SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 3, 1996
Union Financial Bancshares, Inc.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5735 57-1001177
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State or other jurisdiction Commission (I.R.S. Employer
of incorporation File Number Identification No.)
203 West Main Street, Union, South Carolina 29379
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code) (864) 427-1863
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On October 3, 1996, the Registrant's wholly-owned
subsidiary, Union Federal Savings Bank, entered into a Purchase
and Assumption Agreement ("Agreement") with First Union National
Bank of South Carolina to purchase First Union's Laurens, South
Carolina branch. For further information, reference is made to
the Agreement and to Registrant's press release dated October 3,
1996, which are attached hereto as Exhibits 10 and 99,
respectively, and incorporated herein by reference.
Item 7. Exhibits
10. Purchase and Assumption Agreement dated as of October
3, 1996 by and between Union Federal Savings Bank and
First Union National Bank of South Carolina.
99. Press Release dated October 3, 1996.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized.
UNION FINANCIAL BANCSHARES, INC.
DATE: October 8, 1996 By: /s/ Dwight V. Neese
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Dwight V. Neese
President
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EXHIBIT 10
PURCHASE AND ASSUMPTION AGREEMENT
---------------------------------
This Agreement, dated as of October 3, 1996, is by and
between Union Federal Savings Bank, a federal savings bank
organized under the laws of the United States and having its
principal place of business in Union, South Carolina ("Buyer"),
and First Union National Bank of South Carolina, a national
banking association having its principal place of business in
Greenville, South Carolina ("Seller").
I. DEFINITIONS
1.1 Certain Defined Terms.
---------------------
Some of the capitalized terms appearing in this
Agreement are defined below. The definition of a term expressed
in the singular also applies to that term as used in the plural
and vice versa.
"Affiliate" means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, a specified
Person, except in those cases where the controlling Person
exercises control solely in a fiduciary capacity.
"Amount of Premium" has the meaning set forth in
Section 3.1 of this Agreement.
"Assets" has the meaning set forth in Section 2.1 of
this Agreement.
"Benefit Plan" means any pension, profit-sharing, or
other employee benefit, fringe benefit, severance or welfare
plan maintained by or with respect to which contributions are
made by, Seller or any of its Affiliates with respect to
Seller's employees.
"Branch" means that branch office of Seller listed on
Schedule 1.1 to this Agreement.
"Business Day" means any Monday, Tuesday, Wednesday,
Thursday or Friday on which Seller is open for business.
"Cash Reserve Lines of Credit" means those consumer
lines of credit made available to customers of the Branch as a
protection against overdrafts on Deposit Accounts.
"Cash Reserve Loans" means those loans outstanding on
the Closing Date pursuant to Cash Reserve Lines of Credit.
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"Closing" means the purchase of the Assets by Buyer
and the assumption of the Liabilities by Buyer on the Closing
Date.
"Closing Date" has the meaning set forth in Section
9.1 of this Agreement.
"Deposit Accounts" means the deposit accounts at the
Branch, the balances of which are included in the Deposits or
would be so included if the Deposit Account had a positive
balance.
"Deposits" means all deposits (as defined in 12 U.S.C.
Section 1813(l)) which are booked at the Branch on the Closing
Date, including in each case accrued but unpaid interest and
both collected and uncollected funds, but excluding (i)
deposits held in accounts for which Seller acts as fiduciary
(other than deposits held by Retirement Plans), and (ii)
deposits constituting official checks, travelers checks, money
orders or certified checks.
"Equipment Leases" means those operating and financial
leases and conditional sales contracts covering Fixed Assets
which Seller may assign to Buyer without restriction or with the
lessor's written consent.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" means any entity that is considered
one employer with Seller under Section 4001 of ERISA or Section
414 of the Internal Revenue Code of 1986, as amended.
"Federal Funds Rate" means, for any day, the rate per
annum (expressed on a basis of calculation of actual days in a
year) equal to the "near closing bid" federal funds rate
published in The Wall Street Journal on the Business Day
following the Closing Date.
"Fixed Assets" means all fixtures (including signage
poles and frames), leasehold improvements, furnishings
(excluding artwork owned by Seller), vaults, safe deposit boxes,
equipment (including, for example, all ATM machines, but
excluding any computer or telecommunications equipment),
supplies (other than forms and other supplies which bear
Seller's name or logo), and other personal property listed on
Schedule 1.2 to this Agreement, which are owned or (to the
extent of Seller's interest as lessee) leased by Seller, which
are located at the Branch on the Closing Date.
"Governmental Entity" means any government or any
agency, bureau, board, commission, court, department, official,
political subdivision, tribunal or other instrumentality of any
government having authority in the United States, whether
federal, state or local.
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"Hazardous Material" means any substance presently
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous or otherwise regulated, under any
applicable state or federal law relating to the protection,
preservation or restoration of the environment, including, but
not limited to, the following federal environmental laws: the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendment and Reauthorization Act,
the Water Pollution Control Act of 1972, the Clean Air Act, the
Clean Water Act, the Resource Conservation and Recovery Act of
1976, the Solid Waste Disposal Act, the Toxic Substances Control
Act and the Insecticide, Fungicide and Rodenticide Act, each as
amended.
"Liabilities" has the meaning set forth in Section 2.2
of this Agreement.
"Mediator" means a firm of certified public
accountants mutually agreeable to Seller and Buyer.
"Overdrafts" means those overdrafts of the book
balance of any Deposit Accounts which are not subject to Cash
Reserve Lines of Credit.
"Person" means an association, a corporation, an
individual, a partnership, a trust or any other entity or
organization, including a Governmental Entity.
"Real Property" means the land (including the
improvements thereon) owned by Seller on which the Branch is
located.
"Retirement Plans" means those non-discretionary
individual retirement accounts and qualified retirement plan
accounts relating to the Deposits for which Seller acts as
custodian or trustee.
"Training Expenses" means the overtime and
out-of-pocket expenses (meals and mileage) incurred by Seller as
a result of Buyer's training schedule prior to Closing.
"Welfare Benefit Plans" means those Benefit Plans
which are "welfare benefit plans" as defined by ERISA.
II. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Purchase of Assets.
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Subject to the terms and conditions of this Agreement,
Seller agrees to sell, assign and transfer possession of and all
right, title and interest of Seller in and to the following
assets to Buyer (the "Assets") and Buyer agrees to purchase the
same from Seller, as of the close of business on the Closing
Date:
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(a) the Real Property;
(b) the Fixed Assets;
(c) cash on hand in the Branch;
(d) the Cash Reserve Loans;
(e) the Overdrafts; and
(f) Seller's rights under the Cash Reserve Lines of
Credit and any safe deposit box rental agreements relating
to safe deposit boxes located at the Branch.
2.2 Assumption of Liabilities.
Buyer agrees to assume, pay, perform and discharge the
following liabilities of Seller (the "Liabilities") as of the
close of business on the Closing Date:
(a) the Deposits and all terms and agreements
relating to the Deposit Accounts;
(b) Seller's duties and responsibilities relating to
the Deposits with respect to: (i) the abandoned property
laws of any state, (ii) any legal process which is served
on Seller on or before the Closing Date with respect to
claims against or for the Deposits or (iii) any other
applicable law;
(c) Seller's duties and responsibilities with respect
to the Equipment Leases for the period after the Closing
Date;
(d) Seller's duties and responsibilities with respect
to the Cash Reserve Lines of Credit;
(e) Seller's duties and responsibilities with respect
to the safe deposit boxes located at the Branch; and
(f) Seller's duties and responsibilities with respect
to the Retirement Plans.
2.3 Transfer of Records.
(a) At the Closing, Seller also shall transfer to
Buyer possession and all right, title and interest of
Seller in and to all books and records relating to the
Assets and the Liabilities which are maintained at the
Branch.
(b) All books and records relating to the Assets and
the Liabilities held by either Seller or Buyer after the
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Closing Date shall be maintained in accordance with (and
for the period provided in) that party's standard
recordkeeping policies and procedures. Throughout such
period, the party holding such books and records shall
comply with the reasonable request of the other party to
provide copies of specified documents, at the expense of
the requesting party. The requesting party shall give
reasonable notice of any such request.
2.4 Tax Matters.
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(a) Notwithstanding Section 2.5, Buyer shall pay to
Seller or the relevant taxing jurisdiction (as appropriate
under the circumstances), or reimburse Seller if Seller
shall have paid, any sales and use taxes and any interest
and penalties thereon which are payable or arise as a
result of this Agreement or the consummation of any of the
transactions contemplated by this Agreement.
(b) Notwithstanding Section 2.5, Buyer shall pay to
Seller or the relevant taxing jurisdiction (as appropriate
under the circumstances), or reimburse Seller if Seller
shall have paid, any real property transfer, recording and
similar documentary taxes arising out of the transfer of
the Real Property and the Fixed Assets.
2.5 Proration of Certain Expenses.
-----------------------------
Subject to the provisions of Section 2.4, all rentals,
real estate taxes, personal property taxes (tangible or
intangible), and utility, water and sewer charges and
assessments, as well as semiannual assessments paid to the Bank
Insurance Fund with respect to the Deposits, shall be prorated
between Buyer and Seller as of the close of business on the
Closing Date.
2.6 Back Office Conversion.
----------------------
Seller and Buyer shall cooperate with each other and
shall use their reasonable best efforts (consistent with their
internal day-to-day operations) in order to cause the timely
transfer of information concerning the Assets and the
Liabilities which is maintained on Seller's data processing
systems so that Buyer can incorporate such information into
Buyer's data processing systems no later than the opening of
business on the Business Day following the Closing Date.
2.7 Processing of Certain Items After Closing.
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A draft of the written practices and procedures under
which Buyer and Seller shall handle all items (including, for
example, automated clearing house and electronic funds transfer
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items) relating to the Assets and the Liabilities which are
presented or returned following the Closing Date and any claims
relating to such items are attached to this Agreement as Exhibit
A, including certain other matters relating to consummation of
the transactions contemplated hereby (the "Working Agreement").
As promptly as practicable following the execution of this
Agreement, the parties agree to finalize the Working Agreement.
2.8 Information Returns.
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Buyer shall file all required information returns with
the Internal Revenue Service with respect to interest paid on
the Deposits after the Closing Date, interest received on the
Cash Reserve Loans after the Closing Date, and any other
information returns required with respect to the Assets and the
Liabilities for the periods beginning after the Closing Date.
Seller will file all required information returns with the
Internal Revenue Service and any information returns required by
state or local tax authorities with respect to interest paid on
the Deposits on or before the Closing Date, interest received on
the Cash Reserve Loans on or before the Closing Date, and any
other information returns required with respect to the Assets
and the Liabilities for periods ending on or before the Closing
Date.
III. CONSIDERATION
3.1 Calculation.
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In consideration of Buyer's purchase of the Assets and
its assumption of the Liabilities, Seller agrees to pay to Buyer
an amount equal to the Deposits, plus accrued interest thereon,
less the sum of the following, in each case calculated as of the
close of business on the Closing Date:
(a) $800,000.00, representing the purchase price of
the Real Property and the Fixed Assets;
(b) the principal amount of the Cash Reserve Loans,
plus accrued interest thereon;
(c) the amount of cash on hand at the Branch;
(d) the principal amount of the Overdrafts;
(e) the net amount (which may be a negative amount)
of taxes payable by Buyer and Seller under Section 2.4
(i.e., the amount payable by Buyer less the amount payable
by Seller);
(f) the net amount (which may be a negative amount)
of any adjustments under Section 2.5 (i.e., the amount
payable by Buyer less the amount payable by Seller);
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(g) an amount equal to 10.50 percent of the aggregate
outstanding balance of the Deposits as of the Closing Date
(the "Amount of Premium"); and
(h) the Training Expenses.
3.2 Settlement.
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(a) Not less than two Business Days before the
Closing Date, Seller shall deliver to Buyer a Preliminary
Closing Statement prepared in accordance with Seller's
customary practices and procedures used in preparing
financial statements, substantially in the form of Exhibit
B to this Agreement, which shall be completed as of the
close of business on the Friday before the Closing Date and
be the basis of a preliminary payment to be made to Buyer's
account on the Closing Date (the "Preliminary Payment").
(b) The parties shall cooperate in the preparation of
a Final Closing Statement within 30 days after the Closing
Date which shall be prepared in accordance with Seller's
customary practices and procedures used in preparing
financial statements, substantially in the form of Exhibit
C to this Agreement, which shall be completed as of the
close of business on the Closing Date. On the Business Day
after Buyer and Seller agree to the Final Closing
Statement, or Buyer and Seller receive notice of any
determination of the Final Closing Statement under
subsection (d) (the "Final Settlement Date"), Seller shall
pay to Buyer (or Buyer shall pay to Seller, as the case may
be) an amount (the "Adjustment Payment") equal to the
amount due stated on the Final Closing Statement, plus
interest from the day after the Closing Date until the
calendar day before the Adjustment Payment is made at a
rate per annum (calculated daily based on a 360-day year)
equal to the Federal Funds Rate.
(c) If the parties are unable to agree on a Final
Closing Statement within 30 days after the Closing Date,
either party may submit the matter to the Mediator, which
shall determine all disputed portions of the Final Closing
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Statement in accordance with the terms and conditions of
this Agreement within 30 days after the submission. The
parties shall each pay half of the fees and expenses of the
Mediator, except that the Mediator may assess the full
amount of its fees and expenses against either party if it
determines that party negotiated the Final Closing
Statement in bad faith. The Final Closing Statement, as
agreed upon by the parties and/or determined under this
subsection, shall be final and binding upon the parties.
(d) The Preliminary Payment and the Adjustment
Payment shall each be made by wire transfer of immediately
available funds to the account of the party receiving the
payment, which account shall be identified by the party
receiving the funds to the other party not less than two
Business Days prior to such payment.
IV. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties
to Buyer.
4.1 Power and Authority.
-------------------
(a) Seller has the corporate power and authority to
enter into and perform this Agreement. The execution and
delivery of this Agreement has been duly authorized by all
necessary corporate action by Seller. Upon execution and
delivery by both parties, this Agreement will constitute a
valid and binding obligation of Seller, enforceable in
accordance with its terms, subject to conservatorship,
receivership, and a court's right under general principles
of equity to refuse to direct specific performance.
(b) The performance of this Agreement by Seller will
not violate any provision of the Articles of Association or
Bylaws of Seller, or any applicable law, rule, regulation,
or order or any contract or instrument by which Seller is
bound, except for such violations which alone, or taken in
the aggregate, would not reasonably be expected to have a
material adverse effect on the financial condition,
business or operations of the Branch, taken as a whole, or
the consummation of the transactions contemplated by this
Agreement (a "Seller Material Adverse Effect").
4.2 Litigation and Regulatory Proceedings.
-------------------------------------
There are no actions, complaints, petitions, suits or
other proceedings, or any decree, injunction, judgment, order or
ruling, entered, promulgated or pending or (to Seller's
knowledge) threatened against Seller or any of the Assets or the
Liabilities, which alone, or taken in the aggregate, reasonably
would be expected to have a Seller Material Adverse Effect. No
governmental agency has notified Seller that it would oppose or
not approve or consent to the transactions contemplated by this
Agreement and Seller knows of no reason for any such opposition,
disapproval or nonconsent.
4.3 Consents and Approvals.
----------------------
Except for required regulatory approvals, no consents,
approvals, filings or registrations with any third party or any
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public body, agency or authority are required in connection with
Seller's consummation of the transactions contemplated by this
Agreement, other than any required lessor consents to the
assignment of the Equipment Leases and as may be required as a
result of any facts or circumstances relating solely to Buyer.
4.4 Real Property and Fixed Assets.
------------------------------
(a) Schedule 4.4 contains a list of all the Real
Property.
(b) Seller has good and marketable title to the Real
Property, free and clear of all encumbrances, except for
easements and restrictions of record, applicable zoning
laws, the rights of landlords under any ground leases
relating to the Real Property, the rights of any tenants,
and liens for taxes and assessments not delinquent.
4.5 Ownership of Cash Reserve Loans.
-------------------------------
Seller has full power and authority to hold each Cash
Reserve Loan, and has good title to the Cash Reserve Loans free
and clear of all liens and encumbrances. Seller is authorized
to sell and assign the Cash Reserve Loans to Buyer and, upon
such assignment, Buyer will have the rights of Seller with
respect to the Cash Reserve Loans in accordance with the terms
and conditions thereof.
4.6 Compliance with Certain Laws.
----------------------------
The Deposit Accounts and the Cash Reserve Lines of
Credit were opened, extended or made, and have been maintained,
in accordance with all applicable federal and state laws,
regulations, rules and orders, and the Branch has been operated
in compliance with Seller's policies and procedures and all
applicable federal and state laws, regulations, rules and
orders, except for such instances of noncompliance which do not
have, and are not reasonably likely to have, a Seller Material
Adverse Effect.
4.7 FDIC Insurance.
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The Deposits are insured by the Federal Deposit
Insurance Corporation through the Bank Insurance Fund to the
extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when
due by Seller.
4.8 Deposit Information.
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The books and records of Seller relating to
information about the Deposits have been maintained in
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accordance with Seller's policies and procedures and are true
and correct in all material respects.
V. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer makes the following representations and warranties to
Seller.
5.1 Power and Authority.
-------------------
(a) Buyer has the corporate power and authority to
enter into and perform this Agreement. The execution and
delivery of this Agreement has been duly authorized by all
necessary corporate action by Buyer. Upon execution and
delivery by both parties, this Agreement will constitute a
valid and binding obligation of Buyer, enforceable in
accordance with its terms subject to conservatorship,
receivership, and a court's right under general principles
of equity to refuse to direct specific performance.
(b) The performance of this Agreement by Buyer will
not violate any provision of the Charter, Bylaws or similar
governing documents of Buyer, or any applicable law, rule,
regulation, or order or any contract or instrument by which
Buyer is bound except for such violations which alone, or
taken in the aggregate, would not reasonably be expected to
have a material adverse effect on the consummation of the
transactions contemplated by this Agreement (a "Buyer
Material Adverse Effect").
5.2 Litigation and Regulatory Proceedings.
-------------------------------------
There are no actions, complaints, petitions, suits or
other proceedings, or any decree, injunction, judgment, order or
ruling, entered, promulgated or pending or (to Buyer's
knowledge) threatened against Buyer or any of its properties or
assets which alone, or taken in the aggregate, reasonably would
be expected to have a Buyer Material Adverse Effect. No
governmental agency has notified Buyer that it would oppose or
not approve or consent to the transactions contemplated by this
Agreement, and Buyer knows of no reason for any such opposition,
disapproval or nonconsent.
5.3 Consents and Approvals.
----------------------
Except for required regulatory approvals, no consents,
approvals, filings or registrations with any third party or any
public body, agency or authority are required in connection with
Buyer's consummation of the transactions contemplated by this
Agreement other than what may be required as a result of any
facts or circumstances relating solely to Seller.
VI. ADDITIONAL AGREEMENTS OF SELLER
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6.1 Access to Seller's Premises, Records and Personnel.
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(a) Upon execution of this Agreement, Seller shall
give Buyer and its representatives such access to the
Branch as Buyer may reasonably request, provided that Buyer
does not unreasonably interfere with the Branch's business
operations. Seller shall not be required to provide access
to or to disclose information where such access or
disclosure might violate or prejudice the rights of any
customer or employee or would be contrary to law, rule,
regulation or any legal or regulatory order or process or
any fiduciary duty or binding agreement entered into prior
to the date of this Agreement.
(b) Anything contained in this Agreement to the
contrary notwithstanding, Seller shall not be required to
disclose, or to cause the disclosure to Buyer or its
representatives (or provide access to any offices,
properties, books or records of Seller, that could result
in the disclosure to such Persons or others), of any tax
returns and/or any work papers relating thereto or any
other confidential information relating to income or
franchise taxes or other taxes of Seller, or trade secrets,
patent or trademark applications, or product research and
development belonging to or performed by or for Seller, nor
shall Seller be required to permit or to cause others to
permit Buyer or its representatives to copy or remove from
the offices or properties of Seller any documents, drawings
or other materials that might reveal any such confidential
information; provided, however, Buyer shall have access to
tax returns to the extent that liability for the taxes at
issue could be imposed on Buyer.
(c) At Buyer's request, Seller shall authorize and
permit certain of its officers and members of management to
engage in discussions with Buyer for the purposes of
discussing the Branch's business and negotiating and
concluding management employment contracts, employee
benefit plans, and new incentive plans and Buyer shall
maintain the confidentiality of any information furnished
by such officers or members of management of Seller
pursuant to such discussions with Buyer.
6.2 Matters Relating to Branch Closing.
----------------------------------
In the event that Buyer intends to close the Branch on
the Closing Date or before ninety (90) days thereafter, Buyer
and Seller agree to the following:
(a) Subject to subsection (b), Seller and Buyer shall
prepare Branch closing notices to Seller's customers, to be
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mailed by Seller at Buyer's request and expense, at such
time as shall be mutually agreed upon between Buyer and
Seller. Seller and Buyer also shall prepare another notice
to Seller's customers, to be mailed by Seller at Buyer's
request and expense, of Buyer's impending acquisition of
the Branch within ten Business Days following Seller's
receipt of notice that Buyer has obtained any and all
required regulatory approvals for the transactions
contemplated by this Agreement or such earlier date as
Seller and Buyer may mutually agree upon. After Seller
mails this notice, Buyer shall be permitted to provide to
Seller material to be sent, at Buyer's expense, to the
depositors, borrowers and other customers of the Branch
concerning the proposed acquisition and Buyer's products.
Each party's communication shall be subject to the approval
of the other party, which approval shall not be
unreasonably withheld.
(b) Unless Buyer shall certify in writing at the time
that (x) Buyer is not aware of the occurrence of any event
or condition, which, if not corrected, would be reasonably
expected to result in the failure of any condition to
Closing under Sections 9.3 or 9.4; (y) Buyer has no reason
to believe that any regulatory approval required under
Section 9.3(a) will not be forthcoming, and (z) no
challenge has been threatened or filed and is pending with
respect to any such regulatory approval:
(i) Buyer shall not take any action with respect
to the Branch which would require that notices be
posted or provided to customers or regulators, as
required by 12 U.S.C. Section 1831r-1, on or prior to
the Closing Date; and
(ii) Seller shall not be required to participate
in the closing of the Branch or in any notice to
customers relating to such a closing.
6.3 Regulatory Approvals.
--------------------
Seller agrees to use its reasonable best efforts to
obtain promptly any regulatory approval on which its
consummation of the transactions contemplated by this Agreement
is conditioned. Seller also agrees to cooperate with Buyer in
obtaining any regulatory approval which Buyer must obtain before
the Closing. Seller shall notify Buyer promptly of any
significant development with respect to any application it files
under this Section. Seller also shall provide Buyer with a copy
of any regulatory approval it receives under this Section,
promptly after Seller's receipt of the same.
6.4 Conduct of Business.
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Except as provided in this Agreement or as may
otherwise be agreed upon by Buyer, Seller will continue to carry
on the business at the Branch until the Closing in the ordinary
course of business, consistent with past business practices.
Seller will notify Buyer of any event of which Seller obtains
knowledge which would make any of Seller's representations under
Article IV of this Agreement false in any material respect.
6.5 No Solicitation by Seller.
-------------------------
From the date of this Agreement and for a period of
one year following the Closing Date, Seller shall not
specifically target and solicit customers of the Branch;
provided, however, that Seller shall not be restricted from
engaging in general mass mailings (including, but not limited
to, statement stuffers), telemarketing programs, newspaper,
radio or print advertisements and other similar types of
communications which are directed to the general public or to a
group of customers defined by criteria other than status as
customers of the Branch (but may include customers of the
Branch). Notwithstanding anything to the contrary in the
foregoing, Seller is expressly permitted to contact customers of
the Branch and take any and all actions as may be required to
comply with any applicable federal or state laws, rules or
regulations or the requirements of any regulatory or judicial
authorities having jurisdiction over Seller.
6.6 Customers' Check Vendor(s).
--------------------------
Seller shall use its best efforts to obtain the
cooperation of the Branch customers' check vendor(s) in
producing information about the Branch customers' checking
accounts necessary for Buyer to issue new checks.
VII. ADDITIONAL AGREEMENTS OF BUYER
7.1 Regulatory Approvals.
--------------------
Buyer agrees to use its reasonable best efforts to
obtain promptly any regulatory approval on which its
consummation of the transactions contemplated by this Agreement
is conditioned. Buyer also agrees to cooperate with Seller in
obtaining any regulatory approval which Seller must obtain
before the Closing. Buyer shall notify Seller promptly of any
significant development with respect to any application it files
under this Section. Buyer also shall provide Seller with a copy
of any regulatory approval it receives under this Section,
promptly after Buyer's receipt of the same.
7.2 Change of Name, Etc.
-------------------
Immediately after the Closing, Buyer will (a) change
the name and logo on all documents and facilities relating to
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the Assets and the Liabilities to Buyer's name and logo, (b)
notify all persons whose Cash Reserve Loans or Deposits are
transferred under this Agreement of the consummation of the
transactions contemplated by this Agreement, and (c) provide all
appropriate notices to the applicable federal and state
regulatory authorities required as a result of the consummation
of such transactions. Buyer agrees not to use any forms or
other documents bearing Seller's name or logo after the Closing
without the prior written consent of Seller, and, if such
consent is given, Buyer agrees that all such forms or other
documents to which such consent relates will be stamped or
otherwise marked in such a way that identifies Buyer as the
party using the form or other document. As soon as practicable
and, in any event, within seven calendar days after the Closing
Date, Buyer will issue new checks reflecting its transit and
routing number to customers of the Branch with check writing
privileges. Buyer shall use its best efforts to encourage these
customers to begin using such checks and cease using checks
bearing Seller's name.
7.3 Real Property.
-------------
(a) Except as expressly set forth herein, Buyer
hereby acknowledges and agrees that: (i) Buyer is expressly
purchasing the Real Property in its existing condition "AS
IS, WHERE IS, AND WITH ALL FAULTS" with respect to any
facts, circumstances, conditions and defects; (ii) Seller
has no obligation to repair or correct any such facts,
circumstances, conditions or defects or to compensate Buyer
for same; (iii) Seller has specifically bargained for the
assumption by Buyer of all responsibility to inspect and
investigate the Real Property and of all risk of adverse
conditions; and (iv) Buyer has or will have prior to the
Closing undertaken all such physical inspections and
examinations of the Real Property as Buyer deems necessary
or appropriate as to the condition of the Real Property.
Except as expressly set forth herein, Buyer acknowledges
that Seller has made no representations or warranties and
shall have no liability to Buyer (and Buyer hereby waives
any right to recourse against Seller) with respect to the
conditions of the soil, the existence or nonexistence of
hazardous substances, any past use of the Real Property,
the economic feasibility of the Real Property, or the Real
Property's compliance or noncompliance with all laws, rules
or regulations affecting the Real Property.
(b) Buyer may, at Buyer's option and expense within
forty-five (45) days from the date of this Agreement,
undertake such physical inspections and examinations of the
Real Property and the legal title thereto as Buyer deems
necessary or appropriate. If Buyer shall discover a
Material Defect, as defined herein, as a result of Buyer's
inspections and examinations, Buyer shall give Seller
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written notice as soon as possible describing the facts or
conditions constituting such Material Defect and the
measures which Buyer reasonably believes are necessary to
correct such Material Defect. Seller shall promptly notify
Buyer whether Seller elects to cure such Material Defect or
terminate the Agreement, unless Buyer elects to waive such
Material Defect. If Seller elects to cure, then Seller
shall have thirty (30) days from the date of the receipt of
Buyer's notice, or such later time, which shall not be
later than the Closing Date, as shall be mutually agreeable
to the parties which agreement shall not be unreasonably
withheld, in which to cure such Material Defect and
Seller's reasonable cure shall be a condition to Buyer's
obligation to purchase the Assets and assume the
Liabilities under this Agreement. "Material Defect" shall
mean the existence of (i) a lien or encumbrance on the
legal title to the Real Property, except as previously
disclosed in writing to Buyer by Seller, which materially
detracts from the value of the Real Property, (ii) any
discharge, disposal, release, threatened release or
emission of any Hazardous Material in the ground or the
structure of the Branch for which the Buyer has been
advised in writing by its legal counsel that Buyer could
become responsible for the assessment, removal or
remediation of such discharge, disposal, release,
threatened release or emission or for other corrective
action, or (iii) a structural problem or defect in the
Branch building which materially impairs the use of such
building as a branch.
VIII. SELLER'S EMPLOYEES
8.1 Transferred Employees.
---------------------
(a) Buyer will offer to employ all of Seller's
employees who are employed at the Branch on the Closing
Date ("Transferred Employees"), at a salary or hourly wage
comparable to that earned by them at the time of the
Closing and all such Transferred Employees shall be at will
employees of the Buyer.
(b) Seller is responsible for the filing of Forms W-2
with the Internal Revenue Service and any required filing
with state tax authorities, with respect to wages and
benefits paid to each Transferred Employee for periods
ending on or prior to the Closing Date.
(c) As soon as reasonably practicable, Seller agrees
to notify Buyer in the event that any Branch employee
terminates employment with Seller before the Closing Date.
Seller further agrees to consult with Buyer and obtain the
agreement of Buyer, which agreement shall not be
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unreasonably withheld, before making an offer of employment
to a Branch employee before the Closing Date.
8.2 Employee Benefits.
-----------------
(a) (i) Following the Closing, Buyer shall not have
any liability or obligation under any Benefit Plans or any other
program or arrangement of Seller or an ERISA Affiliate
thereof under which any current or former employee of Seller
or any of its Affiliates has any right to any benefits;
(ii) Upon the Closing, the participation of
Transferred Employees in the Benefit Plans shall cease in
accordance with the terms of such plans; and
(iii) With respect to the Transferred Employees,
Seller shall be responsible for any welfare benefits or
claims which, by reason of events which take place on or
prior to the Closing Date, become payable under the terms
of any Welfare Benefit Plan. With respect to Transferred
Employees, Buyer shall be responsible for any welfare
benefits or claims which become payable by reason of events
that take place after the Closing Date.
(b) (i) From and after the Closing Date, Buyer shall
provide the Transferred Employees with the employee
benefits, if any, provided to employees of Buyer and its
Affiliates, subject to the terms of Buyer's benefit plans;
(ii) Buyer will grant for purposes of vacation
benefits, severance pay and all welfare benefit plans (as
defined in ERISA) past service credit to all Transferred
Employees for periods of time credited to such Transferred
Employees under the Welfare Benefit Plans. To the extent
that any Transferred Employee has satisfied in whole or in
part any annual deductible under a Welfare Benefit Plan, or
has paid any out-of-pocket expenses pursuant to any Welfare
Benefit Plan co-insurance provision, such amount shall be
counted toward the satisfaction of any applicable
deductible or out-of-pocket expense maximum, respectively,
under the benefit plans and programs provided to
Transferred Employees by Buyer, and such plans and programs
shall be applied without regard to any limitations relating
to preexisting conditions or required physical examinations
that would not otherwise apply under the respective Welfare
Benefit Plans to the extent that such Transferred Employees
are covered by the Welfare Benefit Plans on the Closing
Date; and
(iii) Buyer shall take whatever action is necessary,
including amendment of its defined contribution pension
plan, to grant to each Transferred Employee past service
credit for all purposes (including any waiting period)
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under Buyer's defined contribution pension plan for all
periods of service credited to each such Transferred
Employee under the Seller's defined contribution pension
plan. Within 45 days after the Closing Date, Seller shall
provide to Buyer such information as Buyer reasonably
requires to establish the service for the Transferred
Employees credited under the Seller's defined contribution
pension plan.
8.3 Training.
--------
Seller shall permit Buyer to train the Transferred
Employees before Closing with regard to Buyer's operations,
policies and procedures at Buyer's sole cost and expense. This
training shall take place outside of business hours and may, at
Seller's option, take place at the Branch.
IX. CLOSING AND CONDITIONS TO CLOSING
9.1 Time and Place of Closing.
-------------------------
The Closing shall be on March 28, 1997, or such other
date as shall be mutually agreed upon by the parties (the
"Closing Date"). The Closing shall take place at Seller's
offices located at One Insignia Financial Plaza, Greenville,
South Carolina, at 10:00 a.m. on the Closing Date, or at a time
and place otherwise determined by mutual agreement of the
parties.
9.2 Exchange of Closing Documents.
-----------------------------
The parties shall exchange drafts of all documents to
be delivered at the Closing (other than the Preliminary Closing
Statement) at least ten Business Days prior to the Closing Date.
9.3 Buyer's Conditions to Closing.
-----------------------------
Buyer's obligations to purchase the Assets and assume
the Liabilities is contingent upon and subject to the
fulfillment of the following conditions in all material
respects:
(a) the parties obtaining all regulatory approvals
which are required in order for them to proceed with the
transactions contemplated by this Agreement and the
expiration of any required waiting period without the
commencement of adverse proceedings by any governmental
authority with jurisdiction over the transactions
contemplated by this Agreement; provided, however, that
such regulatory approvals shall not contain any conditions
or restrictions which the Buyer and Seller shall mutually
agree are overly burdensome or onerous, which agreement
shall not be unreasonably withheld;
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(b) each representation and warranty of Seller in
this Agreement being true and correct in all material
respects as of the Closing Date and all covenants and
conditions of Seller to be performed or met by Seller on or
before the Closing Date having been performed or met in all
material respects;
(c) Seller's delivery to Buyer of the following
documents in form and substance reasonably satisfactory to
Buyer:
(i) the Preliminary Closing Statement;
(ii) special warranty deeds conveying the Real
Property;
(iii) bills of sale, assignments and other
instruments of transfer sufficient to convey to Buyer
all of Seller's right, title, and interest in and to
the remaining Assets; and
(iv) a certificate executed by an appropriate
officer of Seller attesting, to the officer's best
knowledge, to Seller's compliance with the conditions
set forth in Section 9.3(b);
(d) Buyer's receipt of the Preliminary Payment as
provided in Section 3.2; and
(e) the Real Property and the Fixed Assets shall be
in substantially the same condition on the Closing Date as
on the date hereof, except for any changes in condition due
to the continued operation of Seller's business consistent
with past business practices.
9.4 Seller's Conditions to Closing.
------------------------------
Seller's obligation to sell the Assets and transfer
the Liabilities to Buyer is contingent upon and subject to the
fulfillment of the following conditions in all material
respects:
(a) the parties obtaining all regulatory approvals
which are required in order for them to proceed with the
transactions contemplated by this Agreement and the
expiration of any required waiting period without the
commencement of adverse proceedings by any governmental
authority with jurisdiction over the transactions
contemplated by this Agreement; provided, however, that
such regulatory approvals shall not contain any conditions
or restrictions which the Buyer and Seller shall mutually
agree are overly burdensome or onerous, which agreement
shall not be unreasonably withheld;
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(b) each representation and warranty of Buyer in this
Agreement being true and correct in all material respects
as of the Closing Date and all covenants and conditions of
Buyer to be performed or met by Buyer on or before the
Closing Date having been performed or met in all material
respects;
(c) Buyer's delivery to Seller of the following
documents in form and substance reasonably satisfactory to
Seller:
(i) one or more executed assumptions of the
Equipment Leases;
(ii) one or more executed instruments assuming
the remaining Liabilities; and
(iii) a certificate executed by an appropriate
officer of Buyer attesting, to the officer's best
knowledge, to Buyer's compliance with the conditions
set forth in Section 9.4(b).
9.5 Survival of Representations and Warranties.
------------------------------------------
Unless provided otherwise in this Agreement, Buyer's
and Seller's representations and warranties under this Agreement
or contained in any certificate or instrument delivered by
either party at the Closing shall survive for a period of one
year following the Closing Date.
X. TERMINATION
10.1 Termination by Either Party.
---------------------------
Either party may terminate this Agreement upon written
notice to the other if:
(a) as a result of any breach of any representation,
warranty or covenant, the party terminating this Agreement
has given the other party written notice of such breach and
such breach is not cured within 30 days thereafter;
(b) the Closing does not occur within two hundred
seventy (270) days after the date of this Agreement; or
(c) the other party so agrees in writing.
The termination of this Agreement under subsection (a)
shall not absolve the breaching party from any liability to the
other party arising out of its breach of this Agreement.
XI. MISCELLANEOUS
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11.1 Continuing Cooperation.
----------------------
(a) On and after the Closing Date, Seller agrees to
execute, acknowledge and deliver such documents and
instruments as Buyer may reasonably request to vest in
Buyer the full legal and equitable title to the Assets and
Liabilities.
(b) On and after the Closing Date, Buyer shall
execute, acknowledge and deliver such documents and
instruments as Seller may reasonably request to relieve and
discharge Seller from its obligations with respect to the
Liabilities.
(c) Seller and Buyer shall cooperate with each other
in connection with any examination conducted by any tax
authority subsequent to the Closing Date by promptly
providing upon request information relating to the tax
liability of any business operated by Seller or Buyer with
respect to the Branch and promptly informing the other of
the institution of, any material developments concerning,
and the outcome of, the same.
(d) Except as provided in Section 7.2, no interest in
or right to use Seller's logo or the name "First Union" or
any other similar word, name, symbol or device in which
Seller has any interest by itself or in combination with
any other word, name, symbol or device, or any similar
variation of any of the foregoing (collectively, the
"Retained Names and Marks") is being transferred to Buyer
pursuant to the transactions contemplated hereby. Unless
permitted pursuant to Section 7.2, Buyer shall not after
the Closing Date in any way knowingly use any materials or
property, whether or not in existence on the Closing Date,
that bear any Retained Name or Mark. Buyer agrees that
Seller shall have no responsibility for claims by third
parties arising out of, or relating to, the use by the
Buyer of any Retained Name or Mark after the Closing Date,
and Buyer agrees to indemnify and hold harmless Seller from
any and all claims (and all expenses, including reasonable
attorneys' fees and disbursements incurred in connection
with any such claim) that may arise out of the use thereof
by Buyer.
11.2 Merger and Amendment.
--------------------
This Agreement sets out the complete agreement of the
parties with respect to the matters discussed in this Agreement,
and it supersedes all prior agreements between the parties,
whether written or oral, which apply to these matters. No
provision of this Agreement may be changed or waived except as
expressly stated in a document executed by both parties.
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11.3 Dispute Resolution.
(a) Neither Seller nor Buyer shall assert any claim
arising out of or relating to this Agreement (except with
respect to claims to be handled under the Working Agreement
or submitted to the Mediator under Section 3.2(c)), unless:
(i) except for claims arising under or in
respect of Sections 2.4, 2.5 or 11.1(d), the amount in
dispute with respect to any claim exceeds $5,000.00;
(ii) except for claims arising in respect of
Sections 2.4, 2.5 or 11.1(d), the aggregate amount of
all claims by Buyer or Seller (as the case may be)
which satisfy the preceding clause exceeds $25,000.00,
in which case a claim may be asserted only to the
extent that such threshold has been exceeded;
(iii) except for claims arising under Sections
2.4, 2.5, or 11.1(d), the aggregate amount of all
claims by Buyer or Seller (as the case may be) shall
not exceed the Amount of Premium; and
(iv) except for claims arising under Sections
2.4, 2.5 or 11.1(d), the notification required by
Section 11.3(b) (if any) is given on or before the
first anniversary of the Closing Date.
(b) The parties shall attempt in good faith to
resolve any dispute arising out of or relating to this
Agreement promptly by negotiations, as provided in this
subsection (b). Either party may give the other party
written notice of any dispute not resolved in the normal
course of business. Executives of both parties at
comparable levels at least one step above the personnel who
have previously been involved in the dispute shall meet at
a mutually acceptable time and place within ten days after
delivery of such notice, and thereafter as often as they
reasonably deem necessary, to exchange relevant information
and to attempt to resolve the dispute. If the matter has
not been resolved by these persons within 30 days of the
disputing party's notice, or if the parties fail to meet
within ten days, the dispute shall be referred to more
senior executives of both parties who have authority to
settle the dispute and who shall likewise meet to attempt
to resolve the dispute. All negotiations under this
subsection (b) are confidential and shall be treated as
compromise and settlement negotiations for purposes of the
Federal Rules of Evidence, applicable state rules of
evidence, and common law. The procedures set forth above
will be followed in advance of litigation of any dispute
between the parties; nevertheless, either party may
seek a preliminary injunction or other provisional judicial
<PAGE> <PAGE>
relief if in its judgment such an action is necessary to
avoid irreparable damage or to preserve the status quo.
Despite any such action, the parties will continue to
participate in good faith in the procedures set forth in
this subsection (b).
(c) Neither party shall have any liability for lost
profits or punitive damages with respect to any claim
arising out of or relating to this Agreement. The sole
recourse and remedy of a party hereto for breach of this
Agreement by the other party hereto shall be against such
other party and its assets, and no officer, director,
employee, stockholder or affiliate of any party shall be
liable at law or in equity for the breach by such party of
any of its obligations under this Agreement.
11.4 Counterparts.
------------
This Agreement may be executed in any number of
counterparts, each of which will constitute an original, but all
of which taken together shall constitute one and the same
instrument.
11.5 Exhibits and Schedules.
----------------------
All exhibits and schedules referred to in this
Agreement shall constitute a part of this Agreement.
11.6 Assignment.
----------
This Agreement is not assignable by either party
without the written consent of the other party, which shall not
be unreasonably withheld.
11.7 Headings.
--------
The headings contained in this Agreement are inserted
for convenience only and shall not affect the meaning of this
Agreement or any of its provisions.
11.8 Notices.
-------
Any notice under this Agreement shall be made in
writing and shall be deemed given when delivered in person, when
delivered by overnight express mail service or first class mail
postage prepaid (in which case the notice shall be deemed given
on the third Business Day following the date on which the notice
is postmarked), or when delivered by facsimile transmission,
which transmission also shall be sent by first class mail,
postage prepaid, or by overnight express mail, before the second
Business Day following the transmission (in which case the
notice shall be deemed given on the day transmitted if
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transmitted before or during normal business hours or,
otherwise, on the next succeeding Business Day) to the parties
at the respective addresses set forth below or at such other
addresses as each party shall inform the other in writing.
If to Seller to: Eric Dana
Chief Financial Officer
First Union National Bank of
South Carolina
One Insignia Financial Plaza, 8th Floor
Greenville, South Carolina 29601
with a copy to: Keith D. Lembo, Esq.
Senior Vice President
and Deputy General Counsel
First Union Corporation
One First Union Center, Leg-0630,
31st Floor
Charlotte, North Carolina 28288-0603
If to Buyer to: Dwight Neese
President and Chief Executive Officer
Union Federal Savings Bank
203 West Main Street
Post Office Box 866
Union, South Carolina 29379-0866
with a copy to: Paul M. Aguggia, Esq.
Breyer & Aguggia
1300 I Street, NW
Suite 470 E
Washington, D.C. 20005
11.9 Expenses.
--------
Unless specifically stated to the contrary in this
Agreement, each party will assume and pay for the expenses it
incurs with respect to the purchase and sale of the Assets and
assumption of the Liabilities under this Agreement; provided,
however, that Buyer shall pay all fees and expenses associated
with the regulatory application process. Each party shall be
responsible for any fee payable to any agent, broker or finder
acting on its behalf in this transaction.
11.10 Public Announcements.
--------------------
Each party shall consult with the other before making
any announcement or other public communication with respect to
the transactions contemplated by this Agreement and shall
furnish a copy of the text to the other party of the
announcement or other communication.
11.11 Governing Law; Jurisdiction.
---------------------------
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This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with
the laws of the State of South Carolina applicable to contracts
made and to be performed entirely within the State of South
Carolina.
11.12 No Third Party Beneficiaries.
----------------------------
The parties intend that this Agreement shall not
benefit or create any right or cause of action in or on behalf
of any Person other than Seller and Buyer.
<PAGE> <PAGE>
IN WITNESS WHEREOF, each of the parties to this Agreement
has caused this Agreement to be executed by a duly authorized
officer as of the date written on page one of this Agreement.
UNION FEDERAL SAVINGS BANK
By:/s/ Dwight V. Neese
------------------
Its: President
FIRST UNION NATIONAL BANK
OF SOUTH CAROLINA
By:/s/ Eric Dana
-----------------------
Its: Chief Financial Officer
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EXHIBIT 99
FOR IMMEDIATE RELEASE
-----------------------
Contact: Dwight V. Neese
President
203 West Main Street
Union, SC 29379-0866
(864) 427-1863
UNION FEDERAL SAVINGS BANK
TO PURCHASE FIRST UNION'S LAURENS BRANCH
Union, South Carolina - October 3, 1996: Union Financial
Bancshares, Inc. today announced that its wholly-owned
subsidiary, Union Federal Savings Bank, has entered into an
agreement with First Union National Bank of South Carolina to
purchase First Union's Laurens, South Carolina branch.
Union Federal currently operates two offices in Union, South
Carolina and one office in Jonesville, South Carolina. The
Laurens branch will be Union Federal's first branch outside of
Union County. "We are excited about expanding into Laurens
County," said Dwight V. Neese, President and Chief Executive
Officer. "With the acquisition of approximately $23.4 million
in deposits and a well located facility, we believe that Union
Federal will be well positioned to provide first class community
banking services in Laurens."
The branch acquisition, which is subject to receipt of
regulatory approval, is expected to close in the first quarter
of 1997.
At September 30, 1996, Union Financial reported total
consolidated assets of $125.7 million and consolidated
stockholders' equity of $12.1 million. Union Financial
Bancshares' common stock is traded on the Nasdaq Stock Market's
Over-the-Counter Bulletin Board under the symbol UFBS.
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