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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): June 16, 1996
Home Financial Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-24748 65-0508062
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
Registrant's telephone number, including area code: (954) 925-3211
Not Applicable
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(Former name or former address, if changed since last report)
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Item 1(b). Change of Control of the Registrant.
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On June 16, 1996, Home Financial Corporation (the "Registrant") and its
subsidiary Home Savings Bank, FSB, entered into an Agreement and Plan of Merger
(the "Agreement") with First Union Corporation ("First Union") and First Union
National Bank of Florida, which provides, among other things, that (i) the
Registrant shall merge with and into First Union, and (ii) shares of the
Registrant's common stock shall become and be converted into the right to
receive 0.2233 shares of First Union common stock, subject to adjustment
relating to the proceeds received in the disposition of the assets of American
Home Service Corporation ("AHSC"), a subsidiary of Home Financial Corporation,
as set forth in Section 5.19 of the Agreement.
Consummation of the Acquisition is subject to certain conditions, including
the approval of the Registrant's stockholders, the receipt of all regulatory
approvals, and the disposition of AHSC. It is expected that the Acquisition
will be completed during the fourth quarter of calendar 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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The following Exhibits are filed as part of this report:
Exhibit 2 Agreement and Plan of Mergers, dated as of the 16th day of
June, 1996, by and among Home Financial Corporation, Home
Savings Bank, FSB, First Union Corporation, and First Union
National Bank of Florida.
Exhibit 99 Press Release of Home Financial Corporation, Inc. dated June
16, 1996.
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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.
HOME FINANCIAL CORPORATION
DATE: June 20, 1996 By: /s/ Harry K. MacDougall
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Harry K. MacDougall
Executive Vice President and
Chief Operating Officer
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Exhibit Index
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The following Exhibits are filed as part of this report:
Exhibit 2 Agreement and Plan of Mergers, dated as of the 16th
day of June, 1996, by and among Home Financial
Corporation, Home savings Bank, FSB, First Union
Corporation, and First Union National Bank of Florida.
Exhibit 99 Press Release of Home Financial Corporation, Inc. dated
June 16, 1996.
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Exhibit 2
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AGREEMENT AND PLAN OF MERGERS
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AGREEMENT AND PLAN OF MERGERS, dated as of the 16th day of June, 1996 (this
"Plan"), by and among HOME FINANCIAL CORPORATION (the "Company"), HOME SAVINGS
BANK, FSB (the "Bank"), FIRST UNION CORPORATION ("First Union"), and FIRST UNION
NATIONAL BANK OF FLORIDA ("FUNB-FL").
RECITALS:
(A) The Company. The Company is a corporation duly organized and existing
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in good standing under the laws of the State of Delaware, with its principal
executive offices located in Hollywood, Florida. The Company is a registered
savings and loan holding company under the Home Owners' Loan Act, as amended
("HOLA"). As of the date hereof, the Company has 38,000,000 authorized shares
of common stock, each of $0.10 par value ("Company Common Stock"), and 2,000,000
authorized shares of preferred stock, each of $0.10 par value ("Company
Preferred Stock") (no other class of capital stock being authorized), of which
24,715,916 shares of Company Common Stock and no shares of Company Preferred
Stock are issued and outstanding.
(B) The Bank. The Bank is a federal stock savings bank duly organized and
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existing in good standing under the laws of the United States, with its
principal executive offices located in Hollywood, Florida. As of the date
hereof, the Bank has 20,000,000 authorized shares of common stock, each of $1.00
par value ("Bank Common Stock"),and 5,000,000 authorized shares of preferred
stock ("Bank Preferred Stock")(no other class of capital stock being
authorized), of which 100 shares of Bank Common Stock and no shares of Bank
Preferred Stock are issued and outstanding. All of the issued and outstanding
shares of Bank Common Stock are owned by the Company. As of March 31, 1996, the
Bank had capital of $229,023,000 divided into common stock of $1,000, surplus of
$99,756,000, and undivided profits, including retained earnings, of
$145,090,000, net unrealized gain (loss) on investment securities of
($3,352,000) and ESOP debt of ($12,472,000).
(C) First Union. First Union is a corporation duly organized and existing
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in good standing under the laws of the State of North Carolina, with its
principal executive offices located in Charlotte, North Carolina. First Union is
a registered bank holding company under the Bank Holding Company Act of 1956, as
amended. As of the date hereof, First Union has 750,000,000 authorized shares of
common stock, each of $3.33 1/3 par value (together with the rights ("First
Union Rights") issued pursuant to a Shareholder Protection Rights Agreement,
dated December 18, 1990 (as amended, the "First Union Rights Agreement"))
attached thereto, "First Union Common Stock"), 40,000,000 authorized shares of
Class A Preferred Stock, no-par value ("First Union Class A Preferred Stock"),
and 10,000,000 authorized shares of Preferred Stock, no-par
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value ("First Union Preferred Stock") (no other class of capital stock being
authorized), of which 282,918,259 shares of First Union Common Stock, 2,174,705
shares of First Union Series B Convertible Class A Preferred Stock, 350,000
shares of First Union Series D Adjustable Rate Cumulative Class A Preferred
Stock, 74,130 shares of First Union Series F 10.64% Class A Preferred Stock
(represented by depositary shares, each representing a one one-fortieth interest
in a share of First Union Series F 10.64% Class A Preferred Stock), and no
shares of First Union Preferred Stock, were issued and outstanding as of May 31,
1996.
(D) FUNB-FL. FUNB-FL is a national banking association duly organized and
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existing under the laws of the United States, with its principal executive
offices located in Jacksonville, Florida. As of the date hereof, FUNB-FL has
4,596,079 authorized shares of common stock, each of $10.00 par value ("FUNB-FL
Common Stock") (no other class of capital stock being authorized), of which
4,596,079 shares are issued and outstanding and owned by First Union (other than
directors' qualifying shares). As of March 31, 1996, FUNB-FL had capital of
$2,868,062,000, divided into common stock of $45,596,079, surplus of
$2,126,931,000, undivided profits, including capital reserves, of $697,096,000,
and net unrealized holding gains (losses) on available for sale securities of
($1,926,000).
(E) Rights, Etc. Except as Previously Disclosed (as hereinafter defined)
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in Schedule 4.01(C), there are no shares of capital stock of the Company or the
----------------
Bank authorized and reserved for issuance, neither the Company nor the Bank has
any Rights (as defined below) issued or outstanding and neither the Company nor
the Bank has any commitment to authorize, issue or sell any such shares or any
Rights, except pursuant to this Plan. The term "Rights" means securities or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire, or any options, calls or commitments relating to,
shares of capital stock (and shall include stock appreciation rights). There are
no preemptive rights in respect of the Company Common Stock.
(F) Approvals. The Board of Directors of each of the Company, the Bank,
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First Union and FUNB-FL has approved, at meetings of each of such Boards of
Directors, this Plan and has authorized the execution hereof in counterparts.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Plan and prescribe the terms and conditions thereof
and the manner and basis of carrying it into effect, which shall be as follows:
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I. THE MERGERS.
1.01. The Corporate Merger. On the Effective Date:
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(A) The Continuing Corporation. The Company shall merge with and into
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First Union (the "Corporate Merger"), the separate existence of the Company
shall cease and First Union (the "Continuing Corporation") shall survive and the
name of the Continuing Corporation shall be "First Union Corporation."
(B) Rights, Etc. The Continuing Corporation shall thereupon and
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thereafter possess all of the rights, privileges, immunities and franchises, of
a public as well as of a private nature, of each of the merging corporations;
and all property, real, personal and mixed, and all debts due on whatever
account, and all other choses in action, and all and every other interest, of or
belonging to or due to each of the corporations so merged, shall be deemed to be
vested in the Continuing Corporation without further act or deed; and the title
to any real estate or any interest therein, vested in each of such corporations,
shall not revert or be in any way impaired by reason of the Corporate Merger.
(C) Liabilities. The Continuing Corporation shall thenceforth be
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responsible and liable for all the liabilities, obligations and penalties of
each of the corporations so merged, in accordance with applicable law.
(D) Articles of Incorporation; Bylaws; Directors; Officers. The
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Articles of Incorporation and Bylaws of the Continuing Corporation shall be
those of First Union, as in effect immediately prior to the Corporate Merger
becoming effective. The directors and officers of First Union in office
immediately prior to the Corporate Merger becoming effective shall be the
directors and officers of the Continuing Corporation, together with such
additional directors and officers as may thereafter be elected, who shall hold
office until such time as their successors are elected and qualified.
1.02. The Bank Merger. No sooner than the day following the Corporate
---------------
Merger on the Effective Date or as soon thereafter as First Union may deem
appropriate:
(A) The Continuing Bank. The Bank shall be merged with and into FUNB-FL
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(the "Bank Merger" and together with the Corporate Merger, the "Mergers"), the
separate existence of the Bank shall cease and FUNB-FL (the "Continuing Bank")
shall survive; the name of the Continuing Bank shall be "First Union National
Bank of Florida"; and the Continuing
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Bank shall continue to conduct the business of a national banking association at
FUNB-FL's main office in Jacksonville, Florida and at the legally established
branches of the Bank and FUNB-FL.
(B) Rights, Etc. The Continuing Bank shall thereupon and thereafter
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possess all the rights, privileges, immunities and franchises, of a public as
well as of a private nature, of each of the banks so merged; and all property,
real personal and mixed, and all debts due on whatever account, and all other
choses in action, and all and every other interest, of or belonging to or due to
each of the banks so merged, shall be taken and deemed to be transferred to and
vested in the Continuing Bank without further act or deed, including
appointments, designations and nominations and all other rights and interests in
any fiduciary capacity; and the title to any real estate or any interest
therein, vested in each of such banks, shall not revert or be in any way
impaired by reason of the Bank Merger.
(C) Liabilities, Etc. The Continuing Bank shall thenceforth be
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responsible and liable for all the liabilities, obligations and penalties of the
banks so merged (including liabilities arising out of the operation of any trust
departments). All rights of creditors and obligors and all liens on the property
of each of the Bank and FUNB-FL shall be preserved unimpaired.
(D) Charter; Bylaws; Directors; Officers. The Charter and Bylaws of the
------------------------------------
Continuing Bank shall be those of FUNB-FL, as in effect immediately prior to the
Bank Merger becoming effective. The directors and officers of FUNB-FL in office
immediately prior to the Bank Merger becoming effective shall be the directors
and officers of the Continuing Bank, together with such additional directors and
officers as may thereafter be elected, who shall hold office until such time as
their successors are elected and qualified.
(E) Outstanding Stock of the Continuing Bank. The amount of the capital
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stock of the Continuing Bank shall be not less than $45,960,790 and shall
consist of not less than 4,596,079 issued and outstanding shares of common
stock, each of $10.00 par value, and the issued and outstanding shares shall
remain issued and outstanding as shares of FUNB-FL, each of $10.00 par value,
and the holders thereof shall retain their rights therein.
(F) Outstanding Stock of the Bank. Promptly after the Bank Merger
-----------------------------
becomes effective, the Continuing Corporation shall deliver all of the issued
and outstanding shares of
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the capital stock of the Bank to the Continuing Bank for cancellation.
1.03. Effective Date. Subject to the conditions to the obligations of the
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parties to effect the Mergers as set forth in Article VI, the effective date
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(the "Effective Date") shall be such date after September 30, 1996, as First
Union shall notify the Company in writing not less than five days prior thereto,
which date shall not be more than 30 days after such conditions have been
satisfied or waived in writing. Prior to the Effective Date, First Union and
the Company shall execute and deliver to the Secretary of State of the States of
North Carolina and Delaware, Articles of Merger and a Certificate of Merger, as
applicable, in accordance with applicable law. The time on the Effective Date
at which the Corporate Merger becomes effective is referred to as the "Effective
Time".
II. CONSIDERATION.
2.01. Corporate Merger Consideration. Subject to the provisions of this
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Plan, on the Effective Date:
(A) Outstanding First Union Common Stock. The shares of First Union
------------------------------------
Common Stock issued and outstanding immediately prior to the Effective Date
shall, on and after the Effective Date, remain as issued and outstanding shares
of First Union Common Stock.
(B) Outstanding Company Common Stock. Each share (excluding shares
--------------------------------
held by the Company or any of its subsidiaries or by First Union or any of its
subsidiaries, in each case other than in a fiduciary capacity or as a result of
debts previously contracted ("Excluded Shares")) of Company Common Stock issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Corporate Merger, automatically and without any action on the part of the holder
thereof, become and be converted into the right to receive 0.2233 shares (the
"Exchange Ratio") of First Union Common Stock, subject to possible adjustment as
set forth in Section 2.05, Section 5.19 or Section 7.05 (upon any such
------------ ------------ ------------
adjustment any reference in this Plan to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted).
2.02. Stockholder Rights; Stock Transfers. At the Effective Time, holders
-----------------------------------
of Company Common Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive the consideration provided
under this Article II, without interest. After the Effective Time, there shall
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be no transfers on the stock transfer books of the Company or the Continuing
Corporation of the shares of Company Common
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Stock which were issued and outstanding immediately prior to the Effective Time.
2.03. Fractional Shares. Notwithstanding any other provision hereof, no
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fractional shares of First Union Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the
Corporate Merger; instead, First Union shall pay to each holder of Company
Common Stock who would otherwise be entitled to a fractional share an amount in
cash determined by multiplying such fraction by the last sale price of First
Union Common Stock on the last trading day prior to the Effective Date, as
reported by the New York Stock Exchange ("NYSE") Composite Transactions tape (as
reported in The Wall Street Journal).
-----------------------
2.04. Exchange Procedures. As promptly as practicable after the Effective
-------------------
Date, First Union will send or cause to be sent to each former stockholder of
the Company of record immediately prior to the Effective Time, transmittal
materials for use in exchanging such stockholder's certificates for Company
Common Stock for the consideration set forth in this Article II. The
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certificates representing the shares of First Union Common Stock into which
shares of such stockholder's Company Common Stock are converted on the Effective
Date, any fractional share check which such stockholder shall be entitled to
receive, and any dividends paid on such shares of First Union Common Stock for
which the record date for determination of stockholders entitled to such
dividends is on or after the Effective Date, will be delivered to such
stockholder only upon delivery to First Union National Bank of North Carolina
(the "Exchange Agent") of the certificates representing all of such shares of
Company Common Stock (or indemnity satisfactory to First Union and the Exchange
Agent, in their judgment, if any of such certificates are lost, stolen or
destroyed). No interest will be paid on any such fractional share check or
dividends to which the holder of such shares shall be entitled to receive upon
such delivery. Certificates surrendered for exchange by any person constituting
an Affiliate (as hereinafter defined) of the Company shall not be exchanged for
certificates representing First Union Common Stock until First Union has
received a written agreement from such person as specified in Section 5.10.
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2.05. Anti-Dilution Provisions. In the event First Union changes the
------------------------
number of shares of First Union Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization or
similar transaction with respect to the outstanding First Union Common Stock and
the record date therefor shall be prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted.
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2.06. Excluded Shares. Each of the Excluded Shares shall be canceled and
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retired at the Effective Time, and no consideration shall be issued in exchange
therefor.
2.07. Reservation of Right to Revise Transaction. First Union may at any
------------------------------------------
time change the method of effecting the acquisition of the Company and the Bank
(including without limitation the provisions of this Article II) if and to the
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extent it deems such change to be desirable; provided, however, that no such
-----------------
change shall (A) alter or change the amount or kind of consideration to be
issued to holders of Company Common Stock as provided for in this Plan, (B)
adversely affect the intended tax-free treatment to the Company's stockholders
as a result of receiving such consideration, or (C) materially impede or delay
receipt of any approval referred to in Section 6.02 or the consummation of the
------------
transactions contemplated by this Plan.
2.08. Options. From and after the Effective Time, all employee and
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director stock options to purchase shares of Company Common Stock ("Options"),
which are then outstanding and unexercised, shall be converted into and become
options with respect to First Union Common Stock, and First Union shall assume
each such Option in accordance with the terms of the plan and agreement by which
it is evidenced; provided, however, that from and after the Effective Time, (A)
------------------
each such Option assumed by First Union may be exercised solely for shares of
First Union Common Stock, (B) the number of shares of First Union Common Stock
subject to such Option shall be equal to the number of shares of Company Common
Stock subject to such Option immediately prior to the Effective Time, multiplied
by the Exchange Ratio and rounded down to the nearest whole share, with cash
being paid for any fractional share interest, and (C) the per share exercise
price under each such Option shall be adjusted by dividing such price by the
Exchange Ratio and rounding up to the nearest cent.
The Company represents and warrants that the number of shares of Company Common
Stock which are issuable upon exercise of Options as of the date hereof are
Previously Disclosed in Schedule 2.08.
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III. ACTIONS PENDING CONSUMMATION.
Without the prior written consent of First Union, each of the Company and
the Bank shall conduct its and each of the Company Subsidiaries' (as hereinafter
defined) business in the ordinary and usual course consistent with past practice
and shall use its best efforts to maintain and preserve its and each of the
Company Subsidiaries' business organization, employees and advantageous business
relationships and to retain the services of its and each of the Company
Subsidiaries' officers and key employees, and each of the Company and the Bank
will not, and will cause each of the Company Subsidiaries not to, agree to:
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3.01. Capital Stock. Except as Previously Disclosed in Schedule 4.01(C),
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issue, sell or otherwise permit to become outstanding any additional shares of
capital stock of the Company or the Company Subsidiaries, or any Rights with
respect thereto, or enter into any agreement with respect to the foregoing, or
permit any additional shares of Company Common Stock to become subject to grants
of employee stock options, stock appreciation rights or similar stock based
employee compensation rights.
3.02. Dividends, Etc. Make, declare or pay any dividend on or in respect
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of (other than (i) the quarterly cash dividend in the amount of $0.20 payable on
or about July 12, 1996, by the Company to holders of Company Common Stock and
(ii) dividends from Company Subsidiaries to the Company or the Bank, as
applicable), or declare or make any distribution on, or directly or indirectly
combine, split, redeem, reclassify, purchase or otherwise acquire, any shares of
the capital stock of the Company or the Company Subsidiaries or, other than as
permitted in or contemplated by this Plan, authorize the creation or issuance
of, or issue, any additional shares of such capital stock or any Rights with
respect thereto.
3.03. Indebtedness; Liabilities; Etc. Other than in the ordinary course
-------------------------------
of business consistent with past practice, incur any indebtedness for borrowed
money or assume, guarantee, endorse or otherwise as an accommodation become
liable for the obligations of any other individual or corporation, bank,
partnership, joint venture, business trust, association or other organization
(each, a "Business Entity").
3.04. Operating Procedures; Capital Expenditures; Etc. Except as may be
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directed by any regulatory agency, (A) change its or any of the Company
Subisidiaries' lending, investment, liability management or other material
banking or other policies in any material respect, except such changes as are in
accordance and in an effort to comply with Section 5.11, (B) incur or commit to
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incur any capital expenditures beyond those Previously Disclosed in Schedule
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3.04, other than in the ordinary course of business and not exceeding the
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Company's current budget for such expenditures as set forth in Schedule 3.04, or
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(C) implement or adopt any change in accounting principles, practices or
methods, other than as may be required by generally accepted accounting
principles.
3.05. Liens. Impose, or permit or suffer the imposition, on any shares of
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capital stock of any of the Company Subsidiaries, or on any of its or the
Company Subsidiaries' other assets, any Liens (as hereinafter defined), other
than Liens on such other assets that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect (as hereinafter defined) on
the Company.
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3.06. Compensation; Employment Agreements; Etc. Except as Previously
-----------------------------------------
Disclosed in Schedule 3.06, enter into or amend any employment, severance or
-------------
similar agreement or arrangement with any of its directors, officers, employees
or consultants, or grant any salary or wage increase, amend the terms of any
Option or increase any employee benefit (including incentive or bonus payments),
except normal individual increases in regular compensation to employees in the
ordinary course of business consistent with past practice.
3.07. Benefit Plans. Except as Previously Disclosed in Schedule 3.07,
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enter into or modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including without limitation taking any action that accelerates the
vesting or exercise of any benefits payable thereunder (other than any such
acceleration or vesting that results from this Plan or the transactions
contemplated herein).
3.08. Continuance of Business. Except as otherwise provided in Section
----------------------- -------
5.19, (A) dispose of any portion of its assets, deposits, business or
- ----
properties, except for any such disposition that is in the ordinary course of
business and which is not material to the Company and the Company Subsidiaries
taken as a whole, or discontinue or terminate any existing line of business, (B)
merge or consolidate with, or acquire all or any portion of the business or
property of, any other entity except for any such transaction that is in the
ordinary course of business and which is not material to the Company and the
Company Subsidiaries taken as a whole (except foreclosures or acquisitions by
the Bank in a fiduciary capacity, in each case in the ordinary course of
business consistent with past practice) or (C) make any material investment
either by purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any person or Business
Entity other than from wholly-owned Company Subsidiaries and other than the
purchase or sale of loans or marketable securities in the ordinary course of
business consistent with past practices.
3.09. Amendments. Amend its Certificate of Incorporation, Charter or
----------
Bylaws.
3.10. Claims. Settle any claim, action or proceeding involving liability
------
for any material money damages or any restrictions upon the operations of the
Company or any of the Company Subsidiaries, or forgive or compromise any
material
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amount of debt of any person or Business Entity, other than from wholly-owned
Company Subsidiaries.
3.11. Contracts. Enter into, terminate or make any change in any material
---------
contract, agreement or lease, except in the ordinary course of business
consistent with past practice with respect to such contracts, agreements and
leases that are terminable by it without penalty on not more than 60 days prior
written notice.
3.12. Other Actions. Take any actions that would (A) materially impede or
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delay the receipt of any approval referred to in Section 6.02 without the
------------
imposition of a condition or restriction of the type referred to in the proviso
to such Section or (B) adversely affect the ability of any party to perform its
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obligations under this Plan.
3.13. Agreements. Authorize, commit or enter into any agreement to take
----------
any of the actions referred to in Sections 3.01 through 3.12.
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IV. REPRESENTATIONS AND WARRANTIES.
4.01. Representations and Warranties of the Company and the Bank. Each of
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the Company and the Bank hereby represents and warrants to First Union and FUNB-
FL as follows:
(A) Recitals. The facts set forth in the Recitals of this Plan with
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respect to it are true and correct.
(B) Organization, Standing and Authority. It is duly qualified to do
------------------------------------
business and is in good standing in the States of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be duly
qualified, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on the Company. Each of the Company and the Company
Subsidiaries has in effect all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted, the absence of which, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
the Company.
(C) Shares. The outstanding shares of it are validly issued and
------
outstanding, fully paid and nonassessable, and are subject to no, and have not
been issued in violation of any, preemptive rights. Except as Previously
Disclosed in Schedule 4.01(C), there are no shares of capital stock or other
----------------
equity securities of the Company or the Bank outstanding and no outstanding
Rights with respect thereto.
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(D) Company Subsidiaries. The Company has Previously Disclosed in
--------------------
Schedule 4.01(D) a list of all the Company Subsidiaries. Each of the Company
- ----------------
Subsidiaries that is a savings bank is an "insured depository institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder. No equity securities of any of the Company Subsidiaries are or may
become required to be issued (other than to the Company or a wholly-owned
Company Subsidiary) by reason of any Rights with respect thereto. There are no
contracts, commitments, understandings or arrangements by which any of the
Company Subsidiaries is or may be bound to sell or otherwise issue any shares of
its capital stock, and there are no contracts, commitments, understandings or
arrangements relating to the rights of the Company or the Bank, as applicable,
to vote or to dispose of such shares. All of the shares of capital stock of
each Company Subsidiary held by the Company or a Company Subsidiary are fully
paid and nonassessable and subject to no preemptive rights and are owned by the
Company or a Company Subsidiary free and clear of any Liens. Each Company
Subsidiary is in good standing under the laws of the jurisdiction in which it is
incorporated or organized, and is duly qualified to do business and in good
standing in each jurisdiction where its ownership or leasing of property or the
conduct of its business requires it to be so qualified and in which the failure
to be duly qualified is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the Company. Except as Previously Disclosed in
Schedule 4.01(D), the Company does not own beneficially, directly or indirectly,
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any equity securities or similar interests of any Business Entity. The deposits
of the Bank are insured by the Savings Association Insurance Fund (the "SAIF")
of the Federal Deposit Insurance Corporation (the "FDIC"). The Bank is a member
in good standing of the Federal Home Loan Bank of Atlanta (the "FHL Bank"). The
term "Company Subsidiary" means any Business Entity (including the Bank), five
percent or more of the equity interests of which are owned directly or
indirectly by the Company.
(E) Corporate Power. It and each of the Company Subsidiaries has the
---------------
corporate power and authority to carry on its business as it is now being
conducted and to own or lease all its material properties and assets.
(F) Corporate Authority. Subject to any necessary receipt of approval
-------------------
by its stockholders referred to in Section 6.01, this Plan has been authorized
------------
by all necessary corporate action of it and is a valid and binding agreement of
it enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency and other similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
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(G) No Defaults. Subject to the approval by its stockholders referred
-----------
to in Section 6.01, the required regulatory approvals referred to in Section
------------ -------
6.02, and the required filings under federal and state securities laws, and
- ----
except as Previously Disclosed in Schedule 4.01(G), the execution, delivery and
----------------
performance of this Plan and the consummation by it of the transactions
contemplated hereby, does not and will not (1) constitute a breach or violation
of, or a default under, or cause or allow the acceleration or creation of a Lien
(with or without the giving of notice, passage of time or both) pursuant to, any
law, rule or regulation or any judgment, decree, order, governmental or non-
governmental permit or license, or agreement, indenture or instrument of it or
of any of the Company Subsidiaries or to which it or any of the Company
Subsidiaries or its or their properties is subject or bound, which breach,
violation, default or Lien is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company, (2) constitute a
breach or violation of, or a default under, its Restated Certificate of
Incorporation, Charter or Bylaws, or (3) require any consent or approval under
any such law, rule, regulation, judgment, decree, order, governmental or non-
governmental permit or license or the consent or approval of any other party to
any such agreement, indenture or instrument, other than any such consent or
approval, which if not obtained, would not be reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on the Company.
(H) Financial Reports. As to (1) the Company, its Annual Report on
-----------------
Form 10-K for the fiscal year ended September 30, 1995, and all other documents
filed or to be filed subsequent to September 30, 1995 under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (together
with the rules and regulations thereunder, the "Exchange Act"), in the form
filed with the Securities and Exchange Commission (the "SEC") (in each such
case, the "Company Financial Reports"), and (2) the Bank, its Thrift Financial
Report for the fiscal year ended September 30, 1995, and all other Thrift
Financial Reports filed or to be filed subsequent to September 30, 1995, in the
form filed with the Office of Thrift Supervision (the "OTS") (in each case, the
"Bank Financial Reports" and together with the Company Financial Reports, the
"Company/Bank Financial Reports"), did not and will not as of their respective
dates contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading; and each of the balance sheets in or incorporated by reference into
the Company/Bank Financial Reports (including the related notes and schedules
thereto) fairly presents and will fairly present the financial position of the
entity or entities to which it relates as of its date and each of the statements
of income and changes in stockholders' equity and cash flows or equivalent
statements in
12
<PAGE>
the Company/Bank Financial Reports (including any related notes and schedules
thereto) fairly presents and will fairly present the results of operations,
changes in stockholders' equity and cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may be
noted therein, subject to normal and recurring year-end audit adjustments in the
case of unaudited statements.
(I) Absence of Undisclosed Liabilities. Except as disclosed in the
----------------------------------
Company/Bank Financial Reports prior to the date hereof, none of the Company or
the Company Subsidiaries has any obligation or liability (contingent or
otherwise) that, individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect on the Company.
(J) No Events. No events have occurred, or circumstances have arisen,
---------
since March 31, 1996, which, individually or in the aggregate, have had or are
reasonably likely to have a Material Adverse Effect on the Company.
(K) Properties. Except as specifically reserved against or otherwise
----------
disclosed in the Company Financial Reports (including the related notes and
schedules thereto) and except for those properties and assets that have been
sold or otherwise disposed of in the ordinary course of business, and except as
Previously Disclosed in Schedule 4.01(K), the Company and the Company
----------------
Subsidiaries have good and marketable title, free and clear of all liens,
encumbrances, charges, security interests, restrictions (including restrictions
on voting rights or rights of disposition), defaults or equities of any
character or claims or third party rights of whatever nature (collectively
"Liens"), to all of the properties and assets, tangible and intangible,
reflected in the Company Financial Reports as being owned by the Company or the
Company Subsidiaries as of the dates thereof, other than those Liens that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. All buildings and all fixtures, equipment, and
other property and assets which are held under leases or subleases by any of the
Company or the Company Subsidiaries are held under valid leases or subleases
enforceable in accordance with their respective terms.
(L) Litigation; Regulatory Action. Except as Previously Disclosed in
-----------------------------
Schedule 4.01(L), no litigation, proceeding or controversy before any court or
- ----------------
governmental agency is pending which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company or which
alleges claims under any fair lending law or other law relating to
discrimination, including, without limitation, the Truth in Lending Act, the
Equal Credit Opportunity Act, the Fair Credit
13
<PAGE>
Reporting Act, the Fair Housing Act, the Community Reinvestment Act and the Home
Mortgage Disclosure Act, and, to the best of its knowledge, no such litigation,
proceeding or controversy has been threatened; and except as Previously
Disclosed in Schedule 4.01(L), neither it nor any of the Company Subsidiaries or
----------------
any of its or their material properties or their officers, directors or
controlling persons is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment or
supervisory letter or similar submission to or from, any federal or state
governmental agency or authority charged with the supervision or regulation of
depository institutions or engaged in the insurance of deposits (together with
any and all agencies or departments of federal, state or local government
(including, without limitation, the OTS, the FHL Bank, the Federal Reserve
Board, the FDIC and any other federal or state bank, thrift or other financial
institution, insurance or securities regulatory authorities (including the SEC,
the "Regulatory Authorities")) and neither it nor any of the Company
Subsidiaries has been advised by any of the Regulatory Authorities that any such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment or supervisory letter or similar
submission.
(M) Compliance with Laws. Except as Previously Disclosed in Schedule
-------------------- --------
4.01(M), each of the Company and the Company Subsidiaries:
- -------
(1) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Regulatory Authorities that are required in order to permit it to conduct its
business as presently conducted and that are material to the business of the
Company and the Company Subsidiaries taken as a whole; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the best of its knowledge, no suspension or cancellation of any
of them is threatened; and all such filings, applications and registrations are
current;
(2) has received no notification or communication from any
Regulatory Authority or the staff thereof (a) asserting that any of the Company
or the Company Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Regulatory Authority enforces, which, as a
result of such noncompliance in any such instance, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company, (b) threatening to revoke any license, franchise, permit or
governmental authorization, which revocation,
14
<PAGE>
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on the Company, or (c) requiring any of the Company or the
Company Subsidiaries (or any of their officers, directors or controlling
persons) to enter into a cease and desist order, agreement or memorandum of
understanding (or requiring the board of directors thereof to adopt any material
resolution or policy);
(3) is, as to the Bank, "well capitalized" as defined in 12 CFR
(S)564.4 and is not in "troubled condition" as defined in 12 CFR (S)574.9; and
(4) is in compliance in all material respects with all fair
lending laws or other laws relating to discrimination, including, without
limitation, the Truth in Lending Act, 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.
(N) Material Contracts. Except as Previously Disclosed in Schedule
------------------ --------
4.01(N), none of the Company or the Company Subsidiaries, nor any of its
- -------
respective assets, business or operations, is a party to, or is bound or
affected by, or receives benefits under, any contract or agreement or amendment
thereto that in each case (1) is required to be filed as an exhibit to an Annual
Report on Form 10-K filed by the Company that has not been filed as an exhibit
to the Company's Annual Report on Form 10-K filed for the fiscal year ended
September 30, 1995, or (2) which provides for annual payments by the Company or
a Company Subsidiary of $100,000 or more. True and correct copies of such
contracts, and any agreements or amendments thereto, have been supplied to First
Union. None of the Company or the Company Subsidiaries is in default under any
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its respective assets, business or
operations may be bound or affected, or under which it or any of its respective
assets, business or operations receives benefits, which default, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on the
Company, and there has not occurred any event that, with lapse of time or giving
of notice or both, would constitute such a default. Except as Previously
Disclosed in Schedule 4.01(N), neither the Company nor any Company Subsidiary is
----------------
subject to, or bound by, any contract containing covenants which (i) limit the
ability of the Company or any Company Subsidiary to compete in any line of
business or with any person, or (ii) involve any restriction of geographical
area in which, or method by which, the Company or any Company Subsidiary may
carry on its business (other than as may be required by law or any applicable
Regulatory Authority).
15
<PAGE>
(O) Reports. Since January 1, 1993, each of the Company and the
-------
Company Subsidiaries has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (1) the SEC, (2) the FDIC, the OTS, the FHL Bank and the FHL Bank
System, and (3) any other applicable Regulatory Authorities. As of their
respective dates (and without giving effect to any amendments or modifications
filed after the date of this Plan with respect to reports and documents filed
before the date of this Plan), each of such reports and documents, including the
financial statements, exhibits and schedules thereto, complied in all material
respects with all of the statutes, rules and regulations enforced or promulgated
by the Regulatory Authority with which they were filed and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(P) No Brokers. All negotiations relative to this Plan and the
----------
transactions contemplated hereby have been carried on by it directly with the
other parties hereto and no action has been taken by it that would give rise to
any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment, excluding a fee previously disclosed to First Union
to be paid to Alex. Brown & Sons Incorporated and Ryan Beck & Co.
(Q) Employee Benefit Plans.
-----------------------
(1) Schedule 4.01(Q) contains a complete list of all bonus,
----------------
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option plans, all employment or severance contracts, all medical, dental,
health and life insurance plans, all other employee benefit plans, contracts or
arrangements and any applicable "change of control" or similar provisions in any
plan, contract or arrangement maintained or contributed to by it or any of the
Company Subsidiaries for the benefit of employees, former employees, directors,
former directors or their beneficiaries (the "Compensation and Benefit Plans").
True and complete copies of all Compensation and Benefit Plans, including, but
not limited to, any trust instruments and/or insurance contracts, if any,
forming a part thereof, and all amendments thereto have been supplied to First
Union.
(2) All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of Section 3(37)
of ERISA ("Multiemployer Plans"), covering employees or former
16
<PAGE>
employees of it and the Company Subsidiaries (the "ERISA Plans"), to the extent
subject to ERISA, are in substantial compliance with ERISA. Except as Previously
Disclosed in Schedule 4.01(Q) each ERISA Plan which is an "employee pension
----------------
benefit plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and
which is intended to be qualified, under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), has received a favorable determination
letter from the Internal Revenue Service, and it is not aware of any
circumstances reasonably likely to result in the revocation or denial of any
such favorable determination letter or the inability to receive such a favorable
determination letter. There is no material pending or, to its knowledge,
threatened litigation relating to the ERISA Plans. Neither it nor any of the
Company Subsidiaries has engaged in a transaction with respect to any ERISA Plan
that would subject it or any of the Company Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by it or any of the Company Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered one
employer with it under Section 4001(a)(15) of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Neither it nor any of the Company Subsidiaries presently
contributes to a Multiemployer Plan, nor have they contributed to such a plan
within the past five calendar years. No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any Pension Plan or by
any ERISA Affiliate within the past 12-month period.
(4) All contributions required to be made under the terms of any
ERISA Plan have been timely made. Neither any Pension Plan nor any single-
employer plan of an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA. Neither it nor any of the Company Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(5) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent
17
<PAGE>
plan year, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in the plan's most recent
actuarial valuation) did not exceed the then current value of the assets of such
plan, and there has been no material change in the financial condition of such
plan since the last day of the most recent plan year.
(6) Neither it nor any of the Company Subsidiaries has any
obligations for retiree health and life benefits under any plan, except as set
forth in Schedule 4.01(Q). There are no restrictions on the rights of it or any
----------------
of the Company Subsidiaries to amend or terminate any such plan without
incurring any liability thereunder.
(7) Except as Previously Disclosed in Schedule 4.01(Q), neither
----------------
the execution and delivery of this Plan nor the consummation of the transactions
contemplated hereby will (a) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or any employee of it or any of the Company
Subsidiaries under any Compensation and Benefit Plan or otherwise from it or any
of the Company Subsidiaries, (b) increase any benefits otherwise payable under
any Compensation and Benefit Plan, (c) result in any acceleration of the time of
payment or vesting of any such benefit, or (d) result in the imposition to the
recipient of any excise tax pursuant to Section 4999 of the Code.
(R) No Knowledge. It knows of no reason why the regulatory approvals
------------
referred to in Section 6.02 should not be obtained without the imposition of any
------------
condition of the type referred to in the proviso following such Section 6.02.
------------
(S) Labor Agreements. Neither it nor any of the Company Subsidiaries
----------------
is a party to, or is bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is it or any of the Company Subsidiaries the subject of a proceeding asserting
that it or any such Company Subsidiary has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel it
or such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any of the Company Subsidiaries, pending or, to the best of its
knowledge, threatened, nor is it aware of any activity involving its or any of
the Company Subsidiaries' employees seeking to certify a collective bargaining
unit or engaging in any other organization activity.
18
<PAGE>
(T) Asset Classification. It has Previously Disclosed in Schedule
-------------------- --------
4.01(T) a list, accurate and complete in all material respects, of the aggregate
- -------
amounts of loans, extensions of credit or other assets of the Company and the
Company Subsidiaries that have been classified by it as of May 31, 1996 (the
"Asset Classification"); and no amounts of loans, extensions of credit or other
assets that have been classified as of May 31, 1996 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 the Company or a Company Subsidiary prior to May
31, 1996.
(U) Allowance for Possible Loan Losses. The allowance for possible
----------------------------------
loan losses shown on the consolidated balance sheets of the Company included in
the March 31, 1996 Company Financial Reports was, and the allowance for possible
loan losses to be shown on subsequent Company Financial Reports, will be,
adequate, in the opinion of the Board of Directors and management of the
Company, determined in accordance with generally accepted accounting principles,
to provide for possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including accrued interest receivable) as of
the date thereof.
(V) Insurance. Each of Company and the Company Subsidiaries has taken
---------
all requisite action (including without limitation the making of claims and the
giving of notices) pursuant to its directors' and officers' liability insurance
policy or policies in order to preserve all rights thereunder with respect to
all matters that are known to it, except for such matters which, individually or
in the aggregate, are not reasonably likely to have a Material Adverse Effect on
the Company. Set forth in Schedule 4.01(V) is a list of all insurance policies
---------------
maintained by or for the benefit of the Company or the Company Subsidiaries or
their directors, officers, employees or agents.
(W) Affiliates. Except as Previously Disclosed in Schedule 4.01(W),
---------- ----------------
there is no person who, as of the date of this Plan, may be deemed to be an
"affiliate" of the Company (each, an "Affiliate") as that term is used in Rule
145 under the Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the "Securities Act").
(X) State Takeover Laws; Certificate of Incorporation. It has taken
-------------------------------------------------
all necessary action to exempt this Plan and the transactions contemplated
hereby from, and this Plan and the transactions contemplated hereby are exempt
from, (1) any applicable state takeover laws, including, without limitation, the
provisions of Section 203 of the DGCL, (2) any applicable
19
<PAGE>
takeover provisions in the Company's Certificate of Incorporation, and (3) any
takeover provisions set forth in any agreement to which the Company is a party
or may be bound.
(Y) No Further Action. It has taken all action so that the entering
-----------------
into of this Plan, and the consummation of the transactions contemplated hereby
(including without limitation the Mergers) or any other action or combination of
actions, or any other transactions, contemplated hereby do not and will not (1)
require a vote of stockholders (other than the affirmative vote of the holders
of a majority of shares of Company Common Stock entitled to be cast on this Plan
or on any other actions necessary to facilitate the transactions contemplated
hereby and the approval of the Company in its capacity as sole stockholder of
the Bank, which approval has been given), or (2) result in the grant of any
rights to any person under the Certificate of Incorporation, Charter or Bylaws
of the Company or any Company Subsidiary or under any agreement to which the
Company or any of the Company Subsidiaries is a party, or (3) restrict or impair
in any way the ability of First Union or FUNB-FL to exercise the rights granted
hereunder.
(Z) Environmental Matters.
---------------------
(1) To its knowledge, it and each of the Company Subsidiaries, the
Participation Facilities and the Loan/Fiduciary Properties (each as defined
below) are, and have been, in compliance with all Environmental Laws (as defined
below), except for instances of noncompliance which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company.
(2) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency or board or other forum in
which it or any of the Company Subsidiaries or any Participation Facility has
been, or with respect to threatened proceedings, reasonably would be expected to
be, named as a defendant or potentially responsible party (a) for alleged
noncompliance (including by any predecessor) with any Environmental Law, or (b)
relating to the release or threatened release into the environment of any
Hazardous Material (as defined below), whether or not occurring at or on a site
owned, leased or operated by it or any of the Company Subsidiaries or any
Participation Facility, except for such proceedings pending or threatened that
are not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or have been Previously Disclosed in Schedule
--------
4.01(Z).
- -------
(3) There is no proceeding pending or, to its knowledge,
threatened before any court, governmental agency
20
<PAGE>
or board or other forum in which any Loan/Fiduciary Property (or it or any of
the Company Subsidiaries in respect of any Loan/Fiduciary Property) has been, or
with respect to threatened proceedings, reasonably would be expected to be,
named as a defendant or potentially responsible party (a) for alleged
noncompliance (including by any predecessor) with any Environmental Law, or (b)
relating to the release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a Loan/Fiduciary Property,
except for such proceedings pending or threatened that are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company or have been Previously Disclosed in Schedule 4.01(Z).
----------------
(4) To its knowledge, there is no reasonable basis for any
proceeding of a type described in subsections (2) or (3) above, except as has
been Previously Disclosed in Schedule 4.01(Z).
----------------
(5) To its knowledge, during the period of (a) its or any of the
Company Subsidiaries' ownership or operation of any of their respective current
properties, (b) its or any of the Company Subsidiaries' participation in the
management of any Participation Facility, or (c) its or any of the Company
Subsidiaries' holding of a security or other interest in a Loan/Fiduciary
Property, there have been no releases of Hazardous Material in, on, under or
affecting any such property, Participation Facility or Loan/Fiduciary Property,
except for such releases that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company or have been
Previously Disclosed in Schedule 4.01(Z).
----------------
(6) To its knowledge, prior to the period of (a) its or any of the
Company Subsidiaries' ownership or operation of any of their respective current
properties, (b) its or any of the Company Subsidiaries' participation in the
management of any Participation Facility, or (c) its or any of the Company
Subsidiaries' holding of a security or other interest in a Loan/Fiduciary
Property, there were no releases of Hazardous Material in, on, under or
affecting any such property, Participation Facility or Loan/Fiduciary Property,
except for such releases that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company or have been
Previously Disclosed in Schedule 4.01(Z).
----------------
(7) The following definitions apply for purposes of this Section
-------
4.01(Z): "Loan/Fiduciary Property" means any property owned or controlled by it
- -------
or any of the Company Subsidiaries or in which it or any of the Company
Subsidiaries holds a security or other interest, and, where
21
<PAGE>
required by the context, includes any such property where Company or any of the
Company Subsidiaries constitutes the owner or operator of such property, but
only with respect to such property; "Participation Facility" means any facility
in which it or any of the Company Subsidiaries participates in the management
and, where required by the context, includes the owner or operator or such
property, but only with respect to such property; "Environmental Law" means (a)
any federal, state and local law, statute, ordinance, rule, regulation, code,
license, permit, approval, order, judgment, decree, injunction, or agreement
with any governmental entity, relating to (i) the protection, preservation or
restoration of the environment, (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or to
human health or safety, or (ii) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Material, in each case as amended
and as now in effect and includes, without limitation, the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the federal Solid Waste Disposal and the
federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, each as
amended and as now in effect, and (b) any common law or equitable doctrine
(including, without limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may impose liability
or obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Material; "Hazardous Material" means
any substance presently listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, under any Environmental
Law, whether by type or quantity, and includes, without limitation, any oil or
other petroleum product, toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos,
asbestos containing material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
(8) For purposes of this Section 4.01(Z), the term "knowledge"
---------------
means the actual knowledge of the directors and officers of the Company and the
Company Subsidiaries.
22
<PAGE>
(AA) Taxes. Except as Previously Disclosed in Schedule 4.01(AA), (1)
----- -----------------
all reports and returns with respect to Taxes (as defined below) and tax related
information reporting requirements that are required to be filed by or with
respect to it or the Company Subsidiaries, including without limitation
consolidated federal income tax returns of it and the Company Subsidiaries
(collectively, the "Company Tax Returns"), have been duly filed, or requests for
extensions have been timely filed and have not expired, and such Company Tax
Returns were true, complete and accurate in all material respects, (2) all taxes
(which shall mean federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, employment, premium, recording, documentary, documentary stamps, real
estate transfer, transfer, back-up withholding or similar taxes, together with
any interest, additions, or penalties with respect thereto, imposed on the
income, properties or operations of it or the Company Subsidiaries, together
with any interest in respect of such additions or penalties, collectively the
"Taxes") shown to be due on the Company Tax Returns or otherwise imposed on the
income, properties or operations of the Company or Company Subsidiaries have
been paid in full, (3) the Company Tax Returns have been examined by the
Internal Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which such
Company Tax Returns were required to be filed has expired, (4) all Taxes due
with respect to completed and settled examinations have been paid in full, (5)
no issues have been raised by the relevant taxing authority in connection with
the examination of any of the Company Tax Returns which are reasonably likely,
individually or in the aggregate, to result in a determination that would have a
Material Adverse Effect on the Company, except as reserved against in the
Company Financial Reports filed prior to the date of this Plan, and (6) no
waivers of statutes of limitations (excluding such statutes that relate to years
under examination by the Internal Revenue Service) have been given by or
requested with respect to any Taxes of it or the Company Subsidiaries.
(BB) Accuracy of Information. The statements with respect to the
-----------------------
Company and the Company Subsidiaries contained in this Plan, the Schedules and
any other written documents executed and delivered by or on behalf of it
pursuant to the terms of this Plan do not omit any material fact necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
(CC) Derivatives Contracts; Structural Notes; Etc. None of the Company
---------------------------------------------
or the Company Subsidiaries 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
23
<PAGE>
thereof) (each a "Derivatives Contract") or owns securities that (1) are
referred to as "structured notes", "high risk mortgage derivatives", "capped
floating rate notes," or "capped floating rate mortgage derivatives," or (2) are
likely to have changes in value as a result of interest rate changes that
significantly exceed normal changes in value attributable to interest rate
changes, except for those Derivatives Contracts and other instruments legally
purchased or entered into in the ordinary course of business and Previously
Disclosed in Schedule 4.01(CC), including a list, as applicable, of any Company
-----------------
or Company Subsidiary assets pledged as security for each such instrument.
(DD) Accounting Controls. Each of the Company and the Company
-------------------
Subsidiaries has devised and maintained systems of internal accounting controls
sufficient to provide reasonable assurances, in the judgment of the Board of
Directors of the Company, that (1) all material transactions are executed in
accordance with management's general or specific authorization; (2) all material
transactions are recorded as necessary to permit the preparation of financial
statements in conformity with generally accepted accounting principles
consistently applied with respect to thrift or any other criteria applicable to
such statements, (3) access to the material property and assets of the Company
and the Company Subsidiaries is permitted only in accordance with management's
general or specific authorization; (4) the recorded accountability for items is
compared with the actual levels at reasonable intervals and appropriate action
is taken with respect to any differences; and (5) there are no violations of the
Bank Secrecy Act.
(EE) Commitments and Contracts. Neither the Company nor any Company
-------------------------
Subsidiary is a party or subject to any of the following (whether written or
oral, express or implied):
(1) except as Previously Disclosed in Schedule 4.01(EE), any
-----------------
employment contract or understanding (including any understandings or
obligations with respect to severance or termination pay liabilities or fringe
benefits) with any present or former officer, director or employee (other than
those which are terminable at will by the Company or such Company Subsidiary
without any obligation on the part of the Company or such Company Subsidiary to
make any payment in connection with such termination);
(2) except as Previously Disclosed in Schedule 4.01(EE), any real
-----------------
property lease with annual rental payments aggregating $100,000 or more; or
(3) except as Previously Disclosed in Schedule 4.01(EE), any
-----------------
material contract with any Affiliate.
24
<PAGE>
(FF) No Dissenters' Rights. The holders of Company Common Stock have
---------------------
no dissenters' or appraisal rights in connection with the execution of this Plan
or the consummation of any of the transactions contemplated hereby.
(GG) Prior Corporate Transactions. Each of the corporate transactions
----------------------------
completed on October 22, 1992, and on October 24, 1994 (the "Transactions"),
constituted a tax-free transaction under the Code. Neither the Company, the
Bank, Home Financial Corporation M.H.C. (Mutual Holding Company), the Company's
shareholders, depositors of the Bank nor any other holders of beneficial
ownership interest in any party to the Transactions were required to recognize
any gain or loss for purposes of the Code by virtue of the Transactions.
4.02. First Union and FUNB-FL Representations and Warranties. Each of
------------------------------------------------------
First Union and FUNB-FL hereby represents and warrants to the Company and the
Bank, as follows:
(A) Recitals. The facts set forth in the Recitals of this Plan with
--------
respect to it are true and correct.
(B) Corporate Authority. Subject to the required regulatory approvals
-------------------
referred to in Section 6.02, this Plan has been authorized by all necessary
------------
corporate action of it and is a valid and binding agreement of it enforceable
against it in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency and other similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
(C) No Defaults. Subject to the required regulatory approvals
-----------
referred to in Section 6.02, and the required filings under federal and state
------------
securities' laws, the execution, delivery and performance of this Plan, and the
consummation of the transactions contemplated hereby by it, does not and will
not (1) constitute a breach or violation of, or a default under, any law, rule
or regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of it or of any of its subsidiaries or to
which it or any of its subsidiaries or properties is subject or bound, which
breach, violation or default is reasonably likely to have a Material Adverse
Effect on First Union, (2) constitute a breach or violation of, or a default
under, its Articles of Incorporation, Charter or Bylaws, or (3) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, or the consent or approval of any other
party to any such agreement, indenture or instrument other than such consent or
approval, which if not obtained, would not be reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect.
25
<PAGE>
(D) Financial Reports. In the case of First Union, its Annual Report
-----------------
on Form 10-K for the fiscal year ended December 31, 1995, and all other
documents filed or to be filed subsequent to December 31, 1995 under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed with the SEC
(in each such case, the "First Union Financial Reports"), did not and will not
as of their respective dates contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets in or incorporated by
reference into the First Union Financial Reports (including the related notes
and schedules thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in the First Union Financial Reports (including any
related notes and schedules thereto) fairly presents and will fairly present the
results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for the
periods set forth therein, in each case in accordance with generally accepted
accounting principles consistently applied to banks and bank holding companies
during the periods involved, except as may be noted therein, subject to normal
and recurring year-end audit adjustments in the case of unaudited statements.
(E) No Events. No events have occurred, or circumstances have arisen,
---------
since March 31, 1996, which, individually or in the aggregate, have had or are
reasonably likely to have a Material Adverse Effect on First Union.
(F) No Brokers. All negotiations relative to this Plan and the
----------
transactions contemplated hereby have been carried on by it directly with the
other parties hereto and no action has been taken by it that would give rise to
any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment.
(G) No Knowledge. It knows of no reason why the regulatory approvals
------------
referred to in Section 6.02 should not be obtained without the imposition of any
------------
condition of the type referred to in the proviso following such Section 6.02.
------------
(H) Shares Authorized. In the case of First Union, the shares of
-----------------
First Union Common Stock to be issued (1) in exchange for shares of Company
Common Stock upon consummation of the Corporate Merger in accordance with
Article II of this Plan, and (2) upon exercise of outstanding Options pursuant
- ----------
to Section 2.08, have been duly authorized and, when issued in accordance with
------------
the terms of this Plan, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights.
26
<PAGE>
(I) Organization, Standing and Authority. It is duly qualified to do
------------------------------------
business and is in good standing in the States of the United States and foreign
jurisdictions where the failure to be duly qualified, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on First
Union. Each of First Union and its subsidiaries has in effect all federal,
state, local and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now
conducted, the absence of which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on First Union.
(J) Corporate Power. First Union and FUNB-FL each has the corporate
---------------
power and authority to carry on its business as it is now being conducted and to
own or lease all its material properties and assets.
(K) Accuracy of Information. The statements with respect to First
-----------------------
Union and FUNB-FL contained in this Plan, the Schedules and any other written
documents executed and delivered by or on behalf of First Union or FUNB-FL
pursuant to the terms of this Plan are true and correct in all material
respects, and such statements and documents do not omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(L) Litigation; Regulatory Action. Neither First Union nor any of
------------------------------
its subsidiaries is a party to any litigation, proceeding or controversy before
any court or governmental agency which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on First Union and, to the
best of its knowledge, no such litigation, proceeding or controversy has been
threatened; and neither it nor any of its subsidiaries or any of its or their
material properties or their officers, directors or controlling persons is a
party to or is the subject of any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any Regulatory Authorities, which is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on First
Union and neither it nor any of its subsidiaries has been advised by any
Regulatory Authorities that any such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum or understanding, commitment letter or
similar submission.
(M) Compliance with Laws. To its knowledge, it and its subsidiaries
--------------------
have conducted their business in compliance with all federal, state, and local
laws, ordinances and regulations, including applicable banking laws, federal and
state securities laws, and laws and regulations concerning truth-in-lending,
usury, fair credit reporting, fair lending, the Community
27
<PAGE>
Reinvestment Act, consumer protection, occupational safety, fair employment
practices and fair labor standards, except where the failure to so comply is not
reasonably likely to have a Material Adverse Effect on it. Neither it nor any of
its subsidiaries has received any written notification or communication from any
Regulatory Authority, (i) asserting that either it or any of its subsidiaries
are not currently in compliance with any of the statutes, regulations or
ordinances that such Regulatory Authority enforces, which noncompliance is
reasonably likely to have a Material Adverse Effect on it, or (ii) threatening
to revoke any license, franchise, permit or governmental authorization the
revocation of which would have a Material Adverse Effect on it. As of the date
hereof, FUNB-FL has received a "satisfactory" rating from the OCC pursuant to
the Community Reinvestment Act.
(N) Absence of Undisclosed Liabilities. None of First Union or its
----------------------------------
subsidiaries has any obligation or liability (contingent or otherwise) that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it, except as reflected in the First Union Financial Reports
prior to the date of this Plan.
V. COVENANTS.
Each of the Company and the Bank hereby covenants to First Union and FUNB-
FL, and each of First Union and FUNB-FL hereby covenants to the Company and the
Bank, that:
5.01. Efforts. Subject to the terms and conditions of this Plan, it shall
-------
use its reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Mergers on the Effective Date and to otherwise enable consummation of the
transactions contemplated hereby and shall cooperate fully with the other
parties hereto to that end (it being understood that any amendments to the
Registration Statement (as hereinafter defined) or a resolicitation of proxies
as a consequence of an acquisition agreement by First Union or any of its
subsidiaries shall not violate this covenant).
5.02. Company Proxy/Registration Statement. The Company and First Union
------------------------------------
shall prepare a proxy statement/prospectus (the "Proxy Statement") to be mailed
to the holders of Company Common Stock in connection with the transactions
contemplated hereby and to be filed by First Union (after providing drafts in
advance to the Company and its counsel for review and comment) in a registration
statement (the "Registration Statement") with the SEC as provided in Section
-------
5.08, which shall conform to all applicable legal requirements. The Company
- ----
shall call a special meeting (the "Meeting") of the holders of Company Common
Stock to
28
<PAGE>
be held as soon as practicable for purposes of voting upon the approval of this
Plan and the Company shall use its best efforts to solicit and obtain votes of
the holders of Company Common Stock in favor of the approval of this Plan, and,
subject to the exercise of its fiduciary duties under applicable law (based upon
the advice of outside counsel), the Board of Directors of the Company shall
recommend approval of this Plan by such holders.
5.03. Registration Statement Compliance with Securities Laws. When the
------------------------------------------------------
Registration Statement or any post-effective amendment or supplement thereto
shall become effective, and at all times subsequent to such effectiveness, up to
and including the date of the Meeting, such Registration Statement and all
amendments or supplements thereto, with respect to all information set forth
therein furnished or to be furnished by or on behalf of the Company relating to
the Company or the Company Subsidiaries and by or on behalf of First Union
relating to First Union or its subsidiaries, (A) will comply in all material
respects with the provisions of the Securities Act and the Exchange Act and any
other applicable statutory or regulatory requirements, and (B) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading; provided, however, in no event shall any party hereto be
-------- -------
liable for any untrue statement of a material fact or omission to state a
material fact in the Registration Statement made in reliance upon, and in
conformity with, written information concerning another party furnished by or on
behalf of such other party specifically for use in the Registration Statement.
5.04. Registration Statement Effectiveness. First Union will advise the
------------------------------------
Company, promptly after First Union receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed (after providing drafts in advance to the Company and its counsel
for review and comment), of the issuance of any stop order or the suspension of
the qualification of the First Union Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
5.05. Press Releases. Neither the Company nor the Bank will, without the
--------------
prior approval of First Union (which approval shall not be unreasonably withheld
or delayed), and neither First Union nor FUNB-FL will, without the prior
approval of the Company (which approval shall not be unreasonably withheld or
delayed), issue any press release or written statement for general circulation
relating to the transactions contemplated hereby, except as otherwise required
by law.
29
<PAGE>
5.06. Access; Information. (A) Upon reasonable notice, the Company and
-------------------
the Bank shall afford First Union and its officers, employees, counsel,
accountants and other authorized representatives, access, during normal business
hours throughout the period prior to the Effective Date, to all of its and the
Company Subsidiaries' properties, books, contracts, data processing system
files, commitments and records and, during such period, the Company and the Bank
shall furnish promptly to First Union (1) a copy of each material report,
schedule and other document filed by the Company and the Company Subsidiaries
with any Regulatory Authority, and (2) all other information concerning the
business, properties and personnel of the Company and the Company Subsidiaries
as First Union may reasonably request, provided that no investigation pursuant
--------
to this Section 5.06 shall affect or be deemed to modify or waive any
------------
representation or warranty made by the Company or the Bank or the conditions to
the obligations of the Company and the Bank to consummate the transactions
contemplated by this Plan; and (B) First Union will not use any information
obtained pursuant to this Section 5.06 for any purpose unrelated to the
------------
consummation of the transactions contemplated by this Plan and, if this Plan is
terminated, will hold all information and documents obtained pursuant to this
paragraph in confidence (as provided in Section 8.06) unless and until such time
------------
as such information or documents become publicly available other than by reason
of any action or failure to act by First Union or as it is advised by counsel in
writing that any such information or document is required by law or applicable
published stock exchange rule to be disclosed, and in the event of the
termination of this Plan, First Union will, upon request by the Company, deliver
to the Company all documents so obtained by First Union or destroy such
documents and, in the case of destruction, will certify such fact to the
Company.
5.07. Acquisition Proposals. In the case of the Company, without the
---------------------
prior written consent of First Union, it shall not, and it shall cause the
Company Subsidiaries not to, solicit or encourage inquiries or proposals with
respect to, or, except as required by the fiduciary duties of the Board of
Directors of the Company under applicable law (as advised by its outside
counsel), furnish any nonpublic information relating to or participate in any
negotiations or discussions concerning, any acquisition or purchase of all or a
substantial portion of the assets or deposits of, or a substantial equity
interest in, the Company or any of the Company Subsidiaries or any merger or
other business combination with the Company or any of the Company
Subsidiaries other than as contemplated by this Plan (including Section 5.19);
------------
it shall instruct its and the Company Subsidiaries' officers, directors, agents,
advisors and affiliates to refrain from taking any action that would violate or
conflict with any of the foregoing; and it shall notify First Union immediately
if any such inquiries or proposals are received
30
<PAGE>
by, or any such negotiations or discussions are sought to be initiated with, the
Company or any of the Company Subsidiaries.
5.08. Registration Statement Preparation. In the case of First Union, it
----------------------------------
shall, as promptly as practicable following the date of this Plan, and subject
to the cooperation of the Company, prepare and file the Registration Statement
with the SEC, and shall use its best efforts to cause the Registration Statement
to be declared effective as soon as practicable after the filing thereof.
5.09. Blue-Sky Filings. In the case of First Union, it shall use its best
----------------
efforts to obtain all necessary state securities laws or "blue sky" permits and
approvals, provided that First Union shall not be required by virtue thereof to
--------
submit to general jurisdiction in any state.
5.10. Affiliate Agreements. In the case of the Company, it will cause
--------------------
each person who may be deemed to be an Affiliate of the Company to execute and
deliver to First Union on or before the mailing of the Proxy Statement for the
Meeting an agreement in the form attached hereto as Exhibit A restricting the
---------
disposition of the shares of First Union Common Stock to be received by such
Affiliate in exchange for such Affiliate's shares of Company Common Stock.
5.11. Certain Policies of the Company and the Bank. In the case of each
--------------------------------------------
of the Company and the Bank, it shall, consistent with generally accepted
accounting principles and regulatory accounting principles, use its best efforts
to record any accounting adjustments required to conform its and the Company
Subsidiaries' 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 First Union; provided, however, that the Company and the Bank shall
-----------------
not be obligated to record any such accounting adjustments pursuant to this
Section 5.11 (A) unless and until the Company and the Bank shall be reasonably
- ------------
satisfied that the conditions to the obligation of the parties to consummate the
Mergers will be satisfied or waived on or before the Effective Time, and (B) in
no event until the day prior to the Effective Date.
5.12. State Takeover Laws; Certificate of Incorporation. In the case of
-------------------------------------------------
the Company, it shall not take any action that would cause the transactions
contemplated by this Plan to be subject to any applicable state takeover statute
and the Company shall take all necessary steps to exempt (or ensure the
continued exemption of) the transactions contemplated by this Plan from (A) any
applicable state takeover law, as now or hereafter in effect, including, without
limitation, Section 203 of the DGCL, (B) any
31
<PAGE>
applicable takeover provisions in the Company's Certificate of Incorporation,
and (C) any takeover provisions set forth in any agreement to which the Company
is a party or may be bound.
5.13. No Rights Triggered. In the case of the Company, it shall take all
-------------------
necessary steps to ensure that the entering into of this Plan and the
consummation of the transactions contemplated hereby (including without
limitation the Mergers) and any other action or combination of actions, or any
other transactions contemplated hereby or thereby do not and will not, (A)
result in the grant of any rights to any person (including directors, officers
and employees of the Company or any Company Subsidiary) under the Certificate of
Incorporation or Bylaws of the Company or under any agreement to which the
Company or any of the Company Subsidiaries is a party, or (B) restrict or impair
in any way the ability of First Union or FUNB-FL to exercise the rights granted
hereunder.
5.14. Shares Listed. In the case of First Union, it shall use its best
-------------
efforts to list, prior to the Effective Date, on the NYSE, upon official notice
of issuance, the shares of First Union Common Stock to be issued to the holders
of Company Common Stock and the outstanding Options referred to in Section 2.08,
------------
pursuant to this Plan.
5.15. Regulatory Applications. In the case of First Union and FUNB-FL,
-----------------------
subject to the cooperation of the Company and the Bank, (A) it shall promptly
prepare and submit applications to the appropriate Regulatory Authorities for
approval of the Mergers, and (B) promptly make all other appropriate filings to
secure all other approvals, consents and rulings which are necessary for the
consummation of the Mergers by First Union and FUNB-FL. First Union will provide
copies of such applications and responses to the Company and its counsel prior
to submitting such applications and responses to the applicable Regulatory
Authorities. In the case of the Company, it agrees, upon request, to furnish
First Union with information concerning itself, the Company Subsidiaries, its
and their directors, officers and stockholders and such other matters as may be
necessary or advisable in connection with any filing, notice or application made
by or on behalf of First Union or any of its subsidiaries in connection with the
Mergers and the other transactions contemplated in this Plan.
5.16. Regulatory Divestitures. In the case of the Company, effective on
-----------------------
or before the Effective Date (to the extent required by any Regulatory
Authority), the Company and the Company Subsidiaries shall cease engaging in
such activities as First Union shall advise the Company in writing are not
permitted to be engaged in by First Union under applicable law following the
Effective Date, and to the extent required by any Regulatory Authority as a
conditional approval of the transactions
32
<PAGE>
contemplated by this Plan, the Company shall divest any Company Subsidiary
engaged in activities or holding assets that are impermissible for a bank
holding company, on terms and conditions agreed to by First Union.
5.17. Indemnification/Liability Coverage.
----------------------------------
(A) For six years after the Effective Date, First Union shall, and
shall cause the Continuing Corporation to, indemnify, defend and hold harmless
the present and former directors, officers and employees of the Company and the
Company Subsidiaries (each, an "Indemnified Party") against all liabilities
arising out of actions or omissions occurring at or prior to the Effective Date
(including, without limitation, the transactions contemplated by this Plan) to
the extent such persons are indemnified under the DGCL and the Company's
Certificate of Incorporation and Bylaws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any litigation.
(B) First Union shall use its reasonable best efforts to maintain the
Company's existing directors' and officers' liability insurance policy (or a
policy, including First Union's existing policy, providing comparable coverage
amount on terms no less favorable) covering persons who are currently covered by
such insurance for a period of three years after the Effective Date; provided,
--------
that First Union shall not be obligated to make an annual premium payment in
respect of such policy (or replacement policy) which exceeds, for the portion
related to the Company's directors and officers, 150% of the annual premium
payment on the Company's current policy in effect as of the date of this Plan;
provided, further, that if such coverage can only be obtained upon the payment
- -----------------
of an annual premium in excess of 150% of the annual premium payment of the
Company's current policy, First Union shall obtain such coverage as can
reasonably be obtained by paying a premium of 150% of the annual premium payment
of the Company's current policy in effect as of the date of this Plan.
(C) Any Indemnified Party wishing to claim indemnification under
Section 5.17(A), upon learning of such claim, action, suit, proceeding or
- ---------------
investigation, shall promptly notify First Union thereof; provided, that the
--------
failure so to notify shall not affect the obligations of First Union and the
Continuing Corporation under Section 5.17(A) (unless such failure materially
---------------
increases First Union's liability under such Section). In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Date), (1) First Union or the Continuing Corporation shall
have the right to assume the defense thereof, if it so elects, and First Union
or the Continuing Corporation shall pay all reasonable fees and expenses of
counsel for the Indemnified
33
<PAGE>
Parties promptly as statements therefor are received; provided, however, that
-----------------
First Union shall be obligated pursuant to this subsection (C) to pay for only
one firm of counsel for all Indemnified Parties 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, (2) the Indemnified Parties
will cooperate in the defense of any such matter, and (3) First Union shall not
be liable for any settlement effected without its prior written consent.
(D) If First Union or the Continuing Corporation or any of its
successors or assigns shall consolidate with or merge into any other entity and
shall not be the continuing or surviving entity of such consolidation or merger
or shall transfer all or substantially all of its assets to any entity, then and
in each case, proper provision shall be made so that the successors and assigns
of First Union or the Continuing Corporation shall assume the obligations set
forth in this Section 5.17.
------------
(E) First Union shall pay, or cause the Continuing Corporation to pay,
all reasonable expenses, including attorneys' fees, promptly as statements
therefore are received, that may be incurred by any Indemnified Party in
enforcing the indemnity and other obligations provided for in this Section 5.17.
-------------
The rights of each Indemnified Party hereunder shall be in addition to any other
rights such Indemnified Party may have under the Certificate of Incorporation or
Bylaws of the Company, under the DGCL or otherwise.
5.18. Current Information.
-------------------
(A) During the period from the date of this Plan to the Effective
Date, each of the Company and First Union shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(B) The Company and the Bank shall promptly notify First Union of (1)
any material change in the business or operations of the Company or any Company
Subsidiary, (2) any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any Regulatory
Authority relating to the Company or any Company Subsidiary, (3) the institution
or the threat of material litigation involving or relating to the Company or any
Company Subsidiary, or (4) any event or condition that might be reasonably
expected to cause any of the Company's and the Bank's representations or
warranties set forth herein not to be true and correct as of the Effective Time
(except to the extent contemplated by Section 6.08) or prevent the Company or
-------------
the Bank from fulfilling its or their obligations hereunder; and in each case
shall keep First Union informed with respect thereto.
34
<PAGE>
(C) First Union shall (1) promptly notify the Company of any event or
condition that might reasonably be expected to cause any of First Union's and
FUNB-FL's representations or warranties set forth herein not to be true and
correct as of the Effective Date (except to the extent contemplated by Section
-------
6.07), and (2) notify the Company immediately of any denial of any application
- -----
filed by First Union or FUNB-FL with any Regulatory Authority with respect to
this Plan, and in each case shall keep the Company and the Bank informed with
respect thereto.
5.19. Disposition of AHSC. The Company agrees to dispose (the
-------------------
"Disposition") of the AHSC Assets (as hereinafter defined) of American Home
Service Corporation ("AHSC"). The consideration for the Disposition shall be
cash, or such other form of consideration as shall be acceptable to First Union.
To the extent that the proposed sale of any AHSC Assets is with any recourse to
the Company or any of the Company Subsidiaries, such proposed sale shall require
the prior approval of First Union, which approval shall not be unreasonably
withheld. The Company agrees to forward to First Union for its review a copy of
any proposed agreement relating to such proposed sale prior to executing such
agreement and to give First Union a reasonable period to conduct such review in
order for First Union to determine that the proposed sale is in fact without any
such recourse. To the extent the purchase price paid in the Disposition, as
increased or decreased by the Tax Effect (as hereinafter defined) related
thereto (the "Purchase Price"), is greater or less 70% of the book value of the
AHSC Assets, as properly recorded on the books of AHSC in accordance with
generally accepted accounting principles consistently applied, as of the date of
the Disposition (the "Base Price"), the Exchange Ratio shall be adjusted as
follows:
(A) the Exchange Ratio, as the same may be adjusted pursuant to
Section 2.05 or Section 7.05, shall be multiplied by the average of the
- ------------ ------------
closing sale prices (the "FTU Price") of First Union Common Stock on the NYSE
Composite Transactions tape (as reported in The Wall Street Journal) for the ten
-----------------------
consecutive trading days ended on the last trading day immediately preceding the
Effective Date and the result shall be multiplied by the sum of the number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time plus the number of shares of Company Common Stock covered by outstanding
Options (the "Outstanding Shares");
(B) the result obtained in (A) above shall either be increased by the
excess of the Purchase Price over the Base Price or decreased by the amount the
Purchase Price is less than the Base Price; and
35
<PAGE>
(C) the result obtained in (B) above shall be divided by the Outstanding
Shares and the result shall be divided by the FTU Price, which shall be the
adjusted Exchange Ratio (rounded to the nearest one-thousandth).
For purposes of this Section 5.19, "AHSC Assets" shall mean all of the real
------------
estate assets and loans Previously Disclosed on Schedule 5.19(A),and accrued
----------------
interest receivable with respect thereto as of the date of the Disposition. For
purposes of this Section 5.19, "Tax Effect" shall mean an amount which equals
------------
the marginal tax rate with respect to the gain or loss recognized by AHSC for
tax purposes on the Disposition.
No new assets shall be transferred to or be acquired by AHSC prior to the
Disposition without the prior written consent of First Union. First Union and
the Company agree to use their reasonable best efforts to minimize the tax costs
of the Disposition to AHSC, the Company and the acquiring party.
Notwithstanding the foregoing, to the extent mutually agreed upon between
the Company and First Union, such agreement not to be unreasonably withheld, the
Disposition may be in the form of the sale of all of the stock of AHSC, in which
case the parties agree to make such changes to this Section 5.19 as may be
------------
mutually agreed upon to appropriately reflect such sale.
Previously Disclosed on Schedule 5.19(B) is the balance sheet of AHSC as of
----------------
May 31, 1996.
VI. CONDITIONS TO CONSUMMATION OF THE MERGERS.
Consummation of the Mergers is conditioned upon:
6.01. Shareholder Vote. Approval of this Plan by the requisite vote of
----------------
the stockholders of the Company.
6.02. Regulatory Approvals. Procurement by First Union and FUNB-FL, as
--------------------
applicable, of all required regulatory consents and approvals by the appropriate
Regulatory Authorities and the expiration of the statutory waiting period
relating thereto; provided, however, that no such approval or consent shall have
-------- -------
imposed any condition or requirement which, in the reasonable opinion of First
Union, would so materially and adversely impact the economic or business
benefits to First Union of the transactions contemplated by this Plan so as to
render inadvisable the consummation of the Mergers.
6.03. No Injunction. There shall not be in effect any order, decree or
-------------
injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of any of the transactions contemplated hereby.
36
<PAGE>
6.04. Accountants' Letters. The Company shall cause Grant Thornton to
--------------------
deliver to First Union letters, dated the date of or shortly prior to (A) the
mailing of the Proxy Statement, and (B) the Effective Date, in form and
substance reasonably satisfactory to First Union, with respect to the Company's
consolidated financial position and results of operations, which letters shall
be based upon "agreed upon procedures" undertaken by such firm in accordance
with the Statement on Financial Accounting Standards No. 72.
6.05. Legal Opinion. The Company and the Bank shall have received an
-------------
opinion, dated the Effective Date, of Marion A. Cowell, Jr., counsel for First
Union and FUNB-FL in form reasonably satisfactory to the Company and the Bank,
which shall cover the matters contained in the first sentence in Recital (C),
the first sentence in Recital (D), Section 4.02(B), (C), (H) and (I), the first
sentence in Section 4.02(L), and Section 5.03.
6.06. Legal Opinion. First Union and FUNB-FL shall have received an
-------------
opinion, dated the Effective Date, of Luse Lehman Gorman Pomerenk & Schick,
P.C., counsel for the Company and the Bank, in form reasonably satisfactory to
First Union and FUNB-FL which together shall cover the matters contained in the
first sentence in Recital (A), the first sentence in Recital (B), Section 4.01
(B) and (C), the fifth and sixth sentences in Section 4.01(D), Section 4.01(F)
and (G), the first clause of the first sentence in Section 4.01(L), Section
4.01(W), (X), (Y) and (FF) and Section 5.03. Such counsel shall be entitled to
rely upon (1) the opinion of counsel acceptable to First Union as to matters of
Florida law and (2) on certificates of responsible officers of the Company and
its subsidiaries and public officials as to matters of fact.
6.07. Officers' Certificate. (A) Each of the representations and
---------------------
warranties contained herein of First Union and FUNB-FL shall be true and correct
as of the date of this Plan and upon the Effective Date with the same effect as
though all such representations and warranties had been made on the Effective
Date, except for any such representations and warranties made as of a specified
date, which shall be true and correct as of such date, and (B) each and all of
the agreements and covenants of First Union and FUNB-FL to be performed and
complied with pursuant to this Plan on or prior to the Effective Date shall have
been duly performed and complied with in all material respects, and the Company
and the Bank shall have received a certificate signed by an executive officer of
each of First Union and FUNB-FL, dated the Effective Date, to such effect.
6.08. Officers' Certificate. (A) Each of the representations and warranties
---------------------
contained herein of the Company and the Bank shall be true and correct as of the
date of this
37
<PAGE>
Plan and upon the Effective Date with the same effect as though all such
representations and warranties had been made on the Effective Date, except for
any such representations and warranties made as of a specified date, which shall
be true and correct as of such date, and (B) each and all of the agreements and
covenants of the Company and the Bank to be performed and complied with pursuant
to this Plan on or prior to the Effective Date shall have been duly performed
and complied with in all material respects, and First Union and FUNB-FL shall
have received a certificate signed by the Chief Executive Officers and the Chief
Financial Officers of the Company and the Bank, dated the Effective Date, to
such effect.
6.09. Effective Registration Statement. The Registration Statement shall
--------------------------------
have become effective and no stop or other order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
6.10. Blue-Sky Permits. First Union shall have received all state
----------------
securities laws and "blue sky" permits necessary to consummate the Corporate
Merger.
6.11. Tax Opinion. First Union and the Company shall have received an
-----------
opinion from Sullivan & Cromwell to the effect that (A) the Corporate Merger
constitutes a reorganization under Section 368 of the Code, and (B) no gain or
loss will be recognized by stockholders of the Company who receive shares of
First Union Common Stock solely in exchange for their shares of Company Common
Stock, except that gain or loss may be recognized as to cash received in lieu of
fractional share interests. In rendering their opinion, Sullivan & Cromwell may
require and rely upon representations and agreements contained in documents
executed by officers of First Union, the Company and others.
6.12. NYSE Listing. The shares of First Union Common Stock issuable
------------
pursuant to this Plan shall have been approved for listing on the NYSE, subject
to official notice of issuance.
6.13. Receipt of Affiliate Agreements. First Union shall have received
-------------------------------
from each Affiliate of the Company the agreement referred to in Section 5.10.
------------
6.14. AHSC Disposition. The Disposition shall have occurred in accordance
----------------
with Section 5.19;
------------
provided, however, that a failure to satisfy any of the conditions set forth in
- -------- -------
the proviso following Section 6.02 or in Sections 6.04, 6.06, 6.08, 6.13 or 6.14
------------ ---------------------------------------
shall only constitute conditions if asserted by First Union, and a failure to
satisfy
38
<PAGE>
any of the conditions set forth in Section 6.05 or 6.07 shall only constitute
--------------------
conditions if asserted by the Company.
VII. TERMINATION.
This Plan may be terminated prior to the Effective Date, either before or
after receipt of required stockholder approvals:
7.01. Mutual Consent. By the mutual consent of First Union and the
--------------
Company.
7.02. Breach. By First Union or the Company, if its Board of Directors so
------
determines by vote of a majority of the members of its entire Board, in the
event of (A) a breach by the other party of any representation or warranty
contained herein, which breach cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching party of such
breach, or (B) a breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching party of such
breach.
7.03. Delay. By First Union or the Company, if its Board of Directors so
-----
determines by vote of a majority of the members of its entire Board, in the
event that the Corporate Merger is not consummated by May 1, 1997.
7.04. No Stockholder or Regulatory Approval. By the Company or First
-------------------------------------
Union, if its Board of Directors so determines by a vote of a majority of the
members of its entire Board, in the event that any stockholder approval
contemplated by Section 6.01 is not obtained at the Meeting, including any
------------
adjournment or adjournments thereof, or in the event that written notice is
received which states that any required regulatory approval contemplated by
Section 6.02 will not be approved or has been denied.
- ------------
7.05. Possible Adjustment. By the Company, if its Board of Directors so
-------------------
determines by a vote of a majority of the members of its entire Board, at any
time during the ten-day period commencing on the Determination Date, if both of
the following conditions are satisfied:
(A) the Average Closing Price on the Determination Date of shares of
First Union Common Stock shall be less than $51.00; and
(B) (1) the number obtained by dividing the Average Closing Price on
such Determination Date by $60.00 (such number being referred to herein as
the "FUNC Ratio") shall be less than (2) the number obtained by dividing
the Index Price on the Determination Date by the Index Price on the
39
<PAGE>
Starting Date and subtracting 0.15 from the quotient in this clause (B)(2)(such
number being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If the Company elects to
- -----------------
exercise its termination right pursuant to the immediately preceding sentence,
it shall give prompt written notice to First Union (provided that such notice of
--------
election to terminate may be withdrawn at any time within the aforementioned
ten-day period). During the seven-day period commencing with its receipt of
such notice, First Union shall have the option of adjusting the Exchange Ratio
to equal the lesser of (a) a number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the product of $51.00 and the
Exchange Ratio (as then in effect) and the denominator of which is the Average
Closing Price, and (b) a number equal to a quotient (rounded to the nearest one-
thousandth), the numerator of which is the Index Ratio multiplied by the
Exchange Ratio (as then in effect) and the denominator of which is the FUNC
Ratio. If First Union makes an election contemplated by the preceding sentence,
within such seven-day period, it shall give written notice to the Company of
such election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 7.05 and this Plan shall remain in effect
------------
in accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Plan to "Exchange Ratio" shall thereafter
be deemed to refer to the Exchange Ratio as adjusted pursuant to this Section
-------
7.05.
- ----
For purposes of this Section 7.05, the following terms shall have the
------------
meanings indicated:
"Average Closing Price" means the average of the daily last sale
prices of First Union Common Stock as reported on the NYSE Composite
Transactions tape (as reported in The Wall Street Journal or, if not
-----------------------
reported therein, in another mutually agreed upon authoritative source) for
the ten consecutive full trading days in which such shares are traded on
the NYSE beginning two business days after the date on which the last
required approval of the Regulatory Authorities referred to in Section 6.02
------------
required for consummation of the Mergers shall be received.
"Determination Date" means the last day of the ten-day trading period
referred to in the preceding paragraph.
"Index Group" means the group of each of the 18 bank holding companies
listed below, the common stock of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and before
the Determination Date, an announcement of a proposal for the acquisition
or sale of such company. In the event that the
40
<PAGE>
common stock of any such company ceases to be publicly traded or any such
announcement is made with respect to any such company, such company will be
removed from the Index Group, and the weights (which have been determined based
on the number of outstanding shares of common stock) redistributed
proportionately for purposes of determining the Index Price. The 18 bank holding
companies and the weights attributed to them are as follows:
Bank Holding Company Weighting
- -------------------- ---------
BankAmerica Corporation (BAC) 14.53%
NationsBank Corporation (NB) 12.80
Banc One Corp. (ONE) 8.19
First Chicago NBD Corporation (FND) 7.02
Norwest Corporation (NOB) 6.52
Fleet Financial Group, Inc. (FLT) 6.02
PNC Financial Corp (PNC) 5.50
KeyCorp (KEY) 4.76
CoreStates Financial Corp (CFL) 4.54
First Bank System, Inc. (FBS) 4.35
Mellon Bank Corporation (MEL) 4.00
National City Corporation (NCC) 3.90
Wachovia Corporation (WB) 3.85
Boatmen's Bancshares, Inc. (BOAT) 3.27
Barnett Banks, Inc. (BBI) 3.04
U.S. Bancorp (UBAN) 2.83
Comerica (CMA) 2.71
SunTrust Banks, Inc. (STI) 2.18
-----
100.00%
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the
companies composing the Index Group.
"Starting Date" means the first NYSE trading day immediately following
the date of the first public announcement of entry into this Plan.
If any company belonging to the Index Group or First Union declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting Date
and the Determination Date, the prices for the common stock of such company or
First Union shall be appropriately adjusted for the purposes of applying this
Section 7.05.
- ------------
41
<PAGE>
7.06. Termination Fee.
---------------
(A) The Company hereby agrees to pay First Union and First Union shall
be entitled to payment of, a nonperformance fee (the "Termination Fee") of $17
million following the occurrence of a Payment Event (as defined below), provided
--------
that First Union shall have sent written notice of such entitlement within 90
days after First Union actually becomes aware of such occurrence. Such payment
shall be made in immediately available funds within five business days after
delivery of a notice from First Union requesting such payment. The right to
receive the Termination Fee shall terminate if any of the following (a "Fee
Termination Event") occurs prior to a Payment Event: (i) the Effective Date,
(ii) termination of this Plan in accordance with the provisions hereof if such
termination occurs prior to the occurrence of a Preliminary Payment Event (as
defined below), except a termination by First Union pursuant to Section 7.02,
------------
(iii) termination of this Plan following the occurrence of a Preliminary Payment
Event and the passage of eighteen (18) months after such termination, or (iv)
termination of this Plan by First Union pursuant to Section 7.02, and the
------------
passage of eighteen (18) months after such termination.
(B) The term "Preliminary Payment Event" shall mean any of the
following events or transactions occurring after the date hereof:
(1) The Company or the Bank without having received First Union's
prior written consent, shall have entered into an agreement to engage in
any Acquisition Transaction (as defined below) with any person (the term
"person" for purposes of this Section 7.06 having the meaning assigned
------------
thereto in Section 3(a)(9) and 13(d)(3) of the Exchange Act) other than
First Union or any of its subsidiaries or affiliates, or the Board of
Directors of the Company shall have recommended that the shareholders of
the Company approve or accept any Acquisition Transaction with any person
other than First Union or any of its subsidiaries or affiliates. For
purposes of this Plan, "Acquisition Transaction" shall mean (a) a merger or
consolidation, or any similar transaction, involving the Company or the
Bank, (b) a purchase, lease or other acquisition of all or substantially
all of the assets or deposits of the Company or the Bank, (c) a purchase or
other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 20% or more of the voting
power of the Company or of the Bank; provided that the term "Acquisition
--------
Transaction" does not include any internal merger or consolidation
involving only the Company and/or any of the Company Subsidiaries;
42
<PAGE>
(2) (a) any person other than First Union or any of its
subsidiaries or affiliates shall have acquired beneficial ownership or the right
to acquire beneficial ownership of 20% or more of the outstanding share of
Company Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the Exchange
Act, or (b) any group (as such term "group" is defined in Section 13(d)(3) of
the Exchange Act), other than a group of which any of First Union or any of its
subsidiaries or affiliates is a member, shall have been formed that beneficially
owns 20% or more of the Company Common Stock then outstanding;
(3) any person other than First Union or any of its subsidiaries
or affiliates shall have made a proposal to the Company or its shareholders, by
public announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction (including, without
limitation, any situation in which any person other than First Union or any of
its subsidiaries or affiliates shall have commenced (as such term is defined in
Rule 14d-2 under the Exchange Act) or shall have filed a registration statement
under the Securities Act, with respect to, a tender offer or exchange offer to
purchase any shares of Company Common Stock such that, upon consummation of such
offer, such person would own or control 20% or more of the then outstanding
shares of Company Common Stock (such an offering referred to herein as a "Tender
Offer" or an "Exchange Offer", respectively));
(4) after a proposal is made by a third party to the Company or
its shareholders to engage in an Acquisition Transaction, or such third party
states its intention to the Company to make such a proposal, the Company shall
have breached any representation, covenant or obligation contained in this Plan
and such breach would entitle First Union to terminate this Plan under Section
-------
7.02 (without regard to the cure period provided for therein unless such cure is
- ----
promptly effected without jeopardizing consummation of the Corporate Merger); or
(5) the holders of shares of Company Common Stock shall not have
approved this Plan at the Meeting or the Meeting shall not have been held or
shall have been canceled prior to termination of this Plan, in each case after
any person other than First Union or any of its subsidiaries or affiliates shall
have (a) made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction or (b) commenced a Tender Offer or filed a registration
statement under the Securities Act, with respect to an Exchange Offer.
43
<PAGE>
(C) The term "Payment Event" shall mean either of the following events
or transactions occurring after the date hereof:
(1) the acquisition by any person other than First Union or any
of its subsidiaries or affiliates, alone or together with such person's
affiliates and associates, or any group (as defined in Section 13(d)(3) of the
Exchange Act), of beneficial ownership of 25% or more of the outstanding shares
of Company Common Stock; or
(2) the occurrence of a Preliminary Payment Event described in
(x) clause (B)(1) above, except that the percentage referred to in clause (c)
thereof shall be 25%, or (y) clause (B)(5) above.
(D) The Company shall notify First Union promptly in writing of its
knowledge of the occurrence of any Preliminary Payment Event or Payment Event;
provided, however, that the giving of such notice by the Company shall not be a
- -------- -------
condition to the right of First Union to the Termination Fee.
VIII. OTHER MATTERS.
8.01. Survival. If the Effective Date occurs, all representations,
--------
warranties, agreements and covenants contained in this Plan, except for Sections
--------
5.17, 8.04 and 8.09,shall not survive the Effective Date. If this Plan is
- ---- ---- ----
terminated prior to the Effective Date, the agreements and representations of
the parties in Sections 4.01(P) and 4.02(F), Sections 5.03, 5.06(2), 5.12 and
--------------------------------------------------------------
5.13, Section 7.06, and Sections 8.01, 8.03, 8.04, 8.05, 8.06, 8.07, 8.09 and
- -----------------------------------------------------------------------------
8.11 shall survive such termination.
- ----
8.02. Waiver; Amendment. Prior to the Effective Date, any provision of
-----------------
this Plan may be (A) waived in writing by the party benefitting by the
provision, or (B) amended or modified at any time (including the structure of
the transactions contemplated hereby) by an agreement in writing among the
parties hereto approved by their respective Boards of Directors and executed in
the same manner as this Plan, except that, after the vote by the stockholders of
the Company, the consideration to be received by the stockholders of the Company
for each share of Company Common Stock shall not thereby be decreased.
8.03. Counterparts. This Plan may be executed in one or more
------------
counterparts, each of which shall be deemed to constitute an original. This
Plan shall become effective when one counterpart has been signed by each party
hereto.
8.04. Governing Law. This Plan shall be governed by, and interpreted in
-------------
accordance with, the laws of the State of North Carolina, except as federal law
may be applicable.
44
<PAGE>
8.05. Expenses. Each party hereto will bear all expenses incurred by it
--------
in connection with this Plan and the transactions contemplated hereby, except
printing expenses which shall be shared equally between the Company and First
Union.
8.06. Confidentiality. Except as otherwise provided in Section 5.06(B),
--------------- ---------------
each of the parties hereto and their respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed.
8.07. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to First Union
or FUNB-FL, to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704)374-3425
Attention: Edward E. Crutchfield
Chairman and Chief Executive Officer
Copy to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704)374-3425
Attention: Marion A. Cowell, Jr.
General Counsel
If to the Company
or the Bank, to: Home Financial Corporation
1720 Harrison Street
Hollywood, Florida 33020
Telecopy Number: (954) 926-6230
Attention: Thomas M. Wohl
President and Chief
Executive Officer
Copy to: Luse, Lehman & Gorman
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, DC 20015
Telecopy Number : (202) 362-2902
Attention: Eric Luse, Esq.
45
<PAGE>
8.08. Definitions. Any term defined anywhere in this Plan shall have
-----------
the meaning ascribed to it for all purposes of this Plan (unless expressly noted
to the contrary). In addition:
(A) the term "Material Adverse Effect", when applied to a party, shall
mean an event, occurrence or circumstance (including without limitation, any
breach of a representation or warranty contained herein by such party) which (1)
has a material adverse effect on the financial condition, results of operations,
business or prospects of such party and its subsidiaries, taken as a whole, or
(2) would materially impair such party's, or any affiliated party's (which
includes, as to the Company, the Bank and as to First Union, FUNB-FL), ability
to timely perform its obligations under this Plan or the consummation of any of
the transactions contemplated hereby; provided, that a Material Adverse Effect
--------
with respect to a party shall not include effects resulting from general
economic conditions (including changes in interest rates), changes in accounting
practices or changes to statutes, regulations or regulatory policies, that do
not have a materially more adverse effect on such party than that experienced by
similarly situated financial institutions;
(B) the term "individually or in the aggregate" as used in Article IV of
----------
this Plan includes all events, occurrences and circumstances described in any
paragraph of Article IV, and is not linked to any specific paragraph; and
----------
(C) the term "Previously Disclosed" by a party shall mean information set
forth in a Schedule that is delivered by such party to the other party
contemporaneously with the execution of this Plan and specifically designated as
information "Previously Disclosed" pursuant to this Plan.
8.09. Entire Understanding; No Third Party Beneficiaries. This Plan
--------------------------------------------------
and all schedules hereto represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersede any
and all other oral or written agreements heretofore made. Except for Section
-------
5.17, nothing in this Plan, expressed or implied, is intended to confer upon any
- ----
person, other than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this Plan.
8.10. Benefit Plans. As soon as administratively practicable after the
-------------
Effective Time, employees of the Company and the Company Subsidiaries shall be
generally entitled to participate in the pension, benefit and similar plans of
First Union on substantially the same terms and conditions as employees of First
Union and its subsidiaries. For the purpose of determining eligibility to
participate in such plans and the
46
<PAGE>
vesting of benefits under such plans (but not for the accrual of benefits under
such plans), First Union shall give effect to years of service with the Company
or the Company Subsidiaries, as the case may be, as if such service had been
with First Union or its subsidiaries.
8.11. Headings. The headings contained in this Plan are for reference
--------
purposes only and are not part of this Plan.
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FIRST UNION CORPORATION
By: /s/ Kenneth R. Stancliff
----------------------------
Name: Kenneth R. Stancliff
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF FLORIDA
By: /s/ Kenneth R. Stancliff
----------------------------
Name: Kenneth R. Stancliff
Title: Senior Vice President
HOME FINANCIAL CORPORATION
By: /s/ Thomas M. Wohl
----------------------------
Name: Thomas M. Wohl
Title: President
HOME SAVINGS BANK, FSB
By: /s/ Thomas M. Wohl
----------------------------
Name: Thomas M. Wohl
Title: President
48
<PAGE>
BOARD OF DIRECTORS
HOME SAVINGS BANK, FSB
/s/ Thomas M. Wohl
- ---------------------------
/s/ Thomas N. Kearns
- ---------------------------
/s/ Toni N. Paoli
- ---------------------------
/s/ Lawrence R. Paretta
- ---------------------------
/s/ W. Roy Wilkes
- ---------------------------
/s/ Harry K. MacDougall
- ---------------------------
/s/ James M. Wohl
- ---------------------------
/s/ Earrol Smith
- ---------------------------
49
<PAGE>
BOARD OF DIRECTORS*
FIRST UNION NATIONAL BANK OF FLORIDA
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________
* To be executed prior to the Effective Date.
50
<PAGE>
Exhibit A
---------
FORM OF AFFILIATE'S LETTER
--------------------------
, 1996
----------------
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Mergers, dated as of
June 16, 1996 (the "Plan"), by and among Home Financial Corporation ("Company"),
Home Savings Bank, FSB, First Union Corporation ("FUNC"), and First Union
National Bank of Florida, the Company plans to merge with and into FUNC (the
"Merger"). As a result of the Merger, the undersigned may receive shares of FUNC
common stock, par value $3.33 1/3 per share ("FUNC Stock") in exchange for
shares of Company common stock, par value $0.10 per share ("Company Stock").
The undersigned hereby represents, warrants and covenants with and to FUNC
that in the event the undersigned receives any FUNC Stock as a result of the
Merger:
(A) The undersigned will not sell, transfer or otherwise dispose of such
FUNC Stock unless (i) such sale, transfer or other disposition has been
registered under the Securities Act of 1933, as amended (the "Act"), (ii) such
sale, transfer or other disposition is made in conformity with the provisions of
Rule 145 under the Act (as such rule may be hereafter from time to time be
amended), or (iii) in the opinion of counsel in form and substance satisfactory
to FUNC, or under a "no-action" letter obtained by the undersigned from the
staff of the Securities and Exchange Commission (the "SEC"), such sale, transfer
or other disposition will not violate or is otherwise exempt from registration
under the Act.
(B) The undersigned understands that FUNC is under no obligation to
register the sale, transfer or other disposition of shares of FUNC Stock by the
undersigned or on the undersigned's behalf under the Act or to take any other
action necessary in order to make compliance with an exemption from such
registration available.
A-1
<PAGE>
(C) The undersigned also understands that stop transfer instructions
will be given to FUNC's transfer agent with respect to the shares of FUNC Stock
issued to the undersigned as a result of the Merger and that there will be
placed on the certificates for such shares, or any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate were issued in a transaction
to which Rule 145(d) under the Securities Act of 1933 applies. The shares
represented by this certificate may only be transferred in accordance with the
terms of a letter agreement between the registered holder hereof and FUNC, a
copy of which agreement is on file at the principal offices of FUNC."
(D) The undersigned also understands that, unless the transfer by the
undersigned of the FUNC Stock issued to the undersigned as a result of the
merger have been registered under the Act or a sale made in conformity with the
provisions of Rule 145(d) under the Act, FUNC reserves the right, in its sole
discretion, to place the following legend on the certificates issued to any
transferee of such FUNC Stock from the undersigned:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who received
such shares in a transaction to which Rule 145 under the Securities Act of 1933
applies. The shares have been acquired by the holder not with a view to, or for
resale in connection with, any distribution thereof within the meaning of the
Securities Act of 1933 and may not be offered, sold, pledged or otherwise
transferred except in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs (C)
and (D) above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to FUNC (i) a copy of a "no
action" letter from the staff of the SEC, or an opinion of counsel in form and
substance satisfactory to FUNC, to the effect that such legend is not required
for purposes of the Act, or (ii) evidence or representations satisfactory to
FUNC that the FUNC Stock represented by such certificates is being or has been
sold in a transaction made in conformity with the provisions of Rule 145(d).
(E) The undersigned further represents, warrants and covenants with and
to FUNC that the undersigned will, and will cause each of the other parties
whose shares are deemed to be beneficially owned by the undersigned pursuant to
A-2
<PAGE>
paragraph (F) below to, have all shares of Company Stock owned by the
undersigned or such parties registered in the name of the undersigned or such
parties, as applicable, prior to the effective date of the Merger and not in the
name of any bank, broker-dealer, nominee or clearing house.
(F) The undersigned understands and agrees that this letter agreement
shall apply to all shares of the capital stock of Company and FUNC that are
deemed to be beneficially owned by the undersigned pursuant to applicable
federal securities laws.
(G) The undersigned has carefully read this letter and discussed its
requirements and other applicable limitations upon the undersigned's ability to
sell, transfer or otherwise dispose of the capital stock of Company or FUNC, to
the extent the undersigned felt necessary, with the undersigned's counsel or
counsel for Company.
A-3
<PAGE>
Very truly yours,
--------------------
Name:
[add below the signatures
of all registered owners
of shares deemed
beneficially owned by the
affiliate]
----------------------
Name:
----------------------
Name:
----------------------
Name:
Acknowledged this ____ day of
_____________, 1996.
FIRST UNION CORPORATION
By:
-------------------------
Name:
Title:
A-4
<PAGE>
FIRST UNION TO ACQUIRE HOME FINANCIAL CORPORATION
JACKSONVILLE, Fla., June 17 -- First Union Corporation (NYSE: FTU) has
entered into a definitive agreement to acquire Home Financial Corporation
(Nasdaq: HOFL) and its principal subsidiary, Home Savings Bank,
FSB. Home Savings, with headquarters in Hollywood, Florida, operates 8 offices
in Broward, Dade and Highlands counties and has approximately $1.2 billion in
assets, as of March 31, 1996.
Under terms of the agreement, First Union will exchange 0.2233 shares of
its common stock for each share of Home Financial Corporation common stock,
subject to adjustment under certain circumstances. Based on First Union's
closing stock price on June 14, 1996, of $60 per share and an exchange ratio of
0.2233, the transaction would be valued at $336 million or $13.40 per share of
Home Financial common stock. Based on the average closing price of First Union
common stock for the 20 trading days ended June 14, 1996, the transaction would
be valued at $13.91 per share of Home Financial common stock.
The transaction will be accounted for as a purchase and is expected to
close during the fourth quarter of 1996, subject to Home Financial shareholder
approval, regulatory approvals and various other conditions of closing. First
Union plans to purchase in the open market the number of First Union shares to
be issued in the transaction. The acquisition is expected to be accretive to
First Union's 1997 earnings.
The 0.2233 exchange ratio is subject to possible upward or downward
adjustment based on the amount of proceeds from the sale of certain assets of a
subsidiary of Home Financial in relation to the book value of such assets.
"The Home Savings acquisition is not only financially attractive to First
Union but also allows us to offer a wide array of financial services including
sophisticated trust and investment products to Home Savings customers," said
Byron E. Hodnett, Chief Executive Officer of First Union National Bank of
Florida. "One of the strengths of First Union is our ability to provide a
seamless transition for acquired financial institutions while maintaining
quality service to our new customers."
Thomas M. Wohl, President and Chief Executive Officer of Home Financial
Corporation stated, "We are very proud of our success over the past 40 years in
building Home Savings Bank into the leading community bank it is today. As we
face an increasingly competitive banking environment, we are confident that this
affiliation with First Union will benefit our customers, employees and
shareholders."
Home Financial will pay its currently declared dividend as scheduled on
July 12, 1996, but will not pay further dividends on its common stock, pending
consummation of the transaction.
Jacksonville-based First Union National Bank of Florida is a subsidiary of
First Union Corporation, the nation's sixth largest bank holding company based
on assets of approximately $131 billion as of March 31, 1996. First Union
operates full-service financial offices in 12 states along the Eastern seaboard
and the District of Columbia.
