<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 18, 1997
REGISTRATION NO. 333 -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SOUTHERN NATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NORTH CAROLINA 6060 56-0939887
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
OF INCORPORATION OR
ORGANIZATION)
200 WEST SECOND STREET
WINSTON-SALEM, NORTH CAROLINA 27101
(910) 733-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JERONE C. HERRING, ESQ.
200 WEST SECOND STREET, 3RD FLOOR
WINSTON-SALEM, NORTH CAROLINA 27101
(910) 733-2180
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
THE COMMISSION IS REQUESTED TO SEND COPIES OF
ALL COMMUNICATIONS TO:
GARZA BALDWIN, III FRANK M. CONNER, III
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC ALSTON & BIRD LLP
3300 ONE FIRST UNION CENTER 601 PENNSYLVANIA AVENUE, N.W.
301 SOUTH COLLEGE STREET NORTH BUILDING, SUITE 250
CHARLOTTE, NORTH CAROLINA 28202 WASHINGTON, D.C. 20004
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
----------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$5.00 per share (1)... 27,947,958 (2) $1,101,912,902.00(3) $133,537.22(4)
- --------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Each share of the registrant's common stock includes one preferred share
purchase right.
(2) Not applicable.
(3) Computed in accordance with Rule 457(f) based on the average of the high
($45.00) and low ($44.50) sales price of the common stock of United
Carolina Bancshares Corporation on March 14, 1997 as reported on the
Nasdaq National Market.
(4) Pursuant to Rule 457(b), the registration fee has been reduced by an
amount equal to the fee of $200,375.78 paid upon the filing with the
Commission of the preliminary proxy materials of Southern National
Corporation and United Carolina Bancshares Corporation on January 30,
1997.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
SOUTHERN NATIONAL CORPORATION
200 WEST SECOND STREET
WINSTON-SALEM, NORTH CAROLINA 27101
March 19, 1997
Dear Shareholders:
You are cordially invited to attend the annual meeting of shareholders (the
"SNC Meeting") of Southern National Corporation ("SNC"), to be held at the
Charlotte Convention Center, 501 South College Street, Charlotte, North
Carolina on April 22, 1997, at 11:00 a.m., local time. At the SNC Meeting, you
will be asked to consider and vote upon a proposal (the "Merger Proposal") to
approve (a) an Agreement and Plan of Reorganization, dated as of November 1,
1996, by and between SNC and United Carolina Bancshares Corporation, a North
Carolina corporation ("UCB"), as amended and restated (the "Reorganization
Agreement"), and a related Plan of Merger (the "Plan of Merger"), and (b) the
related issuance of up to approximately 27.9 million shares of common stock of
SNC ("SNC Common Stock"). Pursuant to the Merger Proposal, UCB will merge with
and into SNC (the "Merger"), and each share of common stock of UCB (other than
shares held by dissenting shareholders) will be converted into the right to
receive 1.135 shares of SNC Common Stock (subject to possible upward
adjustment as described in the accompanying Joint Proxy Statement/Prospectus)
and cash in lieu of any fractional share. SNC will be the surviving
corporation in the Merger, and shareholders of UCB (other than dissenting
shareholders) will become shareholders of SNC.
In addition to considering the Merger Proposal at the SNC Meeting, you will
be asked to consider and vote upon proposals (a) to elect eight directors of
SNC for three-year terms expiring in 2000, (b) to amend Article I of SNC's
Articles of Incorporation to change SNC's name to "BB&T Corporation," (c) to
amend Article III, Section 2 of SNC's Bylaws to increase the maximum number of
directors of SNC from 25 to 30, (d) to amend the Southern National Corporation
Non-Employee Directors' Deferred Compensation and Stock Option Plan (the
"Directors' Plan") to increase the number of shares of SNC Common Stock
issuable under such plan from 400,000 shares to 900,000 shares and (e) to
ratify the reappointment of Arthur Andersen LLP as SNC's auditors for 1997.
Your Board of Directors believes that the Merger will significantly
strengthen SNC's market share in North Carolina and South Carolina and is
consistent with SNC's strategy to acquire high quality institutions in its
current market in order to enhance financial performance and franchise value.
Accordingly, the Board recommends that you approve the Merger Proposal.
Consummation of the Merger is subject to certain conditions in addition to
approval of the Merger Proposal by SNC's shareholders, including approval of
the Reorganization Agreement and the Plan of Merger by UCB's shareholders,
approval of the Merger by various regulatory agencies, and satisfaction or
waiver of other conditions set forth in the Reorganization Agreement.
The shareholders of UCB will consider and vote upon a proposal to approve
the Reorganization Agreement and the Plan of Merger at the annual meeting of
shareholders of UCB to be held in Whiteville, North Carolina at 10:00 a.m. on
the same day as the SNC Meeting.
THE ENCLOSED NOTICE OF ANNUAL MEETING AND JOINT PROXY STATEMENT/PROSPECTUS
CONTAIN IMPORTANT INFORMATION CONCERNING THE SNC MEETING AND THE PROPOSED
MERGER. PLEASE CAREFULLY READ THESE MATERIALS AND THOUGHTFULLY CONSIDER THE
INFORMATION CONTAINED IN THEM.
Whether or not you plan to attend the SNC Meeting, you are urged to
complete, sign, date and promptly return the enclosed proxy card to assure
that your shares will be voted at the SNC Meeting. If you attend the SNC
Meeting, you may vote in person, whether or not you have previously submitted
a proxy.
<PAGE>
THE BOARD OF DIRECTORS OF SNC UNANIMOUSLY APPROVED THE MERGER PROPOSAL AND
BELIEVES THAT THE MERGER PROPOSAL IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE SHAREHOLDERS OF SNC. ACCORDINGLY, THE BOARD OF DIRECTORS OF SNC RECOMMENDS
THAT SHAREHOLDERS OF SNC VOTE "FOR" APPROVAL OF THE MERGER PROPOSAL. THE BOARD
OF DIRECTORS OF SNC ALSO RECOMMENDS THAT SHAREHOLDERS OF SNC VOTE "FOR" THE
PROPOSED SLATE OF DIRECTORS, THE PROPOSED AMENDMENTS TO SNC'S ARTICLES OF
INCORPORATION AND BYLAWS, THE PROPOSED AMENDMENT TO THE DIRECTORS' PLAN AND
THE RATIFICATION OF THE REAPPOINTMENT OF ARTHUR ANDERSEN LLP AS SNC'S AUDITORS
FOR 1997.
Sincerely,
/s/ John A. Allison
John A. Allison IV
Chairman and Chief Executive Officer
<PAGE>
SOUTHERN NATIONAL CORPORATION
200 WEST SECOND STREET
WINSTON-SALEM, NORTH CAROLINA 27101
--------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1997
--------------------------------------------------
TO THE SHAREHOLDERS OF SOUTHERN NATIONAL CORPORATION:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "SNC
Meeting") of Southern National Corporation, a North Carolina corporation
("SNC"), will be held at the Charlotte Convention Center, 501 South College
Street, Charlotte, North Carolina on April 22, 1997, at 11:00 a.m., local
time, for the following purposes:
1. Merger Proposal. To consider and vote upon a proposal (the "Merger
Proposal") to approve (a) an Agreement and Plan of Reorganization, dated as
of November 1, 1996, by and between SNC and United Carolina Bancshares
Corporation, a North Carolina corporation ("UCB"), as amended and restated
(the "Reorganization Agreement"), and a related Plan of Merger (the "Plan
of Merger"), and (b) the related issuance of up to approximately 27.9
million shares of common stock of SNC ("SNC Common Stock"), pursuant to
which UCB will merge with and into SNC, and each share of common stock of
UCB (other than shares held by dissenting shareholders) will be converted
into the right to receive 1.135 shares of SNC Common Stock (subject to
possible upward adjustment) and cash in lieu of any fractional share, as
described in the accompanying Joint Proxy Statement/Prospectus. A copy of
the Reorganization Agreement and the Plan of Merger set forth therein is
attached to the accompanying Joint Proxy Statement/Prospectus as Appendix
I.
2. Election of Directors. To consider and vote upon a proposal to elect
eight directors of SNC for three-year terms expiring in 2000.
3. Amendment to Articles of Incorporation. To consider and vote upon a
proposal to approve an amendment to Article I of SNC's Articles of
Incorporation to change SNC's name to "BB&T Corporation."
4. Amendment to Bylaws. To consider and vote upon a proposal to approve
an amendment to Article III, Section 2 of SNC's Bylaws to increase the
maximum number of directors of SNC from 25 to 30.
5. Amendment to Directors' Plan. To consider and vote upon a proposal to
approve an amendment to the Southern National Corporation Non-Employee
Directors' Deferred Compensation and Stock Option Plan to increase the
number of shares of SNC Common Stock issuable under such plan from 400,000
shares to 900,000 shares.
6. Appointment of Auditors. To consider and vote upon a proposal to
ratify the reappointment of Arthur Andersen LLP as SNC's auditors for 1997.
7. Other Business. To transact such other business as may be properly
brought before the SNC Meeting or at any and all adjournments or
postponements thereof.
<PAGE>
Shareholders of SNC of record at the close of business on March 3, 1997 are
entitled to notice of and to vote at the SNC Meeting. You are cordially
invited to attend the SNC Meeting in person; however, whether or not you plan
to attend, we urge you to complete, date and sign the accompanying proxy card
and to return it promptly in the enclosed postage prepaid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jerone C. Herring
Jerone C. Herring
Secretary
Winston-Salem, North Carolina
March 19, 1997
ANY SNC SHAREHOLDER SHALL HAVE THE RIGHT TO DISSENT FROM THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED BY THE REORGANIZATION AGREEMENT AND THE PLAN OF
MERGER AND TO RECEIVE PAYMENT OF THE FAIR VALUE OF HIS OR HER SHARES UPON
COMPLIANCE WITH THE PROCEDURES PRESCRIBED BY CHAPTER 55, ARTICLE 13 OF THE
GENERAL STATUTES OF NORTH CAROLINA. SEE "THE MERGER--DISSENTERS' RIGHTS" IN
THE JOINT PROXY STATEMENT/PROSPECTUS THAT ACCOMPANIES THIS NOTICE AND THE FULL
TEXT OF CHAPTER 55, ARTICLE 13 ATTACHED THERETO AS APPENDIX IV FOR A
DESCRIPTION OF THESE PROCEDURES.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE SNC MEETING.
<PAGE>
UNITED CAROLINA BANCSHARES CORPORATION
127 WEST WEBSTER STREET
WHITEVILLE, NORTH CAROLINA 28472
March 19, 1997
Dear Shareholders:
You are cordially invited to attend the annual meeting of shareholders (the
"UCB Meeting") of United Carolina Bancshares Corporation ("UCB"), to be held
at the UCB Support Services Building, Highway 701 North, Whiteville, North
Carolina on April 22, 1997, at 10:00 a.m., local time. At the UCB Meeting, you
will be asked to consider and vote upon a proposal to approve an Agreement and
Plan of Reorganization, dated as of November 1, 1996, by and between UCB and
Southern National Corporation ("SNC"), as amended and restated (the
"Reorganization Agreement"), and a related Plan of Merger (the "Plan of
Merger"). Pursuant to the Reorganization Agreement and the Plan of Merger, UCB
will merge with and into SNC (the "Merger"), and each share of common stock of
UCB ("UCB Common Stock") (other than shares held by dissenting shareholders)
will be converted into the right to receive 1.135 shares of common stock of
SNC ("SNC Common Stock") (subject to possible upward adjustment as described
in the accompanying Joint Proxy Statement/Prospectus) and cash in lieu of any
fractional share. SNC will be the surviving corporation in the Merger, and
shareholders of UCB (other than dissenting shareholders) will become
shareholders of SNC.
In addition to considering the Reorganization Agreement and the Plan of
Merger at the UCB Meeting, you will be asked to consider and vote upon a
proposal to elect 12 directors of UCB for terms expiring at the earlier of the
effective time of the Merger or the date of the 1998 annual meeting of UCB
shareholders.
The Merger has been approved by your Board of Directors and is recommended
by the Board to you for approval. The Board believes that, among other
benefits, the Merger will result in a company with significantly greater
financial strength and increased opportunity and flexibility for profitable
expansion and diversification. Consummation of the Merger is subject to
certain conditions, including approval of the Reorganization Agreement and the
Plan of Merger by the UCB and SNC shareholders, approval of the Merger by
various regulatory agencies, and satisfaction or waiver of certain other
contractual conditions.
The shareholders of SNC will consider and vote upon a proposal to approve
the Reorganization Agreement and the Plan of Merger and the related issuance
of up to approximately 27.9 million shares of SNC Common Stock at the annual
meeting of shareholders of SNC to be held in Charlotte, North Carolina at
11:00 a.m. on the same day as the UCB Meeting.
THE ENCLOSED NOTICE OF ANNUAL MEETING AND JOINT PROXY STATEMENT/PROSPECTUS
CONTAIN IMPORTANT INFORMATION CONCERNING THE UCB MEETING AND THE PROPOSED
MERGER. PLEASE READ THESE MATERIALS AND THOUGHTFULLY CONSIDER THE INFORMATION
CONTAINED IN THEM.
Whether or not you plan to attend the UCB Meeting, you are urged to
complete, sign, date and promptly return the enclosed proxy card to assure
that your shares will be voted at the UCB Meeting. If you attend the UCB
Meeting, you may vote in person whether or not you have previously submitted a
proxy.
THE BOARD OF DIRECTORS OF UCB UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT AND THE PLAN OF MERGER AND BELIEVES THAT THE REORGANIZATION
AGREEMENT IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF UCB.
ACCORDINGLY, THE BOARD OF DIRECTORS OF UCB RECOMMENDS THAT SHAREHOLDERS OF UCB
VOTE "FOR" APPROVAL OF THE REORGANIZATION AGREEMENT AND THE PLAN OF MERGER.
THE BOARD OF DIRECTORS OF UCB ALSO RECOMMENDS THAT SHAREHOLDERS OF UCB VOTE
"FOR" THE PROPOSED SLATE OF DIRECTORS.
Sincerely,
/s/ E. Rhone Sasser
E. Rhone Sasser
Chairman and Chief Executive Officer
<PAGE>
UNITED CAROLINA BANCSHARES CORPORATION
127 WEST WEBSTER STREET
WHITEVILLE, NORTH CAROLINA 28472
-----------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1997
-----------------------------------------------
TO THE SHAREHOLDERS OF UNITED CAROLINA BANCSHARES CORPORATION:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "UCB
Meeting") of United Carolina Bancshares Corporation, a North Carolina
corporation ("UCB"), will be held at the UCB Support Services Building,
Highway 701 North, Whiteville, North Carolina on April 22, 1997, at 10:00
a.m., local time, for the following purposes:
1. Merger. To consider and vote upon a proposal to approve an Agreement
and Plan of Reorganization, dated as of November 1, 1996, by and between
UCB and Southern National Corporation, a North Carolina corporation
("SNC"), as amended and restated (the "Reorganization Agreement"), and a
related Plan of Merger (the "Plan of Merger"), pursuant to which UCB will
merge with and into SNC, and each share of common stock of UCB (other than
shares held by dissenting shareholders) will be converted into the right to
receive 1.135 shares of common stock of SNC (subject to possible upward
adjustment) and cash in lieu of any fractional share, as described in the
accompanying Joint Proxy Statement/Prospectus. A copy of the Reorganization
Agreement and the Plan of Merger set forth therein is attached to the
accompanying Joint Proxy Statement/Prospectus as Appendix I.
2. Election of Directors. To consider and vote upon a proposal to elect
12 directors of UCB for terms expiring at the earlier of the effective time
of the Merger or the date of the 1998 annual meeting of the UCB
shareholders.
3. Other Business. To transact such other business as may be properly
brought before the UCB Meeting or at any and all adjournments or
postponements thereof.
Shareholders of UCB of record at the close of business on March 3, 1997 are
entitled to notice of and to vote at the UCB Meeting. You are cordially
invited to attend the UCB Meeting in person; however, whether or not you plan
to attend, we urge you to complete, date and sign the accompanying proxy card
and to return it promptly in the enclosed postage prepaid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Howard V. Hudson Jr.
Howard V. Hudson, Jr.
Secretary
Whiteville, North Carolina
March 19, 1997
ANY UCB SHAREHOLDER SHALL HAVE THE RIGHT TO DISSENT FROM THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED BY THE REORGANIZATION AGREEMENT AND THE PLAN OF
MERGER AND TO RECEIVE PAYMENT OF THE FAIR VALUE OF HIS OR HER SHARES UPON
COMPLIANCE WITH THE PROCEDURES PRESCRIBED BY CHAPTER 55, ARTICLE 13 OF THE
GENERAL STATUTES OF NORTH CAROLINA. SEE "THE MERGER--DISSENTERS' RIGHTS" IN
THE JOINT PROXY STATEMENT/PROSPECTUS THAT ACCOMPANIES THIS NOTICE AND THE FULL
TEXT OF CHAPTER 55, ARTICLE 13 ATTACHED THERETO AS APPENDIX IV FOR A
DESCRIPTION OF THESE PROCEDURES.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE UCB MEETING. PLEASE DO NOT SEND
IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE>
JOINT PROXY STATEMENT
SOUTHERN NATIONAL CORPORATION
UNITED CAROLINA BANCSHARES CORPORATION
---------------
PROSPECTUS
SOUTHERN NATIONAL CORPORATION
COMMON STOCK
This Joint Proxy Statement/Prospectus is being furnished to the holders of
the common stock, par value $5.00 per share ("SNC Common Stock"), of Southern
National Corporation, a North Carolina corporation ("SNC"), in connection with
the solicitation of proxies by the Board of Directors of SNC (the "SNC Board")
for use at the annual meeting of shareholders of SNC, or any adjournment or
postponement thereof (the "SNC Meeting"), to be held on April 22, 1997, at
11:00 a.m., local time, at the Charlotte Convention Center, 501 South College
Street, Charlotte, North Carolina. At the SNC Meeting, the shareholders of SNC
will be asked to consider and vote upon a proposal (the "Merger Proposal") to
approve an Agreement and Plan of Reorganization, dated as of November 1, 1996,
by and between SNC and United Carolina Bancshares Corporation, a North
Carolina corporation ("UCB"), as amended and restated (the "Reorganization
Agreement"), a copy of which is attached hereto as Appendix I, and the related
Plan of Merger (the "Plan of Merger"), which is set forth in the form of
Articles of Merger attached as Annex A to the Reorganization Agreement, and
the related issuance of up to approximately 27.9 million shares of SNC Common
Stock. Shareholders of SNC will also be asked to consider and vote upon
proposals (a) to elect eight directors of SNC for three-year terms expiring in
2000, (b) to amend Article I of SNC's Articles of Incorporation (the "SNC
Articles") to change SNC's name to "BB&T Corporation," (c) to amend Article
III, Section 2 of the Bylaws of SNC (the "SNC Bylaws") to increase the maximum
number of directors of SNC from 25 to 30, (d) to amend the Southern National
Corporation Non-Employee Directors' Deferred Compensation and Stock Option
Plan (the "Directors' Plan") to increase the number of shares of SNC Common
Stock issuable under such plan from 400,000 shares to 900,000 shares and (e)
to ratify the reappointment of Arthur Andersen LLP as SNC's auditors for 1997.
See "THE SNC MEETING" and "ADDITIONAL MATTERS RELATING TO THE SNC MEETING--
Election of Directors," "--Approval of Amendment to SNC Articles," "--Approval
of Amendment to SNC Bylaws," "--Approval of Amendment to Directors' Plan" and
"--Appointment of Auditors."
This Joint Proxy Statement/Prospectus is also being furnished to the holders
of the common stock, par value $4.00 per share (the "UCB Common Stock"), of
UCB in connection with the solicitation of proxies by the Board of Directors
of UCB (the "UCB Board") for use at the annual meeting of shareholders of UCB,
or any adjournment or postponement thereof (the "UCB Meeting"), to be held on
April 22, 1997, at 10:00 a.m., local time, at the UCB Support Services
Building, Highway 701 North, Whiteville, North Carolina. At the UCB Meeting,
the shareholders of UCB will be asked to consider and vote upon a proposal to
approve the Reorganization Agreement and the Plan of Merger. Shareholders of
UCB will also be asked to consider and vote upon a proposal to elect 12
directors of UCB for terms expiring at the earlier of the Effective Time (as
defined herein) or the date of the 1998 annual meeting of UCB shareholders.
See "THE UCB MEETING" and "ADDITIONAL MATTERS RELATING TO THE UCB MEETING--
Election of Directors."
The Reorganization Agreement and the Plan of Merger provide for the merger
of UCB with and into SNC (the "Merger"). As a result of the Merger, each
issued and outstanding share of UCB Common Stock (other than shares held by
dissenting shareholders) will be converted into and exchanged for 1.135 shares
of SNC Common Stock, subject to certain possible upward adjustment as
described herein (the "Exchange Ratio"). The Exchange Ratio is adjustable
upward only if certain conditions are met concerning the reported price of SNC
Common Stock, and then only with the concurrence of SNC. The UCB Board has the
right to elect to terminate the Reorganization Agreement if such conditions
should occur, in which case the SNC Board would be required to determine
whether to proceed with the Merger at a higher Exchange Ratio. In making this
determination, the principal factors the SNC Board would consider include,
without limitation, the projected effect of the Merger on SNC's pro forma
earnings and book value per share and whether SNC's assessment of UCB's
earning potential as part of SNC justifies the issuance of a greater number of
SNC's shares. If the SNC Board should decline to adjust the Exchange Ratio,
UCB may elect to proceed without adjustment. In making such determination, the
principal factors the UCB Board would consider include, without limitation,
whether the Merger remains in the best interest of UCB and its shareholders,
despite a decline in the SNC Common Stock price, and whether the consideration
to be received by the holders of UCB Common Stock remains fair from a
financial point of view. See "THE MERGER--Exchange Ratio."
This Joint Proxy Statement/Prospectus also constitutes a prospectus of SNC
with respect to up to approximately 27.9 million shares of SNC Common Stock to
be issued to holders of the outstanding shares of UCB Common Stock in
accordance with the Reorganization Agreement and the Plan of Merger. The SNC
Common Stock is listed for trading on the New York Stock Exchange, Inc. (the
"NYSE") under the trading symbol "SNB." On March 13, 1997, the last sale price
of SNC Common Stock as reported on the NYSE Composite Transactions List was
$40.125. The UCB Common Stock is listed for trading on the Nasdaq National
Market under the trading symbol "UCAR." On March 13, 1997, the last sale price
of UCB Common Stock as reported on the Nasdaq National Market was $45.00. On
November 1, 1996, the last trading day before the public announcement of the
proposed Merger, the last reported sale price of UCB Common Stock on the
Nasdaq National Market was $27.50.
This Joint Proxy Statement/Prospectus, the Notices of Meeting and the
accompanying proxy cards are first being mailed to the shareholders of SNC and
UCB on or about March 19, 1997.
NEITHER THE MERGER NOR THE SECURITIES TO BE ISSUED PURSUANT TO THIS JOINT
PROXY STATEMENT/PROSPECTUS HAVE BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE SHARES OF SNC COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF SNC AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
The date of this Joint Proxy Statement/Prospectus is March 19, 1997.
<PAGE>
AVAILABLE INFORMATION
SNC and UCB are each subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the
following Regional Offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. The Commission maintains a World Wide
Web site on the Internet at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission, including SNC and UCB.
Shares of SNC Common Stock and UCB Common Stock are, respectively, listed on
the NYSE and traded on the Nasdaq National Market, and proxy statements,
reports and other information concerning SNC and UCB can also be inspected and
copied at the offices of the NYSE, 20 Broad Street, New York, New York 10005
and the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006, respectively.
This Joint Proxy Statement/Prospectus constitutes part of a Registration
Statement on Form S-4 (together with all amendments, exhibits and schedules
thereto, the "Registration Statement") filed by SNC with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of SNC Common Stock to be issued in the Merger. This Joint Proxy
Statement/Prospectus does not include all of the information set forth in the
Registration Statement, as permitted by the rules and regulations of the
Commission. The Registration Statement, including any amendments, schedules
and exhibits filed or incorporated by reference as a part thereof, is
available for inspection and copying as set forth above. Statements contained
in this Joint Proxy Statement/Prospectus or in any document incorporated
herein by reference as to the contents of any contract or other document
referred to herein or therein are not necessarily complete and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or such other document, and
each such statement shall be deemed qualified in its entirety by such
reference.
The information contained herein with respect to SNC has been provided by
SNC, and the information contained herein with respect to UCB prior to the
Merger has been provided by UCB.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING
OF SECURITIES MADE HEREBY OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY SNC OR UCB. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES COVERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS OR A SOLICITATION
OF A PROXY IN ANY JURISDICTION WHERE, OR TO OR FROM ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF SNC OR UCB SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by SNC with the Commission under
the Exchange Act are incorporated herein by reference:
(a) SNC's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
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(b) SNC's Current Report on Form 8-K dated January 14, 1997;
(c) The description of SNC Common Stock in SNC's registration statement
filed under the Exchange Act with respect to SNC Common Stock, including
all amendments and reports filed for the purpose of updating such
description; and
(d) SNC's Registration Statement on Form 8-A, dated January 10, 1997,
with respect to the adoption of its shareholder rights plan.
UCB's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
previously filed by UCB with the Commission under the Exchange Act is
incorporated herein by reference.
All documents filed by SNC or UCB pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the SNC Meeting and the UCB Meeting shall be
deemed to be incorporated by reference into this Joint Proxy
Statement/Prospectus and to be a part hereof from the date of the filing of
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER
THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE HEREIN) ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN
OR ORAL REQUEST BY ANY PERSON, INCLUDING ANY BENEFICIAL OWNER OF UCB COMMON
STOCK, TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS HAS BEEN DELIVERED.
REQUESTS FOR DOCUMENTS RELATING TO SNC SHOULD BE DIRECTED TO INVESTOR
RELATIONS, SOUTHERN NATIONAL CORPORATION, 223 WEST NASH STREET, WILSON, NORTH
CAROLINA 27893 OR TELEPHONE: (919) 246-4219. REQUESTS FOR DOCUMENTS RELATING
TO UCB SHOULD BE DIRECTED TO HOWARD V. HUDSON, JR., SECRETARY, UNITED CAROLINA
BANCSHARES CORPORATION, 127 WEST WEBSTER STREET, WHITEVILLE, NORTH CAROLINA
28472 OR TELEPHONE: (910) 642-1496. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY SUCH REQUEST SHOULD BE RECEIVED BY APRIL 15, 1997.
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF SNC FOLLOWING THE CONSUMMATION OF THE MERGER, INCLUDING STATEMENTS
RELATING TO THE COST SAVINGS AND REVENUE ENHANCEMENTS THAT ARE EXPECTED TO BE
REALIZED FROM THE MERGER AND THE EXPECTED IMPACT OF THE MERGER ON SNC'S
FINANCIAL PERFORMANCE (SEE "THE MERGER--REASONS FOR THE MERGER"). THESE
FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. FACTORS
THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY
SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING
POSSIBILITIES: (1) EXPECTED COST SAVINGS FROM THE MERGER CANNOT BE FULLY
REALIZED; (2) DEPOSIT ATTRITION, CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE
MERGER IS GREATER THAN EXPECTED; (3) COMPETITIVE PRESSURE IN THE BANKING
INDUSTRY INCREASES SIGNIFICANTLY; (4) COSTS OR DIFFICULTIES RELATED TO THE
INTEGRATION OF THE BUSINESSES OF SNC AND UCB ARE GREATER THAN EXPECTED; (5)
REQUIRED OPERATIONAL DIVESTITURES ARE GREATER THAN EXPECTED; (6) CHANGES IN
THE
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INTEREST RATE ENVIRONMENT REDUCE MARGINS; (7) GENERAL ECONOMIC CONDITIONS,
EITHER NATIONALLY OR REGIONALLY, ARE LESS FAVORABLE THAN EXPECTED, RESULTING
IN, AMONG OTHER THINGS, A DETERIORATION IN CREDIT QUALITY; (8) CHANGES OCCUR
IN THE REGULATORY ENVIRONMENT; (9) CHANGES OCCUR IN BUSINESS CONDITIONS AND
INFLATION; AND (10) CHANGES OCCUR IN THE SECURITIES MARKETS. THE FORWARD-
LOOKING EARNINGS ESTIMATES INCLUDED IN THIS JOINT PROXY STATEMENT/PROSPECTUS
HAVE NOT BEEN EXAMINED OR COMPILED BY THE INDEPENDENT PUBLIC ACCOUNTANTS OF
SNC OR UCB, NOR HAVE SUCH ACCOUNTANTS APPLIED ANY PROCEDURES THERETO.
ACCORDINGLY, SUCH ACCOUNTANTS DO NOT EXPRESS AN OPINION OR ANY OTHER FORM OF
ASSURANCE ON THEM. FURTHER INFORMATION ON OTHER FACTORS THAT COULD AFFECT THE
FINANCIAL RESULTS OF SNC AFTER THE MERGER IS INCLUDED IN THE COMMISSION
FILINGS INCORPORATED BY REFERENCE HEREIN.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION...................................................... i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ i
SUMMARY.................................................................... 1
The SNC Meeting.......................................................... 1
The UCB Meeting.......................................................... 2
Parties to the Merger.................................................... 2
The Merger............................................................... 3
Comparative Market Prices and Dividends.................................. 8
Selected Historical Financial Data....................................... 9
Comparative Per Share Data............................................... 11
THE SNC MEETING............................................................ 13
General.................................................................. 13
Record Date, Voting Rights and Vote Required............................. 13
Voting and Revocation of Proxies......................................... 14
Solicitation of Proxies.................................................. 15
Recommendation of SNC Board.............................................. 15
THE UCB MEETING............................................................ 16
General.................................................................. 16
Record Dates, Voting Rights and Vote Requirements........................ 16
Voting and Revocation of Proxies......................................... 17
Solicitation of Proxies.................................................. 17
Recommendation of UCB Board.............................................. 18
THE MERGER................................................................. 19
General.................................................................. 19
Background of the Merger................................................. 19
Reasons for the Merger................................................... 21
Opinions of Financial Advisors........................................... 24
Exchange Ratio........................................................... 32
Exchange of UCB Common Stock Certificates................................ 35
The Reorganization Agreement............................................. 35
Interests of Certain Persons in the Merger............................... 40
Regulatory Considerations................................................ 47
Comparison of Shareholders' Rights....................................... 49
Dissenters' Rights....................................................... 53
Certain Federal Income Tax Consequences of the Merger.................... 55
Accounting Treatment..................................................... 56
Option Agreements........................................................ 56
Effect on Employees, Employee Benefit Plans and Stock Options............ 60
Restrictions on Resales by Affiliates.................................... 61
INFORMATION ABOUT SNC...................................................... 62
General.................................................................. 62
Subsidiaries............................................................. 62
Acquisitions............................................................. 62
Capital.................................................................. 63
Deposit Insurance Assessments............................................ 64
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
INFORMATION ABOUT UCB...................................................... 64
PRO FORMA CONDENSED FINANCIAL INFORMATION.................................. 65
DESCRIPTION OF SNC CAPITAL STOCK........................................... 72
General.................................................................. 72
Common Stock............................................................. 72
Preferred Stock.......................................................... 72
Shareholder Rights Plan.................................................. 72
Certain Provisions of the NCBCA, SNC Articles and SNC Bylaws............. 75
ADDITIONAL MATTERS RELATING TO THE SNC MEETING............................. 77
Security Ownership....................................................... 77
Election of Directors.................................................... 78
Section 16(a) Beneficial Ownership Reporting Compliance.................. 81
Compensation of Executive Officers....................................... 82
Retirement Plans......................................................... 83
Employment Contracts and Change in Control Agreements.................... 85
SNC Compensation Committee Report on Executive Compensation.............. 86
Compensation Committee Interlocks and Insider Participation.............. 89
Compensation of Directors................................................ 90
Transactions with Officers and Directors................................. 90
Performance Graph........................................................ 92
Approval of Amendment to SNC Articles.................................... 92
Approval of Amendment to SNC Bylaws...................................... 93
Approval of Amendment to Directors' Plan................................. 93
Appointment of Auditors.................................................. 95
Proposals for 1998 Annual Meeting........................................ 95
Other Business........................................................... 95
ADDITIONAL MATTERS RELATING TO THE UCB MEETING............................. 96
Security Ownership....................................................... 96
Election of Directors.................................................... 97
Compensation of Executive Officers....................................... 100
Long Term Incentive Plan................................................. 101
Retirement Plans......................................................... 103
Employment Contracts and Change in Control Agreements.................... 104
UCB Personnel Committee Report on Executive Compensation................. 105
Compensation Committee Interlocks and Insider Participation.............. 108
Transactions with Officers and Directors................................. 108
Performance Graph........................................................ 109
Appointment of Auditors.................................................. 109
Section 16(a) Beneficial Ownership Reporting Compliance.................. 110
Proposals for 1998 Annual Meeting........................................ 110
Other Business........................................................... 110
LEGAL MATTERS.............................................................. 110
EXPERTS.................................................................... 110
Appendix I--Agreement and Plan of Reorganization and Plan of Merger
Appendix II--Opinion of Wheat First Butcher Singer
Appendix III--Opinion of Alex. Brown & Sons Incorporated
Appendix IV--Article 13 of the North Carolina Business Corporation Act
</TABLE>
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SUMMARY
The following summary is intended only to highlight certain information
contained elsewhere in this Joint Proxy Statement/Prospectus. This summary is
not intended to be complete and is qualified in its entirety by the more
detailed information contained elsewhere in this Joint Proxy
Statement/Prospectus, the Appendices hereto and the documents incorporated by
reference or otherwise referred to herein. Shareholders are urged to review
carefully this entire Joint Proxy Statement/Prospectus, including the
Appendices hereto. Information herein relating to UCB Common Stock has been
adjusted to give effect to a three-for-two stock split effected in the form of
a 50% stock dividend declared January 17, 1996. As used in this Joint Proxy
Statement/Prospectus, the terms "SNC" and "UCB" refer to those entities,
respectively, and, where the context requires, to those entities and their
respective subsidiaries.
THE SNC MEETING
The SNC Meeting will be held on April 22, 1997, at 11:00 a.m., local time, at
the Charlotte Convention Center, 501 South College Street, Charlotte, North
Carolina. At the SNC Meeting, the shareholders of SNC will consider and vote
upon proposals (a) to approve the Merger Proposal, which includes the
Reorganization Agreement and the Plan of Merger attached hereto as Appendix I
and the related issuance of up to approximately 27.9 million shares of SNC
Common Stock, (b) to elect eight directors of SNC for three-year terms expiring
in 2000, (c) to approve an amendment to Article I of the SNC Articles to change
SNC's name to "BB&T Corporation," (d) to approve an amendment to Article III,
Section 2 of the SNC Bylaws to increase the maximum number of directors from 25
to 30, (e) to approve an amendment to the Directors' Plan to increase the
number of shares of SNC Common Stock issuable under such plan from 400,000
shares to 900,000 shares and (f) to ratify the reappointment of Arthur Andersen
LLP as SNC's auditors for 1997. On March 3, 1997, the record date for the SNC
Meeting (the "SNC Record Date"), there were approximately 44,297 holders of
record of the 109,541,859 shares of SNC Common Stock then outstanding and
entitled to vote at the SNC Meeting.
The affirmative vote of the holders of a majority of the outstanding shares
of SNC Common Stock is required to approve the Merger Proposal. As of the SNC
Record Date, directors and executive officers of SNC and their affiliates
beneficially owned 2,779,017 shares or 2.54% of the SNC Common Stock entitled
to vote at the SNC Meeting, all of which are expected to be voted in favor of
the Merger Proposal. In addition, as of the SNC Record Date, SNC's banking
subsidiaries held of record or in the name of nominees 15,938,239 shares (or
approximately 14.55% of the outstanding shares) of SNC Common Stock as
fiduciary for the beneficiaries of certain trusts and estates and as agent, and
had voting power over 1,887,269 of such shares (representing 1.72% of the
outstanding shares). The directors and executive officers of UCB and their
affiliates beneficially owned, as of the SNC Record Date, a total of less than
1% of the outstanding shares of SNC Common Stock. On the SNC Record Date, UCB
and its subsidiaries owned and intended to vote on their own account or in
fiduciary capacities a total of less than 1% of the outstanding shares of SNC
Common Stock.
The election of each director nominee requires the affirmative vote of a
plurality of the shares of SNC Common Stock voted in the election of directors;
holders of SNC Common Stock do not have cumulative voting rights in the
election of directors. The proposed amendment to the SNC Articles will be
approved if the votes cast in favor of the proposal exceed the votes cast
opposing it. Approval of the proposed amendment to the SNC Bylaws requires the
affirmative vote of two-thirds of the total number of shares of SNC Common
Stock outstanding. In accordance with the requirements of the NYSE, approval of
the proposed amendment to the Directors' Plan requires the affirmative vote of
a majority of the votes cast on the proposal. Under such requirement, the
number of votes cast must represent over 50% of the shares entitled to vote on
the proposal. Ratification of the reappointment of Arthur Andersen LLP as SNC's
auditors for 1997 requires the affirmative vote of a majority of the shares of
SNC Common Stock voted on the matter. See "THE SNC MEETING" and "ADDITIONAL
MATTERS RELATING TO THE SNC MEETING."
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THE UCB MEETING
The UCB Meeting will be held on April 22, 1997, at 10:00 a.m., local time, at
the UCB Support Services Building, Highway 701 North, Whiteville, North
Carolina. At the UCB Meeting, the shareholders of UCB will consider and vote
upon proposals (a) to approve the Reorganization Agreement and the Plan of
Merger attached hereto as Appendix I and (b) to elect 12 directors of UCB for
terms expiring at the earlier of the Effective Time or the date of the 1998
annual meeting of UCB shareholders. On March 3, 1997, the record date for the
UCB Meeting (the "UCB Record Date"), there were approximately 10,200 holders of
record of the 24,383,978 shares of UCB Common Stock then outstanding and
entitled to vote at the UCB Meeting.
The affirmative vote of a majority of all shares of UCB Common Stock entitled
to be cast on the proposal is required to approve the Reorganization Agreement
and the Plan of Merger. As of the UCB Record Date, the directors and executive
officers of UCB and their affiliates beneficially owned 1,110,709 shares, or
4.56%, of the UCB Common Stock entitled to vote at the UCB Meeting, all of
which are expected to be voted in favor of the Reorganization Agreement and the
Plan of Merger. The directors and executive officers of SNC and their
affiliates beneficially owned, as of the UCB Record Date, a total of less than
1% of the outstanding shares of UCB Common Stock. On the UCB Record Date, SNC
and its subsidiaries owned and intended to vote on their own account or in
fiduciary capacities a total of less than 1% of the outstanding shares of UCB
Common Stock.
As of the UCB Record Date various subsidiaries of UCB as fiduciary,
custodians and agents, had sole or shared voting power over 288,556 shares, or
1.18% of the issued and outstanding shares, of UCB Common Stock under trust
agreements and other instruments and agreements. It is the policy of these
subsidiaries not to vote such shares in the absence of instructions from other
appropriate parties having an interest in such stock, such as co-fiduciaries
and participants in such plans, unless the subsidiary has sole authority with
respect to shares thereto. In addition, a subsidiary of UCB is the trustee of
UCB's Dollar Plus Savings Plan and Trust (the "UCB Savings Plan") and may,
under applicable authority, have certain residual fiduciary responsibilities
with respect to the voting of any unvoted, allocated shares of UCB Common Stock
held in the UCB Savings Plan. As of the UCB Record Date, there were 2,577,917
allocated shares, or 10.57% of the issued and outstanding shares of UCB Common
Stock, held by the UCB Savings Plan. See "ADDITIONAL MATTERS RELATING TO THE
UCB MEETING--Security Ownership."
The election of each director nominee requires the affirmative vote of a
plurality of the shares of UCB Common Stock voted in the election of directors;
holders of UCB Common Stock do not have cumulative voting rights in the
election of directors. See "THE UCB MEETING" and "ADDITIONAL MATTERS RELATING
TO THE UCB MEETING."
PARTIES TO THE MERGER
SNC
SNC is a multi-bank holding company headquartered in Winston-Salem, North
Carolina. SNC conducts its operations in North Carolina, South Carolina and
Virginia primarily through its commercial banking subsidiaries and, to a lesser
extent, through its other subsidiaries. SNC's bank subsidiaries are Branch
Banking and Trust Company ("BB&T-NC"), a North Carolina chartered bank which
currently operates 299 banking offices throughout North Carolina; Branch
Banking and Trust Company of South Carolina ("BB&T-SC"), a South Carolina
chartered bank which currently operates 95 banking offices throughout South
Carolina; Branch Banking and Trust Company of Virginia ("BB&T-VA"), a Virginia
chartered bank which currently operates 21 banking offices in the Hampton Roads
region of Virginia; and Fidelity Federal Savings Bank ("FFSB"), a federally
chartered savings bank that operates seven banking offices in the Richmond,
Virginia area.
The mailing address and telephone number of SNC's principal executive offices
are 200 West Second Street, Winston-Salem, North Carolina 27101, (910) 733-
2000. Additional information with respect to SNC and its
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subsidiaries is included elsewhere in this Joint Proxy Statement/Prospectus and
in documents incorporated by reference in this Joint Proxy
Statement/Prospectus. See "AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" and "INFORMATION ABOUT SNC."
UCB
UCB is a North Carolina bank holding company headquartered in Whiteville,
North Carolina which was incorporated in 1969. At December 31, 1996, UCB had
total consolidated assets of approximately $4.49 billion, total consolidated
deposits of approximately $4.05 billion, and total consolidated shareholders'
equity of $350.5 million. UCB provides a broad range of financial services
through its two wholly owned bank subsidiaries, United Carolina Bank ("UCB-NC")
and United Carolina Bank of South Carolina ("UCB-SC"), which operate 155 branch
offices in 89 communities in the two states.
The mailing address and telephone number of UCB's principal executive offices
are 127 West Webster Street, Whiteville, North Carolina 28472, (910) 642-1496.
Additional information with respect to UCB and its subsidiaries is included in
documents incorporated by reference in this Joint Proxy Statement/Prospectus.
See "AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE"
and "INFORMATION ABOUT UCB."
THE MERGER
General
At the Effective Time, UCB will be merged with and into SNC, and SNC will be
the surviving corporation in the Merger. As soon as practicable after the
Effective Time, UCB-NC and UCB-SC will be merged into BB&T-NC and BB&T-SC,
respectively, with BB&T-NC and BB&T-SC as the surviving entity in each case
(the "Bank Mergers").
Exchange Ratio
Upon consummation of the Merger, each share of UCB Common Stock outstanding
at the Effective Time (other than shares held by dissenting shareholders) will
be converted into the right to receive 1.135 shares of SNC Common Stock,
subject to possible upward adjustment as described in the following paragraph.
In the event that either:
(a) both (i) the average closing price of SNC Common Stock for the ten
full trading days ending on the date the Board of Governors of the Federal
Reserve System (the "Federal Reserve") approves the Merger (the "Average
Closing Price") is less than $28.50 and (ii) the number obtained by
dividing the Average Closing Price by $33.50 is less than the number
obtained by (A) dividing the weighted average, as set forth in the
Reorganization Agreement, of the closing prices of a specified index of 19
bank stocks on the date the Federal Reserve approves the Merger by the
weighted average of the closing prices of such stocks on November 1, 1996
and (B) subtracting 0.15, or
(b) the Average Closing Price is less than $27.00,
then UCB would have the right to terminate the Reorganization Agreement unless
SNC elects to increase the Exchange Ratio to a number, calculated pursuant to
the Reorganization Agreement, such that holders of UCB Common Stock would
receive consideration having an implied market value (based on the Average
Closing Price) of $32.35 per share of UCB Common Stock (in the case of
termination pursuant to (a) above) or $30.65 per share of UCB Common Stock (in
the case of termination pursuant to (b) above). Under no circumstances would
the Exchange Ratio be less than 1.135 shares of SNC Common Stock for each share
of UCB Common Stock.
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No fractional shares of SNC Common Stock will be issued in the Merger.
Holders of UCB Common Stock otherwise entitled to a fractional share will be
paid an amount in cash determined by multiplying the fractional part of such
share of SNC Common Stock by the closing price of such common stock on the NYSE
Composite Transactions List on the last trading day preceding the consummation
of the Merger. See "THE MERGER--Exchange Ratio."
Effective Date and Time of the Merger
The closing of the transactions contemplated by the Reorganization Agreement
will take place on the business day designated by SNC that is within 30 days
following the satisfaction of the conditions to the consummation of the Merger,
or such later date as the parties may otherwise agree. The Merger will be
effective on the date and at the time (the "Effective Time") specified in the
Articles of Merger to be filed with the Secretary of State of North Carolina.
The filing of the Articles of Merger is anticipated to take place within 45
days following the date on which the Reorganization Agreement and the Plan of
Merger are approved by the SNC shareholders and UCB shareholders. See "THE
MERGER--The Reorganization Agreement--Effective Date and Time of the Merger."
Recommendations of the Boards of Directors; Reasons for the Merger
The SNC Board and the UCB Board have each unanimously approved the
Reorganization Agreement and the Plan of Merger and the transactions
contemplated thereby. The SNC Board and the UCB Board believe that the Merger
is in the best interests of SNC and UCB, respectively, and their respective
shareholders and recommend that such shareholders vote "FOR" the matters to be
voted upon by such shareholders in connection with the Merger. For further
discussion of the factors considered by the SNC Board and the UCB Board in
reaching their respective conclusions, see "THE MERGER--Background of the
Merger" and "--Reasons for the Merger."
Opinions of Financial Advisors
Wheat First Butcher Singer ("Wheat First"), the financial advisor to UCB in
connection with the Merger, has delivered its written opinion (the "Wheat First
Opinion") to the UCB Board that, based upon and subject to various
considerations set forth in such opinion and as of the date of such opinion,
the Exchange Ratio is fair, from a financial point of view, to the holders of
UCB Common Stock. Alex. Brown & Sons Incorporated ("Alex. Brown"), the
financial advisor to SNC in connection with the Merger, has delivered its
written opinion (the "Alex. Brown Opinion") to the SNC Board that, based upon
and subject to various considerations set forth in such opinion and as of the
date of such opinion, the Exchange Ratio is fair, from a financial point of
view, to SNC. The full texts of the Wheat First Opinion and the Alex. Brown
Opinion, each updated to the date of this Joint Proxy Statement/Prospectus, are
set forth in Appendices II and III, respectively, to this Joint Proxy
Statement/Prospectus and each should be read in its entirety with respect to
the procedures followed, assumptions made, limitations on the reviews
undertaken, and other matters considered in connection with rendering such
opinion. See "THE MERGER--Opinions of Financial Advisors."
Conditions to the Merger
The consummation of the Merger is subject to various conditions, including
the approval of the Reorganization Agreement and the Plan of Merger by the
shareholders of SNC and the shareholders of UCB, receipt of necessary
regulatory approvals, receipt of a legal opinion regarding the federal income
tax consequences of the Merger and other customary conditions to closing. See
"THE MERGER--The Reorganization Agreement--Conditions to the Merger."
Waiver; Amendment; Termination; Expenses
Prior to the Effective Time, any provision of the Reorganization Agreement
(except with respect to any required regulatory approval) may be (a) waived by
the party benefited by the provision or (b) amended or
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modified at any time, by mutual agreement of the parties, except that, after
the UCB Meeting the consideration to be received by the UCB shareholders for
each share of UCB Common Stock may not thereby be decreased.
The Reorganization Agreement may be terminated and the Merger abandoned (a)
by the mutual consent of the parties, (b) by either party if the other party
materially breaches any of its covenants or agreements contained in the
Reorganization Agreement and fails to cure by the earlier of 30 days after
notice of such breach and the Effective Time, (c) by either party in the event
of an inaccuracy of any representation or warranty of the other party contained
in the Reorganization Agreement that would provide the nonbreaching party the
ability to refuse to consummate the Merger under the applicable standard set
forth in the Reorganization Agreement (generally, inaccuracies that in the
aggregate have or are reasonably likely to have a material adverse effect on
the breaching party, or inaccuracies in the representations and warranties
concerning capitalization other than those that are de minimus in amount) and
such inaccuracy has not been cured by the earlier of 30 days after notice of
such inaccuracy and the Effective Time, (d) by either party in the event that
the Merger is not consummated by September 30, 1997 and the party seeking to
terminate has not breached its representations, warranties, covenants or
undertakings in the Reorganization Agreement, or (e) by either party, in the
event (i) any of the regulatory approvals required for consummation of the
Merger and the other transactions contemplated by the Reorganization Agreement
have been denied and the time period for appeals and requests for
reconsideration have run, (ii) any required shareholder approval is not
obtained at the UCB Meeting or the SNC Meeting or (iii) any of the other
conditions precedent to the obligations of the other party cannot be satisfied
or fulfilled before the scheduled date of the closing of the transactions
contemplated by the Reorganization Agreement (the "Closing Date") and the party
seeking to terminate has not breached its representations, warranties,
covenants or undertakings in the Reorganization Agreement. In addition, the
Reorganization Agreement may be terminated by the UCB Board if certain
conditions concerning the trading price of SNC Common Stock are met, unless SNC
in turn determines to increase the Exchange Ratio. See "THE MERGER--Exchange
Ratio."
Each party to the Reorganization Agreement will bear all expenses incurred by
it in connection with the Reorganization Agreement and the transactions
contemplated thereby, except that printing expenses and Commission registration
fees will be borne 70% by SNC and 30% by UCB. See "THE MERGER--The
Reorganization Agreement--Waiver; Amendment; Termination; Expenses."
Interests of Certain Persons in the Merger
Certain members of UCB's management and the UCB Board have interests in the
Merger in addition to their interests as shareholders of UCB generally. These
interests relate to: (a) the election of four members of the UCB Board,
including E. Rhone Sasser, Chairman and Chief Executive Officer of UCB and UCB-
NC, to the SNC Board, the election of the eight remaining members of the UCB
Board to the Board of Directors of BB&T-NC, and the election of three
individuals serving on the UCB-SC Board to the Board of Directors of BB&T-SC;
(b) the appointment of one executive of UCB as a Regional President of UCB-NC,
three executives of UCB as Executive Vice Presidents of UCB-NC, and three
executives of UCB as Senior Vice Presidents of UCB-NC; (c) the entering into a
Settlement and Non-Competition Agreement with Mr. Sasser in exchange for
termination of his existing employment agreement with UCB and his agreement not
to compete with SNC (pursuant to which agreement Mr. Sasser will receive
payments the net present value of which is estimated to be $6.4 million, which
payments do not include various additional benefits Mr. Sasser has accrued and
will receive in the form of payments under UCB's defined benefit, non-
contributory retirement plan (the "UCB Pension Plan") and UCB's Benefit
Equivalency Plan (the "BEP") in an aggregate annual amount of $184,350 and a
payment, at the Effective Time, under UCB's 1994 Long-Term Incentive Plan (the
"LTIP") in the amount of approximately $1.1 million); (d) the entering into
employment agreements with seven other executive officers of UCB (who, together
with Mr. Sasser, are referred to below as the Executive Officer Group) in
exchange for termination of their existing employment agreements with UCB
(which agreements provide for such executive officers to receive (i) base
salaries equal to the base salaries currently paid to them by UCB, subject to
adjustment, (ii) annual bonuses under an existing incentive plan of SNC, (iii)
the grant of options to purchase SNC Common Stock under an existing stock
option plan of SNC and (iv) certain other benefits); (e) the assumption by SNC
of
5
<PAGE>
outstanding stock options granted by UCB on a basis that reflects the Exchange
Ratio, which options entitle the Executive Officer Group to purchase in the
aggregate 101,171 shares of SNC Common Stock and have an aggregate value of
approximately $4.4 million; (f) the vesting of various LTIP awards granted to
members of the Executive Officer Group having an aggregate value of
approximately $3.6 million (including the $1.1 million LTIP payment to Mr.
Sasser described above) and which become payable as to any such person upon
consummation of the Merger if such person does not become an employee of SNC or
UCB-NC after the Effective Time; (g) the eligibility of the former employees of
UCB who become employees of SNC for certain employee benefits; (h) the
continued indemnification by SNC of the former directors, officers, employees
and agents of UCB and its subsidiaries following consummation of the Merger;
and (i) the commitment by SNC to maintain a certain employment base in the
Whiteville, North Carolina community and to make certain charitable
contributions totalling $1 million. See "THE MERGER--Interests of Certain
Persons in the Merger."
Regulatory Considerations
The Merger is subject to the approval of the Federal Reserve and the South
Carolina State Board of Financial Institutions (the "SC Board"). Although not a
condition to the consummation of the Merger, the Bank Mergers must be approved
by the Federal Deposit Insurance Corporation (the "FDIC"), as well as by the
North Carolina Commissioner of Banks (the "NC Commissioner") and the SC Board.
SNC submitted the required applications relating to the Merger to the
appropriate regulatory authorities in February 1997, and expects to submit the
required applications relating to the Bank Mergers in the second quarter of
1997. There can be no assurance that those applications will be approved or as
to the date of any such approvals. See "THE MERGER--Regulatory Considerations."
Comparison of Shareholders' Rights
The rights of the shareholders of UCB currently are determined by the North
Carolina Business Corporation Act ("NCBCA"), the Restated Charter of UCB (the
"UCB Articles") and the Bylaws of UCB (the "UCB Bylaws"). At the Effective
Time, the shareholders of UCB (other than dissenting shareholders) will become
shareholders of SNC. Their rights as shareholders will then be determined by
the NCBCA, the SNC Articles and the SNC Bylaws. See "THE MERGER--Comparison of
Shareholders' Rights" and "DESCRIPTION OF SNC CAPITAL STOCK."
Dissenters' Rights
Under North Carolina law, holders of SNC Common Stock or UCB Common Stock who
do not vote in favor of the Reorganization Agreement and the Plan of Merger and
who comply with certain notice requirements and other procedures will have the
right to dissent and to be paid cash for the "fair value" of their shares. The
"fair value" of SNC Common Stock as finally determined under such procedures
may be more or less than the trading price of SNC Common Stock at such time,
and such "fair value" of UCB Common Stock may be more or less than the
consideration to be received by other shareholders of UCB under the terms of
the Reorganization Agreement and the Plan of Merger. The procedures to be
followed by dissenting shareholders are described elsewhere in this Joint Proxy
Statement/Prospectus, and the text of the applicable statutory provisions is
set forth in Appendix IV to this Joint Proxy Statement/Prospecus. Failure to
follow these procedures precisely may result in the loss of dissenters' rights.
Dissenting shareholders who receive cash for their shares of SNC Common Stock
or UCB Common Stock pursuant to their dissenters' rights will recognize gain or
loss for federal income tax purposes. See "THE MERGER--Dissenters' Rights" and
"--Certain Federal Income Tax Consequences of the Merger."
Certain Federal Income Tax Consequences
The Merger has been structured to qualify as a nontaxable transaction under
the Internal Revenue Code of 1986, as amended (the "Code"). It is a condition
to the Merger that UCB and SNC receive an opinion from
6
<PAGE>
Womble Carlyle Sandridge & Rice, PLLC, counsel to SNC, to the effect that the
Merger will constitute one or more reorganizations under Section 368 of the
Code and that no gain or loss will be recognized by reason of the Merger by the
holders of UCB Common Stock to the extent that such shareholders exchange
shares of UCB Common Stock for shares of SNC Common Stock (gain or loss will be
recognized with respect to cash received in lieu of a fractional share). See
"THE MERGER--Certain Federal Income Tax Consequences of the Merger."
Accounting Treatment
The Merger is intended to be accounted for as a pooling of interests under
generally accepted accounting principles. It is a condition to the Merger that
SNC receive letters from Arthur Andersen LLP to the effect that the Merger will
qualify for pooling of interests accounting treatment. See "THE MERGER--
Accounting Treatment."
Option Agreements
As a condition to SNC entering into the Reorganization Agreement and to
increase the probability that the Merger will be consummated, SNC and UCB
entered into an option agreement, dated as of November 1, 1996 (the "SNC Option
Agreement"), pursuant to which SNC was granted an option to purchase up to
4,828,960 shares of UCB Common Stock (approximately 19.9% of the number of
shares of UCB Common Stock then outstanding), subject to adjustment, at an
exercise price of $30.50 per share (the "SNC Option"). In addition, SNC and UCB
have entered into a second option agreement, also dated as of November 1, 1996
(the "UCB Option Agreement" and together with the SNC Option Agreement, the
"Option Agreements"), pursuant to which UCB was granted an option to purchase
up to 10,806,121 shares of SNC Common Stock (approximately 9.9% of the number
of shares of SNC Common Stock then outstanding), subject to adjustment, at an
exercise price of $34.625 per share (the "UCB Option") and subject to a maximum
realizable profit of $25 million. Copies of the Option Agreements have been
filed as exhibits to the Registration Statement. The exercise of either the SNC
Option or the UCB Option is permitted only upon the occurrence of certain
events which generally relate to an actual or proposed acquisition of control
of UCB or SNC, respectively, by a third party or the acquisition by a third
party of a significant interest in the equity of UCB or SNC, respectively.
Neither the SNC Option nor the UCB Option is presently exercisable. See "THE
MERGER--Option Agreements."
Effect on Employees, Employee Benefit Plans and Stock Options
Each employee of UCB or any of its subsidiaries at the time of the Merger
will become, immediately following the Merger, an employee of SNC or one of its
subsidiaries upon substantially the same terms and conditions as in effect
immediately preceding the Effective Time, and will be eligible to receive
benefits comparable to those provided to similarly situated employees of SNC or
the appropriate SNC subsidiary. SNC will cause the 401(k) plan of UCB to be
merged with the 401(k) plan maintained by SNC and its subsidiaries, and the
account balances of the employees who are participants in the UCB plan will be
transferred to the accounts of such employees under the SNC 401(k) plan. The
parties also anticipate that SNC will cause the tax qualified defined benefit
pension plan of UCB to be merged with the tax qualified defined benefit plan of
SNC. In addition, at the time of the Merger, all rights with respect to UCB
Common Stock outstanding at the effective time pursuant to stock options
granted by UCB under the existing stock plans of UCB, whether or not
exercisable, will be converted into and become rights with respect to SNC
Common Stock on a basis that reflects the Exchange Ratio. See "THE MERGER--
Exchange Ratio" and "--Effect on Employees, Employee Benefit Plans and Stock
Options."
7
<PAGE>
COMPARATIVE MARKET PRICES AND DIVIDENDS
SNC Common Stock is listed on the NYSE under the symbol "SNB." UCB Common
Stock is included in the Nasdaq National Market under the symbol "UCAR." The
following table sets forth, for the periods indicated, the high and low sales
price of SNC Common Stock and UCB Common Stock on the NYSE Composite
Transactions List and the Nasdaq National Market, respectively, and cash
dividends paid per share. The prices do not include retail markups, markdowns
or commissions.
<TABLE>
<CAPTION>
SNC UCB(1)
---------------------- ----------------------
CASH CASH
HIGH LOW DIVIDEND HIGH LOW DIVIDEND
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended
March 31, 1997 (through
March 13, 1997)............... $40.88 $35.25 $ .27 $45.50 $38.88 $ .18
Quarter Ended
March 31, 1996................. 29.75 25.88 .23 26.25 21.67 .18
June 30, 1996.................. 31.75 28.88 .23 24.75 21.75 .18
September 30, 1996............. 33.88 28.63 .27 24.50 21.25 .18
December 31, 1996.............. 36.75 33.38 .27 40.38 23.25 .18
For year 1996................ 36.75 25.88 1.00 40.38 21.25 .72
Quarter Ended
March 31, 1995................. 22.38 18.88 .20 19.33 16.17 .146
June 30, 1995.................. 24.13 19.88 .20 20.67 19.33 .167
September 30, 1995............. 27.13 23.63 .23 24.50 20.17 .167
December 31, 1995.............. 27.00 25.63 .23 26.00 22.50 .167
For year 1995................ 27.13 18.88 .86 26.00 16.17 .647
</TABLE>
- --------
(1) For information with respect to provisions in the Reorganization Agreement
relating to UCB's ability to pay dividends on UCB Common Stock prior to the
Effective Time, see "THE MERGER--The Reorganization Agreement--Conduct of
UCB's and SNC's Business Prior to the Effective Time."
The following table sets forth the last reported sales price for shares of
SNC Common Stock and UCB Common Stock on November 1, 1996, the last trading day
before the public announcement of the proposed Merger, and March 13, 1997, on
the NYSE Composite Transactions List and the Nasdaq National Market,
respectively. The UCB Equivalent represents the last sales prices of a share of
SNC Common Stock on those dates multiplied by the Exchange Ratio of 1.135. The
Exchange Ratio may be subject to upward adjustment under certain circumstances.
See "THE MERGER--Exchange Ratio."
<TABLE>
<CAPTION>
UCB
DATE SNC UCB EQUIVALENT
- ---- ------- ------ ----------
<S> <C> <C> <C>
November 1, 1996...................................... $35.25 $27.50 $40.01
March 13, 1997........................................ $40.125 $45.00 $45.54
</TABLE>
SELECTED FINANCIAL DATA
The following selected historical financial information has been derived from
historical consolidated financial statements of SNC and UCB, respectively, and
should be read in conjunction with such historical consolidated financial
statements, and the notes thereto, which are incorporated herein by reference.
8
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA--SNC(1)
<TABLE>
<CAPTION>
AS OF/FOR THE YEARS ENDED DECEMBER 31
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income....... $ 1,606,613 $ 1,576,612 $ 1,339,542 $ 1,212,986 $ 1,218,407
Interest expense...... 778,120 813,942 586,296 509,110 592,675
----------- ----------- ----------- ----------- -----------
Net interest income... 828,493 762,670 753,246 703,876 625,732
Provision for loan and
lease losses......... 53,661 34,632 20,181 54,558 63,584
----------- ----------- ----------- ----------- -----------
Net interest income
after provision for
loan and lease
losses............... 774,832 728,038 733,065 649,318 562,148
Noninterest income.... 297,389 230,994 229,861 223,229 187,541
Noninterest expense... 654,053 681,228 589,795 667,441 513,649
----------- ----------- ----------- ----------- -----------
Income before income
taxes................ 418,168 277,804 373,131 205,106 236,040
Provision for income
taxes................ 134,504 91,463 129,289 112,717 84,322
----------- ----------- ----------- ----------- -----------
Net income............ $ 283,664 $ 186,341 $ 243,842 $ 92,389 $ 151,718
=========== =========== =========== =========== ===========
PER SHARE DATA
Primary earnings...... $ 2.56 $ 1.65 $ 2.21 $ 0.83 $ 1.51
Fully diluted
earnings............. 2.54 1.62 2.16 0.83 1.44
Cash dividends........ 1.00 0.86 0.74 0.64 0.50
Book value............ 15.82 15.04 13.44 12.63 12.71
AVERAGE BALANCE SHEET
DATA
Securities at carrying
value................ $ 5,176,841 $ 5,394,372 $ 5,340,070 $ 4,670,213 $ 3,998,587
Loans and leases(2)... 14,008,824 13,591,113 12,290,880 11,087,053 10,069,318
Other assets.......... 1,388,405 1,418,385 1,441,666 1,369,128 1,339,256
----------- ----------- ----------- ----------- -----------
Total assets........ $20,574,070 $20,403,870 $19,072,616 $17,126,394 $15,407,161
=========== =========== =========== =========== ===========
Deposits.............. $14,777,537 $14,251,176 $14,298,728 $13,546,050 $12,601,590
Other liabilities..... 2,278,429 3,422,090 2,624,611 1,590,357 1,453,887
Long-term debt........ 1,858,569 1,127,575 677,227 597,519 153,064
Common shareholders'
equity............... 1,644,376 1,530,684 1,397,907 1,318,325 1,132,815
Preferred
shareholders'
equity............... 15,159 72,345 74,143 74,143 65,805
----------- ----------- ----------- ----------- -----------
Total liabilities
and shareholders'
equity............. $20,574,070 $20,403,870 $19,072,616 $17,126,394 $15,407,161
=========== =========== =========== =========== ===========
PERIOD END BALANCES
Total assets.......... $21,246,562 $20,636,430 $19,971,602 $18,927,837 $16,016,224
Deposits.............. 14,953,914 14,684,056 14,314,154 14,594,952 13,044,173
Long-term debt........ 2,051,767 1,383,935 910,755 837,241 423,211
Shareholders' equity.. 1,729,169 1,711,342 1,525,548 1,420,790 1,275,877
SELECTED RATIOS
Rate of return on:
Average total
assets............. 1.38% 0.91% 1.28% 0.54% 0.98%
Average common
shareholders'
equity............. 17.21 11.84 17.07 6.61 12.99
Dividend payout....... 39.06 52.12 33.48 77.11 33.11
Average equity to
average assets....... 8.07 7.86 7.72 8.13 7.78
</TABLE>
- --------
(1) The selected historical financial data of SNC gives effect to the
acquisition by SNC of Regional Acceptance Corporation on September 1, 1996,
accounted for as a pooling of interests.
(2) Loans and leases are net of unearned income and the allowance for losses.
Amounts include loans held for sale.
9
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA--UCB(1)
<TABLE>
<CAPTION>
AS OF/FOR THE YEARS ENDED DECEMBER 31
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income....... $ 328,939 $ 304,091 $ 247,240 $ 214,748 $ 218,485
Interest expense...... 149,732 135,443 92,542 81,649 94,388
---------- ---------- ---------- ---------- ----------
Net interest income... 179,207 168,648 154,698 133,099 124,097
Provision for loan
losses............... 8,850 7,292 3,549 5,271 12,446
---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan and lease
losses............... 170,357 161,356 151,149 127,828 111,651
Noninterest income.... 52,115 47,061 44,878 42,730 39,777
Noninterest expense... 152,713 137,296 146,705 121,117 109,808
---------- ---------- ---------- ---------- ----------
Income before income
taxes................ 69,759 71,121 49,322 49,441 41,620
Provision for income
taxes................ 24,555 25,074 17,769 16,146 12,968
---------- ---------- ---------- ---------- ----------
Income before
cumulative effects of
accounting changes... 45,204 46,047 31,553 33,295 28,652
Cumulative effects of
changes in accounting
methods.............. -- -- (316) 1,030 --
---------- ---------- ---------- ---------- ----------
Net income.......... $ 45,204 $ 46,047 $ 31,237 $ 34,325 $ 28,652
========== ========== ========== ========== ==========
PER SHARE DATA(2):
Net income............ $ 1.87 $ 1.91 $ 1.30 $ 1.49 $ 1.27
Cash dividends
declared............. 0.72 .647 .56 .507 .44
Book value............ 14.41 13.39 11.77 11.33 10.39
AVERAGE BALANCE SHEET
DATA
Securities and short
term investments..... $ 960,907 $ 850,137 $ 710,542 $ 731,549 $ 734,816
Loans(3).............. 2,938,821 2,690,101 2,416,966 2,058,681 1,896,306
Other assets.......... 316,733 293,468 276,221 262,185 245,376
---------- ---------- ---------- ---------- ----------
Total assets........ $4,216,461 $3,833,698 $3,403,729 $3,052,415 $2,876,498
========== ========== ========== ========== ==========
Deposits.............. $3,799,831 $3,441,657 $3,025,209 $2,714,442 $2,565,490
Other liabilities..... 79,659 88,129 98,107 87,724 85,769
Long-term debt........ 2,811 2,885 2,427 1,234 1,049
Shareholders' equity.. 334,160 301,027 277,986 249,015 224,190
---------- ---------- ---------- ---------- ----------
Total liabilities
and shareholders'
equity............. $4,216,461 $3,833,698 $3,403,729 $3,052,415 $2,876,498
========== ========== ========== ========== ==========
PERIOD END BALANCES
Total assets.......... $4,487,843 $4,037,518 $3,553,724 $3,342,388 $2,971,124
Deposits.............. 4,049,426 3,637,652 3,138,586 2,999,456 2,630,694
Long-term debt........ 2,273 2,975 2,305 2,390 891
Shareholders' equity.. 350,469 323,148 282,598 269,839 234,897
SELECTED RATIOS
Rate of return on:
Average total
assets............. 1.07% 1.20% .92% 1.12% 1.00%
Average common
shareholders'
equity............. 13.53 15.30 11.24 13.78 12.78
Dividend payout....... 37.93 31.28 38.22 32.11 32.10
Average equity to
average assets....... 7.93 7.85 8.17 8.16 7.79
</TABLE>
- --------
(1) During 1996, UCB consummated mergers with Triad Bank and Seaboard Savings
Bank, SSB, Inc., both of which were accounted for as poolings of interests.
Accordingly, the consolidated financial statements have been restated to
include the accounts of Triad Bank and Seaboard Savings Bank, SSB, Inc. for
all periods presented.
(2) Per share amounts, other than cash dividends declared, have been adjusted
to reflect retroactively the impact of shares issued in connection with
acquisitions accounted for as poolings of interests and the three-for-two
stock split effected in the form of a 50% stock dividend declared January
17, 1996. Cash dividends per share have been adjusted to reflect
retroactively the stock split.
(3) Loans are net of unearned income and the allowance for losses. Amounts
include loans held for sale.
10
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth: (a) selected comparative per share data for
each of SNC and UCB on an historical basis; (b) selected unaudited pro forma
comparative per share data assuming that the Merger and SNC's acquisition of
Fidelity Financial Bankshares Corporation ("FFBC"), the parent company of FFSB,
which was completed on March 1, 1997 (the "FFBC Merger"), had been effective
during the periods presented for SNC and UCB combined; and (c) UCB pro forma
equivalent amounts, using the Exchange Ratio of 1.135 shares of SNC Common
Stock for each share of UCB Common Stock. The Exchange Ratio may be subject to
upward adjustment under certain circumstances. See "THE MERGER--Exchange
Ratio." The unaudited pro forma data has been prepared giving effect to the
Merger as a pooling of interests. For a description of the effect of pooling of
interests accounting on the Merger and the historical financial statements of
SNC, see "THE MERGER--Accounting Treatment." The comparative per share data
presented are based on and derived from, and should be read in conjunction
with, the historical consolidated financial statements and the related notes
thereto of each of SNC and UCB incorporated by reference herein.
<TABLE>
<CAPTION>
AS OF/FOR THE YEAR ENDED DECEMBER 31
--------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Earnings per common share
(1)(2)(3)(4)(7)
Primary
SNC historical....................... $ 2.56 $ 1.65 $ 2.21
UCB historical....................... 1.87 1.91 1.30
SNC and UCB pro forma................ 2.38 1.66 1.99
UCB pro forma equivalent(5).......... 2.70 1.88 2.26
SNC, UCB and FFBC pro forma.......... 2.34 1.64 1.97
Fully diluted
SNC historical....................... $ 2.54 $ 1.62 $ 2.16
UCB historical....................... 1.87 1.91 1.30
SNC and UCB pro forma................ 2.36 1.64 1.96
UCB pro forma equivalent(5).......... 2.68 1.86 2.22
SNC, UCB and FFBC pro forma.......... 2.32 1.62 1.94
Cash dividends declared per common
share(6)
SNC historical....................... $ 1.00 $ 0.86 $ 0.74
UCB historical....................... 0.72 0.65 0.56
SNC and UCB pro forma................ 1.00 0.86 0.74
UCB pro forma equivalent(5).......... 1.14 0.98 0.84
SNC, UCB and FFBC pro forma.......... 1.00 0.86 0.74
Shareholders' equity per common share
(end of period)(2)(3)(4)
SNC historical....................... $ 15.82 $ 15.04 $ 13.44
UCB historical....................... 14.41 13.39 11.77
SNC and UCB pro forma................ 14.90 14.08 12.55
UCB pro forma equivalent(5).......... 16.91 15.98 14.24
SNC, UCB and FFBC pro forma.......... 14.91 14.09 12.56
</TABLE>
11
<PAGE>
NOTES TO COMPARATIVE SHARE DATA
(UNAUDITED)
(1) Goodwill of $38.1 million was recorded resulting from the FFBC Merger to
represent the excess of the purchase price of $65.1 million plus estimated
capitalized merger costs of $300,000 less the aggregate exercise price of
FFBC's options of $782,827 over the fair market value of the net assets
acquired of $26.9 million. The SNC, UCB and FFBC pro forma earnings per
share amounts reflect the amortization of this goodwill over a 15-year
period using the straight-line method.
(2) During May 1995, SNC and UCB entered into a transaction wherein UCB
acquired 12 North Carolina branch offices which were required to be
divested by SNC in order to comply with limits imposed by the Federal
Reserve on deposit market share. In the acquisition, UCB assumed $178.7
million in deposits and purchased $26.8 million in loans from SNC. Two of
the branch banking offices acquired by UCB in the transaction with
aggregate deposits and loans of $32.7 million and $4.9 million,
respectively, were sold to third-party banks during the fourth quarter of
1995. UCB recorded a premium of $10.1 million for the assumed deposit base
of the branches retained. SNC recorded a total gain on divestiture of $12.3
million. As a result of SNC's indirect reacquisition of the remaining 10
branches in the Merger, a portion of the amortization recorded by UCB and
the gain recorded by SNC will be reclassified as intercompany. The
calculation of SNC and UCB pro forma shareholders' equity per common share
reflects the elimination of the unamortized deposit intangible and the
intercompany portion of the gain recorded in 1995. The earnings per share
calculations do not reflect these adjustments, nor do they reflect the
impact of UCB's reduced amortization expense, which totaled $1.8 million
and $1.4 million for the years ended December 31, 1996 and 1995,
respectively. No other periods are affected by this adjustment. SNC
anticipates that in connection with the Merger it will be required to
divest a portion of the remaining 10 branches in order to comply with the
deposit market share limitations of the Federal Reserve; however, SNC is
unable at this time to estimate the number of branches that will be
required to be divested.
(3) Certain material, nonrecurring adjustments of approximately $50 million
will be recorded in conjunction with the Merger. These adjustments include
amounts to effect the settlement of obligations under existing employment
contracts, severance pay for involuntary terminations, early retirement and
related employee benefits and amounts associated with branch closings and
divestitures and the consolidation of bank operations and systems. It is
estimated that $5 million of the expenses will be directly related to
effecting the Merger. The impact of these adjustments has been reflected in
the calculation of shareholders' equity per common share. The earnings per
share calculations do not reflect the impact of these adjustments.
(4) UCB elected to amortize the accumulated postretirement obligation related
to the adoption of SFAS No. 106 over a period of 20 years as a component of
the postretirement benefit cost. SNC elected to reflect the adoption of
SFAS No. 106 through the recording of a cumulative charge for this change
in accounting principle. The calculation of shareholders' equity per common
share reflects an adjustment to conform UCB's transition method to the
method elected by SNC. The accompanying earnings per share calculations do
not reflect adjustments for amounts previously recorded by UCB as
amortization of the unrecorded transition obligation, which amounted to
$394,000 each year for the years ended December 31, 1996, 1995 and 1994.
(5) UCB pro forma equivalent amounts are calculated by multiplying the SNC and
UCB pro forma combined amounts by the Exchange Ratio of 1.135 shares of SNC
Common Stock for each share of UCB Common Stock. The Exchange Ratio may be
subject to upward adjustment under certain circumstances. See "THE MERGER--
Exchange Ratio."
(6) Pro forma cash dividends declared per common share represent historical
dividends per share paid by SNC.
(7) SNC repurchased 1.64 million shares of SNC Common Stock in connection with
the FFBC Merger. The impact of this repurchase has not been reflected in
the pro forma earnings per common share amounts.
12
<PAGE>
THE SNC MEETING
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to the shareholders
of SNC as of the SNC Record Date and is accompanied by a form of proxy which
is solicited by the SNC Board for use at the SNC Meeting to be held on April
22, 1997, at 11:00 a.m., local time at the Charlotte Convention Center, 501
South College Street, Charlotte, North Carolina. At the SNC Meeting, the
shareholders of SNC will consider and vote upon proposals (a) to approve the
Merger Proposal, which includes the Reorganization Agreement and the Plan of
Merger attached as Appendix I to this Joint Proxy Statement/Prospectus and the
related issuance of up to approximately 27.9 million shares of SNC Common
Stock, (b) to elect eight members to the SNC Board for three-year terms
expiring in 2000, (c) to amend Article I of the SNC Articles to change SNC's
name to "BB&T Corporation," (d) to amend Article III, Section 2 of the SNC
Bylaws to increase the maximum number of directors of SNC from 25 to 30, (e)
to amend the Directors' Plan to increase the number of shares of SNC Common
Stock issuable under such plan from 400,000 shares to 900,000 shares and (f)
to ratify the reappointment of Arthur Andersen LLP as SNC's auditors for 1997
(collectively, the "SNC Matters"). Proxies may be voted on such other matters
as may properly come before the SNC Meeting at the discretion of the proxy
holders named therein. The SNC Board knows of no such other matters except
matters incidental to the conduct of the SNC Meeting.
Holders of SNC Common Stock are requested to complete, date and sign the
accompanying proxy and return it promptly to SNC in the enclosed postage
prepaid envelope.
RECORD DATE, VOTING RIGHTS AND VOTE REQUIRED
Only the holders of SNC Common Stock on the SNC Record Date (March 3, 1997)
are entitled to receive notice of and to vote at the SNC Meeting. On the SNC
Record Date, there were 109,541,859 shares of SNC Common Stock outstanding
which were held by approximately 44,297 holders of record. Each share of SNC
Common Stock outstanding on the SNC Record Date is entitled to one vote as to
each of the matters submitted at the SNC Meeting.
Pursuant to the NCBCA and the SNC Articles, approval of the Merger Proposal
will require the affirmative vote of the holders of a majority of the
outstanding shares of SNC Common Stock. FAILURE OF A HOLDER OF SNC COMMON
STOCK TO VOTE SUCH SHARES WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE
MERGER PROPOSAL.
The SNC Board consists of 24 persons. The SNC Board is divided into three
classes, with each class to be as nearly equal in number as possible. There
are eight nominees for election as directors who will serve for three-year
terms expiring in 2000. It is intended that the persons named in the
accompanying form of proxy will vote to elect the eight nominees listed
elsewhere in this Joint Proxy Statement/Prospectus as directors, unless
authority so to vote is withheld. Although management expects that each of the
nominees will be available for election, in the event a vacancy in the slate
of nominees is occasioned by an unexpected occurrence, it is intended that
shares of SNC Common Stock represented by proxies will be voted for the
election of a substitute nominee selected by the proxyholders named in the
accompanying form of proxy. The election of each nominee requires the
affirmative vote of a plurality of the shares of SNC Common Stock voted in the
election of directors. Holders of SNC Common Stock do not have cumulative
voting rights in the election of directors. See "ADDITIONAL MATTERS RELATING
TO THE SNC MEETING--Election of Directors."
The SNC Board has unanimously recommended to SNC's shareholders that Article
I of the SNC Articles be amended to change SNC's name to "BB&T Corporation."
This amendment would change only the name of SNC and would not affect its
continued corporate existence or business. The proposed amendment to the SNC
Articles will be approved if the votes cast in favor of the proposal exceed
the votes cast opposing it. See "ADDITIONAL MATTERS RELATING TO THE SNC
MEETING--Approval of Amendment to SNC Articles."
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Article III, Section 2 of the SNC Bylaws provides that the SNC Board shall
consist of not less than three nor more than 25 members. The SNC Board
currently consists of 24 members. The Reorganization Agreement provides that
SNC shall cause four current directors of UCB to be appointed to the SNC Board
following consummation of the Merger. See "THE MERGER--Interests of Certain
Persons in the Merger." The SNC Bylaws must be amended to increase the number
of directors to assist SNC in complying with its contractual obligation under
the Reorganization Agreement. Accordingly, the SNC Board has adopted, subject
to shareholder approval, an amendment to Article III, Section 2 of the SNC
Bylaws to increase the maximum number of directors from 25 to 30. The SNC
Board intends to submit this proposal to SNC shareholders regardless of
whether the Merger Proposal is approved. Approval of this proposed amendment
requires the affirmative vote of two-thirds of the outstanding shares of SNC
Common Stock. See "ADDITIONAL MATTERS RELATING TO THE SNC MEETING--Approval of
Amendment to SNC Bylaws."
The SNC Board has adopted, subject to shareholder approval, an amendment to
the Directors' Plan to increase the number of shares of SNC Common Stock
issuable under such plan from 400,000 shares to 900,000 shares. In accordance
with the requirements of the NYSE, approval of this proposed amendment
requires the affirmative vote of a majority of the votes cast on the proposal.
Under such requirement, the number of votes cast must represent over 50% of
the shares entitled to vote on the proposal. See "ADDITIONAL MATTERS RELATING
TO THE SNC MEETING--Approval of Amendment to Directors' Plan."
The Audit Committee of the SNC Board (the "SNC Audit Committee") has
reappointed the firm of Arthur Andersen LLP as independent auditors to examine
the books of SNC and subsidiaries for the year 1997, and to report on the
consolidated balance sheets, statements of income and other related statements
of SNC and its subsidiaries. Ratification of the reappointment of Arthur
Andersen LLP as SNC's auditors requires the affirmative vote of a majority of
the shares of SNC Common Stock voting on such matter. See "ADDITIONAL MATTERS
RELATING TO THE SNC MEETING--Appointment of Auditors."
As of the SNC Record Date, the directors and executive officers of SNC and
their affiliates beneficially owned a total of 2,779,017 shares, or 2.54% of
the issued and outstanding shares of SNC Common Stock, exclusive of shares
which may be acquired pursuant to the exercise of stock options or rights or
awards. Each director and executive officer of SNC has indicated such person's
intention to vote those shares of SNC Common Stock over which such person has
voting authority (other than in a fiduciary capacity) in favor of the SNC
Matters. In addition, as of the SNC Record Date, SNC's banking subsidiaries
held of record or in the name of nominees 15,938,239 shares (or approximately
14.55% of the outstanding shares) of SNC Common Stock as fiduciary for the
beneficiaries of certain trusts and estates and as agent, and had voting power
over 1,887,269 of such shares (representing 1.72% of the outstanding shares).
As of the SNC Record Date, the directors and executive officers of UCB and
their affiliates beneficially owned less than 1% of the issued and outstanding
shares of SNC Common Stock. Each director and executive officer of UCB has
indicated such person's intention to vote those SNC shares over which such
person has voting authority (other than in a fiduciary capacity) in favor of
the SNC Matters. As of the SNC Record Date, UCB and its subsidiaries owned and
intended to vote on their own account or in fiduciary capacities a total of
less than 1% of the outstanding shares of SNC Common Stock.
VOTING AND REVOCATION OF PROXIES
The shares of SNC Common Stock represented by properly completed proxies
received at or prior to the time for the SNC Meeting will be voted as directed
by the shareholders unless revoked as described below. If no instructions are
given, executed proxies will be voted "FOR" approval of the SNC Matters.
Shares with respect to which proxies have been marked as abstentions will not
be counted as votes cast. In addition, shares held in street name which have
been designated by brokers on proxy cards as not voted ("Broker Shares") will
not be counted as votes cast. Shares with respect to which proxies have been
marked as abstentions and Broker Shares, however, will be treated as shares
present for purposes of determining whether a quorum is present. If any other
matters are properly presented at the SNC Meeting and may be properly voted
on, the proxies solicited hereby will be voted on such matters at the
discretion of the proxy holders named therein. If necessary, the proxy holder
may vote in favor of a proposal to adjourn the SNC Meeting in order to permit
further solicitation of proxies in
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the event that there should not be sufficient votes to approve the SNC Matters
at the time of the SNC Meeting. However, in such event, voting authority will
be exercised only to the extent permissible under the applicable federal
securities laws and no proxy holder will vote any proxies voted "against"
approval of a particular SNC Matter "for" a proposal to adjourn the SNC
Meeting to solicit additional proxies for that particular SNC Matter. The SNC
Board is not aware of any other business to be presented at the SNC Meeting,
other than matters incidental to the conduct of the SNC Meeting. The
accompanying proxy is being solicited for the SNC Meeting called to consider
the SNC Matters and will not be used for any other meeting of the shareholders
of SNC.
The presence of a shareholder at the SNC Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with,
or by delivering a duly executed proxy bearing a later date to, the Secretary
of SNC at SNC's principal executive offices prior to the SNC Meeting, or by
attending the SNC Meeting and voting in person. The proxy will not be revoked
by the death or incapacity of the shareholder executing it unless, before the
shares are voted, notice of such death or incapacity is filed with the
Secretary of SNC or other person authorized to tabulate the votes.
BECAUSE APPROVAL OF THE MERGER PROPOSAL REQUIRES THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE OUTSTANDING SHARES OF SNC COMMON STOCK AND APPROVAL OF THE
PROPOSAL TO AMEND THE SNC BYLAWS REQUIRES THE AFFIRMATIVE VOTE OF TWO-THIRDS
OF THE OUTSTANDING SHARES OF SNC COMMON STOCK, ABSTENTIONS AND BROKER SHARES
WILL HAVE THE SAME EFFECT AS NEGATIVE VOTES AS TO SUCH MATTERS. ACCORDINGLY,
THE SNC BOARD URGES ITS SHAREHOLDERS TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE.
SOLICITATION OF PROXIES
SNC will pay 70%, and UCB will pay 30%, of the cost of printing and
registering the shares issuable pursuant to this Joint Proxy
Statement/Prospectus, and SNC will bear all other costs relating to the
solicitation of proxies in connection with the SNC Meeting. In addition to the
use of the mails, proxies may be solicited personally or by telephone or
facsimile by directors, officers and other employees of SNC, who will not be
specially compensated for such solicitation activities. Arrangements also may
be made with brokerage houses and other custodians, nominees and fiduciaries
for the forwarding of solicitation materials to the beneficial owners of
shares held of record by such persons, and such persons will be reimbursed for
their reasonable expenses incurred in connection therewith by SNC. SNC
presently intends to use the services of a proxy soliciting firm, Morrow &
Co., in connection with the solicitation of proxies for the SNC Meeting, at an
estimated fee of $7,500.
No person is authorized to give any information or to make any
representation not contained or incorporated by reference in this Joint Proxy
Statement/Prospectus and, if given or made, such information or representation
should not be relied upon as having been authorized by SNC, UCB or any other
person. The delivery of this Joint Proxy Statement/Prospectus will not, under
any circumstances, create any implication that there has been no change in the
affairs of SNC or UCB since the date of this Joint Proxy Statement/Prospectus.
RECOMMENDATION OF SNC BOARD
The SNC Board has unanimously adopted the Merger Proposal and believes that
the Merger Proposal is fair to and in the best interests of SNC and its
shareholders. The SNC Board unanimously recommends that SNC's shareholders
vote "FOR" approval of the Merger Proposal and the other SNC Matters. See "THE
MERGER--Background of the Merger," "--Reasons for the Merger," "ADDITIONAL
MATTERS RELATING TO THE SNC MEETING--Election of Directors," "--Approval of
Amendment to SNC Articles," "--Approval of Amendment to SNC Bylaws," "--
Approval of Amendment to Directors' Plan" and "--Appointment of Auditors."
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THE UCB MEETING
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to the shareholders
of UCB as of the UCB Record Date and is accompanied by a form of proxy which
is solicited by the UCB Board for use at the UCB Meeting to be held on April
22, 1997, at 10:00 a.m., local time, at the UCB Support Services Building,
Highway 701 North, Whiteville, North Carolina. At the UCB Meeting, the
shareholders will consider and vote upon proposals (a) to approve the
Reorganization Agreement and the Plan of Merger attached hereto as Appendix I
to this Joint Proxy Statement/Prospectus and (b) to elect 12 members to the
UCB Board for terms expiring at the earlier of the Effective Time or the date
of the 1998 annual meeting of UCB shareholders (collectively, the "UCB
Matters"). Proxies may be voted on such other matters as may properly come
before the UCB Meeting at the discretion of the proxy holders named therein.
The UCB Board knows of no such other matters except matters incidental to the
conduct of the UCB Meeting.
Holders of UCB Common Stock are requested to complete, date and sign the
accompanying proxy and return it promptly to UCB in the enclosed postage
prepaid envelope.
RECORD DATES, VOTING RIGHTS AND VOTE REQUIREMENTS
Only the holders of UCB Common Stock on the UCB Record Date are entitled to
receive notice of and to vote at the UCB Meeting. On the UCB Record Date there
were 24,383,978 shares of UCB Common Stock issued and outstanding which were
held by approximately 10,200 holders of record. Each share of UCB Common Stock
outstanding on the UCB Record Date is entitled to one vote as to each of the
matters submitted at the UCB Meeting.
Pursuant to the NCBCA and the UCB Articles, approval of the Reorganization
Agreement and the Plan of Merger will require the affirmative vote of a
majority of all shares of UCB Common Stock entitled to be cast on the
proposal. FAILURE OF A HOLDER OF UCB COMMON STOCK TO VOTE HIS SHARES WILL HAVE
THE SAME EFFECT AS A VOTE "AGAINST" THE REORGANIZATION AGREEMENT AND THE PLAN
OF MERGER.
The UCB Board currently consists of 13 persons who are elected annually for
one-year terms. One incumbent director will retire in accordance with UCB's
director retirement policy on the date of the UCB Meeting, having reached the
mandatory retirement age of 70. It is intended that the persons named in the
accompanying form of proxy as proxy holders will vote to elect the 12 nominees
listed elsewhere in this Joint Proxy Statement/Prospectus as directors, unless
authority so to vote is withheld. Although management expects that each of the
nominees will be available for election, in the event a vacancy in the slate
of nominees is occasioned by an unexpected occurrence, it is intended that
shares of UCB Common Stock represented by proxies will be voted for the
election of a substitute nominee selected by the persons named in the
accompanying form of proxy. The election of each nominee requires the
affirmative vote of a plurality of the shares of UCB Common Stock cast in the
election of directors. Holders of UCB Common Stock do not have cumulative
voting rights in the election of directors. See "ADDITIONAL MATTERS RELATING
TO THE UCB MEETING--Election of Directors."
As of the UCB Record Date, the directors and executive officers of UCB and
their affiliates beneficially owned a total of 1,110,709 shares, or 4.56%, of
the issued and outstanding shares of UCB Common Stock, exclusive of shares
which may be acquired pursuant to the exercise of stock options or rights or
awards. Each director and executive officer of UCB has indicated such person's
intention to vote those shares of UCB Common Stock over which such person has
voting authority (other than in a fiduciary capacity) in favor of the UCB
Matters. As of the UCB Record Date, the directors and executive officers of
SNC and their affiliates beneficially owned a total of less than 1% of the
issued and outstanding shares of UCB Common Stock. Each director and executive
officer of SNC has indicated such person's intention to vote those UCB shares
over which such person has voting authority (other than in a fiduciary
capacity) in favor of the UCB Matters. As of the UCB Record Date, SNC and its
subsidiaries owned and intended to vote on their own account or in fiduciary
capacities a total of less than 1% of the outstanding shares of UCB Common
Stock.
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As of the UCB Record Date various subsidiaries of UCB as fiduciary,
custodians and agents, had sole or shared voting power over 288,556 shares, or
1.18% of the issued and outstanding shares, of UCB Common Stock under trust
agreements and other instruments and agreements. It is the policy of these
subsidiaries not to vote such shares in the absence of instructions from other
appropriate parties having an interest in such stock, such as co-fiduciaries
and participants in such plans, unless the subsidiary has sole authority with
respect to shares thereto. In addition, a subsidiary of UCB is the trustee of
the UCB Savings Plan and may, under applicable authority, have certain
residual fiduciary responsibilities with respect to the voting of any unvoted,
allocated shares of UCB Common Stock held in the UCB Savings Plan. As of the
UCB Record Date, there were 2,577,917 allocated shares, or 10.57% of the
issued and outstanding shares, of UCB Common Stock, held by the UCB Savings
Plan. See "ADDITIONAL MATTERS RELATING TO THE UCB MEETING--Security
Ownership."
VOTING AND REVOCATION OF PROXIES
The shares of UCB Common Stock represented by properly executed proxies,
received at or prior to the time for the UCB Meeting, will be voted as
directed by the shareholders unless revoked as described below. If no
instructions are given, executed proxies will be voted "FOR" approval of the
UCB Matters. Shares with respect to which proxies have been marked as
abstentions will not be counted as votes cast. In addition, Broker Shares will
not be counted as votes cast. Shares with respect to which proxies have been
marked as abstentions and Broker Shares, however, will be treated as shares
present for purposes of determining whether a quorum is present. If any other
matters are properly presented at the UCB Meeting and may be properly voted
on, the proxies solicited hereby will be voted on such matters at the
discretion of the proxy holders named therein. If necessary, the proxy holder
may vote in favor of a proposal to adjourn the UCB Meeting in order to permit
further solicitation of proxies in the event that there should not be
sufficient votes to approve the UCB Matters at the time of the UCB Meeting.
However, in such event, voting authority will be exercised only to the extent
permissible under the applicable federal securities laws and no proxy holder
will vote any proxies voted "against" approval of a particular UCB Matter
"for" a proposal to adjourn the UCB Meeting to solicit additional proxies for
that particular UCB Matter. The UCB Board is not aware of any other business
to be presented at the UCB Meeting, other than matters incidental to the
conduct of the UCB Meeting. This proxy is being solicited for the UCB Meeting
called to consider the UCB Matters and will not be used for any other meeting
of the shareholders of UCB.
The presence of shareholders at the UCB Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with,
or by delivering a duly executed proxy bearing a later date to, the Secretary
of UCB at UCB's principal executive offices prior to the UCB Meeting, or by
attending the UCB Meeting and voting in person. The proxy will not be revoked
by the death or incapacity of the shareholder executing it unless, before the
shares are voted, notice of such death or incapacity is filed with the
Secretary of UCB or other person authorized to tabulate the votes.
BECAUSE APPROVAL OF THE REORGANIZATION AGREEMENT AND THE PLAN OF MERGER
REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF UCB
COMMON STOCK, ABSTENTIONS AND BROKER SHARES WILL HAVE THE SAME EFFECT AS
NEGATIVE VOTES. ACCORDINGLY, THE UCB BOARD URGES ITS SHAREHOLDERS TO COMPLETE,
DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE.
SOLICITATION OF PROXIES
SNC will pay 70%, and UCB will pay 30%, of the cost of printing and
registering the shares issuable pursuant to this Joint Proxy
Statement/Prospectus, and UCB will bear all other costs relating to the
solicitation of proxies in connection with the UCB Meeting. In addition to the
use of the mails, proxies may be solicited personally or by telephone or
facsimile by directors, officers and other employees of UCB, who will not be
specially compensated for such solicitation activities. Arrangements also may
be made with brokerage houses and other custodians, nominees and fiduciaries
for the forwarding of solicitation materials to the beneficial owners of
shares held of record by such persons, and such persons will be reimbursed for
their reasonable
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expenses incurred in connection therewith by UCB. UCB presently intends to use
the services of a proxy soliciting firm, Morrow & Co., in connection with the
solicitation of proxies for the UCB Meeting, at an estimated cost of $5,000.
No person is authorized to give any information or to make any
representation not contained or incorporated by reference in this Joint Proxy
Statement/Prospectus and, if given or made, such information or representation
should not be relied upon as having been authorized by SNC, UCB or any other
person. The delivery of this Joint Proxy Statement/Prospectus will not, under
any circumstances, create any implication that there has been no change in the
affairs of SNC or UCB since the date of this Joint Proxy Statement/Prospectus.
RECOMMENDATION OF UCB BOARD
The UCB Board has unanimously adopted the Reorganization Agreement and the
Plan of Merger and believes that the Reorganization Agreement and the Plan of
Merger are fair to, and in the best interests of, UCB and its shareholders.
The UCB Board unanimously recommends that UCB's shareholders vote "FOR"
approval of the Reorganization Agreement, the Plan of Merger and the other UCB
Matters. See "THE MERGER--Background of the Merger" and "--Reasons for the
Merger," and "ADDITIONAL MATTERS RELATING TO THE UCB MEETING--Election of
Directors."
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THE MERGER
The following information describes the material aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety
by reference to the Appendices hereto, including the Reorganization Agreement
and the Plan of Merger, which are attached to this Joint Proxy
Statement/Prospectus as Appendix I and incorporated herein by reference. All
shareholders are urged to read the Appendices in their entirety.
The information below contains certain forward-looking statements with
respect to the financial condition, results of operations and business of SNC
following consummation of the Merger. See the inside cover page of this Joint
Proxy Statement/Prospectus for a description of factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements.
GENERAL
At the Effective Time, UCB will be merged with and into SNC, and SNC will be
the surviving corporation. Shareholders of UCB (other than dissenting
shareholders) will receive 1.135 shares (subject to possible upward
adjustment) of SNC Common Stock for each share of UCB Common Stock and cash in
lieu of fractional shares as described below. See "--Exchange Ratio." As soon
as practicable after the Merger, the Bank Mergers of UCB-NC and UCB-SC into
BB&T-NC and BB&T-SC, respectively, will be effected, with BB&T-NC and BB&T-SC
as the surviving entity in each case. See "--Background of the Merger" and "--
Reasons for the Merger" for a description of factors that the SNC Board and
the UCB Board each considered in approving the Reorganization Agreement and
the Plan of Merger and the transactions contemplated thereby.
BACKGROUND OF THE MERGER
In light of significant consolidation in the financial services industry
fueled largely by material technological changes, deregulation and heightened
competition, management of UCB, together with the UCB Board, has over the past
several years periodically evaluated UCB's overall operating strategy and
alternatives that were available to the company as a mid-size financial
institution headquartered in North Carolina. In that regard, it was the belief
of management and the UCB Board that any of the following corporate strategies
could be pursued by UCB: (i) continued growth in earnings on an independent
basis, including acquisitions of smaller institutions from time-to-time and
various other assumptions; (ii) a merger of equals (in which the transaction
is structured to take into account the relative contribution of the respective
parties to a variety of measures, but which generally involves no acquisition
premium based on the trading prices of the common stock of the respective
parties) with another North Carolina mid-size institution; or (iii) a merger
with or sale to a larger financial institution (which would involve an
acquisition premium based on the trading price of UCB Common Stock). As an
integral part of its periodic assessment, UCB consulted with Wheat First, who
met at least annually with the UCB Board beginning in 1994 to discuss the
consolidation environment in North Carolina, the Southeast and other regions
of the United States, and to advise and review with the UCB Board those
strategic alternatives which they believed were available to UCB. On the basis
of such advice and consultation with Wheat First and continued assessment of
UCB's future business prospects, the UCB Board determined that a course of
corporate independence should be pursued so long as UCB's shareholders and
other constituencies remained well served. The UCB Board, however, recognized
that continued independence of mid-size financial institutions like UCB was
subject to uncertainty in view of the ongoing industry consolidation, and that
at some point, any of several larger institutions could propose on an
unsolicited basis a combination that would warrant serious consideration by
UCB and potentially result in the acquisition or merger of UCB with and into
such an institution. The UCB Board requested executive management of UCB to
keep it fully informed of any material changes or strategic shifts in the
alliances between financial institutions in North Carolina and the Southeast
generally. In that regard, UCB's executive management had informal contacts
and discussions from time-to-time with the executive management of other
financial institutions, including SNC, to assess such institutions' operating
philosophy and strategic goals and objectives with respect to acquisitions and
mergers in UCB's market area. The informal contacts and discussions that
management held with other financial institutions were designed only to
acquaint UCB management with the management philosophy and strategic
objectives of the other institutions, and were
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not designed or intended by UCB to solicit definitive merger proposals or lead
to formal merger or acquisition negotiations with any of such institutions.
Such contacts and discussions were pursued only for the purpose of furthering
UCB's knowledge of other institutions located in the Southeast that could
reasonably be expected to be interested in furthering or developing their
franchises in UCB's market area. During the referenced period, the UCB Board
did not believe that a merger of equals transaction between UCB and another
mid-size financial institution was a desirable or viable corporate strategy
for UCB and its shareholders, since a merger of equals as described above
would result in loss of significant control of UCB without its shareholders
realizing an immediate acquisition premium. Consequently, UCB elected to
pursue its corporate independence as a financially strong, well operated
financial institution until the emergence in 1996 of SNC as a serious merger
partner.
On April 22, 1996, John A. Allison, IV, Chairman and Chief Executive Officer
of SNC, telephoned, on an unsolicited basis, E. Rhone Sasser, Chairman and
Chief Executive Officer of UCB, to request an opportunity to discuss a
possible combination between SNC and UCB. As a result of such conversation, on
May 15, 1996, Messrs. Allison and Sasser met to explore a possible combination
between the two institutions. While no agreements or understandings were
reached with respect to a proposed combination of UCB and SNC, certain
nonfinancial issues relating to consolidating the operations of UCB and SNC
were discussed generally and the parties agreed to continue their discussions.
Following further telephone conversations between Messrs. Allison and
Sasser, UCB requested Wheat First to prepare an updated analysis of UCB's
strategic alternatives, and make a presentation to the UCB Board on June 19,
1996. At this meeting, Mr. Sasser briefed the UCB Board as to the status of
discussions with SNC at that point and representatives of Wheat First briefed
the UCB Board on the regional and national merger climate for financial
institutions generally, reviewed the Wheat First assessment of the strategic
alternatives available to UCB, and reviewed UCB's and SNC's financial
performance and future prospects. On the basis of such presentations, the UCB
Board authorized UCB management and Wheat First to further explore a possible
merger with SNC, including receipt of an indication of financial terms.
On June 20, 1996, representatives of Wheat First, on behalf of UCB, met with
Mr. Allison and other representatives of SNC to discuss the financial terms of
a proposed merger transaction between UCB and SNC. At this meeting, SNC
initially proposed an exchange ratio of 1.04 shares of SNC Common Stock for
each outstanding share of UCB Common Stock. During the course of such meeting
with Wheat First, SNC increased the proposed exchange ratio to 1.12, which
represented a value of approximately $32.90 per share of UCB Common Stock
based on the closing price of SNC Common Stock on June 19, 1996. The above
referenced meeting was followed by further discussion between Messrs. Allison
and Sasser with respect to the proposed financial terms.
The proposed exchange ratio of 1.12, based on the then trading price of SNC
Common Stock, was deemed by the UCB Board, based in part on the analysis
prepared by Wheat First, to represent a value per share of UCB Common Stock
that was not acceptable to the UCB Board. As a result, discussions were
terminated on June 21, 1996.
In early September 1996, Scott E. Reed, Senior Executive Vice President and
Chief Financial Officer of SNC, telephoned a representative of Wheat First to
explore the possibility of re-opening discussions between UCB and SNC. That
telephone conversation was followed by an unsolicited, written merger proposal
from Mr. Allison to Mr. Sasser. On September 23, 1996, representatives of UCB,
Wheat First and Alston & Bird LLP, special counsel to UCB, met to discuss
generally the process of analyzing and responding to the written merger
proposal of SNC.
On October 16, 1996, Mr. Sasser updated the UCB Board with respect to
discussions with SNC and called for a special meeting of the UCB Board to be
held on October 23, 1996, to consider the written merger proposal of SNC. At
such meeting, Mr. Sasser reviewed the events leading up to the meeting. Alston
& Bird LLP reviewed generally the fiduciary obligations of directors in
considering strategic alternatives, mergers and sales. Wheat First made a
presentation relating to various financial analyses of the transaction on the
basis proposed by SNC, a comparison of UCB as an independent institution, and
an assessment of SNC Common Stock to be
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received in the proposed merger. In addition, Wheat First reviewed the
capacity of certain other banking institutions to pay acquisition premiums for
UCB without any material earnings per share dilution principally because of
their perceived ability to achieve various levels of cost savings. The
information generally indicated that large-in-market institutions, such as
SNC, could likely achieve significant cost savings in a merger with UCB and
therefore potentially pay higher prices than out-of-market institutions. After
further discussion and consideration of the factors described below, the UCB
Board authorized its Executive Committee (the "UCB Executive Committee"),
together with management and its advisors, to continue discussions with SNC.
Following the October 23 UCB Board meeting, Mr. Sasser had further
discussions with Mr. Allison aimed at increasing the proposed exchange ratio
of SNC Common Stock for UCB Common Stock. As a result of these conversations,
Mr. Allison informed Mr. Sasser on October 24, 1996, that SNC would be willing
to increase the exchange ratio from 1.12 to 1.135 shares of SNC Common Stock
for each share of UCB Common Stock, representing approximately $38.02 per
share of UCB Common Stock based on the closing sale price of SNC Common Stock
on October 24, 1996.
Based on the increase in the proposed exchange ratio from 1.12 to 1.135
shares of SNC Common Stock for each share of UCB Common Stock and the increase
in the market price of SNC Common Stock since the parties terminated
discussions on June 21, 1996, the value to be received for each share of UCB
Common Stock increased from $32.90 to $38.02 and was deemed by the UCB Board,
based in part on the analysis prepared by Wheat First, to represent a value
per share of UCB Common Stock that was reflective of a fair offer for UCB.
Accordingly, the UCB Board authorized two members of the UCB Executive
Committee, Alfred E. Cleveland and Jack E. Shaw, together with Mr. Sasser and
Ronald C. Monger, Chief Financial Officer of UCB, to meet with Messrs. Allison
and Reed and Henry G. Williamson, Jr., Chief Operating Officer of SNC, on
October 26, 1996, in Richmond, Virginia. The material terms of the proposed
merger were discussed, including certain nonfinancial issues relating to SNC's
commitments to minimize job losses in the Whiteville, North Carolina community
and to offer employment or settlement agreements to certain executive officers
of UCB. As a result of such meeting, a tentative schedule for negotiating and
approving the definitive merger agreement was discussed. During the following
week, discussions continued between representatives of UCB and SNC, including
various discussions related to appropriate price protection mechanisms and the
Option Agreements. On the basis of these discussions with respect to price and
price protection, the UCB Executive Committee authorized on October 28, 1996,
UCB and its representatives to proceed with negotiating the definitive merger
agreement. Further discussions and negotiations with respect to the definitive
agreement occurred throughout the week of October 28, 1996.
On November 1, 1996, the UCB Board met to review the terms of the
Reorganization Agreement and the Option Agreements as summarized by Alston &
Bird LLP. Wheat First reported that it had completed its due diligence review
and delivered its written opinion as to the fairness, from a financial point
of view, of the Exchange Ratio to the shareholders of UCB.
On the basis of such presentations and the factors set forth under "--
Reasons for the Merger--UCB," the UCB Executive Committee recommended approval
of the Reorganization Agreement and the Option Agreements to the UCB Board,
and the UCB Board unanimously approved and authorized execution of the
Reorganization Agreement and the Option Agreements.
In entering into the Reorganization Agreement, the parties deferred their
respective due diligence investigations until after execution of the
Reorganization Agreement. SNC and UCB did not exchange financial forecasts or
other material nonpublic information prior to the execution of the
Reorganization Agreement.
REASONS FOR THE MERGER
SNC
SNC's announced acquisition strategy is to pursue high-quality banks and
thrifts in its current markets with the ultimate goal of improving its
financial performance and franchise value. SNC management believes the
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Merger meets these criteria and that it will significantly strengthen SNC's
market share in North Carolina and South Carolina. SNC management considers
UCB to have a solid capital position, excellent credit quality and a strong
branch office network, and believes that its corporate culture is highly
compatible with SNC's. In light of the benefits and potential cost savings
that SNC management perceives to be inherent in in-market acquisitions, such
as the Merger, SNC management believes that the Merger will enable SNC to
increase its franchise value and improve upon its efficiencies and momentum in
selling fee-based and interest-based products and services.
In approving the Reorganization Agreement and the Merger, the SNC Board
considered a number of material factors concerning the benefits of the Merger,
including the following:
(a) Information concerning UCB. Management of SNC presented information
to the SNC Board concerning the business, operations, earnings, asset
composition and quality, financial condition and market share of UCB. The
SNC Board considered the compatibility of SNC's and UCB's operations,
noting that the Merger would significantly increase SNC's deposit market
share in North Carolina and South Carolina. Based on these factors, the SNC
Board concluded that UCB's ability to contribute to the revenues, earnings
and franchise value of SNC made UCB an attractive acquisition candidate.
(b) The financial terms of the Merger. The SNC Board reviewed information
showing the relationship of the value of the consideration issuable in the
Merger to UCB Common Stock's market value at October 31, 1996 (a 51%
premium), tangible book value at September 30, 1996 (2.79x), and earnings
per share for the 12 months ended September 30, 1996 (19.4x). The SNC Board
considered that these ratios reflected recent upward movement in the market
price of SNC Common Stock and concluded that the Merger represented an
attractive strategic acquisition.
(c) The nonfinancial terms of the Merger. The SNC Board considered that
the Merger would be treated as a tax-free exchange of UCB Common Stock for
SNC Common Stock for federal income tax purposes and would be accounted for
as a pooling of interests.
(d) Regulatory approvals. The SNC Board considered the likelihood that
the Merger and the Bank Mergers would be approved by applicable regulatory
authorities without undue conditions or delay. See "--Regulatory
Considerations."
(e) Opportunities to enhance efficiency. The SNC Board considered the
opportunities for reduction of expenses associated with the operations of
UCB through consolidations of branches and support functions, as well as
opportunities for enhanced balance sheet management and margins.
(f) Industry consolidation. The SNC Board considered the prevailing trend
toward consolidation in the nation's banking industry, in particular the
distribution of market share in the markets served by SNC, and concluded
that the Merger would enhance SNC's ability to remain competitive in such
markets.
(h) Fairness opinion of Alex. Brown. The SNC Board received the report of
its financial advisor, Alex. Brown, which compared UCB to selected peer
banks and the premium to be paid in the Merger to premiums paid in other
merger transactions, and the opinion rendered by Alex. Brown that the
Exchange Ratio was fair from a financial point of view to SNC.
The foregoing discussion is not exhaustive, but includes all of the material
factors considered by the SNC Board in determining to recommend that
shareholders approve the Merger Proposal. The SNC Board did not quantify or
otherwise attempt to assign relative or specific weights to the factors
considered in reaching its determination that the Merger Proposal is in the
best interests of shareholders.
For the reasons described above, the SNC Board unanimously approved the
Reorganization Agreement and the Plan of Merger and believes the Merger
Proposal is fair to, and is in the best interests of, its shareholders. The
SNC Board recommends that SNC shareholders vote "FOR" approval of the Merger
Proposal.
UCB
In reaching its conclusion to approve the Merger, the UCB Board consulted
with UCB's senior management, as well as with its financial and legal
advisors, and considered various factors, including the following:
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(a) The financial terms of the Merger. The presentation by Wheat First
indicating that the transaction multiples for UCB, based on the Exchange
Ratio in the Merger and the SNC Common Stock price on October 31, 1996,
compared favorably with, and were among the highest of, the other
transactions reviewed by Wheat First, and represented multiples of 2.79 x
UCB's per common share fully diluted book value at September 30, 1996, 19.4
x UCB's last 12 months earnings per share through September 30, 1996; and a
58.8% premium over the closing price of UCB Common Stock on October 31,
1996, and a 67.2% premium over the closing price of UCB Common Stock on
October 1, 1996.
(b) The effect on shareholder value of UCB's remaining independent
compared to the effect of its combining with SNC. In this respect, the UCB
Board considered whether it was reasonable to anticipate that UCB as an
independent enterprise could produce the earnings necessary to result in a
value comparable to the value to be received in the Merger. Second, the UCB
Board took into account that UCB had special value to SNC in providing SNC
with the largest deposit market share position in North Carolina and that
SNC had the ability to realize cost savings in the Merger to support the
price being paid which out-of-market acquirors could not reasonably be
expected to meet. Third, the UCB Board considered that the operating
philosophies and corporate cultures of UCB and SNC were similar and
complementary in scope. Fourth, the UCB Board considered that, based upon
the current dividend payouts by UCB and SNC, there would be a 70.3%
increase in dividends for UCB shareholders.
(c) Certain financial information about UCB and SNC. Such information
included, but was not limited to, information with regard to recent and
historical stock performance, valuation analyses, pro forma analyses,
comparative financial and operating performance data, acquisition capacity
analyses, "Wall Street" research ratings comparisons and comparable merger
and acquisition transactions as presented by Wheat First.
(d) Advice of financial advisor and fairness opinion. The opinion of
Wheat First (including the assumptions and financial information and
projections relied upon by Wheat First in arriving at such opinion) that,
as of November 1, 1996, the Exchange Ratio was fair, from a financial point
of view, to the shareholders of UCB. See "--Opinions of Financial
Advisors."
(e) Certain nonfinancial information and terms of agreements. The UCB
Board considered the terms of the Reorganization Agreement including its
right to terminate the Reorganization Agreement in the event of a
significant decline in the price of SNC Common Stock prior to consummation
of the Merger unless SNC then elected to increase the Exchange Ratio as
specified in the Reorganization Agreement. The UCB Board was advised that
SNC made the SNC Option Agreement a condition of the transaction, and the
UCB Board considered that the existence of the SNC Option Agreement might
discourage third parties from seeking to acquire UCB. The UCB Board took
into account that it is expected that the Merger will be tax-free, for
federal income tax purposes, to UCB's shareholders to the extent they
receive shares of SNC Common Stock (other than with respect to cash paid in
lieu of fractional shares). The UCB Board was reminded that the Merger
would trigger certain change in control provisions of certain preexisting
employment and incentive compensation agreements with executive management,
and that SNC had offered to enter into new employment or settlement
arrangements with eight of such executives in consideration of such
individuals terminating their respective, existing employment agreements
with UCB or its bank subsidiaries, as appropriate. See "--Exchange Ratio,"
"--Certain Federal Income Tax Consequences of the Merger," "--Interests of
Certain Persons in the Merger," and "--Option Agreements."
(f) Regulatory approvals. The UCB Board considered the probability of the
regulatory approvals that would be required with respect to the Merger
being obtained. See "--Regulatory Considerations."
(g) Impact on UCB constituencies. The general impact of the Merger on the
various constituencies served by UCB, including its customers, employees,
communities and others. In this regard, the UCB Board took into account
SNC's perceived approach to its employees and the communities in which it
operates, including the commitments made by SNC with respect to employment
opportunities in the Whiteville, North Carolina community, as well as the
commitment of SNC to offer employment to seven executives of UCB following
the Merger.
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The foregoing discussion of the information and factors considered by the
UCB Board is not intended to be exhaustive but is believed to include all
material factors considered by the UCB Board. In reaching its determination to
approve the Merger, the UCB Board did not assign any relative or specific
weights to the foregoing factors, and individual directors may have given
differing weights to different factors. After deliberating with respect to the
Merger and the other transactions contemplated thereby, and considering, among
other things, the matters discussed above and the opinion of Wheat First
referred to above, the UCB Board unanimously approved the Reorganization
Agreement, as being in the best interests of UCB and its shareholders.
For the reasons described above, the UCB Board unanimously approved the
Reorganization Agreement and believes the Merger is fair to, and is in the
best interests of, its shareholders. Accordingly, the UCB Board unanimously
recommends that UCB shareholders vote "FOR" approval of the Reorganization
Agreement and the Plan of Merger.
OPINIONS OF FINANCIAL ADVISORS
Wheat First
UCB retained Wheat First to act as its financial advisor in connection with
the Merger and to render a written opinion to the UCB Board as to the
fairness, from a financial point of view, to the holders of UCB Common Stock
(other than SNC and its affiliates) of the Exchange Ratio. Wheat First is a
nationally recognized investment banking firm regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. The UCB Board selected
Wheat First to serve as its financial advisor in connection with the Merger on
the basis of such firm's expertise. Wheat First regularly publishes research
reports regarding the financial services industry and the businesses and
securities of publicly owned companies in that industry, including UCB and
SNC.
Representatives of Wheat First attended the meeting of the UCB Board on
November 1, 1996, at which the Reorganization Agreement was considered and
approved. At the meeting, Wheat First issued its written opinion that, as of
such date, the Exchange Ratio was fair, from a financial point of view, to the
holders of UCB Common Stock (other than SNC and its affiliates). A written
opinion dated as of the date of this Joint Proxy Statement/Prospectus has been
delivered to the UCB Board to the effect that, at such date, the Exchange
Ratio is fair, from a financial point of view, to the holders of UCB Common
Stock.
The full text of the Wheat First Opinion, dated as of the date of this Joint
Proxy Statement/Prospectus, which sets forth certain assumptions made, matters
considered and limitations on review undertaken is attached as Appendix II to
this Joint Proxy Statement/Prospectus, is incorporated herein by reference,
and should be read in its entirety in connection with this Joint Proxy
Statement/Prospectus. The summary of the Wheat First Opinion set forth in this
Joint Proxy Statement/Prospectus is qualified in its entirety by reference to
the opinion. The Wheat First Opinion is directed only to the fairness, from a
financial point of view, of the Exchange Ratio to the holders of UCB Common
Stock (other than SNC and its affiliates) and does not constitute a
recommendation to any shareholder of UCB as to how such shareholder should
vote on the Merger.
In arriving at its written opinion dated November 1, 1996, Wheat First
reviewed certain publicly available business and financial information
relating to UCB and SNC and certain other information provided to it,
including, among other things, the following: (a) UCB's Annual Reports to
Shareholders, Annual Reports on Form 10-K and related financial information
for the three fiscal years ended December 31, 1995; (b) UCB's Quarterly
Reports on Form 10-Q and related financial information for the periods ended
June 30, 1996 and March 31, 1996 and certain financial data provided by
management of UCB for the period ended September 30, 1996; (c) SNC's Annual
Reports to Shareholders, Annual Reports on Form 10-K and related financial
information for the three fiscal years ended December 31, 1995; (d) SNC's
Quarterly Reports on Form 10-Q and related financial information for the
periods ended June 30, 1996 and March 31, 1996 and certain financial data
provided by management of SNC for the period ended September 30, 1996; (e)
certain publicly available
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information with respect to historical market prices and trading activities
for UCB Common Stock and SNC Common Stock and for certain publicly traded
financial institutions which Wheat First deemed relevant; (f) certain publicly
available information with respect to banking companies and the financial
terms of certain other mergers and acquisitions which Wheat First deemed
relevant; (g) the Reorganization Agreement; (h) certain estimates of the cost
savings, revenue enhancements and divestitures projected by UCB and SNC for
the combined company; (i) other financial information concerning the
businesses and operations of UCB and SNC, including certain audited financial
information and certain internal financial analyses and forecasts for UCB and
SNC prepared by the senior managements of these companies; and (j) such
financial studies, analyses, inquiries and other matters as Wheat First deemed
necessary. In addition, Wheat First met with members of the senior managements
of UCB and SNC to discuss the business and prospects of each company.
In connection with its review, Wheat First relied upon and assumed the
accuracy and completeness of all of the foregoing information provided to it
or publicly available, including representations and warranties of UCB and SNC
included in the Reorganization Agreement, and Wheat First has not assumed any
responsibility for independent verification of such information. Wheat First
relied upon the managements of UCB and SNC as to the reasonableness and
achievability of its financial and operational forecasts and projections, and
the assumptions and bases therefor, provided to Wheat First, and assumed that
such forecasts and projections reflect the best currently available estimates
and judgments of such managements and that such forecasts and projections will
be realized in the amounts and in the time periods currently estimated by such
managements. Wheat First also assumed, without independent verification, that
the aggregate allowances for loan losses and other contingencies for UCB and
SNC are adequate to cover such losses. Wheat First did not review any
individual credit files of UCB or SNC, nor did it make an independent
evaluation or appraisal of the assets or liabilities of UCB or SNC.
Additionally, Wheat First considered certain financial and stock market data
of UCB and SNC and compared that data with similar data for certain publicly
held financial institutions and considered the financial terms of certain
other comparable transactions that recently have been announced or effected,
as further discussed below. Wheat First also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as it deemed relevant.
In connection with rendering its opinion, dated as of the date of this Joint
Proxy Statement/Prospectus, Wheat First performed a variety of financial
analyses. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to partial analysis
or summary description. Moreover, the evaluation of the fairness, from a
financial point of view, of the Exchange Ratio to holders of UCB Common Stock
(other than SNC and its affiliates) was to some extent a subjective one based
on the experience and judgment of Wheat First and not merely the result of
mathematical analysis of financial data. Accordingly, notwithstanding the
separate factors summarized below, Wheat First believes that its analyses must
be considered as a whole and that selecting portions of its analyses and of
the factors considered by it, without considering all analyses and factors,
could create an incomplete view of the evaluation process underlying its
opinion. The ranges of valuations resulting from any particular analysis
described below should not be taken to be Wheat First's view of the actual
value of UCB or SNC.
In performing its analyses, Wheat First made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of UCB or SNC. The analyses
performed by Wheat First are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, analyses relating to the values of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold. In rendering its opinion, Wheat First assumed
that, in the course of obtaining the necessary regulatory approvals for the
Merger, no conditions will be imposed that will have a material adverse effect
on the contemplated benefits of the Merger, on a pro forma basis, to SNC.
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The Wheat First Opinion is just one of the many factors taken into
consideration by the UCB Board in determining to approve the Reorganization
Agreement. The Wheat First Opinion does not address the relative merits of the
Merger as compared to any alternative business strategies that might exist for
UCB, nor does it address the effect of any other business combination in which
UCB might engage.
The following is a summary of the analyses performed by Wheat First in
connection with its written opinion delivered to the UCB Board on November 1,
1996:
Comparison of Selected Companies. Wheat First compared the financial
performance and market trading information of SNC to that of a group of
regional bank holding companies (the "Group"). The Group included: AmSouth
Bancorporation, Banc One Corporation, Crestar Financial Corporation, First
Union Corporation, Huntington Bancshares Incorporated, KeyCorp, NationsBank
Corporation, Norwest Corporation, Regions Financial Corporation, SouthTrust
Corporation, SunTrust Banks, Inc., Synovus Financial Corp. and Wachovia
Corporation.
Based on financial data as of and for the three-month period ended June 30,
1996, or September 30, 1996, SNC had: (a) equity to assets of 7.85% compared
to an average of 7.80%, a minimum of 6.49% and a maximum of 9.63% for the
Group; (b) nonperforming assets to total assets of 0.37% compared to an
average of 0.46%, a minimum of 0.16% and a maximum of 0.62% for the Group; (c)
reserves for loan losses to nonperforming assets of 233.57% compared to an
average of 274.43%, a minimum of 166.91% and a maximum of 561.80% for the
Group; (d) returns on average assets before extraordinary and nonrecurring
items of 1.48% compared to an average of 1.38%, a minimum of 1.09% and a
maximum of 1.83% for the Group; and (e) returns on average equity before
extraordinary and nonrecurring items of 18.71% compared to an average of
17.86%, a minimum of 13.02% and a maximum of 22.44% for the Group.
Based on the market values as of October 31, 1996, and financial data as of
September 30, 1996, SNC had: (a) a stock price to book value multiple of
228.10% compared to an average of 216.27%, a minimum of 181.74% and a maximum
of 282.52% for the Group; (b) a stock price to "First Call" (as hereinafter
defined) 1996 estimated earnings per share before extraordinary items multiple
of 12.59x compared to an average of 13.14x, a minimum of 11.57x and a maximum
of 16.95x for the Group; (c) a stock price to First Call 1997 estimated
earnings per share multiple of 11.35x compared to an average of 11.96x, a
minimum of 10.51x and a maximum of 15.44x for the Group; and (d) an indicated
dividend yield of 3.12% compared to an average of 2.80%, a minimum of 1.47%
and a maximum of 3.45% for the Group. "First Call" is a data service that
monitors and publishes a compilation of earnings estimates produced by
selected research analysts regarding companies of interest to institutional
investors.
Analysis of Selected Transactions. Wheat First performed an analysis of
premiums paid in 11 selected pending or recently completed mid-size bank
acquisitions announced between May 1, 1995, and October 30, 1996 (the
"Selected Transactions"). Multiples of book value, premium to prior week
price, trailing 12 months earnings and estimated current year earnings paid in
the Selected Transactions were compared to the multiples and premiums implied
by the consideration offered by SNC in the Merger. The Selected Transactions
included the following pending transactions: Crestar Financial
Corporation/Citizens Bancorp and Mercantile Bancorporation, Inc./Mark Twain
Bancshares. The Selected Transactions included the following completed
transactions: Bank of Boston Corporation/BayBanks, Inc.; Regions Financial
Corporation/First National Bancorp; CoreStates Financial Corp/Meridian
Bancorp, Inc.; UJB Financial Corp./Summit Bancorporation; NationsBank
Corporation/Bank South Corporation; Boatmen's Bancshares, Inc./Fourth
Financial Corporation; First Bank System, Inc./FirsTier Financial, Inc.; PNC
Bank Corporation/Midlantic Corporation; and U.S. Bancorp/West One Bancorp.
Based on the market value of SNC Common Stock on October 31, 1996, and
financial data as of September 30, 1996, the analysis yielded the following
ratios of the implied consideration to be paid by SNC to UCB: (a) to book
value of 279.31% compared to an average of 219.46%, a minimum of 177.97% and a
maximum of 280.32% for the Selected Transactions; (b) to premium to prior week
price of 58.79% compared to an average
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of 27.25%, a minimum of 1.24% and a maximum of 68.03% for the Selected
Transactions; (c) to trailing 12 months earnings per share multiple of 19.36x
compared to an average of 16.21x, a minimum of 10.80x and a maximum of 21.48x
for the Selected Transactions; and (d) to First Call current year estimated
earnings per share multiple of 18.54x compared to an average of 15.82x, a
minimum of 12.33x and a maximum of 19.27x for the Selected Transactions.
Contribution Analysis. Wheat First analyzed the relative contribution made
by each of UCB and SNC to certain balance sheet and income statement items
including assets, deposits, shareholders' equity and estimated earnings. Wheat
First then compared the relative contribution of such balance sheet and income
statement items with the fully diluted ownership percentage of the combined
company of approximately 20.09% for UCB shareholders based on an Exchange
Ratio of 1.135. The contribution analysis showed that under the SNC proposal,
UCB would contribute approximately 16.83% of the combined assets, 17.20% of
the combined shareholders' equity (before Merger-related expenses) and 14.50%
of the First Call current year estimated earnings of the two companies (before
cost savings).
Discounted Dividends Analysis. Using discounted dividends analysis, Wheat
First estimated the present value of the future stream of dividends that UCB
could produce over the next five years, under various circumstances, assuming
the company performed in accordance with the earnings forecasts of management
and an assumed level of expense savings were achieved. Wheat First then
estimated the terminal values for UCB Common Stock at the end of the period by
applying multiples ranging from 10x to 12x earnings projected in year five.
The dividend streams and terminal values were then discounted to present
values using different discount rates (ranging from 13% to 15%) chosen to
reflect different assumptions regarding the required rates of return to
holders or prospective buyers of UCB Common Stock. This discounted dividend
analysis indicated reference ranges of between $33.45 and $41.53 per share for
UCB Common Stock. These values compare to the implied consideration to be
offered by SNC to UCB in the Merger of $39.30 based on the market value of SNC
Common Stock on October 31, 1996.
In connection with its written opinion as of the date hereof, Wheat First
confirmed the appropriateness of its reliance on the analyses used to render
its November 1, 1996 opinion by performing procedures to update certain of
such analyses and by reviewing the assumptions on which such analyses were
based and the factors considered in connection therewith.
No company or transaction used as a comparison in the above analysis is
identical to UCB, SNC or the Merger. Accordingly, an analysis of the results
of the foregoing necessarily involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the public trading value of the
companies used for comparison in the above analysis.
The Wheat First Opinion is dated as of the date of this Joint Proxy
Statement/Prospectus and is based solely upon the information available to
Wheat First and the economic, market and other circumstances as they existed
as of such date. Events occurring after that date could materially affect the
assumptions and conclusions contained in the Wheat First Opinion. Wheat First
has not undertaken to reaffirm or revise this opinion or otherwise comment on
any events occurring after the date hereof.
As compensation for Wheat First's services, UCB has agreed to pay Wheat
First $350,000 which was payable upon the delivery to the UCB Board of a
written opinion. UCB will also pay Wheat First an amount equal to $2.6 million
which is payable on the Closing Date. UCB has agreed also to reimburse Wheat
First for its out-of-pocket expenses incurred in connection with the
activities contemplated by its engagement, regardless of whether the Merger is
consummated. UCB has further agreed to indemnify Wheat First against certain
liabilities, including certain liabilities under federal securities laws. The
payment of the above fees is not contingent upon Wheat First rendering a
favorable opinion with respect to the Merger. In addition, UCB has paid Wheat
First a financial advisory retainer of $1.25 million, which was payable on
December 31, 1996, for financial advisory services.
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Alex. Brown
SNC retained Alex. Brown to act as its financial advisor in connection with
its proposed acquisition of UCB. Alex. Brown was selected to act as SNC's
financial advisor based upon it qualifications, expertise and reputation, as
well as Alex. Brown's prior investment banking relationship and familiarity
with SNC. Alex. Brown has historically provided, and continues to provide,
certain other financial advisory and agency services to SNC. Alex. Brown
regularly publishes research reports regarding the financial services industry
and the businesses and securities of publicly owned companies in that
industry, including SNC.
On November 1, 1996, at the meeting at which the SNC Board approved and
adopted the Reorganization Agreement and the Plan of Merger, Alex. Brown
delivered a written opinion to the SNC Board that, as of such date, the
Exchange Ratio of 1.135 shares of SNC Common Stock to be paid by SNC for each
share of UCB Common Stock was fair from a financial point of view to SNC. No
limitations were imposed by the SNC Board upon Alex. Brown with respect to the
investigations made or procedures followed by it in rendering the Alex. Brown
Opinion. The full text of the Alex. Brown Opinion, updated to the date of this
Joint Proxy Statement/Prospectus, which sets forth assumptions made, matters
considered and limits on the review undertaken, is attached as Appendix III to
this Joint Proxy Statement/Prospectus and is incorporated herein by reference.
SNC shareholders are urged to read the Alex. Brown Opinion in its entirety.
The following summary is qualified in its entirety by reference to the full
text of the Alex. Brown Opinion.
In connection with its opinion, Alex. Brown reviewed certain publicly
available financial information concerning SNC and UCB and certain internal
financial analyses and other information furnished to it by SNC relating to
SNC and UCB. Alex. Brown held discussions with members of the senior
management of SNC regarding the business and prospects of SNC and UCB, and
reviewed certain internal financial analyses and forecasts for SNC and UCB
prepared by their respective managements. Alex. Brown also reviewed with
members of the senior management of SNC the expected cost savings and revenue
enhancements related to the Merger. Alex. Brown also noted that, as part of
the Reorganization Agreement, SNC had an expanded due diligence investigation
right through January 10, 1997, which investigation could potentially lead to
a termination event should SNC not be satisfied with the results. In addition,
Alex. Brown (a) reviewed the reported price and trading activity for UCB
Common Stock and SNC Common Stock, (b) compared certain financial and stock
market information for UCB and SNC, respectively, with similar information for
certain commercial banks, the securities of which are publicly traded, (c)
reviewed the Reorganization Agreement and compared the financial terms of the
Reorganization Agreement with those of certain recent business combinations in
the commercial banking industry and (d) performed such other studies and
analyses and considered such other factors as it deemed appropriate.
Alex. Brown relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by and
discussed with it for purposes of the Alex. Brown Opinion. With respect to the
financial forecasts reviewed by Alex. Brown in rendering its opinion, Alex.
Brown assumed that such financial forecasts were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
respective managements of each of SNC and UCB as to the future financial
performance of SNC and UCB. Alex. Brown did not make an independent evaluation
or appraisal of the assets or liabilities of SNC or UCB nor was it furnished
with any such appraisal.
The summary set forth below does not purport to be a complete description of
the analyses performed by Alex. Brown in this regard. The preparation of a
fairness opinion involves various determinations as to the most appropriate
and relevant methods of financial analysis and the application of these
methods to the particular circumstances and, therefore, such an opinion is not
readily susceptible to summary description. Accordingly, notwithstanding the
separate factors discussed below, Alex. Brown believes that its analyses must
be considered as a whole and that selecting portions of its analyses and of
the factors considered by it, without considering all analyses and factors,
could create an incomplete view of the evaluation process underlying its
opinion. No one of the analyses performed by Alex. Brown was assigned a
greater significance than any other. In performing its analyses, Alex. Brown
made numerous assumptions with respect to industry performance, business and
economic
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conditions and other matters, many of which are beyond SNC's or UCB's control.
The analyses performed by Alex. Brown are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable
than suggested by such analyses. Additionally, analyses relating to the values
of businesses do not purport to be appraisals or to reflect the prices at
which businesses actually may be sold.
The following is a summary of the material analyses presented by Alex. Brown
to the SNC Board on November 1, 1996 in connection with the Alex. Brown
Opinion:
Summary of the Proposal. Alex. Brown reviewed the implied value of the
Exchange Ratio based upon the closing share price of SNC Common Stock on
October 31, 1996. This analysis showed that the implied value of the Exchange
Ratio was approximately $39.30 per share of UCB Common Stock, for a total
value of approximately $965 million. Based on the aggregate consideration
offered using the October 31, 1996 price for SNC Common Stock, Alex. Brown
calculated the premium to UCB's market price one month prior, the price as a
multiple of book value, the price as a multiple of tangible book, the price as
a multiple of latest 12 months ("LTM") earnings, the price as a multiple of
one-year forward estimated earnings (based on Institutional Brokerage
Estimation Service ("I/B/E/S") estimates) and the implied core deposit premium
(defined as the transaction value less the tangible book divided by core
deposits). This analysis yielded a premium to UCB's market price one month
prior of 69%, a price to book value multiple of 279%, a price to tangible book
value multiple of 289%, a price to latest 12 months earnings multiple of
19.4x, a price to one year forward earnings multiple of 16.6x and an implied
core deposit premium of 17%. The Exchange Ratio implied that UCB shareholders
in aggregate would receive 27.9 million shares, or 20.8% of pro forma total
SNC shares.
Contribution Analysis. Alex. Brown also determined the contribution by UCB
of key historical balance sheet items at September 30, 1996 (including assets,
loans, deposits, stated equity and tangible equity) and selected historical
and estimated income statement items (including LTM net income (through
September 30, 1996), 1996 I/B/E/S estimated earnings and 1997 I/B/E/S
estimated earnings) to the resulting pro forma entity, as compared to the
ownership percentage of the pro forma entity's common stock that was received
by current SNC shareholders in aggregate (based on the October 31, 1996
closing price of SNC Common Stock) as a result of the acquisition.
The relative levels of contribution by UCB in these selected areas and the
level of pro forma ownership received by current UCB shareholders, in
aggregate are presented in the following table:
<TABLE>
<CAPTION>
UCB CONTRIBUTION
----------------
<S> <C>
BALANCE SHEET ITEMS
Assets.................................................... 16.9%
Loans..................................................... 17.7%
Deposit................................................... 20.5%
Equity.................................................... 16.6%
Tangible Equity........................................... 16.7%
INCOME STATEMENT ITEMS
LTM Net Income............................................ 14.7%
I/B/E/S 1997 E Earnings................................... 14.7%
I/B/E/S 1998 E Earnings................................... 14.3%
UCB PRO FORMA OWNERSHIP OF SNC.............................. 20.8%
</TABLE>
Analysis of Selected Publicly Traded Companies. In preparing the Alex. Brown
Opinion, Alex. Brown, using publicly available information, compared key
market trading statistics including price as a multiple of book value,
tangible book value, assets, LTM earnings, 1996 I/B/E/S estimated earnings,
and 1997 I/B/E/S estimated earnings, for both SNC and UCB and a peer group of
commercial bank organizations.
In evaluating SNC's market trading performance, Alex. Brown compared SNC's
financial information to the average of a peer group comprised of 18
commercial banks in the United States that possessed asset bases
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<PAGE>
between $20 billion and $50 billion (the "SNC Composite"). As of October 31,
1996, the relative multiples implied by the market price of SNC Common Stock
and the mean market price of the common stock of the SNC Composite to such
selected financial data was: to LTM earnings 13.2x for SNC and 15.2x for the
SNC Composite; to 1996 I/B/E/S estimated earnings per share, 12.6x for SNC and
14.0x for the SNC Composite; to 1997 I/B/E/S estimated earnings per share,
11.4x for SNC and 12.5x for the SNC Composite; to stated book value, 228% for
SNC and 237% for the SNC Composite; to tangible book value, 235% for SNC and
275% for the SNC Composite; and to total assets, 17.9% for SNC and 18.8% for
the SNC Composite.
In evaluating UCB's market trading performance, Alex. Brown compared UCB's
financial information to the averages of several peer groups. The first peer
group was comprised of 48 commercial banks in the United States that possessed
asset bases between $3 billion and $10 billion (the "UCB National Composite");
this peer group was then segmented into those commercial banks headquartered
in the Southeast Region (North Carolina, South Carolina, Virginia, Tennessee
and the District of Columbia) (the "UCB Regional Composite"). The UCB Regional
Composite included Centura Banks (NC), CCB Financial Corporation (NC), First
Citizens BancShares (NC), First Virginia Banks (VA), National Commerce Bancorp
(TN) and Riggs National Corporation (DC). As of October 31, 1996, the relative
multiples implied by the market price of UCB Common Stock and the mean market
price of the common stock of the UCB National Composite and UCB Regional
Composite, respectively, to such selected financial data was: to LTM earnings
13.0x for UCB and 13.5x and 12.9x for the UCB National Composite and UCB
Regional Composite, respectively; to 1996 I/B/E/S estimated earnings per
share, 12.1x for UCB and 13.2x and 13.0x for the UCB National Composite and
UCB Regional Composite, respectively; to 1997 I/B/E/S estimated earnings per
share, 11.0x for UCB and 12.0x and 12.1x for the UCB National Composite and
UCB Regional Composite, respectively; to stated book value, 185% for UCB and
192% and 190% for the UCB National Composite and UCB Regional Composite,
respectively; to tangible book value, 192% for UCB and 213% and 209% for the
UCB National Composite and UCB Regional Composite, respectively; and to total
assets, 14.4% for UCB and 16.3% and 15.5% for the UCB National Composite and
UCB Regional Composite, respectively.
Analysis of Selected Acquisition Transactions. In preparing the Alex. Brown
Opinion, Alex. Brown analyzed certain selected merger and acquisition
transactions for commercial banks based upon the acquisition price relative to
stated book value, to tangible book value, to LTM earnings, to forward one
year earnings (based on I/B/E/S estimates), and to total assets and the
premiums to core deposits and market price one month prior to the acquisition
announcement (in this instance, September 30, 1996). The analysis included a
review and comparison of the mean multiples represented by a sample of
recently effected or pending commercial bank acquisitions nationwide having a
transaction value greater than $500 million (excluding mergers of equals)
which were announced since January 1, 1994 (a total of 18 transactions) (the
"National Transactions"), as segmented into: (a) transactions in which the
selling commercial bank achieved a return on average assets ("ROAA") greater
than 1.20% in the year of its announced acquisition (a total of eight
transactions) (the "Profitability-Segmented Transactions") and (b)
transactions announced in 1996 (a total of three transactions).
30
<PAGE>
The relative multiples implied by the Exchange Ratio ($39.30 implied per
share value to UCB shareholders as of October 31, 1996) and each of the
selected acquisition transaction segmentations, respectively, are provided in
the following table:
<TABLE>
<CAPTION>
PURCHASE PRICE TO:
-------------------------------------
TANGIBLE
BOOK BOOK LTM FORWARD CORE DEPOSITS MARKET
TRANSACTION GROUP VALUE VALUE ASSETS EPS(1) EPS(2) PREMIUM PREMIUM
- ----------------- ----- -------- ------ ------ ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Merger Consideration
($39.30 per share)..... 279.3% 289.8% 22.1% 19.4x 16.6x 17.5% 69.0%
Precedent Transactions:
(a) National--Mean...... 210.3% 231.8% 18.9% 15.6x 13.5x 15.5% 29.8%
High.................. 281.0% 299.1% 27.2% 21.5x 18.0x 25.4% 68.0%
Low................... 104.9% 155.2% 10.1% 11.3x 10.7x 6.1% -0.1%
(b) Profitability-
Segmented--Mean........ 224.6% 245.7% 19.7% 14.7x 13.0x 15.8% 26.6%
High.................. 281.0% 299.1% 27.2% 18.5x 15.0x 25.9% 49.8%
Low................... 192.0% 200.8% 15.2% 12.4x 10.8x 11.9% -0.1%
(c) 1996--Mean.......... 258.6% 270.5% 23.4% 18.2x 15.7x 21.2% 45.0%
High.................. 281.0% 299.1% 27.2% 20.0x 18.0x 25.9% 68.0%
Low................... 224.1% 224.7% 19.0% 16.0x 14.1x 15.2% 17.1%
</TABLE>
- --------
(1) Latest twelve months earning per share
(2) Estimates are from I/B/E/S
Pro Forma Merger Analysis. Alex. Brown analyzed certain pro forma effects
resulting from the Merger. This analysis indicated that, based on the closing
price of SNC Common Stock as of October 31, 1996, the Exchange Ratio, the one-
time restructuring charge associated with the Merger of $50 million pre-tax
and the expected non-interest expense savings of $45.8 million and $72.4
million pre-tax in 1997 and 1998, respectively (30% and 45% of UCB's expected
non-interest expenses in 1997 and 1998, respectively), the transactions would
result in a slight decrease in 1997 estimated earnings per share, book value
per share and tangible book value per share. The transaction would result in a
slight increase, however, in 1998 earnings per share, as full cost savings are
achieved.
Dividend Analysis. Using discounted cash flow analysis, Alex. Brown
estimated the present value of the future cash flows that UCB could produce on
a stand-alone basis from 1997 to 2006 and distribute to SNC ("dividendable net
income"). In this analysis, Alex. Brown assumed that UCB performed in
accordance with the earnings forecasts, including projected cost savings and
after-tax merger and reorganization charges resulting from the Merger,
provided to Alex. Brown by SNC's senior management and that UCB's tangible
capital to tangible asset ratio would be maintained at a 7.00% minimum level.
Alex. Brown estimated the terminal value for UCB Common Stock based on a range
of trading multiple from 10.0x to 11.0x UCB's 2006 earnings. This dividendable
net income stream and terminal value were then discounted to present values
using different discount rates ranging from 12.0% to 14.0% chosen to reflect
different assumptions regarding the required rates of return of holders or
prospective buyers of SNC Common Stock. This discounted dividend analysis
indicated a reference range of $39.54 to $47.76 per share of UCB.
The analysis was based upon SNC senior management's projections, which were
based upon many factors and assumptions, many of which are beyond the control
of SNC and UCB. As indicated above, this analysis is not necessarily
indicative of actual values or future results and does not purport to reflect
the prices at which any security may trade at the present or at any time in
the future.
In connection with its written opinion as of the date hereof, Alex. Brown
performed substantially the same analyses used to render its November 1, 1996
opinion.
Compensation of Financial Advisor. Alex. Brown will receive a fee for
investment banking services related to the Merger and related advisory work of
$500,000, $250,000 of which was paid at the time of the
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<PAGE>
engagement, $125,000 of which will be paid on or about the date of this Joint
Proxy Statement/Prospectus and the balance of which is payable at the date the
Merger is consummated. Alex. Brown will also be reimbursed for its reasonable
out-of-pocket expenses incurred in connection with its advisory work, and will
be indemnified against certain liabilities related to or arising out of the
Merger, including liabilities arising under securities laws. In 1996, Alex.
Brown received underwriting discounts of approximately $179,000 as an
underwriter for a public offering of $250,000,000 principal amount of 7.05%
Subordinated Notes due 2003 of SNC. In addition, in 1995 Alex. Brown received
fees of approximately $1.13 million as financial advisor to Commerce Bank in
connection with the acquisition of Commerce Bank by BB&T Financial-VA.
EXCHANGE RATIO
At the Effective Time, UCB will be merged with and into SNC, and SNC will be
the surviving corporation in the Merger. Each share of UCB Common Stock (other
than shares held by dissenting shareholders) will be converted into the right
to receive SNC Common Stock at the Exchange Ratio of 1.135 shares of SNC
Common Stock for each share of UCB Common Stock.
Under certain circumstances, the Exchange Ratio could be adjusted upward
pursuant to certain provisions of the Reorganization Agreement; under no
circumstances would the Exchange Ratio be less than 1.135 shares of SNC Common
Stock for each share of UCB Common Stock. An adjustment to the Exchange Ratio
could occur only if the UCB Board should elect by majority vote to terminate
the Reorganization Agreement pursuant to the provisions of the Reorganization
Agreement described below, and if SNC then elects to avoid termination of the
Reorganization Agreement by adjusting the Exchange Ratio.
UCB, by a vote of the majority of all of the members of the UCB Board, may
elect to terminate the Reorganization Agreement and abandon the Merger if the
circumstances in either (a) or (b) exist:
(a) both of the following conditions are satisfied:
(i) the Average Closing Price (as defined below) is less than $28.50,
and
(ii) (A) the number obtained by dividing the Average Closing Price by
$33.50 (the "SNC Ratio") is less than (B) the number obtained by
dividing the Index Price (as defined below) on the Determination Date
by the Index Price on the Starting Date (as defined below) and
subtracting 0.15 (the "Index Ratio"); or
(b) the Average Closing Price is less than $27.00.
UCB may refuse to consummate the Merger pursuant to this provision by giving
written notice to SNC during the ten-day period beginning two days after the
Determination Date. The notice must specify which of clauses (a) or (b) is
applicable (or, if both would be applicable, which clause is being invoked).
SNC will thereafter have a five-day period in which it may, in the case of a
failure to satisfy the condition in clause (a), elect to increase the Exchange
Ratio to equal the quotient obtained by dividing $32.35 by the Average Closing
Price, or, in the case of a failure to satisfy the condition in clause (b),
elect to increase the Exchange Ratio to equal the quotient obtained by
dividing $30.65 by the Average Closing Price. SNC WOULD HAVE NO OBLIGATION TO
INCREASE THE EXCHANGE RATIO. Either such election will be made by giving
notice to UCB of such election and the revised Exchange Ratio, whereupon UCB
would be required to proceed with the Merger with the adjusted Exchange Ratio
in accordance with all other terms of the Reorganization Agreement. UCB may
withdraw its notice of termination at any time during the ten-day period
described above, and could elect to proceed with the Merger at the Exchange
Ratio of 1.135 if SNC were to determine not to adjust the Exchange Ratio.
For purposes of the rights of termination and adjustment described above,
the following terms are defined as follows:
"Determination Date" means the date on which SNC receives consent to the
Merger from the Federal Reserve.
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<PAGE>
"Average Closing Price" means the average of the daily closing sales
prices per share of SNC Common Stock as reported on the NYSE Composite
Transactions List (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as chosen by SNC) for the
ten consecutive full trading days in which such shares are traded on the
NYSE ending at the close of trading on the Determination Date.
"Index Group" means 19 bank holding companies designated in the
Reorganization Agreement, the common stocks of all of which must be
publicly traded and as to which there may not have been, since the Starting
Date and before the Determination Date, any public announcement of a
proposal for such company to be acquired or for such company to acquire
another company or companies in transactions with a value exceeding 25% of
the acquiror's market capitalization. In the event that any such company or
companies are removed from the Index Group, the weights (which have been
determined based upon the number of shares of outstanding common stock)
will be redistributed proportionately for purposes of determining the Index
Price. If any company belonging to the Index Group, or SNC, 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 SNC will be appropriately adjusted for the purposes of applying
the provision set forth in clause (a) above.
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing sales prices of
the companies composing the Index Group.
"Starting Date" means November 1, 1996.
These conditions reflect the parties' agreement that UCB's shareholders will
assume certain risks of decline in the value of SNC Common Stock. If the value
of SNC Common Stock were to decline so that the Average Closing Price were
between $27.00 and $28.50, but the Average Closing Price did not reflect a
decline in the price of SNC Common Stock from $33.50 (the closing price of SNC
Common Stock on October 24, 1996, which was the date the parties agreed upon
the Exchange Ratio) (the "Starting Price") of more than 15% in comparison to
the stock prices of the group of comparable bank holding company stocks (the
Index Group referenced above) as measured from November 1, 1996 to the
Determination Date, then UCB's shareholders would continue to assume the risk
of decline in the value of SNC Common Stock. UCB has the right to terminate
the Reorganization Agreement only when either (a) both the Average Closing
Price of SNC Common Stock is less than $28.50 and the decline from the value
of the Starting Price to such Average Closing Price exceeds by more than 15%
the decline in value for the group of comparable bank holding companies from
November 1, 1996 to the Determination Date or (b) the Average Closing Price is
less than $27.00.
If the UCB Board elects to terminate the Reorganization Agreement because of
a decline in the price of SNC Common Stock, SNC may avoid termination by
increasing the Exchange Ratio. In deciding whether to increase the Exchange
Ratio, the principal factors SNC would consider include, without limitation,
the projected effect of the Merger on SNC's pro forma earnings and book value
per share and whether SNC's assessment of UCB's earning potential as part of
SNC justifies the issuance of a greater number of shares of SNC Common Stock.
If SNC should decline to adjust the Exchange Ratio, UCB may elect to withdraw
its election to terminate and to proceed with the Merger without adjustment,
provided it does so within 12 days of the Determination Date. In making such
determination, the principal factors the UCB Board would consider include,
without limitation, whether the Merger remains in the best interest of UCB and
its shareholders, despite a decline in the SNC Common Stock price, and whether
the consideration to be received by the holders of UCB Common Stock remains
fair from a financial point of view.
In particular, the UCB Board will review the circumstances surrounding the
decline in the price of SNC Common Stock and whether such decline is a result
of an issue specific to SNC or whether it is reflective of a general decline
in the bank stock market. In the event SNC should decline to adjust the
Exchange Ratio and UCB should determine to proceed without adjustment, SNC and
UCB intend to review the circumstances prevailing at that time to determine
whether to resolicit the SNC and UCB shareholders, although the terms of the
Reorganization Agreement do not specifically require the parties to effect a
resolicitation of the SNC and UCB shareholders.
33
<PAGE>
The operation of the adjustment mechanism can be illustrated by five
scenarios. (For purposes of the numerical examples, the Exchange Ratio prior
to any adjustment is 1.135 and the Index Price, as of November 1, 1996, is
$100.)
(a) The first scenario is that the Average Closing Price of the SNC
Common Stock is not less than $28.50. Under this scenario, regardless of
any comparison between the SNC Ratio and the Index Ratio, there would be no
right on the part of UCB to terminate the Reorganization Agreement due to a
decline in value of the SNC Common Stock and therefore no potential
adjustment to the Exchange Ratio, even though the value of the
consideration to be received by UCB shareholders could have fallen from a
pro forma $40.01 per share as of November 1, 1996 to $32.35 per share (if
the Average Closing Price were $28.50) as of the Determination Date,
assuming that the value at the Determination Date equals the Average
Closing Price.
(b) The second scenario is that the Average Closing Price is between
$27.00 and $28.50, but the SNC Ratio is above the Index Ratio. Under this
scenario, there again would be no right on the part of UCB to terminate the
Reorganization Agreement due to a decline in value of the SNC Common Stock
and therefore no potential adjustment to the Exchange Ratio, even though
the consideration received by UCB shareholders could have fallen from a pro
forma $40.01 per share as of November 1, 1996 to $30.65 per share (if the
Average Closing Price were $27.00) as of the Determination Date, assuming
that the value at the Determination Date equals the Average Closing Price.
(c) The third scenario is that the Average Closing Price is between
$27.00 and $28.50 and the SNC Ratio is below the Index Ratio (i.e., SNC's
stock price has declined by more than 15% relative to the price of shares
of the Index Group). Under this scenario, UCB would have the right to
terminate the Reorganization Agreement and SNC would have the right, but
not the obligation, to reinstate the Reorganization Agreement by adjusting
the Exchange Ratio. In this case, the potential adjustment in the Exchange
Ratio is designed to ensure that UCB shareholders would receive shares of
SNC Common Stock having a value (based upon the Average Closing Price)
equal to $32.35 per share.
For example, if the Average Closing Price were $27.50, and the Index
Price on the Determination Date were $105, the SNC Ratio would be 0.82 and
would be below the Index Ratio (0.90, or 1.05-0.15). In such a case, UCB
could terminate the Reorganization Agreement unless SNC elected within five
days to increase the Exchange Ratio to 1.176, which represents $32.35
divided by the Average Closing Price. Based upon the assumed $27.50 Average
Closing Price, the new Exchange Ratio would represent a value to UCB
shareholders of $32.35 per share.
(d) The fourth scenario is that the Average Closing Price is below $27.00
but the SNC Ratio is above the Index Ratio. In this case, UCB would have
the right to terminate the Reorganization Agreement and SNC would have the
right, but not the obligation, to reinstate the Reorganization Agreement by
adjusting the Exchange Ratio. In this case, the potential adjustment in the
Exchange Ratio is designed to ensure that UCB shareholders would receive
shares of SNC Common Stock having a value (based upon the Average Closing
Price) equal to $30.65 per share.
For example, if the Average Closing Price were $26.00, UCB could
terminate the Reorganization Agreement unless SNC elected within five days
to increase the Exchange Ratio to 1.179, which represents $30.65 divided by
the Average Closing Price. Based upon the assumed $26.00 Average Closing
Price, the new Exchange Ratio would represent a value to UCB shareholders
of $30.65 per share.
(e) The fifth scenario is that both the Average Closing Price is below
$27.00 and the SNC Ratio is below the Index Ratio. In this case, UCB would
have the right to terminate the Reorganization Agreement on either of the
two grounds for termination that are based on a decline in SNC's stock
price. SNC would have the right, but not the obligation, to reinstate the
Reorganization Agreement by adjusting the Exchange Ratio in accordance with
the provisions of the basis for termination selected by the UCB Board.
Depending on which basis for termination UCB selected, UCB shareholders
would receive shares of SNC Common Stock having a value (based upon the
Average Closing Price) equal to either $30.65 per share or $32.35 per
share.
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<PAGE>
For example, if the Average Closing Price were $26.00 and the UCB Board
elected to terminate the Reorganization Agreement on the basis that such
price was below $27.00, SNC would have the right, but not the obligation,
to reinstate the Reorganization Agreement by increasing the Exchange Ratio
within five days to 1.179, which represents $30.65 divided by the Average
Closing Price. Based upon the assumed $26.00 Average Closing Price, the new
Exchange Ratio would represent a value to UCB shareholders of $30.65 per
share. If the Index Price were $98, the SNC Ratio would be 0.78 (based on
the Average Closing Price of $26.00) and would be below the Index Ratio
(0.83, or 0.98 minus 0.15). If the UCB Board elected to terminate the
Reorganization Agreement on this basis, SNC would have the right, but not
the obligation, to reinstate the Reorganization Agreement by increasing the
Exchange Ratio within five days to 1.244, which represents $32.35 divided
by the Average Closing Price. Based upon the assumed $26.00 Average Closing
Price, the new Exchange Ratio would represent a value to UCB shareholders
of $32.35 per share.
UCB shareholders should be aware that the actual market value of a share of
SNC Common Stock at the Effective Time and at the time certificates for those
shares are delivered following surrender and exchange of certificates for
shares of UCB Common Stock may be more or less than the Average Closing Price.
UCB shareholders are urged to obtain information on the trading value of SNC
Common Stock that is more recent than that provided in this Joint Proxy
Statement/Prospectus. See "SUMMARY--Comparative Market Prices and Dividends."
No fractional shares of SNC Common Stock will be issued in the Merger.
Holders of UCB Common Stock otherwise entitled to a fractional share will be
paid an amount in cash determined by multiplying the fractional part of such
share of SNC Common Stock by the closing price of such common stock on the
NYSE Composite Transactions List on the last trading day preceding the
Effective Time.
EXCHANGE OF UCB COMMON STOCK CERTIFICATES
Promptly after the Effective Time, transmittal forms will be mailed to each
record shareholder of UCB Common Stock at the Effective Time. The transmittal
form will include instructions to be followed in exchanging the certificates
formerly evidencing shares of UCB Common Stock for certificates evidencing
shares of SNC Common Stock and, if applicable, cash in lieu of fractional
shares. Upon surrender of certificates formerly evidencing shares of UCB
Common Stock in accordance with the transmittal forms and instructions, each
holder thereof will receive a certificate evidencing the number of whole
shares of SNC Common Stock to which that holder is entitled and any cash
payable in lieu of a fractional share.
HOLDERS OF UCB COMMON STOCK SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE TRANSMITTAL FORMS AND INSTRUCTIONS.
After the Effective Time, until so surrendered and exchanged, each
certificate that evidenced shares of UCB Common Stock immediately prior to the
Effective Time (other than certificates held by dissenting shareholders) will
represent only the right to receive the whole shares of SNC Common Stock and
any cash payment in lieu of a fractional share in the Merger. Holders of
certificates formerly evidencing UCB Common Stock will not be entitled to
receive any dividends or other distributions payable with respect to shares of
SNC Common Stock until the unexchanged certificates are surrendered. Any
dividends and distributions on SNC Common Stock from the Effective Time until
surrender will be accumulated and paid, together with any cash payment in lieu
of fractional shares, without interest upon surrender of certificates formerly
evidencing UCB Common Stock.
THE REORGANIZATION AGREEMENT
Effective Date and Time of the Merger
The Reorganization Agreement provides that the closing of the transactions
contemplated therein will take place on the business day designated by SNC
that is within 30 days following the satisfaction of the conditions to the
consummation of the Merger, or such later date as the parties may otherwise
agree. The Effective Time
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<PAGE>
will occur at the time and date specified in the Articles of Merger to be
filed with the Secretary of State of North Carolina. It is currently
anticipated that the filing of the Articles of Merger will take place within
45 days following the date on which the Plan of Merger is approved by the SNC
shareholders and the UCB shareholders at their respective meetings and all
other conditions to the respective obligations of SNC and UCB to consummate
the Merger have been satisfied. If the Merger is approved at the SNC Meeting
and the UCB Meeting on April 22, 1997, it is currently anticipated that the
filing of the Articles of Merger and the Effective Time will occur on or about
July 1, 1997.
Conditions to the Merger
The respective obligations of SNC and UCB to effect the Merger and the other
transactions contemplated by the Reorganization Agreement are subject to
satisfaction (or, if permissible, waiver) of the following conditions at or
prior to the Effective Time: (a) all corporate action necessary to authorize
the execution, delivery and performance of the Reorganization Agreement and
the Plan of Merger, the UCB Option Agreement and the SNC Option Agreement must
have been duly and validly taken, including without limitation the required
approvals of the shareholders of SNC and the shareholders of UCB; (b) the
Registration Statement must be effective under the Securities Act, SNC must
have satisfied all state securities or "Blue Sky" requirements and no
proceedings may be pending or, to the knowledge of SNC, threatened by the
Commission or any state "Blue Sky" securities administration to suspend the
effectiveness of the Registration Statement; (c) all regulatory approvals
required in connection with the transactions contemplated by the
Reorganization Agreement must have been received and be in effect, and all
notice periods and waiting periods required after the granting of any such
approvals must have passed; (d) neither SNC or UCB nor any of their respective
subsidiaries may be subject to any order, decree or injunction of a court or
agency of competent jurisdiction that enjoins or prohibits consummation of the
transactions contemplated by the Reorganization Agreement; (e) SNC and UCB
must have received an opinion of SNC's legal counsel, Womble Carlyle Sandridge
& Rice, PLLC, in form and substance satisfactory to SNC and UCB, substantially
to the effect that the Merger will constitute one or more reorganizations
under Section 368 of the Code and that the shareholders of UCB will not
recognize any gain or loss to the extent that such shareholders exchange
shares of UCB Common Stock for shares of SNC Common Stock (other than with
respect to cash received in lieu of a fractional share); (f) SNC must have
received letters, dated as of the date of filing of the Registration Statement
with the Commission and as of the Effective Time, in form and substance
reasonably satisfactory to SNC, from Arthur Andersen LLP to the effect that
the transactions contemplated by the Reorganization Agreement will qualify for
pooling of interest accounting treatment; and (g) the shares of SNC Common
Stock issuable pursuant to the Merger must have been approved for listing on
the NYSE, subject to official notice of issuance.
In addition, each party's obligation to effect the transactions contemplated
by the Reorganization Agreement is subject to the satisfaction of the
following conditions at or prior to the Effective Time, unless waived by such
party: (a) all representations and warranties of the other party must be true
and correct at the Effective Time (other than inaccuracies that in the
aggregate do not have, or are not reasonably likely to have, a material
adverse effect on the other party); (b) the other party must have performed in
all material respects all obligations and complied in all material respects
with all covenants in the Reorganization Agreement; and (c) each party must
have received customary closing certificates from the other party and legal
opinions from the other party's counsel.
The obligations of SNC to effect the transactions contemplated by the
Reorganization Agreement are subject to satisfaction of the following
additional conditions at or prior to the Effective Time, unless waived by SNC:
(a) no regulatory approval may have imposed any condition or requirement
which, in the reasonable opinion of the SNC Board, would so materially
adversely affect the business or economic benefits to SNC of the transactions
contemplated by the Reorganization Agreement as to render consummation of such
transactions inadvisable or unduly burdensome; provided, that (i) SNC must
have used reasonable efforts to cause such conditions or restrictions to be
removed or modified as appropriate; (ii) notwithstanding the foregoing, in the
event that such consent is conditioned or restricted as a result of a
regulatory or legal issue resulting from other
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acquisitions by SNC, whether announced before or after the date of the
Reorganization Agreement, or otherwise unrelated to UCB, SNC may not refuse to
consummate the Merger on this basis; and (iii) any required disposition of
deposits will be deemed acceptable if the dollar amount of deposits required
to be divested does not exceed $500 million; (b) SNC must have received
written agreements from affiliates of UCB concerning sales of SNC Common Stock
to be received by such affiliates; and (c) the holders of no more than 9.0% of
the UCB Common Stock may have given written notice of their intent to demand
payment for their shares and not voted for the Merger, pursuant to Article 13
of the NCBCA.
Conduct of UCB's and SNC's Business Prior to the Effective Time
Except with the prior written consent of SNC, prior to the Effective Time
UCB may not, and must cause each of its subsidiaries not to:
(a) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as conducted prior to the date of
the Reorganization Agreement, or establish or acquire any new subsidiary or
engage in any new activity;
(b) declare, set aside, make or pay any dividend or other distribution in
respect of its capital stock, other than regularly scheduled quarterly
dividends of $.18 per share of UCB Common Stock payable on record dates and
in amounts consistent with past practices (provided, that any dividend
declared or payable on the shares of UCB Common Stock for the quarterly
period during which the Effective Time occurs will, unless otherwise agreed
upon in writing by SNC and UCB, be declared with a record date prior to the
date of the Merger only if the normal record date for payment of the
corresponding quarterly dividend to holders of SNC Common Stock is prior to
the Effective Time);
(c) issue any shares of its capital stock, except pursuant to existing
stock plans of UCB and the SNC Option Agreement, or issue, grant or
authorize any rights to purchase any shares of its capital stock or effect
any recapitalization, reclassification, stock dividend, stock split or like
change in capitalization;
(d) amend the UCB Articles or the UCB Bylaws; impose or permit imposition
of any lien, charge or encumbrance on any share of stock held by it in any
subsidiary, or permit any such lien, charge or encumbrance to exist; or
waive or release any material right or cancel or compromise any debt or
claim other than in the ordinary course of business;
(e) merge with any other entity or permit any other entity to merge into
it, consolidate with any other entity, acquire control over any other
entity or liquidate, sell or otherwise dispose of any assets or acquire any
assets other than in the ordinary course of its business consistent with
past practices;
(f) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of
its business;
(g) increase the rate of compensation of any of its directors, officers
or employees, or pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers or
employees, except in the ordinary course of business consistent with past
practices, or enter into or substantially modify (except as may be required
by applicable law or regulation) any pension, retirement, stock option,
stock purchase, stock appreciation right, 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 (except that this clause does not prevent renewals of any of the
foregoing consistent with past practice, except for contemplated changes in
UCB's Flexible Benefit Plan);
(h) solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, UCB or any
subsidiary or any business combination with UCB or any subsidiary other
than as contemplated by the Reorganization Agreement; or authorize any
officer, director, agent or affiliate of UCB or any subsidiary to do any of
the above; or fail to notify SNC immediately if any such inquiries or
proposals are received, any such information is requested or required, or
any such negotiations or discussions are sought to be initiated (except
that this commitment
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will not apply to furnishing information, negotiations or discussions
following an unsolicited offer if, as a result of such offer, UCB is
advised in writing by legal counsel that the failure so to furnish
information or negotiate would constitute a breach of the fiduciary duties
of the UCB Board to its shareholders);
(i) enter into any (i) material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) agreement, indenture or other
instrument not made in the ordinary course of business relating to the
borrowing of money by UCB or any subsidiary or guarantee by UCB or any
subsidiary of any obligation, (iii) agreement, arrangement or commitment
relating to the employment or severance of a consultant or the employment,
severance, election or retention in office of any present or former
director, officer or employee (except that this commitment will not apply
to the election of directors by shareholders in the normal course, and the
election of officers by directors in the normal course terminable at will
except to the extent otherwise provided in a disclosed agreement,
arrangement or commitment); or (iv) contract, agreement or understanding
with a labor union;
(j) change its lending, investment or asset liability management policies
in any material respect, except as may be required by applicable law,
regulation or directives, and except that after approval of the
Reorganization Agreement and the Plan of Merger by its shareholders UCB
will cooperate in good faith with SNC to adopt policies, practices and
procedures consistent with those utilized by SNC, effective on or before
the Closing Date;
(k) change its methods of accounting in effect at December 31, 1995,
except as required by changes in generally accepted accounting principles
concurred with by SNC's independent certified public accountants, which
concurrence may not be unreasonably withheld, or change any of its methods
of reporting income and deductions for federal income tax purposes from
those employed in the preparation of its federal income tax returns for the
year ended December 31, 1995, except as required by changes in law or
regulation;
(l) incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $250,000 for any one expenditure or
$2,000,000 in the aggregate, or incur any indebtedness other than deposits
from customers or otherwise in the ordinary course of business;
(m) take any action which would or could reasonably be expected to (i)
cause the Merger not to be accounted for as a pooling of interests or not
to constitute a reorganization under Section 368 of the Code, in either
case as determined by SNC, (ii) result in any inaccuracy of a
representation or warranty that would allow for a termination of the
Reorganization Agreement or (iii) cause any of the conditions precedent to
the transactions contemplated by the Reorganization Agreement to fail to be
satisfied; or
(n) agree to do any of the foregoing.
Except with the prior written consent of UCB, which consent may not be
arbitrarily or unreasonably withheld, prior to the Effective Time neither SNC
nor any subsidiary of SNC may: (a) exercise the SNC Option other than in
accordance with the terms of the SNC Option Agreement, or dispose of the
shares of UCB Common Stock issuable upon its exercise other than as permitted
or contemplated by such terms; (b) enter into a merger or other business
combination transaction with any other corporation or person in which SNC
would not be the surviving or continuing entity after the consummation
thereof, or sell or lease all or substantially all of the assets and business
of any subsidiary; (c) carry on its business other than in the usual, regular
and ordinary course in substantially the same manner as conducted prior to the
date of the Reorganization Agreement; (d) fail to comply in any material
respect with any laws, regulations, ordinances or governmental actions
applicable to it and to the conduct of its business; or (e) take any action
that would or might be expected to (i) cause the Merger not to be accounted
for as a pooling of interests or not to constitute a reorganization under
Section 368 of the Code, (ii) result in any inaccuracy of a representation or
warranty that would allow for termination of the Reorganization Agreement or
(iii) cause any of the conditions precedent to the transactions contemplated
by the Reorganization Agreement to fail to be satisfied.
The Reorganization Agreement further provides that in connection with either
a consolidation or merger with any party in which SNC is not the surviving
entity or a transfer of all or substantially all of SNC's assets to another
entity, SNC shall cause any successors and assigns of SNC to specifically
agree to assume SNC's obligations under the Reorganization Agreement.
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Waiver; Amendment; Termination; Expenses
Except with respect to any required regulatory approval, SNC or UCB may at
any time (whether before or after approval of the Reorganization Agreement and
the Plan of Merger by the UCB shareholders) extend the time for the
performance of any of the obligations or other acts of the other party and may
waive (a) any inaccuracies of the other party in the representations or
warranties contained in the Reorganization Agreement, the Plan of Merger or
any document delivered pursuant thereto, (b) compliance with any of the
covenants, undertakings or agreements of the other party, or satisfaction of
any of the conditions precedent to its obligations, contained in the
Reorganization Agreement or in the Plan of Merger or (c) the performance by
the other party of any of its obligations set out therein. No such extension
or waiver, or amendment or supplement executed after approval by the UCB
shareholders of the Reorganization Agreement and the Plan of Merger, however,
may reduce either the number of shares of SNC Common Stock into which each
share of UCB Common Stock will be converted in the Merger or the payment terms
for fractional interests. Subject to the foregoing proviso, the Reorganization
Agreement or the Plan of Merger may be amended or supplemented at any time in
writing by mutual agreement of SNC and UCB.
In the event of nonfulfillment of any of the conditions to the obligation of
either party to consummate the Merger, such party will consider the
materiality to its shareholders of such nonfulfillment and, if appropriate
under the circumstances, will resolicit shareholder approval of the
Reorganization Agreement and the Plan of Merger and in connection therewith
provide appropriate information concerning the nonfulfillment of such
condition. With respect to the condition of the Reorganization Agreement
requiring delivery to SNC and UCB of a tax opinion of SNC's counsel as
described above (see clause (e) under "--The Reorganization Agreement--
Conditions to the Merger"), such counsel has previously delivered to SNC an
opinion to such effect in connection with the filing of the Registration
Statement. However, if for any reason such counsel is unable to deliver such
opinion at the Effective Time, SNC and UCB will either decline to waive such
condition or resolicit the proxies of their shareholders and provide
appropriate information as to the federal income tax consequences of the
Merger in connection with such resolicitation.
The Reorganization Agreement may be terminated, and the Merger may be
abandoned:
(a) at any time prior to the Effective Time, by the mutual consent in
writing of SNC and UCB;
(b) at any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in the Reorganization Agreement or (ii) in the event of an
inaccuracy of any representation or warranty of the other party contained
in the Reorganization Agreement that would provide the nonbreaching party
the ability to refuse to consummate the Merger under the applicable
standard set forth in the Reorganization Agreement (generally, inaccuracies
that in the aggregate have or are reasonably likely to have a material
adverse effect on the breaching party, or inaccuracies in the
representations and warranties concerning capitalization other than those
that are de minimus in amount); and, in the case of (i) or (ii), if such
breach or inaccuracy has not been cured by the earlier of 30 days following
written notice of such breach to the party committing such breach or
inaccuracy or the Effective Time;
(c) at any time prior to the Effective Time, by either party in writing,
if any of the conditions precedent to the obligations of the other party to
consummate the transactions contemplated in the Reorganization Agreement
cannot be satisfied or fulfilled prior to the Closing Date, and the party
giving the notice is not in breach of any of its representations,
warranties, covenants or undertakings;
(d) at any time, by either party in writing, if any of the applications
for prior regulatory approval are denied, and the time period for appeals
and requests for reconsideration has run;
(e) at any time, by either party in writing, if the shareholders of UCB
do not approve the Reorganization Agreement and the Plan of Merger or if
the shareholders of SNC do not approve the Merger Proposal;
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(f) at any time following September 30, 1997, by either party in writing,
if the Effective Time has not occurred by the close of business on such
date, and the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings; or
(g) by a majority of all of the members of the UCB Board, pursuant to the
provisions of the Reorganization Agreement described above under "--
Exchange Ratio."
If the Reorganization Agreement and the Plan of Merger are terminated
pursuant to any of the provisions described above, both the Reorganization
Agreement and the Plan of Merger will become void and have no effect, except
that (a) provisions in the Reorganization Agreement relating to
confidentiality and expenses will survive any such termination and (b) a
termination for an uncured breach of a covenant or agreement or inaccuracy in
a representation or warranty will not relieve the breaching party from
liability for that breach or inaccuracy. The Option Agreements are governed by
their own terms. See "--Option Agreements."
Each party to the Reorganization Agreement will bear all expenses incurred
by it in connection with the Reorganization Agreement and the transactions
contemplated thereby, except that printing expenses and Commission
registration fees will be borne 70% by SNC and 30% by UCB.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General
Certain members of UCB's management and the UCB Board have interests in the
Merger in addition to their interests as shareholders of UCB generally. As
more fully described below, those interests relate to, among other things,
provisions in the Reorganization Agreement regarding indemnification,
eligibility for certain employee benefits, election of certain individuals to
the Boards of SNC, BB&T-NC and BB&T-SC and agreements by SNC and UCB-NC to
enter into employment or settlement agreements with certain executive officers
of UCB at the Effective Time in exchange for such executive officers
terminating their existing employment agreements with UCB and to maintain a
certain employment base in the Whiteville, North Carolina community.
Post-Merger Management Matters
SNC has agreed to cause E. Rhone Sasser and three other current members of
the UCB Board to be appointed to the SNC Board following consummation of the
Merger. UCB has recommended to SNC that Alfred E. Cleveland, Jack E. Shaw and
Harold B. Wells be appointed to serve on the SNC Board in addition to
Mr. Sasser. Mr. Sasser will also serve on the SNC Board's Executive Committee
(the "SNC Executive Committee"). SNC has also agreed to cause the remaining
eight members of the UCB Board to be elected to the board of directors of
BB&T-NC following consummation of the Merger for an annual retainer of $5,000
and an attendance fee of $1,000 per meeting. These individuals are J. W.
Adams, John V. Andrews, Russell M. Carter, W. E. Carter, James L. Cresimore,
Thomas P. Dillon, James C. High and Charles M. Winston. SNC has further agreed
to elect three individuals serving on the UCB-SC Board to the board of
directors of BB&T-SC for an annual retainer and attendance fees as established
for BB&T-SC. These individuals are James H. Benson, Jr., Merl F. Code and
Howard W. Covington, Jr.
In addition, SNC has offered employment opportunities to certain executive
officers of UCB after the Effective Time. Specifically, SNC will cause one
executive of UCB to be appointed to the position of a Regional President of
UCB-NC, three executives of UCB will be appointed Executive Vice Presidents of
UCB-NC and three executives of UCB will be appointed Senior Vice Presidents of
UCB-NC.
UCB and UCB-NC have previously entered into identical employment agreements
with UCB executive officers, including E. Rhone Sasser, Chairman and Chief
Executive Officer of UCB and UCB-NC; Kenneth L. Miller, Jr., President of UCB
and UCB-NC; Ronald C. Monger, Executive Vice President and Chief Financial
Officer of UCB and UCB-NC; Jeff D. Etheridge, Jr., Executive Vice President of
UCB and UCB-NC (Credit Administration); David L. Thomas, Executive Vice
President of UCB and UCB-NC (Trust and Related Financial Services); Preston E.
Davenport, Jr., Executive Vice President of UCB-NC (Branch Administration);
Thomas A.
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Nicholson, Jr., Senior Vice President of UCB and UCB-NC (Human Resources); and
Howard V. Hudson, Jr., General Counsel of UCB and UCB-NC (collectively, the
"Named Officers"). The terms of such agreements are described in detail under
"ADDITIONAL MATTERS RELATED TO THE UCB MEETING--Employment Contracts and
Change in Control Agreements." Each employment agreement generally provides
for a rolling three-year term which is automatically extended each day after
the date of the employment agreement and provides the executive the right to
terminate the agreement for good reason (as defined) within three years
following the date of a change of control of UCB and receive a payment as
calculated under such agreement. In consideration of such executives
terminating such agreements at the Effective Time, SNC has agreed to enter
into a settlement agreement with Mr. Sasser and an employment agreement with
each of the other Named Officers (the "Other Named Officers"). The terms of
the agreements proposed to be entered into by SNC and such executive officers
of UCB are set forth below.
Settlement and Employment Agreements
E. Rhone Sasser. In connection with the Merger, SNC and Mr. Sasser agreed
that, upon consummation of the Merger, it would be in the best interest of SNC
that Mr. Sasser not remain an employee of SNC but continue to serve on the SNC
Board and the SNC Executive Committee. Mr. Sasser is a shareholder of UCB, and
has served as Chairman and Chief Executive Officer of UCB since 1986 and 1983,
respectively. Although he was prepared to continue to serve in such capacities
until attaining the age of 65, Mr. Sasser agreed to resign his employment by
UCB at the Effective Time. In addition, because of Mr. Sasser's long tenure
with UCB and standing in UCB's market area and the absence of a covenant not
to compete in Mr. Sasser's current employment agreement with UCB, SNC also
requested that Mr. Sasser enter into a covenant not to compete with SNC on the
basis described below. Accordingly, the parties have agreed that at the
Effective Time, SNC and Mr. Sasser will enter into a Settlement and
Noncompetition Agreement (the "Settlement Agreement") that will terminate
Mr. Sasser's current agreement with UCB, provide for a covenant not to compete
and provide for various payments to Mr. Sasser on the terms described below.
Under the Settlement Agreement, Mr. Sasser will be prohibited from engaging,
directly or indirectly, in the banking and financial services businesses
anywhere in the states of North Carolina, South Carolina or Virginia, or in
any county contiguous to these states for a period of ten years (the
"Noncompetition Covenant"). In consideration for terminating Mr. Sasser's
existing employment agreement with UCB and for the Noncompetition Covenant,
SNC will pay annually to Mr. Sasser the sum of $769,392 (to be adjusted
annually in accordance with the Consumer Price Index) until Mr. Sasser attains
the age of 65, at which time Mr. Sasser will receive annually an amount equal
to 70% of the amount paid Mr. Sasser during the final year under the
Settlement Agreement, estimated to be approximately $623,000, reduced by
amounts payable to Mr. Sasser under the UCB Pension Plan and the BEP as
described below and under "Additional Matters Relating to the UCB Meeting--
Retirement Plans." The payments provided for under the Settlement Agreement
will be made to Mr. Sasser for his life and, after his death, to his current
wife for her life if she survives him in the annual amount equal to 35% of the
amount paid Mr. Sasser during the final year under the Settlement Agreement,
estimated to be approximately $312,000, reduced by amounts payable to Mr.
Sasser's wife under the UCB Pension Plan and the BEP. If Mr. Sasser dies prior
to age 65, the payments that would otherwise have been made to him will
continue until the date he would have reached age 65, at which time the
payments to his current wife would begin (if she survives to that date). In
addition, Mr. Sasser will be entitled to certain miscellaneous benefits,
including the continuation of certain life, health and welfare benefits. The
net present value of the payments to be made to Mr. Sasser under the
Settlement Agreement is estimated to be approximately $6.4 million (not
including amounts payable to Mr. Sasser under the UCB Pension Plan and the BEP
as described below and under "ADDITIONAL MATTERS RELATING TO THE UCB MEETING--
Retirement Plans").
If any of the amounts payable under the Settlement Agreement are subject to,
or cause any other payments to be subject to, excess tax under Section 4999 of
the Code as excess parachute payments under Section 280G of the Code, SNC will
indemnify Mr. Sasser on an after-tax basis for any excess tax, plus any
penalties or interests, plus any excess taxes and income taxes on the
indemnity amounts.
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The net present value of the payments that would be made to Mr. Sasser under
his existing employment agreement with UCB, if Mr. Sasser's employment were
terminated at the Effective Time other than for cause, is estimated, based on
various assumptions, to be approximately $1.7 million. The difference between
the net present value of the payments to Mr. Sasser under the Settlement
Agreement and the estimated amount payable to him as described in the
preceding sentence is primarily attributable to the value allocated by SNC to
the Noncompetition Covenant.
In addition to the payments under the Settlement Agreement (including those
payable to Mr. Sasser under the UCB Pension Plan and the BEP), Mr. Sasser has
accrued various additional benefits under the UCB benefit plans and will be
entitled to receive such benefits after the Effective Time, as described in
the sections set forth below, including the payment, at the Effective Time, of
the awards granted to Mr. Sasser under the LTIP. For information with respect
to beneficial stock ownership of, stock options held by, compensation paid to,
and awards under the LTIP to, Mr. Sasser, see the other sections set forth
below and "ADDITIONAL MATTERS RELATING TO THE UCB MEETING--Security
Ownership," "--Compensation of Executive Officers" and "--Long Term Incentive
Plan."
Other Named Officers. SNC has agreed for UCB-NC to offer employment to the
Other Named Officers pursuant to terms of individual employment agreements to
be dated as of the Effective Time (each an "Employment Agreement"). UCB-NC
will enter into each Employment Agreement in consideration of the Other Named
Officer terminating such officer's existing employment agreement with UCB and
agreeing to continued employment under the Employment Agreement. Each
Employment Agreement will stipulate that such Employment Agreement's term will
terminate on the later of the day after the fifth anniversary of the Effective
Time or the 55th birthday of the contracting Other Named Officer (the
"Employment Term"). The Other Named Officers have been offered the following
positions with UCB-NC pursuant to the proposed Employment Agreements: Messrs.
Miller, Monger and Davenport, Executive Vice President; Messrs. Thomas,
Nicholson and Hudson, Senior Vice President; and Mr. Etheridge, Regional
President.
During the Employment Term, each Other Named Officer will receive cash
compensation consisting of a base salary (each a "Base Salary") plus the
opportunity to earn an annual bonus. The Base Salary to be paid by UCB-NC to
each of the Other Named Officers is as follows: Mr. Miller, $275,004; Mr.
Monger, $218,500; Mr. Etheridge, $210,600; Mr. Thomas, $188,504; Mr.
Davenport, $185,996; Mr. Nicholson, $146,004; and Mr. Hudson, $137,300. The
Base Salaries are equal to the base salaries currently paid to the Other Named
Officers by UCB. Each Other Named Officer's Base Salary will be reviewed on an
annual basis in accordance with UCB-NC's established performance review
procedures during the Employment Term. However, pursuant to the terms of each
Employment Agreement, no Other Named Officer's base salary may be decreased
below the original Base Salary during the term of the Employment Agreement.
Each Other Named Officer's annual bonus will be calculated under the
standards set forth in SNC's Amended and Restated Short-Term Incentive Plan
(the "SNC Incentive Plan"), or any replacement plan therefor. Each Other Named
Officer will participate in the SNC Incentive Plan so as to be eligible to
receive a bonus payment each year calculated at a target level of 30% of Base
Salary (except in the case of Messrs. Miller, Nicholson and Hudson, whose
target bonus payments will be calculated at 35%, 25% and 25%, respectively, of
Base Salary) with a maximum bonus payment not to exceed 150% of the targeted
bonus. Each Other Named Officer's participation in the SNC Incentive Plan will
be based upon the same performance measurements used under the SNC Incentive
Plan for similarly situated participants and SNC's actual operating
performance for the year in question, except that for the year 1997
participation will be based on corporate performance goals and determined as
though such Other Named Officer had been an employee of SNC for the entire
year. During the year in which the Effective Time occurs, each Other Named
Officer's participation level in the SNC Incentive Plan will be determined as
if such Other Named Officer had been in the employ of SNC or an affiliate of
SNC for the entirety of such year, and base salary received by the Other Named
Officer from UCB during such year will be deemed to be Base Salary for the
purpose of determining the Other Named Officer's target level as described
above. If an Other Named Officer's employment under his Employment Agreement
ends during the
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Employment Term on a date other than the close of a plan year, his bonus, if
any, for the year of termination will be prorated for the portion of such year
during which he was employed.
Each Employment Agreement provides for the annual grant of options to
purchase shares of SNC Common Stock under the SNC Amended and Restated Stock
Incentive Plan (the "SNC Stock Plan"). Such options will constitute incentive
stock options within the meaning of Section 422 of the Code to the maximum
extent permitted under the Code. Options will be granted each year in an
amount having a value of 44.2% of the Base Salary then in effect for the Named
Executive Officer in question, except with respect to Mr. Miller, in whose
case the value will be 49.2% of Base Salary, and Mr. Hudson, in whose case the
value will be 39.2% of Base Salary. In addition, pursuant to the
Reorganization Agreement, SNC will assume the obligations of UCB with respect
to all outstanding stock options (as adjusted for the Merger) that were
granted prior to Effective Time to the Other Named Officer under UCB's Key
Employee Stock Option Plan or 1995 Stock Option and Incentive Award Plan.
Also, SNC will assume the outstanding obligations as they have accrued at the
Effective Time to each Other Named Officer under the terms of the LTIP. For
additional information, see "ADDITIONAL MATTERS RELATING TO THE UCB MEETING--
Long Term Incentive Plan."
If SNC terminates or amends the SNC Incentive Plan or the SNC Stock Plan in
a manner that would adversely affect an Other Named Officer, such officer will
be entitled to participate in any replacement plan or program to the same
extent as similarly situated management employees. If either plan is replaced
by a comparable plan, each Other Named Officer will participate in such
replacement plan at the same percentage level as provided above.
Pursuant to each Employment Agreement, during the Employment Term, each
Other Named Officer will continue to participate in and accrue retirement
benefits under the BEP. Any benefits to which an Other Named Officer is
entitled will be fully vested and will be determined and paid in accordance
with the terms of the BEP. Upon termination of an Other Named Officer's
employment pursuant to his Employment Agreement, all rights of such Other
Named Officer under the BEP will be paid under the terms of the BEP.
If an Other Named Officer incurs a disability during his Employment Term
within the meaning of UCB-NC's group disability plan as in effect at such
time, and such disability continues for 12 consecutive months, the Other Named
Officer's services under his Employment Agreement will terminate and the
Employment Term will end. If, prior to the expiration of such 12-month period,
the Other Named Officer recovers from such disability and returns to the full-
time active discharge of his duties, his employment will continue as if it had
been uninterrupted. During the first 12 months of the period of an Other Named
Officer's disability, the Other Named Officer will continue to earn all
compensation (including bonus compensation) to which he would have been
entitled as if he had not been disabled, such compensation to be paid at the
time, in the amounts, and in the manner described above, inclusive of any
compensation received pursuant to any applicable group disability insurance
plan of UCB-NC. Thereafter, the Other Named Officer will receive compensation
to which he is entitled under any applicable group disability insurance plan.
As soon as practicable following the date of such Employment Agreement, UCB-
NC will transfer to each of five of the Other Named Officers title to the
automobile which was formerly titled to UCB and assigned to such Other Named
Officer for use in the conduct of UCB's business. UCB-NC also will pay to each
of such Other Named Officers the amount of the difference, if any, between the
fair market value of the automobile transferred to the Other Named Officer in
question and the fair market value of the automobile with the highest fair
market value transferred to any of the Other Named Officers. In addition, UCB-
NC will pay each Other Named Officer a cash amount to cover the income tax
incurred as a result of such transfer and any such payment. If any Other Named
Officer is required to relocate his residence as a result of his employment
with UCB-NC, he will also receive relocation benefits under UCB-NC's
relocation policy.
Under the terms of each Employment Agreement, if UCB-NC terminates the
employment of the Other Named Officer in question other than for just cause
(as defined in each Employment Agreement), or if the Other Named Officer
terminates his employment at any time for good reason (as defined in each
Employment
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Agreement), the Other Named Officer will be entitled to continue to receive,
during the remainder of what would otherwise have been the Employment Term and
subject to compliance with the non-competition provisions described below, his
annual Base Salary (at the highest rate in effect for the 12 months
immediately preceding his termination), plus monthly payments equal to one-
twelfth of the highest annual cash bonus earned for any of the three years
immediately preceding termination. In addition, during this period such Other
Named Officer will (a) continue to receive health benefits, life insurance,
disability benefits and other group coverages and (b) continue to participate
in and accrue benefits under the BEP. SNC will also use its best efforts to
vest in the Other Named Officers any stock options granted to them and then
issued and outstanding.
Each Employment Agreement also provides that if an Other Named Officer
voluntarily terminates his employment with UCB-NC during the Employment Term,
or if an Other Named Officer's employment is terminated by UCB-NC for just
cause during the Employment Term, such Other Named Officer will be subject to
a covenant not to compete until the first anniversary of such Other Named
Officer's termination. Alternatively, if an Other Named Officer's employment
during the Employment Term is terminated by UCB-NC for any reason other than
Just Cause, or if the Other Named Officer terminates employment during the
Employment Term for good reason, the Other Named Officer will be subject to a
covenant not to compete for the period with respect to which he continues to
receive compensation under the Employment Agreement.
Each Employment Agreement provides that if, following a change in control
(as defined in each Employment Agreement) of SNC, the employment of the Other
Named Officer in question is terminated by UCB-NC other than for just cause or
by the Other Named Officer for good reason, and if a portion of the payments
and benefits received following termination is determined to be an excess
parachute payment under Section 280G of the Code, the payments and benefits to
be provided will be reduced so that no such excess parachute payments are
made. The Other Named Officer will have the sole right to select which
payments or benefits will be reduced in order that the limits are not
exceeded. For the purposes of making the aforementioned Section 280G
determination, SNC's independent auditor will provide a written opinion, after
consultation with the Other Named Officer and his advisors, of the portion, if
any, of such payments that are excess parachute payments and of the values of
payments and benefits to which he is entitled, which report will be
conclusive. The parties agree that the payments and benefits provided as a
result of such termination will be treated as damages in the nature of
reasonable compensation for all services of the Other Named Officer under the
Employment Agreement. To the extent required by the applicable rules and
regulations of the Internal Revenue Service (the "IRS") promulgated under
Section 280G, the Other Named Officer will be required to mitigate such
damages in the event of termination following a change in control.
In the event that any of the Other Named Officers were to elect not to enter
into an employment agreement with UCB-NC at the Effective Time and payments
were required to be made to such officer under his existing employment
agreement with UCB, the estimated amount of such payments due the Other Named
Officers under the terms of the UCB employment agreement would be $1,158,612,
$888,525, $856,530, $767,037, $756,888, $573,012 and $539,070 for Messrs.
Miller, Monger, Etheridge, Thomas, Davenport, Nicholson and Hudson,
respectively. In addition to the foregoing payments, each Other Named Officer
would be entitled to receive an increased supplemental pension payment under
the terms of the BEP based on three years of additional credited service for
benefit accrual purposes, as provided in each Other Named Officer's existing
employment agreement with UCB.
Executive Officer Stock Options. UCB has granted stock options to its
executive officers under the 1986 Key Employee Stock Option Plan and the 1995
Stock Option and Incentive Award Plan (the "1995 Option and Incentive Plan").
The Reorganization Agreement provides that SNC will assume any outstanding
option grants, whether vested or unvested, which have been granted under the
UCB stock option plans on a basis adjusted to reflect the Exchange Ratio. See
"THE MERGER--Effect on Employees, Employee Benefit Plans and Stock Options."
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The following table sets forth, with respect to the Named Officers and all
executive officers as a group (including the Named Officers, the "Executive
Officer Group"), the number of shares of UCB Common Stock covered by
outstanding options held by such persons.
<TABLE>
<CAPTION>
OPTIONS WEIGHTED AGGREGATE
CURRENTLY AVERAGE EXERCISE VALUE OF
OPTIONS HELD(1) EXERCISABLE PRICE PER OPTION OPTIONS(2)
--------------- ----------- ----------------- ----------
<S> <C> <C> <C> <C>
E. Rhone Sasser......... 8,449 -0- $19.44 $ 369,644
Kenneth L. Miller....... 24,388 13,883 17.10 1,066,975
Ronald C. Monger........ 18,890 10,399 17.31 826,438
Jeff D. Etheridge, Jr... 8,412 -0- 25.85 368,025
David L. Thomas......... 7,525 -0- 25.86 329,219
Preston E. Davenport,
Jr. ................... 12,831 -0- 20.99 561,356
Thomas A. Nicholson,
Jr..................... 8,718 2,821 20.70 381,413
Howard V. Hudson, Jr.... 11,958 6,434 17.39 523,163
Executive Officer Group
(8 persons in all)..... 101,171 33,537 20.58 4,426,233
</TABLE>
- --------
(1) The exercisability of any options held will not accelerate as a result of
the consummation of the Merger.
(2) Based on closing sale price of UCB Common Stock of $43.75 quoted on the
Nasdaq National Market on March 3, 1997.
Long Term Incentive Plan. UCB maintains the LTIP for purpose of encouraging
eligible executive management employees to make long term investment decisions
that increase UCB's shareholder value and enhance UCB's ability to retain such
key employees. Pursuant to the LTIP, awards have been granted to various
executive officers of UCB. Each LTIP award consists of a number of performance
units, expressed in dollars, but payable in shares of UCB Common Stock at the
end of each measurement period if certain performance objectives of UCB are
achieved. The terms of the LTIP are described in detail under "ADDITIONAL
MATTERS RELATING TO THE UCB MEETING--Long Term Incentive Plan."
A participant will be entitled to receive payout of an LTIP award in the
event a change in control of UCB or UCB-NC occurs during a measurement period
(or a threatened change in control occurs followed by the participant's
termination by UCB or UCB-NC without cause (as defined in the LTIP) or the
participant's resignation with good reason). The payout of an LTIP award in
such event is based upon the target award level of performance or the actual
performance of UCB to the date of the change or threatened change in control,
whichever provides greater payment, and, in the discretion of the Personnel
Committee of the UCB Board (the "UCB Personnel Committee"), is payable in
shares of UCB Common Stock and/or cash. Except for awards that are payable
immediately upon a participant's termination of employment or resignation in
connection with a threatened change in control, a participant is entitled to
payment of an LTIP award for any given measurement period during which a
change in control occurs only if (a) he remains employed by UCB (or its
successor) until the end of the measurement period, or (b) prior to the end of
the measurement period, his employment is terminated by UCB (or its successor)
without cause, or the participant retires (whether early, normal or late)
under UCB's (or its successor's) retirement plan, dies or becomes disabled, or
(c) he resigns from employment with UCB (or its successor) with good reason
prior to the end of the measurement period.
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The following table sets forth amounts with respect to outstanding LTIP
awards granted to each Named Officer and the Executive Officer Group that
would vest and become payable upon consummation of the Merger if the Named
Officer does not become an employee of SNC or UCB-NC after the Effective Time.
<TABLE>
<CAPTION>
LONG-TERM
INCENTIVE AWARDS(1)
-------------------
<S> <C>
E. Rhone Sasser.......................................... $1,078,800
Kenneth L. Miller........................................ 530,000
Ronald C. Monger......................................... 416,100
Jeff D. Etheridge, Jr. .................................. 411,000
David L. Thomas.......................................... 371,850
Preston E. Davenport, Jr................................. 314,100
Thomas A. Nicholson, Jr.................................. 282,600
Howard V. Hudson, Jr. ................................... 224,900
Executive Officer Group (8 persons in all)............... 3,628,550
</TABLE>
- --------
(1) Under the terms of the LTIP, the dollar amounts of the awards set forth
above have been calculated as if all performance objectives have been met
and the awards are payable in shares of SNC Common Stock as successor to
UCB, valued on the basis set forth in the LTIP at the Effective Time.
Benefit Equivalency Plan
UCB maintains the BEP for the benefit of certain senior management employees
of UCB and its affiliated subsidiaries, including certain of the Named
Officers. Upon a change in control of UCB, as defined in the BEP, participants
in the BEP receive a non-forfeitable vested benefit, which cannot be reduced.
The Merger constitutes a change in control under the BEP. For additional
information regarding the BEP, see "ADDITIONAL MATTERS RELATING TO THE UCB
MEETING--Retirement Plans."
Other Matters Relating to UCB Employee Benefit Plans
For information relating to employee benefits which will be provided to
former employees of UCB and its subsidiaries who become employees of SNC and
its subsidiaries pursuant to the Merger, see "THE MERGER--Effect on Employees,
Employee Benefit Plans and Stock Options."
Indemnification; Directors' and Officers' Insurance
SNC has agreed that after the Effective Time it will indemnify, defend and
hold harmless the present and former directors, officers, employees and agents
of UCB and its subsidiaries against all liabilities arising out of actions or
omissions occurring at or prior to the Effective Time to the full extent then
permitted under North Carolina law and by the UCB Articles and the UCB Bylaws
as in effect on November 1, 1996, including provisions relating to advances of
expenses, whether or not SNC is insured against any such matter. SNC has also
agreed to either cause the directors and officers of UCB immediately prior to
the Effective Time to be covered under SNC's then existing directors' and
officers' insurance policy or to use its reasonable efforts to maintain in
effect for three years after the Effective Time UCB's existing directors' and
officers' insurance policy, subject to certain limitations, including the
right to replace policies and to limit the premium costs of such coverage.
Commitments to Whiteville, North Carolina Community
Pursuant to the Merger, SNC has agreed to provide no less than 500 jobs in
Columbus County, North Carolina. In determining compliance with this goal,
employees working in the office of the Regional President located in
Whiteville shall be included and jobs at branch offices of BB&T-NC (as
successor to UCB-NC) in such County shall be excluded. SNC has also agreed to
contribute $1,000,000 in the aggregate to one or more
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charitable organizations (within the meaning of (S)501(c)(3) of the Code)
located in Columbus County, North Carolina, as designated by the UCB Board
prior to the Effective Time.
REGULATORY CONSIDERATIONS
Bank holding companies (such as SNC and UCB) and their respective depository
institution subsidiaries are highly regulated institutions, with numerous
federal and state laws and regulations governing their activities. Among these
laws and regulations are requirements of prior approval by applicable
government regulatory authorities in connection with acquisition and merger
transactions such as the Merger, as summarized below. In addition, these
institutions are subject to ongoing supervision, regulation, and periodic
examination by various federal and state financial institution regulatory
agencies. Discussions of such ongoing regulatory oversight and the laws and
regulations under which it is carried out can be found in the Annual Reports
on Forms 10-K of each of SNC and UCB incorporated by reference herein. See
"AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
Those summaries are qualified in their entirety by the actual language of the
laws and regulations, which are subject to change based on recently enacted
and future legislation and action by regulatory agencies.
The Merger and the Bank Mergers are subject to certain regulatory approvals,
as set forth below. To the extent that the following information describes
statutes and regulations, it is qualified in its entirety by reference to
those particular statutes and regulations. For additional information on
potential regulatory conditions or restrictions, see "THE MERGER--The
Reorganization Agreement--Conditions to the Merger."
The Merger
The Merger is subject to approval by the Federal Reserve under the Bank
Holding Company Act. In considering an application for approval of a
transaction such as the Merger, the Bank Holding Company Act requires the
Federal Reserve to review the financial and managerial resources and future
prospects of the bank holding companies and the banks concerned and the
convenience and needs of the communities to be served. The Federal Reserve
also is required to evaluate whether the Merger would result in a monopoly or
would be in furtherance of any combination or conspiracy or attempt to
monopolize the business of banking in any part of the United States or
otherwise would substantially lessen competition or tend to create a monopoly
or which in any manner would be in restraint of trade, unless it finds that
the anticompetitive effects of the proposed transaction are clearly outweighed
in the public interest by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served. In addition, the
Federal Reserve must take into account the records of SNC and UCB in meeting
the credit needs of the entire community, including low- and moderate-income
neighborhoods, served by such institutions.
Applicable federal law provides for the publication of notice and public
comment on applications filed with the Federal Reserve, and permits the
Federal Reserve to allow interested parties to intervene in the proceedings.
If an interested party is permitted to intervene, such intervention could
delay the regulatory approvals required to consummate the Merger.
The Bank Holding Company Act requires that any bank acquisition or merger
may not be consummated until the thirtieth day after approval, during which
time the United States Department of Justice (the "DOJ") may challenge the
transaction on antitrust grounds. The Federal Reserve may shorten the 30 day
waiting period to 15 days in the event it has not received any adverse
comments from the DOJ concerning the competitive effects of the proposed
transaction. A commencement of an antitrust action by the DOJ would stay the
effectiveness of the Federal Reserve's approval unless a court specifically
ordered otherwise.
The Merger also is subject to approval by the SC Board under the South
Carolina Bank Holding Company Act, which allows the SC Board to approve the
Merger only after determining that the Merger would not create anticompetitive
or monopolistic effects on the South Carolina banking business. The SC Board
also must take into consideration the financial and managerial resources and
future prospects of the companies and banks
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<PAGE>
involved, as well as of the communities to be served. In making this
determination, the SC Board will wait until after the Federal Reserve makes
its determination and will deny the application only if the SC Board finds
that the Federal Reserve's determination is not supported by evidence that is
substantial when viewed in light of the whole record considered by the Federal
Reserve.
The Bank Mergers
Although not required by the terms of the Reorganization Agreement or the
Plan of Merger, SNC will effect the Bank Mergers after consummation of the
Merger. The Bank Mergers are subject to approval of the FDIC under the Bank
Merger Act. In granting its approval under the Bank Merger Act, the FDIC must
consider the financial and managerial resources and future prospects of the
existing and proposed institutions and the convenience and needs of the
communities to be served. Further, the FDIC may not approve the Bank Mergers
if they would result in a monopoly, if they would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States, if the affect of the
Bank Mergers in any section of the country may be substantially to lessen
competition or to tend to create a monopoly or if they would be in any other
manner in restraint of trade, unless the FDIC finds that the anticompetitive
effects of the Bank Mergers are clearly outweighed in the public interest by
the probable effect of such Mergers in meeting the convenience and needs of
the communities to be served. In addition, the FDIC must take into account the
record of performance of the existing and proposed institution under the
Community Reinvestment Act in meeting the credit needs of the entire
community, including low- and moderate-income neighborhoods, served by such
institution. Applicable regulations also require publication of notice of the
application for approval of the Bank Mergers and an opportunity for the public
to comment on the application in writing and to request a hearing.
The Bank Merger Act requires that any bank merger, including the Bank
Mergers, may not be consummated until the thirtieth day after approval by the
FDIC, during which time the DOJ may challenge the Bank Mergers on antitrust
grounds. The FDIC may shorten the 30 day waiting period to 15 days in the
event the FDIC has not received any adverse comments from the DOJ concerning
the competitive effects of the proposed transaction.
The Bank Mergers also require the approvals of the NC Commissioner and the
SC Board, and will proceed when all applicable laws governing the Bank Mergers
are complied with.
Status of Regulatory Approvals
All of the required applications and notices for the Merger have been
submitted to the appropriate regulatory agencies, and SNC anticipates that the
regulatory approvals described herein will be received. However, there can be
no assurance that such regulatory approvals will be obtained so as to permit
consummation of the Merger, the dates of such approvals, or that such
approvals will not be conditioned upon matters that would cause such approvals
to fail to satisfy the conditions set forth in the Reorganization Agreement.
There likewise is no assurance that the DOJ or a state Attorney General will
not challenge the Merger or the Bank Mergers, or, if such a challenge is made,
as to the results thereof. It is a condition to consummation of the Merger
under the Reorganization Agreement that, unless waived by SNC, no regulatory
approval may have imposed any condition or requirement, which in the
reasonable opinion of the SNC Board, would so materially adversely affect the
business or economic benefits of the transaction to SNC as to render
consummation of the Merger inadvisable or unduly burdensome, provided certain
conditions are met. In addition, for information with respect to provisions in
the Reorganization Agreement relating to the ability of SNC to terminate the
Reorganization Agreement and refuse to consummate the Merger in the event that
required divestitures by the Federal Reserve or the DOJ are in excess of a
certain amount, see "--The Reorganization Agreement--Conditions to the
Merger."
SNC and UCB are not aware of any other governmental approvals or actions
that are required for consummation of the Merger or the Bank Mergers, except
as described above. Should any other approval or action be required, it is
contemplated presently that such approval or action would be sought or taken.
There can
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<PAGE>
be no assurance that any such approval or action, if needed, could be
obtained, would not delay consummation of the Merger or would not be
conditioned in a manner that would cause SNC to abandon the Merger.
COMPARISON OF SHAREHOLDERS' RIGHTS
At the Effective Time, holders of UCB Common Stock (other than dissenting
shareholders) will become shareholders of SNC. The following is a summary of
material differences between the rights of holders of SNC Common Stock and
holders of UCB Common Stock. Since SNC and UCB are both organized under the
laws of North Carolina, any such differences arise from differing provisions
of the corporations' respective articles of incorporation and bylaws.
The following summary does not purport to be a complete statement of the
provisions affecting, and differences between, the rights of holders of SNC
Common Stock and those of holders of UCB Common Stock. The identification of
specific provisions or differences is not meant to indicate that other equally
or more significant differences do not exist. This summary is qualified in its
entirety by reference to the governing corporate instruments of SNC and UCB,
to which the shareholders of UCB are referred.
Authorized Capital Stock
SNC. SNC's authorized capital stock consists of 300,000,000 shares of SNC
Common Stock and 5,000,000 shares of preferred stock, par value $5.00 per
share (the "SNC Preferred Stock"). The SNC Articles authorize the SNC Board to
issue shares of SNC Preferred Stock in one or more series and to fix the
designation, powers, preferences, and rights of the shares of SNC Preferred
Stock in each such series. As of the SNC Record Date, 109,541,215 shares of
SNC Common Stock were outstanding. No shares of SNC Preferred Stock were
issued and outstanding as of such date, although 2,000,000 shares of SNC
Preferred Stock have been designated as Junior Participating Preferred Stock
(the "SNC Junior Preferred Stock") and are reserved for issuance in connection
with SNC's shareholder rights plan. See "DESCRIPTION OF SNC CAPITAL STOCK--
Shareholder Rights Plan."
UCB. UCB's authorized capital stock consists of 40,000,000 shares of UCB
Common Stock and 2,000,000 shares of preferred stock, par value $10.00 per
share ("UCB Preferred Stock"). The UCB Articles authorize the UCB Board to
determine the preferences, limitations, designations, relative rights and
conversion, voting, redemption and other rights, terms and conditions of the
UCB Preferred Stock and to establish series within this class and determine
all variations between such series. As of the UCB Record Date, 24,383,978
shares of UCB Common Stock and no shares of UCB Preferred Stock were
outstanding.
Directors
SNC. The SNC Bylaws provide for a board of directors having not less than
three nor more than 25 members as determined from time to time by vote of a
majority of the members of the SNC Board or by resolution of the shareholders
of SNC. Currently, the SNC Board consists of 24 directors. At the SNC Meeting,
holders of SNC Common Stock will vote upon a proposal to increase the maximum
number of members of the SNC Board to 30. See "ADDITIONAL MATTERS RELATING TO
THE SNC MEETING--Approval of Amendment to SNC Bylaws."
The SNC Board is divided into three approximately equal classes, with the
members of each class serving a staggered three-year term. Under the SNC
Articles and the SNC Bylaws, SNC directors may be removed only for cause and
only by the vote of a majority of the outstanding shares of SNC Common Stock
entitled to vote in the election of directors. Holders of SNC Common Stock do
not have cumulative voting rights in the election of directors.
UCB. The UCB Articles provide that the number of directors may be fixed in
the UCB Bylaws, but must be at least three. Pursuant to the UCB Bylaws the
number of directors may be fixed by resolution of the UCB
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<PAGE>
Board, but must be at least six and no more than 25. The UCB Board currently
consists of 13 directors, and will be fixed at 12 members following the UCB
Meeting.
All of UCB's directors are elected each year. A member of the UCB Board may
be removed, with or without cause, by shareholder vote if the number of votes
cast to remove him or her exceeds the number of votes cast not to remove him
or her. The entire UCB Board may be removed, with or without cause, by vote of
shareholders holding a majority of the votes entitled to be cast at any
election of directors. Holders of UCB Common Stock do not have cumulative
voting rights in the election of directors.
Dividends and Other Distributions
SNC. The NCBCA prohibits a North Carolina corporation from making any
distributions to shareholders, including the payment of cash dividends, that
would render it insolvent or unable to meet its obligations as they become due
in the ordinary course of business. SNC is not subject to other express
regulatory restrictions on payments of dividends and other distributions. The
ability of SNC to pay distributions to the holders of SNC Common Stock will
depend, however, to a large extent upon the amount of dividends its bank
subsidiaries, which are subject to restrictions imposed by regulatory
authorities, pay to SNC. In addition, the Federal Reserve could oppose a
distribution by SNC if it determined that such a distribution would harm SNC's
ability to support its bank subsidiaries. There can be no assurances that
dividends will be paid in the future. The declaration, payment and amount of
any such future dividends would depend on business conditions, operating
results, capital, reserve requirements and the consideration of other relevant
factors by the SNC Board.
UCB. The authority of UCB to pay distributions is identical to that of SNC.
Notice of Shareholder Nominations and Shareholder Proposals
SNC. The SNC Bylaws establish advance notice procedures for shareholder
proposals and the nomination, other than by or at the direction of the SNC
Board or a committee thereof, of candidates for election as directors. The SNC
Bylaws provide that a shareholder wishing to nominate a person as a candidate
for election to the SNC Board must submit such nomination in writing to the
Secretary of SNC not later than 60 days before one year after the date of the
immediately preceding annual meeting of shareholders, together with
biographical information about the candidate, the shareholder's name and
shareholdings. Nominations not made in accordance with the foregoing
provisions may be ruled out of order by the presiding officer or the chairman
of the meeting.
Similarly, a shareholder must notify the Secretary of SNC in writing not
later than 60 days before one year after the date of the immediately preceding
annual meeting of shareholders of the shareholder's intention to make a
proposal for consideration at the next annual meeting. The notice must contain
(a) a brief description of the proposal, (b) the name and shareholdings of the
shareholder submitting the proposal and (c) any material interest of the
shareholder in such proposal.
UCB. The UCB Articles and the UCB Bylaws provide no limitations or
procedures relating to shareholder nominations for directors or shareholder
proposals.
Exculpation and Indemnification
SNC. The SNC Articles provide that, to the fullest extent permitted by
applicable law, no director of SNC will have any personal liability for
monetary damage for breach of a duty as a director. The SNC Bylaws require SNC
to indemnify its directors and officers against liabilities arising out of
such person's status as such, excluding any liability relating to activities
that were at the time taken known or believed by such person to be clearly in
conflict with the best interests of SNC.
UCB. The UCB Articles provide that, except to the extent that the North
Carolina General Statutes prohibit such limitation or elimination of liability
for directors for breaches of duty, no director of UCB shall be
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personally liable to UCB shareholders, UCB or others for monetary damages for
breach of duty as a director. The UCB Bylaws require UCB to indemnify its
directors, but not its officers who are not directors, to the fullest extent
permitted by law against expenses and liabilities resulting from proceedings
arising out of such person's status as a director, officer, employee or agent
of UCB. Under the NCBCA, UCB may by action of the UCB Board indemnify its non-
director officers, employees and agents to the same extent applicable.
Mergers, Share Exchanges and Sales of Assets
SNC. In general, the NCBCA requires that any merger, share exchange or
transfer of substantially all the assets other than in the ordinary course of
business of a North Carolina corporation be approved by a majority of the
votes cast within each voting group entitled to vote on the proposed
transaction. For a description of additional provisions of the NCBCA that
could apply in the case of a transaction of this kind involving SNC, see "--
Anti-takeover Statutes--SNC."
UCB. The UCB Articles provide that, except as described below, the
affirmative vote of the holders of not less than 75% of the outstanding shares
of UCB Common Stock will be required to authorize (a) any merger or
consolidation of UCB into or with any other corporation, (b) any sale, lease,
exchange, mortgage, transfer or other disposition of all or any substantial
part (more than 10%) of UCB's assets, (c) the issuance or transfer of any
securities of UCB or any subsidiary to an "Interested Shareholder" (as defined
below), (d) any recapitalization or reclassification of securities that would
have the effect of increasing the voting power of any Interested Shareholder
or (e) the adoption of any plan proposed by an Interested Shareholder for
UCB's liquidation or dissolution.
"Interested Shareholder" means any corporation, person, group or other
entity (other than UCB and certain related parties) which, together with its
affiliates, directly or indirectly beneficially owns 10% or more of the shares
of any class of capital stock of UCB. An Interested Shareholder will be deemed
to "beneficially own" shares of capital stock of UCB if it has the right to
acquire such stock at any time pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise.
The above-described supermajority approval requirement will not apply if the
transaction in question (a) has been approved by at least two-thirds of the
entire UCB Board and (b) if it involves an Interested Shareholder, satisfies
certain "fair price" requirements, described in the following paragraph.
For a transaction involving an Interested Shareholder to avoid the
supermajority approval requirement, the aggregate amount of the cash and the
"Fair Market Value" (as defined below), as of the date of the consummation of
the transaction, of stock and other property to be received per share of UCB
Common Stock by the holders thereof must be at least equal to the highest of
(a) the highest per share price (including any brokerage commissions, transfer
taxes, soliciting dealer fees and other related expenses) paid by the
Interested Shareholder in acquiring any share of UCB Common Stock, whether
acquired before or after becoming an Interested Shareholder; (b) the Fair
Market Value per share of UCB Common Stock on the date of the first public
announcement of the proposed transaction (the "Announcement Date"); (c) the
product of (i) UCB's net income per share of UCB Common Stock for the four
fiscal quarters immediately preceding the Announcement Date multiplied by (ii)
the highest price/earnings multiple of UCB within the two years immediately
preceding the Announcement Date; (d) the product of (i) UCB's book value per
share of UCB Common Stock at the end of the fiscal quarter immediately
preceding the Announcement Date multiplied by (ii) the highest price/book
multiple of UCB during the two years immediately preceding the Announcement
Date; (e) the product of (i) UCB's net income per share of UCB Common Stock
for the four fiscal quarters immediately preceding the Announcement Date
multiplied by (ii) the highest price/earnings multiple of UCB paid by an
Interested Shareholder (or calculable for any such purchase) for any share of
UCB Common Stock; or (f) the product of (i) UCB's book value per share at the
end of the fiscal quarter immediately preceding the Announcement Date
multiplied by (ii) the highest price/earnings multiple of UCB paid by an
Interested Shareholder (or calculable for any such purchase) for any share of
UCB Common Stock.
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"Fair Market Value" means (a) in the case of stock for which quoted prices
are available, the highest closing sale price of a share of such stock during
the 30-day period immediately preceding the date in question and (b) in other
instances, the fair market value on the date in question of the property in
question as determined by a majority of the UCB Board in good faith. The UCB
Board is also given the power and the duty to determine, on the basis of
information known to them after reasonable inquiry, (a) the existence of an
Interested Shareholder, (b) the number of shares of UCB Common Stock
beneficially owned by a potential Interested Shareholder and the per share
price paid for any such share of UCB Common Stock and (c) whether a person is
an affiliate of another person.
Although the Merger is a type of business combination that comes within the
scope of the provisions of the UCB Articles requiring, for the Merger to be
approved, the affirmative vote of the holders of not less than 75% of the
outstanding shares of UCB Common Stock, the supermajority vote requirements of
the UCB Articles do not apply to the Merger as SNC is not an "Interested
Shareholder" within the meaning of the UCB Articles as determined by the UCB
Board and the Merger was approved by the unanimous vote of the UCB Board.
Accordingly, the required vote for the UCB shareholders to approve the Merger
is a majority of the outstanding shares of UCB Common Stock. Even if SNC were
deemed to be an "Interested Shareholder," the "Fair Market Value" of SNC
Common Stock to be received for each share of UCB Common Stock satisfies,
based on the closing sale price of SNC Common Stock on March 3, 1997, the
various pricing requirements for a merger with an Interested Shareholder as
set forth in the UCB Articles and described above.
Anti-takeover Statutes
SNC. The North Carolina Control Share Acquisition Act (the "Control Share
Act") applies to SNC. The Control Share Act is designed to protect
shareholders against certain changes in control and to provide shareholders
with the opportunity to vote on whether to afford voting rights to certain
shareholders.
The Control Share Act is triggered upon the acquisition by a person of
shares of voting stock of a North Carolina corporation that, when added to all
other shares beneficially owned by the person, would result in that person
holding one-fifth, one-third, or a majority of the voting power in the
election of directors. Under the Control Share Act, the shares acquired that
result in the crossing of any of these thresholds ("Control Shares") have no
voting rights until such rights are conferred by the affirmative vote of the
holders of a majority of all outstanding voting shares, excluding those shares
held by any person involved or proposing to be involved in the acquisition of
Control Shares, any officer of the corporation and any employee of such
corporation who is also a director of such corporation. If voting rights are
conferred on Control Shares, all shareholders of such corporation have the
right to require that their shares be redeemed at the highest price paid per
share by the acquiror for any Control Shares.
North Carolina has also enacted the North Carolina Shareholder Protection
Act (the "Shareholder Protection Act"). In accordance with the provisions of
such statute, SNC has elected not to be governed by the Shareholder Protection
Act.
UCB. In accordance with the provisions of such statutes, UCB has elected to
be governed by neither the Control Share Act nor the Shareholder Protection
Act.
Amendments to Articles of Incorporation and Bylaws
SNC. The NCBCA provides generally that a North Carolina corporation's
articles of incorporation may be amended if the amendment is affirmatively
approved by a majority of the votes cast within each voting group entitled to
vote. The SNC Articles and SNC Bylaws also require the affirmative vote of
two-thirds of the outstanding shares entitled to vote to approve an amendment
to the SNC Articles or SNC Bylaws amending, altering or repealing the portions
of such articles or bylaws relating to classification and staggered terms of
the board, removal of directors or any requirement for a supermajority vote on
such an amendment.
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The SNC Bylaws also prohibit the SNC Board from amending or repealing the
corporation's bylaws to: (a) require more than a majority of the voting shares
for a quorum at a regular meeting of the shareholders or more than a majority
of the votes cast to constitute action by the shareholders, unless higher
percentages are required by law; (b) increase or decrease the number of
directors; or (c) alter or repeal any bylaws adopted or amended by the
shareholders.
UCB. The UCB Articles provide that the supermajority shareholder approval
requirement for certain transactions (see "--Mergers, Share Exchanges and
Sales of Assets--UCB") may be amended or repealed only upon the vote of the
holders of 75% of the outstanding voting shares of all classes of stock of
UCB. The UCB Board may, in accordance with the NCBCA, amend or repeal the UCB
Bylaws, except that a bylaw adopted, amended or repealed by the shareholders
of UCB may generally be readopted, amended or repealed only by the
shareholders.
Liquidation Rights
SNC. In the event of the liquidation, dissolution, or winding-up of the
affairs of SNC, holders of outstanding shares of SNC Common Stock are entitled
to share, in proportion to their respective interests, in SNC's assets and
funds remaining after payment, or provision for payment, of all debts and
other liabilities of SNC.
Because SNC is a bank holding company, its rights, the rights of its
creditors and of its shareholders, including the holders of the shares of any
SNC Preferred Stock that may be issued, to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization may be subject to
the prior claims of the subsidiary's creditors except to the extent that SNC
may itself be a creditor with recognized claims against the subsidiary and any
interests in the liquidation accounts established by savings associations or
savings banks acquired by SNC for the benefit of eligible account holders in
connection with conversion of such savings associations to stock form.
UCB. The rights of holders of UCB Common Stock upon liquidation are
identical to those of SNC.
DISSENTERS' RIGHTS
Under North Carolina law, holders of SNC Common Stock or UCB Common Stock
who do not vote in favor of the Reorganization Agreement and the Plan of
Merger and who comply with certain notice requirements and other procedures
will have the right to dissent and to be paid cash for the "fair value" of
their shares. The "fair value" of SNC Common Stock as finally determined under
such procedures may be more or less than the trading price of SNC Common Stock
at such time, and such "fair value" of UCB Common Stock may be more or less
than the consideration to be received by other shareholders of UCB under the
terms of the Reorganization Agreement and the Plan of Merger. Failure to
follow such procedures precisely may result in loss of dissenters' rights. It
is a condition to SNC's obligation to effect the Merger that the holders of no
more than 9.0% of the UCB Common Stock dissent from the Merger. See "--The
Reorganization Agreement--Conditions to the Merger."
The following discussion is not a complete statement of the law pertaining
to dissenters' rights under the NCBCA and is qualified in its entirety by the
full text of Chapter 55, Article 13 of the NCBCA ("Article 13"), which is
reprinted in its entirety as Appendix IV to this Joint Proxy
Statement/Prospectus.
A record shareholder may assert dissenters' rights as to fewer than all the
shares of SNC Common Stock or UCB Common Stock registered in his name only if
he dissents with respect to all shares beneficially owned by any one person
and notifies SNC or UCB, as the case may be, in writing of the name and
address of each person on whose behalf he asserts dissenters' rights. The
rights of a partial dissenter will be determined as if the shares as to which
he dissents and his other shares were registered in the names of different
shareholders. A beneficial owner may assert dissenters' rights as to shares of
SNC Common Stock or UCB Common Stock held on his behalf only if he: (a)
submits to SNC or UCB, as the case may be, the record shareholder's written
consent to
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the dissent not later than the time the beneficial shareholder asserts
dissenters' rights and (b) asserts dissenters' rights with respect to all
shares of which he is the beneficial owner.
A holder of shares of SNC Common Stock or UCB Common Stock wishing to
exercise dissenters' rights must: (a) give to SNC or UCB, as the case may be,
and such corporation must actually receive before the vote on the
Reorganization Agreement is taken, written notice of the holder's intent to
demand payment for his shares if the Merger is consummated and (b) must not
vote his shares in favor of the Merger. If the Reorganization Agreement is
approved by holders of the requisite number of outstanding shares of SNC
Common Stock and UCB Common Stock, SNC and UCB will each, no later than ten
days following the consummation of the Merger, mail a written dissenters'
notice to all of their respective shareholders who gave the aforementioned
notice of intent to demand payment. Such dissenters' notice will in each case:
(a) state where the payment demand must be sent and where and when
certificates for certificated shares must be deposited; (b) inform holders of
uncertificated shares to what extent transfer of the shares will be restricted
after the payment demand is received; (c) supply a form for demanding payment;
(d) set a date by which the corporation must receive the payment demand, which
date may not be fewer than 30 nor more than 60 days after the date on which
the dissenters' notice is sent; and (e) be accompanied by a copy of Article
13. To exercise his dissenters' rights, a shareholder sent a dissenters'
notice must demand payment and deposit his share certificates in accordance
with the terms of the notice. A shareholder failing to do so will not be
entitled to payment for his shares under Article 13. A shareholder who demands
payment and deposits his share certificates in accordance with the terms of
the notice will retain all other rights of a shareholder until consummation of
the Merger. All notices, demands and other communications directed to SNC or
UCB in connection with the appraisal process should be sent to SNC at 200 West
Second Street, Winston-Salem, North Carolina 27101, Attention: Secretary or to
UCB at 127 West Webster Street, Whiteville, North Carolina 28472, Attention:
Secretary.
Upon receipt of a payment demand by a shareholder made in compliance with
the above-described procedures, SNC or UCB, as the case may be, will offer to
pay such shareholder the amount such corporation estimates to be the value of
his shares, plus interest accrued to the date of payment. Such corporation
will pay this amount to each dissenter who agrees in writing to accept such
payment in full satisfaction of his demand. Such offer of payment will be
accompanied by: (a) the corporation's balance sheet as of the fiscal year
ended December 31, 1996, an income statement and a statement of cash flows for
that year and the latest available interim financial statements; (b) a
statement of the corporation's estimate of the fair value of the shares; (c)
an explanation of how the interest was calculated; (d) a statement of the
dissenter's right to demand payment if he is dissatisfied with the
corporation's offer, if the corporation fails to make payment within 30 days
of a dissenter's acceptance or if the corporation, having failed to consummate
the Merger, fails to return deposited share certificates or release the
transfer restrictions imposed on uncertificated shares within 60 days after
the date set for demanding payment; and (e) a copy of Article 13.
If: (a) a dissenter believes that the amount offered by SNC or UCB, as the
case may be, is less than the fair value of his shares, or that the interest
due is incorrectly calculated; (b) such corporation fails to make payment to a
dissenter who accepts the corporation's offer within 30 days after the
acceptance; or (c) the corporation having failed to consummate the Merger,
fails to return deposited stock certificates to a dissenter or release the
transfer restrictions imposed on uncertificated shares within 60 days after
the date set for demanding payment, the dissenter may notify such corporation
in writing of his own estimate of the fair value of his shares and amount of
interest due and demand payment of his estimate or reject the corporation's
offer and demand payment of the fair value of his shares and interest due. A
dissenter will waive his right to demand payment as described in this
paragraph, and will be deemed to have withdrawn his dissent and demand for
payment, unless he notifies the corporation of his demand in writing within 30
days after the corporation (x) offers payment for his shares or (y) fails to
take the actions described in clauses (b) and (c) of this paragraph, as the
case may be.
If a demand for payment as described above remains unsettled, a shareholder
may commence a proceeding within 60 days after the date of his payment demand
and petition the court to determine the fair value of the shares and accrued
interest. If the dissenter does not commence a proceeding within the 60 day
period, the dissenter will have an additional 30 days in which he may either
accept in writing the amount offered by SNC or
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UCB, as the case may be, as described above or withdraw his demand for payment
and resume the status of a nondissenting shareholder. A dissenter who takes no
action during this 30 day period will be deemed to have withdrawn his demand
for payment.
Upon service on it of the petition filed with the court, SNC or UCB, as the
case may be, will pay to the dissenter the amount offered by it as described
above. The court may, in its discretion, make all dissenters whose demands
remain unsettled parties to the proceeding. Each dissenter made a party to the
proceeding by the court will be entitled to judgment for the amount, if any,
by which the court finds that the fair value of his shares, plus interest,
exceeds the amount paid by such corporation upon service of the petition filed
with the court. The court may appoint one or more appraisers to receive
evidence and recommend decision on the question of fair value. Parties to the
proceeding are entitled to the same discovery rights as parties in other civil
proceedings. Since SNC and UCB are both "public corporations," no party to any
proceeding described herein will have the right to trial by jury.
The court may assess the costs of a proceeding described above, including
the compensation and expenses of appointed appraisers, as it finds equitable.
With respect to the fees and expenses of counsel and experts for the parties
to the proceeding, the court may assess such costs against (a) SNC or UCB, as
the case may be, and in favor of any or all dissenters if it finds that such
corporation did not substantially comply with the above-described procedures
or (b) either the corporation or a dissenter or in favor of either or any
other party, if it finds that the party against whom such costs are assessed
acted arbitrarily, vexatiously, or not in good faith with respect to the
dissenters' rights provided under Article 13. In addition, if the court finds
that the services of counsel to any dissenter were of substantial benefit to
other dissenters and that the costs of such services should not be assessed
against the corporation in question, the court may award to such counsel
reasonable fees to be paid out of the amounts to the dissenters who were
benefitted.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary description of certain anticipated federal income
tax consequences of the Merger to the shareholders of UCB and to SNC and UCB.
This summary is not intended to be a complete description of all of the
federal income tax consequences of the Merger. No information is provided with
respect to the tax consequences of the Merger under any other tax laws,
including applicable state, local and foreign tax laws. In addition, the
following discussion may not be applicable with respect to certain specific
categories of shareholders, including but not limited to persons who are
corporations, trusts, dealers in securities, financial institutions, insurance
companies, or tax exempt organizations; persons who are not United States
citizens or resident aliens or domestic entities (partnerships or trusts);
persons who are subject to alternative minimum tax (to the extent that tax
affects the tax consequences of the Merger) or are subject to the "golden
parachute" provisions of the Code (to the extent that tax affects the tax
consequences of the Merger); persons who acquired UCB Common Stock pursuant to
employee stock options or otherwise as compensation if such shares are subject
to any restriction related to employment; persons who do not hold their shares
as capital assets; or persons who hold their shares as part of a "straddle" or
"conversion transaction." The federal income tax laws are complex, and a
shareholder's individual circumstances may affect the tax consequences to the
shareholder. Consequently, each UCB shareholder is urged to consult his or her
own tax advisor regarding the tax consequences of the Merger. No ruling has
been or will be requested from the IRS with respect to the tax effects of the
Merger.
In the opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to SNC: (a)
the Merger will constitute a reorganization under Section 368 of the Code; (b)
no gain or loss will be recognized by SNC or UCB by reason of the Merger; (c)
the shareholders of UCB will recognize no gain or loss for federal income tax
purposes to the extent SNC Common Stock is received in the Merger in exchange
for UCB Common Stock; (d) a shareholder of UCB who receives cash in lieu of a
fractional share of SNC Common Stock will recognize gain or loss as if the
shareholder received the fractional share and it was then redeemed for cash in
an amount equal to the amount paid by SNC in respect of such fractional share;
(e) the tax basis in the SNC Common Stock received by a shareholder (including
any fractional share interest deemed received) will be the same as the tax
basis in the UCB Common Stock surrendered in exchange therefor; and (f) the
holding period for SNC Common Stock
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received (including any fractional share interest deemed received) in exchange
for shares of UCB Common Stock will include the period during which the
shareholder held the shares of UCB Common Stock surrendered in the exchange,
provided that the UCB Common Stock was held as a capital asset at the
Effective Time.
The receipt of cash for shares of UCB Common Stock or SNC Common Stock by a
shareholder pursuant to exercise of dissenters' rights under the NCBCA will be
a taxable transaction. Any holder of UCB Common Stock or SNC Common Stock
considering the exercise of such rights should consult a tax advisor about the
tax consequences of doing so.
The consummation of the Merger is conditioned upon the receipt by SNC and
UCB of the legal opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to
SNC, dated as of the Closing Date to the effect of items (a) and (c) as
described above. Such counsel has previously delivered to SNC an opinion to
such effect in connection with the filing of the Registration Statement.
However, if for any reason such counsel is unable to provide such opinion at
the Effective Time, SNC and UCB will either decline to waive such condition or
resolicit the proxies of their shareholders and provide appropriate
information as to the federal income tax consequences of the Merger in
connection with such resolicitation.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests transaction under generally accepted accounting principles. Under
such accounting method, holders of UCB Common Stock will be deemed to have
combined their existing voting common stock interest with that of holders of
SNC Common Stock by exchanging their shares for shares of SNC Common Stock.
Accordingly, the book value of the assets, liabilities and stockholders'
equity of UCB, as reported on its consolidated balance sheet, will be carried
over to the consolidated balance sheet of SNC and no goodwill will be created.
SNC will be able to include in its consolidated income the consolidated income
of UCB for the entire fiscal year in which the Merger occurs; however, certain
expenses incurred to effect the Merger must be treated by SNC as current
charges against income rather than adjustments to its balance sheet. In order
for the Merger to qualify for pooling of interests accounting treatment, among
other criteria, substantially all (90% or more) of the outstanding UCB Common
Stock must be exchanged for SNC Common Stock.
SNC's and UCB's respective obligations to consummate the Merger are
conditioned upon the receipt by SNC of letters from Arthur Andersen LLP, SNC's
independent certified public accountants, dated as of the date of filing of
the Registration Statement with the Commission and as of the Effective Time,
to the effect that the Merger qualifies for pooling of interests accounting
treatment.
The unaudited pro forma combined financial information contained in this
Joint Proxy Statement/Prospectus has been prepared using the pooling of
interests accounting method to account for the Merger. See "PRO FORMA
CONDENSED FINANCIAL INFORMATION."
OPTION AGREEMENTS
The SNC Option Agreement
As a condition to SNC entering into the Reorganization Agreement, UCB (as
issuer) entered into the SNC Option Agreement with SNC (as grantee), pursuant
to which UCB granted the SNC Option to SNC to purchase from UCB up to
4,828,960 shares of UCB Common Stock (subject to adjustment in certain
circumstances, but in no event to exceed 19.9% of the shares of UCB Common
Stock outstanding upon any exercise of such option) at a price of $30.50 per
share (subject to adjustment under certain circumstances, as described below)
(the "Purchase Price"). The purchase of any shares of UCB Common Stock
pursuant to the SNC Option is subject to compliance with applicable law,
including the receipt of necessary approvals under the Bank Holding Company
Act. See "--Regulatory Considerations."
Exercisability. If SNC is not in material breach of the SNC Option Agreement
or its covenants and agreements contained in the Reorganization Agreement and
if no injunction or other court order against delivery
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of the shares covered by the SNC Option is in effect, SNC may generally
exercise the SNC Option, in whole or in part, at any time and from time to
time, following the happening of either of the following events (each a
"Purchase Event"):
(a) without SNC's prior written consent, UCB taking certain actions (each
an "Acquisition Transaction"), including authorizing, recommending,
publicly proposing (or publicly announcing an intention to authorize,
recommend or propose) or entering into an agreement with any third party to
effect (i) a merger, consolidation or similar transaction involving UCB or
any of its significant subsidiaries, (ii) the sale, lease, exchange or
other disposition of 15% or more of the consolidated assets or deposits of
UCB and its subsidiaries or (iii) the issuance, sale or other disposition
of securities representing 15% or more of the voting power of UCB or any of
its significant subsidiaries; or
(b) any third party or group of third parties acquiring or having the
right to acquire beneficial ownership of securities representing 15% or
more of the voting power of UCB or any of its significant subsidiaries.
Termination. The SNC Option will terminate upon the earliest to occur of the
following events: (a) the Effective Time; (b) the termination of the
Reorganization Agreement prior to the occurrence of a Purchase Event or
Preliminary Purchase Event (as defined below) (other than a termination by SNC
based on either a willful material breach by UCB of a covenant or agreement in
the Reorganization Agreement or a willful inaccuracy in UCB's representations
or warranties in the Reorganization Agreement of a nature entitling SNC to
terminate (a "Default Termination"); (c) 12 months after a Default
Termination; (d) 12 months after termination of the Reorganization Agreement
(other than a Default Termination) following the occurrence of a Purchase
Event or a Preliminary Purchase Event; or (e) six months after a termination
of the Reorganization Agreement based on the failure of the shareholders of
UCB to approve the Reorganization Agreement and the Plan of Merger.
A "Preliminary Purchase Event" is defined as either of the following:
(a) the commencement by any third party of a tender or exchange offer
such that it would thereafter own 15% or more of the outstanding shares of
UCB Common Stock or the filing of a registration statement with respect to
such an offer, or
(b) the failure of the shareholders of UCB to approve the Reorganization
Agreement, the failure of the UCB Meeting to have been held, the
cancellation of such meeting prior to the termination of the Reorganization
Agreement or the UCB Board having withdrawn or modified in any manner
adverse to SNC its recommendations with respect to the Reorganization
Agreement, in any case after a third party: (i) proposes to engage in an
Acquisition Transaction, (ii) commences a tender offer or files a
registration statement under the Securities Act with respect to an exchange
offer such that it would thereafter own 15% or more of the outstanding
shares of UCB Common Stock or (iii) files an application or notice under
federal or state statutes relating to the regulation of financial
institutions or their holding companies to engage in an Acquisition
Transaction.
To the knowledge of SNC and UCB, no Purchase Event or Preliminary Purchase
Event has occurred as of the date of this Joint Proxy Statement/Prospectus.
Adjustments. The SNC Option Agreement provides for certain adjustments in
the SNC Option in the event of any change in UCB Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction or in the event of the issuance of any
additional shares of UCB Common Stock before termination of the SNC Option.
Repurchase Rights. At the request of the holder of the SNC Option any time
during the 12 months after the first occurrence of a Repurchase Event (as
defined below), UCB must, if the SNC Option has not terminated, repurchase
from such holder (a) the SNC Option and (b) all shares of UCB Common Stock
purchased by the holder pursuant to the SNC Option with respect to which the
holder then has beneficial ownership. The repurchase will be at an aggregate
price equal to the sum of:
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(a) the aggregate Purchase Price paid by the holder for any shares of UCB
Common Stock acquired pursuant to the SNC Option with respect to which the
holder then has beneficial ownership, plus
(b) the excess, if any, of (i) the Applicable Price (as defined in the
SNC Option Agreement) for each share of UCB Common Stock over the Purchase
Price, multiplied by (ii) the number of shares of UCB Common Stock with
respect to which the SNC Option has not been exercised, plus
(c) the excess, if any, of (i) the Applicable Price over the Purchase
Price paid (or, in the case of shares of UCB Common Stock covered by the
SNC Option with respect to which the SNC Option has been exercised but the
closing date for such purchase has not occurred, payable) by the holder for
each share of UCB Common Stock with respect to which the SNC Option has
been exercised and with respect to which the holder then has beneficial
ownership, multiplied by (ii) the number of such shares.
A "Repurchase Event" occurs if: (a) any third party acquires actual
ownership or control of, or any "group" (as such term is defined under the
Exchange Act) is formed that has acquired actual ownership or control of, 50%
or more of the then outstanding shares of UCB Common Stock, or (b) any of the
merger or other business combination transactions described in subsections (a)
through (d) in the paragraph below describing substitute options is
consummated.
Substitute Options. If, prior to the termination of the SNC Option
Agreement, UCB enters into an agreement:
(a) to consolidate with or merge into any third party and will not be the
continuing or surviving corporation of such consolidation or merger;
(b) to permit any third party to merge into UCB with UCB as the
continuing or surviving corporation, but, in connection therewith, the then
outstanding shares of UCB Common Stock are changed into or exchanged for
stock or other securities of UCB or any other person or cash or any other
property, or the outstanding shares of UCB Common Stock after such merger
represent less than 50% of the outstanding shares and share equivalents of
the merged company;
(c) to permit any third party to acquire all of the outstanding shares of
UCB Common Stock pursuant to a statutory share exchange; or
(d) to sell or otherwise transfer all or substantially all of its assets
or deposits to any third party,
then such agreement must provide that the SNC Option will be converted or
exchanged for an option (a "Substitute Option") to purchase shares of common
stock of, at the holder's option, either (x) the continuing or surviving
corporation of a merger or consolidation or the transferee of all or
substantially all of UCB assets or (y) any person controlling such continuing
or surviving corporation or transferee. The number of shares subject to the
Substitute Option and the exercise price per share will be determined in
accordance with a formula in the SNC Option Agreement. To the extent possible,
the Substitute Option will contain terms and conditions that are the same as
those in the SNC Option Agreement.
Registration Rights. The SNC Option Agreement grants to SNC and any
permitted transferee of the SNC Option certain rights to require UCB to
prepare and file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of UCB Common Stock or other securities that have been
acquired by or are issuable upon exercise of the SNC Option.
The SNC Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms set forth in the
Reorganization Agreement. Consequently, certain aspects of the SNC Option
Agreement may have the effect of discouraging persons who might now, or prior
to the Effective Time, be interested in acquiring all of or a significant
interest in UCB from considering or proposing such an acquisition, even if
such persons were prepared to offer to pay consideration to shareholders of
UCB with a higher current market price than the shares of SNC Common Stock to
be received for each share of UCB Common Stock pursuant to the Reorganization
Agreement.
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The SNC Option Agreement is filed as an exhibit to the Registration
Statement, and reference is made thereto for the complete terms of the SNC
Option Agreement and the SNC Option. The foregoing discussion is qualified in
its entirety by reference to the SNC Option Agreement. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The UCB Option Agreement
As a condition to UCB entering into the Reorganization Agreement, SNC (as
issuer) entered into the UCB Option Agreement with UCB (as grantee), pursuant
to which SNC granted the UCB Option to UCB to purchase from SNC up to
10,806,121 shares of SNC Common Stock (subject to adjustment in certain
circumstances, but in no event to exceed 9.9% of the shares of SNC Common
Stock outstanding upon any exercise of such option) at a price of $34.625 per
share.
Except as otherwise described in this discussion, the terms of the UCB
Option Agreement and the UCB Option materially mirror those of the SNC Option
Agreement and the SNC Option. See "--The SNC Option Agreement."
Notwithstanding anything to the contrary contained in the UCB Option
Agreement, in no event may the Total Profit (as defined below) of UCB and any
other holder(s) of the UCB Option exceed $25 million and, if it otherwise
would exceed such amount, the current holder, at its sole election, must
either (a) reduce the number of shares of SNC Common Stock subject to the UCB
Option, (b) deliver to SNC for cancellation the shares of SNC Common Stock
purchased pursuant to the UCB Option, (c) pay cash to SNC or (d) any
combination thereof, so that the holder(s) will not actually realize Total
Profit in excess of $25 million after taking into account the foregoing
actions. In addition, the UCB Option may not be exercised for a number of
shares as would, as of the date of exercise, result in a Notional Total Profit
(as defined below) of more than $25 million; provided, however, that this
limitation will not restrict any exercise of the UCB Option permitted by the
UCB Option Agreement on any subsequent date.
"Total Profit" means the aggregate amount (before taxes) of the following:
(a) the amount received by the holder(s) pursuant to SNC's repurchase of the
UCB Option (or any portion thereof), (b) (i) the amount received by the
holder(s) pursuant to SNC repurchase of shares of SNC Common Stock purchased
pursuant to the UCB Option, less (ii) the purchase price for such shares, (c)
(i) the net cash amounts received by the holder(s) pursuant to the sale of SNC
Common Stock purchased pursuant to the UCB Option (or any other securities
into which such shares may be converted or exchanged) to any unaffiliated
party, less (ii) the purchase price of such shares, (d) any amounts received
by the holder(s) on the transfer of the UCB Option (or any portion thereof) to
any unaffiliated party and (e) any equivalent amount with respect to the
Substitute Option.
"Notional Total Profit" with respect to any number of shares of SNC Common
Stock as to which the holder of the UCB Option may propose to exercise the UCB
Option means the Total Profit determined as of the date of such proposed
exercise assuming that the UCB Option were exercised on such date for such
number of shares and assuming that such shares, together with all other SNC
Common Stock purchased pursuant to the UCB Option held by the holder and its
affiliates as of such date, were sold for cash at the last sale price for the
SNC Common Stock as of the close of business on the preceding trading day
(less customary brokerage commissions).
The UCB Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms set forth in the
Reorganization Agreement. Consequently, certain aspects of the UCB Option
Agreement may have the effect of discouraging persons who might now, or prior
to the Effective Time, be interested in acquiring all of or a significant
interest in SNC from considering or proposing such an acquisition.
The UCB Option Agreement is filed as an exhibit to the Registration
Statement, and reference is made thereto for the complete terms of the UCB
Option Agreement and the UCB Option. The foregoing discussion is
59
<PAGE>
qualified in its entirety by reference to the UCB Option Agreement. See
"AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
EFFECT ON EMPLOYEES, EMPLOYEE BENEFIT PLANS AND STOCK OPTIONS
Each employee of UCB or any of its subsidiaries at the Effective Time will
become, immediately following the Merger, an employee of SNC or one of its
subsidiaries upon substantially the same terms and conditions as in effect
immediately preceding the Merger. Each such employee, as an employee of SNC or
one its subsidiaries, will be eligible to receive bonus or incentive,
retirement, severance, group hospitalization, medical, life, disability and
other benefits comparable to those provided to similarly situated employees of
SNC or the SNC subsidiary in question. For purposes of participating in all
plans and benefits of SNC or the SNC subsidiary, service to UCB and its
subsidiaries by each such employee will be deemed to be service with SNC or
one of its subsidiaries for participation and vesting purposes only (subject
to the matters described in the following paragraph). SNC will cause the
401(k) plan of UCB to be merged with the 401(k) plan maintained by SNC and its
subsidiaries, and the account balances of the employees who are participants
in the UCB plan will be transferred to the accounts of such employees under
the SNC 401(k) plan. Following such merger and transfer, such accounts will be
governed and controlled by the terms of the SNC 401(k) plan as in effect from
time to time.
The parties anticipate that SNC will cause the tax qualified defined benefit
pension plan of UCB to be merged with the tax qualified defined benefit
pension plan of SNC. If such merger occurs, the SNC pension plan will provide
future benefit accruals under the SNC pension plan for former employees of UCB
or its subsidiaries that will not be less than the sum of the benefit accrued
to the Effective Time under the UCB pension plan plus the future benefit
accrued under the SNC pension plan. For purposes of applying the SNC pension
plan following such merger, service with UCB or its subsidiaries of such an
employee will be deemed to be service with SNC for the purposes of determining
eligibility and vesting, but not for the purpose of determining benefit
accruals following the Effective Time.
UCB has instituted or previously assumed the following stock option plans:
UCB 1986 Key Employee Stock Option Plan; Option and Incentive Plan; Stock
Option Policy for Non-employee Directors of Triad Bank; Triad Bank Employees'
Stock Option Plan (Non-qualified); Seaboard Savings Bank, Inc., SSB 1993
Nonstatutory Stock Option Plan for Directors; Seaboard Savings Bank, Inc., SSB
1993 Incentive Stock Option Plan; and Bank of Iredell 1987 Employee
Nonqualified Stock Option Program (collectively, the "Plans"). Pursuant to the
Reorganization Agreement and the terms of the Plans, each outstanding option
(other than the SNC Option issued to SNC pursuant to the SNC Option Agreement)
to purchase shares of UCB Common Stock (whether or not then exercisable) that
is unexercised immediately prior to the Effective Time (the "Stock Options")
will be converted automatically into rights with respect to SNC Common Stock
in an amount equal to the product (omitting any resulting fractional shares)
of (a) the number of shares of UCB Common Stock subject to the original option
and (b) the Exchange Ratio, and at an exercise price per share of SNC Common
Stock equal to the quotient (rounded up to the nearest cent) of (x) the
exercise price per share of UCB Common Stock under the original option divided
by (y) the Exchange Ratio. Any Stock Option that is an "incentive stock
option" will be adjusted as required by Section 424 of the Code and the
Regulations thereunder so that the Stock Option will continue as an incentive
stock option under Section 424(a) of the Code without a modification,
extension or renewal thereof within the meaning of Section 424(h) of the Code.
SNC has agreed that it will assume the Stock Options and/or substitute
options under the Southern National Corporation 1995 Omnibus Stock Incentive
Plan for all or part of the Stock Options on the terms and conditions
described above.
Options to purchase an aggregate of 278,483 shares of UCB Common Stock were
outstanding as of the UCB Record Date. Any shares of UCB Common Stock issued
pursuant to the exercise of Stock Options prior to the Effective Time (other
than shares held by dissenting shareholders) will be converted into shares of
SNC Common Stock in accordance with the Exchange Ratio in the same manner as
other shares of UCB Common Stock (other than shares held by dissenting
shareholders). See "THE MERGER--Exchange Ratio" and "--Interests of Certain
Persons in the Merger."
60
<PAGE>
RESTRICTIONS ON RESALES BY AFFILIATES
All shares of SNC Common Stock issuable in the Merger will be registered
under the Securities Act and will be freely transferable, except that any such
shares received by "Persons" who are deemed to be "Affiliates" (as such terms
are defined under the Securities Act) of UCB at the Effective Time may be
resold by them only in transactions registered under the Securities Act or
permitted by the resale provisions of Rule 145 under the Securities Act or as
otherwise permitted by the Securities Act. Those who may be deemed Affiliates
of UCB generally include individuals or entities that directly, or indirectly
through one or more intermediaries, control, are controlled by or are under
common control with UCB and may include certain executive officers and
directors of UCB. The restrictions on resales by an Affiliate extend also to
certain related parties of the Affiliate, including spouse, relatives and
spouse's relatives who in each case have the same home as the Affiliate.
The Reorganization Agreement requires UCB to cause each of its Affiliates to
deliver to SNC a written agreement to the effect that such person will not
offer or otherwise dispose of any shares of SNC Common Stock issued to that
person in the Merger except (a) in compliance with the Securities Act and the
rules and regulations promulgated thereunder and (b) after such time as SNC
publishes financial statements reflecting at least one month of combined
operations with UCB, which restriction is necessary to obtain "pooling of
interests" accounting treatment.
61
<PAGE>
INFORMATION ABOUT SNC
GENERAL
SNC is a multi-bank holding company headquartered in Winston-Salem, North
Carolina. SNC conducts operations in North Carolina, South Carolina and
Virginia primarily through its commercial banking subsidiaries and, to a
lesser extent, through its other subsidiaries. Substantially all of SNC's
loans are to businesses and individuals in the Carolinas and Virginia. SNC has
no material amount of foreign loans and no loans that can be defined as highly
leveraged transactions. The principal assets of SNC are all of the issued and
outstanding shares of common stock of BB&T-NC, Winston-Salem, North Carolina,
BB&T Financial Corporation of South Carolina, Greenville, South Carolina,
which in turn owns all of the issued and outstanding shares of BB&T-SC, and
BB&T Financial Corporation of Virginia ("BB&T Financial-VA"), Virginia Beach,
Virginia, which in turn owns all of the issued and outstanding shares of BB&T-
VA and FFSB.
SUBSIDIARIES
BB&T-NC, SNC's largest subsidiary, is the oldest bank in North Carolina and
currently operates through 299 banking offices throughout North Carolina.
BB&T-NC provides a wide range of banking services in its local market for
retail and commercial customers, including small and mid-size businesses,
public agencies and local governments, trust customers and individuals. BB&T
Leasing Corporation, a wholly owned subsidiary of BB&T-NC, located in
Charlotte, North Carolina, offers lease financing to commercial businesses and
municipal governments. BB&T Investment Services, Inc., also a wholly owned
subsidiary of BB&T-NC, located in Charlotte, North Carolina, offers customers
investment alternatives, including discount brokerage services, fixed-rate and
variable-rate annuities, mutual funds, and government and municipal bonds.
BB&T Insurance Services, Inc., located in Raleigh, North Carolina, is also a
subsidiary of BB&T-NC and offers life and property and casualty insurance on
an agency basis. Additional subsidiaries of BB&T-NC include Goddard Technology
Corporation, which engages in the design and production of imaging and
security devices and programs, and Prime Rate Premium Finance Corporation,
Inc., which provides insurance premium financing and services to customers in
Virginia and the Carolinas.
BB&T-SC serves South Carolina through 95 banking offices. BB&T-SC provides a
wide range of banking services in its local market for retail and commercial
customers, including small and mid-size businesses, public agencies, local
governments, trust customers and individuals. BB&T-SC's subsidiaries include
BB&T Investment Services of South Carolina, Inc., which is licensed as a
general broker/dealer of securities and is currently engaged in retailing of
mutual funds, U.S. Government securities, municipal securities, fixed and
variable insurance annuity products and unit investment trusts.
BB&T-VA, formerly Commerce Bank, was acquired on January 10, 1995 by BB&T
Financial Corporation ("BB&T Financial") prior to the merger of BB&T Financial
with and into SNC. BB&T-VA offers a full range of commercial and retail
banking services through 21 banking offices in the Hampton Roads region of
Virginia.
ACQUISITIONS
SNC's profitability and market share have been enhanced through both
internal growth and acquisitions during recent years. Specifically, SNC has
expanded by both the acquisition of financial institutions (including thrift
institutions) and the purchase of deposits and assets from the Resolution
Trust Corporation in federally assisted transactions.
During the five years ended December 31, 1995, SNC and BB&T Financial
completed numerous mergers and acquisitions of thrift institutions and
commercial banking companies. On February 28, 1995, SNC merged with BB&T
Financial, a multi-bank holding company with approximately $11 billion in
total assets. Each BB&T Financial shareholder received 1.45 shares of SNC
Common Stock for each share of BB&T Financial common stock held. A total of
57.9 million shares of SNC Common Stock were issued in conjunction with the
merger.
62
<PAGE>
On September 1, 1996, SNC completed the acquisition of Regional Acceptance
Corporation ("RAC") of Greenville, North Carolina in a transaction accounted
for as a pooling of interests. RAC, which has 28 branch offices in North
Carolina, South Carolina, Tennessee and Virginia, specializes in indirect
financing for consumer purchases of mid-model and late-model used automobiles.
Approximately 5.85 million shares of SNC Common Stock were issued in exchange
for all the outstanding shares of RAC.
On March 1, 1997, SNC completed the acquisition of FFBC, which was a
Virginia corporation that served as the holding company for FFSB, in a
transaction accounted for as a purchase. FFSB operates seven banking offices
in the Richmond, Virginia area offering a full range of commercial and retail
banking services. SNC intends to effect the merger of FFSB, which is currently
a wholly owned subsidiary of BB&T Financial-VA, with and into BB&T-VA not
later than the first quarter of 1998.
SNC acquired three insurance agencies in the fourth quarter of 1996 which
were accounted for under the purchase method of accounting. SNC issued 610,390
shares of SNC Common Stock to effect the acquisitions and recorded intangible
assets of $16.9 million.
SNC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions. Such acquisitions may entail the
payment by SNC of consideration in excess of the book value of the underlying
net assets acquired, may result in the issuance of additional shares of SNC
capital stock or the incurring of an additional indebtedness by SNC, and could
have a dilutive effect on the earnings or book value, per share, of SNC Common
Stock. Moreover, such acquisitions sometimes result in significant charges
against earnings, although cost savings, especially incident to in-market
acquisitions, also are frequently anticipated.
CAPITAL
The Federal Reserve has established a minimum requirement for a bank holding
company's ratio of capital to risk-weighted assets (including certain off-
balance-sheet activities, such as standby letters of credit) of 8%. At least
half of the total capital is required to be composed of common equity,
retained earnings, and qualifying perpetual preferred stock, less certain
intangibles ("Tier 1 capital"). The remainder may consist of certain
subordinated debt, certain hybrid capital instruments and other qualifying
preferred stock, and a limited amount of the loan loss allowance ("Tier 2
capital" and, together with Tier 1 capital, "total capital"). At December 31,
1996, SNC's Tier 1 and total capital ratios were 11.7% and 14.7%,
respectively. Effective January 1, 1997, with mandatory compliance as of
January 1, 1998, the Federal Reserve also is requiring certain bank holding
companies that engage in trading activities to adjust their risk-based capital
to take into consideration market risk that may result from movements in
market prices of covered trading positions in trading accounts, or from
foreign exchange or commodity positions, whether or not in trading accounts,
including changes in interest rates, equity prices, foreign exchange rates or
commodity prices. Any capital required to be maintained pursuant to these
provisions may consist of new "Tier 3 capital" consisting of certain short
term subordinated debt. In addition, the Federal Reserve has issued a policy
statement, pursuant to which a bank holding company that is determined to have
weaknesses in its risk management processes or a high level of interest rate
risk exposure may be required, among other things, to hold additional capital.
The Federal Reserve also has established minimum leverage ratio requirements
for bank holding companies. These requirements provide for a minimum leverage
ratio of Tier 1 capital to adjusted average quarterly assets ("leverage
ratio") equal to 3% for bank holding companies that meet certain specified
criteria, including that they have the highest regulatory rating. All other
bank holding companies will generally be required to maintain a leverage ratio
of from at least 100 to 200 basis points above the stated minimum. SNC's
leverage ratio at December 31, 1996 was 8.0%. Bank holding companies
experiencing internal growth or making acquisitions are expected to maintain
strong capital positions substantially above the minimum supervisory levels
without significant reliance on intangible assets. Furthermore, the
requirements indicate that the Federal Reserve will continue to consider a
"tangible Tier 1 leverage ratio" (deducting all intangibles) in evaluating
proposals for expansion or new activity.
63
<PAGE>
The FDIC has adopted minimum risk-based and leverage ratio regulations to
which SNC's bank subsidiaries are subject that are substantially similar to
those requirements established by the Federal Reserve described above. Under
federal banking laws, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including, in the most
severe cases, the termination of deposit insurance by the FDIC and placing the
institution into conservatorship or receivership. The capital ratios of each
of SNC's bank subsidiaries exceeded all minimum regulatory capital
requirements as of December 31, 1996.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of each of SNC's bank subsidiaries are insured by the FDIC up
to the limits set forth under applicable law. A majority of the deposits of
the banks are subject to the deposit insurance assessments of the Bank
Insurance Fund ("BIF") of the FDIC. However, approximately 40% of the deposits
of BB&T-NC and BB&T-SC (related to the banks' acquisition of various savings
associations) are subject to assessments imposed by the Savings Association
Insurance Fund ("SAIF") of the FDIC.
Pursuant to recently enacted budget reconciliation legislation, the FDIC
imposed a special assessment on SAIF-assessable deposits of 65.7 basis points
per $100 of SAIF-assessable deposits in order to increase the SAIF's net worth
to 1.25 percent of SAIF-insured deposits as of October 1, 1996. This special
assessment was applied by the FDIC to the amount of SAIF-assessable deposits
held by institutions as of March 31, 1995. Certain institutions that engaged
in thrift acquisitions, including BB&T-NC, received a 20 percent discount on
the assessment. As a result, the pre-tax impact of the special assessment on
SNC was approximately $33 million, and was recorded as an expense as of
September 30, 1996.
The FDIC also lowered the assessment rates for SAIF-insured deposits,
effective January 1, 1997, to the same levels as the assessment rates
currently applicable to BIF-insured deposits. Thus, for the semi-annual period
beginning January 1, 1997, the assessments imposed on all FDIC deposits for
deposit insurance range from 4 to 31 basis points, with an effective rate of 0
to 27 basis points per $100 of insured deposits, depending on the
institution's capital position and other supervisory factors. However, because
the recently enacted legislation requires that both SAIF-insured and BIF-
insured deposits must pay a pro rata portion of the interest due on the
obligations issued by the Financing Corporation, the FDIC is assessing BIF-
insured deposits an additional 1.30 basis points per $100 of deposits, and
SAIF-insured deposits an additional 6.48 basis points per $100 of deposits, to
cover those obligations.
INFORMATION ABOUT UCB
UCB is a bank holding company headquartered in Whiteville, North Carolina.
UCB conducts operations in North Carolina and South Carolina primarily through
its commercial banking subsidiaries. UCB provides a broad range of commercial
and consumer banking services, including deposits, lending, trust, investment
and related services, to the general public. As of December 31, 1996, UCB had
total consolidated assets of approximately $4.49 billion, total consolidated
deposits of approximately $4.05 billion, and total consolidated shareholders'
equity of approximately $350.5 million.
In North Carolina, UCB operates through UCB-NC, which at December 31, 1996,
had total assets of approximately $4.08 billion and total deposits of
approximately $3.71 billion. UCB-NC operates 139 banking offices in 81
communities in North Carolina.
In South Carolina, UCB operates through UCB-SC, which at December 31, 1996,
had total assets of approximately $386.8 million and total deposits of
approximately $349.7 million. UCB-SC operates 16 banking offices in eight
communities located in Greenville, Spartanburg and Horry counties, South
Carolina. Additional information with respect to UCB and its subsidiaries is
included in the documents incorporated by reference in this Joint Proxy
Statement/Prospectus. See "AVAILABLE INFORMATION" and "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
64
<PAGE>
PRO FORMA CONDENSED FINANCIAL INFORMATION
The following Pro Forma Condensed Financial Information and explanatory
notes are presented to show the impact of the Merger and the FFBC Merger on
SNC's historical financial position and results of operations. The Merger is
reflected in the Pro Forma Condensed Financial Information under the pooling
of interests method of accounting and the FFBC Merger is reflected under the
purchase method of accounting.
The Pro Forma Condensed Balance Sheet presented assumes that the Merger and
the FFBC Merger were consummated on December 31, 1996, and the Pro Forma
Condensed Income Statements assume that the Merger and the FFBC Merger were
consummated at the beginning of each period presented.
SNC acquired three insurance agencies in the fourth quarter of 1996 which
were accounted for under the purchase method of accounting. SNC issued 610,390
shares of SNC Common Stock to effect the acquisitions and recorded intangible
assets of $16.9 million. Substantially all of these shares were repurchased
prior to the consummation of these transactions. These amounts are not
reflected in the Pro Forma Condensed Balance Sheet contained herein. The
intangible assets recorded would result in amortization expense of $1.1
million each year for the years ended December 31, 1996 and 1995. These
amounts are not reflected in the Pro Forma Condensed Income Statements
contained herein.
During 1996, SNC consummated a merger with RAC, which was accounted for as a
pooling of interests and UCB consummated mergers with Triad Bank and Seaboard
Savings Bank, SSB, Inc., which were each accounted for as a pooling of
interests. Accordingly, the consolidated financial statements of SNC and UCB
reflected in the following pro forma condensed financial information have each
been restated to give effect to the respective transactions.
The pro forma earnings are not necessarily indicative of the results of
operations had the Merger and FFBC Merger occurred at the beginning of the
periods presented, nor are they necessarily indicative of the results of
future operations.
65
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SNC PRO FORMA
PRO FORMA AND FFBC ADJUSTMENTS
ADJUST- PRO FORMA -------------------------
SNC FFBC MENTS COMBINED UCB DEBIT CREDIT
----------- -------- --------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due
from banks..... $ 638,748 $ 4,773 $ 643,521 $ 199,487 $ $
Interest-bearing
deposits with
banks.......... 1,046 -- 1,046 361
Federal funds
sold and
securities
purchased under
resale
agreements or
similar
arrangements... 19,940 -- 19,940 90,603
Securities
available for
sale........... 5,136,789 38,262 5,175,051 877,432
Securities held
to maturity.... 124,718 1,498 126,216 46,090
Loans held for
sale........... 219,469 3,769 223,238 --
Loans and
leases, net of
unearned
income......... 14,364,595 270,824 14,635,419 3,149,697
Allowances for
loan and lease
losses........ (183,932) (3,980) (187,912) (46,138)
----------- -------- -------- ----------- ---------- ------- -------
Loans and
leases, net.... 14,180,663 266,844 14,447,507 3,103,559
----------- -------- -------- ----------- ---------- ------- -------
Premises and
equipment,
net............ 319,082 4,471 323,553 55,872
Other assets.... 606,107 7,222 38,146 (1) 651,475 114,439 4,282 (2)
----------- -------- -------- ----------- ---------- ------- -------
Total assets.... $21,246,562 $326,839 $ 38,146 $21,611,547 $4,487,843 $ -- $ 4,282
=========== ======== ======== =========== ========== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-
bearing demand
deposits....... $ 1,990,415 $ 13,596 $ $ 2,004,011 $ 633,014 $ $
Savings and
interest
checking....... 1,376,260 21,232 1,397,492 650,202
Money rate
savings........ 3,372,018 52,325 3,424,343 798,931
Other time
deposits....... 8,215,221 164,065 8,379,286 1,967,279
----------- -------- -------- ----------- ---------- ------- -------
Total deposits.. 14,953,914 251,218 15,205,132 4,049,426
Short-term
borrowed
funds.......... 2,263,303 2,969 (63,216)(3) 2,329,488 42,521
Long-term debt.. 2,051,767 41,532 2,093,299 2,273
Accounts payable
and other
liabilities.... 248,409 4,177 (500)(4) 253,086 43,154 35,788 (5)(6)
----------- -------- -------- ----------- ---------- ------- -------
Total
liabilities.... 19,517,393 299,896 (63,716) 19,881,005 4,137,374 35,788
----------- -------- -------- ----------- ---------- ------- -------
SHAREHOLDERS' EQUITY
Preferred stock,
$5 par value,
5,000,000
shares
authorized,
none issued and
outstanding at
December 31,
1996........... -- -- -- --
Common stock, $5
par value,
300,000,000
shares
authorized,
109,297,489
issued and
outstanding at
December 31,
1996;
109,297,489
shares and
136,896,865
shares pro
forma issued
and
outstanding,
respectively... 546,487 2,298 2,298 (1)(3)(7) 546,487 97,267 40,730 (8)
Additional paid-
in capital..... 134,758 9,697 8,324 (1)(3)(4)(7) 136,131 51,676 40,730 (8)
Retained
earnings....... 1,038,067 14,967 14,967 (7) 1,038,067 201,596 40,070 (2)(5)(6)
Loan to employee
stock ownership
plan and
unvested
restricted
stock.......... (1,952) -- (1,952) --
Net unrealized
(depreciation)
appreciation on
securities
available for
sale........... 11,809 (19) (19)(7) 11,809 (70)
----------- -------- -------- ----------- ---------- ------- -------
Total
shareholders'
equity......... 1,729,169 26,943 25,570 1,730,542 350,469 80,800 40,730
----------- -------- -------- ----------- ---------- ------- -------
Total
liabilities and
shareholders'
equity......... $21,246,562 $326,839 $(38,146) $21,611,547 $4,487,843 $80,800 $76,518
=========== ======== ======== =========== ========== ======= =======
<CAPTION>
SNC, UCB
AND FFBC
PRO FORMA
COMBINED
------------
<S> <C>
ASSETS
Cash and due
from banks..... $ 843,008
Interest-bearing
deposits with
banks.......... 1,407
Federal funds
sold and
securities
purchased under
resale
agreements or
similar
arrangements... 110,543
Securities
available for
sale........... 6,052,483
Securities held
to maturity.... 172,306
Loans held for
sale........... 223,238
Loans and
leases, net of
unearned
income......... 17,785,116
Allowances for
loan and lease
losses........ (234,050)
------------
Loans and
leases, net.... 17,551,066
------------
Premises and
equipment,
net............ 379,425
Other assets.... 761,632
------------
Total assets.... $26,095,108
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-
bearing demand
deposits....... $ 2,637,025
Savings and
interest
checking....... 2,047,694
Money rate
savings........ 4,223,274
Other time
deposits....... 10,346,565
------------
Total deposits.. 19,254,558
Short-term
borrowed
funds.......... 2,372,009
Long-term debt.. 2,095,572
Accounts payable
and other
liabilities.... 332,028
------------
Total
liabilities.... 24,054,167
------------
SHAREHOLDERS' EQUITY
Preferred stock,
$5 par value,
5,000,000
shares
authorized,
none issued and
outstanding at
December 31,
1996........... --
Common stock, $5
par value,
300,000,000
shares
authorized,
109,297,489
issued and
outstanding at
December 31,
1996;
109,297,489
shares and
136,896,865
shares pro
forma issued
and
outstanding,
respectively... 684,484
Additional paid-
in capital..... 147,077
Retained
earnings....... 1,199,593
Loan to employee
stock ownership
plan and
unvested
restricted
stock.......... (1,952)
Net unrealized
(depreciation)
appreciation on
securities
available for
sale........... 11,739
------------
Total
shareholders'
equity......... 2,040,941
------------
Total
liabilities and
shareholders'
equity......... $26,095,108
============
</TABLE>
See Notes to Pro Forma Condensed Financial Information.
66
<PAGE>
PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SNC AND SNC, FFBC
FFBC PRO AND UCB PRO
PRO FORMA FORMA FORMA
SNC FFBC ADJUSTMENTS COMBINED UCB(9) COMBINED(9)
------------ ---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans and leases...... $ 1,282,521 $ 23,659 $ 1,306,180 $ 272,301 $ 1,578,481
Interest and dividends
on securities......... 323,360 1,582 324,942 51,897 376,839
Interest on short-term
investments........... 732 1,322 2,054 4,741 6,795
------------ ---------- ------------ ----------- ------------
Total interest income.. 1,606,613 26,563 1,633,176 328,939 1,962,115
------------ ---------- ------------ ----------- ------------
INTEREST EXPENSE
Interest on deposits... 564,747 11,746 576,493 147,744 724,237
Interest on short-term
borrowed funds........ 105,936 964 106,900 1,823 108,723
Interest on long-term
debt.................. 107,437 1,671 109,108 165 109,273
------------ ---------- ------------ ----------- ------------
Total interest
expense............... 778,120 14,381 792,501 149,732 942,233
------------ ---------- ------------ ----------- ------------
NET INTEREST INCOME..... 828,493 12,182 840,675 179,207 1,019,882
Provision for loan and
lease losses.......... 53,661 3,050 56,711 8,850 65,561
------------ ---------- ------------ ----------- ------------
NET INTEREST INCOME
AFTER PROVISIONS FOR
LOAN AND LEASE LOSSES.. 774,832 9,132 783,964 170,357 954,321
------------ ---------- ------------ ----------- ------------
NONINTEREST INCOME
Service charges on
deposit accounts...... 107,581 -- 107,581 24,599 132,180
Mortgage banking
activities............ 34,352 -- 34,352 5,493 39,845
Trust income........... 22,811 -- 22,811 5,983 28,794
Agency and other
insurance
commissions........... 33,542 -- 33,542 6,139 39,681
Other nondeposit fees
and commissions....... 68,835 -- 68,835 9,456 78,291
Securities gains
(losses), net......... 3,206 (211) 2,995 (116) 2,879
Other noninterest
income................ 27,062 834 27,896 561 28,457
------------ ---------- ------------ ----------- ------------
Total noninterest
income................ 297,389 623 298,012 52,115 350,127
------------ ---------- ------------ ----------- ------------
NONINTEREST EXPENSE
Personnel expense...... 302,383 4,121 306,504 85,061 391,565
Occupancy and equipment
expense............... 103,594 1,347 104,941 17,525 122,466
Federal deposit
insurance expense..... 42,820 2,004 44,824 1,227 46,051
Other noninterest
expense............... 205,256 1,486 2,543 (10) 209,285 48,900 258,185
------------ ---------- ------- ------------ ----------- ------------
Total noninterest
expense............... 654,053 8,958 2,543 665,554 152,713 818,267
------------ ---------- ------- ------------ ----------- ------------
EARNINGS
Income before income
taxes................. 418,168 797 (2,543) 416,422 69,759 486,181
Income tax expense..... 134,504 307 134,811 24,555 159,366
------------ ---------- ------- ------------ ----------- ------------
Net Income............. 283,664 490 (2,543) 281,611 45,204 326,815
Preferred dividend
requirements.......... 610 -- 610 -- 610
------------ ---------- ------- ------------ ----------- ------------
Income applicable to
common shares......... $ 283,054 $ 490 $(2,543) $ 281,001 $ 45,204 $ 326,205
============ ========== ======= ============ =========== ============
PER COMMON SHARE
Net income
Primary................ $ 2.56 $ .21 $ 2.51 $ 1.87 $ 2.34
============ ========== ============ =========== ============
Fully diluted.......... $ 2.54 $ .21 $ 2.48 $ 1.87 $ 2.32
============ ========== ============ =========== ============
AVERAGE SHARES
OUTSTANDING
Primary................ 110,486,127 2,286,773 112,118,197 24,210,796 139,597,450
============ ========== ============ =========== ============
Fully diluted.......... 111,836,200 2,286,773 113,468,270 24,210,796 140,947,523
============ ========== ============ =========== ============
</TABLE>
See Notes to Pro Forma Condensed Financial Information.
67
<PAGE>
PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SNC AND SNC, FFBC
FFBC PRO AND UCB PRO
PRO FORMA FORMA FORMA
SNC FFBC ADJUSTMENTS COMBINED UCB(9) COMBINED(9)
------------ ---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans and leases...... $ 1,261,658 $ 22,731 $ 1,284,389 $ 255,251 $ 1,539,640
Interest and dividends
on securities......... 312,423 1,493 313,916 42,086 356,002
Interest on short-term
investments........... 2,531 1,203 3,734 6,754 10,488
------------ ---------- ------------ ----------- ------------
Total interest
income............... 1,576,612 25,427 1,602,039 304,091 1,906,130
------------ ---------- ------------ ----------- ------------
INTEREST EXPENSE
Interest on deposits... 557,149 11,185 568,334 132,620 700,954
Interest on short-term
borrowed funds........ 186,194 1,251 187,445 2,653 190,098
Interest on long-term
debt.................. 70,599 1,537 72,136 170 72,306
------------ ---------- ------------ ----------- ------------
Total interest
expense.............. 813,942 13,973 827,915 135,443 963,358
------------ ---------- ------------ ----------- ------------
NET INTEREST INCOME..... 762,670 11,454 774,124 168,648 942,772
Provision for loan and
lease losses.......... 34,632 431 35,063 7,292 42,355
------------ ---------- ------------ ----------- ------------
NET INTEREST INCOME
AFTER PROVISIONS FOR
LOAN AND LEASE LOSSES.. 728,038 11,023 739,061 161,356 900,417
------------ ---------- ------------ ----------- ------------
NONINTEREST INCOME
Service charge on
deposit accounts...... 89,621 201 89,822 24,043 113,865
Mortgage banking
activities............ 26,408 -- 26,408 4,810 31,218
Trust income........... 18,629 -- 18,629 5,243 23,872
Agency and other
insurance
commissions........... 26,438 -- 26,438 5,252 31,690
Other nondeposit fees
and commissions....... 54,634 -- 54,634 7,225 61,859
Securities (losses)
gains, net............ (18,600) (42) (18,642) 11 (18,631)
Other noninterest
income................ 33,864 582 34,446 477 34,923
------------ ---------- ------------ ----------- ------------
Total noninterest
income............... 230,994 741 231,735 47,061 278,796
------------ ---------- ------------ ----------- ------------
NONINTEREST EXPENSES
Personnel expense...... 346,308 4,016 350,324 78,390 428,714
Occupancy and equipment
expense............... 107,877 1,314 109,191 17,410 126,601
Federal deposit
insurance expense..... 22,995 501 23,496 3,864 27,360
Other noninterest
expense............... 204,048 1,189 $ 2,543(10) 207,780 37,632 245,412
------------ ---------- ------- ------------ ----------- ------------
Total noninterest
expense.............. 681,228 7,020 2,543 690,791 137,296 828,087
------------ ---------- ------- ------------ ----------- ------------
EARNINGS
Income before income
taxes................. 277,804 4,744 (2,543) 280,005 71,121 351,126
Income tax expense..... 91,463 1,713 -- 93,176 25,074 118,250
------------ ---------- ------- ------------ ----------- ------------
Net Income............. 186,341 3,031 (2,543) 186,829 46,047 232,876
Preferred dividend
requirements.......... 5,079 -- -- 5,079 -- 5,079
------------ ---------- ------- ------------ ----------- ------------
Income applicable to
common shares......... $ 181,262 $ 3,031 $(2,543) $ 181,750 $ 46,047 $ 227,797
============ ========== ======= ============ =========== ============
PER COMMON SHARE
Net income
Primary................ $ 1.65 $ 1.34 $ 1.63 $ 1.91 $ 1.64
============ ========== ============ =========== ============
Fully diluted.......... $ 1.62 $ 1.34 $ 1.61 $ 1.91 $ 1.62
============ ========== ============ =========== ============
AVERAGE SHARES
OUTSTANDING
Primary................ 109,776,710 2,261,310 111,390,607 24,099,190 138,743,188
============ ========== ============ =========== ============
Fully diluted.......... 114,801,843 2,261,310 116,415,740 24,099,190 143,768,321
============ ========== ============ =========== ============
</TABLE>
See Notes to Pro Forma Condensed Financial Information.
68
<PAGE>
PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SNC AND SNC, FFBC
FFBC PRO AND UCB
PRO FORMA FORMA PRO FORMA
SNC FFBC ADJUSTMENTS COMBINED UCB(9) COMBINED(9)
----------- --------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans and leases...... $ 1,042,553 $ 18,928 $ 1,061,481 $ 212,511 $ 1,273,992
Interest and dividends
on securities......... 291,805 1,048 292,853 32,298 325,151
Interest on short-term
investments........... 5,184 904 6,088 2,431 8,519
----------- --------- ----------- ---------- -----------
Total interest income.. 1,339,542 20,880 1,360,422 247,240 1,607,662
----------- --------- ----------- ---------- -----------
INTEREST EXPENSE
Interest on deposits... 441,876 7,814 449,690 89,430 539,120
Interest on short-term
borrowed funds........ 103,493 966 104,459 2,948 107,407
Interest on long-term
debt.................. 40,927 1,448 42,375 164 42,539
----------- --------- ----------- ---------- -----------
Total interest
expense............... 586,296 10,228 596,524 92,542 689,066
----------- --------- ----------- ---------- -----------
NET INTEREST INCOME..... 753,246 10,652 763,898 154,698 918,596
Provision for loan and
lease losses.......... 20,181 525 20,706 3,549 24,255
----------- --------- ----------- ---------- -----------
NET INTEREST INCOME
AFTER PROVISIONS FOR
LOAN AND LEASE LOSSES.. 733,065 10,127 743,192 151,149 894,341
----------- --------- ----------- ---------- -----------
NONINTEREST INCOME
Service charge on
deposit accounts...... 85,106 -- 85,106 23,874 108,980
Mortgage banking
activities............ 24,920 -- 24,920 3,893 28,813
Trust income........... 17,180 -- 17,180 5,163 22,343
Agency and other
insurance
commissions........... 24,243 -- 24,243 3,773 28,016
Other nondeposit fees
and commissions....... 48,265 -- 48,265 7,269 55,534
Securities (losses)
gains, net............ 3,074 (3) 3,071 (46) 3,025
Other noninterest
income................ 27,073 585 27,658 952 28,610
----------- --------- ----------- ---------- -----------
Total noninterest
income................ 229,861 582 230,443 44,878 275,321
----------- --------- ----------- ---------- -----------
NONINTEREST EXPENSES
Personnel expense...... 296,545 3,533 300,078 78,586 378,664
Occupancy and equipment
expense............... 88,580 1,187 89,767 17,181 106,948
Federal deposit
insurance expense..... 32,697 432 33,129 6,556 39,685
Other noninterest
expense............... 171,973 1,250 $ 2,543(10) 175,766 44,382 220,148
----------- --------- ------- ----------- ---------- -----------
Total noninterest
expense............... 589,795 6,402 2,543 598,740 146,705 745,445
----------- --------- ------- ----------- ---------- -----------
EARNINGS
Income before income
taxes................. 373,131 4,307 (2,543) 374,895 49,322 424,217
Income tax expense..... 129,289 1,568 130,857 17,769 148,626
----------- --------- ------- ----------- ---------- -----------
Income before
cumulative effects of
changes in accounting
methods............... 243,842 2,739 (2,543) 244,038 31,553 275,591
Cumulative effects of
changes in accounting
methods............... -- -- -- -- (316) (316)
----------- --------- ------- ----------- ---------- -----------
Net Income............. 243,842 2,739 (2,543) 244,038 31,237 275,275
Preferred dividend
requirements.......... 5,198 -- 5,198 -- 5,198
----------- --------- ------- ----------- ---------- -----------
Income applicable to
common shares......... $ 238,644 $ 2,739 $(2,543) $ 238,840 $ 31,237 $ 270,077
=========== ========= ======= =========== ========== ===========
PER COMMON SHARE
Net income
Primary................ $ 2.21 $ 1.22 $ 2.18 $ 1.30 $ 1.97
=========== ========= =========== ========== ===========
Fully diluted.......... $ 2.16 $ 1.22 $ 2.13 $ 1.30 $ 1.94
=========== ========= =========== ========== ===========
AVERAGE SHARES
OUTSTANDING
Primary................ 108,142,988 2,236,736 109,739,346 23,954,818 136,928,065
=========== ========= =========== ========== ===========
Fully diluted.......... 113,193,681 2,236,736 114,790,039 23,954,818 141,978,758
=========== ========= =========== ========== ===========
</TABLE>
See Notes to Pro Forma Condensed Financial Information.
69
<PAGE>
NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION
(1) Goodwill of $38.1 million was recorded herein to represent the excess of
the purchase price of $65.1 million plus estimated capitalized costs of
the FFBC Merger of $300,000 less the aggregate exercise price of FFBC's
options of $782,827 over the fair market value of the net assets acquired
of $26.9 million. There are no material fair market value adjustments to
FFBC's assets or liabilities. The table below reflects the calculation of
the purchase price, goodwill and pro forma equity resulting from the FFBC
Merger.
(2) During May 1995, SNC and UCB entered into a transaction wherein UCB
acquired 12 North Carolina branch offices which were required to be
divested by SNC. In the acquisition, UCB assumed $178.7 million in
deposits and purchased $26.8 million in loans from SNC. Two of the branch
banking offices acquired by UCB in the transaction with aggregate deposits
and loans of $32.7 million and $4.9 million, respectively, were sold to
third party banks during the fourth quarter of 1995. UCB recorded a
premium of $10.1 million for the assumed deposit base of the branches
retained. SNC recorded a total gain on divestiture of $12.3 million. This
adjustment eliminates the unamortized deposit intangible and the
intercompany portion of the gain in the Pro Forma Condensed Balance Sheet.
The Pro Forma Condensed Income Statements do not reflect these
adjustments, nor do they reflect the impact of UCB's reduced amortization
expense, which totaled $1.8 million and $1.4 million for the years ended
December 31, 1996 and 1995, respectively.
(3) To reflect SNC's repurchase of 1.64 million shares of SNC Common Stock in
connection with and prior to the FFBC Merger at a fair value of $38.52 per
share. The cost of funding the repurchase and the related per share and
weighted average share impact are not reflected in the Pro Forma Condensed
Income Statements.
(4) To record the payable of $300,000 for estimated direct merger costs of
FFBC and $200,000 for estimated stock issuance costs.
(5) Certain material, nonrecurring adjustments of approximately $50 million
will be recorded in conjunction with the Merger. These adjustments include
amounts to effect the settlement of obligations under existing employment
contracts, severance pay for involuntary terminations, early retirement
and related employee benefits; amounts associated with branch closings and
divestitures and the consolidation of bank operations and systems. It is
estimated that $5 million of the expenses will be directly related to
effecting the Merger and therefore will not be deductible for income tax
purposes. The impact of these adjustments, net of the related tax benefit,
has been reflected in the Pro Forma Condensed Balance Sheet as of December
31, 1996.
(6) UCB elected to amortize the accumulated postretirement obligation related
to the adoption of SFAS No. 106 over a period of 20 years as a component
of the postretirement benefit cost. SNC elected to reflect the adoption of
SFAS No. 106 through the recording of a cumulative charge for this change
in accounting principle. The Pro Forma Condensed Balance Sheet reflects an
adjustment to conform UCB's transition method to the method elected by
SNC. The accompanying Pro Forma Condensed Income Statement does not
reflect adjustments for amounts previously recorded by UCB as amortization
of the unrecorded transition obligation, which amounted to $394,000 each
year for the years ended December 31, 1996, 1995 and 1994.
(7) To eliminate shareholders' equity of FFBC of $26.9 million and to record
the issuance of 1.64 million shares of SNC Common Stock at $38.52 per
share and the issuance of options to purchase 85,750 shares of SNC Common
Stock, which options have a weighted average value of $9.13 per option.
(8) Based on an exchange ratio of 1.135 shares for the conversion of UCB
Common Stock into SNC Common Stock. At December 31, 1996, there were
24,316,631 shares of UCB Common Stock outstanding.
(9) No pro forma adjustments relating to the Merger are reflected in the Pro
Forma Condensed Income Statements.
(10) To record amortization of the excess of the purchase price over the
estimated fair market value of the net assets acquired from FFBC over a
15-year period using the straight-line method.
70
<PAGE>
CALCULATION OF PURCHASE PRICE OF FFBC
DECEMBER 31, 1996
<TABLE>
<S> <C>
CALCULATION OF PURCHASE PRICE AND GOODWILL
FFBC shares of common stock outstanding............................. 2,299,467
FFBC options outstanding............................................ 85,750
----------
Total FFBC shares and options outstanding........................... 2,385,217
Exchange ratio...................................................... .7137
----------
Shares and options of SNC Common Stock issued....................... 1,702,329
Fair market value per share......................................... 38.52
----------
65,572,025
Plus: Estimated capitalized FFBC Merger costs....................... 300,000
Less: Aggregate exercise price of FFBC's options.................... (782,827)
----------
Purchase price...................................................... 65,089,198
----------
Net fair market value of assets acquired............................ 26,943,000
----------
Goodwill............................................................ 38,146,198
==========
CALCULATION OF PRO FORMA CAPITAL
Purchase price...................................................... 65,089,198
Less: Estimated capitalized FFBC Merger costs....................... 300,000
Less: Estimated stock issuance costs................................ 200,000
----------
Pro forma equity.................................................... 64,589,198
==========
</TABLE>
71
<PAGE>
DESCRIPTION OF SNC CAPITAL STOCK
GENERAL
The authorized capital stock of SNC consists of 300,000,000 shares of SNC
Common Stock and 5,000,000 shares of SNC Preferred Stock. As of the SNC Record
Date, there were 109,541,859 shares of SNC Common Stock issued and
outstanding. There were no shares of SNC Preferred Stock issued and
outstanding as of such date, although 2,000,000 shares of SNC Preferred Stock
have been designated as SNC Junior Preferred Stock and are reserved for
issuance in connection with SNC's shareholder rights plan. See "--Shareholder
Rights Plan." Based on the number of shares of UCB Common Stock outstanding at
the SNC Record Date, approximately 27.9 million shares of SNC Common Stock
would be issued in the Merger.
COMMON STOCK
Each share of SNC Common Stock is entitled to one vote on all matters
submitted to a vote at any meeting of shareholders. Holders of SNC Common
Stock are entitled to receive dividends when, as, and if declared by the SNC
Board of Directors out of funds legally available therefor and, upon
liquidation, to receive pro rata all assets, if any, of SNC available for
distribution after the payment of necessary expenses and all prior claims.
Holders of SNC Common Stock have no preemptive rights to subscribe for any
additional securities of any class that SNC may issue, nor any conversion,
redemption or sinking fund rights. Holders of SNC Common Stock have no right
to cumulate votes in the election of directors. The rights and privileges of
holders of SNC Common Stock are subject to any preferences provided for by
resolution of the SNC Board for any series of SNC Preferred Stock that SNC may
issue in the future. The terms of the SNC Junior Preferred Stock reserved for
issuance in connection with SNC's shareholder rights plan provide that holders
of such shares shall have rights and privileges that are substantially
identical to those of holders of SNC Common Stock.
The transfer agent and registrar for SNC Common Stock is BB&T-NC.
Application will be made for the shares of SNC Common Stock to be issued in
the Merger to be listed on the NYSE.
PREFERRED STOCK
Under the SNC Articles, SNC may issue shares of SNC Preferred Stock in one
or more series as may be determined by the SNC Board or a duly authorized
committee. The SNC Board or committee may also establish, from time to time,
the number of shares to be included in each series and may fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof, and may increase
or decrease the number of shares of any series without any further vote or
action by the shareholders. Any SNC Preferred Stock issued may rank senior to
the SNC Common Stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding up of SNC, or both. In addition, any
shares of SNC Preferred Stock may have class or series voting rights. Under
certain circumstances, the issuance of SNC Preferred Stock or the existence of
the unissued SNC Preferred Stock may tend to discourage or render more
difficult a merger or other change in control of SNC. See "--Shareholder
Rights Plan."
SHAREHOLDER RIGHTS PLAN
SNC has adopted a shareholder rights plan pursuant to which holders of
shares of SNC Common Stock also hold rights to purchase securities or other
property that may be exercised upon the occurrence of certain "triggering
events." Shareholder rights plans such as the SNC plan are intended to
encourage potential hostile acquirors of a "target" corporation to negotiate
with the board of directors of the target corporation in order to avoid
occurrence of the "triggering events" specified in such plans. Shareholder
rights plans are intended to give the directors of a target corporation the
opportunity to assess the fairness and appropriateness of a proposed
transaction in order to determine whether or not it is in the best interests
of the corporation and its shareholders. Notwithstanding these purposes and
intentions of shareholder rights plans, such plans, including that of SNC,
could have the effect of discouraging a business combination which
shareholders believe to be in their best interests. The provisions of SNC's
shareholder rights plan are discussed below.
72
<PAGE>
On December 17, 1996, the SNC Board declared a dividend distribution of one
right (a "Right," and collectively the "Rights") for each outstanding share of
SNC Common Stock to shareholders of record at the close of business on January
17, 1997. One Right will also be distributed for each share of SNC Common
Stock issued between January 17, 1997 and the occurrence of a "Distribution
Date" (described in the next paragraph). Accordingly, assuming no Distribution
Date occurs prior to the Effective Time, each share of SNC Common Stock issued
in the Merger will have a Right attached to it. (For purposes of this Joint
Proxy Statement/Prospectus, the term "SNC Common Stock" includes the
associated Rights.) Each Right entitles the registered holder to purchase from
SNC a unit consisting of one one-hundredth of a share (a "Unit") of SNC Junior
Preferred Stock at a Purchase Price of $145.00 per Unit, subject to
adjustment. The description and terms of the Rights are set forth in the
Rights Agreement, dated as of December 17, 1996, between SNC and BB&T-NC in
the capacity of Rights Agent (the "Rights Agreement").
Initially, the Rights will remain attached to all SNC Common Stock
certificates representing shares outstanding, and no separate Rights
Certificates will be distributed. A "Distribution Date" will occur, and the
Rights will separate from shares of SNC Common Stock, upon the earliest of (a)
10 business days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding shares of SNC Common Stock (the "Stock Acquisition Date"), (b) 10
business days following the commencement of a tender offer or exchange offer
that would if consummated result in a person or group beneficially owning 20%
or more of such outstanding shares of SNC Common Stock or (c) 10 business days
after the SNC Board declares any Person to be an "Adverse Person," as
described in the following paragraph.
The SNC Board will declare a person to be an Adverse Person upon its
determinations (a) that such person, alone or together with its affiliates and
associates, has or will become the beneficial owner of 10% or more of the
outstanding shares of SNC Common Stock (provided that any such determination
shall not be effective until such person has in fact become the beneficial
owner of 10% or more of the outstanding shares of SNC Common Stock) and (b)
following consultation with such persons as the SNC Board deems appropriate,
that (i) such beneficial ownership by such person is intended to cause, is
reasonably likely to cause or will cause SNC to repurchase the SNC Common
Stock beneficially owned by such person or to cause pressure on SNC to take
action or enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under circumstances where
the SNC Board determines that the best long-term interests of SNC and its
shareholders would not be served by taking such action or entering into such
transactions or series of transactions at that time or (ii) such beneficial
ownership is causing or is reasonably likely to cause a material adverse
impact (including, but not limited to, impairment of relationships with
customers or impairment of SNC's ability to maintain its competitive position)
on the business or prospects of SNC or (iii) such beneficial ownership
otherwise is determined to be not in the best interests of SNC and its
shareholders, employees, customers and communities in which SNC and its
subsidiaries do business.
However, the SNC Board may not declare a person to be an Adverse Person if,
prior to the time that the person acquired 10% or more of the shares of SNC
Common Stock then outstanding, such person provided to the SNC Board in
writing a statement of the person's purpose and intentions in connection with
the proposed acquisition of SNC Common Stock, together with any other
information reasonably requested of the person by the SNC Board, and the SNC
Board, based on such statement and reasonable inquiry and investigation as it
deems appropriate, determines to notify and notifies such person in writing
that it will not declare the person to be an Adverse Person. The SNC Board
may, however, expressly condition in any manner a determination not to declare
a person an Adverse Person on such conditions as the SNC Board may select,
including, without limitation, such person's not acquiring more than a
specified amount of stock and/or such person's not taking actions inconsistent
with the purposes and intentions disclosed by such person in the statement
provided to the SNC Board. In the event that the SNC Board should at any time
determine, upon reasonable inquiry and investigation, that such person has not
met or complied with any conditions specified by the SNC Board, the SNC Board
may at any time thereafter declare the person to be an Adverse Person.
73
<PAGE>
Until the Distribution Date (a) the Rights will be evidenced by the SNC
Common Stock certificates and will be transferred with and only with such SNC
Common Stock certificates, (b) new SNC Common Stock certificates issued after
January 17, 1997 will contain a notation incorporating the Rights Agreement by
reference and (c) the surrender for transfer of any certificates for SNC
Common Stock outstanding will also constitute the transfer of the Rights
associated with the SNC Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 31, 2006, subject to extension by the SNC
Board, or unless earlier redeemed by SNC as described below.
As soon as practicable after the Distribution Date, Rights Certificates will
be mailed to holders of record of SNC Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Rights Certificates
alone will represent the Rights. Except for certain issuances in connection
with outstanding options and convertible securities and as otherwise
determined by the SNC Board, only shares of SNC Common Stock issued prior to
the Distribution Date will be issued with Rights.
In the event that the SNC Board determines that a person is an Adverse
Person or, at any time following the Distribution Date, a person becomes the
beneficial owner of 25% or more of the then-outstanding shares of SNC Common
Stock, each holder of a Right will thereafter have the right to receive at the
time specified in the Rights Agreement, (a) upon exercise and payment of the
exercise price, SNC Common Stock (or, in certain circumstances, cash, property
or other securities of SNC) having a value equal to two times the exercise
price of the Right or (b) at the discretion of the SNC Board, upon exercise
and without payment of the exercise price, SNC Common Stock (or, in certain
circumstances, cash, property or other securities of SNC) having a value equal
to the difference between the exercise price of the Right and the value of the
consideration which would be payable under clause (a). Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person or
Adverse Person will be null and void. Rights will not become exercisable
following the occurrence of either of the events set forth above, however,
until such time as the Rights are no longer redeemable by SNC as set forth
below.
For example, at an exercise price of $145.00 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $290.00 worth of SNC Common Stock (or other consideration,
as noted above) for $145.00. Assuming that the SNC Common Stock had a per
share value of $72.50 at such time, the holder of each valid Right would be
entitled to purchase four shares of SNC Common Stock for $145.00.
Alternatively, at the discretion of the SNC Board, each Right following an
event set forth in the preceding paragraph, without payment of the exercise
price, would entitle its holder to SNC Common Stock (or other consideration,
as noted above) worth $145.00.
In the event that, at any time following the Stock Acquisition Date, (a) SNC
is acquired in a merger, statutory share exchange or other business
combination transaction in which SNC is not the surviving corporation or (b)
50% or more of SNC's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the Right.
The Purchase Price payable, and the number of Units of SNC Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (a) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the SNC Junior Preferred Stock, (b) if holders of the SNC
Junior Preferred Stock are granted certain rights or warrants to subscribe for
SNC Junior Preferred Stock or convertible securities at less than the current
market price of the SNC Junior Preferred Stock, or (c) upon the distribution
to holders of the SNC Junior Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
74
<PAGE>
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the SNC Junior Preferred
Stock on the last trading date prior to the date of exercise.
In general, SNC may redeem the Rights in whole, but not in part, at a price
of $0.01 per Right at any time until 10 business days following the earlier of
the Stock Acquisition Date or the effective date of any declaration by the SNC
Board that any person is an Adverse Person. After the redemption period has
expired, SNC's right of redemption may be reinstated if an Acquiring Person or
Adverse Person reduces his beneficial ownership to less than 10% of the
outstanding shares of SNC Common Stock in a transaction or series of
transactions not involving SNC and if there are no other Acquiring Persons or
Adverse Persons. Immediately upon the action of the SNC Board ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $0.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of SNC, including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights will not be taxable
to shareholders or to SNC, shareholders may, depending upon the circumstances,
recognize taxable income in the event that the Rights become exercisable for
stock (or other consideration) of SNC or for common stock of the acquiring
company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
SNC Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the SNC Board in order to
cure any ambiguity, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person or Adverse Person) or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption may be made when the Rights are not redeemable.
The Rights Agreement is filed as an exhibit to a Registration Statement on
Form 8-A dated January 10, 1997 that has been filed by SNC with the
Commission. Such registration statement and the Rights Agreement are
incorporated by reference in this Joint Proxy Statement/Prospectus, and
reference is made thereto for the complete terms of the Rights Agreement and
the Rights. The foregoing discussion is qualified in its entirety by reference
to the Rights Agreement. See "AVAILABLE INFORMATION" and "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
CERTAIN PROVISIONS OF THE NCBCA, SNC ARTICLES AND SNC BYLAWS
Certain provisions of the NCBCA, the SNC Articles and the SNC Bylaws deal
with matters of corporate governance and the rights of shareholders. Certain
of these provisions, as well as the ability of the SNC Board to issue shares
of SNC Preferred Stock and to set the voting rights, preferences and other
terms thereof, may be deemed to have an anti-takeover effect and may delay or
prevent takeover attempts not first approved by the SNC Board. These
provisions also could delay or deter the removal of incumbent directors or the
assumption of control by shareholders. SNC believes that these provisions are
appropriate to protect the interests of SNC and all of its shareholders. The
following describes the principal provisions of the NCBCA applicable to SNC,
the SNC Articles and SNC Bylaws that may be deemed to have anti-takeover
effects.
Control Share Act
The Control Share Acquisition Act of the NCBCA may make an unsolicited
attempt to gain control of SNC more difficult by restricting the right of
certain shareholders to vote newly acquired large blocks of stock. For a
description of this statute, see "THE MERGER--Comparison of Shareholders'
Rights--Anti-takeover Statutes."
75
<PAGE>
Provisions Regarding SNC Board
The provisions of the SNC Articles and the SNC Bylaws with respect to the
classification of the SNC Board and the removal of directors only for cause
could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, control of SNC. For
a description of such provisions, see "THE MERGER--Comparison of Shareholders'
Rights--Directors."
Meeting of Shareholders; Shareholders' Nominations and Proposals
Under the SNC Bylaws, meetings of the shareholders may be called by the
Chief Executive Officer or the SNC Board. Shareholders of SNC may not request
that a special meeting of shareholders be called. This provision could have
the effect of delaying until the next annual shareholders' meeting shareholder
actions which are favored by the holders of a majority of the outstanding
voting securities of SNC.
Certain procedures governing the submission of nominations for directors and
other proposals by shareholders may have some deterrent on shareholder actions
designed to result in change of control in SNC. See "THE MERGER--Comparison of
Shareholders' Rights--Notice of Shareholder Nominations and Shareholder
Proposals."
76
<PAGE>
ADDITIONAL MATTERS RELATING TO THE SNC MEETING
SECURITY OWNERSHIP
The table below sets forth the beneficial ownership of SNC Common Stock by
all directors and nominees, the Chief Executive Officer and the four next most
highly compensated executive officers of SNC, all current Executive Officers
of SNC and all directors and Executive Officers of SNC as a group as of March
3, 1997. Unless otherwise indicated, all persons listed below have sole voting
and investment power over all shares beneficially owned. No shareholder is
known to SNC to be the beneficial owner of more than 5% of the outstanding SNC
Common Stock as of March 3, 1997.
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
NAME OF BENEFICIAL OWNER/ BENEFICIALLY PERCENT OF
NUMBER OF PERSONS IN GROUP OWNED(1)(2) COMMON STOCK
-------------------------- ------------ ------------
<S> <C> <C>
John A. Allison IV................................... 236,422 *
Paul B. Barringer.................................... 52,977 *
W.R. Cuthbertson, Jr................................. 100,837 *
Ronald E. Deal....................................... 39,662 *
A.J. Dooley, Sr...................................... 54,457 *
Joe L. Dudley, Sr.................................... 9,520 *
Tom D. Efird......................................... 43,537 *
O. William Fenn, Jr.................................. 31,922 *
Paul S. Goldsmith.................................... 119,593 *
L. Vincent Hackley................................... 13,873 *
Ernest F. Hardee..................................... 126,956 *
Richard Janeway, M.D. ............................... 37,817 *
J. Ernest Lathem, M.D................................ 210,333 *
James H. Maynard..................................... 190,070 *
Joseph A. McAleer, Jr................................ 13,019 *
Albert O. McCauley................................... 12,185 *
Dickson McLean, Jr................................... 27,273 *
Charles E. Nichols................................... 77,808 *
L. Glenn Orr, Jr..................................... 196,795 *
A. Winniett Peters................................... 30,022 *
Richard L. Player, Jr................................ 27,775 *
C. Edward Pleasants, Jr.............................. 61,822 *
Nido R. Qubein....................................... 92,578 *
A. Tab Williams, Jr.................................. 367,158 *
W. Kendall Chalk..................................... 98,578 *
Robert E. Greene..................................... 42,677 *
Kelly S. King........................................ 110,865 *
Morris D. Marley..................................... 29,817 *
Scott E. Reed........................................ 103,110 *
Michael W. Sperry.................................... 46,672 *
Henry G. Williamson, Jr.............................. 172,887 *
Directors and executive officers as a group (31 per-
sons)............................................... 2,779,017 2.54%
</TABLE>
- --------
* Less than 1%.
(1) As reported to SNC by the directors and nominees and executive officers
(including shares held by spouses, minor children, affiliated companies,
partnerships and trusts over which the named person has beneficial
ownership). The table includes options which become exercisable within 60
days after March 3, 1997 and shares allocated to individual accounts by
the Southern National Employee Stock Ownership Plan (the
77
<PAGE>
"ESOP") and by the Southern National ESOP Excess Plan (the "ESOP Excess
Plan"), voting of which is directed by those named persons and group
members who participate in the ESOP and the ESOP Excess Plan.
(2) Unless otherwise indicated, the persons named in the table have sole
voting and investment power over the shares included in the table.
ELECTION OF DIRECTORS
The SNC Board consists of 24 persons. The SNC Board is divided into three
classes, each class to be as nearly equal in number as possible. There are
eight nominees for election as directors who will serve for three-year terms
expiring in 2000. It is intended that the persons named in the accompanying
form of proxy will vote to elect the eight nominees listed below as directors,
unless authority so to vote is withheld. Although management expects that each
of the nominees will be available for election, in the event a vacancy in the
slate of nominees is occasioned by unexpected occurrence, it is intended that
shares of SNC Common Stock represented by proxies will be voted for the
election of a substitute nominee selected by the persons named in the
accompanying form of proxy. The election of each nominee requires the
affirmative vote of a plurality of the shares of SNC Common Stock cast in the
election of directors. Votes that are withheld and shares held in street name
that are not voted in the election of directors will not be included in
determining the number of votes cast.
The names of the nominees for election and the other continuing members of
the SNC Board, their principal occupations and certain other information with
respect to such persons are as follows.
78
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
FOR THREE YEAR TERMS EXPIRING IN 2000
<TABLE>
<CAPTION>
DIRECTOR OF
SNC OR
BB&T FINANCIAL
NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS; RESIDENCES SINCE(1)
- ---- --- ----------------------------------------------------------- --------------
<S> <C> <C> <C>
Paul B. Barringer(3).... 66 Chairman and Chief Executive Officer, 1975
Coastal Lumber Company (dealer in lumber
products); Weldon, N.C.
A. J. Dooley, Sr.(4).... 66 Partner of Dooley, Dooley, Spence, Parker 1994
and Hipp, P.A. (attorneys); Lexington, S.C.
O. William Fenn, 70 Personal Investments; prior to June 1995, 1991
Jr.(4)................. Director of Furniture Export Office,
International Trade Division, North
Carolina Department of Commerce; prior to
April 1992, Vice Chairman of LADD Furniture
Company (furniture manufacturer); High
Point, N.C.
Paul S. Goldsmith(3).... 63 Chairman and President, William Goldsmith 1970
Company, Inc. (real estate); Greenville,
S.C.
L. Vincent Hackley(2)... 56 President, North Carolina System of 1992
Community Colleges; prior to January 1,
1995, Chancellor and Professor of Political
Science, Fayetteville State University;
Vice President for Student and Special
Programs, University of North Carolina;
Raleigh, N.C.
Joseph A. McAleer, 47 Chairman and Chief Executive Officer, 1993
Jr.(3)................. Krispy Kreme Doughnut Corporation since
1992; prior thereto President and Chief
Operating Officer and Director, Krispy
Kreme Doughnut Corporation (manufacturer of
doughnuts and doughnut making equipment);
Winston-Salem, N.C.
Charles E. Nichols(3)... 69 Retired; prior to August 1996, Attorney At 1984
Law; Greensboro, N.C.
A. Winniett Peters(4)... 70 Consultant of Government Affairs for 1977
Standard Commercial Tobacco Company
(tobacco processors and exporters);
Chairman of the Board of Standard
Commercial Tobacco Company until January
1993; Wilson, N.C.
TERMS EXPIRING IN 1998
Joe L. Dudley, Sr.(4)... 59 President and Chief Executive Officer of 1992
Dudley Products, Inc. (manufacturer of hair
care products); Greensboro, N.C.
Ernest F. Hardee(4)..... 56 President of Hardee Realty Corp. (real 1995
estate management); Portsmouth, Va.
J. Ernest Lathem, 63 Personal Investments; Medical Director of 1987
M.D.(3)................ Prostate Diagnostic Center until April
1994; Greenville, S.C.
Dickson McLean, Jr.(4).. 69 President of McLean, Stacy, Henry, McLean, 1956
McIntyre & Ramsaur, P.A., (attorneys);
Lumberton, N.C.
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR OF
SNC OR
BB&T FINANCIAL
NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS; RESIDENCES SINCE(1)
- ---- --- ----------------------------------------------------------- --------------
<S> <C> <C> <C>
Richard L. Player, 62 President of Player, Inc. (commercial and 1990
Jr.(3)................. industrial general contractor);
Fayetteville, N.C.
C. Edward Pleasants, 56 President and Chief Executive Officer, 1993
Jr.(2)................. Pleasants Hardware Company (architectural
door and hardware distributor); Winston-
Salem, N.C.
Nido R. Qubein(4)....... 48 Chief Executive Officer of Creative 1990
Services, Inc. (international management
consulting); High Point, N.C.
A. Tab Williams, 69 Chairman and Chief Executive Officer of A. 1982
Jr.(3)................. T. Williams Oil Company (oil retailer and
convenience stores); Winston-Salem, N.C.
TERMS EXPIRING IN 1999
John A. Allison IV(2)... 48 Chairman and Chief Executive Officer of 1986
SNC; Chairman and Chief Executive Officer
of BB&T Financial until February 1995;
Winston-Salem, N.C.
W. R. Cuthbertson, 66 Retired; prior to June 1995, Senior Vice 1983
Jr.(2)................. President of Branch Banking and Trust
Company; Charlotte, N.C.
Ronald E. Deal(3)....... 53 Chairman of Wesley Hall (furniture 1986
manufacturer); Investor; Hickory, N.C.
Tom D. Efird(2)......... 57 President of Standard Distributors, Inc. 1982
(beverage wholesaler); Gastonia, N.C.
Richard Janeway, 64 Executive Vice President for Health 1989
M.D.(4)................ Affairs; Professor of Neurology and
Research Associate in Radiology, Bowman
Gray School of Medicine, Wake Forest
University; Winston-Salem, N.C.
James H. Maynard(2)..... 57 Chairman and Chief Executive Officer of 1985
Investors Management Corporation
(restaurants); Raleigh, N.C.
Albert O. McCauley(2)... 56 Secretary and Treasurer, Quick Stop Food 1993
Marts, Inc. (convenience stores); President
and Chief Executive Officer, McCauley
Moving and Storage of Fayetteville, Inc.;
Fayetteville, N.C.
L. Glenn Orr, Jr.(2).... 56 Chairman and Chief Executive Officer of Orr 1982
Management Co. (management consulting);
Chairman Emeritus of SNC; prior to March,
1995 Chairman, Chief Executive Officer, and
President of SNC; Winston-Salem, N.C.
</TABLE>
- --------
(1) On February 28, 1995, the merger of BB&T Financial into SNC (the "BB&T
Merger") was consummated and certain directors of BB&T Financial became
directors of SNC.
(2) Member of the SNC Executive Committee.
(3) Member of the SNC Audit Committee.
(4) Member of the SNC Compensation Committee.
80
<PAGE>
Certain of the above directors and nominees are also directors of other
publicly held companies. O. William Fenn, Jr. has been a director of Ladd
Furniture Company since 1982. L. Vincent Hackley has been a director of
Tyson's Foods, Inc. since 1994. J. Ernest Lathem, M.D., has been a director of
Span-America Medical Systems, Inc. since 1996. James H. Maynard has been a
director of Investors Management Corporation since 1972 and a director of
Golden Corral Realty Corporation since 1984. L. Glenn Orr, Jr. has been a
director of Highwoods Properties, Inc. and Ladd Furniture Company since 1995.
A. Winniett Peters was a director of Standard Commercial Corporation from 1978
until August 1994 when he retired. Each of these companies has securities
registered under the Exchange Act.
The SNC Board has established the SNC Executive Committee, the SNC Audit
Committee and a Compensation Committee (the "SNC Compensation Committee") and
has assigned certain responsibilities to each of these committees.
The SNC Executive Committee consists of eight directors. This Committee is
generally authorized to have and to exercise all of the powers of the SNC
Board between board meetings. The SNC Executive Committee also serves as the
Nominating Committee for the SNC Board (the "SNC Nominating Committee) and
recommends to the SNC Board nominees for election as directors and considers
the performance of incumbent directors in determining whether or not to
nominate them for re-election. The SNC Nominating Committee considers written
nominations of candidates for election to the SNC Board submitted by
shareholders to the Secretary of SNC that are accompanied by biographical
material, qualifications and consent of nominees. Nominations of such
candidates must have been received not later than 60 days prior to one year
after the date of the immediately preceding annual meeting of shareholders,
along with such information as was disclosed in the proxy materials concerning
all nominees for director and the shareholder's name, address and number of
shares owned, in order to be considered for the slate of nominees for election
as directors at the next annual meeting.
The SNC Audit Committee recommends engaging and discharging the independent
auditors; directs and supervises special investigations; reviews with the
independent auditors the plan for and result of the auditing engagement;
reviews the scope and result of SNC's procedures for internal auditing and
loan review; approves each professional service above certain limits provided
by the independent auditors; considers the range of audit and non-audit fees;
and reviews the adequacy of SNC's system of internal accounting controls. The
SNC Audit Committee reappointed Arthur Andersen LLP as SNC's auditors for
1997.
The SNC Compensation Committee recommends to the SNC Board remuneration
arrangements for senior management and directors and adoption and
administration of compensation plans in which officers and directors are
eligible to participate.
All members attended at least 75% of the SNC Board meetings and assigned
committee meetings during 1996 except for Mr. Maynard. The SNC Board held 10
meetings during the year; the SNC Executive Committee held five meetings; the
SNC Audit Committee held two meetings; and the SNC Compensation Committee held
two meetings.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, SNC's directors and
executive officers are required to report their ownership of SNC Common Stock
and any changes in that ownership to the Commission. Specific dates for such
reporting have been established and SNC is required to report in this Joint
Proxy Statement/Prospectus any failure to file by the established dates during
1996. In 1996, all of these filing requirements were satisfied by SNC's
directors and executive officers, except Messrs. Deal, Fenn, Hardee, McAleer,
Qubein and Williams, who each failed to file on a timely basis one report
relating to one transaction by each in SNC Common Stock beneficially owned by
such person. In making this statement, SNC has relied on the written
representations of its incumbent directors and executive officers and copies
of the reports that have been filed with the Commission.
81
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents information relating to total compensation
during the fiscal year ended December 31, 1996 of the Chief Executive Officer
and the seven next most highly compensated executive officers of SNC (the "SNC
Named Executives"):
SNC SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- -----------------------------
AWARDS PAYOUTS
--------------------- -------
SECURITIES UNDERLYING
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS/SARS LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) (NO. OF SHARES) PAYOUTS COMPENSATION(2)
- ------------------ ---- -------- -------- --------------- --------------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Allison IV...... 1996 $486,674 $584,009 -- -- -- $40,716
Chairman & Chief 1995 406,200 191,930 122,842 42,877 -- 16,248
Executive Officer 1994 386,212 189,244 -- 40,272 -- 15,449
W. Kendall Chalk........ 1996 $208,000 $208,000 -- -- -- $18,107
Senior Executive 1995 198,492 93,788 62,224 18,401 -- 7,940
Vice President 1994 178,623 87,525 -- 18,785 -- 6,160
Robert E. Greene........ 1996 $210,000 $210,000 -- -- -- $17,379
Senior Executive 1995 163,105 55,000 14,162 14,867 56,400 21,270
Vice President 1994 156,832 57,200 -- 6,828 53,400 15,290
Kelly S. King........... 1996 $255,000 $255,000 -- -- -- $22,125
President 1995 240,731 113,746 78,282 22,289 -- 9,629
1994 272,137 111,297 -- 23,686 -- 9,086
Morris D. Marley........ 1996 $195,000 $195,000 $ 160 -- -- $17,219
Senior Executive 1995 185,370 62,600 14,305 16,897 63,000 12,839
Vice President 1994 178,240 59,200 -- 7,760 56,700 12,117
Scott E. Reed........... 1996 $205,000 $205,000 $24,337 -- -- $17,430
Senior Executive 1995 195,050 92,161 73,974 18,084 -- 7,802
Vice President and 1994 173,750 85,138 -- 18,306 -- 6,160
Chief Financial Officer
Michael W. Sperry....... 1996 $202,000 $202,000 $ 1,120 -- -- $18,870
Senior Executive 1995 195,878 66,100 17,610 17,854 -- 14,548
Vice President 1994 188,344 68,700 -- 8,200 67,900 14,406
Henry G. Williamson,
Jr. ................... 1996 $370,000 $370,000 -- -- -- $31,467
Chief Operating 1995 326,890 154,456 119,145 30,218 -- 13,076
Officer 1994 310,000 151,900 -- 32,329 -- 12,400
</TABLE>
- --------
(1) The compensation shown as "Other Annual Compensation" for 1996 for Mr.
Reed consisted of payments pursuant to SNC's Relocation Policy. For
Messrs. Marley and Sperry, it consisted of amounts accrued under and
interest earned on deferred compensation in excess of 120% of the long-
term applicable federal rate.
(2) The compensation shown as "All Other Compensation" for 1996 consisted of
the following: (a) SNC's matching contribution under the SNC Savings and
Thrift Plan in the amount of $9,000 for each of the named officers; (b)
SNC's contribution to the SNC Supplemental Executive Retirement Plan in
the amount of $31,716 for Mr. Allison, $9,107 for Mr. Chalk, $6,900 for
Mr. Greene, $13,125 for Mr. King, $6,456 for Mr. Marley, $8,830 for Mr.
Reed, $7,086 for Mr. Sperry, and $22,467 for Mr. Williamson; (c) the
actuarial equivalent of benefits to employees from payment of annual
premiums by SNC under the split-dollar life insurance program in the
amount of $1,479 for Mr. Greene, $1,763 for Mr. Marley, and $2,784 for Mr.
Sperry.
No options to purchase SNC Common Stock were granted to any of the SNC Named
Executives in 1996. The following table provides information concerning
options for SNC Common Stock exercised by each of the SNC Named Executives in
1996, and the value of options held by each at December 31, 1996.
82
<PAGE>
SNC AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FY- THE-MONEY OPTIONS AT FY-
SHARES END (SHARES) END
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John A. Allison IV...... -- -- 168,957 35,711 $3,327,518 $406,668
W. Kendall Chalk........ 500 13,008 75,276 15,709 1,499,432 181,216
Robert E. Greene........ 9,937 215,727 28,173 12,188 490,780 138,564
Kelly S. King........... -- -- 85,419 19,050 1,661,282 219,887
Morris D. Marley........ -- -- 31,646 13,852 550,780 157,485
Scott E. Reed........... 700 18,562 72,805 15,436 1,447,094 178,058
Michael W. Sperry....... 9,501 194,438 38,046 14,637 620,300 166,412
Henry G. Williamson,
Jr..................... 600 16,060 130,180 25,865 2,581,346 298,778
</TABLE>
RETIREMENT PLANS
SNC Retirement Plan. SNC has a defined benefit retirement plan, the Southern
National Corporation Pension Plan (the "Retirement Plan"), for eligible
employees. All employees of SNC and certain subsidiaries are eligible to
participate under the Retirement Plan after completing one year of service.
Contributions to the Retirement Plan are computed on an actuarial basis. A
participant's normal annual retirement benefit under the Retirement Plan at
age 65 is an amount equal to 1.0% of the participant's average compensation,
plus .5% of the participant's average compensation in excess of social
security covered compensation times the number of years of service completed
with SNC and certain subsidiaries up to a maximum of 35 years. A participant's
average compensation is his average annual compensation including salary,
wages, overtime, bonuses and incentive compensation, for the five consecutive
years in the last ten years that produce the highest average. Such annual
compensation generally approximates amounts set forth under the "Salary,"
"Bonus" and "LTIP Payouts" columns of the Summary Compensation Table above.
The following table shows the estimated annual benefits payable under the
Retirement Plan upon retirement at age 65 to persons in specified average
compensation and years of service classifications. The amounts shown are based
on a life annuity and are not subject to offsets based upon social security
amounts or other amounts. As of December 31, 1996, for purposes of computing
benefits under the Retirement Plan, age and years of service of the SNC Named
Executives are as follows: age 48 and 26 years for Mr. Allison; age 51 and 22
years for Mr. Chalk; age 47 and 24 years for Mr. Greene; age 48 and 25 years
for Mr. King; age 46 and 12 years for Mr. Marley; age 48 and 25 years for Mr.
Reed; age 52 and 7 years for Mr. Sperry; and age 49 and 25 years for
Mr. Williamson.
83
<PAGE>
ESTIMATED ANNUAL RETIREMENT BENEFITS
BASED ON YEARS OF CREDITED SERVICE(1)(2)
<TABLE>
<CAPTION>
AVERAGE COMPENSATION FOR
5 CONSECUTIVE YEARS
OF HIGHEST COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 300,000 $43,535 $65,302 $87,070 $108,837 $130,604 $152,372
350,000 51,035 76,552 102,070 127,587 153,104 178,622
400,000 58,535 87,802 117,070 146,337 175,604 204,872
450,000 66,035 99,052 132,070 165,087 198,104 231,122
500,000 73,535 110,302 147,070 183,837 220,604 257,372
550,000 81,035 121,552 162,070 202,587 243,104 283,622
600,000 88,535 132,802 177,070 221,337 265,604 309,872
650,000 96,035 144,052 192,070 240,087 288,104 336,122
700,000 103,535 155,302 207,070 258,837 310,604 362,372
750,000 111,035 166,552 222,070 277,587 333,104 388,622
800,000 118,535 177,802 237,070 296,337 355,604 414,872
900,000 133,535 200,302 267,070 333,837 400,604 467,372
1,000,000 148,535 222,802 297,070 371,337 445,604 519,872
1,100,000 163,535 245,302 327,070 408,837 490,604 572,372
1,200,000 178,535 257,802 357,070 446,337 535,604 624,872
1,300,000 193,535 290,302 387,070 483,837 580,604 677,372
</TABLE>
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(1) The amounts shown exceed statutory benefit limits and compensation caps
under the Retirement Plan in some instances. To the extent an amount
cannot be earned under the Retirement Plan, it will be earned under SNC's
Supplemental Executive Retirement Plan.
(2) If employment date is on or after January 1, 1979, basic benefit is
lifetime annuity. If employment date is prior to January 1, 1979, basic
benefit is 120 months certain and thereafter for participant's lifetime.
Supplemental Executive Retirement Plan. SNC maintains a Supplemental
Executive Retirement Plan (the "SERP"), effective January 1, 1989. The SERP
covers certain management employees of SNC and participating subsidiaries as
designated by its administrative committee. Under the SERP, participants who
retire either at or after age 55 with 15 years of service under the Retirement
Plan, or at or after age 65, receive monthly retirement benefits equal to the
greater of: (a) the difference between 55% of "final average monthly
earnings," less the participant's projected monthly benefits under the
Retirement Plan and 50% of the participant's projected monthly "Social
Security benefit," as defined in the SERP; or (b) the difference between the
monthly benefit the participant would have received under the Retirement Plan,
but for certain limitations imposed by the Code and the participant's actual
monthly benefit under the Retirement Plan. Benefits are payable in the form of
a joint and 75% survivor annuity for married participants, and a 10 year
certain and life annuity for unmarried participants and are reduced in the
event payment commences prior to age 65. If the participant dies either while
employed by SNC or a participating subsidiary, or under a "disability," as
defined in the SERP, and before attaining age 65, his surviving spouse, or if
there is none, his designated beneficiary, receives a monthly benefit for 180
months equal to 20% of the participant's "final average earnings." If the
participant dies while employed by SNC or a participating subsidiary and after
attaining age 65, his surviving spouse, if any, receives the SERP retirement
benefits which would have been paid had the participant retired the day before
he died. "Final average earnings" are the participant's average monthly
earnings, including amounts deferred under the ESOP, the ESOP Plan or the
Deferred Plan, for the 60 highest months out of his or her last 120 months of
employment by SNC or a participating subsidiary, as the case may be.
Upon a "change in control" of SNC as defined in the SERP, participants' SERP
benefits become fully accrued and cannot be reduced by amendment or
termination. Such a change of control occurred in February 1995 upon the
consummation of the BB&T Merger. Under the SERP, participants have no interest
in any particular assets of SNC or its subsidiaries and their right to
benefits is no greater than that of a general unsecured creditor.
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Estimated annual benefits generally payable under the SERP upon retirement
at age 65 (without taking into account offsets based upon Social Security
benefits and Retirement Plan benefits) range from $55,000 (based on final
average annual earnings of $100,000) to $151,250 (based on final average
annual earnings of $275,000). Messrs. Greene, Marley and Sperry are the only
SNC Named Executives who participate in the SERP.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
Executive Officer Employment Agreements
In 1994, BB&T Financial and SNC entered into Employment Agreements with 27
of their executive and other senior officers (15 BB&T Financial officers and
12 officers of SNC (prior to the BB&T Merger) (collectively, the "Officers")),
including Messrs. Allison, Chalk, Greene, King, Marley, Reed, Sperry and
Williamson (collectively, "Executive Management"), who are currently serving
as Executive Officers of SNC.
The Employment Agreements provide for five-year terms that are extended
automatically each month (absent contrary notice by either party to the
Employment Agreement). As a result, five years remain on the term of each
Employment Agreement at any time unless either party elects not to extend the
term. The term of any Employment Agreement may not be extended beyond the
month in which the officer reaches age 65, however. The Employment Agreements
provide that the Officers are guaranteed minimum annual salaries equal to
their current annualized base salaries, and continued participation in
specified incentive compensation plans. During the term of the Employment
Agreements, each Officer will be entitled to receive, on the same basis as
other officers, employee pension and welfare benefits and group employee
benefits such as sick leave, vacation, group disability and health, life and
accident insurance and similar indirect compensation that SNC may from time to
time extend to its officers.
The Employment Agreements also provide that under various circumstances an
Officer may continue to receive compensation and health insurance from SNC
after the Officer's voluntary termination of employment or after being
terminated by SNC other than for cause. At any time after the first
anniversary, and until the sixth anniversary of the BB&T Merger, the Officer
voluntarily may terminate his or her employment with SNC and continue to
receive 60% of the Officer's highest annual cash compensation during any one
of the five years preceding termination (such highest annual cash compensation
being referred to herein as the "Termination Compensation") and health
insurance provided by SNC until the sixth anniversary of the BB&T Merger,
subject to compliance with non-competition provisions of the Employment
Agreements, described below. In the event the Officer's employment is
terminated by SNC other than for "just cause" (as defined in the Employment
Agreements), the Officer will be entitled to receive the Termination
Compensation and health insurance for the remainder of the term of the
Employment Agreement, subject to compliance with the non-competition
provisions of the Employment Agreement. In addition, if an Officer is
terminated by SNC other than for just cause, SNC will use its best efforts to
accelerate vesting of any unvested benefits to which the Officer may be
entitled under any stock-based or other benefit plan or arrangement to the
extent permitted by the terms of such plan(s).
The Employment Agreements also provide that if there is a "Change of
Control" (as hereinafter defined) of SNC or certain of its affiliates, the
Officer will be entitled to: (a) terminate his Employment Agreement
voluntarily for "good reason" (generally defined in the Employment Agreements
to include a reduction in the Officer's status, responsibilities and duties or
salary following the Change of Control); and (b) receive, in a lump sum, an
amount equal to 2.99 times the Termination Compensation. In the event the
Officer is terminated by SNC for other than just cause or the Officer
terminates his employment for good reason after a Change of Control, the
Officer would also be entitled to accelerated vesting of unvested benefits
under employee stock and benefit plans to the extent permitted by such plans.
A "Change of Control" is deemed to have occurred under the Employment
Agreements if: (a) any person or group acquires 20% or more of the voting
securities of SNC or specified affiliates; (b) during any two-year period
persons who were directors of SNC at the beginning of the two-year period
cease to constitute at least two-thirds of the SNC Board; (c) the shareholders
of SNC approve any merger or consolidation of SNC with another company that
would result in less than 80% of the voting securities outstanding after the
merger or consolidation being held by persons who were shareholders of SNC
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immediately prior to the merger or consolidation; (d) the shareholders of SNC
approve a plan of complete liquidation or an agreement for the sale of
substantially all of SNC's assets; or (e) any other event occurs that the SNC
Board determines should constitute a Change of Control.
SNC also has the right under the Employment Agreements to terminate the
Officer's employment at any time for just cause. If SNC terminates an
Officer's employment for just cause, such Officer will have no right to
receive compensation or other benefits under the Employment Agreement for any
period after such termination.
The Employment Agreements also provide that under certain circumstances upon
leaving the employment of SNC, the Officer may not engage directly or
indirectly in the banking, financial services or any other business in which
SNC is engaged in the states of North Carolina and South Carolina and in any
counties contiguous to any counties located in such states, nor may the
Officer solicit or assist in the solicitation of any depositors or customers
of SNC or any of SNC's affiliates or induce any employees to terminate their
employment with SNC or its affiliates. This non-competition provision will be
effective: (a) if the Officer voluntarily terminates his employment prior to
the first anniversary of the BB&T Merger, until the later of the first
anniversary of the BB&T Merger or the first anniversary of the Officer's
termination; (b) if after the first anniversary of the BB&T Merger the Officer
voluntarily terminates his employment, for such period of time during which
the Officer elects to receive 60% of the Termination Compensation; or (c) if
the Officer is terminated other than for just cause, until the earlier of the
first anniversary of the Officer's termination or the date as of which the
Officer elects to forego receiving the Termination Compensation.
The Employment Agreement of Mr. Allison provides that he will be Chairman of
the SNC Board and Chief Executive Officer of SNC for the term of such
Employment Agreement.
Employment Contract Amendments
During 1995, the SNC Compensation Committee employed KPMG Peat Marwick LLP
to make recommendations concerning SNC's overall compensation plans, including
a review of the foregoing employment contracts (see "--SNC Compensation
Committee Report on Executive Compensation"). The review of the employment
contracts by KPMG Peat Marwick LLP was undertaken primarily in recognition of
the contracts having been negotiated in connection with the negotiations
surrounding the BB&T Merger, and without the advice of compensation
consultants. KPMG Peat Marwick LLP recommended and the SNC Compensation
Committee approved amendments to the employee contracts which (a) fix the
minimum salary for the contracts as the annualized August 1994 salary; (b)
increase from 20% to 40% as the threshold for acquisition of voting securities
of SNC after a merger or consolidation as a triggering event for change-of-
control provisions; (c) provide up to $20,000 for outplacement services in the
event of termination of employment for certain specified reasons; (d) specify
which employee benefits will be received upon certain conditions of
termination; and (e) specify that in the event payments under the contract
exceed limits established by Section 280(g) of the Code, relating to parachute
payments, contract holders would be entitled to select the benefits to be
received in order to reduce total benefits to the prescribed statutory limit.
The SNC Compensation Committee and KPMG Peat Marwick LLP believe that the
foregoing amendments more clearly reflect the intent of the parties at the
time the contracts were negotiated and provide benefits more comparable to
industry standards.
SNC COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1996, the SNC Compensation Committee administered the various
incentive plans of SNC and reviewed the salary for the Chief Executive
Officer. SNC's incentive plans were established in 1995 based upon a study
conducted by KPMG Peat Marwick LLP ("Peat Marwick"). The Peat Marwick study
followed the February 1995 BB&T Merger and was conducted in order to establish
a compensation philosophy and practices for SNC following the BB&T Merger. At
the conclusion of the study, Peat Marwick made recommendations to
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the SNC Compensation Committee relating to overall compensation philosophy,
appropriate base salaries, short-term and long-term compensation plans,
appropriate goals and targets for such plans and employment contracts of
senior officers of SNC. The recommendations of Peat Marwick were implemented
in 1995 through appropriate SNC Compensation Committee, SNC Board or
shareholder action.
Compensation Philosophy
As a result of the Peat Marwick study, the SNC Compensation Committee has
adopted a compensation philosophy and guiding principles for SNC which consist
of the following:
1. A compensation and reward system should be a management tool to
achieve business results;
2. Competitive total compensation opportunities should be provided based
on external competitive performance;
3. Total compensation should be aligned with relative internal
performance; and
4. A commitment should be made to an annual review of a set of guiding
principles for SNC's total compensation program.
The SNC Compensation Committee approved Peat Marwick's recommendation that
compensation for executive management should be positioned to emphasize
variable pay based on performance with base salary at 90% of median and cash
incentives above median to result in a total cash compensation at market
median. To achieve this goal, compensation opportunities are compared to a
peer group of publicly-traded bank holding companies with assets between
approximately $15 billion and $40 billion, which is the peer group in the
Performance Graph set forth below in this Joint Proxy Statement/Prospectus. In
addition, Peat Marwick recommended that stock options be used as a core for
long-term incentives and that a large portion of total compensation should be
"at risk."
SNC has established incentive compensation programs for executive
management, which consist of an annual cash incentive, stock options, three-
year performance-based incentives, and normal employee benefits. These plans
emphasize variable compensation for executive management which is tied to the
financial results of SNC. The SNC Compensation Committee approves, on an
annual basis, target award opportunities for executive management and
performance criteria to be utilized in the annual incentive plan and the
three-year performance incentive plan.
SNC's compensation philosophy and policies are intended to comply with
Section 162(m) of the Code and related regulations, which establish certain
requirements in order for performance-based compensation in excess of $1
million that is paid to certain executive officers to be deductible by SNC for
federal income tax purposes. In establishing and administering SNC's
compensation programs, the SNC Compensation Committee has intended to comply
with the requirements of Section 162(m), although it intends to retain the
flexibility to pay compensation that is not eligible for favorable treatment
under such section if it determines that it is in the best interest of SNC to
do so.
Compensation Plans
Annual Executive Incentive Plan. In 1995, based on the Peat Marwick study,
the SNC Compensation Committee established the SNC Short-Term Incentive Plan
("Bonus Plan"), which covers executive management and other senior officers
selected by the SNC Compensation Committee. The SNC Compensation Committee
determined that it was appropriate to establish a plan for the year 1996,
which would be a continuation of the 1995 Bonus Plan. Because of the impact of
Section 162(m) of the Code, the Bonus Plan was submitted to shareholders for
approval at the 1996 annual meeting of SNC shareholders and was approved.
The Bonus Plan provides cash awards to participants based on the achievement
of performance goals established by the SNC Compensation Committee. Awards are
based on corporate performance, business unit/function performance, individual
performance or any combination of such types of performance. Corporate
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performance is determined primarily on the attainment of earnings per share
goals and return on asset goals. Business unit/function performance is
determined primarily on the attainment of financial or non-financial goals,
growth and market share. Individual performance is determined primarily on the
attainment of such business criteria as: process improvement, sales, loan
growth, deposit growth and expense management. The SNC Compensation Committee
may, from time to time, select other performance measures. The size of the
cash awards will be determined by establishing target incentive awards
expressed as a percentage of base salary, up to a maximum amount established
by the SNC Compensation Committee. For 1996, the SNC Compensation Committee
provided that the target incentive award would be established for the Chief
Executive Officer at 60% of base salary and for other members of executive
management at 50% of base salary. Actual awards are subject to increase or
decrease on the basis of the participant's achievement of the performance
goals and can range from 25% to 200% of the participant's targeted incentive
awards. For the Chief Executive Officer and executive management, the SNC
Compensation Committee established corporate performance goals based on
earnings per share and return on assets, with specific goals established by
budgeted earnings, industry standards and other similar factors. In 1996, SNC
achieved the specified performance levels, such as would permit the Chief
Executive Officer and executive management to receive an award of 200% of
their target incentive awards. Such amount is shown in the "Bonus" column of
the Summary Compensation Table for the SNC Named Executives.
Stock Incentive Plan. SNC's shareholders have previously approved the 1995
Omnibus Stock Incentive Plan, as amended and restated (the "Stock Plan"). Peat
Marwick recommended that this plan be maintained and, at the 1996 annual
meeting of shareholders, additional shares were reserved for use under this
plan. The Stock Plan is administered by the SNC Compensation Committee in
order to benefit SNC by assisting in recruiting and retaining employees with
ability and initiative, providing greater incentive for employees of SNC and
associating the interest of employees with those of SNC. The SNC Compensation
Committee annually selects individuals who will participate in the Stock Plan
and, from time to time, may grant stock options, stock appreciation rights,
restricted stock awards, performance units and performance shares to selected
participants. Stock options granted under the Stock Plan may be incentive
stock options or non-qualified stock options. A stock option entitles a
participant to purchase shares of SNC Common Stock at the option price, which
is fixed by the SNC Compensation Committee at the time the option is granted,
but cannot be less that 100% of the shares' fair market value on the date of
grant in the case of incentive stock options and not less than 85% of the
shares' fair market value on the date of grant in the case of non-qualified
stock options.
Peat Marwick recommended that option grants be based on competitive market
factors and that the Black-Scholes methodology for computing the value of
options be utilized. The SNC Compensation Committee has followed this
recommendation. In 1996, no stock options were granted. Prior to the BB&T
Merger in February of 1995 and during 1995, stock options were granted at
various times by the two corporations. In order to standardize the practice of
granting stock options, the SNC Compensation Committee deemed it advisable to
consider the grant of stock options in February of each year and, accordingly,
anticipates considering stock option grants in February 1997. Because of this
standardization, no awards for the SNC Named Executives are shown for 1996 in
the Summary Compensation Table above.
Three-Year Long-Term Incentive Plan. Based on Peat Marwick's recommendation,
the SNC Compensation Committee has determined that executive management should
be included in a Long-Term Incentive Plan (as used in this section of this
Joint Proxy Statement/Prospectus, the "LTIP"), and further recommended that a
performance unit plan be utilized for this purpose. In order to permit awards
under the LTIP to be made in either cash or stock, at the option of the SNC
Compensation Committee, certain amendments to the Stock Plan were proposed to
and approved by SNC's shareholders. Performance units are performance-based
awards payable, in the SNC Compensation Committee's discretion, in shares of
SNC Common Stock, cash or a combination of SNC Common Stock and cash. At the
date of grant, the SNC Compensation Committee will establish for each
performance unit (i) a performance target and (ii) an applicable percentage
(which cannot be less than zero, but which can exceed 100% of the value of the
performance unit to be paid to the participant based upon the degree to which
the performance target is met). A performance target is a profitability target
which serves as the basis for valuing a performance unit. A performance target
will be based on certain
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performance criteria determined by the SNC Compensation Committee and is
earned based on the performance unit value during each of the valuation
periods (generally, a calendar year, following the date of the award). The SNC
Compensation Committee will establish the number of valuation periods
applicable to a performance unit, which number may not be less than three. The
value of a performance unit equals the applicable percentage, as set by the
SNC Compensation Committee, times the fair market value of SNC Common Stock on
the date of grant, plus such other nominal value as may be set by the SNC
Compensation Committee. In 1996, the SNC Compensation Committee established
the 1996--1998 performance unit LTIP and provided that the performance
criterion be return on equity. The SNC Compensation Committee approved a
potential payout for the Chief Executive Officer of 40% of average base
salary, and for the remainder of executive management 30% of average base
salary. The Compensation Committee established a return on equity goal of 15%
for the three-year period of the LTIP with a maximum goal of 18%.
Annual Base Salary. The SNC Compensation Committee reviewed the salary range
system previously recommended by Peat Marwick and previously adopted by the
SNC Compensation Committee for all employees' base salaries. It reviewed pay
grades and salary ranges previously recommended by Peat Marwick and concluded
that the grades and ranges were appropriate, and that its previously adopted
policy of having all employees at the appropriate point within their salary
range within a two-year period following the BB&T Merger was appropriate.
Based on this review, together with a review of SNC's performance as compared
to its peer group, the SNC Compensation Committee established the base salary
of the CEO for 1996 as shown in the Summary Compensation Table above (see "--
Compensation of Executive Officers").
Employee Benefit Plans. The SNC Compensation Committee reviewed the various
employee benefit plans maintained by SNC which constitute a portion of the
total compensation package available to executive management and all employees
of SNC. These plans consist of a 401(k) Savings Plan (which permits employees
to contribute up to six percent of their compensation with SNC matching their
contribution); a retirement plan covering substantially all employees of SNC,
including executive management; and a health care plan which provides medical
and dental coverage for all employees. The SNC Compensation Committee
concluded that these plans, which were established based upon recommendations
of Peat Marwick, are consistent with plans provided by peer bank holding
companies and industry standards and that no modification of such plans was
necessary in 1996.
Conclusion
The SNC Compensation Committee believes that all components of its total
compensation program, both for executive management and all employees, is
consistent with market standards and with comparable programs of peer bank
holding companies. The executive compensation programs are based on financial
performance of SNC compared to both market medians and peer group averages and
appropriately links executive performance to the annual financial and
operational results of SNC and the long-term financial interests of the
shareholders. The SNC Compensation Committee believes that the foregoing
compensation philosophy has served and will continue to serve as a basis for
administering the total compensation program of SNC, both for executive
management and all employees for the foreseeable future. The directors who
constitute the SNC Compensation Committee are:
Richard Janeway, M.D., Chairman Ernest F. Hardee
A. J. Dooley, Sr. Dickson McLean, Jr.
Joe L. Dudley, Sr. A. Winniett Peters
O. William Fenn, Jr. Nido R. Qubein
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Nido R. Qubein, a director of SNC and a member of the SNC Compensation
Committee in 1996, is owner of Creative Services, Inc., an international
management consulting firm. BB&T-NC has entered into a consulting services
contract with Creative Services, Inc. under which Creative Services, Inc. is
advising management by
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providing organizational development expertise, including the
conceptualization and creation of integrated corporate employee training
materials and programs. Creative Services, Inc. was paid $386,628 under this
contract in 1996, $378,597 in 1995 and $391,896 in 1994. Management believes
this contract is on terms as favorable as could have been obtained from
others.
Dickson McLean, Jr., a director of SNC and a member of the SNC Compensation
Committee in 1996, is President of McLean, Stacy, Henry, McLean, McIntyre &
Ramsaur, P.A., Attorneys-at-Law. The firm is under retainer to provide legal
services to SNC and its subsidiaries. The firm was paid the sum of $52,912 in
1996, $62,187 in 1995 and $90,107 in 1994. Management believes these services
were provided on terms as favorable as could have been obtained from others.
A. J. Dooley, Sr., a director of SNC and a member of the SNC Compensation
Committee in 1996, is a member of Dooley, Dooley, Spencer & Parker, Attorneys-
at-Law. The firm is under retainer to provide legal services to SNC and its
subsidiaries. The firm was paid $16,975 in 1996, $7,636 in 1995 and $8,560 in
1994.
Messrs. Dooley, McLean and Qubein abstain from voting on matters relating to
stock options and other stock-based incentive plans.
COMPENSATION OF DIRECTORS
General
Non-employee directors of SNC receive an annual retainer of $21,000 for
their services as a director. In addition, such directors receive $1,500 for
each regular SNC Board meeting and each committee meeting attended, and $1,000
for each meeting held by conference telephone in which the director
participates. Directors who are employees of SNC do not receive fees for
serving as a director.
Non-Employee Directors' Deferred Compensation and Stock Option Plan
Effective January 1, 1997, the SNC Board approved the adoption of the
Directors' Plan. The Directors' Plan combines into a single plan two
previously established SNC plans, the Stock Option Subplan and the Directors'
Deferred Compensation Plan. See "--Approval of Amendment to Directors' Plan"
for a description of the Directors' Plan, including information concerning
benefits paid or granted under the Directors' Plan in 1996. During 1996, 14
directors participated in the Directors' Deferred Compensation Plan.
Consulting Agreement
Messrs. Deal, McLean, Nichols, Qubein and Williams and Dr. Janeway have
executed Consulting Agreements with SNC to provide consulting services for a
period of 10 years following their retirement. Directors beginning such
service as consultants during 1995, 1996, or 1997 shall receive $13,200 per
year. Directors beginning such service after 1997 shall receive a sum equal to
the annual retainer paid to SNC's directors in effect at the time they begin
such service. The consultants have agreed not to serve as directors of, or
advisers to, businesses which compete with SNC during the time they serve as
consultants to SNC.
TRANSACTIONS WITH OFFICERS AND DIRECTORS
General
A number of SNC's directors and officers and their associates are customers
of the SNC's bank subsidiaries. Any extensions of credit made to them are in
the ordinary course of business, are substantially on the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable transactions with others, and do not involve more than normal
risk of collectibility or present other unfavorable features. None of such
credits are classified as non-accrual, past due, restructured or potential
problem. All outstanding loans to such officers and directors and their
associates are current as to principal and interest. As of December 31, 1996,
loans in excess of $60,000 to directors, executive officers and their
interests totaled approximately $83.2 million,
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or approximately 4.8% of SNC's consolidated shareholders' equity at such date;
as of December 31, 1995, such loans totaled approximately $76.1 million, or
approximately 4.5% of SNC's consolidated shareholders' equity at such date;
and as of December 31, 1994, such loans totaled approximately $48.9 million,
or approximately 7.7% of SNC's consolidated shareholders' equity at such date.
Transaction with Affiliate of Mr. Goldsmith
On November 7, 1996, BB&T Insurance Services, Inc., an indirect subsidiary
of SNC, completed the acquisition of Wm. Goldsmith Agency, Inc., Greenville,
South Carolina ("Goldsmith Agency") for a price of $1,034,500, subject to
adjustment for certain transactions to be completed prior to closing. Paul S.
Goldsmith, a director of SNC, and his affiliated interest owned approximately
75% of Goldsmith Agency. SNC issued 70,207 shares of SNC Common Stock to
consummate this transaction, which the SNC Board (with Mr. Goldsmith
voluntarily abstaining) reviewed and approved. The SNC Board and management
believe the transaction was on terms as favorable as acquisition terms of
other insurance agencies which have been acquired by SNC.
Agreement with Mr. Orr
Pursuant to a Settlement and Non-Compete Agreement between L. Glenn Orr, Jr.
and SNC, effective following the BB&T Merger (the "Orr Settlement Agreement"),
Mr. Orr resigned as an employee and officer of SNC and was retained as a
consultant as of May 1, 1995. The Orr Settlement Agreement settled SNC's
obligations to Mr. Orr under his then existing employment agreement with SNC
and provides for SNC to pay Mr. Orr an annual amount equal to the difference
between $1,655,000 and the SNC-provided portion of certain benefits payable to
Mr. Orr under the following plans of SNC: the retirement plan, the
supplemental executive retirement plan, the employee stock ownership plan, the
employee stock ownership plan excess plan, and the non-qualified deferred
compensation plan. The Orr Settlement Agreement also provides that Mr. Orr
will serve as a consultant to SNC for a period of five years following the
BB&T Merger and will not engage directly or indirectly in the banking or
financial services business anywhere in North Carolina or South Carolina (or
in any other state in a county contiguous to North Carolina or South Carolina)
or solicit any depositors or customers of SNC or its subsidiaries or induce
any employees of SNC or its subsidiaries to terminate their employment with
SNC. SNC also agreed to provide certain miscellaneous benefits to Mr. Orr,
including the continuation for life of certain life and medical insurance
policies, certain moving expenses and country club membership dues and the
purchase of an automobile. The payments provided for under the Orr Settlement
Agreement will be paid to Mr. Orr in equal monthly installments and will
continue for the life of each of Mr. Orr and his current wife, but in no event
for a period of less than fifteen years. To the extent that payments under the
Orr Settlement Agreement cause a "parachute payment," as defined in Code
section 280G(b)(2), SNC will indemnify Mr. Orr and hold him harmless against
all claims, expenses and excise taxes relating thereto. SNC has established a
rabbi trust to help assure the payment of SNC's obligations to Mr. Orr under
the Orr Settlement Agreement. SNC has placed assets in the rabbi trust
representing partial funding of SNC's obligations to Mr. Orr under the Orr
Settlement Agreement. In the event of a Change of Control (as defined in the
Orr Settlement Agreement) of SNC, SNC may be obligated to contribute
additional assets to the rabbi trust to provide full funding, on an actuarial
basis, of SNC's obligations to Mr. Orr under the Orr Settlement Agreement. The
Orr Settlement Agreement also provides that SNC will use its best efforts,
subject to fiduciary duties, to reelect Mr. Orr to the SNC Board until his
seventieth birthday.
Transaction with Affiliates of Mr. Player
During 1994, BB&T Financial paid Player, Inc., an affiliate of Richard L.
Player, Jr., a director of SNC, the sum of $84,645 for construction costs of a
new main office in Fayetteville, North Carolina and paid Tri-Player
Investments (also an affiliate of Mr. Player) the sum of $46,371 as rent and
related occupancy expenses for the Westwood Branch and main office buildings
in Fayetteville. Management believes that the terms of the agreements with Mr.
Player's affiliates were as favorable to BB&T Financial and SNC as could have
been obtained from a non-affiliated party.
See "--Compensation Committee Interlocks and Insider Participation."
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<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the total returns (assuming
reinvestment of dividends) of SNC Common Stock, the S&P 500 Index and an
industry peer group index of 12 bank holding companies. The graph assumes $100
invested on December 30, 1990 in SNC Common Stock and each of the indices. The
bank holding companies in the peer group index are AmSouth Bancorporation,
Boatmen's Bancshares, Inc., Crestar Financial Corporation, Fifth-Third
BanCorp, Firstar Corporation, First Bank Systems, Inc., First of America Bank
Corporation, Huntington Bancshares, Inc., National City Corporation,
SouthTrust Corporation, Summit Bancorp (formerly UJB Financial Corporation)
and U.S. Bancorp. The peer group consists of bank holding companies with
assets between approximately $15 billion and $40 billion, which approximates
SNC's asset size and is the same peer group utilized by the SNC Compensation
Committee.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG SOUTHERN NATIONAL CORPORATION, THE S&P INDEX,
AND A PEER GROUP
<TABLE>
<CAPTION>
Legend
Index Description 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SOUTHERN NATIONAL
CORPORATION 100 146 151 152 217 310
PEER GROUP 100 134 141 137 209 291
S&P 500 100 108 118 120 165 203
</TABLE>
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
APPROVAL OF AMENDMENT TO SNC ARTICLES
The SNC Board has unanimously recommended to SNC's shareholders that Article
I of the SNC Articles be amended to change SNC's name to "BB&T Corporation."
This amendment would change only the name of SNC and would not affect its
continued corporate existence or business.
In 1995, BB&T Financial, the former parent of BB&T-NC, BB&T-SC and BB&T-VA,
merged with and into SNC, with SNC surviving as the holding company for the
combined operations of the two companies. At
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<PAGE>
the time of this merger of equals transaction, SNC's banking subsidiaries were
merged with and into BB&T-NC and BB&T-SC, respectively. Since then, the
"Southern National" name has been associated only with the holding company,
and SNC's banking operations have operated under the "BB&T" name.
Today, SNC continues to conduct its banking business through its three bank
subsidiaries, BB&T-NC (Branch Banking and Trust Company), BB&T-SC (Branch
Banking and Trust Company of South Carolina) and BB&T-VA (Branch Banking and
Trust Company of Virginia). These subsidiaries operate 415 banking offices in
the Carolinas and Virginia under the "BB&T" banner. (In addition, it is
anticipated that FFSB's seven banking offices will change their name to "BB&T"
in the first quarter of 1998.) As a result, "BB&T" is the name by which SNC's
banking operations are known. Changing SNC's name to BB&T Corporation will
utilize a single name for the holding company and its banking operations and,
in the opinion of the SNC Board, will eliminate confusion among SNC's banking
clients, investors and the market generally and enable SNC to enhance the
franchise value of the "BB&T" name.
Upon approval of the proposed amendment by the shareholders, SNC will
prepare Articles of Amendment, which will restate Article I of the SNC
Articles to read as follows: "The name of the Corporation is BB&T
Corporation." The name change will be effective upon the filing of the
Articles of Amendment with the Secretary of State of North Carolina, which
will occur as soon as practicable after the SNC Meeting.
THE SNC BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE SNC
ARTICLES.
APPROVAL OF AMENDMENT TO SNC BYLAWS
Article III, Section 2 of the SNC Bylaws provides that the SNC Board shall
consist of not less than three nor more than 25 members. The SNC Board
currently consists of 24 members. The Reorganization Agreement provides that
SNC shall cause four current directors of UCB to be appointed to the SNC Board
following consummation of the Merger. See "THE MERGER--Interests of Certain
Persons in the Merger." The SNC Bylaws must be amended to increase the number
of directors to assist SNC in complying with its contractual obligation under
the Reorganization Agreement. Accordingly, the SNC Board has adopted, subject
to shareholder approval, an amendment to Article III, Section 2 of the SNC
Bylaws to increase the maximum number of directors from 25 to 30. The SNC
Board intends to submit this proposal to SNC shareholders regardless of
whether the Merger Proposal is approved. In accordance with SNC's normal
retirement policy for directors who reach the age of 70, five current
directors of SNC will retire from the SNC Board effective December 31, 1997.
It is proposed that the first sentence of Article III, Section 2 of the SNC
Bylaws be amended to read as follows:
"2. NUMBER, TERM AND QUALIFICATION: The Board shall consist of not less than
three nor more than thirty members and the number of members shall be fixed
and determined from time to time by a resolution of the majority of the full
board or by resolution of the shareholders at any meeting thereof, but the
number of Directors shall not be less than three."
Approval of this proposed amendment requires the affirmative vote of two-
thirds of the outstanding shares of SNC Common Stock.
THE SNC BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE SNC
BYLAWS.
APPROVAL OF AMENDMENT TO DIRECTORS' PLAN
Effective January 1, 1997, the SNC Board approved the adoption of the
Directors' Plan. As described above (see "--Compensation of Directors"), the
Directors' Plan combines into a single plan two previously established SNC
plans, the Stock Option Subplan and the Directors' Deferred Compensation Plan.
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<PAGE>
The Stock Option Subplan was approved by the shareholders of SNC at the 1992
Annual Meeting of Shareholders. At the time of the Stock Option Subplan's
adoption, the plan authorized the issuance of 400,000 shares of SNC Common
Stock. Approximately 98,300 of such shares remain available for the grant of
options.
In order for the Stock Option Subplan to continue to provide incentives to
non-employee directors to remain on the SNC Board and to encourage such
directors to acquire or increase their proprietary interest in SNC through the
acquisition of SNC Common Stock, the Directors' Plan amends the Stock Option
Subplan to increase the number of shares of SNC Common Stock authorized for
issuance under the Stock Option Subplan by 500,000 shares (for a total of
900,000 shares authorized for issuance under the Stock Option Subplan).
Shareholder approval of this amendment is required by the rules of the NYSE.
The discussion which follows concerning the Directors' Plan is qualified in
its entirety by the terms of the Directors' Plan, a copy of which may be
obtained without cost by contacting Investor Relations, Southern National
Corporation, 223 West Nash Street, Wilson, North Carolina 27893 ((919) 246-
4219).
The Directors' Deferred Compensation component of the Directors' Plan
permits non-employee directors of SNC, BB&T-NC and BB&T-SC to elect to defer
all or a portion of their retainer fees and meeting fees. Under the Directors'
Deferred Compensation Plan component of the Directors' Plan, such non-employee
directors may elect to defer 0%, 50% or 100% of retainer fees, meeting fees or
both into a deferred compensation account. Deferrals are credited with
interest based on either a fixed rate or an index fund, as elected by the
participant. Deferrals are fully vested at all times and are payable in cash
upon the termination of the participant's service (except for hardship
withdrawals in limited circumstances). During 1996, 14 non-employee directors
participated in the Directors' Deferred Compensation Plan.
In addition, the Stock Option Subplan permits non-employee directors (who
have not elected to defer all or part of their retainer and meeting fees under
the Directors' Deferred Compensation Plan) to elect to defer receipt of
retainer fees, meeting fees or both and have such amounts applied to the grant
of options to purchase shares of SNC Common Stock. A "non-employee director"
for purposes of the Stock Option Subplan means (a) any active member of the
SNC Board who is not an employee of SNC or any of its affiliates or (b) any
active member of the board of directors of an SNC bank subsidiary who was
serving as an active member of the Board of Directors of BB&T Financial or SNC
on February 28, 1995 and who is not an employee of SNC or any of its
affiliates. There are currently 23 non-employee directors of SNC and 16
qualified non-employee directors of BB&T-NC and BB&T-SC. Options granted under
the Stock Option Subplan are non-qualified stock options and will not be
treated as incentive stock options under Section 422 of the Code.
Pursuant to the terms of the Stock Option Subplan, each non-employee
director may elect to defer, prior to the start of the year in which such fees
are earned, 0%, 50% or 100% of the director's annual retainer fees and meeting
fees for the calendar year and apply that percentage toward the grant of
options to purchase shares of SNC Common Stock. Options are granted on July 1
of each year with respect to options granted based on deferred retainer fees
for the year and deferred meeting fees earned in the first six months of the
year. Options are granted on December 31 of each year for the deferred portion
of meeting fees earned in the second half of the year.
The option price for options granted under the Stock Option Subplan is equal
to 75% of the average market value of SNC Common Stock on the date of grant.
"Average market value" is defined as the average of the closing price of SNC
Common Stock as reported by the NYSE for the period of 30 consecutive full
trading days of SNC Common Stock prior to the date of grant. As of March 13,
1997, the last reported sales price of SNC Common Stock on the NYSE was
$40.125. Options granted under the Stock Option Subplan may be exercised
during the period beginning on a date six months after the date of grant and
ending on the date 10 years from the date of grant. In addition, all
outstanding options become fully exercisable in the event of a change in
control of SNC.
The SNC Board may amend or terminate the Directors' Plan at any time.
Notwithstanding the foregoing, (i) no such amendment or termination may reduce
any participant's accrued benefit as of the date of such
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<PAGE>
amendment or termination; (ii) no such amendment shall affect the terms of the
Directors' Plan relating to the payment of accrued benefits without the
participant's prior consent; and (iii) no such amendment may adversely affect
outstanding options or any unexercised rights related to an option or in any
way impair the rights of non-employee directors who have been granted options
without the prior consent of the optionee.
For non-employee directors who elect to participate in the Stock Option
Subplan, neither the election to receive options in lieu of cash compensation
nor the grant of options under the Stock Option Subplan will result in any
immediate tax consequences to SNC or the participating director. Each
participating director will realize ordinary income at the time of the
exercise of an option in an amount equal to the difference between the market
value of the stock on the date of exercise and the option price. SNC will be
entitled to a deduction in the same year in an amount equal to the income
taxable to the optionee.
During the last completed fiscal year, the 19 non-employee directors who
participated in the Stock Option Subplan were granted options to purchase a
total of 67,814 shares of SNC Common Stock at an exercise price of $22.07 per
share. The value of such options at December 31, 1996 was $36.25 per share.
The number of options to be received by non-employee directors for the current
fiscal year is not yet determinable.
THE SNC BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE
DIRECTORS' PLAN.
APPOINTMENT OF AUDITORS
The SNC Audit Committee has reappointed the firm of Arthur Andersen LLP as
independent auditors to examine the books of SNC and subsidiaries for the year
1997, and to report on the consolidated balance sheets, statements of income
and other related statements of SNC and subsidiaries. Arthur Andersen LLP has
served as independent auditors for SNC continuously since 1966.
Representatives of Arthur Andersen LLP are expected to be present at the SNC
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to questions posed by the shareholders.
Ratification of the reappointment of Arthur Andersen LLP as SNC's auditors
requires the affirmative vote of a majority of the shares of SNC Common Stock
voting on such matter.
THE SNC BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO RATIFY
ARTHUR ANDERSEN LLP AS SNC'S AUDITORS FOR 1997.
PROPOSALS FOR 1998 ANNUAL MEETING
Under regulations of the Commission, any shareholder desiring to make a
proposal to be acted upon at the 1998 annual meeting of shareholders must
present such proposal to SNC at its principal office in Winston-Salem, North
Carolina by November 22, 1997 for the proposal to be considered for inclusion
in SNC's proxy statement.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a shareholder even if the
proposal is not to be included in SNC's proxy statement, the SNC Bylaws
provide that the shareholder must give timely notice in writing to the
Secretary of SNC at least 60 days prior to the date one year from the date of
the immediately preceding annual meeting. As to each matter, the notice must
contain (a) a brief description of the business desired to be brought before
the annual meeting, (b) the name of, record address of, and class and number
of shares beneficially owned by, the shareholder proposing such business and
(c) any material interest of the shareholder in such business.
OTHER BUSINESS
The SNC Board knows of no other matter to come before the SNC Meeting.
However, if any other matter requiring a vote of the shareholders should
arise, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.
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<PAGE>
ADDITIONAL MATTERS RELATING TO THE UCB MEETING
SECURITY OWNERSHIP
UCB-NC is the trustee of the UCB Savings Plan, a tax-qualified employee
benefit plan that includes a Code Section 401(k) feature and an employee stock
ownership plan. UCB serves as administrator of the UCB Savings Plan. See "--
UCB Personnel Committee Report on Executive Compensation--Other Compensation."
As a result of certain fiduciary responsibilities reserved to the trustee
under the terms of the UCB Savings Plan, UCB-NC may exercise beneficial
ownership over the voting of unallocated shares of UCB Common Stock held by
the UCB Savings Plan. In addition, UCB-NC is deemed under U.S. Department of
Labor policy to have certain residual fiduciary responsibilities with respect
to the voting of any unvoted, allocated shares of UCB Common Stock held in the
UCB Savings Plan. As of the UCB Record Date, there were 2,577,917 allocated
shares of UCB Common Stock held in the UCB Savings Plan for the individual
accounts of the UCB Savings Plan participants. Substantially all of the
allocated UCB Savings Plan shares of UCB Common Stock have been voted
historically by UCB Savings Plan participants, and UCB-NC, as fiduciary,
disclaims any beneficial ownership of such shares. As of the UCB Record Date,
UCB-NC, as trustee, held 27,252 unallocated shares of UCB Common Stock in the
UCB Savings Plan.
The table below sets forth the beneficial ownership of UCB Common Stock by
all current directors and nominees, the Chief Executive Officer and the four
next most highly compensated executive officers of UCB and all current
directors and executive officers of UCB as a group as of the UCB Record Date.
<TABLE>
<CAPTION>
SHARES OF UCB
COMMON STOCK PERCENT OF UCB
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK
------------------------ --------------------- --------------
<S> <C> <C>
DIRECTORS AND NOMINEES
J.W. Adams.............................. 60,395(2) *
John V. Andrews......................... 10,811 *
Russell M. Carter....................... 6,000 *
W.E. Carter............................. 82,156 *
Alfred E. Cleveland..................... 23,867 *
James L. Cresimore...................... 35,445 *
Thomas P. Dillon........................ 9,565 *
C. Frank Griffin (3).................... 32,716 *
James C. High........................... 16,480(4) *
E. Rhone Sasser (CEO)................... 145,382(5) *
Jack E. Shaw............................ 327,531(6) 1.3%
Harold B. Wells......................... 93,118 *
Charles M. Winston...................... 25,315 *
NON-DIRECTOR EXECUTIVE OFFICERS NAMED IN
SUMMARY COMPENSATION TABLE
Kenneth L. Miller, Jr................... 31,118(5),(7) *
Ronald C. Monger........................ 38,246(5),(7) *
Jeff D. Etheridge, Jr................... 91,769(5) *
David L. Thomas......................... 46,262(5) *
Directors and executive officers as a
group (20 persons)*.................... 1,144,246 4.7%
</TABLE>
- --------
*Less than 1%
(1) Except as otherwise noted, each individual has sole voting and investment
power over all shares beneficially owned except as follows: (a) shared
voting and investment power: Mr. W.E. Carter--41,857 shares;
Mr. Cleveland--744 shares; Mr. Cresimore--69 shares; Mr. High--2,127
shares; Mr. Sasser--102,284 shares; Mr. Shaw--56,189 shares; Mr. Wells--
4,637 shares; Mr. Monger--750 shares; all UCB directors and executive
officers as a group--219,829 shares; (b) shared voting power (Savings Plan
shares):
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<PAGE>
Mr. Sasser--43,095 shares; Mr. Miller--13,248 shares; Mr. Monger--16,500
shares; Mr. Etheridge--19,824 shares; Mr. Thomas--17,639 shares; all UCB
directors and executive officers as a group--149,936 shares.
(2) Includes 14,902 shares held in trust for Mr. Adams and his children as
beneficiaries. Mr. Adams has no voting or investment power over such
shares.
(3) Mr. Griffin is retiring from the UCB Board after 36 years of service to
UCB and its predecessors.
(4) Includes 10,500 shares held in a family trust for which Mr. High serves as
trustee.
(5) Includes shares held in trust for the account of the named officer under
the terms of the UCB Savings Plan.
(6) Does not include 20,250 shares held of record by Mr. Shaw's spouse. Mr.
Shaw disclaims any beneficial ownership of such shares.
(7) Includes shares subject to exercisable stock options outstanding under the
terms of the UCB Key Employee Stock Option Plan.
ELECTION OF DIRECTORS
The UCB Board consists of 13 persons, each of whom is a nominee for
reelection as a director, except C. Frank Griffin, who will retire at the UCB
Meeting in accordance with UCB's director retirement policy having reached the
mandatory retirement age of 70 for a director. It is intended that the persons
named in the accompanying form of proxy will vote to elect the 12 nominees
listed below as directors, unless authority so to vote is withheld. Although
management expects that each of the nominees will be available for election,
in the event a vacancy in the slate of nominees is occasioned by unexpected
occurrence, it is intended that shares of UCB Common Stock represented by
proxies will be voted for the election of a substitute nominee selected by the
persons named in the accompanying form of proxy. The election of each nominee
requires the affirmative vote of a plurality of the shares of UCB Common Stock
cast in the election of directors. Holders of UCB Common Stock do not have
cumulative voting rights in the election of directors.
The names of the nominees for election to the UCB Board, their principal
occupations and certain other information with respect to such persons are as
follows. The 12 nominees presently serve on the UCB Board. All of the nominees
are recommended by the UCB Personnel Committee and by the UCB Board and have
consented to be named and to serve as directors if elected.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS, DIRECTOR OF
NAME AGE AFFILIATIONS WITH UCB AND OTHER DIRECTORSHIPS UCB SINCE
---- --- ------------------------------------------------------- -----------
<S> <C> <C> <C>
J.W. Adams......... 68 Retired bank executive; Vice Chairman of the Board of 1978
Directors and Executive Committee of UCB and member of
the Finance Committee; Vice Chairman of the Board of
Directors and the Executive Committee of UCB-NC.
John V. Andrews.... 63 President of Allvac (metals manufacturer management); 1988
Vice Chairman of the Audit Committee and member of the
Personnel Committee of UCB; Director and Vice Chairman
of the Audit Committee of UCB-NC.
Russell M. 47 President of Atlantic Corporation of Wilmington, Inc. 1992
Carter(1)......... (paper products manufacturer); Member of the Audit
Committee of UCB; Director and member of the Executive
and Audit Committees of UCB-NC.
W.E. Carter........ 58 Owner of W.E. Carter Realty; Member of the Finance and 1995
Personnel Committees of UCB; Director of UCB-NC.
Alfred E. 61 Partner in the law firm of McCoy, Weaver, Wiggins, 1990
Cleveland......... Cleveland & Raper; Member of the Executive and Finance
Committees of UCB; Director and Member of the
Executive Committee of UCB-NC.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS, DIRECTOR OF
NAME AGE AFFILIATIONS WITH UCB AND OTHER DIRECTORSHIPS UCB SINCE
---- --- ------------------------------------------------------- -----------
<S> <C> <C> <C>
James L. 69 Chairman of the Board of Allegiance Brokerage Co. (food 1985
Cresimore......... brokers); Chairman of the Board of Smithfield
Companies, Inc. (food processors); Member of the
Executive and Personnel Committees and Chairman of the
Finance Committee of UCB; Director of UCB-NC.
Thomas P. Dillon... 68 Business consultant; Member of the Audit Committee of 1988
UCB; Director and member of the Executive and Audit
Committees of UCB-NC.
James C. High...... 64 President of The News Reporter Company, Inc. (newspaper 1987
publishing); Member of the Executive and Finance
Committees of UCB; Director and Member of the
Executive Committee of UCB-NC.
E. Rhone Sasser.... 60 Chairman of the Board, Chief Executive Officer, and 1981
Chairman of the Executive Committee of UCB; Chairman
of the Board, Chief Executive Officer, and Chairman of
the Executive Committee of UCB-NC; Chairman of the
Board and Member of the Executive Committee of UCB-SC;
Director of UCB Investor Services, Inc.
Jack E. Shaw....... 62 Chief Executive Officer of Shaw Resources, Inc. (real 1990
estate investment and development); Director of
Unitronix Corporation; Member of the Executive and
Finance Committees and Chairman of the Personnel
Committee of UCB; Vice Chairman of the Board and
Member of the Executive Committee of UCB-SC.
Harold B. Wells.... 65 President of Wells Oldsmobile, Inc. (automobile 1982
dealership); Member of the Executive Committee and
Vice Chairman of the Finance Committee of UCB;
Director and Member of the Executive Committee of UCB-
NC.
Charles M. 67 Chairman of the Board of Winston Hotels Inc. (hotel 1988
Winston........... development); Chairman of the Audit Committee and
Member of the Personnel Committee of UCB; Director and
Chairman of the Audit Committee of UCB-NC.
</TABLE>
- --------
(1) Mr. R.M. Carter has advised that an order for relief under Chapter 11 of
the Bankruptcy Code was entered on March 3, 1992, by the United States
Bankruptcy Court, Middle District of Florida, against Leisure Living for
the Active Retiree Joint Venture, a Florida general partnership ("LLAR").
Within two years immediately preceding entry of the order, Mr. Carter owned
approximately a 2.5 percent partnership interest in LLAR. In October 1990,
Mr. Carter exchanged his interest in LLAR for a limited partnership
interest which became effective in June 1991. In November 1992, LLAR's plan
of reorganization was confirmed. Mr. Carter advises that he was a passive
investor and was never a managing partner, officer or controlling person in
LLAR.
THE UCB BOARD UNANIMOUSLY RECOMMENDS THAT THE UCB SHAREHOLDERS VOTE FOR THE
ELECTION THE ABOVE NOMINEES.
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<PAGE>
The UCB Board annually appoints the following committees: Audit (the "UCB
Audit Committee"), the UCB Executive Committee, Finance (the "UCB Finance
Committee") and the UCB Personnel Committee. Membership on the UCB Audit,
Finance and Personnel Committees are comprised entirely of non-management
directors.
The UCB Audit Committee, which held five meetings during 1996, is empowered
to review the internal controls of UCB and its subsidiaries and the scope and
results of audits conducted by the internal and independent auditors, and to
review any aspects of the operations of UCB and its subsidiaries to ensure
that the UCB Board's policies are being adhered to and implemented.
The UCB Finance Committee, which held four meetings during 1996, reviews and
approves the financial statements and financial disclosures of UCB and its
subsidiaries prior to their submission to the UCB Board and release to the
public, and reviews and makes recommendations to the UCB Board concerning
proposed dividend payments and the adoption of general lending and investment
policies of UCB and its subsidiaries.
The UCB Personnel Committee, which held five meetings during 1996, reviews
and makes recommendations to the UCB Board for final action, as appropriate,
on personnel matters related generally to (i) the compensation of directors,
officers and employees of UCB and its subsidiaries, and (ii) the
administration of certain employee benefit plans adopted by UCB and its
subsidiaries. Pursuant to delegated authority granted by the UCB Board, the
UCB Personnel Committee is solely responsible for the administration of UCB's
LTIP, which is administered by the committee in compliance with the
requirements of Section 162(m) of the Code. Although UCB does not have a
standing nominating committee, the UCB Personnel Committee is authorized to
recommend to the UCB Board for their consideration the number of directors to
be elected to the UCB Board, to recommend any changes in UCB Board membership
and to nominate director candidates annually and as vacancies occur. In
identifying director candidates, the UCB Personnel Committee will consider
individuals recommended by shareholders. Shareholders may make written
recommendations to the committee by addressing such correspondence to the UCB
Personnel Committee, c/o Corporate Secretary, Post Office Box 632, Whiteville,
North Carolina 28472.
During 1996 the UCB Board held five regularly scheduled meetings and four
specially called meetings. The UCB Executive Committee held two meetings
during 1996. Each of the incumbent directors named above attended at least 75
percent of the aggregate number of meetings of the UCB Board and committees on
which such director served. For service as directors of UCB during 1997, each
non-employee director will receive a base fee of $7,500, plus a fee of $900
for each UCB Board meeting attended and $900 for each committee meeting or
approved training session attended, plus travel allowances. The chairman of
the UCB Executive Committee will receive an additional base fee of $2,500 and
the chairmen of the UCB Personnel, Audit and Finance Committees will each
receive an additional base fee of $1,500. Directors who are full-time
employees of UCB or one of its subsidiaries do not receive director or
chairman fees. Each director may elect to defer all or a portion of his fees
each year. Deferred fees bear interest at a variable rate equal to UCB-NC's
prime rate of interest and, at the director's option, become payable in a lump
sum or in up to ten annual installments after the director ceases to be a
member of the UCB Board.
The following fees were paid for special participation in local advisory
board meetings of UCB-NC held during 1996: Mr. R.M. Carter--$400; Mr. W.E.
Carter--$300; and Mr. Cleveland--$500.
The UCB Board adopted in 1994 an unfunded director retirement plan for non-
management directors (the "Director Retirement Plan") who retire after January
1, 1995, with at least one year of UCB Board service. Under the terms of the
Plan, an eligible director, who has retired from the UCB Board and attained
age 70, will be paid annually his base director's fee in effect on the date of
retirement for a period not to exceed the lesser of the number of years the
director served on the UCB Board (and, as applicable, its subsidiary bank
prior to his election as a director of UCB) or ten years (collectively, the
"Retirement Benefits"). Retirement Benefits which remain unpaid at the time of
a retired director's death will be paid on an annual basis to the director's
surviving spouse until paid or until the spouse's death, whichever event first
occurs. If during active Board service or after
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<PAGE>
retirement but before age 70, an eligible UCB director or retired director,
respectively, becomes disabled or dies, the director or his or her spouse, in
the case of death, will be entitled to begin receiving Retirement Benefits at
the end of the then current calendar year. The UCB Personnel Committee is
responsible for administering the Director Retirement Plan.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth, for the fiscal years ended December 31,
1994, 1995 and 1996, the cash compensation paid by UCB, as well as certain
other compensation paid or accrued for those years, to each of the five most
highly compensated executive officers of UCB (the "UCB Named Executives") for
services rendered in all capacities to UCB and its subsidiaries:
UCB SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------- -------------------------------
AWARDS PAYOUTS
----------- -------------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS ($) LTIP PAYOUTS ($)(2) ($)(3)
- --------------------------- ---- ---------- ------------ ----------- ------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
E. Rhone Sasser......... 1996 411,000 164,400 -0- -0- 16,050
Chairman of the Board 1995 395,004 158,002 6,636 -0- 15,799
and Chief Executive 1994 375,000 260,800 -0- 58,841 13,999
Officer of UCB and UCB-
NC
Kenneth L. Miller, Jr... 1996 275,004 107,250 -0- -0- 11,477
President of UCB and 1995 252,498 75,750 4,452 -0- 10,963
UCB-NC 1994 225,000 120,140 -0- 28,513 10,702
Ronald C. Monger........ 1996 218,500 74,290 -0- -0- 12,529
Executive Vice 1995 210,000 63,000 3,528 -0- 12,181
President and Chief 1994 190,000 101,296 -0- 24,111 11,833
Financial Officer of
UCB and UCB-NC
Jeff D. Etheridge, Jr... 1996 210,600 71,604 -0- -0- 12,529
Executive Vice 1995 202,500 60,750 3,402 -0- 11,520
President of UCB and 1994 190,000 113,096 -0- 31,228 11,920
UCB-NC (Credit
Administration)
David L. Thomas......... 1996 188,504 64,090 -0- -0- 12,200
Executive Vice 1995 182,004 54,601 3,057 -0- 11,878
President of UCB and 1994 172,500 96,441 -0- 24,306 11,659
UCB-NC (Trust and
Related Financial
Services)
</TABLE>
- --------
(1) The "Bonus" paid to each UCB Named Executive consisted of: for 1996 and
1995, the payment of an annual bonus pursuant to UCB's Management
Incentive Plan; for 1994, the payment of an annual bonus pursuant to UCB's
Management Incentive Plan and the payout of vested Base Units (non-
performance in nature) previously awarded under the terms of UCB's 1986
Long Term Incentive Plan, which has been terminated.
(2) "LTIP Payouts" for 1994 consisted of the payout of vested performance
units which were previously awarded under the terms of UCB's 1986 Long
Term Incentive Plan which was terminated by the UCB Board in 1994.
(3) For 1996, "All Other Compensation" consisted of: (a) employer
contributions of $9,000 to UCB's Savings Plan to match the executive's
1996 pre-tax deferred contribution to the Savings Plan, and (b) insurance
premiums paid by UCB for group term life insurance with respect to each
executive in the following amounts: Mr. Sasser--$7,050; Mr. Miller--
$2,477; Mr. Monger--$3,529; Mr. Etheridge--$3,529; and Mr. Thomas--$3,200.
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Stock Options
No stock options were granted during 1996 to the UCB Named Executives or
other eligible participants under the Option and Incentive Plan.
UCB AGGREGATED OPTION SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
VALUES
The following table provides information concerning the number and value of
stock options which were exercisable during 1996 and outstanding options which
were held at December 31, 1996, by the UCB Named Executives under the terms of
both the 1986 Key Employee Stock Option Plan and the Option and Incentive
Plan.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISABLE
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT FY-END
OPTIONS AT FY-END ($)(1)
SHARES ACQUIRED VALUE (#) EXERCISABLE/ EXERCISABLE/
NAME OR EXERCISED(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C>
E. Rhone Sasser...................... 33,779 986,683 0/8,449 0/169,267
Kenneth L. Miller, Jr................ -0- -0- 13,883/7,242 405,198/152,965
Ronald C. Monger..................... 3,097 88,071 10,399/5,899 304,597/125,226
Jeff D. Etheridge, Jr................ 5,683 165,011 10,000/5,913 292,910/126,380
David L. Thomas...................... -0- -0- 12,701/5,289 370,818/112,954
</TABLE>
- --------
(1) Value is the difference between the fair market value of the option shares
on the date of grant (the exercise price) and the fair market value of the
underlying shares at fiscal year-end. Under the terms of the 1986 Key
Employee Stock Option Plan, "fair market value" is defined as the mean
between the closing bid and ask prices for UCB Common Stock as quoted by
Nasdaq on the applicable dates. Under the terms of the Option and
Incentive Plan, "fair market value" is defined as the closing sale price
for UCB Common Stock as quoted by Nasdaq on the applicable dates. At
December 31, 1996, the fair market value of the option shares of UCB
Common Stock granted under the 1986 Key Employee Stock Option Plan and the
Option and Incentive Plan were $39.375 and $39.50 per share, respectively.
For information concerning the effect of the Merger on the outstanding stock
options, see "THE MERGER--Interest of Certain Persons in the Merger" and "--
Effect on Employees, Employee Benefit Plans and Stock Options."
LONG TERM INCENTIVE PLAN
UCB maintains the LTIP for purpose of encouraging eligible executive
management employees to make long term investment decisions that increase
UCB's shareholder value and enhance UCB's ability to retain such key
employees. Each LTIP award consists of a number of performance units,
expressed in dollars, which is stated as a percentage or multiple of the
participant's base salary during the first year of the measurement period
established by the UCB Personnel Committee. The UCB Personnel Committee also
establishes for each award certain performance objectives and the weight to be
accorded each such objective, performance targets (i.e., threshold, target and
maximum) applicable to each performance objective and the amount of
compensation that will be paid based on UCB's corporate achievement of the
performance objectives. The UCB Personnel Committee may use one or more of the
following Performance Objectives in making LTIP awards: total shareholder
return, average return on assets, average return on equity, average growth in
assets, increase in operating earnings per share, increase in book value per
share, and ratio of operating overhead to operating revenue.
If the participant remains in the employ of UCB until the end of the
measurement period, he will be eligible to receive a payout of his LTIP award
based on the level of achievement by UCB of the performance objectives
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<PAGE>
selected for the award. No payout of an LTIP award is made unless "threshold"
performance for one or more of the selected performance objections is attained
by UCB for the measurement period. If the participant terminates employment
before the end of the measurement period for any award, he will forfeit his
right to any payment of the award, unless his termination results from death,
disability, retirement under the UCB Pension Plan, or involuntary termination
by UCB without cause. In these latter events, the participant (or in the event
of death, his beneficiary) will be entitled to receive a prorated payment at
the end of the measurement period based on the number of months the
participant was employed during the measurement period divided by the number
of months in the measurement period.
The payout of an LTIP award is first determined by the UCB Personnel
Committee as a dollar figure, but payment of the award is made to the
participant in shares of UCB Common Stock based on its then fair market value
per share (i.e., the closing price per share as quoted by Nasdaq on the date
of payout). Subject to the prior approval of the UCB Personnel Committee, a
participant may request to receive a portion of his award in cash for the
purpose of satisfying tax obligations related to the award. The UCB Personnel
Committee may also discretionarily withhold a portion of an award to pay tax
withholding obligations related to payout of the award.
A participant will also be entitled to receive payout of an LTIP award in
the event a change in control of UCB or UCB-NC occurs during a measurement
period (or a threatened change in control occurs followed by the participant's
termination by UCB or UCB-NC without cause or the participant's resignation
with good reason). The payout of an LTIP award in such event is based upon the
target award level of performance or the actual performance of UCB to the date
of the change or threatened change in control, whichever provides greater
payment, and, in the discretion of the UCB Personnel Committee, is payable in
shares of UCB Common Stock and/or cash. Except for awards that are payable
immediately upon a participant's termination of employment or resignation in
connection with a threatened change in control, a participant is entitled to
payment of an LTIP award for any given measurement period during which a
change in control occurs only if (i) he remains employed by UCB (or its
successor) until the end of the measurement period, or (ii) prior to the end
of the measurement period, his employment is terminated by UCB (or its
successor) without cause, or the participant retires (whether early, normal or
late) under UCB's (or its successor's) retirement plan, dies or becomes
disabled, or (iii) he resigns from employment with UCB (or its successor) with
good reason prior to the end of the measurement period. For information
concerning the effect of the Merger upon outstanding LTIP awards, see "THE
MERGER--Interests of Certain Persons in the Merger."
In 1996, LTIP awards were granted to ten UCB executives, including the UCB
Named Executives. The table below provides information concerning awards of
performance units which were made during 1996 by UCB to each of the UCB Named
Executives under the terms of the LTIP.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUT UNDER
NONSTOCK PRICE BASED PLAN
------------------------------------
PERFORMANCE OR
NUMBER OF OTHER PERIOD UNTIL
NAME UNITS(#) MATURATION OR PAYOUT THRESHOLD($)(1) TARGET($) MAXIMUM($)
- ---- --------- -------------------- --------------- --------- ----------
<S> <C> <C> <C> <C> <C>
E. Rhone Sasser......... 328,000 5 years 65,600 328,000 393,600
Kenneth L. Miller,
Jr. ................... 192,500 5 years 38,500 192,500 231,000
Ronald C. Monger........ 131,100 5 years 26,220 131,100 157,320
Jeff D. Etheridge....... 126,000 5 years 25,200 126,000 151,200
David L. Thomas......... 113,100 5 years 22,620 113,100 135,720
</TABLE>
- --------
(1) The threshold payout above assumes that threshold performance with respect
to each performance objective selected by the UCB Personnel Committee is
attained by UCB for the measurement period. If threshold performance is
attained with respect to any one of such objectives, the minimum amount
payable will be as follows: Mr. Sasser--$13,120; Mr. Miller--$7,700; Mr.
Monger--$5,244; Mr. Etheridge--$5,040; and Mr. Thomas--$4,524.
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<PAGE>
RETIREMENT PLANS
The following table provides information concerning estimated annual
benefits that are payable to covered employees at normal retirement age under
the UCB Pension Plan, including benefits attributable to the BEP, based on the
compensation and years of service classifications specified below. The
combined plan benefits shown in the following table are computed on the basis
of a straight life annuity beginning at age 65.
ESTIMATED ANNUAL RETIREMENT BENEFITS BASED ON YEARS OF CREDITED SERVICE
<TABLE>
<CAPTION>
REMUNERATION YEARS OF SERVICE
(FINAL AVERAGE) --------------------------------------------------------------
EARNINGS) 15 20 25 30 35
--------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 57,669 $ 67,044 $ 67,044 $ 67,044 $ 72,083
150,000 70,794 82,044 82,044 82,044 87,833
175,000 83,919 97,044 97,044 97,044 97,044
200,000 97,044 112,044 112,044 112,044 112,044
225,000 110,169 127,044 127,044 127,044 127,044
250,000 123,294 142,044 142,044 142,044 142,044
300,000 149,611 172,044 172,044 172,044 172,044
350,000 175,794 202,044 202,044 202,044 202,044
400,000 202,044 232,044 232,044 232,044 232,044
450,000 228,294 262,044 262,044 262,044 262,044
500,000 254,544 292,044 292,044 292,044 292,044
</TABLE>
The remuneration covered by the UCB Pension Plan is an employee's "final
average earnings" which, under the terms of the Plan, is defined to be the
average of the highest five consecutive calendar years of base salary
(reported as "Salary" in the Summary Compensation Table above) earned by the
employee during the ten calendar years prior to his or her date of retirement,
termination, disability or death. For Plan Years 1989 through 1993, an
employee's annual base salary used in the determination of accrued Pension
Plan benefits could not exceed an amount (beginning 1989 at $200,000 and
ending in 1993 at $235,840) which was annually indexed and approved by the
Secretary of Treasury. As a result of the enactment of the Revenue
Reconciliation Act of 1993, the maximum base salary which may be used in
determining an employee's accrued Pension Plan benefits is $150,000 beginning
Plan Year 1994. No offset for primary social security benefits received by a
pensioner is allowed with respect to the benefits paid under the Pension Plan.
UCB maintains the BEP for the benefit of certain senior management employees
of UCB and its affiliated subsidiaries, including the UCB Named Executives.
Eligibility to participate in the BEP is determined annually on the basis of
an employee's base salary level, the recommendation of management, and
approval by the UCB Board. The primary purpose of the BEP is to eliminate the
effect of certain Code limitations applicable to qualified retirement plans
generally by providing eligible senior management employees with supplemental
benefits in an amount sufficient to create a level of total retirement income
that is similar to the levels provided to the average UCB employee under the
terms of the Pension Plan. Supplemental benefits payable under the BEP are
determined by the following formula: 30% of the eligible employee's final
average earnings, plus 1.5% of final average earnings multiplied times the
number of years of completed service (up to 20 years), minus benefits paid
under the Pension Plan, minus one-half of the employee's primary social
security benefit, minus any benefits paid from a pension plan of any previous
employer. The BEP was amended by the UCB Board in November 1994 to provide Mr.
Sasser an annual guaranteed minimum retirement benefit of $184,350 in
consideration of his continued employment with UCB. This minimum retirement
benefit is equal to the sum of the normal retirement benefit which is vested
and payable to Mr. Sasser under the provisions of the Pension Plan and a
supplemental benefit which is payable under the terms of the BEP in an amount
equal to Mr. Sasser's guaranteed minimum retirement benefit less his Pension
Plan benefit. Upon retirement, Mr. Sasser will receive the greater of (i) the
guaranteed minimum retirement benefit, or (ii) the combination of retirement
benefits which are otherwise payable under the terms of the Pension Plan and
the BEP on the date of his retirement. For information concerning the effect
of the Merger on the BEP, see "THE MERGER--Interest of Certain Persons in the
Merger."
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<PAGE>
The final average earnings and the respective years of service as of January
31, 1997, for each of the UCB Named Executives are as follows: Mr. Sasser--
$376,202 (29 years); Mr. Miller--$221,750 (15 years); Mr. Monger--$188,700 (20
years); Mr. Etheridge--$190,620 (18 years); and Mr. Thomas--$170,401 (15
years).
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
UCB and UCB-NC have entered into identical employment agreements with each
of the Named Officers (which include all of the UCB Named Executives) and two
other executive officers. The purpose of the agreement is to recognize the
significant contributions and valuable management services rendered by each of
the UCB executive officers to the overall financial performance and success of
UCB, and to provide for the executive's continued employment with UCB or its
subsidiary, UCB-NC, as appropriate.
Under the provisions of the agreement, each executive is employed with UCB
or UCB-NC for a rolling three year term which is automatically extended each
day after the date of the agreement (the "Term"); provided, however, the Term
may not extend beyond the executive's sixty-fifth (65th) birthday unless the
parties otherwise agree in writing. UCB or UCB-NC and the executive may give
notice to the other, at any time, that the Term will cease to automatically
extend, and, as from the effective date of such notice. The Term is fixed at
three years (or, as applicable, for such shorter period). As compensation for
employment services to be rendered by the executive during each year or
partial year of the Term of the agreement, the executive will receive his
annual base salary in effect on the date of the agreement (or, as applicable,
a pro rata portion thereof), payable monthly in accordance with regular
payroll practices, and the executive is entitled to participate in any
employee benefit plan or arrangement generally made available by UCB to its
executive officers. The executive's annual base salary may be adjusted by UCB
or UCB-NC, as appropriate, after the date of the agreement in accordance with
annual salary review practices, and the base salary, as periodically adjusted,
becomes the executive's base compensation under the agreement.
The executive has the right to terminate employment under the agreement (a)
if UCB or UCB-NC, as appropriate, materially breaches the agreement and the
breach is not cured within 30 days after notice, or (b) for good reason. "Good
reason" means the occurrence (without the executives express written consent)
within three years following the date of a change in control of UCB or UCB-NC,
or during the period commencing on the date a threatened change in control
becomes manifest and until it ends, of any one of the following general acts
or events which, after notice, is not promptly corrected by UCB or its
successor: the assignment of duties inconsistent with the executive's status
with UCB or UCB-NC immediately prior to the change or threatened change in
control; the reduction or nonpayment of the executive's base salary and/or the
reduction or elimination of any other material source of the executive's total
compensation, long-term or otherwise; the failure to provide the executive
with employee plan benefits (i.e., pension; life insurance; health and
accident insurance; and disability insurance) substantially similar to those
provided immediately prior to the change or threatened change in control; or,
the relocation of the executive or UCB's principal office outside the States
of North and South Carolina. If the executive terminates employment for either
of the reasons stated above, the executive will be entitled to receive the
following damages: (i) his monthly base salary then in effect (less the
monthly employee cost of insurance coverages referenced below) for the Term of
the agreement; (ii) a monthly amount for the Term of the agreement equal to
one-twelfth (1/12) of the highest annual bonus paid to the executive in the
three-year period immediately preceding termination of employment; (iii) his
life, health, accident and disability insurance coverage benefits then in
effect for the Term of the agreement as provided by UCB or its successor, at
its expense; (iv) a pro rata annual bonus payment for the year in which the
executive's employment is terminated calculated at his target level of
participation; and (v) additional credited service in the BEP for benefit
accrual purposes equal to the number of months remaining in the Term of the
agreement. The executive's right to employment and payment of damages under
the provisions of the agreement terminate and cease if during the Term of the
agreement the executive resigns without cause, dies, becomes disabled, elects
to retire under UCB's pension plan, or is terminated by UCB or its successor
for cause.
For information with respect to the effect of the Merger on the outstanding
employment contracts and change in control agreements of UCB and specific
agreements by SNC to terminate the existing employment
104
<PAGE>
contracts and change in control agreements and enter into new employment or
settlement agreements with certain officers of SNC, see "THE MERGER--Interests
of Certain Persons in the Merger."
UCB PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THIS REPORT IS SUBMITTED BY THE UCB PERSONNEL COMMITTEE ADDRESSING UCB'S
COMPENSATION POLICIES DURING 1996 WITH RESPECT TO ALL OF ITS EXECUTIVE
OFFICERS, INCLUDING THE UCB NAMED EXECUTIVES.
For information with respect to the effect of the Merger on the various
compensation plans of UCB, see "THE MERGER--Interests of Certain Persons in
the Merger" and "--Effect on Employees, Employee Benefit Plans and Stock
Options."
Compensation Philosophy Regarding Executive Officers
The executive compensation program at UCB is structured to enable UCB to
attract needed executive talent, to encourage executives to perform in a
manner consistent with the attainment of both annual and long term strategic
goals, and to provide a reasonable level of security for executives that is
requisite to ensure their retention. Base salaries paid by UCB to its
executives are competitively set, based on practices in peer banking
companies, and reflect internal subjective values based on specific job
responsibilities and assessments of each incumbent's performance. Annual and
long term incentives offered by UCB are based upon UCB's achieving certain
performance goals established by the UCB Personnel Committee at the beginning
of each incentive measurement period. The Option and Incentive Plan provides
key executives identified by the UCB Personnel Committee with an opportunity
for equity participation in the company and forges a direct link with
shareholder value. In general, the UCB executive compensation program balances
a mix of fixed and variable components that work in concert to stimulate
executive management performance and corporate fiscal achievement designed to
benefit UCB's shareholders.
Relationship of Compensation to Performance
Base Salary and Annual Bonus. Base salaries for UCB's executive officers are
targeted at the competitive median salaries which are paid by banking
institutions throughout the nation having total assets of $2 billion to $6
billion (the "National Comparison Group"). In 1996, there were 64 companies in
the National Comparison Group. Base salaries paid by UCB are generally
adjusted on an annual basis so as to remain within the competitive ranges
established by companies in the National Comparison Group for their executives
and to reward each executive for his or her individual performance as
subjectively assessed by UCB's Chief Executive Officer and the UCB Personnel
Committee and approved by the UCB Board. Base salary levels during 1996 for
UCB's executive group consisting of ten persons, (the "UCB Executive Group")
were increased by an overall 4.1% over 1995. The 1996 base salary levels for
the UCB Executive Group on average approximated the midpoint of the base
compensation range for the National Comparison Group. UCB is unaware of any
correlation between the companies which comprise the National Comparison Group
and those which comprise the Indexed group of Nasdaq National Market banks
shown below in the performance graph since the banks in the National
Comparison Group were selected based on their size and scope of operation
without consideration of the exchange on which their respective stocks may be
listed.
UCB's Management Incentive Plan was adopted effective January 1, 1994, and
is designed to provide participants with compensation in addition to base
salary that is subject to the attainment of certain annual performance goals.
UCB's Management Incentive Plan provides that the UCB Board may reduce or
cancel bonus payments if UCB's return on average equity is less than 12.5%, or
if actual operating income per share, as defined in UCB's Management Incentive
Plan and as adjusted by the UCB Personnel Committee to exclude items judged to
be outside the control and influence of management, is less than 90% of the
amount budgeted. During 1996 there were 225 participants in UCB's Management
Incentive Plan, including the UCB Executive Group. Under the 1996 UCB's
Management Incentive Plan rules, each executive participant was assigned a
target level incentive award, expressed as a percentage of his or her base
salary, 80% of which was payable if the target
105
<PAGE>
level of performance relative to the selected goals was met, and 20% of which
was payable at the discretion of the UCB Personnel Committee, subject to the
approval of the UCB Board. The payment of annual bonuses for 1996 pursuant to
UCB's Management Incentive Plan was made in accordance with a plan formula
which compared consolidated operating income per share for the year ended
December 31, 1996, determined in the manner referred to above, with the amount
budgeted. UCB attained its consolidated budgeted operating income per share as
calculated pursuant to the method described above for the year ended December
31, 1996, and based on that level of performance, $2,197,946 was approved by
the UCB Personnel Committee and the UCB Board for payment in 1997 to
participants, which represented 100% of the sum of target bonuses for the
individual participants.
Long Term Incentive Plan. The principal purpose of the LTIP is to encourage
eligible executive management employees to make long term decisions that
increase UCB's shareholder value and enhance UCB's ability to retain such key
employees. Each LTIP target award consists of a number of units, expressed in
dollars, which is calculated as a percentage established by the UCB Personnel
Committee. The value assigned the aforementioned award is the amount to be
paid if the targeted levels of performance for each of the goals are attained
during the measurement period. For each award, the UCB Personnel Committee
establishes certain corporate performance objectives, the weight to be
accorded each objective, and the amount of compensation that will be paid at
various levels of attainment of the performance objectives. For each
performance objective, if the target level of performance is attained, the
payout is 100% of the value of the award; if the minimum (i.e., threshold)
level of performance is attained, the payout is 25% of the value of the award;
and if a maximum level of performance is reached or exceeded, the payout is
150% of the value of the award. If the threshold level of performance is not
attained with respect to any performance objective, no payout relating to that
performance objective is made. Awards were granted in 1996 to 10 executives,
including the UCB Named Executives, and a five year measurement period was
established at the end of which payouts may be awarded based on UCB's
performance compared against pre-established objectives weighted as follows:
average return on assets--20%; average return on equity--20%; growth in
average assets--20%; and total shareholder return--40%. Actual payout to a
participant at the end of the measurement period may range from 5% of the
participant's target award (if the threshold level of performance for only one
of the four objectives is reached) to 150% of the participant's target award
(if the maximum level of performance is reached or exceeded for each of the
four objectives). Based on the extent to which performance objectives are met
or exceeded, the UCB Personnel Committee may authorize payoffs at the end of
the measurement period to participating executives who remain employed by UCB
or by one of its subsidiaries. The payout of a LTIP award is first determined
by the UCB Personnel Committee as a dollar figure, but payment of the award is
made to the participant in shares of UCB Common Stock based on its then fair
market value per share (i.e., the closing price per share as quoted by Nasdaq
on the date of payout). Subject to the prior approval of the UCB Personnel
Committee, a participant may request to receive a portion of his award in cash
for the purpose of satisfying tax obligations related to the award. The UCB
Personnel Committee also has discretion to withhold a portion of an award to
pay tax withholding obligations related to payout of the award.
Stock Plan. The objectives of the Option and Incentive Plan are to promote
greater stock ownership in UCB by those employees who are principally
responsible for its future growth and continued success; to more closely link
the personal interests of plan participants to those of UCB's shareholders and
to provide flexibility to UCB in its ability to motivate, attract and retain
the services of individuals upon whose judgment, initiative and special effort
the continued success of UCB depends. The plan authorizes the UCB Personnel
Committee, as plan administrator, to grant non-qualified stock options and
incentive stock options, and to award stock appreciation rights, stock awards
(restricted or unrestricted), and performance shares. There were no grants or
awards made under the terms of the Option and Incentive Plan during 1996.
Initial grants of non-qualified stock options had been made when the plan was
established July 21, 1995. Although it was the intent of the UCB Personnel
Committee to consider additional awards as appropriate each year, the
Committee has preferred as a regular practice to make any such grants or
awards effective as of the beginning of a fiscal year. Therefore, during 1996
the UCB Personnel Committee elected to defer consideration of additional
awards until the beginning of 1997.
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Other Compensation. UCB's executive officers are covered by a defined
benefit pension plan and by the BEP. For a description of the UCB pension plan
and the BEP see "THE MERGER--Interests of Certain Persons in the Merger." UCB
executives are also eligible to participate along with all other UCB employees
in the UCB Savings Plan, to which pre-tax contributions may be made.
Individual deferral contributions to the UCB Savings Plan in 1996 were limited
to the lesser of 7% of the employee's base salary or $9,000. UCB makes a
matching contribution to the UCB Savings Plan equal to that voluntarily
contributed by each participant up to a maximum of 6% of the participant's
base salary, The UCB contribution is invested in UCB Common Stock. See
"SUMMARY--The UCB Meeting," "THE UCB MEETING--Record Dates, Voting Rights and
Vote Requirements" and "--Security Ownership."
General. Awards made to executives under the LTIP and awards or grants made
to executives under the 1995 Stock Option and Incentive Plan are approved and
administered by the UCB Personnel Committee. All other components of executive
compensation are approved annually by the UCB Board upon recommendation by the
UCB Personnel Committee. In 1996, the total cash compensation paid by UCB to
its executives approximated on average the levels paid for comparable
executive positions in the National Comparison Group.
Mr. Sasser's Compensation. Each component of Mr. Sasser's total compensation
paid or awarded in 1996 was made in accordance with the general compensation
policies discussed above. In this regard, Mr. Sasser's base salary of $411,000
was set for 1996 by the UCB Board upon the recommendation of the UCB Personnel
Committee at a level that approximated the median salary for chief executive
officers among the National Comparison Group referenced above. A base pay
adjustment of 4.05% over his 1995 base salary was made to align Mr. Sasser's
base salary with the median level of the National Comparison Group and
reflected the UCB Personnel Committee's subjective assessment of Mr. Sasser's
individual performance during 1995. Mr. Sasser was paid a cash bonus of
$164,400 for 1996 pursuant to the terms of UCB's Management Incentive Plan
calculated in accordance with the performance formula discussed above.
The UCB Personnel Committee granted in 1996 to Mr. Sasser an award under the
terms of the LTIP which has a target value of $328,800 at the end of a five-
year measurement period, as disclosed in the Long Term Incentive Plan Table.
This target value was determined by dividing the percentage of base salary
represented by Mr. Sasser's initial award made under the LTIP in 1994 by the
number of years in the vesting period, multiplying the result by the number of
years since his last award, and multiplying the resulting percentage times his
1996 salary. Mr. Sasser's initial award was at 200% of his salary at the time
of the award, and therefore the 1996 award, made two years thereafter, was
indexed to 80% of Mr. Sasser's 1996 salary. In the event the Merger is not
consummated, the 1996 award will vest at the end of 2000. The actual value of
the award at vesting will be determined by UCB's performance compared with the
objectives as established and weighted at the beginning of the measurement
period as follows: average return on assets--20%; average return on equity--
20%; growth in average assets--20%; and total shareholder return--40%. The
actual value of the award may range from $16,440 if the threshold level
performance for only one of the objectives is reached, to $493,200 if UCB's
performance is at or above maximum levels for each of the four objectives.
Payment will generally be in the form of UCB Common Stock and the number of
shares will be determined by dividing the actual value of the award by the
fair market value per share of UCB Common Stock on the date of valuation,
although the UCB Board may authorize that a portion of the award be made in
cash or withheld as appropriate to satisfy the tax withholding requirements
applicable to ordinary income.
Additional compensation provided to Mr. Sasser, which is detailed in note
(3) to the Summary Compensation Table, was in the form of a $9,000 matching
contribution to the deferral made to the UCB Savings Plan and the premium of
$7,050 paid by UCB on a term life insurance policy. These forms of
compensation are available on similar terms to all UCB employees.
Taxation Issue. The IRS has issued regulations implementing Code Section
162(m), which generally prohibits the tax deduction by a public corporation of
certain compensation paid each year to UCB's chief executive officer and the
four highest compensated officers of UCB other than the chief executive
officer, unless such compensation is performance related. In the event the
Merger is not consummated, the UCB Personnel
107
<PAGE>
Committee and the UCB Board intend to closely monitor UCB's compensation
policies so as to insure that, to the extent practical, UCB's compensation
related expenses remain deductible in compliance with tax law.
SUBMITTED BY THE PERSONNEL COMMITTEE OF UCB'S BOARD OF DIRECTORS
<TABLE>
<S> <C> <C>
JACK E. SHAW, CHAIRMAN JOHN V. ANDREWS W. EUGENE CARTER
JAMES L. CRESIMORE CHARLES M. WINSTON
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the UCB Personnel Committee during all or
a portion of 1996; John V. Andrews; W.E. Carter; Alfred E. Cleveland; James L.
Cresimore; C. Frank Griffin; Jack E. Shaw; and Charles M. Winston. In August
1996, the Commission promulgated, pursuant to the provisions of the Exchange
Act, new Rule 16b-3 which contains, in part, requirements for the
disinterested administration of a publicly held company's employee benefit
plans by its board of directors or a committee thereof in order to exempt
certain stock transactions under such plans by the company's insiders from
short-swing profit penalties imposed by Section 16(b) of the Exchange Act.
Under the new rule, which became effective November 1, 1996, a non-employee
director who also serves as legal counsel to the company, cannot generally
serve on the company's compensation committee. As a result, Messrs. Griffin
and Cleveland, both of whose firms are routinely retained by UCB and its
subsidiaries, tendered their resignations to the UCB Personnel Committee,
which were accepted with regret in October 1996. At December 31, 1996, the
members of the UCB Personnel Committee were Messrs. Shaw (who succeeded Mr.
Griffin as its Chairman), Andrews, Carter, Cresimore and Winston.
Messrs. Andrews, W. E. Carter, Cleveland, Cresimore, Griffin, Shaw and
Winston and certain of their associates were customers and/or borrowers of
UCB-NC and/or UCB-SC during 1996. All loans made by the bank subsidiaries to
UCB's directors (including members of the UCB Personnel Committee) and their
respective associates (i) were made in the ordinary course of business, (ii)
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and (iii) in the opinion of bank management, did not involve
more than normal risk of collectibility or present other unfavorable features.
During 1996, UCB retained in the ordinary course of business Mr. Griffin's
law firm of Griffin, Caldwell, Helder, Lee & Helms, P.A. Also during 1996,
both UCB and UCB-NC retained in the ordinary course of business the law firm
of McCoy, Weaver, Wiggins, Cleveland & Raper. Mr. Cleveland, a director
nominee of UCB, is a member of the latter firm.
TRANSACTIONS WITH OFFICERS AND DIRECTORS
Certain directors, nominees for director and executive officers of UCB and
its subsidiary banks and certain of their respective associates (including
immediate family members) were customers and/or borrowers of either or both of
UCB-NC or UCB-SC during 1996. All loans made by the banks to a director,
nominee, executive officer or associate of any such person (i) were made in
the ordinary course of business, (ii) were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and (iii) in the opinion
of management of the banks, did not involve more than normal risk of
collectibility or present other unfavorable features.
During 1996, a UCB subsidiary, UCB-NC, purchased, in the ordinary course of
business, $3.9 million in retail consumer contracts originated by Wells
Oldsmobile, Inc., a corporate affiliate of Mr. Wells, a director nominee. In
addition, UCB-NC purchased, in the ordinary course of business, from Wells
Oldsmobile, Inc., $20,086 in goods and services during 1996.
During 1996, UCB and its subsidiaries purchased, in the ordinary course of
business, printing services and supplies in the amount of $329,688 from
Atlantic Corporation of Wilmington, Inc. (dba Atlantic Publishing), a
corporate affiliate of Mr. R. M. Carter, a director nominee.
108
<PAGE>
For information concerning other specific business relationships or related
transactions, see "--Compensation Committee Interlocks and Insider
Participation."
PERFORMANCE GRAPH
The following graph compares, during the measurement period shown, the
yearly percentage change in UCB's cumulative total shareholder return on UCB
Common Stock with the cumulative total returns of the Nasdaq market U.S.
companies and Nasdaq bank stocks, assuming dividend reinvestment:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG UCB, NASDQ U.S. COMPANIES
AND NASDQ BANK STOCKS
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Legend
Index Description 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
UCB 100 129.2 145.5 175.4 244.3 440.6
NASDAQ STOCK 100 166.4 133.6 130.6 184.7 227.2
MARKET INDEX
NASDAQ BANK 100 145.6 166.0 165.4 246.3 325.6
STOCK INDEX
</TABLE>
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
APPOINTMENT OF AUDITORS
On the recommendation of the UCB Audit Committee, the UCB Board has
reappointed the firm of KPMG Peat Marwick, LLP as independent auditors to
examine the books of UCB and subsidiaries for the fiscal year 1997 or until
the Effective Time, if earlier, and to report on the consolidated balance
sheets, statements of income and other related statements of UCB and
subsidiaries. KPMG Peat Marwick LLP has served as independent auditors for UCB
continuously since 1971. Representatives of KPMG Peat Marwick LLP (a) are
expected to be present at the UCB Meeting, (b) will have an opportunity to
make a statement, if they desire to do so, and (c) will be available to
respond to questions posed by the shareholders.
109
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires certain officers of UCB and its
directors, and persons who beneficially own more than 10% of any registered
class of UCB's equity securities to file reports of ownership and changes in
ownership with the Commission and UCB.
Based solely on a review of the beneficial ownership reports and written
representations provided to UCB by the above referenced persons, UCB believes
that all filing requirements applicable to its reporting officers, directors
and greater than 10% beneficial owners were properly and timely complied with
during 1996, except for Mr. Shaw who filed a late Form 5 with regard to his
indirect beneficial ownership of certain UCB Common Stock held by a family
corporation.
PROPOSALS FOR 1998 ANNUAL MEETING
In the event the Merger is not consummated, under regulations of the
Commission, any shareholder desiring to make a proposal to be acted upon at
the 1998 annual meeting of shareholders must present such proposal to UCB at
its principal office in Whiteville, North Carolina by November 22, 1997, for
the proposal to be considered for inclusion in UCB's proxy statement.
OTHER BUSINESS
The UCB Board knows of no other matter to come before the UCB Meeting.
However, if any other matter requiring a vote of the shareholders should
arise, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.
LEGAL MATTERS
The validity of SNC Common Stock to be issued in connection with the Merger
and certain of the tax consequences of the Merger will be passed upon by
Womble Carlyle Sandridge & Rice, PLLC, Charlotte, North Carolina, as counsel
to SNC. As of the date of this Joint Proxy Statement/Prospectus, certain
members of Womble Carlyle Sandridge & Rice, PLLC owned an aggregate of
approximately 22,000 shares of SNC Common Stock.
EXPERTS
The consolidated financial statements and schedules of SNC included in SNC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and
incorporated by reference in this Joint Proxy Statement/Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto, and are incorporated by reference
herein in reliance upon the authority of said firm as experts in giving said
reports.
The consolidated financial statements of UCB as of December 31, 1996 and
1995, and for each of the years in the three-year period ended December 31,
1996, have been incorporated by reference herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick LLP refers
to the fact that on January 1, 1994, UCB adopted the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits."
110
<PAGE>
APPENDIX I
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
UNITED CAROLINA BANCSHARES CORPORATION
AND
SOUTHERN NATIONAL CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I
DEFINITIONS...................................................................... I-1
ARTICLE II
THE MERGER....................................................................... I-4
2.1 Merger................................................................. I-4
2.2 Filing; Plan of Merger................................................. I-5
2.3 Effective Time......................................................... I-5
2.4 Closing................................................................ I-5
2.5 Effect of Merger....................................................... I-5
2.6 Further Assurances..................................................... I-5
2.7 Merger Consideration................................................... I-6
2.8 Conversion of Shares; Payment of Merger Consideration.................. I-6
2.9 Dissenting Shares...................................................... I-7
2.10 Conversion of Stock Options............................................ I-7
2.11 Merger of Subsidiary................................................... I-8
2.12 Anti-Dilution.......................................................... I-8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UCB............................................ I-8
3.1 Capital Structure...................................................... I-8
3.2 Organization, Standing and Authority................................... I-9
3.3 Ownership of Subsidiaries.............................................. I-9
3.4 Organization, Standing and Authority of the Subsidiaries............... I-9
3.5 Authorized and Effective Agreement..................................... I-9
3.6 Securities Filings..................................................... I-10
3.7 Financial Statements; Minute Books..................................... I-10
3.8 Material Adverse Change................................................ I-10
3.9 Absence of Undisclosed Liabilities..................................... I-10
3.10 Properties............................................................. I-10
3.11 Environmental Matters.................................................. I-11
3.12 Allowance for Loan Losses.............................................. I-11
3.13 Tax Matters............................................................ I-11
3.14 Employees; Compensation; Benefit Plans................................. I-12
3.15 Certain Contracts...................................................... I-14
3.16 Legal Proceedings; Regulatory Approvals................................ I-14
3.17 Compliance with Laws................................................... I-15
3.18 Brokers and Finders.................................................... I-15
3.19 Loans.................................................................. I-15
3.20 Repurchase Agreements.................................................. I-15
3.21 Deposit Accounts....................................................... I-15
3.22 Related Party Transactions............................................. I-16
3.23 Certain Information.................................................... I-16
3.24 Accounting, Tax and Regulatory Matters................................. I-16
3.25 State Takeover Laws.................................................... I-16
3.26 Derivatives Contracts.................................................. I-16
3.27 Fairness Opinion....................................................... I-16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SNC.........................................I-16
4.1 Capital Structure of SNC............................................... I-16
4.2 Organization, Standing and Authority of SNC............................ I-17
4.3 Authorized and Effective Agreement..................................... I-17
4.4 Organization, Standing and Authority of SNC Subsidiaries............... I-17
4.5 Securities Documents................................................... I-17
4.6 Financial Statements................................................... I-18
4.7 Material Adverse Change................................................ I-18
4.8 Legal Proceedings; Regulatory Approvals................................ I-18
4.9 Absence of Undisclosed Liabilities..................................... I-18
4.10 Allowance for Loan Losses.............................................. I-18
4.11 Tax Matters............................................................ I-18
4.12 Compliance with Laws................................................... I-19
4.13 Certain Information.................................................... I-19
4.14 Accounting, Tax and Regulatory Matters................................. I-19
4.15 Share Ownership........................................................ I-19
ARTICLE V
COVENANTS.....................................................................I-20
5.1 Shareholders' Meetings................................................. I-20
5.2 Registration Statement; Joint Proxy Statement/Prospectus............... I-20
5.3 Plan of Merger; Reservation of Shares.................................. I-20
5.4 Additional Acts........................................................ I-21
5.5 Best Efforts........................................................... I-21
5.6 Certain Accounting Matters............................................. I-21
5.7 Access to Information.................................................. I-21
5.8 Press Releases......................................................... I-21
5.9 Forbearances of UCB.................................................... I-21
5.10 Employment Agreements.................................................. I-23
5.11 Affiliates............................................................. I-23
5.12 Employee Benefit Plans................................................. I-23
5.13 Directors and Officers Protection...................................... I-24
5.14 Forbearances of SNC.................................................... I-25
5.15 Assumption of Agreement by Acquiror.................................... I-25
5.16 Reports................................................................ I-25
5.17 Exchange Listing....................................................... I-26
ARTICLE VI
CONDITIONS PRECEDENT..........................................................I-26
6.1 Conditions Precedent--SNC and UCB...................................... I-26
6.2 Conditions Precedent--UCB.............................................. I-27
6.3 Conditions Precedent--SNC.............................................. I-27
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT.............................................I-28
7.1 Termination............................................................ I-28
7.2 Effect of Termination.................................................. I-30
7.3 Survival of Representations, Warranties and Covenants.................. I-30
7.4 Waiver................................................................. I-31
7.5 Amendment or Supplement................................................ I-31
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE VIII
MISCELLANEOUS................................................................I-31
8.1 Expenses............................................................... I-31
8.2 Entire Agreement....................................................... I-31
8.3 No Assignment.......................................................... I-31
8.4 Notices................................................................ I-31
8.5 Captions............................................................... I-32
8.6 Counterparts........................................................... I-32
8.7 Governing Law.......................................................... I-33
8.8 Predecessor Agreement.................................................. I-33
</TABLE>
<PAGE>
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization
Agreement" or "Agreement"), dated as of November 1, 1996, between UNITED
CAROLINA BANCSHARES CORPORATION ("UCB"), a North Carolina corporation having
its principal office at Whiteville, North Carolina, and SOUTHERN NATIONAL
CORPORATION ("SNC"), a North Carolina corporation having its principal office
at Winston-Salem, North Carolina;
RECITALS:
The parties desire that UCB shall be merged with and into SNC (said
transaction being hereinafter referred to as the "Merger") pursuant to a plan
of merger (the "Plan of Merger") substantially in the form set forth in
Articles of Merger attached as Annex A hereto ("Articles of Merger"), and the
parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Bank Holding Company Act" shall mean the Bank Holding Company Act of 1956,
as amended.
"Business Day" shall mean all days other than Saturdays, Sundays and Federal
Reserve holidays.
"Closing Date" shall mean the date specified pursuant to Section 2.4 as the
date on which the parties hereto shall close the transactions contemplated
herein.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in a Securities Document filed with the
Commission or in the UCB Disclosure Letter.
"Effective Time" shall mean the time specified in Section 2.3 as the
Effective Time of the Merger.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based upon, or resulting from
the presence, or release into the environment, of any Materials of
Environmental Concern.
<PAGE>
"Environmental Laws" means all applicable federal, state and local laws and
regulations, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, that relate to pollution or protection
of human health or the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Statements" shall mean (a) with respect to SNC, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
SNC as of December 31, 1995, 1994, and 1993, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
1995, 1994, and 1993, as filed by SNC in Securities Documents and (ii) the
consolidated balance sheets of SNC (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity
and cash flows (including related notes and schedules, if any) included in
Securities Documents filed by SNC with respect to periods ended subsequent to
December 31, 1995, and (b) with respect to UCB, (i) the consolidated balance
sheets (including related notes and schedules, if any) of UCB as of December
31, 1995, 1994, and 1993, and the related consolidated statements of income,
changes in shareholders' equity and cash flows (including related notes and
schedules, if any) for each of the three years ended December 31, 1995, 1994,
and 1993 as filed by UCB in Securities Documents and (ii) the consolidated
balance sheets of UCB (including related notes and schedules, if any) and the
related consolidated statements of income, changes in shareholders' equity and
cash flows (including related notes and schedules, if any) included in
Securities Documents filed by UCB with respect to periods ended subsequent to
December 31, 1995.
"Joint Proxy Statement/Prospectus" shall mean the joint proxy statement and
prospectus, together with any supplements thereto, sent to shareholders of UCB
and the shareholders of SNC to solicit their votes in connection with this
Agreement and the Plan of Merger.
"Material Adverse Effect" on SNC or UCB shall mean an event, change, or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse effect on (i) the financial condition,
results of operations, business or business prospects of SNC and the SNC
Subsidiaries, taken as a whole, or UCB and the Subsidiaries, taken as a whole,
or (ii) the ability of SNC or UCB to perform its obligations under this
Agreement or to consummate the Merger and the other transactions contemplated
by this Agreement, provided that "Material Adverse Effect" shall not be deemed
to include the impact of (a) actions and omissions of a party (or any of its
affiliates) taken with the prior informed consent of the other party in
contemplation of the transactions contemplated hereby, and (b) the direct
effects of compliance with this Agreement on the operating performance of the
parties, including expenses incurred by the parties in consummating the
transactions contemplated by this Agreement.
"Materials of Environmental Concern" means pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other materials
regulated under Environmental Laws.
"NCBCA" shall mean the North Carolina Business Corporation Act as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Registration Statement" shall mean the registration statement of SNC with
respect to the SNC Common Stock to be issued in the Merger as declared
effective by the Commission under the Securities Act.
I-2
<PAGE>
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests, and stock
appreciation rights, performance units and similar stock-based rights whether
or not they obligate the issuer thereof to issue stock or other securities or
to pay cash.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939 as amended; and the rules
and regulations of the Commission promulgated thereunder.
"SNC Common Stock" shall mean the shares of common stock, par value $5.00
per share, of SNC.
"SNC Option Agreement" shall mean the Option Agreement dated as of even date
herewith under which SNC has an option to purchase shares of UCB, which shall
be executed immediately following execution of this Reorganization Agreement.
"SNC Subsidiaries" shall mean the Subsidiaries of SNC, which shall include
any corporation, bank, savings association, or other organization acquired as
a Subsidiary of SNC in the future and held as a Subsidiary by SNC at the
Effective Time.
"Stock Option Plan" shall mean, collectively or singularly, UCB's 1986 Key
Employee Stock Option Plan; 1995 Stock Option and Incentive Award; Stock
Option Policy for Nonemployee Directors of Triad Bank; Triad Bank Employees'
Stock Option Plan (Non-qualified); Seaboard Savings Bank, Inc., SSB 1993
Nonstatutory Stock Option Plan for Directors; Seaboard Savings Bank, Inc., SSB
1993 Incentive Stock Option Plan; and Bank of Iredell 1987 Employee
Nonqualified Stock Option Program.
"Stock Option" shall mean, collectively, any option, granted under the Stock
Option Plan and unexercised on the date hereof, to acquire shares of UCB
Common Stock, aggregating 357,577 shares.
"Subsidiaries" shall mean all those corporations, associations, or other
business entities of which the entity in question either owns or controls 50%
or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent (provided,
there shall not be included any such entity the equity securities of which are
owned or controlled in a fiduciary capacity).
"TILA" shall mean the Truth in Lending Act, as amended.
"UCB Common Stock" shall mean the shares of common stock, par value $4.00
per share, of UCB.
"UCB Disclosure Letter" shall mean the written information entitled "UCB
Disclosure Letter" dated the date of this Agreement and delivered not later
than ten days after the execution of this Agreement by UCB to SNC, and
describing in reasonable detail the matters contained therein. Each disclosure
made therein shall be in existence on the date of this Agreement and shall
specifically reference each Section of this Agreement under which such
disclosure is made. Information disclosed with respect to one Section shall
not be deemed to be disclosed for purposes of any other Section not
specifically referenced.
"UCB Option Agreement" shall mean the Option Agreement dated as of even date
herewith under which UCB has an option to purchase shares of SNC, which shall
be executed immediately following execution of this Reorganization Agreement.
I-3
<PAGE>
"UCB Subsidiaries" shall mean the Subsidiaries of UCB, which shall include
any corporation, bank, savings association, or other organization acquired as
a Subsidiary of UCB in the future and held as a Subsidiary by UCB at the
Effective Time.
1.2 Terms Defined Elsewhere
The capitalized terms set forth below are defined in the following sections:
<TABLE>
<S> <C>
Agreement Introduction
Articles of Merger Recitals
Average Closing Price Section 7.1(i)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7
Constituent Corporations Section 2.1
Determination Date Section 7.1(i)
Dissenting Shareholder Section 2.9
Dissenting Shares Section 2.9
Employee Section 5.12
Exchange Ratio Section 2.7
Index Group Section 7.1(i)
Maximum Amount Section 5.13(b)
Merger Recitals
Merger Consideration Section 2.7
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Reorganization Agreement Introduction
SNC Introduction
SNC Option Plan Section 2.10(c)
SNC Ratio Section 7.1(A)(2)
Surviving Corporation Section 2.1(a)
UCB Introduction
UCB-SC Section 3.4
</TABLE>
ARTICLE II
The Merger
2.1 Merger
SNC and UCB are constituent corporations (the "Constituent Corporations") to
the Merger as contemplated by the NCBCA. At the Effective Time:
(a) UCB shall be merged with and into SNC in accordance with the applicable
provisions of the NCBCA, with SNC being the surviving corporate entity
(hereinafter sometimes referred to as the "Surviving Corporation").
(b) The separate existence of UCB shall cease and the Merger shall in all
respects have the effect provided for in Section 2.5.
(c) The Articles of Incorporation of SNC at the Effective Time shall become
the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of SNC at the Effective Time shall become the Bylaws of the
Surviving Corporation.
I-4
<PAGE>
2.2 Filing; Plan of Merger
The Merger shall not become effective unless this Agreement and the Plan of
Merger are duly approved by a vote of a majority of the outstanding shares of
each of UCB (subject in the case of UCB to the provisions of Article X of its
Articles of Incorporation) and SNC entitled to be voted. Upon fulfillment or
waiver of the conditions specified in Article VI and provided that this
Agreement has not been terminated pursuant to Article VII, the Constituent
Corporations will cause the Articles of Merger to be executed and filed with
the Office of the Secretary of State of North Carolina. The Plan of Merger is
incorporated herein by reference, and adoption of this Agreement by the Boards
of Directors of the Constituent Corporations and approval by the shareholders
of the Constituent Corporations shall constitute adoption and approval of the
Plan of Merger.
2.3 Effective Time
The Merger shall be effective at the day and hour specified in the Articles
of Merger filed with the Secretary of State of North Carolina (herein
sometimes referred to as the "Effective Time").
2.4 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the executive offices of SNC, BB&T Financial
Center, 200 West Second Street, Winston-Salem, North Carolina, at 11:00 a.m.
on the Business Day designated by SNC which is within thirty days following
the satisfaction of the conditions to Closing set forth in Article VI, or such
later date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
From and after the Effective Time, the separate existence of UCB shall
cease, and the Surviving Corporation shall thereupon and thereafter, to the
extent consistent with its Articles of Incorporation, possess all the rights,
privileges, immunities, and franchises, of a public as well as of a private
nature, of each of the Constituent 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 Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate or any interest therein vested in
either of the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger. The Surviving Corporation shall thenceforth
be responsible and liable for all the liabilities, obligations and penalties
of each of the Constituent Corporations; and any claim existing or action or
proceeding, civil or criminal, pending by or against either of the Constituent
Corporations may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place; and any judgment
rendered against either of the Constituent Corporations may be enforced
against the Surviving Corporation. Neither the rights of creditors nor any
liens upon the property of either of the Constituent Corporations shall be
impaired by reason of the Merger.
2.6 Further Assurances
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in
law or any other actions are necessary, desirable or proper to vest, perfect
or confirm of record or otherwise, in the Surviving Corporation, the title to
any property or rights of the Constituent Corporations acquired or to be
acquired by reason of, or as a result of, the Merger, the Constituent
Corporations agree that such Constituent Corporations and their proper
officers and directors shall and will execute and deliver all such proper
deeds, assignments and assurances in law and do all things necessary,
desirable or proper to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise to carry out the purpose of
this Agreement, and that the proper officers and directors of the Surviving
Corporation are fully authorized and directed in the name of the Constituent
Corporations or otherwise to take any and all such actions.
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2.7 Merger Consideration
As used herein, the term "Merger Consideration" shall mean the whole shares
of SNC Common Stock to be exchanged for each share of UCB Common Stock issued
and outstanding as of the Effective Time, and cash (without interest) to be
payable in exchange for any fractional share of SNC Common Stock which would
otherwise be exchanged for a share of UCB Common Stock. The number of shares
of SNC Common Stock to be issued in exchange for each issued and outstanding
share of UCB Common Stock shall be in the ratio of 1.135 shares of SNC Common
Stock for each share of UCB Common Stock issued and outstanding (subject to
possible adjustment pursuant to Section 7.1(h), the "Exchange Ratio"). The
value of any fractional share shall be determined by multiplying the
fractional part of such share of SNC Common Stock by the market value of one
share of SNC Common Stock at the Effective Time, which shall be the closing
price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by SNC) on the first trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights,
or any other rights as a shareholder in respect of any fractional shares.
2.8 Conversion of Shares; Payment of Merger Consideration
(a) At the Effective Time, by virtue of the Merger and without any action on
the part of UCB or the holders of record of UCB Common Stock, each share of
UCB Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into and shall represent the right to receive, upon
surrender of the certificate representing such share of UCB Common Stock (as
provided in paragraph (d) below), the Merger Consideration.
(b) Each share of the common stock of SNC issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of UCB Common Stock shall be
deemed upon the Effective Time for all purposes to represent only the right to
receive the Merger Consideration as described in this Section 2.8. No interest
will be paid or accrued on the Merger Consideration upon the surrender of the
certificate or certificates representing shares of UCB Common Stock. With
respect to any certificate for UCB Common Stock that has been lost or
destroyed, the Surviving Corporation shall pay the Merger Consideration
attributable to such certificate upon receipt of a surety bond or other
adequate indemnity and evidence reasonably satisfactory to it of ownership of
the shares represented thereby. After the Effective Time, no transfer of the
shares of UCB Common Stock outstanding immediately prior to the Effective Time
shall be made on the stock transfer books of the Surviving Corporation.
(d) Promptly after the Effective Time, SNC shall cause to be delivered or
mailed to each UCB shareholder a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of UCB Common
Stock in exchange for the Merger Consideration. Upon surrender of such
certificates, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereto, and such other
documents as may be reasonably requested, SNC shall promptly cause the
transfer to the persons entitled thereto of the Merger Consideration.
(e) The Surviving Corporation shall pay any dividends or other distributions
with a record date prior to the Effective Time which have been declared or
made by UCB in respect of shares of UCB Common Stock in accordance with the
terms of this Agreement and which remain unpaid at the Effective Time. To the
extent permitted by law, former shareholders of record of UCB shall be
entitled to vote after the Effective Time at any meeting of SNC shareholders
the number of whole shares of SNC Common Stock into which their respective
shares of UCB Common Stock are converted, regardless of whether such holders
have exchanged their certificates representing UCB Common Stock for
certificates representing SNC Common Stock in accordance with the provisions
of this Agreement. Whenever a dividend or other distribution is declared by
SNC on the SNC Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares of SNC Common Stock issuable pursuant to this Agreement, but
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after the Effective Time no dividend or other distribution payable to the
holders of record of SNC Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate until such
holder surrenders such certificate for exchange as provided in this Section
2.8. Upon surrender of such certificate, both the SNC Common Stock certificate
and any undelivered dividends and cash payments payable hereunder (without
interest) shall be delivered and paid with respect to each share represented
by such certificate.
2.9 Dissenting Shares
Any UCB shareholder who shall have dissented from the Merger in accordance
with the NCBCA and who has properly exercised such shareholder's rights to
demand payment of the value of the Shareholder's shares (the "Dissenting
Shares") as provided in the NCBCA (the "Dissenting Shareholder") shall
thereafter have only such rights, if any, as are provided a Dissenting
Shareholder in accordance with the NCBCA and shall have no rights under
Sections 2.7 and 2.8; provided, however, that if a Dissenting Shareholder
shall withdraw (in accordance with the NCBCA) the demand for such appraisal or
shall become ineligible for such appraisal, then such Dissenting Shareholder's
Dissenting Shares automatically shall cease to be Dissenting Shares and shall
be converted into and represent only the right to receive from the Surviving
Corporation the Merger Consideration provided for in Section 2.7 upon
surrender of the certificate representing the Dissenting Shares.
2.10 Conversion of Stock Options
(a) At the Effective Time, each Stock Option then outstanding, whether or
not then exercisable, shall be converted into and become rights with respect
to SNC Common Stock, and SNC shall assume each Stock Option, in accordance
with the terms of the Stock Option Plan and stock option agreement, or other
agreement, by which it is evidenced, except that from and after the Effective
Time (i) SNC and its Compensation Committee shall be substituted for UCB and
the Committee of UCB's Board of Directors administering the Stock Option Plan,
(ii) each Stock Option assumed by SNC may be exercised solely for shares of
SNC Common Stock, (iii) the number of shares of SNC Common Stock subject to
such Stock Option shall be the number of whole shares of SNC (omitting any
fractional share) determined by multiplying the number of shares of UCB Common
Stock subject to such Stock Option immediately prior to the Effective Time by
the Exchange Ratio, and (iv) the per share exercise price under each such
Stock Option shall be adjusted by dividing the per share exercise price under
each such Stock Option by the Exchange Ratio and rounding up to the nearest
cent. In addition, notwithstanding the provisions of clauses (iii) and (iv) of
the first sentence of this Section 2.10(a), each Stock Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Code, and the Regulations promulgated thereunder, so as to continue as an
incentive stock option under Section 424(a) of the Code, and so as not to
constitute a modification, extension, or renewal of the option, within the
meaning of Section 424(h) of the Code. SNC and UCB agree to take all necessary
steps to effectuate the foregoing provisions of this Section 2.10.
(b) As soon as practicable after the Effective Time, SNC shall deliver to
the participants in the Stock Option Plan an appropriate notice setting forth
such participant's rights pursuant thereto, and the grants pursuant to such
Stock Option Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 2.10(a) after giving effect to
the Merger). SNC shall comply with the terms of the Stock Option Plan to
ensure, to the extent required by and subject to the provisions of such Stock
Option Plan, that Stock Options which qualified as incentive stock options
prior to the Effective Time continue to qualify as incentive stock options
after the Effective Time. At or prior to the Effective Time, SNC shall take
all corporate action necessary to reserve for issuance sufficient shares of
SNC Common Stock for delivery upon exercise of Stock Options assumed by it in
accordance with this Section 2.10. As soon as practicable after the Effective
Time, SNC shall file a registration statement on Form S-3 or Form S-8, as the
case may be (or any successor or other appropriate forms), with respect to the
shares of SNC Common Stock subject to Stock Options and shall use its
reasonable efforts to maintain the effectiveness of such registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. With
respect to those individuals who subsequent to the Merger will be subject to
the reporting requirements under Section 16(a) of the Exchange Act, where
applicable, SNC shall administer the Stock Option Plan assumed pursuant to
this
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Section 2.10 in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act to the extent necessary to preserve for such individuals the
benefits of Rule 16b-3 to the extent such benefits were available to them
prior to the Effective Time. UCB hereby represents that the Stock Option Plan
in its current form complies with Rule 16b-3 to the extent, if any, required
as of November 1, 1996.
(c) Notwithstanding the foregoing provisions of this Section 2.10, SNC may
at its election substitute as of the Effective Time options under the Southern
National Corporation 1995 Omnibus Stock Incentive Plan (the "SNC Option Plan")
for all or a part of the Stock Options, subject to the following conditions:
(i) the requirements of Section 2.10(a)(iii) and (iv) shall be met; (ii) such
substitution shall not constitute a modification, extension or renewal of any
of the Stock Options which are incentive stock options; (iii) the substituted
options shall continue in effect on the same terms and conditions as the Stock
Option Plan or other document granting the Stock Option; and (iv) each grant
of a substitute option shall have been specifically approved in advance by the
full Board of Directors of SNC or by a committee consisting solely of "non-
employee" directors as defined in Rule 16b-3. As soon as practicable following
the Effective Time, SNC shall deliver to the participants receiving substitute
options under the SNC Option Plan an appropriate notice setting forth such
participant's rights pursuant thereto. SNC has reserved under the SNC Option
Plan adequate shares of SNC Common Stock for delivery upon exercise of any
such substituted options. SNC hereby represents that the SNC Option Plan in
its current form complies with Rule 16b-3 to the extent, if any, required as
of November 1, 1996.
2.11 Merger of Subsidiary
In the event that SNC shall request, UCB shall cooperate in taking such
actions, and shall cooperate in causing the UCB Subsidiaries to take such
actions, as may be required in order to effect, at the Effective Time, the
merger of one or more of the UCB Subsidiaries with and into, in each case, one
of the SNC Subsidiaries.
2.12 Anti-Dilution
In the event SNC changes the number of shares of SNC Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend or other similar recapitalization, and the record date thereof (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
Representations and Warranties of UCB
Except as otherwise Disclosed, UCB represents and warrants to SNC as
follows:
3.1 Capital Structure
The authorized capital stock of UCB consists of 40,000,000 shares of UCB
Common Stock, and 2,000,000 shares of preferred stock, par value $10.00 per
share. As of the date hereof, 24,265,175 shares of UCB Common Stock are issued
and outstanding, and no other shares of capital stock of UCB, common or
preferred, are issued and outstanding. All outstanding shares of UCB Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. No other classes of capital stock of UCB are authorized. No
shares of capital stock have been reserved for any purpose, except for (i)
357,577 shares of UCB Common Stock in connection with the Stock Option Plan,
(ii) 4,828,960 shares of UCB Common Stock in connection with the SNC Option
Agreement, (iii) 2,500,000 shares of UCB Common Stock in connection with its
401(k) plan; and (iv) 900,000 shares of UCB Common Stock in connection with
its Long-Term Incentive Plan. Except as set forth herein, there are no Rights
authorized, issued or outstanding with respect to the capital stock of UCB.
Holders of UCB Common Stock do not have preemptive rights.
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3.2 Organization, Standing and Authority
UCB is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets. UCB is not required to be qualified to do business in any
other state of the United States or foreign jurisdiction. UCB is registered as
a bank holding company under the Bank Holding Company Act.
3.3 Ownership of Subsidiaries
Except as Disclosed in the UCB Disclosure Letter, UCB does not own, directly
or indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, partnership, joint venture, or other
organization which would constitute a Subsidiary, except for the UCB
Subsidiaries. The outstanding shares of capital stock of the UCB Subsidiaries
are validly issued and outstanding, fully paid and nonassessable, and all such
shares are directly or indirectly owned by UCB free and clear of all liens,
claims and encumbrances or preemptive rights of any person. No Rights are
authorized, issued or outstanding with respect to the capital stock of the UCB
Subsidiaries, and there are no agreements, understandings or commitments
relating to the right of UCB to vote or to dispose of said shares. None of the
shares of capital stock of the UCB Subsidiaries has been issued in violation
of the preemptive rights of any person.
3.4 Organization, Standing and Authority of the Subsidiaries
Each UCB Subsidiary which is an insured depository institution is a state-
chartered, non-member commercial bank. Each of the UCB Subsidiaries is validly
existing and in good standing under the laws of its state of organization.
Each of the UCB Subsidiaries has full power and authority to carry on its
business as now conducted, and is duly qualified to do business in its state
of organization. No UCB Subsidiary is required to be qualified to do business
in any other state of the United States or foreign jurisdiction other than
such UCB Subsidiary's state of organization, or is engaged in any activities
that have not been Disclosed.
3.5 Authorized and Effective Agreement
(a) UCB has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary governmental approvals and the receipt of
approval of the UCB shareholders of this Agreement and the Plan of Merger) to
perform all of its obligations under this Reorganization Agreement, the
Articles of Merger, the UCB Option Agreement and the SNC Option Agreement. The
execution and delivery of this Reorganization Agreement, the Articles of
Merger and said Option Agreements, and consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action in respect thereof, except in the case of this
Agreement and the Plan of Merger, the approval of UCB shareholders pursuant to
and to the extent required by applicable law. This Agreement and the Plan of
Merger constitute legal, valid and binding obligations of UCB, and each is
enforceable against UCB in accordance with its terms, in each such case
subject to (i) bankruptcy, fraudulent transfer, insolvency, moratorium,
reorganization, conservatorship, receivership, or other similar laws from time
to time in effect relating to or affecting the enforcement of rights of
creditors of FDIC insured institutions or the enforcement of creditors' rights
generally; and (ii) general principles of equity, and except that the
availability of equitable remedies or injunctive relief is within the
discretion of the appropriate court.
(b) Neither the execution and delivery of this Agreement, the Articles of
Merger, the UCB Option Agreement or the SNC Option Agreement, nor consummation
of the transactions contemplated hereby or thereby, nor compliance by UCB with
any of the provisions hereof or thereof, shall (i) conflict with or result in
a breach of any provision of the articles of incorporation or by-laws of UCB
or any UCB Subsidiary, (ii) subject to receipt of any required consents or
approvals, constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of UCB
or any UCB Subsidiary pursuant to, any note, bond, mortgage, indenture,
license, agreement or other instrument
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or obligation, or (iii) subject to receipt of all required governmental
approvals, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to UCB or any UCB Subsidiary.
3.6 Securities Filings
UCB has timely filed all Securities Documents required by the Securities
Laws since December 31, 1993. UCB shall Disclose to SNC a true and complete
copy of each Securities Document filed by UCB with the Commission after
December 31, 1993 and prior to the date hereof, which are all of the
Securities Documents that UCB was required to file during such period. As of
their respective dates of filing, such Securities Documents complied in all
material respects with the Securities Laws as then in effect, and did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.7 Financial Statements; Minute Books
The Financial Statements of UCB fairly present or will fairly present, as
the case may be, the consolidated financial position of UCB and the UCB
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and statements of cash flows for
the periods then ended (subject, in the case of unaudited interim statements,
to normal year-end audit adjustments that are not material in amount or
effect) in conformity with generally accepted accounting principles applicable
to financial institutions applied on a consistent basis. The minute books of
UCB and each of the UCB Subsidiaries contain or will contain at Closing
legally sufficient records of all meetings and other corporate actions of its
shareholders and Board of Directors (including committees of its Board of
Directors).
3.8 Material Adverse Change
Since December 31, 1995, UCB and the UCB Subsidiaries have not incurred any
material liability except as disclosed in the most recent UCB Financial
Statements, or entered into any transactions with affiliates, other than in
the ordinary course of business consistent with past practices, nor has there
been any change, or any event involving a prospective change, in the business,
financial condition or results of operations of UCB and the UCB Subsidiaries
which has had, or is reasonably likely to have, a Material Adverse Effect on
UCB.
3.9 Absence of Undisclosed Liabilities
Neither UCB nor any UCB Subsidiary has any liability (contingent or
otherwise) that is material to UCB on a consolidated basis or that, when
combined with all other similar liabilities, would be material to UCB on a
consolidated basis, except as disclosed in the most recent Financial
Statements of UCB and except for liabilities made in the ordinary course of
its business since the date of UCB's most recent Financial Statements.
3.10 Properties
(a) UCB and the UCB Subsidiaries have good and marketable title, free and
clear of all liens, encumbrances, charges, defaults or equitable interests, to
all of the properties and assets, real and personal, reflected on the
consolidated balance sheet included in the Financial Statements of UCB as of
December 31, 1995 or acquired after such date, except (i) liens for current
taxes not yet due and payable, (ii) pledges to secure deposits and other liens
incurred in the ordinary course of banking business, (iii) such imperfections
of title, easements and encumbrances, if any, as are not material in
character, amount or extent, or (iv) dispositions and encumbrances for
adequate consideration in the ordinary course of business.
(b) All leases and licenses pursuant to which UCB or any UCB Subsidiary, as
lessee or licensee, leases or licenses rights to real or personal property,
are valid and enforceable in accordance with their respective terms.
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3.11 Environmental Matters
Except as Disclosed:
(a) UCB and the UCB Subsidiaries are in compliance with all Environmental
Laws. Neither UCB nor any UCB Subsidiary has received any communication
alleging that UCB or the UCB Subsidiary is not in such compliance, and there
are no present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) UCB has not received notice of any pending, and there are no pending or,
to the best of UCB's knowledge, threatened, legal, administrative, arbitral or
other proceedings, asserting Environmental Claims or other claims, causes of
action or governmental investigations of any nature, seeking to impose, or
that could result in the imposition of, any liability arising under any
Environmental Laws upon (i) UCB or any UCB Subsidiary, (ii) any person or
entity whose liability for any Environmental Claim UCB or any UCB Subsidiary
has or may have retained or assumed, either contractually or by operation of
law, (iii) any real or personal property owned or leased by UCB or any UCB
Subsidiary, or any real or personal property which UCB or any UCB Subsidiary
has or is judged to have managed or supervised or participated in the
management of, or (iv) any real or personal property in which UCB or any UCB
Subsidiary holds a security interest securing a loan recorded on the books of
UCB or any UCB Subsidiary. Neither UCB nor any UCB Subsidiary is subject to
any agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
(c) UCB and the UCB Subsidiaries are in compliance in all material respects
with all recommendations contained in any environmental audits, analyses and
surveys relating to all real and personal property owned or leased by UCB or
any UCB Subsidiary and all real and personal property which UCB or any UCB
Subsidiary has or is judged to have managed or supervised or participated in
the management of.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim or other claim or action or governmental investigation
that could result in the imposition of any liability arising under any
Environmental Laws against UCB or any UCB Subsidiary or against any person or
entity whose liability for any Environmental Claim UCB or any UCB Subsidiary
has or may have retained or assumed, either contractually or by operation of
law.
3.12 Allowance for Loan Losses
The allowance for loan losses reflected on the consolidated balance sheets
included in the Financial Statements of UCB is or will be in the opinion of
UCB's management adequate in all material respects as of their respective
dates, under the requirements of generally accepted accounting principles and
applicable regulatory requirements and guidelines as they apply to banks and
bank holding companies, to provide for reasonably anticipated losses on
outstanding loans net of recoveries.
3.13 Tax Matters
(a) UCB and the UCB Subsidiaries, and each of their predecessors, have
timely filed (or requests for extensions have been timely filed and any such
extensions have been granted and have not expired) all federal, state and
local (and, if applicable, foreign) tax returns required by applicable law to
be filed by them (including, without limitation, estimated tax returns, income
tax returns, information returns, and withholding and employment tax returns)
and have paid, or where payment is not required to have been made, have set up
an adequate reserve or accrual for the payment of, all taxes required to be
paid in respect of the periods covered by such returns and, as of the
Effective Time, will have paid, or where payment is not required to have been
made, will have set up an adequate reserve or accrual for the payment of, all
taxes for any subsequent periods ending on or prior to the Effective Time.
Neither UCB nor any UCB Subsidiary will have any material liability for any
such taxes in excess of the amounts so paid or reserves or accruals so
established.
(b) Except as Disclosed, all federal, state and local (and, if applicable,
foreign) tax returns filed by UCB and the UCB Subsidiaries are complete and
accurate in all material respects. Neither UCB nor any UCB
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Subsidiary is delinquent in the payment of any tax, assessment or governmental
charge. No deficiencies for any tax, assessment or governmental charge have
been proposed, asserted or assessed (tentatively or otherwise) against UCB or
any UCB Subsidiary which have not been settled and paid. There are currently
no agreements in effect with respect to UCB or any UCB Subsidiary to extend
the period of limitations for the assessment or collection of any tax. No
audit examination or deficiency or refund litigation with respect to such
returns is pending.
3.14 Employees; Compensation; Benefit Plans.
(a) Compensation. UCB shall have Disclosed a complete and correct list of
the name, age, position, rate of compensation and any incentive compensation
arrangements, bonuses or commissions or fringe or other benefits, whether
payable in cash or in kind, of each director, shareholder, independent
contractor, consultant and agent of UCB and of each UCB Subsidiary and each
other person (other than an employee as such) to whom UCB or any UCB
Subsidiary pays or provides, or has an obligation, agreement (written or
unwritten), policy or practice of paying or providing, retirement, health,
welfare or other benefits of any kind or description whatsoever.
(b) Employee Benefit Plans.
(i) UCB shall have Disclosed an accurate and complete list of all Plans,
as defined below, contributed to, maintained or sponsored by UCB or any UCB
Subsidiary, to which UCB or any UCB Subsidiary is obligated to contribute
or has any liability or potential liability, whether direct or indirect,
including all Plans contributed to, maintained or sponsored by each member
of the controlled group of corporations, within the meaning of Sections
414(b), 414(c), 414(m) and 414(o) of the Code, of which UCB or any UCB
Subsidiary is a member. For purposes of this Agreement, the term "Plan"
shall mean a plan, arrangement, agreement or program described in the
foregoing provisions of this Section 3.14(b)(i) and which is: (A) a profit-
sharing, deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or incentive
plan, agreement or arrangement, whether or not funded and whether or not
terminated, (B) an employment agreement, (C) a personnel policy or fringe
benefit plan, policy, program or arrangement providing for benefits or
perquisites to current or former employees, officers, directors or agents,
whether or not funded, and whether or not terminated, including without
limitation benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical, sick leave, severance, medical, dental,
hospitalization, life insurance and other types of insurance, or (D) any
other employee benefit plan as defined in Section 3(3) of ERISA, whether or
not funded and whether or not terminated.
(ii) Except as Disclosed, neither UCB nor any UCB Subsidiary contributes
to, has an obligation to contribute to or otherwise has any liability or
potential liability with respect to (A) any multiemployer plan as defined
in Section 3(37) of ERISA, (B) any plan of the type described in Sections
4063 and 4064 of ERISA or in section 413 of the Code (and regulations
promulgated thereunder), or (C) any plan which provides health, life
insurance, accident or other "welfare-type" benefits to current or future
retirees or former employees or directors, their spouses or dependents,
other than in accordance with Section 4980B of the Code or applicable state
continuation coverage law.
(iii) Except as Disclosed, none of the Plans obligates UCB or any UCB
Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control," as such term is
used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan has been maintained, funded and administered in compliance
in all respects with its own terms and in compliance in all respects with
all applicable laws and regulations, including but not limited to ERISA and
the Code. No actions, suits, claims, complaints, charges, proceedings,
hearings, examinations, investigations, audits or demands with respect to
the Plans (other than routine claims for benefits) are pending or
threatened, and there are no facts which could give rise to or be expected
to give rise to any actions, suits, claims, complaints, charges,
proceedings, hearings, examinations, investigations, audits or demands. No
Plan that is subject to the funding requirements of Section 412 of the Code
or Section
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302 of ERISA has incurred any "accumulated funding deficiency" as such term
is defined in such Sections of ERISA and the Code, whether or not waived,
and each Plan has always fully met the funding standards required under
Title I of ERISA and Section 412 of the Code. No liability to the Pension
Benefit Guaranty Corporation ("PBGC") (except for routine payment of
premiums) has been or is expected to be incurred with respect to any Plan
that is subject to Title IV of ERISA, no reportable event (as such term is
defined in Section 4043 of ERISA) has occurred with respect to any such
Plan, and the PBGC has not commenced or threatened the termination of any
Plan. None of the assets of UCB or any UCB Subsidiary is the subject of any
lien arising under Section 302(f) of ERISA or Section 412(n) of the Code,
neither UCB nor any UCB Subsidiary has been required to post any security
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code, and
there are no facts which could be expected to give rise to such lien or
such posting of security. No event has occurred and no condition exists
that would subject UCB or any UCB Subsidiary to any tax under Sections
4971, 4972, 4977 or 4979 of the Code or to a fine or penalty under Section
502(c) of ERISA.
(v) Each Plan that is intended to be qualified under Section 401(a) of
the Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the Internal Revenue Service as to the
qualification under the Code of such Plan and the tax exempt status of such
related trust, and nothing has occurred since the date of such
determination letter that could adversely affect the qualification of such
Plan or the tax exempt status of such related trust.
(vi) No underfunded "defined benefit plan" (as such term is defined in
Section 3(35) of ERISA) has been, during the five years preceding the
Closing Date, transferred out of the controlled group of corporations
(within the meaning of Sections 414(b), (c), (m) and (o) of the Code) of
which UCB or any UCB Subsidiary is a member or was a member during such
five-year period.
(vii) As of the Closing Date, the fair market value of the assets of each
Plan that is a tax qualified defined benefit plan equals or exceeds the
present value of all vested and non-vested liabilities thereunder
determined in accordance with reasonable actuarial methods, factors and
assumptions applicable to a defined benefit plan on an ongoing basis. With
respect to each Plan that is subject to the funding requirements of Section
412 of the Code and Section 302 of ERISA, all required contributions for
all periods ending prior to or as of the Closing Date (including periods
from the first day of the then-current plan year to the Closing Date and
including all quarterly contributions required in accordance with Section
412(m) of the Code) shall have been made. With respect to each other Plan,
all required payments, premiums, contributions, reimbursements or accruals
for all periods ending prior to or as of the Closing Date shall have been
made. No tax qualified Plan has any material unfunded liabilities.
(viii) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of
ERISA or Section 4975 of the Code, whether by statutory, class or
individual exemption) has occurred with respect to any Plan which would
result in the imposition, directly or indirectly, of any excise tax,
penalty or other liability under Section 4975 of the Code or Section 409 or
502(i) of ERISA. Neither UCB, nor to the best knowledge of UCB any UCB
Subsidiary, nor any trustee, administrator or other fiduciary of any Plan,
nor to the best knowledge of UCB any agent of any of the foregoing has
engaged in any transaction or acted or failed to act in a manner which
could subject UCB or any UCB Subsidiary to any material liability for
breach of fiduciary duty under ERISA or any other applicable law.
(ix) With respect to each Plan, all reports and information required to
be filed with any government agency or distributed to Plan participants and
their beneficiaries have been duly and timely filed or distributed.
(x) UCB and each UCB Subsidiary has been and is presently in compliance
with all of the requirements of Section 4980B of the Code.
(xi) Neither UCB nor any UCB Subsidiary has a liability as of December
31, 1995, under any Plan that, to the extent disclosure is required under
generally accepted accounting principles, is not reflected on
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the consolidated balance sheet included in the Financial Statements of UCB
as of December 31, 1995 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the transactions
contemplated under this Agreement will increase (A) UCB's or any UCB
Subsidiary's obligation to make contributions or any other payments to fund
benefits accrued under the Plans as of the date of this Agreement or (B)
the benefits accrued or payable with respect to any participant under the
Plans (except to the extent benefits may be deemed increased by accelerated
vesting).
(xiii) With respect to each Plan, UCB has Disclosed or made available
true, complete and correct copies of (A) all documents pursuant to which
the Plans are maintained, funded and administered, including summary plan
descriptions, (B) the three most recent annual reports (Form 5500 series)
filed with the Internal Revenue Service (with attachments), (C) the three
most recent actuarial reports, if any, (D) the three most recent financial
statements, (E) all governmental filings for the last three years,
including without limitation, excise tax returns and reportable events
filings, and (F) all governmental rulings, determinations, and opinions
(and pending requests for governmental rulings, determinations, and
opinions) during the past three years.
3.15 Certain Contracts
(a) Except as Disclosed, neither UCB nor any UCB Subsidiary is a party to,
is bound or affected by, or receives benefits under (i) any agreement,
arrangement or commitment, the default of which would have a Material Adverse
Effect, whether or not made in the ordinary course of business (other than
loans or loan commitments made or certificates or deposits received in the
ordinary course of the banking business), or any agreement restricting its
business activities, including without limitation agreements or memoranda of
understanding with regulatory authorities, (ii) any agreement, indenture or
other instrument relating to the borrowing of money by UCB or any UCB
Subsidiary or the guarantee by UCB or any UCB Subsidiary of any such
obligation, which cannot be terminated within less than 30 days after the
Closing Date by UCB or any UCB Subsidiary (without payment of any penalty or
cost, except with respect to Federal Home Loan Bank advances), (iii) any
agreement, arrangement or commitment relating to the employment of a
consultant or the employment, election or retention in office of any present
or former director or officer, which cannot be terminated within less than 30
days after the Closing Date by UCB or any UCB Subsidiary (without payment of
any penalty or cost), or that provides benefits which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving UCB of the nature contemplated by this Agreement or the SNC Option
Agreement, (iv) any contract, agreement or understanding with a labor union,
in each case whether written or oral, or (v) any agreement or plan, including
any stock option plan, stock appreciation rights plan, restricted stock plan
or stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the SNC Option Agreement
or the value of any of the benefits of which will be calculated on the basis
of any of the transactions contemplated by this Agreement or the SNC Option
Agreement. Each agreement, arrangement and commitment Disclosed pursuant to
this Section 3.15(a) is in full force and effect.
(b) Neither UCB nor any UCB Subsidiary is in default, which default would
have a Material Adverse Effect or would adversely affect the transactions
contemplated herein, under any agreement, commitment, arrangement, lease,
insurance policy, or other instrument, whether entered into in the ordinary
course of business or otherwise and whether written or oral, and there has not
occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default.
3.16 Legal Proceedings; Regulatory Approvals
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or threatened against UCB or any UCB
Subsidiary or against any asset, interest, or right of UCB or any UCB
Subsidiary, or against any officer, director or employee of any of them that
in any such case, if decided adversely, would reasonably be expected to have a
Material Adverse Effect. There are no actions, suits or proceedings
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instituted, pending or threatened against any present or former director or
officer of UCB or any UCB Subsidiary that would reasonably be expected to give
rise to a claim against UCB or any UCB Subsidiary for indemnification. There
are no actual or threatened actions, suits or proceedings which present a
claim to restrain or prohibit the transactions contemplated herein or in the
SNC Option Agreement. To the best knowledge of UCB, no fact or condition
relating to UCB or any UCB Subsidiary exists (including without limitation
noncompliance with the CRA) that would prevent UCB or SNC from obtaining all
of the federal and state regulatory approvals contemplated herein.
3.17 Compliance with Laws
Each of UCB and each UCB Subsidiary is in compliance in all material
respects with all statutes and regulations (including, but not limited to, the
CRA, TILA and regulations promulgated thereunder, and other consumer banking
laws) applicable and material to the conduct of its business, and neither UCB
nor any UCB Subsidiary has received notification that has not lapsed, been
withdrawn or abandoned by any agency or department of federal, state or local
government (i) asserting a violation or possible violation of any such statute
or regulation which violation would reasonably be expected to have a Material
Adverse Effect on UCB, (ii) threatening to revoke any license, franchise,
permit or government authorization, or (iii) restricting or in any way
limiting its operations. Neither UCB nor any UCB Subsidiary is subject to any
regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and none of them has received any
communication requesting that it enter into any of the foregoing.
3.18 Brokers and Finders
Neither UCB nor any UCB Subsidiary, nor any of their respective officers,
directors or employees, has employed any broker, finder or financial advisor
or incurred any liability for any fees or commissions in connection with the
transactions contemplated herein, in the Plan of Merger or in the SNC Option
Agreement, except for fees to accountants and lawyers and an obligation to
Wheat First Butcher Singer as Disclosed for investment banking services.
3.19 Loans
To the best of UCB's knowledge, substantially all of the loans on the books
and records of the UCB Subsidiaries are valid and properly documented. Neither
the terms of such loans, nor any of the loan documentation, nor the manner in
which such loans have been administered and serviced, violates in any material
respect any federal, state or local law, rule, regulation or ordinance
applicable thereto, including without limitation, the TILA, Regulations O and
Z of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, as
amended, and state laws, rules and regulations relating to consumer
protection, installment sales and usury.
3.20 Repurchase Agreements
With respect to all agreements currently outstanding pursuant to which UCB
or any UCB Subsidiary has purchased securities subject to an agreement to
resell, UCB or the UCB Subsidiary has a valid, perfected first lien or
security interest in the securities or other collateral securing such
agreement, and the value of such collateral equals or exceeds the amount of
the debt secured thereby. With respect to all agreements currently outstanding
pursuant to which UCB or any UCB Subsidiary has sold securities subject to an
agreement to repurchase, neither UCB nor the UCB Subsidiary has pledged
collateral materially in excess of the amount of the debt secured thereby.
Neither UCB nor any UCB Subsidiary has pledged collateral materially in excess
of the amount required under any interest rate swap or other similar agreement
currently outstanding.
3.21 Deposit Accounts
The deposit accounts of the UCB Subsidiaries that are insured depository
institutions are insured by the FDIC to the maximum extent permitted by
federal law, and the UCB Subsidiaries have paid all premiums and assessments
and filed all reports required to have been paid or filed under the FDIA.
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3.22 Related Party Transactions
UCB has Disclosed all transactions, investments and loans, including loan
guarantees, to which UCB or any UCB Subsidiary is a party with any director,
executive officer or 5% shareholder of UCB or any person, corporation, or
enterprise controlling, controlled by or under common control with any of the
foregoing. All such transactions, investments and loans are on terms no less
favorable to UCB than could be obtained from unrelated parties.
3.23 Certain Information
When the Joint Proxy Statement/Prospectus is mailed, and at the time of the
meeting of shareholders of UCB to vote upon the Plan of Merger, the Joint
Proxy Statement/Prospectus and all amendments or supplements thereto, with
respect to all information set forth therein provided by UCB, (i) shall comply
in all material respects with the applicable provisions of the Securities
Laws, and (ii) shall 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, in light of the circumstances in which
they were made, not misleading.
3.24 Accounting, Tax and Regulatory Matters
Neither UCB nor any UCB Subsidiary has taken or agreed to take any action
which would or could reasonably be expected to (i) cause the business
combination contemplated hereby not to be accounted for as a pooling-of-
interests (except to the extent actions taken pursuant to the terms of this
Agreement could have such affect) or not to constitute a reorganization under
Section 368 of the Code, or (ii) materially impede or delay receipt of any
consents of regulatory authorities referred to in Section 5.4(b) or result in
failure of the condition in Section 6.3(b).
3.25 State Takeover Laws
UCB and each UCB Subsidiary have taken all necessary action to exempt the
transactions contemplated by this Agreement from any applicable moratorium,
fair price, business combination, control share or other anti-takeover laws
included in Sections 55-9-101 et seq. and 55-9A-01 et seq. of the NCBCA.
3.26 Derivatives Contracts
Neither UCB nor any UCB Subsidiary 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 interest rate or foreign
currency protection contract not included on its balance sheets in the
Financial Statements, which is a financial derivative contract (including
various combinations thereof), except as Disclosed.
3.27 Fairness Opinion
UCB has received from Wheat First Butcher Singer an opinion that, as of
November 1, 1996, the Exchange Ratio is fair to the shareholders of UCB from a
financial point of view.
ARTICLE IV
Representations and Warranties of SNC
SNC represents and warrants to UCB as follows:
4.1 Capital Structure of SNC
The authorized capital stock of SNC consists of (i) 5,000,000 shares of
preferred stock, par value $5.00 per share, of which no shares are issued and
outstanding, and (ii) 300,000,000 shares of SNC Common Stock, of
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which 109,112,010 shares were issued and outstanding on September 30, 1996.
All outstanding shares of SNC Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. The shares of SNC Common Stock
reserved as provided in Section 5.3 are free of any Rights and have not been
reserved for any other purpose, and such shares are available for issuance as
provided pursuant to the Plan of Merger. Holders of SNC Common Stock do not
have preemptive rights.
4.2 Organization, Standing and Authority of SNC
SNC is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, and is duly qualified to do business in the states of the
United States where its ownership or leasing of property or the conduct of its
business requires such qualification and where failure to so qualify would
have a Material Adverse Effect. SNC is registered as a bank holding company
under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
(a) SNC has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary government approvals and receipt of
required approval of shareholders of SNC of this Agreement and the Plan of
Merger) perform all of its obligations under this Agreement, the SNC Option
Agreement and the UCB Option Agreement. The execution and delivery of this
Reorganization Agreement, the Articles of Merger and said Option Agreements,
and consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of SNC, except in the case of this Agreement and the Plan
of Merger, the approval of SNC shareholders pursuant to and to the extent
required by applicable law or regulation. This Agreement and the Plan of
Merger attached hereto constitute legal, valid and binding obligations of SNC,
and each is enforceable against SNC in accordance with its terms, in each case
subject to (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws in effect from time to
time relating to or affecting the enforcement of the rights of creditors; and
(ii) general principles of equity, and except that the availability of
remedies or injunctive relief is within the discretion of the appropriate
court.
(b) Neither the execution and delivery of this Agreement, the SNC Option
Agreement or the UCB Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by SNC with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the articles of incorporation or bylaws of SNC or any SNC
Subsidiary, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of SNC
or any SNC Subsidiary pursuant to any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation, which would have a
material adverse effect on the business, operations or financial condition of
SNC and the SNC Subsidiaries taken as a whole, or (iii) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to SNC or any
SNC Subsidiary.
4.4 Organization, Standing and Authority of SNC Subsidiaries
Each of the SNC Subsidiaries is duly organized, validly existing and in good
standing under applicable laws. SNC owns, directly or indirectly, all of the
stock of each of the SNC Subsidiaries. Each of the SNC Subsidiaries (i) has
full power and authority to carry on its business as now conducted and (ii) is
duly qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification and where failure to so qualify would
have a Material Adverse Effect on SNC.
4.5 Securities Documents
SNC (and BB&T Financial Corporation prior to its merger with SNC) has timely
filed all Securities Documents required by the Securities Laws since December
31, 1993. As of their respective dates of filing, such
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Securities Documents complied in all material respects with the Securities
Laws as then in effect, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.6 Financial Statements
The Financial Statements of SNC fairly present or will fairly present, as
the case may be, the consolidated financial position of SNC and the SNC
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and changes in cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to
normal year-end audit adjustments that are not material in amount or effect)
in conformity with generally accepted accounting principles applicable to
financial institutions applied on a consistent basis.
4.7 Material Adverse Change
Since December 31, 1995, SNC and the SNC Subsidiaries have not incurred any
material liability except as disclosed on the most recent SNC Financial
Statements, or entered into any transactions with affiliates, other than in
the ordinary course of business consistent with past practices, nor has there
been any change, or any event involving a prospective change, in the business,
financial condition or results of operations of SNC and the SNC Subsidiaries
which has had, or is reasonably likely to have, a Material Adverse Effect on
SNC.
4.8 Legal Proceedings; Regulatory Approvals
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or threatened against SNC or any SNC
Subsidiary or against any asset, interest, or right of SNC or any SNC
Subsidiary, or against any officer, director or employee of any of them that
in any such case, if decided adversely, would reasonably be expected to have a
Material Adverse Effect. There are no actions, suits or proceedings
instituted, pending or threatened against any present or former director or
officer of SNC or any SNC Subsidiary that would reasonably be expected to give
rise to a claim against SNC or any SNC Subsidiary for indemnification. There
are no actual or threatened actions, suits or proceedings which present a
claim to restrain or prohibit the transactions contemplated herein, in the
Plan of Merger or the UCB Option Agreement. To the best knowledge of SNC, no
fact or condition relating to SNC or any SNC Subsidiary exists (including
without limitation noncompliance with the CRA) that would prevent UCB or SNC
from obtaining all of the federal and state regulatory approvals contemplated
herein.
4.9 Absence of Undisclosed Liabilities
Neither SNC nor any of the SNC Subsidiaries has any liability (contingent or
otherwise) that is material to SNC on a consolidated basis or that, when
combined with all similar liabilities, would be material to SNC on a
consolidated basis, except as disclosed in the Financial Statements of SNC and
except for liabilities made in the ordinary course of its business since the
date of SNC's most recent Financial Statements.
4.10 Allowance for Loan Losses
The allowance for loan losses reflected on the consolidated balance sheets
included in the Financial Statements of SNC is or will be in the opinion of
SNC's management adequate in all material respects as of their respective
dates, under the requirements of generally accepted accounting principles and
applicable regulatory requirements and guidelines as they apply to banks and
bank holding companies, to provide for reasonably anticipated losses on
outstanding loans net of recoveries.
4.11 Tax Matters
(a) SNC and the SNC Subsidiaries, and each of their predecessors, has timely
filed all federal, state and local (and, if applicable, foreign) tax returns
required by applicable law to be filed by them (including, without
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limitation, estimated tax returns, income tax returns, information returns,
and withholding and employment tax returns) and have paid, or have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid
as shown on such returns and, as of the Effective Time, will have paid, or
where payment is not required to have been made, will have set up an adequate
reserve or accrual for the payment of, all taxes for any subsequent periods
ending on or prior to the Effective Time. SNC will not, to SNC's knowledge,
have any material liability for any such taxes in excess of the amounts so
paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) tax returns
filed by SNC and the SNC Subsidiaries are complete and accurate in all
material respects. Neither SNC nor any SNC Subsidiary is delinquent in the
payment of any tax, assessment or governmental charge, and has not failed to
file any tax return which is currently past due. No deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against SNC or any SNC Subsidiary which have not
been settled and paid. There currently are no agreements in effect with
respect to SNC or any SNC Subsidiary to extend the period of limitations for
the assessment or collection of any tax.
4.12 Compliance with Laws
Each of SNC and the SNC Subsidiaries is in compliance with all statutes and
regulations (including, but not limited to, the CRA, TILA and regulations
promulgated thereunder and other consumer banking laws) applicable and
material to the conduct of its business, and neither SNC nor any of the SNC
Subsidiaries has received any notification that has not lapsed, been withdrawn
or abandoned from any agency or department of federal, state or local
government (i) asserting a violation or possible violation of any such statute
or regulation, and which violation would reasonably likely have a Material
Adverse Effect on SNC, (ii) threatening to revoke any license, franchise,
permit or government authorization, or (iii) restricting or in any way
limiting its operations. Neither SNC nor any of the SNC Subsidiaries is
subject to any regulatory or supervisory cease and desist order, agreement,
directive or memorandum of understanding, and none of them has received any
communication requesting that they enter into any of the foregoing.
4.13 Certain Information
When the Joint Proxy Statement/Prospectus is mailed, and at all times
subsequent to such mailing up to and including the time of the meeting of
shareholders of SNC to vote on the Merger, the Joint Proxy
Statement/Prospectus and all amendments or supplements thereto, with respect
to all information set forth therein relating to SNC, (i) shall comply in all
material respects with the applicable provisions of the Securities Laws, and
(ii) shall 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, in light of the circumstances in which they were
made, not misleading.
4.14 Accounting, Tax and Regulatory Matters
Neither SNC nor the SNC Subsidiaries have taken or agreed to take any action
which would or could reasonably be expected to (i) cause the business
combination contemplated hereby not to be accounted for as a pooling of
interests or not to constitute a reorganization under Section 368 of the Code,
or (ii) materially impede or delay receipt of any consents of regulatory
authorities referred to in Section 5.4(b) or result in failure of the
condition in Section 6.3(b).
4.15 Share Ownership
As of the date of this Agreement, SNC does not own (except in a fiduciary
capacity) any shares of UCB Common Stock.
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ARTICLE V
Covenants
5.1 Shareholders' Meetings
UCB shall submit this Reorganization Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as practicable, and
by approving execution of this Agreement the Board of Directors of UCB agrees
that it shall, at the time the Joint Proxy Statement/Prospectus is mailed to
the shareholders of UCB, recommend that UCB's shareholders vote for such
approval; provided, that the Board of Directors of UCB may withdraw or refuse
to make such recommendation only if the Board of Directors shall determine in
good faith that such recommendation would violate its fiduciary duty to its
shareholders following (i) the consideration of written advice of legal
counsel that making such recommendation or the failure to withdraw or modify
such recommendation would constitute a breach of the fiduciary duties of such
Board to shareholders of UCB, and (ii) the withdrawal by Wheat First Butcher
Singer in writing of its opinion referred to in Section 3.27 or delivering to
the UCB Board of Directors of written advice from Wheat First Butcher Singer
that the Exchange Ratio is not fair or is inadequate to the shareholders of
UCB from a financial point of view. SNC shall submit this Reorganization
Agreement and the Plan of Merger to its shareholders for approval at a meeting
to be held as soon as practicable, and by approving execution of this
Agreement the Board of Directors of SNC agrees that it shall, at the time the
Joint Proxy Statement/Prospectus is mailed to the shareholders of SNC,
recommend that SNC's shareholders vote for such approval.
5.2 Registration Statement; Joint Proxy Statement/Prospectus
As promptly as practicable after the date hereof, SNC shall prepare and file
the Registration Statement with the Commission. UCB will furnish to SNC the
information required to be included in the Registration Statement with respect
to its business and affairs before it is filed with the Commission and again
before any amendments are filed, and shall have the right to review and
consult with SNC on the form of, and any characterizations of such information
included in, the Registration Statement prior to the filing with the
Commission. SNC shall use its best efforts to cause such Registration
Statement to be declared effective under the Securities Act. Such Registration
Statement, at the time it becomes effective and on the Effective Time, shall
in all material respects conform to the requirements of the Securities Act and
the applicable rules and regulations of the Commission. SNC shall take all
actions required to register or obtain exemptions from such registration for
the SNC Common Stock to be issued in connection with the transactions
contemplated by this Agreement and the Plan of Merger under applicable state
"Blue Sky" securities laws, as appropriate. The Registration Statement shall
include the form of Joint Proxy Statement/Prospectus. SNC and UCB shall use
their best efforts to cause the Joint Proxy Statement/Prospectus to be
approved by the SEC for mailing to the UCB and SNC shareholders, and such
Joint Proxy Statement/Prospectus shall, on the date of mailing, conform in all
material respects to the requirements of the Securities Laws and the
applicable rules and regulations of the SEC thereunder. SNC and UCB shall
cause the Joint Proxy Statement/Prospectus to be mailed to shareholders in
accordance with all applicable notice requirements under the Securities Laws
and the NCBCA.
5.3 Plan of Merger; Reservation of Shares
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In this connection, SNC undertakes and agrees to pay or cause
to be paid when due the number of shares of SNC Common Stock to be distributed
pursuant to Section 2.7 and any cash required to be paid for fractional
shares. SNC has reserved for issuance such number of shares of SNC Common
Stock as shall be necessary to pay the consideration to be distributed to the
UCB shareholders as contemplated in Section 2.8, required in connection with
the UCB Option Agreement, and as otherwise required herein. If at any time the
aggregate number of shares of SNC Common Stock available for issuance
hereunder shall not be sufficient to effect the Merger, SNC shall take all
appropriate action as may be required to increase the amount of the authorized
SNC Common Stock.
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5.4 Additional Acts
(a) UCB agrees to cooperate in taking such actions as may be reasonably
necessary to modify the structure of, or to substitute parties to (so long as
such substitute is SNC or a SNC Subsidiary) the transactions contemplated
hereby, provided that such modifications do not adversely affect the economic
benefits of such transactions or otherwise abrogate the covenants and other
agreements contained in this Agreement.
(b) As promptly as practicable after the date hereof, SNC and UCB shall
submit notice or applications for prior approval of the transactions
contemplated herein to the Federal Reserve Board, and any other federal, state
or local government agency, department or body to which notice is required or
from which approval is required for consummation of the Merger and the other
transactions contemplated hereby. UCB and SNC each represents and warrants to
the other that all information concerning it and its directors, officers and
shareholders and concerning any SNC Subsidiary included (or submitted for
inclusion) in any such application shall be true, correct and complete in all
material respects as of the date presented.
5.5 Best Efforts
SNC and UCB shall use, and shall cause each of their respective Subsidiaries
to use, its best efforts in good faith to (i) furnish such information as may
be required in connection with and otherwise cooperate in the preparation and
filing of the documents referred to in Sections 5.2 and 5.4 or elsewhere
herein, and (ii) take or cause to be taken all action necessary or desirable
on its part to fulfill the conditions in Article VI and to consummate the
transactions herein contemplated at the earliest practicable date. Neither SNC
nor UCB shall take, or cause, or to the best of its ability permit to be
taken, any action that would substantially delay or impair the prospects of
completing the Merger pursuant to this Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
UCB shall cooperate with SNC concerning accounting and financial matters
necessary or appropriate to facilitate the Merger (taking into account SNC's
policies, practices and procedures), including without limitation issues
arising in connection with record keeping, loan classification, valuation
adjustments, levels of loan loss reserves and other accounting practices.
5.7 Access to Information
UCB and the UCB Subsidiaries will keep SNC advised, and SNC and the SNC
Subsidiaries will keep UCB advised, of all material developments relevant to
their business and to consummation of the Merger. Upon reasonable notice, UCB
and the UCB Subsidiaries shall afford to representatives of SNC, and SNC and
the SNC Subsidiaries shall afford to representatives of UCB, access, during
normal business hours during the period prior to the Effective Time, to all of
their respective properties, books, contracts, commitments and records and,
during such period, shall make available all information concerning their
business as may be reasonably requested. No investigation pursuant to this
Section 5.7 shall affect or be deemed to modify any representation or warranty
made by, or the conditions to the obligations hereunder of, either party
hereto. As of the date hereof, UCB and SNC have entered into confidentiality
agreements relating to the information to be provided pursuant to this
Agreement.
5.8 Press Releases
SNC and UCB shall agree with each other as to the form and substance of any
press release related to this Agreement and the Plan of Merger or the
transactions contemplated hereby and thereby, and consult with each other as
to the form and substance of other public disclosures related thereto;
provided, that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which in the
opinion of its counsel is required by law.
5.9 Forbearances of UCB
Except with the prior written consent of SNC, between the date hereof and
the Effective Time, UCB shall not, and shall cause each of the UCB
Subsidiaries not to:
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(a) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, or
establish or acquire any new Subsidiary or engage in any new activity;
(b) declare, set aside, make or pay any dividend or other distribution in
respect of its capital stock, other than regularly scheduled quarterly
dividends of $.18 per share of UCB Common Stock payable on record dates and
in amounts consistent with past practices; provided that any dividend
declared or payable on the shares of UCB Common Stock for the quarterly
period during which the Effective Time occurs shall, unless otherwise
agreed upon in writing by SNC and UCB, be declared with a record date prior
to the Effective Time only if the normal record date for payment of the
corresponding quarterly dividend to holders of SNC Common Stock is before
the Effective Time;
(c) issue any shares of its capital stock, except pursuant to the Stock
Option Plan and the SNC Option Agreement;
(d) issue, grant or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in
capitalization;
(e) amend its articles of incorporation or bylaws; impose or permit
imposition, of any lien, charge or encumbrance on any share of stock held
by it in any UCB Subsidiary, or permit any such lien, charge or encumbrance
to exist; or waive or release any material right or cancel or compromise
any debt or claim other than in the ordinary course of business;
(f) merge with any other entity or permit any other entity to merge into
it, or consolidate with any other entity; acquire control over any other
entity; or liquidate, sell or otherwise dispose of any assets or acquire
any assets, other than in the ordinary course of its business consistent
with past practices;
(g) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of
its business;
(h) increase the rate of compensation of any of its directors, officers
or employees, or pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers or
employees, except in the ordinary course of business consistent with past
practices;
(i) enter into or substantially modify (except as may be required by
applicable law or regulation) any pension, retirement, stock option, stock
purchase, stock appreciation right, 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; provided, that this subparagraph shall not prevent renewals of
any of the foregoing consistent with past practice, except for contemplated
changes in UCB's Flexible Benefit Plan;
(j) solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, UCB or any
UCB Subsidiary or any business combination with UCB or any UCB Subsidiary
other than as contemplated by this Agreement; or authorize any officer,
director, agent or affiliate of UCB or any UCB Subsidiary to do any of the
above; or fail to notify SNC immediately if any such inquiries or proposals
are received, any such information is requested or required, or any such
negotiations or discussions are sought to be initiated; provided, that this
paragraph (j) shall not apply to furnishing information, negotiations or
discussions following an unsolicited offer if, as a result of such offer,
UCB is advised in writing by legal counsel that the failure so to furnish
information or negotiate would constitute a breach of the fiduciary duties
of UCB's Board of Directors to its shareholders;
(k) enter into (i) any material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) any agreement, indenture or
other instrument not made in the ordinary course of business relating to
the borrowing of money by UCB or a UCB Subsidiary or guarantee by UCB or a
UCB Subsidiary of any obligation, (iii) any agreement, arrangement or
commitment relating to the employment or severance of a consultant or the
employment, severance, election or retention in office of any present or
former director, officer or employee (this clause shall not apply to the
election of directors by shareholders in the normal course, and the
election of officers by directors in the normal course terminable at will
except to the
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extent otherwise provided in an agreement, arrangement or commitment
Disclosed); or (iv) any contract, agreement or understanding with a labor
union;
(l) change its lending, investment or asset liability management policies
in any material respect, except as may be required by applicable law,
regulation, or directives, and except that after approval of the Agreement
and the Plan of Merger by its shareholders UCB shall cooperate in good
faith with SNC to adopt policies, practices and procedures consistent with
those utilized by SNC, effective on or before the Closing Date;
(m) change its methods of accounting in effect at December 31, 1995,
except as required by changes in generally accepted accounting principles
concurred in by SNC's independent certified public accountants, which
concurrence shall not be unreasonably withheld, or change any of its
methods of reporting income and deductions for federal income tax purposes
from those employed in the preparation of its federal income tax returns
for the year ended December 31, 1995, except as required by changes in law
or regulation;
(n) incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $250,000, for any one expenditure, or
$2,000,000, in the aggregate;
(o) incur any indebtedness other than deposits from customers or
otherwise in the ordinary course of business;
(p) take any action which would or could reasonably be expected to (i)
cause the business combination contemplated hereby not to be accounted for
as a pooling of interests or not to constitute a reorganization under
Section 368 of the Code, in either case as determined by SNC, (ii) result
in any inaccuracy of a representation or warranty herein which would allow
for a termination of this Agreement, or (iii) cause any of the conditions
precedent to the transactions contemplated by this Agreement to fail to be
satisfied;
(q) dispose of any material assets other than in the ordinary course of
business; or
(r) agree to do any of the foregoing.
5.10 Employment Agreements
SNC shall enter into employment agreements with those UCB employees and on
the terms as agreed by SNC and UCB prior to the date hereof, which shall
supersede presently existing employment agreements.
5.11 Affiliates
UCB shall use reasonable efforts to cause all persons who are affiliates of
UCB to deliver to SNC promptly following this Agreement a written agreement
providing that such person will not dispose of SNC Common Stock received in
the Merger except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and except as consistent with qualifying
the transactions contemplated hereby for pooling of interests accounting
treatment, and in any event shall cause such affiliates to deliver to SNC such
written agreement prior to the Effective Time.
5.12 Employee Benefit Plans
(a) Each employee of UCB and UCB Subsidiaries at the Effective Time (herein
"Employee") shall become an employee of SNC or a SNC Subsidiary immediately
following the Effective Time, upon substantially the same terms and conditions
as in effect immediately preceding the Effective Time. Each Employee, as an
employee of SNC or one of the SNC Subsidiaries shall be eligible to receive
bonus or incentive, retirement, severance, group hospitalization, medical,
life, disability and other benefits comparable to those provided to similarly
situated employees of SNC or the SNC Subsidiary. For purposes of administering
all plans and benefits of SNC or a SNC Subsidiary, service with UCB and the
UCB Subsidiaries by each Employee shall be deemed to be service with SNC or
the SNC Subsidiaries for participation and vesting purposes only (subject to
paragraph (c) of this Section 5.12).
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(b) SNC shall cause the 401(k) plan of UCB to be merged with the 401(k) plan
maintained by SNC and the SNC Subsidiaries, and the account balances of the
Employees who are participants in the UCB plan shall be transferred to the
accounts of such Employees under the SNC 401(k) plan. Following such merger
and transfer, such accounts shall be governed and controlled by the terms of
the SNC 401(k) plan as in effect from time to time (and subject to SNC's right
to terminate such plan).
(c) The parties anticipate that SNC shall cause the tax qualified defined
benefit pension plan of UCB to be merged with the tax qualified defined
benefit plan of SNC. If such merger occurs, the SNC pension plan will provide
future benefit accruals under the SNC pension plan for the Employees which
will not be less than the benefits which would be accrued under the "fresh
start formula without wear away" as described in Treasury Regulation (S)
1.401(a)(4)-13(c)(4)(i) (that is, the accrued benefit of each Employee who
becomes a participant in the SNC pension plan incident to such plan merger
will equal the sum of the benefit accrued to the Effective Time under the UCB
pension plan plus the future benefit accrued under the SNC pension plan). For
purposes of applying the SNC pension plan following such merger, service with
UCB of an Employee shall be deemed to be service with SNC for the purposes of
determining eligibility and vesting, but not for the purpose of determining
benefit accruals following the Effective Time.
(d) UCB's Long Term Incentive Plan, Director Deferred Compensation Plan and
Triad Bank Long Term Incentive Plan shall be frozen as of the Effective Time,
and SNC shall assume as of the Effective Time all obligations under such plans
as then accrued. SNC shall following the Effective Time administer such plans
in accordance with their respective terms, except that no further rights or
benefits shall accrue to participants and no further employees or directors
shall be permitted to participate in either or both of such plans. SNC shall
assume and continue in effect the UCB Supplemental Retirement Plan for the
benefit of current participants therein.
5.13 Directors and Officers Protection
(a) SNC shall indemnify, defend, and hold harmless the present and former
directors, officers, employees, and agents of UCB and the UCB Subsidiaries
(each, an "Indemnified Party") against all liabilities arising out of actions
or omissions arising out of the Indemnified Party's service or services as
directors, officers, employees, or agents of UCB or, at UCB's request, of
another corporation, partnership, joint venture, trust, or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under North
Carolina Law and by UCB's Articles of Incorporation and Bylaws as in effect on
the date hereof, whether or not SNC is insured against any such matter.
Without limiting the foregoing, in any case in which approval by SNC is
required to effectuate any indemnification, SNC shall direct, at the election
of the Indemnified Party, that the determination of any such approval shall be
made by independent counsel mutually agreed upon between SNC and the
Indemnified Party.
(b) SNC shall use its reasonable efforts to (i) cause the directors and
officers of UCB immediately prior to the Effective Time to be covered under
its then existing directors' and officers' liability insurance policy
providing full coverage for acts occurring prior to the Effective Time; or
(ii) to maintain in effect for a period of three years after the Effective
Time UCB's existing directors' and officers' liability insurance policy
(provided that SNC may substitute therefor (A) policies of at least the same
coverage and amounts containing terms and conditions which are substantially
no less advantageous or (B) with the consent of UCB given prior to the
Effective Time, any other policy) with respect to claims arising from facts or
events which occurred prior to the Effective Time and covering persons who are
currently covered by such insurance; provided, that neither SNC nor the
Surviving Corporation shall be obligated to make annual premium payments for
such three year period in respect of such policy (or coverage replacing such
policy) which exceed, for the portion related to UCB's directors and officers,
150% of the annual premium payments on UCB's current policy in effect as of
the date of this Agreement (the "Maximum Amount"). If the amount of the
premiums necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, SNC shall use its reasonable efforts to maintain the most
advantageous policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount.
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(c) If SNC or the Surviving Corporation or any successors or assigns shall
consolidate with or merge into any other entity and shall not be the
continuing or surviving person 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 successor and assigns of
SNC or the Surviving Corporation shall assume the obligations set forth in
this Section 5.13.
(d) The provisions of this Section 5.13 are intended to be for the benefit
of and shall be enforceable by, each indemnified director and officer and
their respective heirs and representatives.
5.14 Forbearances of SNC
Except with the prior written consent of UCB, which consent shall not be
arbitrarily or unreasonably withheld, between the date hereof and the
Effective Time, neither SNC nor any SNC Subsidiary shall:
(a) exercise the UCB Option Agreement other than in accordance with its
terms, or dispose of the shares of UCB Common Stock issuable upon exercise
of the option rights conferred thereby other than as permitted or
contemplated by the terms thereof; or
(b) enter into a merger or other business combination transaction with
any other corporation or person in which SNC would not be the surviving or
continuing entity after the consummation thereof;
(c) sell or lease all or substantially all of the assets and business of
any SNC Subsidiary;
(d) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(e) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of
its business; or
(f) take any action which would or might be expected to (i) cause the
business combination contemplated hereby not to be accounted for as a
pooling-of-interest or not to constitute a reorganization under Section 368
of the Code, (ii) result in any inaccuracy of a representation or warranty
herein which would allow for termination of this Agreement, or (iii) cause
any of the conditions precedent to the transactions contemplated by this
agreement to fail to be satisfied.
5.15 Assumption of Agreement by Acquiror
It shall be a condition precedent to SNC entering into any agreement whereby
SNC shall (i) consolidate with or merge into any other entity and shall not be
the continuing or surviving person of such consolidation or merger, or (ii)
transfer all or substantially all of its assets to any entity, that proper
provision shall be made so that the successor and assigns of SNC shall
specifically agree to assume SNC's obligations under this Agreement.
5.16 Reports
Each of UCB and SNC shall file (and shall cause the UCB Subsidiaries and the
SNC Subsidiaries, respectively, to file), between the date of this Agreement
and the Effective Time, all reports required to be filed by it with the
Commission and any other regulatory authorities having jurisdiction over such
party, and shall deliver to SNC or UCB, as the case may be, copies of all such
reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the Commission, such financial
statements will fairly present the consolidated financial position of the
entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with generally accepted accounting procedures
(subject in the case of interim financial statements to normal recurring year-
end adjustments that are not material). As of their respective dates, such
reports filed with the Commission will comply in all material respects with
the Securities Laws and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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Any financial statements contained in any other reports to a regulatory
authority other than the Commission shall be prepared in accordance with
requirements applicable to such reports.
5.17 Exchange Listing
SNC shall use its reasonable efforts to list, prior to the Effective Time,
on the NYSE, subject to official notice of issuance, the shares of SNC Common
Stock to be issued to the holders of UCB Common Stock pursuant to the Merger,
and SNC shall give all notices and make all filings with the NYSE required in
connection with the transactions contemplated herein.
ARTICLE VI
Conditions Precedent
6.1 Conditions Precedent --SNC and UCB
The respective obligations of SNC and UCB to effect the transactions
contemplated by this Agreement shall be subject to satisfaction or waiver of
the following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Reorganization Agreement and the Plan of Merger,
the UCB Option Agreement and the SNC Option Agreement, and consummation of
the transactions contemplated hereby and thereby shall have been duly and
validly taken, including without limitation the approval of the
shareholders of SNC and UCB of the Agreement and the Plan of Merger, in
each case as set forth in Section 2.2;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, and SNC shall have
received all state securities or "Blue Sky" permits or other
authorizations, or confirmations as to the availability of an exemption
from registration requirements as may be necessary, and no proceedings
shall be pending or to the knowledge of SNC threatened by the Commission or
any state "Blue Sky" securities administration to suspend the effectiveness
of such Registration Statement; and the SNC Common Stock to be issued as
contemplated in the Plan of Merger shall have either been registered or be
subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Reorganization
Agreement, all notice periods and waiting periods required after the
granting of any such approvals shall have passed, and all such approvals
shall be in effect;
(d) None of SNC, any of the SNC Subsidiaries, UCB or any of the UCB
Subsidiaries shall be subject to any order, decree or injunction of a court
or agency of competent jurisdiction which enjoins or prohibits consummation
of the transactions contemplated by this Reorganization Agreement;
(e) UCB and SNC shall have received an opinion of SNC's legal counsel, in
form and substance satisfactory to UCB and SNC, substantially to the effect
that the Merger will constitute one or more reorganizations under Section
368 of the Code and that the shareholders of UCB will not recognize any
gain or loss to the extent that such shareholders exchange shares of UCB
Common Stock for shares of SNC Common Stock;
(f) SNC shall have received letters, dated as of the date of filing of
the Registration Statement with the Commission and as of the Effective
Time, addressed to SNC, in form and substance reasonably satisfactory to
SNC, from Arthur Andersen, LLP to the effect that the transactions
contemplated herein will qualify for pooling-of-interest accounting
treatment; and
(g) The shares of SNC Common Stock issuable pursuant to the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
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6.2 Conditions Precedent--UCB
The obligations of UCB to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by UCB pursuant to
Section 7.4:
(a) All representations and warranties of SNC shall be assessed as of the
date of this Agreement and as of the Effective Time as though made on and
as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or
consented to in writing by UCB. The representations and warranties of SNC
set forth in Section 4.1 shall be true and correct (except for inaccuracies
which are de minimis in amount). The representations and warranties of SNC
set forth in Section 4.14 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of SNC set forth in this Agreement (including the
representations and warranties set forth in Sections 4.1 and 4.14) such
that the aggregate effect of such inaccuracies has, or is reasonably likely
to have, a Material Adverse Effect on SNC; provided that, for purposes of
this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" shall be
deemed not to include such qualifications;
(b) SNC shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this
Agreement;
(c) SNC shall have delivered to UCB a certificate, dated the Closing Date
and signed by its Chairman or President or an Executive Vice President, to
the effect that the conditions set forth in Sections 6.1(a), 6.1(b),
6.1(c), 6.2(a) and 6.2(b), to the extent applicable to SNC, have been
satisfied and that there are no actions, suits, claims, governmental
investigations or procedures instituted, pending or, to the best of such
officer's knowledge, threatened that reasonably may be expected to have a
Material Adverse Effect on SNC or that present a claim to restrain or
prohibit the transactions contemplated herein or in the Plan of Merger;
(d) UCB shall have received opinions of counsel to SNC in the form
reasonably acceptable to UCB's legal counsel; and
(e) All approvals of the transactions contemplated herein from the
Federal Reserve Board and any other state or federal government agency,
department or body, the approval of which is required for the consummation
of the Merger, shall have been received and all waiting periods with
respect to such approvals shall have expired.
6.3 Conditions Precedent--SNC
The obligations of SNC to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by SNC pursuant to
Section 7.4:
(a) All representations and warranties of UCB shall be assessed as of the
date of this Agreement and as of the Effective Time as though made on and
as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or
consented to in writing by SNC. The representations and warranties of UCB
set forth in Section 3.1 shall be true and correct (except for inaccuracies
which are de minimis in amount). The representations and warranties of UCB
set forth in Section 3.24 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of UCB set forth in this Agreement (including the
representations and warranties set forth in Sections 3.1 and 3.24) such
that the aggregate effect of such inaccuracies has, or is reasonably likely
to have, a Material Adverse Effect on UCB; provided that, for purposes of
this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" shall be
deemed not to include such qualifications;
(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of
SNC, would so materially adversely affect the business or economic benefits
to SNC of the transactions contemplated by this Agreement as to render
consummation of such
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transactions inadvisable or unduly burdensome; provided, that (i) SNC has
used its reasonable efforts to cause such conditions or restrictions to be
removed or modified as appropriate; (ii) notwithstanding the foregoing, in
the event that such consent is conditioned or restricted as a result of a
regulatory or legal issue resulting from other acquisitions by SNC, whether
announced before or after the date of this Agreement, or otherwise
unrelated to UCB, SNC shall not be entitled to refuse to consummate the
Merger on the basis set forth in this sentence; and (iii) any required
disposition of deposits shall be deemed acceptable if the dollar amount of
deposits required to be divested does not exceed the upper range of
estimates first disclosed to the public by SNC following the execution of
this Agreement;
(c) UCB shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this
Agreement;
(d) UCB shall have delivered to SNC a certificate, dated the Closing Date
and signed by its Chairman or President, to the effect that the conditions
set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to the extent
applicable to UCB, have been satisfied and that there are no actions,
suits, claims, governmental investigations or procedures instituted,
pending or, to the best of such officer's knowledge, threatened that
reasonably may be expected to have a Material Adverse Effect on UCB or that
present a claim to restrain or prohibit the transactions contemplated
herein or in the Plan of Merger;
(e) SNC shall have received opinions of counsel to UCB in the form
reasonably acceptable to SNC's legal counsel;
(f) SNC shall have received the written agreements from affiliates as
specified in Section 5.11; and
(g) The holders of no more than 9.0% of the UCB Common Stock shall have
given written notice of their intent to demand payment for their shares and
shall not have voted for the Merger, pursuant to Article 13 of the NCBCA.
ARTICLE VII
Termination, Waiver and Amendment
7.1 Termination
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement,
which inaccuracy would provide the nonbreaching party the ability to refuse
to consummate the Merger under the applicable standard set forth in Section
6.2(a) in the case of UCB and Section 6.3(a) in the case of SNC; and, in
the case of (i) or (ii), if such breach has not been cured by the earlier
of 30 days following written notice of such breach to the party committing
such breach or the Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be
satisfied or fulfilled prior to the Closing Date, and the party giving the
notice is not in breach of any of its representations, warranties,
covenants or undertakings herein.
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 are denied, and
the time period for appeals and requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders
of SNC or of UCB do not approve the Agreement and the Plan of Merger.
(f) At any time following September 30, 1997, by either party hereto in
writing, if the Effective Time has not occurred by the close of business on
such date, and the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings herein.
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(g) At any time prior to 11:59 p.m. on January 10, 1997 by SNC in
writing, if SNC determines in its sole good faith judgment, through review
of information Disclosed by UCB, the performance of its due diligence or
otherwise, that the financial condition, results of operations, business or
business prospects of UCB and of the UCB Subsidiaries, taken as a whole,
are materially adversely different from SNC's reasonable expectations with
respect thereto based on information that has been Disclosed in a
Securities Document filed with the Commission since January 1, 1996 and its
knowledge of the operations of banks; provided that SNC shall inform UCB
upon such termination as to the reasons for SNC's determination; and,
provided further, that this Section 7.1(g) shall not limit in any way the
due diligence investigation of UCB and the UCB Subsidiaries which SNC may
perform or otherwise affect any other rights which SNC has after the date
hereof under the terms of this Agreement.
(h) By UCB, if its board of directors determines by a vote of a majority
of the members of its entire board, at any time during the ten-day period
commencing two days after the Determination Date, if either:
(A) both of the following conditions are satisfied:
(1) the Average Closing Price shall be less than $28.50; and
(2) (i) the quotient obtained by dividing the Average Closing
Price by $33.50 (such number being referred to herein as the "SNC
Ratio") shall be less than (ii) the quotient obtained by dividing
the Index Price on the Determination Date by the Index Price on the
Starting Date and subtracting 0.15 from the quotient in this clause
(A)(2)(ii); or
(B) the Average Closing Price shall be less than $27.00;
subject, however, to the following four sentences. If UCB refuses to
consummate the Merger pursuant to this Section 7.1(h), it shall give prompt
written notice thereof to SNC, which notice shall specify which of clauses (A)
or (B) is applicable (or if both would be applicable, which clause is being
invoked); provided, that such notice of election to terminate may be withdrawn
at any time within the aforementioned ten-day period. During the five-day
period commencing with its receipt of such notice, SNC shall have the option,
in the case of a failure to satisfy the condition in clause (A), to elect to
increase the Exchange Ratio to equal the quotient obtained by dividing $32.35
by the Average Closing Price. During such five-day period, SNC shall have the
option, in the case of a failure to satisfy the condition in clause (B), to
elect to increase the Exchange Ratio to equal the quotient obtained by
dividing $30.65 by the Average Closing Price. The election contemplated by
either of the two preceding sentences shall be made by giving notice to UCB of
such election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 7.1(h) and this Agreement shall remain
in effect in accordance with its terms (except as the Exchange Ratio shall
have been so modified), and any references in this Agreement to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 7.1(h).
For purposes of this Section 7.1(h), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily closing sales
prices per share of SNC Common Stock as reported on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source as chosen by SNC) for the ten
consecutive full trading days in which such shares are traded on the NYSE
ending at the close of trading on the Determination Date.
"Determination Date" shall mean the date on which SNC shall receive consent
to the Merger from the Federal Reserve Board.
"Index Group" shall mean the 19 bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination
Date, any public announcement of a proposal for such company to be acquired or
for such company to acquire another company or companies in transactions with
a value exceeding 25% of the acquiror's market capitalization. In the event
that any such company or companies are removed from the Index Group, the
weights (which have been determined based upon the number of shares of
outstanding common stock)
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<PAGE>
redistributed proportionately for purposes of determining the Index Price. The
19 bank holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES % WEIGHTING
---------------------- -----------
<S> <C>
AmSouth Bancorporation 2.41
Barnett Banks, Inc. 8.12
CoreStates Financial Corp 9.38
Comerica Incorporated 4.56
First Bank System, Inc. 5.75
Fifth Third Bancorp 4.50
First of America Bank Corp. 2.57
Firstar Corporation 3.19
Huntington Bancshares Inc. 6.13
Mellon Bank Corporation 5.49
Mercantile Bancorporation, Inc. 2.55
National City Corporation 9.45
Northern Trust Corporation 2.37
Regions Financial Corporation 2.66
SouthTrust Corporation 4.08
SunTrust Banks, Inc. 9.48
Summit Bancorp. 3.89
U.S. Bancorp 6.41
Wachovia Corporation 7.01
------
Total 100.00%
======
</TABLE>
"Index Price" on a given date shall mean the weighted average (weighted in
accordance with the factors listed above) of the closing sales prices of the
companies composing the Index Group (reported as provided with respect to the
Average Closing Price).
"Starting Date" shall mean November 1, 1996.
If any company belonging to the Index Group or SNC 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 SNC
shall be appropriately adjusted for the purposes of applying this Section
7.1(h).
7.2 Effect of Termination
In the event this Agreement and the Plan of Merger is terminated pursuant to
Section 7.1, both this Agreement and the Plan of Merger shall become void and
have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1, respectively,
shall survive any such termination and (ii) a termination pursuant to Section
7.1(b) shall not relieve the breaching party from liability for an uncured
breach of the covenant, agreement, understanding, representation or warranty
giving rise to such termination. The SNC Option Agreement and the UCB Option
Agreement shall be governed by their own terms.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or the Plan
of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time, other
than covenants that by their terms are to be performed after the Effective
Time, provided that no such representations, warranties or covenants shall be
deemed to be terminated or extinguished so as to deprive SNC or UCB (or any
director, officer or controlling person thereof) of any defense at law or in
equity which otherwise would be available against the claims of any person,
including, without limitation, any shareholder or former
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<PAGE>
shareholder of either SNC or UCB, the aforesaid representations, warranties
and covenants being material inducements to consummation by SNC and UCB of the
transactions contemplated herein.
7.4 Waiver
Except with respect to any required regulatory approval, each party hereto,
by written instrument signed by an executive officer of such party, may at any
time (whether before or after approval of the Agreement and the Plan of Merger
by the UCB shareholders) extend the time for the performance of any of the
obligations or other acts of the other party hereto and may waive (i) any
inaccuracies of the other party in the representations or warranties contained
in this Agreement, the Plan of Merger or any document delivered pursuant
hereto or thereto, (ii) compliance with any of the covenants, undertakings or
agreements of the other party, or satisfaction of any of the conditions
precedent to its obligations, contained herein or in the Plan of Merger, or
(iii) the performance by the other party of any of its obligations set out
herein or therein; provided that no such extension or waiver, or amendment or
supplement pursuant to Section 7.5, executed after approval by the UCB
shareholders of this Agreement and the Plan of Merger shall reduce either the
number of shares of SNC Common Stock into which each share of UCB Common Stock
shall be converted in the Merger or the payment terms for fractional
interests.
7.5 Amendment or Supplement
This Agreement or the Plan of Merger may be amended or supplemented at any
time in writing by mutual agreement of SNC and UCB, subject to the proviso to
Section 7.4.
ARTICLE VIII
Miscellaneous
8.1 Expenses
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated by this Reorganization
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel; provided, however, that the filing fees and the
printing costs incurred in connection with the Registration Statement and the
Joint Proxy Statement/Prospectus shall be borne 70% by SNC and 30% by UCB.
8.2 Entire Agreement
This Agreement, the SNC Option Agreement and the UCB Option Agreement
contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all
arrangements or understandings with respect thereto, written or oral, entered
into on or before November 1, 1996, other than documents referred to herein or
therein, and a certain letter agreement dated the date hereof between the
parties. The terms and conditions of this Agreement and said Option Agreements
shall inure to the benefit of and be binding upon the parties hereto and
thereto and their respective successors. Nothing in this Agreement or said
Option Agreements, expressed or implied, is intended to confer upon any party,
other than the parties hereto and thereto, and their respective successors,
any rights, remedies, obligations or liabilities.
8.3 No Assignment
Neither of the parties hereto may assign any of its rights or obligations
under this Reorganization Agreement to any other person, except upon the prior
written consent of the other party.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent
by nationally recognized overnight express courier or by facsimile
transmission, addressed or directed as follows:
I-31
<PAGE>
If to UCB:
Ronald C. Monger
Executive Vice President
Chief Financial Officer
United Carolina Bancshares
127 West Webster Street
Post Office Box 632
Whiteville, North Carolina 28472
Fax No.: 910-642-1330
With a required copy to:
Howard V. Hudson, Jr.
General Counsel and Secretary
United Carolina Bancshares
127 West Webster Street
Post Office Box 632
Whiteville, North Carolina 28472
Fax No.: 910-642-1276
and
Frank M. Conner, III
Alston & Bird
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Fax No.: 202-508-3333
If to SNC:
Southern National Corporation
200 West Second Street
Winston-Salem, North Carolina 27101
Attention: Scott E. Reed
Fax No.: 910-733-0340
With a required copy to:
Womble Carlyle Sandridge & Rice
200 West Second Street
Winston-Salem, North Carolina 27101
Attention: Mr. William A. Davis, II
Fax No.: 910-733-8364
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Captions
The captions contained in this Agreement are for reference only and are not
part of this Agreement.
8.6 Counterparts
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
I-32
<PAGE>
8.7 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina applicable to agreements made and entirely
to be performed within such jurisdiction, except to the extent federal law may
be applicable.
8.8 Predecessor Agreement
On November 1, 1996, the parties hereto executed Agreement and Plan of
Reorganization (the "Predecessor Agreement"). Following execution of the
Predecessor Agreement, the parties have agreed to certain changes, all of
which are reflected in this Amended and Restated Agreement. This Amended and
Restated Agreement amends and supersedes the Predecessor Agreement in its
entirety from the date of its execution, and the Predecessor Agreement shall
have no further force and effect.
IN WITNESS WHEREOF, THE PARTIES HERETO, INTENDING TO BE LEGALLY BOUND
HEREBY, HAVE CAUSED THIS AMENDED AND RESTATED AGREEMENT TO BE EXECUTED IN
COUNTERPARTS BY THEIR DULY AUTHORIZED OFFICERS, ALL AS OF THE DAY AND YEAR
FIRST ABOVE WRITTEN.
Southern National Corporation
John A. Allison IV
By___________________________________
Title:__ Chairman and Chief Executive
Officer
United Carolina Bancshares
Corporation
E. Rhone Sasser
By___________________________________
Title:__ Chairman and Chief Executive
Officer
I-33
<PAGE>
ANNEX A
ARTICLES OF MERGER
OF
UNITED CAROLINA BANCSHARES CORPORATION
INTO
SOUTHERN NATIONAL CORPORATION
----------------
Pursuant to the provisions of Section 55-11-05 of the General Statutes of
North Carolina, Southern National Corporation ("SNC") hereby submits these
Articles of Merger for the purpose of merging United Carolina Bankshares
Corporation ("UCB") into SNC (the "Merger"):
ARTICLE I
The following Plan of Merger was duly approved in the manner prescribed by
law by each of the corporations participating in the Merger on the day of
, 1997, pursuant to the terms of the Amended and Restated Agreement and
Plan of Reorganization, dated as of November 1, 1996, between SNC and UCB (the
"Reorganization Agreement"):
1. Constituent Corporations. The name of the corporation proposing to
merge is United Carolina Bancshares Corporation, a North Carolina
corporation (the "Merging Corporation"); and the name of the corporation
into which the Merging Corporation proposes to merge and which shall
survive is Southern National Corporation, a North Carolina corporation (the
"Surviving Corporation"). The Merging Corporation and the Surviving
Corporation are hereinafter referred to collectively as the "Constituent
Corporations."
2. Effect of the Merger. UCB shall be merged with and into SNC in
accordance with the applicable provisions of the North Carolina Business
Corporation Act ("NCBCA"). From and after the effective time of the Merger
as specified in Section 7 (the "Effective Time"), the separate existence of
UCB shall cease, and the Surviving Corporation shall thereupon and
thereafter, to the extent consistent with its Articles of Incorporation,
possess all the rights, privileges, immunities, and franchises, of a public
as well as of a private nature, of each of the Constituent 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 Constituent Corporations shall be
taken and deemed to be transferred to and vested in the Surviving
Corporation without further act or deed; and the title to any real estate
or any interest therein vested in either of the Constituent Corporations
shall not revert or be in any way impaired by reason of the Merger. The
Surviving Corporation shall thenceforth be responsible and liable for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim existing or action or proceeding, civil or
criminal, pending by or against either of the Constituent Corporations may
be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in its place; and any judgment rendered
against either of the Constituent Corporations may be enforced against the
Surviving Corporation. Neither the rights of creditors nor any liens upon
the property of either of the Constituent Corporations shall be impaired by
reason of the Merger. The Articles of Incorporation and Bylaws of SNC at
the Effective Time shall become the Articles of Incorporation and Bylaws of
the Surviving Corporation.
3. Merger Consideration. As used herein, the term "Merger Consideration"
shall mean the whole shares of Common Stock, par value $5.00 per share, of
SNC together with the associated rights to acquire Series B Junior
Participating Preferred Stock or other securities or property
(collectively, the "SNC Common Stock") to be exchanged for each share of
Common Stock, $4.00 par value per share, of UCB (the "UCB Common Stock")
issued and outstanding as of the Effective Time, and cash (without
interest) to be payable in exchange for any fractional share of SNC Common
Stock which would otherwise be exchanged for a share of UCB Common Stock.
The number of shares of SNC Common Stock to be issued
A-1
<PAGE>
in exchange for each issued and outstanding share of UCB Common Stock shall
be in the ratio of shares of SNC Common Stock for each share of UCB
Common Stock issued and outstanding (the "Exchange Ratio"). The value of
any fractional share shall be determined by multiplying the fractional part
of a share of SNC Common Stock by the market value of one share of SNC
Common Stock at the Effective Time. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect
of any fractional shares.
4. Dissenting Shares. Any UCB shareholder who shall have dissented from
the Merger in accordance with the NCBCA and who has properly exercised such
shareholder's rights to demand payment of the value of the shareholder's
shares (the "Dissenting Shares") as provided in the NCBCA (the "Dissenting
Shareholder") shall thereafter have only such rights, if any, as are
provided a Dissenting Shareholder in accordance with the NCBCA and shall
have no rights to receive the Merger Consideration; provided, however, that
if a Dissenting Shareholder shall withdraw (in accordance with the NCBCA)
the demand for such appraisal or shall become ineligible for such
appraisal, then such Dissenting Shareholder's Dissenting Shares
automatically shall cease to be Dissenting Shares and shall be converted
into and represent only the right to receive from the Surviving Corporation
the Merger Consideration upon surrender of the certificate representing the
Dissenting Shares. Any SNC shareholder who shall have dissented from the
Merger in accordance with the NCBCA and who has properly exercised such
shareholder's rights to demand payment of the value of the shareholder's
shares as provided in the NCBCA, shall thereafter have the rights as are
provided to a dissenter in accordance with the NCBCA to receive payment of
the fair value of the shareholder's SNC shares as provided in the NCBCA.
5. Conversion of Shares; Payment of Merger Consideration. The manner and
basis of converting shares is as follows:
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of UCB or the holders of record of UCB Common Stock,
each share of UCB Common Stock issued and outstanding immediately prior
to the Effective Time shall be converted into and shall represent the
right to receive, upon surrender of the certificate representing such
share of UCB Common Stock (as provided in paragraph (d) below), the
Merger Consideration.
(b) Each share of SNC Common Stock issued and outstanding immediately
prior to the Effective Time shall continue to be issued and
outstanding.
(c) Until surrendered, each outstanding certificate which prior to
the Effective Time represented one or more shares of UCB Common Stock
shall be deemed upon the Effective Time for all purposes to represent
only the right to receive the Merger Consideration. No interest will be
paid or accrued on the Merger Consideration upon the surrender of the
certificate or certificates representing shares of UCB Common Stock.
With respect to any certificate for UCB Common Stock that has been lost
or destroyed, the Surviving Corporation shall pay the Merger
Consideration attributable to such certificate upon receipt of a surety
bond or other adequate indemnity and evidence reasonably satisfactory
to it of ownership of the shares represented thereby. After the
Effective Time, no transfer of the shares of UCB Common Stock
outstanding immediately prior to the Effective Time shall be made on
the stock transfer books of the Surviving Corporation.
(d) Promptly after the Effective Time, SNC shall cause to be
delivered or mailed to each UCB shareholder a form of letter of
transmittal and instructions for use in effecting the surrender of the
certificates which, immediately prior to the Effective Time,
represented any shares of UCB Common Stock in exchange for the Merger
Consideration. Upon surrender of such certificates, together with such
letter of transmittal duly executed and completed in accordance with
the instructions thereto, and such other documents as may be reasonably
requested, UCB shall promptly cause the transfer to the persons
entitled thereto of the Merger Consideration.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have
been declared or made by UCB in respect of shares of UCB Common Stock
in accordance with the terms of the Reorganization Agreement and which
remain unpaid at the Effective Time. To the extent permitted by law,
former shareholders of record of UCB
A-2
<PAGE>
shall be entitled to vote after the Effective Time at any meeting of
SNC shareholders the number of whole shares of SNC Common Stock into
which their respective shares of UCB Common Stock are converted,
regardless of whether such holders have exchanged their certificates
representing UCB Common Stock for certificates representing SNC Common
Stock in accordance with the provisions of the Reorganization
Agreement. Whenever a dividend or other distribution is declared by SNC
on the SNC Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other
distributions on all shares of SNC Common Stock issuable pursuant to
this Agreement, but after the Effective Time no dividend or other
distribution payable to the holders of record of SNC Common Stock as of
any time subsequent to the Effective Time shall be delivered to the
holder of any certificate until such holder surrenders such certificate
for exchange as provided above. Upon surrender of such certificate,
both the SNC Common Stock certificate and any undelivered dividends and
cash payments payable hereunder (without interest) shall be delivered
and paid with respect to each share represented by such certificate.
(f) At the Effective Time, outstanding Options to purchase UCB Common
Stock, to the extent provided in the Reorganization Agreement (an
"Option" or the "Options"), whether or not then exercisable, shall be
converted into and become rights with respect to SNC Common Stock, and
SNC shall assume each Option, in accordance with the terms of the
applicable stock option plan and stock option agreement, or other
agreement, by which it is evidenced, subject to the conditions and
requirements of the Reorganization Agreement, and subject to the
following: (i) each Option assumed by SNC may be exercised solely for
shares of SNC Common Stock, (ii) the number of shares of SNC Common
Stock subject to such Option shall be the number of whole shares of SNC
(omitting any fractional share) determined by multiplying the number of
shares of UCB Common Stock subject to such Option immediately prior to
the Effective Time by the Exchange Ratio, and (iii) the per share
exercise price under each such Option shall be adjusted by dividing the
per share exercise price under each such Option by the Exchange Ratio
and rounding up to the nearest cent. In addition, notwithstanding the
provisions of clauses (ii) and (iii) above, each Option which is an
"incentive stock option" shall be adjusted as required by Section 424
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder, so as to continue as an incentive
stock option under Section 424(a) of the Code, and so as not to
constitute a modification, extension, or renewal of the Option, within
the meaning of Section 424(h) of the Code.
ARTICLE II
The respective shareholders of the Surviving Corporation and the Merging
Corporation have approved this Plan of Merger as required by the NCBCA.
ARTICLE III
The Merger shall become effective at on , 1997.
This the day of , 1997.
SOUTHERN NATIONAL CORPORATION
By: _________________________________
Name:
Title:
A-3
<PAGE>
APPENDIX II
[LETTERHEAD OF WHEAT FIRST BUTCHER SINGER APPEARS HERE]
March __, 1997
Board of Directors
United Carolina Bancshares Corporation
127 West Webster Street
P.O. Box 632
Whiteville, North Carolina 28472
Members of the Board:
United Carolina Bancshares Corporation ("United Carolina") and Southern
National Corporation ("Southern National") have entered into an Agreement and
a Plan of Reorganization, dated as of November 1, 1996 (the "Agreement"),
pursuant to which United Carolina will combine with Southern National by means
of the merger (the "Merger") of United Carolina with and into Southern
National. Upon consummation of the Merger, each of the outstanding shares of
the $4.00 par value common stock of United Carolina ("United Carolina Stock")
(other than shares held by dissenting shareholders) will be converted into
1.135 shares of the $5.00 par value common stock of Southern National
("Southern National Stock"), as adjusted in accordance with the terms of the
Agreement (the "Exchange Ratio").
Wheat, First Securities, Inc. ("Wheat First") as part of its investment
banking business, is regularly engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes. In the ordinary course of our business as a broker-dealer,
we may, from time to time, have a long or short position in, and buy or sell,
debt or equity securities of United Carolina or Southern National for our own
account or for the accounts of our customers. Wheat First will also receive a
fee from United Carolina for rendering this opinion.
You have asked us whether, in our opinion, the Exchange Ratio is fair, from
a financial point of view, to the holders of United Carolina Stock (other than
Southern National and its affiliates).
In arriving at the opinion set forth below, we have conducted discussions
with members of senior management of United Carolina and Southern National
concerning their businesses and prospects and have reviewed certain publicly
available business and financial information and certain other information
prepared or provided to us in connection with the Merger, including, among
other things, the following:
(1) United Carolina's Annual Reports to Shareholders, Annual Reports on
Form 10-K and related financial information for the three fiscal years
ended December 31, 1995;
(2) United Carolina's Quarterly Reports on Form 10-Q and related financial
information for the periods ended March 31, 1996, June 30, 1996 and
September 30, 1996, and certain financial data provided by management
of United Carolina for the period ended December 31, 1996;
(3) Southern National's Annual Reports to Shareholders, Annual Reports on
Form 10-K and related financial information for the three fiscal years
ended December 31, 1995;
II-1
<PAGE>
(4) Southern National's Quarterly Reports on Form 10-Q and related
financial information for the periods ended March 31, 1996, June 30,
1996 and September 30, 1996, and certain financial data provided by
management of Southern National for the period ended December 31, 1996;
(5) Certain publicly available information with respect to historical
market prices and trading activities for United Carolina Stock and
Southern National Stock and for certain publicly traded financial
institutions which Wheat First deemed relevant;
(6) Certain publicly available information with respect to banking
companies and the financial terms of certain other mergers and
acquisitions which Wheat First deemed relevant;
(7) The Agreement;
(8) Certain estimates of the cost savings, revenue enhancements and
divestitures projected by United Carolina and Southern National for the
combined company;
(9) Other financial information concerning the businesses and operations of
United Carolina and Southern National, including certain audited
financial information and certain internal financial analyses and
forecasts for United Carolina and Southern National prepared by the
senior management of these companies; and
(10) Such financial studies, analyses, inquiries and other matters as we
deemed necessary.
In preparing our opinion, we have relied on and assumed the accuracy and
completeness of all information provided to us or publicly available,
including the representations and warranties of United Carolina and Southern
National included in the Agreement, and we have not assumed any responsibility
for independent verification of such information. We have relied upon the
managements of United Carolina and Southern National as to the reasonableness
and achievability of their financial and operational forecasts and
projections, including the estimates of cost savings and revenue enhancements
expected to result from the Merger, and the assumptions and bases therefor,
provided to us, and, with your consent, we have assumed that such forecasts
and projections reflect the best currently available estimates and judgments
of such managements, and that such forecasts and projections will be realized
in the amounts and in the time periods currently estimated by such
managements. We also assumed, without independent verification, that the
aggregate allowances for loan losses and other contingencies for United
Carolina and Southern National are adequate to cover such losses. Wheat First
did not review any individual credit files of United Carolina or Southern
National, nor did it make an independent evaluation or appraisal of the assets
or liabilities of United Carolina or Southern National. We also assumed that,
in the course of obtaining the necessary regulatory approvals for the Merger,
no conditions will be imposed that will have a material adverse effect on the
contemplated benefits of the Merger, on a pro forma basis, to Southern
National.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on the date hereof and the information made
available to us through the date hereof. Events occurring after that date
could materially affect the assumptions and conclusions contained in our
opinion. We have not undertaken to reaffirm or revise this opinion or
otherwise comment on any events occurring after the date hereof. Wheat First's
opinion is directed to the Board of Directors of United Carolina and relates
only to the fairness, from a financial point of view, of the Exchange Ratio to
the holders of United Carolina Stock (other than Southern National and its
affiliates) and does not address any other aspect of the Merger or constitute
a recommendation to any shareholder of United Carolina as to how such
shareholder should vote with respect to the Merger. Wheat First's opinion does
not address the relative merits of the Merger as compared to any alternative
business strategies that might exist for United Carolina, nor does it address
the effect of any other business combination in which United Carolina might
engage.
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<PAGE>
It is understood that this opinion may be included in its entirety in the
Joint Proxy Statement/Prospectus. This opinion may not, however, be
summarized, excerpted from or otherwise publicly referred to without our prior
written consent.
On the basis of and subject to the foregoing, we are of the opinion that as
of the date hereof the Exchange Ratio is fair, from a financial point of view,
to the holders of United Carolina Stock (other than Southern National and its
affiliates).
Very truly yours,
WHEAT, FIRST SECURITIES, INC.
II-3
<PAGE>
APPENDIX III
March , 1997
[ALEX BROWN LETTERHEAD TO COME]
The Board of Directors of Southern National Corporation 200 West Second
Street Winston-Salem, North Carolina 27101
Dear Sirs:
Southern National Corporation ("SNC") has entered into an Agreement and Plan
of Reorganization dated November 1, 1996 (the "Agreement") with United
Carolina Bancshares Corporation ("UCB") whereby SNC will acquire 100% of the
UCB common shares, par value $4.00 per share ("UCB Common Stock") in exchange
for 1.135 shares of SNC common stock (the "Exchange Ratio"), par value $5.00
per share (SNC Common Stock") for each share of UCB Common Stock (other than
shares held by dissenting shareholders) (the "Merger"). We have assumed, with
your consent, that the Merger will qualify for pooling of interests accounting
treatment. You have requested our opinion as to whether the Exchange Ratio
paid by SNC pursuant to the Merger as contemplated in the Agreement is fair,
from a financial point of view, to SNC.
Alex. Brown & Sons Incorporated ("Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and
other purposes. We have acted as financial advisor to SNC in connection with
the Merger and will receive a fee for our services. We have also recently
acted as a co-manager of a public offering of SNC debentures. Alex. Brown
regularly publishes research reports regarding the financial services industry
and the businesses and securities of publicly owned companies in the industry,
including SNC.
In connection with our opinion, we have reviewed certain publicly available
financial information concerning SNC and UCB and certain internal financial
analyses and other information furnished to us by SNC relating to SNC and UCB.
We have also held discussions with members of the senior management of SNC
regarding the business and prospects of SNC and UCB, and have reviewed certain
internal financial analyses and forecasts for SNC and UCB prepared by their
respective managements. We have also reviewed with members of the senior
management of SNC the expected cost savings and revenue enhancements related
to the Merger. We also understand that SNC's obligation to consummate the
Merger was subject to the satisfactory completion of a post-Agreement
execution due diligence period. In addition, we have (i) reviewed the reported
price and trading activity for UCB Common Stock and SNC Common Stock, (ii)
compared certain financial and stock market information for UCB and SNC,
respectively, with similar information for certain commercial banks, the
securities of which are publicly traded, (iii) reviewed the Agreement and
compared the financial terms of the Agreement with those of certain recent
business combinations in the commercial banking industry and (iv) performed
such other studies and analyses and considered such other factors as we deemed
appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to information relating to the prospects of SNC and UCB,
we have assumed that such information reflects the best currently available
estimates and
III-1
<PAGE>
judgments of the managements of SNC and UCB, respectively, as to the likely
future financial performance of SNC and UCB. In addition, we have not made an
independent evaluation or appraisal of the assets or liabilities of SNC or UCB,
nor have we been furnished with any such evaluation or appraisal. Our opinion
is based on market, economic and other conditions as they exist and can be
evaluated as of the date of this letter.
Our advisory services and the opinion expressed herein are for the
information of the Board of Directors of SNC and do not constitute a
recommendation as to whether the Directors and the holders of SNC Common Stock
should vote in favor of the Merger. Our opinion may not be used for any other
purpose without our prior written consent. We hereby consent, however, to the
inclusion of this opinion as an exhibit to any filing made with the Securities
and Exchange Commission and to any proxy statement to be mailed to the holders
of SNC Common Stock in connection with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the Exchange Ratio to be paid by SNC pursuant to the
Merger as contemplated in the Agreement is fair, from a financial point of
view, to SNC.
Very truly yours,
ALEX. BROWN & SONS INCORPORATED
By: Donald W. Delson
Managing Director
III-2
<PAGE>
APPENDIX IV
PROVISIONS OF THE NORTH CAROLINA BUSINESS CORPORATION ACT RELATING TO
DISSENTERS' APPRAISAL RIGHTS
ARTICLE 13.
DISSENTERS' RIGHTS.
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
(S)55-13-01. DEFINITIONS.
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when and
in the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances, giving due consideration to the rate currently
paid by the corporation on its principal bank loans, if any, but not less
than the rate provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
(S)55-13-02. RIGHT TO DISSENT.
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his shares
in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation (other than
a parent corporation in a merger under G.S. 55-11-04) is a party unless (i)
approval by the shareholders of that corporation is not required under G.S.
55-11-03(g) or (ii) such shares are then redeemable by the corporation at a
price not greater than the cash to be received in exchange for such shares;
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, unless such
shares are then redeemable by the corporation at a price not greater than
the cash to be received in exchange for such shares;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than as permitted by G.S. 55-12-01,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale pursuant to a plan by which all or substantially all of the
net proceeds of the sale will be distributed in cash to the shareholders
within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it (i)
alters or abolishes a preferential right of the shares; (ii) creates,
alters, or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of
the shares; (iii) alters or abolishes a preemptive right of the holder of
the shares
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to acquire shares or other securities; (iv) excludes or limits the right of
the shares to vote on any matter, or to cumulate votes; (v) reduces the
number of shares owned by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for cash under G.S. 55-6-04;
or (vi) changes the corporation into a nonprofit corporation or cooperative
organization;
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in
exchange for cash or other property, unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(S)55-13-03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenter's rights as to fewer than all
the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
are determined as if the shares as to which he dissents and his other shares
were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(S)55-13-20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-
13-02 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters'
rights under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02 is
taken without a vote of shareholders, the corporation shall no later than 10
days thereafter notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this section,
such failure shall not invalidate any corporate action taken; but any
shareholder may recover from the corporation any damage which he suffered from
such failure in a civil action brought in his own name within three years
after the taking of the corporate action creating dissenters' rights under
G.S. 55-13-02 unless he voted for such corporate action.
(S)55-13-21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-
13-02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must actually
receive, before the vote is taken written notice of his intent to demand
payment for his shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
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(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment for his shares under this Article.
(S)55-13-22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-
13-02 is authorized at a shareholders' meeting, the corporation shall mail by
registered or certified mail, return receipt requested, a written dissenters'
notice to all shareholders who satisfied the requirements of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than 30 nor more than 60 days after the date
the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
(S)55-13-23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22 must
demand payment and deposit his share certificates in accordance with the terms
of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice,
is not entitled to payment for his shares under this Article.
(S)55-13-24. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.
(S)55-13-25. OFFER OF PAYMENT.
(a) As soon as the proposed corporate action is taken, or upon receipt of a
payment demand, the corporation shall offer to pay each dissenter who complied
with G.S. 55-13-23 the amount the corporation estimates to be the fair value
of his shares, plus interest accrued to the date of payment, and shall pay
this amount to each dissenter who agrees in writing to accept it in full
satisfaction of his demand.
(b) The offer of payment must be accompanied by:
(1) The corporation's most recent available balance sheet as of the end
of a fiscal year ending not more than 16 months before the date of offer of
payment, an income statement for that year, a statement of cash flows for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
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(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under G.S. 55-
13-28; and
(5) A copy of this Article.
(S)55-13-26. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the
transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand
procedure.
(S)55-13-28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH CORPORATION'S OFFER OR
FAILURE TO PERFORM.
(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate or reject the corporation's offer under G.S. 55-13-25 and demand
payment of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under G.S. 55-13-25 is
less than the fair value of his shares or that the interest due is
incorrectly calculated;
(2) The corporation fails to make payment to a dissenter who accepts the
corporation's offer under G.S. 55-13-25 within 30 days after the
dissenter's acceptance; or
(3) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing (i) under subdivision
(a)(1) within 30 days after the corporation offered payment for his shares or
(ii) under subdivisions (a)(2) and (a)(3) within 30 days after the corporation
has failed to perform timely. A dissenter who fails to notify the corporation
of his demand under subsection (a) within such 30-day period shall be deemed
to have withdrawn his dissent and demand for payment.
PART 3. JUDICIAL APPRAISAL OF SHARES.
(S)55-13-30. COURT ACTION.
(a) If a demand for payment under G.S. 55-13-28 remains unsettled, the
dissenter may commence a proceeding within 60 days after the date of his
payment demand under G.S. 55-13-28 and petition the court to determine the
fair value of the shares and accrued interest. Upon service upon it of the
petition filed with the court, the corporation shall pay to the dissenter the
amount offered by the corporation under G.S. 55-13-25.
(a1) If the dissenter does not commence the proceeding within the 60-day
period, the dissenter shall have an additional 30 days to either (i) accept in
writing the amount offered by the corporation under G.S. 55-13-25, upon which
the corporation shall pay such amount to the dissenter in full satisfaction of
his demand, or (ii) withdraw his demand for payment and resume the status of a
nondissenting shareholder. A dissenter who takes no action within such 30-day
period shall be deemed to have withdrawn his dissent and demand for payment.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to make all dissenters (whether or
not residents of this State) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be
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<PAGE>
served with a copy of the petition. Nonresidents may be served by registered
or certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The parties are entitled to the
same discovery rights as parties in other civil proceedings. However, in a
proceeding by a dissenter in a public corporation, there is no right to a
trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation.
(S)55-13-31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30 shall
determine all costs of the proceeding, including the reasonable compensation
and expenses of appraisers appointed by the court, and shall assess the costs
as it finds equitable.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of either or
any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this Article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
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<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation
Act contain specific provisions relating to indemnification of directors and
officers of North Carolina corporation. In general, such sections provide
that: (i) a corporation must indemnify a director or officer who is wholly
successful in his defense of a proceeding to which he is a party because of
his status as such, unless limited by the articles of incorporation, and (ii)
a corporation may indemnify a director or officer if he is not wholly
successful in such defense, if it is determined as provided by statute that
the director or officer meets a certain standard of conduct, provided when a
director or officer is liable to the corporation or is adjudged liable on the
basis that personal benefit was improperly received by him, the corporation
may not indemnify him. A director or officer of a corporation who is a party
to a proceeding may also apply to a court for indemnification, and the court
may order indemnification under certain circumstances set forth in statute. A
corporation may, in its articles of incorporation or bylaws or by contract or
resolution of the board of directors, provide indemnification in addition to
that provided by statute, subject to certain conditions.
SNC's bylaws provide for the indemnification of any director or officer of
SNC against liabilities and litigation expenses arising out of his status as
such, excluding: (i) any liabilities or litigation expenses relating to
activities which were at the time taken known or believed by such person to be
clearly in conflict with the best interest of SNC and (ii) that portion of any
liabilities or litigation expenses with respect to which such person is
entitled to receive payment under any insurance policy.
SNC's articles of incorporation provide for the elimination of the personal
liability of each director of SNC to the fullest extent permitted by law.
SNC maintains directors and officers liability insurance which, in general,
insures: (i) SNC's directors and officers against loss by reason of any of
their wrongful acts and (ii) SNC against loss arising from claims against the
directors and officers by reason of their wrongful acts, all subject to the
terms and conditions contained in the policy.
Certain rules of the Federal Deposit Insurance Corporation limit the ability
of certain depository institutions, their subsidiaries and their affiliated
depository institution holding companies to indemnify affiliated parties,
including institution directors. In general, subject to the ability to
purchase directors and officers liability insurance and to advance
professional expenses under certain circumstances, the rules prohibit such
institutions from indemnifying a director for certain costs incurred with
regard to an administrative or enforcement action commenced by any federal
banking agency which results in a final order or settlement pursuant to which
the director is assessed a civil money penalty, removed from office,
prohibited from participating in the affairs of an insured depository
institution or required to cease and desist from or take an affirmative action
described in Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. (S)
1818(b)).
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as exhibits to this registration
statement on Form S-4:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------------
<C> <S>
2 Amended and Restated Agreement and Plan of Reorganization, dated
as of November 1, 1996, between Southern National Corporation and
United Carolina Bancshares Corporation (Included as Appendix I to
the Joint Proxy Statement/Prospectus included in this
registration statement)
3(a) Articles of Incorporation of Southern National Corporation, as
amended (Incorporated herein by reference to Exhibit No. 3(a) to
the registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996)
3(b) Bylaws of Southern National Corporation, as amended (Incorporated
herein by reference to Exhibit No. 3.2 to the registrant's
registration statement on Form S-4 filed June 29, 1989
(Registration No. 33-29586))
4 Rights Agreement, dated as of December 17, 1996, between Southern
National Corporation and Branch Banking and Trust Company, as
Rights Agent (Incorporated herein by reference to Exhibit No. 1
of the registrant's registration statement on Form 8-A dated
January 10, 1997)
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC
8 Opinion of Womble Carlyle Sandridge & Rice, PLLC
23(a) Consent of Womble Carlyle Sandridge & Rice, PLLC (Included in
Exhibits 5 and 8)
23(b) Consent of Arthur Andersen LLP
23(c) Consent of KPMG Peat Marwick LLP
23(d) Consent of Wheat, First Securities, Inc.
23(e) Consent of Alex. Brown & Sons Incorporated
24 Power of Attorney
99(a) Form of Southern National Corporation Proxy Card
99(b) Form of United Carolina Bancshares Corporation Proxy Card
99(c) Option Agreement, dated November 1, 1996, between Southern
National Corporation and United Carolina Bancshares Corporation
(Incorporated herein by reference to Exhibit No. 2 of the
registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996)
99(d) Option Agreement, dated November 1, 1996, between Southern
National Corporation and United Carolina Bancshares Corporation
(Incorporated herein by reference to Exhibit No. 2 of the
registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996)
</TABLE>
(b) Financial statement schedules: Not applicable.
ITEM 22. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
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<PAGE>
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. The undersigned registrant hereby undertakes as follows: That prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
D. The registrant undertakes that every prospectus (i) that is filed
pursuant to Paragraph (C) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
E. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
F. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
G. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-4 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WINSTON-SALEM, STATE OF
NORTH CAROLINA, ON MARCH 18, 1997.
Southern National Corporation
By: /s/ Jerone C. Herring
----------------------------------
JERONE C. HERRING EXECUTIVE VICE
PRESIDENT AND SECRETARY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-4 has been signed by the following persons in
the capacities indicated on March 18, 1997.
SIGNATURE TITLE
/s/ John A. Allison IV Chairman of the
- ------------------------------------ Board and Chief
JOHN A. ALLISON IV Executive Officer
(principal
executive officer)
/s/ Scott E. Reed Senior Executive
- ------------------------------------ Vice President and
SCOTT E. REED Chief Financial
Officer (principal
financial officer)
/s/ Sherry A. Kellett Executive Vice
- ------------------------------------ President and
SHERRY A. KELLETT Controller
(principal
accounting
officer)
Paul B. Barringer* Director
- ------------------------------------
PAUL B. BARRINGER
W. R. Cuthbertson, Jr.* Director
- ------------------------------------
W. R. CUTHBERTSON, JR.
Ronald E. Deal* Director
- ------------------------------------
RONALD E. DEAL
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<PAGE>
SIGNATURE TITLE
A. J. Dooley, Sr.* Director
- -------------------------------------
A. J. DOOLEY, SR.
Joe L. Dudley, Sr.* Director
- -------------------------------------
JOE L. DUDLEY, SR.
Tom D. Efird* Director
- -------------------------------------
TOM D. EFIRD
O. William Fenn, Jr.* Director
- -------------------------------------
O. WILLIAM FENN, JR.
Paul S. Goldsmith* Director
- -------------------------------------
PAUL S. GOLDSMITH
Director
- -------------------------------------
L. VINCENT HACKLEY
Ernest F. Hardee* Director
- -------------------------------------
ERNEST F. HARDEE
Richard Janeway, M.D.* Director
- -------------------------------------
RICHARD JANEWAY, M.D.
Director
- -------------------------------------
J. ERNEST LATHEM, M.D.
James H. Maynard* Director
- -------------------------------------
JAMES H. MAYNARD
Joseph A. McAleer, Jr.* Director
- -------------------------------------
JOSEPH A. MCALEER, JR.
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<PAGE>
SIGNATURE TITLE
Albert O. McCauley* Director
- -------------------------------------
ALBERT O. MCCAULEY
Dickson McLean, Jr.* Director
- -------------------------------------
DICKSON MCLEAN, JR.
Charles E. Nichols* Director
- -------------------------------------
CHARLES E. NICHOLS
L. Glenn Orr, Jr.* Director
- -------------------------------------
L. GLENN ORR, JR.
A. Winniett Peters* Director
- -------------------------------------
A. WINNIETT PETERS
Director
- -------------------------------------
RICHARD PLAYER, JR.
C. Edward Pleasants, Jr.* Director
- -------------------------------------
C. EDWARD PLEASANTS, JR.
Nido R. Qubein* Director
- -------------------------------------
NIDO R. QUBEIN
Director
- -------------------------------------
A. TAB WILLIAMS, JR.
Jerone C. Herring
*By:
---------------------------------
Jerone C. Herring
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT 5
March 18, 1997
Southern National Corporation 200 West Second Street Winston-Salem, North
Carolina 27102
Re: Registration Statement on Form S-4 (the "Registration Statement") with
respect to shares issued pursuant to the Amended and Restated Agreement
and Plan of Reorganization by and between Southern National Corporation
("SNC") and United Carolina Bancshares Corporation dated as of November
1, 1996 (the "Reorganization Agreement")
Ladies and Gentlemen:
We have acted as counsel to SNC in connection with the registration of
27,947,958 shares of its Common Stock, par value $5.00 per share (the "Common
Stock"), issuable pursuant to the Reorganization Agreement, as set forth in
the Registration Statement that is being filed on the date hereof by SNC with
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). This opinion is
provided pursuant to the requirements of Item 21(a) of Form S-4 and Item
601(b)(5) of Regulation S-K.
In connection with the foregoing, we have examined such records, documents,
and proceedings as we have deemed relevant as a basis for the opinion
expressed herein, and we have relied upon an officer's certificate as to
certain factual matters.
Based on the foregoing, we are of the opinion that when (1) the Registration
Statement shall have been declared effective by order of the Commission and
(2) the shares of Common Stock have been issued upon the terms and conditions
set forth in the Reorganization Agreement and in accordance with the
Registration Statement, then the shares of Common Stock will be legally
issued, fully paid, and nonassessable.
We hereby consent to be named in the Registration Statement under the
heading "LEGAL MATTERS" as attorneys who passed upon the validity of the
shares of Common Stock and to the filing of a copy of this opinion as Exhibit
5 to the Registration Statement. In giving this consent, we do not admit that
we are within the category of persons whose consent is required by Section 7
of the Securities Act or other rules and regulations of the Commission
thereunder.
Sincerely,
WOMBLE CARLYLE SANDRIDGE & RICE A
Professional Limited Liability
Company
By:Garza Baldwin, III
----------------------------------
Garza Baldwin, III
<PAGE>
EXHIBIT 8
March 18, 1997
Southern National Corporation 200 West Second Street Winston-Salem, North
Carolina 27101
Re: Registration Statement on Form S-4 (the "Registration Statement") with
respect to shares issued pursuant to the Amended and Restated Agreement
and Plan of Reorganization by and between Southern National Corporation
("SNC") and United Carolina Bancshares Corporation ("UCB") dated as of
November 1, 1996 (the "Reorganization Agreement")
Ladies and Gentlemen:
We have acted as counsel to SNC in connection with the registration of
27,947,958 shares of its Common Stock, par value $5.00 per share (the "Common
Stock"), issuable pursuant to the Reorganization Agreement, as set forth in
the Registration Statement that is being filed on the date hereof by SNC with
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). This opinion is
provided pursuant to the requirements of Item 21(a) of Form S-4 and Item
601(b)(8) of Regulation S-K. All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Reorganization Agreement.
In the Merger, UCB, a North Carolina corporation, will merge into SNC,
pursuant to North Carolina law, and each outstanding share of UCB Common Stock
(the only class outstanding) is to be converted into a number of shares of SNC
Common Stock determined under a formula in the Reorganization Agreement. Cash
will be paid in lieu of issuance of fractional shares. UCB shareholders are
entitled by state law to dissent from the Merger.
In giving this opinion we have reviewed, and with your permission we have
relied upon the representations and warranties contained in or the facts
described in, the Reorganization Agreement, the Registration Statement and
certificates dated March 18, 1997 in which officers of UCB and officers of SNC
make certain representations on behalf of UCB and SNC regarding the Merger
(the "Tax Certificates"). We also have reviewed such other documents as we
have considered necessary and appropriate for the purposes of this opinion.
In giving this opinion we have with your permission assumed that the
statements in the Tax Certificates are correct as of the date of this opinion,
and any representation or statement made "to the best of knowledge" or
similarly qualified is correct without such qualification. As to all matters
in which a person or entity has represented that such person or entity either
is not a party to, or does not have, or is not aware of, any plan or
intention, understanding or agreement, we have assumed that there is in fact
no such plan, intention, understanding or agreement. We also assume that (a)
the Merger will be consummated in accordance with the Reorganization
Agreement, and (b) UCB's only outstanding stock (as that term is used in
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code")) is
the UCB Common Stock.
Based on the forgoing, and subject to the limitations herein, we are of the
opinion that under existing law, upon consummation of the Merger in accordance
with the Reorganization Agreement, for federal income tax purposes:
(1) The Merger will constitute a "reorganization" within the meaning of
Section 368 of the Code.
(2) No gain or loss will be recognized by SNC or UCB by reason of the
Merger.
1
<PAGE>
(3) No gain or loss will be recognized by the shareholders of UCB upon the
receipt of SNC Common Stock (including any fractional share interest to
which they may be entitled) solely in exchange for their shares of UCB
Common Stock.
(4) A shareholder of UCB who receives cash in lieu of a fractional share of
SNC Common Stock will recognize gain or loss as if the fractional share
has been received and then redeemed for cash equal to the amount paid
by SNC in respect of such fractional share.
(5) The aggregate tax basis of the shares of SNC Common Stock received
(including any fractional share interest deemed received) by
shareholders of UCB who exchange all of their UCB Common Stock solely
for shares of SNC Common Stock in the Merger will be the same as the
aggregate tax basis of the shares of UCB Common Stock surrendered in
exchange therefor.
(6) The holding period of the shares of SNC Common Stock received in the
Merger (including any fractional share interest deemed received) will
include the period during which the shares of UCB Common Stock
surrendered in exchange therefor were held, provided such shares of UCB
Common Stock were held as capital assets at the Effective Time.
We express no opinion as to the laws of any jurisdiction other than the
United States of America. Further, our opinion is limited to the specific
conclusions set forth above, and no other opinions are expressed or implied.
The opinions stated with respect to shares of UCB Common Stock do not apply to
any stock rights, warrants or options to acquire UCB Common Stock. The
opinions stated as to UCB shareholders are general in nature and do not
necessarily apply to any particular UCB shareholder, and, for example, may not
apply to shareholders who are corporations, trusts, dealers in securities,
financial institutions, insurance companies or tax exempt organizations; or to
persons who are not United States citizens or resident aliens or domestic
entities (partnerships or trusts), are subject to the alternative minimum tax
(to the extent that tax affects the tax consequences), or are subject to the
"golden parachute" provisions of the Code (to the extent that tax affects the
tax consequences); or to shareholders who acquired UCB Common Stock pursuant
to employee stock options or otherwise as compensation if such shares are
subject to any restriction related to employment, who do not hold their shares
as capital assets, or who hold their shares as part of a "straddle" or
"conversion transaction."
This opinion represents our best legal judgement, but it has no binding
effect or official status of any kind. Changes to the Code or in regulations
or rulings thereunder, or changes by the courts in the interpretation of the
authorities relied upon, may be applied retroactively and may affect the
opinions expressed herein. Any material defect in any assumption or
representation on which we have relied would adversely affect our opinion.
We furnish this opinion to you solely to support the discussion set forth
under the headings "SUMMARY-- The Merger--Certain Federal Income Tax
Consequences," "THE MERGER--The Reorganization Agreement--Conditions to the
Merger," "THE MERGER--Certain Federal Income Tax Consequences of the Merger"
and "LEGAL MATTERS" in the Registration Statement, and we do not consent to
its use for any other purpose. We hereby consent to be named in the
Registration Statement under the foregoing heading and to the filing of a copy
of this opinion as Exhibit 8 to the Registration Statement. In giving this
consent, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the Securities act or the rules and
regulations of the Commission thereunder.
Very truly yours,
WOMBLE CARLYLE SANDRIDGE & RICE A
Professional Limited Liability Company
By: Jasper L. Cummings, Jr.
-----------------------------------
Jasper L. Cummings, Jr.
2
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants,we hereby consent to the incorporation by
reference in this registration statement of our report dated January 14, 1997,
included in Southern National Corporation's Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
------------------------------------
Charlotte, North Carolina March 18, 1997
<PAGE>
EXHIBIT 23(C)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
United Carolina Bancshares Corporation
We consent to the use of our report incorporated herein by reference, and to
the reference to our firm under the heading "Experts" in the prospectus. Our
report dated February 21, 1997, refers to the fact that on January 1, 1994, the
Corporation adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits".
KPMG Peat Marwick LLP
Raleigh, North Carolina
March 18, 1997
<PAGE>
EXHIBIT 23(D)
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use in this Registration Statement on Form S-4 of
our letter to the Board of Directors of United Carolina Bancshares Corporation
included as Appendix II to the Joint Proxy Statement-- Prospectus that is a
part of this Registration Statement, and to the references to such letters and
to our firm in such Joint Proxy Statement--Prospectus. In giving such consent
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or the rules
and regulations of the Securities and Exchange Commission thereunder.
/s/ Wheat, First Securities, Inc.
WHEAT, FIRST SECURITIES, INC.
Richmond, Virginia Date: March 18, 1997
<PAGE>
EXHIBIT 23(E)
CONSENT OF ALEX. BROWN & SONS INCORPORATED
We hereby consent to the inclusion of our opinion dated November 1, 1996,
and updated as of March 19, 1997, as an Annex to the Joint Proxy
Statement/Prospectus filed as part of the Registration Statement on Form S-4
of Southern National Corporation, and to the references to our firm as
financial advisor to SNC and to our opinion contained in said Joint Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the rules and regulations of the Securities
and Exchange Commission.
ALEX. BROWN AND SONS INCORPORATED
By: /s/ Howard J. Loewenberg
------------------------------------
Name: Howard J. Loewenberg
Title: Principal
March 18, 1997
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned, being a director and/or officer of Southern
National Corporation (the "Company"), hereby nominates, constitutes and
appoints John A. Allison, Scott E. Reed and Jerone C. Herring, or any one of
them severally, to be his or her true and lawful attorney-in-fact and to sign
in his or her name and on his or her behalf in any and all capacities stated
below, and to file with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-4 (the "Registration
Statement") relating to the issuance of shares of the Company's common stock,
$5.00 par value per share, in connection with the acquisition by the Company
of United Carolina Bancshares Corporation, a North Carolina corporation, and
to file any and all amendments, including post-effective amendments, to the
Registration Statement, making such changes in the Registration Statement as
such attorney-in-fact deems appropriate, and generally to do all such things
on his or her behalf in any and all capacities stated below to enable the
Company to comply with the provisions of the Securities Act of 1933, as
amended, and all requirements of the Commission.
This Power of Attorney has been signed by the following persons in the
capacities indicated on December 17, 1996.
/s/John A. Allison IV /s/Scott E. Reed
- ------------------------------------- -------------------------------------
Name:John A. Allison IV Name:Scott E. Reed
Title: Chairman of the Board and Title: Senior Executive Vice
Chief Executive Officer President and Chief Financial
(principal executive officer) Officer (principal financial
officer)
/s/Sherry A. Kellett /s/Paul B. Barringer
- ------------------------------------- -------------------------------------
Name:Sherry A. Kellett Name:Paul B. Barringer
Title: Executive Vice President and Title: Director
Controller (principal
accounting officer)
/s/W.R. Cuthbertson, Jr. /s/Ronald E. Deal
- ------------------------------------- -------------------------------------
Name:W.R. Cuthbertson, Jr. Name:Ronald E. Deal
Title: Director Title: Director
/s/A. J. Dooley, Sr. /s/Joe J. Dudley, Sr.
- ------------------------------------- -------------------------------------
Name:A. J. Dooley, Sr. Name:Joe J. Dudley, Sr.
Title: Director Title: Director
/s/Tom D. Efird /s/O. William Fenn, Jr.
- ------------------------------------- -------------------------------------
Name:Tom D. Efird Name:O. William Fenn, Jr.
Title: Director Title: Director
/s/Paul S. Goldsmith
- ------------------------------------- -------------------------------------
Name:Paul S. Goldsmith Name:L. Vincent Hackley
Title: Director Title: Director
<PAGE>
PROXY PROXY
SOUTHERN NATIONAL CORPORATION
ANNUAL MEETING APRIL 22, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OFSOUTHERN NATIONAL
CORPORATION
The undersigned shareholder of Southern National Corporation, a North
Carolina corporation ("SNC"), appoints John A. Allison IV and Jerone C.
Herring, or either of them, with full power to act alone, the true and lawful
attorneys-in-fact of the undersigned, with full power of substitution and
revocation, to vote all shares of stock of SNC which the undersigned is
entitled to vote at the annual meeting of shareholders of SNC (the "SNC
Meeting") to be held at the Charlotte Convention Center, 501 South College
Street, Charlotte, North Carolina on April 22, 1997, at 11:00 a.m., local time
and at any adjournment thereof, with all powers the undersigned would possess
if personally present, as follows:
THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS ON THE REVERSE SIDE IF NO
INSTRUCTION TO THE CONTRARY IS INDICATED. IF ANY OTHER BUSINESS IS PRESENTED
AT THE SNC MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT.
(Continued on reverse side)
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
. FOLD AND DETACH HERE .
<PAGE>
1. Proposal to approve (a) an Agreement and Plan of Reorganization, dated as of
November 1, 1996, by and between SNC and United Carolina Bancshares
Corporation, a North Carolina corporation ("UCB"), as amended and restated,
and a related Plan of Merger, and (b) the related issuance of shares of
common stock of SNC ("SNC Common Stock"), pursuant to which UCB will merge
with and into SNC, and each share of common stock of UCB (other than shares
held by dissenting shareholders) will be converted into the right to receive
1.135 shares of SNC Common Stock (subject to possible upward adjustment) and
cash in lieu of any fractional share.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Proposal to elect eight directors of SNC for three-year terms expiring in
2000.
Paul B. Barringer O. William Fenn, Jr. L. Vincent Hackley Charles E. Nichols
A. J. Dooley, Sr. Paul S. Goldsmith Joseph A. McAleer A. Winniett Peters
FOR AGAINST ABSTAIN
[_] [_] [_]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE FOLLOWING SPACE.)
- --------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example [X]
3. Proposal to approve an amendment to Article I of the Articles of
Incorporation to change SNC's name to "BB&T Corporation."
FOR AGAINST ABSTAIN
[_] [_] [_]
4. Proposal to approve an amendment to Article III, Section 2 of SNC's Bylaws
to increase the maximum number of directors of SNC from 25 to 30.
FOR AGAINST ABSTAIN
[_] [_] [_]
5. Proposal to approve an amendment to the Southern National Corporation Non-
Employee Directors' Deferred Compensation and Stock Option Plan to increase
the number of shares of SNC Common Stock issuable thereunder from 400,000
shares to 900,000 shares.
FOR AGAINST ABSTAIN
[_] [_] [_]
6. Proposal to ratify the reappointment of Arthur Andersen LLP as SNC's
auditors for 1997.
FOR AGAINST ABSTAIN
[_] [_] [_]
7. Any other matter that may be submitted to a vote of shareholders at the SNC
meeting.
THE UNDERSIGNED HEREBY RATIFIES AND CONFIRMS ALL THAT SAID PROXIES, OR EITHER
OF THEM OR THEIR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF, AND ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE SNC MEETING AND THE
JOINT PROXY STATEMENT/PROSPECTUS ACCOMPANYING IT.
Dated this day of , 1997.
(SEAL)
- ------------------------------------------------------------------------
(SEAL)
- ------------------------------------------------------------------------
PLEASE INSERT DATE OF SIGNING. SIGN EXACTLY AS NAME APPEARS AT LEFT. WHERE
STOCK IS ISSUED IN TWO OR MORE NAMES, ALL SHOULD SIGN. IF SIGNING AS ATTORNEY,
ADMINISTRATOR, EXECUTOR, TRUSTEE OR GUARDIAN, GIVE FULL TITLE AS SUCH. A COR-
PORATION SHOULD SIGN BY AN AUTHORIZED OFFICER AND AFFIX SEAL.
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY)
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
. FOLD AND DETACH HERE .
<PAGE>
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
UNITED CAROLINA BANCSHARES CORPORATION
The undersigned hereby appoints E. Rhone Sasser, C. Frank Griffin, and
Harold B. Wells, and each of them, with full power of substitution, as Proxies
and hereby authorizes them to represent and to vote, as designated below, all
the shares of common stock of United Carolina Bancshares Corporation ("UCB")
held of record by the undersigned on March 3, 1997, at the Annual Meeting of
Shareholders to be held April 22, 1997, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH OF THE PROPOSALS SET FORTH ON THE REVERSE SIDE.
(Continued on reverse side)
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
. FOLD AND DETACH HERE .
<PAGE>
1. Proposal to approve an Agreement and Plan of Reorganization, dated as of
November 1, 1996, by and between UCB and Southern National Corporation, a
North Carolina corporation ("SNC"), as amended and restated, and a related
Plan of Merger, pursuant to which UCB will merge with and into SNC (the
"Merger"), and each share of common stock of UCB (other than shares held by
dissenting shareholders) will be converted into the right to receive 1.135
shares of common stock of SNC (subject to possible upward adjustment) and
cash in lieu of any fractional share.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. ELECTION OF DIRECTORS
[_] FOR all nominees listed below (except as marked to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all nominees listed below
J. W. Adams W. E. Carter T. P. Dillon J. E. Shaw
J. V. Andrews A. E. Cleveland J. C. High H. B. Wells
R. M. Carter J. L. Cresimore E. R. Sasser C. M. Winston
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
3. In their discretion, the Proxies are authorized to vote the shares
represented hereby upon such other business as may properly come before the
meeting and for substitute nominees, if any.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE PROPOSALS .
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE PROMPTLY SIGN AND DATE BELOW AND RETURN IN THE ENCLOSED ENVELOPE.
Dated: , 1997
--------------------------------------------------------------------------
Signature:
----------------------------------------------------------------------
Signature:
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK RECORDS, JOINT OWNERS
SHOULD EACH SIGN PERSONALLY. TRUSTEES AND OTHERS SIGNING IN A REPRESENTATIVE
CAPACITY SHOULD INDICATE THE CAPACITY IN WHICH THEY SIGN.
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY)
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
. FOLD AND DETACH HERE .
