Event.
CFC has not failed to provide or make available to FSFC all material information
regarding CFC.
SECTION V. CONDUCT OF BUSINESS PENDING CLOSING
22
<PAGE>
<PAGE>
5.1. Conduct of FSFC Pending Closing. During the period commencing on the
date hereof and continuing until the Closing Date, each of FSFC and FFA
covenants and agrees to the following (except to the extent that CFC shall
otherwise expressly consent in writing, which consent shall not be unreasonably
delayed or withheld); provided, however, that any breach of or inaccuracy in any
of the covenants given in this Section 5.1 must have a Material Adverse Effect
before such breach shall be actionable or shall constitute grounds for
termination or failure to perform under this Reorganization Agreement.
(a) Each of FSFC and FFA will carry on its business only in the
ordinary course in substantially the same manner as heretofore conducted
and, to the extent consistent with such business, use all reasonable
efforts to preserve intact its business organization and goodwill,
maintain the services of its present officers and employees and preserve
its relationships with customers, suppliers and others having business
dealings. Neither FSFC nor FFA shall purchase or otherwise acquire or
enter into a contract to acquire servicing or subservicing rights with
respect to loans not originated by FSFC or FFA without the written consent
of CFC, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, FSFC may proceed to open branch offices in Wal-Mart stores
located in Simpsonville, Anderson and Greenville, all as currently
contemplated.
(b) Neither FSFC nor FFA will amend its Certificate of
Incorporation, Federal Stock Charter or Bylaws as in effect on the date
hereof, except as may be required by applicable law or regulation.
(c) FSFC will not issue, grant, pledge or sell, or authorize the
issuance of, reclassify or redeem, purchase or otherwise acquire, any
shares of its capital stock of any class or Rights to acquire any such
shares or any shares or Rights to acquire shares of FFA; nor will it enter
into any arrangement or contract with respect to the issuance of any such
shares or other Rights to acquire shares; nor will it declare, set aside
or pay any dividends (of any type) or make any other change in its equity
capital structure; provided, however, that it may pay its customary $0.06
per share quarterly cash dividend prior to closing.
(d) FSFC will promptly advise CFC in writing of any change in the
businesses of FSFC or FFA which is or may reasonably be expected to have a
Material Adverse Effect.
(e) FSFC will not take, agree to take, or knowingly permit to be
taken (except as may be required by applicable law or regulation) any
action or do or knowingly permit to be done anything in the conduct of the
business of FSFC or FFA, or otherwise, which would be contrary to or in
breach of any of the terms or provisions of this Reorganization Agreement,
or which would cause any of the representations of FSFC or FFA contained
herein to be or become untrue in any material respect.
(f) Neither FSFC nor FFA will incur any indebtedness for borrowed
money, issue or sell any debt securities, or assume or otherwise become
liable, whether directly, contingently or otherwise, for the obligation of
any other party, other than in the ordinary course of business.
(g) Except for expenses attendant to the Mergers and current
contractual obligations, neither FSFC nor FFA will incur any expense in an
amount in excess of $100,000 after the execution of this Reorganization
Agreement without the prior written consent of CFC.
(h) Neither FSFC nor FFA will grant any executive officers any
increase in compensation (except in the ordinary course of business in
accordance with past practice and only upon prior notice to CFC), or enter
into any employment agreement with any executive officer without the
consent of CFC except as may be required under employment or termination
agreements in effect on the date hereof which have been previously
disclosed to CFC in writing.
(i) Neither FSFC nor FFA will acquire or agree to acquire by merging
or consolidating with, purchasing substantially all of the assets of or
otherwise, any business or any corporation, partnership, association or
other business organization or division thereof.
(j) Except as may be directed by any Regulatory Authority, as may
be undertaken in the ordinary course of business in accordance with past
practices, or as may be reasonably
23
<PAGE>
<PAGE>
appropriate in view of changes in economic circumstances, neither FSFC nor
FFA shall (1) change its lending, investment, liability management or
other material banking or other policies in any material respect, or (2)
implement or adopt any change in accounting principles, practices or
methods, other than as may be required by GAAP.
(k) FSFC shall not impose, or permit or suffer the imposition of any
Liens on any shares of capital stock of FFA, or (except in the ordinary
course of business) on any of its or FFA's assets, other than Liens on
such other assets that, individually or in the aggregate, are not material
to the business, properties or operations of FSFC or FFA.
5.2. Conduct of CFC Pending Closing. During the period commencing on the
date hereof and continuing until the Closing Date, CFC covenants and agrees to
the following (except to the extent that FSFC shall otherwise expressly consent
in writing, which consent shall not be unreasonably delayed or withheld);
provided, however, that any breach of or inaccuracy in any of the covenants
given in this Section 5.2 must have a Material Adverse Effect before such breach
shall be actionable or shall constitute grounds for termination or failure to
perform under this Reorganization Agreement.
(a) CFC shall carry on its business in substantially the same
manner as heretofore conducted.
(b) CFC will not amend its Articles of Incorporation or Bylaws as in
effect on the date hereof in any manner that will adversely affect the
FSFC shareholders in any material respect.
(c) CFC will promptly advise FSFC orally and in writing of any
change in its business which is or may reasonably be expected to be
materially adverse to CFC.
(d) CFC will not take, agree to take, or knowingly permit to be
taken any action or do or knowingly permit to be done anything in the
conduct of its business or otherwise, which would be contrary to or in
breach of any of the terms or provisions of this Reorganization Agreement,
or which would cause any of the representations of CFC contained herein to
be or become untrue in any material respect.
SECTION VI. COVENANTS OF THE PARTIES
6.1. Access to Properties and Records. Between the date of this
Reorganization Agreement and the Closing Date, the parties will provide to each
other and to their respective accountants, counsel and other authorized
representatives reasonable access, during reasonable business hours and upon
reasonable notice, to their respective premises, properties, contracts,
commitments, books, records and other information and will cause their
respective officers to furnish to the other party and its authorized
representatives such financial, technical and operating data and other
information pertaining to their respective businesses, as the parties shall from
time to time reasonably request.
6.2. Confidentiality. Each party will and will cause its employees and
agents to hold in strict confidence, unless disclosure is compelled by judicial
or administrative process, or in the opinion of its counsel, by other
requirements of law, all Confidential Information and will not disclose the same
to any Person. The party gaining access to such Confidential Information shall
exercise the same degree of care with respect thereto that any such party uses
to preserve and safeguard its own confidential proprietary information.
Confidential Information shall be used only for the purpose of and in connection
with consummating the transaction contemplated herein. If this Reorganization
Agreement is terminated, each party hereto will promptly return all documents
received by it from each other party containing Confidential Information. Each
party will and will cause its employees and agents to hold in strict confidence,
unless disclosure is compelled by judicial or administrative process, or in the
opinion of its counsel, by other requirements of law, the status of the Mergers.
Each party shall coordinate with the other parties, any public statements
regarding the Mergers.
6.3. Cooperation. Each party shall use its respective, reasonable best
efforts to take any and all necessary or appropriate actions, and to use its
reasonable best efforts to cause its officers, directors, employees, agents, and
representatives to use their reasonable best efforts and to take all steps in
good
24
<PAGE>
<PAGE>
faith within their power, to cause to be fulfilled those of the conditions
precedent to its obligations to consummate the Mergers which are dependent upon
its or their actions, including but not limited to (i) requesting the delivery
of appropriate opinions and letters from its counsel and (ii) obtaining any
consents, approvals, or waivers required to be obtained from other parties.
6.4. Affiliates' Letters. FSFC shall deliver to CFC a letter identifying
all Persons who are, at the time the Corporate Merger is submitted to a vote of
the shareholders of FSFC, "affiliates" of FSFC for purposes of Rule 145 of the
General Rules and Regulations under the Securities Act. FSFC shall use its
reasonable best efforts to cause each Person who is identified as an "affiliate"
in the letter referred to above to deliver to CFC on or prior to the Effective
Time a written agreement, in form reasonably satisfactory to CFC that such
Person shall not sell, pledge, transfer or otherwise dispose of any capital
stock of FSFC or any CFC Common Stock owned by such person or to be received by
such person as part of the consideration except in compliance with the
applicable provisions of the Securities Act.
6.5. Listing of CFC Common Stock. CFC shall cause the shares of CFC Common
Stock to be issued in the transactions contemplated by this Reorganization
Agreement to be approved for quotation on the Nasdaq National Market, subject to
official notice of issuance, prior to the Effective Time. CFC shall give such
notice to the Nasdaq Stock Market as may be required to permit the listing of
the CFC Common Stock issued in connection with the Corporate Merger.
6.6. Letters from Accountants. Prior to the date the Registration
Statement is declared effective and prior to the Effective Time, FSFC will
deliver to CFC letters from Crisp Hughes & Co. addressed to CFC and dated not
more than two business days before the date on which such Registration Statement
shall have become effective and not more than two business days prior to the
Effective Time, respectively, in form and substance satisfactory to CFC, and CFC
will deliver to FSFC letters from KPMG Peat Marwick LLP, addressed to FSFC and
dated not more than two business days before the Registration Statement shall
have become effective and not more than two business days prior to the Effective
Time, respectively, in form and substance satisfactory to FSFC, in each case
with respect to the financial condition of the other party and such other
matters as are customary in accountants' comfort letters.
6.7. Tax Treatment. FSFC and CFC shall each take such acts within their
power as may be reasonably necessary to cause the Mergers to qualify as
"reorganizations" within the meaning of Section 368(a) of the Code, except to
the extent such performance or failure would be prohibited by law or regulation.
6.8. Expenses. Except to the extent expressly provided otherwise herein,
the parties shall pay their own fees and expenses (including legal and
accounting fees) incurred in connection with the Mergers.
6.9. Material Events. At all times prior to the Closing Date, each party
shall promptly notify the other parties in writing of the occurrence of any
event which will or may result in a breach of any covenant, representation or
warranty in this Reorganization Agreement, or the failure to satisfy the
conditions specified in Section VI or Section VII of this Reorganization
Agreement or other material developments relevant to the consummation of the
Mergers, and shall use its reasonable best efforts to prevent or promptly to
remedy the same.
6.10. Acquisition Proposals. In the case of FSFC, without the prior
written consent of CFC, it shall not, and it shall cause FFA not to, solicit or
encourage inquiries or proposals with respect to, or furnish any nonpublic
information relating to or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial portion of the
assets or deposits of, or a substantial equity interest in, FSFC or FFA or any
merger or other business combination with FSFC or FFA; provided, however, that
if FSFC is not otherwise in violation of this Section 6.10, the Board of
Directors of FSFC may furnish or cause to be furnished information and may
participate in such discussions and negotiations if such Board of Directors,
after having consulted with and considered the written advice of outside
counsel, has determined that the failure to provide such information or
participate in such negotiations and discussions would cause the members of such
Board of Directors to breach their fiduciary duties under applicable law. FSFC
shall instruct its and FFA's officers, directors, agents, advisors and
affiliates to refrain from taking any action that would violate or conflict with
the foregoing; and it shall
25
<PAGE>
<PAGE>
notify CFC immediately if any such inquiries or proposals are received by, or
any such negotiations or discussions are sought to be initiated with, FSFC or
FFA.
6.11. Public Announcements. At all times until after the Closing Date,
neither FSFC nor CFC shall issue or permit any of its respective subsidiaries,
affiliates, officers, directors or employees to issue any press release or other
information to the press with respect to this Reorganization Agreement, without
the express prior consent of the other party, except as may be required by law
or the policies of the Nasdaq Stock Market. The parties shall cooperate to
prepare a joint press release with respect to the transactions contemplated
herein.
6.12. Updating of Schedules. FSFC and CFC shall, at the Effective Time,
prepare and deliver to each other such supplements to the schedules attached
hereto as may be necessary or appropriate to ensure the accuracy and
completeness of the information required to be disclosed in such schedules at
all times prior to the Effective Time, provided that the furnishing of any such
supplement to such Schedules shall not modify, limit, or otherwise affect any
representations or warranties of FSFC or CFC contained herein or any right of
FSFC or CFC to terminate this Reorganization Agreement. FSFC and CFC shall
provide to each other drafts of such supplemental Schedules at least three (3)
business days prior to the Closing Date.
6.13. Certain Policies of FSFC. FSFC shall, consistent with GAAP and
regulatory accounting principles, use its best efforts to record any accounting
adjustments required to conform its and FFA's loan, litigation and other reserve
and real estate valuation policies and practices (including loan classifications
and levels of reserves) so as to reflect consistently on a mutually satisfactory
basis the policies and practices of CFC; provided, however, that FSFC and FFA
shall not be obligated to record any such accounting adjustments pursuant to
this Section unless and until FSFC and FFA shall be reasonably satisfied that
all the conditions to the obligation of the parties to consummate the Mergers
will be satisfied or waived on or before the Effective Time, and (ii) in no
event until the day prior to the Closing Date. Notwithstanding any other
provision hereof, until the Effective Time, the management of FSFC and the
authority to establish and implement its business policies shall continue to
reside solely in FSFC officers and board of directors, and the election of FSFC
directors shall be solely the prerogative of FSFC shareholders.
6.14. Employee Matters. (a) CFC, FSFC and FFA agree to cooperate to
develop staffing plans which will result in retention of as many FSFC and FFA
managers and employees as is practical (as determined by CFC). CFC agrees that
FSFC and FFA employees shall also be eligible for consideration for any other
available positions for which they are qualified at CFC and its subsidiaries.
CFC agrees that those former FSFC or FFA employees who are employed by CFC or
its subsidiaries immediately following the Closing Date: (i) will be eligible,
on the same basis as current CFC employees, for all CFC Benefit Plans; and (ii)
will receive past service credit for eligibility and vesting (but not benefit
accrual) purposes under CFC Benefit Plans for years of service with FSFC and FFA
as if such service had been with CFC or its subsidiaries. CFC agrees that FSFC
may elect to fully vest its employees under some or all FSFC Benefit Plans prior
to consummation of the Mergers. Any FSFC Benefit Plans that are intended to be
qualified under Section 401(a) of the Code and exempt from tax under Section
501(a) of the Code will be terminated by proper action of the Board of Directors
of FSFC or FFA prior to the Effective Time. CFC agrees to assume all of FSFC's
obligations under its Post-Retirement Health Benefit Plan with respect to FFA
employees eligible to receive benefits under such Plan at the Effective Time
based on their age and years of service with FFA. CFC further agrees that those
former FSFC or FFA employees who are employed by CFC or its subsidiaries
immediately following the Closing Date will not be subject to any pre-existing
condition exclusion under CFC's medical Benefit Plans. CFC agrees that, upon the
Mergers, it will assume or honor (as appropriate) FSFC's and FFA's Director
Emeritus Plan, Deferred Compensation Plan for Key Employees and Non-employee
Directors, Employee Severance Compensation Plan and Pay to Stay program and the
obligations to pay benefits in accordance with the terms of such plans and any
elections by participants thereunder; provided that CFC's total obligations
under the Pay to Stay program shall not exceed $75,000 (and FSFC hereby
represents to CFC that the maximum obligations under the Pay to Stay program do
not exceed $75,000).
26
<PAGE>
<PAGE>
(b) CFC acknowledges the transactions contemplated by this Reorganization
Agreement constitutes a change in control for purposes of the employment
agreements between FSFC and FFA and David C. Wakefield,, III and John L.
Biediger (the "Officers"), respectively and further acknowledges that the
Officers are entitled to receive the payments and benefits provided for in
Section 9(g) of such employment agreements upon a change in control of FSFC or
FFA. FSFC, on or before the Effective Time, shall cause such employment
contracts to be amended so that at the election of the officer (i) the payments
and benefits to be provided under such employment agreements shall be payable or
provided to the Officer over a period sufficient to reduce the present value of
such payments or benefits to an amount which is one dollar ($1.00) less than
three (3) times the Officer's "base amount" under Section 280G(b)(3) of the Code
or (ii) the payments or benefits to be provided to the Officer shall be reduced
to the extent necessary to avoid treatment as an excess parachute payment with
the allocation of the reduction among such payments and benefits and the period
over which such payments and benefits are to be provided to be determined by the
Officer. Notwithstanding anything in this subparagraph (b) to the contrary, the
payments and benefits to be paid or provided to each Officer shall have an
aggregate present value, determined as of the Effective Time, of not less than
$537,933 and $350,504, respectively.
6.15. Directors. At the Special Meeting, CFC will nominate the three
existing FSFC directors listed below to CFC's board of directors and recommend
their election to the CFC shareholders:
1. David C. Wakefield III (Class of 1995)
2. William R. Phillips (Class of 1996)
3. Vernon E. Merchant, Jr. (Class of 1997)
At CFC's 1998 annual meeting of shareholders, CFC shall nominate David C.
Wakefield III to the Class of 1998. CFC shall also cause such persons to be
elected to CFB's board of directors.
6.16. Charitable Contributions. CFC shall honor FSFC's obligations to make
the charitable contributions set forth on Schedule 6.16 (which contributions
shall not exceed $15,000 annually).
6.17. Prohibited Actions. (a) Except as expressly provided in this
Reorganization Agreement, as agreed to by CFC or as required by applicable law,
rules or regulations (including the fiduciary duties of the FSFC and FFA
directors under applicable law), during the period from the date of this
Reorganization Agreement to the Effective Time, FSFC shall, and shall cause its
subsidiaries to, (i) take no action which would adversely affect or delay the
ability of the parties hereto to obtain any necessary Regulatory Approvals or
Authorizations required for the transactions contemplated hereby or to perform
its covenants and agreements on a timely basis under this Reorganization
Agreement and (ii) take no action that could reasonably be expected to have a
Material Adverse Effect on FSFC or FFA.
(b) Except as expressly provided in this Reorganization Agreement, as
agreed to by FSFC or as required by applicable law, rules or regulations, during
the period from the date of this Reorganization Agreement to the Effective Time,
CFC shall, and shall cause its subsidiaries to, (i) take no action which would
adversely affect or delay the ability of the parties hereto to obtain any
necessary Regulatory Approvals or Authorizations required for the transactions
contemplated hereby or to perform its covenants and agreements on a timely basis
under this Reorganization Agreement and (ii) take no action that could
reasonably be expected to have a Material Adverse Effect on CFC.
SECTION VII. CONDITIONS TO CFC'S OBLIGATION TO CLOSE
The obligation of CFC and CFB to consummate the transactions contemplated
in this Reorganization Agreement is subject to the satisfaction of the following
conditions at or before the Closing Date:
7.1. Performance of Acts and Representations by FSFC. Each of the acts and
undertakings of FSFC and FFA to be performed on or before the Closing Date
pursuant to the terms of this Reorganization Agreement shall have been duly
authorized and duly performed, and each of the representations and warranties of
FSFC and FFA set forth in this Reorganization Agreement shall be true in all
material
27
<PAGE>
<PAGE>
respects on the Closing Date, except as to transactions contemplated by this
Reorganization Agreement or representations which are as of a specific date.
7.2. Opinion of Counsel for FSFC. FSFC shall have furnished CFC with an
opinion of its counsel, dated as of the Closing Date, and in form and substance
reasonably satisfactory to CFC and its counsel, to the effect that, except as
disclosed herein: (i) Each of FSFC and FFA is duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation (except that with respect to FFA, counsel shall be entitled to
state merely that it has no knowledge of any reason why FFA is not duly
organized); (ii) the consummation of the transactions contemplated by this
Reorganization Agreement will not (A) violate any provision of FSFC's or FFA's
Certificate of Incorporation, Federal Stock Charter or Bylaws, as applicable,
(B) violate any provision of, result in the termination of, or result in the
acceleration of any obligation under, any agreement listed on Schedule 3.18 or
any order, arbitration award, judgment or decree known to counsel to which FSFC
or FFA is a party, or by which either is bound, except as such would not, in the
aggregate, have a Material Adverse Effect, except as disclosed on schedules to
the Reorganization Agreement, or (C) violate or conflict with any other
restriction of any kind or character of which such counsel has knowledge and to
which FSFC or FFA is subject; (iii) all of the shares of FSFC Common Stock and
FFA common stock are validly authorized and issued, fully paid and
non-assessable; (iv) each of FSFC and FFA has the legal right and power, and all
authorizations and approvals required by law, to enter into this Reorganization
Agreement, and to consummate the transactions contemplated herein (except that
exception may be taken with respect to the Bank Merger) and all applicable
regulatory waiting periods have passed; (v) other than filings and registrations
required under applicable law to be made by CFC or CFB, all filings and
registrations with, and notifications to, all federal and state authorities
required on the part of FSFC or FFA for the consummation of the Mergers have
been made; (vi) each of FSFC and FFA has full corporate power and authority to
enter into this Reorganization Agreement, and this Reorganization Agreement has
been duly authorized, executed and delivered by each of FSFC and FFA and
constitutes a valid and legally binding obligation of FSFC and FFA enforceable
against each of FSFC and FFA in accordance with its terms, except as such
enforceability may be limited by (x) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors of FDIC-insured institutions or the relief of
debtors generally, (y) laws relating to the safety and soundness of depository
institutions, and (z) general principles of equity; and (vii) to the best
knowledge of such counsel, no material suit or proceeding is pending or
threatened against FSFC, FFA or other parties which would have a Material
Adverse Effect on FSFC's or FFA's business or properties or their abilities to
make the representations and warranties and perform the obligations set forth
herein.
7.3. Conduct of Business. There shall have been no Material Adverse Event
with respect to FSFC or FFA from the date hereof through the Closing Date.
7.4. Consents. All Regulatory Approvals and other authorizations
necessary, in the reasonable opinion of counsel for CFC, to the consummation of
the transactions contemplated hereby shall have been obtained, and no
governmental agency or department or judicial authority shall have issued any
order, writ, injunction or decree prohibiting the consummation of the
transactions contemplated hereby. Regulatory Approvals shall have been obtained
without the imposition of any condition or requirements that, in the reasonable
judgment of CFC, renders the consummation of this transaction unduly burdensome
(excluding conditions or requirements that are typically imposed in transactions
of the type contemplated herein).
7.5. Certificate. CFC shall have been furnished with such certificates of
officers of FSFC and FFA, in form and substance reasonably satisfactory to CFC,
dated as of the Closing Date, certifying to such matters as CFC may reasonably
request, including but not limited to the fulfillment of the conditions
specified in this Section VII.
7.6. Shareholder Approvals. The Shareholder Approvals shall have been
obtained.
7.7. IRS Ruling. In the event that CFC shall have determined to
restructure the Mergers as permitted under Section 2.8 hereof and CFC determines
that it is desirable to obtain an IRS ruling with respect to such restructuring,
then it shall be a condition of Closing that CFC shall have received such IRS
ruling, which ruling shall be reasonably acceptable to CFC. Notwithstanding the
foregoing, in the event
28
<PAGE>
<PAGE>
that CFC determines to pursue such IRS ruling and such IRS ruling has not been
received by January 31, 1998, then CFC shall be deemed and required to waive
this condition to Closing and proceed with Closing.
7.8. Securities Laws. The Registration Statement shall have been declared
effective. No order suspending the sale of the shares of CFC Common Stock in any
jurisdiction shall have been issued, and no proceedings for that purpose shall
have been instituted.
7.9. FSFC Allowance. Immediately prior to Closing, the FSFC Allowance
shall not be less than 0.75% of the total FSFC loans then outstanding, unless
required otherwise by GAAP or applicable law.
SECTION VIII. CONDITIONS TO THE OBLIGATION OF FSFC TO CLOSE
The obligation of FSFC to consummate the transactions contemplated in this
Reorganization Agreement is subject to the satisfaction of the following
conditions at or before the Closing Date:
8.1. Performance of Acts and Representations by CFC and CFB. Each of the
acts and undertakings of CFC and CFB to be performed on or before the Closing
Date pursuant to the terms of this Reorganization Agreement shall have been duly
authorized and duly performed, and each of the representations and warranties of
CFC and CFB set forth in this Reorganization Agreement shall be true in all
material respects on the Closing Date, except as to transactions contemplated by
this Reorganization Agreement or representations which are as of a specific
date.
8.2. Opinion of Counsel for CFC. CFC shall have furnished FSFC with an
opinion of its counsel, dated as of the Closing Date, and in form and substance
reasonably satisfactory to FSFC and its counsel, to the effect that, except as
disclosed herein: (i) CFC and CFB are duly organized, validly existing and in
good standing under the laws of the State of South Carolina; (ii) the
consummation of the transactions contemplated by this Reorganization Agreement
will not (A) violate any provision of CFC's or CFB's Articles of Incorporation
or Bylaws, (B) violate any provision of, result in the termination of, or result
in the acceleration of any obligation under, any mortgage, lien, lease,
franchise, license, permit, agreement, instrument, order, arbitration award,
judgment or decree known to counsel to which CFC or CFB is a party, or by which
it is bound, except as such would not, in the aggregate, have a material adverse
effect on the business or financial condition of CFC, or (C) violate or conflict
with any other restriction of any kind or character of which such counsel has
knowledge and to which CFC or CFB is subject; (iii) all of the shares of CFC
Common Stock to be issued in connection with the Corporate Merger will be, when
issued, validly authorized and issued, fully paid and non-assessable; (iv) CFC
and CFB have the legal right and power, and all authorizations and approvals
required by law, to enter into this Reorganization Agreement (except that
exception may be taken with respect to the Bank Merger), and to consummate the
transactions contemplated herein and all applicable regulatory waiting periods
have passed; (v) all filings and registrations with, and notifications to, all
federal and state authorities required on the part of FSFC or FFA for the
consummation of the Mergers have been made; (vi) CFC and CFB have full corporate
power and authority to enter into this Reorganization Agreement, and this
Reorganization Agreement has been duly authorized, executed and delivered by CFC
and CFB and constitutes a valid and legally binding obligation of CFC and CFB
enforceable against CFC and CFB in accordance with its terms, except as such
enforceability may be limited by (x) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors of FDIC-insured institutions or the relief of
debtors generally, (y) laws relating to the safety and soundness of depository
institutions, and (z) general principles of equity; (vii) to the best knowledge
of such counsel, no material suit or proceeding is pending or threatened against
CFC or other parties which would have a material adverse effect on CFC's
business or properties or its abilities to make the representations and
warranties and perform the obligations set forth herein, and (viii) the
Registration Statement became effective on [date] and no stop order suspending
the effectiveness of the Registration Statement or any part thereof has been
issued and no proceedings for that purpose have been instituted or are pending
under the Securities Act.
29
<PAGE>
<PAGE>
8.3. Conduct of Business. There shall have been no Material Adverse Event
with respect to CFC or CFB from the date hereof through the Closing Date.
8.4. Consents. All Regulatory Approvals or other authorizations necessary,
in the reasonable opinion of counsel for FSFC, to the consummation of the
transactions contemplated hereby shall have been obtained, and no governmental
agency or department or judicial authority shall have issued any order, writ,
injunction or decree prohibiting the consummation of the transactions
contemplated hereby. Approvals of all applicable regulatory agencies shall have
been obtained without the imposition of any condition or requirements that, in
the reasonable judgment of FSFC, renders the consummation of this transaction
unduly burdensome (excluding conditions or requirements that are typically
imposed in transactions of the type contemplated herein).
8.5. Certificate. FSFC shall have been furnished with such certificates of
officers of CFC and CFB, in form and substance reasonably satisfactory to FSFC,
dated as of the Closing Date, certifying to such matters as FSFC may reasonably
request, including but not limited to the fulfillment of the conditions
specified in this Section VIII.
8.6. Tax Opinion. FSFC shall have received from Wyche, Burgess, Freeman &
Parham, P.A. a tax opinion, reasonably satisfactory to FSFC, opining, subject to
reasonable qualifications, that the Corporate Merger shall, upon compliance with
reasonable conditions, qualify as a tax-free reorganization under Section 368(a)
of the Code.
8.7. Shareholder Approvals. The Shareholder Approvals shall have been
obtained.
8.8. Securities Laws. The Registration Statement shall have been declared
effective. No order suspending the sale of the shares of CFC Common Stock in any
jurisdiction shall have been issued, and no proceedings for that purpose shall
have been instituted.
SECTION IX. TERMINATION
9.1. Termination. This Reorganization Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual consent of the parties;
(b) by either CFC or FSFC, at that party's option, (A) if a
permanent injunction or other order (including any order denying any
required regulatory consent or approval) shall have been issued by any
Federal or state court of competent jurisdiction in the United States or
by any United States Federal or state governmental or regulatory body,
which order prevents the consummation of the transactions contemplated
herein, or (B) if the Shareholder Approvals are not received at the
Shareholder Meetings;
(c) by either CFC or FSFC if the other party (or its subsidiaries)
has failed to comply with the agreements or fulfill the conditions
contained herein, provided, however, that any such failure of compliance
or fulfillment must result in a Material Adverse Event and the breaching
party must be given notice of the failure to comply and a reasonable
period of time to cure;
(d) by either CFC or FSFC as set forth in Section 2.3 hereof.
(e) by either CFC or FSFC if the Ending Price is above $19.0156 or
below $11.4094 (as such price shall be subject to equitable adjustment for
stock splits, stock dividends, reverse stock splits and similar items).
SECTION X. INDEMNIFICATION
10.1. Information for Application and Statements. Each of CFC and FSFC
represents and warrants that all information concerning it which is or will be
included in any statement and application made to any governmental agency
(including the Registration Statement) in connection with the transactions
contemplated by the Agreement shall be true and correct in all material respects
and shall not omit any
30
<PAGE>
<PAGE>
material fact required to be stated therein or necessary to make the statements
made, in light of the circumstances under which they were made, not misleading.
Each of CFC and FSFC so representing and warranting will indemnify and hold
harmless the other, each of its directors and officers, who controls the other
within the meaning of the Securities Act, from and against any and all losses,
claims, damages, expenses or liabilities to which any of them may become subject
under applicable laws and rules and regulations thereunder and will reimburse
them for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any actions whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any such application or statement or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary in order to make the
statements therein not misleading, but only insofar as any such statement or
omission was made in reliance upon and in conformity with information furnished
in writing by the representing and warranting party expressly for use therein.
Each of CFC and FSFC agrees, at any time upon the request of the other, to
furnish to the other a written letter or statement confirming the accuracy of
the information contained in any proxy statement, registration statement, report
or other application or statement, or in any draft of any such document, and
confirming that the information contained in such document or draft was
furnished expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or draft or indicating the information
not furnished expressly for use therein. The indemnity agreement contained in
this Section X shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the other party.
10.2. Indemnification of Officers and Directors. (a) CFC covenants and
agrees that it will cause each person who is an officer or director of FSFC or
FFA (an "Indemnitee") on the Closing Date to be indemnified for any costs and
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") arising out of such
person's service as an officer or director of FSFC or FFA to the fullest extent
to which such Indemnitee is entitled under the Articles of Incorporation and
Bylaws of CFC in effect on the date hereof (except that this provision shall not
be construed so as to cause CFC to violate applicable law). Without limiting the
foregoing obligation, CFC agrees that all limitations of liability existing in
favor of an Indemnitee in the Certificate of Incorporation and Bylaws of FSFC as
in effect on the date hereof, arising out of matters existing or occurring at or
prior to the Effective Time shall survive the Mergers and shall continue in full
force. CFC, upon request of such Indemnitee, shall advance expenses in
connection with such indemnification. The provisions of this Section X shall
survive the closing and shall be enforceable directly by each officer and
director of FSFC benefited by this Section X.
(b) Any Indemnitee wishing to claim indemnification under this Section X,
upon learning of such claims or liabilities, shall promptly notify CFC thereof;
provided, that the failure so to notify shall not affect the obligations of CFC
hereunder unless such failure materially increases CFC's liability hereunder. In
the event of any litigation giving rise to a claim hereunder, (i) CFC shall have
the right to assume the defense thereof, if it so elects, and CFC shall pay all
reasonable fees and expenses of counsel for the Indemnitees promptly as
statements therefor are received; provided, however, that CFC shall be obligated
pursuant to this Section to pay for only one firm of counsel for all Indemnitees
in any jurisdiction for any single action, suit or proceeding or any group of
actions, suits or proceedings arising out of or related to a common body of
facts, (ii) the Indemnitees shall cooperate in the defense of any such matter,
(iii) CFC shall not be liable for any settlement effected without its prior
written consent and (iv) CFC shall have no obligation hereunder in the event a
federal banking agency or a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and nonappealable,
that indemnification of an Indemnitee in the manner contemplated hereby is
prohibited by applicable law.
31
<PAGE>
<PAGE>
10.3. Insurance. FSFC and CFC shall use their reasonable best efforts to
maintain FSFC's existing directors' and officers' liability insurance policy (or
a policy, similar to FSFC's existing policy, providing comparable coverage on
terms no less favorable) past the Closing Date covering persons who are
currently covered by such insurance; provided that CFC or FSFC shall not make a
premium payment in respect of such policy (or replacement policy) which exceeds
$50,000 and provided further that FSFC and CFC shall obtain the maximum amount
of such coverage as can be obtained by paying a premium of $50,000. CFC shall
take no action to terminate prematurely such policy.
SECTION XI. MISCELLANEOUS
11.1. Survival of Representations and Warranties. Except as otherwise
provided in this Reorganization Agreement, the representations, warranties and
covenants contained in this Reorganization Agreement or in any other documents
delivered pursuant hereto, shall not survive the Closing of the transactions.
Notwithstanding any investigation made by or on behalf of the parties, whether
before or after Closing Date, the parties shall be entitled to rely upon the
representations and warranties given or made by the other party(ies) herein.
Each of the covenants set forth in Sections 6.2, 6.14, 6.15, 6.16, 10.2 and 10.3
shall survive the Closing Date forever (except that this sentence shall not be
construed to extend any applicable statutes of limitations). The provisions of
the foregoing sections shall survive the Closing and shall be enforeceable
directly by each person benefitted or intended to be benefitted by such
sections.
11.2. Entire Agreement. This Reorganization Agreement, including any
schedules, exhibits, lists and other documents referred to herein which form a
part hereof, contains the entire agreement of the parties with respect to the
subject matter contained herein and there are no agreements, warranties,
covenants or undertakings other than those expressly set forth herein.
11.3. Binding Agreement. This Reorganization Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Agreement shall not be
assigned by either of the parties hereto without the prior written consent of
the other party hereto.
11.4. Notices. Any notice given hereunder shall be in writing and shall be
deemed delivered and received upon reasonable proof of receipt. Unless written
designation of a different address is filed with each of the other parties
hereto, notice shall be transmitted to the following addresses:
For CFC: William S. Hummers III
Carolina First Corporation
102 South Main Street
Greenville, South Carolina 29601
Fax: 864-239-4605
Copy to: William P. Crawford, Jr.
Wyche, Burgess, Freeman & Parham, P.A.
Post Office Box 728
Greenville, South Carolina 29602
Fax: 864-235-8900
For FSFC: David C. Wakefield III
First Southeast Financial Corporation
201 North Main Street
Anderson, South Carolina 29622
Fax: 864-260-6211
32
<PAGE>
<PAGE>
Copies to: John F. Breyer, Jr.
Breyer & Aguggia
1300 I Street, N.W., Suite 470E
Washington, D.C. 20005
Fax: 202-737-7979
11.5. Counterparts. This Reorganization Agreement may be executed in one
or more Counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
11.6. Headings. The section and paragraph headings contained in this
Reorganization Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretations of this Reorganization Agreement.
11.7. Law Governing. This Reorganization Agreement shall be governed by
and construed in accordance with the laws of the State of South Carolina.
11.8. Amendment. This Reorganization Agreement may not be amended except
by an instrument in writing signed on behalf of all of the parties.
11.9. Waiver. Any term, provision or condition of this Reorganization
Agreement (other than that required by law) may be waived in writing at any time
by the party which is entitled to the benefits thereof.
END OF PAGE
33
<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Reorganization Agreement has been duly entered as
of the date first written above.
WITNESS:
CAROLINA FIRST CORPORATION
_________________________ By: /s/WILLIAM S. HUMMERS III
________________________________________
William S. Hummers III
_________________________ Executive Vice President
CAROLINA FIRST BANK
_________________________ By: /s/WILLIAM S. HUMMERS III
________________________________________
William S. Hummers III
_________________________ Executive Vice President and Cashier
FIRST SOUTHEAST FINANCIAL CORPORATION
_________________________ By: /s/DAVID C. WAKEFIELD III
________________________________________
David C. Wakefield III
_________________________ President and Chief Executive Officer
FIRST FEDERAL SAVINGS AND LOAN
ASSOCIATION OF ANDERSON
_________________________ By: /s/DAVID C. WAKEFIELD III
________________________________________
David C. Wakefield III
_________________________ President and Chief Executive Officer
34
<PAGE>
<PAGE>
APPENDIX A
PLAN OF MERGER
OF
FIRST SOUTHEAST FINANCIAL CORPORATION
WITH AND INTO
CAROLINA FIRST CORPORATION
Pursuant to this Plan of Merger (the "Plan of Merger"), First Southeast
Financial Corporation ("FSFC"), a Delaware corporation headquartered in
Anderson, South Carolina, shall be merged with and into Carolina First
Corporation ("CFC"), a South Carolina corporation headquartered in Greenville,
South Carolina.
ARTICLE I. DEFINITIONS
The capitalized terms set forth below shall have the following meanings:
1.1. "Articles of Merger" shall mean the Articles of Merger to be executed
by CFC and FSFC in a form appropriate for filing with the Secretary of State of
South Carolina, relating to the effective consummation of the Corporate Merger
as contemplated by the Plan of Merger.
1.2. BCA shall mean the South Carolina Business Corporation Act of 1988,
as amended.
1.3. CFB shall mean Carolina First Bank, a South Carolina corporation and
a wholly-owned subsidiary of CFC.
1.4. "CFC Common Stock" shall mean the common stock, par value $1.00 per
share, of CFC.
1.5. "Change of Control Transaction" shall mean, with respect to CFC, a
transaction in which a majority of the surviving entity of such transaction (or
a majority of the entity holding substantially all of the assets of CFC) is not
owned by persons holding CFC Common Stock immediately prior to such transaction.
1.6. "Conversion Ratio" shall mean the number of shares of CFC Common
Stock issuable in exchange for one share of FSFC Common Stock, as calculated
pursuant to Section 3.1 hereof.
1.7. "Corporate Merger" shall mean the merger of FSFC with and into CFC as
more particularly set forth herein and in the Reorganization Agreement.
1.8. "Effective Time" shall mean the date and time which the Corporate
Merger becomes effective as more particularly set forth in Section 2.2 hereof.
Subject to the terms and conditions hereof, the Effective Time shall be such
time on such date as CFC shall notify FSFC in writing not less than five days
prior thereto, which date shall not be more than 30 days after all conditions
have been satisfied or waived in writing.
1.9. "Ending Price" shall mean the average of the closing prices as quoted
on the Nasdaq National Market for CFC Common Stock for the ten days in which CFC
Common Stock was traded immediately prior to the Closing Date.
1.10. FFA shall mean First Federal Savings and Loan Association of
Anderson, a federal savings association organized and existing under the laws of
the United States of America. Where the context permits, FFA shall be deemed to
include FFA and FMSC.
1.11. FMSC shall mean First Master Service Corporation, a South Carolina
corporation and wholly-owned subsidiary of FFA.
1.12. "OTS" shall mean the Office of Thrift Supervision.
1.13. "Person" shall mean an individual, a partnership, a corporation, a
commercial bank, an industrial bank, a savings association, a savings bank, a
limited liability company, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
1.14. "Reorganization Agreement" shall mean the Reorganization Agreement
among CFC, CFB, FFA and FSFC dated the date hereof, to which this Plan of Merger
is attached as Appendix A.
1.15. "Rights" shall mean warrants, calls, commitments, options, rights
(whether stock appreciation rights, conversion rights, exchange rights, profit
participation rights, or otherwise), securities or obligations convertible into
or exchangeable for, or giving any Person any right to subscribe for or acquire,
and other arrangements or commitments which obligate a Person to issue,
otherwise cause to become outstanding, sell, transfer, pledge, or otherwise
dispose of any of its capital stock or other ownership interests, or any voting
rights thereof or therein, or to pay monetary sums by reference to the existence
or market valuation, or in lieu and place, of any of its capital stock or
ownership interests therein.
<PAGE>
<PAGE>
1.16. "Shareholder Approvals" shall mean, as the context may require, the
duly authorized written consent of CFC to the merger of FFA with and into CFB;
the duly authorized written consent of FSFC to the merger of FFA with and into
CFB; the approval by the requisite vote of the shareholders of FSFC at the FSFC
Shareholders' Meeting of the merger of FSFC with and into CFC; and the approval
by the requisite vote of the shareholders of CFC at the CFC Shareholders'
Meeting of the merger of FSFC with and into CFC, all in accordance with the
Reorganization Agreement and this Plan of Merger.
1.17. "Shareholders' Meeting" shall mean, as applicable, the meetings of
the shareholders of FSFC and CFC at which the Corporate Merger shall be voted
upon.
1.18. "Surviving Corporation" shall mean CFC after consummation of the
Corporate Merger.
ARTICLE II. THE CORPORATE MERGER
2.1. Corporate Merger. At the Effective Time, subject to the terms and
conditions of the Reorganization Agreement and this Plan of Merger, FSFC shall
merge with and into CFC, the separate existence of FSFC shall cease, and CFC
(the "Surviving Corporation") shall survive and the name of the Surviving
Corporation shall be "Carolina First Corporation". By virtue of the Corporate
Merger and without any action on the part of the holders thereof, each of the
shares of FSFC Common Stock issued and outstanding immediately prior to the
Effective Time (excluding shares held by FSFC, CFC, any FSFC Subsidiary or any
CFC Subsidiary, in each case other than in a fiduciary capacity or as a result
of debts previously contracted (the "Excluded Shares")) shall be converted into
the right to receive the Merger Consideration referenced in Section III below.
Each of the shares of CFC Common Stock (including the rights ("CFC Rights")
issued pursuant to a Shareholder Rights Agreement, dated November November 9,
1993 (as amended, the "CFC Rights Agreement")), and any shares of any CFC
Subsidiary or FSFC Subsidiary outstanding immediately prior to the Effective
Time shall continue to be issued and outstanding, and shall not be converted,
exchanged or altered in any manner as a result of the Corporate Merger.
2.2. Effective Time. The Corporate Merger shall become effective on the
date and at the time specified in the Articles of Merger, and in the form to be
filed with the Secretary of State of the State of South Carolina.
2.3. Capitalization. The number of authorized shares of capital stock of
the Surviving Corporation shall be the same as immediately prior to the
Corporate Merger.
2.4. Articles of Incorporation. The articles of incorporation of CFC as in
effect at the Effective Time shall be and remain the articles of incorporation
of the Surviving Corporation.
2.5. Bylaws. The Bylaws of CFC, as in effect at the Effective Time, shall
continue in full force and effect as the bylaws of the Surviving Corporation
until otherwise amended as provided by law or by such bylaws.
2.6. Properties and Liabilities of FSFC and CFC; Management. At the
Effective Time, the separate existence and corporate organization of FSFC shall
cease, and CFC shall thereupon and thereafter, to the extent consistent with
applicable law and with its articles of incorporation and the changes, if any,
provided by the Corporate Merger, possess all the rights, privileges,
immunities, liabilities and franchises, of a public as well as a private nature,
of FSFC without further act or deed. The directors and officers of CFC in
office immediately prior to the Corporate Merger becoming effective shall be the
directors and officers of the Surviving Corporation, together with such
additional directors and officers as may thereafter be elected, who shall hold
office until such time as their successors are elected and qualified.
ARTICLE III. MERGER CONSIDERATION
3.1. Merger Consideration. In connection with the Corporate Merger, each
share of FSFC Common Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Corporate Merger and without any action
on the part of the holder thereof, be exchanged for and converted into 1.000
shares of CFC Common Stock (the "Conversion Ratio"). However, the Conversion
Ratio shall be subject to adjustment as follows:
<PAGE>
<PAGE>
1. In the event that the Ending Price is above $16.7338, then the
Conversion Ratio shall be reduced so that each holder of the FSFC
Common Stock shall receive the number of shares of CFC Common stock
equal to $16.7338 divided by the Ending Price, for each share of FSFC
Common Stock.
2. In the event that the Ending Price is below $13.6913, then the
Conversation Ratio shall be increased so each holder of FSFC Common
Stock shall receive the number of shares of CFC Common Stock equal to
$13.6913 divided by the Ending Price, for each share of FSFC Common
Stock.
3. In the event that on the Closing Date, (i) CFC has executed a letter
of intent or entered into a definitive agreement providing for a
Change of Control Transaction or (ii) a bona fide offer to acquire a
majority of the outstanding shares of CFC Common Stock is outstanding
from a financial institution having the ability and intention to
consummate such offer, then the Conversion Ratio shall not be less
than 1.000.
All of the stock prices set forth in this Section 3.1 shall also be subject to
equitable adjustment for stock splits, stock dividends, reverse stock splits and
similar items.
3.2. CFC Common Stock. None of the shares of CFC shall be converted in
the Corporate Merger and the capitalization of CFC after the Corporate Merger
shall remain unchanged.
3.3. Authorized or Treasury Shares. Any and all shares of FSFC Common Stock
held as treasury shares by FSFC or authorized but unissued shares shall be
canceled and retired at the Effective Time, and no consideration shall be issued
or given in exchange therefor.
3.4. Fractional Shares. No fractional shares of CFC Common Stock will be
issued as a result of the Merger. In lieu of the issuance of fractional shares
pursuant to Section 3.1 hereof, cash will be paid to the holders of the FSFC
Common Stock in respect of any fractional share that would otherwise be issuable
based on the Ending Price.
3.5. Excluded Shares. Each of the Excluded Shares shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.6. Equitable Adjustments. In the event of any change in the outstanding
CFC Common Stock by reason of a stock dividend, stock split, stock
consolidation, recapitalization, reorganization, merger, split up or the like,
the Conversation Ratio and all stock prices set forth in this Article III
shall be appropriately adjusted so as to preserve, but not increase, the
benefits of this Plan of Merger to the holders of FSFC Common Stock.
3.7. Transfers. At the Effective Time, the stock transfer books of FSFC
shall be closed and no transfer of FSFC Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Merger notwithstanding, none of
the parties to the Reorganization Agreement or any affiliate of the foregoing
shall be liable to a holder of FSFC Common Stock for any amount paid
or property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat, or similar law.
ARTICLE IV. EXCHANGE OF COMMON STOCK CERTIFICATES
4.1. Issuance of CFC Certificates; Cash for Fractional Shares.
(a) As soon as practicable after the Effective Time (but in no event more
than five days after the Effective Time), CFC or its transfer agent (in such
capacity, the "Exchange Agent") shall mail, or cause to be mailed, and otherwise
make available to each record holder of Shares, a form of the letter of
transmittal and instructions for use in effecting surrender and exchange of
certificates which immediately before the Effective Time represented shares of
FSFC Common Stock ("Certificates") for payment therefor. Upon receipt of such
notice and transmittal form, each holder of Certificates at the Effective Time
shall surrender the Certificate or Certificates to the Exchange Agent, and shall
promptly upon surrender receive in exchange therefor the Merger Consideration
provided in Section 3 of this Plan of Merger. If any portion of the payment to
be made upon surrender and exchange of a Certificate is to be paid to a person
other than the person in whose name the Certificate is registered, it shall
be a condition of such payment that the Certificate shall be properly endorsed
or otherwise in proper form for transfer and that the person requesting such
<PAGE>
<PAGE>
payment shall pay in advance any transfer or other taxes or establish to the
satisfaction of CFC that no such tax is applicable. Upon surrender, each
Certificate shall be canceled. In addition, Certificates surrendered for
exchange by any person constituting an affiliate of FSFC for purposes of Rule
145(c) under the Securities Act of 1933, as amended (the "Securities Act"),
shall not be exchanged for certificates representing shares of CFC Common Stock
until CFC has received the written agreement from such person as provided for in
Section 6.4 of the Reorganization Agreement.
(b) Adequate provisions shall be made to permit Certificates to be
surrendered and exchanged in person not later than the business day following
the Effective Time.
4.2. Authorized Withholdings. CFC shall not be obligated to deliver the
consideration to which any former holder of FSFC Common Stock is entitled as a
result of the Merger until such holder surrenders his or her certificate or
certificates representing the shares of FSFC Common Stock for exchange as
provided in this Article IV, or, in default thereof, an appropriate affidavit of
loss and indemnity agreement and/or a bond as may be reasonably required in each
case by CFC or FSFC. In addition, no dividend or other distribution payable to
the holders of record of CFC Common Stock as of any time subsequent to the
Effective Time shall be paid to the holder of any certificate representing
shares of FSFC Common Stock issued and outstanding at the Effective Time
until such holder surrenders such certificate for exchange as provided in
Section 4.1 above. However, upon surrender of the FSFC Common Stock certificate
both the CFC Common Stock certificate, together with all such withheld dividends
or other distributions and any withheld cash payments in respect of fractional
share interest, but without any obligation for payment of interest by such
withholding, shall be delivered and paid with respect to each share represented
by such certificate.
4.3. Limited Rights of Former FSFC Shareholders. After the Effective Time,
each outstanding certificate representing shares of FSFC Common Stock prior to
the Effective Time shall be deemed for all corporate purposes (other than voting
and the payment of dividends and other distributions to which the former
shareholder of FSFC Common Stock may be entitled) to evidence only the right of
the holder thereof to surrender such certificate and receive the requisite
number of shares of CFC Common Stock in exchange therefor (and cash in lieu of
fractional shares) as provided in this Plan of Merger.
ARTICLE V. STOCK OPTIONS AND OTHER RIGHTS
5.1. Options. There are no Rights to purchase FSFC Common Stock or
securities convertible into FSFC Common Stock.
ARTICLE VI. MISCELLANEOUS
6.1. Conditions Precedent. Consummation of the Merger is conditioned upon
receipt of the Shareholder Approvals. In addition, consummation of the Merger is
conditioned upon the fulfillment of the conditions precedent set forth in
Section VII and Section VIII of the Reorganization Agreement, subject to waiver
of any such conditions, if appropriate, as provided thereunder.
6.2. Termination. This Plan of Merger may be terminated at any time prior
to the Effective Time as provided in Section IX of the Reorganization Agreement.
6.3. Amendments. To the extent permitted by law, this Plan of Merger may be
amended by a subsequent writing signed by all of the parties hereto upon the
approval of the board of directors of each of the parties hereto; provided,
however, that this Plan of Merger may not be amended after the Shareholders'
Meetings except in accordance with applicable law.
Dated as of this _____ day of _______________, 1997.
<PAGE>
<PAGE>
APPENDIX B
PLAN OF MERGER
OF
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF ANDERSON
WITH AND INTO
CAROLINA FIRST BANK
Pursuant to this Plan of Merger (the "Plan of Merger"), First Federal
Savings and Loan Association of Anderson ("FFA"), a federal savings and loan
association existing under the laws of the United States of America, shall be
merged with and into Carolina First Bank ("CFB"), a state banking corporation
existing under the laws of South Carolina.
ARTICLE I. DEFINITIONS
The capitalized terms set forth below shall have the following meanings:
1.1. "Articles of Merger" shall mean the Articles of Merger to be executed
by CFB and FFA in a form appropriate for filing with the Secretary of State of
South Carolina and the Office of Thrift Supervision, relating to the effective
consummation of the Bank Merger as contemplated by the Plan of Merger.
1.2. "BCA" shall mean the South Carolina Business Corporation Act of 1988,
as amended.
1.3. "Bank Merger" shall mean the merger of FFA with and into CFB as more
particularly set forth in the Reorganization Agreement.
1.4. "CFB Common Stock" shall mean the common stock, par value $1.00 per
share, of CFB.
1.5. CFC shall mean Carolina First Corporation, a bank holding company
headquartered in Greenville, South Carolina.
1.6. "Effective Time" shall mean the date and time which the Bank Merger
becomes effective as more particularly set forth in Section 2.2 hereof. Subject
to the terms and conditions hereof, the Effective Time shall be such time on
such date as CFB shall notify FFA in writing not less than five days prior
thereto, which date shall not be more than 30 days after all conditions have
been satisfied or waived in writing.
1.7. FSFC. First Southeast Financial Corporation, a corporation organized
and existing under the laws of the state of Delaware.
1.8. "OTS" shall mean the Office of Thrift Supervision.
1.9. "Person" shall mean an individual, a partnership, a corporation, a
commercial bank, an industrial bank, a savings association, a savings bank, a
limited liability company, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
1.10. "Reorganization Agreement" shall mean the Reorganization Agreement
among CFC, CFB and FSFC dated the date hereof, to which this Plan of Merger is
attached as Appendix A.
1.11. "Shareholder Approvals" shall mean, as the context may require, the
duly authorized written consent of CFC to the merger of FFA with and into CFB;
the duly authorized written consent of FSFC to the merger of FFA with and into
CFB; the approval by the requisite vote of the shareholders of FSFC at the FSFC
Shareholders' Meeting of the merger of FSFC with and into CFC; and the approval
by the requisite vote of the shareholders of CFC at the CFC Shareholders'
Meeting of the merger of FSFC with and into CFC, all in accordance with the
Reorganization Agreement and this Plan of Merger.
1.12. "Surviving Corporation" shall mean CFB after consummation of the
Bank Merger.
ARTICLE II. THE BANK MERGER
2.1. Bank Merger. At the Effective Time, subject to the terms and
conditions of the Reorganization Agreement and this Plan of Merger, FFA shall
merge with and into CFB, the separate existence of FFA shall cease, and CFB (the
"Surviving Corporation") shall survive and the name of the Surviving shall be
"Carolina First Bank". By virtue of the Bank Merger and without any action on
the part of the holders thereof, each of the shares of FFA Common Stock issued
and outstanding immediately prior to the Effective Time, shall be converted into
the right to receive the Merger Consideration referenced in Section III below.
Each of the shares of CFB Common Stock, and any shares of any CFB subsidiary or
FFA subsidiary outstanding immediately prior to the Effective Time shall
continue to be issued and outstanding, and shall not be converted, exchanged
or altered in any manner as a result of the Bank Merger.
<PAGE>
<PAGE>
2.2. Effective Time. The Bank Merger shall become effective on the date and
at the time specified in the Articles of Merger, and in the form to be filed
with the Secretary of State of the State of South Carolina and the OTS.
2.3. Capitalization. The number of authorized shares of capital stock of
the Surviving Corporation shall be the same as immediately prior to the Bank
Merger.
2.4. Articles of Incorporation. The articles of incorporation of CFB as in
effect at the Effective Time shall be and remain the articles of incorporation
of the Surviving Corporation.
2.5. Bylaws. The Bylaws of CFB, as in effect at the Effective Time, shall
continue in full force and effect as the bylaws of the Surviving Corporation
until otherwise amended as provided by law or by such bylaws.
2.6. Properties and Liabilities of FFA and CFB; Management. At the
Effective Time, the separate existence and corporate organization of FFA shall
cease, and CFB shall thereupon and thereafter, to the extent consistent with
applicable law and with its articles of incorporation and the changes, if any,
provided by the Bank Merger, possess all the rights, privileges, immunities,
liabilities and franchises, of a public as well as a private nature, of FFA
without further act or deed. The directors and officers of CFB in office
immediately prior to the Bank Merger becoming effective shall be the directors
and officers of the Continuing Corporation, together with such additional
directors and officers as may thereafter be elected, who shall hold office until
such time as their successors are elected and qualified.
ARTICLE III. MERGER CONSIDERATION
3.1. Merger Consideration. In connection with the Bank Merger, all shares
of FFA Common Stock issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Bank Merger and without any action on the part of
the holder thereof, be exchanged for and converted into ______ shares of CFB
Common Stock (the "Merger Consideration").
3.2. CFB Common Stock. None of the shares of CFB shall be converted in the
Bank Merger and the capitalization of CFB after the Bank Merger shall remain
unchanged.
3.3. Authorized or Treasury Shares. Any and all shares of FFA Common Stock
held as treasury shares by FFA or authorized but unissued shares shall be
canceled and retired at the Effective Time, and no consideration shall be issued
or given in exchange therefor.
3.4. Transfers. At the Effective Time, the stock transfer books of FFA
shall be closed and no transfer of FFA Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Merger notwithstanding, none of
the parties to the Reorganization Agreement or any affiliate of the foregoing
shall be liable to a holder of FFA Common Stock for any amount paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
ARTICLE IV. EXCHANGE OF COMMON STOCK CERTIFICATES
4.1. Issuance of CFB Certificates; Cash for Fractional Shares. After the
Effective Time, each holder of shares of FFA Common Stock issued and outstanding
at the Effective Time shall surrender the certificate or certificates
representing such shares to CFB or its transfer agent, and shall promptly upon
surrender receive in exchange therefor the Merger Consideration provided in
Section 3.1 of this Plan of Merger.
4.2. Authorized Withholdings. CFB shall not be obligated to deliver the
consideration to which any former holder of FFA Common Stock is entitled as a
result of the Bank Merger until such holder surrenders his or her certificate or
certificates representing the shares of FFA Common Stock for exchange as
provided in this Article IV, or, in default thereof, an appropriate affidavit of
loss and indemnity agreement and/or a bond as may be reasonably required in each
case by CFB or FFA. In addition, no dividend or other distribution payable to
the holders of record of CFB Common Stock as of any time subsequent to the
Effective Time shall be paid to the holder of any certificate representing
shares of FFA Common Stock issued and outstanding at the Effective Time until
such holder surrenders such certificate for exchange as provided in Section 4.1
above. However, upon surrender of the FFA Common Stock certificate both the CFB
Common Stock certificate, together with all such withheld dividends or other
distributions and any withheld cash payments in respect of fractional share
interest, but without any obligation for payment of interest by such
<PAGE>
<PAGE>
withholding, shall be delivered and paid with respect to each share represented
by such certificate.
4.3. Limited Rights of Former FFA Shareholders. After the Effective Time,
each outstanding certificate representing shares of FFA Common Stock prior to
the Effective Time shall be deemed for all Bank purposes (other than voting and
the payment of dividends and other distributions to which the former shareholder
of FFA Common Stock may be entitled) to evidence only the right of the holder
thereof to surrender such certificate and receive the requisite number of shares
of CFB Common Stock in exchange therefor as provided in this Plan of Merger.
ARTICLE V. STOCK OPTIONS AND OTHER RIGHTS
5.1. Options. There are no Rights to purchase FFA Common Stock or
securities convertible into FFA Common Stock.
ARTICLE VI. MISCELLANEOUS
6.1. Conditions Precedent. Consummation of the Bank Merger is conditioned
upon receipt of the Shareholder Approvals. In addition, consummation of the Bank
Merger is conditioned upon the fulfillment of the conditions precedent set forth
in Section VII and Section VIII of the Reorganization Agreement, subject to
waiver of any such conditions, if appropriate, as provided thereunder.
6.2. Termination. This Plan of Merger may be terminated at any time prior
to the Effective Time as provided in Section IX of the Reorganization Agreement.
6.3. Amendments. To the extent permitted by law, this Plan of Merger may be
amended by a subsequent writing signed by all of the parties hereto upon the
approval of the board of directors of each of the parties hereto.
Dated as of this _____ day of _______________, 1997.
<PAGE>
<PAGE>
Exhibit 99
Press Release dated July 1, 1997
<PAGE>
<PAGE>
First Southeast
---------------
Financial Corp.
NEWS RELEASE
DATE: July 1, 1997
CONTACTS:
Carolina First Corporation First Southeast Financial Corporation
William S. Hummers III David C. Wakefield, III, President
Mary M. Gentry (864) 224-3401
(864) 255-4919
TO: News Media
RELEASE DATE: Immediate
CAROLINA FIRST AND FIRST SOUTHEAST SIGN MERGER AGREEMENT
GREENVILLE, S.C. - Carolina First Corporation (Nasdaq/NM:CAFC) and First
Southeast Financial Corporation (Nasdaq/NM:FSFC) today announced the signing of
a definitive agreement by which First Southeast will merge with Carolina First.
First Southeast is the holding company for First Federal Savings and Loan
Association of Anderson based in Anderson, South Carolina. Carolina First plans
to merge First Federal into Carolina First Bank, a subsidiary of Carolina First
Corporation. The transaction is subject to the receipt of regulatory and
shareholder approvals.
Following the merger, Carolina First will be the largest independent financial
institution in South Carolina with over $2.0 billion in assets and a market
capitalization of approximately $250 million. The combined company is expected
to operate over 65 banking offices and 40 ATMs. Carolina First will also rank
first in market share in Anderson County, a strategic market located along the
desirable Interstate 85 corridor between Atlanta and Charlotte and the fourth
largest metropolitan statistical area in South Carolina.
Under the agreement, First Southeast shareholders will receive 1.0 share of
Carolina First common stock for each share of First Southeast stock. This
exchange ratio, which is subject to adjustment in the event of a 10% movement in
Carolina First's stock based on a price of $15.2125, is expected to result in
the issuance of 4,388,231 shares of Carolina First common stock. Based on
Carolina First's closing price on June 30, 1997, the deal is valued at $14.75
per First Southeast share or approximately $65 million in total. Carolina First
will record the acquisition using the purchase method of accounting.
First Southeast, through its subsidiary savings and loan association, First
Federal Savings and Loan Association of Anderson, has 11 offices in Anderson,
Abbeville, and Greenwood counties and plans to open an additional three branches
in Wal-Mart superstores beginning this summer. At March 31, 1997, First
Southeast had approximately $335 million in assets, $261 million in loans, and
$283 million in deposits.
Mack I. Whittle, Jr., President and Chief Executive Officer of Carolina First
Corporation, said, "The merger of First Southeast with Carolina First will
create significant benefits for the customers and shareholders of both
companies. Our combination will create a strong and profitable bank with the
largest market share in Anderson County. It will also mark the entrance of
Carolina First into Greenwood County. We will benefit our combined shareholders
by realizing cost savings from an in-market merger and enhancing First
Southeast's profit opportunities by broadening the services offered to
customers. This merger will further solidify Carolina First's position as the
largest South Carolina-based financial institution."
<PAGE>
<PAGE>
David C. Wakefield, III, President and Chief Executive Officer of First
Southeast Financial Corporation, commented, "We are very pleased to affiliate
with Carolina First, a dynamic and growing company. The merger will provide our
shareholders with a significantly enhanced investment and at the same time lay
the foundation for improved products and services for our valued customers.
Carolina First is a pioneer in finding innovative ways to offer banking
services in today's fast paced world of electronic commerce. We look forward to
being a part of Carolina First's vision of the future."
Carolina First Corporation, headquartered in Greenville, South Carolina, is one
of the largest independent bank holding companies in South Carolina with assets
of $1.6 billion and 50 banking offices throughout the state. Its three
subsidiaries are Carolina First Bank (CFB), a state-chartered commercial bank,
Carolina First Mortgage Company (CFMC), a mortgage banking operation, and Blue
Ridge Finance Company, an automobile finance company. CFB is the largest South
Carolina-based commercial bank, and CFMC is the second largest mortgage loan
servicer in South Carolina. Through its subsidiaries, Carolina First provides a
full range of banking services, including mortgage, trust and investment
services, designed to meet substantially all of the financial needs of its
customers. Carolina First's common stock trades on the Nasdaq National Market
under the symbol CAFC.
***END***
<PAGE>
<PAGE>
